Commons Sitting of 20 July 1966

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  TEES VALLEY AND CLEVELAND WATER BILL (By Order)
  Consideration, as amended, deferred till Tuesday next.
ORAL ANSWERS TO QUESTIONS
  AGRICULTURE, FISHERIES AND FOOD

    Fishery Protection Squadron
    Mr. Wallasked the Minister of Agriculture, Fisheries and Food whether he is satisfied that, in view of the extension of fisheries limits, the protection at present afforded by vessels of the Fishery Protection Squadron is adequate; and if he will make a statement.
    Mr. Wolrige-Gordonasked the Minister of Agriculture, Fisheries and Food if he is satisfied with the degree of fishery protection currently being afforded to the inshore fishing fleet; and if he will make a statement.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy): Yes, Sir. I am satisfied that the resources of the Fishery Protection Squadron are deployed to give the maximum assistance to our fishermen.
    Mr. Wall: Is the Minister aware that many people are not satisfied that there are enough vessels in the Squadron to carry out adequate protective duties? Would he seriously consider augmenting the number of vessels with helicopter patrols?
    Mr. Hoy: We have thought of that. It is true to say that we also augment the force when we feel that it is necessary, but we have to make the best use of available resources.
    Mr. James Johnson: Is it not a fact that there is now less congestion inside the new limit than there was in the old, but that foreign vessels are being much less careful in observing the six-mile limit?
    Mr. Hoy: No. That is not the information that we have. Since we extended the limits to protect our own fisheries, we have had infringements, but these have been pretty quickly detected.
    Mr. Hector Hughes: Has the Minister realised that the extension of boundaries by foreign countries has reduced the size of that part of the North Sea available for British fishermen and has thereby increased the responsibilities of the Fishery Protection Squadron? Will he take that into account?
    Mr. Hoy: Whenever a country extends its limits, there are obviously less fishing grounds available for others. I do not differ from my hon. and learned Friend in this. It makes it all the more important that we should give the best possible protection to our fleet.

    Brambell Committee (Report)
    Mr. Wallasked the Minister of Agriculture, Fisheries and Food if he will now make a statement on the implementation of the Brambell Report on farm animals.
    Sir H. Lucas-Toothasked the Minister of Agriculture, Fisheries and Food what steps he has taken in accordance with the recommendation of the Brambell Committee to ensure that the intention of its report is not prejudiced by imports of food produced under unacceptable systems; and what progress has been made in this direction.
    The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart): My right hon. Friend and I are still considering this Report, including the recommendation about imports.
    Mr. Wall: Can the Minister say what is causing this long delay? If it is because of the long congestion in the legislative

    599
    programme, would he consider setting up a standing advisory committee to keep this matter under review, as so many people are interested in the results of this Report?
    Mr. Peart: It is not a question of a hold-up in legislation. It is merely a question of giving the industry and all interested parties a fair opportunity to present their views. This is a very difficult matter and I will make a statement as soon as I can.
    Sir H. Lucas-Tooth: Is the right hon. Gentleman aware of the need to secure some satisfactory arrangement overseas as the basis of any final arrangement? Will he consider urgently ways of taking this essential preliminary step?
    Mr. Peart: The position of overseas countries in relation to our imports of food products is something that I shall have to bear in mind, and I am doing so.
    Mr. Molloy: Is my right hon. Friend aware that there are very many people in the country who are greatly interested in the Brambell Report and who will be a little, disappointed at the delay which is taking place in implementing its recommendations? Will my right hon. Friend bear this in mind?
    Mr. Peart: There is no delay here. I hope that my hon. Friend has read the Report very carefully. It involves a considerable number of organisations and one must give them an opportunity to air their views fully.
    Mr. Godber: Will the Minister confirm the undertaking, given by the Leader of the House, that we shall have an opportunity to debate this Report before the Summer Recess? This would be welcomed on both sides of the House.
    Mr. Peart: The right hon. Gentleman should put that question to the Leader of the House, not to me.

    Brucellosis Control
    Mr. Kitsonasked the Minister of Agriculture, Fisheries and Food if he will introduce legislation to prohibit the use of Strain 19 on cattle over eight months of age.
    Mr. Peart: No, Sir. I hope shortly to announce a decision on brucellosis con-
    600
    trol. It would be premature to adopt this suggestion.
    Mr. Kitson: While welcoming that statement, if the Minister really means it, may I ask him whether it is not a necessary first step to introduce this legislation, otherwise it will be very complicated to carry out blood tests on cattle over eight months of age?
    Mr. Pearl: I think that the hon. Gentleman should wait until I make the announcement.
    Sir A. V. Harvey: I welcome the change of heart of the Minister and his Department in the last four weeks. Will he undertake to make a statement about brucellosis before we rise for the Summer Recess, because the matter is far more urgent than he or his colleagues ever realised?
    Mr. Peart: There is no question of a change of heart on my part. I have always recognised that this problem must be tackled. It has always been a question of settling priorities.

    Old Orchards
    Mr. Crouchasked the Minister of Agriculture, Fisheries and Food if he is aware that there are large areas of old orchards no longer productive, the owners of which have not found the present level of grant sufficient incentive to grub trees, with the result that the standard of fruit from these orchards is unlikely to meet his minimum grade; and if he will raise the grant to meet this.
    Mr. Hoy: The matter is being discussed with the N.F.U. and the outcome will be announced. We should not too readily assume that a higher rate of grant would solve the problem.
    Mr. Crouch: Is the hon. Gentleman aware that the very high cost of grubbing, which can be as much as £80 an acre, is deterring the British apple grower from increasing his orchard productivity? Will he look into this question to see whether we can compete with, not just match, the productivity in countries like Holland and Italy?
    Mr. Hoy: Yes. Only a few days ago I had an opportunity of visiting some of the orchards in the hon. Gentleman's constituency. We give fairly substantial

    601
    grants at present, but, as I said in my original reply, this matter is being discussed with the N.F.U. and an announcement will be made.
    Mr. John Wells: Is not the hon. Gentleman aware that it is primarily the general farmer with a few odd acres of old orchards who is unwilling to grub up? If he would seriously consider a once-for-all-time elimination of these old orchards, rather than the rotational grubbing grants, that would be far more helpful. Would the hon. Gentleman consider that?
    Mr. Hoy: I know that it has been suggested that we should make a 100 per cent. grant, but perhaps the time is not quite Propitious to think about spending public money in that way.
    Mr. Crouchasked the Minister of Agriculture, Fisheries and Food if he is aware of the poor growth that may occur in fruit trees planted on land previously occupied by the same or closely related species and that this is causing concern in the fruit growing areas; and if, in view of the research carried out at East Mailing Research Station and in Holland in connection with this problem, he will seek to provide a grant-aided soil fumigation service to farmers to facilitate the replanting of obsolescent orchards.
    Mr. Hoy: This problem is not a new one. The common precaution is to replant on fresh land, but fumigation may prove effective in some cases. Research is proceeding, and when reliable and economical methods are developed, grant will be available under the Horticulture Improvement Scheme for the equipment.
    Mr. Crouch: I thank the hon. Gentleman for that helpful and forward-looking Answer. Is he aware that there are Dutch apple growers who are getting a crop three to four years after planting compared with six to seven years in this country due to the advance in techniques of soil fumigation? Will he look with more energy into this matter?
    Mr. Hoy: We have looked into it very carefully—and the growers have to do so, too, and endeavour to maintain technological advance in the same way as their competitors overseas.

    Pigs
    Mr. Buchanan-Smithasked the Minister of Agriculture, Fisheries and Food what he estimates will be the number of pigs slaughtered from July to December, 1966; and how this compares with the number slaughtered in the same period last year.
    Mr. Peart: The number of pigs slaughtered in the United Kingdom in July to December, 1965, was 7,579,000. I expect the comparable figure this year to be somewhat under 7 million.
    Mr. Buchanan-Smith: Would the right hon. Gentleman agree that the reduction in the number of slaughterings which he forecasts is because the size of the breeding herd is at its lowest for over four years? Would he accept that this is because of the stringent way in which the Government have treated this industry?
    Mr. Peart: On the contrary, as the hon. Gentleman must know, this shows how the flexible guarantee system works. In the Price Review we raised the middle band by 400,000, which gives over 2s. 3d. a score more than in the previous February.
    Mr. Maxwell-Hyslop: But would not the right hon. Gentleman agree that the standard quantity of the centre band for pigs is substantially less than the number which we need to have coming on to the market?
    Mr. Peart: I do not accept that. I think that the hon. Gentleman should wait to see how the flexible guarantee finally operates.

  Cheese and Dried Milk (Imports)
  Mr. Buchanan-Smithasked the Minister of Agriculture, Fisheries and Food if he is aware of the concern amongst British farmers over the imports of Dutch cheese and French dried milk; what action he will take; and if he will make a statement.
  Mr. Hoy: I am aware that these imports have been the subject of recent comment. For the last calendar year, they were less than 3 per cent. of total imports of the products in question, and

  603
  should therefore be kept in perspective. I am not satisfied there is any cause for action by the Government.
  Mr. Buchanan-Smith: Would the Minister agree that the British dairy farmer can make an even greater contribution to the replacement of imports of dairy produce? Would he accept that with the present economic stringency this is the time when they could be given a bigger share than they would have under this arrangement?
  Mr. Hoy: We hope that they will play a bigger part, but, if we expect to sell overseas, we have to buy. But that does not detract from the part which we think this sector of the industry will play in future.

  Meat Inspection (Fees)
  Mr. Norwoodasked the Minister of Agriculture, Fisheries and Food if he will introduce legislation to make the fees payable for inspection of slaughtered meat a charge upon the Revenue and not one which falls upon butchers.
  The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie): Our proposals for the amendment of the Meat Inspection Regulations, 1963, do not include any change in the financial arrangements. My right hon. Friend hopes to make a statement shortly.
  Mr. Norwood: Would not my hon. Friend agree that the arguments used by his colleague in 1963 when this matter was under discussion are equally compelling now? Since it is a national scheme, as he said at the time, it should be a national responsibility.
  Mr. Mackie: The total amount which meat inspection puts on a pound of meat is less than a tenth of a penny. I do not think that the public objects to paying for the aesthetic and health value of meat inspection.

  Cereals (Deficiency Payments)
  Mr. Godberasked the Minister of Agriculture, Fisheries and Food how many claims for acreage payments have been submitted too late to rank for payment in each of the last three cereal deficiency payment years; and what are
  604
  his reasons for abolishing the sending out of reminders to growers to send in these forms.
  Mr. Joplingasked the Minister of Agriculture, Fisheries and Food what acreage of barley and oats was involved in applications which were received too late for subsidy payment in each of the last three cereal deficiency payment years.
  Mr. John Mackie: The number of late claims rejected in each of the last three years was 183, 165 and 123. I regret that information about the acreages involved is not available. It is the farmer's responsibility to submit his claims in time, and we do not issue reminders under other subsidy schemes.
  Mr. Godber: The numbers which the Parliamentary Secretary has given are fairly substantial. He will realise that it has been the practice to issue reminders. Although, in spite of reminders, there has been this number, is not the hon. Gentleman afraid that it will be vastly greater without them? Does not this mean that many farmers who would otherwise be entitled to a subsidy will not get it? Is not this very unfortunate?
  Mr. Mackie: No. In the form which we are sending out we include this red printed slip, which surely should be adequate. We are trying to save money. To put out hundreds of thousands of extra reminders is quite a lot. That influenced us a good deal in stopping this reminder system.
  Mr. Jopling: Would the hon. Gentleman say how much money his Ministry has saved by stopping the sending of these reminders?
  Mr. Mackie: Not without notice.

  National Plan (Targets)
  Mr. Bruce-Gardyneasked the Minister of Agriculture, Fisheries and Food whether he is satisfied with the progress of the home agricultural industry towards fulfilment of the targets set out for it in the National Plan and if he will make a statement.
  Mr. John Mackie: Yes, Sir. Good progress is being made towards the objectives of a selective expansion of output and the release of labour through

  605
  increasing productivity. The Government and the industry have taken steps to implement the Plan and we have measures in hand, such as the Agriculture Bill, which will give the industry further help towards the achievement of these objectives.
  Mr. Bruce-Gardyne: Would not the hon. Gentleman agree that, even if the planned targets were achieved, there would be a substantial increase in the bill for imported food, which we cannot afford? Would not he further agree that the right way to give the agricultural industry its head would be gradually to move over to something nearer the Common Market system of agricultural support?
  Mr. Mackie: I do not think that that arises from the Question. The figure for increased demand is roughly what the industry itself thought it was capable of achieving.
  Mr. Godber: May I ask the hon. Gentleman a question which arises directly from Question on the Paper? Will he define what neither he nor his right hon. Friend the Minister have previously defined, namely, what is meant by saying that "a major part" of the increased demand at home will be met under the National Plan by home producers?
  Mr. Mackie: One cannot possibly be precise in agricultural production, as the right hon. Gentleman knows, but a "major part" is a major part.
  Mr. Emrys Hughes: Would my hon. Friend say whether any provision was made in the National Plan for a 7·2 increase in rents last year? In order to encourage small farmers, will he agree to a retrospective rent freeze?
  Mr. Mackie: We all understand my hon. Friend's interest in rents, which, as he well knows, are always taken into account in the Price Review. We did not include this point in the National Plan, because it is not a production point.
  Mr. Gibson-Watt: The hon. Gentleman will be aware that one of the targets in the National Plan was to get rid of 140,000 agricultural workers, 5,000 of them in Wales. Would the hon. Gentleman say whether the Government still have that target and whether they intend to carry it through?
  Mr. Mackie: It is not a good description to say that the aim is to get rid of men. We are asking agriculture to make a contribution of 140,000 men to increasing productivity. We are up to that target. I have not the figures for Wales, where the hon. Gentleman and I were yesterday, as against the rest of the country. But this is part of the target, and it is one which the industry is meeting.

  Shell Fishermen (Cornwall and Devon)
  Mr. Nottasked the Minister of Agriculture, Fisheries and Food what action he intends to take to protect the traditional shell fishermen of Cornwall and Devon from the activities of Irish aqualung divers who have been banned from commercial fishing in the Republic.
  Mr. Hoy: I have no reason to think that any protection is needed.
  Mr. Nott: Is the Minister aware that in South Africa, the United States, Ireland and many other countries skin diving has been banned because of its effects upon stocks of crayfish? If the hon. Gentleman is not prepared to ban skin diving, will he consider a method whereby zones could be introduced to protect the spawning grounds of the crayfish?
  Mr. Hoy: The hon. Member will be aware that I cannot answer for other countries, but he will also be aware that scientific investigation is at present taking place into the Cornish crayfish stocks. Certainly there is no scientific information to bear out the hon. Member's allegation that skin diving is having an effect.
  Mr. Loveys: Is the Minister aware that this is an increasing problem and is not confined solely to the South-West but that there is much poaching of lobsters from fishermen's pots by aqualung operators in other parts of the country, including Selsey, in my constituency? Cannot the Minister offer some protection for the fishermen?
  Mr. Hoy: If poaching of that kind is taking place and the hon. Member will let me have information, I will see that action is taken. This was not borne out, however, by a delegation which was led by one of his hon. Friends.

  Brewers (Charges)
  Mr. Ellisasked the Minister of Agriculture, Fisheries and Food if he is aware that, despite the agreement arising from Report No. 13 of the National Board for Prices and Incomes, brewers are evading the spirit of the agreement by increasing charges in their managed houses in non-public bars, and increasing the practice of not providing public houses with public bars; and what action he will take to deal with this situation.
  Mr. Peart: I have no evidence to suggest that brewers are evading the spirit of the agreement in either of the ways suggested by my hon. Friend. My Department is in close touch with the Brewers' Society on the working of the agreement.
  Mr. Ellis: Is my right hon. Friend aware that there is plenty of evidence to show that this is taking place? I will make it available to him pretty quickly if he does not know about it. On the other point, will my right hon. Friend make representations to the Brewers' Society that when some of us are called to the bar we prefer the unpretentiousness of the public bar and are more concerned with price and quality than with the knick-knacks on the walls?
  Mr. Peart: I can only say that I sympathise with that last remark. I have, however, made an agreement with the Brewers' Society and I have no evidence of the kind suggested by my hon. Friend. If he has any evidence, I will carefully look at it.
  Mr. John Hall: Would not the Minister agree that the brewing industry has done everything possible to comply with the undertaking which was given to him? Would he not further agree that the attention of his hon. Friend the Member for Bristol, North-West (Mr. Ellis) might better be directed to the much higher prices charged in houses leased to free undertakers by the Bristol Corporation?

  Salmonella Typhimurium Infection
  Mr. Kitsonasked the Minister of Agriculture, Fisheries and Food what are the factors responsible for the rise, spread and increase in salmonella typhimurium infection; what are the reasons for the rise in drug resistance in these organisms; whether he is aware of the potential risk
  608
  of infection from these organisms in man; and if he will make a statement.
  Mr. John Mackie: I have no precise information to show whether this infection in animals is increasing or that veterinary use of antibiotics has led to an increase in drug resistance. A Joint Committee of the Agricultural and Medical Research Councils has been considering some aspects of this problem and its report is awaited. My right hon. Friend's Scientific Advisory Panel is also reviewing the use of antibiotics in food and agriculture.
  Mr. Kitson: Is the Minister aware that six people in this country died of salmonella typhimurium infection during the last six months? Is he further aware that the source of most of this infection is in Essex? Will he not have discussions with the Minister of Health to see whether action should not be taken, because it has definitely been proved that the use of drugs in calves is setting up a serious resistance within human beings?
  Mr. Mackie: I doubt the hon. Member's last statement that it has been proved that these drugs have set up this resistance. We recognise, however, the problem of salmonella infections, of which, as I take it the hon. Member knows, there are simply hundreds, including this one. We are looking at the matter carefully and the eminent committees which I have mentioned are looking into the position seriously.
  Mr. Godber: Will the Minister undertake personally to follow up the situation carefully? Some serious issues are involved, including that of human health, and I am sure that he would wish to see every possible safeguard maintained.
  Mr. Mackie: I certainly give that assurance.
  Mr. Kitson: Owing to the unsatisfactory Answer which I have received, I give notice that I will raise this matter on the Adjournment.

  Insecticides (Organo-phosphorous Compounds)
  Mr. Harold Walkerasked the Minister of Agriculture, Fisheries and Food if he will have published the names of agricultural insecticides based on organo-phosphorous compounds.
  Mr. Hoy: The list of products for farmers and growers approved for efficiency under the Agricultural Chemicals Approval Scheme indicates those which are based on organo-phosphorous compounds. Manufacturers participating in the Pesticides Safety Precautions Scheme indicate on the label of their products when an agricultural insecticide is so based.
  Mr. Harold Walkerasked the Minister of Agriculture, Fisheries and Food what information he has concerning the lethal and epidemic qualities of certain agricultural insecticides such as those based on organo-phosphorous compounds from the Chemical Defence Experimental Establishment; and if he will make a statement.
  Mr. Hoy: There are no agricultural insecticides on sale in this country based on organo-phosphorous compounds provided by the Chemical Defence Experimental Establishment.
  Mr. Walker: Is my hon. Friend aware that a lecture on this subject was given recently by the senior principal scientific officer of that establishment? Is he aware that one of these pesticides was recently reported in the Press as the cause of a small township in the United States needing to be evacuated because of its accidental misuse, and that this particular compound, Paraphion, is freely available to members of the public in this country? In the public interest, should not my hon. Friend prohibit it and the use of other similar pesticides?
  Mr. Hoy: We exercise tremendous care in dealing with these matters. We have advisory committees consisting of really eminent people to consider them. I was unaware of the lecture to which my hon. Friend has referred. I shall certainly look at what he has said in the last part of his supplementary question.

  Fish, Broccoli and Potatoes (Transport from Cornwall)
  Mr. Geoffrey Wilsonasked the Minister of Agriculture, Fisheries and Food the average quantities of fish, broccoli and potatoes exported from Cornwall to other parts of the British Isles each year; by what means they are transported; and whether he will make a statement.
  Mr. John Mackie: Precise figures are not available but it is estimated that in a normal year some 4,000 tons of fish, 30,000 tons of broccoli and 11,000 tons of early potatoes are exported from Cornwall to other parts of the British Isles. Some two-thirds of the fish, broccoli and potatoes goes by road and the remainder by rail.
  Mr. Wilson: Has the hon. Gentleman any information about the route taken by the proportion that goes by road? Is it the A30 or the A38?
  Mr. Mackie: All I know is that if any of it goes the way I went round the A38 one day, it could be slowed up considerably. I cannot give the hon. Member precise information, but there is no evidence of a real hold-up in the area in the transport by road of this produce to the markets.

  European Economic Community
  Mr. McNamaraasked the Minister of Agriculture, Fisheries and Food whether he will publish a White Paper setting out the main effects of British entry into the European Economic Community on British agriculture and retail food prices, respectively.
  Mr. Peart: I do not think I could usefully enlarge upon the statements that have already been made on these matters.
  Mr. McNamara: Would not my right hon. Friend agree that this is one of the most important questions regarding any sort of negotiations which might be made with the Community, quite apart from any other political considerations, 'and that we need this information to have properly informed public discussion of the matter?
  Mr. Peart: I agree that many statements have been made. I have made statements myself. Obviously, joining the Community could mean a considerable increase in prices.
  Mr. Hooson: Would not the Minister agree that his well-known opposition to the Common Market would be put in better perspective by publication of a White Paper of this kind to enlarge public debate on a major issue which will arise if we again seek membership of the Community?
  Mr. Peart: I am not certain about all the factors in relation to the European Community, which has not finally clarified its own position on many points of agricultural policy. I still adhere to the statements which I have made. Entry could be harmful without proper safeguards to our farmers and it could mean increased food prices to consumers.
  Mr. Godber: Will not the Minister leave aside his well-known prejudices in regard to this matter and let us look at it factually? Is it not an excellent thing to do as is suggested and issue a White Paper and let us have discussion of these matters? The right hon. Gentleman knows that I take a very different view from him in this regard and that many of us are not satisfied with his negative approach to the whole question.
  Mr. Peart: I may have prejudices, but I believe that they are good prejudices. My only anxiety on this matter is that our home agriculture should not be jeopardised. Therefore, in any future developments we must hear this in mind.
  Sir T. Beamishasked the Minister of Agriculture, Fisheries and Food what discussions he is having with the National Farmers' Union and the Agricultural Workers' Union with a view to preparing the ground for the United Kingdom's entry into the European Economic Community and what conclusions he has reached about the problems involved.
  Mr. Pearl: I am not holding any such discussions with either of these organisations at present.
  Sir T. Beamish: As it is now clear that, in spite of all the gobbledegook from the Prime Minister, one of the primary aims of British foreign policy is to join the Common Market on acceptable terms, is it not deplorable that the Government have been so slothful in considering the effects that this might have on British agriculture and horticulture?
  Mr. Pearl: The Government have not been slothful. If we had accepted the Conservative approach. we would have gone in without any safeguards.
  Mr. Godber: The right hon. Gentleman must know that that is not so. He has refused to issue a White Paper. Is
  612
  it not time that he took this matter seriously and tried to take some action which will help to facilitate our entry into the Common Market with proper safeguards?
  Mr. Peart: The right hon. Gentleman knows that the Tory Party levy policy for British agriculture means the end of major safeguards?

  Pork and Beef (Imports from Yugoslavia)
  Mr. Peter Millsasked the Minister of Agriculture, Fisheries and Food how many tons of Yugoslav pork and beef were imported into the country during 1964–65
  Mr. Hoy: 2,200 tons of pork and 13,100 tons of beef between April, 1964, and March, 1965.
  Mr. Mills: Will the Minister bear in mind that increasing quantities of these products will be coming into this country due to the Common Market tariffs, and therefore food is diverted to this country? Does that not show how important it is that there should be far stricter import control over these products?
  Mr. Hoy: No. I think the figures for 1965–66 show a very substantial fall. Beef fell to 3,500 tons and pork to 1,300 tons.

  Tractors (Outrigger Arms)
  Mr. Peter Millsasked the Minister of Agriculture, Fisheries and Food what consideration he has given to the new type of outrigger arms for tractors as an adequate safety device in forming the regulations he is preparing on tractor safety.
  Mr. John Mackie: We are considering the possible effectiveness of the outrigger arms for tractors to which the hon. Member refers as part of the general study of the comments on the proposed regulations. It does not seem probable, however, that they will afford adequate protection against overturning in as wide a range of circumstances as would a safety frame or cab.
  Mr. Mills: Will the Minister bear in mind that we have had a further two

  613
  or three fatal accidents with tractors in the South-West very recently? Will he urgently bring forward new regulations to deal with this very serious problem?
  Mr. Mackie: Yes, we are attending to this very urgently indeed, but as the hon. Gentleman's Question suggests, there are differences of opinion as to what is the best method, and consultations are going on. We should like to be sure that what we decide is right. We appreciate that outrigger arms afford a considerable amount of safety.

  White Fish (Retailing)
  Mr. Bakerasked the Minister of Agriculture, Fisheries and Food what plans:le has, in co-operation with the White Fish Authority, for market research into the retailing of white fish.
  Mr. Hoy: My Department is meeting half the cost of the White Fish Authority's programme of economic research, which includes studies of retailing.
  Mr. Baker: Would the hon. Gentleman not agree that, in view of the savage cut in the white fish and herring subsidies for the ensuing year, it is essential to press on with this project with a view to giving better returns to fishermen as quickly as possible?
  Mr. Hoy: Quite obviously, I disagree with the first part of the hon. Gentleman's supplementary question, but we will debate it later. As to the latter part, we have always believed that proper marketing would bring better results, not only to those who catch and sell fish but to the consumers as well.
  Mr. John.Hall: Would the hon. Gentleman agree that the White Fish Authority has been in existence long enough to have conducted half a dozen market researches? Does he really think that the White Fish Authority is making a worthwhile contribution to the industry?
  Mr. Hoy: I think that the White Fish Authority has done a fairly good job; and I 'think that under the present Chairman this job has been tackled. I cannot be held responsible for what went on in the years prior to his taking over.

  South Atlantic Fishing Grounds
  Mr. Bakerasked the Minister of Agriculture, Fisheries and Food what study he has made of prospects for the
  614
  exploitation of the South Atlantic fishing grounds; and if he will make a statement.
  Mr. Hoy: Investigations into prospects in the South-Eastern Atlantic are being carried out jointly by the White Fish Authority, the Ministry of Technology and my Department. An account is given in the Annual Report of the Authority laid before Parliament on 23rd June, 1966.
  Mr. Baker: While thanking the hon. Gentleman for that reply, may I ask him if he would not agree that the exploitation of these grounds would help in easing the overfishing in some of the more traditional grounds around our coasts?
  Mr. Hoy: Yes, I agree with the hon. Gentleman, and that is the reason why these researches have taken place.
  Mr. James Johnson: Is my hon. Friend aware that fishing off the Patagonia coast will cause longer and longer voyages for the home-based fishing fleet, and is he further aware that the consequent absence of the husbands causes their wives much concern? Will he agree to have a sociological survey into this?
  Mr. Hoy: I do not underestimate the seriousness of the question raised by my hon. Friend. When we are investigating these things, as we are, quite obviously we have got to consider all the repercussions they will have on the people employed in the industry.

  Fish Farming
  Mr. Evelyn Kingasked the Minister of Agriculture, Fisheries and Food what research is now being conducted in the field of fish farming; what results have so far been achieved; and if he will make a statement.
  Mr. Hoy: Research and experimental work in fish farming is being carried out by the Fisheries laboratories, by the White Fish Authority and by universities. An account appears in the Annual Report of the White Fish Authority laid before Parliament on 23rd June.
  Mr. King: Will the hon. Gentleman hurry this research on? Would he confirm its potential importance to seaside resorts, particularly where heat and power from power stations are likely to be available.
  Mr. Hoy: Yes. In reply to the latter part of the supplementary question, research is going on into this particular aspect. With regard to overall research, whatever we do it is going to take some time to get proper answers, but I can assure the hon. Gentleman that the three parties concerned in this work are not losing any time at all in seeking to find results.
  Mr. Manuel: Would my hon. Friend indicate just what success has been attained so far in connection with fish farming as a viable enterprise? Have any definite conclusions yet been obtained?
  Mr. Hoy: We are in the early stages of the research at Lowestoft, which is being very helpful indeed; but I am bound to tell my hon. Friend that it will be some time yet before we are able to say whether it will be a viable proposition or not.

  White Fish Industry (Minimum Prices)
  Mr. James Johnsonasked the Minister of Agriculture, Fisheries and Food what talks he has had with the White Fish Authority regarding the formulation of a scheme for the establishment of minimum prices in the white fish industry; and whether he will make a statement.
  Mr. Hoy: I have nothing to add to the replies given on 2nd March and 11th May.
  Mr. Johnson: While thanking my hon. Friend for his usual candour, may I ask him whether he is aware that this delay is becoming a little niggling? Could he possibly give us a date when this report may come?
  Mr. Hoy: I think my hon. Friend will realise that this really is not a matter for the Ministry. It is a matter for the Authority and the industry. I think my hon. Friend can be assured that the Authority and its very able Chairman are doing all they possibly can.
  Mr. Godber: On this point, may I endorse what the hon. Member for Kingston upon Hull, West (Mr. James Johnson) has said, in that speed is needed, and also what the hon. Gentleman has said about the very able Chairman, but may I ask whether he would not agree that it is
  616
  most essential to get this cleared up, since otherwise the industry will suffer very seriously?
  Mr. Hoy: Yes, I agree with the right hon. Gentleman, but when one undertakes a scheme like this, then consultation has to take place with every part of the industry.
  Mr. Speaker: Order. It is difficult for the Chair to hear the Questions and Answers when there is so much background noise.

  Milk (Half-Pint Bottles)
  Mr. Lomasasked the Minister of Agriculture, Fisheries and Food if he will introduce legislation compelling milk retailers to provide half-pint bottles for milk, in view of the number of retired persons and individuals living on their own who have no means of storing milk overnight.
  Hon. Members: Wake up.
  Mr. Hoy: I must say that it is a little difficult to hear what Questions are being asked.
  Some dairies have discontinued the sale of milk in half-pint bottles because they find it uneconomic. I am not satisfied that it would be desirable to introduce an element of compulsion into the present arrangements governing the sale of milk.
  Mr. Lomas: Is my hon. Friend aware that the present system creates a great wastage of milk and also creates a wastage of money? Does he not think that, in the interests of those living on low fixed incomes and of people having to live on their own, this legislation is long overdue?
  Mr. Hoy: I have had a look at this. If we are going to insist on this, we are going to put up considerably the cost of delivery. We also have to remember that, in at least half of the country, people are still able to get these half-pint bottles, and we do not want to cause an increase in their cost of living by forcing them upon the others. On the other hand, I am informed by the people concerned that today milk bought in one-pint bottles and kept in a cool place will last two days.

  River Teifi (Flooding)
  Mr. Elystan Morganasked the Minister of Agriculture, Fisheries and Food how soon work can commence near Llechryd, Cardiganshire, to combat the danger of flooding by the River Teifi in that area.
  Mr. John Mackie: We are ready to consider the proposals for approval for grant as soon as we get the details required and I understand that the river authority hopes to give these shortly. I cannot say when it will start this work.
  Mr. Morgan: Does my hon. Friend appreciate that there has been quite some delay in this matter? There were reports to the Government in 1852 and 1873. There is a grave danger that if this work is not carried out expeditiously there will be further flooding, perhaps causing loss of life.
  Mr. Mackie: My right hon. Friend and I cannot be responsible for the reports submitted on the dates referred to by my hon. Friend, but we are advised that there is no great danger of the slate slipping or loss of human life, but we will look into the matter.

  Meat (Imports from New Zealand)
  Sir J. Gilmourasked the Minister of Agriculture, Fisheries and Food what estimate he has made of the quantity of meat which will be imported annually into this country from New Zealand during the currency of the recently negotiated agreement whereby imports of meat from New Zealand will be without restriction in quantity until September, 1972.
  Mr. Peart: The quantity will depend on supply and demand but I do not foresee any marked divergence from current trends.
  Sir J. Gilmour: As the New Zealand meat producers have announced plans to diversify the sale of lamb from New Zealand, and particularly to review what is sold to the United Kingdom and North America would not the hon. Gentleman agree that he ought to be able to give encouragement to those producing lamb in this country to increase the amount for the home market?
  Mr. Peart: Certainly, Sir. That was the purpose of our National Economic Plan, to have a selective approach to increased production.
  Mr. Speaker: Order. I must ask the House to be fair to those who have Questions to ask.
  Mr. Peart: We have encouraged home production, and that was the purpose of the last review.
  Mr. Godber: Can the right hon. Gentleman assure us that this agreement will not run counter in any way to the assurance given in the National Plan that the major part of the increased requirement would come from home farmers?
  Mr. Peart: Certainly we stand by the National Plan.

  Exports
  Mr. Bryant Godman Irvineasked the Minister of Agriculture, Fisheries and Food what steps he is taking to increase agricultural exports; and what success has been achieved in the last 12 months.
  Mr. Peart: The full range of Government services to exporters is available to the agricultural industry, and my Department works closely with the Departments responsible. Exports of agricultural and food products in the year ended May, 1966, were worth £316 million—£38 million up on the previous year.
  Last week I presided over the launching of the British Agricultural Export Council, which has been set up by the industry with encouragement and advice from me and my Department.
  Mr. Irvine: Has the right hon. Gentleman considered the possibility of in, creasing our agricultural representatives in embassies abroad?
  Mr. Peart: I will consider the whole question of attachés, but, where we have no attachés, obviously our commercial counsellors help considerably.

  Fruit and Vegetables (Consumption)
  Mr. Bryant Godman Irvineasked the Minister of Agriculture, Fisheries and Food what steps he is taking to increase the consumption of fresh fruit and vegetables.
  Mr. Hoy: Sales promotion is primarily a matter for the industry. But the introduction of statutory grading and the setting up of an Apple and Pear Development Council should help.
  Mr. Irvine: As we are at the bottom of the league table in Europe in respect of both products, will the hon. Gentleman look at this again to see whether there is anything that his Department can do to be of assistance?
  Mr. Hoy: We have made a start, and we have persuaded the industry—at least we have done it in consultation with the industry—to set up this machinery, and I am certain that it will show good results.

  Hormone Selective Weed Killers
  Mr. Burdenasked the Minister of Agriculture, Fisheries and Food if he is aware that some hormone selective weed killers are a danger to the health and life of human beings and animals; and what steps are taken to clear them for use and ensure that dangerous specifications are not put into use.
  Mr. Hoy: The Advisory Committee on Pesticides and Other Toxic Chemicals subjects weed killers to rigorous scrutiny before making recommendations for their safe use and before they are cleared through the Pesticides Safety Precautions Scheme.
  Mr. Burden: I understand the interest of the party opposite in pesticides at the moment, but will the hon. Gentleman give an undertaking that really great attention is being paid to this matter, because it is causing grave concern in the country?
  Mr. Hoy: Yes, Sir. I can give the hon. Member that assurance.
  Mr. Maxwell-Hyslop: Does the Minister to agree that it looks as if the Treasury Bench needs a little selective weed killer at the moment?
  Mr. Hoy: I am encouraged in that view from the position I am looking from just now.
  Mr. Speaker: It is obviously time to move away from Questions.

  ORDER PAPER (SELECTION OF AMENDMENTS)
  Mr. Worsleyasked the Lord President of the Council whether he will arrange for the Services Committee to consider the matter of producing an Order Paper listing amendments announced as being provisionally selected by the Chair to be available to Members when a Bill is being considered in committee of the whole House.
  The Lord President of the Council and Leader of the House of Commons (Mr. Herbert Bowden): The time available is insufficient to produce an over-printed Order Paper listing Amendments provisionally selected by the Chair but consideration is being given to placing an extra 50 copies of the list of selected Amendments on the shelf in the No Lobby. Even if extra copies can be provided in this way, however,Mr.Speaker or the Chairman must, of course, retain their right to alter the provisional selection, which is sometimes done after representations have been received.

  HOUSE OF COMMONS (VISITORS)
  Mr. Archerasked the Lord President of the Council if he is aware that admission under the Gallery is not open to women without special permission; what is the reason for this discrimination; and whether he will take steps to admit women on the same terms as men.
  Mr. Bowden: Under the Gallery is intended primarily for expert advisers and those having a direct interest in the debate and if a woman comes within those categories arrangements can be made for her to be admitted.
  Mr. Archer: Is my right hon. Friend aware that to secure the admission even of a woman expert, it is necessary to obtain the certificate of the Chief Whip on either side of the House? Would my right hon. Friend explain why his need is greater than that of other hon. Members?
  Mr. Bowden: The history of the admission of women under the Gallery goes back to the eighteenth century. There is a very good reason for it. I

  621
  would remind the House that both Mr. Speaker's and the Serjeant at Arm's Galleries are reserved for women only.
  Mr. R. C. Mitchell: Will the Lord President undertake a complete review of the allocation of seats in the public Gallery? Is he aware that many hon. Members have been told that there is not a single seat left today, yet we look up there and see a whole row of empty seats? Is he further aware—
  Mr. Speaker: Order. The hon. Gentleman cannot call attention to the presence or absence of strangers without risking serious consequences.
  Dame Irene Ward: May I partly thank the right hon. Gentleman for his information? Is he aware that who sits in various Galleries in other parts of the House is nothing to do with the right of women to be admitted under the Gallery as experts? The whole procedure to get women's rights established as experts has been abominable. Is the right hon. Gentleman aware that I was thinking of establishing myself a wayleave under the Gallery in order to protect our interests?
  Mr. Bowden: There is no difficulty whatever about a lady being given permission to sit under the Gallery if she is an expert and is advising any hon. Member within the House on a private Member's Bill or on public business.

  MEMBERS (FILING CABINETS)
  Mr. McNamaraasked the Lord President of the Council what progress is being made towards supplying each private Member who so requests with more than one filing cabinet.
  Sir Gerald Wills: I have been asked to reply.
  The number of filing cabinets issued to Members depends largely on space. A Member who has a single room can have a second filing cabinet if he wants one but there is normally insufficient space in Members' desk rooms for the provision of a second filing cabinet for each Member.
  Mr. McNamara: While thanking the hon. Gentleman for that reply, may I ask whether he is aware that, within hours of
  622
  asking my Questions last week about the provision of desks for new hon. Members within the precincts, I was offered one? May I ask him whether that is establishing a precedent, so that if all new hon. Members table similar Questions they will get new desks?
  Sir G. Wells: I am glad to hear the efficacy of the hon. Gentleman's efforts so far.
  Mr. John Smith: Is not this tinkering with the problem? Is not the spirit of the age after much bigger game than filing cabinets? Is it not the truth that we cannot do our job by our constituents in a building designed as an early Victorian club, charming though it is, and ought we not to clear out of here, Galleries and all—
  Mr. Speaker: Order. The hon. Gentleman cannot make a speech. Questions should be brief.
  Sir G. Wells: I think that that raises rather a wider question.

  ESTIMATES COMMITTEE (CLERKS)
  Mr. William Hamiltonasked the Lord President of the Council what progress is being made in the recruitment of extra Clerks for service with the Estimates Committee in accordance with the recommendations of the Select Committee on Procedure.
  Mr. Bowden: The Select Committee on House of Commons (Services) has already reported on the proposal that Select Committees should be permitted to employ specialist assistance but the recommendation for extra Clerks for service with the Estimates Committee will be considered as part of a wider review of the work and staffing of the Clerk's Department, which is currently being undertaken by a Treasury O and M team.
  Mr. Hamilton: Is it not the case that, some time ago, my right hon. Friend accepted the recommendation that there should be two full-time Clerks for the whole Committee and that the Clerks of each Sub-Committee should be full-time to the Estimates Committee? Will he give an assurance that the cuts in public expenditure to be announced shortly will not include this particular item, and will

  623
  he give a further assurance that we might have some women Clerk experts added for the Estimates Committee?
  Mr. Bowden: On 27th October, 1965, I promised the House that the House of Commons (Services) Committee would look at the problem. I am sure the whole House is aware of the importance of adequately staffing all the Committees of the House, but the o and M team at present engaged in looking at the whole question is anxious to make sure not only that they are fully staffed but that they are not overstaffed.

  HOUSE OF COMMONS (DUPLICATING MACHINES)
  Mr. Higginsasked the Lord President of the Council when a duplicating machine will be installed in Old Palace Yard.
  Mr. Selwyn Lloyd: I have been asked to reply.
  The Administration Sub-Committee of the Select Committee on House of Commons (Services) is considering the installation of additional duplicating machines in the House, and this proposal will be sympathetically considered.
  Mr. Higgins: In thanking ,my right hon. and learned Friend for that reply, may I ask him to ensure that this matter is treated as one of some urgency? Hon. Members crossing the road to duplicate their documents run some risk, and the effect of a by-election after the Government's economic announcement today might be traumatic on Government morale.
  Mr. Lloyd: We hope to make a recommendation within a few days.

  BILLS (SECOND READING DEBATES)
  Mr. Winnickasked the Lord President of the Council whether he will move to alter the procedure of the House for the Second Reading of Government Bills on major subjects so that there would be a greater opportunity for back-bench Members to speak.
  Mr. Bowden: I answered a similar Question on 22nd June when I said that the Select Committee can, if it wishes, look at this question.

  LAND REGISTRATION
  Mr. Hector Hughesasked the Attorney-General if he will state his plans to cheapen, expedite and simplify the procedure relating to the registration by the Land Registry of transfers of property.
  The Attorney-General (Sir Elwyn Jones): The attainment of these objects depends in large measure on improvements to the substantive law relating to the transfer of land. The Law Commission is considering this with a view to simplification. It is hoped that expedition will be achieved through the passage of the Land Registration Bill and the expansion of the Ordnance Survey Department and of the Land Registry, together with the extended use of modern processes and equipment. No immediate reduction in land registration fees can be expected.
  Mr. Hughes: While thanking the learned Attorney-General for his historical reply and his hope, may I ask whether he realises that the procedural reforms asked for in the Question are particularly urgent having regard to the present financial stringency which inflicts loss and damage on the vendors and purchasers of properties when there is delay in completing purchases?
  The Attorney-General: The need for improvement is appreciated, and the appropriate steps are being taken.

  DIRECTOR OF PUBLIC PROSECUTIONS (BOOK)
  Sir C. Taylorasked the Attorney-General whether he will now direct the Director of Public Prosecutions to institute criminal proceedings against the publishers of the book, details of which have been handed to him by the honourable Member for Eastbourne, in view of the publicity which it has now received.
  The Attorney-General: No. As I indicated in my Answer to the hon. Member's Question on 11th May, the Director of Public Prosecutions, after consultation with the Law Officers, decided that criminal proceedings should not be instituted. The grounds for this decision are as valid now as they were then.
  Sir C. Taylor: Has the right hon. and learned Gentleman's attention been drawn to Motion No. 119 signed by 35 hon. Members of all parties, which urges that he should change his mind about this?
  The Attorney-General: Yes. My attention has been drawn to that Motion, and also to Motion No. 116, to exactly the opposite effect.
  Sir C. Nabarro: How does the right hon. arid learned Gentleman reconcile his Answer today and his earlier Answer with his imputation that the flood of pornography entering the country was the fault of the Tory Party? In his answers to both these questions, is he not himself guilty of moral turpitude?
  Mr. Speaker: Order. I know that the hon. Gentleman means it lightheartedly, but he should withdraw that at once.
  Sir G. NabarroI am sorry, Mr. Speaker, if that is unparliamentary, and I will withdraw it unhesitatingly. May I substitute moral indecision—moral in. decision.
  The Attorney-General: Whether I heard the hon. Gentleman's condemnation correctly I confess does not trouble me greatly. Nevertheless, the fact is that the Government and public authorities are taking all active steps that are within the resources of Customs and of police in regard to the flood of pornography, and I do not accept the summary of what I said earlier to be accurately stated by the hon. Gentleman.

LAW OF SUCCESSION (ILLEGITIMATE PERSONS)
Mr. Abseasked the Attorney-General whether Her Majesty's Government accept the recommendations of the Russell Committee on the law of succession in relation to illegitimate persons; and what action is intended to be taken upon them.
The Attorney-General: The Government are considering the Report and no decision has yet been reached about the acceptance of the recommendation contained in it.
Mr. Abse: In view of the fact that the Report was almost unanimous, and also that it undoubtedly has been received in many circles with acclamation, and since many of its recommendations are not re-
626
trospective, will my right hon. and learned Friend look at this as a matter of urgency?
The Attorney-General: Yes, most certainly, but the Report was published only on 13th July, and we are anxious to get the views of the House, the public, and all interested parties before action is taken.

SOLICITORS (CONVEYANCING CHARGES)
Mr. Whitakerasked the Attorney-General whether he will take powers to refer solicitors' conveyancing charges to either the Monopolies Commission or the Restrictive Practices Court; and if he will refer recent increases in solicitors' remuneration arising out of conveyancing to the National Board for Prices and Incomes.
The Attorney-General: No. Statutory control over solicitors' conveyancing charges is exercised by a committee of which my noble Friend the Lord Chancellor is the chairman. There has been no change in the scales authorised by the Committee since 1960. My noble Friend recently invited the Law Society to consider alterations in the method of charging. The Law Society is now doing this. It would therefore be premature to consider the desirability of the suggested references at this stage.
Mr. Whitaker: Will my right hon. and learned Friend explain why the legal profession is reluctant to submit its contentions to the verdict of a jury composed of non-lawyers?
The Attorney-General: The Committee to which I have referred contains eminent public personalities and judges who, I think, ought to be relied on to protect the public interest, but, as I say, in any event this matter is now under active consideration by the Law Society, and is being watched most carefully by my noble Friend.

LEGAL AID (RENT ASSESSMENT COMMITTEE PROCEEDINGS)
Mr. William Wellsasked the Attorney-General whether, in view of the high proportion of landlords appearing

627
before rent assessment committees who either are represented by solicitors or counsel or who call expert witnesses, he will hasten his review of this problem with a view to amending the regulations under the Legal Aid and Advice Acts so as to provide for the grant of legal aid in cases to be determined by these committees.
The Attorney-General: My noble Friend the Lord Chancellor will continue to watch this matter. But, as my right hon. Friend the Minister of Housing and Local Government indicated yesterday in answer to my hon. Friend the Member for Hampstead (Mr. Whitaker), it is doubtful whether the extension of legal aid to these proceedings is really the answer to this problem. What would seem to be most needed where a party is without adequate means is the assistance of a surveyor. This, as my right hon. Friend indicated, he is considering.
Mr. Wells: Will my right hon. and learned Friend remember that the present position is loading the dice heavily in favour of property companies and tending to frustrate the purpose of rent control, and that second-best is better than nothing at all?
The Attorney-General: It is the availability of a competent and expert witness which could, I think, render the greatest assistance to the tenant, and it is along these lines that we are thinking.

ECONOMIC MEASURES
The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I wish to make a statement.
Sterling has been under pressure for the past two and a half weeks. After improvement in the early weeks of May we were blown off course by the seven-week seamen's strike and when the bill for that strike was presented in terms of the gold and convertible currency figures in June the foreign exchange market reacted adversely. But there were deeper and more fundamental causes. Many have been at home and of these I shall speak in a moment. Several have been overseas. For several weeks past there has been an increasing pressure on liquidity in the world's financial centres.
628
Action taken by the United States' authorities to strengthen the American balance of payments has led to an acute shortage of dollars and Euro-dollars in world trade and this has led to a progressive rise in interest rates in most financial centres and to the selling of sterling to replenish dollar balances. Last Thursday, action was taken by the Bank of England to raise its discount rate and to double its call on the clearing banks for special deposits. On that day I informed the House that I would shortly be announcing further measures to deal not only with the short-run pressure on sterling, but also with the underlying economic situation.
Action is needed for the purpose of making a direct impact on our payments balance, and particularly on certain parts of our overseas expenditure which, in recent years, has been growing rapidly. Action is needed equally to deal with the problem of internal demand, public and private, and to redeploy resources, both manpower and capacity, according to national priorities, and check inflation.
Exports until the seamen's strike have been rising. By value, in the first five months of this year they were 9 per cent. higher than in the same period last year. By volume, the increase over the same period last year was 6 per cent., a rate of increase higher than that laid down in the National Plan. But abundant market opportunities abroad for British products—which are competitve enough in terms of quality, performance and price—are being lost owing to the shortage of labour. Order books are too long, and delivery dates excessively protracted. Hours of work have been reduced and incomes have been rising faster than productivity.
What is needed is a shake-out which will release the nation's manpower, skilled and unskilled, and lead to a more purposive use of labour for the sake of increasing exports and giving effect to other national priorities. This redeployment can be achieved only by cuts in the present inflated level of demand, both in the private and public sectors. Not until we can get this redeployment through an attack on the problem of demand can we confidently expect growth in industrial production which is needed to realise our economic and social policies.

629
I will begin with the measures needed to restrain private demand at home. The economy is carrying too heavy a burden of production financed by hire purchase which means that too high a proportion of today's production is being paid for by a mortgage on tomorrow's earnings.
My right hon. Friend the President of the Board of Trade has today made Orders. which will come into effect at midnight tonight, tighteninig up still further the regulations governing hire purchase. The down payment on cars, motor cycles and caravans is raised to 40 per cent. and the repayment period shortened to 24 months. The down payment on furniture is raised to 20 per cent. and the repayment period shortened to 24 months. The down payment on domestic appliances is raised to 33⅓ per cent.; the repayment period remains at 24 months. There is no change in the present regulations for cookers and water heaters. Corresponding changes are made in the regulations governing rental payments. It is estimated that this will cut hire-purchase borrowing by £160 million.
This of itself is not enough. The Government have, therefore, decided to activate the regulator created under Section 9 of the Finance Act of 1961, renewed in successive Finance Acts and given greater flexibility in Section 8 of the Finance Act, 1964.
The 'Treasury has today made an Order the effect of which is to put a surcharge of 10 per cent. on the duties on beer, wines and spirits; on hydrocarbon oils, petrol substitutes and power methylated spirits; and on Purchase Tax.
I wish to make it clear that in the case of Purchase Tax the increase is the equivalent of 10 per cent. of the existing rates. Thus, for goods now chargeable at 10 per cent. the new effective charge will be 11 per cent; for goods chargeable at 15 per cent. it will be 16½ per cent.; and for goods chargeable at 25 per cent. it will be 27½ per cent.
The surcharge will take effect from midnight tonight. Its effect will be further to increase the revenue at the rate of about £150 million in a full year. This is a net figure after allowing for the effect of the hire-purchase proposals and for the additional export rebate which
630
will become payable following the increases in oil duty and Purchase Tax.
The increase in the duty on petrol and derv will, following the precedent set last year, be refunded to bus operators. The necessary administrative arrangements will be made as soon as possible and Parliamentary authority sought in the ordinary way. In addition, a further £20 million will be taken out of the economy as a result of changes announced today by my right hon. Friend the Postmaster-General in certain postal and telecommunications tariffs; parcels, registration and overseas rates will be increased from 3rd October. The telecommunications changes affecting certain call charges will involve no net increase in Post Office revenue, but will be designed to rationalise changes on a basis more closely related to costs. These will take effect from 1st January next. In addition, my right hon. Friend will be requiring a year's rental in advance for new telephones instead of a quarter's rental as at present. This will apply to orders accepted from tomorrow. Details will be published in the OFFICIAL REPORT and are now available in the Vote Office.
In the field of direct taxation the Government propose that a one-year surcharge of 10 per cent. be imposed on Surtax. This will be levied on Surtax liabilities for 1965–66 for payment on 1st September, 1967. The necessary legislation will be introduced in next year's Finance Bill. The extra yield is estimated at £26 million.
These measures on private current expenditure will be reinforced by action to restrain private sector building outside the housing and industrial fields and outside the development areas. The Government have decided to intensify the control on less essential building work and thus to reinforce the priority accorded to building programmes in the fields of housing, schools, hospitals—and new factories.
When the Building Control Bill, now before Parliament, receives the Royal Assent, the Minister of Public Building and Works will make an Order reducing the cost limit above which a project is subject to control from £100,000 to £50,000. The Order will require an affirmative Resolution in both Houses.

631
As before, this control will not apply in the development areas as now defined. With a cost limit of £100,000 the control would affect about 500 projects worth £180 million in a year. The lowering of the limit to £50,000 will extend control to cover a total of about 1,000 projects worth £220 million in a year.
This will give the Government more power to adjust the volume of privately-sponsored construction work as the economic situation develops. Hitherto, approval has been withheld from less than 10 per cent. of the projects about which the Minister has been consulted, but it will be necessary to defer a larger proportion of privately-sponsored work in future. The lowering of the limit will give the Minister scope to concentrate the postponement control on less urgent smaller schemes instead of having to rely on deferring some of the larger projects which are more in the public interest. This measure will be supplemented by a tighter control on office building.
My right hon. Friend the President of the Board of Trade has made an Order, coming into force at midnight, extending control of office building to the whole of Britain south of a line from the Wash to the borders of Hampshire and Dorset, by including within the control the whole of the East Midlands, West Midlands and South-East Region. Projects for buildings of more than 3,000 sq. ft. of office space which were not the subject of an application for planning permission at the time the Order comes into operation will require on Office Development Permit. In addition to tightening the control on building, this measure will reinforce those already taken by the Government for the prevention of undue congestion in these parts of the country and will supplement the strict policy which is being applied to the issue of industrial development certificates.
Now I turn to public investment programmes. The investment programmes in the public sector have been reviewed and the Government are introducing a number of deferment measures which will reduce demands on resources in this field by £150 million in 1967–68, though these steps will also lead to significant reductions in demand in the current year. While they will involve forgoing for the
632
present a number of desirable projects, they will be concentrated on those activities which are not vital to our production capacity and for the development of the economy as a whole.
Housing, schools, hospitals, Government financed factories built in develop. ment areas, including advance factories, will not be affected. On investment by central and local government, we are making cuts amounting to £55 million in 1967–68. This will mean cutting back projects designed to contribute to local amenities, but which, in present circumstances, must be postponed without any set back to our major projects. These will cover such items as swimming baths and new local government offices. The Covent Garden Market project will similarly be deferred.
The programme for investment in nationalised industries has also been carefully scrutinised to ensure that essential industrial investment within the public sector shall go on. Nevertheless, the Government are arranging, in consultation with the chairmen of these industries, for a reduction in the total demand on resources made by public industry investment to be reduced by £95 million in 1967–68. This is in addition to programmes which have fallen behind schedule owing to slippage in construction, or in the delivery by contractors of the necessary plant and machinery.
The measures I have so far announced, by reducing the level of demand within the domestic economy, will make a vital contribution to our balance of payments by freeing resources, particularly labour, for work on exports and essential investment. But this, of itself, is not enough. More direct action on the balance of payments is required.
In accordance with the policy foreshadowed in the Defence White Paper, we have been urgently reviewing how far we can make a major saving in overseas Government expenditure without altering the basic lines of external policy on which the Defence Review was founded. We have also reviewed the level of military and economic aid which we can afford next year. The Government have decided on firm programmes which will reduce our overseas Government expenditure, military and civil, by at least £100 million.

633
I will come, in a moment, to the cost of our forces in Germany. Elsewhere, we are pressing ahead with measures designed to ensure a substantial and early saving compared with the present level of expenditure. Given an end to confrontation, the plans made by my right hon. Friend the Secretary of State for Defence during his recent visit to the area will secure a major contribution towards this saving.
As regards Germany, in the Defence White Paper published in February we said that we thought it right to maintain our ground forces in Germany at about their existing level until satisfactory arms control arrangements had been agreed in Europe, provided, however, that some means was found for meeting the foreign exchange cost of those forces. In my right hon. Friend's Budget statement on 1st May, he made clear our intention to negotiate with the Federal Government a new settlement aimed at eliminating the foreign exchange cost of our troops in Germany.
In a few minutes my right hon. Friend will be leaving for Bonn to continue these negotiations. In the light of these discussions, the Government will immediately consider what, if any, further action is called for, including the question whether this would mean proposing, forthwith through the prescribed N.A.T.C). and W.E.U. procedures, very substantial cuts in our forces in Germany, sufficient to bring the foreign exchange costs down to the level covered by offset and other payments.
The figure of £100 million that I have mentioned includes in addition to the savings on defence expenditure, which, of course, are by far the greater part of it, reductions on military and civil aid expenditure and in the cost of our representation and information services overseas.
Private overseas expenditure must also make its contribution. Expenditure on holiday travel outside the sterling area has been rising rapidly and the deficit on travel account with non-sterling countries has risen from £38 million in 1961 to an estimated figure of £95 million in 1966 and is expected, on current trends, to reach about £105 million next year. We cannot allow this formidable deficit to go on mounting without restric-
634
tion, but the change requires consultation with the International Monetary Fund, which we have initiated.
For the 12 months starting on 1st November next there will be a basic allowance of £50 per person for travel to countries outside the sterling area. This allowance will have to cover all the foreign exchange requirements of the traveller, whether paid for in sterling or a foreign currency, except for fares paid for in sterling. There will be special arrangements for business and health travel and for those who, instead of paying fares abroad, take their cars abroad.
From today up to 31st October the amount of foreign exchange which may be bought for journeys to be started during that period will normally be limited to £50 per person. Special arrangements will, however, be made for people who have already made their holiday bookings to acquire a reasonable amount of foreign exchange, and sterling payments through travel agents may continue to be made as under existing arrangements. The Treasury is announcing full details this afternoon.
On the positive side of encouraging tourist expenditure in this country, the Government have decided to introduce, for an experimental period of one year in the first instance, a scheme under which development loan assistance can be offered for the building, expansion or modernisation of hotels which can show that this will result in a significant increase in their earnings from overseas visitors. The President of the Board of Trade will be making a full announcement on this before the Recess.
There is another field of private overseas expenditure lying between current and capital expenditure, which has imposed an increasing charge on our balance of payments—the remittances of emigrants to non-sterling area countries. In addition to the genuine transfers of capital by emigrants, there has been evidence of evasion of the control of capital movements. We have decided that, while the existing allowance of up to £5,000 in official exchange for each emigrating family should stand, any balance over and above this should be transferred through the investment currency market and not through the security sterling market. Also from today, the

635
total amount which may be sent by way of cash gifts to residents outside the sterling area will be reduced from £250 a year to £50 a year.
The net direct saving on our overseas payments from all these measures, Government and private, amounts to £150 million. This is a direct saving on our overseas outgoings and, therefore, on the balance of payments deficit.
To sum up the measures I have so far outlined. I estimate that they will reduce demand on the domestic economy by more than £500 million. This is in addition to the earlier budgetary measures by this Government, reducing the pressure of demand in the private sector by over £700 million. They are in addition to the monetary policy which has been in force and which was reinforced by the three further measures announced last week. They are in addition, also, to the impact of this year's Finance Bill which is yet to have its effect on the economy, which is due to reduce demand and which will extract a further £300 million from the economy, with all which this means in terms of imports and of redeployment of labour towards exports and other essential industries.
In addition to the measures designed to reduce the domestic pressure, the economies in overseas expenditure, public and private, will, as I have said, make a direct saving of £150 million. But the House will recognise that the whole operation stands or falls on the extent to which we can keep our costs and prices under control. In recent years money incomes have been increasing at a rate far faster than could be justified by increasing production; in 1965, we paid ourselves increases in money incomes of about £1,800 million compared with in the previous year. About £1,300 million of this represented increases in wages and salaries. Over the same period we earned only £600 million by way of increased production. These trends are continuing.
The Declaration of Intent of 16th December, 1964, was a great landmark when, for the first time in our history, employer, trade union and Government signed a compact designed to restrain the growth of incomes to a norm within the national capacity to pay. Yet ever since that time wage increases have outrun the
636
figure allowed for, and pre-empted the amount available for such increases for a considerable period ahead. The time has come to call a halt.
The Government are now calling for a six-month standstill on wages, salaries and other types of income, followed by a further six months of severe restraint, and for a similar standstill on prices.
Where a definite commitment already exists to increase pay or reduce hours, its implementation should be deferred for six months. New commitments should not be implemented during the rest of 1966 and in the following six months only if the grounds for exceptional treatment are particularly compelling. In this way it is intended to secure virtual stability in incomes for a period of six months followed by a limited growth of incomes in accordance with national priorities during the first six months of 1967. Thereafter, it will be essential to secure that the growth of incomes is resumed in an orderly manner in step with national output.
The same principles apply to other types of money income. Companies, for example, must hold down their dividends during the 12-month period. The Government similarly call for a 12-month standstill on prices of all goods and services, except to the limited extent that increases are necessitated by increases in the cost of imported materials, by seasonal factors or by the action of the Government, for example through increased taxation.
It is not our intention to introduce elaborate statutory controls over incomes and prices. This is a situation in which the Government look with confidence to everyone concerned with these matters to act in accordance with the public interest. Many individual salaries and other forms of remuneration are fixed outside the normal process of collective bargaining. Here, too, the same canons of restraint must apply. This applies also to emoluments of directors and high executives: companies will be required to publish details of these fees and salaries with comparable figures for the previous year.
Within the main field of collective bargaining we shall rely in the first instance on voluntary action. Nevertheless, in order to ensure that the selfish do not benefit at the expense of those who cooperate, it is our intention to strengthen

637
the provisions of the Prices and Incomes Bill, to speed its passage through Parliament arid to redefine the role of the National Board for Prices and Incomes. Meanwhile the Government will not hesitate to act within the powers they enjoy, or may further seek, to deal with any actions involving increases outside and beyond this policy.
The Government will be consulting the T.U.C., C.B.I. and other interested organisations on the detailed application of the standstill within the next few days and a White Paper will be issued in the near future.
The House will not under-rate the deep significance of what I have just announced, its implications for industry and the degree of co-operation and restraint which will be required on the part of those affected by it. But, equally, the House, and, I believe, the country, will recognise the urgency of these measures, if we are to get our economy into balance and to keep our costs under control.
I should not feel justified in making this demand on industry, if I did not feel that we had done everything in our power—
Hon. Members: Resign.
Mr. Speaker: Order. If the right hon. Member for Hexham (Mr. Rippon) wishes to intervene, he must do so in a proper manner.
The Prime Minister: I should not feel justified in making this demand on industry, if I did not feel that we had done everything in our power to secure social justice for the first time in the broader fiscal and social policies of the Government. For no Government have the right to ask for restraint, still less for an effective standstill, unless they have done everything a Government can do to create a climate of social justice, which alone can justify such a policy.
Inevitably, today I have dealt with measures which, taken by themselves, involve restriction and restraint. But the House will realise that their whole purpose is to provide industry with the opportunity to achieve a major increase in productivity by streamlining production and labour utilisation. They must be seen against a background of policies designed to speed the application of scientific methods and techniques—
638
already well-known to progressive managers—to increase efficiency in private industry and in the public sector.
Industry by industry, the Economic Development Committees are tackling the practical problems of raising efficiency and spreading knowledge of how performance can be improved in individual companies. Industry by industry—shipbuilding, printing, the docks, rail transport—the Government are engaged in urgent discussions designed to increase productivity and to eliminate overmanning and restrictive practices. We have sought to proceed by voluntary agreement. Where this is not forthcoming, other action must be taken. The Government have indicated to all concerned their determination that the freight liner train services shall go ahead on the basis of open terminals.
The problems with which I have been dealing are problems that have beset Britain's economy virtually since the end of the war. The unsung achievements of keen executives and of hard-working, responsible trade unionists, of inventive scientists and creative designers are all too often overshadowed by attitudes of selfishness and indifference, of indolence and indiscipline on both sides of industry.
For while the Government can and must do all in their power to create conditions to lay down the rules within which the economy must operate, the determination and resolve which today's measures demonstrate must be matched by effort and endeavour on the part of the whole British people.
Mr. Heath: The long statement which the Prime Minister has just made, so far-reaching in its scope and affecting every man, woman and family in the country, recognises, albeit belatedly, the gravity of the present situation, which is all the more serious because of the delay in announcing the measures which the Government have now decided to take, measures which, on the first hearing of this statement, contain nothing new in type but a combination of all those measures which the right hon. Gentleman and his colleagues have so repeatedly condemned in the past and, when others have put them forward, they have so repeatedly maligned.
Is the Prime Minister aware that Her Majesty's Opposition have always pledged

639
support for measures which they believed to be properly designed to protect the £? That remains our position, but it does not exempt us from the duty of exposing the weakness, the vacillation and the incompetence which have brought the country to its present position.
Does the Prime Minister recognise that it is fundamentally a crisis of confidence in himself and his Administration? It is now no longer the words of the Government which matter, but their actions; and this is particularly true of the concluding part of the Prime Minister's statement. We shall judge this statement, when we have had time to examine it, on the extent to which these measures deal with the long-term position, as well as the immediate problem, the extent to which the balance—
Mr. Michael Foot: On a point of order. Mr. Speaker, would you tell us whether there is a Motion before the House?
Hon. Members: Sit down.
Mr. SpeakerOrder. Noise makes no useful contribution to the discussion
Mr. Michael Foot: On a point of order. On many occasions during the war, when statements were made—[HoN. MEMBERS: "The hon. Gentleman was not here. I was not here, but I have studied the affairs of the House of Commons. On many occasions during the war, when a statement was made by the Prime Minister of that day, Mr. Speaker ruled that spokesmen in other parts of the House were not entitled to follow with statements or speeches of their own.
What I am asking, Mr. Speaker, is that you should rule in that sense. If the Opposition wish to have a debate, they can call for a debate. All they are entitled to do now, which is what other Members are entitled to do, is to put questions to my right hon. Friend.
Mr. Speaker: The query I accept, obviously, as a point of order from the hon. Gentleman, but the Chair will rule and make its own decision on ruling. It is the custom—the hon. Gentleman is perfectly right—that when a statement is made elucidatory questions may be asked by Members of the House of the Minister who has made the statement. How-
640
ever, I give some latitude to the Leader of the Opposition, who is in a special position.
Mr. Heath Mr. Heath rose—
Mr. Rankin: Further to that point of order—
Hon. Members: Sit down.
Mr. Speaker: Order. There are differences of opinion in the House, but we ought to be able to hear each other without making just silly noises.
Mr. Rankin: Further to that point of order and to what my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) has said. Are you aware, Sir, that opposite us there is the Official Opposition, there is the Liberal Opposition, and now there is a third opposition on the other side? Are the leaders of these oppositions to be granted the same privilege as that being granted to the Leader of the Official Opposition?
Mr. Speaker: Order. The hon. Gentleman should know that the Chair is aware of the political complexions of various Members of the House. He must leave the Chair to decide this issue.
Mr. Selwyn Lloyd: Further to that point of order. You, Mr. Speaker, will remember that when I made my statement on 25th July, 1961, the comments and questions of the right hon. Gentleman the present Prime Minister occupied a column and a half in HANSARD.
Mr. Speaker: Order. I am grateful to the right hon. and learned Gentleman for his support. May I say, very kindly, that I do not need it?
Mr. Heath: Is the Prime Minister aware that we shall judge these matters, after careful consideration, on the extent to which they maintain the balance between the immediate requirements and the longer term, especially in the context of the Selective Employment Tax, on the balance between the private sector and the public sector, and the extent to which they maintain justice between individuals? Is the Prime Minister aware that the House has noted that at last he has recognised the need for keeping demand in check? This is to be welcomed.
Finally, is the Prime Minister aware, in this context, that the measures which

641
he has announced are more serious than they need have been even 10 days ago, let alone 10 months ago? In this respect, we regret the fact that he has not announced in the longer term effective action to deal with restrictive practices or to drop nationalisation of steel, both of which are important factors in overseas opinion., which he is trying to bolster. Is the Prime Minister aware that for many months Her Majesty's Opposition have warned the Government of this situation and of the need to take action, that he has repeatedly failed to heed those warnings, that he is accountable to the House and to the country, and that we shall want to debate it all at the earliest possible moment?
The Prime Minister: The right hon. Gentleman—and, of course, I do not cornplain—has made his political points, which might have carried more weight if they had not come from a party which, three months ago, promised to increase, not cut, Government expenditure by £900 million and reduce taxation at the same time. I agree with the right hon. Gentleman that what the country and the world will judge us all by now will be, not words, but actions. I believe that my statement today contained notice of some very resolute actions which I would hope that the whole House can support.
I would say to the right hon. Gentleman, because I know that he is looking at these problems with a great deal more seriousness than some of those sitting behind him, that I believe that both the Opposition and the Government will be judged by the country on the extent to which support is given to measures which, however unpopular, have to be taken.
Mr. Grimond: Will the Prime Minister agree that his statement shows an entirely different view of the economy from that expressed by the Government only a week or two ago? Will he agree that what he is now doing is simply to return to those policies of deflation, about which he used to be so scathing in the days of the Tory Government?
Has the Prime Minister any estimate of the amount of extra unemployment which INC may expect next winter? Which of his measures will do anything to in. crease competition, efficiency or produc-
642
tivity in British industry? Finally, since the Prime Minister has now recognised the importance of the hotel industry to the tourist trade, why does he not drop not only the Iron and Steel Bill, but also the more ludicrous provisions of the Selective Employment Payments Bill?
The Prime Minister: I am grateful to the right hon. Gentleman for his questions. [HON. MEMBERS: "Answer them, then."] In relation to the old policies of deflation which we used to debate in the House—and may I say to the Leader of the Opposition that on 25th July, 1961, the column and a half of HANSARD was made up of questions, not a speech—the difference today, as the right hon. Gentleman the Leader of the Liberal Party will be the first to realise, is that we have exempted, as the Tories never exempted, from the necessary steps which have had to be taken, all the development areas — [Interruption.]
Mr. Speaker: Order. I do not wish to have to call attention by name to hon. Members who persistently and consistently interrupt from a sedentary position.
The Prime Minister: —instead of driving these areas into an intolerable level of unemployment and causing a deep gap between the more prosperous parts of the country and the areas of unemployment. What we have done is to bring the unemployment figures of the two parts of the country much closer together and our policies will ensure that the policies that we have been following for the development areas will continue. The same is true of the other priority areas we have exempted in housing, education and hospital building.
On the question of making the economy more streamlined and more competitive in the sense meant by the right hon. Gentleman, I believe that the shake-out that will result and the redeployment of labour will greatly help to do this both at home and overseas. Unemployment has been running for some months at a total of about ·1 per cent. We believe that the effect of our measures would not be to increase it to a level that will be considered by any hon. Member to be intolerable. What we intend to see is that we do not have a situation where it is 0·7 per cent. in

643
half the country and 12 per cent. in other areas.
Mr. Hooson: On a point of order Mr. Speaker. Would it be possible for us to have an interpretation of the word "shake-out", which, I think, is new in Parliamentary language?
Mr. Speaker: Order. The hon. and learned Gentleman knows that that is not a point of order.
Mr. Bellenger: Whatever may be said at 'this time by way of recrimination from the Opposition parties, the Liberals included, will my right hon. Friend be assured that he will be supported in these measures at least on this side of the House? Is he confident, however, that the measures he has announced today will, from a longer-term point of view, settle our balance of payments problem?
The Prime Minister: Yes, Sir, and this is a point that I should have referred to when the right hon. Gentleman the Leader of the Opposition mentioned it. He surprised me by saying that the measures required today are much greater and more substantial than would have been required only 10 days ago. There has been no change in the basic underlying economic position in those 10 days.
Either the right hon. Gentleman thinks that these measures are required or he does not. If he thinks that I have gone too far by making them today, and not 10 days ago, he had better say which of these measures are not required. I should have thought that he would have felt, especially since he now claims that he has been asking for these measures for months, that the measures are right, adequate and relevant.
Mr. Maudling: The Prime Minister will be aware that his statement has been of measures that are wholly negative and restrictive. Is it not a fact that, apart from a passing reference to liner trains, the only contribution to further productivity is to talk about a shake-out, which, presumably, means more unemployment? Does he not recognise that this emphasis on restriction and ignoring the question of productivity and efficiency will create a most deplorable effect?
The Prime Minister: I do not remember that the right hon. Gentleman, over two and a half years, did very much of a character designed to increase efficiency. I recognise that he set on foot a great election boom that run us into an £800 million deficit. The right hon. Gentleman knows that if he is referring, as I think he may well be, to the need for special incentives for exports and for the saving of imports by increasing the competitiveness of our import-saving industries, I fully agree with him about the importance of that. I have told the House of the steps we are taking at the moment in the matter of export incentives. He knows the difficulty. He will remember that he turned down the "tax on value added" proposals. I have said that we are re-examining them. This is a difficult question, but, certainly, if it is possible to have an export incentive that is viable and legal under G.A.T.T. and E.F.T.A. we shall introduce it.
Mr. Shinwell: Would my right hon. Friend agree that it will be to the advantage of the House and the country if an opportunity is afforded at a very early date to enable the Opposition, including the Liberal Opposition, to state whether they are prepared to support the policy of the Government? That would be in the interests of the House and the country.
Reference has been made to the need for action. May I have an assurance from my right hon. Friend that he intends with resolution and determination to push this policy through, irrespective of opposition from any quarter?
The Prime Minister: Yes, Sir. We intend to push this policy through. I have taken some heart this afternoon from the fact that the right hon. Gentleman the Leader of the Opposition says that time will be required to study what I know was a lengthy and complicated statement, before the Opposition can state their attitude to the various measures that have been proposed. I have no doubt that there will be discussions through the usual channels about a debate. We shall then see how far there is general agreement on these measures.
Mr. Tapsell: Would the Prime Minister accept that however blameworthy many of us may feel that he is for the present situation, we all very much hope that

645
the measures which he has announced this afternoon will take the pressure off sterling? I believe that they will. But will he tell the House whether the grave measures he has just announced carry with them the unanimous support of all his Cabinet colleagues?
The Prime Minister: I thank the hon. Gentleman for his good wishes. I was slightly concerned about the preamble with which he introduced them. What I have announced is the policy of the Cabinet.
Mr. Michael Foot: Will the Prime Minister recognise that many hon. Members on this side of the House have been pressing for a very long time for a direct and stringent attack on the balance of payments, and that although we welcome the moves made in this direction now we do not think that the cuts in defence expenditure go anything like far enough?
Will the Prime Minister further recognise that, whereas we wish to ensure that the situation is overcome, we bitterly oppose a massive, masochistic deflation partially dictated by persons who, apparently, do not understand the real strength of the economy of the country, and that, therefore, we shall judge his measures primarily by their effects on maintaining the employment levels of the people?
The Prime Minister: My hon. Friend will have seen, in connection with defence cuts, that I said that there is a direct attack on overseas expenditure—not an indirect attack through the measures on internal demand—to the extent of £150 million. This is a very substantial part of the deficit against which we are fighting. I know that many of my hon. Friends would like to have seen still further cuts, but I believe that it would not have been possible to make a bigger impact on this.
On my hon. Friend's second point, believe that this will be seen at home and abroad as providing adequate and relevant measures for dealing with the balance of payments problem, which lies at the heart of all our economic difficulties and which has dominated the economic life of the country and debates in the House now for he past 15 years. I believe that it is by their relevance to the balance of payments that the measures will be judged in the country and the world.
Sir D. Glover: May I put to the Prime Minister two questions? He has so far wriggled out of the expression "a big shake-out". He and the Cabinet must have some idea of what—
Hon. Members: Question.
Mr. Speaker: Order. I gathered that the hon. Gentleman was coming to his question.
Sir D. Glover: I said that I wanted to ask the Prime Minister two questions. The Cabinet must have some estimate of the figure for unemployment. What does the Prime Minister expect as a result of the measures he has announced? Does he expect a total of 500,000, 600,000, or 700,000? If he does not know, he has not worked these things out.
My second question is this. As the right hon. Gentleman has made this budgetary statement, has he taken over the Chancellorship of the Exchequer? What is the position of his right hon. Friend sitting next to him?
The Prime Minister: I can give the hon. Gentleman an assurance that we do do not seek any policies of the kind he used to vote for that brought unemployment to over 800,000 in this country.
In my view, and in the Government's view, the situation at the moment is that there are still large unsatisfied demands for labour, particularly in our export industries, and that any labour released, redeployed or shaken out from other employment by the measures which I have announced today will be readily absorbed; and it is certainly very heavily needed, whether skilled or unskilled, in essential work, whether for exports, in the construction sector for housing, and the rest. We believe, therefore, that it will be possible to have a very big redeployment without a marked increase in unemployment.
As for the unemployment figures, I said that these must be judged by the spread between the extremes in one part of the country and another. We shall ensure that the unemployment level will he more equally patterned over the country than has been the case in the past. I referred to a tolerable figure of unemployment. If the figure of unemployment were, after all the reabsorption, after all the redeployment and after the measures for regional distribution, to rise

647
to a figure between 1½ and 2 per cent., I do not believe that the House as a whole would consider that unacceptable.
Mr. Mayhew: The House will have noted the contrast between the Prime Minister's statement today and the ambitious world military rôle which he outlined in his speech on 22nd June. Will he give an assurance that the defence reductions which he has outlined will relate to cuts in commitments and will not simply increase the strain on our forces and our dependence on the Americans? Can a world military role be sustained by a country which, apparently, will have to count its centimes before crossing the Channel?
The Prime Minister: I welcome the ingenuity and single-mindedness with which my hon. Friend on any and every occasion comes back to the subject he was pursuing with so little support some time ago. [HoN. MEMBERS: "Cheap."] I made it clear to him and to all my hon. Friends some weeks ago that we would carry out our defence commitments and obligations, that we would hope to do so with substantial reductions, substantial economies in costs, particularly as we are able to become more mobile, for reasons which my hon. Friend knows all about. We shall be able to do it, therefore, more cheaply in the future than in the past.
I should be very surprised if my hon. Friend were to put forward as a reason for his defence policy the fact that we have now set a limit on tourist expenditure which is considerably above the average tourist expenditure of everyone leaving our shores for holidays.
Mr. John Hynd: On a point of order, Mr. Speaker. May I ask whether there is any possibility of questions being asked by back benchers apart from Privy Councillors and ex-Ministers?
Mr. Speaker: Order, That is an inaccurate comment on what has happened so far.
Mr. Barber: The Prime Minister is having some difficulty in giving straight answers to the simple questions which have been put to him. Will he answer this question clearly and specifically: what contribution to the balance of payments and the strength of sterling does
648
he think will be made by the nationalisation of steel?
The Prime Minister: I shall certainly answer that. The nationalisation of steel is being undertaken for the sake of increasing efficiency in the steel industry —[HON. MEMBERS: "Oh."]—which is highly relevant to our balance of payments. Few industries have led to bigger increases of imports in recent years because of their own inadequacy. Few industries have invited more criticism, even from right hon. Gentlemen opposite, by its pricing policies, because it is not a competitive industry.
As the right hon. Gentleman will know, at the present time, though it is admittedly a relatively small one in quantity, one of the reasons for the increase in imports recently is that this country—I hope that I can get the right hon. Gentleman to believe this, as it happens to be a fact—with the steel industry as at present organised, is actually importing pig iron because it is cheaper than what can be produced in this country or sold on present pricing policies within that industry.
Mr. Palmer: Does my right hon. Friend appreciate that an economic policy founded upon the deliberate creation of unemployment is opposed to everything for which the Labour movement has always stood? Will he do something to remove our misgivings?
The Prime Minister: I have already explained that, I thought, with rather lengthy answers this afternoon. I have explained that what we want is a redeployment of labour, that this is urgently needed, and that it is the necessary condition for increased production and economic growth in this country. What I have said is that we are not going back to the policies which led to very heavy unemployment in the development areas and over-congestion in the rest.
Mr. Gresham Cooke: With regard to the increase in unemployment which will undoubtedly come about by the reduction of £500 million in demand on top of the £700 million brought about by previous measures, the Selective Employment Tax, and so on, has the Prime Minister estimated by how much Government staffs and civil servants will be increased by the implementation of the complicated measures he has announced today?
The Prime Minister: I think that it will lead to very little increase, if any, in Government staffs to implement the particular policies to which I have referred. When the hon. Gentleman says, with such apparent enthusiasm—perhaps it is just his way of speaking—that there will be an increase in unemployment as a result of the measures—[HoN. MEMBERS: "Cheap."] We can see the hon. Gentleman.
Mr. Ridley: On a point of order, Mr. Speaker. Is it in order for the Prime Minister to imply that my hon. Friend used words which he never used? Will you ask him to withdraw?
Mr. Speaker: Order. The hon. Gentleman is unduly sensitive.
The Prime Minister: I did not put any words into the hon. Gentleman's mouth. I referred to the expression on his face, and we can see it.
If the hon. Gentleman thinks that there will be substantial unemployment as a result of these measures, he will recall that it has been the policy of his own party to press for some time for more stringent measures to reduce employment. We do not believe that they will have the effect which some hon. Members opposite seem to expect.
Mr. Maxwell: As is well known, one of the causes of our serious balance of payments crisis has been the considerable increase in imports. Will my right hon. Friend tell the House why he did not think it necessary to introduce physical import controls?
The Prime Minister: We considered this very carefully indeed. It has been considered by successive Governments. I know that it was considered by our predecessors. I have a lot of experience of administering import controls. [Laughter.] I have a lot of experience of administering import controls, and I probably know quite a bit about them. I got rid of a lot, and was very glad to do so.
I was saying that we considered this very carefully indeed, but, having regard to our commitments not only under the G.A.T.T., the I.M.F. but more particularly under the E.F.T.A., and the powers, possibilities and likelihood of retaliation, we reached the conclusion, after studying it very carefully—as I think our pre-
650
decessors would have done—that this was not the right policy in the circumstances. I believe that it is necessary for us to try to get the maximum economy in the use of imported raw materials, in, for example, cutting out waste in some of them—this could be done—and in reducing the call on certain imported raw materials in favour of indigenous materials produced in this country.
Mr. Boyd-Carpenter: Can the Prime Minister confirm that the pay freeze proposals will involve overriding arbitration awards, wages councils awards and wages cost-of-living agreements? Does the proposed amendment to the Prices and Incomes Bill which he foreshadowed involve taking legal powers to this end?
The Prime Minister: Where there are agreements providing for an increase during the six months that I have referred to, where there is a once-for-all agreement due to come into force in the six months, or, for example, a continuing cost of living agreement, it will mean that these will have to be set aside.
The exact position of wages councils and arbitrations is a matter on which I am sure the right hon. Gentleman will feel we have to see both sides of industry—this we are doing—to discuss with them the least harmful way, to them, in which the policy that we have announced, and are determined to put through, shall be carried out. I cannot at this stage anticipate the exact wording of the amendment to the Prices and Incomes Bill.
Mr. Park: Would my right hon. Friend agree that the real cause of our present economic situation is that we have been attempting to perform two roles at once in the sense of trying to improve living standards and social services at home and, at the same time, maintaining an expensive outdated imperial presence abroad? Has not the time come to make the final choice, to cut down much more drastically than the Prime Minister has proposed today our arms expenditure abroad?
The Prime Minister: It is not only two rôles that we are carrying out. This country must carry out far more rôles than two. A further one concerns measures necessary to increase our

651
efficiency and to invest in British industry. There is also the role that we have, and shall continue to have, of providing economic assistance to poorer countries, which I am sure my hon. Friend is not asking me to cut even though it is extremely costly in terms of foreign exchange.
We have debated the defence rôle on many occasions. We have a peace-keeping rôle abroad. We have obligations abroad. It is no good hon. Members in any part of the House urging on us the fulfilment of a peace-keeping rôle through the United Nations, the Commonwealth or our alliances unless we are prepared to maintain the necessary means of getting our forces to the areas where they are needed.
Mr. Stodart: The right hon. Gentleman referred to a freeze on prices. Is he aware that before he made his announcement the electricity board in Scotland announced an increase of 6 per cent. next week? Will he put a stop on that, because it will have the gravest effects on costs of fuel in the development areas?
The Prime Minister: The freeze is to start today. I will certainly look into the case that the hon. Gentleman has mentioned. I had read about it. We intend there to be a six months' freeze from the present time.
Mr. Paget: With regard to the military cuts, and with regard to Germany first of all, will my right hon. Friend tell us whether any estimate has been made of the cost of rehousing the troops and their dependants, who outnumber them two to one, if they are brought home? Secondly, with regard to the overseas cuts of £100 million without reducing commitments, what does my right hon. Friend mean when he says that this will be achieved by increasing mobility? The idea that increased mobility is an economy comes as rather a shock to military planners.
The Prime Minister: It does not come as a shock to those who have been concerned with the Defence Review. The most expensive way, as we have found, of honouring military commitments is to get very large forces locked up in bases where they are not wanted and where
652
one has to use half one's forces and resources to hold down the local population. Mobility on the lines that I have described is the right way to deal with the question.
As to the question about Germany, I hope that my right hon. Friend the Chancellor will, when he gets to Bonn this afternoon, be able to negotiate a satisfactory arrangement to cover the foreign exchange costs. If not, I have said that we must go to W.E.U. and N.A.T.O. with the procedures necessary to ensure that we do not go on bearing this additional cost, whether it means withdrawal of troops or any other course of action.
Mr. Maude: Would the right hon. Gentleman seriously reconsider whether it makes sense to evolve yet a new system for injecting into the hotel industry the investment incentives which the Government have deliberately destroyed? Would it not make more sense simply to restore the investment allowances and perhaps relieve the industry from the Selective Employment Tax?
The Prime Minister: Many ideas have been considered in the past. I remember the selective relief from Purchase Tax for visitors to dollar-earning hotels. Many of these have been tried. We believe that the important thing is to give help for the construction, modernisation or rebuilding of hotels which particularly cater for overseas visitors, and that there must be some selection in the matter. That is why we are proposing help on a selective basis in this way.
Mr. Heath: May I ask the Prime Minister to deal with two specific points which have arisen this afternoon before we discuss through the usual channels the question of what I hope will be a very full debate on these matters?
The first point concerns development areas. Is it not a correct deduction from the statement that the right hon. Gentleman has made that the major measures affecting demand at home—in other words, hire purchase, the regulator and the Post Office charges, as well as the individual matters of the holiday travel allowance and Surtax—will affect everybody in the development areas and that the restriction on demand in the country as a whole will also have its impact on development areas? We must be clear about this.

653
Secondly, will the right hon. Gentleman deal with what I think is one of the most important statements that he has made today, and, if I may say so, do so without impugning the motives of those opposite him? He said that the Government believe that after redeployment the level of unemployment will be between 1½ and 2 per cent. and that, therefore, will be the level on which the Government intend in future to operate the economy—in other words, I suppose, an upper limit of 500,000 to 600,000. Will the right hon. Gentleman be quite clear about this, because this is one of the most important statements that he has made and obviously governs the attitude of the House and the country and people overseas to the whole of these measures?
The Prime Minister: I was not suggesting that those who are living in development areas will be exempt from the increased postal charges or tourist control. I was referring to the restrictions on capital investment—office building, for example, and the building licensing restrictions. Of course, it is true that anything affecting the general level of demand seeps through to particular areas. This is why we are pushing on with and not suspending or slowing up the action necessary to get more factories into the development areas, so that they do not suffer from the policies that are being followed.
On the question of the unemployment figures, I think that the right hon. Gentleman—I am certainly not impugning him in any way—when he looks at HANSARD tomorrow, will find perhaps that he did not exactly reproduce what I was trying to say to the House.
I do not know—no one knows—exactly how many vacancies there will be and what redeployment is possible. Every

POST OFFICE TARIFFS

I.—TELECOMMUNICATIONS SERVICES

(New charges will take effect from 1st January, 1967)

(The full rates shown below apply from 6.0 a.m. to 6.0 p.m. Mon-day to Saturday and the cheap rates from 6.0 p.m. to 6.0 a.m. Monday to Saturday and all day Sunday.)

Present

Revised

1. SUBSCRIBERS' TRUNK CALLS: INLAND

(a) STD: Time allowed for each 2d. charge unit:

Cheap rate: up to 35 miles

…

…

…

45 secs

60 secs

from 35 to 50 miles

…

…

…

22½ secs

30 secs

over 50 miles

…

…

…

15 secs

20 secs

time we have taken disinflationary measures over the last two years there has been widespread expectation of heavy unemployment. It has been forecast from the Opposition Front Bench with unfailing regularity. I think that they, and to some extent we ourselves, have been surprised that unemployment now is very much lower than it was a few months or a year ago. We do not know how big is the absorptive capacity for the labour that will be made available by the measures.
I said that if unemployment rises, as it will be likely to rise, it will not be allowed to rise to a figure which the House would consider intolerable. I was asked what the figure was. I said that I do not think any Member of the House will consider a figure between 1½ and 2 per cent. to be intolerable in our present circumstances, but that is quite different from saying that we should want to keep that level of unemployment for all time.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. I cannot call all right hon. and hon. Gentlemen who wish to be called.
Mr. Frederic Harris: On a point of order, Mr. Speaker. I have never been called on a Ministerial statement. How does one ever get into the position of asking such a question?
Mr. Speaker: Order. I too was never called on a Ministerial statement in my life as a backbencher. It is something that happens to almost every hon. Member. The most difficult task the Chair has is to select. All I can say is that the Chair tries to select impartially and fairly.
Following is the information about changes in Post Office tariffs:

Present

Revised

(b) Non STD:

Charge for 3 minutes:

Cheap rate:

up to 35 miles

…

…

…

9d.

Unchanged

from 35 to 50 miles

…

…

…

1s. 3d.

from 50 to 75 miles

…

…

…

2s. 0d.

1s. 9d.

over 75 miles

…

…

…

2s. 3d.

Unchanged

BILL PRESENTED

  PARLIAMENTARY COMMISSIONER
  Bill to make provision for the appointment and functions of a Parliamentary Commissioner for the investigation of administrative action taken on behalf of the Crown, and for purposes connected there
  666
  with, presented by the Prime Minister; supported by Mr. Herbert W. Bowden, the Chancellor of the Exchequer, Mr. William Ross, Mr. Douglas Houghton, Mr. Cledwyn Hughes, and Mr. Niall MacDermot; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 86.]

ORDERS OF THE DAY

  SELECTIVE EMPLOYMENT PAYMENTS BILL
  [1ST ALLOTTED DAY]
  Considered in Committee.
  [Sir ERIC FLETCHER in the Chair]
  4.41 p.m.
  The Chairman: Before I call the first Amendment selected, it might be for the convenience of the Committee if I indicate how the provisions of the Guillotine Order will operate today. Under paragraph 3(3) of the Order, the time which has elapsed between 3.30 this afternoon and the beginning of the consideration of the Bill is to be added to any time specified in the Order. The time which falls to be added today is one hour, 11 minutes. The result is that, under the provisions of the Order, the proceedings upon Clause 1 will be brought to an end at 8.41 p.m. and the proceedings of the Committee in the present sitting will be concluded at 12.41 a.m.
  The first Amendment selected is Amendment No. 2, standing in the name of the right hon. Member for Enfield, West (Mr. lain Macleod) and the names of hon. and right hon. Members.

  SELECTIVE EMPLOYMENT PAYMENTS BILL

    Clause 1.—(SELECTIVE EMPLOYMENT PREMIUM.)
    Mr. Iain Macleod: I beg to move Amendment No. 2, in page I, line 10, to leave out from "paid" to end of line 21.
    I wish to take one minute of our precious time to outline the Opposition's attitude towards the time for these Amendments. We were told by the Leader of the House, no doubt in good faith, that he thought that adequate time had been allotted and that some mysterious gentleman had decided between the relative merits of the claims upon our time.
    We were also told by a number of professors in the guillotine debate that these matters could be dealt with in three or four points. We were also told in the Press by the hon. Member for Tottenham (Mr. Atkinson) that it was
    668
    idiotic to spend the night discussing whether six hours could be added to consideration of the Bill. On the latter point, I will merely state that the hon. Member's observation was both impertinent and inaccurate. The claim of the Opposition was for six days. We all know this, and the Government would admit it. I trust that the Press will give as much space to the correction as it did to the original insertion.
    Now we have the selection of Amendments before us. That is something not to be questioned by myself or by the Leader of the House, or by these professors. For Clause 1, for which the Leader of the House thought that four hours was generous, 10 Opposition Amendments are selected, together with five Government Amendments, making a total of 15. Altogether 51 other Amendments are to be discussed with them, making a total of 66. It is abundantly clear as we start that an impossible task has been set us and that every word we put before the House two days ago was fully justified.
    Amendment No. 2 is perhaps the most important single Amendment, and therefore it is right, even at the expense of ten minutes of our guillotined time, to record that it would omit the premium. I have not bothered to put on the Order Paper the numerous consequential Amendments which would follow. But the effect would be to leave the premium out. The theory of the Government was old when Queen Victoria was young. The theory of 18th century economists that one can identify and discriminate between manufacture and sale is becoming increasingly impossible in a modern complex society. As I said in the Budget debate, one of the ways to distinguish a democracy or any community with a swiftly rising standard of living is that it should have an explosive growth of its services. It was Sir Paul Chambers who said that production does not become productivity unless one sells the product.
    4.45 p.m.
    The proposal of the Government to add 7s. 6d. as a premium for men in manufacturing industry is bound to encourage hoarding. I do not suggest that it will encourage recruiting. No one will bring a man into his business at an average cost of £18 to £20 a week in

    669
    order to gain 7s. 6d. a week. But equally it will encourage employers in manufacturing industry to hold tenaciously to their labour forces.
    I have made all the study possible, and I am convinced that if there be labour hoarding it is overwhelmingly in the manufacturing industries and not in services. The Government have gone entirely on the wrong track. Today's statement by the Prime Minister makes it all the more important that the spirit if not the words of the Amendment should be accepted, because we are proposing that there should not be such a pay-out. The original figure was stated to be £133 million to manufacturing industry, and perhaps this will be slightly adjusted now as a result of concessions that have been made.
    The Chief Secretary to the Treasury must explain whether he believes that we can afford, in the circumstances of the Prime Minister's statement, a pay-out of that sort, particularly when it impinges upon the labour front, to which the Prime Minister rightly showed himself sensitive this afternoon. We shall be judged by what happens to the country as a result of the Prime Minister's statement, and in no direction will this be more important than in what the Prime Minister euphemistically calls the "redeployment" of labour, which really means the increased unemployment which will flow from his statement.
    The original idea of the premium was that it offered some way around the provisions of the G.A.T.T. and was compatible with our international obligations. The snag in that argument is that the premium is to apply to everyone in manufacturing industry, whether the product is intrinsically worthless or something as valuable as chemicals or machine tools. It applies to people whether they be key exporters or whether they manufacture only for a wholly unimportant market in this country. Above all, it is applied equally to people whose labour force is already streamlined, as efficient manufacturers always seek to do, and to people whose industry is flabby. It will thus encourage the latter to remain in that state. En other words, in the phrase used by my right hon. Friend the Leader of the Opposition in the Budget debate a year ago, it encourages the survival of the fattest.
    670
    We do not believe in forwarding the welfare state for industry, to use a phrase first used, I think, by my hon. Friend the Member for Oswestry (Mr. Biffen). Through the debates on the Finance Bill, whenever we were chided for suggesting measures which would cost money, we prayed in aid this measure which we were offering to the Government, £133 million, in return. We got virtually no concession in the Finance Bill, but we still put forward our share of that bond and offer this £133 million.
    The Liberal Party at one point put forward an alternative method of regional differentiation in a flat-rate payroll tax. Whatever the merits of that may be, something like it would unquestionably be much more acceptable than the absurdities which have flowed and which can already be seen to have flowed from the Bill.
    To sum up; we believe that the thinking behind these proposals is all wrong, that the distinction between manufacture and services is entirely artificial and. moreover, that it is based on a statistical illusion, because the classification was drawn up exclusively for statistical and not for manufacturing purposes and it is quite wrong to use it as a basis for assessing manufacture.
    The number of anomalies and absurdities multiplies literally with every post we open, and certainly hon. Members on this side of the Committee know that even if right hon. and hon. Gentlemen opposite do not. We believe that it is a premium on inefficiency to operate in this way and we do not see why we should not seek to amend the Bill in this particular. The general provision would still be unacceptable to us, but many of the anomalies would disappear if we could get rid of the premium. I therefore recommend the Amendment to the Committee.
    Mr. Michael Alison: I want for a minute or two to pursue the subject of hoarding in industry. My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) touched on something which is of crucial and fundamental importance. I want to quote to the Committee one or two of the figures behind our assertion that there is already a great deal of hoarding and that it will

    671
    not be in any sense reduced by the Government's proposals.
    I want to quote a figure which has been given not by one but by quite a number of economists of national standing. It is that the degree of underemployment in manufacturing and distributive industry as a whole is as much as 30 per cent. of the employed population. When we have a possible unemployment level for the nation as a whole of between 1½ and 2 per cent. and that is set against the figure of as much as 30 per cent. of the working force under-employed, due to the inefficiencies of restrictive practices agreements, possibly bad management, and the effect of the unions, we must feel that any measure which encourages management to hold on to labour must be counter-productive in the present economic situation.
    Let us consider some of the factors which are a positive inducement to management in particular to hold on to labour. I want first to draw attention to the National Plan figure for the manpower gap. The National Institute for Economic and Social Research drew attention to this in one of its recent reports. It said that the publicity given to the manpower gap, estimated at perhaps 200,000 by 1970, was a written-in red light to management to hold on to labour as the scarcest asset in production as the years went on.
    Incentives can be given for capital equipment, and the Government does what it can to make it easy to get capital, but the one thing which the Government cannot do, except perhaps by indirect fiscal measures, is to raise the level of the population. It might be able to do so over a long period, but not immediately, and by 1970 we shall have a manpower gap of 200,000. As that is written into the National Plan, how can it be assumed that manufacturers, who are intelligent, will do anything except to make plans to hold on to what they have cause to believe will be the scarcest commodity as the years go on?
    Secondly, as my right hon. Friend said, we should bear in mind that manufacturing industry is the industry in which the tendency and the temptation to hold manpower are greatest, simply because that is the most highly unionised sector of
    672
    the economy. Nobody would deny that the unions themselves do a good job on behalf of their members, their job being to keep as many men in employment as they can. In an atmosphere of full employment, it is easy for management to take the easy way out and to reach a compromise with the unions and keep on more men than they need. That is inevitable, because in manufacturing industry it is easier to organise union activities and union solidarity in the shop or in the manufacturing plant where men are grouped together in close proximity. It is self-evident that the most unionised sector of the economy will be the one where manpower will be most difficult to shake out, to use the Prime Minister's euphemism.
    In addition, we have the present provisions for redundancy payments. It is open to question whether the Redundancy Payments Act has had the effect of encouraging or discouraging firms to shakeout labour. Perhaps the hon. Lady the Parliamentary Secretary to the Ministry of Labour will be able to tell us whether an effective study has yet been made and whether any statistics are available to show whether that Act has had the effect of encouraging manufacturers to hold on to labour, or has had the reverse effect and encouraged them to get rid of workers when genuinely redundant.
    To do the latter costs manufacturers something. If into the bargain is added the premium, coupled with existing union pressure and the warning lights in the economy about the shortage of manpower, with the penalty imposed when redundancy has to take place and workmen have to be discharged, there are at least four major emphases encouraging management to hold on to labour.
    We want to emphasise as powerfully as we can that the premium in itself bites most effectively in terms of hoarding on the one sector where manpower is ill allocated in present circumstances. We all know how difficult it is to shift manpower from the declining into the prosperous sectors. That will probably be remedied to some extent by the growth area idea, but even that is not yet proven. We want to stress with all the authority and argument which we can deploy that the hiatus which has been created, not only by the Bill, but also by the Industrial

    673
    Development Bill, which received its Third Reading last night, with its artificial and irrational division between services and distribution and manufacturing, will distort and undermine the effectiveness of the economy.
    I draw attention to a vivid illustration of this which comes from the United States of America, from which we have a great deal to learn about productivity, the use of manpower, and the techniques of management. The example is that of Sears Roebuck, one of the largest, most prosperous, most effectively gifted companies in terms of survival—and sheer survival is the acme of managerial enterprise and effectiveness—in the United States.
    Sears Roebuck is a great mail order firm with roots going back into American history. It is essentially a distribution organisation and yet nobody can estimate what it has effectively caused to happen in the American economy over the years by the sheer variety of orders for manufactures and supplies for which it has called. It has called for a huge range of distribution, manufacture and transportation, and a whole diverse range of subsidiary, subordinate, complementary, productive activities in the United States economy have been generated and sponsored and promoted by this vast, efficiently managed, distributive undertaking.
    5.0 p.m.
    I need hardly remind the House that manufacturers in the United States have a knack of increasing productivity which is not strictly related to the amount of capital applied to their manufacturing processes. One thing that studies in the United States have shown is that where plant in the United States is compared with plant in the United Kingdom and in Western Europe, where the degree of capital intensiveness is virtually the same, there is an enormous margin of advantage in terms of productivity, sometimes as much as a third greater. This is not because the plant is more capital intensive but because management techniques are more rationally thought out.
    What incentive is there to management by giving them this sort of medicine? There is the additional incentive to relax on manpower, to hold to what they have and not to shake it out. The initiative
    674
    and imagination of management is frustrated and distorted by the clutch of economic measures which have been brought along, discrimination in industrial development, the Selective Employment Payments Bill and the rest. Management is discouraged from making a rational use of manpower, and it is with management that the responsibility lies.
    We want to re-emphasise that all the arguments that we bring to bear on the premium are focused upon an artificially separate segment of industry, namely manufacturing, and the distinction against distribution and other features is entirely nonsensical. I will give a brief illustration to show how the general drift of the Government's broad canvas of economic proposals makes no sense at all.
    Anyone in the West Country will appreciate that the British Motor Corporation, rightly or wrongly—but it must be doing it for sound economic reasons—has decided that it pays to farm out the manufacturing of motor vehicle bodies to Pressed Steel in places like Swindon. One of the features of the British motor car manufacturing industry is the diversion and subdivision, horizontal disintegration, to use the economic jargon, of some of their activities. This means that vehicles transport car bodies from Swindon to Oxford, from Pressed Steel to the Cowley manufacturers. Under one of the measures introduced by the Government, the manufacturers will not get a grant for this although it is part of the production line in this industry. This shows the anomalous position which arises in selecting individual segments as we are doing in industrial development and the Selective Employment Payments Bill for a premium quite unrelated to the effect that it will have upon the basic ideals and objectives of productivity. For this reason, we urge the Government to think again on this irrational and nonsensical measure.
    Mr. Peter Doig: I would urge my right hon. Friend to accept this Amendment. In the light of what has been said by the Prime Minister today this opportunity, when the whole Committee apparently agrees that we can save a substantial amount of money, ought to be taken. It can he done without causing hardship to anyone, because none of these people are receiving this money now.

    675
    I am rather surprised that the right hon. Gentleman the Member for Enfield, West (Mr. fain Macleod) should stop at saying that we should not pay the premiums. If his logic was correct and he convinced himself and his supporters, I am surprised that he did not go the whole hog and say that we should do away with all of the exemptions as well. If his argument was good for the premiums, then why was it not good for the repayments as well? Of course, I am not advocating that. What is wrong with this Clause is that it is based upon the Standard Industrial Classification, and thus begins from an anomalous position. Under this formula one can have two groups of bakeries, producing precisely the same amounts, and because in one case the bakery is contained within one building, holding not only the bakers but the office staff, sales staff, cleaners, motor mechanics, electricians—
    Sir Douglas Glover: On a point of order. Is it in order under this Amendment to talk about bakeries and all the other anomalies of the Bill?
    The Chairman: This will be dealt with under a later Amendment.
    Mr. Doig: The point is that this Industrial Standard Classification is mentioned in this Amendment and, in view of that, I thought that it would be in order to deal with it.
    The Chairman: It can be dealt with in a later Amendment.
    Mr. Doig: I will endeavour to catch your eye again later on. It seems that this basis causes many anomalies. The premium is going to be paid to some groups of people performing a certain task and yet not to others doing exactly the same thing. I will give two examples, and here again I must come back to bakeries, because this applies to them. I am dealing with a particular Clause later in the Bill not relating to retail shops. There can be two groups of bakeries, one of which houses all of its staff within a single building. Not only does it get the rebate for all of these people, but it gets the premiums as well. On the other hand, the other bakery, of similar size, because it happens to have its staff in separate buildings, is unable to receive the
    676
    premium or rebate on all of those workers not engaged in baking.
    There is a clear anomaly here, because of the basis upon which these premiums are paid. The same thing applies in Dundee, which is the centre of the jute industry in Britain. There are two large combines of almost exactly the same size, producing jute, each of them owning many mills. One group has its office staff within one of the mills and thus qualifies for a full rebate and premium for all of its staff employed. The other group, because it has a separate building for office and other staff, does not receive the rebate or the premium for any of these staff. The difference between these two companies producing the same kind of material in exactly the same amounts, is £19,000 a year.
    Sir John Hobson: Does the hon. Gentleman realise that these provisions do not apply to the nationalised industries and that they receive the premium and a refund for their office staff?
    Mr. Doig: I am dealing with the anomalies affecting my constituency. These are very important, and they can be duplicated in almost every constituency throughout the country. This is a very valid point and the Government should take note of it. If this Bill is left as it is, the difference between these two combines of jute producers is £19,000 a year. If we were to accept the Amendment and to do away with the premium, it would be roughly one-third less.
    This is a good argument which the Government should accept. We should do away with the premium. If we did so, we should be helping the economy and the Government, and we should not be penalising anybody. All that these firms are concerned about is not whether they get the premium but that they should not be at a disadvantage with their competitors in the same industry. This Clause treats differently two groups producing the same commodity in the same amount. That is wrong. The Government should recognise that this is an opportunity of saving about £133 million, and they should grab it.
    Mr. John Nott: This Bill is riddled with anomalies. Perhaps the greatest anomaly is the absurd idea of

    677
    paying a premium to manufacturing industry. It is a subsidy for inefficiency in industry and a positive disincentive to the redeployment of labour about which we heard so much from the Prime Minister only a few minutes ago. It is absolute nonsense for money to be paid to manufacturing industry for employing more men. It is a complete contradiction of every word spoken from the Dispatch Box less than an hour ago. It is yet another example of the incapacity of the Government to understand the effect of their own measures and to work out their consequences.
    The Government should cancel this premium here and now and make their action suit their words by paying it as a rebate to the development areas. An hour ago the Prime Minister talked about the necessity of benefiting the development areas. Yet we all know perfectly well that this tax will have a very serious effect on the development areas. It will bear upon them very much more hardly than on other areas.
    Before I give an illustration of how it will do that, may I give an example of the nonsense which the premium will create and why I say that it will be a subsidy to the inefficient. Take a firm of cattle food compounders in a small country town. Over the last two years it has increased its efficiency by cutting back on its labour and installing more machinery. The result is that more than 50 per cent. of its employees are not in manufacturing but in office employment. Because of its efficiency in installing more machinery, it will not be paid the premium, whereas a few yards down the street a firm doing precisely the same, compounding cattle food, which has not made itself more efficient or installed more machinery will qualify for the premium. In effect, the efficient firm is subsidising the inefficient firm and is helping it to reduce its prices, whereas the efficient will have to charge more to pay for the excellent rationalisation which it has put into effect.
    I know someone in Bradford who is the joke of all his friends. He is chairman of one of the leading top-making companies in the country. If ever there was an industry which needed rationalisation, it is the top-making industry. Over the last two years this man has cut back on his employment. He has released labour
    678
    to other more needy industries like the machine tool industry. Now he is the joke of Bradford because all his friends are saying to him, "You made yourself more efficient, but now you will receive only £10,000 in premiums whereas those of us who remained nicely coddled and inefficient and did not install more machinery will receive £30,000 in premiums ". This is an example of the anomalies and nonsenses which this premium will create.
    5.15 p.m.
    My hon. Friends may differ with me here, but the reason why I say that the amount representing premium should be paid as a rebate to the development areas is this. In one part of my constituency only 3 per cent. of employment is in manufacturing as against an average in the country of 38 per cent. Therefore, there are certain parts of the country—the development areas and my constituency in particular—which will be 90 per cent. worse off compared with aver-ace parts of the country so far as receiving the premium is concerned.
    According to 1964 Ministry of Labour figures, the incidence of service trades in the country generally is 51 per cent. In Cornwall 64 per cent. of the people are employed in service trades. The figure in my constituency is 72 per cent. These are Ministry of Labour figures. Therefore, there are development areas such as the St. Ives division which are 40 per cent. worse off than the average parts of the country when it comes to receiving a refund.
    I hope that I have shown how this tax will bear extremely hardly on the development areas. The premium should be used as a rebate to offset some of its adverse effects, bearing in mind that it is in the development areas that there is already high under-employment and incomes generally are much lower than in the country as a whole. Moreover, the premium should be abolished for the simple reason that it is a disincentive to the redeployment of labour. If manufacturers are to be paid this premium per employee, clearly there is a disincentive to them to cut back on their employment and install more machinery. It is a complete contradiction of every word which the Prime Minister said less

    679
    than an hour ago. If the Government wish us to believe that they mean action they should cancel this premium immediately.
    Mr. R. E. Winterbottom: I should hate to incur your displeasure, Sir Myer, and I am not sure whether I am strictly in order or whether the debate can range over the whole Clause as distinct from the Amendment. From what I have heard, it seems that the debate can cover the whole Clause, otherwise there is not much sense in what has been said.
    I want to deal with the Amendment, which proposes to limit the premiums to firms in development areas. [HoN. MEMBERS: "No."] I stand to be corrected.
    Mr. Norman St. John-Stevas: The hon. Gentleman is on the wrong Amendment.
    The Temporary Chairman (Sir Myer Galpern): We are discussing Amendment No. 2.
    Mr. Winterbottom: I beg your pardon, Sir Myer. I thought that we were still on Amendment No. I.
    I want to comment on Amendment No. 2 and to say this about the development areas. Sometimes it is very hard—
    The Temporary Chairman: Order. I hope that the hon. Member is quite clear about the Amendment which is under discussion. It is Amendment No. 2, which rules out entirely discussion on development areas. I hope that the hon. Member will confine his discussion to the terms of the Amendment.
    Mr. St. John-Stevas: On a point of order. Are we to be submitted, Sir Myer, to a filibuster as well as a guillotine?
    Mr. Winterbottom: Further to that point of order. I asked in the first place for the guidance of the Chair so that I could clearly understand what was being discussed. It was my mistake in thinking that we were still on development areas. For that I apologise, and I will now resume my seat. There is no intention whatever to filibuster. I connected what I heard from hon. Members with the development areas and thought that it was hopelessly wrong. [HON. MEM-
    680
    BERS: "It was.1 That is clear to me as well.
    There is, however, one thing that 1 would like to say. It seems to me that the debate on the Amendment has been much wider than the text of the Amendment warrants. It has spread almost to the whole of the Clause. I was rather surprised at the hon. Member for St. Ives (Mr. Nott) talking about a premium. I agree for instance, that this premium will be, in the hon. Member's words, a subsidy for inefficiency. I go further and say that it might be an inspiration to inefficiency. I agree on that, too.
    At the same time, when I look at the mass of Amendments to the Clause, none of which will be accepted by the Government, I can only conclude that the Opposition are rather inefficient in putting down all these verbose Amendments, which have no hope whatever of success and, indeed, do not deal with the central point with which they themselves wish to deal.
    There is only one straight issue on the Clause and it cannot be found in Amendments such as the one we are discussing. That is merely to say that this is a big sin; we will countenance it, but we will make it a little smaller. That is not likely to cut any ice in the House of Commons.
    The Opposition would be well advised to cease filibustering with this mass of Amendments and oppose the Clause in truth, as I want to oppose it, in terms of the Question, "That the Clause stand part of the Bill" instead of trying to snipe and enter into full fray and into the joy of battle. Let hon. Members opposite put all those things on one side and deal with the principle which they and I want to see eliminated, namely, that no subsidy should be paid to anybody, whether in the development areas or anywhere else.
    Mr. John Pardoe: I shall be brief. We on this side want to make a lot of points, and I think it best if I follow the line of taking less than five minutes to make each point. I will try to keep to that principle throughout the debate.
    I support the Amendment. It happens to be in the name of the right hon.

    681
    Member for Enfield, West (Mr. lain Macleod) only because I have a constituency far from London. I thought it up or the train, but by the time I got back to London I found that the right hon. Gentleman had put down the Amendment instead.
    My hon. Friends and I had an Amendment to Clause 42 of the Finance Bill to leave out the word "selective", which is what Amendment No. 2 would do. In the Bill, the whole business of trying to select is an absolute nonsense. It is the sort of thing which I would have been keen on doing on having just finished reading part one of economics at university and being lectured to for hours on end by Left-wing professors. One had then a tremendous feeling that economics were all-powerful and could select in this way. In the intervening years, I have found that they cannot select in this way and that it is nonsense to pretend that they can. To try to mix up all these industries, which are vastly different and have vastly different problems, just because they happen to appear in a booklet produced some years ago by a statistical office is sheer and utter nonsense.
    I would like briefly to illustrate my meaning by references to two industries. Why does not agriculture qualify for the premium? I know why the National Farmers' Union does not want it to qualify—because it would then be classified as a manufacturing industry and might he rated as such. That, however, is not why I thought about it in this context.
    Agriculture has a very good productivity record, with a 6 per cent. increase a year. Very few industries can match that. "Very well", say the Government, "we accept this figure". Nevertheless, agriculture is still not paid the premium because the Government say, as they have said in the National Plan, that they want x number of people to leave agriculture and go into industry.
    I do not altogether quarrel with the National Plan's figure. I remind the Government, however, that the present rate of exit of people from agriculture is substantially faster than the figure laid down in the National Plan. If we go on like this we will not have enough people left on the land to match the targets which the National Plan has produced.
    Captain Walter Elliot: In the hon. Member's opinion, would the owner of a battery hen organisation which employs men get the 7s. 6d. refund?
    Mr. Pardoe: I would have thought, at present, certainly not; but if the Government rate these enterprises, it should qualify as a manufacturing industry.
    The second industry which I take is coalmining, which will not qualify for the premium. We shall talk later about opencast mining on an Amendment which appears in my name. Coalmining is not classified as a manufacturing industry, so it does not get the premium. We find, however, that the exit of men from coalmining is at a much faster rate than the figure laid down in the National Plan. The Minister of Power will back me up in saying that there is a real danger that we will not have sufficient men in coal-mining to match the targets laid down in the National Plan. Therefore, if we are being selective, we ought surely to say that coalmining is an industry which needs the premium to encourage labour into it, and yet here we are not paying it the premium. These two examples show clearly how nonsensical it is to try to differentiate between industries in this way.
    I presume that the Government must be convinced that there has been a movement of employment from manufacturing into service industry which is altogether too fast, and that they wish to check it. I accept that there is an argument here. What the Government must prove, however, is that the movement is any faster than it is in other Western industrialised economies which are successful. I dispute that. The lastest figures in my possession show clearly that the movement from manufacturing into service industries, which is a phenomenon of all highly industrialised countries in the modern world, is no faster in this country than elsewhere.
    The Chief Secretary to the Treasury (Mr. John Diamond): I hope that the hon. Member will proceed to give his figures, as mine show the opposite.
    Mr. Pardoe: I shall be delighted later to hear the right hon. Gentleman's figures. I hope that he will prove the point. I made much the same point on Clause 42 of the Finance Bill, but the Chief Secretary did not bother to produce the figures.

    683
    If he is able to prove the point, I am certainly prepared to withdraw the argument, but I doubt whether he can prove it.
    My third point may not be extremely important, but it is worth making. If we are to get rid of the selective principle and do away with these premiums, which I do not think serve any purpose, we could substantially cut the administrative costs of the scheme. It will cause great complication in the Ministry of Labour in giving a premium plus a rebate to somebody and then a rebate only to somebody else. It would be much simpler to have one figure.
    My fourth point arises from an Amendment of mine which has not been selected. To select between men and women and have a different incentive for employers to encourage them to employ men as opposed to employing women is absolute nonsense. We surely want to encourage women into industry to take jobs just as much as we want to encourage men to take jobs in industry. I see no reason at all to make this kind of nonsensical differentiation.
    5.30 p.m.
    Finally, if the Government want to be selective at all—and I disagree with this selectivity because I think that this is Left-wing economics gone mad—it would have been far better to have been selective in terms of the criteria in the Government's economic policy, namely, to get a better balance between the regions, to get productivity up by 4 per cent. a year at least, and to increase exports by 4 per cent. a year.
    I am sorry that the Amendment I tabled has not been selected, because if it had been it would have confined the premiums rather more to those sectors. I am sorry it has not been chosen, because had it been I hoped the Chief Secretary would have had to say the Government could not measure this productivity. I had hoped to hear him say SO.
    This Measure is not a Measure to increase productivity. It will undermine the whole economic policy of the Government. If those are the criteria by which the Government choose to judge the economy it would be far better to use the selective principle, if one is to
    684
    use it at all, to encourage those three criteria, but this is not going to do that. It is not genuinely selective but only mixes everybody up, and then takes a chunk of the people here and another chunk there, and nobody knows the reason why in the end.
    Mr. John Hall: It was not originally my intention to take part in this debate because from the start it appeared likely that all the speeches would come from this side of the Committee—only four back benchers being present on the Government side. However, I have been encouraged to take part because 50 per cent. of the representation here of the party opposite have spoken, and 50 per cent. of that party as represented here have spoken in support of the Amendment moved from this side of the Committee. Therefore, it would appear that this particular part of the Bill has no support in any part of the Committee. Now we have just heard the Liberal Party condemn the principle, and in no uncertain terms, and the hon. Member for Cornwall, North (Mr. Pardoe) produced some extremely good examples to back up his point.
    I speak on this aspect of the matter as an industrialist, and I can say that when I first heard the Government's proposal to introduce a premium for employees in industry it horrified me. As an industrialist I have been trying for a very long time, despite all the discouragement offered from time to time, to ensure that my concern employed no more people than absolutely necessary to make it efficient. One has been opposed in this by difficulties put in one's way—by reduced hours of work, by restrictive practices, many of which cause managements very often to employ more people than they need.
    Then, when one is getting to the point where one is overcoming one's difficulties, difficulties with which managements are confronted every day of their working week, one gets this blow—to keep labour one does not need for efficient operation of the factory or other work. If the average undertaking is employing, say, about 500 men—and I shall deal with men only at the moment and not be diverted to consider the sexual inequality which comes out in this Bill—but if the average factory has about 500 people

    685
    it may pay the management to keep eight out of ten men with the tax, because it is paid for by the premium. This is absolute Insanity.
    I would suggest to the Committee that in view of what we have heard this afternoon the present Bill is quite irrelevant. It does not match up to the needs which we are told are required. It will dislocate industry. It will create appalling anomalies between one manufacturing industry and another, one qualifying for premium, and another, for various circumstances, not.
    It is certainly not going to have the effect of diverting labour from service industries into manufacturing industry. In fact, in many cases we do not want to divert it, because manufacturing industries have got too much labour already. The Chief Secretary shakes his head. I do not know how long it is since he was actively employed managing a factory or dealing with men on the shop floor. It is a long time ago, I imagine. Let me tell him quite frankly that I foresee underemployment in the manufacturing industries mentioned with the announcement of the suggestion in the National Plan that by 1970 we shall have a shortfall of 200,000 men. My hon. Friend the Member for Barkston Ash (Mr. Alison) brought this point up.
    I would have thought that the purpose of any Government employment tax, a payroll tax, should be to encourage all industry, whether in services or manufacturing. to be efficient, and I personally—I speak purely personally—would not be averse to a payroll tax, preferably as a tax on the payroll and not as a poll tax, because one of the great advantages of having a tax on the payroll is that it encourages manufacturers sometimes to put up resistance to wage demands which are unjustified because they know that if they are to have an increased wages bill they will pay the increased tax put upon it. If we had an overall tax on the use of labour of this kind spread over the country as a whole at a reasonably low level it might have useful results in that way.
    This tax, however, is going to dislocate the industrial effort of this country. It will penalise in many respects the very service industries which make a very great contribution to the export potential, and to the invisible exports of this country.
    686
    It is not going to have the effect at all, as I see it, of bringing about redeployment of labour.
    I beg the Government to think about it again. I do not believe for one moment that manufacturing industries want to receive this £123 million in the form of premium. I imagine it was designed originally, as I understand it, in order to try and offset the additional costs which might be brought about by the tax on manufacturing industries in the form of increased costs of insurance and services which industry might be called upon to meet. It is an extremely rough method of doing something for industry, to reverse the export-import rebate, and to spread it over such a wide field as to include industries which are not concerned with exports at all. I can only think this to be the basis of this.
    It is not going to have that effect. Let me tell the Chief Secreary what happened as soon as this premium was announced. A major customer of one company said he hoped to find it reflected in the prices, since the company was to get the premium. He hoped to receive a substantial discount.
    Secondly, shop stewards were very quick to point out that when the next round of wage demands came up they would expect a proportion of the premium received by the industry to meet them.
    Mr. Winterbottom: Quite wrongly!
    Mr. Hall: Now we have had the statement that there is to be a standstill for six months, and a further attempt to prolong that standstill beyond that six months, but to that extent it will only delay the demands and in due course we shall have the next round of wage demands with the hope that they can be met from the premium.
    As I see it, it serves no useful purpose. It is a form of economics that I find extremely hard to follow. It is a measure which has no support on either side of the Committee. Indeed, I venture to suggest to the Chief Secretary that if he likes to have a secret ballot among the members of his own party—a really secret ballot—he will find an overwhelming majority against having this premium at all. I challenge him to conduct this investigation and to stand by the results,

    687
    because if he did he would offer this Amendment every encouragement.
    Mr. Raymond Gower: I echo what my hon. Friend the Member for Wycombe (Mr. John Hall) has just said. Indeed, the speech of the hon. Member for Sheffield, Brightside (Mr. Winter-bottom) illustrated some of the disquiet which exists in the party on that side of the Committee about the nature not only of the tax but in particular of these premiums which we are discussing. I think that not only the hon. Gentleman and some of his colleagues but some members of the Government, too, would welcome an excuse to bury this tax in the ground, and I suggest to the Chief Secretary that they have an excuse, they have an eminently good reason, in the nature of the present emergency as described by the Prime Minister this afternoon.
    I put it to the Chief Secretary a little more seriously than that. In announcing the steps which the Prime Minister has described to us, he was obviously calling for considerable sacrifices from the country. He was asking the people to forgo a number of things. He was asking for restraint. He was asking them to undergo increases in certain forms of taxation. The Government themselves are showing a very poor example if, at the same time as calling for that kind of restraint and those sacrifices, they are giving away or passing over premiums to manufacturers who have not asked for them, who in many cases do not need them and whose industries do not require them. I should have thought that the reasons for reconsidering the payment of premiums on that level are very strong.
    Then my hon. Friend the Member for Barkston Ash (Mr. Alison) observed that we were reminded that the division between manufacturing and service industries is somewhat artificial. It is far more artificial than has been suggested. I think that it is completely fallacious. There are a great many industries where the service parts of those industries have a close relationship with the productive parts. The hon. Member for Dundee, West (Mr. Doig) gave some useful examples of that in his own constituency.
    The distinction is based on another misconception of the inevitable growth
    688
    of sophisticated economies in the Western countries. In countries with low standards of living, it would be natural to find a vast preponderance of productive industries. But we should be comparing ourselves with the more sophisticated economies of the West.
    In an earlier contribution, the Chief Secretary intimated that he would adduce evidence that the movement of people from the manufacturing industries into the service industries was too rapid. Like others of my hon. Friends, I shall be interested to hear those figures, because we should expect a considerable growth in the service industries; it is bound to happen. I expect that growth to accelerate in years ahead; it is bound to. I should expect to see more and more people employed in those industries and services which render life more pleasant.
    Mr. James Dance: Following on what my hon. Friend has been saying, I was talking to a constituent of mine the other day who had put a new piece of plant into his factory. As a result, he was able to employ fewer people and produce more, and he wanted more salesmen on the roads. I am sure that that pattern is one which will be seen increasingly.
    Mr. Gower: Precisely. On the other hand, in the more backward countries that does not happen.
    The Government are being misled into making hasty judgments about this. They are dealing with the problems of today with the minds of those who were considering the industries of 20, 30 or 40 years ago. I hope that it can be reconsidered.
    As my hon. Friend the Member for St. Ives (Mr. Nott) has indicated, the payments of premiums, as they appear in the Bill at present, must bear harshly on certain parts of the country where there are fewer manufacturing industries. That is true of a large area in Scotland, it is true of a large part of the West Country, and it is certainly true of the preponderant part of Wales. The payments of premiums as intended by the Bill must be totally at variance with all the Government's policy about the development areas, and I hope that the Government will reconsider the matter from that point of view as well.

    689
    Let them at least accept the Amendment. It would be far better if they consigned the whole Bill to limbo, but the next best thing would be to bury these premiums.
    5.45 p.m.
    Sir Lionel Heald: A number of hon. Members will find this a convenient Amendment on which to speak, because it provides a means of improving many of the anomalies which have caused so much concern all over the country.
    There are undoubtedly a number of things, if I may call them that, which any ordinary person would describe as "manufactures" and which are not included i the premiums as matters stand. I need not refer to them in detail, but there are several categories which we hope may be referred to during the debate, although it is doubtful whether we shall be able to discuss them in detail.
    There will be a premium in some extraordinary cases, and the most extraordinary one of all, which shows the anomaly which l mention not from hostility of any kind to those concerned, is that which concerns the printing and publishing of newspapers and periodicals, including publishers who do not do their own printing. It means that premium is going to be paid to those who publish newspapers and do not even print them.
    The only possible justification for including newspaper publishers under the heading of "manufacturers" is because, owing to their use of great printing machines and industrial processes, they are regarded as manufacturers for the purpose of the Factories Acts safety regulations and such things of that kind. That is perfectly right. But that that should enable them to attract a payment of 25s. a week for every employee in that part of the business is fantastic, unless we give it to people like builders, film studios, and others who do exactly parallel things.
    It is a remarkable fact that we have read little about this matter in the newspapers. One can understand it, of course, They may feel a little delicate about it. However, I have received a letter from someone engaged in that business, amongst whom I have a number of friends. He said that he thought that it
    690
    was fantastic for them to get a premium. As I say, it is a rather delicate matter. If the Government offer to pay a man 25s. a week for everyone he employs, he ought not to attack them for it. That may account for it, but the fact remains that it is an extraordinary position. If one considers the end product, what is the difference between the various forms of communication? In one case the product may be a film, and in the other case a newspaper. However, they are both intended to give information, instruction or entertainment to the public, yet one is in and the other is out.
    It seems that there are two alternatives. Though it is not what we are discussing now, one is to put all these things in. The other is to take them out, and that is what I suggest.
    Mr. St. John-Stevas: There are a number of other hon. Members who wish to speak on this Amendment, so I shall be brief. But the brevity of my remarks should not be taken as an indication of the importance that I attach to the Amendment, because I agree with my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) that it is perhaps the most important single Amendment that we have to consider in this truncated Committee stage. I am sorry that there are not more hon. Members opposite present to listen to the arguments and to support the Government. I dare say that they are ashamed, and I imagine that they are also dazed by the statement which the Prime Minister made earlier today and have gone away to recover as best they may.
    There is a connection between the general economic policy of the Government and this Clause of the Bill, in that both are entirely irrelevant to our real economic problems. The Clause is not only irrelevant; it is positively harmful to the efforts which are being made to solve those problems and put the economy on a sound basis.
    The aim of the Amendment is to do away with the premium altogether. The whole idea of this premium is misconceived. It rests upon the fundamental flaw of a distinction between manufacturing and service industries. No such distinction can be made. It was Adam Smith who, in that book "The Wealth of Nations", which I am sure the hon.

    691
    Lady the Member for Hitchin (Mrs. Shirley Williams) has read, because she is one of the better read Members of the Government—that is a modified compliment—
    Mr. Charles Fletcher-Cooke: The hon. Lady may be better read, but under this Bill she is worth only 3s. 9d., compared with 7s. 6d. for the other illiterates.
    Mr. St. John-Stevas: I would give her the benefit of the doubt, and award her an extra half crown.
    In that book to which I have referred there is a chapter on productive and unproductive labour, in which Adam Smith takes this point of the distinction between manufacturing and service industries and disposes of the whole economic argument for the distinction between them.
    Quite apart from the fallacious economic basis of this distinction, there is, too, a fundamental moral error which lies at the base of it, the idea that in some way it is better to be in a manufacturing industry than in a service one, that somehow the contribution made by a manufacturing industry is more worthwhile than the contribution made by a service industry. This is an erroneous, puritanical notion, because in an advanced industrial society, such as we have today, the contribution of service industries is every bit as vital as that of manufacturing industries. Indeed, in practice they cannot be separated, because manufacturing and service industries are inter-connected at so many points.
    Once again the Government are behind the times in trying to make this distiction, because the whole trend in an advanced society is to employ fewer people in manufacturing industries and more in service industries, and surely this is a trend which must continue when we move towards a much more automated society than we have at the moment?
    Leaving those more general considerations, even if we look at the very narrow point of the effect on the balance of payments—and it is said that this premium will somehow help our balance of payments by increasing exports—the argument is ill-founded. First, because it is not selective enough between one type of manufacturing industry and another. Sec-
    692
    ondly, because it so grossly discriminates between manufacturing industry and a service industry such as the hotel industry which makes a vital contribution to the tourist trade and to solving our balance of payments problem.
    A rather delayed measure of justice for the hotel industry was foreshadowed in the Prime Minister's statement this afternoon. It would be much more sensible to give back to the hotel industry in some tangible form the investment grants of which it has been so unfairly deprived, and to relieve hotels of the extremely heavy burden of taxation which is being imposed by the Bill.
    It is impossible in practice to make a sharp distinction between manufacturing and service industries, because so many industries cross the frontiers of the distinction which is attempted to be laid down by the Bill. The Clause will raise immense difficulties of classification, which would be got rid of by a simple excision of this Clause from the Bill.
    One of the justifications for the Bill is that it is said to be likely to facilitate the redistribution and better use of labour. I wish that these hopes could be justified, because one of our basic economic problems, which so far has not been tackled in any way by the Government, is the lack of effective use of manpower, and it is the effective use of manpower within manufacturing industry which is really the nub of the whole matter.
    The Chief Secretary shook his head when my hon. Friend the Member for Barry (Mr. Gower) referred to the over-manning of British industry and the uneconomic use of labour. Perhaps I might remind the right hon. Gentleman of the words of his colleague the Chancellor of the Exchequer, which I put down in this notebook, in what I might call my commonplace book. "I have referred," said the Chancellor, "to complaints about the wasteful use of manpower in manufacturing industry. Many of these complaints are justified". There one has as it were from the Chief Secretary's superior officer confirmation of the indictment made by my hon. Friend the Member for Barry.
    That is where the hoarding is, and that is where the problem centres. This Bill may lead to a number of part-time teachers, part-time charladies, and part-time hairdressers losing their jobs. They

    693
    will not be turned overnight into skilled workers, and this is where the problem lies. It is not a problem of unskilled labour, but one of a shortage of skilled labour in industry, and the efficient use of this extremely scarce commodity.
    Here one finds a direct contradiction in Government policy. On the one hand there is the policy of exhorting industry to use its skilled labour in an efficient way, and on the other one has the positive incentive provided by the premium laid down in the Bill to do precisely the opposite. I agree with my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). Of course industrialists will not go out and recruit skilled labour because of the premium provided by the Bill. But that is not the problem. The problem is to get manufacturers to disgorge skilled labour so that it can be usefully employed elsewhere, and the existence of this premium may well tip the balance.
    After all, though small in itself, the total subsidy being given to manufacturing industry is likely to be about £150 million a year, and as we move into recession, as we surely shall after the Prime Minister's statement this afternoon, the temptation to hoard skilled labour will be greater than ever, because manufacturers know that it is extremely difficult to get that skilled labour back when the "go" of the "stop-go" gets going again.
    The whole purpose of the Government's labour policy should be to increase the flexibility and mobility of the labour force. This Bill in general, and this Clause in particular, do the opposite. The Bill as a whole is unpopular, and rightly so, in the House and in the country. But the most unpopular part of it is this Clause. It has literally no friends—or if it has friends in this House they have been remarkable by their silence. I commend the Chief Secretary to the advice given by the distinguished banker and economist Walter Bagehot to his nephew, Guy, when his nephew, at breakfast, had difficulty in opening his egg. Bagehot said, "Hit it hard on the head, Guy. It has no friends." I commend that course of action to the Chief Secretary in relation to this Clause, and if he declines to hit it hard on the head we will hit it as hard as we can.
    6.0 p.m.
    Mr. Geoffrey Rhodes: I agree with the hon. Member for Chelmsford (Mr. St. JohnStevas) that the distinction made in the Clause between the manufacturing process and the distributive process is far too easily drawn by people who, if they knew industry and commerce sufficiently, would realise that it is far from clear in practice.
    I also want to refer to the point made by the spokesman for the Liberal Party, who referred to the Bill, and to this Clause in particular, as being the product of Left-wing economists. I am an economist, and I claim to be Left-wing, but I hope that nobody will think that the Bill or the Clause was any product of my intellect or imagination, because there are some things that I want to say about them that I would interpret as being critical.
    As I understand the Clause, it provides that a number of premiums will be paid to manufacturers regardless of the social value of the work that they do or of any special contribution they may make to the national economy, and especially to the export trade. The subsidy will be given to all people who are suitably classified in the Standard Industrial Classification on a basis which seems to me to be irrelevant to the overall needs of the economy, and partly irrelevant to the White Paper that preceded this debate, some months ago.
    As a result of this legislation people constantly ask why, for example, the brewers, who do not need a subsidy and who have not asked for one, are being given one, at the same time as many other people will suffer a severe fiscal penalty. That is a fair question, and I repeat it this evening because I have constantly asked it and I am still waiting for a satisfactory answer.
    Mr. Geoffrey Hirst: The hon. Member may or may not know—the Committee certainly does—that I have often declared an interest in the brewing trade. That trade estimates the net cost to it as being about £5 million. It will not be receiving a benefit.
    Mr. Rhodes: I would not quarrel with the hon. Gentleman's information. I merely say that because of the way in which the Bill is framed that is the kind

    695
    of question which is constantly being asked. Why should manufacturers be subsidised regardless of their social usefulness to the export trade? Perhaps I am indulging in a Freudian slip in referring to the brewing industry, because I had a number of things to say about it, in another context, on a previous occasion.
    But my main point is one which I do not think the hon. Member for Shipley (Mr. Hirst) will disagree with, because the last time I said it he said that he agreed with me—although I sometimes become worried when he agrees with me, because there are few occasions on which we can share this privilege.
    In replying to the Second Reading debate, while I was recovering from a long stint by having some refreshment, the Financial Secretary criticised me and a number of my hon. Friends—and the Opposition in general—for being critical about the anomalies and difficulties within the Bill. As he put it, we had been completely destructive and had offered no alternative suggestions. I heard the latter part of his speech, but I did not have an opportunity to say anything then, although a number of my hon. Friends protested on my behalf.
    That was a distortion of what was said in the debate. A Liberal Member distinctly categorised at length a number of alternative proposals which the Liberal Party had carefully costed. I specifically suggested that it would not help the Government in the present economic situation for premiums to be paid indiscriminately to certain people who are fortunate enough to fit into the right part of the Standard Industrial Classification, and that it would be better if they were not paid. I suggest that if the Government are concerned to tax the more inefficient parts of the distributive process they might consider imposing the tax upon self-employed retail distributors, who are not the most efficient.
    At any rate, a number of constructive suggestions were made, and to argue that our case is not worth answering because we have not made alternative suggestions is unfair.
    Mr. Winterbottom: We also put up a set of suggestions which even questioned
    696
    the efficiency of the Treasury as a tax collector.
    Mr. Rhodes: That is not the theme which I developed, although I drew attention to the fact that if the object of the tax was to encourage efficiency in industry it seemed odd that those distributors who were centralising their warehousing and transport systems into central units would become subject to the tax, whereas if they were to leave those units indiscriminately at the various points of production they would become eligible for a subsidy.
    I cannot see the logic of this provision, and as a Left-wing economist it does not seem to me to serve the interests of economic efficiency or sound socialist principle to indulge in the imposition of this tax in this way. We have the situation in which we give a premium to the manufacturer of dog food while imposing a penalty on those who engage in the processing and bottling of milk. I am pleased to see the Joint Parliamentary Secretary to the Ministry of Health here. He might remind me that it is illegal to distribute milk without having previously processed it and bottled it. I cannot see why the processor of milk should suffer a penalty when the manufacturer of certain dog foods receives a subsidy.
    The reason why milk processing becomes subject to this kind of penalty is that, from the point of view of the Bill, it happens to be wrongly placed in the Standard Industrial Classification. This brings us back to the ultimate question: is the purpose of this Standard Industrial Classification sufficiently exact to be used for this type of legislation, which has a different purpose?
    I suggest that it is not. The statistical value of the Standard Industrial Classification is quite unrelated to the purposes of the Bill. Although it is a convenient device, unfortunately, it is a device that is also pregnant with anomalies of all kinds. Consequently, of course, we get all the complaints. One reason why people have never protested at the processing of milk, for example, being placed in the distributive part of the Standard Industrial Classification is that, in the past, it has not mattered very much to the trade which part of the classification it happened to be in—
    Mr. Diamond: I hope that my hon. Friend will not accuse me of discourtesy when I wind up the debate if I do not reply specifically to his comments about milk, as there is another Amendment which deals exclusively with the problem of milk and its bottling.
    Mr. Rhodes: I expected that this point might be raised if not from my right hon. Friend, then from the Chair, but I would still make the point that, if the Committee supported Clause 1 unamended, it would support a classification for giving subsidies to people who, for many reasons which I have explained, neither need them nor deserve them, and would impose a penalty on other groups of manufacturers, like those processing milk. This will, of course, bring the tax into public disrepute, because it is illogical, anomalous and unfair.
    We appeal again for improvements to be made in the classification for carrying out the tax as early as possible. The power is in the hands of the Government, with this legislation, to make Amendments and to switch around into different categories of manufacturing and distribution in different parts of the Standard Industrial Classification for the purpose of the Bill.
    I accept that whenever a new tax has to be got off the ground, whenever a new aeroplane is put into flight, it is defective and needs time for improvement, but I would be encouraged to think that improvements would be made if at least some sympathetic noises were made from the Treasury Bench in answer to the very fair, sensible and moderate points of criticism which have been made, not only by the Opposition—they may have different motives—but from this side of the Committee as well.
    I suggest that, unless improvements are made soon, and the Treasury Bench indicate that they sympathise with and understand the point which is constantly being put to them, this tax will be continually ridiculed in the country and, in the long run, will bring the Government into disrepute.
    6.15 p.m.
    Mr. Fletcher-Cooke: During my 15 years' experience of the House, I do not think that I have ever heard a Clause of a Government Measure so bitterly attacked from all quarters of the House and most bitterly from
    698
    behind the Treasury Bench. This is the more impressive because we are operating under a timetable, a procedure in which there is no sanction against Government supporters speaking. If we were operating in the normal way, without a timetable, there would, of course, be inhibitions against Government supporters speaking, because that delays progress. But, in these circumstances, there are no such inhibitions.
    Not a single Government supporter has said one word in favour of the Clause or against this Amendment. Three speakers have made the most powerful and damaging criticisms of the Government and have supported the Amendment. If Parliamentary democracy means anything, I should have thought that, with those criticisms from the Labour Party, the Liberal Party, and the Conservative Party, the Government must give some way particularly bearing in mind that this provision entails the Government giving money away.
    Of course, if the Government were taking money from the population, and said that they must have this money and had to stand rigidly like Mr. Gladstone, or Sir Michael Hicks-Beach, or one of the "great black dogs" of the past in favour of rigid Treasury control, one could understand their position. But this is a unique situation. Hon. Members in every quarter of the Committee and in every party are saying to the Government, "Do not give this money away: keep this money." Yet the Government apparently are adamant. Is not that the most unique and extraordinary Parliamentary situation within the recollection of any hon. Member? Does it not make the Chief Secretary think that he must be wrong?
    No credible explanation for this premium has yet been given. All that is said on the positive side is that, hitherto, taxation has been "somewhat" unfair to manufacturing and "somewhat" unfavourable to services, as though they were two disembodied or classical figures on a monument, sculpted figures, one representing "Manufacture" and the other "Services", reminiscent of the Great Exhibition of 1851, which saw two neuter figures in the middle, one representing Charity and one Agriculture, which were neither good nor bad. That personalised fashion is not the way in

    699
    which to consider taxation. It was understood that, when the Labour Government came to power, they would indulge in what is known as "purposive" taxation, that the fiscal weapon would be used for certain social and defined purposes.
    I think that the hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes) would approve of that. But he has explained very frankly and squarely that this does not effect any such purpose. Certainly, no purpose has been explained. The most the Government have done is to say that it will not do that much damage, it will not cause the hoarding of labour in manufacturing industries which people think. That is a poor defence. I suggest that even that is not right.
    Although it is true that, probably nobody, will employ more people in order to get 7s. 6d. for a man or 3s. 9d. for a woman, there are, nevertheless, bound to be marginal cases of firms which are within the 50 per cent. rule, or near it, between qualifying and non-qualifying operatives, when it will be worth their while within a plant, establishment or site, or whatever the definitive term may be, to employ two or three more qualifying operatives so as to bring the whole of the site or establishment within qualification for the premium.
    This is a very dangerous and critical situation, because two or three or four qualifying operatives might make all the difference to the whole plant. Although this seems to be a small matter in relation to the plant, for the country as a whole it will be a more frequent occurrence than the Chief Secretary realises, and will be absolutely deleterious and devastating to any suggestion of the redeployment of labour on the lines which the Prime Minister told us this afternoon must happen.
    I ask the Chief Secretary and his advisers, therefore, to consider the critical point at which the numbers of qualifying and non-qualifying operatives are nearly in balance in any establishment. This is a more frequent occurrence than is generally recognised. If that is so the prize for employing more qualifying operatives than one really needs so as to get over the 50 per cent. rule is much too great. We shall never have time to go into the
    700
    anomalies in the Bill, owing to the Guillotine
    I was most interested to hear the hon. Member for Dundee, West (Mr. Doig) explain the enormous anomalies in the jute industry in his constituency. There is, of course, a great anomaly in my constituency in the processing of paper. If a firm uses as its raw material rags or esparto grass or something like that, it is a manufacture. If, however, it uses waste paper to produce new paper, it is a service industry and does not qualify. There are hundreds of examples. Many Amendments are down, some selected and some unselected: it does not very much matter, because we will not be able to get on to any of them.
    The only clean and honourable way to deal with this is to abolish the premium. I do not think that it is remediable—certainly not in time for the passage of the Bill, since the Government say that they must have all stages before the House rises in August.
    Unlike some hon. Members, I can say that my constituents on the whole will benefit from these provisions. Most of them are qualifying operatives. But I am sure that they would be the first to say that this is not only a wrong use of the fiscal weapon, but also a useless use of the fiscal weapon and that it will achieve no economic objective that one can understand, because there is no economic objective, over and above a personalised and futile attempt to do what is called social justice between manufacturing and services—which is a philosophy which has no foundation in heaven or in earth.
    The Temporary Chairman: Sir Tatton Brinton.
    Sir D. Glover: On a point of order. Is it not usual, particularly under a timetable Motion, that an hon. Member who has his name to an Amendment is called during the debate on that Amendment?
    The Temporary Chairman: As far as I am aware, during my years in the House the matter has been entirely at the discretion of the Chair, but I will keep the point in mind.
    Sir Tatton Brinton: I must declare an interest, because I am a manufacturer and, as a manufacturer, I am totally against this premium which is to be paid to manufacturers.

    701
    First, I am against the principle of selectivity in general. I think that it is a feature of the Bill which has produced all the difficulties and all the anomalies. We shall have some limited time, I suppose, in this curtailed debate in which to point out a few of the manifold anomalies which have arisen.
    Like many of my hon. Friends and hon. Members opposite, I should have preferred a payroll tax, as my hon. Friend the Member for Wycombe (Mr. John Hall) said. In my opinion, such a payroll tax should have been a percentage tax on the payroll and should have been universally applied. In this way the burden of the tax would be spread in proportion to the amount of labour and the administrative cost on salaries, and so on. This would have done away with the anomalies which will arise over the part-time workers, the disabled workers and the very low-paid workers who may become unemployed in the distributive trade. It would immediately have ironed out many of the anomalies.
    The Government have gone one step further even than was necessary for their purpose., for they have made it not merely selective between the services and the manufacturing industries; they have created three different categories, one of which we are discussing under the Clause. This has unduly complicated what is already a bad idea and has introduced a further series of anomalies over and above those which would in any case have been entailed in the selective principle.
    In the Financial Memorandum to the Bill the Government suggest, to my mind extremely optimistically, that the large number of appeals which they have invited by having this triple selection process will cost the nation only £10,000 in the remuneration and allowances of the tribunals and those required to give evidence to the tribunals which will deal with the appeals. I think that hundreds of cases will arise solely out of this one principle, without taking into account the problem of the major selection between distribution and manufacture.
    Many of the points which I had intended to make have already been made by my hon. Friends and by the hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes). But one or two comments
    702
    remain to be made which underline the inability of the Government to make up their mind as to what they wish to achieve. Like so many of their Measures, the actions taken in connection with a particular problem are mutually incompatible. On the one hand, we are told by the Government that manufacturing is such a virtuous occupation, irrespective of what may be made or foisted on the public by certain types of manufacturer, that it deserves to receive 7s. 6d. a week for every male employee. On the other hand, a sum of £150 million will have to be paid by manufacturing industry between September when the tax comes into operation and the first repayment at the end of February.
    We have been told that the entire country will pay between these dates £500 million. I assume that those in manufacturing industry—those receiving the premium—account for about one-third of this. That is a reasonable estimate, although it may not be absolutely accurate. We have also been told that this sum may not be borrowed from the bank.
    As a result, a very serious situation will arise in the autumn. The very people the Government wish to encourage, and who are supposed to earn overseas the living of the nation, will have to find large sums of cash; they will ultimately receive it back, but in the meantime they will have to finance it without assistance from the banks. If the Government want to take purchasing power out of the economy in the present crisis, do they wish to do it at this rate and do they wish to apply it to the very people they say they wish to encourage? This seems to me a complete contradiction of what the Government are trying to achieve.
    My hon. Friend the Member for Wycombe has pointed to the effect which this will have on the distributive customer of the manufacturer, and I should like briefly to confirm everything that he said. Perhaps encouraged by an article by one of the financial editors of a major newspaper, maintaining that the Government were intentionally transferring large chunks of profit from distribution into manufacturing by this tax, the retail customers have been putting pressure on the manufacturers and are still doing so —on the basis that the manufacturers who are to receive the benefit of the

    703
    premium should be prepared to hand over all or part of it to the distributors who will bear the brunt of the tax. I have some sympathy with the view of the distributors, but I maintain that there is no basis in this demand as a manufacturer.
    My own company is roughly typical of a number of companies in that the tax will be worth about ½ per cent. on the turnover. This must vary between one company and another, depending on the balance between raw materials and labour, but that is a rough estimate for manufacturing companies.
    We have also estimated in my company—and many others have done the same—that by the end of one year, the ½per cent. will have totally disappeared, particularly in my industry where wages are to some extent linked with cost-of-living increases bearing in mind the increased cost of all the services which we need. We believe that this small subsidy will have disappeared into the maw of inflation by the end of one year. That is all the use it is to manufacturers.
    I could go through the many anomalies produced by the Bill and the injustice between one type of enterprise and another and one individual and another. There are over 350 Amendments and 17 new Clauses down on the Paper. There is criticism from all sides of the tax, but the Government appear to be determined to bring it in. Looking at all these Amendments, which we shall never discuss, I wonder whether any sort of plastic surgery can ever repair the physical defects of this moon calf.
    6.30 p.m.
    Sir D. Glover: When the Chancellor of the Exchequer introduced the tax, it was a silly, ill-thought-out, and nonsensical tax. After the Prime Minister's statement this afternoon, it is criminal lunacy to continue with it. After that statement I asked the Prime Minister a detailed question about unemployment. In a masterly piece of double talk, for which the right hon. Gentleman is famous, he wriggled and squirmed, but eventually said that the effect of the measures about which he told us would be to raise unemployment to between 1½ per cent. and 2 per cent., which he, as the Prime Minister, and the Government would accept.
    704
    In his long-winded statement the Prime Minister talked about shaking people out of jobs. He was not talking about shaking people out of jobs in service industries. He talked about shaking people out of manufacturing industries to go into the export trade. Yet within an hour we are debating an Amendment to a Clause which will give people a premium of 7s. 6d. for not doing what the Government ask them to do. It is criminal irrelevancy to proceed with the Bill immediately after the Prime Minister's statement.
    It is impossible to decide what is manufacturing and what is distribution. Most hon. Members opposite representing mining constituencies would be horrified to think that the coalmining industry is a distributive industry. Yet nobody over the last 2 million years has invented coal. All that a miner does is to move it from A to B. Coalmining is a distributive industry. The miner breaks it up from large lumps into small lumps. He puts it on to a trolley. The coal is moved from one place to another. It eventually reaches a factory, a household or a furnace. This is not manufacturing. This is distribution.
    Is the real thesis of the Government that, if anybody wants to buy a car, there is so much virtue in it that they had better go to Coventry or to Halewood? Is not a motor car showroom anywhere in the country just part of the manufacturing chain involved in turning rough metal into cars?
    Even the Government know that they were very ill-advised to introduce the tax in the first place. They have not had a friend anywhere in the House of Commons or in the country, particularly for the premium we are now discussing. As it is completely not only irrelevant, but actually damaging, to the proposals the Government made this afternoon, could not the Chief Secretary, even at this late stage, save Parliament from wasting its time and withdraw the Bill?
    Mr. John Biffen: The Bill is very much the product of the fact that this is an Administration composed of frustrated management consultants. Almost from the start, but certainly from the end of 1964, we have been presented with a series of measures designed to have a selective impact upon the economy and produce certain pre-ordained results. The

    705
    fact that the results which are produced are rarely those which are pre-ordained has in no way deterred the Government.
    The Bill is the latest in an unhappy series of Measures which we have been asked to endorse. The Amendment would have the effect of removing a highly discriminatory part of the tax by ensuring that no premiums were repaid. I believe that it is not a logical argument following on from that that the money should remain with the Government. I believe that this is a clear case where it can be demonstrated that when we call for lower taxes we can think of some areas of public expenditure which can be cut.
    I want to examine some of the arguments about the presumed consequences of this kind of legislation. It has been argued that too many people are employed in service industries and that a tax of this kind will have some effect upon the redeployment of labour. I very much doubt this. In fairness to the Chancellor, I acknowledge that he himself has never endorsed the argument that the tax will lead to redeployment of labour. However this is not true of all members of the Administration. I recall, though I certainly cannot detail, an occasion when the Parliamentary Secretary to the Ministry of Power said that one of the consequences of the Bill, particularly the use of the premium, would be redeployment of labour.
    Let us not look to the publications of various Left-wing academic economists which may inspire the Government. We should, instead, think of our experience in our constituencies. For many of the service industries which will be hit by the tax, labour is a major element in their total cost. A gentleman's hairdresser cannot replace labour by the extensive use of plant or capital. Yet in a great deal of heavy engineering, the steel industry and the chemical industry, the labour element is a comparatively small part of the overall cost. Much more importance is attached to having the plant operating 24 hours a day, six or seven days a week.
    Therefore, we are not surprised when we are told, for example, by Mr. Allen, in the Sunday Times, that it is in British manufacturing industry that a great deal of under-employment takes place. I do not regard this as necessarily a blazing indictment of British industry.
    706
    I suspect that the same is true of other industrial countries in the Western world. I do not draw the conclusion that we are noticeably worse than anybody else.
    In view of the high labour element in the overall cost, one would expect to find a greater concern about the profitable employment of labour in the distributive trades than in manufacturing industry. Yet the purpose of the Bill is to give a premium to manufacturing industry. This is a ham-handed way of trying to ensure that manufacturing industry has £133 million which it might not otherwise have. The alternative of lower taxation is eminently to be preferred.
    I therefore hope that when we vote—alas, under the Guillotine; I wish that the debate could be extended—we shall take this opportunity of repudiating the kind of nonsense which is leading to a welfare state for industry under the guidance of the Chief Secretary to the Treasury, a policy which, in the long run, I believe, cannot but be calamitous for our economic performance.
    Mr. Alfred Morris: I do not want to follow the hon. Member for Ormskirk (Sir D. Glover), who, in my view, degraded this discussion with his talk of "criminal lunacy". The Opposition would have done better to have indulged in reasoned arguments instead of vituperative abuse. I am sure that my right hon. Friend the Chief Secretary wants to hear a reasonable statement about the anomalies in the application of the tax and will be entirely unimpressed by abuse.
    The most serious anomaly is that the Standard Industrial Classification is to be used as the basis for applying the tax. I hope that my right hon. Friend will not try to defend over the long term the use of this standard for a purpose for which it was never intended. It may regard it as a useful ad hoc arrangement, but I trust that when he replies to the debate he will indicate that it is not the Government's intention to stick slavishly and rigorously to the Standard Industrial Classification.
    The second anomaly is that there are manpower-hoarding manufacturers who will benefit financially and that there are distributive enterprises who are short of manpower and who will feel themselves to be very seriously penalised. I have

    707
    said on another occasion that I am particularly concerned about the possibility that certain employers in the distributive trades will discharge part-time employees and add to the hours of work of their fulltime employees.
    There has been considerable stress on the position of mothers whose children have grown up and who can work between 10 and 20 hours a week in distribution. I am also deeply concerned about the position of the elderly person. I commend to the Chief Secretary a paper presented at this year's national conference of the National Association for Mental Health, concerning mental ill-health among elderly people who go from full-time employment into full-time retirement.
    Professor Ferguson Anderson, of the University of Glasgow, a very distinguished authority, has demonstrated conclusively that it is conducive to mental ill-health among elderly people if they go from full-time employment into fulltime retirement. If it has to be given to anyone, I should like to see the premium given in respect of elderly people in part-time employment.
    I hope, also, that the Chief Secretary will make it abundantly clear when he replies that manufacture is not virtue and that distribution is not wicked. There is a growing tendency now to regard manufacturing as virtuous and distribution as wicked, manufacturing as productive and distribution as wasteful. I should have thought that every hon. Member could accept that distribution is as important to manufacture as manufacture is to distribution.
    I hope that those who follow me in the debate will not degrade the argument as it was degraded by hon. Members opposite, and that we shall have a serious and fair discussion about the anomalies in the tax.
    Mr. W. R. Rees-Davies: I am sure that after listening for a short while the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) will not think that I degrade the debate by what I say. I have found it difficult to achieve, but I have tried to take a bipartisan approach to the general problems of this subject. I did so yesterday on the Report stage of the Industrial Develop-
    708
    ment Bill, and I propose to follow the same line today.
    The hon. Gentleman talked about degrading the debate. I wonder whether I could have his attention for a moment. I hope that he is not about to leave us now, immediately after he has spoken.
    The first thing that I noticed about the Selective Employment Tax was that whereas a brick-maker will get a premium of 7s. 6d. for every brick-maker that he employs in the making of bricks, 25s. will be paid in respect of every bricklayer.
    6.45 p.m.
    The Government want to hand industry £133 million, having taken several hundreds of millions of pounds from everybody else, particularly the distributive industries. The difficulty that the Government faced straight away was the question, "What is manufacturing industry, and, indeed, what is industry itself?" After a great deal of trouble, we put horticulture and agriculture into the neutral belt. Now the Government are beginning to recognise that they have made a serious blunder over the tourist industry, particularly the hotel and catering industry, and that they must now try to reverse the situation.
    The matter does not end there. A particular anomaly that must be removed is the one with which the name of Ambrose Congreve is associated. I do not know this gentleman, but I know his company. It is an extraordinary state of affairs when one of the companies that sell "know-how" and the services of great technicians throughout the world will have to carry a burden of over £100,000, I understand, in respect of its staff, whereas if the staff who are seconded were actually working for the companies to which they are seconded, there would be a rebate in respect of them. I specifically put this as a question to the Chief Secretary. What will he do about the Ambrose Congreve case? This is a company supplying from its own resources many of our great technicians and experts.
    The Chairman: Order. The point that the hon. Member raises does not arise on this Amendment. He seems to be pleading for an exemption. There are several Amendments later dealing with exemptions, and I do not think that his present argument is relevant to this Amendment.
    Mr. Rees-Davies: With respect, Sir Eric, it goes right to the point. I am putting it this way. This company of technicians will at present have to pay the Selective Employment Tax. If the technicians were transferred to industry, not only would they not be subject to the tax., but the industry would get the rebate.
    This is an extraordinary situation. The Government should remove the rebate from industry entirely and not apply it at all. In that event, one would not get the absurd situation that if one employed one's own technician in industry one received a rebate whereas if one obtained him on contract one did not.
    This was an aside to my general argument. I do not want to canvass any of the arguments that have gone before, but I take the view, as do others, that this amount of money should not be repaid to industry.
    I draw the attention of the Chief Secretary to the present position of the hotel and catering industry, in the light of the fact that £133 million, much of which it will have paid, will be given to manufacturing industry. It has never been suggested, and it could not be, that a single person in the hotel and catering industry will leave it and go into manufacturing industry. It cannot be suggested that the major-domos, the head waiters, the waiters or other members of hotel and catering staff, which is at present grossly undermanned, will leave the industry.
    I have figures, which I shall pass to the Chief Secretary later in their entirety, which came in today and show the up-to-date position of Grand Metropolitan Hotels. What is the picture here? This hotel group will carry a burden of £225,000 per annum on Selective Employment Tax. That is the direct figure in respect of the group.
    I come now to the impact which this will have together with the withdrawal of investment allowances. In 1964, investment allowances were available in respect of capital expenditure on the Europa Hotel, Grosvenor Square of £299,000—call it £300,000—and with Income Tax at 8s. 3d. in the £ and Profits Tax at 15 per cent. those allowances were worth £170,000 in cash. With Corporation Tax at 40 per cent. today, they would have been worth £120,000 in cash. There has
    710
    been an increase in building costs of 41 per cent. since then, so that the figure would have been higher.
    The direct cost of the S.E.T. in respect of the staff operating in the hotel is £16,000 a year. Last night, 432 persons were sleeping in the Europa Hotel, of whom 371–86 per cent.—were from overseas. Those are the figures today which have just come to me from the group.
    My purpose in quoting those figures is to show the effect of the imposition of this tax coupled with the removal of the investment allowances. We have reached a point when a real growth industry, albeit not manufacturing, is singled out for a form of treatment which, by contrast, is so unfair that there will inevitably be very serious consequences.
    The Chairman: Order. The hon. Gentleman still appears to be arguing for an exemption, which does not arise on this Amendment.
    Mr. Rees-Davies: With respect, Sir Eric, I submit that the argument does apply. The reason for the strong and bitter feeling in the hotel industry is the same as was felt by people in agriculture until they got out of it, that there is no reason at all why we should pay £133,000 back to manufacturing at this stage, giving an enormous benefit to manufacturing when, as we all know, the hotel and catering industry, although not manufacturing, is the principal growth industry today, bringing the greatest benefit to the country.
    That is the way I use the argument. It is a prestige argument. I have used figures to illustrate it, but it is a prestige argument. There is intense feeling throughout the hotel and catering industry at being singled out to be clobbered by the Government and having to pay a large part of this tax which is to be refunded for the benefit of another industry which it regards as considerably less efficient than itself.
    This afternoon, the Prime Minister intimated that suggestions were coming forward for some kind of loan arrangements for the hotel and catering industry. If it were clearly stated at the Dispatch Box that there would be some concrete benefit to the industry to offset the substantial impost and rebate which it will have to

    711
    meet—a discrimination which I strongly oppose—that might be some sort of defence. But I understand that this is not to be so and that the scheme being put up is merely a scheme to lend money at Exchequer rates of interest, which will be of no real benefit. We shall be back in the same position as we were before.
    I shall not pursue that aspect of the matter further, Sir Eric, because I can quite see that if I did so I should be going wide of the Amendment.
    The Chairman: The hon. Gentleman is already wide of the Amendment.
    Mr. Rees-Davies: I saw that you were beginning to sidle in the Chair, Sir Eric, with a view to rising to express that Ruling. With respect, I share your view and I shall not get involved further.
    I shall not canvass the other arguments which have been most ably put from this side of the Committee. The country as a whole would be willing to accept either a poll tax or some kind of payroll tax, but, whether on grounds of economic principle or on grounds of general dislike of discrimination, everyone I have met inside the House and almost everyone ontside takes the view that we should remove the selective element in the tax. For these reasons, we should not in any circumstances permit manufacturing industry to have a rebate.
    Mr. John Peyton: I shall not take long, and neither shall I follow my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) in an argument which does not seem to me to be appropriate to the Amendment. My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) was absolutely on the mark when he stressed that we are here confronted with a proposal actually to return money from the Exchequer to various selected sections of industry but not a single person in the House of Commons favours the idea. Normally, we all have our views about how worth while and important it is to extract money from the Treasury and to secure concessions. We always find it very difficult. But here we have a unique situation when no one has a word to say for this fantastic proposal.
    712
    Now a word of warm though rather unaccustomed sympathy for the Chief Secretary to the Treasury. The right hon. Gentleman is incredibly unlucky. Every time the Government has a rotten case, he is put up at the Despatch Box to defend it. Very often, my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), with far greater eloquence than I can command, has a good deal to say in criticising his answers. On this occasion, I hope that my hon. Friend the Member for Finchley (Mrs. Thatcher) will take heart from the debate and do nothing of the kind. It would be very unfair to criticise the right hon. Gentleman. He cannot possibly put forward a decent case beta use there is not one. I hope that my hon. Friend will temper justice with mercy.
    I was absolutely astounded at the intervention we had from the hon. Memher for Manchester, Wythenshawe (Mr. Alfred Morris). He rebuked my hon. Friend the Member for Ormskirk (Sir D. Glover) for describing these proposals as criminal lunacy. Presumably, if the word "criminal" had been taken out, the hon. Gentleman would not have objected and our criticism would have ceased to be vituperative.
    It cannot be too often or too firmly stated that to adopt these Kaldor experiments is madness. With the extremely delicate and complex economy which we have in this country, it is madness to seize upon this weird counsellor who, wherever he has gone. in very much simpler circumstances, has spread a trail of ruin among people who have accepted his advice. Now he comes here and. with disastrous effect, wishes this sort of thing upon us. All Ministers are left to say, publicly and privately, is that we shall have to let the tax work out in practice, we can refine it in the fire of experience, and so on. Inevitably, there will be immense losses, contortions and distortions inflicted upon industry in a most wanton way.
    7.0 p.m.
    We are greatly curtailed in time, but this is the one Amendment which offers a wide oportunity to consider the ridiculous line dividing those who have premiums and those who do not. My right hon. and learned Friend the Member for Chertsey (Sir L. Heald) spoke of the ludicrous position of publishers who do not

    713
    do their own printing, but who get the premium. This is utterly indefensible if one compares it with the unhappy lot of the film studio which is sunk without trace. It seems a gratuitous slap in the face to the film industry. I hope that the right hon. Gentleman will be able to give us some cheer.
    Let us take the case of a mixer truck which carries ready-mixed concrete and continues the process of manufacture while in transit and right on to the site. Is the driver regarded as in manufacturing or transport? I have not the slightest idea. Whichever side of the line he happens to be dropped on, it will be just luck or bad luck. There cannot be a really well-founded argument that would be the official justification for putting the man on one side or the other. If he is treated as transport, will he be able to claim that he is taking part in a manufacturing operation? One would say that this was disastrously unlikely. Taxation should not be made the field for such processes of lottery.
    As I said, I am profoundly sorry for the right hon. Gentleman in that he has to present a case when he knows damned well there is not one.
    Mr. W. T. Williams: You may not be surprised to discover, Mr. Jennings, that my real interest is not in this Amendment and that in rising to speak on it my purpose is only obliquely directed to the Amendment itself. I should have preferred to deal with a later Amendment in my name, but I am prevented by the procedure which has been adopted from speaking about the matters that I want to raise, namely, those relating to milk processing and distribution. That being so, I must do the best I can to raise the matters in which I am interested within the terms of order on this Amendment.
    It is clear that if the Government had chosen to introduce such a form of employment tax as is proposed by the Amendment it would have been possible to have spread the tax much more widely. It would have involved a good deal less administrative energy and expenditure, and it would have been possible by that process to have reduced the tax very considerably in respect of each employer.
    If the Government had taxed every employer, instead of making the tax 25s.
    714
    and comparable amounts for other employees in the way in which the tax is now to be raised, and then redistributed it to some favoured employers by means of the premium, it would have been possible to make the tax a good deal gentler on all employers, including service employers.
    This Amendment would not have met the wishes of those who think as I do that the tax in its incidence upon the distributive trade in unduly heavy. We think that, bearing, as it will in particular, upon that part of the distributive trade which is concerned with the distribution of milk and other essential foodstuffs, it will impose on it so heavy a burden as to cause considerable difficulty, and in some cases possibly disaster, to those engaged in the form of distribution, to say nothing of the increase it will cause in the cost of living—
    The Temporary Chairman (Mr. J. C. Jennings): Order. The hon. and learned Gentleman is being very skilful, but he cannot, under this Amendment, argue even in general terms for exemption. He must restrict himself to the narrow confines of the Amendment.
    Mr. Williams: With the greatest possible respect, Mr. Jennings, I was not arguing for discrimination in favour of the distributive trade. I was merely saying that if the Government had chosen what the Opposition are inviting them to do in this Amendment, it would have been possible not to have laid as great a burden on the distributive industry as they have done. I think that that is entirely within order.
    Since the Government have not chosen to follow the principle of taxation proposed by the Amendment, it is to me and to those who agree with my point of view, a matter to be deplored. However, it may well be that the Government can find a way out of their dilemma and my dilemma if it is possible for the Chief Secretary to say that the provisions laid down by the Government in the Clause are not by any means final, that the Government will hear representations from those of us who think that the form in which the tax is being applied and the premium is being repaid has been too arbitrarily drawn, and that if those who think as I do are prepared to support the Government against the Opposition in their Amendment, it will

    715
    be possible, even if not now, then very soon for the Government to look again at the Standard Industrial Classification and include some of the industries in which I and those of my hon. Friends who think like me are particularly interested.
    If I dare get this in before you, Mr. Jennings, rise to your feet—
    The Temporary Chairman: Order. The hon. and learned Gentleman is still being very skilful. In general terms and by innuendo he is making out a special case. He must confine himself to the general principle of the selective employment premium. So I am stopping him before he completes his sentence beginning "If I dare get this in".
    Mr. Williams: Very well, Mr. Jennings. I am flattered by your praise. It is the first time that I have been called skilful by the Chair.
    I will abandon completely the point that I was about to make, and substitute for it this one which, I think, is in order. I urge the Government to deserve the support of those who think as I do, and accept it, in the recognition that we have reservations, about which we cannot speak and be in order, but about which the Government must be well aware and to which they should have regard.
    Mr. Diamond: I am in difficulty the moment I rise because of a point of order. I am not addressing you on a point of order, Mr. Jennings, but that is the difficulty before me. My hon. and learned Friend the Member for Warrington (Mr. W. T. Williams) has addressed a suggestion to me which I understand full well. Indeed, you were good enough to say that you understood full well. I get the burden of my hon. and learned Friend's message. But, as you pointed out, in effect we are discussing that part of the Clause dealing exclusively with the premium. It would, therefore, be wrong for me to say, even with respect, that your Ruling is quite right, because, obviously, it does not need saying.
    My hon. and learned Friend was referring, as you indicated, to the second part of the Clause which is not affected by the Amendment. It is thus impossible for me to reply to that part of his speech. I merely make it clear to him that,
    716
    anxious though I would be in other circumstances, and on a different Amendment, or on the Question "That the Clause stand part of the Bill", to deal with what he has said, I must now come to the Amendment.
    What is at issue is the premium. Numerous hon. Members have drawn attention to anomalies that they say exist as between different categories and areas which are no part of the Amendment. Although I could easily answer them, I cannot. In considering the Amendment, the right hon. Member for Enfield, West (Mr. Iain Macleod) said that 66 Amendments had been chosen and he drew a conclusion in relation to the guillotine Motion. I will not waste time on the point except to say that 66 Amendments were chosen after the guillotine Motion was passed by the House and nobody knows what the Chairman would have selected had there been no Guillotine. Indeed, one wonders why a Chairman ever selects when there is a Guillotine.
    The Temporary Chairman: Order. I hope that no criticism of the Chairman's choice is being made.
    Mr. Diamond: I am incapable of making such a suggestion, Mr. Jennings. I was casting my mind back to the time when I had to make selections and I was putting myself in a kind of soliloquy in wondering what I would do in the Chair if there were a guillotine Motion, because, of course, it is for the House to decide its priorities when a guillotine Motion has been passed.
    My right hon. Friend the Chancellor of the Exchequer would have been here himself to deal with the Amendment were he not on his way to Bonn. The proposals in the Bill—including the premium —were, of course, fully taken into acount and were part of the economic background against which my right hon. Friend the Prime Minister's statement was made. There is no question, therefore, of suggesting that, because of the statement, we should not go on with this, or should do something else. These proposals are part of the economic background against which the statement was made and were fully taken into account.
    I want to explain why we propose a premium for manufacturing. Of course, the Government are not saying that

    717
    manufacturing is a virtue and distribution is a vice. The premium is merely a fiscal measure to encourage a faster rate of growth in manufacturing in order to adjust an existing imbalance. It is not an attempt by the Government to make a qualitative judgment or to assess the social values of one or another.
    We say that the existing state of affairs is wrong. It is one under which, by fiscal processes to which every Government have contributed, there has been an undue increase in the rate of labour joining the service industries and an inadequate increases, in the labour force joining manufacture. That results from a system of taxation under which the products of manufacture—it does not matter at which point of time they are taxed—are taxed heavily whereas the products of services are not taxed, or are not taxed nearly as heavily.
    A Whole host of services are totally unrelated to the products of manufacture. Such services as banking, hairdressing, cinemas and other entertainment, for example, have nothing whatever to do with manufacturing or with production in that sense. None of these services is taxed or taxed at the same weight as the products of manufacturing. We are seeking, therefore, primarily to adjust the existing imbalance and if we do not accept that there is an imbalance we do not proceed on the same argument. It is the imbalance that we are trying to adjust.
    An alternative suggestion, which, I understand, would be acceptable to a large number of hon. and right hon. Members opposite, would be a payroll tax levied equally on the wage bills of every employer. That would achieve nothing except an increase in costs and prices. It would be passed on immediately. It would have no differential effect, which is what we are trying to achieve. It would be the same as an all round increase in wages in its economic effect. We are trying to achieve a differential effect.
    7.15 p.m.
    Mr. John Tilney: Does the right hon. Gentleman then want a differential against merchant exporters?
    Mr. Diamond: The hon. Gentleman has asked a valid point and the answer is, "yes". He thought that the answer would be "no". But the answer must be that, if one is levying a tax on services, and one of those services is a merchant exporter who may be—to give the greatest weight to the hon. Gentleman's argument—devoting 100 per cent. of his time to exporting, the answer is still, "yes".
    Here, we are differentiating between manufacture and the services and the hon. Gentleman knows as well as I do that we cannot encourage only exporting activities by either services or manufacturing. What the right hon. Member for Enfield, West, said about this is right. We do not attempt to say that the premium should be exclusively directed to helping exports because no Government could bring forward such a tax having regard to our international obligations.
    Our main reason for introducing this system is to correct an imbalance—and we are still only going a small part of the way. When the Bill becomes law, the position will still be that the products of manufacture are taxed very much more heavily than are the services. We will still not have put the matter right by anything like the full amount that we ought to.
    We shall watch the effect of the tax. If it is effective, as we believe that it will be, we shall consider whether it may not be possible to go further in the same direction in due course. It would be astonishing if it did not have the kind of remedial effect that we are hoping for, having regard to the deterrent effect that existing tax levels have had on increases in manpower in manufacturing, which has held back production and is at the moment holding back export orders.
    Many hon. Members have referred to "labour hoarding". It is a pity that we have not agreed statistics about this. It is a vague concept about which it would be impossible to have precise statistics. The labour hoarder would not be likely to fill in a form saying, "Yes, I am a labour hoarder; I am hoarding three men and two women". We are not likely to get the facts that way.

    719
    I have been asked to consider what my right hon. Friend said in his Budget statement about hoarding. He said:
    " Despite some hoarding and waste of manpower it is still true that the growth of manufacturing output has been seriously impeded by labour shortages; and this has hampered the growth of productivity. If manpower can be saved in the service industries, whether through a slower rate of growth in demand for services or through greater economy of manpower, extra labour might well become available for manufacturing, giving it greater scope for growth. It would be helpful to have a tax system which recognised this."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 727, c. 1454.]
    And he went on to demonstrate how a payroll tax would not achieve this and the logic of his argument was this kind of tax.
    I now come to hoarding more specifically. I do not know what hon. Members opposite have in mind when they talk about hoarding. We are all at one in wanting to avoid labour being used any less efficiently than is possible. But the hoarding which I think some hon. Members mean and which we have in mind and which my right hon. Friend had in mind to some extent is the kind of misuse of labour, its under-use, which can perhaps more accurately be described as overmanning.
    Overmanning stems, as we all know, from practices which are—I will not say common—but in which members of both sides of industry participate. We can all think of one or two industries where it is alleged that there is serious overmanning. That overmanning is the result of the pressures of restrictive practices on both sides of industry rather than any other policy directed to seasonal economic activity or anything of that kind. That overmanning will not be affected or reduced by this kind of tax. It needs a different approach and it is the Government's responsibility to supply that approach.
    But the other kind of overmanning, which is what has been meant by some hon. Members, when a manufacturer deliberately holds more men than he needs, will, it is said, be encouraged by the premium. It is said that the manufacturer will be even more lax or miserly in his retention of labour. I hope that I can say with courtesy that I just do not believe it.
    720
    The hon. Member for Wycombe (Mr. John Hall) asked how long it was since I was on the shop floor. I do not know how long it was since he was on the shop floor and I do not know whether I have spent more hours than he has on the shop floor. I will give my experience. Since being a Minister, of course, I have not been connected with the factories and many commercial interests with which up to that time I had been connected, but as a Minister I have spoken to manufacturers and I have been to many cities where chambers of commerce have been good enough to entertain me and we have exchanged views.
    I have not come across one manufacturer who has said, "I pay an average of £20 or £21 a week to each man, and if you will give me another 7s. 6d. a week, I shall be only too glad to hold on to more men than I need". I do not know of a single manufacturer who, paying £11 to each woman, has said that if he is given 3s. 9d. a week in respect of each women he employs he will hold on to them for longer than he needs them. Yet this is the argument which has been advanced by many hon. Members. They say that this plussage of 3s. 9d. for a woman with an average wage of about £11 will induce employers not only to hold on to excessive woman power, but increase it. I do not accept that argument.
    Mr. John Hall: The right hon. Gentleman is misrepresenting the arguments. No one suggests that because of an extra 7s. 6d. or 3s. 9d., a manufacturer will hold on to one additional person, but, with premiums on the total staff employed in the factory, he will be able to hold on to a percentage of employees whom he would otherwise get rid of rather more quickly because the cost will be covered by the premium.
    Mr. Diamond: My cost accounting experience is wider than the hon. Gentleman's. Cost accounting would show up that sort of thing in a fortnight. We are talking about proportions and there is no firm which could say that it would employ another dozen men, which at £20 a week would amount to £240, just because of the premium—because of the 7s. 6d. against that.
    The whole discussion is on the proportion. All manufacturers' costs are made up of proportions and in cost

    721
    accounting every item in production costs is reduced to a proportion. A manufacturer would see immediately what the proportion of cost was and I have the greatest difficulty in believing that any manufacturer would be induced by the premium to hoard labour in any sense which would be affected by these provisions.
    Mr. A. P. Costain: Is not the right hon. Gentleman forgetting the 49/50 balance and its effect on people eligible for premiums? The employer could keep on half-a-dozen men in order to qualify the whole of the staff for the premium.
    Mr. Diamond: That intervention shows why it is just as well to allow whoever is replying to a debate to do so, for I was just coming to that issue, which was raised by the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). The hon. and learned Gentleman said that the main case against the premium would be not in its overall effect but in its marginal effect and that, where there was a 49/51 case, there could be an inducement to an employer so to adjust as to get the benefit of the percentage. I understand the argument, which is valid. Because it is, the Government considered the figures very carefully before making these proposals.
    I do not want to bother the hon. and learned Gentleman with all figures, but I will give some examples to demonstrate that although the 49/51 per cent. consideration may exist in an individual case—and, of course, I could not say that it did not exist in any individual case—it is unlikely to exist in more than a handful of examples and that overall the figures are such as completely to eliminate this argument from our worries.
    In any of the 14 categories there is a vast difference between the proportion qualifying and the proportion not qualifying. In food, drink and tobacco, 494,000 qualify and 214,000, less than one-third of the total, do not qualify; in chemicals, 276,000 qualify and 184,000 do not; in metal manufacture, 461,000 qualify and 141,000 do not.
    I will send the hon. and learned Gentleman all of these figures with the greatest pleasure, but he will see that there is not one category in all 14 industrial groups in which the numbers qualifying are not
    722
    substantially in excess of those not qualifying. Therefore, overall there is no such problem, although, as I admit, there may be individual cases.
    Mr. Fletcher-Cooke: Those were global figures, which I accept, but it is the individual site figures which matter. Until the right hon. Gentleman can satisfy me on the individual sites, my withers will be quite unwrung by the global figures.
    Mr. Diamond: The hon. and learned Gentleman approaches all these arguments with objectivity and intelligence and he cannot say that his withers are unwrung, for he is just as much impressed by the argument as I am. The deduction to be drawn from the figures is that the likelihood is that there will be vast numbers of firms within each Order which will present no problem at all. He is saying that there may be some which present a problem. There has been one. We have invited correspondence and complaints, but we have come across only one.
    7.30 p.m.
    This is not conclusive evidence, but it is an indication, in that one would have thought that if there were many people falling into this category there would have been complaints and letters. As every hon. Member knows there has been an enormous number of letters, but only one complaining about this. If the anomaly which the hon. and learned Gentleman the Member for Darwen (Mr. Fletcher-Cooke) has in mind is the anomaly relating to the establishment, which comes later, then we would be only too glad to deal with it later. There are ample methods in the Bill, and Amendments proposed to be inserted, if the Committee agrees, which will get rid of this kind of anomaly.
    I have given the reason why we thought it right to have a differential tax in terms of the premium, and I have indicated why we think that it will assist, to some extent, the existing imbalance, and why it will have a great effect, we hope, on our manufacturing industry, which is a source of increasing productivity and exports. As the Committee knows, 85 per cent. of our exports are manufactured goods or, putting it the other way round, 25 per cent. of what we manufacture is exported, but it is only 25 per cent. because a large percentage of what is manufactured is also import substitutes. An import substitute

    723
    serves just as valuable a purpose as it does as an export. I have indicated why we think it is valuable, and I have tried to demonstrate that we shall keep the whole of the Bill under review.
    No one would claim, before a new tax is implemented, that one knows what its final effects are to be. What is certainly the case is that all indications are that this kind of righting of the imbalance is overdue and will serve a useful purpose, and that the anomalies have nothing to do with the premium, but with the classification, which is a different issue. I hope that the Committee will not feel it necessary to press this matter to a Division.
    Mrs. Margaret Thatcher: Although this is an important Amendment, I will not detain the Committee long because my right hon. and hon. Friends are anxious to get on with succeeding Amendments.
    The Chief Secretary had a bad case and he made the worst of it. Let us look at what this method of paying the premiums does. I note that the Chief Secretary said that his proposals are part of the economic background against which the Prime Minister made his statement this afternoon. Let us examine that. The result of paying premiums in the way the Bill proposes is to keep the inefficient person in business.
    The premiums are given regardless of efficiency and that means that the efficient manufacturers neither need them nor want them. They do not want help from the Government, they want an absence of hindrance. Their own ability will enable them to go ahead. The policy of the Chief Secretary and the Government ought to be to encourage the efficient because they will grow and produce goods at the lowest prices and export them. The Government should discourage the inefficient. If this is done, the inefficient firms will yield up their labour to the growing industries, but if one does what the Chief Secretary is suggesting one will have competition for labour between the efficient and the inefficient which will result in bringing up the price of labour.
    One will be creating the very situation which the Prime Minister's statement was meant to reduce. In one day we have
    724
    had the Chief Secretary creating a basically inflationary position over wages, while earlier the Prime Minister had to come to the House with a very severe statement with the object of reducing inflation. It is crazy to have, in the same day, policies going in diametrically opposite directions. If the Chief Secretary pays premiums in the way in which it is proposed in the Bill he knows that in the beginning of January and February he will be pumping back premiums in to the economy when there is a wages and prices standstill. Again, there are diametrically opposed policies, one to reduce inflation and the other to create it, by injecting extra money when there is a control operating to stop inflation. This is absolutely stupid.
    I have an administrative point to raise. The Chief Secretary said that classification is a different problem, but the whole of his premiums are based on classification. What he is really doing is using machinery for a purpose for which it was never designed. It is as absurd to use the Standard Industrial Classification for the purpose of the selective employment payments as it would be to use a clothes washing machine for washing up crockery. It is every bit as absurd, and the Chief Secretary knows it.
    Mr. Diamond Mr. Diamond rose—
    Mrs. Thatcher: The right hon. Gentleman is not so good on clothes washing and dish washing machines as I am, so he had better sit down. But I will give way to him if he wants me to.
    Mr. Diamond: I am terrified. I was only about to make a simple point that this Amendment does not deal with the classification.
    Mrs. Thatcher: It deals with one of the consequences which flow from the classification. The Amendment will reduce the number of groups from three to two. Instead of getting the penalty plus the rebate plus the premiums there would only be the penalty plus the rebate. This would considerably reduce administrative costs. It has already been pointed out that the administrative costs of the Bill as shown in the Memorandum are nearly £1½ million—which need not be spent.
    I have one final point. What in the world are the Government doing handing

    725
    out £133 million which no one wants? If they have it to spare I will have it and place it much better than the Chief Secretary could. It is absurd to have a statement to take money out of the economy and yet to be pumping in £133 million, which we do not want. I hope that hon. Members opposite who have spoken
    against the premium in its present form will show their disgust by voting with us in the Lobby.
    Question put, That the words proposed to be left out stand part of the Clause:—
    The Committee divided: Ayes 295, Noes 234.

    Paget, R. T.

    Rowland, E. (Cardiff, N.)

    Varley, Eric G.

    Palmer, Arthur

    Ryan, John

    Wainwright, Edwin (Dearne Valley)

    Pannell, Rt. Hn. Charles

    Shaw, Arnold (Ilford, S.)

    Walden, Brian (All Saints)

    Park, Trevor

    Sheldon, Robert

    Walker, Harold (Doncaster)

    Parkyn, Brian (Bedford)

    Shinwell, Rt. Hn. E.

    Wallace, George

    Pearson, Arthur (Pontypridd)

    Shore, Peter (Stepney)

    Watkins, David (Consett)

    Peart, Rt. Hn. Fred

    Short,Rt.Hn.Edward(N'c'tle-u-Tyne)

    Weitzman, David

    Pentland, Norman

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

    Wellbeloved, James

    Perry, Ernest C. (Battersea, S.)

    Silkin, John (Deptford)

    Wells, William (Walsall, N.)

    Perry, George H. (Nottingham, S.)

    Silkin, S. C. (Dulwich)

    Whitaker, Ben

    Prentice, Rt. Hn. R, E.

    Silverman, Julius (Aston)

    White, Mrs. Eirene

    Price, Christopher (Perry Barr)

    Silverman, Sydney (Nelson)

    Willey, Rt. Hn. Frederick

    Price, Thomas (Westhoughton)

    Slater, Joseph

    Williams, Alan (Swansea, W.)

    Price, William (Rugby)

    Small, William

    Williams, Alan Lee (Hornehurch)

    Probert, Arthur

    Spriggs, Leslie

    Williams, Clifford (Abertillery)

    Pursey, Cmdr. Harry

    Steele, Thomas(Dunbartonshire, W.)

    Williams, Mrs. Shirley (Hitchin)

    Rankin, John

    Stewart, Rt. Hn. Michael

    Williams, W. T. (Warrington)

    Redhead, Edward

    Stonehouse, John

    Willis, George (Edinburgh, E.)

    Rhodes, Geoffrey

    Strauss, Rt. Hn. G. R.

    Wilson, William (Coventry, S.)

    Richard, Ivor

    Summerskill, Hn. Dr. Shirley

    Winnick, David

    Roberts, Coronwy (Caernarvon)

    Swain, Thomas

    Winterbottom, R. E.

    Roberts, Gwilym (Bedfordshire, S.)

    Swingler, Stephen

    Woof, Robert

    Robertson, John (Paisley)

    Symonds, J. B.

    Wyatt, Woodrow

    Robinson,Rt.Hn.Kenneth(St.P'c'as)

    Thomas, Iorwerth (Rhondda, W.)

    Yates, Victor

    Robinson, W. 0. J. (Walth'stow, E.)

    Thomson, Rt. Hn. George

    Zilliacus, K.

    Roebuck, Roy

    Thornton, Ernest

    TELLERS FOR THE AYES:

    Rogers, George

    Thin, James

    Mr. William Whitlock and

    Rose, Paul

    Tomney, Frank

    Mr. loan L. Evans.

    Ross, Rt. Hn. William

    Tuck, Raphael

    Rowland, Christopher (Meriden)

    Urwin, T. W.

    Division No. 136.]

    AYES

    [7.38 p.m.

    Abse, Leo

    Dunn, James A.

    Jones, Dan (Burnley)

    Albu, Austen

    Dunnett, Jack

    Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)

    Allaun, Frank (Salford, E.)

    Dunwoody, Mrs. Gwyneth (Exeter)

    Jones, J. Idwal (Wrexham)

    Alldritt, Walter

    Dunwoody, Dr. John (F'th & C'b'e)

    Judd, Frank

    Allen, Scholefield

    Eadie, Alex

    Kelley, Richard

    Anderson, Donald

    Edelman, Maurice

    Kenyon, Clifford

    Archer, Peter

    Edwards, Robert (Bilston)

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

    Armstrong, Ernest

    Edwards, William (Merioneth)

    Kerr, Russell (Feltham)

    Ashley, Jack

    Ellis, John

    Lawson, George

    Atkins, Ronald (Preston, N.)

    English, Michael

    Leadbitter, Ted

    Atkinson, Norman (Tottenham)

    Ensor, David

    Ledger, Ron

    Bacon, Rt. Hn, Alice

    Evans, loan L. (Birm'h'm, Yardley)

    Lee, Rt. Hon. Frederick (Newton)

    Barnes, Michael

    Finch, Harold

    Lee, Rt. Hn. Jennie (Cannock)

    Barnett, Joel

    Fitch, Alan (Wigan)

    Lee, John (Reading)

    Beaney, Alan

    Fletcher, Raymond (Ilkeston)

    Lestor, Miss Joan

    Bellenger, Rt. Hn. F. J.

    Fletcher, Ted (Darlington)

    Lever, Harold (Cheetham)

    Bence, Cyril

    Floud, Bernard

    Lever, L. M. (Ardwick)

    Benn, Rt. Hn. Anthony Wedgwood

    Foley, Maurice

    Lewis, Ron (Carlisle)

    Bennett, James (G'gow, Bridgeton)

    Foot, Sir Dingle (Ipswich)

    Lomas, Kenneth

    Bidwell, Sydney

    Foot, Michael (Ebbw Vale)

    Loughlin, Charles

    Bishop, E. S.

    Ford, Ben

    Luard, Evan

    Blackburn, F.

    Forrester, John

    Lyon, Alexander W. (York)

    Blenkinsop, Arthur

    Fowler, Gerry

    Lyons, Edward (Bradford, E.)

    Boardman, H.

    Fraser, Rt. Hn. Tom (Hamilton)

    Mabon, Dr. J. Dickson

    Booth, Albert

    Freeson, Reginald

    McBride, Neil

    Boston, Terence

    Gardner, A. J.

    McCann, John

    Bowden, Bt. Hn. Herbert

    Garrow, Alex

    MacColl, James

    Boyden, James

    Ginsburg, David

    MacDermot, Niall

    Braddock, Mrs. E. M.

    Gordon Walker, Rt. Hn. P. C.

    Macdonald, A. H.

    Bradley, Tom

    Gourlay, Harry

    McGuire, Michael

    Bray, Dr. Jeremy

    Gray, Dr. Hugh (Yarmouth)

    McKay, Mrs. Margaret

    Brooks, Edwin

    Greenwood, Rt. Hn. Anthony

    Mackenzie, Gregor (Rutherglen)

    Broughton, Dr. A. D. D.

    Gregory, Arnold

    Mackie, John

    Brown, Hugh D. (G'gow, Provan)

    Grey, Charles (Durham)

    Mackintosh, John P.

    Brown, Bob(N'c'tle-upon-Tyne, W.)

    Griffiths, David (Bother Valley)

    Maclennan, Robert

    Brown, R. W. (Shoreditch & F'bury)

    Griffiths, Rt. Hn. James (Llanelly)

    McMillan, Tom (Glasgow, C.)

    Buchan, Norman

    Griffiths, Will (Exchange)

    McNamara, J. Kevin

    Buchanan, Richard (G'gow, Sp'burn)

    Hamilton, James (Bothwell)

    MacPherson, Malcolm

    Butler, Herbert (Hackney, C.)

    Hamilton, William (Fife, W.)

    Mahon, Peter (Preston, S.)

    Butler, Mrs. Joyce (Wood Green)

    Hamling, William

    Mallalieu, E. L. (Brigg)

    Cant, R. B.

    Hannan, William

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

    Carmichael, Neil

    Harper, Joseph

    Manuel, Archie

    Carter-Jones, Lewis

    Harrison, Walter (Wakefield)

    Marquand, David

    Castle, Rt. Hn. Barbara

    Hart, Mrs. Judith

    Marsh, Rt. Hn. Richard

    Chapman, Donald

    Hazell, Bert

    Mason, Roy

    Coe, Denis

    Healey, Rt. Hn. Denis

    Maxwell, Robert

    Coleman, Donald

    Heffer, Eric S.

    Mendelson, J. J.

    Concannon, J. D.

    Herbison, Rt. Hn. Margaret

    Milian, Bruce

    Corbet, Mrs. Freda

    Hilton, W. S.

    Miller, Dr. M. S.

    Craddock, George (Bradford, S.)

    Hobden, Dennis (Brighton, K'town)

    Mitchell, R. C. (S'th'pton, Test)

    Crawshaw, Richard

    Hooley, Frank

    Molloy, William

    Cronin, John

    Horner, John

    Morgan, Elystan (Cardiganshire)

    Crosland, Rt. Hn. Anthony

    Houghton, Rt. Hn. Douglas

    Morris, Alfred (Wythenshawe)

    Cullen, Mrs. Alice

    Howarth, Harry (Wellingborough)

    Morris, Charles R. (Openshaw)

    Darling, Rt. Hn. George

    Howarth, Robert (Bolton, E.)

    Morris, John (Aberavon)

    Davidson, Arthur (Accrington)

    Howie, W.

    Moyle, Roland

    Davies, Dr. Ernest (Stretford)

    Hoy, James

    Mulley, Rt. Hn. Frederick

    Davies, G. Elfed (Rhondda, E.)

    Hughes, Rt. Hn. Cledwyn (Anglesey)

    Murray, Albert

    Davies, Ednyfed Hudson (Conway)

    Hughes, Emrys (Ayrshire, S.)

    Neal, Harold

    Davies Harold (Leek)

    Hughes, Hector (Aberdeen, N.)

    Newens, Stan

    Davies, Robert (Cambridge)

    Hunter, Adam

    Norwood, Christopher

    de Freitas, Sir Geoffrey

    Hynd, John

    Oakes, Gordon

    Dell, Edmund

    Jackson, Peter M. (High Peak)

    Ogden, Eric

    Dempsey, James

    Jay, Rt. Hn. Douglas

    O'Malley, Brian

    Dewar, Donald

    Jeger, George (Goole)

    Orbach, Maurice

    Diamond, Rt. Hn. John

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

    Oswald, Thomas

    Dickens, James

    Jenkins, Hugh (Putney)

    Owen, Dr. David (Plymouth, S'tn)

    Dobson, Ray

    Jenkins, Rt. Hn. Roy (Stechford)

    Owen, Will (Morpeth)

    Donnelly, Desmond

    Johnson, Carol (Lewisham, S.)

    Padley, Walter

    Driberg, Tom

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

    Page, Derek (King's Lynn)

    NOES

    Alison, Michael (Barkston Ash)

    Dean, Paul (Somerset, N.)

    Hirst, Geoffrey

    Allason James (Hemel Hempstead)

    Deedes, Rt. Hn. W. F. (Ashford)

    Hobson, Rt. Hn. Sir John

    Astor, John

    Digby, Simon Wingfield

    Hogg, Rt. Hn. Quintin

    Atkins, Humphrey (M't'n & M'd'n)

    Dodds-Parker, Douglas

    Holland, Philip

    Awdry, Daniel

    Doughty, Charles

    Hooson, Emlyn

    Baker, W. H. K.

    Douglas-Home, Rt. Hn. Sir Alec

    Hordern, Peter

    Balniel, Lord

    Drayson, G. B.

    Hornby, Richard

    Batsford, Brian

    du Cann, Rt. Hn. Edward

    Howell, David (Guildford)

    Beamish, Col. Sir Tufton

    Eden, Sir John

    Hunt, John

    Bell, Ronald

    Elliot, Capt. Walter (Carahalton)

    Hutchison, Michael Clark

    Bennett, Sir Frederic (Torquay)

    Errington, Sir Eric

    Iremonger, T. L.

    Berry, Hn. Anthony

    Eyre, Reginald

    Irvine, Bryant Godman (Rye)

    Bessell, Peter

    Farr, John

    Jenkin, Patrick (Woodford)

    Biffen, John

    Fisher, Nigel

    Johnston, Russell (Inverness)

    Birch, Rt. Hn. Nigel

    Fletcher-Cooke, Charles

    Jones, Arthur (Northants, S.)

    Body, Richard

    Forrest, George

    Jopling, Michael

    Boyd-Carpenter, Rt. Hn. John

    Fortescue, Tim

    Joseph, Rt. Hn. Sir Keith

    Boyle, Rt. Hn. Sir Edward

    Foster, Sir John

    Kaberry, Sir Donald

    Braine, Bernard

    Galbraith, Hn. T. G.

    Kerby, Capt. Henry

    Brinton, Sir Tatton

    Gibson-Watt, David

    Kershaw, Anthony

    Bromley-Davenport,Lt. Col. Sir Walter

    Giles, Rear-Adm. Morgan

    Kimball, Marcus

    Brown, Sir Edward (Bath)

    Gilmour, Ian (Norfolk, C.)

    King, Evelyn (Dorset, S.)

    Bruce-Gardyne, J.

    Gilmour, Sir John (Fife, E.)

    Kitson, Timothy

    Bryan, Paul

    Glover, Sir Douglas

    Knight, Mrs. Jill

    Buchanan-Smith,Alick(Angus,N—M)

    Glyn, Sir Richard

    Lambton, Viscount

    Buck, Antony (Colchester)

    Godber, Rt. Hn.J. B.

    Langford-Holt, Sir John

    Bullus, Sir Eric

    Goodhart, Philip

    Legge-Bourke, Sir Harry

    Burden, F. A.

    Goodhew, Victor

    Lewis, Kenneth (Rutland)

    Campbell, Gordon

    Gower, Raymond

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

    Carlisle, Mark

    Grant, Anthony

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Carr, Rt. Hn. Robert

    Grant-Ferris, R.

    Longden, Gilbert

    Cary, Sir Robert

    Gresham Cooke, R.

    Loveys, W. H.

    Channon, H. P. G.

    Griffiths, Eldon (Bury St. Edmunds)

    Lubbock, Eric

    Chichester-Clark, R.

    Grimond, Rt. Hn. J.

    McAdden, Sir Stephen

    Clark, Henry

    Gurden, Harold

    MacArthur, Ian

    Clegg, Walter

    Hall, John (Wycombe)

    Mackenzie,Alasdair(Ross—Cromity)

    Cooke, Robert

    Hall-Davis, A. G. F.

    Maclean, Sir Fitzroy

    Cooper-Key, Sir Neill

    Hamilton, Michael (Salisbury)

    Macleod, Rt. Hn. lain

    Cordle, John

    Harris, Frederic (Croydon, N.W.)

    McMaster, Stanley

    Corfield, F. V.

    Harris, Reader (Heston)

    Macmillan, Maurice (Farnham)

    Costain, A. P.

    Harrison Brian (Maldon)

    Maddan, Martin

    Craddock, Sir Beresford (Spelthorne)

    Harrison, Col. Sir Harwood (Eye)

    Maginnis, John E.

    Crouch, David

    Harvey, Sir Arthur Vere

    Marples, Rt. Hn. Ernest

    Crowder, F. P.

    Harvie Anderson, Miss

    Marten, Neil

    Cunningham, Sir Knox

    Hastings, Stephen

    Mathew, Robert

    Currie, G. B. H.

    Heald, Rt. Hn. Sir Lionel

    Maude, Angus

    Dalkeith, Earl of

    Heseltine, Michael

    Mawby, Ray

    Dance, James

    Higgins, Terence L.

    Maxwell-Hyslop, R. J.

    Davidson,James(Aberdeenshire,W.)

    Hiley, Joseph

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

    d'Avigdor-Goldsmid, Sir Henry

    Hill, J. E. B.

    Mills, Peter (Torrington)

    Mills, Stratton (Belfast, N.)

    Miscampbell, Norman

    Price, David (Eastleigh)

    Teeling, Sir William

    Mitchell, David (Basingstoke)

    Prior, J. M. L.

    Temple, John M.

    Monro, Hector

    Pym, Francis

    Thatcher, Mrs. Margaret

    More, Jasper

    Quennell, Miss J. M.

    Tilney, John

    Morgan, W. G. (Denbigh)

    Rees.Davies, W. R.

    van Straubenzee, W. R.

    Morrison, Charles (Devizes)

    Renton, Rt. Hn. Sir David

    Vickers, Dame Joan

    Mott-Radclyffe, Sir Charles

    Ridley, Hn. Nicholas

    Wainwright, Richard (Colne Valley)

    Munro-Lucas-Tooth, Sir Hugh

    Ridsdale, Julian

    Walker, Peter (Worcester)

    Murton, Oscar

    Rippon, Rt. Hn. Geoffrey

    Walker-Smith, Rt. Hn. Sir Derek

    Nabarro, Sir Gerald

    Robson Brown, Sir William

    Wall, Patrick

    Neave, Airey

    Rossi, Hugh (Hornsey)

    Walters, Dennis

    Noble, Rt. Hn. Michael

    Royle, Anthony

    Ward, Dame Irene

    Nott, John

    Russell, Sir Ronald

    Weatherill, Bernard

    Onslow, Cranley

    St. John-Stevas, Norman

    Webster, David

    Orr, Capt. L. P. S.

    Sandys, Rt. Hn. D.

    Wells, John (Maidstone)

    Orr-Ewing, Sir Ian

    Scott, Nicholas

    Whitelaw, William

    Osborn, John (Hallam)

    Sharpies, Richard

    Wills, Sir Gerald (Bridgwater)

    Osborne, sir Cyril (Louth)

    Shaw, Michael (sc'b'gh & Whitby)

    Wilson, Geoffrey (Truro)

    Page, Graham (Crosby)

    Sinclair, Sir George

    Winstanley, Dr. M. P.

    Page, John (Harrow, W.)

    Smith, John

    Wolrige-Gordon, Patrick

    Pardoe, John

    Stainton, Keith

    Wood, Rt. Hn. Richard

    Pearson, Sir Frank (Clitheroe)

    Steel, David (Roxburgh)

    Woodnutt, Mark

    Peel, John

    Stodart, Anthony

    Worsley, Marcus

    Percival, Ian

    Stoddart, Scott, Col. Sir M. (Ripon)

    Wylie, N. R

    Peyton, John

    Summers, Sir Spencer

    Younger, Hn. George

    Pike, Miss Mervyn

    Talbot, John E.

    TELLERS FOR THE NOES:

    Pink, R. Banner

    Taylor, Sir Charles (Eastbourne)

    Mr. R. W. Elliott and

    Pounder, Rafton

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

    Mr. Peter Blaker.

    Powell, Rt. Hn. J. Enoch

    Taylor, Frank (Moss Side)

    Mr. Geoffrey Wilson: I beg to move Amendment No. 221, in page 1, line 28, after "in" to insert:
    "Order II, Heading 103, so far as that relates to the extraction and processing of china clay and ball clay".
    The Chairman: It will be convenient to discuss at the same time Amendment No. 310, in page 1, line 28, after "in" insert:
    "Order II, heading 102, so far as that relates to slate quarrying and mining".
    Amendment No. 311, in page 1, line 28, after "in" insert:
    "Order II, Heading 102, so far as that relates to slate quarrying and mining in Wales".
    Amendment No. 333, in page 1, line 28, after "in" insert:
    "Order II, Heading 102 relating to stone and slate quarrying and mining and Heading 109 so far as that relates to other metalliferous mining and quarrying".
    Amendment No. 271, in page 1, line 28, leave out "III" and insert "I".
    Amendment No. 273, in page 1, line 29, at end insert:
    (ii) extracting coal from opencast workings.
    And Amendment No. 175, in Clause 2, page 3, line 18, at end add:
    (iii) by way of the carrying out of any civil engineering work in connection with opencast coalmining.
    Mr.Wilson: The purpose of this Amendment is to give to the industries concerned with the extraction and processing of china clay and ball clay the benefit of the selective employment
    730
    premium. It is the reverse of the Amendment we have just debated. If we are to have premiums, they should be selective and must be based on a principle and not on chance as to whether or not they happen to be included in the Standard Industrial Classification.
    Cmnd. Paper 2986 defined the objectives of the tax as, first, to redress the Tax balance between manufacturing and service industries and, secondly, to make labour more available in the manufacturing industries. Paragraph 15 of the White Paper indicated that modification of the classification might be necessary. This is further recognised in the Bill. The Standard Industrial Classification lumps china clay and ball clay together with mining and quarrying under Order II, Heading 103, with the result that if the White Paper were followed these industries would pay the tax without getting a refund. Under Clause 2(3,a) of the Bill, they would qualify for a refund.
    That is an improvement, but it is not enough. It is absurd to accept production of Portland cement as manufacturing, as it would be accepted under the industrial classifications, but to exclude china clay and ball clay, which are much more elaborately processed before the material is passed on from the works to the selling point. It is even more absurd to lump china clay and ball clay with gravel extraction, which is a comparatively simple process.

    731
    Perhaps there is something misleading about the word "clay". Except that both ball clay and china are, in simple terms, decayed rock, both are found in the West Country and both in varying degrees are used in the ceramics industry, china and ball clay have little in common in origin, methods of extraction or the uses to which they are put.
    Ball clay is rock which is decayed by wind and weather aeons of time ago and carried to its present site by the action of water. China clay is rock—granite really—which is decayed by volcanic processes at an even earlier period and found beneath the surface at the site where it is located and has nothing to do with water. Ball clay is processed dry or in a plastic state on the site where it is found by pneumatic spaders, which remove it from the stope by means of shafts or tunnels. After shredding, milling and refining by air classification or chemical treatment, it is pelletised, fluid-bed dried and bagged. In addition to the ceramic market, it is used in a number of other industries, including rubber, fertilisers, paint, plastics, vitreous enamel and the foundry market.
    Some 590,000 tons of ball clay is produced in the course of a year and 54 per cent. is exported. It is largely a Devon product. If my hon. Friend the Member for Totnes (Mr. Mawby) is fortunate enough to catch your eye, Sir Eric, he will probably be able to say a great deal more about the reasons why the ball clay industry should be regarded as manufacturing and not extractive. It is a Devon product largely produced in my hon. Friend's area.
    I wish to concentrate on china clay, which is largely a Cornish product and most of which is produced in my constituency. For the last 16 years I have been familiar with this rather fascinating industry. There are a large pit and several smaller ones on Dartmoor, there is a large pit on Bodmin Moor and there are a number of smaller ones elsewhere. The greater number of the clay pits, however, are in my constituency on the high ground behind St. Austell, where there are over 20 of them.
    The words "clay pits" are themselves misleading because they tend to conjure up a picture of a hole in the ground
    732
    with a man with a spade shovelling clay into a barrow. Nothing could be less like the truth. The St. Austell clay pits are 200 ft. or more deep and thousands of yards in diameter. At the bottom of the pit there are powerful monitors playing high-pressure jets of water on the sides of the pit and reducing the clay matrix to a slurry, which gravitates to the bottom of the pit, where it is pumped into an extractor plant which separates the clay from the vast quantities of quartz sand which, by mean of trucks on rope lines or a conveyor belt, is put into those large mounds or burrows which can be seen from all over Cornwall, and which the Press like to describe as the Mountains of the Moon. These burrows are in themselves a valuable product of sand which is not sufficiently used in building or in concrete-making.
    After that, the china clay is taken from the bottom of the pit and the slurry is pumped to the surface and streamed. It is exhaustively tested for chemicals and for its physical properties. It is passed through miles of pipeline to all sorts of other processes according to the specifications of the industries which require this product. There are filter presses, rotary dryers and processes for bleaching the clay to the required whiteness, and the degree of moisture which is required by the consumer is carefully tested. Usually it is reduced to about 10 per cent. but it can be taken down to as little as 1 per cent. This involves all sorts of machinery—turbo-driers, drum driers, spray driers, flash driers, cutters, mixers, mills and pelletisers.
    Only 25 per cent. of the industrial capital investment is spent on mining equipment in the clay pit and 75 per cent. is required for tanks and electric and mechanical processing plant, including highly sophisticated electronic control and measuring devices. Clearly, this is not a service industry. In fact, the Board of Trade has always dealt with it through the Industries and Manufacturing Department. It is curious that it is put in its present classification.
    In addition to supplying the ceramics industry, with which its name suggests that it would be connected, the biggest consumer of the china clay industry is the paper industry, both here and overseas. A great number of other industries are also interested in the china clay as a

    733
    product. They are some 81 in number and include, in addition to ceramics and paper, refractories, rubber, plastics, paint, leather, textiles, linoleum, inks, crayons, pencils, dyes, pharmaceuticals, cosmetics, cleaners, polishes, soaps, cement, insecticides and fertilisers. I have been told that china clay is even put in ice cream, because it is a perfectly safe and useful product to eat.
    Of the industry's annual total output of 2,300,000 tons, 70 per cent. is exported, much of it as dollar exports. The principal firm—English Clays Lovering Pochin & Company Ltd.—this year received the Queen's Award for Exports. Only this month, on 14th July, Her Majesty, in visiting Cornwall, visited the company's rotary drier at Trevisco, which is in a very big building, bigger than most factories.
    Cornwall tends to be an area of high unemployment. It is an area which is dependent largely on agriculture, tourism and the service industries, all of which come off badly under the Bill. Here we have as industry—an export industry—which is competing overseas, often in the dollar market, in a product the price of which is low and which depends to a large extent on transport charges, which in the case of the long distances that the product travels may be substantial. Therefore, any slight variation in its price makes a great difference to its export prospects.
    Surely this is an industry in which a reduction of its overhead expenses would be likely to lead to an expansion. It is clear that it would be in the national interest to transfer this industry from its present classification and include it as manufacturing. It is absurd that it is not so treated when the cement industry, the processes of which are rather similar but less elaborate, does so qualify. I submit that these two industries should he treated as manufacturing industries and should be entitled to the premium.
    8.0 p.m.
    Mr. Gower: I support my hon. Friend the Member for Truro (Mr. Geoffrey Wilson) in moving his Amendment, and at the same time I would commend the Amendments which, Sir Eric, you have ruled may be taken with this Amendment. They include two in my name; one deals with slate quarrying and mining
    734
    in general, and one deals with it in Wales.
    It is noteworthy that all these industries —because I describe these as industries —affected by these Amendments are in parts of the United Kingdom where they are of some considerable importance: all of them. Also, they are in parts of the United Kingdom where there are few of the manufacturing industries as so classified under this rather arbitrary classification which has been adopted by the Government. Therefore, these industries are of peculiar importance to those areas. For that reason I submit to the Government that these should be considered with particular sympathy, apart from the general merits of the case which we can adduce.
    There is an extra reason for sympathetic consideration for one of the Amendments comprised in this group, and that is the one which affects the tin industry, and that extra reason is that it is a most valuable saver of foreign currency. But for this industry we should have to spend more on imports; I have been told that some £2 million per annum would have to be spent on tin imports if it were not for the home produced tin.
    As I said, one of my Amendments is on behalf of Wales. I am surprised that hon. Gentlemen who represent constituencies in North Wales are not here this evening, because slate quarrying is of particular importance to North Wales. Indeed, the argument for the slate industry applies to any considerable degree only in North Wales and in Cornwall. The Minister who is to reply, and, indeed, the Minister of Labour himself, and, of course, the Secretary of State for Wales, must be very well acquainted with the problems. The Secretary of State for Wales is not present. However, those Ministers must be well acquainted with the problems of the slate industry. It is an industry which has been facing great difficulty, and there has, I must admit, been a contraction in the industry during many years. It has been due to the growth of the rival tile industry. It is ironical that the slate industry, which has been making great efforts and has had encouragement from successive Governments to improve its position, is now prejudiced by the proposals in this Bill and particularly the arrangements

    735
    for the payment of premium in some cases to the exclusion of this industry.
    What is even more bitter to those who preside over the destinies of the slate quarries is the fact that the rival industry, the manufactured tile industry, will enjoy the premium. This seems a particularly bitter blow, that the manufactured tile industry, which is in direct rivalry with the slate industry, will have this—well, unexpected benefit, for which there is no particular merit or reason. That is why we feel that the slate quarrying industry is being unfairly prejudiced in its difficult battle against the rival industry.
    Therefore, I support strongly the references made by my hon. Friend, and I do hope that the Minister will consider particularly the problems of the slate industry, which is of such great importance, and particularly in an area of North Wales where there is very little productive industry.
    Mr. Ray Mawby: It will be within the recollection of the Committee that when the proposals for the Selective Employment Tax were made these industries, the extractive industries, including china clay and ball clay, were considered to be service industries and so should not have the rebate, let alone the premium. We are grateful for the fact that on second thoughts a change has been made, that there has been a change of attitude on the part of the Government, so that they have now put the extractive industries half way; in other words, they have put them into the position where they will receive back the same amount which they pay. We are asking—for very good reasons, I believe—that the Government should go this little bit further and put them into the premium class. We do this for a number of reasons.
    Ball clay is mined in large amounts in my constituency and in other constituencies in Devon. Of course, when people think of the mining of ball clay most think of a hole in the ground where a man toils away and digs out clay and puts it on lorries and sends it away to be made into pottery. That may have been so many years ago, but at this time the ball clay industry is a very sophisticated industry indeed, and the amount of manufacturing process which is involved
    736
    in dealing with ball clay is very considerable. When one considers that the export of ball clay is 54 per cent. of the total produced one realises that this is one of the very few minerals which we are able to export from this country at a profit.
    Obviously, however, if ball clay is to be exported it must be of a high standard and must have a considerable amount of treatment. Therefore, there is a considerable manufacturing process, which includes the shredding of the ball clay after mining; there is milling, and refining; there is chemical treatment; there are drying and bagging so that it can be easily handled so that it can be sent overseas and so earn us valuable currency abroad.
    This is terribly important, and where all these manufacturing processes are involved it does seem rather ludicrous to say that a manufacturer in Stoke-on-Trent who produces a chamber pot shall get the premium but that the manufacturing process at the other end of the line and involved in producing the basic material shall be treated as a service industry.
    There is one other point, which the right hon. Gentleman may consider irrelevant, but which, nevertheless, I believe ought to be taken into account, and that is that it has been worked out by two geographers from London University that taking the impact of the Selective Employment Tax as at present it stands it will have a greater effect-10 per cent. more—per head of population in the West Country than it will have on the average in the rest of the country.
    Therefore, I believe that if the right hon. Gentleman accepted our arguments he would be killing two birds with one stone. It was pointed out earlier today that it is extremely difficult to find the line which separates one type of industry from a type of service. In our arguments this evening, I hope that we have convinced the right hon. Gentleman that at least ball clay and china clay come just on the right side of the line, and we hope that he will make the necessary arrangements.
    Dame Joan Vickers: I have pleasure in supporting what has been said by my hon. Friend the Member for Truro (Mr. Geoffrey Wilson). The china clay and ball clay industries

    737
    are the life blood of the West Country, to which they bring tremendous employment, and they also help the country generally.
    May I make a quotation from the writings of the Reverend Sidney Smith, who lived in the 1700s? He wrote:
    " We can inform Jonathan what are the inevitable consequences of being too fond of glory. Taxes upon every article which enters into the mouth, or covers the back, or is placed under the foot, taxes on everything on earth and the waters under the earth."
    We have had to have these taxes, not because we are too fond of glory, but because there have been too many promises in the past. This is one place where the promise could be fulfilled, because the pits that we are discussing lie in the development area and it is essential that that should be taken into consideration.
    As my hon. Friend the Member for Totnes (Mr. Mawby) mentioned, the West Country is a contributing area, and we feel bitter that the West Country should have to contribute so much to the prosperous Midlands. We are doing it through tourism and through agriculture, though agriculturists will get money back. Speaking for the city of Plymouth alone, our second biggest industry is the retail trade, employing 15 per cent. of the population. It is clear that we are doing more than our share to contribute to these taxes.
    My hon. Friend the Member for Truro has pointed out the many applications for china clay. However, with the exception of paper making, the product cannot be used unless it is thoroughly processed. In addition, I might mention that the china clay industry has a very big research and development laboratory in which there are 250 employees.
    The clay has first to be got out of the ground. It has to be dried, analysed, shredded, and blended, which is quite a difficult process. Finally, if it is going abroad as most of it does, it has to be bagged or sacked. I would have thought that that made it categorically into a manufacturing process.
    One other point which I would mention is that the industry is a great help in the provision of housing, because it makes blocks which are used for Cornish units. If the industry gets the premiums, it will
    738
    be able to help keep down the price of housing. It is generally recognised that a house will cost an extra £150 in future, and china clay will be one of the means of keeping costs down, providing that the industry is eligible for the premiums.
    It has never been classified as a service industry. Dealings have always been through the Department of Industries and Manufacturing in the Board of Trade, and not any other Department. In addition, it is classified with ceramics and glass work under the Industrial Training Act, which is a second proof that it is a manufacturing industry.
    As all the clay has to go through the many processes which have been enumerated, it cannot be considered to be an industry on its own until it has been manufactured. It is different from coal and other commodities which are mined in that it is unsuitable for sale to the consumer unless it goes through all the processes. I would suggest that it is not an extractive industry but a manufacturing industry. It cannot be used unless it is processed, and I should have thought that that was a good enough definition to prove to the right hon. Gentleman the Chief Secretary that it is a manufacturing industry and should be classified as such.
    8.15 p.m.
    Mr. Peter Mills: I rise to support the Amendment and to support all that my hon. Friends have said. I do so wholeheartedly, not only because I realise the importance of the china clay and ball clay industries to the South-West, but because we have large deposits of ball clay at Merton and Meeth, in my constituency.
    I am certain that everyone knows how vitally important the clay industry is to the economy of the country, and never perhaps more than now, since it is playing its part in seeking increased exports. It is even more vital to the economy of the South-West, and I have in mind particularly the importance of the ball clay industry to Devonshire. A large number of people work in the pits, and they are very grateful for this opportunity of being able to work in a manufacturing or production industry, because most of the work in the South-West is of a service nature. Here they have the chance of working in a manufacturing or production industry, and that is an important

    739
    point which underlines the need for the reclassification of the industry so that premiums can be paid. The industry needs every encouragement, and any recession in it always hits us very hard in the South-West.
    The premiums would be of great assistance. They would give the industry not only the financial reward but the encouragement of knowing that it is really producing something and playing its part in the economic factor.
    How anyone can say that it is not a manufacturing or production industry, I do not know. One has only to think of the processes through which the clay goes to realise that. I wonder whether the Minister or his advisers have ever been to the South-West and seen the manufacturing processes which go on. If they had, they would never say that it is not a manufacturing or production industry, and it beats me how anything to the contrary can be suggested.
    When one looks at the industry's export records, it will be seen that 54 per cent. of the ball clay produced in this country goes abroad. Would to goodness other industries had such a fine record.
    The Government must think again. They ought to give way on this and reclassify the industry. I suggest that it is the bounden duty of the Minister to do so.
    Mr. Diamond: It is not my intention to curtail the debate. I am only responding to the debate because I imagine that the Opposition would wish to devote no time to matters about which there is no dispute between the two sides of the Committee. I hope, therefore, that it is helpful in the difficult circumstances which an Opposition always face under a guillotine Motion that I should get up now and offer my comments.
    The Government are aware of the importance of china clay, and those of us who have visited St. Ives and its potteries and those of us who enjoy good porcelain and who have seen china clay extracted before getting to that stage are very anxious to help. We are also aware of the export figures, and so on.
    However, confusion has arisen, because perhaps the Standard Industrial Classification has not been fully appreciated. If one looks at the list of industries in the
    740
    detailed classification, under "china clay" it will be seen that there are two sub-headings. One of them is "Grinding and preparing", which is classified as a sub-heading of a manufacturing industry and will therefore get the premium.
    Mr. F. V. Corfield: Will the right hon. Gentleman give the number of the heading?
    Mr. Diamond: The subheading is 469/2, and 469 comes under Order XIII," bricks, pottery, glass, cement ", etc. If one looks at the 1958 revised edition of the Standard Industrial Classification, on page 23 one sees that 469/2 is
    " Building materials, etc., not elsewhere specified "
    and includes
    " the working of stone, and mineral manufactures not elsewhere specified."
    If one proceeds to go still more deeply into the alphabetical list of industries, one sees that on page 11, china clay, grinding and preparing, is analysed as coming within 469/2, which is a subheading on page 13, which is one of the manufacturing Orders. So that the processes of grinding and preparing china clay are processes which attract the premium. I do not think that the Committee was fully seized of that.
    Mr. Geoffrey Wilson: What is grinding and preparing? It does not seem an apt description for a rotary drier, or one or these spin driers.
    Mr. Diamond: I was going on to say that there are other activities, if I might use a neutral word, involved in winning the china clay, in extracting it, which would come under a different category of mining and extraction, which is Order II "mining and quarrying". Order II, minimum list heading 103, refers to chalk, clay, sand, and gravel extraction. In short, the position is that there are some activities which would be activities classified as appropriate for a refund, and some activities which would be activities classified as appropriate for premium.
    What one then has to do, be it for china clay, for slate quarrying, or for any of these, is to count the numbers qualifying in the two major categories of refundable or premiumable, whatever the appropriate term may be meaning "eligible for the payment of a premium".

    741
    If the activities are carried out in one establishment—we shall come to that in a moment—the total number of employees goes with the majority. That is to say, if there are more grinders and preparers, or whatever the term is that should be used, than there are miners, then the total number employed will rank for premium. If there are more miners than grinders and preparers, the total number will rank for refund.
    I am glad that I have the hon. Member for Tomes (Mr. Mawby) with me. It makes ii: think that I am being almost explicit in what I am saying. But let me continue, because it is not easy, and I do not spend every day down a clay pit.
    The next question which hon. Members ask is, What if the miners and the grinders are separate; in the sense that they work on different areas—one works below ground, and one works above ground—and a great deal of machinery is involved, and the manufacturing activities are related to the grinders and not related to the miners? In this case there is power in the Bill, under Clause 10(3), on an application being made by the employer, for the Minister to divide the two establishments at the option of the employer, because the employer would not put in an application for reclassification if it did not suit him to do so.
    If an employer employed one-third miners and two-thirds grinders, and therefore got the premium in respect of three-thirds, he would not apply to have it reclassified. But, if it were the other way round, he would seek to have it reclassified. If there were two-thirds miners and one-third grinders, the employer would seek to have it reclassified, and the Minister could, under the powers in Clause 10, if they are given, when we get there, divide it into two establishments, having regard to the fact which he would normally have regard to, namely, that the activities carried on fall under two main groups, one a refund group and one a premium group. I hope, therefore, that I have satisfied the Committee that there is no need to do anything more than rely on the contents of the Bill as it stands for both china clay and slate quarrying.
    Mr. Nott: The right hon. Gentleman referred to minimum list heading 469,
    742
    which is headed, "Abrasives and building materials". We are allowed to discuss with this Amendment, Amendment No. 333 which includes tin mining. Can the hon. Gentleman say whether tin mining which is also a manufacturing and extractive industry, will be covered under the classification? I ask that because it does not seem that tin mining comes under the heading of abrasives and building materials.
    Mr. Diamond: I hope that I can recommend to the hon. Gentleman the purchase of this valuable document which deals with tin. On page 57 it refers to
    "Tin, manufacture, printing, refining, smelting, working "
    and goes on to refer to tin mines, tin boxes, tin oxide, and many other things which the hon. Gentleman will find great enjoyment in studying.
    It is made clear that each one comes into a particular category. Broadly—I shall give the hon. Gentleman the numbers if he wants them, but I do not think that the Committee will be entertained by them—they are manufacturing categories, with the exception of "working", which is a mining and quarrying category, as the hon. Gentleman would expect. Thus, the answer to the hon. Gentleman's question is, "Yes, where they are manufacturing processes they are treated as such, as qualifying in that sense. Where they are mining processes, they are treated as such". One has to have regard to the mix, to use an inelegant expression, meaning the relative numbers of employees employed in the various activities. If the mix contains a greater proportion—over 50 per cent.—of the total number of employees belonging to a particular category, the establishment will be treated as falling in that category. If that does not suit the employer he can make an application, in appropriate circumstances, for the Minister to exercise his powers under Clause 10.
    8.30 p.m.
    Mr. Corfield: The Chief Secretary has been about as clear as slurry. We have had to wade throught the documents to see where the grinders are, and then we have to find what a screen is, technically and what a pump is, and also a filter press and a cutter and a mixer, a mill and a pelletiser, and then decide whether or

    743
    not it is manufacturing. The fact is that this is an industry which extracts something from the ground which is of no value until it has been through a number of manufacturing processes in exactly the same way as occurs in the cement industry.
    I hope that the right hon. Gentleman will look at the comparison between the two industries and realise how idiotic it is to treat them separately. The processes through which clay goes are more complicated and costly, and at the end in both industries it is necessary to transform something from a material that came out of the ground. I beg the Minister to think about the matter so as at least to make it appear as though the Government wanted to make the situation clear and wanted to make it work,
    As the right hon. Gentleman has attempted to show that there is some hope, I ask my hon. Friend to withdraw his Amendment.
    Mr. David Gibson-Watt: I want to make a quick reference to the slate quarrying aspect of the matter, because the answer given by the Chief Secretary will not be entirely satisfactory to that industry, especially in North Wales. Will he go further into the matter and give us an explanation? Nothing could be more complicated. In North Wales, the industry has also been responsible for the preparation of slates into tables and parts of furniture and other types of building materials, which the industry has tried to make competitive with the products of other industries.
    I will not press the matter further tonight, but I suggest that it is one about which, up to now, we are still very dissatisfied.
    Mr. Geoffrey Wilson: I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. R. Chichester-Clark: I beg to move Amendment No. 3, in page 1, line 28, to leave out "XVI" and to insert "XVII".
    The Chairman: With this Amendment it would be convenient for the Committee to discuss Amendment No. 19, in Clause 2, page 3, line 10, after "709", insert:
    "and heading 500 in Order XVII (which relates to construction)."
    744
    and Amendment No. 305, in line 10, after "709" insert:
    "and under heading 500 in Order XVII (which relates to construction) to the extent only that such activities relate to the direct performance of contracts entered into prior to 3rd May 1966".
    Mr. Chichester-Clark: My only regret at this moment is that we have so little time adequately to discuss these very serious and grave Amendments. We are discussing other Amendments, including one dealing with fixed-price contracts and their effect upon the industry. That in itself is a subject worthy of a good many hours of debate if the situation is to be made clear.
    Sixteen Amendments have been selected, and, despite the speed with which they have been discussed, despite the speed with which my hon. Friends have spoken and the restraint with which they have treated the Amendments, saying no more than it was necessary to say, we find ourselves with but a few minutes left to discuss the largest industry in the country, employing 1,811,000 people, of whom, I understand, 1,350,000 are liable for the Selective Employment Tax. Here we are having to deal in a few minutes with an impost of about £86 million, no less than £48 million of which is likely to be levied on men engaged on public authority contracts carried out by private builders, for which the weary taxpayers and ratepayers have to foot the bill.
    We are also discussing an industry the manpower of which builds our houses, roads, schools and universities. This is the first occasion during the course of the Bill—and it may be the last—on which we are able to dilate upon the importance of the industry and what it is doing today. That is disgraceful, and is entirely due to the Government's timetable.
    The purpose of the Amendment is to move the construction industry, as defined by Order XVII, Minimum List Heading 500 in the Standard Industrial Classification, out of its present position where it is subject to a levy of 25s. a head into the "good boy" class with a cash prize of 7s. 6d. a head—in other words, from low gear, via neutral, to overdrive.
    To discuss this Amendment, we should have needed much more time. We shall also have to use a great number of figures, because this is, as the right hon. Member

    745
    for Leeds, West (Mr. C. Pannell) has said, a "technocratic" industry and it must be considered with statistical accuracy and care so that the "dialogue" —his words again, I think—can be meaningful in the Committee.
    As the Bill is at present drafted, the incidence of the tax on the construction industry will have a very serious effect on output and performance. We believe that the industry should be encouraged rather than depressed, assisted rather than attacked. It has suffered another blow today. lf there are to be premiums at all, there are few more worthy candidates than this industry, which builds our houses, schools, hospitals and universities.
    As the Clause stands, the industry will bear the full incidence of the tax without refund or premium, which means an impost of I:86 million in a full year. The National. Plan shows that 1,350,000 people are liable for the Selective Employment Tax. As I said, a number of those are engaged on public authority contracts carried out by private builders, for which we have to foot the bill. No one is suggesting, I think, that the industry should in any way "opt out" of the economic crisis, but, after all, any industry can reasonably expect a Measure of this kind to meet at least two requirements. One of them is relevance and I will come to the other in a moment.
    One of the avowed aims of the tax is that
    "…it will have a beneficial longer-term effect by encouraging economy in the use of labour in services and thereby making more labour available for the expansion of manufacturing industry."
    That is from the Chancellor's own White Paper. He said, in his Budget Statement:
    " The tax will apply to construction in the same way as services so as to encourage the industry to scrutinise its use of labour more closely;"— [OFFICIAL REPORT, 3rd May, 1966; Vol. 728, c. 1455.]
    That, to anyone who has knowledge of the industry over the past few years, is a very strange remark, as the Parliamentary Secretary ought to know.
    Of course, it would be idle to deny that some improvements can be made in the industry's use of manpower. Of course they can, although the industry's record in this connection is second to none. But I am fair from convinced that the industry is ever able to hoard labour, unlike
    746
    potential labour hoarders like the motor industry and the printing industry—and they get a cash prize under Clause 1. Even if the construction industries did hoard labour, the tax would be irrelevant, for the very reason that it is discriminatory or selective, term it what one will.
    I would give a hypothetical example. The right hon. Gentleman's tax seriously affects the small and medium-sized builders. A builder in a small manufacturing town will be faced with the prospect of paying 25s. a head for his employees, some of whom will be skilled men. He might decide that he could not absorb all the tax and would not dare to pass it on because of the fierce competition in tendering in the area.
    Therefore, he would lay of two men, perhaps skilled bricklayers, members of a craft which is in short supply. Down the road might be a motor manufacturer who took them on—not as skilled bricklayers, but simply as unskilled labourers. He could use them on the shop floor and receive a premium for each of them. 'That is a loss to the building industry of two skilled men and a gain to the motor industry of two unskilled men. That is the kind of thing which the Government ought to know. Who can call that a sensible redeployment of labour?
    I know that, in a moment, Sir Eric, you will be moving in your Chair. I will only echo my earlier protest that it is absolutely disgraceful that we should be faced with a timetable which prevents us from discussing what is perhaps the most important industry in the country. We have done our best to be discreet and restrained in our discussion of Amendments so far. They have been discussed with expedition and they have been sensibly discussed.
    No one has made any attempt to hold up progress. On the contrary, we have tried to speed progress. Yet the Government have arranged matters so that the construction industry shall have no discussion of the vast problems which face it—an industry in which the Government have created a crisis of confidence, added to by the events which have taken place today and the announcement which the Prime Minister made concerning that industry this afternoon.

    747
    This is a disgraceful situation. What is anyone to think of a Government who so treat one of the major industries of the country that they make a distinction between the brickmaker and the bricklayer sufficient to justify the award of a cash prize to one and the imposition of the supreme penalty on the other. The Contracts Journal, the other day, relapsed into the kind of language which A. A. Milne might have used, and which I suspect the right hon. Member for Leeds, West might use, when it wrote:
    " I suppose it is no use trying to point out to Mr. Callaghan that there can be no possible purpose in making bricks and paying out 7s. 6d. a week in respect of every man making them unless they can be laid."
    It being one hour and eleven minutes after half-past Seven o'clock, being the time equivalent to the time which elapsed between half-past Three o'clock and the time at which consideration of the Bill was entered upon, The CHAIRMAN proceeded, pursuant to Order, to put forthwith the Questions on the Amendments, moved by a member of the Government, of which notice had been given, to that part of the Bill to be concluded at that hour.
    Amendments made: In page 2, line 2, leave out from "which" to end of line 3 and insert:
    "that or an associated establishment is engaged; or
    (iii) training relating as aforesaid;".
    In line 5, leave out "for the purposes of the" and insert:
    "in any employment in, or carried out from. that".
    In line 7, leave out from "are" to "as" in line 8 and insert:
    "so employed wholly or mainly in connection with such activities, research or training''.
    In line 10, leave out "normally so employed only" and insert "so employed wholly or mainly".
    In line 14, leave out "aforesaid" and insert:
    " are mentioned in paragraph (a) of this subsection or the Minister of Labour is satisfied that the establishment is engaged in training which is so relevant ".—[Mr. Diamond.]
    The CHAIRMAN then proceeded, pursuant to Order, to put forthwith the Question necessary to complete the proceedings on Clause 1:
    Question put, That the Clause, as amended, stand part of the Bill:—
    The Committee divided: Ayes 305, Noes 238.

    Griffiths, Rt. Hn. James (Llanelly)

    McNamara, J. Kevin

    Ross, Rt. Hn. William

    Griffiths, Will (Exchange)

    MacPherson, Malcolm

    Rowland, Christopher (Meriden)

    Hamilton, James (Bothwell)

    Mahon, Peter (Preston, S.)

    Rowlands, E. (Cardiff, N.)

    Hamilton, William (Fife, W.)

    Mallalieu, E. L. (Brigg)

    Ryan, John

    Hamling, William

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

    Shaw, Arnold (Ilford, S.)

    Hannan, William

    Manuel, Archie

    Sheldon, Robert

    Harper, Joseph

    Marquand, David

    Shinwell, Rt. Hn. E.

    Hart, Mrs. Judith

    Marsh, Rt. Hn. Richard

    Shore, Peter (Stepney)

    Hazell, Bert

    Mason, Roy

    Short, Rt. Hn.Edward(N 'c'tle-u-Tyne)

    Healey, Rt. Hn. Denis

    Maxwell, Robert

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

    Herbison, Rt. Hn. Margaret

    Mendelson, J. J.

    Silkin, Rt. Hn. John (Deptford)

    Hobden, Dennis (Brighton, K'town)

    Milian, Bruce

    Silkin, S. C. (Dulwich)

    Hooley, Frank

    Miller, Dr. M. S.

    Silverman, Julius (Aston)

    Horner, John

    Mitchell, R. C. (S'th'pton, Test)

    Silverman, Sydney (Nelson)

    Houghton, Rt. Hn. Douglas

    Molloy, William

    Slater, Joseph

    Howarth, Harry (W ellingborough)

    Morgan, Elystan (Cardiganshire)

    Small, William

    Howarth, Robert (Bolton, E.)

    Morris, Alfred (Wythenshawe)

    Snow, Julian

    Howie, W.

    Morris, Charles R. (Openshaw)

    Spriggs, Leslie

    Hoy, James

    Morris, John (Aberavon)

    Steele, Thomas (Dunbartonshire. W.)

    Hughes, Rt. Hn. Cledwyn (Anglesey)

    Moyle, Roland

    Stewart, Rt. Hn. Michael

    Hughes, Enirys (Ayrshire, S.)

    Mulley, Rt. Hn. Frederick

    Stonehouse, John

    Hughes, Hector (Aberdeen, N.)

    Murray, Albert

    Strauss, Rt. Hn. C. R.

    Hunter, Adam

    Neal, Harold

    Summerskill, Hn. Dr. Shirley

    Hynd, John

    Newens, Stan

    Swain, Thomas

    Jackson, Peter M. (High Peak)

    Noel-Baker, Francis (Swindon)

    Swingler, Stephen

    Jay, Rt. Hn. Douglas

    Norwood, Christopher

    Symonds, J. B.

    Jeger, George (Goole)

    Oakes, Gordon

    Taverne, Dick

    Jeger,Mrs.Lena(H'b'n—St.P'CraS,S.)

    Ogden, Eric

    Thomas, George (Cardiff, W.)

    Jenkins, Hugh (Putney)

    O'Malley, Brian

    Thomas, lorwerth (Rhondda, W.)

    Jenkins, Rt. Hn. Roy (Stechford)

    Ornach, Maurice

    Thomson, Rt. Hn. George

    Johnson, Carol (Lewisham, S.)

    Orme, Stanley

    Thornton, Ernest

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

    Oswald, Thomas

    Tinn, James

    Jones, Dan (Burnley)

    Owen, Dr. David (Plymouth, S'tn)

    Tomney, Frank

    Jones,Rt.Hn Sir Elwyn(W.Ham,S.)

    Owen, Will (Morpeth)

    Tuck, Raphael

    Jones, J. Idwal (Wrexham)

    Padley, Walter

    Urwin, T. W.

    Judd, Frank

    Page, Derek (King's Lynn)

    Varley, Eric G.

    Kelley, Richard

    Paget, R. T.

    Wainwright, Edwin (Dearne Valley)

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

    Palmer, Arthur

    Walden, Brian (All Saints)

    Kerr, Russell (Feltham)

    Pannell, Rt. Hn. Charles

    Walker, Harold (Doncaster)

    Lawson, George

    Park, Trevor

    Wallace, George

    Leadbitter, Ted

    Parkyn, Brian (Bedford)

    Watkins, David (Consett)

    Ledger, Roll

    Pearson, Arthur (Pontypridd)

    Weitzman, David

    Lee, Rt. Ho. Frederick (Newton)

    Peart, Rt. Hn. Fred

    Wellbeloved, James

    Lee, Rt. Hit. Jennie (Cannock)

    Pentland, Norman

    Wells, William (Walsall, N.)

    Lee, John (Reading)

    Perry, Ernest G. (Battersea, S.)

    Whitaker, Ben

    Lestor, Miss Joan

    Perry, George H. (Nottingham, S.)

    White, Mrs. Eirene

    Lever, Harold (Cheetham)

    Prentice, Rt. Hn. R. E.

    Whitlock, William

    Lever, L. M. (Ardwick)

    Price, Christopher (Perry Barr)

    Wigg, Rt. Hn. George

    Lewis, Ron (Carlisle)

    Price, Thomas (Westhoughton)

    Willey, Rt. Hn. Frederick

    Lomas, Kenneth

    Price, William (Rugby)

    Williams, Alan (Swansea, W.)

    Loughlin, Charles

    Probert, Arthur

    Williams, Alan Lee (Hornchurch)

    Luard, Evan

    Pursey, Cmdr. Harry

    Williams, Clifford (AbertillerY)

    Lyon, Alexander W. (York)

    Rankin, John

    Williams, Mrs. Shirley (Hitchin)

    Lyons, Edward (Bradford, E.)

    Redhead, Edward

    Williams, W. T. (Warrington)

    Mabon, Dr. J. Dickson

    Rhodes, Geoffrey

    Willis, George (Edinburgh, E.)

    McCann, John

    Richard, Ivor

    Wilson, William (Coventry, S.)

    MacColl, James

    Roberts, Albert (Normanton)

    Winnick, David

    MacDermot, Niall

    Roberts, Goronwy (Caernarvon)

    Winterbottom, R. E.

    Macdonald, A. H.

    Roberts, Gwilym (Bedfordshire, S.)

    Woof, Robert

    McGuire, Michael

    Robertson, John (Paisley)

    Wyatt, Woodrow

    McKay, Mrs. Margaret

    Robinson,Rt.Hn.Kenneth(St.P'c'as)

    Yates, Victor

    Mackenzie, Gregor (Rutherglen)

    Robinson, W. 0. J. (Walth'stow, E.)

    Zilliacus, K.

    Mackie, John

    Rodgers, William (Stockton)

    TELLERS FOR`THE AYES:

    Mackintosh, John P.

    Roebuck, Roy

    Mr. Neil McBride and

    Maclennan, Robert

    Rogers, George

    Mr. Walter Harrison.

    McMillan, Tom (Glasgow, C.)

    Rose, Paul

    Division No. 137.]

    AYES

    [8.43 p.m.

    Abse, Leo

    Buchan, Norman

    Dunn, James A.

    Albu, Austen

    Buchanan, Richard (G'gow, Sp'burn)

    Dunnett, Jack

    Allaun, Frank (Salford, E.)

    Butler, Herbert (Hackney, C.)

    Dunwoody, Mrs. Gwyneth (Exeter)

    Alldritt, Walter

    Butler, Mrs. Joyce (Wood Green)

    Dunwoody, Dr. John (F'th & C'b'e)

    Allen, Scholefield

    Cant, R. B.

    Eadie, Alex

    Anderson, Donald

    Carmichael, Neil

    Edelman, Maurice

    Archer, Peter

    Carter-Jones, Lewis

    Edwards, Robert (Bilston)

    Armstrong, Ernest

    Castle, Rt. Hn. Barbara

    Edwards, William (Merioneth)

    Ashley, Jack

    Chapman, Donald

    Ellis, John

    Atkins, Ronald (Preston, N.)

    Coe, Denis

    English, Michael

    Atkinson, Norman (Tottenham)

    Coleman, Donald

    Ensor, David

    Bacon, Rt. Hn. Alice

    Concannon, J. D

    Evans, Albert (Islington, S.W.)

    Bagier, Gordon A. T.

    Conlan, Bernard

    Evans, loan L. (Birm'h'm, Yardley)

    Barnes, Michael

    Corbet, Mrs. Freda

    Finch, Harold

    Barnett, Joel

    Craddock, George (Bradford, S.)

    Fitch, Alan (Wigan)

    Beaney, Alan

    Crawshaw, Richard

    Fletcher, Raymond (Ilkeston)

    Bence, Cyril

    Cronin, John

    Fletcher, Ted (Darlington)

    Benn, Rt. Hn. Anthony Wedgwood

    Crosland, Rt. Hn. Anthony

    Floud, Bernard

    Bennett, James (G'gow, Bridgeton)

    Cullen, Mrs. Alice

    Foley, Maurice

    Bidwell, Sydney

    Darling, Rt. Hn. George

    Foot, Sir Dingle (Ipswich)

    Binns, John

    Davidson, Arthur (Accrington)

    Foot, Michael (Ebbw Vale)

    Bishop, E. S.

    Davies, Dr. Ernest (Stretford)

    Ford, Ben

    Blackburn, F.

    Davies, G. Elfed (Rhondda, E.)

    Forrester, John

    Blenkinsop, Arthur

    Davies, Ednyfed Hudson (Conway)

    Fowler, Gerry

    Boardman, H.

    Davies, Harold (Leek)

    Fraser, Rt. Hn. Tom (Hamilton)

    Booth, Albert

    Davies, Robert (Cambridge)

    Freeson, Reginald

    Boston, Terence

    de Freitas, Sir Geoffrey

    Gardner, A. J.

    Bowden, Rt. Hn. Herbert

    Delargy, Hugh

    Garrett, W. E.

    Boyden, James

    Dell, Edmund

    Garrow, Alex

    Braddock, Mrs. E. M.

    Dempsey, James

    Ginsburg, David

    Bradley, Tom

    Dewar, Donald

    Gordon Walker, Rt. Hn. P. C.

    Bray, Dr. Jeremy

    Diamond, Rt. Hn. John

    Gourfay, Harry

    Brooks, Edwin

    Dickens, James

    Gray, Dr. Hugh (Yarmouth)

    Broughton, Dr. A. D. D.

    Dobson, Ray

    Greenwood, Rt. Hn. Anthony

    Brown, Hugh D. (G'gow, Provan)

    Doig, Peter

    Gregory, Arnold

    Brown ,Bob (N'c'tle-upon-Tyne, W.)

    Donnelly, Desmond

    Grey, Charles (Durham)

    Brown, R. W. (Shoreditch & F'bury)

    Driberg, Tom

    Griffiths, David (Rother Valley)

    NOES

    Alison, Michael (Barkston Ash)

    Blaker, Peter

    Campbell, Gordon

    Allason, James (Hemel Hempstead)

    Body, Richard

    Carlisle, Mark

    Astor, John

    Bossom, Sir Clive

    Carr, Rt. Hn. Robert

    Atkins, Humphrey (M't'n—M'd'n)

    Boyd-Carpenter, Rt. Hn. John

    Cary, Sir Robert

    Awdry, Daniel

    Boyle, Rt. Hn. Sir Edward

    Channon, H. P. G.

    Baker, W. H. K.

    Braine, Bernard

    Chichester-Clark, R.

    Balniel, Lord

    Brinton, Sir Tatton

    Clark, Henry

    Batstord, Brian

    Bromley-Davenport,Lt-Col.Sir Walter

    Clegg, Walter

    Beamish, Col. Sir Tufton

    Brown, Sir Edward (Bath)

    Cooke, Robert

    Bell, Ronald

    Bruce-Gardyne, J.

    Cooper-Key, Sir Neill

    Bennett, Sir Frederic (Torquay)

    Bryan, Paul

    Cordle, John

    Berry, Hn. Anthony

    Buchanan-Smith,Alick(Angus,N—M)

    Corfield, F. V.

    Bessell, Peter

    Buck, Antony (Colchester)

    Costain, A. P.

    Biffen, John

    Bullus, Sir Eric

    Craddock, Sir Beresford (Spelthorne)

    Birch, Rt. Hn. Nigel

    Burden, F. A.

    Crouch, David

    Crowder, F. P.

    Hutchison, Michael Clark

    Percival, Ian

    Cunningham, Sir Knox

    Iremonger, T. L.

    Pike, Miss Mervyn

    Currie, G. B. H.

    Irvine, Bryant Godman (Rye)

    Pink, R. Bonner

    Dalkeith, Earl of

    Jenkin, Patrick (Woodford)

    Pounder, Rafton

    Dance, James

    Johnson Smith, G. (E. Grinstead)

    Powell, Rt. Hn. J. Enoch

    Davidson,James(Aberdeenshire,W.)

    Johnston, Russell (Inverness)

    Price, David (Eastleigh)

    d'Avigdor-Goldsmid, Sir Henry

    Jones, Arthur (Northants, S.)

    Prior, J. M. L.

    Dean, Paul (Somerset, N.)

    Jopling, Michael

    Pym, Francis

    Deedes, Rt. Hn. W. F. (Ashford)

    Joseph, Rt. Hn, Sir Keith

    Quennell, Miss J. M.

    Digby, Simon Wingfield

    Kaberry, Sir Donald

    Rees-Davies, W. R.

    Dodds-Parker, Douglas

    Kerby, Capt. Henry

    Renton, Rt. Hn. Sir David

    Doughty, Charles

    Kershaw, Anthony

    Ridley, Hn. Nicholas

    Douglas-Home, Rt. Hn. Sir Alec

    Kimball, Marcus

    Ridsdale, Julian

    Drayson, G. B.

    King, Evelyn (Dorset, S.)

    Rippon, Rt. Hn. Geoffrey

    du Cann, Rt. Hn. Edward

    Kitson, Timothy

    Robson Brown, Sir William

    Eden, Sir John

    Knight, Mrs. Jill

    Rodgers, Sir John (Sevenoaks)

    Elliot, Capt. Walter (Carshalton)

    LambtOn, Viscount

    Rossi, Hugh (Hornsey)

    Errington, Sir Eric

    Langford-Holt, Sir John

    Royle, Anthony

    Eyre, Reginald

    Legge-Bourke, Sir Harry

    Russell, Sir Ronald

    Farr, John

    Lewis, Kenneth (Rutland)

    St. John-Stevas, Norman

    Fisher, Nigel

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

    Sandys, Rt. Hn. D.

    Fletcher-Cooke, Charles

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Scott, Nicholas

    Forrest, George

    Longden, Gilbert

    Sharpies, Richard

    Fortescue, Tim

    Loveys, W. H.

    Shaw, Michael (Sc'b'gh & Whitby)

    Foster, Sir John

    Lubbock, Eric

    Sinclair, Sir George

    Galbraith, Hn. T. C.

    McAdden, Sir Stephen

    Smith, John

    Gibson-Watt, David

    MacArthur, Ian

    Stainton, Keith

    Giles, Rear-Adm. Morgan

    Mackenzie,Alasdair(Ross—Crom'ty)

    Steel, David (Roxburgh)

    Gilmour, Ian (Norfolk, C.)

    Maclean, Sir Fitzroy

    Stodart, Anthony

    Gilmour, Sir John (Fife, E.)

    Macleod, Rt. Hn. Iain

    Stoddart-Scott, Col. Sir M. (Ripon)

    Glover, Sir Douglas

    McMaster, Stanley

    Summers, Sir Spencer

    Glyn, Sir Richard

    Macmillan, Maurice (Farnham)

    Talbot, John E.

    Godber, Rt. Ho. J. B.

    Maddan, Martin

    Tapsell, Peter

    Goodhart, Philip

    Maginnis, John E.

    Taylor, Sir Charles (Eastbourne)

    Goodhew, Victor

    Marplee, Rt. Hn. Ernest

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

    Gower, Raymond

    Marten, Neil

    Taylor, Frank (Moss Side)

    Grant-Ferris, R.

    Mathew, Robert

    Teeling, Sir William

    Gresham Cooke, R.

    Maude, Angus

    Temple, John M.

    Griffiths, Eldon (Bury St. Edmunds)

    Mawby, Ray

    Thatcher, Mrs. Margaret

    Grimond, Rt. Hn. J.

    Maxwell-Hyslop, R. J.

    Thorpe, Jeremy

    Gurden, Harold

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

    Tilney, John

    Hall, John (Wycombe)

    Mills, Peter (Torrington)

    van Straubenzee, W. R.

    Hall-Davis, A. G. F.

    Mills, Stration (Belfast, N.)

    Vickers, Dame Joan

    Hamilton, Michael (Salisbury)

    Miscampbell, Norman

    Wainwright, Richard (Coble Valley)

    Harris, Frederic (Croydon, N.W.)

    Mitchell, David (Basingstoke)

    Walker, Peter (Worcester)

    Harris, Reader (Heston)

    Monro, Hector

    Walker-Smith, Rt. Hn. Sir Derek

    Harrison, Brian (Maldon)

    More, Jasper

    Walters, Dennis

    Harrison, Col. Sir Harwood (Eye)

    Morgan, W. G. (Denbigh)

    Ward, Dame Irene

    Harvey, Sir Arthur Vere

    Morrison, Charles (Devizes)

    Weatherill, Bernard

    Harvie Anderson, Miss

    Mott-Radelyffe, Sir Charles

    Webster, David

    Hastings, Stephen

    Monro-Lucas-Tooth, Sir Hugh

    Wells, John (Maidstone)

    Heald, Rt. Hn. Sir Lionel

    Murton, Oscar

    Whitelaw, William

    Heath, Rt. Hn. Edward

    Nabarro, Sir Gerald

    Wills, Sir Gerald (Bridgwater)

    Heseltine, Michael

    Heave, Airey

    Wilson, Geoffrey (Truro)

    Higgins, Terence L.

    Noble, Rt. Hn. Michael

    Winstanley, Dr. M. P.

    Hiley, Joseph

    Nutt, John

    Wolrige-Gordon, Patrick

    Hill, J. E. B.

    Onslow, Cranley

    Wood, Rt. Hn. Richard

    Hirst, Geoffrey

    Orr, Capt. L. P. S.

    Woodnutt, Mark

    Hobson, Rt. Hn. Sir John

    Orr-Ewing, Sir Ian

    Worsley, Marcus

    Hogg, Rt. Hn. Quintin

    Osborn, John (Hallam)

    Wylie, N. R.

    Holland, Philip

    Osborne, Sir Cyril (Louth)

    Younger, Hn. George

    Hooson, Emlyn

    Page, Graham (Crosby)

    TELLERS FOR THE NOES:

    Hordern, Peter

    Page, John (Harrow, W.)

    Mr. R. W. Elliott and

    Hornby, Richard

    Pardoe, John

    Mr. Anthony Grant.

    Howell, David (Guildford)

    Pearson, Sir Frank (Clitheroe)

    Hunt, John

    Peel, John

Clause 2.—(SELECTIVE EMPLOYMENT REFUND.)
Mr. Pardoe: I beg to move Amendment No. 262, in page 2, line 23, at the end to insert:
(2) This section applies to any employment for a contribution week of less than 21 hours, in any establishment or activity not mentioned in sections 1, 3, 4, 5, 6 of this Act, or in other subsections of this section.
The Chairman: I think that it would be for the convenience of the Committee if there were discussed with it the following Amendments:
Amendment No. 209, in page 2, line 23, at the end to insert:
Provided that any such payment shall be reduced by one-half in respect of a person who has worked less than twenty-one hours during that week

753
Amendment No. 280, in page 2, line 24, to leave out subsections (2) to (6) and insert:
(2) This section applies to any employment—

(a) for a contribution week of less than 21 hours, or

(b) of any person who is registered as a disabled person.

Amendment No. 307, in page 2, line 38, at the end to insert:
" the establishment employs amongst its employees at least 20 per cent. who are in part-time employment who each works for less than 21 hours a week, or are over 60 years of age ".
Amendment No. 131, in page 2, line 38, at the end to insert:
(c) the establishment employs among its employees at least 20 per cent. who are in part-time employment who each work for less than 21 hours per week.
Amendment No. 249, in page 2, line 38, at the end to insert:
(c) more than half of the employed persons employed for the purposes of the establishment are normally so employed at a rate of remuneration not exceeding five pounds per week.
New Clause 3, "Part-time workers".
Mr. Pardoe: Amendment No. 262 concerns part-time employees. Amendment Nci. 280 makes nonsense unless it is taken in conjunction with Amendment No. 267, in page 1, line 10, to leave out from "to" to the end of the section and insert:
"twice the tax paid—

(a) if that person was employed within a development area as designated by the Board of Trade, or

(b) if the employer can show, to the satisfaction of the Minister, that the value of output per manhour, in his latest financial year, was at least 4 per cent. more, measured at constant prices, than in his previous financial year, or

(c) if the employer can show, to the satisfaction of the Minister, that the value of his exports abroad in his latest financial year, was at least 4 per cent. more, measured at constant prices, than in his previous financial year ".

on Clause 1. These two were designed together. Therefore, we should concentrate on Amendment No. 262, and I do not intend to refer any further to Amendment No. 280, which, in a sense, has already been overtaken by events.
The points to be made in support of this Amendment are very simple and can be shortly stated. I shall try to set
754
a good example by speaking for only a very few minutes. First, this tax, being a poll tax, is a higher proportion of a low income than of a high income. Part-time employees receive low incomes and, therefore, the tax is a much greater disincentive to the employment of part-time workers than of full-time workers. This is a matter of simple arithmetic and the Front Bench opposite will be able to work it out.
Far be it from me to give the Government Front Bench a lecture on Socialist economics or Socialist principles of taxation, though I have some experience of Socialist economics. On previous occasions, I have said that one of the principles we should follow in taxation is to take according to the ability to pay. In this tax, we have a classic example of taxing low income earners. By definition, part-time workers are low income earners, and we are taxing them very heavily. Therefore, as I have said, the disincentive to employ part-time workers is all the greater.
We must attract part-time workers into employment. Earlier today, the Prime Minister laid great stress on the appalling shortage of labour in our economy. Where shall we find the labour? Apart from the shake-out of which the right hon. Gentleman talked, we shall find it only among those who are not at present members of the labour force. Who are these people? They are those who want part-time employment, primarily women and elderly people.
The employment in industry of women, particularly housewives and mothers of young children, presents a problem. Not only do we want to bring back into employment those qualified as doctors and teachers—the need there is obvious —but we want to bring women into employment in the whole length and breadth of British industry. We should encourage them at the time when their families have grown up to school age or some sort of independence to come back and take an active part in industry. But they cannot be brought back as full-time employees.
We all know about the "latch-key" children, and we have no desire to encourage that sort of thing. We should ensure that industry is able to adapt itself to the problems of housewives and mothers of young children so that they

755
are encouraged to come in and work the sort of hours which fit in with the bringing up of a young family. This means part-time employment.
There are already substantial disincentives against women taking employment. Our Income Tax is a notorious disincentive, lumping together the incomes of husband and wife for tax purposes in many instances. I have had many such cases put to me, and we all know how these calculations are made and the criticisms which they cause. So there is already some disincentive for women to come back into industry. The tax will create an even greater disincentive because of the burden that it places on the employer who wishes to adapt his industrial processes to the employment of part-time women. We shall not be gaining from this great reservoir of now unemployed women.
9.0 p.m.
Thirdly, do the Government believe that a great host of part-timers, when they have been shaken out by the tax, will go and push handles and get their heads down in manufacturing industry? I can assure them it will not happen. The Mrs. Mopps will not be forced by the tax into industrial processing. Many of them have reached a stage in life where industrial training for them would be somewhat problematical. Many of them are not the kind of people who can adapt themselves to the hours and processes in which the Government seem to be interested. So we shall not get a shakeup. We shall merely ensure a situation in which all those at present sweeping our floors will not be employed. If they are shaken out they will have to go back and sit all day in their front parlours. They will not go into factories.
My fourth point concerns the other important category of part-time employees —the elderly. Earlier we had an instance from the Government back benches. It is a medical fact that elderly people need a period of part-time employment to adjust to retirement. The Government are placing a hefty disincentive on part-time employment and are not making any provision for a period in which elderly people can adjust to retirement. We want older people to continue
756
working productively in industry and elsewhere. This is, I hope, part of the Government's purpose. But employers will face the fact that, although the employment is cheap, and although the elderly employees are working few hours, they have to pay this very substantial tax, for it will be substantial in proportion to the incomes paid to the elderly. We already have a substantial disincentive to elderly people working because of the earnings rule. Now the Government are to heap this other disincentive on top.
I cannot believe that the Government can possibly fail to accept this Amendment. I cannot think what argument they could use to persuade themselves that the Amendment does not make sense. So I commend it to the Government and the Committee and hope it will be accepted.
Mr. Gower: I echo the words of the hon. Member for Cornwall, North (Mr. Pardoe). I canot see a valid reason why the Government could reasonably reject the Amendment. As the hon. Gentleman said, those concerned are generally low-income earners, and the imposition of this tax must, in effect, be a great disincentive to the employment of persons in this category.
I have put Amendment No. 131 on the Notice Paper, in page 2, line 38, at end insert:
(c) the establishment employs among its employees at least 20 per cent. who are in part-time employment who each work for less than 21 hours per week.
It would define even more narrowly the categories for whom I would seek a concession if the Government are so obdurate as to resist this Amendment. It would be a modest requirement because establishments of this nature with as much as 20 per cent. in part-time employees are doing a wonderful job for the community. If people are working less than 21 hours per week, they are truly part-timers.
There is a long tradition of part-time work in the booming industrial areas—the Midlands and Yorkshire, for example —where there has been prosperity for many years. But in many other areas the effects will be worse, because the opportunities for part-time employment are much smaller and are of comparatively recent development—for example,

757
the South-West, Wales and Scotland. These are development areas where opportunities for part-time employment have been relatively small in the past.
It is only in comparatively recent years that some areas have been developing, through the infusion of newer industries, wider opportunities for the employment of part-time people. If the Government reject even the principle of the Amendment they will inflict yet another blow at these areas.
We know how hard it is in some cases to entice married women back to work. We know how desperately the Secretary of State for Education and Science wants to get them back to part-time teaching and how important it is for the future health of the economy that we should persuade more and more married women to go back to work when their children are old enough. This tax will lessen the opportunities for them.
The same is true of widows. We know how precious to many of them is the opportunity they have to do part-time work in order to supplement their inadequate pensions. If the Government reject the Amendment, widows will have fewer opportunities of such employment. The predicament of the elderly in some parts of the country will also be bad if their limited opportunities of part-time work are to be reduced. It will be particularly bad for those in the development areas and in places like the worst-hit parts of Scotland, Wales and the West of England.
The rejection of this series of Amendments by the Government can only be regarded as notice to widows, the elderly and others for whom part-time work is needed that, in future, their opportunities will be sadly reduced by the impact of this impost in its present form.
Mr. Hirst: I support the Amendment. It is yet another which arises out of our discussions on certain other legislation. After all that we have heard during the Committee and Report stages of the Finance Bill, I wonder whether right hon. Gentlemen opposite have any hearts at all. I am not a doctor, but I suppose that anatomically they must have, but it seems extraordinary that we should reach this stage in our discussions in the hope—and that is all it is—that the Government have now reached some reasonable discretion in this matter.
758
I know only too well how important to the economy part-time workers are. They are extremely important in my constituency, as they are elsewhere. There have always been certain industries which undeniably depended on part-time workers, and it is interesting that those which depend most on part-time workers are often the most competitive. I would have thought that that would have dawned in the head and the heart of the Financial Secretary to the Treasury. He has had a lot of hard words from me. I am in one of my most reasonable moods tonight, because hope springs eternal and I have always imagined that one day the obvious would sink in, even with this Government, although I sometimes despair.
I hope that it will in this case, not only for the industries which I have mentioned and in which I have a particular constituency interest, but for the many other aspects of the economy which we have to keep going. Although the Government have today taken somewhat serious measures, I suppose and I shall read and learn more in due course—that even they want to keep the economy going. If they imagine that they can do so without using part-time workers, I invite the Financial Secretary once again to come to my constituency and to learn something outside the law courts which will he of great additive value to his appreciation of matters which are discussed in the House of Commons.
Many elderly people depend on part-time work for their livelihoods above a certain line. That applies particularly to those mentioned by the hon. Lady the Member for Wood Green (Mrs. Joyce Butler), in that telling speech which I have mentioned more than once—those who work in the shops. There is also a social aspect. There is not only an economic advantage in having this sort of assistance, but there is a social advantage from having people who are getting on in years having something which they can do and in which they can take an interest and which gives them that little extra which the State cannot provide and which adds to their dignity of living. Is not that something?
I remember only too well, when I sat on the benches opposite, listening to the speeches from this side of the Committee pleading much more eloquently than I

759
dare to imagine that I could, hour after hour, without a Guillotine, for these very people. Are we nearer to giving them a chance now? is this the time when right hon. Gentlemen opposite will say that this is their opportunity and their chance to help these people about whom they have talked all these years, not to damn them and to tax their jobs out of existence?
Has it required all these debates to reach that point? If it has, my confidence in the democratic working of Parliament is not yet broken and I hope that on this issue it will be preserved.
9.15 p.m.
Mr. W. T. Williams: I do not propose to spend very long on this Amendment. I hope that the Government will find it possible to accept this, or one of the variants which have been put down. I have three reasons for asking that my voice may be added to those already raised in support of this Amendment, and to the voices which will undoubtedly follow mine.
The Government have talked a good deal about the difficulty of introducing legislation of this kind except in broad terms. It is agreed on every hand, including in Government quarters that this is a rough, rude instrument, that it falls heavily with little discrimination and that the only way in which it can be improved is by experience. It is said that it will need to be seen in the months ahead how the blows fall. To those who think as I do it appears that the weapon is too rough and rude, and falls too heavily in places for which the Government ought to have had regard before they introduced this legislation.
It appears to us that one of the difficulties into which the Government have got in introducing the selective employment payments machinery is that they have been content to divide industry into two sections, manufacturing and services, whereas there are at least three broad sections into which industry can be properly set. They are services, manufacturing and distribution, and each is as unrelated to the other as the Government accept services is to manufacturing.
The distributive industry has a completely different case from that of the general services industry. If the Govern-
760
ment had been wise enough to have made the division a little broader they might have avoided many of the anomalies which are now apparent. In particular, the incidence of this tax upon part-time employees is one inflicting great and, we believe unnecessary burdens upon an important and valuable section of the community. When one is talking about the shops and the establishments which provide foodstuffs such as bread and milk and the other essentials of life, what one recognises immediately is that, by and large, the food distributive industry depends very substantially for its work upon part-time labour at weekends.
Most people shop at weekends and most establishments for the distributive trades employ additional labour at weekends. That being so, if the tax is to fall —even a 12s. 6d. tax applicable to women employees—upon the shops and distributive agencies, employing part-time labour at weekends, the Government will do double injury. They will injure the shops and make more difficult their operation, and they will do a great disservice to a large section of the community to whom reference has already been made—married women, widows and other people who, for some reason or other, have to do part-time work and are not in a position to undertake any other kind of employment than to work in shops at weekends.
If the Government persist in this tax the result will be that many of the shops which now employ part-time workers will be unable to continue to do so. It means, also, that families will feel the pinch from being prevented from earning the modest sum of money which they could earn if they were enabled to keep their jobs.
I understand perfectly the difficulties which the Government face, although I am less sympathetic with them than I am with the difficulties of the people affected by the tax. The Government's difficulty is to ensure that there is not abuse and of making the tax work through the machinery of the insurance system. This use of the insurance structure is in itself something which I deplore and which members of the Government used themselves to deplore in previous decades. But if difficulty arises because it is not possible to collect this tax without the danger of abuse and fraud, surely it is not beyond the wit of the Government to

761
introduce an additional stamp through the insurance scheme which would meet the needs of part-time workers. Many of us feel that the stamp should anyway be cheaper than the full stamp, because many part-time workers, especially married women, feel a real sense of grievance that they have to pay the full insurance stamp, although they cannot reap all the benefits of it which would follow if, for example they were unmarried.
We do not wish to embarrass the Government, but we believe most sincerely that by introducing this tax they are putting an unnecessary burden both on the people who work in shops and on the proprietors of the shops themselves. Because we believe that this difficulty is not insuperable, we hope that the Government will not, merely because of the administrative problems of doing this through the insurance stamp or in conjunction with it, refuse to accept our plea.
Sir Keith Joseph: I have sought to catch your eye, Mr. Jennings, because my right hon. and hon. Friends and I have other Amendments, and particularly new Clause No. 31, which march parallel with this Amendment. We feel so strongly that this Amendment should be carried that my right h on. Friend the Member for Grantham (Mr. Godber) will later seek to catch your eye, Mr. Jennings. I realise that many hon. Members wish to speak and therefore I shall keep my remarks as short as possible.
If a Conservative Government had introduced this tax, the outcry would have been enormous. How the welkin would have rung. We should have had passion. There would have been near hysteria from these benches. But, as it is, we have had a cogent case put exceptionally trenchantly by the hon. Member for Cornwall, North (Mr. Pardoe) and supported with the greatest clarity and force by my hon. Friends the Member for Barry (Mr. Gower) and Shipley (Mr. Hirst). Now the Government have heard the case put soberly, almost sadly, by the hon. and learned Member for Warrington (Mr. W. T. Williams).
The Government must note that the implication of the Bill goes dead against any sensible constructive labour policy. We are told that the country is short of labour. We believe that any Government
762
should encourage people to work. We know that many people work part time because they cannot work full time. We are familiar with the sources—housewives, widows, the elderly, people who are disabled to such an extent that they cannot work full time but not so greatly disabled that they cannot work part time.
Earlier in our debates the Government sought to prove that the bulk of this army of part-time workers worked in manufacturing industries. But the March, 1966 issue of their own publication, the Ministry of Labour Gazette, disproves this thesis completely. I hope that the Government Front Bench will pay heed to these figures. According to that publication, nearly 2 million part-time workers were employed in March this year, 1¾million of them women. I do not have a division between adults and the 18–21 age group, but of the 2 million part-time workers the analysis shows that only about one-third of 1 million worked in manufacturing industries.
That shows that seven-eighths of the part-time workers are in service occupations and, therefore, come under the impact of this proposed tax. It is not, therefore, open to the Government to say that most part-time workers will benefit from the refund, let alone the premium. The vast bulk of part-time workers will ,through their employers, bear the tax with no refund, and certainly no premium.
Where do these part-time workers work? They work, as the hon. and learned Member for Warrington has told us, to a large extent in distribution, where they enable shopkeepers, stores, shops and co-ops to bear the peak load, particularly at weekends. They work in grocery shops, food shops, tobacconists, bookshops and in all manner of shops. Without them the peak shopping habits of the population would be most inadequately served. They work in the services, in dry cleaning, laundries, catering, shoe repairs and contract cleaning. We could all add to the list. They work in cinemas and hotels. The Government are desperately seeking to add to their number in teaching and nursing. Again, I give only a few of the headings of their employment.
What will be the result of this tax'? I fully endorse the argument of the hon.

763
Member for Cornwall, North (Mr. Pardoe) that the lower the pay of the worker, the higher the proportion a fixed poll tax bears to his pay. We are dealing here with part-timers whose pay is relatively low. Therefore, let not the Government use the argument that it is a mere 12s. 6d. a week or something like that. In proportion to the wage costs of the occupation, this is a heavy impost. It may represent an increase of as much as 20 or 30 per cent. of the labour content of their service.
The Government have argued that any worry about part-timers was completely unnecessary because there was so little unemployment, they said, that no employer would be in a position to dismiss anybody because he could not replace him. Thus the Government were able to argue, I think wrongly, that in the present state of very low unemployment the part-timer was safe. Indeed, it is true that many of the services for which we speak are desperately short of labour.
It is no longer possible, however, for the Government to use that argument. After this afternoon's statement in the Prime Minister's frank admission that the Government expect unemployment to rise, and the Government's determination to hold prices steady, employers will be squeezed and they will have a growing number of unemployed from whom to choose for their employ.
In this situation we have to ask ourselves what the effect of this tax will be. Its purpose, although disguised by the Government, has been clear all along—that is, to put up prices. We are back to the 1951 Budget strategy when the late Mr. Gaitskell sought to deal with inflation by mopping up purchasing power, by putting up prices. The present Government chose to disguise their objective by making the employer put up prices to bear the burden of this tax.
It was a proper service under the Government's scheme for the employer to pass on this tax. That was the strategy. Now, however, the employer will not be able to pass on this tax because his profits will be squeezed and his prices will be held steady. Thus the employer will be forced to absorb the tax or to dismiss labour.
764
9.30 p.m.
Now we ask ourselves the big question: whom will the employer choose to dismiss? As my hon. friends have already said, the part-timer already is an expensive luxury in a free labour market, because the employer has to bear full National Insurance stamp for less than full-time work. The result of this tax will be that the part-timers will be dismissed. The very people who eke out an extra income from part-time work for the benefit of the economy will be the ones who will have first to be dismissed.
The very people the Government should be encouraging to come into the labour force will be turned out of the labour force, and, as has been made plain, it is these people who, because of their pattern of life, cannot shift to industry. There cannot be any argument from the Government that these people are mobile, or that they will work in factories or exporting industry. Surely the Government have been riven by the logic of events and their own policies, culminating in the Prime Minister's statement this afternoon, of all their defences of the thoroughly damaging effect of the tax on part-time workers.
That is why my hon. and right hon. Friends and I urge upon the Government this group of Amendments. We support, in particular, New Clause 3. But if the Government cannot make sense of their wretched tax sufficiently to exempt the part-timers, then we ask them to find a way of refunding the tax to the employers of part-timers, and if they cannot do that, let them consider the method proposed by the hon. and learned Member for Warrington of a special tax.
There must be some way in which this tax can be spared on the part-timers. If there is not a way, and if this is what the Financial Secretary intends to tell us, then this is one more condemnation of a thoroughly bad tax.
Mr. Richard Wainwright: In supporting the Amendment which has been moved by my hon. Friend the Member for Cornwall, North (Mr. Pardoe) I wish to follow for a moment or two the line of argument, not, if I may be forgiven, of the last speaker, the right hon. Member for Leeds, North-East (Sir K. Joseph), but of the hon. and learned

765
Member for Warrington (Mr. W. T. Williams), whose argument it is a pleasure to try to pursue—perhaps in a slightly different direction. I was only sorry that during the eloquent speech which he made he had behind him virtually empty benches.
The fact is that this proposed tax with no refund in respect of part-timers is a poll tax upon a poll tax, because of its being added to the employer's National Insurance contribution. The National Insurance stamp is thoroughly identified in the public mind as a poll tax which is always going up, and one can scarcely blame the public if they begin to wonder how many months it will be before the S.E.T. part of the stamp also goes up.
Since the Liberal Party launched a campaign up and down the country against he S.E.T. proposals—by leaflets, and the like—our party postbag has, naturally, been very large. It has been brought home to us very clearly by employers of part-time labour that they regard this as a poll tax upon a poll tax, as I should like to illustrate by two brief quotations from the letters we have received.
From a substantial cleaning services company with various addresses in North and West London we have this comment from a director, in a letter dated 25th June, 1966:
"We have, among others, a male pensioner working for us. He rises at 5 a.m., and works 2½hours in the mornings five days a week for £3 15s. Out of this he pays 11s. Income Tax and 8s. in fares and 9d. towards the National Insurance stamp of 14s. Id. He probably earns us about £1 or a little less. Under the S.E.T. we would have to pay an additional 25s. This old man, who still works and keeps his self-respect, will become redundant."
Then, if I may give one example in respect of the part-time employment of women, I have a letter from a laundry company in London, S.E.6, dated 22nd June, 1966, in which a director of the company says:
" Our organisation at Catford employs some 700 people of which about 350 are part-time women. We estimate the cost of the Selective Employment Tax which we will have to meet to be about £526 per week, which is something like an 8 per cent. increase on wages. With such a la-ge percentage of part-time women, which with present-day labour shortages we are forced to employ, we are already carrying a heavy burden in the form of full National Insurance contribution for them."
766
In pursuing the Amendment, I have some feeling of hope, because of the sentiments expressed by the Chief Secretary when the probable plight of part-timers was discussed in the House on 27th June. On that occasion, and with special reference to a proposal from his own side of the House to alleviate the tax in respect of part-timers, the Chief Secretary used these words:
"There is no point in having a disproportionate tax if one does not have to have one, and we would have been only too glad to have provided a method of avoiding a disproportion which was consistent with the need to introduce a tax of this kind at this time with the machinery that is available and which would be capable of being collected, in an economic fashion. My hon. Friend is right in saying that we would have introduced something to meet his point had it been possible to do so."—[OFFIciAL REPORT, 27th June, 1966; Vol. 730, c. 1347.]
I believe that the Amendment moved by my hon. Friend the Member for Cornwall, North (Mr. Pardoe) proposes a viable means of meeting the point which the Chief Secretary said that he would be glad to meet. I hope that in a few minutes we shall hear that that is exactly what the Government are willing to do.
Mr. R. B. Cant: I tried to dispel many of the misgivings which I have about the tax by going into the Library and reading an article by the Economic Editor of the Financial Times in the penultimate issue of the Banker. Although the article was extremely favourable in parts—it thinks that the tax, like the curate's egg, is good in parts—it did not dispel those misgivings. To some extent, the problem is that no one has defined precisely what the tax is supposed to do.
At the beginning, I thought that it was a revenue raiser. Then it slowly became a sort of resource reallocator. It is obvious now that it is a deflator which, in terms of a gamble, perhaps will not come off. Perhaps we should console ourselves with the fact that Mr. Kaldor did not introduce his expenditure tax.
I want to make one particular point and, in doing so, may I say that I am a completely unsponsored Member of Parliament, with no affiliations. I want to take up the question of the part-time worker because, without going into all the heartrending exhibitions that we have had from the benches opposite, I think

767
that the Financial Secretary might look at the economics in terms of the present area of retail distribution.
It comes as a surprise to many people reading the work of Lady Margaret Hall, Oxford, that productivity in the area of retail distribution has risen extremely rapidly since the late 1959s. Whereas undoubtedly that is a function of major capital investment in the industry, it is also entirely dependent on the use of part-time labour.
Where one gets this sort of indivisibility in capital investment which is subject to peak period demand, it is essential to make certain that one can adapt the labour supply, and in this industry, or service, I think that we have this unique contribution, or combination, of investment on a considerable scale in the last decade made even more fruitful by the use of part-time labour. I hope that some of these Amendments will be agreed to by the Government, although I shall follow the conventions of the House and vote for the Government.
Sir David Renton: The application of the Selective Employment Tax to part-time workers will so obviously conflict with so many of the social and economic purposes which the Government and the Opposition have in mind that I think the Government will have to do something about this.
Amid all the conflicting factors, and arguments on these factors, that we have had in these discussions on the Selective Employment Tax—I wonder whether I might have the Financial Secretary's attention, because I want to make an impact on his mind, if it is possible to do so still—I should have thought that the Government could accept, and could not avoid accepting, two aims. First, that in these difficult times we have to make the maximum use of the energies and talents of as many of our people as possible. It is rather extraordinary that this tax should have been conceived, and this Bill drafted, without taking any note at all of the part played by part-time workers, be they married women, old-age pensioners, disabled people, or anyone else. The second aim, and this I would have hoped would have appealed particularly to a Left-wing Government, although I
768
think that we have as good a record as they have, should be to apply this Tax to avoid hardship.
We can all quote various examples of how this tax will operate. I shall quote only one, that of a clerk to a local authority, who retired at the age of 60, a good many years ago now. He thought that it was his duty to keep on working for as long as he could. The value of his superannuation payment is not as good as he hoped it would be when he retired, in spite of the various increases which have taken place. He is now working for two days a week as a clerk to a firm of building contractors. He cannot imagine that the firm will keep him in employment if the full tax has to be paid in respect of his employment. Therefore, I would have hoped that we could agree upon aims.
On this, as in so many other matters —and I speak with some experience of Whitehall—there is always a tendency in Whitehall to overlook the situation which applies in rural England. I think that in our villages and country towns we tend to make greater use of part-time workers than is done in the great cities, partly because our people in the country places have more energy, and partly because they live longer, and therefore we have far more old people who are in part-time employment.
I hope that when the Financial Secretary replies there will not be any dispute about the aims. If we can agree on the aims, this debate can turn into a discussion as to methods. I know of only two methods of overcoming the Government's omissions in the Bill. The first is to follow the method proposed in most of these Amendments, which is to make the tax payable in respect of part-time workers the subject of refund. Another method is to have differential rates of tax, and I must say that, speaking as a Member representing a rural constituency, this has an advantage. To the extent that part-time workers are employed on farms their employers will be able to claim a refund, but if we have differential rates there will be no discouragement at all to the employment of part-time workers on farms; indeed, there will be an incentive on the part of farmers to employ part-time workers as much as possible.

769
9.45 p.m.
I therefore suggest that the Government do not commit themselves tonight on the method by which the aims on which we all agree should be achieved. If they do not find the methods suggested in the Amendments, or the drafting of those Amendments, acceptable, they should say that they agree that the aim should be achieved and let us know later, when they have had further thoughts, about the method.
The Financial Secretary to the Treasury (Mr. Niall MacDermot): Is the right hon. and learned Gentleman envisaging that there is an easier method for dealing with a differential rate compared with the proposition for a total exemption? If so, I shall be glad to know what it is.
Sir D. Renton: I would have thought that exemption was much more easily administered, but in order to give a special advantage in the case of part-time workers on farms the incentive of differential rates might be a good thing.
As the hon. and learned Gentleman has got me to my feet on the question of method, I should like to point out how wise my hon. Friends and Members of the Liberal Party are to have chosen 21 hours in a week as the dividing line, because that is the period fixed in the Contracts of Employment Act and the Redundancy Payments Act.
Mr. Doig: I want to draw the Government's attention to Amendment No. 209 and ask them carefully to consider its purpose. In the Second Reading debate I suggested that part-time employees working 21 hours or less a week ought to pay only half the rates for a stamp. Having failed in that respect I try again and put forward the view that half of what they pay should be refunded. The majority of these people cannot possibly take full-time employment. We are deliberately taking out of employment and production people who can do no other type of work. This means that what they are now doing will have to be done by someone else, who will have to come from the pool of employment from which we draw productive workers.
I am not concerned about the big combines which employ Mrs. Mopps, but I am concerned about the large number
770
of small shopkeepers who depend on part-time workers to give them a little time off from a seven-day week, and often a 52-week year, so that they can have a holiday. These people depend on part-time help.
These are the very people who are being squeezed on all sides. They cannot increase their prices because they have to compete with the multiple stores, who can undercut them. Very often they are victims of crimes of violence, against which they often cannot afford to insure. Many of them have invested their life's savings in a small business in order to fulfil their life's ambition and become their own boss, and we may be reaching the stage when, owing to the various pressures upon them, they will go out of business and return to work for someone else. The one thing which keeps many of these people in business is the fact that they can engage part-time staff occasionally to give them a few hours off. If we take this away from them, they will not be able to take those hours.
This means that people will no longer be able to buy a newspaper in the early hours of the morning or, as is done in Scotland, buy morning rolls for breakfast before going to work, because these shops will not be able to keep open seven days a week from early morning to late at night. If they cannot get the relief which they get now by employing part-time people, they will be hit very hard and eventually driven out of business.
This can have very important effects. Small shops like chemists fulfil a useful and necessary function. If we make it difficult or impossible for them to get part-time help, they will have to recruit full-time help or stay open for shorter periods. There will be fewer shops. Instead of a dozen small chemists scattered over a city, there will be one or two large shops which will not be open for the same long periods. This will not be worth what the Government will get out of it.
Among trade unions, we used to show a film called "The National Cake". It was designed to encourage people to produce more, because the more which was provided the more there was to share out among everybody. What we are doing now is reducing the number of people who can help to provide services.

771
As a result, there will be less production or fewer services. Either way, we will suffer. This is something which the Government ought to take seriously.
Mr. Costain: This is such a well-conducted debate that one does not want to intervene for long, but this is a matter which greatly affects my constituency, in three ways—first of all, for the elderly. In coastal resorts there are numbers of elderly retired people. The present rise in the cost of living has been hitting them very badly. I have had a number of requests for help before the Prime Minister's announcement today. Because of that announcement, they will be even worse off. The way they get employment is in part-time work in hotels and shops.
A number of hoteliers in my constituency employ elderly people on an uneconomic basis because they think that as these people have been there for some time they ought to continue to work there. They have made it clear that this is the dividing line. If the tax is introduced for part-time workers who have not been earning their full keep but have been kept on, they will have to be discharged. The result is that these people, reluctantly, will have to go on to National Assistance—people who are determined to stay off National Assistance, but will be forced by this Government to take that step.
The tax will also affect the holiday camps of which there is a number in my area. I have had letters from local holiday camp proprietors pointing out that the only way in which they can staff the camps is with part-time workers in the evenings. An example is married women. Naturally, their husbands object to their being on duty every night, although they are prepared for them to work only two or three nights a week in order to supplement the family income. By putting this extra tax on part-time workers, the situation will be made extremely difficult and expensive. The result, of course, will be that they will try to employ more people than they do now for eight hours a day. The result will be that the Ministry will lose the stamp and they will be further unpopular.
The hon. Member for Dundee, West (Mr. Doig) drew special attention to ser-
772
vices. I have had letters on this. The delivery of bread has been stopped in one of the villages in my area, purely because of the introduction of the Selective Employment Tax. People will have to go shopping when the shops are open and they will not be able to work the number of hours they would have worked.
Although this is a form of taxation which is supposed to encourage efficiency, in fact it discourages initiative, and if there is anything fundamentally wrong with the Government's policy it is that every Measure they introduce seems determined to cripple initiative. This Bill could not have been better chosen if they wished to discourage initiative.
We do not want to spend too long on the debate, but I ask Ministers to look at this matter again and to realise that there has been no one on the Government back benches prepared to support this proposal. They cannot go on relying on their back bench Members who in the past have roared like bulls when it came to objecting to the proposals but stamped like butterflies when they went into the Lobbies. Why should they not follow their convictions and come with us into the Division Lobbies—and tell the Government what they ought to do?
Mr. Terence L. Higgins: I am glad to be able to make this brief intervention. I am aware that many hon. Members want to speak on this issue. The effect of this tax on part-time employment in my constituency will be very great indeed. Effectively, the impact of the tax is twice as great on someone working half time as on someone working full time. The deterrent effect on the employer is twice as great. We are, therefore, not asking for equal treatment for part-time workers; because of this situation we are asking that they should be given special treatment.
In my constituency, the tax has two important effects above all others. First, it has a very grave effect on elderly people who hope to supplement their pensions by working part-time, and it has a particularly bad effect on those constituents who do not have National Insurance pensions and for whom part-time work is the only way in which they can supplement their incomes, which have been steadily depreciated by the effects of inflation.

773
If the Amendment is not accepted there is a grave danger—because there is no employment other than part-time employment available to them—that they will be in very serious circumstances indeed and may be forced in their later years on National Assistance, a situation which they have steadfastly sought to avoid since their retirement.
There is a vital point which has not been debated either in the Finance Bill or in connection with the Selective Employment Tax—and this indicates the way in which the Government have curtailed debate. In the guillotine debate the Leader of the House said that all points had been made, and I intervened to point out that none of the matters governed by our Amendments in Committee of the Finance Bill in respect of nursing homes, private hospitals and old people's homes had been debated at all and that, apart from a few passing sentences, there had been no mention of them.
They will be very seriously affected by the fact that the Government have granted no exclusion of part-time workers. This is a matter of vital concern to my constituency and many other constituencies where the burden falling on the hospital service is steadily increasing and the expansion of the hospital service has been curtailed by Government deferment. It may well be that in many areas, as in my own, people will die because adequate hospital facilities are not provided.
10.0 p.m.
At the moment, a large number of nursing homes and private hospitals cater, in particular, for geriatric patients. These establishments are staffed largely by part-time employees who work on a shift basis to provide geriatrict treatment and to look after people who are unable to look after themselves. I have had a number of letters from my constituents on this problem. Hon. Members may be interested in this passage in one such letter:
" The patients consist almost entirely of terminal and senile cases… They are essentially case; which the hospitals are no longer able to retain. There are about 20 patients, with a staff of 30 to look after them, which staff work on a "—
three-shift basis.
" A few work whole time, but the majority are part time."
774
The tax can have one of two effects on such a nursing home. The nursing home may have to raise its charges to these people. As they are in hospital, they have no means of increasing their income to pay the increased charges. In view of the burden which is already falling on the National Health Service, where are these people to go if they cannot afford to pay for these services in private nursing homes? If the nursing home takes the view that it cannot raise its prices to take account of the impact of this tax on the part-timers who are looking after these patients, the only alternative is that the nursing home must close down.
If there were adequate hospital services, it could be argued that the State should provide for these people who are in their declining years and who are too sick and too old to look after themselves. But there is already a very great drain on the hospital service. We all hope that the hospital service will be expanded at the earliest possible moment. However, it cannot be expanded immediately, nor can it be expanded adequately to cope with all the people who are already in private homes. It is, therefore, vital that this Amendment be accepted.
I sent details of some of these cases to the Chancellor of the Exchequer. My letter was passed to the Minister of Health, because the Chancellor of the Exchequer, who has no doubt received many such letters, has been farming them out to the Ministries concerned. This is the reply I received from the Minister of Health:
" We shall, however, bear in mind the effect of the tax on nursing homes and the points made in your constituent's letter in considering the application of the tax in case it is found right and possible to give any groups special treatment under a more refined scheme later."
Society cannot countenance a state of affairs in which these people are thrown on to the streets because of the impact of this tax, nor can it be content with a vague assurance by the Minister of Health that a more refined system will be introduced later. There is only one possible course, which is for the Committee to accept the Amendments.
Sir Gerald Wills: It is of paramount importance that some form of employment should be available for people who cannot work full time. This is especially so in rural districts, where

775
there are many people who are old and half retired, who are unable to spend their whole time working, but also who can improve their retirement conditions, make themselves happier, and make a contribution to the community by doing a job.
In many villages and districts where tourists congregate those who cater for the needs of tourists during the season could not carry on without the help of temporary people. If hotels were unable to rely on workers who come in for a few hours at a time to help out, the system would break down. That is the middle and both ends of it. Many elderly people and those who are nearing retirement, or who, perhaps, have retired find great happiness in working in this way and contributing to their own well-being and to the well-being of many other people. Disabled people, when they can work in this way for a few days a week, find a great reward and help in doing so.
If we do not recognise that many wish to work and should be allowed to work a reasonable number of hours each week, we shall not only go against the wishes of so many people, but also entirely against the Government's avowed intention of making as many people possible available to work. I imagine that that is what they want. If they want as many people as possible to work and they need the labour, let those who want to work a few hours a week get on with it, do the job, and help wherever they can to the best of their ability and to the country's good.
Mr. Julian Ridsdale: In the early hours of Monday morning I spoke about this tax and asked a question of the Economic Secretary. I asked what effect the new economic measures would have on the Selective Employment Tax, particularly as it affected part-time workers. At that moment the Economic Secretary—
Mr. MaeDermot Mr. MaeDermot indicated dissent.
Mr. Ridsdale: Perhaps the hon. and learned Gentleman would like to correct me.
Mr. MacDermot: There is no Economic Secretary.
Mr. Ridsdale: I should have said the Chief Secretary. I hope that the
776
hon. Gentleman will pay as much attention to some of my questions.
The Chief Secretary did not reply in any way to the points that I made, and I now ask the Financial Secretary whether he wishes to collect money from the tax on these part-time workers. Are not the measures announced this afternoon to raise £500 million for the Chancellor enough to collect money and mop up some of the purchasing power? Does he wish to force some of these part-time workers on to the labour market? Is not the prospect that about half to three-quarters of a million people will be unemployed as a result of the measures announced by the Prime Minister this afternoon enough to satisfy the Government's deflationary policy?
The Government should not be so hard-hearted now. Even though they may be suffering from midsummer madness, perhaps they may reconsider the position and the burden they are putting on part-time workers, particularly elderly people and the part-time workers employed in small shops, in hotels and guest houses, and in many rural area.
To me, this is a deliberate attack on the hard-earned pocket money of the retired people and married women. I hope that now, with the new measures announced this afternoon, the Front Bench and the Financial Secretary will be sympathetic. This is a social attack. It is not now a financial policy, in view of the new financial measures. I ask the hon. Gentleman not to be so hard-hearted, not to be so cruel to these part-time workers who rely on their part-time work for pocket money and to help them face the cost of living which is rising as a result of the Government's measures.
Mr. Patrick Jenkin: I should like to deal with one or two of the trades which will be particularly hit by the imposition of the tax at the full rate on part-time workers. I want to deal with three groups of wholesalers—food wholesalers, general wholesalers and, in particular, the pharmaceutical wholesale trade. I shall also say a word about laundries. All these employ substantial numbers of part-time workers, a much higher proportion than in other employment generally.
I take wholesalers first. There are two general points which are often forgotten here. The wholesale trade is very

777
frequently in competition with its own manufacturers. This competition will now be distorted because the manufacturers will be able to claim refund in respect of their distribution people, provided that they qualify under the 50 per cent. of establishment rule, whereas the wholesalers will pay the tax and have no refund. Because of the large number of part-time workers which wholesalers employ, this distortion will be further accentuated.
Second, the wholesalers operate, for the most part, on quite tiny profit margins. have been astonished in studying the figures in trade after trade to realise that net profit margins as a percentage of turnover are sometimes less than 1 per cent. or between 1 and 2 per cent., which gives extraordinarily little scope for any saving. Any substantial addition in costs, which the Selective Employment Tax will represent, is bound to be passed on in higher prices.
It has been said often that the S.E.T. is a tax on food. Nowhere is this more apparer t than in the wholesale grocery trade. The net profit of an average firm represents 1·23 per cent. of turnover. Wages represent 4·8 per cent., and the tax will have the effect of putting the wage bill up to 5·2 per cent. and cutting the net profit by no less than 33 per cent., reducing it to less than 1 per cent. of turnover. No firm can stand that sort of cut in its profit. No firm can have its return on capital reduced by that amount. Inevitably, prices will be increased. If the Government say, "Let them introduce more mechanisation and improve efficiency", I throw the challenge back to them. How can they say that when by the Bill we were discussing in the early hours of this morning they are removing any form of investment incentive in this trade?
Now, the wholesale textile trade. I am given to understand that in a typical firm no fewer than one-fifth of the employees are part-time. The tax will cost this firm £112,000, a sum equivalent to 16 per cent. of its net profit. With the tax bearing particularly hard on part-time employees, the firm will be severely hit. How can textile wholesalers modernise? A textile wholesaler carries an enormous number of lines, and it has proved in practice almost impossible to mechanise. It is very much a labour intensive activity.
778
Next, hardware wholesalers. Here the average net profit of a typical firm is 1·7 per cent. and the Selective Employment Tax will reduce this by 0·7 per cent., almost by half. Ten per cent. of the employees are part-time. A radio wholesaler who wrote to me has 20 per cent. of his employees part-time, and I understand that the radio wholesale trade as a whole is likely to have to pay £1½million in Selective Employment Tax.
So one can go on, but I wish to say a word about the pharmaceutical wholesaler because his is a special case. The business of pharmaceutical wholesalers is almost entirely in the distribution of drugs for the National Health Service to 14,000 retail chemists and to over 1,000 hospitals. The wholesaler carries the drugs of 300 manufacturers. I understand that there are between 14,000 and 15,000 different lines carried by about 150 wholesale depots which perform two vital functions for the National Health Service. They are able to make immediate delivery of almost any drug which they have in stock, on demand, and they are able to carry a comprehensive stock of that enormous range of 14,000 or 15,000 different drugs.
Pharmaceutical wholesalers operate on tiny profit margins, below 2 per cent. profit of turnover. They are extensive users of part-time labour. Naturally, the problem of processing orders when dealing with goods on this scale involves an enormous amount of clerical work, and pharmaceutical wholesalers use a very large percentage of part-time labour. If it is asked why they do not automate, the answer is that this was tried eight years ago in America and failed disastrously because the nature of the work means that it cannot be put into an automatic system.
10.15 p.m.
Mr. Paul Dean: Would not my hon. Friend agree that his powerful arguments apply equally to the retail pharmacist, the man who dispenses prescriptions?
Mr. Jenkin: Indeed. If my hon. Friend's experience is anything like mine, he will have had a large number of letters from retail pharmacists in his constituency making that point. For the moment I am concentrating on the wholesale aspect.

779
If the tax is to be such a burden on the wholesale pharmacist—it is likely to represent between 0·6 and 1 per cent. of his turnover, I understand, cutting his net profit in some cases by more than half—what will he be able to do about it? He and other distributors were advised by Mr. Fred Catherwood at a conference held in May for the distributive trades by their Economic Development Committee. He advised retailers and other distributors to protect reasonable profit margins by raising their prices and seeking better terms from manufacturers receiving premuim payments under the new tax arrangements. That may be possible for some trades but it is impossible for wholesale pharmaceutical distributors because the prices of their goods are fixed by agreement between the Government and the manufacturers. So the wholesale and retail margins are fixed, and there is no opportunity for such firms to recoup any of the extra burden.
So the firms are faced with two possibilities. They can reduce their delivery services, which will inevitably lead to delays in delivery of essential drugs required on prescription, representing a danger to health, or they can reduce the range of stocks which they hold. Seventy-five per cent. of their turnover is accounted for by only 20 per cent. of their products. They could cut out large numbers of the rarely used drugs and no doubt save a good deal of money to offset the cost of the tax.
But do the Government want this important link in the Health Service between the drug manufacturer and the patient to become so very much less efficient? Are they prepared to put the lives of men and women at risk because pharmaceutical wholesalers will be unable to afford a comprehensive stock of drugs? [Interruption.] An hon. Member opposite is laughing. He should talk, as I have done, to men responsible for running wholesale pharmacies. It is monstrous that hon. Members opposite should scoff at the arguments advanced by the Opposition on a matter causing gravest concern to the industry. He should be ashamed of himself. The tax is bound to reduce standards in the industry, and the fact
780
that it is a high employer of part-time labour accentuates the difficulties.
Laundries are very substantial users of part-time labour. Indeed, 20 per cent. of their labour is part-time, compared with about 6 per cent. in industry as a whole. Laundries in some areas employ up to 75 per cent. of their workers part-time. The tax and the National Insurance contribution will amount to about 2s. an hour in the trade. This makes it quite uneconomic.
The tax will cost the industry about £5 million a year, representing no less than 6 per cent. of its total turnover. That is why there will be a substantial increase in laundry costs. This is an essential service. People cannot do without it. If they do the work themselves it is much less economic. Yesterday in the evening press, one of the largest firms in the country stated that it would have to put up its prices by ls. in the £—5 per cent. It processes 10 million miles of roller towelling a year for supply to offices and other places. The report said that the Selective Employment Tax was blamed for the increase and added:
" With 10.500 mostly part-time workers on the payroll, the tax is going to cost the firm an extra £440,000 a year."
That is what the Government are doing to firms performing essential services.
This is bound to put up costs. In many cases firms cannot pass costs on in their prices as Mr. Catherwood recommended they should. It will cause acute difficulty. The Amendment would go part of the way to solve the problem so that part-time workers would not be such an additional burden for these firms to bear.
Mr. R. Gresham Cooke: The hon. Member for Dundee, West (Mr. Doig), who is not here, gave some sturdy North Country advice to the Government on this issue and I hope that he will go into the Lobby with us in support of the Amendment. The Amendment would give the Government an easy way out, saving their face by reducing the tax by a half.
My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) has put the case for the wholesalers. I have had a mass of correspondence on this matter. I have not had so many letters on a single subject since

781
Suez. That is what the public think of the tax. It is the greatest issue of the last 10 years. I have picked out particularly those letters which rely heavily on part-time workers, such as laundries, engineering distributors, chemists, accountants, solicitors, caravan distributors and electrical contractors. The last named are very badly hit because they have to pay the tax while their nationalised rivals do not.
Very often the words of an M.P. do not carry much weight in the House while the rough words that constituents use do. I have had a letter from a constituent which says:
" If this crowd of bright boys think they can get away with this one, then I have underestimated them. What about the mass of part-timers doing a very satisfactory job? Do we pay an extra 25s. for about 15 hours and see some firms getting a rebate at our expense?…. Had it been, say ten bob they might have got away with it. but not as it stands, I am sure.
Yours faithfully,
' Reluctant Victim ' ".
That represents the views of a large number of retailers.
My hon. Friend the Member for Wanstead and Woodford also referred to distribution. I have been connected with both manufacturing and distribution and I assure the Financial Secretary that, if there is any overmanning and labour hoarding, it occurs in manufacturing and not in distribution, which is labour intensive. I was talking to a steel master today about the situation in Sheffield. He said that things are very flat in Sheffield, that the order book is small, that the industry is already working short-time and that it will soon be on a four-day week. I asked whether he would get rid of his labour in view of this, but he replied, "We have to hold on to our labour during a bad period for when good times come again, if they do." That is the manufacturer's outlook. He will hoard is labour. The retailer and the man in distribution does not take that view.
Does the Financial Secretary suggest for a minute that women in Twickenham employed part-time in a laundry, if made unemployed, will go into a foundry or a steel works to help manufacture? Of course he does not. What will happen as a result of the tax is simply that costs will be put up by the retailer, or there
782
will be unemployment among these part-time workers, the married women, the retired people and old-age pensioners who all make a valuable contribution throughout the country and without whom we should feel very sadly in need. This is one of the worst provisions of the Bill and I hope that it will be defeated.
Mr. Philip Goodhart: Throughout much of this important debate the number of Liberal Members of Parliament present has exceeded the number of Labour back benchers present. This is the first time in years that I can recall this happening, although if we have a few more days like today the Liberal Members of Parliament may well permanently outnumber hon. Members opposite.
Mr. Hooson: If the hon. Gentleman were in the Chamber more often he would see this process repeated many times.
Mr. Goodhart: I am assiduous in my attendance of debates in the Chamber and I cannot recall this happening in the last nine years, and probably not since the end of the war.
The Kent Development Plan Survey shows that about 47 per cent. of the workers in my constituency are employed in distributive and professional services as opposed to 24 per cent. in manufacture. This shows that the effect of the Selective Employment Tax as a whole will bear particularly hard on my constituents. The same survey shows that about 10 per cent. of the workers in my constituency are employed on a part-time basis and the effect of the tax on part-timers will bear most heavily, therefore, on local services.
As hon. Members from both sides of the Committee have said, many of these part-time workers are employed in chemists' shops, in newsagents and in grocers and throughout the entire distributive trade system. In recent weeks, I have talked to and corresponded with many shopkeepers, and almost to a man they have assured me that the tax on part-timers will put up their total labour bill by almost 10 per cent.
Before the so-called price freeze, no doubt this increase would have been passed on to the consumer, and I suspect that it still will be in large part. but if it is not many of these workers, the lowest paid in the country, will be put out of

783
employment. During our previous discussions of the subject, the Chief Secretary has been asked many times what survey the Government have made of the impact of the tax on part-time employment. Do they have any idea of what will happen, the number who will be thrown out of work, the number who will be thrown on to National Assistance?
From the usual poverty of the replies that we have had from the Chief Secretary on this subject, as on so many subjects, it is perfectly plain that the Government have made no real survey at all. But if they had made a survey before, it certainly would have been made out of date by the impact of the measures introduced this afternoon to mark the collapse of the Government's economic policy.
10.30 p.m.
There are, however, some people who know full well what will be the impact of this tax on part-timers, and I should like to quote from a letter that I have received from a constituent who is himself a member of a firm that employs a very large number of part-time women workers. He says:
784
" In the event of loss of trade resulting from increased prices, the jobs of many of these women will be placed in jeopardy. Some 60 per cent. of them are old-age pensioners, widows and mothers of large families, supplementing a low wage-earning or sick husband. In most cases they need to work near their homes in order to maintain their domestic obligations. Thus there would be no willingness on their part to he absorbed into manufacturing industries."
In Beckenham, and Kent generally, there are very few manufacturing industries in which the displaced part-time workers can be absorbed and, indeed, the Government spend a considerable amount of time and effort in preventing the expansion of those factories that are already located in the constituency. Therefore, quite clearly they cannot absorb these part-time workers who have been displaced.
These Amendments were put down before the events of this afternoon were thought out. It would be fair to say that before the latest squeeze on the economy the tax on part-time employment was going to hit hard at some of the lowest paid workers in the country. Now it will not just be a hard blow to them. It will be an absolute calamity.
Mr. Hooson: I cannot understand why, in reason and humanity, the Government do not accept this Amendment, or at least the spirit of the Amendment. We heard this afternoon from the Prime Minister that we are living in a period of labour shortage. If we are living in an age of labour shortage, there are plenty of full-time jobs to be had. Why, therefore, are there so many part-time employees?
I think that the reason is fairly simple. Most people who work part time do so because, for a variety of circumstances, they cannot take a full-time job. There are the old-age pensioners, the widows with children, the married women, the disabled men. There are many people who, for a variety of reasons, cannot contemplate taking a full-time job.
Another reason why I believe many people are part-time employees is that they live in a part of the country where full-time employment is not available. I represent such a part of the country, where certainly there are some full-time jobs, but married women, for example, would find extreme difficulty in many parts of my constituency in getting a full-time job. What will be the effect of this tax on those people?
The Government will be taking a wrong view if they think that nothing serious will happen as a result of the application of this tax to part-time employment. In fact, tens of thousands of part-time employees will be out of work, for this obvious reason, that the proportion of the tax in relation to the low earnings of part-time employees is so great. Take, for example, the part-time employees in a laundry. Obviously, laundries employ many married women because they are so suitable for the job. They are so skilled at doing it.
As a result of this tax they will be tempted more and more to employ more full-time employees and part-time work will not be available. In such an area as mine one gets part-time employment, because the small shopkeeper cannot afford a full-time employee. He is working a six or seven day week and he wants relief for a few hours a day. Therefore, he employs a part-time worker. The small hotelier or cafe proprietor, running
786
on a small margin, employing a married woman to help out in the busy season is another example.
Mr. Ron Ledger: Where are the full-time workers to come from to replace these people?
Mr. Hooson: I said that there would be difficulty because of this tax. What will the result be? I know from my own experience that many people, if they are not in part-time employment, will be entitled to National Assistance. Have the Government considered the effect of this tax upon these people? They will lose their jobs and there will be an additional charge upon the State.
Many other people, although they may not qualify for National Assistance, would be hard hit. In areas such as mid-Wales there is a scarcity of jobs. Take the roadman, whose average wage is £9 to £10 a week. His wife, although she has three or four children, finds work in a local hotel and this makes the difference between mere existence and getting the extra bit of money for the family.
As a result of this tax the married woman is unlikely to be employed and that will mean real hardship for the family. If this tax, with its particular application to part-time workers had been introduced by a Conservative Government, the Labour benches would have exploded. This is a direct attack upon those who can least afford it. It is disgraceful that the Government have shown such a lack of sympathy for the part-time worker. It seems that the Government are more concerned about a neater administrative package and administrative difficulties arising from the use of the stamp. This can be overcome if the will to cure it existed.
I understand from previous debates on this matter that the Government are saying that this is a rough and ready tax, to be amended in the light of experience. What an argument for what is purported to be a radical government. If that kind of government cannot anticipate where hardship is to fall, then there is something seriously wrong with them. This is old-fashioned Tory argument, which I hope even the Tories have abandoned now—that we should simply apply

787
a rough and ready measure and then amend it when the hardship is felt in the light of experience. Hardship is to be seen and the Government should do something about it.
Mr. Norman Miscampbell: I shall be brief, but I would not like to let this debate pass without saying a word or two about one of the areas where this tax applies most heavily. There has been a great controversy about who was the orginating mind behind it. We do not know that, but one thing that we do know is that it was based on London experience and has no relevance to areas north of Birmingham, and areas in the West and in Scotland.
Dame Irene Ward: And the North-East.
Mr. Miscampbell: Or the North-East. This is the best example that I can think of where a tax has been thought up in relation to the over-employed southern part of the country without any thought of the peripheral areas in the country. In the Fylde area, one finds that practically no one will attract the premium and that almost everybody will pay the tax. On top of that, the proportion of part-timers is one of the highest in the country.
I should like briefly to refer to two industries to which I have referred before, but which deserve to be mentioned again. I excuse my hon. Friend the Member for Worthing (Mr. Higgins) for missing my small contribution on a previous occasion. There was no reason why he should particularly have noticed it, but I have addressed the House before concerning those employed in nursing homes and there is no harm in thinking of them for just a moment again.
A typical nursing home requires about half as many staff as patients. A home with about 20 beds needs 10 or 12 people to look after them. In a place such as Blackpool, almost everybody who becomes old has finally to resort to such a nursing home, because there are no facilities in the national system for these people to be looked after.
People in the last stages of decrepitude, the geriatric cases, are looked after in nursing homes because there is nowhere else for them to go. Ten or 12 people come in to help them. In most cases the
788
helpers are part-timers. They are not necessarily trained nurses, but they have a modicum of skill and can look after the patients in their last days.
Those are the people whom the Government are taxing. I say this because my constituency will at least recognise the appositeness of the contrast. They are taxing them and—at the moment we are having a holocaust of stink bombs—they are subsidising the manufacturers of stink bombs. That is the contrast.
Sir D. Glover: Purposive planning.
Mr. Miscampbell: That applies not only to nursing homes. If one looks at the main industry of the Fylde coast, one sees the classic example of an industry which is dependent upon part-timers. I use the example because it is familiar, but it can be repeated from many different industries. I refer to the holiday or boarding-house industry.
In that industry part-timers are essential. Nobody will work the hours that are necessary in a boarding-house. Owners cannot get people to come in from 6 o'clock in the morning and stay till nearly midnight. They must have part-timers. It is the only way that it can be worked. Some come in in the morning, some at midday and some later. The imposition of this tax on an industry such as that is likely to be appalling.
But if the industry itself is hurt, how much more will those typical part-timers be hurt? In most cases they are elderly. Where are they to go if they cannot take full-time work? If they try to leave Blackpool, there is no manufacturing industry within 20 miles to which they can go. There is no help for them in that way. In most cases, they would not in any event be able to take up full-time work. The choice before them is part-time or nothing.
Although Blackpool is often thought to be a rich town, it is not. Very often these are the people whose income makes all the difference to a family which otherwise would have a marginal living. Perhaps the wife is younger than her husband and by going out to work part-time in an hotel she does something to help at home. Her income makes all the difference between living in near-misery and having something extra to spend.

789
These are the people whom the Government are hurting by this tax.
I believe that the economic thought underlying the tax is based entirely on experience of a mixed, highly over-employed economy in the southern part of the country. It has no relevance to whole areas outside the London area. For this reason and many others, the Government should accept the Amendment.
10.45 p.m.
Mr. Rees-Davies: I should like to come straight to another point. We have had such cogent and detailed arguments employed that I have long ago come to the conclusion that it is quite impossible to get the Government to accept any reasoned argument, but I am inclined to think that they may be prepared to accept some emotional argument. They are so unreasoned in their approach that I think their heart may, perhaps, be appealed to more than their head, and so I want to put forward this suggestion.
I have noticed a certain amount of toing and fro-ing on the Treasury Bench: the Minister of Pensions and National Insurance has left, accompanied by the Chief Secretary and others; and I was wondering whether, if possible, the Government: are really trying to find a way out of this problem of the part-timers.
An Hon. Member: Where is the First Secretary?
Mr. Rees-Davies: Well, of course, as we very well know, the right hon. Member for Belper (Mr. George Brown) retired hurt—I think the phrase is—with bruises of his own, earlier this afternoon, and, of course, has not been seen on the pitch since.—[Hoisr. MEMBERS: "Sent off?"] Whether he was sent off or whether he contemplated resignation, undoubtedly, at any rate, he felt very sore about what he had to listen to this afternoon. Well, I can understand that; he preferred not to listen to it.
All of us have been disappointed, none more than this side of the Committee, by the lack of reception we have had of ex tremely well reasoned and cogent arguments on Amendment after Amendment on this Bill, on the Finance Bill, and on the Industrial Development Bill, but this is a matter which appeals to the heart, and I put forward this sugges-
790
tion. If, in fact, the Minister is not willing to give complete exemption—and I appreciate that he is not willing to do so —in respect of part-timers for less than 21 hours, and then the next difficulty which arises is that he is not willing to have an allocation of about half the amount because of the administrative difficulty, then there is only one simple way out of it, and that is to classify those up to 21 hours as if they were women.
This can be done—administratively. We can classify part-timers as women, and we can classify part-time women as being boys under 18—[Laughter.] I know that this sounds an amusing way of handling it, but the fact is that if we want to deal with this group on the stamp, and we do not want to increase the number of stamps, all we can do administratively is to treat the group which we are dealing with on the full amount as going on the half amount and the ones on the half amount as going on the lesser amount.
In this way we would be able to see that part-time workers under 21 hours would be paying the half rate. I throw this out as a serious suggestion—although it sounds amusing—to try to get over the administrative difficulty not having to have more stamps—[Interruption.] We may have plenty of stamps, but apparently the Government want to save stamps.
Mr. John Hall: Would my hon. Friend not agree that the classification which he is urging upon the Government might lead to some future difficulty?
Mr. Rees-Davies: It might lead to a future difficulty, but the difficulty we are faced with at present is that unless we find an immediate method of saving the situation for the part-timers we shall have the manifold difficulties which have already been outlined to the Committee. I will be fairly brief in indicating a few more.
My hon. Friend the Member for Blackpool, North (Mr. Miscampbell) and my hon. Friend the Member for Worthing (Mr. Higgins) have dealt with the case of the nursing homes. It so happens that by my own home, in Broadstairs, within a matter of 440 yards surrounding it, there are no fewer than 10 examples administrative difficulty of not having to

791
There is the nursing home case. In the road in which I live, there are three nursing homes which employ, between them, 25 part-time people. The average wage is £3 15s. a week, and they are paid 5s. an hour. The average woman earns four times that figure, yet those part-timers pay exactly the same amount.
I am sure that the Government would agree that, if they could find a method whereby such people paid only a quarter of the normal rate for 15 hours' work, that would be equitable and right, and I suggest that some method whereby a cheaper stamp is used is the only way to achieve that.
Then, within a few hundred yards of my house, there is a spastics' home, and, nearby, two other homes, one for juvenile delinquents and the other for mentally handicapped children. Each of them employs part-time workers. In one case of course, it will be local authority owned, and that may be able to recover the amount or not even have to pay it. The other two are private, and I suggest that it is unfair to draw a distinction between a local authority home, which may be able to recover the full amount or not even pay it at all, and what I call private enterprise homes which are not covered by charities but by small subscriptions.
Then there is the case of newsagents. Practically all the newsagents and small tobacconists who distribute newspapers are using part-time employees. Is the distribution of newspapers throughout the country to be lost to us, because this is a real factor in the printing and distributing industry?
We think, too, of the catering trade. One aspect which has not been mentioned so far is part-time banqueting in rural areas. Local Rotary and Conservative club dinners are very important to my constituents, as, I am certain, Labour club dinners are to the constituents of the hon. Member for Buckingham (Mr. Maxwell). I am sure that, without those dinners which he attends, they would not be prepared to sustain him in his seat. All these functions are handled by part-time workers, and it is the women in small towns and villages who turn up to do the two or three hours' work, winter and summer, to provide the class of dinner
792
with which all hon. Members are so well conversant. It means, for those part-timers, an average of 12 hours' work a week.
Then there are the old-age pensioners. My constituency has a large number of old-age pensioners who are also on National Assistance in the winter. There are about 1,500 of them in the Isle of Thanet alone on National Assistance in the winter and obtaining a certain amount of employment in the summer. They earn about 5s. a hour and do about 15 hours' work a week. Their total earnings vary from £3 10s. to £7 a week. It is quite unrealistic that they should be charged pro rata the same rate—25s. for a man and 12s. 6d. for a woman—as the man earning £1,500 or the woman earning £1,000.
However it is achieved, if there cannot be a total rebate, I hope that the Government will be able to say that the stamp which is to be used for the 12s. 6d. woman can be downgraded so that the man employed part-time can go into that category, and the woman employed part-time can go into a 6s. 3d. category and thus pay half the rate. By overstamping or some method of that kind, it is possible to achieve a half-rate in respect of those people, and I am convinced that, with the assistance of the Postmaster-General or whoever creates this form of stamping, something can be arranged to achieve what I am prepared to believe that the Minister of Pensions and National Insurance is in favour of achieving.
I cannot think that anybody who looks at this problem fairly can believe that it is selective employment—"selective" is the word—to treat the part-time worker on the same basis as the full-time industrial worker. It simply cannot be so. This is to deny the essence of the Bill. But, even on their basis, if it is selective employment, let it be selective, and, if it is, they must find a method of diminution in the case of the diminutive amounts of money which these old people earn.
Mr. Bryant Godman Irvine: I think that this tax will have a bigger effect in my constituency than in any other—[HON. MEMBERS: "No.']—so it might be as well to give some reasons why I urge that the Amendment should be accepted. There is a certain amount of dissent from what I have said. I hope

793
that by the time I have finished some of my colleagues will have appreciated that this tax will have a big impact on my constituents, where there are an enormous number of retired people, and as many pensioners as in any other constituency. [Hon. Members: "No."] It seems that some of my hon. Friends dissent from that, too.
My hon. Friend the Member for Beckenham (Mr. Goodhart) said that it would not be easy for his constituents to get work in a factory. I think that it would be much easier for them to do that than it would be for my constituents, who are in the far corner of South-East England, to get a job in a manufacturing industry. If they do not work in the industries available in my constituency, the simple answer is that they will not he able to work at all, and if the Financial Secretary could tell us how an elderly person who, at the moment, is working part-time in my constituency, but who is laid off because of this tax, can get himself, or herself, into an export trade, it would be very helpful.
There are four categories about which I should like to make a few comments. First, I have in my constituency a number of schools, a high percentage of which are boarding schools. These schools provide something which the State does not provide, and there is a strong case for supporting them. People send their children to these schools from all over the world. There are some people who, for various reasons, have to send their children to boarding schools.
These schools have to rely on a certain amount of assistance, and the only assistance available in my area is from elderly and part-time workers, and if they are employed these schools will have to pay twice as much as they would have to pay if they employed full-time workers. I therefore suggest that this tax will have a serious impact on them.
It is perhaps as well to remember that many of the children attending these schools come from abroad. In one school, a number of the pupils come from the United States, and a good deal of the money content in these schools comes from outside the sterling area.
The hotels in my area provide a considerable amount of employment. Nobody can suggest that they have over-staffed
794
themselves. I am constantly receiving letters urging me to obtain permits for people to come here from different parts of the world so as to help these hotels to keep going. The only way in which people running hotels in my constituency are able to keep going is by getting elderly part-time assistance.
11.0 p.m.
The other difficulty that arises is that during the winter months they may want to keep these people, and hotels are not so full in the winter as they are in the summer. If a hotel cannot keep open in the winter it will lose this labour and will find it very difficult to replace it when summer comes round again.
I therefore ask the Minister to examine the situation in respect of hotels in my type of constituency. The idea that they are overstaffed is nonsense. If they are unable to keep such part-time staff as they have because they are having to pay a tax of twice the amount that is paid in respect of full-time employees, their standards will fall, and then foreign visitors, who come to my constituency in numbers as great as in any other constituency because it is near the Continent, will not get the service that they expect.
The third category includes such people as shopkeepers, pharmacists, the proprietors of laundries, and other people who have been referred to by other hon. Members. I have received many representations from chambers of trade and chambers of commerce about the difficulties that will arise as a result of the imposition of this tax. I know a laundry where 235 out of the 274 people employed are working part-time. That laundry specialises in doing work for hospitals, schools, charitable institutions and shipping lines. If it has to pay in respect of the part-time people as well as the full-time people it has no doubt that it will have to pass on the cost in some way to its customers.
A case has been made out for the wholesale pharmacists. I am concerned with the retail pharmacists. I have received a number of representations from them about the difficulties which will arise because they have to rely on part-time workers.
Finally, on a number of occasions when we debated the Finance Bill, as well as in

795
our debates on this Bill, the Chief Secretary has said that this is not a tax on employees, but on employers. In my constitueny the difficulty is that many of the employers are themselves elderly persons. I gave the right hon. Gentleman some examples recently of employers in the 70-plus category, who have to have some assistance. They employ somebody part time. I gave the right hon. Gentleman the example of a person over the age of 80 who employs somebody for seven hours a week. He is working on a very slender margin.
Mr. MacDermot: The hon. Member realises that no tax would be payable in that case?
Mr. Godman IrvineThen it must be for over eight hours a week.
Mr. MacDermot: The hon. Member may have forgotten that even if it were payable it would be refunded under the terms of the Bill.
Mr. Godman Irvine: That is not a very simple arrangement for somebody when he reaches the age of 80. I ask the Financial Secretary to consider the case of the employer who is of an advanced age and who employs people part time whether it be for seven or 17 hours a week.
The other annexe to that point is that a number of these people have to go into homes in due course. There is a large number of such homes in my constituency, and the effect upon them will be very serious. Therefore, there will be a greater impact than in some others if there is not complete agreement on that proposition.
Mr. John M. Temple: At 6.20 a.m. yesterday morning, I glanced up at Big Ben as I was walking home to my flat. I was surprised to see a large number of London buses driving down the Embankment. A number pulled up outside Scotland Yard. I wondered what was happening in Scotland Yard that buses were arriving at that hour. Out of those buses descended a crowd of women, who were going to clean up the mess at Scotland Yard. Some of them were possibly coming to clean up the mess in the House of Commons.
796
I was very interested in those women. Some of them were young women; some of them were very well dressed. I wondered how much work the Government were giving these women employed in contract cleaning. I think that I was the first during the debates on this Measure to use the words "contract cleaning "—
Sir D. Glover: It was me.
Mr. Temple: I will not dispute that. In HANSARD there is a report of an interruption which I made, and everyone laughed when I mentioned contract cleaning.
I thought that I would follow this matter up, particularly with the Chief Secretary. So I asked, in a Question on 28th June,
" What proportion of Government offices in central London are cleaned by outside cleaners under contract; ".
I am glad that the Financial Secretary to the Treasury is on the Government Front Bench. He has my sympathy this evening: he has not a friend on either side of the Committee—
Mr. Diamond Mr. Diamond indicated dissent.
Mr. Temple: In the whole of my Parliamentary experience, I have never seen such a friendless Front Bencher. The hon. and learned Gentleman gave me an interesting reply. He said that approximately two-thirds of the cleaning work in Government offices was done by contract cleaners, and went on:
" The saving… is… about £430,000 per annum."—[OFFICIAL REPORT, 28th June, 1966; Vol. 730, c. 122.]
So, by employing contract cleaners, the Government are saving nearly half a million pounds in Central London alone. I wonder how much they are saving all over the country.
The Prime Minister today expressed the intention of keeping both prices and costs stable. I can inform the House that the effect of the Selective Employment Tax on the contract cleaning industry is bound to raise prices by about 15 per cent. If the Government are determined that their costs shall be kept steady, they will not be able to employ these contract cleaners because they will be driven out of business. They are giving a tremendous amount of employment in the part-time sector: about 90 per cent. of their employees are part-time.

797
The only alternative for these contract cleaners is to employ full-time men and women who will work through the night. I do not imagine that any of those contractors would wish to engage in an entirely anti-social undertaking. Just because they are not able to get people to work for a short shift in the morning and another in the evening—a different squad—-they would have to employ part-time men and women working entirely through the night. That would be entirely anti-social. I would not regard it as being in accord with any Government's policy, and it is certainly not the policy of the Conservative Party.
Contract cleaning is important. It is only one aspect of part-time employment. I have explained the great saving which the Government and large industrial organisations are making from employing contract cleaning.
Another aspect of part-time work arises in respect of the type of constituency l represent—significantly, a Tory seat. I have an idea that this deep-laid plot is aimed at Tory seats. It is significant that Tory seats are mostly those in which a high proportion of employment is in service industries, which are to be taxed. A high proportion of the seats represented by hon. Members opposite are industrial seats, and manufacturing industry will get a bonus. Is this a fluke, or is it by design? I have a suspicion that it is by design. In my constituency there is a high proportion of men and women—pensioners—who are helping out in the hotel industry and in the distributive trades.
Agricultural workers—agriculture is a neutral zone—retire at the age of 65, but many of them take up part-time gardening, tilling the land just as much as if they were in agriculture. These men are to be subject to the tax if they work more than eight hours a week.
These proposals for part-time workers are disastrous and I am not surprised that the Treasury Bench is so friendless this evening.
Mr. John Farr: Reference has been made to the effect of the tax on part-time workers employed by wholesale pharmacists. I want to refer to the even greater effect of the tax on retail pharmacists. A wholesale pharmacist must depend on full-time workers.
798
A much higher proportion of the employees of the retail pharmacist are part time, perhaps married women who know the different drugs and medicines which are needed and who come in for a few hours a day or a week to help out.
Some specific points have been raised in letters I have received. Leicestershire is the hub of the nation's shoe and hosiery trade. The county has the nation's lowest unemployment figure. This condition has existed for some time, although I hesitate to think what the effect of the measures announced by the Prime Minister will have on the nation's unemployment figure. However, there is a high level of employment in Leicestershire.
The result is that all the varied garment industries in Leicester, in the county and throughout the Midlands have to depend on part-time labour, because full-time labour cannot be obtained. All the workers are tied up largely in the hosiery and shoe industries. In this part of the Midlands employers must employ part-timers, or shut up shop.
I want to call some examples to the attention of Treasury Ministers. I have received representation from a firm of wholesale hardware merchants. The firm says that for over 100 years it has been providing useful service in supplying to the public, to local authorities, and to the building trade materials and fitments for industrial and private construction work.
The managing director of this firm said that if the S.E.T. were applied to last year's figures, on the number of part-time workers he had to employ it would have the effect of absorbing over 40 per cent. of the firm's net profit before tax, and the effect on the previous year would have been to absorb no less than 80 per cent. of the profit before tax.
11.15 p.m.
I wish to refer to two other industries —launderers, who have been mentioned, and dry cleaners, who have not been mentioned. My hon. Friend referred particularly to part-time cleaners in laundries and I will mention dry cleaners. In dry cleaning, many of the employees are women and no less than 25 per cent. of all the employees in dry cleaning are part-timers.

799
The Minister realises that dry cleaning plays an important part, perhaps an unsung and even an unspoken part, in the national economy. It helps to preserve garments by proper cleaning and treatment and lengthens the useful life of a garment. In this way costly imports are saved, and the length of life of our garments can be extended. There is a very large female labour force in dry cleaning. Women represent three-quarters of the labour force of dry cleaners, and over 25 per cent. of these are part timers.
There is no doubt that if the incidence of this unfair and savage tax prevents part-time women workers from putting in a few hours' work a week because the employer cannot afford to employ them, it will have a serious effect on national efficiency and on a very useful and productive industry.
What about British Legion clubs? I have been unable to find out, even although I have attended most of the debates about the tax, what is the position of the individual British Legion club. I understand that the British Legion as a movement will be treated as a charity, but what is the position of the part-time worker who works for a few hours a week in a British Legion club? Will this tax have to he paid in respect of him or. because the British Legion is to be treated as a charity, will the employees in clubs throughout the country be treated in the same way?
Not only British Legion clubs, but many other clubs are affected. I will not make the obvious reference to Conservative clubs. Instead, I will refer to a working men's club, the representatives of which came to see me the other day. It is a very small club with very few members, but it engages some part-timers to provide amusement and entertainment for the members in the evening. This club will have to pay £9 a week in Selective Employment Tax—£450 a year. This picture can be repeated in working men's clubs in smaller towns throughout the country. The tax can make the difference between bankruptcy and solvency for these clubs.
I sat right through the night during the debate on the Finance Bill relating to the hotel and catering industry. I wished to make some remarks about part timers in
800
that industry, but, unfortunately, I was unable to catch your eye, Sir Eric.
I shall try not to paint the picture that was so successfully painted by my hon. Friends from seaside towns and tourist centres, but the picture of the application of the tax to the small hotel in a small market town in a Midland shire or, indeed, in any part of the country. My hon. Friend the Member for Blackpool, North (Mr. Miscampbell) spoke of the savage effect the tax would have on the hotel industry in Blackpool, and we have also heard of the savage effect that it will have on seaside and tourist hotels elsewhere.
But, in addition, in many Midland towns and market towns one of the most important centres is the little country hotel, which is so dependent on the part-timer not only to serve behind the bar, but to cook, to act as the waiter and help as the chamber maid and in many other ways. These part-timers cannot be channelled into another industry. They are likely not to be employed by many of these hotels if the tax comes into force. and in many of the market towns there is no manufacturing industry to which they can be transferred. The net result is likely to be that they will stay at home and live on the old-age pension for which many of them qualify.
I stress the invaluable part that married women play in a part-time capacity in many industries, particularly in nursing. Skilled physiotherapists and nurses, perhaps with many years' training at great expense to the State, who have left to get married, are prepared to come back to do a few hours' work a week, but they will be discouraged. The job will not be there for them if the tax comes into operation.
We have heard examples of the effect the tax will have on some of the older people. A pensioner of 67 or 68 came to me the other day. He wanted a part-time job in a garden, and I had to tell him that if the Bill became law such a job could not be found for him. He is not very well, and cannot work more than 12 or 14 hours a week, but he is the type of man who can still play a useful part in society. Yet there is a threat to people in this category, because employers will not pay the full rate of tax for an elderly man whom one employs as much to help him as to help oneself.

801
The Bill is very bad. For Treasury Ministers not to allow exemptions for part timers who work 21 hours a week or under is a disgraceful imposition, and I shall seize with relish the opportunity to vote for the Amendment.
Mr. Paul Hawkins: It is sad to look at the empty Government back benches. Most hon. Members opposite are ashamed to be here, a id those who are here are obviously ashamed to oppose the Amendment.
I speak from the point of view of the rural areas. Scotland, Devon and Cornwall, and Norfolk are lower-paid areas, but we shall have to pay millions of pounds to higher-paid industrial areas, and the rural areas contain very large numbers of part-time workers who cannot possibly obtain industrial work in factories. It is a most unfair tax. People grumble at taxation, but accept it if it is necessary; but they do not accept unfair taxation. That is why the Government benches are so empty.
I will give three examples of how the tax will affect some of my constituents. Two examples concern seasonal workers, who must present tremendous administrative difficulties. My business of a farmers' livestock auction employs 25 or 26 men for nine or 10 hours every Tuesday for part of the year and for seven hours for the rest of the year. We are told that for the weeks when the men work less than eight hours we shall not have to pay any tax, but when they work eight or more hours we shall have to pay. Imagine the difficulty that this will present to those paying and collecting the tax. Fruit pickers, vegetable packers and others are seasonally employed. Some weeks they will work 15 or 20 hours and others six. It will present enormous difficulties.
My constituency has three privately run old people's homes, and the majority of the workers there are employed part time doing an extraordinarily good job looking after people in their last years. The tax will add a big burden to the running of the homes. I believe that it will create great injustices for everybody in rural areas.
The Bill is an extremely bad piece of legislation. It is unfair, and extremely badly thought out. If the tax had been a poll tax for evrybody at a third of the
802
rate, I think we should all have accepted it, for it would have enabled us in good times to reduce the main taxation. But the Bill is rotten, unfair and totally incompetent, and I shall have great pleasure in voting for the Amendment.
11.30 p.m.
Mr. MacDermot: We debated the subject of part-time workers at considerable length when we were considering the Finance Bill in Committee and on Report. Naturally, we have now had another full and very interesting debate on the subject. However, I think it fair to say about the speeches that we have heard today that it has been a question not so much of new arguments being adduced as of new examples being given illustrating the arguments previously put forward. [HON. MEMBERS: "No."] I should be interested to have my attention focused on new arguments. I sat through all the previous debates—some of the hon. Gentlemen saying "No" did not—and I recall arguments I heard then that I have heard again tonight. We have heard them illustrated from examples of a wealth of different industries and activities. I am sure that hon. Members will not expect me to deal with individual examples, but rather with the general underlying principles upon which the argument is based.
Some hon. Members suggested that there should be complete refund of the tax for part timers, others that a fair solution might be to have a proportionate refund or lower rate of tax for them. The hon. Member for Worthing (Mr. Higgins), in a powerful speech dealing particularly with the problems of nursing homes, argued that for part timers there should only be a half rate. I remind the Committee that 90 per cent. of part timers working between eight and 30 hours a week—those working less do not have to have the tax paid—are women. The rate for women is half that for men. This reflects the very high incidence of part-time workers among women. Broadly speaking, the incidence of the tax is related to the average earnings for people in different categories.
Last time I stated this, the hon. Lady the Member for Finchley (Mrs. Thatcher) challenged me. I have looked up the figures since then. The rates of this tax

803
were based on the average earnings as disclosed by the Family Expenditure Survey for different classes of employees in the various services, excluding public administration and defence, but including transport and communications.
The tax rates are 25s. for the adult male, 12s. 6d. for the adult woman, 12s. 6d. for a boy and 8s. for a girl. If we had followed exactly the proportions of the average earnings of people in these categories, the same figure would have been produced for the adult male, lls. 3d. for the adult woman, 12s. instead of 12s. 6d. for the boy and 7s. 3d. instead of 8s. for the girl. I repeat that the structure of the tax takes account to a substantial degree of the fact that the earnings of part-time workers are lower and that the incidence of the tax on their employers is, therefore, at a lower rate in general than for full-time workers because of the high incidence of part-time work among women.
Sir K. Joseph: Surely the hon. and learned Gentleman is giving the average earnings for full-time women workers. What is at issue is the earnings of part-time women workers.
Mr. MacDermot: No. I am giving average earnings for all women and the point I have made is that a very high proportion of women employees are part-timers and an enormously high proportion of part-timers are women. Indeed, 90 per cent. of all part-time employees are women.
Sir K. Joseph: But only about one-quarter of all women employees work part-time.
Mr. MacDermot: I am not suggesting, and never have, that the rates were proportionate to the hours worked. What I have said is that, broadly speaking, the high incidence of women among part-time workers is reflected in the rates and there is some gradation as a result.
A very large section of part-time workers will qualify their employers for either the premium or the refund. The right hon. Member for Leeds, North-East (Sir K. Joseph) suggested, I think in error, that the Ministry of Labour Gazette had given a figure for part-time women workers in the manufacturing industries
804
of about one-third of a million. Had the right hon. Gentleman turned the page in that document he would have seen that the column from which he was quoting continues and that the figure given is 480,000 and not one-third of a million.
I have with me figures, based on estimates, showing that of the part-time workers, just over 50 per cent. work in industries which are liable to pay the tax without the refund, and just under 50 per cent. who will qualify their employers to either the refund or premium—and of those the great majority will be for the premium and not for the refund.
Of a total of 905,000 who, it is estimated, will qualify their employers for the refund, 528,000 will qualify their employers for the premium. This shows that for a substantial part of the part-time employees, there will be no disincentive. On the contrary, there will be a slight incentive the other way.
Sir Frederic Bennett: So what?
Mr. MacDermot: So what indeed. It is being suggested that the greatest weight of this tax will be to act as a disincentive to part-time employment. I am pointing out that only a part of it could operate in that way and that the other part, nearly a half, will operate in the contrary direction. It is a matter of balancing the different factors.
Mr. Temple: The hon. and learned Gentleman's argument would be clearer if he would quote the figures for part-time workers alone. He is confusing the issue by referring to part-time and full-time statistics.
Mr. MacDermot: The last statistics I quoted were for part-time workers alone.
Dame Irene Ward Dame Irene Ward rose—
Mr. MacDermot: No. I will gladly give way to the hon. Lady later. My argument is becoming sufficiently disjointed.
Hon. Members: Give way.
Dame Irene Ward: I have sat through the whole of this debate. I am surely entitled to put one question to the hon. and learned Gentleman. Is it not a fact that the people in the service industries are in no way affected by his argument

805
so far? It is the other people about whom we want to hear from the Financial Secretary.
Mr. MacDermot: I am glad to know that the hon. Lady has been following my speech so far, because I had intended to direct my next remarks to dealing with those part-timers employed in the service industries.
Dame Irene Ward: Jolly good. Thank you.
Mr. MacDermot: The primary argument on this issue is that this tax will act as a strong disincentive for employers to employ part-timers in the services. This point was emphasised by the hon. and learned Member for Montgomery (Mr. Hooson). It has been stated that, as a result of this tax, employers will seek to employ full-timers instead of part timers. In the existing National Insurance contributions system there is already an incentive for employers to employ full-timers rather than part-timers if they can. Certainly, employers are not now going to employ two part-timers instead of one full-timer and thereby have to pay double their contributions in stamps.
The fact is—and all the arguments have been based on this fact—that there is great economic pressure on employers to employ part-timers. That is the main argument against the whole of the assumption on which the argument of hon. Members opposite is based—this assumption that because employers have to pay this tax they will start to dismiss their part-timers. They will not, because they will need the employment of these people just as they need it now.
Then it has been said that as a result of the measures announced today, with the reduction in demand, employers will employ fewer people than they did before, and that this is an inevitable part of the redeployment process at which these measures are aimed. Again, if an employer, as a result of a reduction in demand, will have to reduce his staff, he will not be affected in that decision or deterred from making that decision because he is exempted from the Selective Employment Tax. If he does not need to employ any more because of the reduction in demand, he will not hoard the labour and keep on a part-time 'employee as a result of the tax.
Mr. Gower: Can the hon. and learned Gentleman address himself to a major question that arises here? Many of these people who are employed in the service industries are, by definition, unlikely or unable to work in other industries. Therefore, what is the purpose of the tax which affects them?
Mr. MacDermot: I give notice that I do not intend to give way any further, because every time I do give way an hon. Member asks me to move on to my next point.
Dame Irene Ward: If the hon. and learned Gentleman came to it more quickly, we should not waste time.
Mr. MacDermot: If I was not interrupted so much, I would find it easier to proceed more quickly.
As I said when discussing the subject on the Finance Bill, it is our belief that the fears expressed by hon. Members opposite about the effect of this tax on part-time workers are exaggerated. But I also said that we would take very careful note of the arguments that have been adduced. As I conceded then during the debate on the Finance Bill, the incidence of the tax is to some extent, though to a more moderate extent than has been argued, disproportionate in its weight in respect of the employment of part-time employees. I spoke then of the difficulties, within the framework of this tax, of making an exception for part-time employees.
We were urged in one debate, in which the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) spoke powerfully, that we should make an exemption for a particular category of people within the National Insurance field—a somewhat illogical group from the point of view of this tax, but it was urged that we ought to make an exception for them and either grant an exemption or a different rate for them. I gave the reasons why we did not feel that that was the right thing to do.
Now we are being asked whether some machinery is possible by which we could devise a repayment system which would be discriminatory and selective within the sphere of the part timers. We are discussing, in particular, an Amendment, and other Amendments grouped with it which are variations on it, suggesting

807
that there should be a refund in relation to people who are employed between eight and 21 hours a week. I must tell the Committee that we are able to find no practical way whatever of devising a refund system on the basis of part timers. I can explain very briefly why.
If there is to be a refund system, neither the Ministry of Labour nor the Ministry of Pensions and National Insurance has any list of people in the employment of different employers, still less of part-time employees. Therefore, applicants for such a refund would have to make a return of the numbers whom they said they had in their employment during a particular period and who were working a given number of hours.
That could be done either with or without names. If it was done there is no practical way in which that information could be checked. It would have to be taken on trust.
11.45 p.m.
Mr. Pardoe: Can the Financial Secretary say how the Ministry of Pensions and National Insurance at present assesses whether someone has worked more or less than eight hours?
Mr. MacDermot: I have said that I would not give way again because I would be coming to the point. I was coming on to that point and if the hon. Gentleman had been present when we were debating the matter on the Finance Bill he would know the answer, because I gave it then.
With the eight-hour exception for National Insurance there is a built-in policing system, because the employee has an interest to see that he is not returned as having worked less than eight hours when he is working more, because he will lose his National Insurance contribution, rights and benefits.
This does not operate on a 21-hour basis, which has no significance from the point of view of a man's insurance rights. It would obviously be wholly impracticable for the Ministry of Labour, or whichever Ministry was concerned, to police and check the claims made by employers on that basis. We would be in the position of paying out enormous sums of public money entirely on trust, without any practical means of verification.
808
My hon. and learned Friend the Member for Warrington (Mr. W. T. Williams) was the first to anticipate and recognise this and to say that if a solution was to be found he felt that it could only be found within the framework of the National Insurance stamp system. This was repeated by other hon. Members. I do not see any approach that we could make while we are operating this on the basis of the National Insurance stamp, other than through the mechanism of the stamp.
I have told the House on the Finance Bill what the difficulties are there. I have been asked to look at this again and I can give the assurance that we certainly will be doing so. I can assure hon. and right hon. Gentlemen that we appreciate the problem and that we will look further at it and consider how the Measure is operating and what the facts are, whether the fears expressed by the hon. Members opposite are realised, or whether our more sanguine approach is justified. If it is shown that hon. Members opposite are right and that we are wrong, and action is required, it will require a fairly considerable alteration to the National Insurance system so that we can devise a mechanism by which we could make a separate category of part-time workers.
This could not be achieved in time for the launching of this scheme, which will be starting in September. We will have an opportunity in the Finance Bill to operate as from the beginning of the next financial year. It is only a six-month period from that time when the scheme starts and within that period we can make any adjustments which are proved to be justifiable and necessary. Meanwhile, I must advise the Committee to reject the Amendment.
Mr. Rees-Davies: Does the right hon. Gentleman agree that what I was suggesting earlier, a differential rate stamp, is a practical suggestion, subject to the time which the Minister of Pensions and National Insurance would need to put the differing rates on the stamp?
Mr. MacDermot: The suggestion of the hon. Gentleman has already been looked at, and I do not think that it is workable. All that I am saying is that it would be necessary to devise new categories of stamps to improve the situation.
Mr. J. B. Godber: Having listened to the Financial Secretary it becomes more and more clear why we had a Guillotine on this Bill. Such totally inadequate replies as we have had are enough to exasperate any Opposition and would certainly have led to prolonged discusion in the normal way. I am sure that all my right hon. and hon. Friends will feel that after the cogent arguments and points that have been put from all sides of the Committee the reply which we have just heard has been one of the lamest that any of us can recall.
Throughout the debate on this important series of Amendments relating to part-time workers it has been extremely noticeable that every speech without exception. apart from that of the Financial Secretary, has been attacking the Government. The speeches from the hon. and learned Gentleman's own side have been harshly critical, although one of his colleagues, after attacking the Bill and supporting the Amendment, said that he would follow the convention of voting for the Government. I suggest that when Government supporters have been reduced to that stage, it does not look a very happy future for the Government.
The Financial Secretary must admit that all the speeches, from both sides, have concentrated on the unfairness of this tax concerning part-time workers. The speech to which we have just listened reflects the Financial Secretary's feeling that that is abundantly justified. He has based himself, we understand, on the impracticability of dealing with the matter. If one introduces a tax, one should work out the practicability of it first. That is the sort of thing that is normally done by Governments. We certainly find it exceedingly strange to have that argument put forward as the major reason for not granting an Amendment. We on this side, therefore, are bitterly disappointed with the reply which we have just heard.
I do not propose to go through again the many and cogent arguments which have been put forward from hon. Members on this side. I merely pick up the point, made by my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies), that as this is a selective tax and we are dealing with selective employment repayments, the fact that we are dealing with part timers makes the degree
810
of selectivity much worse. It means that it impinges much more severely on the part timers in the industries which do not get repayment than it does on the full timer.
We have, therefore, the distinction between manufacturing industry, in which there is to be repayment and premium, those industries which get repayment and those which do not get, either. It is in these latter industries that the savageness of the imposition on part timers really comes about. This has been borne out abundantly in the speeches to which we have listened.
Various categories have been brought to our attention— shop workers, particularly in retail food distribution, the distributive trade generally—
Sir John Eden: Will my right hon. Friend give way? Since he has referred especially to the distributive trade, may I say that a very relevant passage which appeared recently in the National Plan indicated the need for the distributive trades to develop fully the use of part-time staff. Is it not extraordinary that this encouragement should have been given in the Plan to develop the use of part-time staff, but that in the Bill the Government are trying to do the very reverse? It is no wonder that the Chief Secretary is on the point of resignation.
Mr. Godber: I am grateful to my hon. Friend for his intervention, but I do not think that the Chief Secretary—
Mr. Diamond: Will the right hon. Gentleman allow me to deny that rumour? I feel reasonably assured that if I were to offer my resignation it would be accepted immediately.
Mr. Quintin Hogg: My hon. Friend meant the First Secretary.
Mr. Godber: I am sure that some sections of the Committee are relieved to have that assurance from the Chief Secretary.
I am grateful to my hon. Friend for pointing out the complete illogicality of the Government's approach as opposed to the National Plan, but he recognises, as we all do, that the National Plan is virtually dead and that its author is very sick indeed. I sympathise with him in

811
some degree in this predicament in which he is placed.
Nevertheless, the fact remains that upon all these distributive trades and the whole area of services and work which we have been discussing upon this Amendment the impact of this tax is harsh and savage. There have been some extremely strong criticisms of it; indeed, one of the Financial Secretary's hon. Friends, the hon. and learned Member for Warrington (Mr. W. T. Williams), referred to the tax as a whole as being a rough and rude instrument. In so far as it impinges on these part-time workers I think that the criticism should be even stronger than that.
We have had references to all these categories of workers. We have had references to the cleaners. We have had references to the Mrs. Mopps, for whom I think there is a particularly strong feeling of sympathy because of the injustice to those excellent ladies who do such good work. We have had references to laundries, nursing homes, homes for old folk, hotel workers. All these categories of workers are being savagely hit by the imposition of this tax, in that their employers are having to bear the whole range of the tax, and it cuts right across the whole field.
In particular, there have been references to the elderly, to whom I also would make a particular reference. The point has been made tonight by various of my hon. Friends that there are social as well as economic reasons why the elderly should be encouraged to remain at work. Here is a tax by which they will be prevented from doing so. Those of us who also have been Minister of Labour, as one or two of my right hon. Friends and I have, know from the social point of view and also, of course, from the economic point of view, the need to try to encourage these part-time workers, the elderly in particular. There is a feeling of sympathy with their desire in many cases to go on at some useful job. These are the people who will be not only discouraged, but prevented from doing that.
I think that I can put the position probably more clearly than in any other way by quoting from a letter I have received from a constituent. Various hon. Members have quoted this evening from
812
letters they have received. This letter does put in a nutshell the effect of the tax on the employment of old-age pensioners who are doing small jobs to eke out their incomes. My constituent writes of the absurdity of the tax and its effects on the part-time workers and old-age pensioner part-time workers, and he says:
" I employ an old-age pensioner 20 hours a week to help in the garden. From this the Chancellor gets 10s. Income Tax and 14s. 1d. in National Insurance. If I am taxed 25s. I shall have to reduce his hours to eight a week, which means no stamp, no Income Tax, no Selective Employment Tax. The net result of the Chancellor's wisdom is a loss of 24s. Id. to the Revenue and a loss of income to the man employed, who will only be doing eight hours instead of 20."
My constituent adds:
" It does not make sense to pay 39s. Id. with National Health Insurance and S.E.T. for 12 hours for an old-age pensioner."
That, I think, puts in a nutshell the folly of the tax, a folly if judged from the point of view only of the need to bring in revenue. We have been told time and again that the purpose of this tax is to help the Exchequer. That letter shows its practical effect: there is a man being cast off; and that case can be multiplied hundreds and thousands of times over. This is the sort of thing my hon. Friends have all been emphasising.
Some of them have reminded us of the particular problem in the rural areas. If redeployment of labour is needed in the rural areas, it is no good putting a part-time worker off when there is no alternative employment available. That is a very serious aspect, as any hon. Member representing a rural constituency will know. Many part-time workers are employed in agriculture, mainly seasonal workers, and, admittedly, the amounts paid in respect of them will now be fully recouped. But in respect of those employed in trades ancillary to agriculture, of whom there are a great many, there will be no recoupment at all. I have in mind firms dealing in agricultural machinery and repairs to machinery, corn merchants and, in particular, agricultural and horticultural co-operatives.
12 p.m.
The co-operatives are something which the Government and their predecessors have encouraged, and a large number of women are employed part-time in them. But these people are not included in the

813
classification to enable them to get repayment. It could be argued that they should seek reclassification, and I do not know what assistance will be given there. But, as things stand at present, part-time workers in a co-operative venture will not be able to get recoupment, whereas other people doing similar work on nearby holdings will get it.
This selective tax is grossly unfair in its selectivity, and that is the main criticism which we raise. It is particularly unfair in relation to the part-time worker, where the effect is doubled many times over.
The whole debate this evening has taken place against the background of the statement which the Prime Minister made this afternoon. It is very important, in that connection, to consider what has been said by Government spokesmen about the part-time worker in the discussions that we lave had both on the Finance Bill and the Second Reading of the present Bill.
On the Second Reading of the Finance Bill, the right hon. Gentleman the Chief Secretary said, referring to part-time workers:
" So long as the policy of full employment is maintained—and this the Government are determined to do—it does not seem that there can be an overall falling-off in the need for workers in these groups."—[OFFICIAL REPORT, 25th May, 1966; Vol. 729, c. 485]
In winding up the Second Reading of the Selective Employment Payments Bill, the Chancellor of the Exchequer was much more explicit when he said, in relation to part-timers:
"…we are introducing this tax in a period of very full employment. There is at present a great swirling around of people offering jobs to part-time workers ".
A little later, he said:
".…this is a problem which we must look at carefully. We will have to see how it operates, remembering that we are operating in a condition of full employment."—[OFFICIAL REPORT, 23rd June, 1966; Vol. 730, c. 1046–7.]
What did the Prime Minister say today? He said that what is needed is a shakeout that will release the nation's manpower. When asked by my right hon. Friend the Leader of the Opposition to clarify that, he talked of 1½ to 2 per cent.
814
unemployment, meaning up to half a million unemployed. With the prospect of half a million unemployed, how can the Financial Secretary or the Chief Secretary pretend that the situation is the same now as when the tax was first proposed?
The whole basis has been changed. That being so, and the fact that the Chancellor rested his argument on the great swirling around of people offering jobs to part-time workers, the whole basis has been destroyed, and the position of part-time workers should be looked at again.
The Financial Secretary must have had that in mind in his very lame reply to what we had been saying, because he rested his case tonight not so much on the swirling around of jobs available, but on the difficulties of excluding part-time workers. In the light of what has been said previously by his right hon. Friends, there is a clear duty imposed on the Government. They brought in this tax and thought that it was a clever one to introduce. It is for them to find a way out of the difficulty that they have created and the injustice that it is creating for the part-time worker.
In the light of what the Prime Minister said today, the Financial Secretary's answer is far from good enough. We must have some improvement in this attitude, and some definite proposals to help out the part-time workers, otherwise many innocent people—in many cases old people, widows, and those who are unable to take full-time jobs, the people who are least able to defend themselves —will be thrown out of employment because of the effects of this tax, apart from the effect of the new measures which the Prime Minister has announced. For this reason we utterly reject the arguments which have been put forward by the Government, and I invite my right hon. and hon. Friends to show their feeling by taking this matter to a Division.
Mr. Pardoe: My reply will be the shortest on record. I find the Financial Secretary's reasons for this tax on part-time employees completely unsatisfactory, and I therefore intend, with my hon. Friends, to divide the House.
Question put, That those words be there inserted: —
The Committee divided: Ayes 234, Noes 300.

Division No. 138.]

AYES

[12.6 a.m.

Alison, Michael (Barkston Ash)

Godber, Rt. Hn. J. B.

Munro-Lucas-Tooth, Sir Hugh

Allason, James (Hemel Hempstead)

Goodhart, Philip

Murton, Oscar

Astor, John

Goodhew, Victor

Heave, Airey

Atkins, Humphrey (M't'n & m'd'n)

Gower, Raymond

Noble, Rt. Hn. Michael

Awdry, Daniel

Grant, Anthony

Nott, John

Baker, W. H. K.

Grant-Ferris, R.

Onslow, Cranley

Balniel, Lord

Gresham Cooke, R.

Orr, Capt. L. P. S.

Batsford, Brian

Griffiths, Eldon (Bury St. Edmunds)

Orr-Ewing, Sir Ian

Beamish, Col. Sir Tufton

Gurden, Harold

Osborn, John (Hallam)

Bell, Ronald

Hall, John (Wycombe)

Page, Graham (Crosby)

Bennett, Sir Frederick (Torquay)

Hall-Davis, A. G. F.

Page, John (Harrow, W.)

Berry, Hn. Anthony

Hamilton, Michael (Salisbury)

Pearson, Sir Frank (Clitheroe)

Bessell Peter

Harris, Frederic (Croydon, N.W.)

Peel, John.

Biffen, John

Harris, Reader (Heston)

Percival, Ian

Birch, Rt. Hn. Nigel

Harrison, Brian (Malden)

Peyton, John

Blaker, Peter

Harrison, Col. Sir Harwood (Eye)

Pike, Miss Mervyn

Body, Richard

Harvey, Sir Arthur Vere

Pink, R. Bonner

Bossom, Sir Clive

Harvey Anderson, Miss

Pounder, Rafton

Boyd-Carpenter, Rt. Hn. John

Hastings, Stephen

Powell, Rt. Hn. J. Enoch

Boyle, Rt. Hn. Sir Edward

Hawkins, Paul

Prior, J. M. L.

Braine, Bernard

Hay, John

Pym, Francis

Brinton, Sir Tatton

Heald, Rt. Hn. Sir Lionel

Quennell, Miss J.M.

Bromley-Davenport,Lt.Col Sir Walter

Heseltine, Michael

Rawlinson, Rt. Hn. Sir Peter

Brown, Sir Edward (Bath)

Higgins, Terence L.

Rees-Davies, W. R.

Bruce-Gardyne, J.

Hill, J. E. B.

Renton, Rt. Hn. Sir David

Bryan, Paul

Hirst, Geoffrey

Ridley, Hn. Nicholas

Buchanan-Smith,Alick(Angus,N—M)

Hobson, Rt. Hn. Sir John

Ridadale, Julian

Buck, Antony (Colchester)

Hogg, Rt. Hn. Quintin

Rippon, Rt. Hn. Geoffrey

Bullus, Sir Eric

Holland, Philip

Rodgers, Sir John (Sevenoaks)

Burden, F. A.

Hooson, Emlyn

Rossi, Hugh (Hornsey)

Campbell, Gordon

Hordern, Peter

Royle, Anthony

Carlisle, Mark

Hornby, Richard

Russell, Sir Ronald

Carr, Rt. Hn. Robert

Howell, David (Guildford)

St. John-Stevas, Norman

Cary, Sir Robert

Hunt, John

Sandys, Rt. Hn. D.

Channon, H. P. G.

Hutchison, Michael Clark

Scott, Nicholas

Chichester-Clark, R.

Iremonger, T. L.

Sharpies, Richard

Clark, Henry

Irvine, Bryant Godman (Rye)

Shaw, Michael (Sc'b'gh & Whitby)

Clegg, Walter

Jenkin, Patrick (Woodford)

Sinclair, Sir George

Cooke, Robert

Johnston, Russell (Inverness)

Smith, John

Cooper-Key, Sir Neill

Jones, Arthur (Northants, S.)

Stainton, Keith

Cordle, John

Jopling, Michael

Steel, David (Roxburgh)

Garfield, F. V.

Joseph, Rt. Hn. Sir Keith

Stodart, Anthony

Costain, A. P.

Kaberry, Sir Donald

Stoddart-Scott, Col. Sir M. (Ripon)

Craddock, Sir Beresford (Spelthorne)

Kerby, Capt. Henry

Summers, Sir Spencer

Crawley, Aidan

Kershaw, Anthony

Talbot, John E.

Crouch, David

Kimball, Marcus

Tapsell, Peter

Crowder, F. P.

King, Evelyn (Dorset, S.)

Taylor, Sir Charles (Eastbourne)

Cunningham, Sir Knox

Kitson, Timothy

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

Currie, G. B. H.

Knight, Mrs. Jill

Taylor, Frank (Moss Side)

Dalkeith, Earl of

Lambton, Viscount

Teeling, Sir William

Dance, James

Langford-Holt, Sir John

Temple, John M.

Davidson,James(Aberdeenshlre,W.)

Legge-Bourke, Sir Harry

Thatcher, Mrs. Margaret

d'Avigdor-Goldsmid, Sir Henry

Lewis, Kenneth (Rutland)

Thorpe, Jeremy

Dean, Paul (Somerset, N.)

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

Tilney, John

Deedes, Rt. Hn. W. F. (Ashford)

Lloyd, Rt. Hn. Selwyn (Wirral)

Turton, Rt. Hn. R. H.

Digby, Simon Wingfield

Longden, Gilbert

van Straubenzee, W. R.

Dodds-Parker, Douglas

Loveys, W. H.

Vickers, Dame Joan

Doughty, Charles

McAdden, Sir Stephen

Wainwright, Richard (Colne valley)

Douglas-Home, Rt. Hn. Sir Alec

MacArthur, Ian

Walker-Smith, Rt. Hn. Sir Derek

Drayson, G. B.

Mackenzie,Alasdair(Ross&Crom'ty)

Wall, Patrick

du-Cann, Rt. Hn. Edward

Maclean, Sir Fitzroy

Walters, Dennis

Eden, Sir John

Macleod, Rt. Hn. lain

Ward, Dams Irene

Elliot, Capt. Walter (Carshalton)

McMaster, Stanley

Weatherill, Bernard

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

Macmillan, Maurice (Farnham)

Webster, David

Errington, Sir Eric

Maddan, Martin

Wells, John (Maidstone)

Eyre, Reginald

Maginnie, John E.

Whitelaw, William

Farr, John

Marples, Rt. Hn. Ernest

Wills, Sir Gerald (Bridgwater)

Fisher, Nigel

Marten, Neil

Wilson, Geoffrey (Truro)

Fletcher-Cooke, Charles

Maude, Angus

Winstanley, Dr. M. P.

Forrest, George

Mawby, Ray

Wolrige-Gordon, Patrick

Fortescue, Tim

Maxwell-Hyslop, R. J.

Wood, Rt. Hn. Richard

Foster, Sir John

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

Woodnutt, Mark

Galbraith, Hn. T. G.

Mills, Peter (Torrington)

Worsley, Marcus

Gibson-Watt, David

Mills, Stratton (Belfast, N.)

Wylie, N. R.

Giles, Rear-Adm. Morgan

Miscampbell, Norman

Younger, Hn. George

Gilmour, Ian (Norfolk, C.)

Mitchell, David (Basingstoke)

TELLERS FOR THE AYES:

Gilmour, Sir John (Fife, E.)

Monro, Hector

Mr. Eric Lubbock and

Glover, Sir Douglas

More, Jasper

Mr. John Pardoe.

Glyn, Sir Richard

Morrison, Charles (Devizes)

Mott-Radclyffe, Sir Charles

NOES

Abse, Leo

Evans, Albert (Islington, S.W.)

Mabon, Dr. J. Dickson

Albu, Austen

Evans, loan L. (Birm'h'm, Yardley)

McBride, Neil

Allaun, Frenk (Salford, E.)

Fernyhough, E.

McCann, John

Alldritt, Walter

Fitch, Alan (Wigan)

MacColl, James

Allen, Scholefield

Fletcher, Raymond (Ilkeston)

MacDermot, Niall

Archer, Peter

Fletcher, Ted (Darlington)

Macdonald, A. H.

Armstrong, Ernest

Floud, Bernard

McGuire, Michael

Ashley, Jack

Foley, Maurice

McKay, Mrs. Margaret

Atkins, Ronald (Preston, N.)

Foot, Sir Dingle (Ipswich)

Mackenzie, Gregor (Rutherglen)

Atkinson, Norman (Tottenham)

Foot, Michael (Ebbw Vale)

Mackie, John

Bacon, Rt. Hn, Alice

Ford, Ben

Mackintosh, John P.

Barnes, Michael

Forrester, John

Maclennan, Robert

Barnett, Joel

Fowler, Gerry

McMillan, Tom (Glasgow, C.)

Beaney, Alan

Fraser, Rt. Hn. Tom (Hamilton)

McNamara, J. Kevin

Bence, Cyril

Freeson, Reginald

MacPherson, Malcolm

Bern, Rt. Hn. Anthony Wedgwood

Gardner, A. J.

Mahon, Peter (Preston, S.)

Bennett, James (G'gow, Bridgeton)

Garrett, W. E.

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

Bidwell, Sydney

Garrow, Alex

Manuel, Archie

Binns, John

Ginsburg, David

Mapp, Charles

Bishop, E. S.

Gordon Walker, Rt. Hn. P. C.

Marquand, David

Blackburn, F.

Gray, Dr. Hugh (Yarmouth)

Marsh, Rt. Hn. Richard

Blenkinsop, Arthur

Greenwood, Rt. Hn. Anthony

Mason, Roy

Boardman, H.

Gregory, Arnold

Maxwell, Robert

Booth, Albert

Grey, Charles (Durham)

Mayhew, Christopher

Boston, Terence

Griffiths, Will (Exchange)

Mellish, Robert

Bottomley, Rt. Hn. Arthur

Hamilton, James (Bothwell)

Mendelson, J. J.

Bowden, Rt. Hn. Herbert

Hamilton, William (Fife, W.)

Millan, Bruce

Boyden, James

Hamling, William

Miller, Dr. M. S.

Braddock, Mrs. E. M.

Hannan, William

Mitchell, R. C. (S'th'pton, Test)

Bradley, Tom

Harper, Joseph

Molloy, William

Bray, Dr. Jeremy

Harrison, Walter (Wakefield)

Morgan, Elyetan (Cardiganshire)

Brooks, Edwin

Hart, Mrs. Judith

Morris, Alfred (Wythenshawe)

Broughton, Dr. A. D. D.

Hazell, Bert

Morris, John (Aberavon)

Brown, Hugh D. (G'gow, Proven)

Healey, Rt. Hn. Denis

Moyle, Roland

Brown,Bob(N'c'tle-upon-Tyne,W)

Heifer, Eric S.

Mulley, Rt. Hn. Frederick

Brown, R. W. (Shoreditch & F'bury)

Henig, Stanley

Murray, Albert

Buchan, Norman

Herbison, Rt. Hn. Margaret

Neal, Harold

Buchanan, Richard (G'gow, Sp'burn)

Hilton, W. S.

Newens, Stan

Butler, Herbert (Hackney, C.)

Hobden, Dennis (Brighton, K'town)

Norwood, Christopher

Butler, Mrs, Joyce (Wood Green)

Hooley, Frank

Oakes, Gordon

Cant, R. B.

Horner, John

Ogden, Eric

Carmichael, Neil

Houghton, Rt. Hn. Douglas

O'Malley, Brian

Carter-Jones, Lewis

Howarth, Harry (Wellingborough)

Orbach, Maurice

Castle, Rt. Hn. Barbara

Howarth, Robert (Bolton, E.)

Orme, Stanley

Coe, Denis

Howie, W.

Oswald, Thomas

Coleman, Donald

Hey, James

Owen, Dr. Davis (Plymouth, S'tn)

Concannon, J. D.

Hughes, Emrys (Ayrshire, S.)

Owen, Will (Morpeth)

Conlan, Bernard

Hughes, Hector (Aberdeen, N.)

Padley, Walter

Corbet, Mrs. Freda

Hunter, Adam

Page, Derek (King's Lynn)

Cousins, Rt. Hn. Frank

Hynd, John

Paget, R. T.

Craddock, George (Bradford, S.)

Jackson, Colin (B'h'se Spenb'gh)

Painter, Arthur

Crawshaw, Richard

Jackson, Peter M. (High Peak)

Park, Trevor

Cronin, John

Jay, Rt. Hn. Douglas

Parkyn, Brian (Bedford)

Crosland, Rt. Hn. Anthony

Jeger, George (Goole)

Pearson, Arthur (Pontypridd)

Cullen, Mrs. Alice

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

Peart, Rt. Hn. Fred

Dalyell, Tam

Jenkins, Hugh (Putney)

Pentland, Norman

Davidson, Arthur (Accrington)

Jenkins, Rt. Hn. Roy (Stechford)

Perry Ernest G. (Battersea, S.)

Davies, Dr. Ernest (Stretford)

Johnson, Carol (Lewisham, S.)

Perry, George H. (Nottingham, S.)

Davies, G. Vied (Rhondda, E.)

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

Prentice, Rt. Hn. R. E.

Davies, Ednyfed Hudson (Conway)

Jones, Dan (Burnley)

Price, Christopher (Perry Barr)

Davies, Harold (Leek)

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

Price, Thomas (westhoughton)

Davies, Robert (Cambridge)

Jones, J. Idwal (Wrexham)

Price, William (Rugby)

de Freitas, Sir Geoffrey

Judd, Frank

Probert, Arthur

Delargy, Hugh

Kelley, Richard

Pursey, Cmdr. Harry

Dell, Edmund

Kenyon, Clifford

Rankin, John

Dewar, Donald

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

Redhead, Edward

Diamond, Rt. Hn. John

Kerr, Russell (Feltham)

Rhodes, Geoffrey

Dickens, James

Lawson, George

Richard, Ivor

Dobson, Ray

Leadbitter, Ted

Roberts, Albert (Normanton)

Doig, Peter

Lodger, Ron

Roberts, Goronwy (Cae narvon)

Donnelly, Desmond

Lee, Rt. Hn. Frederick (Newton)

Roberts, Gwilym (Bodfordshire, s.)

Driberg, Tom

Lee, Rt. Hn. Jennie (Cannock)

Robertson, John (Paisley)

Dunn, James A.

Lee, John (Reading)

RobimionRt.Hn.Kermeth(St.P'c'as)

Dunnett, Jack

Lestor, Miss Joan

Robinson, W. 0. J. (Walth'stow E.)

Dunwoody, Mrs. Gwyneth (Exeter)

Lever, Harold (Cheatham)

Rodgers, William (Stockton)

Dunwoody, Dr. John (F'th & C'b'e)

Lever, L. M. (Ardwick)

Roebuck, Roy

Eadie, Alex

Lewis, Arthur (W. Ham, N.)

Rogers, George

Edelman, Maurice

Lewis, Ron (Carlisle)

Rose, Paul

Edwards, Robert (Bilston)

Lomas, Kenneth

Ross, Rt. Hn. William

Edwards, William (Merioneth)

Loughlin, Charles

Rowland, Christopher (Meriden)

Ellis, John

Luard, Evan

Rowlands, E. (Cardiff, N.)

English, Michael

Lyon, Alexander W. (York)

Ryan, John

Ensor, David

Lyons, Edward (Bradford,E.)

Shaw, Arnold (Ilford, S.)

Sheldon, Robert

Taverne, Dick

White, Mrs. Eirene

Shore, Peter (Stepney)

Thomas, George (Cardiff, W.)

Whitlock, William

Short,Rt.Hn.Edward(N'c'tle-u-Tyne)

Thomas, lorwerth (Rhondda, W.)

Willey, Rt. Hn. Frederick

Short,Mrs.Renée (W'hampton.N.E.)

Thomson, Rt. Hn. George

Williams, Alan (Swansea, W.)

Silkin, Rt. Hon. John (Deptford)

Thornton, Ernest

Williams, Alan Lee (Hornchurch)

Silkin, S. C. (Dulwich)

Tinn, James

Williams, Clifford (Abertillery)

Silverman, Julius (Aston)

Tourney, Frank

Williams, Mrs. Shirley (Hitchin)

Skeffington, Arthur

Tuck, Raphael

Willis, George (Edinburgh, E.)

Slater, Joseph

Urwin, T. W.

Wilson, William (Coventry, S.)

Small, William

Varley, Eric G.

Winnick, David

Snow, Julian

Wainwright, Edwin (Dearne Valley)

Winterbottom, R. E.

Steele, Thomas (Dunbartonshire, W.)

Walker, Harold (Doncaster)

Woof, Robert

Stewart, Rt. Hn. Michael

Wallace, George

Wyatt, Woodrow

Storehouse, John

Watkins, David (Consett)

Yates, Victor

Strauss, Rt. Hn. G. R.

Weitzman, David

Zilliacus, K.

Summerskill, Hn. Dr. Shirley

Wellbeloved, James

TELLERS FOR THE NOES:

Swain, Thomas

Wells, William (Walsall, N.)

Mr. Charles R. Morris and

Swingler, Stephen

Whitaker, Ben

Mr. Harry Gourlay.

Dame Irene Ward: On a point of order. So many Amendments cannot be discussed in the time allocated, may I ask whether there is an arrangement for the Government to announce which Amendments they would have accepted if they had been discussed?
The Deputy Chairman (Mr. Sydney Irving): That is not a point of order.
Dame Irene Ward: May I ask for your guidance, Mr. Irving? How can I find out what the procedure will be? We shall never know what Amendments would have been accepted?
The Deputy Chairman: For the hon. Lady's guidance, the Government may move any Amendments they wish. Perhaps they will do so during the course of the timetable Motion.
Dr. M. P. Winstanley: I beg to move Amendment No. 263, in page 2, line 23, at the end to insert:
(2) This section applies to the employment of any person who is registered as a disabled person in any establishment or activity not mentioned in sections 1, 3, 4, 5. 6 of this Act, or in other subsections of this section.
The Deputy Chairman: It would perhaps be for the convenience of the Committee if we discussed with this Amendment Amendment No. 130, in page 2, line 38, at end insert:
(c) the establishment employs among its employees at least 5 per cent. who are registered disabled workers.
and new Clause 4, "Disabled workers."
Dr. Winstanley: This Amendment seeks to put persons registered under the Disabled Persons (Employment) Acts of 1944 and 1958 in a neutral position under the Selective Employment Tax. In other words, they will get the repayment so that the tax does not affect them. Unless
820
something is done for these people, and if the Tax goes through unamended, there is not the slightest doubt that it will have a catastrophic effect on the present machinery for dealing with disabled people.
I know that the machinery is very efficient because I am part of it. The Minister of Labour, who has responsibility for the tax, is also part of it. If the tax went through unamended, I believe that all those concerned with the machinery for providing employment for disabled people would find their work very much hampered.
I have had considerable experience of the working of this machinery. As a general practitioner for about 18 years, I have had the job from time to time of finding employment for disabled persons, of assisting disabled persons to keep employment, and of looking after disabled persons when they have lost their employment. As a member of one of the Ministry of Labour's disablement panels, I have been responsible for deciding who should go on the disabled persons' register and who should be assisted by this machinery and, finally, as a former part-time medical officer in industry in an establishment which made considerable use of disabled persons, I am personally aware of the great difficulty which occurs from time to time in finding suitable employment and, indeed, in persuading management to keep such people in that suitable employment.
When the question of disabled persons was discussed in Committee on the Finance Bill, the Financial Secretary went some distance towards conceding that there was a case. I am not saying that he showed any wild enthusiasm, but, after all, he has shown that he is

821
not disposed to react vigorously in any direction. At least, however, he assured the Committee that there was a problem. These were his words:
" But I say at once that my right hon. Friend will be watching and reviewing the working of this tax, particularly in its relation to the disabled, most anxiously and carefully. He will certainly not hesitate to take what steps he can to adjust the form of the tax if these fears to be better founded…."
and he concluded this speech by saying:
" I repeat that my right hon. Friend will watch this position most carefully, and if it is found to be right and possible,"
right and possible, note,
" he will consider what special treatment can and should be made…. to help the disabled." —[OFFICIAL REPORT, 29th June 1966; Vol. 730 c. 1953–55.]
It is my job to show that it is right that the Chancellor should take certain steps arid that it is not only possible but simple 10 take them. I believe that since the Financial Secretary made that statement the matter has become urgent, because since then we have had the statement to which we all listened today from the Prime Minister, who said some things about unemployment. If I remember accurately the words used by the Prime Minister in reply to a question by my right hon. Friend the Leader of the Liberal Party, the right hon. Gentleman said that unemployment would rise but he believed it would not rise to a level which hon. Members in all parts of the House would find intolerable.
The tolerability of various levels of unemployment is a matter on which I suspect there will be some difference of opinion between hon. Members in various parts of the House; people's thresholds of tolerability of unemployment vary. But I am sure that we all expect an increase in unemployment. That increase is relevant to this question. It is relevant to the remarks which the Financial Secretary made in Committee on the Finance Bill. In arguing that perhaps this problem was not as great as we thought the hon. and learned Gentleman said this:
" A full employment society is the greatest protection and security to the disabled person in finding employment."—[OFFICIAL REPORT, 29th June. 1966; Vol. 730, c. 1953–5.]
I agree with the hon. and learned Gentleman. We all agree with him, but we must realise that we are moving into a
822
situation in which we shall not have full employment in the context of this speech.
At present, as the Chief Secretary well knows, unemployment amongst disabled persons is 5½times the national average. If unemployment is to rise, I do not think that the Chief Secretary has any reason to conclude that this ratio will change. Therefore, there will be a considerable increase in the total number of disabled unemployed. At the moment 48,000 registered disabled persons are unemployed. There are 650,000 persons on the disabled persons' register. Of those, 48,000 are at present unemployed in a time of virtually full employment. But with unemployment the situation will get much more difficult.
In talking of the size of the problem it is important to remember that the figure of 650,000 registered disabled persons does not necessarily represent the total number of persons who would be on the disabled register if conditions became very difficult. The tendency is for a disabled person not to go on the disabled persons' register until he loses his employment and finds difficulty in obtaining another job. At this point the Ministry of Labour assists him and sees to it that he goes on the register. The potential figure is very much larger than 650,000 and the potential figure of disabled unemployed is very much larger than the present figure of 48,000, which is bad enough, of those already registered.
We must look at the problem of the employment of disabled persons in a rather different way from that in which we look at employment generally. We have talked a great deal about the need to make our labour force efficient and the importance of not wasting labour. I am sure that every hon. Member agrees that it is essential that we use our labour force efficiently and do not waste it, and for this reason hon. Members in various parts of the Committee are prepared to support any measure which they believe will result in the redeployment of labour and people moving to more important jobs.
But here we are dealing with people for whom it is very difficult to find jobs at all. Again replying on the last occasion—and he was replying to something I had said—the Financial Secretary said that the vast majority of the disabled who find work do it as well as a normal man. This is not correct. It may seem to be correct

823
from a superficial examination—and I mean no criticism of the Financial Secretary; but these people who are working as displaced persons are working with special arrangements and special consideration by management. They may appear to be doing their particular job satisfactorily, but their particular job might not exist at all had it not been created especially for them.
In other words, medical officers all over the country, when examining disabled persons, may say, for example, "This person who is an unstable diabetic must do no shift work." The firm may take him on in a job which according to the Financial Secretary he is doing as well as a normal person, but he is not working shifts. A special arrangement has been made for him. A medical officer may say that a man must have no long periods of standing. Special arrangements may be made to allow him to work in a special place so that he is not standing. Or a medical officer may say, "This man should do no climbing ". Duties which may involve climbing are excluded from his contract. It may appear to the Financial Secretary that this person is working as well as the normal person but in fact he is doing only part of the job.
Mr. Nicholas RidleyMost of these people would be getting the premium. The hon. Member is talking about people employed in manufacturing industry. Would he address his mind to disabled persons in the service industries?
Dr. Winstanley: On the Financial Secretary's own figures, which he gave last time, there are 600,000 registered disabled persons who are employed and more than 200,000 of them are employed in service industries. The considerations which I mentioned apply in service industries as well as in manufacturing industries. I agree that in manufacturing industry a premium is paid in respect of them and that it is not paid in the service industries.
There are many service occupations which apply to people in this category. We have heard about bakeries and about the catering industry. There are a great many disabled people employed in the catering industry and, as the hon. Mem-
824
ber for Sheffield, Brightside (Mr. Winter-bottom) said in the last debate, there are in the catering industry special jobs which are paid at specially low rates for disabled persons. This is not a problem which relates only to manufacturing, for 200,000 of those on the register are in service occupations, many employed through the ancillary organisations connected with the British Legion and with other organisations of this kind. Those 200,000 would in every case be penalised under the tax and handicapped in relation to the retention of their employment. What will happen? We have before us a whole series of measures designed to make employers in service industries look at their wage bill and their list of employees, and scratch their heads and ask. "Who can we get rid of?".
12.30 a.m.
In the end, their attention will inevitably come down on those with whom they have certain difficulties, such as having to arrange special lunch times, special rest periods and all sorts of special consideration not given to ordinary employees. They will also come down on people who, through no fault of their own, are not so productive as others. They will not get rid of efficient productive people who can make a significant contribution to the manufacturing industries that the Treasury wants to help.
Mr. W. E. Garrett: On a point of order, Mr. Irving. Unfortunately, the hon. Gentleman has been in the House only a short while. No doubt he has a limited knowledge of industry, but he is accusing the larger directorates of being inhuman, and that is not so. The fact of the matter, and I speak with personal experience—
Sir D. Glover: On a point of order—
The Deputy Chairman: I am dealing with a point of order, which may turn out not to be a point of order, but I must be allowed to deal with it.
Mr. Garrett: I will make one brief point—
The Deputy Chairman: The hon. Gentleman raised a point of order, and if he is not going to pursue it I must ask him to resume his seat.
Dr. Winstanley: This is what the Chancellor of the Exchequer wants employers to do, and in many cases they will do it. Some people will say that the quota that industry must keep will make it keep these people, but let me remind the Chief Secretary first that there are very large numbers of these disabled persons who work in establishments which are too small to come within the quota arrangements and are not off the necessary scale.
Secondly, there are many people who have disabilities that do not affect them in their present job who nevertheless qualify for inclusion in the disabled persons register. One of the difficulties of the panels operating the disablement scheme is to persuade managements not to fill their quota with people who do not need this particular assistance.
Mr. Garrett Mr. Garrett indicated dissent.
Dr. Winstanley: It is no good the hon. Gentleman shaking his head. I have seen it not once but often, and I have had to deal with it.
Mr. Garrett: On a point of order. With all due respect to the hon. Member for Cheadle. I have had to deal with it as well, and large firms do not—
The Deputy Chairman: Order. That is not a point of order. Dr. Winstanley.
Dr. Winstanley: There is no doubt that this happens. I hasten to acknowledge that there are large firms, little firms and firms of all descriptions all over the country which do their level best to operate the disabled persons scheme. Many do a lot more than they are required to do under the Act. Many fall over themselves backwards to assist. But if new factors, penal obstacles of this kind, are introduced, employers will be virtually forced to take avoiding action.
The Financial Secretary earlier has shaken his head in acute depression about the number of things that he clearly felt should be done but which were not possible. Here is something which the Financial Secretary will admit is not merely possible but easy. These people are readily identified. They are on a register. The Minister now to be made responsible for the tax, the Minister of Labour, is responsible for compiling the
826
register, and it is accurate. There are no technical difficulties in identifying these people, nor are there any difficulties of people getting through the back door. The arrangements operated by the Minister of Labour are efficient and ensure that only people who are really qualified get on the register. So he has an identifiable class of people whom he can easily help.
Mr. Garrett: I have listened with great patience to the hon. Gentleman, but the innuendo behind what he is saying is that those who are registered as disabled are not contributing to the industrial capacity of the country.
Dr. Winstanley: There are no imputations. The plain fact is that disabled people frequently, through no fault of their own, are not able to make the same contribution as fully fit people, and we should help them. As a matter of social necessity we should help them to make a contribution. It is not just an economic problem. We should help them feel that they are helping the community and taking an active part in community life.
Mr. Gower: I have listened with great sympathy and agree entirely with almost all that the hon. Gentleman has said. He said that these people are identifiable. I agree. But he will recall that in the debates on the Finance Bill the Financial Secretary objected, saying that the Government would have to inspect establishments to prove how many people were employed there. Would he comment on that?
Dr. Winstanley: It is true that the Financial Secretary said that, but he has had time to think it over and may now realise that he was wrong. The Ministry of Labour, which is to deal with the tax, has the necessary information; it keeps it up to date, and it is readily available. I beg the Government to think again about this category of people. It would be easy to help them.
There have been suggestions from time to time that the Government have been too ready to help the under-privileged. I do not accept that, but I am sure that every hon. Member feels that the Government have not gone far enough to help this group of people. This is a

827
sensible Amendment. In the terms of the Financial Secretary's speech, it is both right that something should be done and possible for something to be done. We are now waiting for something to be done.
Sir D. Glover: This debate will continue tomorrow, and so I ask the Parliamentary Secretary to the Ministry of Labour to use her influence with the Government on this problem. I am sure that the whole House had sympathy with the Amendment long before the Prime Minister made his announcement yesterday. It is obvious from what he said that there will be an increase in unemployment.
It is even more worrying than that. When the increase in unemployment takes place, a great many service institutions will find it far more difficult to make a profit as a result of the deflationary measures brought in by the Government. Some may find that they are not making a profit and examine their on-costs and decide to reduce their staff. Unless the hon. Lady can get a concession from the Government it is all too likely that staff will be reduced by dismissing disabled persons.
Take a small establishment employing perhaps five or six persons. From a sense of social justice, the employer may have as a cashier a man who has lost a leg or both legs, who can, of course, do the job once he is behind the cash desk.
828
But if the staff has to be reduced through the Government's deflationary policy, that person cannot do any other job in the shop, and if one person has to be got rid of, he is likely to be the one dismissed. It may hinge on the 25s. a week. If such a person is placed in a special category, the employer may say, and I hope he will, that he will keep that person on.
The hon. Lady must realise that there are literally thousands of disabled people in distribution and services whose jobs are at risk as a result of the measures announced by the Prime Minister. She has built up a reputation before entering the House of Commons and since as a woman with a great sense of social justice and I would hate to see her tarnish that reputation by allowing the Government to go on with this Bill without bringing in some alleviation for the disabled.
Mr. Gower: It is a matter of considerable pleasure to support the Amendment, which was moved so clearly, cogently and effectively by the hon. Member for Cheadle (Dr. Winstanley).
It being one hour and eleven minutes after half-past Eleven o'clock, being the time equivalent to the time which elapsed between half-past Three o'clock and the time at which consideration of the Bill was entered upon, The CHAIRMAN, pursuant to Order, left the Chair to report Progress and ask leave to sit again.
Committee report Progress; to sit again this day.

INDONESIA
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Charles R. Morris.]
12.41 a.m.
Mr. Tam Dalyell: My hon. Friend the Member for Brighouse and Spenborough (Mr. Colin Jackson) and I recently returned from Indonesia, where we had the opportunity to meet most of the leaders, including Dr. Sukarno, General Subarto, the Sultan of Jogjakarta, Mr. Malik and the Governor of the Bank of Indonesia. If my hon. Friend catches your eye, Mr. Speaker, he will deal with political matters. I shall raise economic matters.
This debate is fortunately timed in that it gives the Government an opportunity to enlarge on the communiqué issued at the end of the Umarjadi talks. First, however', I regret the emphasis that some newspapers laid on the discussion of British claims against Indonesia aspect of thetalks, particularly headlines such as "Indonesia agrees to damages". My first question to my hon. Friend the Minister of State is whether she would confirm that the main purpose of the talks was to discuss the re-scheduling of medium and long-term debts.
I welcome the reference in the final communiqué to Her Majesty's Government's readiness to take a constructive part in the forthcoming multilateral discussions between creditor nations and the Indonesian Government designed to find a solution to the problem, and I also welcome the announcement in today's Press that the Government are taking part in the 9-nation discussions on the settlement of debts. I would state a preference that these should take place in Tokyo rather than in Paris, London or Rome. There is a certain advantage in having them take place in Asia.
One constructive and practical proposal is for the E.C.G.D. to provide cover for tin dredging equipment. The Governor of the Bank of Indonesia attaches special importance to this, as tin-dredging is a short-term hard currency-earning activity. I went to see the Minister of State, Board of Trade, and officials of the E.C.G.D. to urge them that the normal and understandable deparmental criteria should be waived in this case.
830
Would my hon. Friend care to comment on the discussion which has taken place between her Department and the Board of Trade on this matter?
The second question I wish to raise concerns the rebuilding of the British Embassy in Jakarta. What will the total cost be and how much will the Indonesians contribute? It would seem that, on Socialist criteria—and I do not forget that my hon. Friend the Minister of State is a member of the National Executive of the Labour Party—there are much more important things to do than to erect a brand new edifice in the centre of Jakarta, opposite the Hotel Indonesia. If I were an Indonesian at this time I would be dismayed to see such a building being erected. As a Member of the British Parliament, having heard the announcement of my right hon. Friend the Prime Minister today, I suggest that this project in Jakarta should be among the cuts to be made.
If there is money available, the priorities should be—and I ask my hon. Friend to comment on these suggestions —first, that consideration should be given to reconstituting the British Council, which would now have to be done by special grant—that is, if anything is to happen before 1968—and, secondly, that we should consider the provision of text books in elementary science and of basic equipment for laboratories in Indonesia. My hon. Friend knows that I have discussed this matter with the Ministry of Overseas Development. Under this heading, we should consider the provision of places for Indonesian students in British colleges of technology and regional technical colleges, and facilities for students to gain experience in the British engineering industry. Equally important is the provision of places in teacher training colleges. I have given my hon. Friend notice of my discussions with the Ministry of Overseas Development, and I hope that she is in a position to comment on this issue.
My hon. Friend the Member for Brighouse and Spenborough and I were guests of the Roman Catholic University in Jakarta. The people there have to work in a building which is used during the morning as a secondary school. It is thoroughly wrong to give priority to the reconstruction of an embassy over needs such as these.

831
Britain has a role to play in the Far East, provided we remember that in 1966 the Good Samaritan is not a soldier dressed in a military uniform. He is an engineer, doctor, teacher or merchant who trades in fair prices. Our technical and financial abilities constitute the prestige which in 1966 we have in the world, not military forces or embassy buildings.
12.48 a.m.
Mr. Colin Jackson: I am grateful to my hon. Friend the Member for West Lothian (Mr. Dalyell) for raising this subject, and I agree with him about the reconstruction of the British Embassy in Jakarta. The Indonesian Government have acknowledged that the damage done to the Embassy was wrong. They have admitted liability and it will be rebuilt. However, this is not the time to rebuild it.
Further to the statement today by my right hon. Friend the Prime Minister, there is not only in the United Kingdom a limitation of the construction of large buildings, for reasons of financial stringency, but we should not forget that the Indonesian Government have placed a total ban on new building. To erect a splendid edifice in Jakarta now, when the Government there have stopped new building, even half-completed Government buildings, might have an adverse psychological effect.
The principle of repayment for the embassy having been agreed, and the sum, less than £150,000, not being large, I agree that that money could, particularly at this time, be used more effectively to help in the educational sphere, particularly in the provision of text books. There is a crying need in Indonesia for text books for the study of English and science and a contribution along these lines on our part could be significant for AngloIndonesian relations.
Having been to that country on two previous occasions, in 1953 and 1955, I gained the impression that for a time Indonesia was turning its back on the friendly Western countries and had become obsessed with ideas, particularly during the later period of rule of President Sukarno, which were not related to promoting intelligent international understanding. However, when I visited
832
Indonesia this year I felt that they were coming back into the mainstream of sensible friendship with the countries of both East and West. My feeling is that the United Kingdom is entirely right to take up again a position of positive friendship. One way we can do this is to match the Indonesia good intent on the Sabah and Sarawak frontiers with reciprocal actions on our side. I agree that Her Majesty's Government must await the formal signature between Malaysia and Indonesia, when confrontation is finished, but one would hope that this actual signature will not be long withheld. This stage having been reached, I think we should not be too disturbed by isolated incidents on the frontiers of Sabah and Sarawak.
It is difficult for the Jakarta Government to control units which have lived through a violent period and may be controlled by local commanders who, for a variety of reasons, do not want a return to friendship with Britain. There are undoubtedly small elements of Communist forces on the frontier who have no interest in peace between the two countries, and I hope the United Kingdom Government will not be over-anxious in demanding the total cessation over a long period before we make open indications that we ourselves are withdrawing units. I know the Malaysian Government are anxious for us to withdraw, and I hope we shall be careful that we do not delay too long in case relations once again turn sour.
I was glad to hear the Foreign Secretary comment in his remarks following his visit to Indonesia that he was favourably inclined to Indonesia's support for an Asian States association. I think this is a very encouraging development from the negative anti-foreign bitter attitude of President Sukarno, to move on to Mr. Malik's desire not just for an Asian States association, comprising Indonesia, Malaysia and Singapore, but to look to bringing in Thailand as well and to creating a large neutral prosperous bloc inside East Asia. This would be of enormous benefit to Australia. It would certainly help the Indian sub-continent in feeling that they have a positive, stable partner in the South-East, and I hope that we shall consider leaving S.E.A.T.O., or S.E.A.T.O.'s becoming irrelevant, and an Asian States organisation taking its place with Britain having as a backstop

833
military presence in Australia, and the overall safety of the area being guaranteed by the United Nations.
In a world which has many depressing stories in international relations, this short Adjournment debate registering a positive achievement is one for which the House should have pleasure in allowing time, and I think in future years we shall look back on this occasion as one of the major turning points in development in South-East Asia.
12.45 a.m.
The Minister of State for Foreign Affairs (Mrs. Eirene White): I am sure the House welcomes this brief debate because, as my hon. Friend the Member for Brighouse and Spenborough (Mr. Colin Jackson) has just said, this is one of the more encouraging and constructive turns of affairs in recent months, and in a World which is in many places gloomy and fraught with problems I think we are very glad indeed that things seem to have taken this definite turn for the better. We are also glad that our two colleagues have been to Indonesia and have taken this Parliamentary opportunity of touching upon some of the problems. Her Majesty's Government are much encouraged by the new Indonesian Government's desire to turn from a policy of confrontation to one of restoring international relationships, which have been broken, and restoring the Indonesian economy, which had been run down to a very dangerous degree.
We welcomed the Bangkok agreement and we hope that this will soon be ratified. The ending of confrontation would be a major step towards the restoration of peace in this troubled area. As the House knows, my right hon. Friend the Foreign Secretary had the opportunity earlier this month to discuss the problem of Anglo-Indonesian relations with the Indonesian Foreign Minister, Mr. Malik. As he reported to the House on 4th July he found a great deal of common ground with Mr. Malik on these problems and world problems generally.
My hon. Friend has mentioned an association of Asian states wider than Maphilindo. This is certainly something which we would welcome and which would add to stability in that part of the world. It is not something in which
834
we could take any kind of initiative but we would be happy to see the States concerned bringing themselves together in this way. At the same time we should make it clear, as my right hon. Friend made it clear to Parliament, that it is difficult for us to get our relations with Indonesia on a really satisfactory footing unless there is a cessation of hostilities towards Malaysia.
I take the point of my hon. Friend and I am sure that he will recognise that, although we know that there are difficulties, nevertheless for completely satisfactory restoration of relations and the complete withdrawal of British troops, we would expect that hostile acts should cease. I do not have time to develop these wider issues and I turn to the other talks held last week in London, which my noble Friend the Parliamentary Under-Secretary had with the Indonesian Mission, led by Mr. Umarjadi.
These talks were friendly and provided an opportunity for a wide-ranging discussion of the new Indonesian plans for restoring their country. My hon. Friends referred to the communique issued after the talks, giving a resume of the conclusions reached. It is very clear from the information which we already had and further detailed information provided by the Mission, that the economic position of Indonesia is very serious. We should like to do what we can to help, but our resources are limited. If this was not clear before, the statement by my right hon. Friend the Prime Minister earlier ought to have underlined that.
As the House knows we made an immediate gesture of £1 million in aid. Plans for spending this are under way. The commodities likely to be purchased include spare parts for machines, chemicals including pharmaceuticals, pesticides and fertilisers and possibly some purchase of textiles. All of these are very useful and will be welcome. I hope that arrangements to conclude these purchases will be made before long. The communiqué indicated that we were not able to do anything further in the way of direct financial aid to Asia but that we hoped to do more under the Colombo Plan arrangements by way of technical assistance. My hon. Friends have mentioned the need for this. Books have been mentioned. Indonesia is with in the

835
scope of the low-price book scheme and there are the special arrangements for technical books run by the Ministry of Overseas Development. There is the other very important question of providing training in this country for teachers, especially, as my hon. Friend mentioned, in technical colleges and in management. I am happy to say that arrangements will be made by my right hon. Friend the Minister of Overseas Development to see that as much as we can possibly do will be done in this direction. Arrangements are being made to find places and I think that this part of the plan for co-operation should go quite smoothly.
As to the British Council, as the statement made earlier today by my right hon. Friend the Prime Minister indicated, certain cuts are having to be made in overseas information expenditure. I cannot make any firm promise at this stage, before we have had a chance to discuss the whole matter with the British Council, how soon the Council could resume its activities in Indonesia. We fully appreciate that this would be valuable, but I could not make any specific pledge until we have had an opportunity, in the light of the latest economic announcements, to discuss this whole problem with Sir Paul Sinker and his colleagues in the British Council.
Mention has been made by both my hon. Friends of the rebuilding of the British Embassy. I will, of course, make sure that this is considered carefully in the light of their representations tonight. On the other hand, I should emphasise that my information is that to enable our staff there to work adequately, some rehousing is needed. If full relationships are restored as we hope, we may need more staff than is at present in post in Jakarta. Therefore, I quite appreciate the point that we should not embark on lavish building in a country which is itself limiting new building. Equally, however, we want to make sure that the staff have reasonable conditions in which to work. I am glad that my hon. Friends have raised the point and I will, of course, make certain that it is carefully examined.
Now, I should say a word about the other aspects of the talks which are concerned with the indebtedness of Indonesia to the Government and various concerns
836
and organisations in the United Kingdom. The indebtedness falls into three parts. Much the smaller part arises out of the burning and the other incidents in 1963, and towards a total claim of roughly £650,000 a token payment of £120,000 has already been made. This is being divided equally between Government and private claimants. Then there is the commercial indebtedness, which, in the case of United Kingdom claimants, is of the order of £12-E13 million. This is a relatively small amount compared with claims from a number of other countries. We are a relatively minor creditor country.
A preliminary meeting—the nine-country meeting to which my hon. Friend referred—has just concluded in Tokyo and arrangements will be made for a formal multilateral meeting of creditors to be held in September. It was the view of the delegates that co-operation should be sought from the International Monetary Fund to help to restore the Indonesian economy and to assist in the orderly repayment of creditors.
I hope very much that arrangements can be made that Indonesia will reapply for membership of the International Monetary Fund, because this would be invaluable. The expertise that would be made available to the Indonesians by this means would be very valuable and would restore confidence and ensure that this difficult rehabilitation of the economy will be carried out in the best possible way.
At least, it has been encouraging to find that the Indonesian Government is prepared to co-operate in working out a rephasing of debts. One cannot say more about that at the moment, however, because the meeting in Tokyo was a preliminary meeting only and the main discussions will take place in September.
Then, of course, the third category is the problem of the British property which was sequestrated by Presidential decree in November, 1964. We are glad that the Indonesian Government have recognised the existence of claims arising from the Indonesian control of British enterprises, and discussions will be arranged in Jakarta between the Indonesian authorities and the groups of British claimants who represent various interests. I think they probably fall into three main groups, plantations and estates, manufacturing and distributive organisations, and financial and merchanting houses and

837
insurance companies. We hope very much that these claims can be settled by agreements which will help the Indonesian economy. For example, the Shell Company has already made for its very large concern an agreement for payments which will be made out of production over a period of years. I think that this sort of arrangement should be to mutual benefit.
We hope very much that these various claims can be equitably and satisfactorily settled. because it is quite clear that till arrangements have been made under these various headings the resumption of normal trading relationships will not be easy. On the other hand, if one sees real effort is being made not only to put the Indonesian economy into order but also to meet the reasonable needs of international commerce and trade, then we shall be able to get those normal trading relationships. I know there are a number of firms in this country and elsewhere who would like to restore trading relationships with Indonesia.
It is not going to be easy; it will take quite a long time; but we all recognise that a stable Indonesia under the present Government, who have made many very strenuous efforts towards this, will be to the great advantage of that part of the world, and no one will be happier than Her Majesty's Government if the negotiations on all the fronts I have mentioned take place satisfactorily, and if the very great difficulties of the inflation are overcome, and if the real productive enterprises can be restored,
838
not on the old pattern of what some people might consider exploitation from without, but on a partnership which will bring mutual benefit.
I think we are all very glad we have had this chance to mention these things tonight, and I am very grateful to both my hon. Friends for the contributions which they have just made.
Mr. Dalyell: Before my hon. Friend sits down, would she just say a word on the question of E.C.G.D. cover for the tin dredge equipment? It is a question of which I gave her prior notice.
Mrs. White: I beg my hon. Friend's pardon. I should have mentioned that. As he knows, credit was given for a tin dredge. Payment on that is very much behind, but I think that till we are a little clearer about the arrangements for indebtedness we could not urge the Export Credits Guarantee Department to go into arrangements for a second tin dredge. I do appreciate that this is regarded as of great importance in Indonesia, and, again, I will have further discussions with my right hon. Friends concerned about this, but at the moment I am afraid I cannot give any specific pledge about it.
Mr. Dalyell Mr. Dalyell rose—
Mr. Speaker: The hon. Member has exhausted his right to speak now.
Question put and agreed to.
Adjourned accordingly at ten minutes past One o'clock.