Commons Sitting of 17 May 1966

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
MESSAGE FROM THE QUEEN

  MALAWI (GIFT OF A SPEAKER'S CHAIR)
  The VICE-CHAMBERLAIN OF THE HOUSE HOLD reported Her Majesty's Answer to the Address, as follows:
  I have received your Address praying that I will give directions for the preservation on behalf of your House of a Speaker's Chair to the National Assembly of Malawi, and assuring me that you will make good the expenses attending the same.
  It gave me the greatest pleasure to learn that your House desires to make such a presentation and I will gladly give directions for carrying your proposal into effect.

ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    Income Tax Returns (Capital Gains)
    Sir C. Osborneasked the Chancellor of the Exchequer if he is aware that the requirements of the Income Tax returns concerning capital gains are causing difficulty to the accountancy profession, with the result that there will be delay in the payment of taxes; in view of these difficulties, if he will revise these requirements; and if he will make a statement.
    The Chief Secretary to the Treasury (Mr. John Diamond): I am aware of the additional work falling on the accountancy profession, but I cannot undertake to modify the requirements.
    Sir C. Osborne: Would the right hon. Gentleman consult the Institute of
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    Chartered Accountants to see whether the same aims cannot be achieved by simpler methods? Is he not aware that the present requirements are nearly driving members crazy in that profession?
    Mr. Diamond: I am not aware of what the hon. Member says in the last part of the question. I do not think that members of the profession are ever likely to be driven crazy. But I am aware of certain anxiety, and my right hon. Friend has told the President of the Institute that we shall be prepared to discuss this matter with him.
    Mr. Barnett: Is my right hon. Friend aware that, as a member of the accountancy profession, I am not quite as crazy or as miserable as the hon. Member for Louth (Sir C. Osborne)? But is my right hon. Friend aware that he could gain a great deal of good will by looking at the matter again and that he could assist both the accountancy profession and taxpayers by seeing whether he could do something to help in simplifying these tax forms?
    Mr. Diamond: I have already indicated that we are only too glad to discuss this matter with leaders of the profession.
    Mr. Stratton Mills: Has the right hon. Gentleman noted the dozen resolutions which have been tabled at the Inland Revenue Staff Conference this month? Has he also noticed that 179 senior grade tax officers resigned during the last year?
    Mr. Diamond: My right hon. Friend the Chancellor reminds me that it is exactly 30 years since he moved an identical kind of resolution himself.

    Travellers (Duty-free Spirits)
    Mr. Brewisasked the Chancellor of the Exchequer why the duty-free concession for travellers entering the United Kingdom has been increased from half a bottle to a whole bottle of spirits.
    Mr. Diamond: To conform to international commitments affecting overseas visitors and to facilitate the passage through Customs of ever-increasing numbers of travellers.
    Mr. Brewis: Could the right hon. Gentleman say how much this represents in terms of Scotch whisky being reimported into this country? Would it

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    not be better to reduce the duty for people who take their holidays at home?
    Mr. Diamond: No, Sir. It is better to conform, in the manner which I have already indicated, to the convenience of travellers coming either from Europe or from outside Europe.

    Agricultural Machinery (Allowances)
    Mr Ridleyasked the Chancellor of the Exchequer how much more Income Tax will now be paid by a married farmer, with two children, who buys a tractor worth £1,000, as a result of his change in the allowances for agricultural machinery.
    Mr. Diamond: This depends on the amount of his income.
    Mr. Ridley: Is not the right hon. Gentleman aware that I mentioned in the Question a constituent of mine with this income who has to pay £39 more a year? How does he think that the ordinary industrial worker would react if he were asked to pay £39 more a year in Income Tax from the average wage?
    Mr. Diamond: I am anxious to serve the House, but I am Chief Secretary and not a juggler. There is no reference in the Question to income. The Question refers to buying a tractor worth £1,000.

    Civil Servants
    Mr. Iremongerasked the Chancellor of the Exchequer what change in the number of civil servants he estimates will have occurred by this time next year.
    Mr. Diamond: The 1966–67 Estimates provide for an addition of about 13,000 but do not include the staff necessary for new legislation such as the investment incentives scheme and the non-contributory benefits scheme.
    Mr. Iremonger: Is the right hon. Gentleman aware that this is following the classical Socialist pattern of high taxation, swollen bureaucracy and economic failure? It is only President Johnson who is saving him from devaluation.
    Mr. Diamond: If I may reply to the more serious parts of the allegations, I am aware that I have a responsibility to the House for public expenditure, and I am aware of the need to keep down to the barest minimum the increase in
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    the number of civil servants. For that reason, I am glad to tell the House that during the three years 1964–67 the increase in the number of civil servants due to a classical Socialist Administration will be less than the number engaged in the final three years of the Conservative Administration?
    Mrs. Thatcher: Will the Chief Secretary give comparable figures from 1951 to 1954?
    Mr. Diamond: The figures have already been given by my hon. Friend and were published in HANSARD.
    Hon. Members: What were they?
    Sir D. Renton: What will be the cost of these extra 13,000 civil servants?
    Mr. Diamond: The rough cost is always £1,000 a head.

    Post-War Credits
    Mr. Iremongerasked the Chancellor of the Exchequer what is the total amount of post-war credits outstanding now; and what considerations govern his decision as to whether or not to repay them at any given time.
    The Chancellor of the Exchequer (Mr. James Callaghan): About £217 million, plus £38 million in respect of accrued interest. Changes in the conditions of repayment are made in the light of the general economic situation.
    Mr. Iremonger: Will the right hon. Gentleman recognise that he always has a choice to make when he is able to increase purchasing power, particularly in regard to those to whom he should give money, and will he now consider giving a really higher priority to those people who have been promised it by successive Governments?
    Mr. Callaghan: Yes, Sir, but, without reverting to the last Question, it is very difficult both to reduce taxation and increase expenditure, as I spent some time explaining to right hon. Gentlemen opposite during the General Election.
    Mr. Bessell: Would the right hon. Gentleman say whether he will consider special cases; people who are suffering particular hardship and to whom repayment would give special benefit?
    Mr. Callaghan: Yes, Sir. There is a wide variety of cases which can be met where hardship arises. They are well understood, and I will gladly see to it that the hon. Gentleman gets a copy of the circular explaining them, which is available to everybody.

    Foreign Currency Securities (Sales)
    Mr. Patrick Jenkinasked the Chancellor of the Exchequer whether he will introduce legislation, with a provision requiring annual renewal, to give effect to the arrangements at present in force under the Exchange Control Act 1947, providing that 25 per cent. of the proceeds of sales of foreign currency securities must be exchanged for sterling at the official exchange rate.
    Mr. Callaghan: No, Sir. No such legislation is required.
    Mr. Jenkin: Does the right hon. Gentleman not recognise that, with the premium now standing at over 25 per cent., the tax is about 5 per cent. on every change of a portfolio investment? Does he not think that a tax of this sort should be levied under an Act of Parliament, passed on that behalf, and not under some Regulations under an Act framed for an entirely different purpose?
    Mr. Callaghan: No, Sir. This is not a tax. It is a concession under which, at the present time, investors are able to use this market to secure 75 per cent. of the proceeds without surrendering them to the reserves at the normal rate. And that cannot, in any sense, be regarded as a tax.

    Directors (Expenses and Fees)
    Mr. St. John-Stevasasked the Chancellor of the Exchequer whether he will take steps to remove present restrictions on the expenses and fees of directors of family companies which may be claimed before the levy of Corporation Tax.
    Mr. Diamond: No, Sir.
    Mr. St. John-Stevas: Are not the present limits of £13,000 a year, 1·5 per cent. of the profits that may be charged before tax, grossly discriminatory against the medium and larger sized family companies which are making such a great
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    contribution to our industrial welfare? Will he not revise these limits upwards?
    Mr. Diamond: No, Sir. I do not recognise any such discrimination. This broadly follows the pattern of previous taxation under Profits Tax. The limits were fully debated during the last Finance Act, and I do not see any reason to suggest their increase.
    Mr. Barnett: Is my right hon. Friend aware that the Opposition are grossly exaggerating, mischievously exaggerating, the effect of Corporation Tax on close public companies of this type?
    Mr. Diamond: I am certainly aware of that. I am sorry to have to observe that it is extremely difficult to try to get over—and I shall be greatly helped if hon. Members would assist me to get this over—that there are no penal provisions whatever in the Corporation Tax for close companies. The situation is ameliorated, not worsened, as compared with Profits Tax.
    Mrs. Thatcher: Will the right hon. Gentleman confirm that he has received a large number of representations from both professional and industrial bodies showing that this tax is inequitable in its incidence, and will he say why he refuses to allow this group of people remuneration allowable for Corporation Tax at a level commensurate with the services which they render?
    Mr. Diamond: I have said that the level is better, is higher, than the level that was thought appropriate when the hon. Lady's Government were in office.

    Capital Gains and Corporation Tax (Booklets)
    Mr. Stratton Millsasked the Chancellor of the Exchequer why the official explanatory booklets about the Capital Gains Tax and Corporation Tax were not available to the public until 23rd February; and if he will make a statement.
    Mr. Diamond: Because of other work arising from last year's Finance Act.
    Mr. Stratton Mills: Is the Chief Secretary aware that he has recognised once again the heavy burden which is placed on the Inland Revenue, and will he say specifically why it took six months longer to prepare this booklet than the one prepared by chartered accountants, which

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    came out in August 1965, and the one prepared by certified accountants, which came out in September 1965?
    Mr. Diamond: To answer the second part of that question first, outside bodies do not have the Revenue's obligation to give an authoritative interpretation of the law or a statement of the practice which will be followed. To answer the first part, my anxiety—as I have already described to the House and which I think is shared by hon. Members—is not to increase the number of civil servants so as to produce the document unnecessarily early. The only further comment I would make is that this booklet was prepared at a much shorter interval than the comparable booklet prepared by the Tories on a much shorter short-term gains tax.
    Mr. Jenkin: Why did it take the Inland Revenue from July or August until February to find out what the 1965 Finance Act meant?
    Mr. Diamond: It took the Inland Revenue a longer period to describe what a shorter tax meant.

    Dollar Premium
    Mr. Dodds-Parkerasked the Chancellor of the Exchequer whether he is aware that the dollar premium has now stood for some considerable period at over 20 per cent.; and, in view of the fact that this reflects adversely on the standing of sterling and puts British companies at a disadvantage against their foreign competitors in connection with investments overseas, what steps he intends to take to achieve a reduction in the level of this premium.
    Mr. Callaghan: The measures in my Budget speech will have the effect of relieving pressure on the investment currency market. This small market has no bearing on the standing of sterling.
    Mr. Dodds-Parker: Will the right hon. Gentleman look at this again and seek some disinterested advice—there is plenty of it about; and I do not mean Mr. Kaldor? Does he realise that the Prime Minister at the Economic Club in New York gave great praise to and claimed considerable credit for this type of investment, yet this action by the Chancellor is seriously undermining the status of these investments?
    Mr. Callaghan: I do not lack advice. I get it from all quarters, and I read it all and use it whenever it seems to be valuable. I am sure that the present policy is the right one; and it is producing more than £70 million a year, which goes into the reserves.
    Mr. O'Malley: Is it not likely that the rise in the dollar premium last week arose as a result of the sharp falls on Wall Street and that once the present authorisations have been exercised, the result of the Budget proposals will probably be a fall in the premium?
    Mr. Callaghan: That may be so. People tend to feel that they are "locked in" a holding when the price of securities falls.
    Mr. Peyton: Is the right hon. Gentleman really saying that the dollar premium does not reflect the views of people in this country on the strength of their currency?
    Mr. Callaghan: That is exactly what I am saying.

    Capital Gains Tax
    Mr. Robert Cookeasked the Chancellor of the Exchequer what has been the yield from the Capital Gains Tax on tangible movable property since its introduction.
    Mr. Diamond: This information is not available, but the yield would be very small so far.
    Mr. Cooke: Would the right hon. Gentleman give an estimate of the yield in the first available year and tell the House how many persons are being employed to receive information from all these people who might have transactions which might be involved in this tax?
    Mr. Diamond: No, Sir, because the returns issued last month have not yet come in and it is impossible, therefore, to make any kind of estimate.
    Mr. Stratton Millsasked the Chancellor of the Exchequer if individuals have to calculate their capital gains for submission to the Revenue or if this will be done for them where they provide the relevant information.
    Mr. Diamond: Individuals have to calculate their capital gains or losses and enter them in their Income Tax returns.
    Mr. Stratton Mills: Will the right hon. Gentleman look at this again to see that individuals have all the information required as to profits and losses during the year, as the Inland Revenue can do the calculations which are extremely difficult where the question of rights issues arises?
    Mr. Diamond: The Inland Revenue will be only to glad to be of help and assistance. The booklet which is being issued is specifically for the purpose of giving assistance. If the profits and losses are calculated, there remains little to do.

    Internal Air Services (Fuel Tax)
    Mr. Robert Cookeasked the Chancellor of the Exchequer whether he will remit the fuel tax on petrol used for internal air services to bring it to the same level as that levied on jet turbine fuels.
    Mr. Diamond: No, Sir.
    Mr. Cooke: Is the Chief Secretary aware that many of the smaller internal airlines face going out of business because of the disadvantages with which they find themselves faced compared with the larger companies which pay a different type of tax, and will he look at the whole matter again?
    Mr. Diamond: Under my right hon. Friend's proposal the tax in question is refunded to internal airlines.
    Later—
    Mr. Diamond: On a point of order, Mr. Speaker. May I have your permission to correct a statement I made when answering Question No. 12? I apologise to the hon. Member for Bristol, West (Mr. Robert Cooke), but as we do not read out the Question we are sometimes not absolutely sure what the words in a Question actually are. The Question refers to fuel tax and I replied to a point in connection with employment tax.
    Mr. Cooke: Perhaps I may reinforce my request to the right hon. Gentleman to look at this matter again because these people are in dire straits.
    Mr. Diamond: It was with the intention of giving the hon. Member that opportunity—I hope he accepts my apology—that I sought your leave, Mr. Speaker, to correct my answer immediately. I am afraid, however, that my right hon. Friend is not prepared to look at the question again this year.

    Government Contracts (Racial Discrimination Clause)
    Mr. Winnickasked the Chancellor of the Exchequer whether, in all contracts with Government Departments, he will introduce a clause barring any form of discrimination on grounds of a person's colour and race.
    Mr. Callaghan: The Government are strongly opposed to racial discrimination in employment and although there are difficulties in making such a clause effective, I propose to give further consideration to this matter.
    Mr. Winnick: I appreciate my right hon. Friend's reply and I am pleased to know that this matter is being looked into. Would he not agree that such a clause would give a clear lead by the Government against any form of discrimination in employment, and is my right hon. Friend aware that such a clause works in other countries, notably in the United States?
    Mr. Callaghan: That is one of the factors that has influenced me: that they apparently make it work in the United States. We must draw a distinction, however, between something that is purely declaratory and something which would be effective, and that is the further point I want to consider.

    Savings (State Unit Trust)
    Mr. Cantasked the Chancellor of the Exchequer whether he is aware of the fall in personal savings as a proportion of national income; and whether, in this context, he will make a statement regarding the formation of a State unit trust.
    Mr. Callaghan: The latest figures show that the ratio of personal savings to disposable income has remained at about 8 per cent. during the past three years.
    I have no further statement to make at present about a State unit trust.
    Mr. Cant: Would the Chancellor say whether, in his Budget strategies, he is not dealing a death blow to savings in the public sector? Is he aware that I am concerned because he is quite obviously financing so much of his below-the-line capital expenditure by forced savings through taxation?
    Mr. Callaghan: It is quite true, of course, that we have got a very large Budget surplus this year, but that should be a matter for opprobation and not denigration.
    Sir Knox Cunningham: Would the right hon. Gentleman say if such a State unit trust would simply mean that it invests in Government securities and, if not, how would that help savings in the public and State interest?
    Mr. Callaghan: As I said in my original Answer, I have no further statement to make at the moment.
    Sir G. Nabarro: How does the right hon. Gentleman conceive the idea that unnecessarily onerous taxation and an unnecessarily large Budget surplus is a matter of approbation to the nation, though it may be a matter of approbation to him personally?
    Mr. Callaghan: The hon. Gentleman is putting words which I did not use into my mouth.
    Sir G. Nabarro: The right hon. Gentleman said "approbation".
    Mr. Callaghan: I said that it was a matter of approbation to have a large Budget surplus out of which to finance necessary borrowings by local authorities and nationalised industries. I do not see how that can be denied.

    International Liquidity (Discussions)
    Mr. Bruce-Gardyneasked the Chancellor of the Exchequer when he now expects to receive the reports of the Ministers' Deputies who have been studying the question of reform of the international liquidity system; and if he will make a statement on the progress of this work to date.
    Mr. Callaghan: The Deputies' Report is likely to be ready in June or July.
    Mr. Bruce-Gardyne: In view of the recent public controversy between the Managing Director of the International Monetary Fund and the Chairman of the Group of Ten, could the Chancellor tell us whether the Government will bear in mind in framing their attitude on the proposals for monetary reform that they must command the support of the
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    majority of the Group of Ten if those proposals are to be accepted?
    Mr. Callaghan: That is only partly true, I think. They must certainly command the support of the Group of Ten; but they must also command the support of member countries of the I.M.F. who were not included in these preliminary discussions.

    Nationalised Industries (Capital Requirements)
    Mr. Peytonasked the Chancellor of the Exchequer why he decided that the capital requirements for 1966–67 of electricity and gas industries, the Post Office, British European Airways, London Transport, and British Transport Docks should be met by an increased proportion of Exchequer borrowing rather than from internal resources.
    Mr. Diamond: Because the proportionate burden of capital expenditure must be expected to vary from year to year.
    Mr. Peyton: Would not the right hon. Gentleman agree that the demands of the nationalised industries upon our resources are immense and that if they are not to grow unreasonable they must be subject to some form of discipline? This constant weakening of pressures by the Government on these industries to provide for their own needs out of their resources is wholly wrong and grossly unfair to other sectors of the economy.
    Mr. Diamond: Of course, these demands must be subject to the most careful scrutiny. Indeed, that is what is happening at present.
    Mr. Peytonasked the Chancellor of the Exchequer why there has been a downward adjustment by £96 million of the capital requirements of the nationalised industries, referred to in paragraph 6 of Command Paper No. 2974, in view of the fact that the programmes of those industries have already been vetted and approved.
    Mr. Diamond: The individual programmes are not altered but experience shows that there is always some shortfall in the aggregate of the approved programmes due to unforeseen difficulties and delays.
    Mr. Peyton: Does it not seem very odd, even to the right hon. Gentleman, that when some very careful sums have been done by the industries, by the Ministry of Power, the Ministry of Transport and his own Department and they having all agreed on these sums, they should now say they should not spend them? Does not the right hon. Gentleman think that the budgeting should be more careful?
    Mr. Diamond: It is in order to be more careful in budgeting that we are putting down the best estimate we can. It does not relate to individual programmes but to the fact that experience of previous years shows that, however careful one is on an individual programme, due to unforeseen delays the total aggregate expenditure is not met. In the previous year it was £124 million.
    Mr. Speaker: Mr. Hooley.
    Mr. Peyton rose—
    Mr. Speaker: Order. I did not call the hon. Member for Yeovil (Mr. Peyton).

    Industrial Safety Wear (Tax)
    Mr. Hooleyasked the Chancellor of the Exchequer what is the yield of Purchase Tax on safety wear supplied to industrial users what classes of safety wear are exempt from tax; and whether he will abolish the tax on this class of goods.
    Mr. Diamond: The detailed information on the yield is not available. Protective boots designed for use by miners or quarrymen, or moulders, and protective helmets are exempt from tax. It would not be practicable to exempt industrial safety wear generally.
    Mr. Hooley: Is my right hon. Friend aware that the number of accidents per 1,000 employees in the steel industry is running at 60, compared with 28 per 1,000 in manufacturing industry generally? Would he not think that an exemption from Purchase Tax would assist in reducing this accident rate?
    Mr. Diamond: I shall certainly look at that. I do not think my hon. Friend identified the kind of protective clothing he has in mind, but I shall look at the point he has made.

    Decimal Currency System
    Mr. J. H. Osbornasked the Chancellor of the Exchequer what representations he has had from trade, commercial and industrial associations about the system of decimal currency to be adopted in this country; and whether he will reconsider the decision to adopt the £/cent in view of the complexities resulting from the circulation of a half cent piece.
    Mr. Callaghan: I have received only two or three representations indicating a preference for a 10s. unit. The Government gave the fullest consideration to the arguments for the selection of different major units put forward to the Halsbury Committee and decided to retain the £.
    Mr. Osborn: Would not the Chancellor agree that this decision means we shall have this awkward half cent piece, which will not fit in with the decimal currency system? Is it now too late to reconsider the decision? Is this the last word?
    Mr. Callaghan: I think there was pretty general acceptance of the decision. I think the country was anxious that there should be a decision; and it would be unwelcome to a great many people if argument continued about the matter now because industry wants to get on and to plan ahead. I recognise that the half cent is a transitional deformity in the currency system, but we are devising a system which we hope will last for the next thousand years as the present system has lasted for a thousand years.
    Mr. Lubbock: Does the Chancellor recognise that if he had chosen a 5s. cent all coins from 3d. upwards could have been retained and that this would have saved at least £40 million which could have been lopped off the conversion?
    Mr. Callaghan: We looked at that. I cannot remember the reasons why we rejected it, although I am sure that they were jolly good ones.
    Mr. Sheldon: Would not my right hon. Friend agree that the divergence of opinion between the single unit cent and retaining the £ as it is is largely a divergence between the interests of the

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    City and of industry? Would he not think of putting the situation of industry first in priorities and offering some encouragement that we might get this change introduced before 1971?
    Mr. Callaghan: I am glad that my hon. Friend has asked that question because it enables me to say that the decision was not reached in the face of divergence of interest between the City and industry. Indeed, some of the organisations representing industry said that they were content to leave the decision with the Government because the argument was evenly balanced. We could have an academic discussion for a long time to come, but if, as my hon. Friend wants, the system is to be introduced as early as possible, I ask the House—the decision having been taken—that we should get on with it now.

    Pirate Radio and Television Stations (Advertisement Costs)
    Mr. Hugh Jenkinsasked the Chancellor of the Exchequer if he will disallow for taxation relief purposes the cost of advertising on pirate radio or television stations.
    Mr. Callaghan: No, Sir.
    Mr. Jenkins: Does my right hon. Friend recognise that what he is doing is subsidising the theft of performance on the one hand and proposing to tax legitimate performance on the other hand? Will he reconsider and reverse these two things?
    Mr. Callaghan: I do not think I should want at this stage to recommend to the House that we should decide whether advertising should be allowed for taxation purposes by reference to the merit of the particular medium through which the advertisement is made.
    Sir A. V. Harvey: Is not the Chancellor embarrassed by the situation when 18 months ago the Postmaster-General said that he would shut down these stations and the Dutch have been able to do so? Are the Government afraid to do so because the stations are too popular?
    Mr. Callaghan: I do not think this is my responsibility; but I can tell the hon. Member that I live in an almost permanent state of embarrassment.
    Later
    Mr. Jenkins: On a point of order. In view of the entirely unsatisfactory nature of the reply of my right hon. Friend the Chancellor of the Exchequer to Question No. 21 on pirate radio and television stations, in accordance with your Ruling, Mr. Speaker, that these questions should be raised at the end of Question Time, I give notice that I shall raise the matter on the Adjournment at the earliest possible moment.
    Mr. Speaker: The hon. Gentleman misunderstood my Ruling. If an hon. Member does not like the answer to a Question, he must give notice before we move to the next Question that he intends to raise the matter on the Adjournment. What I was suggesting was that tricky points of order during Question Time might be raised at the end of Questions.

    Tax Evasion
    Mr. Ashleyasked the Chancellor of the Exchequer what proportion of those found to be evading taxes in the last financial year were prosecuted.
    Mr. Diamond: In 1964–65 there were 94 prosecutions for false accounts, false returns and false claims to allowances. In the same year 12,405 cases of underassessment were settled by the payment of tax and penalties. The criteria are different and percentages or proportions would be misleading.
    Mr. Ashley: In view of that Answer and as this year a man was sent to prison for seven months because he defrauded to the extent of £175, whilst others who have defrauded to the extent of thousands of £s have gone scot-free, would the Chief Secretary agree that the system of selecting cases for prosecution is grossly unfair and needs revision?
    Mr. Diamond: No, I could not accept that for one moment. If my hon. Friend would care to send to me details of the one case he has in mind, I would be glad to be of what help I properly can.
    Mr. Ashleyasked the Chancellor of the Exchequer what proportion of those found guilty of evading taxes in the last financial year were concerned with land deals.
    Mr. Diamond: I regret that this information is not available.

    Schedule E (Rents)
    Mr. David Mitchellasked the Chancellor of the Exchequer whether, in assessing the taxpayer's liability to pay Schedule E tax under Section 47 of the Finance Act 1963, the notional income on which tax is levied will be limited to the difference between the rent paid and the rent which would be applicable when fixed by a local rent officer for a regulated tenancy under the terms of the Rent Act, 1965.
    Mr. Diamond: No, Sir. This is not the measure of liability prescribed by Section 47.
    Mr. Mitchell: I cannot see any logic in the position that the Chancellor of the Exchequer is taking up. If one is levying a tax on the difference between—
    Hon. Members: Question.
    Mr. Mitchell: If one is levying a tax on the difference between an assumed rent and the rent actually paid, there must be some fair and external way of arriving at the figure of the fair rent.
    Mr. Speaker: Questions must be put in the form of questions.

    Selective Employment Tax
    Mr. Wolrige-Gordonasked the Chancellor of the Exchequer what will be the position of the fishing industry in relation to the Selective Employment Tax.
    Mr. Diamond: As in the case of shipping, employers in the fishing industry who pay the tax will receive a refund.
    Mr. Wolrige-Gordon: Is the Chief Secretary aware that almost the least planned for victim of this hasty, ill-considered and unplanned tax has been the fishing industry, which has been caused considerable and understandable confusion as a result of the introduction of this tax? Is the right hon. Gentleman aware that, just like agriculture, fishing needs to be classed as a basic productive and manufacturing industry?
    Mr. Diamond: No, I am not aware of either of those statements and do not accept either of them. I am aware of a good deal of noise.
    Mr. Hector Hughes: Does the Minister realise that in the national interest
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    and in the interests of catches and consumers the fishing industry deserves and requires a rebate, not a penalty? Would he take steps to see that that is put into effect?
    Mr. Diamond: I have already said—I repeat it—that employers in the fishing industry who pay the tax will receive a refund.
    Mr. Macleod: Does not the right hon. Gentleman realise that although the Government's position in relation to agriculture, fishing and forestry should be classed as manufacturing industries and that we shall press for that?
    Mr. Diamond: It is for the right hon. Gentleman to decide on what course he will adopt. If he intends to press for that, there will be another opportunity for us to debate these issues.
    Mr. Wolrige-Gordonasked the Chancellor of the Exchequer if he will assist by fiscal means those development areas most seriously affected by the Selective Employment Tax.
    Mr. Callaghan: The Government's measures to strengthen the development areas have had a substantial effect in increasing employment and there is no present need for the step proposed.
    Mr. Wolrige-Gordon: Is the Chancellor aware that the introduction of the Selective Employment Tax has hit any regional development policy more seriously than anything else could have done and that, unless some alternative of the kind I suggest in my Question is put forward, the depopulation from my part of the country and from many other parts of the country will be increasingly intensified?
    Mr. Callaghan: That extravagant language might be justified if it were not the case that under the Industrial Development Bill 40 per cent. investment grants will be payable; building grants, loans and the provision of factories will be continued for investment; there will be additional incentives for certain new projects; there has been a tighter control over I.D.C.s in the more congested areas; there is preferential access to the Public Works Loan Board for local authorities

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    in certain regions; development districts have been exempted from the deferment of capital projects; banks have been requested to give special regard to regional development policies; and the loans and building grants, as my right hon. Friend said yesterday, will continue to be available for new hotels and other employment-creating institutions in the tourist industry.
    Mr. Younger: Is not the Chancellor aware that all that wonderful catalogue does not alter the fact that the Selective Employment Tax will tax people out of jobs, particularly in the Highlands? Will he not take this matter more seriously and discuss it with his right hon. Friend the Secretary of State for Scotland with a view to doing something concrete and giving jobs back to those who will be thrown out of work?
    Mr. Callaghan: The hon. Gentleman, like the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon), is forecasting something which has not yet happened. The tax is not yet in operation. They are merely making prophecies. I am asked in the Question to give additional assistance over and above the very wide range of measures that I have catalogued this afternoon which are an earnest of the Government's desire to ensure that there is full employment in these regions.
    Mr. Woodburn: Is my right hon. Friend aware that the same dismal prophecies were made about the Tory tax on hotel occupants which was proposed and then withdrawn?
    Mr. Callaghan: I think that is true. At that time, unlike now, there was considerable unemployment in Scotland. I am glad to say that now there is a record number of vacancies in proportion to the number of unemployed in Scotland and the position is better than it has been for as far back as I can remember.
    Mr. Baker: Does not the Chancellor realise two things; first, that the rate of male unemployment in North-East Scotland is double that for the rest of Scotland and, secondly, that service industries, which employ a great number of people in the areas concerned in this Question. do not qualify for the grant?
    Mr. Callaghan: The hon. Gentleman obviously does not listen to my answers.
    1112
    The Question asks if I will give additional fiscal assistance. I have already given the House this afternoon a long list of the help that is available to these areas. Perhaps when the hon. Gentleman is making speeches in the country he will pay equal, it not greater, regard to that list.
    Mr. Loveysasked the Chancellor of the Exchequer to what extent, under the terms of paragraph 17 of Command Paper No. 2986, agriculture, horticulture and forestry will be adversely affected by the proposed Selective Employment Tax.
    Mr. Diamond: On the first part of the Question I would refer the hon. Member to the reply given by my right hon. Friend the Minister of Agriculture on 13th May. On Forestry, I cannot add to what was said in the White Paper.
    Mr. Loveys: I welcome the change in the system of repayment announced since the White Paper was published, but how is account to be taken of the cost to these industries of outside purchases which will be affected by the tax and which in the case of agriculture alone amount to approximately £1,000 million a year?
    Mr. Diamond: I am not quite clear that I follow the hon. Gentleman's supplementary question. He understands, I am sure, that the tax is payable by everybody who pays an insurance stamp—that is the criterion—and my right hon. Friend has indicated where the repayment will take place as to the agricultural industry.
    Mr. Grimond: We welcome the change in the Government's attitude, but would it not be much simpler, as farmers are readily identifiable, to relieve them of this tax altogether?
    Mr. Diamond: Self-employed farmers are relieved of this tax altogether, and the essential principle in collecting the tax at the minimum cost is the one I have just indicated.
    Mr. Wingfield Digby: With regard to forestry, is the right hon. Gentleman aware that paragraph 17 is very ambiguous in that it does not make clear what will be given back? Will the two fixed scales of grant remain, or will there be one scale in future?
    Mr. Diamond: The hon. Gentleman is right in saying that the paragraph does

    1113
    not precisely describe the amount in every single case, but discussions will take place which will lend further clarification.
    Mr. Gibson-Watt: In view of the importance of forestry to the Welsh rural economy, will the right hon. Gentleman come clean and tell the House whether these industries, agriculture, forestry, fishery and horticulture, will be treated in exactly the same way?
    Mr. Diamond: I do not take offence at what the hon. Gentleman said about coming clean. I know that he did not mean what he said. His hon. Friend the Member for Finchley (Mrs. Thatcher) who is sitting on the Opposition Front Bench, is always very helpful on this kind of logic. The Question refers to forestry, and my right hon. Friend has already indicated the effect on agriculture.
    Mr. Lubbockasked the Chancellor of the Exchequer if he will exempt institutions of higher education which are negotiating for accession to universities from the Selective Employment Tax.
    Mr. Diamond: No one for whom flat rate employers' National Insurance contributions are paid is exempt. Educational institutions in receipt of public funds will be variously compensated to the extent set out in the White Paper, paragraph 22.
    Mr. Lubbock: Is the right hon. Gentleman aware that the particular institutions which I mention will have to dismiss lecturers as the only means possible of finding the money with which to pay the tax? Is this not extremely unfortunate just at a moment when they are negotiating for accession to university status?
    Mr. Diamond: No, Sir; I am not aware that that is the only method they have for meeting the tax.
    Mr. Iain Macleod: Could the right hon. Gentleman clear up a point which arises out of the White Paper? It lays down that universities will have recompense in one way or another through the University Grants Committee, but for modern universities the university is the unit whereas for many other universities the college is the unit. Will the college have the same treatment as the university?
    Mr. Diamond: With great respect to the right hon. Gentleman, I do not
    1114
    think that that is a question, as he himself pointed out, which arises on this Question, being directed to the White Paper.
    Mr. Macleod: But the Question is directed to institutions of higher education. Is the Chief Secretary telling the House that, as so often, he has not even thought of this point in relation to the colleges, apart from the universities?
    Mr. Diamond: That has been adequately set out in paragraph 22 of the White Paper.

    Government Departments (Press Advertisements)
    Mr. Moonmanasked the Chancellor of the Exchequer if he will indicate the actual amounts spent by Government departments on advertising in the national daily and Sunday newspapers.
    Mr. Diamond: The amounts paid by Government Departments (excluding the Post Office) for display advertising space in the national daily and Sunday newspapers in 1965–66 were £1,218,241 and £1,110,502, respectively. It is not possible without disproportionate expense to identify amounts paid in respect of semi-display and classified advertising in particular kinds of newspapers. In addition, the Post Office paid £142,318 for all forms of advertising in the national dailies and £47,844 in the national Sunday newspapers.
    Mr. Moonman: Would not my right hon. Friend agree that the figures reveal a very small allocation to the newspapers associated with the working-class movement and that this is causing a great deal of concern, not only in the printing industry, but also in the nation as a whole from the point of view of the sort of society we would like to have?
    Mr. Diamond: I am aware of my hon. Friend's anxieties, but I think that the full answer to this Question was given by my hon. and learned Friend the Financial Secretary to my hon. Friend the Member for Salford, East (Mr. Frank Allaun) on 26th April.

    Non-industrial Civil Servants
    Sir D. Rentonasked the Chancellor of the Exchequer why Her Majesty's Government have increased the number of

    1115
    non-industrial civil servants by nearly 11,000 since 15th October, 1964, at a cost of about £11 millions at a time when manpower is scarce and there is a need to save public money; whether it is the Government's policy to increase or reduce the present strength of the Civil Service; and what attempts are being made to save manpower and expense and improve efficiency by the use of computers and other modern techniques in Government departments.
    Mr. Diamond: All Government Departments are enjoined to make full use of modern techniques such as computer installations to economise in the use of manpower. The increase in recruitment is to provide the necessary means for carrying out the Government's new policies, and for manning existing essential services.
    Sir D. Renton: When there is both a general shortage of administrative manpower and heat in the economy, why do the Government deliberately set such a bad example to other employers as to increase by 25,000 in two years—for that is what it will have been—the total number of non-industrial civil servants employed by them?
    Mr. Diamond: I have already indicated the care which the Government take in examining every single request for additional civil servants and the need to give effect to Government policies which are the wish of the people of this country—[HON. MEMBERS: "Oh."]—upon which an election has been fought and in regard to which we are carrying out our election promises. In the comparable period under the Government of which the right hon. and learned Gentleman was such a distinguished member, the increase was higher.

    Bank Notes (Design)
    Mr. Hector Hughesasked the Chancellor of the Exchequer, in view of the similarity in format between £1 notes, £5 notes and £10 notes, if he will direct the Bank of England to differentiate them respectively in size and colour.
    Mr. Callaghan: Current Bank of England £1, £5 and £10 notes are already differentiated in both size and colour.
    Mr. Hughes: Does the Chancellor realise that even in these affluent days one does not want to make the mistake of giving away a "fiver" or a "tenner" for a "one-er", which is very easily done, having regard to their similarity, and will he, therefore, change the form of these notes in order to prevent such unfortunate error?
    Mr. Callaghan: I never expected to live to hear a Scottish Member say that it was easy to give away a £5 note instead of a £1 note.

    War Loan
    Mr. Weatherillasked the Chancellor of the Exchequer if he will state the estimated cost of allowing holders of 3½ per cent. War Loan the option of converting such stock to Premium Bonds.
    Mr. Diamond: If holders of War Loan were allowed to convert at par into Premium Bonds, the effect would be the same as if they were given the option of redeeming their holdings at par. The cost of such a redemption would be £1,909 million.
    Mr. Weatherill: But will not the right hon. Gentleman agree that many people who purchased 3½ per cent. War Loan were small investors who believed that they were being patriotic and that they could not put their money into a safer investment than Britain? Does not the present price of 51 per cent. amount almost to a national scandal, and ought not an opportunity to be given now to those who have held this stock for 20 years or more to go into Premium Bonds and save at least some part of their shrinking capital?
    Mr. Diamond: The hon. Gentleman will be aware that this matter has been discussed many times by Governments of all parties but, because of the difficulties in dealing with the matter and selecting worthy cases, it has not been found possible to make the kind of advance he suggests.

  VIETNAM
  Sir C. Osborneasked the Prime Minister if he will seek the earliest opportunity to visit Peking and discuss peace in Vietnam with the Chinese Government; and if he will make a statement.
  The Prime Minister (Mr. Harold Wilson): I would be willing to consider any step which might lead to peace in Vietnam but the immediate need is for an indication of readiness to negotiate on the part of Peking and Hanoi, particularly the latter.
  Sir C. Osborne: Is not the Prime Minister aware that millions of Americans, like Senator Fulbright, are convinced that the war will not be brought to an end by bombs and bullets alone, and that no peace talks can be successful unless Peking is in agreement with those talks? Would it not be worth his while to take even a 100 to one chance of going there to see what he can do?
  The Prime Minister: All of us have said many times in recent debates that this war will not be settled by a military solution and that negotiations are necessary. That was what all last year's arguments were about. But the hon. Gentleman should recognise that those American Senators who have proposed talks on the lines that many of us have suggested have been very scornfully treated by the Chinese Government and the Chinese Press, and the answer really does lie in Hanoi rather than Peking.
  Mr. Michael Foot: Will not the Prime Minister agree that one of the most serious aspects of the present situation is the proposed intensification of the war, chiefly by American air power and also by the addition of great American forces in Vietnam? What representations has he made to the United States Government in the past two weeks about this proposed intensification of the war?
  The Prime Minister: As I have already told the House, we have made perfectly clear our attitude if the intensification were to lead to the bombing of the big cities, Hanoi and Haiphong.
  Mr. Zilliacusasked the Prime Minister, in view of the opening of negotiations by the Indonesian Government with a view to ending their policy of confrontation, whether he will give an assurance that the British forces still in Malaysia will be brought home and demobilised on the ending of the confrontation with Indonesia, and will not in any circumstances be sent to Vietnam;
  1118
  and if he will take steps to inform President Johnson to this effect.
  The Prime Minister: I would refer my hon. Friend to the Answers I gave to similar Questions on 3rd May.
  Mr. Zilliacus: In view of the development of the situation since May, could not my right hon. Friend give a categorical assurance that in no circumstances will British forces either from Malaysia or elsewhere be sent to Vietnam?
  The Prime Minister: We are, in fact, still in the month of May, and it was on 3rd May that I gave a categorical assurance. This Question relates partly to Indonesia, and my reply related to troops released from Indonesia if, happily, we see the end of confrontation, and to any other forces.
  Mr. Zilliacusasked the Prime Minister whether, in view of the continued escalation of the conflict in Vietnam, including the building up of land forces, the practice of saturation bombing in the south and the use of B52 bombers and the bombing of industrial installations in the north, Her Majesty's Government will withdraw their support for United States military action in that country.
  The Prime Minister: I have nothing to add to the statement made by my right hon. Friend the Foreign Secretary in the debate on 26th April.
  Mr. Zilliacus: In view of the failure over a long time of his policy of privately working for peace in Washington while publicly supporting the war in Vietnam, will my right hon. Friend now abandon that policy, oppose the war in Vietnam and thereby at least do something effetive for peace?
  The Prime Minister: The Government have always opposed the war in Vietnam. That is why we have sought to get those concerned round the conference table. The refusal to come to the conference table did not come from Washington.
  Mr. Norwoodasked the Prime Minister what British-made arms licensed for export are in use in the Vietnam conflict; and to what extent additional shipments of British-made arms are being

  1119
  made to Australia as the result of the Australian Government's participation in the conflict.
  The Prime Minister: No licences have been granted for the export of arms to Vietnam. We do not normally disclose information about arms exports, but in this case I can say that shipments to Australia have not increased as the result of her participation in the Vietnam conflict.
  Mr. Norwood: Will my right hon. Friend accept that that reply affords some satisfaction? Would not he agree that, even at this comparatively unimportant level, it is of great importance for this country that we do not become, however indirectly, involved in the conflict in any way?
  The Prime Minister: We are not supplying arms directly or indirectly for the fighting in Vietnam. But perhaps I should make it clear, in view of the Government's special position as co-Chairman, that our fellow co-Chairman is supplying arms on a very considerable scale for use in Vietnam.
  Mr. Goodhart: Does the right hon. Gentleman intend to give any support to the large and valiant Commonwealth forces now engaged in fighting in Vietnam?
  The Prime Minister: If by that the hon. Gentleman means, "Are we going to join them by sending troops?", I remind him that I answered that question when it was put two weeks ago.
  Mrs. Anne Kerrasked the Prime Minister whether he will now withdraw support for United States military efforts in Vietnam, in view of the policy of the Government of South Vietnam expressed in an official statement by Marshal Ky that elections in South Vietnam will be delayed until 1967 and that a resulting Communist or a neutralist government would be opposed with military force.
  The Prime Minister: I would refer my hon. Friend to the Answer I gave earlier today to a Question by my hon. Friend the Member for Manchester, Gorton (Mr. Zilliacus).
  Mrs. Kerr: Does my right hon. Friend appreciate that American attempts to
  1120
  bolster the Government of Marshal Ky are not dissimilar from what would have been the situation had the Nazis occupied England from a line drawn—
  Hon. Members: Speech.
  Mrs. Kerr: —between Anglesey and the Wash and then, with the connivance of a puppet Government, had bombed Northern England, Glasgow and Edinburgh? Moreover, I would ask
  Mr. Speaker: Order. We cannot have a speech at Question Time. The hon. Lady must be concise.
  The Prime Minister: My hon. Friend's question is extremely fanciful as to geography and totally misleading, if I understand her rather complicated analogy aright, in drawing any kind of similarity between the Nazis and the United States at the present time. Her analogy further broke down in its reference to the bombing of Glasgow and Edinburgh, because the United States has not been bombing Hanoi and Haiphong.
  Mr. Michael Foot: But does not my right hon. Friend remember that it was Marshal Ky himself who drew the comparison? Does he think that the Ky régime is upholding democracy in South-East Asia?
  The Prime Minister: In our recent foreign affairs debate, my right hon. Friend the Foreign Secretary made it clear that the Government hold no brief for views expressed by Marshal Ky or for some actions by successive South Vietnamese Governments. The point is that we want to bring the war to an end by bringing all concerned to the conference table.
  Mr. Marten: In view of some of the rather barbed questions from the benches behind him, could the Prime Minister just say now, quite clearly, that he does support American policy in Vietnam?
  The Prime Minister: The hon. Gentleman is getting an obsession about my hon. Friends. [Laughter.] If he was sitting at his place, and few attend more regularly than the hon. Gentleman, he will have heard me and my right hon. Friends express support for United States policy over a very long period of time. He will also recall that on a number of occasions we have mentioned schemes

  1121
  and ideas for bringing this war to an end, only to earn the opposition and derision of hon. and right hon. Gentlemen opposite.
  Mr. Molloy: Will the Prime Minister realise that there is not a great deal of comfort to be drawn from the fact that the Americans have not yet bombed Hanoi or Haiphong? Is he aware that we are concerned that this escalation may continue and that this will happen, in which case we shall be in the very grave difficulty of trying to stop what might be an escalation to a world war?
  The Prime Minister: I am not drawing comfort from that fact. I was trying to prevent my hon. Friend the Member for Rochester and Chatham (Mrs. Anne Kerr) from drawing false parallels. That is why I said what I did on that particular point. As we have said many times, as long as this war goes on it carries tremendous dangers of escalation, perhaps far beyond the soil of Vietnam. This is why we keep pressing to get the parties to the conference table.
  Mr. Eldon Griffiths: Is it not clear that there could be peace tomorrow in Vietnam if the Communists would cease their aggression? Is it not clear that the United States is willing to go to the conference table but the Communists are not?
  The Prime Minister: We have expressed the position, and I would rather do it in the form of words we have used rather than the shorter form exercised by the hon. Gentleman. Certainly the position is that the only people, as far as I can see, who are unwilling to go to the conference table are the North Vietnamese. I would not want to lump them generically with other Communist countries. I think there might be a desire in some countries to see a conference in due course, but so far they have not agreed to come to the conference table. I hope that they will.
  Mr. Rose: In view of the perfidious attack by supporters of Marshal Ky upon Buddhists in Da Nang this week, would the Prime Minister seek some clarification of the position of the Government of South Vietnam with regard to the holding of free elections?
  The Prime Minister: The question of free elections was raised in a previous
  1122
  Question this afternoon, and it is our understanding that it is intended to proceed first to an interim stage and then to free elections at a later stage, probably next year. I have made quite plain that our attitude to the question of Vietnam is not dependent on what we may or may not think of individual Ministers of the Government of South Vietnam, including the Prime Minister. There are far bigger issues at stake and all of them could be solved if the parties would get to the conference table.

  PRIME MINISTER (SPEECHES TO TRADE UNIONS)
  Mr. Kenneth Lewisasked the Prime Minister how many public speeches he has made since the general election to trade union conferences or their executive councils on Government policy.
  The Prime Minister: Two, Sir. In addition, of course, I have had a private meeting with the National Union of Seamen.
  Mr. Lewis: Nevertheless, does not the Prime Minister agree that all this adds up to a great many words which are rather opposite to the sort of words he was using at the time of the general election? In terms of action, can he say whether any union rule books have been sent to him or to the British Museum, or whether, arising out of his talks with the railwaymen, there has been any progress on liner trains?
  The Prime Minister: What I have said at union conferences—I think it useful to say it to the rank and file delegates as well as to say it in central places like Westminster or the public platform—is exactly what I said at two elections, and exactly what I said to the T.U.C. even before the 1964 election.
  As regards following up the railway talks of last February, as the House knows, my right hon. Friend the Minister of Labour had started a series of meetings on relating pay to productivity, and the first meeting at any rate was, I think, extremely successful. On liner trains, my right hon. Friend the Minister of Transport was discussing the matter with the union executive last week and pressing for acceptance of all that is needed.

  HOUSES (DAMPNESS)
  Mr. Dalyellasked the Prime Minister what he is doing to co-ordinate the activities of the Scottish Office, the Ministry of Housing and Local Government and the Ministry of Public Building and Works to make case studies of condensation and dampness in recently completed houses, with a view to easing the difficulties of tenants faced with problems of rotting furniture, peeling wallpaper, mildewed clothes, and unhealthy bedrooms.
  The Prime Minister: The three Departments and the Building Research Station are already considering how best to make available further information and experience on the causes, remedies and prevention of condensation in buildings.
  Mr. Dalyell: Is it recognised that in conditions of high humidity this winter many thousands of families faced conditions which can only he described as slum conditions on account of dampness, and will the Prime Minister start a drive to improve the quality of building, to speed up the way in which local authorities attend to repairs and, finally, to help tenants understand the simple physics of dampness?
  The Prime Minister: As my hon. Friend the Parliamentary Secretary to the Ministry of Public Buildings and Works explained to my hon. Friend the Member for West Lothian (Mr. Dalyell) last month, the Departments concerned are looking at information they have had from the Building Research Station about the problem and at some of the things to be done with new building. There is also, of course, the very serious problem of condensation in our older houses, and there seems to be need for research as to deliquescent substances which are needed to absorb some of the excess humidity.

  MINISTRY OF RURAL AFFAIRS
  Earl of Dalkeithasked the Prime Minister if he will reconstitute the Ministry of Agriculture, Fisheries and Food, with the title of the Ministry of Rural Affairs, with unified responsibility for agriculture, fisheries, forestry and rural amenities and with the function of promoting
  1124
  the best economic use and development of rural land through the of all the interests in the countryside.
  The Prime Minister: No, Sir.
  Earl of Dalkeith: Does the Prime Minister intend, following the winding up of the Ministry of Land and Natural Resources, to place forestry under the Ministry of Agriculture and thereby enable it to make the enormous contribution of which it is capable to the wealth of the nation through expansion in the association with farming? Will he also intervene personally to ensure that forestry is not penalised by the Selective Employment Tax, which will kill all prospects of expansion in future?
  The Prime Minister: The latter point has just been raised in Questions to my right hon. Friend the Chancellor of the Exchequer. In answer to the general question, I would point out that it is very difficult to give any single Department responsibility for all the problems of rural development, rural industry and rural amenity taken together. But existing planning authorities and such bodies as the Highland Development Board and our own proposals for a countryside commission are designed to see that all these matters are considered together, as is, of course, the responsibility of the Secretary of State for Wales in his own country.
  Mr. Woodburn: Is my right hon. Friend aware that the Chancellor of the Exchequer also gives very considerable concessions in taxation to forestry with a view to inducing people to dedicate their land to forestry?
  The Prime Minister: Yes, Sir. I am aware of the help given by my right hon. Friend the Chancellor of the Exchequer and, indeed, other Departments. The hon. Member for Edinburgh, North (Earl of Dalkeith) was asking about Departmental responsibility in this matter, on which I shall have something to say later.

  MINISTRY OF INDUSTRY AND TECHNOLOGY
  Mr. J. H. Osbornasked the Prime Minister if he will change the name of the Ministry of Technology to Ministry

  1125
  of Industry and Technology; what commercial and trading, as distinct from technological, functions of the Board of Trade have now been transferred to the Ministry of Technology; how many civil servants have been involved; and if he will make a statement.
  The Prime Minister: No, Sir. As to the second part of the Question, I would refer the hon. Member to the Answer I gave on 1st December last to a Question by my hon. Friend the Member for Aston (Mr. Floud). 77 civil servants have been transferred from the Board of Trade to the Ministry of Technology.
  Mr. Osborn: Is the Prime Minister aware that the Ministry of Technology is taking over commercial functions and becoming a Ministry of Industry and Technology for home-based industries? To what extent is it the decision of the new Ministry of Technology to concern itself with exports, imports and commercial matters? The borderline is not clear.
  The Prime Minister: As I made clear in my statement some months ago, the Ministry has taken over sponsorship responsibilities formerly exercised by the Board of Trade in respect of the engineering industry. To that extent, it is an industrial Ministry with sponsorship responsibilities. All those concerned in the industry know where the borderline is drawn. What we have not done is what would be required by the hon. Gentleman's Question—for example, to transfer textiles, pottery, glass and many other industries from the Board of Trade to the Ministry of Technology. I think that this would have been wrong.

  LAND AND NATURAL RESOURCES AND HOUSING AND LOCAL GOVERNMENT
  Mr Gibson-Wattasked the Prime Minister, in view of the abolition of the post of Minister of Land and Natural Resources, what changes he intends to make in the functions and responsibilities of the Secretary of State for Wales.
  Mr. Floudasked the Prime Minister what steps he will take to give the Minister of Housing and Local Government more power in carrying out his
  1126
  responsibilities for housing; and whether he will make a statement.
  The Prime Minister: With permission, I will answer these Questions at the end of Questions.

  BANK OF ENGLAND (SENIOR POSTS)
  Mr. Hamlingasked the Prime Minister what experience in economic matters he requires in those he appoints to senior posts in the Bank of England.
  The Prime Minister: Members of the Court of Directors of the Bank of England are appointed by Her Majesty The Queen on my recommendation. Experience in economic matters is one of the many factors which are taken into account.
  Mr. Hamling: In view of the recent change at the top, can we expect that in future the Bank of England will support Her Majesty's Government's policy for a change?
  The Prime Minister: The Bank of England has had the right, and has expressed that right, to criticise successive Governments on one matter of great importance to successive Governors—the question of Government expenditure, if that is what my hon. Friend has in mind. I would add that I understand that the present Governor a few weeks ago praised this Government as having exercised a tighter grip on Government expenditure than any of their predecessors.
  Sir C. Osborne: Will the Prime Minister give an assurance that future Governors will be able to enjoy the same privilege of criticising the Government when they think that it is in the national interest so to do?
  The Prime Minister: Yes, Sir. Of course, Governors have always had that right. Ministers equally have had the right to reply when they have thought that the Governors were expressing views not borne out by the facts.

  ADMINISTRATIVE CAPITAL
  Mr. Dickensasked the Prime Minister if he will advise the appointment of a Royal Commission to consider the

  1127
  feasibility of building a new administrative capital, including new Houses of Parliament, at a suitable location north of the River Trent, and the consequential relocation of the present Parliamentary institutions and Government Departments.
  The Prime Minister: No, Sir.
  Mr. Dickens: Is my right hon. Friend aware that his Reply will cause much disappointment in the North, notably in Huddersfield? Is he further aware that it will cause grave disappointment to those of us in this House who had hoped to see new Parliamentary institutions designed to meet the needs of the twentieth century?
  The Prime Minister: Huddersfield has had enough disappointment recently without going into this. I yield to no one in my loyalty to the North, but it would not facilitate either good Government, administration or Parliamentary proceedings if we were to tear up all our roots from here and rebuild on some lonely moor, whether in Yorkshire, Lancashire or any other part of the North.

LAND AND NATURAL RESOURCES AND HOUSING AND LOCAL GOVERNMENT
The Prime Minister (Mr. Harold Wilson): With permission, I will now answer Questions Nos. Q9 and Q17.
My right hon. Friend the Minister of Housing and Local Government, in association where appropriate with my right hon. Friends the Secretaries of State for Scotland and Wales, will take over from my right hon. Friend the Minister of Public Building and Works responsibility for the National Building Agency, which will concentrate its efforts on housing; also for the regulations under the Public Health Acts about the construction of new buildings in England and Wales; and for the programming and processing of certain statistics and returns relating to housing.
The Housing Ministers will take over from my right hon. Friend the Minister of Public Building and Works responsibility for historic buildings under Part I of the Historic Buildings and Ancient Monuments Act, 1953.
1128
I intend in due course to discontinue the office of Minister of Land and Natural Resources as head of a separate Department. This will involve legislation. Integration of the staff of the Ministry of Land and Natural Resources with that of the Ministry of Housing and Local Government is far advanced, but the staff, of course, will continue to serve the Minister of Land and Natural Resources so long as he retains legal responsibility for his functions. When the time comes for the redisposition of these functions, they will be announced to the House, and that announcement will specify, amongst other things, any powers transferred to the Secretary of State for Wales.
Meanwhile, this was the point concerning Question No. Q9, the Welsh Office will gain responsibility for historic buildings in Wales; the administration of building regulations and by-laws in Wales; and Welsh aspects of water resources. It will gain a share in the control of the National Parks Commission and the National Building Agency, and in the appointment of the Building Regulations Advisory Committee.
The Welsh Office will not be giving up any functions in connection with these changes.
Some of the changes to which I have referred in this Answer will be made by Order in Council under the Ministers of the Crown (Transfer of Functions) Act, 1946.
Mr. Gibson-Watt: As the right hon. Gentleman has said, under the Transfer of Functions Order, 1964, the Minister of Land and Natural Resources was responsible for hydrometric schemes in Wales. In view of the importance of water to Wales in particular, would the right hon. Gentleman give the assurance that all responsibilities for water in Wales will now come under the Secretary of State for Wales?
The Prime Minister: I made clear in my Answer that he will now be taking over the Welsh aspects of water resources. Some of the general legislation will still be a matter for England and Wales legislation together, but my right hon. Friend the Secretary of State for Wales will now take on new functions in respect of water.
Mr. Floud: May I ask the right hon. Gentleman whether these changes mean that there will be a change in departmental responsibility for the construction industry as a whole?
The Prime Minister: This was very carefully considered. As I said in answer to a previous Question in the last Parliament, it is a very difficult balance to decide, but it has been decided, probably I think rightly, that the responsibility for the construction industries, which includes a lot of building outside housing, is properly exercised by the Ministry of Public Building and Works. I think that that is just the right answer, but only just. The specialised functions, the National Building Agency, building regulations, and certain other responsibilities relating purely to housing ought to be in the Ministry of Housing, and that is where they are going.
Mr. Birch: Will not the Minister of Public Building and Works be rather short of a job now? Would it not be more logical, instead of transferring responsibility for historic building functions to the Minister of Housing and Local Government, to transfer from the Minister of Housing and Local Government his aesthetic responsibilities for the preservation of historic buildings to the Minister of Public Building and Works?
The Prime Minister: There will not be any question of my right hon. Friend the Minister of Public Building and Works being out of a job. The right hon. Gentleman will recall that two years ago the previous Government transferred a lot of work to him, particularly from the Service Departments. The Department now has enormous responsibilities in connection with the Government's own building programme, particularly for the Services.
The latter part of the question, about historic buildings, raises some very difficult issues. There was a strong case for them being either in one Ministry or the other. On balance, and only very much on balance and after a lot of thought, I felt that it was right that they should be in the Ministry of Housing and Local Government, who have so many other responsibilities in that sphere. It was a very difficult decision.
Mr. Woodburn: Would the Prime Minister clear up the position about the Historic Buildings Council in Scotland? I gather that the corresponding body in Wales is to be under the Secretary of State for Wales. At present, the Scottish Building Council advises both the Secretary of State for Scotland and the Minister of Public Building and Works. Does this mean that the Secretary of State for Scotland will work in the same way with the Minister of Housing and Local Government? What will be the exact responsibility for this work?
The Prime Minister: In Scotland, the responsibility will be completely with the Secretary of State for Scotland. In England it will be with the Minister of Housing and Local Government and in Wales with the Secretary of State.
Sir D. Renton: Who will become responsible for the Nature Conservancy of Great Britain?
The Prime Minister: That is being considered and will be dealt with when we bring forward the necessary legislation in relation to the Ministry of Land and Natural Resources.
Mr. Boyd-Carpenter: Does this mean that the right hon. Gentleman now accepts the view that has been urged upon him from these benches over the last 18 months, that responsibility for land use should lie with the same Minister who is responsible for planning decisions? Does it also mean that the Minister of Housing and Local Government will take over the Land Commission Bill?
The Prime Minister: It means, as I explained a week or two ago, that when one came to consider the division, as I believe the wrong division, between the Ministry of Public Building and Works and housing, and the necessity to transfer work to it, it became clear that one could only make sense of the whole thing by bringing back the land and natural resources housing functions as well. This was because we were dissatisfied with the reallocation of functions between housing and works two years ago.
Nevertheless, if we had not had the Ministry of Land and Natural Resources during the last 18 months we would not

1131
have been able to secure Ministerial concentration by my right hon. Friend on those two most valuable Measures, the Land Commission Bill and the proposals now coming forward for leasehold enfranchisement. They will continue to be handled by the Minister as long as he is Minister and when the Department is fully absorbed it will be a responsibility of the Ministry of Housing and Local Government.
Mr. Sharples: One of the principal reasons for transferring responsibility from the Service Departments to the Ministry of Public Building and Works was to give the Ministry of Public Building and Works a sufficient programme to carry out research into building generally and housing in particular. Can the Prime Minister say how, under this new arrangement, these research programmes are to be initiated?
The Prime Minister: It was right to transfer responsibility from the Service Departments to the Ministry of Public Building and Works, perhaps not so much for the reason stated by the hon. Gentleman, but because it was the most efficient way to get Service Department work done. Nevertheless, the division of responsibility between housing and the Ministry of Public Building and Works, and the relations between the two Departments, which the hon. Gentleman will remember pretty well approached civil war a couple of years ago, have left echoes reverberating in Whitehall. It is right to have housing under the Ministry of Housing.

SCOTTISH ESTIMATES
Committee of Supply discharged from considering the Estimates set out hereunder, and the said Estimates referred to the Scottish Grand Committee:—
Class V, Vote 2, Department of Agriculture and Fisheries for Scotland,
Class VII, Vote 2, Scottish Education Department,
Class VII, Vote 4, Teachers' Superannuation (Scotland).—[Mr. Bowden.]

ORDERS OF THE DAY

  MILITARY AIRCRAFT (LOANS) BILL
  Considered in Committee.
  [Sir ERIC FLETCHER in the Chair]

  MILITARY AIRCRAFT (LOANS) BILL

    Clause 1.—(ISSUES FROM CONSOLIDATED FUND FOR PURCHASE OF MILITARY AIRCRAFT AND RELATED PURPOSES.)
    3.43 p.m.
    The Chairman: The first Amendment selected is that in the name of the right hon. Member for Mitcham (Mr. R. Carr). It would be convenient if we took, at the same time, the second Amendment in the name of the right hon. Member for Mitcham and other hon. Members, in page 2, line 22, at end add:
    (4) No sum shall be issued under subsection (1) of this section unless contracts have been made in respect of the military aircraft to be purchased which provide:—

    (a) a fixed price for the aircraft, and for parts, equipment or other articles required in connection with their use and maintenance;

    (b) arrangements for the cancellation of any order in the event of the aircraft not meeting the required specification as to performance or time of delivery; and

    (c) arrangements for meeting any unforeseen research and development expenditure.

    Mr. Robert Carr: I beg to move, in page 1, line 13, at the beginning to insert:
    "Subject to the provisions of subsection (4) of this section"
    I agree that it would be for the convenience of the Committee if we were to take the two Amendments together, Sir Eric.
    This is a Bill to provide money for the purchase of military aircraft from the United States. We have already made clear as an Opposition that we object to that policy and think that it is a folly, but we have also agreed that we must provide this money, because, in the circumstances, it is the only way in which the Royal Air Force can have the planes which it needs. We have accepted that principle.
    The purpose of the Amendment is to control the operation of that principle. We believe that it is even more than usually important in this case that the way in which this money is spent and the

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    control over the amount spent should be particularly clearly laid down. That is why we suggest that there should be a new subsection (4) which lays down certain conditions.
    The substance of our case lies in the second Amendment. Therefore, the Committee will understand if I address myself in substance to that Amendment. Our proposed subsection (4) provides that
    "No sum shall be issued … unless contracts have been made in respect of the military aircraft to be purchased which provide"
    a number of things.
    First, we believe that these contracts must provide a fixed price for the aircraft to be purchased. We are very concerned about this matter. I would give as an example the F111 aircraft. Since this plan has been before us, it has been stressed that a fixed price, or ceiling price, hay been obtained for the F111. But that is not truly the case. We are not buying the basic F111. We are buying an F111 modified to meet the needs of the Royal Air Force.
    As recently as the Second Reading debate on this Bill, the Under-Secretary of State for Defence for the Royal Air Force said:
    "… we hope soon to negotiate a ceiling price for the modifications needed to bring the aircraft to the Royal Air Force standard of configuration."—[OFFICIAL REPORT, 11th May, 1966; Vol. 728, c. 539.]
    I ask the Committee to note the word "soon". This is a clear admission that a ceiling price has not yet been negotiated.
    It is not sufficient simply to have negotiated a ceiling price for the basic aircraft, because that means very little. What the Committee and eventually the House will require before passing the Bill is a condition written into the Bill saying that the loans which we are authorising cannot be made until a fixed price has been obtained for the aircraft concerned, of which I have quoted the F111 as an example. With the aircraft we include the
    "parts, equipment or other articles required in connection with their use and maintenance."
    We have deliberately included the word "maintenance" because there has been unfortunate experience in other countries which have purchased United States aircraft. When they have the aircraft and are using them, they have found that the
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    cost of spares involved in maintenance has been uncontrolled and has led the purchasing country into expenditure which was uncontemplated when it purchased the aircraft. Therefore, we regard paragraph (a) of our proposed subsection (4) as very important.
    Paragraph (b) of our proposed subsection (4) provides that the contracts which are to be made should include
    "arrangements for the cancellation of any order in the event of the aircraft not meeting the required specification as to performance or time of delivery".
    It is very important that Parliament should insist on this if we are to have proper control of the money.
    We know from our experience and the experience of other countries that aircraft and other sophisticated products can fail to meet the specifications. By their nature, they usually have to be bought before the product is finally refined and, therefore, they have to be bought when they are in a state of uncertainty. We realise that and make no complaint about it, but we believe that the contracts should lay down what should happen if, unfortunately, any of the aircraft whose purchase is contemplated by the Government should not meet their specification or should not be delivered when promised. We regard this as a simple matter of good business procedure, if I may put it in that way, and something on which the House of Commons shoud insist before it gives the Government these large borrowing powers.
    Paragraph (c) of our proposed subsection asks that the contracts to be made for the aircraft should include arrangements for meeting any unforeseen research and development expenditure. Here again, I instance the F111 purely as an example of the sort of possibility against which we should guard. There are reports—and I accept that it is not unusual at this stage of an aircraft's development—that the F111 is in serious development trouble. We hope that these difficulties will be overcome, but we also know from experience that difficulties of this kind are seldom overcome without very large extra expenditure, and the question then arises of how this expenditure is to be recouped.
    The contracts entered into by the Government should clearly contain clauses which lay down what is to happen if there

    1135
    are demands for meeting any research and development expenditure which has not been foreseen, and could not be foreseen up to the point of making the basic commitment.
    Mr. Tam Dalyell: The right hon. Gentleman is referring, I take it, to the F111A and not to reports about the FB111?
    Mr. Carr: I am referring to reports about the F111A, but I was only instancing it as an example. I am not trying to argue, as I do not think it would be proper for me, how substantive these reports are. I am only saying that it would not be unusual in the development of highly sophisticated aircraft if difficulties of this kind arose during development and the research and development expenditure was ultimately very much higher than was originally contemplated. This is a possibility that we ought to guard against. We all hope that it does not arise, but we know from experience that it is a possibility which is not an entirely imaginary one, and which, unfortunately, has proved to be very real in other cases in the past.
    I need say no more in support of this Amendment, except to emphasise again that we are asking the Committee to accept an Amendment that will make it obligatory for the Government, before they can draw the moneys that we are giving them power to borrow, to have entered into contracts for the aircraft that cover the three main points laid down in our Amendment.
    Mr. Maurice Edelman: I have some sympathy with the intention of the Amendment, but it sits very ill in the mouths of right hon. Gentlemen opposite to urge that there should be fixed prices for the aircraft ordered under these contracts. Hon. Gentlemen opposite are experts in what I might call financial weightlessness as applied to the aircraft industry. If one looks at the escalation of costs during their period in power, and the way in which that escalation has complicated the time-scale of production to a point where cancellations became inevitable, one can see the extraordinary—I hope that the right hon. Member for Mitcham (Mr. R. Carr) will forgive me if I use this term—impertinence with which they propose an
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    Amendment in favour of fixed prices, which, I understand, have already been established in principle.
    We should be quite sure exactly what aircraft we are talking about when we refer to this Clause. The right hon. Gentleman mentioned the F111A. I believe that it was established last year during our debates not only that there would be a fixed price for this aircraft, but, also, that the avionics concerned would be a fixed proportion of that fixed price. I hope that this afternoon we may have confirmation from by right hon. Friend of this.
    At the same time, I must agree with the right hon. Member for Mitcham that one of the great difficulties in contracts for advanced types of aircraft is the progressive creep of costs, which have steadily risen as snags have been encountered and difficulties, such as drag, arose. In the case of the F111A, this is rather more than a report—it is an established fact. I hope that this afternoon my right hon. Friend will be able to tell us definitely whether the drag which has occurred, and which the American manufacturers were making desperate efforts to overcome, has, in fact, been overcome, and whether we shall be involved in any extra cost.
    Arising out of this Amendment, I should also like to ask my right hon. Friend whether the sums which we are being asked to vote for the F111 may be multiplied in the future by the fact that the variable geometry aircraft, which was to be the cornerstone of our defence system in the air, may be delayed.
    My right hon. Friend recently had talks in Paris with his French counterpart about the future of the variable geometry aircraft, and I gathered that, although he was successful in establishing both price and a time-scale for the Jaguar aircraft, no price was established for the variable geometry aircraft. I understand that the talks broke down, or, at least, were interrupted, because of the difficulty in reaching agreement on a future price. I can understand why that was so, because the project, which is to be central to our continuing aircraft programme, is in the stage of gestation, when anything might well happen.
    For example, perhaps my right hon. Friend can confirm or even deny that the

    1137
    variable geometry aircraft, which began as a 12-ton aircraft, has risen because of R.A.F. modifications, to something like 18 tons, with consequent escalation in the potential cost. This is directly relevant to the Amendment because unless the variable geometry aircraft is produced on time, at least in the time scale in which it was hoped to provide it, that will mean that the money we are asked to vote this afternoon is the thin end of the wedge.
    In that event, what some of us prophesied earlier, when the F111 was in the process of being purchased—the prospect that this was only the beginning and that we might well have to go on buying more of these aircraft to keep our forces supplied—may well be the case.
    The relationship of the variable geometry aircraft produced by Anglo French co-operation is of direct relevance to this Amendment. I hope that when my right hon. Friend replies he will tell us what stage the project has reached. I understand that there will be another meeting in July, but that there will not be a full-scale meeting until September. I understand also from the French communiqué—and I regret that a comparable communiqué was not issued in this country—that not only has the project not been crystallised but that it is still in the talking stage on the variable geometry project. The result might well be that, instead of the time scale for this aircraft being something like eight years' hence, it may well be substantially longer. That, in turn, will mean that further sums will have to be voted for the F111.
    Consequently, that will mean that the sum which we are being asked to vote today, instead of being the final amount required, will be merely a trail blazer for future commitments. That was one of our original anxieties and it remains an anxiety. I hope that this afternoon my right hon. Friend the Minister will be able to reassure us on this point.
    4.0 p.m.
    Mr. Stephen Hastings: The hon. Member for Coventry, North (Mr. Edelman) speaks with great knowledge of this subject. I was a little astonished to hear him accuse my right hon. and hon. Friends of impertinence in bringing forward the Amendment, particularly
    1138
    as much of what the hon. Member said later made it plain that he suffers from exactly the same misgivings as we on this side have concerning this series of contracts. The point made by the hon. Member concerning the variable geometry aircraft is an important one nevertheless, and I hope that when the Minister replies we shall hear more about it.
    The aim of our Amendments is to ensure that payment is conditional upon a satisfactory contract. The speech by the Under-Secretary of State for Defence for the Royal Air Force in our recent debate, which I have read in detail, certainly leaves a number of important question marks.
    I wish simply to concern myself with the FI11A, because this seems to me to be the largest imponderable of the three aircraft, and to confine my remarks to the question of modifications and spares. Modifications are potentially of two kinds: to the basic aircraft and those which are required to bring the F111A up to meet the British requirement.
    To take, first, the question of modifications to the basic aircraft, we all know, as the hon. Member for Coventry, North has said, that this aeroplane is in trouble. Rumours vary. There seems to be trouble with the reheat system, the control system, the bomb load, maximum weight and, possibly, the radar. In his speech a few days ago, the Under-Secretary of State for Defence for the Royal Air Force said that he believed that we were covered for all this by a ceiling price.
    My first question to the Minister is: how tight is our specification in terms of performance guarantees? In other words, if, in the end, the F111A as delivered to us falls short by 200 miles in radius of action, for example, or in bomb load, speed, take-off performance, or maximum weight, will there be penalties for these shortfalls? Certainly, there were penalties in the case of the TSR2, and I hope that the same thing will apply with the Americans. I shall be glad to hear whether this is so.
    The second range of modifications is, perhaps, the most important. Unless the F111A system comes near to what TSR2 would have been—in other words, can fulfil operational requirement 343, on which both aeroplanes, I understand, have

    1139
    been based—it would be better to save our money and trust to luck.
    A number of questions arise. First, who pays for the flight test programme to prove not the American requirements, but the British requirements? Will the ceiling price—which the Minister only "hopes" to negotiate—cover the cost of modifications arising during this flight test programme in terms of the British requirement?
    The Under-Secretary said the other day that we will not pay more than the average price paid by the United States for the F111A; but I am not talking about anything which is required by the United States Government. I am talking about the British requirement. In terms of the British requirement, what provision has been made to cover the development of test equipment, both manual and automatic? Is the existing test equipment, which must be American if it exists, compatible with these British requirements? Is a new radar complex necessary? If so, will not this mean that the whole range of test equipment must be redesigned? If so, how much will this cost? Will it be covered within the ceiling price that the Minister hopes to negotiate? Certainly, the test equipment was a most expensive item with the TSR2.
    The Minister knows better than I do that these complex weapons systems cannot take off at all unless the check-out equipment is in order. If one of the systems is wrong, the fact must be spotted before take-off and one has to know which system it is. That is possible only if the test equipment is geared to the radar complex as a whole. Will the existing radar fit the British requirement?
    To pursue the radar question, let us assume that the terrain following is satisfactory. We have read in the Press that terrain-following flight tests are being carried out. I do not know whether this will prove to be the case, but let us give it the benefit of the doubt. I very much doubt whether the nav/attack system is adequate or comes near to our specification to meet our own operational requirement.
    Is it not a fact that the nose radars are accurate enough only to cover a nuclear strike—that is to say, with a broad margin of error in aiming—and are
    1140
    nowhere near accurate enough for tactical strike: that is to say, to hit the span of a bridge? Unless this aeroplane system is capable of hitting the span of a bridge, it will not meet the operational requirement; it will not be able to do what TSR2 could have done. In this case, what modifications would be necessary?
    I understand that three radars are involved. These are only questions; if I am wrong, the Minister will correct me when he replies. Of the three radars in the nose of the aircraft, or dishes, as I believe they are called, there is one large one in front for target acquisition, which I think is the technical term, and for ranging on the target, and two smaller ones are set behind for navigation purposes.
    If my understanding is correct, the large one is inaccurate in terms of our requirement, but it feeds the nay/attack system. The technical problem, therefore, must be to transfer the rôles of these two radars: that is to say, to make the navigation radar feed the nav/attack system and make the attack radar play the other rôle. Can this be done without a computer being added? If not, whose computer will it be? Who will do this. and who will pay for it?
    With the radars placed as they are, is there not a grave risk of what the technicians call aberrations, the radar being placed in such a way that vision is not direct and does not work? It took British firms months and months to design and position the nay/attack system in the TSR2, and they got it right. If they had not got it right, goodness knows what the escalation would have been. Can it be that we are faced with precisely this problem in the F111A? If we are, it follows that all the check-out equipment will also have to be modified or redeveloped. My last question on the radar is whether there is a head-up sight.
    On spares and repairs, I would like to know whether the contracts for repairs will be subject to open tender, or whether they are all to go to General Dynamics. There could obviously be a great gap in the contract and there would be a possibility for costs to escalate seriously afterwards. I see no reason why contracts for repairs should not be put out to open tender to firms in this country.

    1141
    Finally, what is meant by the "initial spares lay-in"? It would be interesting to have a clearer idea of this. What percentage of, say, the £2¼million capital cost of the aircraft does this represent? Is it 10, 20 or 30 per cent., for example? That would tell us something, because it would give us an idea whether the contract includes initially damaged spares, spare inner and outer wings, and spare nose fuselages.
    It is notorious that spares costs for the American F104G—the Starfighter which was sold to the German Government—rose out of all proportion to the cost of the aircraft. We do not want the same thing to happen on this occasion, which is why we ask these questions. That is one of the basic reasons for this range of Amendments.
    The right hon. Gentleman will remember that the F104G story holds more than that. The special development contract for the German Government's requirements—the sort of requirements which relate not to the American Government, but, in the case of the F111A, to us—rose from something like 30 million dollars to 50 million dollars, and most of that increase had to be paid by the German Government, not by the Americans. The cost per unit of that plane rose from about £400,000 as originally stipulated to something like £730,000, which is nearly double. Even now, as I understand it, the inertial navigation platform has to be modified and is not complete.
    It is a seamy story which reflects no great credit on the American aviation industry or on the kind of deal which the right hon. Gentleman and the Government have let us in for. It is our business to inquire into it and ensure that these contracts are tied up properly. There are far too many loopholes in what we heard the other day, and I hope that when the right hon. Gentleman replies to these Amendments he will be able to set our minds at rest on some of them. He will never satisfy us that the Bill and everything from which it stems is not a lamentable disaster to the British aviation industry, but he may be able to set our minds at rest to some extent as far as the taxpayer is concerned.
    Mr. R. J. Maxwell-Hyslop: There are a considerable number of matters about which we on this side are
    1142
    as yet uninformed by the Minister. May I start with the words of the contract? Is there a contract? Has a definite form of contract yet been signed? Is there just an intention to purchase—an I.T.P. or heads of agreement—or is there a full contract? If there is a full contract, what does it include? Does it include a price at which we can buy replacement aircraft for those lost in combat, in training crashes, or other types of accident? If so, is that the same price as the initial price?
    Is the contract, or if it does not exist, will it be, subject to renegotiation? In America, the term "fixed-price contract" means a price which is initially fixed but which is subsequently open to renegotiation up or down: down if the profits are seen to be excessive; up if the costs escalate. If that is so, then what is sold to the House of Commons as a fixed-price contract is not a fixed-price contract at all.
    The Minister has not given us any indication whether the contract is signed in detail. If it is not signed in detail, we have no means of knowing whether the £430 million asked for in Clause 1 of the Bill is adequate. We have no means of knowing that unless the contract has already been signed in full detail; and I cannot imagine why we have not been told that yet.
    What is to happen about spare parts? If we are told that we pay the same price as the Americans, what does that mean? Hon. Members on both sides were told by the President of General Dynamics on 9th February that, in contracts between his company and the American Government, the prices hold good for only one year. They have to be renegotiated every year; in other words, the sky is the limit. If our terms are the same as those of the American Government, they are not fixed prices at all.
    The Minister must make it clear that, if that is not the case, we have not got the same terms as the American Government, but something quite different and very much better. If that is so, let the Minister claim credit for it. With his usual modesty, I am sure that he would not be hesitant to do that, because it is about the only creditable thing that he could claim about this deal.

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    What happens about spares obsolescence? What happens about spares which we buy and which then become worthless because, as a result of accidents or other service defects, modifications have to be brought in which render that stock of spares obsolete? Do the manufacturers guarantee to buy them back at the full price, or credit their full price against the replacement modified spares? Those are factors which materially affect the total bill that we get each and every year.
    What about cost escalation of the aircraft itself due to modifications? None of us, least of all the Minister, knows what modifications will be necessary to enable the aircraft to meetitsperformance guarantees. It is commonly agreed between all parties—General Dynamics and everyone in the House except the Treasury Bench—that no one knows whether the aircraft will be able to meet its performance guarantees, because the flight test programme is in such an early stage that it has not demonstrated its ability to do so.
    4.15 p.m.
    That is admitted in the report of an interview in Flight of 24th February by Mr. Davis, the President of the Fort Worth division of the company which makes the aircraft. He says:
    "Nobody can tell you what the drag is. The actual performance tests to measure drag have not yet begun."
    If he does not know it, I take it that the Minister agrees that he does not know it, and nor do his advisers.
    What is the history of General Dynamics? Can we be confident that all is right with the design, that it is bound to come off on time, and meet its performance guarantees? We have no such grounds for confidence. The last civil aircraft produced by the company was the very much less sophisticated Convair 990, which failed disastrously to reach its performance guarantees and which cost no less than 400 million dollars in retrospective modification programmes to enable it to meet its performance guarantees.
    If the cost of this aircraft escalates dramatically, are we to believe that that will be borne by the shareholders of
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    General Dynamics, or will the renegotiation procedures come into effect? Alternatively, will they lump it on to the spares prices in the way that Lockheed lumped its additional costs on to the spares prices of the 104Gs sold to N.A.T.O., which has bled the N.A.T.O. countries white, as anyone in Belgium or Germany will confirm.
    Do they accept financial responsibility for the replacement of aircraft lost in crashes due to malfunctioning systems? We need to know that. We know that they have not in the case of the F104G, because we know that the German taxpayer has to replace the 54 which have already been lost in crashes. I do not suggest that even the majority of the F104 crashes were due to structural defects in design or development. Some of them are due to pilot error, some are due to bad maintenance, and some are due to bad local manufacture. It would be unfair to lay that figure of 54 at Lockheed's door.
    We are dealing here with an aircraft which is much more sophisticated, than the Lockheed F104 produced by a company whose record in civil aviation does not lead one to look forward with confidence to its ability to meet conditions. which it has yet to demonstrate. What happens if the aircraft does not meet its performance guarantees? Have we any right to cancel the contract? The Committee may think that it does not really matter whether we have or not. It would be a pretty useless right to operate, because we would be left with no aircraft.
    What is our defence against defective performance? If it is the same defence as the United States Air Force has, namely, that for each percentage change of X in various aspects of performance there is a financial penalty of Y, how much is the financial penalty? Unless we know. we are not in a position to judge whether or not the sums provided are adequate. What happens, for instance, if we need retrospective modifications, not because the aircraft is defective. but because our operational requirements change? Can they "take us for a ride" on those prices?
    I think that it is widely recognised, except by the Left wing of the Labour Party, that this aircraft's primary glory lies, if I may use such a word, in its excellence as an instrument of wreaking

    1145
    havoc in a nuclear rôle when it is using atomic bombs. When it is using conventional bombs in a low altitude high speed attack rôle, with its wings folded back to the maximum amount, it has a very inconsiderable bomb-load indeed-10,000 lb. only, as was shown upstairs to Members on both sides on a diagram provided by the President of General Dynamics. It is when it is used in a nuclear capacity that its advantages show.
    Is this why the Government are buying it? Do they hope that their Left wing will not realise that they are buying an aircraft primarily for the delivery of nuclear weapons? Do they hope that their Left wing will think that they are buying an aircraft primarily for the delivery of conventional weapons?
    Mr. John Rankin: I am sure the hon. Gentleman realises that some members of the Left wing were at the meeting to which he referred.
    Mr. Maxwell-Hyslop: Yes, but only those who normally show an interest in aviation, rather than those who normally show an interest in affairs in Vietnam.
    Mr. Rankin: No.
    Mr. Maxwell-Hyslop: We are buying an aircraft which can be used anywhere throughout the world.
    Earlier, I asked what provisions we had written into the contract as to the price at which replacement aircraft could be bought. It is easy to think that because an aircraft is devastatingly sophisticated, we buy with that money a degree of invulnerability. The Minister may remember that during the Korean War more than 80 per cent. of the United Nations aircraft shot down were brought down by light anti-aircraft fire. The heavy air casualties which the Americans are suffering in Vietnam today are not caused primarily by sophisticated weapons. They are caused by quite ordinary, very skilfully used, anti-aircraft guns, not even missiles, and the casualty rate of sophisticated aircraft like the Phantom is alarmingly high.
    Let us not, therefore, think that if these aircraft are used in anger there will not be many losses, and 50 of them, which is presumably all that is encompassed within this figure of £430 million—of course other things are encompassed as well—will not last us very long when
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    we consider the number to be used for crew training, the number which will be out of action for maintenance or modification, and the rate of attrition which will undoubtedly fall on them when they are used in action.
    I think that the right hon. Gentleman must "come clean" with the Commmittee and admit either that it is not intended ever to use these aircraft, or that he has made contractual commitments as to the price of replacements. The Committee must know this before we move on from this Amendment, otherwise we may find that, having lit the blue touch paper, there is much more in the firework than we thought because this commitment is not limited to the 50 aircraft about which we have been talking.
    If we are to have them for an operational rôle, we shall need replacements for them as and when they are crashed or lost through military action, and we must be told what provisions there are in the contract covering these replacements. On the whole, these negotiations leave a nasty taste in the mouth, the sort of taste which a dash of Worcester sauce will not wash away.
    To far too great an extent the House of Commons has been led to suppose that what is being bought is a fixed number of aircraft, at an immutable cost whatever happens, of known performance, of demonstrated capacity to meet their operational guarantees, with a demonstrated capacity to handle in an acceptable manner, with proven ability to be delivered at the required date—this was part of the argument put forward for getting the aircraft in the first instance—and that they will prove to be an effective deliverer of conventional weapons in just the type of operation which is taking place in Vietnam at the moment, in the course of which a large number of very sophisticated aircraft are being lost.
    The Minister has a long way to go before he convinces us on those points. The moment of truth has arrived for him in this Committee. If he says that he does not know, he should not be sitting on that Bench as the Minister of Aviation. If he does know the answers, which I hope he does, it is his duty to share that knowledge with the Committee, because nothing that he has been

    1147
    asked infringes security in any way at all. Without answers to those questions, the Committee cannot know whether the money that it is voting is enough or too little for the task which lies before the Armed Forces.
    We believe that without the Amendment the road will be open and clear for disastrous cost escalation. These aircraft are so expensive that they have to last us a lifetime. For those that survive we have to live with the spares costs, the maintenance costs, the obsolescence costs, the modification costs, and the overhead costs for many years, and indeed for more years than are covered by the six mentioned in the Bill. I think that the Committee is more than due for information, rather than just expressions of hope and confidence from the Treasury Bench.
    4.30 p.m.
    Mr. William Baxter: I have listened with interest to the hon. Members for Mid-Bedfordshire (Mr. Hastings), and Tiverton (Mr. Maxwell-Hyslop), and I consider that they have posed valid questions on the sensibility or otherwise of proceeding further with this project, and that there is no question but that the onus of responsibility rests squarely on the shoulders of the Government to give sensible, reasonable, and understandable answers to the questions which have been asked.
    However, like my hon. Friend the Member for Coventry, North (Mr. Edelman), I find it rather difficult to listen to Opposition back bench speakers posing those questions, because for many years they remained silent while the Conservative Government were entering into commitments with the Americans for the Phantom and the C.130 aircraft. No questions were asked, and no guarantees were given, as to what we were going to pay, and what we would get in return. Similarly, with the purchase of the Polaris submarines, there was no great challenge from Conservative back benchers as to whether we were making a good agreement with the Americans for the delivery of these items of mass destruction. One or two questions spring to mind when listening to the arguments for and against this proposal. One thing which concerns me is that this appears to be a commitment by this nation, through the Government, to purchase
    1148
    these aircraft, together with the aircraft contracted for by the previous Government, to sustain our rôle in the Far East. It is within the knowledge of most people that there is a considerable volume of opinion on these benches, and throughout the country, against our commitments in this part of the world. The main volume of opinion is most anxious that the Government should cut back in this respect.
    Presuming that there is a change in the occupants of the Front Bench in the not too far distant future, and that the new occupants are of this mind, is there anything in the agreement that will permit them to cut back on this considerable expenditure? The hon. Member for Tiverton said quite clearly that the contract for fixed prices would run only for one year. If so, does the whole agreement run only for one year, or is there a clause in it by which we can terminate it, and cease to proceed any further with this great folly?
    We are told that we are to come to some agreement with America to obtain a loan of £430 million for the purchase of some of these aircraft, and that we should congratulate ourselves. In the Second Reading debate the Under-Secretary of State for Defence for the Royal Air Force made it abundantly clear that at 4¾ per cent. it was a great bargain. We were led to believe that in the normal course of events the American Government would support our obtaining orders for ships, etc., up to American requirements and that this would help our balance of payments.
    This is rather misleading, in that we are to pay, over and above this £430 million, a further £230 million in cash transactions. That is not all. We have been told in various Answers to Questions that we are providing British equipment in those aircraft to the extent of almost 46 per cent. That presupposes that the contract into which we are entering in respect of these aircraft will cost the nation roughly £1,000 million—46 per cent. of this being material and goods provided by our own people, the other being provided by the Americans. If that is so, it is a terrific sum to which to commit the country for the rôle east of Suez when, at the moment, many of our people are out on strike for a meagre wage. The two

    1149
    things do not run in unison, nor are they compatible.
    I should like some clarification on these points. I want to put on record clearly and concisely what view I take. The hon. Member for Mid-Bedfordshire (Mr. Hastings) said that it is almost a lottery, and that it is a matter of "take it or leave it". Perhaps we shall be lucky enough to keep going without purchasing anything.
    Mr. Hastings: I was not trying to suggest something literally in those terms; I was simply suggesting that only if these modified aircraft succeed in meeting British requirements shall we avoid wasting our money.
    Mr. Baxter: There is no guarantee that it will be modified to meet British requirements. Nobody has told us that it will be. As the hon. Member has rightly pointed out, over the years many such projects have been cancelled because they did not come up to our expectations. I need not go over the whole list. We know that the same situation has existed in America. There has been no guarantee. But even if there were a guarantee it is clear that the ultimate aim will be to fit the aircraft with a weapon carrying a nuclear warhead. It will be used in that capacity sooner or later, for there is no other purpose in purchasing such an aircraft.
    I want to put on record the fact that I am diametrically opposed to the Government and the Opposition on the purchase of aircraft for this purpose. I cannot understand how the Government can act in this way when they have gone on record as saying that we shall not be a nuclear Power in the future. We are committing the nation, over the next 10 years, to the purchase of aircraft for nuclear war and for no other purpose.
    I hope that there are other means by which we can register our protest, but it appears that on both sides of the Committee there is general agreement that we should continue this policy of committing the nation to considerable expenditure—a policy which is condemned by many because it really amounts to the desire to contain China and to continue our warlike efforts in the area east of Suez. I say categorically that this is the height of madness, and that I cannot
    1150
    understand a Socialist Government even contemplating such an agreement.
    Mr. Albert Booth: If there is any merit in the proposal put before us this afternoon by the Opposition it must rest on the feasibility of fixing the cost for aircraft such as those we are now to purchase. I contend that it is impossible to sustain an argument based upon the idea of fixing costs. We are buying aircraft which have never been completed. It is almost inevitable that we shall do this if we try to continue the military rôle which we have set ourselves. In my opinion, this is an argument against continuing that military rôle. Nevertheless, under the present Government and previous Governments we have committed ourselves time and again to the purchase of aircraft which have not existed—to the purchase of brilliant military ideas and wonderful specifications on which hundreds of millions of £s have been expended in an attempt to obtain a superior weapon.
    The reason why America is seeking to sell these aircraft at the moment is that they know quite clearly from their own experience and the experience of other countries that the research and development costs necessary to bring these aircraft into reality are so high that they must spread the costs by sales to other countries.
    I can give a simple hypothetical example. If the building of a single prototype of some military aircraft costs £80 million, which is not an unrealistic sum, since many have cost more than that, and the final version can be made at £1 million a time—which is a very low cost for a military aircraft—if 80 can be sold abroad at £2 million each, research and development costs are recouped. But no one can say, when setting out to produce this military aircraft, what those research and development costs will be.
    Those who believe in this policy and in the purchase of aircraft which are highly sophisticated and superior to anything that has ever flown before in the military field should also realise that it is inevitable that we are attempting something which can be done only by the expenditure of enormous sums of money. If there is any great wisdom in the old military adage that surprise is one's biggest asset, it is clear that a country would not sell its

    1151
    finest weapon if it could contain within it an element of surprise. We cannot do this, because we cannot afford it today. Even if we could get a fixed cost for this version of this plane, it will not be long before there is a new version which our military advisers will tell us we need, and the cost would increase enormously.
    In this age of bringing down the cost of producing the aircraft from our industry, specifications may well have to be altered so that we can buy something which we can afford. But once we are engaged upon the course which we are considering now, of buying American aircraft, we will be doing irreparable harm to our own aircraft industry if, by changing specifications to admit the purchase of American aircraft, we do not at the same time give British manufacturers an opportunity to build planes to that specification or to give us at least as reasonable a guess of what their cost would be as the Americans can give us.
    Nobody can say that an aircraft manufacturer can give anything better than a reasonable guess at the cost of producing something merely from looking at its specification, if it embodies something which he has never produced before. When the present Opposition were the Government they made a whole series of false starts in an attempt to provide the Royal Air Force with what they believed would be highly advanced and suitable planes—I evidenced this last week in the number of cancellations which I listed—but, having made all these false starts, they brought this country to the point where there was a clear, ruthless and concise logic in the programme for producing planes which they set the aircraft industry.
    I hand them this: there was a logic about it. The planes fitted into a pattern which made military sense, but the tragedy was that once one is committed to that, and if one holds to that commitment, one must be faced with costs of the order of those in the bill for the TSR2. It may have been possible to carry out that programme, but we should have done it at a cost which would have been ruinous to the country's economy.
    On the other hand, I am very unhappy about the fact that the programme of this Government commits us to buying
    1152
    American aircraft which must inevitably be less expensive because of the share out of research and development costs. Having shared out research and development costs, one has to give away the "know-how" which flows from overcoming the technical problems of building to such a high military specification. The value of this "know-how" to our civil aircraft industry is almost inestimable. If one concedes this, what then is the judgment which one should make of the proposition put to us tonight?
    If one believes, as I do not, that it is possible to fix a price for these planes, one would have to weigh this against the effect on our own industry. If, on the other hand, as I believe, it is impossible to fix prices for planes like this, the only sane course of action is to say that we will set standards for what we believe to be morally sound and humane social aims. We would meet this by taxation and by raising money, as a Government have the right to do, but we must then accept that we cannot go on in the way this country has been trying to do for so many years—raising the money for ruinous military commitments which are damaging to the future of our industry, to our country's social standards and our moral standing in the world.
    4.45 p.m.
    The Minister of Aviation (Mr. Frederick Motley): The Amendment seeks, by statutory means, to impose quite unrealistic limitations on the Government's powers to negotiate the contracts to be financed under the Bill. As the debate proceeded I found it difficult to accept what I knew to be the case—that both the hon. Member for Mid-Bedfordshire (Mr. Hastings) and the hon. Member for Tiverton (Mr. Maxwell-Hyslop) had, and possibly still have, responsible positions in the aircraft industry. On the other hand, it was refreshing that my hon. Friend the Member for Barrow-in-Furness (Mr. Booth), who has considerable firsthand experience himself, brought a much more sober touch of realism to our discussions.
    Clearly, no industry could have imposed upon it the kind of limitation which, in many speeches went much beyond the terms of the Amendment. The conditions under which the aircraft will be bought have to a large extent already

    1153
    been determined. They follow the same general lines of the arrangements negotiated by the Conservative Government for the naval Phantom, but they embody significant improvements. I must stress that the Bill is not only about the F111A: it also covers the arrangements for the Phantom, the first purchase of which was made by our predecessors, and the C130.
    Since the hon. Member for Tiverton has asked about the contractual arrangements, I will say that these aircraft are required under arrangements, or memoranda of understanding, entered into between the United States Government and Her Majesty's Government. They are Government-to-Government agreements. These arrangements define the price of aircraft, delivery, pattern and, broadly, the financial arrangements, including costs. The arrangements are supplemented by implementing sales orders, or letters of offer or acceptance, which set out the contractual terms in great detail.
    The important point is that the United States Government had already entered into a contract with their suppliers for the development and purchase of these aircraft, and for practical purposes we are buying ourselves into these existing contracts. This means to a large extent that the contractual terms are fixed and we have to accept them as settled by the United States Government. Of course, in return, we obtain the very substantial benefit of those terms. This is the position, in broad outline, followed by the previous Government.
    It is this fact which has fixed the present arrangements contained in all these agreements. Under the arrangements, the cost to the United Kingdom will be computed, at the time of delivery of the last of our aircraft, on the basis that the United Kingdom should pay a proportionate share of the costs incurred, except that, in the case of the Phantom and the C130, we will not contribute to research and development costs incurred before the arrangements were finalised in February, 1965, and, in the case of the F111, a ceiling price has been obtained for what is referred to as the basic aircraft.
    It may be convient if I go through the three parts of the Amendment. The first requires us to agree a fixed price for every element in the transaction. Such
    1154
    a fixed price contract across the whole field would not be negotiable, except perhaps, at a prohibitive price. Obviously, any contractor will quote a fixed price if that fixed price is high enough to cover every possible contingency. What we have done is to negotiate the most realistic basis for pricing our orders to ensure that we have an arrangement which obliges us to meet our fair share, but no more than our fair share, of the cost of the programme in which we shall be participating.
    In essence, the price which we have to pay for the C130 and for that part of the Phantom which is common to both British and U.S. programmes will be based on an average price for a long production run, of which our own orders form only a small part.
    For the basic F111, as has been explained many times in the House, we have a ceiling price. As regards the spares and other items to be purchased under the programme, we have a firm undertaking that we shall pay no more than the price which the United States forces themselves are being charged for the same article. This assurance goes very far to show that the suspicions voiced by some hon. Members on Second Reading and again today that the Americans might seek to recover unexpected extra costs by loading them on the price of spares, are completely groundless.
    Mr. R. Carr: The right hon. Gentleman again said that we have a ceiling price for the F111. His hon. Friend the Under-Secretary of State for Defence for the Royal Air Force stated categorically on Second Reading last week that we had not a ceiling price for the Royal Air Force version. He said that he hoped soon to negotiate a ceiling price. This is one of the points which bothers us. What is the good of having a ceiling price for an aircraft we are not going to have?
    Mr. Mulley: I was coming to that point. I made it clear that the ceiling price relates to the basic F111. That is rather more than 80 per cent. of the total cost. But since I could not deliver all my speech in one sentence, and since I should be accused of discourtesy if I tried to do so, I have not reached the other point. I have a note of the right hon. Gentleman's remarks.

    1155
    I should tell the Committee that my hon. Friend the Under-Secretary of State for Defence for the Royal Air Force is not able to be present today owing to a bereavement. His father died very suddenly. I think that the Committee understands that in those circumstances he is not able to be here, as he wished, to participate in and listen to the debate.
    A further point about the cost of spares was raised by the hon. Member for Mid-Bedfordshire when he asked what was meant by the initial lay-in of spares. This covers the first buy of spares to cover the initial period of the introduction of the aircraft, the purchase of a stock of spare engines and any ancillary ground handling, servicing and testing equipment which are required. He asked what proportion of the cost this would bear to the aircraft themselves. The cost of the initial lay-in of spares—I have not the exact figure—is about 20 per cent. of the all-up cost of the aircraft. Hon. Members apparently do not appreciate that we have gone to very great trouble to get assurances of price stability into the programme. Taking it as a whole, I think it can be said that the arrangements represent an advance on any previous arrangement embodied in orders for complex and costly aircraft.
    The second paragraph of the Amendment provides that we should be able to cancel if the aircraft failed to meet the specifications or were late. I am not at all sure that this is a very meaningful paragraph. Our arrangements with the Americans already provide that we may negotiate cancellation terms at any time. Cancellation is always possible at a price. If this paragraph means anything, it must mean that the Government are to be obliged to negotiate that we may cancel without penalty in the event of deviation from the specification or forecast delivery date.
    Apart from the fact that the contract provisions for some of these aircraft have already been negotiated, such a provision would be quite impracticable. It is possible to negotiate production contracts providing penalties in the event of late deliveries or failure to meet the specification, and under the price arrangements negotiated with the United States Government we shall obtain the benefit of the penalty conditions embodied, for
    1156
    example, in the Fill contract between the Department of Defense and its suppliers. But we could not get a blanket assurance such as the paragraph envisages. In a practical commercial world it is simply "not on".
    I must make it quite clear that I do not consider it in the least likely that we shall find ourselves in this position in relation to this programme, which we considered long and deeply before we committed ourselves and in which we have every confidence.
    Mr. R. T. Paget: In the American contract the price of spares includes a very high level of servicing. Are we to get the same level of servicing? Is it applicable over here? If not, how are the two prices separated?
    Mr. Mulley: The servicing arrangements have still to be finalised, but I will look into that point and write to my hon. and learned Friend about it.
    My hon. Friend the Member for Coventry, North (Mr. Edelman) raised technical questions about the performance of the aircraft. There has been much publicity about the drag. As my hon. Friend said, when the President of General Dynamics was here he was very frank with hon. Members and agreed that this was a considerable problem. I have great confidence that they will be able to reduce it, if not the whole of it, at any rate a very considerable part of it. But both my Department and the Royal Air Force keep in very close touch with their counterparts in the United States, and we are quite satisfied that even if the whole of the drag were not removed, nevertheless the plane would meet the operational requirements of the Royal Air Force, as my hon. and right hon. Friends have said many times. We are quite satisfied that at the end of the day the aircraft will meet the Royal Air Force's requirements. If it should happen that it does not, we are protected by the very stringent penalties and conditions which the United States have in the contract with all their suppliers in the event that the aircraft does not meet their national requirements. The Committee may be assured on that point.
    Mr. Edelman: Is it not a fact that in comparable cases of drag in previous aircraft it has taken approximately a year

    1157
    to overcome the problems, using all the resources which the company had? Has the F111A programme been substantially retarded by this problem of drag which has arisen? If so, to what extent?
    Mr. Mulley: We are not immediately concerned with the beginning of the deliveries of the F111 because they are to go to the United States Air Force, which is due to get aircraft at least a year before the delivery date to us. But I am informed that there is no delay in the expected delivery of the first aircraft to the United States Air Force.
    The third paragraph of the Amendment requires us to make
    "arrangements for meeting any unforeseen research and development expenditure".
    I must explain the present position in this matter. Our arrangements with the Americans require us to make no contribution to the past research and development costs of the C130 or the basic American Phantom. By far the greater part of our research and development liability for these two aircraft will derive from the cost of modifications to meet British requirements and, particularly, to incorporate British components. I am sure that the Committee approves of the fact that we have made the maximum arrangements to put as many British components in these two aircraft as possible. This has led to modifications in the design which, in turn, have led to some research and development expenditure. The hulk of this expenditure is the modification of the Phantom in order to take the Spey engine. I emphasise that we are concerned here only with the dollar side of the programme, and this is neither particularly large nor complex in relation to the programme we are considering.
    5.0 p.m.
    So much for the C130 and the Phantom. It is only in respect of the F111 that the United States Government are requiring us to meet a share of the research and development costs of the aircraft. There are two main considerations here. First, our total liability will be determined by the percentage of the total production of the aircraft which we acquire; at present rather less than 5 per cent. of the whole. Secondly, regarding the basic aircraft—and I remind the Committee that the term "basic aircraft" is expected to cover
    1158
    more than 80 per cent. of the total cost—even this share is covered by the ceiling price arrangements. We cannot pay more than the ceiling price for the aircraft, no matter how much research and development costs rise.
    Mr. W. Baxter: My right hon. Friend has spoken about ceiling prices and one thing and another, but will he express what this all means in simple terms? Are we paying £2½ million for each of these aircraft, and what other aircraft are we purchasing? What are we paying for each one? How much are we paying for spares and what else are we buying? How much is involved in the total bill, bearing in mind the amount of goods which we are supplying by way of the Spey engine and so on?
    Mr. Mulley: If my hon. Friend will read the Bill he will see that the purpose of this debate is to give authority for my right hon. Friends at the Treasury to borrow £430 million over a period of six years.
    Mr. Baxter: What is the total figure?
    Mr. Mulley: I have given the total figure.
    Mr. Baxter: Break it down for the Committee.
    Mr. Mulley: I cannot break down figures of this character in a Committee debate. If my hon. Friend will write to me I will let him have a complete breakdown of the figures which have been published. I cannot take up the time of the Committee giving the total of every item comprised in the overall sum. I apologise to my hon. Friend, but he made his speech, to which I am replying, and he did not stress these points in his observations. I understand his concern about the whole programme and the individual costs but, with respect, I cannot accept his view of the position.
    Mr. Baxter: Irrespective of whether or not my hon. Friend accepts my opinion, the taxpayers of this country have a right to know how this total sum will be spent. Will we pay £2½ million for each F111, what will we pay for the Phantom, how much money will be spent in this country—is it true that £400 million will be spent here—and what is the total amount of interest which will be paid on the American loan?
    Mr. Mulley: All those figures have been given in defence debates. The total in dollars over the 10-year period of this programme has been given by my right hon. Friend on many occasions. It is £660 million. The loan element is £430 million and, as I have said, we are still dealing with the percentage of the British element in a number of these aircraft. For the Phantom it is 45 per cent. For the other aircraft, because the numbers are smaller, it has not been practicable to have the same extent of British equipment, and I am sure that my hon. Friend appreciates that.
    The ceiling price of the basic aircraft—which, in short, is the part of the American aircraft which we need before we adapt it for British equipment and requirements—is £2·1 million, and it is estimated that, with the additional modifications for R.A.F. purposes, it will be £2·5 million.
    I wish to deal with the point made by the right hon. Member for Mitcham (Mr. R. Carr) about why we have not already got the ceiling price for the research and development concerned with our modifications. The short answer is that this takes time to negotiate because on a number of these things a whole list of technical questions was raised by us and we want to satisfy ourselves that what we are getting will meet the R.A.F.'s requirements, not only broadly but in total. As my hon. Friend the Under-Secretary of State said, we hope this summer to get a fixed price, the ceiling price, for the research and development element of the adaptation of the basic aircraft for our requirements.
    To sum up the position, all the proposed paragraphs of the Amendment seek to place quite unrealistic limitations on the negotiating power of the Government. When hon. Members, particularly those with knowledge of these matters, consider this, they will realise that it would be unrealistic to proceed on the lines which the right hon. Member for Mitcham and his hon. Friends are seeking to write into the Bill. The safeguards for this country envisaged in the Amendment have already been incorporated in our arrangements, so far as it is practicable and sensible to do so.
    On Second Reading the right hon. Member for Mitcham, on behalf of the Opposition, said that while the Opposition had reservations about some items in
    1160
    the programme, he would not advise his hon. Friends to oppose the Bill. I suggest that the Amendment is seeking to kill or block the Bill by other means and, while I accept that it was absolutely proper for these matters to be aired, if the Opposition pressed the Amendment they would be going back on the position which they took up on Second Reading. However, if the Amendment is pressed, I must advise my hon. Friends to reject it.
    Mr. Maxwell-Hyslop: Is the right hon. Gentleman aware that most of the things which he has said could not be done—by way of agreements covering spares, costs and so on—are done in a large number of civil contracts which are placed at about the same stage of gestation of an aircraft's life, and would he therefore say why this could not be done in this military project, instead of merely asserting that it could not be done?
    Mr. Mulley: I did not say that anything could not be done in relation to the spares. I said that the spares position was fully safeguarded, that we will be acquiring spares on the same terms and under the same arrangements as the United States Government and United States Air Force, who are the persons in contract with the suppliers. This is a quite proper arrangement and the kind of arrangement which I think the hon. Gentleman has in mind.
    Mr. Maxwell-Hyslop: But is not the right hon. Gentleman aware that they can load on to their spares prices to the American Government—and, therefore, to us—unexpected development costs which go on to their overheads and then on to their spares prices?
    Mr. Mulley: I accept that there are all maner of hypothetical considerations, but I assure the hon. Gentleman that there are many people, including Mr. McNamara, in the Department of Defence who know as much, if not rather more, about the commercial and technical side of negotiating aircraft contracts than the hon. Gentleman. I am certain that they have taken care of these points.
    Mr. John Hall: We find ourselves debating Amendments to a Treasury Bill which is really a piece of machinery designed to make it possible for the Government to enter into certain loan arrangements to purchase American

    1161
    aircraft. We debated that at considerable length on Second Reading. Today, hon. Members on both sides of the Committee have questioned the wisdom of the policy which has led to the necessity for the Bill and grave anxiety has been expressed about the possible effect on the future of the British aircraft industry of what sometimes regarded or described as the open-ended nature of this commitment.
    Many of the hon. Members who have taken part have great knowledge of these matters and this has, therefore, been a somewhat technical debate. I confess that I have found difficulty in understanding much of what has been said. Hon. Members speaking with great technical knowledge and understanding of the problems have put a number of questions to the Minister and he has by no means answered them. Since I have been on this side of the House of Commons I have listened to a number of unsatisfactory replies from the Government. But if there were a league table for unsatisfactory replies, I assure the Minister of Aviation that he would be very near the top of the list.
    I do not think that the right hon. Gentleman has put at rest the anxieties which have been expressed. I could understand that if I were speaking only for hon. and right hon. Members on this side of the Committee, but without exception every hon. Member who spoke on Second Reading and in the debate this afternoon has shown hostility to the policy behind the Bill—I do not say to the Bill itself, which is a technical Measure, but to the policy behind it. There has not been a single friend of the Government's policy from the right hon. Gentleman's side or from ours. I cannot believe that everyone is out of step except "our Fred". There must be some substance in the anxieties expressed on both sides.
    The Minister has not dealt with the questions which have been asked. He has criticised the Amendments put forward by my right hon. Friend the Member for Mitcham (Mr. R. Carr) as in a sense unrealistic. He has suggested that no contract could be entered into which took account of the various provisions laid down in the Amendment proposed to line 22. That is not strictly accurate because many contracts can take account
    1162
    of the conditions there laid down. There is no reason why if a contract was entered into freely between this Government and American suppliers an arrangement could not be made to take these matters into account. We have accepted a contract which is already in existence between the American Government and the manufacturers of aircraft and have come into that.
    We have accepted all the provisions and conditions of those contracts without regard to our own requirements and needs. The Minister said, when referring to
    (c) arrangements for meeting any unforeseen research and development expenditure,
    that those arrangements were in the arrangements the Government had made, but what are the arrangements the Government have made? The right hon. Gentleman has made a number of vague statements that these things have been taken care of, but he has not said what the arrangements are.
    Mr. Mulley: It is unfortunate that one has to say these things so often. There is no R & D as regards the Phantom and the C130s. As regards the F111, in the agreement between ourselves and the Americans we have a ceiling price which prevents unforeseen and sharp development charges there. The only research and development not settled in this way are on the dollar element of adaptations to fit British equipment. Surely no one wants to say that we should not try to do this. As the Parliamentary Secretary said at the end of Second Reading debate, we are hoping to get a fixed price or ceiling by the end of the summer. That is the position on unforeseen R & D.
    Mr. Maxwell-Hyslop: Will my right hon. Friend the Member for Wycombe (Mr. John Hall) agree that we do not mind the Minister giving information so long as he gives the same answers to the same questions?
    Mr. Hall: That is right. In this case it is unlike the student who called on a professor of economics and said, "My goodness, these are the same questions you asked three years ago", and the professor answered, "Oh yes, but the answers are quite different". The Minister said that on cancellations we have the. Same

    1163
    rights, if that is the correct word, as apply to manufacturers and the United States Government. If there is a desire to cancel an aircraft there are certain provisions, if I understood the Minister rightly, by which we can get out of some part of this contract, but it is on the same basis as that which exists between manufacturers and the Defence Department in Washington. Did I understand him correctly?
    5.15 p.m.
    Mr. Mulley: We have the same protection on shortcomings of performance as has the United States Government, yes.
    Mr. Hall: It means that we can cancel an aircraft if we find it does not come up to the stated performance? Is that correct?
    Mr. Mulley: I hoped that I had covered the point. We have the same contractual arrangements as the United States Government. If the date and specifications are not met the manufacturers have very severe penalties. I am sure that the President of General Dynamics dealt with this.
    Mr. Hall: I did not have the advantage of hearing him on that occasion. I cannot say the extent of these penalties and whether they would cover our liabilities in this matter. When we take account of the conditions which apply to ourselves and the manufacturers, when we consider the effect on development costs—part of which it is agreed we may have to pay on the F111, and we do not know what will be our future requirements for the F111A—we see that in this Bill we have an open-ended commitment. We may well find that we are not providing sufficient money for the future commitments for this aircraft and for spares and maintenance.
    We have not heard anything satisfactory about arrangements for servicing these aircraft. The Minister might have told us about that. What we are doing by the policy which is allowed by the Bill is so to commit ourselves to the American aircraft industry that there will no retreat. Whether we want or not, we shall be forced to go on and vote more money in support of this policy.
    Mr. W. Baxter: Does not the hon. Gentleman agree that the Conservative
    1164
    Government committed us to the purchase of the Phantoms?
    Mr. Rankin: And the C130.
    Mr. Baxter: Yes, the cost of 50 of the F111s at £2½ million each comes to £125 million and the sum we are actually discussing is £160 million plus 40 per cent. of the equipment provided by this country, bringing the total bill to almost £1,000 million. What did the Conservative Government do about that? It is not right for the pot to call the kettle black.
    Mr. Hall: That intervention is very interesting. The policy of the previous Government in making some purchases from the American aircraft industry did not lead to the large-scale cancellation of British aircraft which has practically paralysed the British aircraft industry, but, if that policy was wrong, the then Opposition failed in their duty not to impress this on the House. I am not saying whether a mistake was made or not, but, if a mistake was made, there is all the more reason why we should not repeat it in a far worse form today.
    I accept that the hon. Member for West Stirlingshire (Mr. W. Baxter) believes that a mistake was made and I expect his support if we take this Amendment to a Division. If he believes that it is entirely wrong that the American aircraft industry should have a stranglehold on our aviation industry and that the policy enshrined in this Bill is likely to be detrimental to the interests of this country, I hope that he will have the courage of his convictions and follow-them into the Division Lobby. I am confidently looking for his support and the support of those who have spoken in this debate.
    A great deal has been said in this debate, mostly of a technical nature. I do not propose to detain the Committee longer on that. We have heard from both sides of the Committee what I consider very serious and almost damning indictments of the policy behind the Bill. I am not condemning the Bill, but the policy behind it. We have not had at any time satisfactory answers to the questions which have been raised. The Bill has had no support from either side of the Committee. Not one Member has had one good word to say for it.

    1165
    An occasional Member has had a side swipe at the Opposition benches merely to keep himself not too far out of line with his own Front Bench. On policy, the Bill has been universally condemned.
    No one can argue that the Amendments have been replied to. No one can say that the answers we asked for have been given. No one can say that the anxieties which have been expressed about the future of the aviation industry, and indeed of the Air Force, have been in any way allayed. For these reasons, I would advise my right hon. and hon. Friends to divide on these issues.
    Mr. Dalyell: In my view, so far this has been a very unsatisfactory afternoon's work. The fault is not the Minister's. It is the fault of the system under which we work. I should have liked to have heard some of the answers to the questions which have been posed by the hon. Members for Mid-Bedfordshire (Mr. Hastings) and Tiverton (Mr. Maxwell-Hyslop) in relation to renegotiations and to what they had to say about the possibility of defective performance, and subsequent contract agreement. However, I am not at all clear that in the present circumstances it is reasonable to ask a Minister to reply to such detailed questions.
    If ever there was an argument for the kind of specialist committee that the Parliamentary and Scientific Committee is urging on the Prime Minister, this is it. I should have liked to have seen the Minister and his officials and some distinguished outside experts having to answer the legitimate questions of the hon. Members for Mid-Bedfordshire and Tiverton. I would have liked hon. Members to be in the position of purposeful members of the United States Armed Services Committee.
    I think that we all deplore the reasons which have led to the absence of my hon. Friend the Member for Leeds, South (Mr. Merlyn Rees). I wish to put two specific questions to the Minister. First, he will know that my hon. Friend the Member for Leeds, South sent a very long letter to me in answer to the speech I made on 11th May. In the course of the letter there is this passage:
    "The possible escalation of research and development costs, if it were to occur, would be covered by the ceiling price arrangement referred to above."
    1166
    Briefly, what the letter says is this:
    "For the F111A, as the Under-Secretary said in his speech, we have negotiated a ceiling price for the basic aircraft and hope shortly to negotiate a ceiling price for the modifications needed to bring the aircraft to the R.A.F. configuration. These ceiling prices will ensure us against price escalation in every respect except increases in basic wage rates and material costs. The Under-Secretary would not agree that this is something of an open-ended contract. On the contrary, as he said, we have more confidence that prices will not escalate in this case than we have had with any other advanced military aircraft that we have ever ordered in the past."
    I should like to ask the Minister what evidence there is for this attitude of mind. Or is it perhaps that I misheard what he said about the escalation of research and development costs, because I understood from something he said towards the end of his speech that this was, in fact, not covered by a ceiling.
    My second point is again a very specific one and concerns something my hon. Friend said last week on the subject of cancellation:
    "Cancellation is, therefore, only the remotest possibility but certainly by the time we start disbursing significant sums on the aircraft any prospect of a general cancellation will be negligible. But we considered it proper to include in our arrangement with the Americans provision for a proper joint review of the British Government's position even in this remote possibility."—[OFFICIAL REPORT, 11th May, 1966; Vol. 728, c. 539–40.]
    I wonder whether, this afternoon, the Minister would care to say a little more about the terms of the joint review, even if it is a remote possibility. The possibility may not be quite as remote as some of us may think in 1966.
    Mr. Cranley Onslow: As the hon. Member for West Lothian (Mr. Dalyell) has mentioned the question of specialist committees, I wish to support his plea. This debate has been carried on with the knowledge that there is other business to which the Committee wishes to proceed. It is unfortunate that this should have been so, because I think that the Treasury Bench must have misjudged the interest that Members have in this subject and the extent to which they want to probe the effects of the Government's policy, even though we are stuck with it.
    It is true that the answers given by the Minister are unsatisfactory. Whether this is because he has had inadequate time to

    1167
    research, whether it is because he himself does not know them, whatever the reason may be, the end result is that we have had unsatisfactory answers. We have been left in an unsatisfactory position. This is very unfortunate, because in relation to these contracts and the money which is to be spent under them this is probably the last real opportunity any one of us will have to conduct a searching inquiry into where the money is going—the £430 million to which we are now saying goodbye.
    The case for the institution of a system whereby we can criticise the actions of the Minister is made stronger every time we debate matters concerning aviation. It is no good the Minister standing at the Dispatch Box looking like a sad spaniel and telling us that a lot of work has been done but that Members do not appreciate it. We should be told about it when the work is being done. We should be told what is being done. We should not have to ferret around for a brief opportunity to ask the Minister questions and receive half answers. How can the Minister expect to be appreciated? Even if he had the opportunity to deploy all his talents, we might be reluctant to appreciate him to the full, but he does not give us a chance. It is a fundamentally unsatisfactory state of affairs that any searching questions about these aircraft cannot effectively be asked here by Members of Parliament and answered by the Minister of Aviation but can, if we can find a friendly Congressman in the United States, be asked in Washington and be answered.
    Mr. Rankin: I want to follow up the point made by my hon. Friend the Member for West Lothian (Mr. Dalyell). I do so because, although there is no sign at the moment of their materialisation, we accept the idea of a specialist committee or specialist committees which could be brought more into the confidence of Ministers than is possible at times in Committee of the whole House.
    The Chairman: Order. We really ought not on this Amendment to deal with the question of having specialist committees.
    Mr. Rankin: I am simply referring to the question in passing. I am referring to it because at the moment an immense sum of money is at stake. We have been debating this issue for a long while. The hon. Member for Woking (Mr. Onslow) said that £430 million was going away. That is totally wrong. It is not going away. We have not got it to lose. We have not got a penny. As far as I understand it, the £430 million is in the possession of America at the moment and she is going to make us a loan of that money with which to buy her aircraft. We have not got any money to lose. We are going, by and by, to lose it in bits and pieces. The total is not just £430 million, but £660 million.
    That is a very important matter, and I am merely pursuing the point which my hon. Friend the Member for West Lothian raised. If we cannot be taken fully into the confidence of Ministers on the disposal of these huge sums, for whatever purposes, at least it might be done under other auspices and, while the specialist committee is, in my view, far ahead at present—
    The Chairman: Order. I remind the hon. Gentleman again that we cannot debate the need for specialist committees on this Amendment.
    Mr. Rankin: I conclude in this way, then, Sir Eric. There is at present in existence a group, of which I am chairman, the Aviation Group, which might be a little better informed about what is going on in the Ministry than this Committee can be at present.
    Question put, That those words be there inserted:—
    The Committee divided: Ayes 141, Noes 254.

    Division No. 12.]

    AYES

    [5.31 p.m.

    Astor, John

    Biffen, John

    Brewis, John

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

    Biggs-Davison, John

    Brinton, Sir Tatton

    Baker, W. H. K.

    Birch, Rt. Hn. Nigel

    Brown, Sir Edward (Bath)

    Balniel, Lord

    Blaker, Peter

    Buchanan-Smith, Alick (Angus, N&M)

    Batsford, Brian

    Body, Richard

    Carlisle, Mark

    Bennett, Sir Frederick (Torquay)

    Bossom, Sir Clive

    Carr, Rt. Hn. Robert

    Bennett, Dr. Reginald (Gos. & Fhm)

    Boyd-Carpenter, Rt. Hn. John

    Channon, H. P. G.

    Bessell, Peter

    Braine, Bernard

    Clegg, Walter

    Cooke, Robert

    Hordern, Peter

    Peel, John

    Costain, A. P.

    Hornby, Richard

    Peyton, John

    Crosthwaite-Eyre, Sir Oliver

    Howell, David (Guildford)

    Pike, Miss Mervyn

    Crouch, David

    Jenkin, Patrick (Woodford)

    Pink, R. Bonner

    Cunningham, Sir Knox

    Jennings, J. C. (Burton)

    Pounder, Rafton

    Dalkeith, Earl of

    Johnston, Russell (Inverness)

    Powell, Rt. Hn. J. Enoch

    Dance, James

    Jopling, Michael

    Ramsden, Rt. Hn. James

    Davidson, James (Aberdeenshire, W.)

    Joseph, Rt. Hn. Sir Keith

    Renton, Rt. Hn. Sir David

    Dean, Paul (Somerset, N.)

    King, Evelyn (Dorset, S.)

    Ridley, Hn. Nicholas

    Digby, Simon Wingfield

    Kirk, Peter

    Rodgers, Sir John (Sevenoaks)

    Dodds-Parker, Douglas

    Kitson, Timothy

    Russell, Sir Ronald

    Eden, Sir John

    Knight, Mrs. Jill

    St. John-Stevas, Norman

    Elliot, Capt. Walter (Carshalton)

    Lancaster, Col. C. G.

    Scott, Nicholas

    Errington, Sir Eric

    Langford-Holt, Sir John

    Sharples, Richard

    Eyre, Reginald

    Legge-Bourke, Sir Harry

    Sinclair, Sir George

    Fisher, Nigel

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

    Smith, John

    Fletcher-Cooke, Charles

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Steel, David (Roxburgh)

    Forrest, George

    Loveys, W. H.

    Summers, Sir Spencer

    Fortescue, Tim

    Lubbock, Eric

    Tapsell, Peter

    Foster, Sir John

    Mackenzie, Alasdair (Ross & Crom'ty)

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

    Gilmour, Sir John (Fife, E.)

    Maginnis, John E.

    Taylor, Frank (Moss Side)

    Glover, Sir Douglas

    Marten, Neil

    Temple, John M.

    Goodhart, Philip

    Mathew, Robert

    Thatcher, Mrs. Margaret

    Goodhew, Victor

    Maude, Angus

    Turton, Rt. Hn. R. H.

    Gower, Raymond

    Mawby, Ray

    Vaughan-Morgan, Rt. Hn. Sir John

    Grant, Anthony

    Maxwell-Hyslop, R. J.

    Vickers, Dame Joan

    Griffiths, Eldon (Bury St. Edmunds)

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

    Walters, Denis

    Grimond, Rt. Hn. J.

    Mills, Peter (Torrington)

    Ward, Dame Irene

    Gurden, Harold

    Miscampbell, Norman

    Weatherill, Bernard

    Hall, John (Wycombe)

    Mitchell, David (Basingstoke)

    Webster, David

    Hall-Davis, A. G. F.

    Monro, Hector

    Wells, John (Maidstone)

    Hamilton, Michael (Salisbury)

    More, Jasper

    Whitelaw, William

    Harrison, Col. Sir Harwood (Eye)

    Morrison, Charles (Devizes)

    Wilson, Geoffrey (Truro)

    Harvey, Sir Arthur Vere

    Mott-Radclyffe, Sir Charles

    Winstanley, Dr. M. P.

    Hastings, Stephen

    Munro-Lucas-Tooth, Sir Hugh

    Wolrige-Gordon, Patrick

    Heald, Rt. Hon. Sir Lionel

    Noble, Rt. Hn. Michael

    Wood, Rt. Hn. Richard

    Heath, Rt. Hn. Edward

    Nott, John

    Younger, Hn. George

    Higgins, Terence L.

    Orr-Ewing, Sir Ian

    Hirst, Geoffrey

    Page, Graham (Crosby)

    TELLERS FOR THE AYES:

    Holland, Philip

    Pardoe, J.

    Mr. Pym and Mr. R. W. Elliott.

    NOES

    Abse, Leo

    Coleman, Donald

    Fraser, Rt. Hn. Tom (Hamilton)

    Allaun, Frank (Salford, E.)

    Concannon, J. D.

    Freeson, Reginald

    Alldritt, Walter

    Craddock, George (Bradford, S.)

    Galpern, Sir Myer

    Allen, Scholefield

    Crawshaw, Richard

    Gardner, A. J.

    Anderson, Donald

    Cullen, Mrs. Alice

    Garrett, W. E.

    Archer, Peter

    Dalyell, Tam

    Garrow, Alex

    Armstrong, Ernest

    Davidson, Arthur (Accrington)

    Ginsburg, David

    Ashley, Jack

    Davies, Dr. Ernest (Stretford)

    Gordon Walker, Rt. Hn. P. C.

    Atkins, Ronald (Preston, N.)

    Davies, Harold (Leek)

    Gourlay, Harry

    Atkinson, Norman (Tottenham)

    Davies, Ifor (Gower)

    Gray, Dr. Hugh

    Bagier, Gordon A. T.

    Davies, Robert (Cambridge)

    Greenwood, Rt. Hn. Anthony

    Barnes, Michael

    Dempsey, James

    Grey, Charles

    Barnett, Joel

    Dewar, Donald

    Griffiths, David (Rother Valley)

    Bence, Cyril

    Diamond, Rt. Hn. John

    Griffiths, Rt. Hn. James (Lianelly)

    Bennett, James (G'gow, Bridgeton)

    Dickens, James

    Griffiths, Will (Exchange)

    Bidwell, Sydney

    Dobson, Ray

    Hale, Leslie (Oldham, W.)

    Binns, John

    Doig, Peter

    Hamilton, James (Bothwell)

    Bishop, E. S.

    Dunnett, Jack

    Hamilton, William (Fife, W.)

    Blackburn, F.

    Dunwoody, Mrs. Gwyneth (Exeter)

    Hamling, William

    Blenkinsop, Arthur

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

    Hannan, William

    Boardman, H.

    Eadle, Alex

    Harper, Joseph

    Booth, Albert

    Edelman, Maurice

    Harrison, Walter (Wakefield)

    Boston, Terence

    Edwards, Rt. Hn. Ness (Caerphilly)

    Haseldine, Norman

    Bowden, Rt. Hn. Herbert

    Edwards, Robert (Bilston)

    Hattersley, Roy

    Braddock, Mrs. E. M.

    Edwards, William (Merioneth)

    Hazell, Bert

    Bray, Dr. Jeremy

    Ellis, John

    Heffer, Eric S.

    Brooks, Edwin

    Ennals, David

    Henig, Stanley

    Brown, Rt. Hn. George (Belper)

    Ensor, David

    Herbison, Rt. Hn. Margaret

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

    Evans, Albert (Islington, S. W.)

    Hobden, Dennis (Brighton, K'town)

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

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

    Hooley, Frank

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

    Faulds, Andrew

    Howarth, Robert (Bolton, E.)

    Buchan, Norman

    Fernyhough, E.

    Howie, W.

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

    Fitch, Alan (Wigan)

    Hoy, James

    Butler, Herbert (Hackney, C.)

    Fitt, Gerald (Belfast, W.)

    Hughes, Hector (Aberdeen, N.)

    Butler, Mrs. Joyce (Wood Green)

    Fletcher, Raymond (Ilkeston)

    Hughes, Roy (Newport)

    Cant, R. B.

    Fletcher, Ted (Darlington)

    Hunter, Adam

    Carmichael, Neil

    Foot, Michael (Ebbw Vale)

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

    Carter-Jones, Lewis

    Ford, Ben

    Jackson, Peter M. (High Peak)

    Castle, Rt. Hn. Barbara

    Forrester, John

    Jenkins, Hugh (Putney)

    Chapman, Donald

    Fowler, Gerry

    Jenkins, Rt. Hn. Roy (Stechford)

    Coe, Denis

    Fraser, John (Norwood)

    Johnson, Carol (Lewisham, S.)

    1170

    1171

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

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

    Rowland, Christopher (Meriden)

    Jones, Dan (Burnley)

    Molloy, William

    Rowlands, E. (Cardiff, N.)

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

    Moonman, Eric

    Ryan, John

    Jones, J. Idwal (Wrexham)

    Morgan, Elystan (Cardinganshire)

    Shaw, Arnold (Ilford, S.)

    Judd, Frank

    Morris, Charles R. (Openshaw)

    Sheldon, Robert

    Kelley, Richard

    Moyle, Roland

    Shinwell, Rt. Hn. E.

    Kenyon, Clifford

    Mulley, Rt. Hn. Frederick

    Shore, Peter (Stepney)

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

    Murray, Albert

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

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

    Neal, Harold

    Silkin, John (Deptford)

    Kerr, Russell (Feltham)…

    Noel-Baker, Francis (Swindon)

    Silverman, Julius (Aston)

    Lawson, George

    Norwood, Christopher

    Slater, Joseph

    Leadbitter, Ted

    Oakes, Gordon

    Small, William

    Ledger, Ron

    Ogden, Eric

    Snow, Julian

    Lee, Rt. Hn. Frederick (Newton)

    O'Malley, Brian

    Spriggs, Leslie

    Lee, John (Reading)

    Oram, Albert E.

    Steele, Thomas (Dunbartonshire, W.)

    Lestor, Miss Joan

    Orbach, Maurice

    Stewart, Rt. Hn. Michael

    Lever, L. M. (Ardwick)

    Orme, Stanley

    Stonehouse, John

    Lewis, Arthur (W. Ham, N.)

    Oswald, Thomas

    Swain, Thomas

    Lewis, Ron (Carlisle)

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

    Symonds, J. B.

    Lomas, Kenneth

    Owen, Will (Morpeth)

    Tinn, James

    Loughlin, Charles

    Page, Derek (King's Lynn)

    Tomney, Frank

    Lyon, Alexander W. (York)

    Paget, R. T.

    Urwin, T. W.

    Lyons, Edward (Bradford, E.)

    Palmer, Arthur

    Varley, Eric G.

    Mabon, Dr. J. Dickson

    Pannell, Rt. Hn. Charles

    Wainwright, Edwin (Dearne Valley)

    McCann, John

    Park, Trevor

    Walker, Harold (Doncaster)

    MacDermot, Niall

    Pavitt, Laurence

    Wallace, George

    Macdonald, A. H.

    Pearson, Arthur (Pontypridd)

    Watkins, David (Consett)

    McGuire, Michael

    Peart, Rt. Hn. Fred

    Wellbeloved, James

    McKay, Mrs. Margaret

    Perry, Ernest G. (Battersea, S.)

    Whitaker, Ben

    Mackenzie, Gregor (Rutherglen)

    Perry, George H. (Nottingham, S.)

    White, Mrs. Eirene

    Mackintosh, John P.

    Price, Christopher (Perry Barr)

    Williams, Alan (Swansea, W.)

    Maclennan, Robert

    Price, J. T. (Westhoughton)

    Williams, Alan Lee (Hornchurch)

    McMillan, Tom (Glasgow. C.)

    Price, William (Rugby)

    Williams, Clifford (Abertillery)

    McNamara, J. Kevin

    Probert, Arthur

    Williams, Mrs. Shirley (Hitchin)

    MacPherson, Malcolm

    Rankin, John

    Willis, George (Edinburgh, E.)

    Mahon, Peter (Preston, S.)

    Rhodes, Geoffrey

    Wilson, William (Coventry, S.)

    Mahon, Simon (Bootle)

    Richard, Ivor

    Winnick, David

    Mallalieu, E. L. (Brigg)

    Roberts, Albert (Normanton)

    Winterbottom, R. E.

    Manuel, Archie

    Roberts, Gwilym (Bedfordshire, S.)

    Woodburn, Rt. Hn. A.

    Marquand, David

    Robertson, John (Paisley)

    Woof, Robert

    Marsh, Rt. Hn. Richard

    Robinson, W. D. J. (Wath'stow, E.)

    Yates, Victor

    Mayhew, Christopher

    Rodgers, William (Stockton)

    Mellish, Robert

    Rogers, George

    TELLERS FOR THE NOES:

    Millan, Bruce

    Rose, Paul

    Mr. Whitlock and Mr. McBride.

    Miller, Dr. M. S.

    Ross, Rt. Hn. William

    Mr. Emrys Hughes: I beg to move, in page 1, line 16, to leave out "four" and to insert "one".
    This is an entirely different kind of Amendment from the one we have just discussed. It is fundamental. Those supporting me are not in favour of spending this very large sum of money on military aircraft to be purchased from the United States. Since there are some new hon. Members present, it might be as well to consider the background of the controversy.
    Quite rightly, the Government cancelled the TSR2 project. We entirely supported them in doing so, agreeing that the astronomical cost made it imperative for the Government to reduce this kind of expenditure. The Opposition say that the Government acted wrongly in that they should have continued with the TSR2 and are therefore not justified in ordering military aircraft from America. We, however, take the view that, having cancelled the TSR2, the Government should have carried the matter to the
    1172
    logical conclusion and not bought any military aircraft at all from abroad. This is the vital difference between the Opposition's approach and that which I and some of my hon. Friends take.
    If the Government intend to spend £430 million, the Committee is entitled to know exactly what it is for. It is an enormous sum and we are entitled to have it broken down so that we may have an idea of the different kinds of aircraft involved and how much is needed for equipment and spares. I hope that the Government will give us a detailed "shopping list".
    We are entitled to ask what these military aircraft are for. What rôle are they to play in the years over which the money is to be spent? What use is a bomber to this country to solve any particular political or international problem at the present time? The F111A is not a conventional bomber. It will carry nuclear weapons—meaning atomic and hydrogen bombs. Some of us think this wrong from many points of view. Hence our opposition to the project.

    1173
    5.45 p.m
    This is not just a matter for technicians and chartered accountants. We are entitled to know how this bombing force will operate but we have yet had no intelligible answer from the Government. Is it to operate in Europe? Are we to use nuclear weapons in Europe? I do not see how the use of a nuclear weapon in Europe will solve any international problems.
    This question was posed four years ago by Lord Montgomery in another place, when he said that it was impossible to solve the problem of Berlin by dropping an atom bomb on the city. Nuclear bombs will not solve the problems of Berlin or Germany. We are, therefore, entitled to an idea of what this bombing force will do and how it is to operate. If it is not to do anything, and if it will not operate, we are not justified in calling upon the people to spend such a large sum at the present time on such a force.
    At this early stage, the Government's priorities have gone haywire. In the middle of a financial crisis, in which we are told that the £ is in danger and that we must economise and tighten our belts, one of the first Measures of the new Session is a Bill to provide £430 million for the purchase of military aircraft and equipment in America.
    Many people would prefer to see that money spent on education, on advance factories, on the modernisation of industry and on hospitals. To use the money for military aircraft means that it will be a burden on the economy and all these desirable things will suffer. In my constituency, we do not know what good we will get from a bombing force bought with this money. This is still an important current controversy. In The Times today, for example, there is a report of a speech by a very well-known admiral.
    The argument is based on the assumption that we are going to have some kind of east of Suez strategy. If these aircraft are to be used east of Suez, we are entitled to know something of the circumstances under which they will operate. In The Times today Sir Peter Gretton, a vice-admiral, formerly Fifth Sea Lord, criticises the proposal to operate the F111A aircraft from bases in the Indian Ocean. Sir Peter said in an article in the Royal United Services
    1174
    Institution Journal, quoted in The Times, that deployment of the F111A is based on wishful thinking rather than practical possibilities. The Times says:
    "After studying the Admiralty charts for the area the Admiral concludes that an airstrip at Aldabra would be astronomically expensive and of great inconvenience …"
    If the implication of that is that these aircraft are going to be astronomically expensive then this is a repetition of the procedure which took place when the Conservatives were in power. I do not know where my hon. Friend the Paymaster-General is this afternoon, but I remember the speeches that he used to make criticising the then Government about the waste of money upon aircraft, Blue Streak, Skybolt and the whole list of projects that turned out to be useless for the safety of the nation. One of the last actions of the Labour Party before the Conservative Government fell was to move a Motion of censure upon the Government. We said that they had wasted £20,000 million during their term of office. We have only been in office a few months, but £430 million is a very good instalment.
    We are afraid that we are going to see the escalation of costs, the continuation of the arms race and the inability of the Government to remain below the £2,000 million ceiling which they have set themselves. The bombing force cannot operate in Europe: if it ever did, it would be the end of this country. If any of these expensive aircraft ever go into operation there will be immediate retaliation. These are suicide aircraft and we are spending £2,500,000 per aircraft on a suicidal policy. That is one of the premises upon which I base my argument. I do not want the TSR2; I do not want the F111A. I do not want to see this country sink to borrowing money from the United States Government at 4¾ per cent. in order to buy something from the American armament firms which may turn out to be ineffective.
    I am fortified in my belief by the opinion of others who understand the strategic ideas behind these projects rather better than I do. I have been reading a book by the military correspondent of the Sunday Times, an eminent authority on military subjects. The Book is called "The Broken Wing". As I have read

    1175
    this my doubts have grown and grown and I cannot conceive that this sum of money can be justified by anyone who thinks out the implications involved. Mr. Divine said that the precise nature of a war in which a first strike of 15 aircraft—even aircraft as sophisticated as the F111—will significantly affect the issue is obscure. He does not know how these aircraft would be employed in any significant way in any future military operation.
    Referring to the previous expenditure of the Government, he deals with Blue Streak, which was one of the achievements of the hon. and gallant Gentleman's Government. Mr. Divine says about Blue Streak:
    "It would be unjust to say that with Blue Streak Britain was sold a pup. It might not be unjust to say that Britain bought a pup".
    Who sold us the pup? The very same people who are now selling us the F111A.
    These pups are very expensive if they are going to cost £3 million each. That is as much as it would cost to build a great big technical school, and we are to have 50 of these aircraft. We have heard the word "escalation" and we think that there is a prospect that this Government will do exactly the same thing as the previous Government unless they are strongly criticised in the House.
    Mr. Divine goes on to say:
    "The R.A.F.'s standing over what may approximately be called the decade of the F111 may be simply delimited. It is in process of abandoning finally all pretensions to the strategic nuclear rôle. It will provide—since even the Anglo-French Jaguar project will not come to fruition until the very end of it—a diminishing tactical capability resolving eventually into the potential of the truncated Phantom project and the 50 F111s."
    I do not think that it will be difficultt to translate this military jargon into comprehensive English. Mr. Divine comes to the conclusion that this is not a sound strategic enterprise and that this aircraft cannot take part in European operations. Nor can it take part in operations in Asia. It is difficult to understand how we can justify the size of the Royal Air Force including 88 air marshals, 157 air commodores, 500 group captains and a grand total of 131,300 officers and men. This is the big vested interest behind the idea that we can
    1176
    continue to use manned aircraft in the nuclear age.
    6.0 p.m.
    The position has been clearly expressed by Mr. McNamara. American strategists say that the missile age has come and that the days of the manned bomber are numbered. Mr. McNamara says that the weapons used in the next war will be inter-continental ballistic weapons carrying nuclear warheads.
    Mr. Rankin: On a point of order. May I call attention to the fact that, judging from the appearance of the Tory back benches, hon. Members opposite are no longer interested in military expenditure?
    The Deputy Chairman (Mr. Sydney Irving): That is not a point of order.
    Mr. Hughes: I am very much obliged to my hon. Friend for that helpful interruption.
    I was about to quote the argument of Mr. McNamara, who says that we have arrived in the missile age in which a large part of the money which we are spending on bombers is unnecessary. It is at this point of time that we propose to enter upon, as one hon. Member opposite has said, a decade of using these aircraft. Long before the decade is over and before they are paid for they will be obsolete. I object to paying interest to American armaments firms long after the life of usefulness of a product which they have supplied to us.
    Of course, we will have to pay the Americans. One great idea in helping to pay the Americans is that we shall make money out of armaments. Therefore, an arms salesman has been appointed who will compete with our friends the Americans in selling arms. This will inevitably increase the tension throughout the world. It will increase the arms race. We are committed to this in a very irresponsible way.
    Some interesting facts about the F111 have been given in the Daily Express. There have been news items and reports from the Congressional Record in America which throw doubt on whether this plane can fulfil the rôle expected of it. There have been three articles in the Daily Express which filled me with considerable alarm. The air reporter gave evidence which cannot be ignored, to the effect that there are doubts in America

    1177
    that the F111A will fulfil its requirements. He says that these planes, which are to be stationed east of Suez, can carry nuclear warheads as far as Canton, but not as far as Peking. This is an alarming prospect. We are thinking in terms of atomic war with China. Is that the purpose of the strategy in the Far East? Is that what these F111A aircraft are for? Are we contemplating a nuclear war with China? I do not believe that the people of this country want a nuclear war with China.
    When these prospects are held out to me, I wonder what is likely to happen in that part of the world during the next five of ten years. Therefore, the less we go in for this problematical east of Suez policy the better. If we proceed with it we cannot say that we are leading the world to a new civilisation. The possession of bombers and sophisticated aircraft does not mean that a nation accomplishes anything with them. Look at what is happening in Vietnam. The Americans have enormous numbers of aircraft in Vietnam. They can bomb and bomb and bomb, but they cannot solve the problem of Vietnam. I do not believe that we can contribute to the solution of any problem in the Far East by purchasing American aircraft, however powerful they may be.
    At the beginning of the life of a new Government, we are embarking on an armaments programme involving a large expenditure of money on aircraft—money which we cannot afford, money which is needed it home, money which is needed to improve our industry. This may be an historic debate. I remember the debates on Blue Streak when Ministers assured us that it was a splendid weapon, that it was the kind of weapon we needed and that it could fulfil its requirement. A few years afterwards a Front Bench spokesman of the Labour Party said that the Conservative Government had deluded the country. We tabled an Amendment to the effect that the Conservative Government had wasted £20,000 million.
    This may seem an insignificant debate, but it is an ominous debate. This policy continues tension throughout Europe and the world; it increases the arms race. If the Labour Government allow the arms race to go on, the same thing will happen to them as happened to the Government of 1951, when we started the great
    1178
    armaments programme. I was here when we started that programme. The hon. Member for Bosworth (Mr. Wyatt) then defended the policy of embarking on the rearmament programme.
    The Deputy Chairman: I hesitate to intervene, but the hon. Gentleman is getting wide of the Amendment. His argument seems to be directed not to reducing expenditure but to cutting it out altogether. Will he address himself a little more precisely to the Amendment?
    Mr. Hughes: I am pointing out that we made mistakes like this before and that we should not make them again. I thought that that was relevant to my argument. We have had before assurances similar to those which we have had recently. This is an illustration of the futility of armaments and rearming. I remember the hon. Member for Bosworth saying, "We must spend this money this year and then in three years we will sit down and talk with the Russians from a position of strength." What has happened is that the arms race has gone on all these years. It is continuing. I want the Labour Government to do something to stop it, but they are not doing that with this Bill.
    Mr. W. Baxter: I congratulate my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) on a very powerful, sensible and moving speech. I do not want to comment on his remarks, but I should like to direct attention to the fact that the Minister has still not answered the questions which I asked some time ago. There is another one which I should like to ask about the interest rate, which is laid down at 4¾ per cent. to be paid over roughly 10 years. I am told that the interest alone will amount to about £250 million, but I should like confirmation of this from the Minister, because it has a great bearing on the Committee's attitude to this project.
    Mr. Mulley: I will again try to give the information that my hon. Friends have asked for, although all this information has been given many times before. My hon. Friend the Member for West Stirlingshire (Mr. W. Baxter) asked me, and was indignant, because I did not again go over the interest rate. He clearly showed, in his more recent intervention, that he was well aware of the fact

    1179
    that the interest rate has been published many times, and is 4¾ per cent. As a matter of arithmetic, he will—although I do not hold it against him that he is no good at arithmetic, as I am no good at it myself—find that that could not possibly amount to £250 million on £430 million. I will give him the exact sum.
    Mr. W. Baxter: I want to know how much we have to pay.
    Mr. Mulley: I am just coming to this. To put forward the idea that one could possibly, over 10 years, pay £250 million on a loan of £430 million is wrong, because it is a matter of arithmetic that the actual sum over the 10-year period—although it is a matter more for the Treasury than for me—is £90 million in interest.
    I now turn to the point of how the £430 million is broken down as between the various aircraft. Just over half—about £230 million—will be borrowed on account of the Phantom aircraft; about £140 million for the F111A; and about £60 million for the C130. I hope this satisfies my hon. Friend as to the information he wants, but if at any time he cares to write to me or to my right hon. and hon. Friends in the Ministry of Defence we shall seek to give him the information, provided that there are no security restrictions on it.
    Throughout the debate—I do not criticise them unduly, but I did find it a little nauseating—hon. Members opposite have complained that they were never given any information, not even the numbers or price of the planes to be bought. Hon. Members opposite complain that it is unsatisfactory that I am not prepared here and now to have a public discussion about operational requirements of aircraft. When the time comes that we can have public discussions about all the intimate details of operational requirements and equipment that the Royal Air Force will use, then it may well be that we have the kind of situation for which my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) was pleading, when we would not need any aircraft at all.
    I do not think that my hon. Friend will hold it against me when I say that
    1180
    I have heard this theme from him before. There were one or two new variations today, but I have never heard him so eloquent in quoting admirals and military correspondents in his support. I have never heard him as enthusiastic about the Daily Express, but if, as I dare say, he is a regular reader of that newspaper, and has so far found only three articles to cause him concern and anxiety, then he probably reads the Daily Express less carefully than I do, because over the years more than three articles have caused me a great deal of concern and anxiety.
    I congratulate my hon. Friend on his increasing moderation with the years. When I entered the House, 16 years ago, I should not have thought that I should see him sponsoring an Amendment the effect of which is to recommend to the House of Commons that we spend £130 million on military aircraft. This, in fact, is the effect of my hon. Friend's proposals.
    Mr. Emrys Hughes: I am sorry to destroy my right hon. Friend's arguments, but it is civil aircraft—I am prepared to allow the money for civil aircraft.
    Mr. Mulley: I understand that my hon. Friend has an Amendment on the Notice Paper about civil aircraft instead of military, but I have to judge it as it stands and I do not even know whether he will move that Amendment.
    Mr. Hughes: It is not to be called.
    Mr. Mulley: If he is not going to move an Amendment to change "military" to "civil", if he is recommending, as presumably he does in moving his Amendment, that the Committee should accept it, the effect of his Amendment would he that he is publicly sponsoring the borrowing of £130 million for the purpose of buying military aircraft—
    Mr. Hughes: No.
    Mr. Mulley: —and I congratulate my hon. Friend on his improving moderation over the years. No doubt we shall get closer together as the years go by.
    In short, the effect of my hon. Friend's Amendment would be—and I am sure he would from a personal point of view think this was the better alternative—that either we buy fewer aircraft or we go through

    1181
    with the aircraft programme. The purpose of the Bill is to give authority for the money to be borrowed. It is not, as so many hon. Members in the course of the debate have rather implied, that we are voting or approving expenditure in the same way as when the House has before it the Defence Estimates. We are approving the principle of the programme in the fact that we are authorising the Treasury to borrow the money.
    6.15 p.m.
    If the sum to be borrowed were reduced, and we went ahead with the programme, it would mean we had to find immediately, much sooner than we intended, the £300 million that my hon. Friend would delete from the Bill. This would throw an additional burden on the balance of payments, at a time when we are all concerned about the future trend of the balance of payments, and no hon. Member in any part of the Committee would wish that.
    I hope that my hon. Friend, on reflection, will seek leave to withdraw his Amendment, particularly if, as I understand, he is not moving the subsequent one.
    Mr. Eric S. Heffer: I do not want to take up the time of the Committee, but there are one or two points I should like to make. My right hon. Friend the Minister said that he had heard this theme from my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) many times before and that on this occasion there was merely a slight variation, or a number of variations, to the theme. The fact that we have had this theme in the House before in no way diminishes the importance of the points made by my hon. Friend. Because there have been lone voices crying in the wilderness over the years, demanding cuts in military expenditure and expenditure on aircraft for military purposes, that does not mean that those voices have been wrong.
    I want to emphasise this point, because we have the first Government in history with a Minister of Disarmament, which shows that we as a Government are equally concerned with this question of cutting down military expenditure. I find it a little difficult to understand how we can have a Minister of Disarmament, concerned with getting an all-
    1182
    round cut in military expenditure throughout the world, while, at the same time, we are discussing borrowing such vast sums of money to buy military aircraft from the United States of America.
    Mr. John Hall: Perhaps I can explain this seeming contradiction by pointing out that this is the first Government to have a super arms salesman, too.
    Mr. Heffer: This makes the position even worse. It makes the contradiction almost impossible to understand. I am not defending the idea of a super arms salesman. It seems that we are getting ourselves tied up in knots on this question of military expenditure. We have a Defence Review, which rightly points out the necessity for keeping our arms expenditure to a reasonable level. At the same time, we have these contradictory situations.
    My hon. Friend the Member for West Stirlingshire (Mr. W. Baxter) has asked how much we would be paying out in interest over a period of 10 years. We shall be paying out to the Americans £90 million. In the sort of sums that we discuss in the House of Commons, that is not a great deal of money, but £90 million could practically solve our housing problems. We need housing, we need schools, we need roads. We need the £90 million here in this country and we do not need it on the type of military aircraft that we are to purchase from the United States of America.
    I am not a pacifist. I would not go the whole way with my hon. Friend the Member for South Ayrshire, who has, over the years, very honestly and courageously stood up in the House of Commons and fought against the whole principle of any arms for any reason at all. I am not a pacifist. I spent my war years in the Royal Air Force. I am not ashamed of that. I am rather proud of the small part which I played in that great struggle.
    I believe, therefore, that we have to defend our country. I believe it to be necessary to have armaments, but I do not consider it essential that we must spend these vast sums that we are spending on, in some cases, aircraft which have become obsolete even before we have purchased them. This, surely, is a ridiculous situation.

    1183
    I end on this note about the whole concept of east of Suez, for which we shall be requiring these aircraft. Surely, the time has come when we have to get rid of those bases east of Suez. We must have a new attitude to this question. We do not have to continue to argue that we have the need for a special presence, for Britain being the policeman of the world. Those days are past and gone. The quicker we recognise that, the better for this country and the quicker we shall be able to solve our balance of payments problem.
    With this plea, I add my voice to the great speech which has been made this afternoon by my hon. Friend the Member for South Ayrshire.
    Mr. Emrys Hughes: I should like to deal shortly with a technical point made by the Minister about the sum by which I have tried to reduce the amount to be voted. If I had not been able to put down these words, I would not have been able to move the Amendment. We have to keep these technical points in mind before we put our case. I consulted my hon. Friend the Member for Glasgow, Govan (Mr. Rankin), who, I believe, is chairman of the Labour Party group on aircraft, to ask him about this very large sum of money which was included as a lump sum, and my hon. Friend said, "You cannot oppose all of that because there are civil aircraft in it." I do not want to oppose civil aircraft. The Minister must recognise this compromise. It is quite true that he has heard the theme of my speech before, and it is quite true that he will hear it again.
    Amendment negatived.
    Mr. Emrys Hughes: I beg to move, in page 2, line 5, to leave out from "equipment" to the end of line 7.
    I can save the time of the Committee if I explain that what I want to know is whether the words after "equipment" mean that in this sum we are paying for any re-equipment for missiles for the Polaris base.
    Mr. Mulley: I am glad that my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) has explained the point of his probing Amendment. I was a little puzzled when I first saw it. The
    1184
    only reason why we have included development and training costs, and so on, is for articles associated with the aircraft programme. We did not want to have technical arguments about whether certain technical publications connected with the aircraft were or were not equipment. We therefore used this rather wider form of words.
    I give my hon. Friend the assurance that none of this loan is to be expended on money for the Polaris submarine base.
    Mr. Emrys Hughes: I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Question proposed, That the Clause stand part of the Bill.
    Mr. R. Carr: I would like to ask two questions. I am sure that the Committee will forgive me if, before putting them, I say, on behalf of all my hon. Friends on this side, how sorry we are to learn of the reason for the absence from our debate today of the Under-Secretary of State for Defence for the Royal Air Force. We did not know of this until the Minister mentioned it in reply to an Amendment.
    It would help us on this side if the Government could reply to two questions which arose on Second Reading last week. We are in a little state of confusion about the monetary side of the Bill. The Bill asks for borrowing powers to the total sum of £430 million. We know, however, from information given to the House—and it has been referred to again today—that the total dollar cost of the programme of purchases of American aeroplanes to which the Government are committed is £660 million, or £230 million more than the sum involved in the Bill.
    We are not clear how the £430 million is made up and why more of the £660 million is not included. We do not know whether it is because the remainder does not qualify under the United States Government's arrangements, or whether, for some reason, our Government would not wish to borrow more than £430 million. It would help us if we could have a reply about this.
    Secondly, we are still in a state of confusion about the point of criticism made by the Select Committee of Estimates, to

    1185
    which I referred on Second Reading. On that occasion, I quoted from paragraph 20 of the Select Committee's Report, which criticised the Government for having been slow in introducing the Bill and which reported to the House that the effect of this slowness was to place on our balance of payments a burden of £22 million worth of dollars which otherwise need not have been carried as a burden On our balance of payments had the Government moved with greater expedition.
    We thought that we understood the position last week, but the Government said that the Select Committee of Estimates was wrong in that criticism. But it is a rather complicated matter, and we are not sure whether we understand the position accurately. Here again, before allowing the Clause to stand part of the Bill, we would like elucidation on the point.
    6.30 p.m.
    The Chief Secretary to the Treasury (Mr. John Diamond): I am happy to reply to the very reasonable questions put to me by the right hon. Member for Mitcham (Mr. R. Carr).
    Dealing with his first question, as the figure of £660 million is clearly in everyone's mind, may I go back to the question to which the £660 million was the answer. because that in itself removes some of the assumptions which are perhaps misconceived.
    It was a Question put to my right hon. Friend the Secretary of State for Defence and answered in columns 396 and 397 of HANSARD on 4th March of this year. The Question asked was:
    "… what is the total estimated cost to this country, in dollars and sterling, respectively, of the F111A force, the Phantom force for the Royal Navy and the Royal Air Force and the Hercules force, over a ten-year period"—
    that is one condition to which I draw attention—
    "including initial purchase price, spares replacements"—
    which is another condition to which I draw attention—
    'the United Kingdom contribution to United States research and development costs, running costs, and all interest payable as a result of the credit terms arranged for payment."
    If I may give the figures in a way which will be easily digested by the
    1186
    Committee, talking about cost for the moment, the original cost was £450 million. That original cost covered original spares, but did not cover spares replacements. There is an odd £2 million on the spares replacements figure, but I should confuse the Committee if I brought that in. The spares replacements in round figures were £140 million, payable in cash. Interest payments payable in cash as the interest accrues are £90 million. So there is a total of £680 million.
    The £230 million about which the right hon. Gentleman asked me is simply those two—figuresreplacement spares, £140 million, and interest, £90 million, total £230 million—added on to the original cost of £450 million, bringing the full cost to £680 million. That is not the full cost over the 10 years, but the full cost.
    The right hon. Gentleman asks me to explain the borrowing in cash payments over 10 years. The position is as follows. There is the £430 million to be borrowed under the Bill, to which we must add a round £20 million—and the right hon. Gentleman has been good enough to accept the roundness—already paid under previous powers which I will deal with more explicitly. That makes a total of £450 million. There are the further payments that we have mentioned totalling altogether £680 million, of which £660 million is payable in the first 10 years and a further £20 million after the expiry of 10 years.
    I hope that I have satisfied the right hon. Gentleman on the arithmetic of the £660 million. The full answer is £680 million, including, naturally, a spot more interest in the period after the 10 years.
    The right hon. Gentleman went on to say that it is not like a Select Committee to misunderstand the circumstances, and he asked me to explain the apparent inconsistency between the Report of the Select Committee and what I said. First of all, as to the arithmetic again, the £22·5 million at that point of time was an estimate and is the round figure of £20 million which has been accepted for the purposes of clarity. That figure reflects payments which were in the course of being made during the last financial year in respect of contracts entered into,

    1187
    one of them entered into by the previous Administration.
    As the Select Committee rightly pointed out, that was at a time
    "when balance of payments difficulties are acute".
    They were acute during that period. But the whole of that £20 million has, in effect, been refunded, because, under its borowing powers, the Treasury borrowed that sum of money for that year which covered those payments. To be precise, it was a line of credit which was not to exceed 52 million dollars. The agreement was presented to Parliament in April of this year (Command 2982), and that was the machinery by which the payments made in that first year were recovered. So that there was no net cost to the balance of payments during that year.
    That is a matter which is of concern to the Treasury, just as much as it is to the Select Committee, and I am grateful to the right hon. and hon. Gentlemen opposite for raising it.
    To be set against that, there was the fact that some of this money was out of the Treasury for a period—some for a few months and some for a very short period—before the borrowing was made. If we had attempted to prevent a single penny going out in that way and had borrowed before a dollar was expended, we should have had to come to the House with legislation for an indefinite amount, because the present legislation gives borrowing powers to cover a purchase of planes which was an integral part of the Defence Review, and that was settled in February and presented to the House at the end of that month.
    We had to set the small cost of being out of one's money for a short time against having two Bills and occupying the time of the House in considering two Bills, and the unsatisfactory nature of presenting a Bill with an imprecise amount or the much more unsatisfactory nature of asking the House to give the Treasury permission, on a Bill for a small amount, to add an additional amount by an affirmative Order.
    We took the view that, on overall costs, we would be much better served by borrowing the sum under our normal
    1188
    borrowing powers and seeking power by legislation to borrow the balance of £430 million. The effect of that has been that the Votes on the first year could not be relieved by appropriations in aid to the extent of that £20 million, and therefore they bear the full cost. In future years, these Votes will be relieved.
    I regret to say that the hon. Member for Woking (Mr. Onslow) has misunderstood the point of the Bill. He said that we are saying goodbye to the right to examine this expenditure. The whole purpose of my standing here as a Treasury Minister is to make sure that the House has an opportunity each year of debating the expenditure that is being incurred direct by the American Government, through its Defence Department, to the contractor, and to make sure that each year the House has the same right of debating, criticising and voting or not voting the Supply as it would have had had the money not been borrowed but met through Votes in the ordinary way each year.
    Mr. Onslow: The Minister of Aviation has told us that they had agreed the principle, and it is still the case, I feel, that we are now embarking upon it before many genuine doubts felt on both sides have been resolved. That was the principal point that I wanted to make.
    Mr. Diamond: We are in this technical difficulty. This is a new Parliament, and nothing that was said time and time again in the old Parliament has ever been said, and it will have to be said over again. I do not think that the hon. Member for Woking would take that point, because he himself is not a new Member. All these matters of the contract and the policy were debated at length. What we are debating today is the borrowing powers. I hope, therefore, that I have satisfied the right hon. Gentleman on the two points he made and that the Clause can now be passed.
    Question put and agreed to.
    Clause ordered to stand part of the Bill.
    Clauses 2 and 3 ordered to stand part of the Bill.
    Bill reported, without Amendment read the Third time and passed.

  OVERSEAS AID BILL
  Order for Second Reading read.
  6.41 p.m.
  The Minister of Overseas Development (Mr. Anthony Greenwood): I beg to move, That the Bill be now read a Second time.
  We shall be judged by posterity on the progress we make during the next vital quarter of a century in achieving a juster distribution of the world's wealth, in banishing hunger and disease, and in conquering illiteracy. The Bill before the House constitutes a modest—but far from negligible—contribution to the discharging of that great responsibility—a responsibility which all of us accept without any qualification save that imposed by our economic difficulties.
  The Bill contains a number of Clauses on matters for which legislative authority is required, and I shall begin by referring to Clause 1, which is intended to provide the Minister of Overseas Development with the general financial powers which he needs. This Clause forms the main substance of the Bill, but the other powers which I am seeking are also indisputably necessary if we are to continue our present policies, and most of these powers are urgently required.
  Up to now overseas aid has been provided under various financial powers. Loans and grants to the Colonies for their development are provided under the Colonial Development and Welfare Acts, as extended by the Overseas Development and Service Act, 1965. The appropriate powers have been transferred to me by Order in Council. The Secretary of State responsible for the Colonies will be able to provide budgetary aid to them. None of these powers is affected by the Bill, except that it enables me to provide to the Colonies certain technical assistance outside the scope of the Colonial Development and Welfare Acts.
  Loans to independent countries, both within and outside the Commonwealth, which are intended to be tied to the supply of goods from this country, have been provided under Section 3 of the Export Guarantees Act. In addition, some loans to independent countries provide funds for other purposes as well as the supply of goods from this country—for
  1190
  the local costs of investment projects; and in some cases we also wish to make grants either for development, or to help countries to provide, through their budgets, indispensable administrative services.
  Assistance of this kind was formerly provided on the Votes of the Secretaries of State for Commonwealth Relations and for Foreign Affairs. It is now provided on my Votes, under the covering authority of the Appropriation Acts. Technical assistance is similarly provided. Since we now have a continuing financial commitment to the developing countries which in recent years has reached very significant levels, I recognise that functions involving financial liabilities extending beyond a given year should be defined by specific Statute, and I therefore seek specific legislative authority for the activities of my Department.
  Accordingly, the purpose of Clause 1 is to confer continuing power upon me to provide economic assistance in the appropriate forms to independent developing countries overseas. I must point out, first of all, that although the Bill provides me with powers it provides me with no money. Funds for all purposes are to be provided on the Votes of my Department, and will, therefore, be subject to the annual approval of Parliament.
  Now as to the purposes for which aid may be provided. For the most part bilateral aid to independent countries is in the form of loans for their development. Help may also be needed to remove obstacles to potential development, or to create conditions in which development is possible. Thus, in some cases we may need to assist poor countries to balance their budgets, or it may be desirable to help them to deal with overseas debts which are beyond the strength of local foreign exchange resources.
  We shall continue to provide technical assistance, and to provide ourselves with the means to do so by, for example, financing research in tropical medicine. We shall continue to provide aid through multilateral channels, and the Bill covers the possibility of enlarging contributions to the funds of institutions specially capable of making a significant additional impact on development. It is for reasons

  1191
  such as these that the provisions are drawn in wide terms, and I think it is right that the powers should be wide.
  The needs of the developing countries for external aid extend into almost every field of human activity. We are financing the provision of heavy electrical machinery from this country for India, and diesel locomotives for East Africa. We are helping to keep thousands of skilled public servants in the field. We are training others. We are carrying out mapping which is essential to development planning. We are helping a score of universities in as many countries with staff, buildings, and equipment; and we are contributing to the fight against illiteracy at the other end of the educational spectrum.
  Volunteers from this country, whose work we support and value greatly, are carrying out a vast range of tasks, and demonstrating an unselfish way of life. We are helping with medical research in tropical diseases of men and animals. We are helping to build up statistical services and providing the tools of economic planning. These are just examples of the sort of aid we intend to continue providing.
  Next, as to the terms on which aid may be provided. The Clause specifies that aid may be provided by grant, or by loan on such terms as the Treasury may approve. Most of this aid—except for technical assistance—will be, as I have said, by loan. My predecessor explained our policies as to the terms on which we provide loans when announcing our decision to introduce interest-free loans last June, and in the White Paper of August, and I need not repeat them now.
  Those, then, are the spheres in which financial powers are sought. I hope that I have made clear that the main purpose of the Clause is to reformulate in a way which is both comprehensive, and, in some respects, more appropriate, powers which I already exercise. I hope that the House will approve them.
  I need not describe in detail the work of the Ministry which has been set up to enable me to carry out these functions. This was described in the White Paper to which I have referred. I would make only two general observations as to the
  1192
  reasons for establishing it. The first was to concentrate in one Department functions which had previously been dispersed between five.
  The second was to make it possible to study the problems of development in greater depth, and to base our policies more deliberately on the results of that study. I am sure that the concentration has achieved valuable results, and that the second object is being gradually achieved. Indeed, we are increasingly being consulted by the developing countries on their development programmes.
  I should now like to refer to some of the broader aspects of the aid policy for which the financial powers in the Bill are needed, and to the international setting in which our programme and policies take their place.
  During the past 50 years we have made enormous progress in tackling the problems of poverty and unemployment at home. As a general problem extreme poverty as we used to know it has been virtually eliminated. Our standards of living are rising, although perhaps not as fast as we should wish. We see the enormous possibilities of modern technology and as a result our own appetites are rising faster than ever before. The more we have the more we tend to want.
  But in the developing countries of the world the picture is very different. The majority of the world'spopulation still lives in poverty and a large proportion of these people live in the less well endowed of those countries which we colonised and brought to political independence. Income per head in the developing countries is on average no more than one-tenth of our own.
  In the 1950s considerable progress was made. Income per head in the developing countries rose by about a quarter in 10 years. But, regrettably, since 1960 the rate of progress has slowed down. This is partly due to the accelerating growth of world poplation, but is also due to the difficulties which the poor primary producers are experiencing in sustaining the export earnings of their traditional products.
  A crucial factor in the past progress was the rapid rise in economic aid given by developed countries, which almost tripled between the early 'fifties and the early 'sixties; our own contribution in

  1193
  the same period also tripled. The aid still represents only a modest proportion of the total resources of the developing countries but it offers a vital supplement to domestic savings and foreign exchange earnings. It is vital to the progress of development.
  Mr. Cranley Onslow: The right hon. Gentleman relates the increase in aid from developed countries to developing countries to the rise in income of those countries during the late 1950s and the early 1960s. Can he say whether the aid from the developing countries that was put to use was so immediately productive that it was reflected at once in an increase in the gross national product in the developing countries?
  Mr. Greenwood: No. The hon. Member has not followed my point. I was not saying that the rise in income of the developing countries was solely due to development aid which had been pumped into them, but it was a factor in improving the situation, raising the purchasing power and injecting vital help to the economy at a time when it was badly needed.
  I am, therefore, profoundly concerned that—taking the donor countries as a whole—the growth of this flow now seems to have slowed down almost to a halt. The economic implications of this, taken in conjunction with the trade prospects of the developing countries, could represent a major set-back to world development.
  The reasons for the slowing down of the increase in aid no doubt vary from country to country. But in all donor countries official aid competes with other uses of national resources and with other forms of public expenditure. Some people may be disappointed that the existing aid is not showing quicker results. But we cannot achieve an economic revolution in a developing country within a few years. Where aid has been prolonged and substantial, considerable results are being achieved. We have to recognise that aid to developing countries is a long-term business and that we must accept a continuing obligation.
  We must not lose sight of the needs and responsibilities which we have to face. We might remember the assessment by the President of the World Bank that the
  1194
  developing countries could usefully absorb at least 50 per cent. more aid than they are at present receiving. We must not allow ourselves to relapse into what the Secretary-General of the United Nations has described as prosperous provincialism. Whether or not we agree with the terms in which this description is put we cannot overlook the seriousness of the situation.
  International attention will be focused on these matters at the second United Nations Conference on Trade and Development which takes place next year. This, like its predecessor, will be a major international event. The main theme will again be the need of the poorer countries for resources for development and their prospects of obtaining them either from trade or from aid. A great many of these matters bear upon the responsibility of my right hon. Friend the President of the Board of Trade, but they have implications for our development policies with which I am closely concerned.
  All parties in the House have always emphasised that this country should make an adequate contribution to international development. We stated in the Labour Party election manifesto at the recent General Election that we have increased the flow of aid both inside and outside the Commonwealth, in spite of our economic difficulties, and that it would be our aim to mobilise increasing resources in money, export advice and voluntary effort to make war on want. We emphasised that we should play a positive part at the next United Nations Conference on Trade and Development.
  Many people ask whether the United Kingdom can afford to give aid at the present time. Aid cannot be costless; it is intended to transfer real resources to help the growth of developing countries; the human and material resources we provide could have been used to add to the growth of our own economy. There is also a significant foreign exchange cost in aid which, at present, places a special burden on our economy for reasons which Members will not need me to spell out.
  But the burden should not be exaggerated; aid is still only a very small fraction of the national income, and at least two-thirds of the value of British aid results in additional exports of goods and services, representing costs in

  1195
  resources rather than foreign exchange. And like all other bilateral donors we are aware of the help given by aid in promoting exports and contributing to the stability of areas where we have political interests.
  But the basic reason why we give aid to developing countries is that their living standards remain appallingly low, while ours are going up. Such a situation is no more acceptable in the world nowadays than such disparities of wealth could be at home.
  I turn now to our own policies and, first of all, to the size and shape of our aid programme. We expect the total to increase from about £200 million in the financial year 1965–66 to £225 million in 1966–67. At this point, I ought to draw attention to a misprint in the Explanatory Memorandum to the Bill. In paragraph 9 the date "1966" in the third line should be "1966–67". I might, at the same time, explain that the apparent discrepancy between the £137 million and the £225 million is largely made up by the amount which is spent in the Colonies and under Section 3 loans which are not covered by the £137 million.
  Repayments on development loans made in the past will be somewhat higher this year than last, so that the net cost of the programme will not increase by as much as £25 million. Nevertheless, the increase will be substantial, and I hope that it will be regarded as giving reality to our policies in this field, in spite of our own economic difficulties. What we can do in future will naturally depend on our progress in overcoming those difficulties; my right hon. Friend the Prime Minister has already stated that we shall review the aid programme in future with this progress in mind.
  Within our programme we attach particular importance to aid through international agencies which carries special advantages. Not the least is that a multilateral institution can more easily secure the efficient use of aid without laying itself open to political criticism. It is one of the hopeful signs in the situation I have described that multilateral aid is steadily growing, although it still only represents one-seventh of the total flow.
  We support the wish of the International Bank to extend and increase
  1196
  the operations of its affiliate, the International Development Association, which makes long-term interest-free loans available, subject to a small management charge. Her Majesty's Government, together with the Swedish Government, took a leading part in promoting in the U.N.C.T.A.D. a new scheme for supplementary financial measures to help developing countries whose development plans are disrupted by unexpected shortfalls in their export receipts. I gladly pay tribute to the part played by right hon. Gentlemen opposite in that proposition. We hope that a workable scheme can be agreed between all concerned. We have supported and shall continue to support the planned extension of the United Nations Development Programme.
  Apart from increases in multilateral aid, we hope to see much closer collaboration, as time goes on, both between aid-giving countries, through the Development Assistance Committee, and between donors and recipients, through consortia and consultative groups, such as those which meet under the chairmanship of the International Bank. International collaboration in providing aid is still only in its early stages. We want to see much closer collaboration, and the development, where possible, of a consensus as to the needs of individual countries and the ability of the donors to meet them.
  I will now deal with Clauses 2 to 7. Clause 2 covers the payments of a subscription to the Asian Development Bank. The agreement to set up the Bank has been laid before the House and should be ratified not later than 30th September. It will be necessary to make some reservations on ratification. We shall have a total liability to the Bank of £10·7 million, of which one half is paid-up subscription to the initial capital, payable over the next five years. The Bank has attracted powerful support from the industrialised countries. The United States and Japan, for example, are subscribing 200 million dollars each. But a fact of at least equal significance is that the Asian and Far Eastern developing countries have committed themselves to putting large sums of money of their own into the nominal capital, a quarter of it in convertible currency.

  1197
  Clause 3 raises the financial limit on the contribution to the Indus Basin Development Fund from the £20·86 million authorised by the Act of 1960 to nearly £35 million. This project for works to implement the agreement between India and Pakistan for the allocation of the Punjab waters is a joint one between the World Bank and a number of donor countries. It was agreed in 1964 that greatly increased contributions would be necessary if the project were to be successfully completed. The House is asked to authorise the provision of funds to meet the increase in the British share.
  Clauses 4 and 5 follow from the introduction of our policy of providing interest-free loans. Clause 5 is necessary so as to remove any possible doubts about the power to apply the policy to Colonies and Clause 4 makes it possible to relieve the Commonwealth Development Corporation of interest charges in respect of capital provided for enterprises of a special developmental character during their fructification period.
  The purpose of Clause 6 is to amend the Commonwealth Teachers Act, 1960. That Act limits expenditure, both under the Act and under the Commonwealth Scholarships Acts, 1959 and 1963, to a total of £6 million. It provides that a larger amount may be substituted by Order in Council, and the limit has been raised in this way to £11 million. We think it right to amend the Act so as to abolish both this form of financial limit and the need for further Orders in Council. Provision would then, of course, be made in annual Estimates.
  Clause 7 gives power to establish an Overseas Service Pensions Fund. This is a new initiative, to meet a gap in the technical assistance which we offer developing countries. As the new Commonwealth countries attain independence, the pensionable overseas officers serving there become free to leave, and I am then asked to make many contract appointments to replace them. We cannot meet all these requests by creating a new pensionable British Government Service, since we could not guarantee continuous overseas employment or a full career. But short-term contract officers, although professionally well-qualified, are often inexperienced in life overseas.
  We want to encourage these valuable men and women to build up their
  1198
  experience and make their own careers overseas through a series of contract appointments. My scheme offers them security for the future if they attempt this, by providing from contributions pensions for fund members and protection for their dependants.
  The scheme will apply to employment overseas approved by the Minister of Overseas Development. It will be open, for example, to all contract officers designated under the Overseas Development and Service Act, 1965, and to members of my Ministry's small corps of specialists. The scheme will be fed from the contributions of members, but the Government propose to meet the full cost of the contributions due from members of the corps of specialists.
  Perhaps I may conclude by referring once again to the new international situation which has been created by the development of Government-to-Government aid on a large scale. It creates new relationships, new opportunities, new challenges and, we must say, new dangers. The co-operative effort in which the richer and the poorer countries are becoming more and more deeply involved to overcome the causes of poverty and to create the opportunities of a full life for all will be needed for a long time.
  We shall have our setbacks and our disappointments. We shall make our mistakes and suffer our disenchantments, but we must always recognise the continuing responsibility which we have to discharge. We cannot be content to keep our growing wealth to ourselves. We must help less fortunate men to overcome their poverty. This country has a great deal to offer in this fight. Our financial resources are limited, although the contribution we make is not unimpressive; but we are also providing our trained men, and women, whose service abroad means far more to the growth of understanding and the founding of the sort of human society we want to see than a simple measure of how much it costs could indicate.
  The needs of the developing countries are almost infinite. In many countries the growth of facilities for education can scarcely keep pace with the expansion of the population. They are greviously torn between fighting illiteracy, and training the graduates they so desperately

  1199
  need in their Government and industry. It requires a great co-ordinated effort of the developed countries of the West if we are to meet this challenge. We are proud to have in the United Kingdom a special Ministry whose task is to adapt the material and human resources which we can make available to the needs of the less developed countries.
  The Ministry has had to work in a prolonged and difficult balance of payments situation. We are rightly conscious of the burden which aid places both on the public purse and on the balance of payments. This can be and often is much exaggerated, but however the economists may assess this burden I think that we should bear one final thought in mind. In the end, the balance of payments is one reflection of the ways in which we choose to use our economic resources. It is not a separate problem. In the end, the amount of aid we give will have to reflect our decisions on the sharing of our resources. It will depend on how far-sighted and generous we are prepared, as a nation, to be.
  7.7 p.m.
  Mr. Richard Wood: The right hon. Gentleman has explained the purpose of the Bill and has explained also that what the Bill does not do is provide for new programmes of expenditure. He made it clear to the House that such new programmes would require the annual approval of Parliament. But the right hon. Gentleman gave us a brief account of the work of his Department and I should like to take the opportunity which this Bill affords to examine the aid policy of the present Government.
  First, I should like to go back to the 13 so-called wasted years, and the total of British Official Gross Economic Aid, to use its official title. We can see from Cmnd. 2736, in Table X on page 24, that the total aid given in those 13 wasted years was nearly 1,500 million, rising from £52 million a year to £190 million a year and, perhaps more significantly, from one-third per cent. of the gross national product to two-thirds per cent. In the last 18 months, I am delighted that Government aid to countries abroad has continued to rise, but, in the words of the present Minister of Transport a year ago, "overwhelmingly
  1200
  the greater part of disbursements in 1965–66 will be the result of commitments entered into a year or more previously."
  In the last months of the Conservative Government before October, 1964, the right hon. Lady who is now the Minister of Transport called for a greatly increased programme. She said that 1 per cent, was no longer adequate and that 2 per cent. ought to be the goal. Furthermore, she put a generous interpretation on the recommendation of the United Nations Conference on Trade and Development at Geneva, pointing out that the amount of money returning to Britain in the form of debt repayments so eased the burden of aid on the balance of payments that this burden, she said, should not be advanced as a reason why the Government should not immediately increase their—that is the official—overseas aid to 1 per cent. of the national income. As I shall try to show, I believe that the present Government will be hard put to it even to maintain the present level of official aid which, as we all know. is a long way below 1 per cent.
  The White Paper, to which I have referred, avoided these awkward questions about the level of aid. In the preface, in the second sentence, it says,
  "We do not specify the amounts of aid which we propose to provide in any particular periods."
  Then came the National Plan of last September. This was a little more specific but it was not very much more forthcoming. In paragraph 39, on page 75, it said:
  "… the plan makes provision for only a small rise over the level of the current financial year."
  It would be very reassuring this evening if the Government shared with the rest of us their thinking about the likely expansion of aid in the rest of this decade, and I dare say it would relieve many of the anxieties of their own supporters. Realising that it could only guess at the future, the Fabian Society's Venture of last December gazed into the crystal and forecast, perhaps rather pessimistically,
  "£220 million a year in the later 1960's"
  and on this forecast it calculated that this would be an increase of
  "£30 million or 16 per cent. by 1970 over the aid levels of 1964–1965 compared with a

  1201
  25 per cent. target increase in national income over the same period."
  The article went on, rather revealingly,
  "If this guess is near the truth, it means that it is officially anticipated that official aid, as a proportion of national income, is likely to fall from its present level of ·67 per cent. It is therefore most unlikely that Britain can maintain, let alone improve on, the famous 1 per cent. proportion of development assistance to national income."
  We should be grateful if the Parliamentary Secretary, who I understand will wind up the debate, will tell us whether this bold guess of the Fabian Society's Venture was inspired or uninspired, because the same anxiety is no doubt shared by the hon. Member for Dover (Mr. Ennals), who is now Under-Secretary of State for Defence for the Army and who formerly was Parliamentary Private Secretary to the right hon. Lady who is now Minister of Transport. The hon. Member for Dover is reported to have said, in my county of Yorkshire, last January, that
  "now that he had left the Ministry of Overseas Development he was burning to criticise the National Plan for its lack of specific targets for overseas aid."
  I am and my right hon. Friends are sorry that his promotion to the Government will no doubt prevent him from burning as brightly tonight as we might have hoped. In spite of his forthright comments in Sheffield, his party's election manifesto was as guardedly uninformative as was the National Plan. Its title, as we all remember, was "Time for Decision", but some of us found the words, a few of which the right hon. Gentleman quoted tonight, not particularly decisive.
  Certainly we all support the offer of interest-free loans to developing countries with special needs—a useful step in the liberalisation of aid terms set out in the Conservative Party's White Paper Cmd. 2147 of 2½ years ago. But the Government must be well aware of the policy of our international competitors, especially the U.S.A. and Germany, of subsidising economic planning and feasibility studies by private firms with a view to securing valuable export orders and the consequent edging out of British firms which are still charging the Governments of the developing countries for their studies.
  The Government must also be aware, perhaps even more seriously, of the effect
  1202
  of last year's Budget—in April—on the level of private investment in developing countries, because even if the level of Government aid continues slowly to rise, the action which the Chancellor of the Exchequer took last year is bound to make it increasingly difficult for us to go on hitting the target of total aid set by the United Nations Conference on Trade and Development.
  I should like to make a few specific comments and to ask a few questions about the Bill. The right hon. Gentleman has kindly answered the first question which I had in mind about the relationship of the £137 million mentioned in the Explanatory and Financial Memorandum to the £225 million which he quoted again today.
  May I ask about the Asian Development Bank, with its 19 regional and eight non-regional countries? This bank has a membership which is not the same as but is as comparable to that of the Colombo Plan, with its essentially bilateral agreements between countries giving or receiving aid. The purpose of the bank is to meet the demand for wider and more comprehensive powers of financial allocation to needy countries. The question which I should like to ask the hon. Gentleman, if he would be kind enough to answer it, is, first, what will be the future relationship between the bank and the Colombo Plan and secondly, how will the existence of the Bank affect British contributions to the Plan?
  As we all know, the Indus Basin Development will cost more, and Clause 3 of the Bill gives the Government authority to provide the British share of the supplementary funds needed. My own opinion is that if the Agreement makes, as it can, a real contribution to relations between India and Pakistan, then it will be worth many times the money which we are now asked to provide.
  I have already made it clear that we welcome the interest-free loans in suitable cases. Our introduction of the Commonwealth Teachers Act and the Commonwealth Scholarships Act, together with the undertaking given by my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle) at the Ottawa Conference in August, 1964,

  1203
  pledges our support for the action which is proposed by the right hon. Gentleman under Clause 6.
  I welcome the introduction of an Overseas Service Pension Scheme. This was foreshadowed. as the right hon. Gentleman pointed out, in the White Paper of August, 1965. It seems to me that there is a very good case indeed for a pension scheme in respect of specialists, such as medical and agricultural specialists. I was not quite clear from the right hon. Gentleman's speech who is likely to be included in the scheme. It may be that my fears have no basis at all, but it seems to me that the case for inclusion is clearly stronger where the demand for such specialists—if it is in respect of specialists—is known and certain and more or less limited. I think that the case for a pensions scheme would be less strong in respect of other workers in the field. In the case of specialists it would be very strong indeed. I should be grateful if the Parliamentary Secretary would make it clear who will be included in the scheme.
  So much, for the moment, for the details of the Bill. We are discussing a subject which is of greater importance in the long run to the future peace of the world than matters which make far greater and more sustained demands on our Parliamentary time. Humanly speaking, the provision of help, financial, technical and otherwise, by the relatively strong to the relatively weak is ultimately the most powerful force in the struggle for men's minds.
  Most of us can name half a dozen corners of the world where this struggle will quicken during our lifetime and that of our children. In some places it will be settled by military force. In others, armed conflict will drag on drearily and with infinite suffering until the weary opponents meet together to settle their differences by compromise and negotiation.
  But if we succeed in avoiding a catastrophe, with the might of the whole world trying to tear itself in pieces, then, in spite of a thousand setbacks, in spite of all the obstacles, some of which the right hon. Gentleman mentioned, and the already familiar agony of nations coming to maturity, we shall one day
  1204
  reap the reward. I say "we", but I do not mean we in Britain or we in the West, for the victory and the reward will belong to the world itself.
  Many people in Britain today sigh for the glories of the past and others curse themselves and earlier generations for mistakes that might have been avoided. Some are shamed by the founding of an Empire while others deplore its change into a Commonwealth. I do not sympathise with either view, but I do take pleasure and comfort from the continued opportunity which lies ahead of us—an opportunity for this country, together with other powerful nations, to play a different part and, perhaps, an even more constructive part than we have played in the past.
  I therefore welcome the Bill. When it becomes law we will keep a close watch on the use which the right hon. Gentleman makes of it. The Bill itself is not of such importance as the use which, in the years to come, is made of it. We will watch it closely, because the last 18 months have given us real doubts about whether some, or many, of the Government's financial policies will enable them to use the Bill as we think it should be used and will enable them, even more importantly, effectively to face the challenge which the world's undeveloped resources are now presenting to nations like our own.
  7.23 p.m.
  Mr. Frank Hooley: At first sight, the Overseas Aid Bill may not seem to have any very great bearing on the affairs of the City of Sheffield, one part of which I have the honour to represent. In a general sense, however, all citizens of this country, all taxpayers, make a contribution to overseas aid. Many of them do so through personal generosity to organisations like Oxfam, Christian Aid and the United Nations Association, while others contribute even more directly.
  Sheffield makes a direct contribution to technical assistance through the work of its university which, particularly in the last two decades, has trained many hundreds of young men and women from overseas in mining, engineering, metallurgy, medicine, the law and many other professional skills which are in very short supply in overseas lands.

  1205
  A year or two ago I took the trouble to count up the number of different nationalities of students in Sheffield, and I found that no less than 40 different nations and territories were represented among them. There may be more today. Not only in the training of young men and women from abroad, but also through sending distinguished academic teachers to serve overseas has the university made a contribution. Indeed, I often think that this country is able to make a better contribution by sending both young and experienced men and women out to the countries of Asia and Africa than even by inviting their nationals to come to be trained in institutions here, although both moves are extremely valuable.
  I have had the pleasure of serving for a short time in West Africa, in Fourah Bay College, in Sierra Leone. I was pleased to see there in physical terms the scientific laboratories and other buildings which had been put up with Commonwealth development funds. I saw the immense value of this work to the people of that country. I was particularly impressed by the desperate need in West Africa—and this applies throughout the Continent—for trained manpower doctors, engineers, scientists, teachers, agriculturists and men and women of every possible professional skill. I am sorry to say that there was no dearth of politicians. There is not only the need for professional people, but a shortage at all levels, particularly of craftsmen and artisans—such as plumbers, electricians and carpenters.
  I am glad to say that industry in Sheffield has played a part in the training of people at this level. Not only have the engineering and steel works of Sheffield provided important capital equipment and plant for the Indian sub-continent and elsewhere, but have given opportunities for young men to go into the works at the craft level and learn the skills of operating these great machines.
  The overseas aid provided for in the Bill is not a form of international charity. As was said in the White Paper:
  "We give aid because, in the widest sense, we believe that it is in our interests to do so as a member of the world community."
  I stress the phrase:
  "… as a member of the world community."
  It is certainly to our long-term economic advantage to stimulate the growth
  1206
  of economies of other countries and to contribute towards a general expansion of world trade. It is also extremely important for our reputation, our influence and standing in the world that we should be seen to be making an adequate contribution to the great international effort towards raising the standard of living of poorer countries.
  I need not remind the House that other countries are making a very powerful contribution in this sphere and that it is important that we should stand shoulder to shoulder with them so that our contribution is on a par with theirs, bearing in mind our economic resources. I scarcely need mention the contribution of France and the United States and the fact that the contribution of the Scandinavian countries is, per capita, in some cases greater than our own. Countries like Japan are now entering this sphere and are likely, shortly, to be making financial contributions which can rival the contributions envisaged in the Bill.
  There is, of course, a price to be paid. There is a real transfer of resources—manpower, capital and equipment—when we provide for money to be spent on overseas aid. But this must be kept in perspective. To quote the White Paper:
  "The sacrifice of resources which the aid programme may involve is not great in relation to our wealth. By the standards of developing countries we are rich, with an average income about 10 times the average of theirs."
  This cannot be too often emphasised. Twenty years ago we contributed £48 million, which then represented half of 1per cent. of our national wealth—or about 1¼d. in the £. Our contribution now is about £200 million, which is two-thirds of 1 per cent. of our national income and represents about ½d. in the £, so we are doing ¼d. in the £ better.
  The Government, of course, are entitled to stress the problems which arise in balance of payments through provision of this aid, but I am somewhat disturbed that the National Plan provides for a very tiny increase in the next four years in our contributions. So far as I can see, it will provide a slightly smaller proportion of national wealth by 1970 than we are giving now. Fortunately, the plan is subject to review year by year. I hope that this aspect will receive very close and detailed attention, particularly as the 1960s have been designated by the United

  1207
  Nations as the Development Decade. That is a decade in which the nations of the world have pledged themselves to pay particular attention to the needs of the poorer countries and the need to raise their standard of living.
  Finally, I quote a phrase used by the Prime Minister on 17th March, 1963. I hope that I have the date right, for am sure that he will not forgive me if I have it wrong. My right hon. Friend referred to
  "providing the munitions of life, not the munitions of death"
  to people in lands where life hangs all too often by a very slender thread. The Bill enables us to send out the munitions of life. I hope that, for that reason, it will have the ungrudging support of the whole House.
  7.33 p.m.
  Mr. Henry Clark: It has been remarked on a number of occasions in the last few weeks that the standard of maiden speaking in this Parliament has been as high as anyone can remember. It is a privilege to be able to congratulate the hon. Member for Sheffield, Heeley (Mr. Hooley) on the speech he made, which fully maintained the high standard to which we have become accustomed.
  The constituents of Heeley have something rather more than a Member who has a ready-made election slogan. Those of us who have served in the Commonwealth will certainly welcome the hon. Member to our ranks and his experience will be of considerable value to the House. We look forward to hearing him on many future occasions on this and other subjects.
  I cannot help feeling what an amazing occasion this debate would be to our predecessors of 20, 30 or 100 years ago in this House. Here we are prepared almost to give the Minister complete carte blanche for the spending of something in the region of £150 million. He can do just about what he thinks fit with it and need not worry at all. For once, the Minister's well-known smile is fully justified. He knows that every speaker will welcome the Bill, as I do. He knows that in Committee and on Report only constructive points will be made, and he knows that he can turn them down with the fullest Treasury backing.
  1208
  By mid-July—if he is lucky, as I think he will be—the Minister will have finished with his work in this Chamber probably for the next 12 months, except for the trouble of answering Questions every five or six weeks. They also, I think we can be certain, will be constructive. It is not surprising that the Minister quitted the troubles of Aden and British Guiana and the foundering ship of the Colonial Office to slip up to the new ivory tower in Victoria when the opportunity came. No wonder that his predecessor moved on to the limelight of transport as soon as the opportunity came and she had had enough of foreign travel.
  I believe very sincerely that before this House passes this omnibus enabling Bill we must find out more about the activities of the Ministry of Overseas Development. I believe very firmly that we must ensure that in debates we have a continuous stream of information about what the Ministry is up to.
  In the 18 months that the Ministry has been in existence we have had precisely this interesting pamphlet, or White Paper, and we had one Bill last year which was about as uninformative as the Bill before us now. I do not think the House is getting adequate information about what has become a very considerable spending Ministry. It is rather similar to the Defence Ministry where most of the money is spent and most of the mistakes are made beyond the sight and experience of hon. Members. This House wants to be sure that the Ministry of Overseas Development knows what it is about and what aid is about.
  This country has a great tradition of working overseas. We were the first country to set the fashion for overseas aid. I think we can say that we have more knowledge and experience of work in underdeveloped countries than the whole of Europe and, probably, America. It is absolutely essential that this country should remain in the forefront and continue to set the fashion in aid-giving for the rest of the world to follow.
  Yet we find the opening paragraphs of this pamphlet defining the purposes of aid in a way which can only be described as a very unreal description of the problems. We find the same kind of thing in the reports of almost any of the international agencies. Probably this was copied from

  1209
  a report of an international agency. It is not a very deep survey of the problems of underdevelopment. Is not the Ministry aware that comparing per capita incomes as a basis for development is getting a little "old hat" and that statistically it is a very blunt instrument indeed?
  Following the highly unoriginal preface, we have a description of the various agencies, bodies and categories of people who, for generations in some cases, certainly for many years, have worked for the Commonwealth and the underdeveloped countries of the world. We now find that they are working for the greater glory of the Ministry of Overseas Development. I want to be convinced that the co-ordination of these various agencies which are doing an excellent job will definitely create more results and not just more paper. Frankly, the impression I have got in the last 18 months has been that the Ministry, despite its elevation in rank, has lost some of the vitality which its predecessor, the Department of Technical Co-operation, had in its first years.
  Thank goodness, one table has been left out, the international league table of who gives what and how much and when. That was one of the most unfortunate tables that could be quoted, although hon. Members opposite were very fond of it at one time. What we must establish very firmly in the British tradition of aid is that quality of aid rather than quantity counts. It is far too easy to measure aid in terms of money; far too seldom is it measured in terms of results. Quality is infinitely more important than quantity. A thousand pounds at the right time and place will be of far more use than £1 million too early or too late.
  I believe very firmly that, based on our experience, this country leads the world in terms of quality. I can think of a dozen agencies in this country giving aid of unequalled quality. One I discovered the other day was the courses which the Bank of England gives to central bankers from under-developed countries throughout the world. That is a magnificent but hardly ever mentioned service. The principle of quality must be maintained in the forefront.
  There is one aspect of the Bill and of the White Paper which I find optimistic.
  1210
  Clause 1(2) will grant the Minister money to employ people to engage in basic research into the problems of underdeveloped countries, poverty, and of creating development. Most people would agree that as a science the economics of developing countries is in its infancy. We shall not get a general theory of under-development or over development. What this generation sadly needs is a new genius to solve the problems of under-development rather as Keynes laid the foundations for the solutions of the problems of the developing countries in the 1930s.
  With the money which the Minister will shortly have I hope some of this country's very fine economic brains will be put to work, with full facilities for research and travel, on solving the problems of under-development. I hope that Dr. Shumacher will no longer have to work in the National Coal Board but will be able to develop his worth-while theories on intermediate technology. It seems a complete waste to leave him merely dealing with coalmines when he could contribute so much to the whole world.
  I stress one aspect which fully justifies deep research. On a trip to Uganda last year I was delighted to hear that a small ceramics factory was being built to supply that country's needs and also a small percentage for export. I was told that Uganda had got that factory only after a very long search. Every ceramics firm in this country had said that it was impossible to build an economic factory on the small scale required for the Uganda market. In the end they found one manufacturer in America who was prepared to make a plant for them. It is now in the process of getting going. It will supply the Uganda market.
  This is an example which has very great implications. Almost all the underdeveloped countries want to manufacture their own less sophisticated consumer goods, but the scale of manufacture which has been developed in the advanced countries is too vast to be transplanted to under-developed countries. Anyone who travels considerably, as I have been fortunate enough to do, knows of countries which want ceramics factories, others which want cement factories, some which want small pulp mills, others which want small fertiliser plants or small scrap

  1211
  smelters. Time and time again one is told that it is impossible to build a plant sufficiently small to render it economical.
  If the Minister would set up an institution to investigate throughout the world the demands for small-scale plants I believe that it would be found that probably 10 countries want a small-scale pulp mill, for example. It would be worth a manufacturer's time to design a small-scale pulp mill, put it into production, and sell it to 10 different countries, whereas it would never be economical to make such a factory as a one-off job.
  There are many points of details which I hope we shall get a chance to take up in Committee. There is the odd factor that we are now to legalise expatriate local government officers, though strangely enough we refused to compensate expatriate local government officers with pensionable service some years ago and thus lost some of our more reliable officers.
  There is the rather dangerous removal of the commercial incentive from C.D.C., which is essentially a commercial enterprise, by excusing it the necessity of paying interest in certain cases. We must be given full information about the extent to which loan repayments and pension payments to this country balance the amount of aid we are granting to various Commonwealth countries. There are many detailed points to examine. We shall do this constructively, but we want the time to do it.
  I return to my main theme. This is a Ministry spending over £200 million, largely outside this country and largely away from the eyes of hon. Members. We have talked much of House of Commons reform. I do not think that anyone can doubt that a specialist committee would be highly suitable to keep an eye on the activities of this Ministry. I am not sure that we want to have specialist committees, but I believe that the House is entitled to demand that we should receive no less information from this Ministry than we do from the Service Departments. I should like an assurance from the Front Bench during the passage of the Bill that we can look forward to an annual White Paper and an annual debate on the affairs of this Ministry.
  7.45 p.m.
  Mr. Laurence Pavitt: The hon. Member for Antrim, North (Mr. Henry Clark) has asked for further and more regular information. The whole House will agree with that request. However, information comes when it is demanded. My right hon. Friend was down to answer Oral Questions today. Of the 115 Questions on the Order Paper only one was for my right hon. Friend. The interest now being displayed in the affairs of this Ministry has not been reflected in the number of Questions tabled to this Ministry over the last few weeks.
  The hon. Member for Antrim, North fell into a trap into which many of us fall from time to time in discussing this important subject. We slip into paternalism. We speak of what "we" do for "them"—we the superiors, the developed. Perhaps sometimes we should talk of ourselves as the over-developed rather than as the developed. The Keynes whom the hon. Member hopes will arise is more likely to be somebody with an Indian-sounding name or an African name than someone from this country.
  Most of this problem is bound up not just with economics, but with social and cultural aspects. When we pass a Bill of this nature, as I am sure we shall, it should be done in the context of not trying to export a westernised way of life or economy. We should try to build on the traditions, cultures, social background and way of life of the underdeveloped countries.
  Mr. Onslow: I take it that the hon. Gentleman would agree with me that in attempting to identify the Keynes of the under-developed world Dr. Kaldor should be excluded from competition in this?
  Mr. Pavitt: I have had the good fortune to have worked in India with a number of their economists. I am prepared to say that Dr. Keynes would have been able to learn a little in this specialised field from something of what is now going on in economic research in Bombay and Madras. I agree with the warm welcome which the hon. Member for Antrim, North gave to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), who made a first-class speech in a most interesting manner.

  1213
  Like other hon. Members, I welcome the Bill because this is the Minister's attempt to get away from many years of sporadic and short-term aid and come on to a rather more systematic and long-term approach by giving statutory provisions to the kind of development which has been growing up in the various Ministries over the years. The Bill is a step in the right direction.
  I agree that there is a still greater need for more co-ordination between that which we are doing and that which others are doing. I welcome the individual multilateral agencies attached to a specific project but, in addition the whole framework of the specialised agencies of the United Nations shows gaps and overlaps in what is being done. There are areas where our aid, Colombo Aid, the Point Four American scheme, I.L.O., F.A.O., and U.N.E.S.C.O. tread on each others' toes. There is a great need for more thinking about this and more concise action if our present plans and those foreshadowed by the Bill are to be effective.
  As to our own co-ordination, one of the points where I am sorry that this Ministry seemed to give way to the Ministry of Labour was as to its representation on the International Labour Organisation, at Geneva. In most other international agencies the transfer of representation took place fairly fully to the Ministry of Overseas Development. Except occasionally, this Ministry very rarely is available at Geneva for the annual conferences and other assemblies dealing with overseas aid, yet the I.L.O. is one of the largest of the specialised agencies of U.N. doing overseas development work.
  I share the belief of other hon. Members, especially the right hon. Member for Bridlington (Mr. Wood), in the importance of Clause 3, relating to the Indus Basin Development Fund. I had the good fortune to live for 2½ years in the Punjab, some years ago, and at that time this was the key question in every village that one visited, whether in the East Punjab on the Indian side or in the West Punjab on the Pakistan side of the border. The whole prosperity of that region rests upon its agricultural production, and this, in turn, depends on the waters from the five rivers.
  I agree very much with the right hon. Gentleman that the £14 million is money
  1214
  well spent and well worth finding by the British taxpayer, because this is one of the first attempts ever made in trying to prevent war by dealing with the economic causes of war before it breaks out. If it is successful, if it is possible to solve the problem here, it can become the prototype or pattern to be taken forward in other areas where a little foresight can show where the tensions lie and reveal the underlying economic problems. In this way, as a result of this kind of multilateral scheme, it may well be possible to save further conflict and solve the political and economic problems by purely technical means. In this connection, I pay tribute to the International Bank for the tremendous efforts it made on the Indus Basin Scheme in the early days.
  I have a special interest in the provisions dealing with matters within my own knoweldge, that is, technical assistance under the United Nations Expanded Programme for Technical Assistance. I refer to rural development and agricultural co-operative development envisaged under Clause 1 and educational development under Clause 6 of the Bill. I make a special plea to the Minister to support the great work being done in this country by the Co-operative College, at Loughborough. It is a two-way traffic. At present, Oxfam has launched a scheme for helping to develop in Bechuanaland this mutual self-help co-operative system. The registrar of co-operatives in Bechunanaland comes from the Co-operative College, a former lecturer there, Trevor Bottomley, and he will be able to ensure that the Oxfam effort will be used to best advantage.
  Since 1947, first the Colonial Office and now my right hon. Friend's Ministry have used the Co-operative College to train from all over the world co-operative officers for rural agriculture and agrarian development by self-help movements. Five hundred and twenty-two students have now been through the college, coming from 50 countries, and at the present session one-third of the places—that is, about 40—are taken by people from overseas developing countries.
  This is not a static provision. It is a live educational programme which is constantly altering. Now, together with Nottingham University, a two-year course for a diploma specifically designed for

  1215
  overseas students has been developed. A further innovation at the request of the Ministry of Overseas Development will come this summer with a 12-week special course for Latin America and another special course for Tanzania. Four Ministers in the first Government of independent Tanganyika were former students of the Co-operative College at Loughborough.
  This has been the continuing provision and service by a voluntary organisation, the British Co-operative movement, co-operating with the Government so that both voluntary effort and State aid may be aligned to do a useful job for the world at large. I hope that the passing of this Bill will lead to an expansion of it.
  As the Minister probably realised, my preamble leads now to the demand. I hope that there will be a good deal more support for work of this kind and that he will look again at the possibility of grant aid for the college at Loughborough. There is at present an urgent need for the appointment of a senior lecturer in agricultural economics. As I said before, it is extremely difficult to interpret the needs of agricultural growth and development in under-developed countries where the main requirement is for things like credit and thrift co-operative societies so that the peasant shall have enough money to buy seed when we look at these matters from a country which has a system such as ours, with agriculture more or less a full-scale industry scientifically and technologically organised to the last degree of modern development. When one is dealing with the 80 per cent. of subsistence farming which goes on in most under-developed countries, a different approach is called for. If we are to teach people the way to go about these things, a senior lecturer at this college in the sort of agricultural economics applicable to Asia and Africa will be an enormous help.
  The recent Budget makes this request for a lecturer even more urgent because the voluntary side of the college's work rests on the willingness of the Co-operative movement in Britain to donate quite a large amount from its funds to subsidise it. I fear that the payroll tax, taking £10 million out of the surplus which Ls normally available, may well mean that the Co-operative College will suffer in the
  1216
  amount of donations provided. Morever, the tax will require the college itself to find another £2,700 in its annual bill.
  I hope, therefore, that my hon. Friend the Parliamentary Secretary will answer a question which arose at Question Time today. I heard the Chief Secretary to the Treasury declare that educational institutions in receipt of public funds will be exempt from the Selective Employment Tax. In an indirect way, public funds are received from the Ministry of Overseas Development through the bringing of overseas students to the college. Does this mean that, as public funds come in in this way, the Co-operative College will he exempt from the payroll tax. [HON. MEMBERS: "No."] I say that with more optimism than hope that I shall receive an entirely favourable answer.
  In asking for this help, I remind my right hon. Friend that he has already made a step in this direction with another very worth-while voluntary organisation, the Plunkett Foundation, which was recently given £15,000 a year for the next five years for a similar task in bringing people over to Britain and ensuring that others go back to assist in the development of co-operative and agricultural work in the developing countries. I hope that he will follow that precedent.
  The Co-operative College is the only institution offering residential courses in this field. Of all the things we do, the helping of people to help themselves is the most important. The line between charity and aid is very difficult to draw. The two-thirds of the world's population who at present are the dispossessed will be able to raise themselves up only by their own shoe-straps. We must give the kind of aid which enables them to do so. We cannot do it for them. At village level, such work is to be seen in the Panchayat scheme in India and the village agricultural and industrial development scheme in Pakistan. In this way, people can make their own social and economic advance and improve the lot of ordinary men and women.
  The Bill will give statutory basis to a surge forward in helping that large section of the world's population towards a decent standard of life. I hope that the Minister will not only be given this power, but, when he has it, will use it with vision and with imagination.
  7.58 p.m.
  Mr. Anthony Kershaw: It is a pleasure to follow the hon. Member for Willesden, West (Mr. Pavitt). I hope that his representations, which are more likely to be well received than mine, will have some effect on the Chancellor of the Exchequer. We all have great sympathy for the problems of the education establishment he mentioned, and we have in mind many others which work in this as in other spheres.
  The Minister's explanation of the Bill disappointed me a little. I realise that he is to some extent bound by the terms of the Bill, but I had hoped that he would take the matter a little further on Second Reading and tell us how his Department envisages the administration of the Bill and the way its thinking has been developing over the years. Technically speaking, as the right hon. Gentleman will be the first to agree, our thinking on overseas aid has been developing in a good many ways over recent years.
  In the first place, we have the problem of evaluating the aid given. My hon. Friend the Member for Antrim, North (Mr. Henry Clark) referred to the league tables of aid, in which we often indulge in this House, as a vain exercise. Nevertheless, they are always being quoted and we see to it that they are still issued. If they are not very well founded, we should know, as part of the evaluation methods now employed, the amount of aid which each country is giving.
  It is not very meaningful, for example, to say that a certain sum of money has been lent until one knows the terms of interest and the length of time for which the money has been lent. One may find that quite a small sum lent for a long term without interest is fully equal to a much larger sum lent at a high interest in the short term. Possibly there are methods for evaluating and checking these sums and distinguishing between different types of aid.
  Having evaluated the true value of aid we are giving, the next query is whether the type of aid being given is that which is really necessary to the recipient country. As the hon. Member for Willesden, West has made clear, there is no doubt that agriculture is the activity to which, in future, we should pay the greatest attention. Tremendous changes in social
  1218
  habits and in their legal systems and perhaps even in their religious beliefs will be necessary if these countries are substantially to increase their agricultural output. This type of aid should have considerable priority over the type we started off with—the provision of heavy industry for developing countries which has often proved to be not very helpful in the long run.
  Then I should like to know what sort of discipline we expect receiving countries to exercise. We must expect them to exercise a certain amount of economic discipline. We must know what is happening to the money we disburse and that it is being well applied to the best purposes. We should know what is being done, because undoubtedly there is an opinion in donor countries that a great deal of aid has been misapplied. I do not wish to repeat corny old jokes about Cadillacs for African embassies, but, nevertheless, that opinion exists. It is harmful to proposals to give more aid if aid that has already been given has been wasted or has gone in corruption.
  I want to know, therefore, what steps are being taken—I am sure that there are some—to ensure that aid is not wasted. We are entitled to exact also a certain amount of political discipline from the recipients. I cannot fail to remember that when we handed over Ghana to independence it had a full treasury. Now, for political reasons, that treasury is empty and it is necessary for us again to dig deep into our pockets, along with other Western countries, to rescue Ghana from the predicament into which Dr. Nkrumah cast it. It is reasonable to ask to what extent the political stability and political prospects of a country constitute a factor in the giving of aid.
  According to the newspapers and to Answers to Questions in this House, we have decided to give £1 million to Indonesia. This cannot be regarded in any way as aid. I imagine that it is given under the auspices of the Minister of Overseas Development, but it goes against every possible rule about giving aid. It is given under conditions for purposes which we cannot control and under circumstances which lead us to believe that it will not be applied for the purposes for which it was given. In the early days of aid, this might have been the way to do it, but now no one, surely, would

  1219
  give any country except Indonesia £1 million to spend as it pleases. In view of the political confrontation that Indonesia is conducting with our allies I do not know whether this gift is a responsible act. It goes through the right hon. Gentleman's Ministry, but I am sure that he and his officials are are rather horrified by it. It is obviously a foreign affairs matter, but it is unsatisfactory and we should be grateful to hear what the Minister has to say if he is in a position to answer.
  I should also like an exposition of the relationship between public and private aid. The right hon. Gentleman did not mention private aid. Perhaps it is not within the terms of the Bill. But it is important. Private aid totals almost half the aid to developing countries and is rising proportionately. We should, therefore, know what conditions we encourage or discourage for private aid.
  Private aid to developing countries has some obvious advantages. It is inherently profitable, presumably—unless the judgment of the investors is wrong—and, therefore, is likely to last and meet a need in that country; it has a built-in technical education side, because one presumes that a private firm investing in such a country trains local people to take part in the enterprise and take over from its managers in due course. Private aid also stimulates local capital accumulation partly by the wealth that it generates and partly by producing profits which may well have to remain in that country because of local laws. In its own home country, it taps resources which would otherwise not become available for investing in developing countries.
  The House may be aware of the enterprise launched from the base of the N.A.T.O. Parliamentarians conference, called "Adela". It was launched by Senator Javits, Chairman of the Economic Committee of the conference, with the purpose of channelling private aid to South America. It is doing so in an extraordinarily successful way. People went round developed countries trying to induce industrialists of great standing to promise to invest in this consortium for investment in South America. I am sorry to say that not many people in this country were very interested in it. But,
  1220
  with the great resources available to an American Senator, and with the great enthusiasm he has, Mr. Javits managed to get the consortium on its feet and today it is a thriving outfit with headquarters in Switzerland and assets of £40 million which it invests in aid to South American countries on a commercial basis. This is a way in which to channel aid to developing countries that should be examined further.
  What progress is being made by the Government in schemes for the protection of investors in developing countries or for the mutual insurance of private investors against the loss of their investments? If that insurance could be arranged, we might find aid flowing more freely, although one can sometimes go too far in this direction because to protect a private investor completely from all risk is to sacrifice some of the advantages of private enterprise, some of the good features which I have been detailing.
  Furthermore, even without investment protection it is not necessarily a good thing that the free money from private enterprise should flow not into the country of origin, but to countries abroad. That would lead to the home Government doing most of the investing at home. As a Tory, I am against the Government doing most of the investment at home. I want private enterprise to be able to take part, too.
  What progress is being made in co-ordinating our aid to these countries with other industrial countries? I have mentioned the league tables, but some of the practices of our other friendly industrialised countries are not the same as ours. It may be difficult for the Minister to answer me here, even tactless perhaps, but we know that some of them insist on very much more onerous terms for the loans they make than we do and they make it more difficult for us, because the low-interest loans which we give may well be used for repaying the high-interest loans which our friends have already made. What degree of co-ordination has been reached and what can we do to stimulate our neighbours who have substantial surpluses to increase their aid?
  Some of them have little or no colonial tradition. The hon. Gentleman the Member for Heeley said that the Scandinavian

  1221
  countries had a much higher investment per capita in developing countries than ourselves. I do not know where he obtained his figures, but they are quite wrong. The Scandinavian countries are well below us. They devote only about 0·2 per cent. of their gross national product to overseas aid whereas we devote very nearly 1 per cent., on any basis that one cares to take.
  However that may be, both we and the United States, who are among the largest contributors, have balance of payments problems and it was the cut-back in United States aid last year which caused the greatest fall in the total amount of aid which has yet been seen. This is not surprising, because one must remember that the United States gives 60 per cent. of the aid which goes to developing countries, and the slightest dimunition in its very generous gifts causes a very large fall. If our balance of payments problems are not solved by international agreement, and we know that there are difficulties in this, I fear that the aid is likely to come down quite seriously.
  I hope that without going out of order I may refer to the allied subject of trade. The United Kingdom has an extremely good record. The amount of textiles, for example, which we receive from developing countries is far and away beyond the figure which our comrades in Europe are prepared to take. We take as much as 30 per cent. of our textiles from the developing countries, mostly for the associated Commonwealth countries, whereas on the Continent they will only receive 5 per cent. of their textiles in this way. If they would open their markets a little more freely to help the developing countries, they would do more in this way than any amount of aid could achieve.
  I learned the other day with some surprise that the amount of industrial exports which the developing countries have produced has risen surprisingly well and encouragingly recently. It was much better than was expected. If we could induce some of our neighbours to take down the tariffs which surround them, at any rate so far as the developing countries are concerned, it would give these countries a boost which is very badly needed.
  The negotiations over the Kennedy Round will hold things back for the time being. The position has been frozen for so long that it is difficult to see how
  1222
  anyone will give way while these negotiations are in the offing. I would be very interested to hear whether the Parliamentary Secretary can hold out any hope of such a reduction in tariffs or whether conversations along these lines are taking place.
  It is also true that the developing countries are taking more temperate foodstuffs from us, mainly in the form of tinned goods and proteins, exceeding the quantity that we expected them to be able to. This is very encouraging from an agricultural point of view and encouraging from their point of view, that they can afford it. It is likely to inflict fairly profound influences upon European agriculture if we find in the next few years a ready market for all the food which Europe can produce. This transforms what we thought was the position about over-production of temperate foods in this part of the world and may well transform our negotiations over our entry into Europe. Has the Parliamentary Secretary any observations to make about this?
  I realise that I have asked a number of questions, to which it is difficult to be able to reply quickly, because there is no answer readily available. These matters are important and urgent. The food requirements of the developing countries, by reason of their rise in population are increasing all the time. Their imports of food are four times what they were four years ago and their desires are rising equally sharply. In the financial sphere they are starting to borrow to repay the interests on the first loans they obtained and this is a serious situation, because this means that they are borrowing money but doing nothing with it for their own country. This is a situation which the Western world must face as soon as possible.
  In sheer volume of aid I would hazard a guess that we are doing as much as we can afford. There is no painless way of giving. If one gives one does so from one's assets. There is no way round it. It is true that we have found a temporary way round it. We borrow from the United States and give the money away. But we cannot go on like that permanently and, sooner or later, we must put our own house in order. If we are giving the maximum amount of aid then we can make sure that our

  1223
  aid goes further and is better applied. It is not only our responsibility to sustain the countries with which we have been so closely associated in the past—we have a special experience and special expertise to give. I know that we desire to do far more than we are doing and I am quite certain that if we channel our aid in the most expert way we will obtain the best benefits for what we give.
  8.18 p.m.
  Mr. James Johnson: I am bound to say that we are listening to more and more fascinating speeches from the back benches opposite. As the night wears on they become more and more paternalistic and I can close my eyes and imagine myself listening to commissioners in former Colonies telling us how to administer the affairs of subject peoples. It is quite staggering. I have heard of the Licensed Victuallers Defence Association but I appear to have just listened to a speech by the Licensed Money Lenders' Defence Association!
  What is this theory that we must tell independent Dominions upon what terms we shall give them loans and the way in which they shall spend the money? If they do not spend it in the way in which back benchers opposite wish them to spend it then we must cut it short. This is a fantastic theory, and I would warn hon. Members opposite that this is not the way to speak to emergent Dominions who have a full life to lead. I am shocked and staggered. "Paternalistic" is a very mild word for some of the language that we have heard in the last quarter of an hour.
  Mr. Kershaw: Is the hon. Member then in favour of leaving a package of banknotes on the embassy steps and running away, without having any control over how it is spent? If we had all the money in the world and simply did not know what to do with it, that might be reasonable. Does he not think we have responsibilities to see that the taxpayers are properly protected?
  Mr. Johnson: I have never left a packet of banknotes on anyone's backstep in my life. I would simply say, pay less attention to a few of these editorials in the Daily Express about Ghana and £3,000 bedsteads and the like and think
  1224
  of the bush, where I know many hon. Members opposite have been just like myself, and of the enormous numbers of schools, hospitals, piped water supplies and all the other things which make up decent living and compare it with the odd decimal of 1 per cent. which has been lost in peculation, nepotism, corruption, and putting into pockets of Ministers and others. I accept that this is human behaviour—what some Members opposite call human nature. Think of all the benefits given to people by schemes of this kind. Let us have a sense of proportion and little less of this paternalistic stuff, this Col. Blimp attitude which died in the 1940s.
  I listened with a little more pleasure to my right hon. Friend the Minister. I enjoyed him immensely. I always enjoy his language, diction and sentiment. But I did not care so much for the content. I want to say something about the lack of meat in his speech. This is the annual statement, I take it, on behalf of the Overseas Development Department for assistance in 1965. The Minister spoke of "slowing down". There is a slowing down. It cannot be denied that aid in 1965 got bogged down on a plateau. The figure is oscillating—it is not even fluctuating—on a plateau of about £190 million. When measured against the needs and aspirations of the developing countries, this position is quite unsatisfactory.
  The Minister spoke about the "have-nots" at home—pensioners and the like—and of poverty among the colonial peoples overseas. I happened to be in Geneva in December, 1964, when U.N.C.T.A.D.—the United Nations Conference on Trade and Development—was being held. If hon. Members opposite had spoken then, as sometimes they do, to African politicians about the state of their domestic economies in Africa, they would have got a sombre picture of the gap which is widening between the Western States and the emergent territories in Africa. It is quite terrifying to me to be told when wishing to compare the position in the United States with the position in Africa that in 1964 the United States added to their income the equivalent of the entire national incomes of all the States on the African continent, which is about 30,000 million dollars. This is the change in pace of the Western world

  1225
  compared with the under-developed territories.
  We had an election, which I hasten to add we won, in October, 1964. There was a manifesto in which we spoke of establishing a new Department of Overseas Development. I want to consider its balance sheet. A number of very good things have been done. Interest-free loans constitute a good Socialist measure. It has been an enormous boon to these nations overseas. When we hear that the Sudan is spending between one-third and one-half of the money which it gets in loans in servicing past loans, we see how much a benefit an interest-free loan can be.
  We certainly played a constructive part in the Geneva conference. The Minister has spoken about our collaboration with the Swedes in putting up the scheme for supplementary finance to offset unforeseen losses or shortfalls in the sale of their export goods. These shortfalls cause enormous instability and in some instances hinder the completion of their development plans. I cannot over-emphasise this. I should like the Parliamentary Secretary to attempt to tell us how we can mitigate the evil effects of what is happening. Since the early 1950s, much aid has been offset by the fall in the price of our imports, which are the exports of these developing nations overseas. This is the constant theme of African politicians. They feel cheated in this way of much of the help which we are giving them year by year.
  The ideal solution would be if we could guarantee markets here for many of their goods. We did this at one time, but the only thing left is the Commonwealth Sugar Agreement. Mauritius, Barbados and Fiji thank heaven for the fact that we stabilise the market in sugar in this way.
  I understand that there are about 1,500 civil servants in the Department. I also understand that about 1,000 or more experts—if that is the right word; I use it in the best sense—have been added to the Department and to the universities for work planning in order to get more efficiency and more value from the loans which we make overseas. But, for all this, I still cannot see the Department living up to the high hopes of October, 1964, or indeed of our last election pledges.
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  I listened carefully to the right hon. Member for Bridlington (Mr. Wood), who led for the Opposition. It seems to me that the Minister has not been allowed by his Cabinet colleagues to spend the money which he would like. The right hon. Member for Bridlington talked about the National Plan. I wish that I could deny what he said. I wish that I could say that the National Plan would help the Minister. But I cannot. Page 17 says that, while the aim is to increase our national product by 25 per cent. between 1964 and 1970,
  "Aid to developing countries will be retained and the effectiveness of each £ of aid increased."
  Let us see if we can get the effectiveness of each £ of aid increased by more efficient and more effective planning in the Department.
  We made pledges on this in our election manifesto. We stated:
  "We will increase the share of our national income devoted to essential aid programmes."
  I know our difficulties. But if official aid to these territories overseas rises more slowly than our national income, we cannot keep pledges, whatever they may be. Our overseas fellow politicians, the leaders of these territories, note this.
  Many questions have been asked by the hon. Member for Stroud (Mr. Kershaw). I wish to ask only one of the Parliamentary Secretary. Can he say how the Government will maintain our total of aid and investment over the period 1965–70? Is it possible to say that this can be done? I have said that interest-free loans are an enormous boon, but can the Parliamentary Secretary guarantee that the effectiveness of each £ of aid is being increased? If so, this will help people like myself, who are not too happy at the moment about the amount of aid being given.
  Mr. John Biffen: If the Parliamentary Secretary says that the effectiveness of aid is being increased, does not this imply that he is operating standards of judgment which were characterised as paternalism by the hon. Gentleman at the outset of his remarks?
  Mr. Johnson: It simply means that the country has made mistakes in the past. There has not been sufficient manpower in the Department to examine

  1227
  the schemes tackled in the past. We can always learn from experience. I am willing to accept that we can have more efficient planning and more efficient aid for countries overseas.
  Is it a fact that the number of personnel overseas fell by 1,000 in 1964? Can I be told what the figure was in 1965? This is not in the White Paper, but I understand that O.E.C.D. made this statement. I am delighted to see that the technical assistance figure has gone up from about £25 million to about £32 million. Given this increased financial aid, more effective value will be got. The value must be higher if the economic planning staff do the job that we hope they will do with their increased numbers.
  I know that the Government shelter behind balance of payments difficulties, and this is an explanation that I accept for not bumping up our aid to the level that we had hoped. I admit our serious position, but it does not justify a Labour Government "taking it out of the poor" overseas. I ask that we should have the same attitude towards these poorer nations overseas that we have to the poorer segment of our own population. At home, we can help our old-age pensioners. Let us help more than at present the less happy people—I will not call them pensioners—in these overseas territories.
  There is a need to educate public opinion. Goodness knows, we need some counterblast to the last two speeches by hon. Members opposite, and to the vituperation and mean-minded complaints of papers like the Daily Express about the waste of overseas aid to our Dominions overseas. We know the old gags and gossip about Ghana, but let us have a little less of that and more education of public opinion.
  In the past, the main appeal to the British sense of decency and to the kindness of our nation to people overseas, has been left in the hands of voluntary societies. We all know them—Oxfam, the United Nations Association, War on Want, and the like. The public image has been given of overseas aid as another charitable organisation, perhaps additional to the church missionary societies of the 19th century.
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  Cannot the Minister of Overseas Development, together with his colleague in the Cabinet, the Secretary of State for Education and Science, do more in the way of publicity and mass communications with the public? The mere fact of my right hon. Friend the Minister being in the Cabinet is a token to me of the Government's sense of obligation to our former Colonies, but we must explain to the taxpayer at large exactly what we are doing and there is a need for much more education in this matter.
  Mr. Cranley Onslow: Does the hon. Gentleman realise that, if the taxpayer is to be persuaded of the advantages of aid, it will be necessary for someone to produce real evidence to show that it not only achieves the effect of promoting economic development but does so more effectively than any other means could? So for in this debate we have had no evidence from the Minister or from any hon. Member opposite to suggest that.
  Mr. Johnson: Anyone who visited Africa and went into territories like Northern Rhodesia and saw the lack of schools and hospitals, and indeed the basic lack of jobs for the work to be done, which is the basis of the whole of a civilised and decent economy, would appreciate the need for this aid overseas. I have been there and know what is being done. The hon. Gentleman is now nodding his head and he, like myself, must have seen the enormous need for this to be done. I am asking for more than £194 million, if the Government can do this without adding to our balance of payments difficulties.
  I will quote the predecessor of my right hon. Friend the Minister. On the 3rd February, 1964, in this House my right hon. Friend the former Minister of Overseas Development said:
  "Nothing effective is being done to educate our people in this vital matter. This country is full of warmhearted people."—[OFFICIAL, REPORT, 3rd February, 1964; Vol. 688, c. 846.]
  I ask now that the Minister should perhaps think of educating the taxpayer and making him aware of the work being done, and the need for much more work to be done. This could be done by films for mass audiences, exhibitions, the free and widespread distribution of educational material, visual aids for schools and so on.

  1229
  It is very important that we should give an image of this Department to the public at large, showing that it is doing the job. We should make the public as a whole aware of what can be done, and of what must be done much more in the future.
  8.35 p.m.
  Sir George Sinclair: This is really a tidying-up Bill. It gives legal sanction to procedures that are already established, it honours commitments that have already been made and, in addition, it throws in a much-needed pension scheme for contract officers. But although that is the purpose of the Bill it is not what this debate has been mainly about.
  What matters far more than the machinery is the intention of the Government in this whole field of overseas aid. Clause 1 of the Bill gives the Minister wide powers to provide financial and technical assistance to overseas countries, but this will be of no effect unless the Government have the will to allocate the funds. The cold attitude of the Government is shown in the neglect of overseas aid in the so-called National Plan, in the Labour Party's 1966 election manifesto and in their discouragement of overseas investment. These are the facts.
  What a contrast this is to the Labour Party's fervour of 1964. What stirring statements were then made about Britain's responsibilities towards developing countries. What imaginative promises were then made about increasing the share of our gross national product that they would allocate to overseas aid. Where is overseas aid now in the Government list of priorities? That is my first question to the Minister. In my view, it is falling very low in the list.
  We hear the Prime Minister talking of Britain's rôle in the world. And yet he pays scant personal attention—in recent years, at least—to overseas aid. We have heard a quotation from what the Prime Minister said in 1963. Nothing like that has been repeated by him between 1964 and 1966. And yet this overseas aid affects a great part of the world, if we count people. It affects a great part of the Commonwealth. The effort that we are willing to make in helping the poorer countries is certainly a main element in Britain's world rôle.
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  One per cent. of our gross national product is not a great contribution to make. I am glad that the Minister, in moving the Second Reading of the Bill, conceded this. It is not a great contribution. So much of it comes back in trade, in repayment of loans, in the payment of our own people serving overseas and in payments towards their pensions. Indeed, so much of it comes back that it is not a major element in our foreign exchange problem. I am glad that the Minister went some way to agree with this, as his predecessor did before him. This applies both to official aid and to private investment overseas.
  The Americans, too, have found that their vastly greater foreign aid programme is not as great a strain on their foreign exchange as some of their own experts had claimed. For them, too, much comes back in one way or another.
  So the Government are not justified on grounds of foreign exchange in retreating from the promises their party made in 1964. Nor are they justified in abandoning the robust lead given by the Tory Government in 1964 at Geneva at the Conference on Trade and Development.
  In spite of the present financial difficulties, this Government could do more. They should do more. The fact is that the Government have turned inwards and backwards on many of the issues affecting Britain's rôle in the world outside. They have now shown that they have lost the crusading spirit and will to bring more help to those parts of the world which need it desperately. But the need has not become less since 1964. It has increased sharply.
  Britain should, I believe, maintain a leading part in solving one of the main problems of our age, which is the division between rich and poor countries. What is needed is that the Government should have the will to give a higher priority to overseas aid.
  One major political step could help in two ways. If Britain joined the Common Market, we would have the opportunity to strengthen our own economy and our power to help other countries. We could help to persuade the Common Market, as a great economic group, to match the world-wide efforts that the United States are making in overseas aid. She could

  1231
  also help to open vast new markets to the exports of the developing countries.
  The Minister of Overseas Development must know that all the efforts of his Ministry will be frustrated unless the terms of trade between the developing and the industrialised nations improve, especially through stable world commodity agreements and the opening of the richer mass markets to the primary and manufactured products of developing countries.
  He knows also that his Ministry's efforts will be of less avail unless the Government change their policy towards overseas investment, because private investment overseas has a real and vital rôle in raising the standards of living of the developing countries. It is a rôle which many receiving countries themselves are beginning to understand better and to welcome more openly. So much for Clause 1. What is needed is a change of Government policy to make it work.
  I turn now to Clause 4. I welcome this help to the Commonwealth Development Corporation. In recent years, that organisation has earned a splendid reputation for itself and done great credit to this country. It has been particularly successful in pioneering new patterns of economic partnership to meet the special needs of the developing countries, which are short of capital and of managerial and technical "know-how".
  It has been associated in a wide range of projects with the Governments of the developing countries, with both overseas and indigenous private enterprise, and with many local co-operative organisations, of which the hon. Member for Willesden, West (Mr. Pavitt) spoke with such great experience. Some of its most spectacular successes have come in agriculture and rural betterment. I understand that the World Bank has sought the Corporation's help in spreading knowledge of the techniques which it has pioneered.
  I should like to see the Government increasing their financial support for the Commonwealth Development Corporation. It is one of the best ways in which to make our aid more effective and more acceptable in the countries where it operates. Part of the good effect of this is the partnership between private enterprise,
  1232
  State enterprise, corporations, co-operative movements, and the peasant farmers. This, on the ground, is the way to help people to help themselves. This is why it is proving one of our best instruments in rural development, where the need is most urgent, the problems most difficult, and, in the end, the opportunities for advance greatest. It is for these reasons that I welcome the Clause and the power which it seeks for the Government to advance money to this Corporation to carry out long-term schemes and to defer payment of interest while those schemes are getting under way.
  Before I sit down, I should like to say a word or two only about the new pension scheme. This is to fill a gap which has long remained a weakness in our care for those who choose to go overseas on contract to work in developing countries, and would like to go again, but feel that they must build up some reserves for their families against the time when they come back. The fact that they can now pay into a pension scheme, and that the Government will contribute as well, is an incentive to take up second and even third contracts, and it is in those contracts that the experience gained in their first years becomes most valuable for the country which is, for the time being, their host. This is a small but very important step forward, and I welcome it.
  What I should like to see, though, in getting greater continuity for our people working abroad is even greater use being made in the universities, in technical colleges and in local government, of the additional posts which enable these bodies to send overeas some of their best people for periods—it may be one tour, it may be two—but then to offer them in this country a return to their own field of work. This will help them to maintain some continuity of effort, and, indeed, to make an enriched contribution in this country by spreading knowledge of the problems of the countries in which they have been working.
  I believe that this is something which the Government can do through the University Grants Committee in even greater measure than they are doing at the moment. That this is a very important interchange in this field is also important: postings are often done between comparable institutions in the overseas territory

  1233
  and those here. In all this, there is no whiff of the paternalism which, quite unjustly, was thrown as a charge at some of my hon. Friends. People are not concerned with paternialism today, from whichever side of the House they speak. They are deeply concerned with trying to help people to help themselves. This is what whoever speaks in favour of aid to overseas countries is trying to do.
  8.48 p.m.
  Mr. Arthur Blenkinsop: I think that the criticism of the hon. Member for Dorking (Sir G. Sinclair) of the Government's aid to developing countries might have been rather more effective had he at the same time paid some tribute to some of the new developments for which my right hon. Friend and his predecessor have been responsible, particularly interest-free loans and other matters of this sort.
  But I share the hon. Gentleman's concern, and, indeed, the concern expressed by many of my hon. Friends, about the way in which the aid appears to be in danger of slowing down, and I think it is right that our anxieties about this should be freely and openly expressed. I share the anxiety of many of my hon. Friends about the reference to this in the National Plan.
  To take up the point made by the hon. Gentleman about the association of Britain with Europe as one means of making a greater contribution towards this whole problem, I would remind him of the comment made by my right hon. Friend the First Secretary, in answer to Questions in the House only a few days ago. My right hon. Friend was making precisely that point. He was eager to achieve a new association with Europe as widely based as possible, because it would enable a much more effective contribution to be made by Europe to the developing countries. The point of view expressed by the hon. Member for Dorking is shared by many of my hon. and right hon. Friends.
  Sir G. Sinclair: I did not include the Secretary of State for Economic Affairs in what I said. What I regretted was the lack of leadership by the Prime Minister in this matter, and his failure to nail this priority somewhere near the masthead.
  Mr. Blenkinsop: Surely the hon. Gentleman agrees that my right hon. Friend the Prime Minister has arranged for the Secretary of State for Economic Affairs to give special leadership on the whole question of Europe. One of the important factors in this matter is the achievement of a greater contribution by Europe to the developing countries.
  I am sorry that the hon. Gentleman did not refer to the positive and valuable contributions that my right hon. Friends have made in this matter, at a time of great pressure. If we cast our minds back to comparable periods of economic pressure in the past—and pressure which in many ways was far less severe than we have been suffering over the last few years—we realise what very serious cut-backs there were in aid of this sort. In the past, our international contributions were some of the first to be cut back.
  I know that some hon. Members opposite welcome that, and regard it as proper, but for those who do not welcome this—and I include the hon. Member for Dorking among them—it is clear that to have an expansion of aid we need to introduce some historical perspective into the matter. We must consider the way in which aid was cut back in the past and the extent to which, so far, the position has been held by this Government. I merely express some anxiety in case there is a danger of our falling back again in the immediate future.
  I took part recently in an interesting debate in the Council of Europe Assembly on the very issue of European aid to developing countries. It is of some consequence that at that meeting, in which there was a very well-informed debate, great stress was placed on the need for our richer industrial countries not only to maintain but to increase their joint contributions to developing countries, and the necessity of trying to reach the target of 1 per cent. of our national income, to which we have so often referred in the past.
  We should not congratulate ourselves too much. We must consider the real contribution made by France and other European countries. We have been inclined to congratulate ourselves too much, and to forget that many of our European partners have made equal if not larger contributions for many years.
  Sir G. Sinclair: The hon. Member asks me to cast my mind back in history. I will do so. I remember the period of the Second World War, during which the foundations for the great aid system which Britain pioneered were fostered and developed.
  Mr. Blenkinsop: I want to deal with one or two of the points which were particularly referred to in the Council of Europe debate. I welcomed the references made in the resolutions which were finally passed, when we discussed aid to developing countries, to the need to include a proper examination of the population growth problem. I hope that, in winding up, my hon. Friend will make some reference to the contributions which we are seeking to make, through our technical aid and the social services which we help to build up, to the health education programmes which are so urgently needed to work in co-ordination with the economic development programmes in so many of these countries.
  It was a great tragedy that, in the past, the World Health Organisation, the body with one of the major international responsibilities for health education work, should have been denied the opportunity to offer advice on matters relating to population increase. I am glad that that restriction has now been withdrawn, but I am anxious that any assistance and advice should be offered by means of the health programmes of the countries concerned rather than as a completely separate and isolated item.
  I want also to ask my hon. Friend to say something about the development of our overseas volunteer schemes. We are all very conscious of what we owe to the main voluntary bodies which have been assisting in organising voluntary aid overseas in the past years. We are very glad that the numbers of volunteers have been increasing, but there has been some criticism of the separation of the four main bodies concerned. It has been suggested that perhaps a more efficient organisation could be achieved if there was a rather closer link between the four bodies. I am not expressing an opinion, but I should like to know whether my hon. Friend has any comment to make.
  I should also like to ask him whether, in this sphere of overseas volunteers, we have had any more success in getting
  1236
  volunteers who are non-graduates. As I see it, we not only need the aid and assistance of the young graduates, a great number of whom are keen to offer their services: we also need the advice of a range of young men from the shop floor, who have a great deal of practical experience and knowledge to contribute, which could, in many cases, be just as valuable as the academic training which other volunteers have to contribute. It has been said that we have, unfortunately, been unable to attract as many from this sphere as from among graduates. I realise that, in most cases, this will mean securing agreements with firms to release some of their staff and I realise how difficult this may be, but I should be interested to know whether any progress has been made in this direction.
  Within the sphere of technical assistance, I have found abroad—particularly in health education projects—some extremely valuable assistance given by public health inspectors. We are short of these men in this country, but there is no doubt that their kind of practical experience is of immense value in developing countries. The Association of Public Health Inspectors made clear recently how eager it is to encourage its members to go abroad to join in practical projects. Can my hon. Friend say whether this offer is being taken up?
  I join my hon. Friends in urging my right hon. Friend to continue to press for as large an allocation as possible for this work. My hon. Friends and I have given pledges involving the encouragement and development of practical schemes of overseas aid. We all feel that this is something which cannot be held back even in the critical financial and economic circumstances which face the country. Any steps which my right hon. Friend can take to get a larger slice out of the future national cake will have the very great support of his colleagues on these benches.
  9.1 p.m.
  Mr. Philip Goodhart: The hon. Member for Willesden, West (Mr. Pavitt) asked who would be the Professor Keynes of the under-developed world. Most of us would agree that it is Professor Arthur Lewis, the distinguished West Indian economist.
  Some years ago I ran into Professor Lewis when he was temporary economic

  1237
  adviser to Dr. Nkrumah. Professor Lewis was then in a state of some anxiety. Ghana had received a short-term windfall through an increase in cocoa prices and temporarily there was more money in the Treasury than had been expected. Consequently, Professor Lewis put forward well-reasoned plans for providing piped water in the villages, the development of schools and many of the other good things about which the hon. Member for Kingston upon Hull, West (Mr. James Johnson) was speaking recently.
  These proposals went out of the Ghanaian Cabinet window and instead another battalion was raised for the Ghanaian Army, although perhaps Dr. Nkrumah now wishes he had not spent the money on raising that battalion.
  Mr. James Johnson: I hope that the hon. Member will accept that a lot of this money went to most worthy projects. There is a Volta Dam. If he goes into the bush in Ghana he will see many social, welfare and educational schemes which are benefiting millions of Ghanaians.
  Mr. Goodhart: I well remember Professor Lewis shaking his head as he described the battalion of the Ghanaian Army, with the barracks which would be built for them and the new hall to be built to take conferences which will now never take place. Professor Lewis left Ghana and went elsewhere, where his wise advice will be taken more readily. It seem to me that it is not arrant colonialism or paternalism to suggest that where countries show that they cannot manage aid, and put it to sensible projects, we should withdraw, just as Professor Arthur Lewis withdrew.
  The present Government have been accused of a great many crimes in the 18 months they have held office. They have been accused of running away from crises, of running in the wrong directions during crises and of doing the opposite to that which they said they would do. I can make a unique charge against the Minister. It is to accuse him of not having thought of any political gimmicks and for not having used the channels of publicity as fully as he might, because I am struck by the way in which the glamour has gone out of this political sphere.
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  If we think back to the early 'sixties—to the foundation of the American Peace Corps, the formation of our Voluntary Service Overseas Movement and, indeed, to the incursion of the Communists into overseas aid—we realise that there was an air of excitement and enthusiasm which somehow appears to have gone sour in the last couple of years. No doubt it hasgone sour because of the reaction of some of the receiver nations, but we appear to have lost the enthusiasm which we once had.
  I suppose that one good reason why the Minister does not beat loudly on the drum that he has available is that, if he did, he would lay himself open to the charges that have been made against him by hon. Members tonight about the way in which the increase in aid has slowed down; the way in which aid seems to have almost disappeared from the National Plan. Indeed, the right hon. Gentleman is not getting the resources that the Labour Party said it would make available—but that, of course, was said when hon. Gentlemen opposite were in an election frame of mind.
  My hon. Friend the Member for Stroud (Mr. Kershaw) reminded us that this country has had a very honourable record of allowing in the products of other countries. We have had virtually no barriers at all against the import of goods from the Commonwealth, particularly manufactured items. But this has changed and the import surcharge has fallen most heavily on the newly developed industries of some Commonwealth countries.
  The Bill refers to the Indus River Development Plan and we are all agreed that this agreement was one of the few bright spots in Indo-Pakistani relations since the war. According to the Bill, in 1966–67 we will be giving another £3 million to the Indus River Development Scheme. Largely as a result of the import surcharge, the amount which India and Pakistan have been able to earn in this country was reduced last year by £12 million, and it does not make sense to hand out small packets of aid and at the same time make substantial cuts in the amount that these developing countries can earn from us.
  It is said that the import surcharge is to be removed at the end of November. Perhaps it will be, but if the economic situation continues to be as dark as it is

  1239
  at the moment there will be need for a new system of import control to take its place, and perhaps a direct import quota system. It is the job of the Minister of Overseas Development, when these new proposals—whatever they are—for import limitation are put forward, to fight for the interests of developing nations, in particular, developing nations of the Commonwealth.
  Of course, there is much in the Bill which is perfectly worth while. No doubt it is a very good idea, as set forward in Clause 6(2), to recruit teachers from the Republic of Ireland and send them to the Commonwealth in Asia and Africa, but it seems a trifle outlandish to do so. The Minister will not be judged as to whether he is a success or not by his ability to get Clause 6 on to the Statute Book, but by his ability to protect the trade of developing nations from the barriers which the present Government so often want to raise against the free flow of trade.
  There is one way in which the Bill truly represents the Government's aid programme. As it stands, it is a technical mish-mash and does not reveal any of the information we might reasonably expect to have. I cannot help contrasting this Measure with the annual aid Bill presented to the American Congress, which contains the full appropriations for the year and provides an opportunity for a full, searching debate by Congress on both the size of American aid and the way in which that aid is used—the strategy which lies behind the distribution of that aid.
  This is a subject on which we are left completely in the dark by the Government. As a result, after the Minister's speech, after the Bill, after the White Paper and after Questions which the Minister has answered from time to time, we still have absolutely no idea of the sort of strategic thinking which the Government have on these problems. How do they decide between sending an expert in the growing of brussels sprouts to Sierra Leone and an equally worthy claim for a teacher of Sir James Pitman's new alphabet to Brunei? This is what the strategy of aid is all about. All over the world there are people who can use an unlimited amount of aid from this country. What
  1240
  the Minister and Ministry have to do is to make a choice between competing and perfectly respectable claims. As a result of this debate we are still no nearer to knowing how the Ministry makes up its mind about those competing claims.
  Instead of these technical Bills which tend to come before us once a year, I am of the opinion that we should have each year a major full-dress debate on the Government's aid policy in which we could discuss both the size of the programme and the way in which it is to be used. I admit that I can understand the Government's reluctance to have much more debate on this subject.
  9.15 p.m.
  Mr. Cranley Onslow: I am reluctant to say anything at this late hour which might spoil the cosy atmosphere of the debate as it has been conducted so far, but I must ask for a few minutes in which to express, with such force as I can still command, a minority view. The Minister introduced the Bill in a frame of mind which I would describe as starry-eyed and many of the speeches which have been made from both sides of the House I would describe as equally starry-eyed.
  What strikes me is that throughout the debate, as I pointed out to the hon. Member for Kingston upon Hull, West (Mr. James Johnson), who, I am sorry to see, is not in his place, no one has asked himself, let alone attempted to answer, two crucial questions. The first question is: does aid in the form in which we are talking about it now actually promote economic development?—and this is one of the aims of the Bill. The second and linked question is: is there no other way which will promote economic development more effectively?
  Until these questions have been asked and examined, it is a little naïve to take it for granted that there is only one way of tackling the problems of the underdeveloped world and that that is by means of aid. We have now some 15 years of evidence which can be examined, much of which is extremely suggestive. This evidence certainly does not justify the axiomatic assumption that aid is the only way, any more than there is anything magical about the 1 per cent. of the gross national product figure which we hear thrown about so frequently.

  1241
  It is all very well for hon. Members who have been about the underdeveloped world to be taken in by the impressive dams, the ceramic factories and the schools. I, too, have seen them. These are not necessarily synonymous with economic development. They are not necessary proof that only aid can provide economic development. The House would make a great mistake if it assumed either of those two things.
  I believe that the evidence suggests very powerfully that aid is in danger of becoming a sort of juggernaut and that if it is not checked it may well crush both the developed and the underdeveloped worlds under its wheels, because its economic consequences will be most damaging.
  Mr. Pavitt rose—
  Mr. Onslow: No, I will not give way now, because others wish to speak.
  I am not delighted that there has been an increase in aid in recent years. To my mind, the only good thing in the National Plan, if I took it at all seriously, would be the fact that there is no provision in it for a constant and open-ended increase in aid. I am not concerned here with the golden bedstead type of waste, the Daily Express criticisms. Let us ignore the fact that there are corruption, nepotism and inefficiency. Let us cast all that aside and examine aid on the assumption that it has been administered perfectly.
  I believe that a very strong argument can be sustained against aid as we know it now. It has been very effectively summarised by an eminent academic working and specialising in this field, whom many hon. Members will probably know by name, Professor Bauer, of the London School of Economics. He said:
  "The widely publicised type of large-scale, indefinite aid—what might be termed mainstream foreign aid—has not served to bring about an appreciable rise in living standards in under-developed countries, or to promote their economic development, despite the large sums that have been and are being provided. While foreign aid may, indeed, sometimes serve its commonly avowed purpose of improving economic conditions in the recipient countries, in general mainstream aid has not fulfilled and cannot fulfill the expectations which it arouses. Indeed, aid often damages the development prospects of the recipients."
  That is a very serious criticism, but it can be sustained. Obviously, aid alone is
  1242
  not enough. There have to be other qualities and conditions present in the country concerned if any progress is to be effected. Money alone is not everything. I imagine that hon. Members will concede that.
  The other side of the coin is that aid as it is provided often prevents these conditions from arising. It positively hinders development. It has a bias towards the increase of governmental power. It encourages centralised planning. Countries providing aid very often insist that there shall be centralised planning carried out by the recipient countries, which have not in many cases the bureaucracy to maintain ordinary law and order. The provision of aid obscures the need for cultural change. It creates an impression that the money will come from outside regardless, and that there is no need for internal change. This must be damaging. It intensifies the struggle for political power because it increases the prizes of power, and this must be damaging. It encourages national insolvency because the means test upon which much aid is distributed, and necessarily so, raises the presumption that the more severe the foreign exchange crisis a country can show the greater is its chance of getting aid. This must be damaging.
  Mr. Pavitt rose—
  Mr. Onslow: No, I shall not give way. There is not enough time.
  Aid produces the situation in which we can all see the phenomenon of the graduate unemployed. This can be seen throughout the Far East, and it must represent a tremendous waste of resources. It produces a trend to pauperism. The progress of the Indian economy in the last 15 years has been summed up as a progress from poverty to pauperism, to a state of dependence on doles, a sort of institutionalised position in which the recipient is incapable of ever providing for himself by his unaided efforts again. I do not suppose that hon. Members opposite will deny that that must be damaging.
  There are alternatives, but we so often ignore them. This Government discourage private investment overseas, yet, as my hon. Friend the Member for Stroud (Mr. Kershaw) emphasised, this is extremely important. Much more could

  1243
  be done in this way, but the more foreign exchange available is pre-empted by official aid programmes the less there is for private investment. The thing is self-destroying.
  There is a great need for change at home, but this we persistently ignore. It seems ludicrous that £60 million of public money should be put into shoring up the Lancashire cotton industry at a time when we are maintaining quotas, and not particularly generous quotas, against imported cotton textiles. It would be much more good sense to divert £60 million or more to redeploying resources within our own economy, which would then enable us to take full advantage of the cheaper cotton textiles which could be manufactured in the under-developed world and which would provide their makers with much needed foreign exchange.
  The Selective Employment Tax will have a similar effect. It will subsidise inefficiency in our own economy. I fail to understand how hon. Members can believe that we can make any contribution to economic development on a world basis so long as we are prepared to devote the taxpayer's money to subsidising inefficiency at home or abroad.
  I hope that there will be chances to elaborate some of these points, which seem so to infuriate the hon. Member for Willesden, West (Mr. Pavitt). I shall gladly debate them with him in Committee. It is a great piece of self-deception and self-delusion for us to believe that we are achieving through aid many of the aims we set ourselves and which we rightly value highly. As much as anyone I want a world of peace and prosperity, but the world will never achieve peace and prosperity so long as we persist in ignoring reality—and this debate has ignored reality to a frightening extent.
  9.25 p.m.
  Mr. Michael Jopling: I hope that my hon. Friend the Member for Woking (Mr. Onslow) will forgive me if I do not follow the line he has taken. Whilst all of us in this House appreciate and understand many of the shortcomings of aid, we feel that it is nevertheless doing a great job and is
  1244
  helping genuinely to increase the prosperity of many under-developed countries. I want to concentrate my remarks on agriculture, and I am glad that most hon. Members so far have stressed the importance of upgrading and developing the agricultural industries of these countries.
  It does not need to be stressed here, of all places, that the first priority of developing countries is to improve their agricultural industries. It has been proved that more sophisticated projects must come second to this basic industry. This is a lesson that many underdeveloped countries have found hard and sometimes slightly degrading to accept. But the moment is coming when they will come to this way of thinking.
  The way in which we and other developed countries can help most in agriculture is in an advisory capacity. I do not believe that there is great scope or necessity at this time for devoting ourselves too much to research because, I understand, the present level of research and knowledge would allow a 50 per cent. increase in yields in most of these countries. It is in an advisory capacity that our rôle is strongest.
  In recent years we have come to the end of an era in assistance to agriculture. In that era, there were career agriculturists who devoted their lives to these countries. I want to quote some figures given in Answers in this House during the last 12 months. In the five years ended June, 1965, a total of 306 agricultural officers left Her Majesty's Overseas Civil Service. Some of them were re-engaged to go overseas again, but only a small proportion. Indeed, in the two years 1963 and 1964, I understand that only 24 agricultural officers were re-engaged for service overseas.
  The lesson of this is that we have to rely, for this type of advisory work in the under-developed countries, very much more on people going abroad for short terms of service. This in itself promotes great difficulties and problems which we must face. The situation now is that the Minister makes no permanent appointments of any sort of agricultural officers to the under-developed countries and, of course, there are relatively few in the private sector.

  1245
  Thus, many graduates in temperate agricultural studies in the United Kingdom, the United States and other countries go to under-developed countries to do advisory work but have had very little training in tropical agricultural studies. For example, I can quote from answers that I have received showing that from mid-1962 to mid-1964, of 113 appointments made in Africa by the Minister and his predecessors, only 36 had formal training in tropical agricultural studies. Again, of the 60 appointments the Minister envisaged making to the year ended July, 1966, in Africa he estimated that only 25 per cent. would have had a formal training in tropical agricultural studies. I quite agree that not every agricultural officer who goes abroad necessarily needs a training in tropical agriculture, but many more than the: present number going out are needed. This is enormously important.
  I know from my own experience, being a graduate in temperate agricultural studies in this country, how utterly useless I would be if I went out to Africa, or a similar country, and tried to be helpful. I would not understand the immediate problems of pest control and crop production which are so important. I am convinced that the Minister must set his mind trying to set up more crash courses for these people going overseas for short terms of service. That is the way in which the Minister can obtain more use and value out of the short term which these experts spend overseas.
  I know what is the usual answer to the points I am trying to make, because I have had it several times from the Minister. He says that there are already quite adequate facilities in the School of Tropical Medicine in Trinidad, at the University of the West Indies. I do not want to dwell for too long on this, but the Minister must know, without my going into detail, that all is not well in the School of Tropical Agriculture in Trinidad, particularly so far as education for those who are going to Africa is concerned. I do not know quite what the situation is now, but I know that only a relatively short time ago there were no teachers in Trinidad who had had practical experience in Africa. This is just part of the problem. On 3rd May, 1966, I received the following Answer from the Parliamentary Secretary:
  "…familiarisation with local conditions is effectively achieved by posting to a specific
  1246
  job experts in tropical agriculture who have received their general training at such establishments as the Faculty of Agriculture of the University of The West Indies."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 728, c. 1404.]
  That was a particularly fatuous reply, because may I first ask the hon. Gentleman where else people could go? The answer is virtually nowhere. Secondly, one must say that in the last five years there have been only 62 graduates from this country, receiving formal education in tropical agricultural studies at the School. If the Parliamentary Secretary thinks that an average of around 12 per year is adequate for the agricultural problems of the under-developed countries he must have another think.
  What must happen is that establishments must be set up, particularly in Africa, which is a country to which I direct most of my remarks, providing short courses, enabling experts to familiarise themselves, for the short period of time which they are going to spend abroad, with tropical agricultural problems. When this training is received it is far better done in a relatively short time by a full-time course rather than a part-time course, in conjunction with other jobs. There is great scope here for us to combine with the United States, which has exactly the same problem. Will the Minister have discussions with the United States or at least ask the Americans if they would be interested in something of this sort? The conclusion at which I have arrived from talks with Americans is that they would be very interested in a joint project with this country.
  I hope that the Minister will look at this matter again and not just sit back and be satisfied with the totally inadequate facilities in Trinidad. I trust that he will see whether it is possible, particularly in Africa, to set up an institution at which short courses of, perhaps, two or three months could be given for the agricultural experts who are going to the continent to help for short periods in increasing agricultural production.
  9.35 p.m.
  Mr. J. Bruce-Gardyne: I confess that I have found the part of the debate which I have heard—and I apologise to the Minister for being unavoidably prevented from hearing his

  1247
  speech—a little disturbing, because it seems to me that it has concentrated entirely on one end of the aid equation involved in the Bill. There are surely two aims: the receiving end and the giving end. What concerns me is what one might call the reverse side of the Bill—the impact of our aid programme on our balance of payments.
  My only reason for intervening in the debate stems from an Answer which the Secretary of State gave my hon. Friend the Member for Banff (Mr. Baker) in c. 1403 of HANSARD for 3rd May, in which he said that the proportion of official bilateral aid which was tied to the purchase of British goods in the calendar year 1965 amounted to 43 per cent. directly and 16 per cent. indirectly. I understand that the right hon. Gentleman has said in this debate that the proportions which he anticipates under this Bill are roughly similar.
  The Minister's reply to my hon. Friend's Question astonished me, because I had always assumed that virtually all, or at any rate a very large proportion of, the outgoings under the heading of bilateral aid by this country was tied to the purchase of British goods. If a substantial proportion of our official bilateral aid programmes is not tied, we cannot ignore the impact of untied aid and the aid programme generally on our balance of payments position. It is to that point that I wish to address a few remarks.
  Some hon. Members opposite complain about the burden on our balance of payments of military spending by the British Government overseas. To some extent, I sympathise with them, but it is worth bearing in mind that, over the last five years, approximately 40 per cent. of our spending—rather more than £750 million out of nearly £2,000 million deficit on Government account—was accounted for by non-military items. I imagine that the vast bulk of it went on aid.
  I had always assumed—and this is why the Minister's reply on 3rd May astonished me—that the bulk of the expenditure on overseas aid was fed back through orders for British goods to be supplied to the countries receiving the aid. I pointed out to the Minister, in a supplementary question, that the Brooking's Institute, in its monumental study on the American balance of payments
  1248
  published in 1963, calculated that approximately 90 per cent. of American aid, on bilateral account and multilateral account, was fed back by orders for American goods. I suggested to the Minister that this country could hardly afford to support a much smaller proportion. I had always assumed that the proportion of aid which this country offered, both through bilateral and multilateral programmes, which was fed back in terms of orders for British industry, must be at least as high as 90 per cent., and that is why I was so astonished by the Minister's reply.
  I appreciate, of course, that estimates of the feedback are bound to be approximate. I have no doubt that the total feedback in terms of orders for British goods is substantially higher than the 59 per cent. which the right hon. Gentleman quoted to my hon. Friend the other day. I believe that, in view of the destination of multilateral aid programmes, so many of which go to Commonwealth countries, our feedback from our contribution to multilateral aid programmes is probably substantially higher than 100 per cent.
  I would accept, and I have no doubt, that because of the destination of aid programmes, both bilateral and multilateral, this country might well stand that we can really afford to leave a far greater proportion of its own official, bilateral aid programmes untied to the purchases of its goods than the United States can afford to do. This seems to me to be economic lunacy in our present balance of payments situation. I found highly unsatisfactory the Minister's bland reaction to the suggestion that the proportion of our aid which was tied was too low in view of our balance of payments situation.
  I accept that we need more information on this subject, so I asked a series of Questions of the Board of Trade and of the right hon. Gentlemen's Department during the last day or two. I noticed, from the reply I received from the Board of Trade, that a considerable volume of export business is also financed from untied and partially tied British aid, technical assistance and aid contributed

  1249
  in various ways by third countries, but that the value of this cannot be precisely estimated.
  I recognise that it cannot be precisely estimated, but we ought to have some sort of answer from the right hon. Gentlemen's Department or from the Board of Trade. I do not believe that we can afford to distribute this money without having any estimate of the return we get, not only from our aid programmes but from the aid programmes of third countries. I agree that we cannot have a precise estimate, but it is not unreasonable to ask that we should have some estimate—a rough estimate, at least—of how much is being fed back in terms of orders for British industry.
  I understand that the right hon. Gentleman has calculated that about three-fifths of the £140 million which is estimated to accrue from the Bill will be fed back in terms of tied aid. I wonder whether he has any figures for the estimate of feedback over and above tied aid, in terms of the current year's programme of £140 million.
  We hear regularly from the Chancellor of the Exchequer that we cannot afford, with out balance of payments problems, to borrow short and to lend long, and I accept that. In the case of our aid programmes, however, given our present balance of payments situation, in effect every penny which we lend has been borrowed already. In this case, we are not merely borrowing short and lending long, but we are doing so and getting a very poor return.
  9.45 p.m.
  Mr. David Steel: I should like briefly to comment on the speech of the hon. Member for Woking (Mr. Onslow). I am glad that he was not followed in his course by the hon. Member for Westmorland (Mr. Jopling). The Liberal Party would like to see, if possible, 1 per cent. of the gross national product devoted to overseas aid. We recognise, of course, that this is a desirable objective which in the present economic situation may not be attainable. If this 1. per cent. were devoted to overseas aid, the amount which we would be spending in the current year would be more like £290 million, whereas the actual amount as it has steadily increased over the last two or three years is, I understand, about £225 million.
  1250
  The hon. Member for Woking seemed to say that the Bill was highly dangerous in conception. He had a theory that aid was a bad thing, because this wealth coming into a country would produce a situation in which people would want to get power. If one takes the reverse of that argument, it means that if only people were to remain in poverty, that undesirable situation would not occur.
  The hon. Member also used the word "dole" in referring to aid and suggested that it was a bad thing to hand out dole to these under-developed countries. In fact it is not dole in any sense, nor is it making those countries necessarily soft and unable to stand on their own feet. The whole point of the aid which is given by this country is that it should be channelled into useful sources—for example, the creation of major waterworks and dams, which produce power and irrigation for a country—and help to build up the infrastructure and enable the under-developed territories to stand on their own feet. Aid of this kind is the very opposite of making those countries soft or dependent upon other countries. It is purely an immediate attempt to make them independent of future aid from outside.
  The general view expressed by the hon. Member for Woking—that in our present balance of payments situation we ought not, perhaps, to give aid to underdeveloped countries—was expressed to me by one or two people during the recent General Election campaign. I am certain that that is not the view taken by the Conservative Party or even by most hon. Members of the Conservative Party in this House, but it clearly is a view which finds favour in some cases and it was more or less expressed by the hon. Member for Woking. I hope that it is a view which is not very widely held.
  I hope that just as in the course of time all parties in the House of Commons and all hon. Members have come to accept the responsibilities of the Welfare State, in which rich and powerful individuals in our society accept moral responsibility for looking after the poor and the weak, so they will come in time, perhaps, to a more enlightened frame of mind in which they accept that we must move towards a welfare world in which the richer and stronger nations accept a

  1251
  moral responsibility for looking after those who are poor and weak.
  9.49 p.m.
  Sir Frederic Bennett: During this debate, in which I have listened to every speech, there has been a division between those who think that we have a moral and ethical responsibility for helping the under-developed countries and those who seek to justify aid on more pragmatic grounds.
  I should like to put another point of view, that there is an overriding self-interest, apart from pure economics, in trying to close the widening gap between the haves and the have-nots in our own essential interest as well as on any moral ground. One of the earliest remarks of Sir Winston Churchill which I read was when, as a very young man before the beginning of the century, he said that the era of the dynastic wars of kings was coming to an end, and they would be replaced by the ideological wars of the peoples; after that, and even more terrible, we might approach an era of conflict between races and colours.
  It is an unhappy accident of history that the haves and have-nots are today divided along lines of race and colour, making the tensions greater than otherwise they would be. I suggest to those of my hon. Friends who cast doubt upon that that, whereas it is quite justifiable to argue how best to achieve the end, there should be no doubt about the end that we want to achieve, which is the prevention of that gap widening at its present terrifying pace.
  I am deeply interested in this subject, and I wish that there was more time available. I should have liked to comment in great detail on the fascinating speeches, even though I have not altogether agreed with some of them, from both sides of the House.
  I was impressed with the maiden speech of the hon. Member for Sheffield, Heeley (Mr. Hooley), because one of the remarks that he made was to emphasise the importance of technical assistance, rather than more ambitious aid programmes. I can think of many good reasons from our point of view why my economically-minded hon. Friends should think that there are great advantages in technical assistance overseas. First, it is
  1252
  the cheapest, and that is always an advantage. Secondly, it encourages self-help in the countries concerned, which is also an advantage.
  I was impressed by the emphasis that the hon. Member laid on the need for a greater production of technical people and graduates in those countries—people like doctors, engineers, and agriculturists. That is a point which was made with great force and considerable wisdom later by my hon. Friend the Member for Westmorland (Mr. Jopling), who stressed the need in the future for a greater emphasis on agricultural experts.
  I was amused to hear it said that one of the troubles about the under-developed countries is that they have copied from us the undesirable trait of having too many politicians and lawyers. Being both myself, I am still able to bring in a healthy air of condemnation of that practice in the under-developed territories. One thing which they could bring in with advantage is a selective employment tax on lawyers and politicians, because that might do something to deter their growth.
  My hon. Friend the Member for Antrim, North (Mr. Henry Clark) was not quite right in saying that we were now losing all control over what the Minister will be able to do as a result of the Bill. He will be subject to his Vote being approved, and there are sharp and decisive ways of keeping control of the Minister's spending of this money. We are not giving him a blank cheque simply because we are codifying previous methods of giving aid.
  There were many other trenchant criticisms made by my hon. Friend, and those need answering. They were the very real public doubts, not about the need for aid but whether it is being most usefully allocated and spent at the present time. The same point was made by a number of other hon. Members afterwards.
  The most important point made by the hon. Member for Willesden, West (Mr. Pavitt) was to emphasise the need for the Indus Basin Development Fund to go ahead to the maximum extent. Outside economic considerations, it can be said that, without it, the friction between Pakistan and India would have been even greater than, unhappily, it is today.

  1253
  My hon. Friend the Member for Stroud (Mr. Kershaw), in a very interesting speech, raised the question of the protection of private investors. There is at the moment the Export Credits Guarantee Department, and there have been recent improvements in it, but I say, both about this Government and about the last Conservative Government, that it is a pity that many of the improvements in the E.C.G.D., for which many of us have been pleading for some years, were not made much earlier, because it has now been found possible to make them without any great loss being recorded to that institution.
  There are still further improvements to be made, and I add a plea of my own. There is an important rôle for private investment, which everyone has conceded, and I think that it is time we looked for some sort of insurance scheme when the E.C.G.D. does not apply, because of default on political grounds. Other countries are looking at this, and I think that there is a case for a serious examination into whether we can meet this, because this in itself would do more than any other item to accentuate genuine investment overseas as opposed to aid. A private investor is prepared to take risks with his money, judged on his own expertise, but in these days of cold war friction it is a little hard to expect him to take on unprotected the full risk of political upheavals in the countries into which he enters.
  I do not think that the hon. Member for Kingston upon Hull, West (Mr. James Johnson), with whom I have exchanged shots during many Commonwealth debates over the years, was quite fair to my hon. Friends, because they have every right, and indeed we all have a duty, to try to protect the taxpayers' money in this country. I do not think that what they said was paternalism, but I know the hon. Gentleman very well. I know his technique. From the moment that he rose to speak he realised that he was going to be very rough with his own side, so to balance the situation he not unnaturally made an attack on our side to begin with so that it did not sound altogether too ferocious. He has done this before, and we accept it in the usual good humour with which he does it.
  My hon. Friend the Member for Dorking (Sir G. Sinclair), with all his
  1254
  experience, made a very telling attack—and it is one that needs answering—on the real attitude of the Government to overseas aid. What is their attitude to priorities? I ask that because, as some of my hon. Friends have said, there does not seem to me the same priority now that they are in Government as there used to be when they were in Opposition. This is one of the most important aspects of planning for the future, and perhaps we shall get some reaffirmation of their attitude tonight.
  The hon. Member for South Shields (Mr. Blenkinsop) brought up a new point on the question of greater European unity. He said that this in itself, apart from the other arguments in favour of it, would help more genuine investment to be made available to the under-developed countries and relieve some of the burdens from this country. The hon. Gentleman does not need much persuasion to convince us on these benches about the need and the desirability for closer ties with Europe and entry into the Common Market. He had better use his powers to persuade some of his hon. Friends who do not seem so convinced, either on this or any other grounds, about the need to go into Europe.
  My hon. Friend the Member for Beckenham (Mr. Goodhart) introduced a note of reality when he said that some of the glamour had gone out of our sense of mission overseas. This is true. It is difficult to find the reasons for it, but I think that it is due partly to the disappointments and setbacks—and I shall come to these later—which have occurred. There is, to some extent, a growing sense of disappointment—I think that we have to accept this if we are to be realistic and not altogether starry-eyed—in this country, in America, and elsewhere as a result of some of the setbacks which have occurred. I am not saying that we should be discouraged by what has happened, but the fact remains that these disappointments are there, and I shall return to this in a little while.
  My hon. Friend the Member for Woking (Mr. Onslow), who has drawn most of the fire today, represents—and it is fair that he should do so because many people in this country feel as he does, whether we like it or not—a point of view which has to be argued. There

  1255
  is genuine doubt about whether our method of helping overseas countries is the best one. The only point on which I disagree with my hon. Friend is when he says that private investment should do the whole job instead. No one is keener than I am that private investment should play its part from a business and every other angle.
  The fact remains that with the shortage of private capital throughout the world money is not available for the real infrastructure of the developing countries. There is no money to be made for shareholders out of building roads and irrigation schemes. It is no good anyone saying, "Let us wait until the money is available", because one of the frightening things about the world today is that the under-developed countries are in a hurry—perhaps wrongly—and if they do not get a move on pretty quickly—
  It being Ten o'clock, the debate stood adjourned.
  Ordered.
  That the Proceedings on the Overseas Aid Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Lawson.]
  Question again proposed, That the Bill be now read a Second time.
  Sir F. Bennett: I was saying that the under-developed countries are in a hurry, and we have to take account of this, and from one source or another—whether multilateral or bilateral—we have to get the essentials going in some of these countries in order to enable private enterprise and private investment to play its proper part afterwards.
  My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) mentioned the confusion that exists—which I share—as to the actual amount of aid or investment overseas which flows back in one form or another. I hope that the Parliamentary Secretary will be able to clarify our thoughts on this point. None of us is quite aware what the correct figures are in this respect, and we are entitled to know them, so that we can compare them with the figures of other countries, such as the United States, where they have been published in considerable detail.
  1256
  I want to make two personal points. We talk about the creation of more banks. As someone who has had a little to do with banking I must point out that one of the biggest fallacies which is shared by both developed and under-developed countries is that if one creates a bank and then yet another bank it somehow makes more money available. The Minister knows the number of conferences at which pleas have been made for yet more banks to be created. In the end only a certain amount of finance is available. The same amount of money is subscribed, whether there is one bank or more. We must not be led astray by the idea that creating more and more development banks increases the amount of money available.
  My other point concerns the question of birth control. There are some strongly held feelings on this subject, but we are entitled to say that in the interests of the great under-developed countries, whether there be religious inhibitions or not, much more attention must be devoted to this end. Otherwise, however hard we try and however dedicated we are, in the end we shall not achieve the necessary step forward. On some occasions we have stepped backwards in this respect by ignoring it.
  I want to refer to one personal reminiscence. In East Pakistan I once helped to establish a pre-natal clinic. A year later I inquired what had happened. The clinic was established to try to preserve the lives of women who in many cases had had six, seven or eight children by the time they were 20 or 22. I found later that all that had happened was that the women were thus better enabled to bear even more children. So the village's population had increased, although the resources were the same, and hence by that gesture of international aid we had done nothing good for the village. This is a question which we must refer to more and more, because only by doing so will the aid that we provide be used to most effect for the people whom we are trying to help.
  I end as I began. After we have argued whether something is financially justifiable, and have looked after our taxpayers' interests and everything else, we still have to decide our attitude to overseas aid on more than just those

  1257
  practical considerations. It is not starry-eyed to say that there must be a national ethic for us in this matter. We are living in an era in which we are often accused of concentrating too much on bread and circuses for ourselves. But one of the tests of a great nation still is whether it has a sense of responsibility for what goes on in the outside world. It helps our national character if we have that, and we would lose much if we gave up this sense of mission. This is not an argument for ignoring the need to use aid as carefully as we can. It does not ignore the need for us to safeguard our taxpayers, but there is a real need for us to have some form of national ethic in our attitude towards aid overseas.
  Of course, disappointments are there and have been mentioned. Reference has been made to nepotism, to corruption, to adolescent nationalist manifestations, for example, of schools which have just been put up being burnt down. These are, of course, terrible things, but I comfort myself in any sense of disappointment by wondering whether the position would not be a great deal worse than this if we had not tried at all.
  10.6 p.m.
  The Parliamentary Secretary to the Ministry of Overseas Development (Mr. Albert E. Oram): I believe that the hon. Member for Torquay (Sir F. Bennett) was making his maiden speech from the Dispatch Box. I heartily congratulate him on that position and join him in congratulating another maiden speaker, my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), who delighted the House with his speech.
  I would say that my hon. Friend, coming as he does from Sheffield, comes from a city which has the interests of developing countries very much at heart. Indeed, it was only just over a week ago that I had the pleasure of visiting Sheffield to take part in a ceremony of handing over cheques to the Freedom From Hunger Campaign, and I had evidence then of the great interest which his constituents take in this matter.
  We have had a valuable debate. Of course, hon. Gentlemen opposite have extracted the maximum party advantage which they could, but through it all I think that they would agree that on this
  1258
  question of aid for developing countries all parties are agreed, even though the occasional rogue elephant comes up from Woking and goes through the jungle. In so far as there has been controversy in the debate, it has been on the question of who can do this job best. There have been accusations from both sides that possibly the Government are falling behind in their anxiety to give the highest possible priority to our aid programme.
  I assert without fear of contradiction that we have nothing to be ashamed of in our record of administering our aid programme. My right hon. Friend said that our programme for the forthcoming year will be £25 million more than last year's, which is an important indication of the way in which we see things. With official aid and private investment rising as they are, we have nothing to be ashamed of in this respect.
  I was invited by the right hon. Member for Bridlington (Mr. Wood) and by some of my hon. Friends to look beyond the forthcoming financial year and to say what our thinking is. I do not propose to be drawn into giving specific figures for the coming decade, as the right hon. Gentleman invited me to do, but as my right hon. Friend the Prime Minister has made clear, and as is made clear in the National Plan and in statements by Government spokesmen, the aid programme is capable of review year by year in the light of our overcoming our economic difficulties. It would have been irresponsible for any Government to take any attitude other than that which has been clearly spelled out.
  Before I go on to some of the general themes which have been raised in the debate, may I first answer one or two of the specific questions asked by the right hon. Member for Bridlington. He pointed out that the Asian Development Bank and Colombo Plan are, so to speak, coterminous and he asked what would be the relationship between these two organisations. Clearly, there will be a complementary existence between these two organisations. They are both means of collaboration between donors and recipients.
  It is not possible, in these early days of the Bank's existence, to predict the exact nature of their relationship, but I assure the right hon. Gentleman that our

  1259
  contribution to the Bank is over and above the contribution which we make in South-East Asia to the Colombo Plan and that this contribution will be in no way diminished or affected adversely by the support which we have decided to give to the Bank.
  Secondly, he asked me who would be included in the pension fund. He clearly welcomed this fund and said that specialists particularly should appropriately be members of it. I agree with him. But we have it in mind that membership of the fund should not necessarily be restricted to members of the corps of specialists or those designated under the Overseas Development and Service Act. There may well be other employment in developing countries which has a social purpose, but which is not subsidised by the British Government and which my right hon. Friend might well be prepared to approve for the purposes of this scheme. These matters will be dealt with when the regulations under the Bill are brought before the House.
  Two hon. Members—the hon. Member for Antrim, North (Mr. Henry Clark) and the hon. Member for Westmorland (Mr. Jopling)—made in a sense similar speeches. The hon. Member for Antrim, North put forward the thesis which has come to be known as intermediate technology, and the hon. Member for Westmorland urged that much more attention should be given to the development of agriculture. I have the utmost sympathy with both of these theses. The hon. Member for Westmorland took me to task over some of the Answers which I have been giving him in relation to his suggestions about the training of agricultural experts in African techniques, but I assure him that I share his great eagerness that much of our aid should be in agricultural form and that it is not through lack of effort on the part of our Ministry that we are not able to send more agricultural experts, as he quite rightly asks that we should try to do.
  Both the hon. Member for Antrim, North and the hon. Member for Dorking (Sir G. Sinclair) referred to the proposal in Clause 4 for relieving the Commonwealth Development Corporation from interest payments. The hon. Member for Antrim, North, in this connection, used
  1260
  the phrase—I think I have his words correctly—that the Corporation would there by be "exempted from commercial incentive" I should not have thought that the proposals of the Bill deprive the Corporation of commercial incentive. It is an easement of the terms under which it can borrow money, although the need to satisfy commercial tests will still be there.
  It might be useful if, at this point, I clear up some points in connection with the Explanatory and Financial Memorandum to the Bill, paragraph 9 of which states:
  "The amounts of interest foregone … are not expected to exceed £150,000 … a year …"
  Since the fructification period of such enterprises may be as much as seven years, the remissions will be cumulative and, in theory, could amount in some future years to seven times as much. The figure of £150,000 in the Bill is illustrative and is not intended to represent a fixed limit or to determine the long-term ceiling, and similar considerations apply to the figure of £75,000 relating to Clause 5. Since the wording of the Memorandum may not be sufficiently clear, it is important to make that point.
  My hon. Friend the Member for Willesden, West (Mr. Pavitt) developed two points; first, that my Ministry did not take over, from the Ministry of Labour, British representation in respect of the operations of the International Labour Organisation. I remind him that we did take over the responsibility in respect of U.N.E.S.C.O. and F.A.O., two institutions where the interests of developing countries are coming to be recognised as being more and more important in their operations.
  The balance of work within the I.L.O. is not, perhaps, so clearly orientated towards developing countries as to make the transfer which my hon. Friend suggests necessarily appropriate. However, I assure him, because he raised this point of representation at conferences, that my Ministry is represented at appropriate I.L.O. conferences.
  My hon. Friend's second point was about the Co-operative College and the value of the courses which are provided there for overseas students. He said there was need for increased aid to enable the

  1261
  college to have agricultural tutors, and so on. It was through the support of my Ministry for the course in co-operation for overseas students that the college was enabled to take on a specialist tutor two or three years ago, and I agree with my hon. Friend that that could be taken as a precedent to be examined further and that there is, perhaps, scope for development in this direction. My hon. Friend went on to complain about the effect of the Selective Employment Tax on the fortunes of the college. I am sure that he will not be slow in bringing this point to the notice of my right hon. Friend the Chancellor, and I wish him well in his representations.
  The hon. Member for Stroud (Mr. Kershaw) aroused the anger of my hon. Friend the Member for Kingston upon Hull, West (Mr. James Johnson) when my hon. Friend used the word "paternalistic". This probably arose out of a few unfortunate introductory sentences used by the hon. Member for Stroud, when he urged that there should be discipline. Perhaps that was a rather unfortunate word for him to use, although I did not take exception to the rest of his speech, because he made some effective points and asked some valid questions. He kindly pointed out that he did not expect me to answer all of them, and he will not be disappointed in that respect.
  In so far as the purport of his speech was directed to urging that there should be more effective management of aid jointly between ourselves and recipient Governments, I go all the way with him. I assure him that the operations of the Ministry are directed to making sure that the aid we provide for developing countries is effectively employed and that we and they get value for money.
  During 1965 the number of representatives in overseas diplomatic posts who are specially expert in aid matters rose interestingly and significantly from 133 at the beginning of the year to 173 at the end. These people are there to achieve just the purpose which the hon. Member has very much in mind. We have recruited within the Ministry our Economic Planning Staff, one of whose main purposes is to discuss with the Governments of overseas countries their development plans This is another
  1262
  means whereby we can ensure effective deployment of funds. Additionally, there is the setting up of the Caribbean Development Division directed to these purposes in that important area.
  Mr. Kershaw: I thank the hon. Gentleman for his kind remarks. Is he able to say anything about the Indonesian loan?
  Mr. Oram: That was announced by the Foreign Secretary and questions on it would be more appropriately directed to my right hon. Friend.
  The hon. Member asked what was being done about co-ordination of our aid efforts with other donor countries, referring particularly to the terms upon which loans are made and so on. Our efforts to get co-ordination are still in their early stages, but in the Development Assistance Committee in Paris we joined in the passing of a resolution last year which accepted that all donors should provide at least 80 per cent. of their aid at 20 to 25 years' maturity at an average interest charge of 3 per cent. The member countries of the D.A.C. are working towards this. This is the kind of effort at co-ordination upon which we are engaged.
  My hon. Friend the Member for Kingston-upon-Hull, West and other hon. Members raised the question of the effect of declining commodity prices on the economic welfare of the developing countries. I assure them that my right hon. Friend, in close collaboration with the President of the Board of Trade, is seriously concerned with this problem. We are vigorously pursuing a scheme for supplementary finance and also taking an active part in negotiations for stabilising prices of commodities. For example, we are engaging in discussions in an international cocoa conference for this purpose. We shall be taking similar action in the U.N.C.T.A.D. conference later.
  The hon. Member for Dorking, in a challenging but nevertheless friendly speech—we always welcome his first-hand experience of these matters and his warm friendship for the whole of aid projects for developing countries—was rightly anxious lest there should be any falling-off of enthusiasm on the part of the Government for these things. I indicated in my opening remarks that there is no such falling-off of enthusiasm.

  1263
  The hon. Gentleman raised the question of the effect on the balance of payments. I agree entirely that aid is by no means all on the debit side in the balance of payments. On the other hand, he will agree that in the situation facing us we cannot entirely ignore that element that is adverse in the balance of payments account; we have to take this very much into account.
  The hon. Gentleman welcomed, as I am sure the whole House does, the provisions for the setting up of a pension scheme. He pointed to the fact that this will enable to be done just what we want to achieve, namely, the encouragement of people to take up a series of contracts overseas. The fact that they will now be able to do this and qualify for pension is a splendid move forward.
  My hon. Friend the Member for South Shields (Mr. Blenkinsop) raised the question of our volunteer programme. I personally spend a great deal of my time in trying to help forward this programme. I do not claim credit for the fact that there has been a considerable step-up in the number of volunteers coming forward. This credit is due to the activities of the voluntary societies to which he referred. My hon. Friend asked whether there ought not to be a more unified structure rather than the separate bodies engaging in this work. Although this is attractive from one point of view, I ask my hon. Friend to bear in mind that these voluntary bodies are very proud of their own approach to affairs—for instance, the United Nations Association having its particular angle on these matters. Therefore, however desirable a unified structure may seem, one has to take into account the variety of motives and philosophies.
  My hon. Friend asked whether we had made any progress in recruiting more non-graduates, more people from industry and commerce. I am happy to be able to assure him that progress is being made. Only this afternoon I heard a representative of one society say that in the present programme they are recruiting 100 such people, as against only 50 last year. This represents a considerable step forward.
  The hon. Member for Woking (Mr. Onslow) made the only really controversial
  1264
  speech. He has been answered by spokesmen from all three parties. Therefore, he should be satisfied. He may be surprised to know that there was one proposition he made with which I agreed, namely, his statement that aid is not enough. I am sure we can all agree that aid is not enough. What I do not accept and what I am sure practically the whole House does not accept is that it is a hindrance to development. If aid were completely indiscriminately given, without regard to the safeguards of management, such as I indicated in answer to the hon. Member for Stroud, it would be capable of doing harm.
  Mr. Onslow—rose
  Mr. Oram: The hon. Gentleman was not very generous in giving way to my hon. Friend.
  Aid is only marginal in its effect on development in developing countries, but it is vitally marginal. It can make a vital difference. This is why we must carry on with the most generous aid programme that we can afford.
  Then there was the contribution of the hon. Member for South Angus (Mr. Bruce-Gardyne), who took up the theme which he pursued at Question Time about tied aid. I have not any more specific figures to give him than those which my right hon. Friend gave earlier, except to say that there is no doubt that even untied aid can benefit—does, in fact, benefit—our trade. There is not doubt that when we make loans which are not specifically linked to purchase of goods over here, nevertheless much of that money is spent on goods over here, so that it is not just a case of seeing how much aid is tied and how much is not tied and saving this is good from the balance of payments point of view and this is bad.
  I assure the hon. Gentleman that we will bear his speech in mind. This is a most important question, and we will have it in mind in consideration of the shape and size of the future aid programme.
  Mr. Bruce-Gardyne: I take entirely the point that the hon. Gentleman is making; in fact, that was precisely the point I recognised—that, of course, tied aid is not only that of which part comes back or is fed back. However, I would ask him if he could try to do for our

  1265
  aid programme the same job, or something like it, which was done by the Brooking Institution, in the United States, three years ago and analyse the extent to which we are getting or are not getting benefit from the aid programme.
  Mr. Oram: I accept the need for more detailed information on these points, and I certainly will give an undertaking that we will look at this proposition.
  Mr. Henry Clark: I did ask that the House should be kept fully informed of the future progress of the Ministry. Could the hon. Gentleman say when we shall receive further detailed information of the activities of the Ministry of Overseas Development? Shall we have a White Paper this year, next year, some time, never?
  Mr. Oram: We are only too anxious to publicise all the work we do in our Ministry. We believe that we are doing excellent work. We want hon. Members and, indeed the country, to know more of what we are doing, and so the hon. Member is pushing at an opened door in asking for information about our activities. Whether the best way to give it is by an annual White Paper I think is doubtful, but certainly, in so far as the hon. Gentleman can stimulate debates here—on Supply days or in other ways—he will not find either my right hon. Friend or myself reluctant to engage in them. Indeed, this Bill itself is one such opportunity, of which hon. Gentlemen have, quite rightly, taken full advantage.
  In Clause 1 it opens up the whole of the aid programme for debate, and, as I said in opening, I think that the House has done well in having this wide-ranging debate on it. I would remind the House, in conclusion, that, in addition to Clause 1, there are a number of most important miscellaneous, but nevertheless significant, operations which are authorised by the Bill. There is the Asian Development Department, the Indus Basin Development Fund, there are the greater facilities we are providing for operations through the Commonwealth Development Corporation. There is the Overseas Pension Scheme and other provisions of the Bill which, I am sure, are most necessary instruments put at the disposal of this Ministry for the pursuit
  1266
  of the important work on which we are engaged.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills)

  OVERSEAS AID [MONEY]
  [Queen's Recommendation signified]
  Considered in Committee under Standing Order No. 88 (Money Committees).
  [Mr. SYDNEY IRVING in the Chair]
  Resolved,
  That, for the purposes of any Act of the present Session to make provision as to the power of the Minister of Overseas Development to provide assistance to, or for the benefit of, overseas countries and territories; to enable effect to be given to an international agreement for the establishment and operation of an Asian Development Bank; to enable the said Minister to make further contributions to the Indus Basin Development Fund and to remit interest on certain advances to the Commonwealth Development Corporation; to amend section 2 of the Colonial Development and Welfare Act 1959 and section 1 of the Commonwealth Teachers Act 1960; and to provide for the establishment and administration of an Overseas Service Pensions Scheme, it is expedient to authorise payments out of moneys provided by Parliament and out of the Consolidated Fund, payments into the Exchequer, the borrowing of money and the remission of debt, under the following heads.
  A. The payment out of moneys provided by Parliament—

  (1) of any expenses incurred by the Minister of Overseas Development (hereinafter referred to as "the Minister") in furnishing any person or body with financial, technical or other assistance for the purpose of promoting the development of, or maintaining the economy of, a country or territory outside the United Kingdom or the welfare of its people;

  (2) of any expenses so incurred in undertaking, or promoting the undertaking of, research for the purpose of enabling the Minister to furnish technical assistance to any person or body as mentioned in paragraph (1) above;

  (3) of any sums required by the Minister for making payments to, or to the order of, the International Bank for Reconstruction and Development for the purposes of the Indus Basin Development Fund, not exceeding in the aggregate the sum of £13,978,571;

  1267

  (4) of any increase in the sums payable out of moneys so provided attributable to a provision of the said Act of the present Session—

  (a) abolishing the limit imposed by section 1(3) and (4) of the Commonwealth Teachers Act 1960 on the sums which under that Act and the Commonwealth Scholarships Act 1959 are authorised to be defrayed out of moneys so provided;

  (b) providing for so extending the said Act of 1960 as to enable the Minister to make payments for encouraging persons from the Republic of Ireland to become temporarily employed in countries and territories outside the United Kingdom as teachers or in connection with teaching and for facilitating the return to, and resettlement in, the said Republic of persons so employed;

  (5) of any sums required by the Minister for paying the whole, or a proportion of, any contribution payable under any scheme established under the said Act of the present Session for the purpose of providing, out of a fund established for the purposes of the scheme, pensions to, or in respect of persons who serve in employment in an overseas territory, being a contribution payable to that fund by a participant in that scheme.

  B. (1) The issue out of the Consolidated Fund of sums required—

  (a) for making payments on behalf of Her Majesty's Government under the said Agreement;

  (b) to redeem any non-interest-bearing and non-negotiable notes or other obligations issued or created by the Minister and accepted by the said Bank under the said Agreement;

  (2) the raising of money under the National Loans Act 1939 for the purpose of providing sums to be issued as mentioned in the foregoing paragraph or for replacing sums so issued.
  C. (1) The payment into the Exchequer of any sums received by the Minister by way of payment of interest on, or repayment of, any loan by means of which any financial assistance is furnished as mentioned in head A(1) above, or by way of payment for any assistance, other than financial, so furnished;
  (2) the payment into the Exchequer and the issue out of the Consolidated Fund, of any sums received by the Minister in pursuance of the said Agreement.
  D. The remission of any obligation of the Commonwealth Development Corporation to make payments under section 14(1) of the Overseas Resources Development Act 1959 in respect of interest on any advance made, whether before or after the passing of the said Act of the present Session, to that Corporation for the purpose of defraying expenditure in the exercise of powers conferred on that Corporation by section 2 of the said Act of 1959.—[Mr. MacDermot.]
  Resolution to be reported
  Report to be received Tomorrow.

  COMPTROLLER AND AUDITOR GENERAL (SALARY)
  Resolution reported,
  That the rate of the salary which may be granted to the Comptroller and Auditor General under section 1 of the Exchequer and Audit Departments Act 1957 be increased from £8,285 to £8,600 per annum, and the date from which, under subsection (3) of that section, the person now holding that Office is entitled to a salary at the said increased rate be 1st September, 1965.
  Resolution agreed to.

  INDUSTRIAL DEVELOPMENT [MONEY]
  Resolution reported,
  That, for the purposes of any Act of the present Session to provide for the making of grants out of moneys provided by Parliament towards expenditure on the provision of new business assets and for connected purposes, it is expedient to authorie—

  A. the payment out of such moneys of—

  (1) grants to persons carrying on, or proposing to carry on, a business in Great Britain towards expenditure by them on or after 17th January 1966—

  (a) in respect of machinery or plant, computers, hover vehicles, ships and prototypes for use for the purposes of that business;

  (b) in connection with mining or similar operations;

  (2) grants in respect of such other assets as may be specified in orders made by the Board of Trade under that Act;

  B. the payment out of moneys provided by Parliament of—

  (1) any increase in the sums so payable under the Local Employment Acts 1960 and 1963 which is attributable to the new Act so far as it—

  (a) provides for powers under those Acts to continue to be exercisable after the date on which they would otherwise expire and for those Acts to have effect in relation to new areas (hereinafter referred to as "development areas") constituted by the new Act;

  (b) amends or extends—

  (i) the provisions of those Acts relating to building grants;

  (ii) sections 4 and 7 of the said Act of 1960;

  (iii) the powers of the corporations established by section 8 of that Act;

  (2) the expenses of any Government department in exercising powers for bringing into use or improving derelict, neglected or unsightly land in development areas;

  1269

  (3) the expenses of the Board of Trade—

  (a) in connection with the modernisation, adaptation or reconstruction of any buildings or works belonging to the Board;

  (b) in exercising transitional powers in areas which cease to be development areas;

  C. any increase in the sums payable out of moneys provided by Parliament which is attributable to any provision of the new Act repealing subsections (5) and (7) of section 3 of the Sea Fish Industry Act 1962 and increasing, in relation to expenditure on or after 17th January 1966, the limits specified in subsection (8) of that section;

  D. the payment out of moneys provided by Parliament of—

  (1) any expenses of the Board of Trade in connection with advisory committees established under the new Act;

  (2) any administrative expenses attributable to that Act of any Government department;

  E. payments into the Exchequer under or by virtue of that Act.

  Resolution agreed to.

  HOUSE OF COMMONS (SERVICES)
  Select Committee appointed to advise Mr. Speaker on the control of the accommodation and services in that part of the Palace of Westminster and its precincts occupied by or on behalf of the House of Commons and to report thereon to this House:—
  Committee to consist of Seventeen Members:
  Mr. Herbert W. Bowden, Mrs. Braddock, Mr. Channon, Mr. Donald Chapman, Sir Myer Galpern, Mr. William Hamling, Mr. Michael Jopling, Mr. Harold Lever, Mr. Selwyn Lloyd, Sir Frank Pearson, Mr. Edward Short, Mr. Sydney Silverman, Mr. David Steel, Dr. Shirley Summerskill, Dame Joan Vickers, Mr. William Whitelaw, and Sir Gerald Wills:
  Five to be the Quorum:
  Second Special Report from the Select Committee on Publications and Debates Reports in Session 1964–65 of the last Parliament referred to the Committee:
  Minutes of the Evidence taken before the Library Sub-Committee appointed by the Select Committee on House of Commons (Services) in the last Session of the last Parliament, with Appendices, and reported to the House on 7h March referred to the Committee:
  Power to send for persons, papers and records; to sit notwithstanding any Adjournment of the House; and to report from time to time:
  Power to appoint Sub-Committees and to refer to such Sub-Committees any of the matters referred to the Committee:
  Every such Sub-Committee to include not more than Five Members nominated by the House, after the Committee shall have made recommendations thereon:
  Three to be the Quorum of every such Sub-Committee:
  Every such Sub-Committee to have power to send for persons, papers and records; to sit notwithstanding any Adjournment of the House; and to report to the Committee from time to time:
  Power to report from time to time the Minutes of Evidence taken before Sub-Committees and reported by them to the Committee:
  Any Sub-Committee which may be appointed to deal with the organisation of, and the provision of Services in, the Library to have the assistance of the Librarian.—[Mr. Lawson.]

  ROADS AND MOTORWAYS (SPEED LIMIT)
  10.38 p.m.
  Mr. Peter Walker: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the 70 miles per hour (Temporary Speed Limit) (England) Order 1966 (S.I., 1966, No. 372), dated 4th April, 1966, a copy of which was laid before this House on 19th April, be annulled.
  I hope that it may be for the convenience of the House, Mr. Deputy Speaker, if at the same time we discuss the five other similar Motions on the Order Paper in the names of my right hon. and hon. Friends and myself,
  That an humble Address be presented to Her Majesty, praying that the Motorways Traffic (Temporary Speed Limit) (England) Regulations 1966 (S.I., 1966, No. 373), dated 4th April, 1966, a copy of which was laid before this House on 19th April, be annulled.
  That an humble Address be presented to Her Majesty, praying that the 70 miles per hour (Temporary Speed Limit) (Wales) Order 1966 (S.I., 1966, No. 374), dated 4th April, 1966, a copy of which was laid before this House on 19th April, be annulled.
  That an humble Address be presented to Her Majesty, praying that the Motorways Traffic (Temporary Speed Limit) (Wales) Regulations 1966 (S.I., 1966, No. 375), dated 4th April, 1966, a copy of which was laid before this House on 19th April, be annulled.
  That an humble Address be presented to Her Majesty, praying that the 70 miles per hour (Temporary Speed Limit Continuation) (Scot land) Order 1966 (S.I., 1966, No. 378), dated 4th April, 1966, a copy of which was laid before this House on 19th April, be annulled.
  That an humble Address be presented to Her Majesty, praying that the Motorways Traffic (Temporary Speed Limit) (Scotland) Regulations 1966 (S.I., 1966, No. 379), dated 4th April, 1966, a copy of which was laid before this House on 19th April, be annulled.
  Mr. Deputy Speaker (Sir Eric Fletcher): Yes, if the House so wishes.
  Mr. Walker: Our reason for putting down this Prayer tonight is that it gives the only opportunity for the House to discuss the Minister's Order extending the period of the experimental 70 m.p.h. speed limit. I thought that it would be convenient for the House to take this opportunity to enable hon. Members on both sides to express any further thoughts they had on the matter, to
  1272
  enable the Minister herself, perhaps, to give some later details and figures drawn from the experiments, and to enable us to discover some of the facts which have emerged in the period of the experiment so far.
  Looking into this, we have already received and obtained a number of figures relating to the experiment and its results for January and February. These indicate that there was a reduction of about 19 per cent. in the number of deaths and serious injuries on rural and Class I roads and a reduction of 11 per cent. upon those roads where speed limits already applied.
  I ask the Minister to comment upon the apparent contradiction between these figures and the figures published yesterday giving the number of deaths and serious injuries for the country as a whole. These showed that, for cars, the number of accidents was 8 per cent. up during this period and, likewise, this coincided with an increase in the mileage of 8 per cent., which cancels it out.
  We seem, therefore, to have the situation where, in those areas of experiment for which figures are given, the figures show a substantial reduction, whereas there is nothing like that reduction over the rest of the country according to the figures issued by the Ministry yesterday. In January and February, it seems, there was a substantial decrease on classified roads and motorways while there seems to have been a substantial increase in accidents involving cars in other parts of the country.
  I want the right hon. Lady also to comment upon the varying reports which appear to be coming in from drivers about what has been happening in the experiment. At a recent conference in my constituency, certain people said there had been a substantial increase in the number of deaths and injuries on the motorways. This was contradicted by statements by various chief constables supervising various parts of the motorways. These tended to say, if anything, that the number of fatalities and injuries had been increasing.
  What consultations has the right hon. Lady had both before the experiment

  1273
  and since it began with police organisations? In our previous debate on this she said:
  "A few days later my right hon. Friend the Member for Hamilton met chief constables and others, including representatives of the motoring organisations."—[OFFICIAL REPORT, 23rd February, 1966; Vol. 682, c. 581.]
  How many chief constables were consulted before this experiment took place? Did the meeting discuss this subject at length? Their view is very important on this matter, which affects the relationship between the police and the public. It has an important effect upon the task of the police in improving the detection of crime and also in supervising various traffic problems.
  So far, the public statements made by police officials appear to be somewhat hostile to the imposition of this speed limit. It is true that there have been only a relatively small number of these comments, but I want to know the degree to which the right hon. Lady has consulted chief constables and what consultations are taking place now.
  I should also be interested in her comments on the general complaints of an increase in "bunching" on the motorways and whether the reports show that in fact there has been such a general increase. I want the right hon. Lady to comment upon the frequent complaints that people travelling in the outside lane and at the maximum speed limit of 70 are refusing to move to the inside lane because they consider that anyone passing them is committing a crime anyway.
  Everyone in this House would deplore such behaviour. I gather that in many cases speedometers are inaccurate. The police, I understand, cater for an inaccuracy of about 10 per cent. Thus, a man can be travelling at 63 miles an hour with an inaccurate speedometer showing 70, causing "bunching" behind him. In any case, if a person wishes to break the law and travel at slightly over 70, it is not in the interests of road safety for a motorist in front to consider that he can stay in the outside lane because his speedometer shows 70. I hope that the Minister would join me in condemning that particular practice as being foolish and silly, and not in any way helpful to her experiment.
  1274
  Have there been any comments during this experiment about the desirability of further experiments on the basis of a minimum speed limit? There have been many comments in this House about the number of accidents caused by people going too slowly and causing congestion and impatience, and I wonder if her observations of the fast speed limit have resulted in her considering that experiments of this nature might be worth while.
  Can the Minister say in what form she will publish the findings on this experiment? It is not sufficient to report the number of accidents or casualties that have taken place, in comparison with previous years or in comparison with last year. I am certain that the Minister will be giving these figures to the House in a few months' time. These figures indicate certain contradictions and it is hard to calculate the true effects.
  As far as motorways are concerned, I believe that the latest figures show a substantial drop in the number of accidents and a less substantial drop in the number of casualties. If this is compared with previous years, it will be found that in the previous year the number of accidents increased by a greater amount than the number of casualties. There appears to be a contradiction there in that the casualty position is not being improved by this experiment as much as the accident position and this is in contradiction to the trend shown the previous year.
  When the Minister publishes her report upon this experiment, as she presumably will, I would ask her to make particular note to bring out such facts as the degree to which the 70 m.p.h. speed limit has been applied. If one looks at the figures this is obviously a very important factor. Secondly, one has to consider the changes that have taken place as compared with the previous year. For example, if during the period of this experiment there has been a considerable increase in the number of police patrolling on certain motorways, this would have made an impact upon the figures.
  Thirdly, it would be interesting to know the estimated speed at the time of the various accidents, compared with their comparative figures in previous years. Were there any changes in roads, before and after the imposition of the limit, by

  1275
  way of improvements? This is an important factor. Can the Minister say whether the installation of new and improved traffic signs, as compared with previous years, has affected the figures in any way? Finally, there is considerable importance to be attached to a comparison of weather conditions. If one looks at the figures published for the January—February period, it would appear that there has been very little improvement in the motorway figures.
  Taking the accidents which did not occur in fog, one finds that there was a fall from 51 to 40, but if one looks at the casualties one finds that there was a considerable increase in both fatal and non-fatal accidents in this period, as compared with the same period last year. If one looks at the figures published yesterday for road casualties throughout the country, there is a tremendous fluctuation between January and February. For the two months an overall improvement is shown and for February the figures show a deterioration of something like 8 per cent. This indicates that weather conditions and factors such as this make quite considerable variations in the figures which might not necessarily be related to the 70 m.p.h. speed limit.
  This is an important experiment. It is an experiment in which motorists and people concerned with road safety are naturally interested. It is important that whatever conclusions the Minister reaches on this question must be backed by full statistics and an explanation that she is absolutely satisfied that any improvement is related to the speed limit and not to other factors.
  I therefore hope that the Minister will be able to take the opportunity of this Prayer tonight to give us further information. My right hon. and hon. Friends will not divide against the Order. Our purpose is simply to obtain more information. so that when the Minister reaches her conclusions we will all have been able to give further thought to this important experiment.
  10.51 p.m.
  The Minister of Transport (Mrs. Barbara Castle): I should like, first, to congratulate—
  Mr. T. L. Iremonger: On a point of order. The House will be obliged to the right hon. Lady for being
  1276
  present and replying to the debate, but am I right, Mr. Deputy Speaker, in thinking that it continues until half-past eleven? In that case, I wonder whether it would not be more convenient to the House for the Minister not to reply to the debate until after other hon. Members have made their observations.
  Mr. Deputy Speaker: That is not a point of order.
  Mrs. Castle: Had the hon. Member allowed me to get the first sentence out of my mouth, I intended, after an initial courtesy to the hon. Member for Worcester (Mr. Peter Walker), in which I was about to congratulate him on the spirit in which he had moved the Motion, to go on to explain that I was intervening at this point, not to curtail the debate—and I hope that I shall certainly not take all the rest of the time that is available—but because I have some very important information to give the House.
  Since the Prayer was tabled, as the hon. Member for Worcester has pointed out, I have received from the Road Research Laboratory its preliminary analysis of the results of the first 16 weeks of the 70 m.p.h. experiment. These will be the latest figures which I shall get before I have to decide what to do on 12th June.
  I have carefully studied the figures and the advice I have received from the Road Research Laboratory, together with the views of other interested groups, and I have reached my decision on the future of this experiment. It is only fair to the House, therefore, to say this at the outset and not allow the debate to continue in a rather false atmosphere as though this were merely an interim stage of the argument.
  As the House knows, the experiment was initiated by my predecessor on 22nd December to last for four months, until 13th April. That decision was taken in a situation in which public opinion had been profoundly shocked by the series of multiple crashes on the motorways and there was considerable pressure in the House upon my right hon. Friend to do something, and to do it urgently, about safety, particularly on the motorways.
  The hon. Member for Worcester asked what kind of consultations we had had, particularly with the police, who, as he rightly says, are concerned with enforcement. I was not Minister of Transport

  1277
  at the time the experiment was introduced, but my hon. Friend the Joint Parliamentary Secretary had urgent meetings on 8th November, following the incidents on the motorways, with the Lancashire and Staffordshire police, who were strongly in favour of the experimental 70 m.p.h. speed limit.
  A few days later, my predecessor, my right hon. Friend the Member for Hamilton (Mr. Tom Fraser), had consultations with chief constables and others. At that stage, everyone agreed that it was important to take any step which might relieve the risk of accidents on the motorways and that this experiment should be tried.
  In the event, it was probably unfortunate that the experiment started for only four months. There was a straightforward reason for it, and that was that four months was the maximum which the law allowed for an initial experiment upon ordinary roads. That is how the law was framed. It was obvious that ordinary roads, being less safe than motorways from an engineering point of view, should also be covered by the speed limit and that the speed limit for motorways and ordinary roads should be a parallel one. But my right hon. Friend made it clear at the time that, if the four months proved not to be sufficient, the experiment would have to be extended.
  We soon discovered that that would be necessary, for two reasons. In the first place, a four-month period for the experiment is not long enough to enable the Road Research Laboratory to assess the results of the four months. There is a time lag. That is why we were able to give only the January and February figures when the time came for us to decide what to do about the first four months of the experiment.
  At the time, the January and February figures clearly justified the continuance of the experiment. As the House knows, they were published on 6th April. They showed that, during those two months of January and February, casualties on rural roads had been reduced significantly, with an actual reduction of 8 per cent. compared with the same period in 1965, and, after allowing for traffic increases, an estimated reduction of 19 per cent.
  1278
  That was dramatic evidence, and the House accepted it. I do not know of anyone who is now suggesting that the 70 m.p.h. limit should be taken off the rural main roads. I do not know of any of our advisers or anyone else in the country who is pressing for that. It has proved itself in respect of those roads. But for the 73 miles of the M1 motorway complex in the same period, the results were less precise. They were less precise for an obvious reason. If one wants to make good comparisons, one has to be able to go back over a number of years. We have not had all the motorways for many years, and the 73 miles of the M1 complex is the only part for which one can go back over a five-year period. The result is that there is a very small number of accidents and casualties, and one has only a short period within which to make comparisons.
  During January and February, there was an increase in casualties on the M1 complex, but not in accidents. After allowing for the growth in traffic, the overall accident rate on the motorway was less than in the six previous years, and lower than might have been expected.
  It was for that reason that, on 4th April, I made Orders extending the period to 12th June for both motorways and non-motorways. In the normal way, I should have announced that to the House. But, because of the General Election, the House was not sitting. Its right to pray against these Orders was preserved, and that is why we have this Prayer tonight.
  The extension of two months has meant merely this. It has enabled the Road Research Laboratory to produce its analysis of the figures for the first 16 weeks of the experiment for the M1 complex, and up to the end of March for other roads. I have placed copies of these figures in the Vote Office, and the hon. Gentleman has had them. These are the figures on which we have to judge the value of the experiment up to 12th June. We have to judge it on all that we have available to us at the moment, though the Road Research Laboratory is, of course, going more fully into the analysis than it can do in this short period.
  What do the figures show? They show that over the first three months of 1966 the reduction in the accident rate on rural

  1279
  main roads was consistent with the 70 m.p.h. limit having had a beneficial effect, and the Road Research Laboratory is still working to determine the best method of analysing the figures, taking into account all the factors to which the hon. Gentleman referred, such as traffic volumes, and other factors which may be relevant. It is no good taking the neat figures. They have to be qualified in this way and I assure the House that the Road Research Laboratory is most scrupulous in its checking and analysis of these figures, and it is not going to be rushed into any sweeping statements unless the evidence warrants them.
  But what is interesting is that in the later set of figures the position is reversed. The position on rural main roads is less precise, but the position on the motoways seems much more significant, taking the three months figures, than we were able to say on the basis of the January and February figures alone. On the Ml motorway complex, over the first 16 weeks of the experiment the accident rate fell by 16 per cent., and the injury accident rate fell by 18 per cent. compared with the average of the previous five years over the same period of the year.
  Mr. Peter Walker: The right hon. Lady said that she had placed these figures in the Vote Office. I am told that they are not available there. I received them only because a journalist asked me to comment on them. They are not available in the Vote Office. It would have been of great assistance to hon. Members if they had been.
  Mrs. Castle: I assure the hon. Gentleman that my Department went to a great deal of trouble to reproduce a considerable number of copies and make them available through the usual channels. I am sorry if the usual channels do not work very efficiently, but that is not the fault of my Department.
  Mr. Graham Page: I received them from the Vote Office only a few moments ago. The Vote Office must have run out of copies.
  Mr. David Webster: One hon. Gentleman opposite and I went to the Vote Office as soon as the right hon. Lady made her statement about copies being available there.
  1280
  The man there told us that he was not aware of the figures.
  Mrs. Castle: I assure the hon. Gentleman that within a matter of hours steps were taken to distribute these figures to the House, because I was in something of a dilemna. Having received the figures, having considered them, having had my consultations, and having made up my mind, I could have sat here and allowed the House to go through the motions of a debate and then given a stalling answer. Had I done this, in two days' time when I made my announcement I would have been accused of having misled the House. The alternative was to make my announcement now, and to take whatever steps I could in the time available to make the figures available to those interested in the debate. It was a choice of evils, and I thought that the one which I decided to choose showed greater courtesy to the House, because this is not the last occasion on which the matter can be raised.
  As I was saying, the injury accident rate fell by 18 per cent., though it is true—and the hon. Gentleman referred to this—that the reduction in casualties was only 2 per cent. But there has been a general tendency in recent years for the number of casualties per accident to increase, and in any case, as Table 6 shows, the casualty rates tend to fluctuate considerably. This is the lesson of Table 6—that the rate fluctuates. Here again, we need more evidence and a fuller study of the problem before we can be sure of the reasons.
  All this is proof to the House that the only firm conclusion that we can reach so far on the basis of the period we have so far allowed ourselves for the experiment is that there is no complete proof yet of the value or otherwise of the 70 m.p.h. speed limit. We cannot have it one way without having it the other. There is not sufficient evidence either way, and I am not basing my argument on the fact that any case has been proved either way.
  Sir Douglas Glover: I can support the right hon. Lady. I went to the Vote Office and obtained the figures. I do not know what the confusion is, but I absolve the right hon. Lady of any discourtesy to the House.
  Mrs. Castle: I am very grateful to the hon. Member. I am glad to be cleared in this way.
  Although there is no conclusive evidence, there are indications of an appreciable beneficial effect. I face this situation. There is evidence that the experiment has actually reduced the number of accidents both on the rural main roads and on the motorways, but there is also evidence that we need to know a lot more before we can really establish the truth, what then is my duty as Minister of Transport?
  Following the receipt of these figures we carried through the usual consultations, and they were very exhaustive. They happened to coincide with today's debate. They were arranged before we knew that a Prayer was to be tabled, and this was one of the factors that led to the speed with which we have had to try to distribute the material to the House. My National Road Safety Advisory Council met today. The meeting had been called some time ago with the knowledge that these figures would be coming forward for consultation purposes.
  Again, I am sorry to say, the attendance was small. All the members present were agreed that the experiment should continue on the non-motorways, but on motorways their views were divided. I suggest that this shows that there is no conclusive evidence on the value of the experiment on the motorways on which we can make up our minds finally either way.
  This morning my Parliamentary Secretary held a meeting to consider the views of a wide range of organisations interested in the question of a speed limit. No less than 25 organisations were represented. It was a very well attended meeting. The organisations included motoring organisations, trade unions, transport associations, safety organisations, local authorities and every conceivable type of body which might be interested.
  It is not surprising that this body was not unanimous in its views. Here again, there was a general acceptance of the need for a further period of experiment on ordinary roads, and a consensus of opinion that a case existed for a similar extension on the motorways. I put it no higher than that. There was also general agreement that if an extension were made it had better
  1282
  be for a worth-while period—sufficiently long to enable the Road Research Laboratory to obtain significant figures and to conduct an analysis in depth.
  The hon. Member asked about the police. We take their views very seriously into consideration, because we all know the problem of enforcement, and that the views of the police on this matter are of great importance. It so happened that consultations took place with the police this morning. The Motorways Sub-Committee of the Traffic Committee of the Central Conference of Chief Constables met at the Home Office today to discuss this question of the experiment. I have seen a report of its views. Although the chief constables—here again, the unanimity of opinion is astonishing—were generally agreed on the value of the 70 m.p.h. speed limit on ordinary roads, there was no similar generally agreed view about the motorways. This pattern has revealed itself in all these consultations.
  It is obvious that enforcement has not been easy, but the number of prosecutions which have been undertaken shows that any driver who thinks that he can ignore the limit with impunity is running a very great risk. I should like to draw the attention of the House to Table 2 in the figures of the Road Research Laboratory and to the very dramatic reduction which that shows in the proportion of motorists driving at high speeds since the limit was introduced. In particular, there has been a dramatic reduction in the number of motorists observed driving at 80 m.p.h. or over.
  I think that this shows, therefore, quite apart from the risk of prosecutions, that we have begun to get an observance of the limit and a change in driver behaviour, an acceptance of the new pattern of driving, which the introduction of a speed limit of this kind compels us to adopt.
  I admit to the hon. Gentleman that there have been complaints of "bunching", but there is an argument about whether what some people call bunching other people would not call the maintenance of a steady stream of traffic, all going at the same speed, which of course is the pattern which has developed in the United States and helped to reduce the accident rate on their expressways.

  1283
  Provided drivers keep a sensible, safe distance apart, a steady consistent flow is by no means a sign of additional danger.
  Therefore, there is an indication that even in the short period of the experiment, drivers have begun to try to live with the limit, and are observing it, even though enforcement may not be as comprehensive as would no doubt be ideal.
  The House will realise from what I have said that two things emerge. The evidence is not conclusive, and the reason is that the period which we have allowed for the experiment so far has been insufficient. I am sure that there is one thing on which the drivers of this country would agree—whether they are people who are putting "Castle Must Go" stickers to get rid of the speed limit, or nice amiable people who think that I am not so bad after all. That is that they do not want messing about, with a little here and a little there, a month or so extra. If we are to have the experiment, let us have it. Let us get results which everybody can accept, results which can be seen clearly to point to the course which we ought to adopt. I believe that motorists would accept this view and would in future like to know where they are.
  Therefore, I have decided that the right course for me to adopt is to say that the case is not proven, but that there are signs, which I dare not ignore, that the speed limit has helped to reduce accidents, and that therefore I should continue the experiment in its present form, but for a really effective period. The Road Research Laboratory considers that the minimum period in which it can hope to produce really worth-while results is 18 months, after which it must have a little time margin to do the assessment and analysis of those figures.
  As the House knows, the trial ban which I am introducing on the use of the third lane of three-lane motorways by heavy vehicles, which begins next Monday, 23rd May, will remain in force for 15 months. I propose to extend the 70 m.p.h. speed limit experiment for the same period, that is, up to 3rd September, 1967. This will cover the August Bank Holiday and the last weekend of the period. I shall, therefore, be laying the necessary Orders before the House
  1284
  before the present limit expires on 12th June.
  I give the House this undertaking: I will not lay the new Statutory Instrument until the latest practical date in order to ensure that before the 40-day praying period elapses the House will have had a chance to study the Road Research Laboratory's fuller assessment of the results of the first four months. At the moment we have an interim assessment, and they have always said that they wanted until July in order to make their analysis and that they could then give us a better indication even on the basis of the present limited period. This will be published as soon as possible in July and certainly in time for the House to have it in order to take it into consideration before hon. Members pray against the new Orders which I introduce, if they wish to do so.
  I am not making a speed limit permanent. I am merely putting the experiment on the only satisfactory basis on which it can work—the basis which will enable us to have scientific results. I am not persecuting the motorists. But with the evidence before us now, hopeful evidence that perhaps we are having a beneficial effect upon accidents, I could not stand up in the House and say, "It is not conclusive enough, and I shall therefore drop it."
  If it is not conclusive enough but hopeful in its indications, then my clear duty not only to the House but to the country is to continue the experiment and in due course to bring the House a full report of its entire results.
  11.17 p.m.
  Sir Clive Bossom: I go a long way with what the Minister said, but I am not fully convinced that a 70 m.p.h. speed limit is the only answer on motorways. The Minister seems almost convinced, but has she and have her advisers seriously considered experimenting with a maximum speed limit of 90 m.p.h. on our motorways? I believe that at this figure we should not have drivers trying to drive up to the limit and we should not have bunching.
  I also believe that in that event we could experiment with a recommended or advisory minimum speed limit. I recognise that there are problems, such as fog, but I should like to see recommended minimum speeds on a three-lane motorway of

  1285
  40, 50 and 60 m.p.h. and on a two-lane motorway of 40 and 60 m.p.h.
  The Minister made great point about asking the police, but I still believe that we could go to the police much more for this information as well as to the three motoring organisations which are driving on our motorways day and night, so they all speak with vast experience. Statistics are important but I hope that thought will be given to the points which I have made, as well as to experimenting with a maximum speed limit. The idea of a 70 m.p.h. speed limit was worth trying, but it was put on quickly and I think that if we raised it to 90 m.p.h. it would be a better and safer system.
  While we wait during this long period there are three other matters which the Minister might consider doing. One is that although British motorways are among the best-constructed in the world, still more could be done for safety if we increased the guard rails, especially on the central medians. That is important. Secondly, we need a much more reliable permanent remote controlled warning light system for accidents and adverse weather conditions, and this should be installed. The present system is not very good. Thirdly, we must start a major propaganda drive in this country on the necessity for far stricter "lane discipline" on all our motorways. At the moment, we do not understand lane discipline as do drivers in America. I hope that the Minister will seriously consider all these suggestions.
  11.20 p.m.
  Mr. Richard Crawshaw: I will make only one point following my right hon. Friend's statement. It is clear that when one is trying to reconcile the figures relating to one period with the figures relating to another, one is faced with having to take weather conditions into account. I do not believe, however long a period one takes, that it is possible to get identical conditions. I therefore do not believe that it will be possible to really judge these matters or reach a final conclusion even over the period suggested by my right hon. Friend.
  The only way I envisage it being possible to get identical conditions is to place the restriction on a motorway in one
  1286
  direction only; in other words, make the restriction apply to traffic travelling in one direction on a motorway so that one set of tracks is restricted while the other is not. That would mean that vehicles would be travelling in identical weather conditions on either side of the motorway. In frost, snow, rain or whatever it might be, the weather conditions would be the same on both sides of the road and one could then, over a certain period, arrive at a conclusion. One would then be able to tell whether the vehicles travelling on one side of the motorway were more accident-prone than the vehicles travelling on the other.
  I trust that my right hon. Friend will consider this suggestion, for I believe it to be the only way of arriving at a definite conclusion as to whether a speed limit is the answer to the accident problem and should, therefore, be extended to all motorways.
  11.21 p.m.
  Mr. T. L. Iremonger: I suggest to the right hon. Lady that the attitude—the psychological condition and state of mind—of drivers is so much more important than any regulation that things like speed limits are really only trifling with the problem. There are much more fundamental matters which must be examined before any regulation will solve the difficulty.
  We are told that the Road Research Laboratory is analysing the figures and wants more time to study them carefully. That is a reasonable request and I accept it. But it is more important that the Laboratory conducts research into drivers' attitudes, and I understand that the right hon. Lady has arranged for that to be done. I would like to have made these remarks before she addressed the House, but perhaps on a future occasion, when she has received the Laboratory's report, she will go into the psychological aspect more deeply.
  The House will understand what I mean when I refer to the attitude of drivers. When people are walking on a pavement alongside a road nobody seems to bother about being one paving stone in front of another person. I am not normally jostled when walking along the pavement and nobody seems to think that there is any exceptional skill or

  1287
  manliness in jostling the other pedestrians. There is no "one-upmanship" spirit among pedestrians.
  But such behaviour, just jostling, is the absolute norm on the roads, especially, I am sorry to say, in the United Kingdom. It is not so in France or Italy, and it is certainly not so in the United States. What is even more disturbing is that this type of behaviour is, in my experience, particularly observable among men, but not women drivers, especially in towns. I am told by those who know about these things that this is a classic symptom of sexual impotence; a classic symptom of repressed aggression.
  It would be valuable if this were understood by men drivers, who drive along blowing their horns and making terrible noises with their beastly exhausts. If they realised that they were exhibiting themselves not as supermen but as the worm turning they might have a little less enthusiasm to indulge in this provocative behaviour. It is, unfortunately, true that this horn blowing and these loud exhaust noises are particularly conducive to a state of mind in other drivers which makes for accidents because it makes them impatient and angry. I would hope that the right hon. Lady will give a little thought to this and see if she could go beyond the making of rules for road safety.
  Mr. Paul B. Rose rose—
  Mr. Iremonger: I am sorry but I cannot give way; there are only a few minutes left.
  I was trying to ask the Minister, whether, if there is not something in the way of rôle playing activity in which it will be borne in upon people who are becoming motorists that an exhibition of aggressiveness on the road is weak and evidence of a stupid mind, and that it is the calm and careful and sensible driver who shows an exhibition of strength.
  We might, at the same time, discuss with the car manufacturers the possibility of their seeing whether they could do something about the tone of the horn in motor vehicles. One might want to sound one's horn as a note of warning, as if saying, "You may not realise I
  1288
  am here, but I would like to go past". Yet we have something loud and aggressive, so that the driver in front thinks, "What the devil is this?" and "What do you take me for?". The motorist behind may be doing something perfectly acceptable in a perfectly gentlemanly way, but he has at present no way of showing that he is not of an aggressive frame of mind.
  Could not the right hon. Lady's department, through the Press and the B.B.C., make an approach to the manufacturers to get an understanding of the way in which people's minds work and of the peculiar way in which their minds are shown in their behaviour on the roads? It might do much to achieve a change of heart and to instil a sense of shame about not being careful on the roads. It might also do much more than making new rules or imposing speed limits, and I would ask that, at some time soon, the right hon. Lady might be able to expand to the House on these most fundamental matters.
  11.28 p.m.
  Mr. John Lee: I have to declare an interest because I was once in the terrifying experience of having a crash at 85 m.p.h. and my attitude to road safety is, perhaps, subjective to that. I thought that my right hon. Friend was a little too defensive about the whole business by appearing to wish to be so certain that these rules are useful. The certain fact is that the faster one goes the less control one has over the vehicle and, if one finds oneself in a position where a crash is likely to occur, the less likely is one able to avoid it; and, I would add, the less likely is one to avoid serious injury.
  I should like to see a 60 m.p.h. speed limit. We tend to underestimate the way in which, by the time the present road programme is completed, we shall be able to cover any distance in this country very much faster than hitherto. There is also a case for trying out an experiment on different types of road. It is difficult to justify the same sort of rules for motorways, dual carriageway roads, and minor roads all at the same time. I should have thought that there was a case for 50 m.p.h. on single carriageway roads and 60 for dual carriageways; or, for replacing the 70 m.p.h. limit with one of 60.

  1289
  Time is moving on, so I will finish, but I hope my right hon. Friend will bear in mind what I have said.
  Mr. R. Gresham Cooke: Although these papers were in the Vote Office, and I went there an hour or so ago—
  It being half-past Eleven o'clock, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 100 (Statutory Instruments, &c. (procedure)).
  Question negatived.

  NATIONAL MARITIME MUSEUM (MR. FRANK CARR)
  Motion made, and Question proposed. That this House do now adjourn.—[Mr. Gourlay]
  11.30 p.m.
  Mr. R. Chichester-Clark: I shall have some difficulty in the time available tonight to tell adequately what I believe to be a sad story of personal injustice. What I am seeking to do tonight is to find out whether there is any good reason why the present director of the National Maritime Museum, Mr. Frank Carr, should be retired, as he believes, prematurely, and to provide an opportunity for the Government, in so far as they can, to put what is wrong right.
  Nearly 20 years ago a mere trickle of visitors, about 250 a day, found their way, sometimes not without difficulty, to the National Maritime Museum, which houses so many treasures of British and Commonwealth naval history. I say not without difficulty, because at that time it was quite possible to find a tram conductor in Greenwich who could not tell you where the museum stood. There was an average of 250 visitors a day in 1947; the number is well over 2,000 a day in 1966, to cope with which the staff has been increased from 32 to 130. Of course, there are reasons for this. There is more to see—the "Cutty Sark" near Greenwich Pier; all the Royal Observatory buildings, since 1951 part of the museum; the new additions to the collection of manuscripts; ships' draughts; and the new planetarium since last November.
  1290
  In all this record of progress and all this provision of more to see Mr. Carr had a very large part. Indeed, he is more closely identified with the restoration of the "Cutty Sark" and the completion of the planetarium than anybody else. For his tenure of office since 1947 it speaks well that, as soon as his case came to the fore, some months ago, an enormous volume of letters has gone to him, and to his friends, and to the columns of many national and provincial newspapers; and they include many tributes from abroad where his work and reputation have spread, with some from the United States of America and some from Canada and many other countries, and notably one from the President of a rather similar institution, Haida. In Britain itself so many eminent public figures have gone to press on his behalf that it would not be possible for me to list them all. The case has been raised in the House by the hon. Member for Woolwich, West (Mr. Hamling) and the present Minister of Power, who has been extremely active and persistent on behalf of Mr. Carr, who is a constituent of his.
  To go back to the beginning, Mr. Carr became Assistant Librarian to the House of Lords on 1st January, 1929. At that time he was told that he could not hope for promotion till his immediate chief reached at least the age of 60 or, more probably, 65. This meant he had no hope of promotion for about 22 years. He accepted this for the reason that, if he remained, he would be likely to be promoted eventually and be able to complete 40 years of public service, which would entitle him to the full pension which he would be able to earn.
  Then, at the end of 1946, the very distinguished director of the National Maritime Museum at that time, Sir Geoffrey Callender, died in office—at the age incidentally, of 71. Lord Attlee, then Prime Minister, offered the post of director to Mr. Carr. However, there was an immediate difficulty about this with regard to his pension. As an Officer of the House of Lords he was not a civil servant, and unless his public service could start from 1st January, 1929, and be regarded as continuous in his new post, he would lose 18 years of accrued pension rights which he had already acquired. Not only that, but, unless he could continue until the end of the year

  1291
  when he became 65, he would be unable to complete the 40 years which would entitle him to the full pension which he would otherwise have obtained in his service for the House of Lords.
  The position was confused because there were three parties concerned. The museum directorship was a Downing Street appointment. The House of Lords was concerned with the appointment of an Assistant Librarian and its other Officers. The only body which could issue Mr. Carr with the required certificate of service was the Civil Service Commission, which was not otherwise involved in the case. But it was additionally complicated because, as director of the museum, he should not be a civil servant. Unfortunately, there was not at the time any machinery to deal with the case, and there was no one responsible for getting things moving.
  The museum did not have a director, the House of Lords could not appoint a successor as Assistant Librarian, and nothing could be done until the deadlock was resolved. This came about eventually by the chief Civil Service commissioner issuing Mr. Carr with a certificate of service starting on 1st January, 1929, and, when this was done, Mr. Carr took up his present appointment on 1st May.
  The significance of this, of course, is that it was definitely accepted and agreed that, when he became director in 1947, he could look forward to enjoying the same length of service as would have awaited him in the service of the House of Lords, namely, that he would continue until he was 65 and retire at the end of 1968 having earned his full pension. Had this not been done, he might have planned his life entirely differently. That is my contention, as, indeed, it is his. He would have had to consider very carefully whether it would have been better for him to remain at his job in the House of Lords.
  I emphasise that this was a rule which applied to all directors appointed to trustee administered museums at that time, and the trustees' decision that he should retire at 63 makes him the only director, so far as I know, of a national museum or gallery whose services have been curtailed in this way.
  Incidentally, I think it highly debatable whether people in positions of the sort
  1292
  which Mr. Can occupies should be tied down to retirement at 60. After all, we are here talking about international experts, and it is, perhaps, ironical that, because of their particular qualifications, they may never be able to acquire the sort of position in industry or commerce which may be open to retiring civil servants, and this could well lead them to earlier voluntary retirement or, indeed, to not coming forward to take up such positions at all if they are to be left in doubt about their pension. However, that is just an interpolation.
  If I understand the position aright, the chairman of the trustees, Lord Runciman, has interpreted the Treasury letter of 1963 to mean that, as from the age of 60, Mr. Carr has been living on what was termed "borrowed time", the apparent implication being that he should be grateful to the trustees for continuing him beyond the age of 60 rather than feel aggrieved at not being continued until 65. It certainly shows a fundamental difference between the terms on which he was appointed and the understanding on which his service is now being ended.
  As I say, there were a good many years of achievement until March, 1965, when Mr. Carr received a, letter from the chairman of the board of trustees suggesting that the director might find himself retired earlier than he expected. The letter contains one significant passage, which I ask the Minister to note:
  "The possibility of"—
  a certain gentleman—I prefer not to name him and I shall not call him "Mr. X" because that is a little melodramatic, though the Minister will have his name in mind—
  "succeeding you has reached the stage where we shall have to consider it particularly in regard to his own position in the Government service…Things may, I fear, have to move rather faster than we had hitherto contemplated".
  That is what was said, and Mr. Carr heard no more until the week before the trustees' meeting in July. He was then told that he was to be retired at the end of April, 1966. However, certain events followed, including a letter to the Prime Minister and to the Chancellor of the Exchequer, and this was followed—I do not say directly, but it was followed—by

  1293
  the trustees being asked to reconsider the decision at a September meeting. Afterwards, as I understand, the Chancellor and the Prime Minister were informed that the case had been reconsidered and the trustees were unanimous in their decision that Mr. Carr should leave, but that his departure should be deferred until the end of 1966.
  I do not want to cast any aspersions on the trustees who are, no doubt, an honourable body, trying to do their best. But in the interest of Mr. Carr I must ask certain questions. First, were all the trustees fully appraised of the situation? Did they know what their powers and responsibilities were? Secondly, were they all summoned to the September meeting when reconsideration took place? Thirdly, were they unanimous? There is a good deal of evidence which tends to show that this was not the case and I am prepared privately to give the hon. and learned Gentleman the evidence I have.
  Did the trustees know of the provisions of the National Maritime Museum Act, 1934? No doubt the hon. and learned Gentleman has looked up the Act. It definitely reserves the appointment of the director to the Treasury. Section 5 (1) says:
  "There shall be a Director of the Museum who shall be appointed by the Treasury and shall hold office on such terms and subject to such conditions as the Treasury may direct, and shall, subject to the control and direction of the Board, be charged with the care of the Museum and of the objects collected there."
  There is more in Section 5 that is relevant but the point is clear. There is nothing there that gives the trustees power to appoint or dismiss the director. As far as I know, that is the case. It does not look as if everyone had realised the limits of their powers.
  Another letter, dated 23rd April, 1965, from Lord Stanhope, previously chairman of the trustees, contained the following relevant passage:
  "Runciman kindly wrote me a long letter in reply saying that the Trustees, as I think rightly, had some time ago been thinking of how they could find a suitable man to succeed you when you reached the age limit. I know only too well what I went through when we lost Callender suddenly in 1946.…"
  The letter then describes how much more difficult it is to find a director for
  1294
  the museum than it is for the Victoria and Albert Museum or the Tate Gallery because the museum covers so many subjects. It continued:
  "Runciman heard some time ago of a certain gentleman, but found that sinless he … knew definitely at a fairly early date that he would be chosen to succeed you he would cease to be available. So the Trustees offered him the job, but they hope to defer his taking over as long as possible which, unfortunately, cannot be as late as the date when you will become 65."
  Lord Runciman told Mr. Carr that he had arranged for this gentleman, to whom I have referred in guarded terms, to be interviewed by those trustees who did not already know him. However, even if the trustees did not know what I believe to be the limitation of their powers, someone did, and it was decided that the post must be filled by open competition. Accordingly, an advertisement appeared in the Sunday Times on 24th April.
  Let us pinpoint just what wrong is being done to Frank Carr. Now that the trustees—or whoever is responsible—have relented a little, he will not lose so much financially as would have been the case had he left at the end of April. If he retires at the end of 1966 as against the time he expected to retire, he calculates that he will lose about £400 by way of income, allowing for interest on savings, etc. That would worry anyone but there are more important things than money.
  What Mr. Carr feels most deeply about, having given a most considerable part of his talented life to dedicated service to the museum, is that he is being dismissed before he can see the results of some of his labours come to fruition. He also feels, with a large section of the public, that he is being deprived prematurely of a cherished job, not to mention income, by retrospective application of a Treasury letter of 1963, which in any case, he never saw.
  This is a shabby treatment of a distinguished man which would never have been meted out by the trustees had they been fully appraised of the circumstances of the case and known the full facts. Did they ever hear the evidence of Lord Attlee, the Prime Minister who appointed Mr. Carr, on the arrangements for his pension and length of service? It is on record that Lord Attlee has intervened in this

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  matter and has written to the Prime Minister. He knows the facts better than anyone else and he has informed the Prime Minister that he did not accept the Runciman explanation. I have copies of the letters here, but without Lord Attlee's permission, which I have not attempted to seek, I should prefer not to quote them. In any case, the Financial Secretary will know about them.
  Tonight, the Financial Secretary has an opportunity, in several ways, to begin putting right an injustice to an individual who deserves a great deal better of the trustees and of the Government, too. When his record is set against the background which is being meted out to him, is it any wonder that the Mayor of Greenwich called the trustees' decision, "an appalling one and completely unjustified"? Is it remarkable that we find the hon. Member for Woolwich, West is quoted as saying:
  "There is no suggestion that he is not doing his job, so why put him out at 63? Why not let him go on, until his work is completed?"
  Is it strange that the right hon. Member for Greenwich (Mr. Marsh) is on record as saying:
  "This has been a terrible shock for Mr. Carr. He never expected it, neither did anyone else. What disturbs me is the failure of the trustees to give a full explanation."
  That is exactly what disturbs me. What we want is a full explanation and a fair deal.
  11.47 p.m.
  The Financial Secretary to the Treasury (Mr. Niall MacDermot): May I begin by saying that it is obvious to everyone that it is matter of great regret that the question of Mr. Frank Carr's retirement should have become a matter of public dispute, because everyone is agreed that he has rendered most distinguished service to the National Maritime Museum over a period of nearly 20 years. On any basis it is an extremely sad thing that his departure should in any way be clouded by this disagreement.
  The first question to consider is who is the proper authority to decide when the time has come for a director to retire? As the hon. Member has said the legal, formal, power is vested in the Treasury, as is the power to appoint trustees, but it has for long been the practice in relation to this, and other museums in a
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  similar position, for the Treasury to leave the decision on this matter to the trustees and to act on their advice. A moment's reflection will make it clear that this is obviously a wise practice.
  The trustees are those who are responsible for supervising the day-to-day management of the museum and they are the ones who have the intimate knowledge which qualifies them to take a decision in a matter of this kind. The Minister would not feel justified in intervening in a decision of this kind, where the trustees have the appropriate day-to-day knowledge.
  As a result of the protests which have been made, and which have been referred to, Ministers have made close inquiries into this case. May I say, at the outset, that there is no doubt whatever that the trustees have acted in this matter with the utmost good faith and in what they believe to be the best interests of the museum. May I also say that they have quite clearly operated within the framework of the rules which prevail within the Civil Service as to retirement, which rules were brought to the attention of them and other similar trustees in 1963. These are not arbitrary rules. They are deliberately designed to be flexible, so as to enable people to continue to serve between the ages of 60 and 65, according to the needs of the Department in which they are employed.
  From the point of view of the public service as a whole this is obviously a much more sensible arrangement than having a fixed rule, either that one has to go at 60 or that everyone is entitled to say until he has reached the age of 65. It follows that quite often officials may be invited to retire sooner than they would wish. I stress, therefore, that Mr. Carr's position in this respect is not exceptional.
  Mr. Chichester-Clark: Before the hon. and learned Gentleman gets too far from the question of appointment, is he really suggesting that the chairman of the trustees was not going far further than he had any right to do, before a vacancy arose, in going out and looking for a man and offering him a job?
  Mr. MacDermot: I will, of course, deal with that, but I do not have much time in which to reply and perhaps I can deploy my answer in my own way and in my own time.

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  Ministers are also satisfied that the trustees did not reach their decision in this matter without long and anxious consideration, with the interests of the museum at heart. While everyone is entitled to his own view about the merits of their decision, there can be no question about the trustees' motives.
  Reference has been made to the fact that it has been a common practice for the senior staffs of museums to serve until the age of 65. Indeed, in earlier days they served sometimes considerably later. There was never any question of a rule about this or of established rights. There is nothing here which can be recognised as an exception to the general retirement policy. As I have said, the policy which we seek to make common throughout the whole of this field was circulated to the chairmen of trustees of museums in 1963.
  It has been suggested that the trustees have not been united in this matter. I assure the hon. Member that the decision taken at the meeting on 15th September, which was to confirm the decision that Mr. Carr should be retired but deferring the retirement until the end of 1966, which, I think, had the effect of giving him another full year's pension rights, was taken unanimously at a properly convened meeting to which the trustees were all summoned. If some of the trustees have had any second thoughts or expressed views privately since then, this is not a matter for which Ministers can accept responsibility.
  The hon. Member has referred to the possibility that the trustees had in mind a particular candidate as a successor to Mr. Carr. I suggest that there is certainly nothing wrong in their giving thought to the question of succession in a specialist post of this kind. The hon. Member read a letter from a very distinguished person in this field explaining particularly in relation to this museum how difficult it is to find the right man. Obviously, the availability of a potential successor is a factor to which, I suggest, it is perfectly proper for the trustees to have regard when reaching their decision on a matter of this kind.
  It certainly would be quite wrong to suggest that this was the only factor, and it is equally quite wrong to suggest that he was offered the job, which I think, was the phrase used in a letter
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  which the hon. Member read. That is not so. I have specifically inquired on this point, because I, also, had seen a copy of the letter from which the hon. Member quoted.
  In any event, what is clear is that the post will be filled by means of an open competition held by the Civil Service Commissioners. Indeed, it has already been publicly and prominently advertised. This is in accordance with what now is the normal procedure for posts of this kind, where it may be necessary to find a candidate from outside the Department concerned. A recent example is the appointment of the new director to the Tate Gallery after the retirement of Sir John Rothenstein. That is a recent example of the use of this method. Certainly, the trustees will be represented on the selection board, as they were in that case—it would be quite ridiculous if they were not—as they have intimate knowledge of the gallery. But they will not be a majority on the selection board, and the eventual recommendation will be that of the Civil Service Commission, whose independence is not in question. The appointment will then require the approval of the Prime Minister.
  For those reasons, I hope that I have made it clear why it is that there can be no question of Ministers intervening now in this decision, or of Mr. Frank Carr's service being extended beyond the end of 1966.
  A question has been raised about Mr. Carr's pension. I cannot accept that there is any kind of binding agreement that has been entered into, or that there is any rule which prevailed under which Mr. Carr was entitled to continue in service until he was 65. There have been a number of cases of other directors of galleries who have retired before the age of 65. But, in any event, there is no power to award him any greater pension than that to which he is entitled by the years of service which he will have completed. It would be contrary to the Superannuation Act, 1965, to seek to reckon his years of service as 40 when, for pension purposes, they are only 38.
  The fact that 40 years' service is the period required to earn a pension equivalent to half salary does not entitle any public servant to an implied moral right to continue to service for that length of time. A very large proportion of

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  the highest administrative and professional class civil servants who enter after the age of 20, and sometimes well after the age of 20, complete less than 40 years' service before their retirement and do not in that sense earn a full pension. That is something which is well understood in the Service to be a result of the conditions of service.
  I can only repeat what I said at the outset, that I greatly regret that there has been this public controversy arising out of the matter. I am satisfied from the investigations that I have made—and other Ministers have looked closely into the matter—that the trustees have acted properly and in good faith in what they consider to be the best interests of the museum. They were acting wholly within their powers, and, though it may be a disappointment to Mr. Carr, I cannot agree that he has suffered an injustice, or that there is any matter here which would make it either desirable or proper for Ministers to seek to interfere with the discretion exercised by the trustees.
  Mr. Chichester-Clark: The hon. and learned Gentleman is dealing with a difficult case. I know what it is to speak from that Dispatch Box and defend certain decisions, but, in view of all that has been said tonight, surely his answer has been a little legalistic and mean. Would it not be fairer to call the trustees together, let all the information now
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  available, including Lord Attlee's evidence about how Mr. Carr was appointed and the certificate from the Civil Service Commission, be laid before them, and make them think again about whether the chairman did not exceed his powers? My own belief is that he did.
  11.58 p.m.
  Mr. T. L. Iremonger: Having listened to what has been said without having been closely involved in it, I must voice what cannot fail to be the feeling of the whole House that this matter is unworthy of the sort of attitude of responsibility that one would have expected from the Government.
  My hon. Friend the Member for Londonderry (Mr. Chichester-Clark) used the word "legalistic". I think that that was a very kind way of putting it. What Ministers are for and what the responsibility of the Government is, is to see that in cases where they have a discretion, they exercise that discretion to ensure that injustice is not done. It has been done in this case, and the House must remain profoundly dissatisfied. I personally feel ashamed both to be a Member of a House which cannot remedy this and to have to acquiesce in a Government decision which seems to me to be a positive scandal.
  Question put and agreed to.
  Adjourned accordingly at Twelve o'clock.