Commons Sitting of 24 July 1967

Preamble
The House met at Ten o'clock
PRAYERS
[Mr. SPEAKER in the Chair]

MR. SPEAKER
Mr. Sandys: On a point of order, Mr. Speaker. May we express to you our warm congratulations and our very best wishes to you and Mrs. Speaker for your future happiness?
The Postmaster-General (Mr. Edward Short): On that point of order, if it is a point of order. May I associate my hon. and right hon. Friends with the right hon. Gentleman's good wishes?
Mr. Speaker: I have to call attention from time to time to bogus points of order. This time, however, I am deeply grateful.

OVERSEAS CROWN SERVANTS (INJURIES TO DEPENDANTS)
The Minister of Defence for Administration (Mr. G. W. Reynolds): With permission, Mr. Speaker, I should like to make a statement. Her Majesty's Government has been concerned at the number of
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incidents overseas in which the dependants of Servicemen and other servants of the Crown have been injured as the result of terrorist or other politically inspired activity.
Her Majesty's Government have therefore decided that, in addition to the provision that is already made for Government employees who are injured in these circumstances, ex gratia payments may now also be made to any of their dependants who sustain injuries in situations involving, the kind of politically inspired violence which is envisaged in the Civil Service Injury Warrants.
The Government have decided that this scheme will cover those dependants whose passage has been paid from public funds, and who have not refused a request to leave on security grounds. It will also provide for any dependent children making privately financed visits to their parents, additional to those allowed at public expense.
The Government will make payments in respect of injuries sustained outside the United Kingdom, which are directly attributable to the existence, in or near that area, of a state of war; of revolution; or of a serious and widespread disturbance. Injuries sustained as a direct result of deliberate acts of the local population or of sporadic political disturbances may also qualify for payment. This formula would exclude those injuries caused or contributed to by the serious negligence or misconduct of the injured person.

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The scheme will operate with effect from 1st December 1964, and payments under it will be for the benefit of the individual who is injured and not for the family or other dependants. This means that there will be no compensation for death, but it is proposed to make a grant of £50 as a contribution towards funeral expenses. The Government have decided that payments will be in the form of capital sums assessed on a basis similar to that used by the Ministry of Social Security in relation to the Industrial Injuries Act. They will range through degrees of loss of faculty up to a sum of £5,000 for severe permanent disablement.
Payments will be made by Departments; but injuries will be assessed on a common basis, using the resources of the Ministry of Social Security and the Army Pensions Office.
Rear-Admiral Morgan Giles: On the subject of dependants, I hope that I shall not be very much out of order, Mr. Speaker, when I also congratulate you on your new dependant.
We on this side of the House welcome the statement as evidence of the Government's concern and interest for the general well-being and peace of mind of those, both civil and military, engaged in these arduous tasks abroad, which they are performing so well. The Minister will understand that the Opposition will need to study the full implications of so important a statement as this. Incidentally, I know that it will be particularly welcomed by my hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers), who has raised cases in connection with this subject.
There are one or two questions I should like to ask the Minister about it. It seems that an anomalous situation might arise if a person were seriously injured and therefore liable for compensation under these arrangements and subsequently died, perhaps a considerable time afterwards as a result of his injuries. I am not quite sure what the situation would then be; perhaps the Minister could say something about it.
Secondly, the wording is a little unspecific when it differentiates between injuries caused as a result of "serious and widespread disturbance" and those
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caused by a single deliberate act. It says that they "may also qualify for payment". Does that indicate any doubt as to whether single sporadic acts might bring about a right to compensation?
I also ask for two assurances. Will the level of compensation be calculated generously and at what one might call a full rate appropriate to active service conditions? I ask this specifically because I know that there has been some doubt, particularly in the minds of soldiers in Aden during the incidents in the internal security situation there, about whether their dependants would be paid in the event of their death at full active service rates. Lastly, will the Minister confirm that it will be the Government's intention to review these terms from time to time as required? Many of us think that it may be necessary to continue these tasks in Aden, and, indeed, elsewhere east of Suez, for much longer than the Government at present seem to think.
Mr. Reynolds: There is no benefit payable on death. One has to remember that one is talking of dependants and not of the actual breadwinner, whether he be a soldier or a civil servant. The compensation paid is for the benefit of the actual individual who is injured. There is no compensation payable under the scheme if someone dies. If someone were to receive very serious injuries and if the assessment had been made and that person were paid a capital sum of up to £5,000 and then died at a later date, one would not be absolutely certain whether he had died as a result of his injuries or from some other cause.
As to the question of the single act which "may" be considered for compensation, "may" in fact means "may"; it does not mean "will" This is the same sort of arrangement which exists for civil servants and Servicemen who serve overseas at the moment. It would be wrong to put their dependants on a more favourable basis than that of the actual breadwinner in that area. The Ministry of Social Security evaluates the justification for paying the amount of money to an approved individual. Everything follows. Once one has stated that £5.000 will be the maximum amount payable for severe permanent disability, then it is for the Ministry of Social Security and the Army Pensions Office, with the experience that they have, to evaluate what proportion of

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that £5,000 should be paid in a particular case. This is not concerned with the general position of active service. It is to deal with dependants of civil servants.
As to any review, the sum of £5,000 has been fixed, but if prices went up from time to time one would have to review it, though one does not anticipate the necessity to do this very often.
Dame Joan Vickers: May I thank the right hon. Gentleman and the Minister of Public Building and Works for this achievement. As the right hon. Gentleman knows, I raised this subject originally in September, 1965. I think the right hon. Gentleman has had a very well won victory over the Treasury. May I ask two or three questions?
First, will people who are off duty qualify? That was a point which I brought up originally. Secondly, how will people know that they may claim back to December, 1964? Thirdly, how many people does the right hon. Gentleman think will be eligible for this award now? Finally, will he also make it well known to the Ministry of Social Security how this scheme is to be worked, and may I also ask whether there is to be a right of appeal if a claimant does not agree with the amount that has been awarded to him?
Mr. Reynolds: I thank the hon. Lady for her remarks about the Government's decision to make these payments. The case in which she has been particularly interested is one of those that will be considered under the arrangements that I have just announced, and the Ministry of Public Building and Works will immediately start going into that particular case.
I think I am right in saying that there have been over 20 incidents in Aden alone in which people might qualify for compensation under this scheme. Until we look at each individual case we shall not know for certain, because it is
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possible that someone may have received an injury which may have no lasting effect.
The compensation of £5,000 is for long-term serious disability. Any other payment is not just for a wound but for a permanent long-term effect on the individual concerned. These cases will be considered by the individual Departments concerned.
I think we have had all the information about the individuals who are affected, but if anyone thinks that he may be justified in claiming we shall be pleased to hear from him. As to persons who are injured while off duty, this is covered by my statement, as the hon. Lady will see if she reads it in HANSARD tomorrow. It is not concerned with whether an individual is on duty or not. It does not relate to persons employed by us; it concerns dependants of people who are employed by us.
Mr. Dodds-Parker: Can the right hon. Gentleman say whether this scheme covers foreign or Commonwealth service officers?
Mr. Reynolds: No, it is concerned with dependants who have been transported to a place overseas to join their husbands at public expense from this country. It would not apply to the dependants of locally enlisted people. There may, however, be one or two cases mainly in the foreign service where people have been enlisted locally but served in another country.
Mr. Dodds-Parker: People in the Foreign Service in this country who go overseas to embassies in China, the Far East and the Middle East have been subjected to indignities, if not injuries. Does the scheme apply to them?
Mr. Reynolds: Yes, it applies to the dependants of Servicemen and members of the Civil Service from the various Ministries who serve overseas.

NURSES ACT 1964 (AMENDMENT)
10.16 a.m.
Mr. T. L. Iremonger: I beg to move,
That leave be given to bring in a Bill to make provision for separate rolls of nurses for general and for psychiatric nursing; to make provision for the inclusion of one registered nurse for the mentally subnormal in the statutory composition of the mental nurses committee; and for other purposes.
Mr. Speaker, I hope that I shall not try your patience too far if I associate myself very warmly with other hon. Members in wishing joy to you and Mrs. Speaker.
In asking the House for leave to introduce this Bill, the effect of which I shall explain in detail directly, I am asking the House to fire a warning shot across the bows of the Minister of Health, and those who advise him, and the General Nursing Council for England and Wales. I am doing so on behalf of psychiatric nurses, whose views I am convinced generally conform to those expressed to me by many on the staff of the two great hospitals, Claybury and Goodmayes, in my constituency. Many of them are my constituents and I value the advice they give me concerning their patients' and their own needs and interests from time to time. Many of them are constituents of my hon. Friend the Member for Wan-stead and Woodford (Mr. Patrick Jenkin), and I am grateful to him for having agreed to sponsor the Bill should the House give me leave to introduce it.
I can assure the House that I am expressing a view which represents the will of the overwhelming majority of the psychiatric specialists in the nursing profession. This is exemplified by both the quality and the quantity of those who have signed petitions addressed to me and by the fact that in the hospital in my constituency in which staff opinion was systematically canvassed the response was 100 per cent. affirmative, not counting those who were absent or on leave at the time.
I must make one further general introductory point, which is of the greatest importance. Although these psychiatric nurses certainly are most anxious and critical about the organisation of their profession, they are not to be regarded as
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being, and do not feel themselves to be, in any way an aggressive or bellicose minority, despite the metaphor I used from naval gunnery. They are in no way fractious or perverse.
The legislative proposals which I shall outline are certainly designed to protect their special needs, and must inevitably emphasise the distinction between psychiatric and general nursing. Inevitably also, therefore, the adaptability of the General Nursing Council is called in question. But I know that those on whose behalf I am speaking would wish me to make it clear that they have no antagonism towards the General Nursing Council as such. They merely feel that without the kind of insight and knowledge which only practical experience of nursing mentally-ill and mentally-subnormal patients can give, it would not be possible for the General Nursing Council, with the best will in the world, adequately to perform for psychiatric nursing the special responsibilities which this House has put upon it.
The psychiatric nurses want to make quite sure that any reorganisation or any changes in the composition, functions and powers of the General Nursing Council and the Mental Nurses Committee that may be under contemplation are not in the end made without their special position being fully guaranteed for the future. To that end my Bill would provide for the composition, functions and powers of the Mental Nurses Committee of the General Nursing Council to be as follows.
The composition would be: two nurse administrators—that is to say, matrons, chief male nurses and their deputies—in psychiatric nurse training schools; and four nurse tutors in psychiatric nurse training schools, two of whom being engaged in teaching pupil nurses as opposed to student nurses. The status and identity of psychiatric nurse training schools is a matter which will very much fall to be decided by the Mental Nurses Committee under the terms of the Bill.
Further, there will be two doctors engaged in teaching student or pupil psychiatric nurses, one State enrolled nurse (mental) and one State enrolled nurse for the mentally subnormal, as recorded in the records kept by the General Nursing Council. Next, there

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will be four psychiatric nurses unspecified, and one hospital administrator in a psychiatric nurse training school.
That makes a total of 15, and of those 15 six will be elected as follows: three registered mental nurses to be elected by their peers, that is to say, by registered mental nurses; one registered nurse for the mentally subnormal to be elected by registered nurses for the mentally subnormal; one State enrolled nurse (mental) to be elected by State enrolled nurses (mental); and one State enrolled nurse for the mentally subnormal, likewise to be elected by State enrolled nurses for the mentally subnormal. The six elected members shall ipso facto be elected to the General Nursing Council.
That leaves nine other members, and they are to be appointed by the Minister of Health to make up the balance of the total membership of 15 which I have specified. They are to be so selected for appointment by the Minister as to ensure that not less than four of the 15 are engaged in training student or pupil nurses in hospitals for the mentally subnormal, the care of the mentally subnormal being a growing section of the psychiatric specialisation which is in danger of becoming the Cinderella of the whole profession. Finally, it shall be stipulated that no person shall be co-opted to the Mental Nurses Committee.
The functions and powers will be as follows. The Mental Nurses Committee is to be responsible in psychiatric hospitals for the training of student and pupil nurses, for laying down the syllabus for and method of conduct of nursing examinations and appointing the examiners, and for the registration and enrolment of nurses. It will nominate ex-officio representatives on to the disciplinary, the finance, the education, the examinations and any other appropriate committee of the General Nursing Council, and it will have an absolute right of veto so that the separate parts of the register and roll reserved for psychiatric nurses shall not be abolished without the full agreement of the Mental Nurses Committee. Further, it shall have a mandatory function in all matters relating to the training, examining, registration or enrolment of nurses for patients with mental disorders; that is to say, all such matters shall be referred
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to this Committee for final decision. I should explain that this shall be not merely a consultative function or status in the sense of a sham guarantee which can be overridden, but shall enable the Mental Nurses Committee to have the final deciding voice in all such matters.
Those are the terms of the Bill. I hope that the House will give me leave to introduce it. I hope that its terms will be studied sympathetically and with profit by those responsible for the future organisation of the nursing profession, and, accordingly, I beg leave to introduce the Bill.
10.24 a.m.
Mr. Laurence Pavitt: I oppose the Motion. I share many of the views put by the hon. Member for Ilford, North (Mr. Iremonger), and I readily endorse his aim of trying to do something for psychiatric nursing. What is more, I share his concern for Goodmayes Hospital, where I was recently the guest of honour at a dinner of the Confederation of Health Service Employees and of the mental nurses engaged at that hospital.
But I ask the House to reject the Bill for these reasons. The Bill is badly timed. It is inadequate. In the present state of negotiations, it will create a good deal of uncertainty if it is allowed to proceed further. Negotiations have been proceeding for some time on this and other nursing matters. I realise that the Bill will die a natural death because of the Parliamentary timetable, but the arrangement whereby we are to come back again in October for the conclusion of the Session will entail a fairly long period of uncertainty and, in the present state of negotiations, this cannot be in the best interest of the nursing profession as a whole or of psychiatric nurses in particular.
The General Nursing Council is in negotiation about this matter, and it has already put forward proposals to the Minister. Discussions are going on with a view of subdividing the present roll into three sections, not two, as suggested by the hon. Member for Ilford, North—one for general nursing, one for mental illness, and one for mental subnormality. This is neither the time nor the place to go into the merits of having one, two or three rolls, but it is obvious that, as

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negotiations are in train, if we try to jump the gun in the way proposed, the profession will be precluded from pursuing the sort of discussions which, perhaps, would lead to a more satisfactory conclusion. It is better not to discuss reorganisation of this kind in isolation from the rest of the problems of the nursing profession, and, in particular, from the pressing problems within psychiatric nursing itself.
The hon. Gentleman's Bill is concerned not so much with status as with constitution, but the whole question of status needs to be answered before one changes the membership of any council, and this matter also is at present under review. The General Nursing Council has responsibility for the whole of the nursing profession. I submit that, rather than give leave to introduce the Bill at this stage, in its half-baked condition, the House would do better to allow full consideration to proceed among the people concerned, not only with the General Nursing Council, the Confederation of Health Service Employees and the National Union of Public Employees but with all others who have an interest in wishing to benefit and improve the welfare of psychiatric nurses. One hopes that the Minister will eventually reach a comprehensive solution and not have piecemeal legislation of the kind proposed. For all those reasons, I ask the House to reject the Bill.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business).
Mr. Speaker: Since a Division has been claimed, I am bound, under paragraph 4 of the Sessional Order for morning sittings, to declare that the proceedings stand deferred until the end of this evening's business.
The Proceedings stood deferred pursuant to Order (Sittings of the House (Morning Sittings)).

ORDERS OF THE DAY
  IRISH SAILORS AND SOLDIERS LAND TRUST BILL [Lords]
  Considered in Committee; reported, without Amendment; read the Third time and passed, without Amendment.

POLICE (SCOTLAND) (No. 2) BILL [Lords]
Order for Second Reading read.
10.28 a.m.
The Under-Secretary of State for Scotland (Mr. Norman Buchan): I beg to move, That the Bill be now read a Second time.
The Bill is pure consolidation, and, apart from Clause 18, which relates to the execution of warrants in Border counties of England and Scotland, and a number of amendments and repeals, applies only to Scotland. The main Statutes covered by the consolidation are the Police (Scotland) Act, 1956, the Seventh Schedule to the Police Act, 1964, and the Police (Scotland) Act, 1966.
The purpose is to have one main enactment relating to the police in Scotland which will be much more convenient to Members of this House and, of course, to all those who have to consult regularly the terms of the legislation, particularly police authorities and the police themselves, to whom it should be of special benefit. Accordingly, I commend the Bill to the House.
10.29 a.m.
Mr. Graham Page: The House is grateful to the hon. Gentleman for his explanation of the Bill. It is called the Police (Scotland) (No. 2) Bill, but it might be better called the Police (Scotland and Border Counties) (No. 2) Bill, because it affects England by Clause 18, under which certain powers are given to the police in the Border Counties. This puts right a piece of legislation that was bad in form, when we included in a Schedule to the 1964 Act amendments to the 1956 Act as they applied to Scotland, which were very difficult for any practitioner to read into the 1956 Act. Therefore, this is a very useful consolidation.

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But we have a rather unusual report from the Joint Committee of the House of Lords and of the House of Commons appointed to consider all consolidation Bills, which gives rise to a need for an assurance from the Government that the conditions on which the Bill was recommended to the House have been carried out. The Report says that the Bill was drafted and is now submitted to the House on the assumption that the Road Traffic Regulation Bill will receive the Royal Assent before this Bill becomes law. It was only last week that we dealt with all the stages of the Road Traffic Regulation Bill, and I do not know what stage it has reached in another place or whether it has received, or when it will receive, the Royal Assent. Perhaps we might have an assurance that the business will be so arranged that that Bill will be presented to Her Majesty for Royal Assent before this Bill is so presented.
Secondly, the Committee said that the Bill was returned to this House on the assumption that the Road Traffic Regulation Bill would pass "in its present form". In fact, it was amended here only a few days ago, and that was subsequent to the Committee's Report. May we have an assurance that last week's Amendments do not affect in any way the Consolidation Bill now before us, that is, that all the conditions required by the Consolidation Committee will be, or have already been, carried out?
Mr. Buchan: I am grateful for the words with which the hon. Member for Crosby (Mr. Graham Page) opened his speech.
We can give both the assurances for which he asked. We will make sure that the Royal Assent is given to the Road Traffic Regulation Bill before this Bill, or at the same time. I am aware of the lion. Gentleman's second point. The situation is not substantially affected and the assurance can be given that the position is as it was. With that, I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Committee of the whole House.—[Mr. Howie.]
Committee Tomorrow.

WIRELESS TELEGRAPHY BILL
Lords Amendments considered.
WIRELESS TELEGRAPHY BILL

  Schedule.—(NOTIFICATIONS AND RECORDS.)
  Lords Amendment No. 1: In page 13, line 15, leave out first "is" and insert "has been".
  10.34 a.m.
  The Postmaster-General (Mr. Edward Short): I beg to move, That this House doth agree with the Lords in the said Amendment.
  I think that it might be convenient to consider at the same time all the other Amendments, since they deal with the same point. They are purely drafting Amendments, put forward at the instance of noble Lords of the party opposite, to insert a lot of "has beens" for "is". I am not normally in favour of "has beens", but I think that in this case they make the Schedule easier to follow, and I commend the Amendments to the House.
  Question put and agreed to.
  Remaining Lords Amendments agreed to.

NATIONAL INSURANCE (No. 2) BILL
Lords Amendment considered.
NATIONAL INSURANCE (No. 2) BILL

  Clause 3.—(AMENDMENTS AS TO BENEFIT UNDER OLD CASES ACT.)
  Lords Amendment: In page 3, line 38, at the end to insert:
  "() In section 14(1) of the Old Cases Act, in the definition of 'pneumoconiosis', after the word 'treated' there shall be inserted the words for the purposes of any scheme under section 2 or 5 of this Act'; and in section 14(2) of that Act for the words 'an allowance under the said section 2 or 5' there shall be substituted the words 'any such scheme'."
  10.35 a.m.
  The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Charles Loughlin): I beg to move, That this House doth agree with the Lords in the said Amendment.
  The object of the Amendment is merely to remedy a defect in the Industrial Injuries and Diseases (Old Cases)

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  Act, 1967, which was a recent consolidation Measure. My hon. Friend the Member for Merthyr Tydfil (Mr. S. O. Davies) introduced a Bill, which became an Act, to deal with the scheme for old cases, whereby those who suffered from pneumoconiosis to the extent of 50 per cent. had taken into account in their assessment any accompanying bronchitis and emphysema. This was intended to apply both in life and in respect of death, and I feel that the House was clear in its intentions. Unfortunately, the word "allowance" was used in the consolidation Measure. Consequently, as the payment for death under the Old Cases Act was in the nature of a lump sum, the word "allowance" was felt not to meet the situation. It is therefore necessary to insert these words in the present Bill to ensure that the position is as the House intended it to be.
  10.37 a.m.
  Mr. Paul Dean: I am obliged to the Parliamentary Secretary for his explanation. I congratulate the person whose eagle eye spotted this error when the consolidation Measure was going through. All who took part in the debates were quite clear that the intention was as the hon. Gentleman has just said. We all felt that that was right, and we therefore support the Amendment.
  Question put and agreed to.

ADEN, PERIM AND KURIA MURIA ISLANDS BILL
Lords Amendments considered.
ADEN, PERIM AND KURIA MURIA ISLANDS BILL

  Clause 1.—(RELINQUISHMENT OF SOVE- REIGNTY OVER ADEN, PERIM AND KURIA MURIA ISLANDS.)
  Lords Amendment No. 1: In page 1, line 5, leave out from "On" to "shall" in line 7 and insert:
  "the day which, in relation to any territory to which this section applies, is the appointed day that territory".
  10.38 a.m.
  The Under-Secretary of State, Foreign Office (Mr. William Rodgers): I beg to move, That this House doth agree with the Lords in the said Amendment.
  Mr. Speaker: The question is— —
  Mr. Douglas Dodds-Parker Mr. Douglas Dodds-Parker (Cheltenham) rose— —
  Mr. Speaker: Did the hon. Gentleman wish to speak on the first Amendment?
  Mr. Dodds-Parker: I wanted to speak on them all.
  Mr. Speaker: The first one is the only one moved so far.
  Mr. Dodds-Parker: I welcome the Amendments which the Under-Secretary of State has moved. I am sorry that I was not in my place.
  Mr. Speaker: The hon. Gentleman has moved only one at the moment.
  Mr. Dodds-Parker: I think that they all hang together. If I might make my remarks on the first Amendment— —
  Mr. Speaker: Order. I have no objection to a number being taken together, but I was not aware of this.
  Mr. William Rodgers: If it is for the convenience of the House, as they hang together we should be very happy if they could be taken together.
  Mr. Speaker: So be it.
  Mr. Dodds-Parker: I am very grateful. I apologise again for not being in my place. I did not realise that business was going so fast.
  We welcome the Amendments and understand that there is a need to get the Bill through without delay. But the Amendments were taken in another place only on Friday and they were available here only at about half past nine this morning. It means that one has to go through them rather quickly.
  However, the Opposition are very glad that the Government have accepted the Amendments put forward by my hon. Friends during the later stages of the Bill two weeks ago. As was said in another place, all these Amendments hang or fall together. Their aim is to enable different days to be set for the relinquishment of sovereignty under Clause 1 in relation to the three territories, Aden, Perim and Kuria Muria. The reason is that there is a possibility of the inter-nationalisation of Perim, which might lead to the possibility of a day being appointed for the relinquishment of

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  sovereignty over it different from that for Aden and the other islands.
  I do not know whether the Minister can say what action has been taken in the United Nations in the meantime to follow up the suggestion put from this side of the House and whether he expects any answer which will enable us to know the date when we might expect the Order to become effective. I wonder whether at the same time he could say anything about the Yemeni claim to Perim, which arose directly after we had the debate in this House. Also, what about consultations with the people of Perim? It is obviously too early to forecast the date, but as the House is going into Recess for about 12 weeks it will mean that about half the time between now and the date for independence will have been consumed before the House comes back again.
  With regard to the Kuria Muria Islands, the Under-Secretary said on Second Reading that consultations will take place. Can he say at this stage whether they are going ahead, and can he say anything about these islands wanting to rejoin Muscat instead of becoming part of the South Arabian Federation? That again will give some indication of when any different Order in Council might be laid which would affect the Amendments before us.
  Kamaran is not referred to in these Amendments but has been referred to on more than one occasion. Can the Under-Secretary say how we are to be told about consultations there, too, and if no Order in Council under the Bill is to be made, what the procedure is so that we can take an interest in this small island, which I am probably the only Member of the House ever to have visited?
  The last group of Amendments affect citizenship. This matter follows any difference in dates which may take effect when sovereignty is relinquished. I can imagine the peoples of these islands and most of the people of Aden feeling somewhat remote from the citizenship, passports and customs and all the other things of the civilised world, but I am sure that it is right to make certain that they are not deprived, if ever they want it one day, of a bit of paper which gives due notice about where they belong. Per-
  18
  haps when they come to reflect on it one day they will come to regret the loss of a British passport which allowed the carrier to go freely over three-quarters of the earth's surface.
  I am obliged to you, Mr. Speaker, for your indulgence. On behalf of the Opposition, I welcome the Amendments and hope that they will lead to the internationalisation of Perim and the people of Kuria Muria in particular being given a choice of whether they become part of the South Arabian Federation or join Muscat, from which they came a century ago.
  Mr. William Rodgers Mr. William Rodgers rose—
  Mr. Speaker: The hon. Gentleman needs the leave of the House to speak again. He spoke earlier, briefly it is true.
  Mr. Rodgers: With your permission, Mr. Speaker, and the leave of the House, perhaps I might speak again. I hesitated to say much, and, in fact, said very little, in moving the Amendment because I realised that it was the desire of the House to make progress, but in view of what the hon. Member for Cheltenham (Mr. Dodds-Parker) has said, I think it would be appropriate for me to say a few words about this group of Amendments because they hang together.
  Although I was not here for the Second Reading of the Bill—I was, regretfully, rather further east of Suez at the time of the Committee stage—from reading HANSARD I have some sense of the feeling expressed on that occasion when the House demonstrated its happy knack of coming together and reconciling divergent views and the Government showed their typical flexibility in trying to meet the proposals from the Opposition when they are wholly constructive, although, alas, that is not very often the case.
  As the hon. Member said, there was some feeling in the House at the time that the internationalisation of Perim was something that we should seek to achieve. I would make absolutely clear in case there should be any misapprehension about it that we have it in mind—it remains our firm intention—to bring South Arabia to independence on 9th January, 1968. These Amendments will allow us that degree of flexibility which is necessary if it seems possible for the United Nations to take Perim over.

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  The hon. Gentleman asked about the progress that we have made. As he will know, my right hon. Friend the Foreign Secretary made clear on 28th June that we should be pursuing the question with the Federal Government and the United Nations, and since then he has said that he has been in touch with both. This remains the position, and I am afraid that for the moment there is nothing more that I can usefully tell the House. There is no precedent of which I am aware for the course which we are now proposing, and, therefore it is not surprising that the steps which have to be taken and the procedures are not as straightforward or obvious as they might be if this sort of thing had happened on previous occasions.
  The hon. Gentleman also referred to consultation. On Second Reading I made clear that consultation would take place. We still have this very much in mind, but the problem of timing is very real and it seems to us that it may prove advantageous to the islanders to leave the consultations until rather nearer the date of independence because, as the hon. Gentleman implied by his remarks about Kamaran, the situation is a little uncertain, and as we want to make the best job we can when independence comes, it is perhaps wise to be cautious and consider timing with very great care.
  The hon. Gentleman also asked about the Kuria Muria's. He will remember what was said on Second Reading by my right hon. Friend the Minister of State when he pointed out that they had been ceded to Queen Victoria in 1854, and said that it was for consideration in deciding their future whether they might not wish to return to Muscat. This again is a matter upon which consultation must take place, and I am prepared to say that in this case and in the case of Kamaran we will seek to keep the House informed, and as the hon. Gentleman has made clear his very special interest in the Kamaran case I personally undertake to keep in touch with him if developments occur which might be interesting to him.
  I hope that I have taken care of all the points that were raised, and, therefore, I very much hope that the House will accept the Lords Amendments.
  Question put and agreed to.
  Remaining Lords Amendments agreed to.

ADJOURNMENT
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Howie.]
10.50 a.m.
Mr. Edward M. Taylor Mr. Edward M. Taylor (Glasgow, Cathcart) rose—
Mr. Speaker: Is the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) seeking to catch my eye?
Mr. Taylor: Yes, Sir.
Mr. Speaker: Has the hon. Gentleman informed the Minister concerned?
Mr. Taylor: Yes, Sir. About five minutes ago.
Mr. Speaker: Is the Minister going to attend?
Mr. Taylor: His private secretary said that he would do his best to attend as soon as possible.
Mr. W. Howie (Comptroller of Her Majesty's Household): On a point of order, Mr. Speaker. Is it usual for an hon. Member to attempt at the last minute to harry a Minister into attending an Adjournment debate for his own convenience rather than for the convenience of the House?
Mr. Taylor: I had no intention of embarrassing the Minister but of assisting him and the House.
Mr. Speaker: The question of harrying or embarrassing has nothing to do with a point of order. It is the practice that, if an Adjournment debate looks like arising, it is courtesy to the Minister to give him adequate notice. The Chair has deprecated on a number of occasions that an hon. Member should raise something on an Adjournment Motion without the presence of a Minister. The Chair has no power to prevent it but, according to Erskine May, Mr. Speaker should deprecate it.
The hon. Member for Luton (Mr. Howie) has moved the Adjournment of the House.
The debate having been concluded, Mr. SPEAKER suspended the Sitting till half-past Two o'clock, pursuant to Order.
Sitting resumed at 2.30 p.m.

PRIVATE BUSINESS
  BRITISH RAILWAYS (No. 2) BILL

    BRITISH TRANSPORT DOCKS (No. 2) BILL
    PORT OF LONDON BILL
    Lords Amendments considered and agreed to.

KINGSTON UPON HULL CORPORATION BILL [Lords]
[Queen's Consent, on behalf of the Crown, signified]
Bill read the Third time and passed, with Amendments.

RHYMNEY VALLEY SEWERAGE BOARD BILL [Lords]
  SOMERSET COUNTY COUNCIL BILL [Lords]
  Read the Third time and passed, with Amendments.

PRIVATE BILLS
Standing Order 208 (Notice of Consideration of Lords Amendments) suspended until the Summer Adjournment:
As regards Private Bills to be returned by the House of Lords with Amendments, such Amendments to be considered at the next sitting of the House after the day on which the Bill shall have been returned from the Lords:
When Amendments thereto are intended to he proposed by the Promoters, a copy of such Amendments to be deposited in the Private Bill Office, and Notice thereof given not later than the day before that on -which the Amendments made by the House of Lords are proposed to be taken into consideration. [The Chairman of Ways and Means.]

ORAL ANSWERS TO QUESTIONS
  PUBLIC BUILDING AND WORKS

    Construction Industry (National Register)
    Mr. Hiltonasked the Minister of Public Building and Works to what extent he has discussed proposals for the establishment of a national register for firms in the construction industry with Professor Norman Sidwell, and other interested parties; and whether he proposes to take any action as a result of these discussions.
    The Minister of Public Building and Works (Mr. Reg Prentice): I met Professor Sidwell on 24th April to discuss his suggestion for setting up a national register for firms in the construction industry. I am of course anxious that standards of building should be improved but I am not at present convinced that this can best be achieved by means of a compulsory registration scheme.
    Mr. Hilton: Is my right hon. Friend aware that I am asking him not to establish a precedent with regard to the setting up of a register for building firms but to create a more defined form of registration such as that which existed in the immediate post-war period, because large numbers of professional men, employers and union officials, would support that policy as being favourable to the construction industry? Will my right hon. Friend consider setting up an inquiry into the matter?
    Mr. Prentice: My hon. Friend will be aware that the National House Builders Registration Council has been growing in strength recently. I think it better for the time being that my right hon. Friend the Minister of Housing and Local Government and I should watch the development and see how it gets on. Before we decide on anything else or set up any inquiry into the matter it is as well to see what progress is made on this front.
    Mr. Urwin: Would not my right hon. Friend agree that it is in the best interests of all concerned with the construction industry that such a register should be set up involving, as it would, the vetting

    23
    of firms before they can be admitted to the register and ascertaining their bona fides and financial standing and their expertise in order to eliminate to a large extent shoddy building?
    Mr. Prentice: The Council to which I referred now covers the greater part of new house building. In major building and other fields there is usually some professional supervision of the construction, and so I am not really convinced that what is proposed would make a significant difference. However, I will consider any ideas that are put forward on the subject.

    Royal Parks (Parking Facilities)
    Mr. Berryasked the Minister of Public Building and Works what arrangements are made for the parking of coaches and other vehicles in the Royal Parks in the area of Buckingham Palace, particularly during the tourist season; whether he is satisfied with those arrangements; and if he will make a statement.
    Mr. Prentice: Both sides of Constitution Hill are available from 11.15 a.m. to 12.45 p.m. for the free parking of about 100 coaches for visitors to see the Changing of the Guard. Otherwise, coaches are directed to off-street coach parks outside St. James's and Green Parks.
    Free parking for other motor vehicles is allowed at any time on parts of Birdcage Walk and Horse Guards' Approach Road.
    Mr. Berry: Would the right hon. Gentleman not agree that there has been congestion this summer in Constitution Hill in the mornings, and as it is right to encourage tourists to come here while also having free use of the road for those who wish to pass, will he consider allowing parking at the far end of the Mall in the side road between the Duke of York's steps and Marlborough House?
    Mr. Prentice: It has been our practice to keep the Mall clear because of the desirability of keeping the vista open. I should like to think about the side roads. Perhaps the hon. Gentleman might care to expand his ideas in a letter and then we can give them consideration.

    Armed Services (Married Quarters)
    Mr. Wingfield Digbyasked the Minister of Public Building and Works what progress is being made in the com-
    24
    pletion of married quarters for the armed Services in the United Kingdom.
    Mr. Prentice: 5,032 quarters were completed in the year ending 31st March, 1967, compared with 3,668 in 1965–66 and 3,631 in 1964–65.
    Mr. Wingfield Digby: As there is nearly £5 million in the Estimates for new starts this year and in view of the rather drastic Service cuts, will the number of new starts for married quarters now be reduced? What decision has been reached?
    Mr. Prentice: No, Sir. We are at present working on a programme of 4,000 completions a year on the regular programme. To this has been added a special programme of 3,300 to be built between now and 1970–71 to cater for Servicemen returning from overseas above those which were expected. I do not see any reason to suppose that this programme may be cut at the present time.

    Whitehall Buildings (Pigeons and Starlings)
    Mr. Tilneyasked the Minister of Public Building and Works what action he is taking to prevent the fouling of public buildings in the Whitehall area by pigeons and starlings.
    Mr. Prentice: Where the birds are such a nuisance as to warrant the expense, sills and ledges on public buildings are treated from time to time with plastic compound which repels them.
    Mr. Tilney: Though some people in some parts of London seem to be resorting to the use of poison bait, will the right hon. Gentleman have a look at the great success of the Anglican Cathedral in Liverpool which stopped this menace by the use of virtually invisible netting?
    Mr. Prentice: I will consider this. I am advised that the material to which I referred is effective. It repels the birds by a sense of insecurity on landing. It seems to work fairly well. However, I am always willing to consider other ideas.

    Banwell Report
    Mr Chichester-Clarkasked the Minister of Public Building and Works whether he will make a statement on his

    25
    policy regarding the report of the Economic Development Committee on building entitled Action on the Banwell Report.
    Mr. Costainasked the Minister of Public Building and Works what is his policy regarding the Report of the Economic Development Committee for Building, on Action on the Banwell Report; and whether he will make a statement.
    Mr. Prentice: My representatives on the E.D.C. accepted the Working Party Report in principle and undertook that we would take prompt action on those recommendations which come within my responsibility. Many recommendations are addressed to other bodies and I hope that they will also react positively.
    Mr. Chichester-Clark: While the right hon. Gentleman uses the term "prompt action", is it not more than a little curious that the E.D.C. should have to commission a Report to look into what the Government have done to implement a Report three years old? Will he now take the recommendations of that Report seriously and do something to put them into effect?
    Mr. Prentice: I do not accept that. The Banwell Report was issued in 1964 and contained a very large number of recommendations for industry, the professions, Government Departments and local authorities. A good deal of progress has already been made on some of these. For example, the switching of emphasis towards selective tendering by public bodies has grown to a considerable extent. I think it is right that there should be a progress report of this kind which identifies the things which need more urgent action. I do not think that generally we need be disappointed.
    Mr. Costain: Has the right hon. Gentleman's attention been drawn to the fact that in section 4.6 on page 11 of its Report the Committee recommends that the Ministry should revise its booklet "Selective tendering for local authorities" to include guidance on the size of the selection list? Is this not another example of a report on which no action has been taken by his Ministry?
    Mr. Prentice: We are urgently considering the detailed recommendations, including possible revision of the booklet.

    Building Industry (Costs)
    Mr. Channonasked the Minister of Public Building and Works what representations he has received from the building industry about extra costs in the industry; and what reply he has sent.
    Mr. Prentice: I have received some representations from the building industry about the effects of S.E.T. on the cost of building. Individual replies have been made explaining the Government's purpose in the application of this tax.
    Mr. Channon: Does not the right hon. Gentleman consider it disturbing that house prices are now rising sharply again? Does not this jeopardise the whole of the Government's housing policy, including its mortgage option scheme, because if houses become too expensive people will not be able to buy them?
    Mr. Prentice: We are watching everything that contributes to the increased cost of houses. I should have thought that in the last two years or so there had not been a considerable rise in the cost of new houses. But certain factors have come into the picture, including the wage increases which were postponed under the incomes policy but have now taken effect.
    Mr. Rankin: Is my right hon. Friend also keeping an eye on the profits which are now being made in the building industry and how they reflect themselves in costs?
    Mr. Prentice: We are keeping an eye on all aspects that affect costs, including profits.
    Mr. Chichester-Clark: Has not the threat of unforeseen menaces like S.E.T. diminished contractors' enthusiasm for firm price contracts, of which the right hon. Gentleman is presumably in favour?
    Mr. Prentice: No, Sir. I think that there is general acceptance of the advantage of firm price contracts. It is true that contractors do not like S.E.T., and I have had to deal with representations from them.
    Mr. Urwin: Can my right hon. Friend indicate to what extent the cost of the S.E.T. has been absorbed in increased efficiency by employers?
    Mr. Prentice: It is difficult to measure. It was, of course, always our hope that some of it would be absorbed. But even if none of it is absorbed, the increase in building costs due to it alone is only about 2 per cent.

    Building Starts
    Mr. Channonasked the Minister of Public Building and Works what representations he has received in recent months from builders about the number of starts begun this year; and what replies he has sent.
    Mr. Prentice: None Sir.
    Mr. Channon: Does not the right hon. Gentleman recognise that a large proportion of his so-called increase in housing starts this year is a fake figure, since a number of starts were put in to avoid the levy under the Land Commission Act? Will he include in the housing statistics a new table of housing starts never completed?
    Mr. Prentice: The levy was a factor in accelerating starts but the effect has been exaggerated in some quarters. Recent figures suggest a considerable improvement in housing starts and building orders generally. In the first quarter of last year there were 84,000 housing starts and in the first quarter of this year over 107,000 and this is a welcome improvement.

    Historic Buildings (Admission Tickets)
    Mr. Moreasked the Minister of Public Building and Works what information is given to the public regarding the payment by bankers' order for season tickets for entry into historic buildings under the control of his department.
    Mr. Prentice: None, Sir. But I will gladly examine the suggestion and see if it is possible to introduce it.
    Mr. More: Does not the right hon. Gentleman think that there should be much more publicity about this? Would it not be a good thing to have this put on a businesslike basis so that people could make arrangements to pay by bankers' order?
    Mr. Prentice: I think that the answer I shall give to a later Question by the hon. Gentleman will suggest that we are
    28
    selling more of these tickets and that the scheme is a success. But, of course, I am willing to examine any suggestion, including the one in this Question, which could lead to still more people taking advantage of this scheme.
    Mr. Moreasked the Minister of Public Building and Works how many official season tickets for entry to historic buildings were sold in the last five calendar years.
    Mr. Prentice: In total, 117,860 season tickets were sold during the last five years. With permission, I will circulate the breakdown by calendar years in the OFFICIAL REPORT.
    Mr. More: Following what I said on Question No. 10, does not the right hon. Gentleman think that sales would be greatly increased if the whole of this system were put on a more businesslike footing with a great deal more publicity? Would not this be a sensible way of increasing attendance?
    Mr. Prentice: The number of tickets sold has gone up by 70 per cent. since 1962 and there has been an increase in the number of people visiting monuments each year. Preliminary figures for this year show an even further increase. The scheme is undoubtedly successful but, of course, I am willing to consider any suggestions from any quarter. Perhaps the hon. Gentleman would like to be more specific in correspondence with me.
    Miss Harvie Anderson: Despite the welcome increase in the numbers visiting historic buildings, is the right hon. Gentleman aware that the yield from ticket prices in no way meets the increased expenditure necessary for these buildings and that it is essential within the next five years to double the present intake from this source?
    Mr. Prentice: We have announced that ticket prices will be raised on 1st January from the present 10s. to 15s. Of course, we want to encourage more people to visit the monuments and we shall do all we can to this end.
    Detailed figues are:

    1962

    …

    …

    …

    20,000

    1963

    …

    …

    …

    15,500

    1964

    …

    …

    …

    20,634

    1965

    …

    …

    …

    27,655

    1966

    …

    …

    …

    34,071

    Vandalism
    Mr. Costainasked the Minister of Public Building and Works what estimate he has made of the cost to his Department of vandalism against public buildings in 1964, 1965 and 1966; and what precautionary methods are being taken to safeguard these buildings.
    Mr. Prentice: The figures requested are not available. For most buildings the normal precautions which would be taken by a householder suffice. Where there is a high risk of vandalism or burglary, night watchmen are employed.
    Mr. Costain: Has the right hon. Gentleman noticed any increase in vandalism over recent years? If he has failed to stop it, can he nevertheless give the public advice on how they could stop it on their property?
    Mr. Prentice: Very useful advice is given by the police to the public on these matters. I have no detailed figures about vandalism on public buildings. It would take a great deal of staff time to extract them from the general figures we have of accidental damage and other things which lead to the need for repairs.

    Lancaster House Reception
    Dr. Reginald Bennettasked the Minister of Public Building and Works what organisms have been isolated from the foods served at Lancaster House on the occasion of the reception for the Italian Prime Minister; what foods were found to be contaminated with these virulent salmonella group organisms; why they were contaminated; and what steps he is taking to ensure a proper standard of hygiene in the future.
    Mr. Prentice: I am informed by the Medical Officer of Health of the City of Westminster that salmonella typhimurium organisms were found in mayonnaise served at the reception. There is no conclusive evidence to show how the organisms got into the mayonnaise.
    Following urgent investigations, the standard of hygiene of the caterers concerned has been found satisfactory. Public health inspectors have also visited all premises where food for Government
    30
    receptions is prepared or consumed and have found all these premises satisfactory.
    I should like to take this opportunity to express my regret that a number of people, including four of our Italian guests, were taken ill. Perhaps I should add that I can find no trace of any similar incident since the Government Hospitality Fund was set up in 1921.
    Dr. Bennett: While it must be difficult to apportion blame, is it not very likely to be, as reported in some quarters, that some three-day-old mayonnaise was being re-served and taken in and out of the refrigerator, which, in hot weather, is an appalling breach of public health standards? Is it not a fact that the organism may have reached here is some imported frozen liquid egg which was probably diluted with ducks' eggs, which are full of this type of infection, because numbers of the guests seem to have been infected with live organisms?
    Mr. Prentice: Perhaps the hon. Gentleman would let me have any evidence he has to that effect. I am advised that hens' eggs rather than ducks' eggs are generally used in mayonnaise and there is no conclusive evidence that they or, indeed, any other element in making the mayonnaise were responsible. We have considered the investigations made of the standards of hygiene in the premises of the caterers concerned and the inspection has given them a completely clean bill of health.
    Mr. Kitson: Will the right hon. Gentleman say what arrangements he is making so that the people infected can be tested to see whether they are still carriers of the disease? This type of salmonella typhimurium organism is very dangerous and we may now be carriers.
    Mr. Prentice: I am advised that, normally, the effects last only five to seven days, so i think the hon. Gentleman's suggestion comes a little late.
    Sir W. Bromley-Davenport: Is the right hon. Gentleman aware that, some years ago, I had correspondence with his Department on this point? Is he further aware that to remove salmonella poisoning from an egg it has to be boiled, and hard-boiled for seven to eight minutes? How can one hard-boil an egg to make mayonnaise?
    Mr. Prentice: I was not aware of the correspondence to which the hon. Gentleman refers. But raw eggs are used by housewives in many kinds of cooking—the icing on cakes and so on. I am advised that occurrences of poisoning are very rare and are not necessarily connected with eggs. There is no conclusive evidence on this point.

    Banqueting House, Whitehall
    Mr. Robert Cookeasked the Minister of Public Building and Works whether he will consider meeting the annual loss of £1,000 incurred through public opening of the Banqueting House, Whitehall, by letting for private functions of a non-political character, on four or more occasions each year at £250 a time.
    Mr. Prentice: I do not accept the hon. Member's implication that a "profit and loss "approach should be adopted to the use of the Banqueting House. But I am keeping the arrangements under review, and will consider all appropriate possibilities.
    Mr. Cooke: Is the right hon. Gentleman aware that, in answer to an earlier Question I put, he said that less than 100 people had visited this historic building in Whitehall on a peak day in summer? Will he consider letting it for private functions, say, four times a year for perhaps 1,000 people on each occasion? Would not this perhaps balance the books?
    Mr. Prentice: The net difference of £1,000 between costs and the money taken is very modest in relation to a building of this historical and architectural importance. The building is valued very greatly by those who visit it. I am considering whether greater use of the building for functions by charitable bodies might be made. I am not, however, inclined to favour its being done on a commercial basis.
    Mr. Rippon: Has the right hon. Gentleman changed the original policy, which was to allow certain functions of a non-governmental character to take place in this Banqueting House?
    Mr. Prentice: No, Sir. We are maintaining the original policy. On the rare occasions when private organisations use the building for the kind of purpose the
    32
    Government consider is compatible with the nature of the building, they are asked to pay for the services of custodians, the cost of fuel and light but there is no profit to public funds from that.
    Sir J. Rodgers: Would the Minister look into the methods adopted by the French Government regarding similar buildings in Paris and see if we could not equally open these buildings to private and charitable organisations more than we do?
    Mr. Prentice: As I said a moment ago, I am considering whether there should be more extensive use. I will consider what is done in Paris as something which may have lessons for us.

    Bricks (Prices)
    Mr. Biffen asked the Minister of Public Building and Works if he will make a statement on the prices that may be charged by manufacturers of Fletton and non-Fletton bricks.
    Mr. Prentice: My right hon. Friend the Chancellor of the Duchy of Lancaster and I met a deputation from the brick industry on 12th July. We agreed that, pending the outcome of the current reference of brick prices to the National Board for Prices and Incomes, producers of both Fletton and non-Fletton bricks may make immediate interim price increases not exceeding 3 per cent. The producers will report such increases to me and have accepted that they should be withdrawn if they are not considered justified.
    Mr. Biffen: Is not this episode one more example of disastrous relations between the Ministry and the brick industry since the Government came to power? Is it not utterly farcical that in May a reference on the price of bricks should be made to the Prices and Incomes Board because it was thought that the proposed price increases would have a significant effect upon building costs, and yet the Government are now allowing a price increase before the Board has reported? Is it not an utter farce?
    Mr. Prentice: Not at all. If the hon. Member is to use language like that, he should give reasons for using it. There was evidence given to us of the need for a modest increase. Our accountants

    33
    examined the cases of individual firms who applied and we thought that an increase of this magnitude would norm- ally be justified. We agreed to this after consultation with the National Board for Prices and Incomes. Even so, the proposal for the increase must be justified in each case and the firm concerned must prove to us that it has justification for it. There is nothing wrong with this. Meanwhile the Board needs to have time to look at the real problem of brick prices, which have never been thoroughly examined in this way before.
    Mr. Speaker: Answers should be reasonably brief.
    Mr. Chichester-Clark: Can the Minister say what information brick makers have to furnish to the Ministry and under what statutory authority this requirement comes?
    Mr. Prentice: All of this comes within the present law on prices and incomes which has been debated at length in the House. The firms concerned will be required to submit brief details to my Ministry justifying the price increases they propose.
    Mr. Maxwell: Would my right hon. Friend bear in mind, when agreeing or not agreeing with the request for a price increase, that the brick industry at present is working at over-capacity and certainly when it last submitted these figures it probably did not take that into account and it is running at very high profits already?
    Mr. Prentice: If we are to agree to these increases the brick firms concerned will have to justify them in terms of the present situation.
    Sir H. Legge-Bourke: Could the right hon. Gentleman say whether at the conference with the brick makers the National Coal Board was also represented, it having recently acquired a brickfield in my constituency?
    Mr. Prentice: There was no representative of the Coal Board there at the time, although the National Coal Board is a member of the National Federation of Clay Industries.
    Mr. Biffen: On a point of order. In view of the unsatisfactory nature of the answer, I beg to give notice that I shall
    34
    raise this matter on the Adjournment at the earliest opportunity, even if I have to wait until the Autumn.

    Public Buildings (Cleaning)
    Mr. Robert Cookeasked the Minister of Public Building and Works whether he will consider the cleaning of the surroundings of Nos. 10, 11 and 12 Downing Street and the future introduction of suitably placed flowering plants in the area.
    Mr. Prentice: I am having the exteriors of Nos. 10, 11 and 12 Downing Street redecorated during the Summer Recess. As I informed the House on 10th July, the stonework of the old Treasury building nearby will also be cleaned, probably later in this financial year.
    There are already plane trees and a small greensward in the street. I doubt whether flowering plants would be appropriate.
    Mr. Cooke: I am sure that the House will be glad that the right hon. Gentleman is making some progress, but would he bear in mind that many people at home and abroad are waiting in conditions of the utmost squalor for something quite indeterminate to happen in Downing Street? Could he give some attention to the buildings behind where people wait, the Foreign Office and Home Office buildings?
    Mr. Prentice: I refer the hon. Member to a Written Answer today about the Foreign Office building. We do not propose to clean that for the time being, because it is due to be taken down in a few years' time. I was not clear on the first part of the supplementary question whether the hon. Gentleman was suggesting that there was some dissatisfaction with what goes on in Downing Street. If so, I disagree.

    Gareloch Submarine Base (Cost)
    Mr. Emrys Hughesasked the Minister of Public Building and Works what expenditure he has incurred at the Polaris submarine base at Gareloch and the missile storage depot there up to 31st June; if he will give the main items of expenditure; and what is his estimate of the work there when it is completed.
    Mr. Prentice: The total estimate for this work is £23 million of which £15½ million had been spent by 30th June. The main items are the Faslane Base, the Armament Depot at Coulport and the housing estates at Rhu and Helensburgh.
    Mr. Emrys Hughes: Could the Minister tell us when this great drain on the building resources of western Scotland is likely to cease? is he aware that the total estimate given to me is £45 million, which is a very large sum for a white elephant?
    Mr. Prentice: I do not accept the proposition that this is a great drain on the building resources of western Scotland. The total labour employed on the site to 30th June was 1,738 men, which is not a very large number compared with the population of that area. The £45 million is the total cost, including that which falls on the Ministry of Defence. The £23 million is the cost of the building work carried out under the auspices of my Ministry.

  SOCIAL SECURITY

    Labour Force Ltd.
    Mr. Hiltonasked the Minister of Social Security what is the total amount of Selective Employment Tax paid to date by Labour Force Limited, of 140 Portland Road, London, S.E.25, in respect of the manpower they supply for the construction industry.
    The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Norman Pentland): It is not our practice to disclose details of payments by individual employers; but I can say that enquiries are being made into this firm's liability for national insurance contributions and Selective Employment Tax, and that proceedings have been instituted tinder Section 90 of the National Insurance Act, following their refusal to produce certain documents.
    Mr. Hilton: is my hon. Friend aware that, according to this advertisement which I have in my hand, 50,000 men are at the command of this firm upon which £3¼ million ought to have been paid in Selective Employment Tax? Apart from the avoidance of this, there is also the
    36
    avoidance of industrial and training levies, which I view even more seriously. It seems peculiar that it should not even be paying Selective Employment Tax in respect of the labour force required to administer this project.
    Mr. Pentland: I would accept a lot of what my hon. Friend has said. That is one of the prime reasons why inquiries are being made and proceedings have now been instituted.
    Mr. Urwin: Could my hon. Friend give some idea of the extent of the evasion of payment of Selective Employment Tax and National Insurance payments, too, by people operating this insidious system of labour-only subcontracting in addition to the instance which my hon. Friend mentioned?
    Mr. Pentland: No, Sir. As my hon. Friend will know, a committee has already been set up by my right hon. Friends the Minister of Labour and the Minister of Public Building and Works. The terms of reference of this Committee are
    "to inquire into the engagement and use of labour in building and civil engineering with particular reference to labour-only subcontracting and to make recommendations."
    We hope, as a result of this Committee, that we shall have more information forthcoming.
    Mr. Chichester-Clark: Has the Minister studied the evidence of the N.F.B.T.E. to the Phelps Brown Committee, to which he has just referred, which makes the fair point that there is a place in the industry for genuine sub-contracting for labour-only but which disapproves of gangs of self-employed men who are using this kind of thing to avoid tax?
    Mr. Pentland: It is not for me to comment upon that aspect. We are waiting for the Committee's recommendations.

    Retirement Pensions
    Sir J. Langford-Holtasked the Minister of Social Security what percentage of retirement pension for a man who has been a contributor since the commencement of the National Insurance scheme has been contributed by him; and on what actuarial expectation of life this is calculated.
    Mr. Pentland: It depends on the individual circumstances and on the basis adopted for calculation, including whether account is taken of contributions before 1948, but would be up to 20 per cent. on the basis of the U.K. Life Tables 1963–65.
    Sir J. Langford-Holt: Can the hon. Gentleman say when the highest point will be reached in this figure?
    Mr. Pentland: No, Sir, not without notice.
    Mr. Iremongerasked the Minister of Social Security what reply she is now able to make, in respect of the constituent about whom she has been in correspondence with the hon. Member for Ilford, North, to the inquiries made about that constituent's entitlement to retirement pension and related matters.
    Mr. Pentland: I have informed the hon. Member that his constituent's pension is being put into payment on the due date at the appropriate rate. The letter I have sent him explains at length the difficulties involved in this particular case.

    Death Grant
    Mr. Hamlingasked the Minister of Social Security whether, in her review of the social security system, she will consider revising the regulations regarding the payment of death grant so that payments are uniform in all cases.
    The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Charles Loughlin): I assume my hon. Friend has in mind the basis on which death grant is made available to people who were within ten years of pensionable age when the benefit was introduced for the first time in 1948. It would not be appropriate to revise these transitional arrangements now.
    Mr. Hamling: Will my hon. Friend consider consulting his right hon. Friend with a view to changing these regulations, as continuous increases in benefit in other respects have made nonsense of many of the actuarial considerations of 1947 and 1948?
    Mr. Loughlin: It is perfectly true that two of the categories concerned, non-
    38
    payment and reductions, are based upon the contributory nature of the fund, but they would still be based upon its contributory nature whatever happened. We have to be guided to some extent by the Advisory Committee. We submitted this issue to it and it said that at this stage it did not feel that there was any useful purpose in changing the regulations.
    Mr. Braine: The hon. Gentleman says "at this stage", but is this matter to be looked at in accordance with his hon. Friend's request? Is the Parliamentary Secretary aware that there are some cases, notably where the mentally subnormal are concerned, where there has been no insurance entitlement and where hardship may be caused to the parent who may be a widow of small means?
    Mr. Loughlin: That is a slightly different aspect. I can assure the hon. Gentleman that we are examining this aspect, although not necessarily specifically related to the death grant.

    Young Widows
    Mr. Brooksasked the Minister of Social Security what research she proposes to conduct to investigate the financial conditions experienced by young widows.
    The Minister of Social Security (Miss Margaret Herbison): One of the proposals being considered as part of my Department's research planning is an investigation into the employment prospects of widows. It is too early to say when this inquiry could be put in hand.
    Mr. Brooks: I thank my right hon. Friend for that Answer. Will she bear in mind that getting information from her Department about the precise details of this problem is like finding out the date of the next General Election? Will she undertake some co-ordinated research into this problem, perhaps in consultation with the universities?
    Miss Herbison: That is certainly true in other respects, but much of the detailed information for which my hon. Friend asks would not help with the problems with which some widows are faced. It is because of this that I have picked out this one aspect as one which I should like to examine.

    Report on the Circumstances of Families
    Dr. David Owenasked the Minister of Social Security if she is satisfied with the arrangements made for providing publicity for the Report on the Circumstances of Families; and if she will make a statement.
    Miss Herbison: Some newspapers and periodicals have, I am glad to say, given substantial space to the findings of this Report. But I regret that the Press did not have longer to study the complex material in it before publication.
    Dr. Owen: Why did not the Press have adequate notice of this very important Report? Is my right hon. Friend aware that The Guardian alleged that the procedure in this case was typical?
    Miss Herbison: One of the reasons was that we were anxious to get the Report out and felt that if we waited another day, which would have allowed the usual time and given up to 24 hours' warning, we might have had complaints that we were delaying the Report further.
    Dr. David Owenasked the Minister of Social Security why the Report on Circumstances of Families which was promised for May or June was not published until July.
    Miss Herbison: The report was published on 5th July, i.e., on the third working day after the end of June. In view of the many complications involved in such a report this publication date was not unreasonable.
    Dr. Owen: Is my right hon. Friend aware that the delay in publication was deeply regretted by some of us? When was the information on the uptake of school meals made available to the Department of Education and Science?
    Miss Herbison: Whatever information was needed for the decisions which had to be taken was in the hands of those Ministers who needed it.

    Earnings Related Benefits
    Mr. Hugh Jenkinsasked the Minister of Social Security why under her regulations earnings related benefits are not
    40
    payable to persons who continue to work after normal retiring age.
    Mr. Pentland: It was considered right to continue the long-established existing arrangements, which provided that unemployment and sickness benefit for a person over pension age should be at a rate equivalent to the flat-rate retirement pension payable on retirement at that age.
    Mr. Jenkins: Is not my hon. Friend aware that a man over pensionable age pays an increased contribution? Would it not, therefore, be just for him to receive an increased reward for it?
    Mr. Pentland: No, Sir. My hon. Friend will probably be aware that a number of possibilities were considered in the formulation of the earnings related scheme and during the passage of the Bill. We have always made it clear that the present earnings related scheme is an interim scheme and we shall certainly consider the position of this group in the major review.

    Earnings Rule
    Mr. Ridsdale asked the Minister of Social Security whether she will seek to abolish the earnings rule in areas which have an unemployment rate above 3·5 per cent.
    Mr. Pentland: No, Sir. The earnings rule is essential to support the retirement condition and it would be impracticable and quite unfair to have different conditions for national insurance retirement pensions in different parts of the country and at different times.
    Mr. Ridsdale: Will not the hon. Gentleman help pensioners to help themselves? If he cannot do that, will he at least advise the Chancellor of the Exchequer to help pensioners by abolishing the Selective Employment Tax in such areas?
    Mr. Pentland: No, Sir. We do everything possible to assist pensioners to help themselves, whether in work or in other directions.
    Mr. Braine: In view of the generally accepted need to encourage older people to go on working in their own interests and those of the economy, when will the Government consider the earnings rule again?
    Mr. Pentland: We have only just looked at the earnings rule and have made certain valuable modifications. It would be quite unacceptable in a national scheme to make payment of a contributory retirement pension dependent upon different conditions in different parts of the country.

    Widows' Pensions
    Mr. Brooksasked the Minister of Social Security if she will now restore the position whereby women qualify for pension if widowed at the age of 45 or over.
    Mr. Pentland: Age 50 has always been the age test for widow's pension under the National Insurance Act for a childless widow. I would refer my hon. Friend to the Written Reply my right hon. Friend gave my hon. Friend the Member for Bolton, West (Mr. Oakes) on 26th June. —[Vol. 749, c. 3.]
    Mr. Brooks: Would not the moment when emergency help is about to be given to large families be a very fitting time for relieving the burden on women of middle age who are bereaved and who are denied the consolations of family life?
    Mr. Pentland: I have a good deal of sympathy with what my hon. Friend says, but, as my right hon. Friend and I have said on more than one occasion, widows' benefits are one of the issues which we are considering in the review.

  MINISTRY OF HEALTH

    Sainsbury Committee
    Mr. Fisherasked the Minister of Health whether he has received the report of the Sainsbury Committee; and when he proposes to publish it.
    The Minister of Health (Mr. Kenneth Robinson): No Sir, though I understand that the Committee hopes to complete it within a week or so. I shall consider the question of publication as soon as I have the Report.
    Mr. Fisher: Will the right hon. Gentleman undertake that when he has had an opportunity to consider the Report he will make a statement on his reactions to it to the House as opposed to some outside body like the Labour Party conference or
    42
    anything of that sort—[Interruption.]—I think so—and thereafter could he invite his right hon. Friend the Leader of the House to give us time to debate it?
    Mr. Robinson: As the hon. Gentleman knows, the question of a debate will not be for me, but no doubt my right hon. Friend will have noted the hon. Gentle. man's suggestion. The Committee's recommendations will, in the nature of things, be touching on difficult and delicate subjects and the Government will need time to consider them before entering into consultations with the industry, and I think that it is highly probable that the Government's first statement will be made to the House.
    Dr. Summerskill: Will my right hon. Friend bear in mind that it is hoped that the whole future of the drug industry will be altered as a result of this Report, and that it is therefore very important that hon. Members should have the chance to question him about it?
    Mr. Robinson: I note my hon. Friend's hopes.

    Drugs
    Mr. Barnesasked the Minister of Health whether he will launch a major publicity campaign to inform the public of the physical, mental and social effects of taking different types of drugs.
    Mr. K. Robinson: My right hon. Friends the Secretaries of State for the Home Department and for Education and Science and I are giving this matter urgent attention in consultation with the Sub-Committee of the Advisory Committee on Drug Dependence, which is considering the need for health education and publicity about drug taking.
    Mr. Barnes: Does not my right hon. Friend agree that there is a great need for more factual information about drugs at the earliest possible moment, not only to bring home to people who may be persuaded to take drugs what drugs are dangerous, but also to assist those whose job it is to administer the law to get the whole matter into better perspective?
    Mr. Robinson: I agree with everything my hon. Friend said. This is a very important matter and we could certainly do with more facts.
    Mr. Braine: I strongly reinforce the plea for more information, for there is a dearth, almost a complete absence as far as I can discover, of any information available for parents or teachers or social workers, apart from the odd pamphlet produced by an enlightened local authority. Can the right hon. Gentleman therefore speed up production of suitable material?
    Mr. Robinson: There may be a demand by parents and other adults responsible for young people for factual information about different drugs and the symptoms which they cause and we are pressing ahead with the provision of such information. The Sub-Committee has held its first meeting and will be meeting again on the 27th of this month.
    Mr. Blenkinsop: Would my right hon. Friend agree that it is of the very greatest importance that this information should be accurate, even if we have to wait a little longer to get it?
    Mr. Robinson: I entirely agree with my hon. Friend.
    Mr. Patrick Jenkin: What attitude does the Minister of Health take to the advertisement appearing in The Times this morning?
    Mr. Robinson: I have seen the advertisement. It probably reinforces what has been said, not only from the Dispatch Box this afternoon but from both sides of the House, that we need more facts before we jump to conclusions.

    Cigarette Smoking
    Dr. John Dunwoodyasked the Minister of Health if he will now seek to ban cigarette coupons, limit cigarette advertising and increase considerably the amount of health education provided by his Department in order to ensure that the entire population knows of the risks of death and disease resulting from cigarette smoking.
    Mr. K. Robinson: I cannot at present add to my reply to my hon. Friend the Member for Swindon (Mr. Francis Noel-Baker) on 19th July.—[Vol. 750, c. 278.]
    Dr. Dunwoody: While welcoming the efforts which we all know my right hon. Friend is making in this direction, will he now consider introducing a financial
    44
    levy on cigarette manufacturers equal to their expenditure on advertising which would be devoted entirely to anti-smoking education and research?
    Mr. Robinson: I note my hon. Friend's suggestion, but as the proposals are under consideration by the manufacturers it would not be appropriate for me to comment further at this stage.
    Sir J. Langford-Holt: Is not the right hon. Gentleman aware that if he is successful in his campaign it will be absolutely disastrous for the Chancellor of the Exchequer and, so long as this is the position, the Government's motives will always be suspect in this matter?
    Mr. Robinson: I do not think there is any need for suspicion of the Government's motives. Certainly mine are quite clear. They are to take all steps open to me to improve the public health.

  HOSPITALS

    Maternity Beds (Croydon)
    Mr. Frederic Harrisasked the Minister of Health what is the present estimated shortage of maternity beds within the Croydon area; and what action he is proposing to take to remedy the situation.
    The Parliamentary Secretary to the Ministry of Health (Mr. Julian Snow): There is a marginal shortage, but teaching hospitals and hospitals of other groups also provide a service for this area.
    Mr. Harris: Does the Parliamentary Secretary realise that the shortage is very real and most distressing and disturbing, particularly to young wives who should have their first baby in hospital? It is extremely worrying to them to know that they cannot do so, and it makes an absolute nonsense of the National Health Service if these young wives are not able to have their first baby in hospital.
    Mr. Snow: The hon. Gentleman's information is not, perhaps, quite right. The Cranbrook Report recommendation was that we should aim towards a 70 per cent. figure of births in hospitals. The position for the hon. Gentleman's area last year was 72·4 per cent.
    Mr. Winnick: Can the Parliamentary Secretary tell us for what period of time

    45
    there has been a shortage of beds in the Croydon area? May I ask him to look into this position, because it affects all constituencies in the Croydon area?
    Mr. Snow: My hon. Friend is right to look at this problem objectively. As I have said, we have no information that there is anything other than a marginal shortage, which is adequately covered by teaching hospitals and other hospitals in other groups.
    Mr. Harris: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest possible opportunity.

  HOUSE OF COMMONS

    New Building
    Mr. Longdenasked the Lord President of the Council what progress is being made in regard to the new building; and if he will make a statement.
    The Lord President of the Council and Leader of the House of Commons (Mr. Richard Crossman): Consideration of the provision of more accommodation for Members is being actively studied by the Select Committee on House of Commons (Services), which will make a Report to the House in due course. I am not therefore in a position to make any statement at present.
    Mr. Longden: Is it not the case that certain decisions of quite fundamental importance have been taken without reference to the House as a whole? For instance, is it the case, as I am told, that it has been decided that the kitchen shall stay here and not be removed to a new place, whereas I should have thought that if anything should have been moved from here it would have been the kitchen? When is the House as a whole to be taken into the right hon. Gentleman's confidence?
    Mr. Crossman: As to the first part of the supplementary question, which was incoherent but intelligible, the answer is that I would not agree with the hon. Gentleman that the further from the House the better for the kitchen. It seems that the kitchen should be some-
    46
    where near the Chamber. It would not be true to say that a decision has been taken on that subject.

    Clerk's Department
    Mr. William Hamiltonasked the Lord President of the Council if he will make a statement on the progress made in the last month in his discussions on the question of the financing of a new career structure within the House of Commons Clerk's Department.
    Mr. Crossman: I am glad to say that considerable progress has recently been made and agreement has been reached with the Treasury on changes in the structure of the Clerk's Department which, I hope, will go a long way towards solving the problem of recruitment. The new senior grading structure will be as follows: Clerk of the House, 2 Deputy Secretaries, 5 Under Secretaries, 3 Assistant Secretaries (with allowances) and 10 Assistant Secretaries. This will considerably improve promotion prospects in the Clerk's Department and bring them into line with those prevailing in the rest of the Civil Service.
    Mr. Hamilton: Is my right hon. Friend aware that the whole House will congratulate him and his Department on achieving this very desirable result? Can he also inform the House whether this will result in the additional clerks we need in October to man the new specialist Committees we are hoping for?
    Mr. Crossman: I am grateful to my hon. Friend for the first part of his question. As to the second part, for the next 12 months we can rest assured that the Clerk's Department will now be manned up to the point where it can fulfil its functions.
    Sir H. Legge-Bourke: May I ask the right hon. Gentleman, arising out of that last supplementary question, whether he will give serious thought to ensuring that there is some special account taken of the very great burden of extra work which falls upon the clerks who have to serve the new specialist Committees?
    Mr. Crossman: I put that in rather a different way. What we are seeking to do is to see that the more ordinary work of the clerks is given to higher executive officers and our fully trained clerks

    47
    are concentrated on such jobs of greater responsibility as the specialist Committees.

    Members' Dining Room
    Mr. William Hamiltonasked the Lord President of the Council what has been the result of consideration of the desirability and feasibility of the suggestion to open the Members' Dining Room to the general public during the long Summer Recess, as a means of eliminating the financial deficit in the Catering Deparment of the House of Commons.
    Mr. Maxwell: I have been asked to reply.
    The Catering Sub-Committee is in favour of this suggestion, not only because it would provide additional facilities to visitors and add to our revenue, but because we believe that it would provide an additional facility, which is badly needed, for Members who wish to make use of the House during the Recess. Towards this aim we have taken positive steps to provide independent boiler facilities. However, the general principle of providing this facility and certain aspects of security are beyond the immediate ambit of the Catering Sub-Committee.
    Mr. Hamilton: Is my hon. Friend aware that this is obviously my day? Can he tell me what proportion of the deficit of the Catering Department is due to the fact that we are closed down in the two long Recesses, and what is the total deficit?
    Mr. Maxwell: As to the first part of the supplementary question, I estimate that about two-thirds of our deficit is due to the wages and extra expenses that the Department has to bear during the Recess. Until recently the deficit was of the order of £3,000 a month, but the Catering Sub-Committee believes that the bulk of these losses have now been stemmed, although this is subject to audit.
    Sir C. Osborne: Would the hon. Member look at the problem again? Many of us dislike this entirely and feel that it would cheapen the standard of Parliament. Will he resist the pressures and, if he can, reverse the decision?
    Mr. Maxwell: I cannot accept the implication that there has been any pressure from any quarter. The Catering Sub-
    48
    Committee feels that the provision of proper facilities for Members and visitors would be very useful, and it is incumbent upon the Department to make sure that we do not become a burden upon the Chancellor of the Exchequer.
    Mrs. Renée Short: May I ask my hon. Friend, if he finds the security arrangements for opening the Members' Dining Room during the Recess to be too difficult, to look at the possibility of using the Harcourt Corridor and the Harcourt Terrace for a summer dining place, since it would be equally if not more attractive to summer visitors?
    Mr. Maxwell: The security problem is very serious, and the Serjeant at Arms is looking into this. The suggestion of my hon. Friend is a very useful one and we will most certainly examine it.
    Mr. Kenneth Lewis: Will the hon. Gentleman consider opening the Members' Dining Room during the Summer Recess for breakfast so that the public can know exactly what it feels like to be a Member when the right hon. Gentleman the Leader of the House overlooks the business of the House.
    Mr. Maxwell: The office of Chairman of the Catering Sub-Committee is nonpolitical. However, I cannot let the hon. Gentleman's comment pass, as I consider it cheap and beyond the need for reply.

    Debates (Sub Judice Rule)
    Sir Knox Cunningham
    asked the Lord President of the Council if he will move to refer to the Select Committee on Procedure the present rule on matters awaiting judicial decision, with a view to its modification so that matters which are being dicussed and commented upon in the Press, television and radio can be referred to by Members in the House.
    Mr. Dribergasked the Lord President of the Council if, in view of the wider latitude in commenting on cases awaiting appeal now allowed to the Press and the general public interest in such cases, he will move to refer to the Select Committee on Procedure, the operation of the sub judice rule in the House of Commons.
    Mr. Crossman: I sympathise on this matter and, in consultation with my right

    49
    hon. and learned Friend the Attorney-General, I am considering whether a further reference to the Select Committee on Procedure should be made.
    Sir Knox Cunningham: Since the right h3n. and learned Gentleman the Attorney-General has commended free discussion outside the House of criminal matters after sentence and before appeal, will the Leader of the House also commend to the Select Committee similar discussion inside the House, for is it not a nonsense that any hon. Member who wishes to discuss these matters in Parliament is prevented from doing so and has to go on television or radio to do so?
    Mr. Crossman: I am grateful to the hon. and learned Gentleman for permitting me to give my personal preferences on this subject some publicity. It is true twat there is prima facie a more severe restriction on comment in Parliament when an appeal is pending than in the Press or on radio and television. When I commend this to the Select Committee, it be in no doubt as to where my feeligs lie.
    Mr. Driberg: Is my right hon. Friend aware that what he has just said will be extremely welcome to many of us and that there has been an astonishing change in the Press in recent times—with things being published which in the past would have been called contempt of court partly as a result of some words uttered, I think, by the Lord Chancellor?
    Mr. Crossman: I am aware of that, and as far as I know no damage has been done by the greater freedom exercised there. I do not see why damage should be done in the House.
    Mr. Hogg: Would the Leader of the House bring to the attention of the Attorney-General that much of the trouble is due to the astonishing long time now elapsing between sentence and appeal?
    Mr. Crossman: I am aware that that is a very relevant factor.

    Refreshment Department (Pay and Conditions)
    Mr. Danceasked the Lord President of the Council if he will give an assurance that in the current negotiations
    50
    on the pay of the staff of the Refreshment Department, full account will be taken of the extra and long hours of duty which late sittings of the House have recently imposed on them.
    Mr. Maxwell: I have been asked to reply.
    Yes, such matters as long and irregular hours will certainly be taken into account. I would remind the hon. Member, however, that while the burden of long regular hours falls on our permanent staff, the demands of late-night sittings are mainly met by the use on a large scale of casual staff. I think all hon. Members would agree with me in paying tribute to the service given to us by the Refreshment Department Manager and staff, both permanent and casual.
    Mr. Dance: Would the hon. Gentleman give an assurance that when this award is made it will be backdated not later than 1st July? Will he also have a word with the Leader of the House to ensure that he arranges business more efficiently in future?
    Mr. Speaker: Order. Members should not anticipate other hon. Member's Questions.
    Mr. Maxwell: I cannot give the assurance sought by the hon. Gentleman because of the financial circumstances of the Department. The arranging of business is a matter for the Leader of the House.
    Sir Knox Cunninghamasked the Lord President of the Council what are the particular reasons for the present situation in the Kitchen Committee which make it impossible to backdate to 1st July or earlier the promised increase in pay to the staff of the Catering Department of the House of Commons.
    Mr. Maxwell: I have been asked to reply.
    These reasons are simply the financial position of the Department. I hope, however, to have the proposed increases in force when the House re-assembles after the Summer Recess.
    Sir Knox Cunningham: Will the Chairman of the Kitchen Committee bear in mind that pay increases outside the House are being backdated and that we as good employers should treat our catering staff properly? Will he reconsider this decision

    51
    and backdate the award to at least 1st July, if not earlier?
    Mr. Maxwell: I cannot give an assurance for the reasons which I have stated. My right hon. Friend the Leader of the House has been in contact with the Chancellor of the Exchequer. I hope to hear what the Chancellor of the Exchequer is willing and able to do for the Department before the House rises. The minute I hear about it I will be in a better position to state what, if anything, can be done about backdating any wage award which may be given in the Department.

    Copying Machine
    Mr. Nottasked the Lord President of the Council whether he will seek to arrange the installation in the House of Commons a Rank Xerox 2400 for the use of Members and their secretaries.
    Mr. Crossman: The Rank Xerox has a greater capacity than the existing models, but is very much more expensive and requires a great deal of use to make it economic. I will ask for an O. and M. investigation into the cost and likely use of such a machine.
    Mr. Nott: Is the right hon. Gentleman aware that this machine works approximately six times faster and that certainly on a cost analysis basis the rental is probably very much cheaper? If we are to preach modernisation in the House, should we not practise it ourselves and use the most efficient and up-to-date machines?
    Mr. Crossman: That is why I said I was willing to have an O. and M. investigation made on this point.

    Offices, Shops and Railway Premises Act 1963
    Mr. Hamlingasked the Lord President of the Council (1) whether he will now seek powers to ensure that sections 4 to 15, inclusive, of the Offices, Shops and Railway Premises Act, 1963, shall apply within the Palace of Westminster and so provide protection for all those who work in the Palace of Westminster;
    (2) how far the provisions of the Offices, Shops and Railway Premises Act, 1963, are used as a standard for deter-
    52
    mining accommodation and facilities in the Palace of Westminster.
    Mr. Crossman: The Offices, Shops and Railway Premises Act, 1963, does not apply to any Crown premises. Such premises are, however, inspected by Her Majesty's Factory Inspectorate in order to fulfil the intention that the standards laid down in the Act should be observed. Such an inspection has been made in the House of Commons and the recommendations of the Inspectors have been implemented. The standards of the Act are, on Mr. Speaker's direction, applied so far as possible.
    Mr. Hamling: Is my right hon. Friend aware that there is a suspicion in certain quarters that this exemption of Crown premises is insisted on to save my right hon. Friend from a criminal prosecution?
    Mr. Crossman: That is a very unfair imputation. If my hon. Friend has details by which he could establish that there was any failure to implement the Act, I hope that he will bring them to my attention.
    Mr. Onslow: Does the fact that the servants of the House have been recently obliged to work such arduous hours give the Minister some sadistic pleasure?
    Mr. Crossman: I should have thought that the Opposition should take some responsibility for the success of their opposition.

    Cloisters (Lighting and Ventilation)
    Mr. Moonmanasked the Lord President of the Council whether he will seek to arrange for lighting and ventilation specialists to examine the conditions in which hon. Members work in the Cloisters.
    Mr. Crossman: I am aware that the lighting and ventilation of the Cloisters is not good, and I am asking my right hon. Friend the Minister of Public Building and Works to make a thorough examination and to make what improvements he can during the Summer Recess.
    Mr. Moonman: I think that we shall all welcome that statement. Would my right hon. Friend appreciate, in his efforts to modernise Parliament, the need to

    53
    make a more effective use of this building, and, in particular, in relation to the 12 or so lost souls in the Cloisters?
    Mr. Crossman: I accept that point.

    Opening of Parliament (Televising)
    Mr. Woodburnasked the Lord President of the Council what consideration is being given to proposals for televising the Opening of Parliament and speeches in the House of Commons on that day; and what arrangements are being made to do so in colour.
    Mr. Crossman: It is not considered that the introduction of colour television justifies departing from the convention that the Opening is televised only at the beginning of the first session of a new Parliament.
    Mr. Woodburn: As the other place was televised so that people have an idea of what it looks like inside, would it not be desirable for this part of the building to be televised so that people have an idea of the ceremonies which take place in this House?
    Mr. Crossman: As Leader of the House, I must observe the views and decisions of the House.

    Private Dining Rooms
    Mr. Bryant Godman Irvineasked the Lord President of the Council if he will now introduce in the Private Dining Rooms a moderately priced menu, so that in future Members will not be precluded from entertaining the majority of their constituents.
    Mr. Maxwell: I have been asked to reply.
    As I told ale hon. Gentleman on 19th June, banqueting charges have recently been reviewed in the light of an independent inquiry into the working of the Refreshment Department, which resulted in the need to introduce prices comparable to those elsewhere. I cannot now undertake to reduce these prices, at least until such times as the Department breaks even, or to accept the hon. Gentleman's inference that they are prohibitive.
    Mr. Irvine: Is the hon. Gentleman aware that in my constituency 32s. 6d. is regarded as a very high price indeed for
    54
    a lunch? Is he further aware that it is one of the functions of this House to have constituents coming here to enjoy such facilities as are available and that if these high prices are maintained a large number of them will be precluded from coming?
    Mr. Maxwell: I am aware that out of hundreds of such bookings fewer than two have been cancelled because of the question of price. The prices established compare favourably with those outside. I hope that the hon. Gentleman's constituents will continue to come and enjoy the facilities of the House.

    Attendants (Pay)
    Mr. William Priceasked the Lord President of the Council why attendants at the House of Commons are required to wait twelve years before achieving the maximum wage of £16 12s. a week.
    Mr. Crossman: The salary scales of House of Commons attendant grades are linked to those of the paperkeeping grades in the Civil Service. The minimum period of twelve years' satisfactory service required by attendants in the Department of the Serjeant at Arms to reach the maximum of the senior attendant grade is no more than the normal period of progression through the paperkeeping grades.
    The maximum of the senior attendants' salary is now equivalent to £.17 7s. a week, and will be further increased to £17 10s. 6d. on 1st January, 1968, with effect from 1st July, 1966, as a result of a pay increase awarded to the paper-keepers following a Civil Service Pay Research Survey.
    Mr. Price: Would my right hon. Friend not agree that 12 years is an incredibly long time to wait for a distressingly low wage? Does he appreciate that, although we do not blame him, we expect him to do something about it?
    Mr. Crossman: There is something in what my hon. Friend says, but this has been worked out very carefully and I would not like to upset the arrangements without very careful consideration.
    Sir R. Cary: Is it not absolutely scandalous that our essential staff should not have a reasonable level of remuneration?
    Mr. Crossman: I am very glad for the sympathy which the hon. Gentleman shows, but, as he well knows, the salaries and wages here are linked approximately to the Civil Service grades in Whitehall and it would be impossible to upset that linking. What I am seeking to do is to have a regrading of certain people here if we feel that they are being put on the wrong link with the Civil Service. We should not assume that, however, until it is demonstrated.
    Sir J. Langford-Holt: Would the right hon. Gentleman explain why it is impossible to avoid linking it to the Civil Service?
    Mr. Crossman: It would not be impossible, but I think, from my experience in the renegotiation of the wages in the Clerk's Department, that we do well to link with the Civil Service, just as we find that our own salaries have to be linked with someone's. It is probably wiser for us to link the salaries of Westminster with those of Whitehall.

  TURKEY (EARTHQUAKE)
  3.31 p.m.
  Mr. John Fraser(by Private Notice) asked the Secretary of State for Foreign Affairs whether he will make a statement on the assistance which Great Britain will afford to the Government of Turkey following the recent tragic earthquakes.
  The Under-Secretary of State for Foreign Affairs (Mr. William Rodgers): Her Majesty's Consul at Istanbul has visited the area affected by the earthquake in order to determine what assistance would be most valuable.
  The Turkish Government have been informed that R.A.F. Cyprus have two aircraft standing by which could fly in a mountain rescue team and a quantity of tents and OXFAM have also offered help. But the local authorities say that they have all they need, and the Ministry of Foreign Affairs consider that help is unlikely to be required.
  Messages of sympathy have meanwhile been sent by Her Majesty the Queen and the Secretary of State.
  Mr. Fraser: I thank my hon. Friend for that reply. He will be aware of the sympathy of the House in the loss
  56
  suffered by the Turks at Adapazari. Would he take the opportunity to have discussions with the Turkish Minister of Reconstruction, who, I believe, is at present in this country?
  Mr. Rodgers: I am very glad of what my hon. Friend says and I am sure that the whole House would wish to be associated with the sentiments already expressed. Certainly, we will have whatever discussions may be required, because we want to help if we are needed.
  Lord Balniel: Is the hon. Gentleman aware that we on these benches would also like to be associated with his expression of sympathy to the people of Turkey, who have suffered more than their fair share of misfortune in the past year, and that, if help is needed, we will be anxious to support it?
  Mr. Rodgers
  Sir A. V. Harvey: Is the hon. Gentleman aware of the telephone message which I put through to his Department this morning about over 100 of my constituents from Macclesfield who were travelling near the earthquake, and that any information which he can give on that point would be much appreciated?
  Mr. Rodgers: We will certainly let the hon. Gentleman know if we have any news, but there is no reason at present to believe that any British subjects have suffered injury.

FAMILY ENDOWMENT SCHEME
3.34 p.m.
The Minister without Portfolio (Mr. Patrick Gordon Walker): With permission, Mr. Speaker, I would like to make a statement.
The problem of family poverty is complex and there is no simple or single solution to it; nor can poverty be removed overnight. Our attack on it must therefore have many aspects and include long-term as well as short-term plans. Our immediate intentions are as follows:
In April, 1968, we shall increase the existing family allowance by 7s. for second and subsequent children. But we intend to give help before the winter to the large families, who are those most in need. Therefore, from the end of

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October next 5s. of this 7s. will be paid for fourth and subsequent children. There are about 1 million such children in 609,000 families.
The cost of the increase in family allowances, net of tax and other adjustments, will be about £83 million in a full year. Such a sum could be raised in a number of ways. Since the purpose of the increase in family allowances is to improve the incomes of families in need, it would be logical, in considering how it should be paid for, to consider, among other things, some adjustment of the Income Tax allowances which affect families. It must be left to my right hon. Friend the Chancellor of the Exchequer to propose, at the right time and in the light of all the relevant circumstances, the method or methods by which the necessary revenue could be raised.
We are much concerned that those entitled to school meals and welfare milk free often do not take up their entitlement. We shall arrange publicity campaigns to see that families are quite clear what they can get and how to get it. The arrangements are now being reviewed so as to make it easy for them to exercise their rights without embarrassment.
We shall be raising the income limits below which families can get free school meals and welfare milk in line with the recently announced increases in supplementary benefits. We shall improve our provision for large families by extending free school meals to the fourth and subsequent children in a family and by extending free welfare milk to the third and subsequent children under five—including expectant mothers with two or more children under 5. This will be in both cases regardless of income and will take effect next April.
We feel bound to increase the charge for school meals and welfare milk for those who do not qualify for them tree. The present charges were fixed in 1957 and the cost has since greatly increased. Continuation of the present level of charge involves a claim on our resources that can no longer be justified. We intend next April, therefore, to increase the charges for school meals by 6d. and for welfare milk by 2d. a pint. There will still be a substantial element of subsidy in these charges. The subsidy will be 1s. 1d. per meal at a net annual running cost
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of about £64 million. At the present retail price of milk, the subsidy for welfare milk will cost about £35 million a year.
The net saving resulting from the increased charges for school meals and welfare milk, after taking account of the wider free provision for large families, will be about £25 million. Thus, the total net cost of the increases in family allowances and the charges in regard to meals and milk will be about £58 million a year.
We recognise that these measures cannot alone solve the complex problem of family poverty. Rent and rates can bear heavily on families of low income. Our rate rebate scheme, which, like rent rebate schemes, applies to the person as distinct from the house, is of great help to the needy. We have also introduced generous new housing subsidies and we are encouraging local authorities to extend local rent rebate schemes so as to ensure that subsidies are used to give help to those who need it most.
The relief of poverty is not, however, solely a matter of cash benefits to individuals. It is also a matter of social capital, and it is necessary to tackle the poverty of the physical environment in which many children grow up. It was this which the Plowden Report had in mind when it spoke of educational priority areas. The Government propose to make a start on tackling this problem by allocating an extra £16 million over the next two years for schools in such areas on top of existing programmes. Additional funds will similarly be made available for Scotland.
Miss Pike: Does the right hon. Gentleman realise that this long overdue announcement and these miserably inadequate stopgaps will be received with dismay by all those who seriously care for the plight of the low-income families? Does he not admit that 70 per cent. of the low-income families have three children and fewer and that, in his own words in speeches in this House and outside, a large number of these families have only two children and fewer and that they will get no relief at all until April, 1948—[Laughter.] I mean April, 1968, of course. This might be very funny to hon. Members, but it will not be very funny for the families who are waiting.

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Would not the right hon. Gentleman also admit that a 7s. across-the-board increase will leave something like 40 per cent. of these low-income families still below the supplementary benefit level? Does this represent Government policy —of putting aside for good selectivity and accepting universality; in other words, more help for those who need it least and not enough for those who need is most?
Does he recognise that, when it comes to school meals, the rich family with four children or more will get free meals while the poor family will be at severe disadvantage? Is this the best the Government are able to do after three years of serious consideration?
Mr. Gordon Walker: There is a very sharp difference between the note that is taken today of this matter by Conservative spokesmen and the note they took during their 13 years of office. I can understand the hon. Lady being upset at our not having introduced a means test to go with family allowances. I know her feelings in this matter.
There is always a balance of argument on a subject of this sort, but I think that the balance is overwhelmingly in favour of our decision. If one paid the increases on the basis of a means test, that would have a grave effect on incentives. And incentives are not only a matter for Surtax payers. They affect many other people. If one paid a person more for not working than for working, which would be the effect in some cases, that would have a grave effect on incentives. In this case, we had to consider the particular problem of the take-up of what is offered. We had to consider the fact that a great many people would be just above the level chosen and would not benefit, although many of them are almost in as great need as those who are below the supplementary benefit level.
Mrs. Lena Jeger: While congratulating my right hon. Friend on maintaining the principle of universality in this direction, can he say to what extent these increases merely take care of the price increases that have occurred since the last increase in family allowances? Is it not a fact that if we tried to keep family allowances in the same proportion to average earn-
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ings as when they were introduced in 1946, it would mean each family receiving 17s. 6d. per child on average to achieve the same purchasing power?
Mr. Gordon Walker: The increases are considerably more than necessary to make up for the increase in the cost of living since the present rates of family allowances were granted. My hon. Friend is right in saying that the increases do not altogether make up for the earnings increases that have occurred in the interval. However, we must here simply consider this in relation to other claims on the Budget and the money that is available for the social services. One must ensure that one keeps a balance in this matter. To have made the rates up completely would have been very expensive indeed, and we think that we have come to a compromise decision.
Mr. Dean: Does the right hon. Gentleman realise that this announcement will be recognised outside the House as a shabby compromise to try to get agreement among his colleagues in the Cabinet? Can he say how many families will still be below the national supplementary benefit level after these increases? Can he also say how many additional families will be paying Income Tax who are not now paying it, if it is decided to devalue the Income Tax child allowances?
Mr. Gordon Walker: The hon. Gentleman must await the proposals of my right hon. Friend the Chancellor of the Exchequer. The figures for which he asks were given by the hon. Lady the Member for Melton (Miss Pike) in her question. I do not agree that this announcement will be regarded as a shabby compromise; rather will it be seen as an important first step in continuing our attack on the problem of poverty.
Mr. James Griffiths: Does my right hon. Friend realise that many of us—indeed, I would say all of us—warmly welcome his announcement? As one who had the privilege of bringing the first family allowances Act into operation, may I tell him how glad I am that he has decided not to introduce a means test in this matter?
Will my right hon. Friend consult the Secretary of State for Education and Science to see, in respect of school meals,

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that every effort is made, so far as this can be done by administration, to prevent there being a division of children into those who get free meals and the others, realising that the last thing we want to apply is indignity to our schools? Will he resist all temptations, despite the use of high falutin' terms like "selectivity" and the rest—since their use only covers what some hon. Members want to see—to reintroduce the means test?
Mr. Gordon Walker: I always do my best to resist improper temptations. I wish to inform my right hon. Friend how much we who are now responsible for these matters are conscious of the fact that we are building on the foundations which were so soundly laid by him. We are indeed aware of the problem resulting from children in our schools being entitled to free meals and the danger that some sort of stigma might be thrown upon them.
My right hon. Friend the Secretary of State for Education and Science has already set up a working party, which will also discuss the matter with local authorities to obtain a uniform practice designed to make it impossible for this sort of thing to happen in future.
Mr. Pardoe: Is the right hon. Gentleman aware that we on the Liberal bench regard these measures as totally inadequate? Will he confirm that these allowances would have had to have gone up by 2s. 6d. to cover the increase in the cost of living and that a further 2s. 6d. is being called for to pay for school meals, meaning that families will be getting 5s. more but will be no better off at all? Will he tell the House why, after all this time, he cannot bother to say how all this will be paid for?
Mr. Gordon Walker: It is always easy for Liberals to say all sorts of things—to say that something should have been done long ago, or that it should have been done on a bigger scale. They never have to do these things. This N always an easy line for them to take. I assure the hon. Gentleman that families will not suffer as a result of this package payment as a whole. It would, of course, be idiotic for me or the Chancellor of the Exchequer to say at this moment what the Chancellor's plans will be in future, in relation to the whole problem.
Mr. Barnes: Does not my right hon. Friend agree that the survey published recently by the Ministry of Social Security showed that this problem was by no means confined to only the larger families? Can he say how many children will still be below the supplementary benefit subsistence level this winter? If we are to solve this problem, and raise all these children above this level, must not we to some extent be selective?
Mr. Gordon Walker: About 51 per cent. of the children in question will continue to be below the supplementary benefit level. [HON. MEMBERS: "Oh."] However, they will all be greatly helped and many of them will be only just below it. It is possible to have a false picture of the situation. As for the survey to which my hon. Friend refers, because wage rates have gone up since that survey was made it is inevitably considerably out of date. In other words, one cannot rely wholly on those figures any more. Such figures are relevant only at the time they are collected.
Sir E. Boyle: Further to the right hon. Gentleman's comments about the alterations in charges for school meals and milk—both the increases and the remissions for those most affected—would it not have been more sensible to have made these changes two years ago, when my hon. Friends were calling for them to be made, rather than inflicting severe cuts on the university building programme?
In regard to the £16 million for the priority areas—something for which we pressed as long ago as last March—how is this to be done? Is this to be brought about by means of an increase in the major school building programme and if so, for which years? Is there also to be an increase in the minor works programme?
Mr. Gordon Walker: It is true that hon. Gentlemen opposite started pressing rather harder once they were in opposition, compared with when they were in office. The right hon. Gentleman, probably because I made my statement rather quickly, is wrong on one point. School milk is not affected at all. That will continue as at present and will cost

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£14 million a year. We are concerned with school meals and welfare milk. Whether one should have done this two two years ago or at some other time is a difficult question to answer.
To answer the right hon. Gentleman's question about whether this will affect minor or major works, the answer is that it will affect partly one and partly the other. Questions of detail in this respect should be put to my right hon. Friend the Secretary of State for Education and Science.
Mrs. Renée Short: Can my right hon. Friend say when he expects to announce the new income limits for free school meals? Can he also say what methods he intends to use to identify those children in need of free school meals—apart from teachers' choice, which is often rather inadequate? Can he say how much of the £16 million for schools in the educationally deprived areas is likely to be for nursery accommodation on the lines of the Plowden recommendation?
Mr. Gordon Walker: The income limits will be raised at the same time as supplementary benefit levels are raised, in October. The detailed question of how the £16 million is to be spent over two years must be directed to my right hon. Friend the Secretary of State for Education and Science, who is wholly responsible for details of the application of policy.
Mr. Doughty: Will the Minister explain to his right hon. Friend the Chancellor of the Exchequer that any effort to cut down children's allowances for the purpose of paying something towards these inadequate increases will be most unpopular and grossly unfair?
Mr. Gordon Walker: My right hon. Friend undoubtedly heard the hon. and learned Gentleman and will make up his own mind, weighing one thing with another.
Mr. Heath: Is the right hon. Gentleman aware that he has now confirmed that more than 50 per cent. of the children will be receiving less help than they need because the Government are now pursuing a policy, once again, of universal increase in family allowances whether or not they are wanted, and doing
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this at a cost of nearly £60 million? At a time of universal anxiety about Government expenditure and the weakness of sterling, the pursuit of this aspect of policy is completely unjustified.
Mr. Gordon Walker: What the right hon. Gentleman overlooks is that if we had adopted his policy of means testing it would have meant that all those who are just above or some way above the supplementary benefit level, who will benefit under our proposals, would have been entirely left alone, and these are some of the families who are in need. One cannot draw the line simply at the supplementary benefit level.
Mr. Heath: The right hon. Gentleman must realise that this depends on where one draws the line. One cannot argue that one cannot possibly not have a line of any kind. It is his job to draw the line in the right place to help those who need it, and not those who do not need it.
Mr. Gordon Walker: If the line which we now understand is the Opposition's policy were drawn well above the supplementary benefit line, the disincentive effect of that policy would become extremely marked indeed.
Mr. Heath Mr. Heath rose—
Hon. Members: No.
Mr. Speaker: Order. The House must conducts itself properly.
Mr. Leadbitter: On a point of order, Mr. Speaker. This is the second occasion on which an hon. Member has had to ask whether the Leader of the Opposition has some right to ask three supplementary questions. Is not the position such that back benchers must take part in important questions of this kind?
Mr. Speaker: Order. I answered that question the last time it was raised. I am not aware that back benchers have no rights in this place. I have been trying to protect them. Mr. Heath.
Mr. Heath: Is the Minister now seriously arguing that men and women will refuse to work, if they are poor, so as to get these family allowances? Is that the philosophy of the party opposite? What about the disincentives to all those who will have to pay more to the Chancellor of the Exchequer by giving up children's allowances?
Mr. Gordon Walker: Part of the family allowances, of course, is taxed according to the taxable income. To this extent, there is selectivity—[HON. MEMBERS: "And disincentive."] We hear a great deal of the disincentive to the very rich man if some part of his income is taken by tax. There is also a disincentive, not that everyone would fall for it, if one so arranges allowances that people who are not working actually get more than if they are at work. It is a disincentive to take overtime, if to do so just brings them above the limit. I know that these disincentives are at rather lower levels than hon. and right hon. Members opposite often think about, but they are none the less real.
Mr. William Hamilton: Is my right hon. Friend aware that we on this side are now getting used to the hypocrisy and humbug and belated development of social conscience on the other side? Nevertheless, will he not agree that it is rather unfortunate that we should deal with these very important social problems in the piecemeal way in which we now seem to be dealing with them? Would my right hon. Friend consider setting up a new Beveridge-type committee to look at the whole problem comprehensively?
Mr. Gordon Walker: The difficulty is that if one waits until one is ready to do everything, one puts off for a very long time doing anything at all. This must be regarded as a continuing attack on the problem. From time to time we will announce various decisions to help us as a country to solve this problem.
I do not think, on the whole, that it would be wise to set up with all the delay that would be involved, another Beveridge-type committee. There is really a very deep and serious review going on in the Government. We will announce from time to time, as I have announced today, the continuing development of our policy. I think that, on the whole, this course is best, particularly when one considers the needs of the people one is trying to help.
Mr. Bellenger: Does my right hon. Friend's announcement today mean that the Chancellor of the Exchequer will be introducing a new financial statement in this fiscal year, and not wait until next
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year, in view of the heavy charges that are now being imposed on the Exchequer?
Mr. Gordon Walker: If my right hon. Friend looks carefully at what I said in the statement, I think that he will find that that is a false inference.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. This is an important statement, but we have important business ahead.

CONSOLIDATED FUND BILL (DEBATE)
Mr. Speaker: Mr. English. A point of order.
Mr. English: Mr. Speaker: I should like you to clarify the statement you made on Friday with regard to the Consolidated Fund Bill debate, and the practice you then introduced of balloting for the Motions concerned.
With respect, would you consider the point that where the Standing Orders of the House are silent, you, Sir, have a discretion to determine what the practice of the House should be? Would you, perhaps, consider the point that it may well be that your discretion should not extend to depriving yourself and your successors of that discretion itself?
I take note, and this is the point upon which I require clarification, that a point was made by members of your staff, or other people, which was not clear, and that you endeavoured to clear it up. If that is the case, if this procedure is to be adopted upon this occasion only, I am sure hon. Members would agree with your decision. But if you are instituting a complete change of practice for the future may I ask that the House should have the opportunity to consider it?
Mr. Speaker: Perhaps I could answer the very broad first part of the point of order. It would certainly not be the wish of this Speaker, just as it would not be in his power, to bind the discretion of future Speakers right through the centuries. I had the problem to solve on Thursday because of the different interpretation placed on what the method was for getting one's name—on the principle of first come, first served—down for the Consolidated Fund Bill debate.

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It was not an easy decision to have to make. I wanted to be fair to both groups. I consulted the three Chief Whips before I made the decision I did. I shall certainly take note of any representation anyone may care to make on how we shall proceed to allocate the order of topics in the debate on the next Consolidated Fund Bill and the form it will take.
It is not an easy matter. The House faces the problem that it is the keenest and most industrious House of Commons in history, and that almost every hon. Member is seeking, quite properly, to make the fullest use of every opportunity he has of raising matters. In olden days, on the Consolidated Fund Bill only a handful of hon. Members wanted to speak, but now very many hon. Members indeed want to speak. The decision I made on Friday was a decision for this year. I will be pleased to listen to any further representations. I hope that we can now move from this.
Mr. English: May I thank you, Mr. Speaker, for stating that you will take this matter into consideration before the next Consolidated Fund Bill debate? I am sure that you will realise that balloting may increase the power of Front Benchers rather than of back benchers.
Mr. Speaker: I will not comment on the last observation. I do not quite appreciate it at the moment.

BUSINESS OF THE HOUSE (SUPPLY)
Ordered,
That this day Business other than the Business of Supply may be taken before Ten o'clock.—[Mr. Grossman.]

ORDERS OF THE DAY
  SUPPLY
  [29TH ALLOTTED DAY] [2nd Series],—considered.

ECONOMIC AFFAIRS
Mr. Speaker: Before I call the spokesman for the Opposition to move the Motion, may I say that I have not selected the Amendment in the names of the hon. Member for Poplar (Mr. Mikardo) and some of his hon. Friends.
4.1 p.m.
Mr. Iain Macleod: I beg to move,
That this House has no confidence in the economic policies of Her Majesty's Government.
I start by treading on a piece of common ground between the Chancellor of the Exchequer and myself. I mention, only to reject, the solution of devaluation, because in my view it is no solution at all. It is idle to pretend that many, and perhaps the majority, of academic economists do not advocate this course. One listens carefully to what they say, but I do not think that devaluation offers us an easy way, or indeed any way, out of our present difficulties. I think, without labouring the point, that the signals of both interest and good faith alike are set against it. I believe this to be the genuine view of both the Treasury Front Bench and the Opposition Front Bench. I therefore state it at the beginning of the debate. No doubt the Chancellor will make some reference to it, when his categorical rejection will certainly be welcomed on this side of the House.
I turn to the Motion of censure. Each July since October, 1964, a debate of this sort has become necessary, because in each July we have seen the failure of the Chancellor's Budget judgment of the spring months. In 1965, he was warned by my right hon. Friend the Leader of the Opposition that he was being too optimistic. The Chancellor protested almost till the end, and then finally brought in a July packet. Last year he was warned by myself on the day after his Budget statement that he was taking a very serious risk with confidence, and

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even with our reserves, in bringing in his measures so late. In July, we had the most serious economic measures that we have had in peacetime.
This year the qualified euphoria of the Budget speech has been dissipated by events. If there are no July measures, that simply means, in my judgment, that the Chancellor has not yet won the battle that he must win, and which I hope he does win, against mounting Government expenditure.
The phrase "qualified euphoria" is not mine. The words I used on the day after the Budget this year, after analysing in particular the unemployment figures, which I shall do again in a moment, were these:
"In short—and, I believe, with good reason —I am less able than the Chancellor to take a cheerful or even passive view of the economy."—[OFFICIAL REPORT, 12th April, 1967; Vol. 744, c. 1216.]
The phrase "qualified euphoria" was used a few days ago by Mr. Cecil King.
I quote from The Times:
"Criticising the failure of performance to live up to pre-election promises, Mr. King … declared: 'No industrial country has deflated so savagely as Britain as recently, since the Keynesian principles of economic management came into practice'.
Mr. King felt unable to share the 'qualified euphoria' expressed by Mr. Callaghan in his Budget speech."
So, whether one takes my judgment or that of Mr. King's, or that of events themselves, I think that for the third time running the Chancellor has to answer the charge in July that his judgment in April—I have conceded that it was a particularly difficult judgment to make this year—has gone wrong.
Let us start by seeing what the original plan was as mapped out by the Prime Minister—not before the election of 1964, although quotations from the speeches he made then are hair raising enough, but from something he said after he had won the election, after he had looked at the books, after he had made the statement of 26th October on the economic situation which said this:
"The Government have satisfied themselves that, with the facilities available, the strength of sterling can and will be maintained"
and that so far as the domestic economy in general is concerned
"there is no undue pressure on resources calling for action."
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The verdict that the Prime Minister announced in the debate on the Address, when he charted the path that his Government were to follow, was this:
"… we have learned the hard way that deflation and contraction, so far from making us more efficient and competitive, have the opposite effect—costs rise; essential investment is discouraged; restrictive attitudes on both sides of industry are discouraged; a policy which relates incomes to expanding production is made infinitely harder to achieve … we are not prepared to accept the unemployment and loss of production which economic defeatism of this kind entails."—[OFFICIAL REPORT, 3rd November, 1964; Vol. 70, c. 79.]
That is the point from which every hon. Member opposite—each and every one of them—started. Each and every hon. Member who sits on the Government benches, whether he sits on the first or on the fifth bench, was elected to the House on a bonus prospectus.
I turn first, as I have done so often in the House—the House knows my deep interest in this matter and, indeed shares it with me—to the unemployment situation. I have not been, and I will not be today, alarmist about it, but I am deeply concerned that at least now we should have no further illusions about the present position. The papers have been splashing the fact recently that these are the highest figures for July since 1940. Indeed, this was true of June as well, but I do not think that it registered at that time. The trends have been apparent for a very long time. In this country the trends have been masked by the very mildness of the winter that we went through.
July, it is sad to remember, is the last of the good months. From August onwards the figures turn against us—partly for seasonal reasons, of course, but they turn against us from now on. so we should at this moment be at the very peak of the year.
Let us look at some of the figures as they came out a few days ago. The graph to look at is that of wholly unemployed, excluding school leavers. The increase, seasonally adjusted, for the last five months goes as follows: plus 13,000, plus 28,000, plus 10,000, plus 19,000, plus 19,000. These are seasonally adjusted figures. The fall last month in

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wholly unemployed was 51, but the seasonally adjusted fall should have been 18,500. The difference between those two figures is the measure of the deterioration in that one month.
It is not a question of unemployment alone. We must look at employment as well. We can get some indication of the Government's failure to redeploy labour by the fact that employment in manufacturing industry—it is an almost incredible figure—fell by 339,000 between July, 1966 and May, 1967. Unemployment increased by only 120,000, but employment dropped by 339,000. Compared with May, 1966, in May, 1967 66,000 fewer were employed in engineering and electrical goods, 47,000 fewer in vehicles, 58,000 fewer in textiles, and 71,000 fewer in construction. Among other things, what nonsense this makes of the Selective Employment Tax, which was introduced a year ago to help manufacturing industry.
Look—and this is what worries the House most—at the regions which are beginning to suffer most. The worst hit in July was the North-Western Region. The second was Scotland and the third Wales. Does that suggest nothing to hon. Members on both sides of the House? Does it not suggest that once more we are seeing, as we move into the second year of a cycle, that the older regions which one may have thought had escaped at the beginning are hit worst and that the bite is fiercer as time goes on there?
Let us look, finally, at the graph provided by the Minister of Labour over the years. I hope that every hon. Member will study this graph. It is the graph of wholly unemployed, giving both actual and seasonally-adjusted figures. Of course, the seasonally-adjusted figures are the ones which matter. The graph now, in July, 1967, is within a fraction of the peak reached in February, 1963, and it is climbing very steeply indeed.
I know that the House treats this subject with the utmost gravity, so let us realise where we are. In February, 1963, that peak was touched only for a matter of a few weeks—I think that by the accident of the time at which the count was taken it was for only a few days. Now one sees no break in this relentless climb up to and quite certainly beyond the peak. I do not say beyond the peak in actual
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numbers for that was the peak of the winter which was the worst for 100 years. We may be lucky again, but let us be quite clear for there is no doubt that we are at the mercy of the weather this winter. If the weather is remotely as bad as it was in 1963, the figures will outstrip those of that year. I do not think that anyone can find comfort from those figures.
I turn to analyse purely factually some other indices. First, the level of industrial production which fell last month is now at 131 points. It was 131 in December, 1964, and it was 131 in May when we had the latest figures for 1967. That is four points below the figure reached in July, 1966. There has been in this year a fall of four points compared with a fall of one point in the comparable cycle of 1961–1963.
The implications for the Government's promises or aims are very serious indeed, because the index needs to average 135 in 1967 indeed, 136 for the last quarter if it is to meet the Treasury's target of a 3 per cent. rise in output. The May figure needed to start at something like five points more than 131 to make this possible. I do not see, in face of that, how the Government can long pretend that their aim remains very much unaltered.
The Index of Retail Prices rose by half a point in June. That brings the increase to 12 points—or 11·1 per cent.—since October, 1964, an annual increase of 4·1 per cent. compared with 2½ per cent. average annual increase during the last six Tory years. The figure for last year was 2·8 per cent., which is much the same as, indeed rather worse than, the average.
During the last six years of Tory government the gross domestic product rose by 25·3 per cent. Her Majesty's Government's plans were for slightly less than that, in spite of their pre-election undertakings-25 per cent. The 25 per cent. is now dead and current estimates are that for these six years it may be 15 per cent. Even this, I think, is questionable. All public expenditure programmes—I shall return to this point and invite the Chancellor to explain it later—were calculated on the basis of 25 per cent. growth rate on which the National Plan was based. They should, therefore, be totally recast.

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I have a string of quotations about the balance of payments showing how each year the optimism of the Government has waxed and waned. I give the House only one. The Chancellor of the Exchequer, speaking at the Labour Party conference at Blackpool on 30th September, 1965, said:
"I have given only one pledge, and that pledge has been made public. It is that we should get ourselves into balance by the end of 1966.… I gave that pledge and the whole Cabinet is, of course, responsible for the pledge too, and it is essential that we should bend and adjust our policies to achieve this end, and I believe the British people understand this and set it against all the Tory yelps about unfulfilled Election promises."
The "Tory yelps" had it and they were right. When last we had a major debate on the Budget I acknowledged, and was glad to be able to do so, that sterling had touched parity that day. Recently, it has been rocketing around about 2.784 per cent. I was glad to see this morning that it was rather stronger.
With that analysis behind one, one comes to the question not why some of these things have happened because some were predictable and were planned, but why have all these things happened together? There is no comparable example I can find in modern economic history of all these indicators going wrong at the same time. Of course, we know that we cannot run an economy at 1·1 per cent. or 1·2 per cent. Of course, we know that a Government have to move to correct what is called over-heating, or whatever it may be, in the economy. I am pretty sure that almost every hon. Member on either side of the House loathes the action they have to take, even if—as I have been—one is a party to it.
We need not "kid" ourselves with words. When we talk about redeployment what we mean is that we must put a man out of work so as among other things, to strengthen the £ and to make our foreign balances come right, but why has this not happened? No one could fairly deny the courage of the Chancellor this last year. Whatever we may feel about the vacillations before July, 1966, he has remained absolutely steadfast, on course, since and he has been given a good deal of praise for it. Why, then—this, in many ways, is the central theme of this debate—if we have clobbered, as
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we have, our home economy have we not put swifty straight our account abroad?
I believe that there are two reasons. On the first, it may well be that I would find some common ground, although for different reasons, with some hon. Members opposite. I think that the Chancellor has been unsuccessful, because I do not think that he believes in the system which he is running. I do not believe that a Socialist Chancellor really understands that profits are the mainspring of the capitalist system. I do not think that he really appreciates what initiative, unhampered as far as may be by Government, can achieve.
About four months ago the C.B.I., in a memorandum, set out what it felt were the reasons for the low level of business confidence, which must worry the Treasury Bench as much as it does me. It referred to the Government's hostility to profits, to fears about nationalisation, to the Government's attitude to smaller businesses, to the prices and incomes policy, to the need for personal incentives, and to the complex burden of administration imposed on industry by the Government's tax and other policies.
Part of the Chancellor's answer was given in his Budget speech. This is a very inept phrase, I think:
"… I have no intention of killing the goose that lays the golden eggs. I think that it was Colbert who said that the object of fiscal policy should be to pluck the maximum of feathers with the minimum of hissing."—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, c. 989.]
That is the attitude of the Chancellor towards businesses in this country. He wants as much taxation as he can get away with. He made that alsolutely clear. But business and industry do not look to a couple of soothing phrases in the Budget speech. They look to action and deeds by the Government.
What have they seen since then? They have seen the Budget which did little or nothing—a "lost opportunities Budget", as it was christened by my right hon. Friend the Leader of the Opposition. We have seen another instalment of compulsion on prices and incomes. We have had the Chancellor making it clear that public spending is to go ahead at a rate that was linked to the National Plan, although it has been acknowledged that the National Plan programmes are dead.

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We have seen the Minister of Transport busily preparing her plans for wholesale transport nationalisation. [HON. MEMBERS: "Hear, hear."] Hon. Members may welcome it, but it is the question of confidence in industry with which we are concerned at the moment. Now we have the Prime Minister telling us that he is preparing a Bill to give power to nationalise, or anyway to increase, State control in new and wide areas.
How can one expect confidence in the face of that record? How can the Government expect business to invest, in spite of the inducements which the Government give them, in a future which for them is so bleak? That is the first answer. I do not believe that the Socialist Government really understand the nature of the system which they are trying to operate.
The second answer is graver, and here I absolve the Chancellor. I believe it to be the responsibility of the Prime Minister. At first, as I showed in a phrase at the opening of my speech, there was no lack of confidence either at home or abroad—not during the election, not when the result of the election was known, not after the election, not indeed until for party political reasons it became convenient for the Prime Minister to emphasise the weakness of this country. It was from that moment that a crisis of confidence began from which we have not yet escaped.
The Prime Minister knew very well that £368 million of the deficit of 1964 was on capital account, and part of the longterm strength of our country. He boasted in New York, in April:
"It is about time the world realised that a well-run shop does not put all its wares in the window. … Like the United States, the United Kingdom is a country rich in overseas assets. In all, we estimate them conservatively to amount to something like £11,000 million."
That was the boast of April. If that boast had been made in the previous November, we would have saved hundreds of millions of pounds for this country.
Again, at the time of the General Election all the talk was of the fourth quarter of 1965 and the current balance profit of £43 million. But, as he spoke, the Prime Minister knew something about the second quarter, did he not? The
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election was right at the end of March. He knew that he first quarter of 1966 would be seriously in deficit. But he used what was convenient to him and he forgot what was not.
Again, only a few weeks ago, in this year, when he was gibing at us on this side of the House for not feeling enthusiastic about paying our way in the first quarter of 1967, the answer by my right hon. Friend at Carshalton was that we knew very well that this surplus was largely fortuitous and purely temporary. We knew that on capital account it included the purchase of Pye by Philips and Chrysler's money flowing into Rootes. We knew the figures for two months on trading account, showing a deficit of no less than £66 million, and now we have the third, and the deficit is £107 million. The Prime Minister knew these things, too, when he was gibing just to make a small party point across the Floor of the House only a few weeks ago.
The net result has been that we have been on a switchback ride ever since between over confidence—qualified euphoria, if one likes—and gloom when some other figures came out. It was the Prime Minister who coined the phrase "selling Britain short". Well, the cap fits. I do not think that any man has done more to devalue the country's economy and himself than the Prime Minister.
I turn to the task which, I think, the Chancellor of the Exchequer should undertake—and I have paid my tribute to his steadfastness. I deal, first, with the question of taxation. Of course, it is true—this was, indeed, common ground in the many debates that we had on the Finance Bill—that in total we are not, or anything like, the most heavily taxed country in the world. We are not, or anywhere near, the most heavily taxed country so far as companies are concerned. But it is true that our personal direct taxation bites more quickly and more fiercely on some of the people on whom we have to rely most for our standard of living in this country, than in any other country except Sweden.
It is also true that our indirect taxes, being as selective as they are, reach saturation point far too quickly, and we

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therefore have had to rely on direct personal taxation where the combination of unpopularity and disincentive effect together make a formidable disadvantage. So the Chancellor has had no sea room at all.
Professor Merrett, speaking last week at a seminar over which I presided, said:
"Director level salaries, therefore, have to double every eight years to offset inflation and double every five years to obtain a 2 per cent. per annum net of tax increase in real income."
I realise that many hon. Members opposite, in their pursuit of equality, do not mind that particularly. I think that they are gravely mistaken. Equality, to me, is a dead and disastrous creed. It is as dead as Karl Marx in Highgate Cemetery. We should turn our minds to an entirely different conception—the pursuit not of equality but of excellence.
This means that we should reward those who can contribute most. I am absolutely unmoved when people either in this House or outside it point out that a reduction in taxation is of greatest benefit to those who pay most tax. Of course it is, and so it should be. This is the way towards greater prosperity for all the people of this country. Therefore, I make it clear again, as I have always done—and I do not avoid these issues—that the level of personal direct taxation is too high, and that we intend to reduce it.
Neither am I impressed by the argument that it cannot be done, because during our 13 years tax rates were cut so that £2,000 million less was being collected by 1964 every year than if 1951 rates were still in force, and yet central and local government expenditure at constant prices increased by 39 per cent. in the same period. It can be done. One can have both reduced taxation and what is popularly called the social infrastructure which we all want to see. But much depends on the, level Government expenditure. I am sure that the Chancellor will have a piece about this in his speech, but I wish to put the dilemma squarely to him, as I see it.
First, I remind the right hon. Gentleman of his Budget speech on 6th April, 1965, when he said:
"The Government have decided that the growth of public expenditure between 1964–65 and 1969–70 will be related to the prospective increase in national production. In the Gov-
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ernment's present judgment, this means limiting the overall increase in public sector expenditure, excluding the investment of the nationalised industries, and taking one year with another, to 4¼ per cent. a year at constant prices."—[OFFICIAL REPORT, 6th April, 1965; Vol. 710, c. 279.]
Last Tuesday, at Question Time, the Chancellor made a similar comment, and I then asked him:
"Would the Chancellor clear up a most important statement …? He said that the Government's intention was that public expenditure should rise by about 4f per cent. per annum. But that was based on growth projections which have now been abandoned by the Government. Do we understand that it still remains?"—[OFFICIAL REPORT, 18th July, 1967; Vol. 750, c. 1690.]
The Chancellor's answer, in effect, was "Yes, it does", and it is a matter of political philosophy—I acknowledge this as to how much public and how much personal expenditure there should be out of any given surplus in any given year.
With respect, that is not the point. The point is that, if the right hon. Gentleman planned, as he told us he did, public expenditure programmes on the basis of growth targets adding up to 25 per cent. over six years, or 3·8 per cent. a year, it is simply not possible by juggling between the years to keep those same targets when one's highest ambition now is a 3 per cent. growth rate, and that called seriously in question by almost every commentator.
Mr. A. Woodburn: The right hon. Gentleman is making an important and interesting point. Will he clear up another one? There are constant demands for more schools, more roads, and, even today, for more benefits and more defence expenditure. What public expenditure would he reduce to balance the budget?
Mr. Macleod: I have not timed it, but I answered that question about four minutes ago. I showed that the rate of those public expenditures went up in real terms by 39 per cent. in our 13 years and that it was possible, at the same time, to make a number of important reductions in taxation.
I ask the Chancellor of the Exchequer to pick up this point of public expenditure and the 4¼ per cent., telling us how

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he relates it to the new 3 per cent. targets when the older targets of 3·8 per cent are impossible of fulfilment.
Our general approach to economic affairs was given by my right hon. Friend the Leader of the Opposition recently at Carshalton. I take this comment on that diagnosis from the Sunday Times of 9th July:
"Few people, apart from the obvious vested interests, would quarrel with the value of most of the things he advocates: cutting the tax disincentives; getting some legal force behind productivity and industrial bargains; sharply stepping up the tempo of retraining; taking a cost-effectiveness scythe to the mounting total of Governmental and local authority spending; getting some sense into the way we pay for our social services; generally getting rid of the restrictions and interference which stand in the way of initiative and enterprise in Britain. These are all things which lots of people, including Business News, have frequently pressed for".
That may be true, but, with the single exception of the policy of stepping up retraining, on which, no doubt, there is agreement between the two sides of the House, each and every one of those proposals would be fiercely opposed from the Government side. They are in every case distinctive proposals. They may be accepted by people now, but they are the right proposals and the ones which the Tory Party has been putting forward both in the House and in the country.
It is then commented that one does not answer the short-term question of what one would do immediately in the Government's situation if one does not accept the Amendment standing in the name of hon. Gentlemen below the Gangway. But, surely, the point is this. In the early days of resumed growth, a deficit must either be financed or eliminated. The alternative ways of eliminating it are deflation, devaluation or controls, each of which, for different reasons, we would wish to reject, and each of which, I fancy, though for different reasons, perhaps, the Treasury Bench would wish to reject as well.
Thus, one is trying to do something which all Governments, not only in this country, have found very difficult—to achieve growth without inflation, growth without tears. But one may well come to the conclusion in the end that, to use the corniest of all metaphors, one needs both the brake and the accelerator in
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the car. We have before us all the examples of countries which have looked as though they had solved the problem for a bit and then, apparently, failed. We have had Germany thrown at us so often, where the terrible overheating in 1965 was followed by an over-correction in 1966, and now the economy is laboriously swinging back again. It may well be that one does need both the accelerator and the brake, and one simply needs more skill in driving the car.
Mr. J. J. Mendelson (Penistone): The right hon. Gentleman said that the Government were lacking in "know-how" of how businessmen behave, and now he talks about skill. When he and his right hon. and hon. Friends were in office, they all knew about businessmen and how they behaved. How did they manage to have, at the same time, a high level of unemployment in 1963 and such a high balance of payments deficit in 1964?
Mr. Macleod: The hon. Gentleman is far too intelligent not to have followed my case. In fact, he has followed it with great care, but he does not like it. It may well be—I was saying this and instancing the example of Germany—that one needs methods for taking the heat out and then pushing the economy forward. But what has gone wrong now is that we have savaged our home economy and we have not got the compensating factor, which the Tories always managed to get, of restoring confidence in our overseas account. That is the point.
We on this side want to see what I have often called an economy of choice. The only way to get this is through the taxation system.
Mr. Joel Barnett Mr. Joel Barnett (Heywood and Royton) rose— —
Mr. Macleod: No.
We must do it by taxing expenditure rather than income and by taxing costs rather than profits. Then, out of the extra money which would be available to the citizens of the country, one would expect people to pay more for their social services.
I come now to the current controversy that rages not only across the House, but, I dare say, within both sides. It is 16 years since my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and I wrote a pamphlet

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called "Needs and Means", which I think was the first challenge to the universality of Beveridge. We heard echoes of that coming, very wisely, from the hon. Member for Brentford and Chiswick (Mr. Barnes) this afternoon.
Let us take the example of what was said by the Minister without Portfolio this afternoon. We heard all the rigmarole about the expenditure of £58 million, but the truth is that there are half a million children in poverty-stricken families. The Government's proposals are to leave half of them—not less than a quarter of a million children—still below the poverty line from next April onwards.
Yet if we concentrated on the needy we could give £1 a week extra to those children for a cost of about £25 million, half what the Government proposed this afternoon. On which side of that scale do hon. Members think that justice really sits? Do they not think that ordinary care about that poverty, which is common ground, should make certain that all those half a million are helped, and not half of them, as is proposed by the Government? We had some extraordinary philosophy from the Minister without Portfolio, who talked about the grave effect on incentives and proposed as a remedy that we should keep the poor poor and should not adopt the line that I believe is not only right but popular.
Mr. Denis Coe: The right hon. Gentleman talked earlier about the level of public spending under the party opposite. Would he not agree that had it been greater during its years in power those children would not be in that position at all?
Mr. Macleod: I do not think that that needs an answer. But I shall make a brief comment on the argument, in which I have been very near the centre for a long time, about National Health Service charges.
The Minister of Health said at the weekend that those who advocated National Health Service charges have not thought the problem through. That seemed to me pretty rough on his right hon. Friend the Member for Sowerby (Mr. Houghton), who has been doing something similar, and to many other people who advocate them. I do not see what is sacred about the figure of 86 per
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cent. paid for out of general taxation in the National Health Service. I should like to see a better Service, with more money spent on it. I honestly do not believe that any Minister of Health will ever get it out of any Chancellor of the Exchequer, unless we are prepared to face the issue of charges within the Service.
A policy is needed to reduce personal direct taxation, to reduce the number of civil servants, whose weight is on industry, and to replace interference with the decision-makers of this country. We need—and our party stands for—a policy of open private enterprise, in which choice is made by the people and not by officials.
In my view, the true opposition to what I have been putting forward consists of those who signed the Tribune manifesto and who have put down the Amendment. I think that they are my political enemies—though they are not personal enemies in any way; I have excellent relations with many of them. They are the opposition for the simple reason that our present discontents must surely be solved either by a Tory or a Socialist solution, and to this problem the sort of garden suburb Fabians on the Front Bench opposite are absolutely irrelevant.
Therefore, we have put down a considered Motion of no confidence in the Government's economic policies. There is no Amendment from the Government, and that is as significant as the dog not barking in the night. They asked, "How can we amend it? What can we ask all that lot to support us on? There is nothing." They went through the list—prices, unemployment, the strength of sterling and whatever it may be—and the Leader of the House rightly said, "Let us rely on the Patronage Secretary, and just vote the thing down." That is the position.
The Chancellor of the Exchequer did his best last week at the Durham Miners' Gala. He gave a list of what had happened in the first 1,000 days of Labour government compared with the last 1,000 days of Tory government, and came to some remarkable conclusions. He said that many more miles of motorway had been opened. Of course they have. The Minister of Transport spends all her time opening schemes which my right hon.

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Friend the Member for Wallasey (Mr. Marples) started. Of course, more miles of motorway were opened in 1967 than in 1957, and there were more in 1957 than there were in 1947, when there were none. I can give the Chancellor of the Exchequer more material. There has been a remarkable increase in the number of colour television sets under the Socialist Government, and a remarkable increase in the number of sonic bangs—if we call that progress.
on Britain's economy, or on the people of
We preferred to put down a simple Britain, but on those who handle the economy. We could have adopted much of the denuciatory part of the Tribune manifesto, for that too is a motion of no confidence. It follows that whatever the result of the vote tonight the Government are in a minority in the House on their economic policies.
We preferred to put down a simple Motion to watch all the anguish and the paper tigers jumping through the paper hoops as the end of the day comes near. Of course, the Government will get their vote. The Patronage Secretary, that sorely tried man, will see to that, and he will be supported by the soft centre of the Labour Party, that massive lump of blancmange which supports the Government in whatever they seek to do. The Government will be victorious in the Lobby, and yet they will be defeated. They will be convicted because they have betrayed their principles and promises and deserve the censure of Parliament and the country.
4.49 p.m.
The Chancellor of the Exchequer (Mr. James Callaghan): As the right hon. Member for Enfield, West (Mr. Iain Macleod) said, we have had the traditional Motion moved in its traditional form in the traditional month and, if I may say so, with the traditional speech. If only the right hon. Gentleman had given freer rein to his capacity for invective and stayed off economic discussion it would have been a much more lively and interesting speech for most of us. I really enjoyed the last five minutes.
I had hoped, after hearing about the seminar which the right hon. Gentleman had arranged and to which he had invited us all, including myself—I apologise that I could not go and also apolo-
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gise on behalf of the City editors who thought it better to go to Lords than to spend the day with him—that after it we might have had a clearer exposition of the alternative credible policies that the right hon. Gentleman would give us. He seems, however, to have been surrounded there with a multitude of opinions and certainly a conflict of advice. But that is not surprising. If he had read what Mr. Stanley Baldwin once said he would have known that this is always the fate of those who conduct seminars of this sort. Stanley Baldwin told us that whenever he got six economists together he always found there were seven opinions. The right hon. Gentleman seems to have rediscovered the truth of that in his discussions last week.
But that in itself is not a subject for scorn, even though I take pleasure at reading, if it is correct, that the right hon. Gentleman was so disgusted with his colleagues that after having given himself 15 minutes in which to wind up at the end of the discussion he confined himself to two minutes and a vote of thanks. The very fact that there are so many opinions and so much conflict of advice about the state of the economy and the solutions that should be followed reflects both the complexity of the problem that the country is confronted with and the difficulty of getting agreement about a solution.
I welcome this discussion. I take no exception to coming here to discuss the Government's policy today—[Laughter.] I apologise if that is misinterpreted; it was not meant in any way except that I welcome the opportunity of coming here. As I was saying, I welcome the discussion, provided that it does not lead to weakness of purpose either in the country or in those who are trying to find solutions to the problem. What I deprecate very strongly is attempts to chop and change our policy at very short intervals before the effects of a given policy have had time to work themselves out.
The Opposition have put down the Motion of no confidence. Some people have indicated or thought that because this is so there is to be a new statement on economic policy. I want to disappoint the House straight away. I want to make clear at the outset that I have

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no proposals to announce or put forward for modifying the Government's basic approach to economic policy today. I recognise that the setback on our trading account in the second quarter of this year is a cause for legitimate concern. Nevertheless, I point out and remind the House that we had very satisfactory results both in the last quarter of 1966 and the first quarter of the present year both on trading and on invisible account. I want to meet the legitimate concern of those who are worried about the falling away in the second quarter. It is a matter of legitimate concern, but I do not forget that there are some who never accepted the Government's strategy and are using one quarter's figures as an excuse to discredit the whole strategy.
Before I come to a discussion on public expenditure, the balance of payments, the level of employment and economic activity, let me say a word about Government strategy in its broadest sense. The country has faced two necessities in the last three years. We should have faced them before. One has been to find a new place in the world commensurate with our standing and economic strength, and the second to restructure the British industrial system so that it is more flexible, less sluggish and more responsive, and so that it provides a proper standard of life for the British people through both the private and the public sectors of industry.
As to the first, finding a new role for Britain in the world, the new defence policy published last week will during the coming years bring into harmony British economic policy, British foreign policy and British defence policy. The three will march together for the first time since 1945. This dramatic approach, combined with the approach that is being made to the European Economic Community, gives Britain an opportunity to secure aviable position in the world and will enable her to earn her living and exert her influence for world peace.
The new defence policy, as it is carried out, will bring with it a substantial bonus to our economic strength. There will be less strain on the balance of payments. It will mean the release of resources for civilian purposes that are now locked up in military research alit. development. It will mean that increased numbers of scientists and technicians, now
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engaged in military operational and other warlike research, will become available for civilian research and development; and, although our commitments and our moral responsibilities to people overseas ensure that the process is not being carried out with irresponsible haste, nevertheless the beneficial consequences to Britain's economy will begin to be felt at an early date and with increasing impact in the later 1960s and the early 1970s. Last week's White Paper will, in my view, be regarded as a historical landmark in the success story of the Government's policy to reconcile military and foreign obligations with economic strength.
At home the Government's strategy has been expounded on a number of occasions together with our reasons for believing that it is possible to combine a growth rate of 3 per cent. per annum, the equivalent of £1,000 million a year in real resources, with a healthy balance of payments and an improvement in the standard of life of the people. But in doing so the Government have never attempted to hide the fact that during the years ahead this country will be walking an economic tightrope which needs a cool nerve; and a slip would have serious consequences.
The fact that this should be so and the fact that the margin of safety is so small represent the real crushing indictment of the failure of the party opposite to act in the years between 1951 and 1964. [An HON. MEMBER: "Stand on your own feet."] We are ready to stand on our own feet. It is a pity that hon. Gentlemen opposite did not stand on theirs. It is astonishing that the great Conservative Party should have so allowed this country to drift in the way it did during the 1950s. They failed to act when they had the power. I am not going to debate this, although I must say that it is rarely far from my mind.
However, it is the Government's conviction that the economic strategy on which we are now embarked, together with the change in our defence arrangements, will enable us to follow a successful policy and one that is right; and that it would be frivolous to be deflected from our present course because one quarter's trading figures are not as good as we would like and because the temporary closure of the Suez Canal has

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worsened our balance of payments. It is a long-term operation that we are engaged in. [An HON. MEMBER: "The Government have been blown off course."] Blown off course? The economy and the £ are much stronger than they were in 1964 to sustain the closure of the Suez Canal—much stronger. When I look back over the last three years I reflect how sterling, for example, has come through the Middle East crisis, and I realise that it could not have done it either in the summer of 1964 or even subsequently, this is a measure of the progress that is being made.
Going back to last winter, our trading results were so good that they led in some unofficial quarters to a much higher degree of optimism than I shared. Unofficial balance of payments forecasts for 1967 were published that even then seemed quite unrealistic. The right hon. Gentleman referred to the pledge that I gave the Labour Party conference in 1965 to obliterate the deficit by the end of 1966. He is right; we failed. [Interruption.] I will go through the figures again. If hon. Gentlemen opposite raise this they will have to have them time after time.
The deficit in 1964 was £761 million. It was reduced in 1965 to £315 million. It was reduced again in 1966 to £189 million. This year I have said up to the time of the Suez Canal temporary closure that we should have a balance. [An HON. MEMBER: "Now the Government will not."]
I do not know how the hon. Gentleman can be so certain about that. But the real question, and the question that I want to discuss in a moment, is how far temporary factors of this sort, which we are now in a much better position to sustain than we were, can be allowed to influence our policy and the economic progress that we are making.
Invisible earnings have been very good in the first quarter of this year. At £80 million—seasonally corrected—they were nearly as much in three months as in the whole of last year. There were exceptional factors at work in both years but even so the level of invisible earnings this year looks like being of considerable help to us.
The export position has been affected in recent months by the level of world
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trade and that, in turn, has reflected a much lower level of production in the major industrial countries. The right hon. Gentleman pointed out that our industrial production index was stationary and that is true, but he might have gone on to point out—as he did not, I will do so—that the United States' industrial production index has turned substantially downwards and that the German index has also turned downwards. Indeed, a lower level of production is common throughout such important customers of ours as Canada, the United States, France, Germany and the Netherlands. The only two countries in which the turn of production is upwards are Italy and Japan.
Therefore, our recent exports to each other in the O.E.C.D. countries have not risen as strongly as they did in recent years, although I am glad to say that this trend has been offset to some extent by improvements in our exports to the sterling area. Indeed, it seems as if the rise in total demand and output throughout the whole O.E.C.D. area may be only 2 per cent. in the first half of this year, which is a much smaller rate of growth than for some years. The result is that British exports, which started so well, have flattened out during the last two or three months.
The important conclusion for policy here is that this falling away in British exports does not represent a loss of competitive power by British industry. The evidence is to the contrary. Our competitive position and our industrial productivity are both improving substantially. I will give two figures. From the first quarter of 1965 to the first quarter of 1966, output per operative hour in manufacturing increased by a little more than 4 per cent. per year—that is, in productive efficiency. From the first quarter of 1966 to the first quarter of 1967, output again per operative hour in manufacturing rose by a further 3½ per cent.
So there is no reason why we should regard these adventitious factors such as the decline in activity and the lower level of world trade as indicating a worsening of Britain's competitive position, but rather the reverse. We are holding our own despite factors which might otherwise have operated much more significantly against us.
The next important policy question is, does this slow-down of world trade, on

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which we depend so much, represent a long-term decline or is it no more than a pause? I naturally picked up this question when the Finance Ministers of major countries came here last weekend and we had a number of informal discussions about it. My conviction, and theirs—and it is a reasonable conclusion to all of us—is that we should be able to look for some resumed growth in world industrial activity during the next 12 months—notably and rather sooner in the United States and to a lesser extent and rather later in Germany.
The pace of world trade should be accelerating during 1968 and it is not unreasonable, therefore, in looking at our future progress, to expect a resumed rise in United Kingdom exports by the end of this year, followed by a rise again in 1968. In both 1965 and 1966, reflecting to some extent this substantial and significant increase in productivity, our export increase was well above the average rate for the preceding ten years. In 1965, there was an increase of exports of 7 per cent. over 1964; in 1966, there was a further increase of 7 per cent. over 1965. This compares with the previous decade, when we had an improvement of about 4½ per cent. per year on average.
So the competitive position of Britain is improving and despite the slowing down in world trade during the first half of this year there was a further increase of exports of 5 per cent. over the level of 1966. Therefore, I repeat that there is no reason to believe that our exports have become less competitive.
Imports have been distorted since last autumn because of the effects of the removal of the import surcharge at the end of November. They were low in the fourth quarter of last year and rose considerably in the first half of 1967, although I am glad to say that they are not running now at anything like the level of 1964. The removal of the surcharge has led to an increase in manufactured and semi-manufactured imports and we shall need to watch very carefully this import pattern and be ready to encourage British industry to provide competitive substitutes for imports.
Mr. Ian Mikardo: Why only watch it? Do something about it.
Mr. Callaghan: So far there has been an increase disproportionately large in
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regard to the rise in demand. It may be that, from now on, a much smaller proportion in the rising demand will be met by imports. My hon. Friend the Member for Shoreditch—for Stepney—[HON. MEMBERS: "Poplar."]—my hon. Friend the Member for Poplar (Mr. Mikardo) interrupted just now. I apologise to Shoreditch and everywhere else.
Mr. Mikardo: You always get it right the third time, Jim.
Mr. Callaghan: I would sooner be right the third time than never be right at all.
Some people advocate putting quotas on imported goods. But quotas would be damaging to our international trading relations and possibly to our exporting progress, and to our long-term interests. I have therefore no proposals to put to the House on that matter.
I should also point out the valuable contribution towards restoring the balances made by the diminished flow of overseas investment. The Government have taken very vigorous action on this aspect through the exchange control, the Control of Borrowing Order and the voluntary programme, together with Corporation Tax. These measures were taken to lessen the burden of overseas investment by the United Kingdom and to encourage investment to come here from overseas. Taking private investment as a whole—and I know this point interests my hon. Friend the Member for Lewisham, West (Mr. Dickens) and others—the deficit of £252 million in our accounts in 1964 was reduced to a deficit of no more than £49 million in 1966 and there was actually a surplus in the first quarter of 1967. In addition, of course, the travel allowance is making a useful contribution towards our overseas balances.
Mr. James Dickens: I draw my right hon. Friend's attention to the table in the Board of Trade Journal for 30th June, which indicated that direct private investment by this country overseas had risen since 1964 from £116 million to £135 million, and I remind him that 1964 was a so-called crisis year. Most of this investment is taking place in South Africa. Why should we invest in a Fascist racialist

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country to the detriment of employment at home?
Mr. Callaghan: It does not give the complete picture to pick out one figure, as my hon. Friend has done, especially as a great deal of that so-called investment from this country comprises reinvestment of profits which never come back to this country.
Mr. Dickens: It does not.
Mr. Callaghan: My hon. Friend will no doubt have an opportunity to make a speech on the matter. A great many calculations come into this computation. If we take the total balance sheet—and my hon. Friend will not dispute it, for he did not do so when he interrupted me—the fact is that total overseas private investment has declined very dramatically. One must consider both sides of the balance sheet.
Mr. Dickens Mr. Dickens rose—
Mr. Callaghan: I want to get on now.
I come now to the impact that the present lower rate of growth of world trade is having on economic activity and employment in this country.
Mr. Reginald Maudling: Can the right hon. Gentleman say what contribution to the improvement in the current balances has been made by the adventitious factor of a great improvement in the terms of trade?
Mr. Callaghan: We have been as fortunate as the Conservative Government were in that we have had a movement in our favour of the terms of trade and I hope that this will continue to help us. As a famous predecessor of my right hon. Friend the Prime Minister said, "A little bit of luck does no one any harm".
Mr. Maudling: Can the right hon. Gentleman give the figure?
Mr. Callaghan: No, not offhand. I could not give it without reference, because I do not carry every figure in the whole of the accounts in my head.
I now come to the impact that the present lower rate of growth of world trade is having on the level of economic activity and employment in this country.
The first effect is that expansion in the domestic economy will be coming a little
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later than I forecast in April. As a result of these factors I would now put the growth of output in 1967 somewhat lower than I did at the time of the Budget. On the other hand, given a recovery in Germany by the end of this year and a fresh acceleration of growth in the United States, I see no reason to alter the expectation that the level of output from now on should grow at about 3 per cent. per annum. This view, in contradistinction to the right hon. Gentleman the Member for Enfield, West, seems to be increasingly held by a number of outside observers who write on these matters.
But, as the right hon. Gentleman himself said, a depressing result of the slowness with which growth is being resumed is its effect on unemployment. The present level is 2·1 per cent. Other countries have also been affected. In Germany it is 2·6 per cent., in the United States it is 3¾ per cent., and France, too, has been adversely affected. Unemployment in this country has risen more steeply than was forecast and, in the light of current developments, I cannot foresee any fall in the months immediately ahead.
The likely course of events is that there will be an increase from the present level during the winter months, with a seasonal peak in January and February when outdoor employment is at its lowest. We should then expect the underlying level of unemployment to fall away during 1968 as expansion returns and exports to overseas countries pick up. Expansionary forces are already at work. Industrially this seems to be true in the motor car industry, and the construction industry, and chemicals are also growing.
There is likely to be an increase in consumer expenditure arising from increases in earnings that flow from agreements already made, and also from the improvements in old age pensions that will take effect in the autumn, together with the increase in family allowances that my right hon. Friend announced today.
Another powerful factor at work in the regions will be the regional employment premium which will come into force on 4th September. At the rate of 30s. per male employee this will strengthen the competitive position of firms in the development areas and should be a powerful stimulus to them. It should enable them

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to modify and improve designs, to invest in market research and marketing overseas, and other methods of expanding the base of their industries.
In the regions we are pressing the attack by every means and it is having an impact, but it will not show itself over-night. This is bound to be a long-term policy that will need long-term measures before it produces final results.
I will enumerate in two sentences what they are. There is the tightened control by industrial development certificates, office building control, the fact that development areas are exempt from building licensing, the fact that investment grants are given at 45 per cent. as against 25 per cent. elsewhere, that 124 new advance factories are being built, that the Government training system is being implemented, the system of grants for training, the preferential access to the Public Works Loan Board, the clearance of derelict lands grant and aid to the shipbuilding industry. All these, together with the regional employment premium, mean that there is being pumped into these areas sustained aid and finance to the tune of about £200 million a year. That is a substantial figure which, in the long run, will make a tremendous impact on these areas.
I now turn to public expenditure.
Sir Edward Boyle: The right hon. Gentleman has talked about his revised forecast for future growth and for private consumption, and the effect of the pensions increase. Can he give the House any information about productive investment in manufacturing industry?
Mr. Callaghan: Productive investment in the manufacturing industry will not fall as badly as was forecast last November. The C.B.I. prophesied a figure of 20 to 25 per cent., and the Board of Trade thought it would be about 10 per cent. In fact, 1966 held up extraordinarily well and there was no fall of private manufacturing investment. For 1967 the present forecast is that the fall will be nothing like either the 20–25 per cent. or even the 10 per cent., but will probably be between 6 per cent. and 8 per cent. during the course of the coming year. This is a factor that must be put into the fore-
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cast on a much better scale than we originally inserted it.
On public expenditure, criticism is made on two fronts. It is common place among many of the Government's critics to say that expenditure is too high and should be cut back. However, there are many others who claim that the demands to be met in the social field are so great that public expenditure should be higher than it is. At the moment the Government are being assailed by both sides. I may say in passing that the Press is recording some mythical defeats and victories in battles in which I have not fought and at meetings at which I certainly was not present and which have never taken place. However, we are faced with legitimate demands for higher public expenditure.
The right hon. Gentleman the Member for Enfield, West said in passing how much they had been able to do—an increase in 13 years of 39 per cent. in the absolute figure on public expenditure. He took some pride in that, so I shall repeat the figures of the Durham Gala to him.
The right hon. Gentleman is proud of his 39 per cent., but let us look at a few other illustrations. First, the number of students in universities. Taking the first three years of the present Government compared with the last three years of the Conservative Government—remember that all was well, we were swimming in prosperity, or so they told us—the number of students at universities has gone up by 29 per cent. The number of teachers in initial training colleges in the first three years of the Labour Government has increased by 56 per cent. over the last three years of the Conservative Government.
Sir E. Boyle Sir E. Boyle rose—
Mr. Callaghan: I have already given way once to the right hon. Gentleman. I will give way again when I have given these figures. The number of schools completed has increased by 44 per cent. compared with the last three years of the Conservative régime. [HON. MEMBERS: "Of course"] It is no use right hon. Gentlemen sniggering and saying "Of course". It depends on what resources are made available whether the schools will be built or whether the students go to the universities. The plain

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truth is that there has been a dramatic and remarkable increase in all sections of education.
Sir E. Boyle Sir E. Boyle rose—
Mr. Callaghan: I will not give way until I have given all the figures. If the right hon. Gentleman wants to take on the mantle of the whole of the Front Bench he may do so.
I come now to hospitals. The number of new beds completed in the first two years of Labour Government compared with the last two years of the Tory Government shows an increase of 38 per cent. Capital expenditure on hospitals—and right hon. Gentlemen can cheer again if they wish—has increased by 59 per cent. The number of homes built for the elderly and handicapped in the last three years of the Conservative Government was 255. There were 354 built in the first three years of the Labour Government, showing an increase of 35 per cent. in the number of people housed.
There were 24 local health centres built in the 13 years of Tory rule. Since the beginning of 1965, 16 have been opened, 37 are under construction, 34 have had plans approved and 80 are in the planning stage. In the last three years of the Conservative Government, 953,000 houses were built. I beg your pardon, Mr. Speaker; I do right hon. Gentlemen opposite more than justice; it was only 803,000. The number of houses built in the first two and a half years of the Labour Government is 953,000, an increase of nearly 19 per cent.
One could go on all through these figures. There has been an improvement both in the kind of service and in the amount of resources devoted to it, and in the cost to public resources of using these facilities. In other words, during the first three years of Labour Government there has been a continual and substantial improvement in the social and collective standards of our people at a far faster rate than the Tories were increasing it during the last three years of their Government.
Sir E. Boyle: The right hon. Gentleman began that list with universities. Is he not aware that we approved a programme of £48 millions' worth of starts in 1964 compared with a figure of £25
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million which is all that the annual programme stands at now? Is he not also aware that there was an increase from £60 million to £80 million in school building in 1964 and that we devoted £60 million to teacher training between 1961 and 1964? Therefore, the figures which he has mentioned are hardly surprising.
Mr. Callaghan: I know that towards the end of his term of office the right hon. Gentleman approved a great many things, but we have found the resources to build them. That is the difference. I get a little impatient with those who, at one and the same time, try to claim credit for all the things which have been done since they left office and call upon us to reduce taxation and public expenditure. That seems to be getting close to hypocrisy.
No one can say that the amount of resources which we have devoted to this kind of provision is not much greater than they devoted in their last few years of office, even though at the same time they were running up the biggest overseas deficit seen in this country for many years, if ever.
I come back to what I was saying before the right hon. Gentleman interrupted me by quoting his own prior record. We are facing legitimate demands for higher public expenditure which no Government could escape. Between 1960 and 1970 the number of vehicles on the roads, to take just one example, will increase from 13 million to 17 million. There will be a large increase in the number of children at school between the ages of 5 and 14 and there will be a large increase in the number of old-age pensioners. The number of houses not worth improvement is growing steadily. Moreover, there will be new needs to be satisfied as the public conscience becomes sensitive to a particular problem.
That means that there is an inexorable tendency for public expenditure to grow at a faster rate every year and to grow in real terms, not just the inflationary effect, but the total amount which is taken in real terms. It is always necessary to look at public expenditure for several years ahead, and this is the exercise which seems to have become publicised in the newspapers and which has been

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and is being carried on. It is true that I have been spending as much time over the last few weeks on the level of public expenditure in 1970–71 as on the level of expenditure in 1968–69. The task is to keep expenditure, with this inexorable built-in growth rate, within the broad economic and social targets which we have accepted.
Public expenditure and private consumption do not work against each other. They work to support each other and to reinforce each other although it is important to get a proper return on capital invested in whichever sector it happens to be. We have also—and this is a political problem—an important task to reconcile the social needs of the community and the needs which people want to be met with a willingness to accept the consequential burdens of taxation and charges.
Of course, if the country is led to believe that it is grossly overtaxed, then the willingness to assume these social obligations, which everyone in his heart knows ought to be met, will be eroded to that extent. These are different sides of the same penny. I am used to people calling for higher pensions and lower taxes at the same time, or to the Opposition calling for higher defence costs and lower taxes. There are the defence savings which the right hon. Gentleman would not have had in his pocket if he had been Chancellor of the Exchequer, because he would have found that he was surrounded by the brigadiers and air commodores who wanted aircraft carriers and to stay in Aden and all the rest of it. He would not have had the bonus of about £200 million as the saving which will result from our cuts in defence expenditure by 1970–71, and this saving will make an important contribution to keeping public expenditure within reasonable bounds.
To take the current year, 1967–68, a deliberate decision was taken to allow public expenditure to increase at 7·8 per cent. by comparison with last year, and I explained the reasons for that at the time of the Budget. But, clearly, such a rate cannot continue indefinitely if we are to make room for the growth in investment which I expect to see in future years. Therefore, the object of the present exercise is to see, not particularly in relation to 1968–69, but in relation to the later years, 1969–70, 1970–71, 1971–72,
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how we can get back on the target when private investment, manufacturing investment, will be taking up more of the available resources.
The broad conclusion which I can see, taking the period as a whole, is that, as a result of this long-term review, it now seems that we shall be able to carry out the development of the policies which we originally set ourselves within an average annual rate of increase of 3 per cent. per annum during the period 1967–68 to 1970–71; that is to say, taking 1967–68 at 7·8 per cent. and adding on all the others, the average will come out at 3 per cent. This will bring us back on target. Even so, I do not disguise from the House, any more than my predecessor did, that, without larger economic growth and a higher level of savings, additional taxation will be involved in carrying out these programmes.
Mr. Iain Macleod: The right hon. Gentleman knows that this is important. Do I take him to be saying that for a number of reasons, on which I will not now comment and because of the change in growth expectations and so on, he is substituting 3 per cent. as the long-term average for the 4¼per cent. which was his approach in the 1965 Budget statement?
Mr. Callaghan: What I am saying is that, with the programmes which have been accelerated so far, we shall maintain on average over the period 4¼ per cent.; but this will involve an average rate of increase of 3 percent. over the next three years, and that will enable us to fulfil the programmes set out in the original plan. Is that clear? If not, I will give way again. I think that it is clear.
I agree with the right hon. Gentleman that we need a continuing debate on the manner and way in which we are to channel the available resources in the public sector. It is clear to me that a great deal more help can be given if assistance is concentrated where it is genuinely needed, but it would need to be concentrated in such a way that the humiliating memories of the past were not revived nor essential services denied, and it is for this reason that I ruled out any attempt to reintroduce prescription charges.

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Nevertheless, I take note that there are many fields in which income testing now exists and some of them are of recent origin. There is no particular shame about that. Parents with a child at university pay according to their income. Tenants on many council house estates pay differential rents according to their incomes. More than 1 million people receive rebates of their rates according to their incomes. We have a vast task to rebuild the slums, to build new schools to replace unfit houses and to expand the roads and hospitals. The financial requirement is of such an order that we shall need a continuous examination in order to ensure that our methods will give those in real need the benefit that they should have. I hope that the debate on this subject will continue.
I come now to the question of devaluation. I agree with what the right hon. Gentleman the Member for Enfield, West said. It is no way out. I used the phrase many months ago—"It is a flight from reality". The Government's policy is quite clear; it remains exactly as it has always been, namely, that we reject the notion that our economic strategy should include a change in the exchange rate of the £. I should have thought it unnecessary to state this again, but advocacy of devaluation has become very modish among a number of theoretical economists, as well as among some Right-wing and Left-wing thinkers.
The very fact that this is happening could lead to speculation that might be dangerous, and I therefore tread on it very firmly now. Fortunately the Government's position is too well known for this to become a serious matter. The fundamental fact about devaluation as a deliberate act is that it consists in making the product of the labour of our people cheaper while making the product of foreign labour dearer. For every hour's working at home we command less of world resources. The purpose of this is to ensure a sudden and large-scale shift in resources from home use to export. The means by which this can be done is by increasing taxes or reducing Government spending programmes, or both. That is what one has to do to make devaluation work.
Let there be no dodging about this. Those who advocate devaluation are call-
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ing for a reduction in the wage levels and the real wage standards of every member of the working class of this country. They are doing this, and the economists know it. I do not think that some of my hon. Friends have hard hearts—they are just good men fallen among economists, bad economists. There are good and bad economists.
If there were devaluation in this country, any effort on the part of the organised workers to counteract it by securing higher wages should be ruthlessly resisted. If the benefits of devaluation were to be secured we would need another incomes freeze in circumstances when prices would be going up fast.
Mr. R. T. Paget Mr. R. T. Paget (Northampton) rose—
Mr. Callaghan: I am sorry, I will not give way. I know my hon. and learned Friend's views very well, and they have never added anything to my knowledge of the subject.
The T.U.C. has gone on record as being opposed to devaluation. I am not surprised. I notice that no trade union has come out in favour of it, nor do I imagine that any is likely to do so. The C.B.I. today, through the voice of Mr. John Davis, its Director-General, has also made its position clear on this subject.
This is a nostrum among economists who are quite clear-sighted and cold-hearted about its purpose. Unfortunately it has been picked up by a number of people who clamour for devaluation because they believe that it is a way of avoiding other harsh measures. They are deluding themselves. The logical purpose of devaluation is a reduction in the standard of life at home. If it does not mean that, it does not mean anything, because if it does not result in wages being held back, or if wages cannot be held back, and if one reinflates at the same time as one devalues, one loses any arguable benefit of devaluation.
So far I have been talking about the domestic consequences, but we live by international trade and finance as well, and we must have regard to the international consequences of what we do. We should break faith with Governments and private citizens overseas. We would find, if that argument does not appeal,

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that the cost of meeting our foreign debts would be increased. We might conceivably upset several other currencies and endanger the finance mechanism of the world.
These are pretty serious consequences. It is true that there are circumstances in which a Government has no option but to devalue, namely, when internal costs and prices are so completely out of line with other countries that there is no other way of restoring a viable relationship. That is emphatically not the situation of Britain today. This is shown by our success in bringing our external accounts back into balance; it is shown by the remarkable figures of productivity that I gave earlier in my speech. The problems that we have to tackle, and which we are tackling, are more fundamental. They are such things as restrictive practices, a sluggish attitude to innovation and modernisation, too little attention to customers' needs, better marketing—the list is well known.
All these things call for unremitting long-term effort, year in and year out, and devaluation would not help in this. Indeed, by making profits easier to earn, at any rate in the first two or three years, it could make a permanent improvement more difficult to achieve, because people would feel that the immediate need for reform was over and done with. For all these reasons the Government's position remains unchanged. Devaluation is not the way out of Britain's difficulties.
This discussion is welcome in the way that it has gone on. A year or two ago sterling was in such a situation that I trembled every time I heard it discussed. I think now that this is having a therapeutic value in that the more the problem is being discussed the less obvious have become the advantages of devaluation. What is more, and I did not see this at first, the fact that there has been this public discussion has meant that those abroad recognise that our decision not to devalue is based on a sound appreciation of our own domestic position and requirement, as well as our responsibilities to the international community.
So the Government stand where they did on this. It is not a matter of prestige with me. That is rubbish. I do not regard sterling as being any great symbol. I just do not want either to devalue our
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own word or to bring down the standard of life of our own people. [An HON. MEMBER: "Well done Jim!"] The Government's strategy does not rest on extravagance or unrealistic assumptions. The policy is that a growth rate of 3 per cent. can be achieved and there is every reason to aim higher if we can sustain it. This is backed by substantial economies in our defence arrangements, by a lower pressure on demand overall in the country, which is offset by the growing impact of the regional policies. We believe that this is consistent with a healthy balance of payments position, and can ensure both a continued improvement in our collective standards of living and a resumed improvement in our personal standards.
I recognise that this is a difficult balance to achieve. I said at the beginning that we were walking an economic tightrope. This is Britain's position, and we cannot escape from it. We have to work our way out of that. An active prices and incomes policy will contribute in an important manner to this. Hence the importance of the work of the T.U.C. in this matter.
While continuing to follow this general strategy there are a number of proposals which my right hon. Friend the President of the Board of Trade will go into this evening, by which we are endeavouring to make the policy more effective. I will not weary the House by going into them now.
In conclusion, there is no magic wand to be waved, no particular remedy that can be advanced, either below the Gangway on either side of the House, or by either Front Bench. We have to face the facts as they stand. It does not invalidate the strategy that we have embarked on if there are temporary setbacks on the way, whether due to events in the Middle East or to a slowing-down of world trade.
The basic fact is that at the moment, as the result of the co-operation of the British people and, I hope and believe, with the policies that the Government have been following, we are leaner and fitter; our competitive position is stronger; our productive potential is greater and is becoming greater rapidly. If I may finish on the old note, we cannot command success, but we will do our best to deserve it.
5.49 p.m.
Mr. R. H. Turton: The Commonwealth Industries Association, of which I am Chairman, is at present engaged in a study of the economy. Some of the discoveries which we have made are so disturbing and cast such doubt on the Government's policy that I wish to give them to the House.
May I start with the speech which the Prime Minister made when he inaugurated the glacial period on 20th July last year. He said:
"But the House will recognise that the whole operation stands or falls on the extent to which we can keep our costs and prices under control. In recent years money incomes have been increasing at a rate far faster than could be justified by increasing production; in 1965, we paid ourselves increases in money incomes of about £1,800 million compared with in the previous year. About £1,300 million of this represented increases in wages and salaries. Over the same period we earned only £600 million by way of increased production. These trends are continuing."—[OFFICIAL REPORT, 20th July, 1966; Vol. 732, c. 635.]
Those bald facts were shocking and startling. But the figure which the Prime Minister gave for increases in incomes from employment can be seen from the 1966 Blue Book to have been valued at current 1965 prices while the figure for increased production in 1965 had been valued at 1958 prices. It is true that the gross national product, at factor costs and 1958 prices, increased in 1965 by only £649 million compared with the previous year. But valued at current 1965 prices the increase in the gross domestic product was £1,785 million and the increase in income from employment from 1964 to 1965 was £1,429 million.
This shows that the Prime Minister's comparison of prices and incomes and gross domestic product, as if they were valued at the same level when in fact they were not, was misleading to the country and to the House. I find it hard to understand how the right hon. Gentleman, who, at one time, was a lecturer in economics, could have used a false comparison to justify the whole of his prices and incomes policy.
In fact, the proportion of the gross domestic product paid out as income from employment has increased by only 2½ per cent. over the 21 years from 1946 to 1966. This shows how remarkably little variation there has been in the relation-
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ship between the income from employment and the growth of the gross domestic product. Certainly, I would agree that there was a continuing need for discipline, but let us realise that the variation in this proportion has been caused by the lack of growth in the economy in certain years rather than by any great, sudden increase in income from employment.
During this period, the Index of Retail Prices has been rising at 3·3 per cent. a year. Considering the relationship between incomes from employment, the Index of Retail Prices and the gross domestic product, this country has not been acting in a greedy, irresponsible manner. Therefore, the conclusion which we have reached is that the economic tightrope about which the Chancellor of the Exchequer spoke is not a wage-cost inflation.
If it is not that, what is it? The simple definition of "inflation" is an abnormal increase of the currency, and this is precisely what I suggest this country has suffered from for many years.
In the period 1960–66, when production was increasing at an average of 2·9 per cent. a year, total money supply was increasing at 4·7 per cent. a year—that is, 62 per cent. higher than the rate of production increase. No wages and prices discipline can ever be successful unless it is accompanied by monetary discipline.
Our present world of make-believe is shattered when we look at our overall balance of payments calculated by the International Monetary Fund definition. The Chancellor of the Exchequer used a different calculation on this occasion, but I recall to him the calculation which he used on 9th May this year when he tried to justify the attempt to enter the Common Market. Over the 12¼ years of the Conservative Government, the overall balance of payments showed a net surplus of £201 million, while during the 2¼years of the Labour Government from October, 1964, to December, 1966, the overall balance of payments showed a net deficit of £1,001 million. That is the economic tightrope which the Chancellor of the Exchequer has constructed for himself.
Mr. Harold Wincott, in a most interesting article in the Financial Times of 20th June, showed that in the six years 1961–66 there was an overall deficit on Exchequer account of £1,840 million, but out of this

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deficit £756 million was financed by printing more currency.
Mr. Callaghan: I am interested in the right hon. Gentleman's figures, especially those concerning the balance of payments deficit. Is he giving the credit or discredit of the whole of 1964, because otherwise how does he get anywhere near that figure?
Mr. Turton: I am using exactly the same calculation as the right hon. Gentleman used on 9th May—that is, taking in the whole position of liquidity with reserves and bringing in drawing rights which were at one time nearly exhausted but which now, thanks to repayment, have arisen again. This information has been published in the Press and the Chancellor of the Exchequer has had a copy of it. Therefore, it is no surprise to him and he has never challenged it.
Mr. Callaghan: It is a little hard to credit me with the deficit because I had to pay for the debts incurred by the Conservative Government.
Mr. Turton: That shows that the right hon. Gentleman did not understand the speech which he made on 9th May, when he was taking in our whole liquidity position. I will send him another copy of the conclusions arrived at by the economists working on this matter.
This is a Rake's Progress which has been caused by an incorrect diagnosis of what is wrong with our economy and by the consequential application of the wrong methods. The Government have made three main mistakes. First, while they should have been encouraging productivity, their freeze has brought the country to stagnation. Second, by discouraging private investment in the sterling area overseas, they have destroyed the goose which used to lay the golden eggs for balancing the accounts. Investments abroad in 1964, the Chancellor said today, amounted to £252 million—my figure is £398 million—whereas the net income from investment for that year was £405 million, which shows that our previous foreign investments helped to balance the accounts.
Third, by increasing the public sector and penalising the private by heavy taxation, they have crippled our ability to recover. During the two years 1964–66, the private sector's contribution to the
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central Government rose by £2,140 million, or over 25 per cent. A comparable period in this six years from 1961 to 1966 is that of 1961–62, when the increase was £762 million, or 10 per cent.
This is the real reason why we are failing to recover and achieve the required growth to expand the economy and pursue a social policy. This is, therefore, the time to face these facts with resolution and freedom from party prejudice.
"For industry to flourish, the first requirement is an economic climate which provides the right incentives to encourage and facilitate increased production."
These are not my words, but those of men of all parties who this morning put their names to a national recovery programme to try to get the country right. What should be the lines of this programme? I would put forward five points.
First is a recognition that, to ensure expansion without inflation, increases in the supply of money should be limited to the rate of increase of the gross national product. Second is the cutting-back of Government expenditure to a level which will encourage private investment. Third is the remodelling of the tax system to provide incentives to improve the output per person, per machine and per £ sterling invested. Fourth is a social policy which will guarantee a minimum standard of living to the poorest section of the community and encourage the remainder to provide for themselves and their families. Fifth is a revision of our international agreements to secure that more of our requirements are provided from our own soil and that exporters are given fiscal encouragements.
A policy based on these five points would have a dynamic effect on our economy and a delay in making a true assessment of what is wrong with this economy will be disastrous, as I believe that the state of the nation today is very serious.
5.55 p.m.
Mr. A. Woodburn: It is some time since I took part in an economic debate, but this one is very important. In view of the censure Motion, it is right that those who believe that the Government are carrying on the right policy should make themselves heard.

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The right hon. Member for Thirsk and Mahon (Mr. Turton) inferred that this was a national and not a party problem and should be approached from a national point of view, but he fell into that very trap by getting on to the hobby horse of a distinction between public and private enterprise, which is nonsense. The Tories make a fetish of this, but they nationalised far more than Labour; whenever it was economically necessary, they nationalised or municipalised.
For example, tramways were privately owned and the Tories and local authorities municipalised them to keep down fares for workers going to work. This will mean lower labour costs. When the Post Office had the chance of exploiting everyone, the Government of the day nationalised it to stop the exploitation of their fellow capitalists. The same has happened with nationalisation. Labour did not nationalise electricity, gas and transport just on the theory. Every commission on the subject had recognised and recommended the co-ordination of transport as a national organisation. During the war, we had to organise transport as a national service and the Tories did a great deal of disservice to the country by introducing denationalisation, which they had to end because they were breaking up a sensible, integrated transport system.
Nationalisation of electricity was carried through largely on the recommendation of a committee headed, I think, by Sir Harry, later Lord, McGowan, and Mr. Heywood, head of I.C.I., was the chairman of a Committee which practically recommended the nationalisation of gas. Before the war, people like Lord Nuffield were calling for the nationalisation of the iron and steel industry because its profiteering was making it impossible for him to compete in the international market. Thus, the idea that there is a difference or an antagonism between private and public enterprise is not accurate.
In addition, electricity by nationalisation is kept cheap today for private enterprise. Industry gets cheap coal. The miners would tell the right hon. Gentle man that they are complaining bitterly that the profits go to industry because the National Coal Board supplies cheap coal, but does not get the profits. Before the
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war, our investments abroad were made possible mainly by the starvation of British miners. Cheap coal made exports and foreign investment possible in a way which is not possible today, because we will not tolerate starvation of miners. If we are to subsidise exports, this must not be at the expense of one section, the miners, but by satisfactorily spreading the burden.
The right hon. Member for Enfield, West (Mr. Iain Macleod) spoke of the problem of getting growth without inflation. I am always interested to hear the solutions people have for solving this problem. Being a simple-minded man, I find that people with simple minds often find solutions to the most complex problems. I regret that I cannot find a solution to this one. We can only consume what we produce. We cannot distribute from the national garden more cabbages than grow in it. Simply to issue more tickets to obtain cabbages than there are cabbages does not mean that more cabbages will be growing.
The same can be said of printing money. There is no need to print more money. We can simply reprint £1 notes with a "2" in them and call fivers tenners. Printing notes does not produce more coal, electricity and other essentials. The most stupid way to attempt to increase our standard of living is merely to clamour for more money.
Inflation is an extremely dangerous thing. People nowadays are apt to forget what happens in a period of bad inflation. It might be called a breeder reaction of currency. Just as at Dounreay plutonium produces more plutonium, so one bout of inflation prodces another. Once there is a general trend towards rising prices, a series of reactions occur. The average person says, "Things will be dearer next year. I had better buy this year what I shall need next year". Without more banknotes being printed, people speed up their rate of spending. Inflation has arrived.
An increase in the velocity of currency is the same as the creation of more currency; more banknotes. When prices go up people want more wages. To obtain the money to give them more wages, more banknotes must be printed. This creates the cash basis to enable the banks to make more loans to meet the boom in

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industry which begins, and then even more banknotes are printed. Prices go up still further and a demand for more wages is made. Inflation goes on feeding on itself and the spiral becomes ever more speedy.
A classic example of inflation occurred in Germany in 1923 and it started in the sort of way in which we are talking now, the dollar was worth between 4 and 5 marks. At the end of 1923 there were 43 thousand million million marks to the dollar. I recall being given a 1 million mark banknote. It was worth less than a piece of toilet paper. I have a photograph of a German going to the cinema and paying with a piece of coal instead of money. His entrance charge would have run into suitcases full of money. That was inflation to the point of absurdity, but it illustrates what can happen once it starts. The last thing that British workers want is galloping inflation because they are the people who suffer.
Britain's gross national production totals about £32,000 million. About £24,000 million goes in personal consumption, about £6,000 million in public expenditure and about £6,000 million in investment. That does not add up to £32 million, but the extra is accounted for by taxation which is deductable. Leaving other items aside, if we consider those three headings under the G.N.P. index, we see that if more money is being spent than there is material and labour to meet the demand, a tendency towards inflation is bound to be there. It is the Government's duty to keep the figures in balance.
Demands have been made today for the Government to spend more on one of the social services. I recall having to introduce three different sets of Estimates. In a housing debate hon. Members clamoured for more houses to he built. In a health debate they wanted more hospitals and health centres. In an education debate they want junior colleges and more schools. A simple calculation had to be made. If we were to provide one health centre we had to sacrifice 120 houses. That was the principle on which we had to work and the same principle applies today.
The building trade can build only a certain number of houses and other buildings. Unless it changes its rate of capacity, when the builders are asked to concentrate on one sector of building,
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they cannot concentrate on something else. That applies throughout our economy. If, therefore, we are distributing money for personal consumption, we cannot spend it on public expenditure and investment.
When the right hon. Member for Enfield, West spoke about public expenditure I asked him, since the Conservative Party wants to add several millions of pounds to our defence budget, increase the social services and do all sorts of other things, how the nation would pay for that expenditure, but he could not tell me. For the last 20 years we have been asking hon. Gentlemen opposite the same question and they have been unable to give us a reply.
A favourite among hon. Gentlemen opposite is the demand for the Civil Service to be reduced. I recall addressing a meeting of farmers and being asked, "Why do not you get rid of some civil servants" I replied, "If farmers stop sending in forms asking for subsidies, we could get rid of 1,000 civil servants overnight." As long as subsidy forms and other documents are being sent to Ministries, people must be employed to inspect them and do the other necessary work. The Conservatives were in office for 13 years and they did not find a magic way of reducing the number of civil servants.
Since we have been in power we have conducted organisation and methods studies to try to solve this problem. I recall appointing outside business officials to look into this matter. They could not find a way to reduce the Civil Service. I wish that hon. Gentlemen opposite would get back to reality and stop picking will o' the wisps which lead nowhere except to disaster.
While on their hobbyhorse about the Civil Service, hon. Gentlemen opposite point out that we could save £1,000 million or more by putting the National Health Service into private hands. Why cannot they understand that public expenditure on the Health Service would not be reduced if it were transferred in that way? The public would still have to spend money on various health services, even if they paid it into private hands. Indeed, the doctors would probably expect to charge more in a

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privately organised health service, is one hon. Gentleman opposite willing to say that a modern hospital can depend on charity, as it did before the war?
I recall going to one of our biggest hospitals some years ago. The X-ray expert apologised for the inefficiency of the equipment and invited me to his home where, he said, he had private X-ray equipment that was more efficient. Today, our hospitals are equipped efficiently. I agree with the right hon. Gentleman that even now the Health Service does not get enough money, but that is because we want to spend more on bingo and on other things like that. But when we are ill we are certainly willing to spend the money then.
The sensible idea is to have a good Health Service and maintain it efficiently in peacetime and— —
Mr. John Hall: My right hon. Friend's point was that the Health Service could be improved by making more money available for it through the introduction of prescription charges.
Mr. Woodburn: When we introduced the Health Service, and I was one of the two Ministers who introduced it, the medical authorities insisted that no barrier should be introduced between doctor and patient, and that the doctor must be entitled to prescribe for the patient according to his illness and not according to his purse. They laid down that principle, and we believe that it is a right principle.
The Labour Government did not introduce prescription charges. They passed a law which made that possible. The charges were introduced by the Conservatives and not by a
Labour Government. Even so, nobody could seriously object to a nominal registration of 1s. per prescription, but then it became a 1s. per item and then 2s. per item. Old people were being asked to spend as much as 14s. which they might not have. If they did spend it they might have to go to another village or town for a refund. The Conservatives knew very well that people would often do without rather than do that. That method of economy has existed from the beginning of the Poor Law—one makes the benefits so difficult to get that people do without, and Surtax
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and other taxpayers are saved from taxation.
To say that some people must pay for prescriptions while others get off is not only to introduce a means test, but to deprive some people of medicine they ought to have. I could introduce the hon. Gentleman to Conservative druggists who would tell him that old-age pensioners and others used to ask, "What can I do without in this prescription?". They asked, because they could not get their pension until the Monday and so could not get what was required for their illness.
The doctors may say that charges would prevent people from asking frivolously for prescriptions, but as it is the rich are not prevented from asking frivolously for prescriptions. It does not bother them. It is all a class distinction. That is quite impossible and unacceptable in a Health Service, and I hope that we will never go back to it. I have never paid for medicine or a doctor, because I was insured in that respect from the age of 12. Prescription charges were a great step backward.
The Health Service cannot be cut. The right hon. Gentleman says that he would like to improve it, but I cannot see how that can be done without more being paid into it. Let us provide better facilities for doctors, and not keep on niggling and criticising the Health Service itself as though it were something of which to be ashamed.
I remember that when the President of the United States of America sent Mr. Ewing to investigate the Health Service in its early stages, Mr. Ewing said, "Mr. Woodburn, we would like to have a Health Service in America, but what you do not understand is that in great parts of America we do not have even elementary hygiene." A Health Service would have been welcomed by the people of America instead of the service they get in hospitals at the moment— —
Mr. Peter Hordern: If that is so, why is it that the Americans spend more on health as a proportion of the gross national product than we do here on the Health Service?
Mr. Woodburn: The hon. Gentleman should know that people there spend

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more on health because they are charged more. The fact is that compared with America we get our Service on the cheap. If anyone thinks that the British public would want to pay American charges he is suffering from a great misconception.
The biggest item in our expenditure is the wage bill. Of a gross national personal income total of £24,000 million, about £20,000 million represents the wage bill. The Lord must have loved the wage-earners, for He made so many of them. If the wage bill goes up out of proportion to the national product, one gets inflation. There is no doubt it creates inflation in itself. Over the past 10 or 12 years there has been a routine demand for increased wages which has put on the economy a pressure it could not sustain. There may have been some justification for the demand in that dividends were also going up in the Conservative boom—I do not dispute that—but there are more wage-earners than there are dividend earners, and the effect of wage increases on the economy is very disastrous. It is much better to be able to keep a stable economy.
I spent 25 years in the engineering industry, dealing largely with exports. One of the most difficult things when exporting goods at that time was the change in the value of currencies. If one exported to South America, one had to decide whether to be paid in pesos. A peso might look the same one day and the next, but in terms of what it brought to this country it was very much different. The argument, therefore, always was whether payment should be made in pesos or pounds. A firm in this country that could not afford the gamble had to choose to be paid in pounds.
The same problem arises today. An engineering contract may take from 12 to 18 months to complete. It a firm estimates in terms of the present-day £ and the value of the £ changes in the next 18 months because of inflation or some other factor, the firm may go bankrupt and its workers are turned on the street. More than that, the firm has to allow for that possibility. The estimate must be sufficient to cover the gamble, and that very often puts the firm out of court in getting orders. If people abroad can depend on the article they get and
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the price they must pay, it makes it easier to get orders and, therefore, it benefits our firms.
I cannot see how our workers benefit in any way from inflation, and I have seen a lot of it in my time. There is no point in increasing that wage bill of £20,000 million unless we increase the product, and that can be done only by better and more efficient methods and machinery.
I come back to the right hon. Gentleman's distinction between public and private enterprise. Does anyone doubt that the reason we are so much behind the United States in the production of wealth and in productivity is that there is far more electricity and power behind the elbow of every American worker than there is here? [HON. MEMBERS: "Private enterprise."] That is a bogus comparison. Electricity in this country is cheaper than it is in the United States, and if there is any deficiency it lies in private enterprise not using more of that electricity. But if we are to put up the price of electricity by handing over to private enterprise enabling it to exploit all the engineers, we will make it more difficult for them to compete.
Nationalisation is a method by which a public service is obtained at the cheapest possible price, sometimes too cheaply. Electricity in this country, allowing for the change in the value of money, is the one product which has greatly decreased in price. It is far cheaper relatively according to the value of the money than it was before the war. This is due to the increase in efficiency and technical ability. The same is true of gas and of every public enterprise.
Public enterprise is supplying private enterprise. If some people go on denouncing the two as not being partners and make them into competitors, disaster will follow. The idea that we should stop developing our gas and electricity works and the production of coal simply because these are not private enterprises is silly, because supplies would fail for private enterprise in a few years. What is happening at Fairfields, whether or not it succeeds, is the right policy. The right method is to produce more with less labour, with better methods and with better machinery.

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During the term of office of the first Labour Government, Stafford Cripps introduced a scheme in certain Yorkshire mills. The co-operation of worker, employers and financial experts was secured. They were able to produce more wool with less labour at a lower price, with higher wages for workers and higher profits for employers. If we could only get co-operation between all sectors of industry and produce by the most efficient methods, we would need to fear no one.
I congratulate this Government on their courage in tackling the problem of trying to get an incomes and prices policy, because, unless incomes and prices are kept within the range of economic possibility, as the hon. Member for Louth (Sir C. Osborne) said, we are bound to be trying to eat more than we grow or to consume more than we produce; and this is the way to disaster, as even Charles Dickens knew 100 years ago.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. I remind the House that everyone now in the Chamber wishes to speak now. I hope that hon. Members will be reasonably brief.
6.22 p.m.
Mr. John Boyd-Carpenter (Kingston-upon-Thames): If I understood the right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn) aright, his speech revolved round two themes—that so long as we had more nationalisation and more public expenditure all would be well. The trouble about that is that that is exactly what we have been having for the last two or three years. The reason we are having this debate is that all is not well.
I thought, too, that the right hon. Gentleman was singularly unhappy in his selection of arguments. He proclaimed the benefits of electricity under nationalisation. The House will recall that the Electricity Council has recently announced an increase of 10 per cent. in electricity charges and the Government of the day have not thought fit even to refer the increase to the National Board for Prices and Incomes.
I thought that the right hon. Gentleman was quite wrong in saying that under the Conservative Government it was not
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possible to tackle public expenditure. He cited specifically the case of the size of the Civil Service. If he will go into the Library and consult the quarterly White Paper which sets out the number of non-industrial civil servants, he will see that for the first three years of the Conservative Government—there was a highly efficient Financial Secretary at that time, whose name modesty prevents me from disclosing—the number of civil servants quarter by quarter and year by year came down.
The number came down for the very good reason which the right hon. Gentleman touched on, that we cut away functions which, however useful in a minor degree, did not seem worth while imposing on an over-burdened taxpayer. This could be done again.
The Financial Secretary to the Treasury (Mr. Niall MacDermot): Will the right hon. Gentleman compare the last three years?
Mr. Boyd-Carpenter: I would with the greatest of pleasure, if I had the figures on me. The Financial Secretary would do better to imitate one of his predecessors than to sneer. I am pointing out that this can be done. The right hon. Member for East Stirlingshire was wrong in saying that it cannot be done. In fact, it was done year after year and unnecessary functions were cut away.
I turn to the Chancellor's speech. I thought that it was a most uphappy one. Even the Chancellor's greatest admirers could not see in it a clarion call for additional effort or a touch of inspiration. His theme, as I understood it, was, "The policy is not working very well". He used the phrase, "The expansion we were expecting will not come quite so soon as we thought"—I thought that that was the understatement of the year—"but we have no other policy and, therefore, we shall persist in it".
This is not a theme which will lend inspiration to a jaded and tired economy. It read very much—"read" is the word—liked a jaded and tired Chancellor. The fact that the right hon. Gentleman felt it necessary to hark back and say that all the troubles were due to Labour's inheritance from the preceding Conservative Government added the tedium of all his speeches on this subject in recent years.

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As my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said, a sort of pattern has developed under the Labour Government. We begin early in the year with vague rumours put out that the economic situation is such that there will have to be a very severe Budget. Then comes the Budget. It is never as severe as has been forecast. Everybody who has fallen for the previous propaganda is rather relieved when the Chancellor puts on only another £200 million or £300 million in additional taxation. Then the Chancellor is buoyant; everything is splendid; the economy will be completely in balance by the end of whatever year he happens to be speaking in.
It all goes on very happily; but, curiously, within a matter of days of the Finance Bill becoming law, a crisis develops. We have a crisis debate and we are told of the grave and difficult situation. We have had this every year under the Labour Government. However, this year it is worse in one very savage particular—that is, in respect of unemployment.
I do not know whether the Financial Secretary recalls the Election Manifesto on which he and his colleagues were elected on 31st March last year. It contains a passage which I now recall to his memory. It refers to the past financial triumphs of the Labour Government—that reads a little oddly now, perhaps—and then says:
"The victory was a real one; but so was the price the nation paid. In particular the high interest rates required to strengthen sterling forced up mortgage payments and council house rents. But one price the nation did not have to pay—the deliberate creation of unemployment which our predecessors regarded as inevitable."
With summer unemployment at its highest level for 27 years, right hon. and hon. Members opposite cannot claim that now. This is a price that the nation now has had to pay, not as the result of a Government coping with the immediate consequences of their predecessors' actions, but after very nearly three years of enjoyment of the blessing of Socialist rule. This is the price that the nation has had to pay, and it is not surprising that some hon. Members below the Gangway opposite, like my hon. Friends, feel real indignation against the Government who have brought things to this pass.
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I want to deal, in particular, with public expenditure, because here the Chancellor wallowed in what I can only assume to have been calculated ambiguity. In his Budget speech he was at least perfectly clear. Having said that public expenditure would be up this year—he was right—he said this:
"But, of course, the corollary of this proposition is that when private investment recovers there should be enough room for it. Private investment will recover—indeed, we have taken many steps to induce such a recovery.
This means that public expenditure, which cannot be quickly changed, must be reined back in time. Otherwise, a recovery in private investment superimposed on a continuing rapid increase in public investment could quickly lead to a renewed overload on the economy—unless we were ready to impose swingeing increases in taxation. For these reasons, my approach to the level of public expenditure is not confined to the medium term. We are already focusing particularly on 1968–69, with a view to moderating next year's prospective increase in expenditure".—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, c. 990–1.]
What does it all come to? On the 18th of this month I asked the right hon. Gentleman a Question about what was being done to implement the statement in his Budget speech that he would rein back the increasing public expenditure for 1968–69. All he said was:
"The Government are examining forecasts of Departmental expenditure in 1968–69. …
In reply to a supplementary question, he said that I would know from my experience
"that the examination of Departmental Estimates is now taking place, and will no doubt reach its fruition during the autumn months."
Anyone who has had any experience of public expenditure knows, and the Financial Secretary knows perfectly well, that by the time one comes to the Estimates season in the autumn it is far too late to make any substantial changes. One can fiddle about with the minor subheads—indeed, it is the Financial Secretary's job to do so—but one cannot effect real changes because the momentum of expenditure has developed. Undertakings have been given to local authorities and arrangements have been made for investment by the nationalised industries.
Under the Conservative Government we used to publish a White Paper on public investment in November. Issues obviously had to be settled by the late summer. Everyone knows that to be "examining" Estimates for 1968–69 now means

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that the right hon. Gentleman has abandoned any real intention to tackle the problems of public expenditure for that year although he said in his Budget speech that he would do so.
The right hon. Gentleman also said an astonishing thing in reply to my right hon. Friend the Member for Enfield, West. My right hon. Friend pointed out that the previous 4¼ per cent. annual rise in public expenditure had been based on the national plan forecast of growth projections, but the Chancellor said:
"There is no particular connection between the growth in public expenditure and the growth in the national product."—[OFFICIAL REPORT, 18th July, 1967; Vol. 750, cc. 1688–89–90.]
In other words, the Chancellor has abandoned the whole of the doctrine which for some time has been his that public expenditure was dependent on the growth in the national product.
The right hon. Gentleman said it in particular at Cardiff just before the 1964 election, when he said:
"Increased social expenditure will be financed out of a growing expansion of British industry."
Now he has broken that link, the link which, of course, was the essence of the National Plan, that as the national product grew we could build up the social services. He has broken that link altogether.
I wonder what effect the right hon. Gentleman thinks that kind of thing will have on foreign confidence. All he can do is to say, as he did today, "I am always having urged on me lower taxes and higher pensions". That was exactly what the Conservatives produced. We increased the national product to do this. We reduced Income Tax from 9s. 6d. in the pound to 7s. 9d. in the pound and the top rate of Purchase Tax from 100 per cent. to 25 per cent. At the same time we increased the real value of the standard National Insurance benefits by over 50 per cent. in real terms and certain benefits for widows and children by over 100 per cent. in real terms.
It is intensely depressing to find the right hon. Gentleman dismissing as impracticable a state of affairs which, in fact, the Conservative Government were able to bring about of lower taxes and
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increased benefits. The right hon. Gentleman cut the link with the national product. I thought that his speech today meant heavier taxation as the only possible conclusion. Does he think that kind of prospect will encourage investment foreign or domestic, or saving, or enterprise, or all the things he and every hon. Member knows are fundamental to a recovery of this nation's economy?
It seemed clear that the right hon. Gentleman, with the forces massed against him in the Cabinet—the Secretary of State for Education and Science gave up his normal hunting of the grammar schools to make a speech last week to the effect that he would not have any cuts and he was followed by the Minister of Health on similar lines—the Chancellor has obviously surrendered to these pressures. This is the only possible conclusion which can be drawn from his speech. It is intensely serious, because it diminishes the gleam of light which we might have thought was at the end of the tunnel and reveals the approach and mentality of the right hon. Member for East Stirlingshire as dominant in the Labour Party. This is the only prospect we have before us.
I mention only one other matter, the foolishness of the Government in maintaining the tourist allowance at £50. This, of course, is lower in real terms than the £35 which we knew under the former Labour Government. All hon. Members who read Lord Cromer's letter in The Times the other day could not but be convinced that he made a powerful case in suggesting that this travel allowance was not, in fact, making any real contribution to our balance of payments problem. There is some question of prestige and confidence. To go on appearing as the paupers of Europe is to rub home to every foreigner whom every British tourist meets that there is something the matter with sterling. To do it at a time when the right hon. Gentleman is claiming a recovery in the economy is to risk retaliation from countries whose tourism is as important to them as ours is to us.
It is peculiarly discriminatory. As Lord Cromer pointed out, there is no restriction whatever on the amount of foreign exchange which the man who has the money can call upon except for going abroad. He can buy his wife expensive dresses from Paris, or he can buy

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chateaux-bottled claret or, worse still, import Coca-Cola, and use all the money the Chancellor leaves to him to spend foreign exchange in foreign countries for every purpose except actually going to those countries and meeting foreigners. This is nonsense. We have never been told what the saving is. Yet I expect it is as small as the net yield of the Land Levy, because people who do not go abroad and are not allowed to spend abroad will spend their money here on foreign articles imported to be consumed here. There is, therefore, no saving in in that respect of foreign exchange.
I am glad that the Financial Secretary is present. I was surprised at his offhand reply to my supplementary question last Tuesday. I referred to the great authority of Lord Cromer who was Governor of the Bank of England in the earlier years of this Government. The House knows and certainly the President of the Board of Trade knows of his incomparable services to this country after the Labour Government came in in October, 1964, when he brought the bankers of the world together and saved our economy. So his name should be treated with respect. Yet all the Financial Secretary said was that one would expect Lord Cromer to give priority to the need to save foreign exchange. Does he not see that if Lord Cromer takes this view so strongly, he being a man whom the Financial Secretary himself has said will give priority to foreign exchange, that supports the view that foreign exchange is not in substance safeguarded by this mean, degraded little restriction?
It does not affect the rich. They have connections abroad or they can go to their villas in the West Indies, in the sterling area. It does affect a great many whose holiday abroad is the thing for which they work hard throughout the year. I know of many people whose holiday on the Mediterranean Coast in the sun is a thing which impells them to work very hard. Many of them want to spend, not a great deal, but more than £50. Therefore, what we are doing is not really saving any amount of foreign exchange, but we are doing one thing more to diminish the stimuli and incentives that our economy needs.
We are undermining in this small way as well as in many big ways confidence to save, to invest, to plan and to build up. This is what the Government, in their
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blundering way, have trampled on—the whole spirit of a free enterprise economy; with as my right hon. Friend said, the desire to earn profits and keep some of them to spend on oneself, which is the dynamic of a free enterprise economy.
All this kind of thing and confidence in the future are being undermined by what the Government have done. How do the Government expect people to invest, when the prospect of earning a decent profit on the money that is invested is so dim and, even if it is earned, an ever-increasing proportion of it will be taken in taxation?
The House must face the dilemma which my right hon. Friend put so well. One can run this country as a free enterprise society, in which case one must accept the basic concepts of a free enterprise society which are moderate taxation and the opportunity of profit; or one can run this country under State Socialism on the verges of Communism, which is a method, however repulsive to many of us, which will work. What will not work is the half-way house between the two. That is where the Government are locked.
6.42 p.m.
Mr. Ian Mikardo: I listened with rapt attention to that part of the speech of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) which leant a little, as he told us, on Lord Cromer, who said that there is not much point in stopping a man from spending more than £50 on the cost of a holiday abroad if he can spend £100 in foreign currency drinking imported Coca-Cola or other nauseous muck. I agree with the logic of that argument. Who could disagree with it?
But, of course, I draw the opposite conclusion. If it does not make sense stopping a man from spending more than £50 on his holiday because he will spend £100 on imported rubbish, then let us stop him spending the £100 on imported rubbish. That is the only logical conclusion of the right hon. Gentleman's argument. Perhaps that is not fair, because his argument was logical, too, but may I say that, of the two logical conclusions to that argument, the other one, whose existence neither the right hon. Gentleman nor Lord Cromer were aware of, is at least as valid.

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Mr. Speaker, I would not for one moment question your wisdom and discretion in deciding not to call the Amendment in the names of my hon. Friends and myself. However, I know that you will not mind my saying, because I have no ill-feeling in saying it, that I regret that the Amendment was not called, because it would have given me—and I never speak in these matters for anybody than myself—an opportunity at 10 o'clock tonight to reinforce my words without the necessity of getting mixed up with that lot over there—an opportunity of which I am now deprived.
The right hon. Member for Enfield, West (Mr. Lain Macleod) described how the policies which we were advocating are anathema to him. I would have thought there was something wrong with them if they were not. But equally, the alternative economic policy which he was putting forward, in so far as he was putting forward any policy at all and not just uttering at the end of his speech a set of ruderies, is anathema to me. The right hon. Gentleman can call me a paper tiger if he likes, although I think that in his heart of hearts he will recognise that that would not be just. I shall find no difficulty this evening in resisting his invitation to demonstrate that I do not like arsenic by swallowing prussic acid instead.
There was much in the speech of my right hon. Friend the Chancellor of the Exchequer which I applaud. Over the years I have often applauded the speeches of my right hon. Friend the Chancellor. I wince a little, I must say, on those occasions—and they are not infrequent—when he says, as he did today, that he is always right. But I even manage to forgive him for that. I remember so well applauding so loudly his speech at the Labour Party conference in 1961, in which he demonstrated much better than I have ever done—much better than has been done by my hon. Friends the Members for Tottenham (Mr. Atkinson), Liverpool, Walton (Mr. Heffer) and Salford, West (Mr. Orme)—with complete conclusive clarity that any Government who tried to intervene in the normal processes of wage bargaining were off their rockers. It was a marvellous speech, absolutely conclusive. I applauded it very much. That was one occasion when I thought he was right.
Sir Cyril Osborne: He has learned since.
Mr. Mikardo: He could not have been right then and also right today.
But I must say that although there was much in his speech that I applauded today, I thought it was complacent. When I listened to him telling us how everything in the garden is not merely lovely, but whiter than white, I asked myself, "What is all the fuss about? Why have we been hearing all this talk from him and his colleagues about economic difficulties? He was even complacent about half a million people being out of work. He said it would be more by January or February. I do not think that he said how many—possibly 700,000. That is not just a figure on a piece of paper. It is 700,000 homes blighted in a way that a home cannot be blighted except by a really foul and malignant disease. He was not worried about it. Of course, he is not unemployed. He has not got the most secure job in the world, but he is not unemployed.
My right hon. Friend goes to the Dispatch Box and reels off a long list of things to prove that he has done better than the Tories, to which my answer is "So what?" If I could not do better than that lot, I would want to be carried out horizontally. Our comparator is not whether he has done better than they have, but whether he has done as well as a Labour Government ought to have done, and whether he has done as well as he and his colleagues, when in opposition, promised to do. That seems to me to be the most important thing.
I do not like this complacency. My right hon. Friend said at the end of a long passage in a sort of roaring crescendo "In 1968, contrary to what some others are saying—get ready to cheer, boys—private investment will fall by 6 per cent. to 8 per cent." He said it as though it were an achievement. We use the comparator of what we expected and what we were brought to expect. It may be that our Amendment is not the right one. If it were not for the danger of its taking too many pages of the Order Paper, I would sooner have put down an Amendment to delete all the words after "House" and to add any one of the

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Chancellor's or the Prime Minister's speeches on economic affairs made between 1961 and 1964.
When I criticise the Government's policy, and people ask me what my alternative is, I refer them to a document in which it was set out. That document was called "A Four-year Plan for Britain", a very long piece, four pages or so, published in the New Statesman in the spring of 1961. It was written by my right hon. Friend the Prime Minister. It was a marvellous statement of policy, first-class. It was what the right hon. Gentleman opposite called for, a real alternative. If we had been doing it these last two years, we should not have been in the situation in which we are now. It was based on the concept of selective, discriminatory planning and control of the economy, a concept which for all practical purposes has been as readily abandoned by the present Government as it was not adopted by their predecessors.
I can understand a Conservative Government—it is part of their political philosophy—believing that the separate decisions of separate companies, those whom the right hon. Gentleman calls the decision makers, taken without reference to one another and each against the criterion of maximising the welfare of each individual company, will produce an amalgam which maximises the welfare of all. For Conservatives to believe in that process is comprehensible. For a Labour Government to operate on that basis is utterly incomprehensible. But that is what has happened.
What discrimination or selectivity have we had? The word "selective" used to be the Prime Minister's favourite word, until it was replaced by "abrasive". What selectivity have we had in our economic planning? We have had two things. We have had some selectivity in favour of the underdeveloped areas. That is first-class. It has not produced much result yet, but, when the Chancellor says that it will produce results, I am happy to accept it and look forward to those results. Second, we have had the so-called selectivity of the S.E T, by which one distinguishes, in rough terms, between manufacturing and non-manufacturing.
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This is not really selective at all. It is very much "bull at a gate". Some non-manufacturing industries are vital, some transport industries are vital, some manufacturing industries are froth. [An HON. MEMBER: "Candy floss."] Yes, candy floss, but that is old vocabulary now. The "U" expression now is "plastic flowers".
The four-year plan for Britain to which I referred talked about keeping down imports by discriminatory controls. Now, we are keeping down imports exactly as the right hon. Gentleman used to do, and as he advocates now, by deflation, with a total lack of discrimination. The right hon. Gentleman said that, in a certain economic situation, there are only three ways out—deflation, devaluation, or controls. He rejected devaluation in his first sentence. He sneered about controls in his last passage. Therefore, he accepts deflation as the only non-discriminatory means of keeping down imports, and, of course, here he has the agreement or consensus—let us keep to the modern word—between the two Front Benches to which he referred when he began his speech.
Mr. Iain Macleod: If the hon. Gentleman will read HANSARD tomorrow, he will find that I rejected all three.
Mr. Mikardo: I shall have to think that one out. Now the right hon. Gentleman says that there are only three ways to deal with the crisis, and none of them is any good. "I reject all three", he says.
I recall—this is not going a long way back—the speech which my right hon. Friend the Prime Minister made at Swansea on 25th January, 1964, in which he said:
"The one lesson of the past few years is that you will not make sterling strong by making the economy weak."
To my mind, that sentence ought to be at the head and front of the thinking, planning and work of every Minister, of every Member and of everyone who is concerned in running the economy. I do not understand the present policy. If one went into a manufacturing company to help to put it right because it was a bit groggy, one would not begin by insisting on increasing the percentage of idle time

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on the shop floor, saying that it must be at least 2½ per cent., or 3 per cent. would be even better.
One would not insist on reducing the totality of output. One would know that, if the totality of output were reduced, with fixed overheads, or a large element of fixed overheads—a nation, like a company, has a large element of overhead costs which cannot be reduced—one would end by putting up unit costs and thereby make the product less saleable. If that applies in a company, it applies just as much to the nation as a whole.
Everyone, the Prime Minister, other Ministers, right hon. Gentlemen opposite, and all of us, when we go to the country at the weekends, say to people, "Whatever we think about the Government's policies—some agree with them, and some disagree—whatever we think individually is the right answer to the problem, let us at least agree on one thing, that we have got to put our backs into it a bit more, and let us agree that, in that, we have got to be willing to be a bit more ready ungrumblingly to take a bit of sacrifice should it come along".
This nation has a wonderful record of rising to an appeal of that sort. Above all, it has a wonderful record, an unparalleled record, of willingness to take sacrifices—but on one condition, that people feel that the burdens and rewards are being fairly shared. Nothing upsets the man in the public bar so much as the feeling that a scrimshanker is getting away with it when he himself is being asked for sacrifices.
We are not doing enough at present to diminish the grossly inegalitarian nature of our society to give ourselves justification for a demand for greater effort and sacrifice. To be justified in doing that, we shall have to do far more to close the gap between the well off and the badly off.
The prices and incomes policy—why we should need it when we are doing as well as the Chancellor told us today, I cannot imagine—has, in practice, hit the productive worker. It has not yet hit a good many others. There is a great demand at present for people called investment analysts. Their wages have gone up 100 per cent. in three years because we cannot get them. The soi-disant quality
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newspapers are sprouting business sections, so there is a great demand for business journalists. They toil not, neither do they spin, but ther "lolly" has gone up 80 per cent. during the last three Years.
Masked behind the apparent overall stagnation of wages, there are these growing inequalities, with the greatest inequality still existing, and virtually untouched since 1964, of enormous luxury expenditure out of capital gains.
My right hon. Friend the Chancellor ended his speech by saying that we not only seek to do well, though maybe we cannot guarantee that, but seek to deserve it. I say to my right hon. Friend, so long as you have half a million children below the poverty line, and will still have one-quarter of a million of them even after the present policies go into action; so long as you have abandoned—in this the right hon. Gentleman was right—the plea that you can finance social security out of growth; so long as you have the contradistinction between luxury expenditure out of capital gains at one end of the scale and really tight belts at the other; so long as you have all that, you not only will not get the nation behind you—worse still, you will not deserve it.
7.0 p.m.
Mr. Richard Wainwright: The hon. Member for Poplar (Mr. Mikardo) made it quite clear at the outset of his significant speech that he would very much like to vote for the Motion of censure. He mentioned only one reason which he says restrains him from doing so—that it would involve him in associating with the Conservative Party. I assure him that it is possible, accepting that the Lobby belongs to no political party, to use the same Lobby as hon. Members on the Conservative benches and yet remain in reasonable health and some political vigour, and even occasionally to have a reassuring and encouraging beam from Dr. Gallup. I therefore hope that if that is literally the only reason which up to now has inhibited the hon. Gentleman from deciding to vote for the Motion, he will think again.
There are two enormous advantages which I believe the nation has on this occasion in facing a period of financial stress compared with the difficulties of both 1962 and 1964. First, we are not

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forced to approach them this time in an atmosphere of preparation for a General Election; second, owing to the widespread discussion of the devaluation issue during the past 12 to 15 months, foreign banking opinion is much more profoundly aware of our domestic issues. There should be no necessity now for bland and somewhat superficial messages which misinform public opinion at home, but used to be thought necessary to reassure foreign banking opinion.
These two fortuitous advantages seem to me to add up to the possibility of a much franker approach to our difficulties this time, and the possibility of a franker approach should enable the Government to produce to the people a coherent policy and make it brutally and simply clear to them. This the Government have not so far done, either in recent weeks or in today's debate.
For instance, the Chancellor of the Exchequer, in his speech this afternoon, gave clear threats of coming increases in taxation. But they were very imprecise; there was no clue as to where this blow will fall. Therefore, those who take note of the debate, and particularly of his speech, are left with the view that they have nothing but heavier burdens coming to them and no prospect of great additional incentives.
Again, the other day there came from Government sources indications that they might be taking power to increase the whole range of State shareholding. This may not amount to very much. It may be largely party conference talk; but because it is not precise and not part of a coherent policy the majority of the population are left with the view that here is another threat of a general nature overhanging them.
The same is true of the Government's persistently equivocal attitude to our entry into Europe. Nor are the Government successful on the point of clarity. Very often they use the excuse that they must deal with a hostile Press, and that they cannot get their message over convincingly to the working population because most of the Press proprietors are not interested in doing so. But it is no longer just the possibly hostile Press which is not spreading the message of encouragement and incentive from Government circles.
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As a result of Government activity since they came to power there is now an enormous army of advisers to Government Departments—and I do not quarrel with this. They are members—often honorary members, which perhaps makes them a little more free to talk out of school—of the innumerable advisory committees which have been appointed to assist in restructuring industry, and so on.
These distinguished people are not in the habit of breaking confidences or revealing explicitly what has taken place in meetings, but naturally, being only human, they tend to breathe the atmosphere which has surrounded them when giving their services to Government. These people are not taking round the country, by and large, the impression of a coherent Government policy which is sufficiently clear to be convincing to industry or the professions. If there is an impression, it is one of confusion, of one Ministry working against another, and of no coherent or determined plan.
I should also like briefly to mention the attitude of those Government Departments, which, because of their responsibilities, are almost the sole customers for certain important manufacturers. Government Departments responsible for public health, public education, many sectors of transport, and so on, hold in their hands the whole trade of a large part of our manufacturing sector. So often, because their plans are not frankly revealed, and, because ambitious targets of public spending are announced and eventually withdrawn, a large section of manufacturing industry conducts its operations on a basis of misinformation. If those Government Departments set a lead and could bring themselves to be more frank with their suppliers in this country we would use a great deal of capacity that is, up to now, wasted.
There must be many hon. Members, including myself, who could take members of the Government into workshops which have been standing, if not idle, at any rate at half-cock, for long periods in the expectation of Government orders. Those orders have never come, not because the workshops were not competitive but because the spending plans had been knocked about and the promises had not been fulfilled. The result of a great deal of this lack of frankness and clearness is

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that a fatalism gets abroad and a large number of people draw the conclusion, I think entirely wrongly, that we are incapable of competing successfully enough in world markets to earn our present standard of living. I hope that most hon. Members will agree that this is a profound mistake, but I believe that it is an impression which is gaining ground.
The Government should be a little more forthcoming in making clear that at least one advantage of the miseries people have had to put up with during recent months is that we are becoming rather more competitive again in many world markets. I do not see why we should be modest about claiming this. Our competitive position has changed and changed about many times in the past 20 years, and I think that the British people should be disabused of any idea that we are necessarily in some kind of long-term decline.
Finally, there is the question of incentive. In my view, it is largely a waste of time for hon. Members on this side of the House, who have a different philosophy, to lecture the Government side on the supreme virtues of preponderant individual incentives. That is not, we all know, by and large the attitude on the Government side of the House, and a debate here is not likely to change it.
But I wonder whether the Government would consider devising some forms of corporate incentive. There is no reason why regions, in particular, should not be sensitive to some kind of corporate incentive for their efforts. I remember what it is like to be brought up in a big manufacturing city proud of its products and to be told in youth that one reason why the city had always been prosperous and why it had excellent public services is that it conducted conspicuously successful export trade and its products have been known round the world to be good and value for money. I believe that there is a future in expanding this kind of corporate incentive.
I realise that the objection which will be put up immediately to giving an extra share of Government spending in recognition of regional success is that Government spending plans now are worked out so far in advance and the contracts for Government expenditure often placed years in advance. But that is not the
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whole story. With modern techniques of public building, and earth levelling, and so on, some projects can be executed remarkably quickly. I suggest that it could be a very great stimulus to some regions if they could know that in return for conspicuous services, particularly in the export field, they could see some of their local and visible public amenities coming to fruition earlier than had previously been expected.
Whether there is merit in that or not, I conclude with the point that I sketched out earlier, that there is certainly a duty on the Government, particularly at a time like this, to make absolutely clear to the people the situation in which we find ourselves and not be inhibited in doing so for fear of creating an unfavourable impression on financial opinion abroad. This is no longer a fear to be seriously reckoned with. Frankness is now possible, and it should be exploited to the uttermost.
7.13 p.m.
Mr. David Ginsburg: We have had an interesting debate so far, but listening to the hon. Member for Colne Valley (Mr. Richard Wainwright) and the right hon. Member for Enfield, West (Mr. Iain Macleod) I found it very difficult to believe that I was listening to a Motion of censure. The best argument against the fact that we were debating a Motion of censure was a letter that I read yesterday in the Observer by the right hon. Member for Barnet (Mr. Maudling). He believed that his policy for growth needed time and a chance, and I think that the same is true of the policy of the present Chancellor.
Referring to the letter by the right hon. Gentleman, I do not want to nark back too long on the question of the inheritance which the present Government had, but the right hon. Member for Barnet confirmed his support for a General Election in the spring of 1964. I think that one can say that it was a costly decision for the country to let the election be delayed another five months. Many of the balance of payments problems that we are confronting today stem from a decision which put party interests before national interests at that time.
I want to make a very brief speech, and I propose to deal with two topics which are running through this debate.

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The first is the balance of payments: how serious is the present crisis, is the Government's broad strategy right or should additional or even very different measures be taken? Secondly, do we face a crisis in regard to full employment, or will the position in the economy correct itself soon?
I begin by looking at the balance of payments. It is by common consent the most crucial area. But we should also face it in this House that it is a concept which seems somewhat elusive and academic to the man in the street. Indeed, the more hon. Members on both sides get alarmist about it the more the general public tend to get bored with it all because we seem to have been here many times before. There is an inevitable diminishing return in the public's response to a crisis.
Last year, the British people were willing to make a response to Governmental exhortation. They are less likely to do so this year, especially if they think either that the Government have made needless mistakes in the interim or that the Opposition or the Government's critics on this side of the House are over-painting the present crisis. I find it difficult to agree with those who take a cataclysmic and critical view of the balance of payments at the present moment. I do not think that is the problem. Progress may be slower than we would like, but there has been progress. Our balance of payments on current account, seasonally corrected, for the last quarter of 1966 showed a surplus of £142 million and for the first quarter of this year the figure was £41 million. It is true that the balance of payments account for the second quarter is likely to show a deterioration in those figures, but what the critics at home and overseas forget is that an improvement on last year's balance of payment's figures is still in progress.
June this year is supposed to have been a very bad month, but I calculate that even for June the improvement on the visible balance of trade has been to the tune of £15 million compared with last June, and that is a sizeable sum for the year as a whole. Since July last year was a very bad month, the improvement this month could be even more marked, because it is of the nature of these trading
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figures that they fluctuate very violently from month to month and a bad month tends to be succeeded by a good one. We have heard from the Chancellor that in 1967 exports are 5 per cent. up on those for 1966 and that there is no reason to believe that the increase in exports will not continue.
The Government have stated that they will not devalue and that strong defences exist to buttress the rate of exchange. The Opposition have stressed in the House and outside that they, too, are opposed to devaluation. What, then, is the problem on the balance of payments that we are debating? The Suez Canal may remain blocked for many months, and I would urge the Government to assume the worst here and to make the necessary contingency planning. This will be an extra burden on the balance of payments. However, again, as the Chancellor has indicated, this is not a critical problem.
The critical problem on the balance of payments is, and it was with the previous Government, the question of imports. It is inevitable, it seems to me, that with the removal of the surcharge there must be an increase in manufactured imports, as is happening at the moment. This need not matter so long as the totality of imports does not grow too much. Indeed, as we have already heard today, some imports are falling in price, and it need not matter if the totality does not grow more rapidly than our exports. The Government's measures to moderate demand should keep the import bill down. Therefore, there should be no need to devalue. The fact that stocks are having to be built up and, therefore, imports are increasing for that reason, is again, it seems to me, no reason for devaluation.
There might, of course—and we should face this—be a situation in which devaluation was justifiable and where it would be right for us to undertake the painful process of paying more for imports and getting less for exports and, as my right hon. Friend said, dealing shabbily and in bad faith with certain countries, very often the poorest. But that situation would only arise if Britain's cost structure were really out of line.
I ask some of my hon. Friends who, apparently, have been favouring devaluation whether they really can claim that

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our exports are not selling because they are too dear or that our imports are flooding in at the moment because they are too cheap? Of course, if it ever became apparent that there was a fundamental disequilibrium in Britain's price structure, devaluation would be necessary as part of the long-term strategy.
Mr. Barnett: Has my hon. Friend seen the statement of the International Monetary Fund for 1965 that, if it were not for our price structure, there would have been an increase in our exports of about £1,000 million?
Mr. Ginsburg: Yes. But I have also seen the figures of recent cost changes in the prices of our exports, and our exports are competitive in the world as a whole.
Mr. John Hall: Has the hon. Gentleman seen the recent statement by the Board of Trade that our exports are less favourably placed now than 12 months ago?
Mr. Ginsburg: It depends on which countries one is comparing with. If one compares our exports with those of Germany and other E.E.C. countries, we are not unfavourably placed. At this stage, it is far from proven that we face a runaway import bill which only import controls or devaluation would stem, failing, of course, a savage deflation, which would be unthinkable.
If, therefore, there is no need for devaluation, and the £ is sufficiently strong and the balance of payments is coming right, although it will take time, what about the other and perhaps more pressing problem of growth and employment? The question is, "Have the Government pushed their medicine and policy too far? Is unemployment likely to rise too fast and too high before it begins to come down again?" The Chancellor is perfectly right to avoid additional measures that will prematurely expand the economy too fast next year. There will be an upturn, starting in the autumn, and it will gather pace next year anyway. But the danger is, so it seems, purely over the next six months.
The question is whether the economy could do with some extra reflation at this moment. National output, as far as
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I can see, is not at present rising at a 3 per cent. growth rate per annum and the Chancellor would be unwise to rely on the stimulus that could come from a breakdown of incomes policy in, say, a few months' time. After all, he wants the incomes policy to make a positive contribution and if, therefore, there has to be some limit in the growth of incomes in the months ahead, it also follows that we need a small but essentially quick working stimulus to the economy not next year, but at this moment.
For obvious reasons, it should be small and it should be quick-working, because we do not want unemployment to rise too fast and too high over the winter months before it begins to come down again as recovery gets under way. If such unemployment can be avoided, it should be. One small but important stimulus would be to bring in the increased social security benefits to the unemployed right away. I believe that this would be administratively practicable. It would concentrate help not only to those who need it most, the longer-term unemployed; but also to those areas that need it and it would be a short-term concession, since the benefits would be assimilated into the wider changes which will be taking place at the end of October. It would be a very small stimulus in money terms.
The other stimulus could come from a partial use of the Purchase Tax regulator, downwards of course. This would operate quickly and the extra imports generated would be sufficiently small for the balance of payments to contain. I believe it to be correct that a relaxation with the Purchase Tax regulator of about £75 million would at worst—and this is probably an over-estimate—involve extra imports of about £15 million on the balance of payments over the whole year. But I think that the economy is strong enough to stand it. Indeed, the use of the regulator, the beauty of it, is that having used it and when the other measures that the Government are taking are having effect next year, it would be easy if necessary to remove this concession when it had had its desired effect.
There has been some mention in the debate of public expenditure and the where possible to moderate public ex-Chancellor has been rightly concerned penditure in the future. But there is one

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opportunity that he missed of applying, as it were, a neutral curb to public expenditure and it is one which I think would commend itself to many of my hon. Friends. The Selective Employment Tax is correctly regarded as a tax which makes for a more rigorous scrutiny of resources in the private section. It cannot be, and has not been, entirely passed on.
The same principle could apply in central and local government. I do not accept the argument for treating central and local government services as neutral for S.E.T. S.E.T. should be levied on Government Departments with a directive from the Chancellor that it must be absorbed through greater efficiency without the need for them to come back to this House for Supplementary Estimates. It might not be possible to do this everywhere and all along the line, but even a modest success in this area would release scarce resources, and this would be a valuable gain once the economy returned to a higher level of activity, as I am sure it will next year. I hope that my right hon. Friend the president of the Board of Trade will comment on this idea.
The Chancellor gave a buoyant forecast for 1968. He said that we must take a long-term view of the Government's measures. He was rightly against chops and changes in policy and, subject to what I have just said about unemployment, I agree with him. In that sense, he is entitled to the support of the House.
7.29 p.m.
Sir Arthur Vere Harvey: The hon. Member for Dewsbury (Mr. Ginsburg) gave me the impression of making a speech which was almost identical to that of the Chancellor of the Exchequer—one of great complacency with no alarm or real concern about what is going on in the country. The Chancellor touched on the unemployment situation for two or three sentences. He expressed no sorrow or real regret and gave no indication of what the figure might be this winter or where we are going in this direction. This is not good enough.
As the hon. Member for Poplar (Mr. Mikardo) has said, to have 700,000 households affected in this year in an economy like Britain's is not a good thing. The Government have frequently referred to
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13 wasted years. But they wasted 13 years in opposition in not doing their homework. They seem to have learnt nothing by experience even during the last three years.
Mr. Arthur Lewis: But my hon. Friend the Member for Poplar (Mr. Mikardo) pointed out that we did do our homework and that the Prime Minister drew up a plan. The trouble is that the Government are not implementing that plan.
Sir A. V. Harvey: I will not involve myself in the civil war on the benches opposite. Hon. Members must figure it out for themselves. If 71 Tories had made the suggestion that hon. Members opposite have made, we should be accused of rocking the boat, but hardly a word has been said to them for what they have done.
I agree with my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) who asked what was the point of devaluation. Devaluation on its own is absolutely useless. Our prices are competitive with world prices. One only devalues when prices are out of line with those of foreign Powers, and ours are not out of line. The disease in Britain, if I may call it that, goes much deeper. There are deep-rooted problems affecting our economy. The Government put on the surcharge and encouraged the wrath of all the E.F.T.A. countries. First, they put on 15 per cent. They eventually got away with it and the E.F.T.A countries became used to it.
What then did they do? In April last year they announced that on 1st December, 1966, they were to take off the surcharge. They gave the world seven or eight months' notice that it would come off. It was a crazy thing to do. I was told by an international banker the other day that, having got away with it with the E.F.T.A. countries, because of the state of our economy at the end of last year we should have kept it on. However, the Government could not do that because they had announced eight months earlier that they were to take it off. How can one run a country with a Government who make decisions of that sort? It is incredible.
Our economy is far more serious than the country is prepared to believe at the

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present time. Why are 54 million skilled people—probably the most skilled in the world—in this situation? Long-term remedies are needed, but for 20 years Britain has lived on the edge of a precipice. A ½per cent. either way on exports or imports seems to tip the balance against us. This is a precarious way to run an economy. The Government are trying to have it both ways. The Prime Minister behaves like a president, but he does not believe in free enterprise, and hon. Members opposite want a complete Socialist State. They cannot one moment encourage free enterprise—the goose that lays the gold eggs—and the next moment give it a kick in the pants. It does not help; it does not fit in. Britain is essentially a free enterprise country. We have to bring about systems and schemes which will help free enterprise to make profits. There is nothing shameful in the word "profits".
The Government had a problem in October, 1964, which we have had for 20 years. When they came to power in October, 1964, they turned that problem into a real crisis, and we all know why. With a majority of three the Prime Minister had his eye on the next General Election. He tried to convince the electorate of Britain what a terrible legacy he had taken over. In doing so he also convinced the foreign bankers. They understood him and took him at face value. Of course, nobody, including some of his own colleagues, takes the Prime Minister at face value today.
The Health Service has been talked about. We all want to see an efficient Health Service, but my fear is that it is failing for many reasons. Replacement of the hospital in my constituency, Macclesfield, which was originally built as a workhouse in 1835–40, has twice been delayed by this Government since they came into power.
The cost of dropping the 2s. prescription charge has been mentioned and the right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn) has talked about the old age pensioners having to pay. It is surely not beyond the wit of a man or a Minister to devise a scheme whereby the chronic sick, the disabled and pensioners, could go to their doctor or the chemist and get their prescriptions without going through
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the business of making a claim. They could have tabs in their pension books. I am sure that something could be done to exclude them from having to pay prescription charges. But why should Members of Parliament and others have free prescriptions costing about £25 million a year by the loss of the 2s. charge and probably another £20 million or £25 million a year in extra consumption of drugs?
Mr. Christopher Rowland Mr. Christopher Rowland (Meriden) rose— —
Sir A. V. Harvey: I will give way when I have finished. I am not saying that all these drugs are not necessary, but a great number are not.
Mr. Rowland: Would the hon. Member tell us how many hospitals were built under the Conservative Government and what prescription charges were charged in that period?
Sir A. V. Harvey: The hon. Member is deploying the argument of the Chancellor who referred to the number of universities in the last two years, the number of students, schools and teachers. Many of these things were planned in the days of the Conservative Government. Aircraft exports, which the Minister is always boasting were £200 million last year were also brought about during the lifetime of the Tory Government. The hon. Member cannot get away with that. It will be some time before the Government get credit for that type of thing.
Prescription charges involve a total of £45 million to £50 million a year. Excluding the chronic sick, the disabled and old-age pensioners, it is wrong for the rest of the people of Britain to get them free, because the money could be deployed in building another eight or nine hospitals a year. It is wrong for young people who are earning good wages to be taught that they can get most things for nothing. It is not the best way to educate young people.
In July last year the Government lost their heads completely. Selective Employment Tax today is a miserable failure. Why do not the Government admit it? Every time they are questioned they say that a long time is needed to assess how successful it has been. When my right hon. Friend gave the figures earlier he

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pointed out that the number of men in manufacturing industries has decreased and those industries which ought to be turning out exports are not doing so. It is a ghastly failure. If the Government must raise money, would it not be best to have a 4s. or 5s. pay-roll tax on every individual in the country rather than have this vicious tax which was originally inflicted even on the agricultural industry?
Much has been said about the Civil Service. According to my researches, the number of civil servants since October, 1964, has risen to 39,100 at a cost of £40 million to £50 million a year and they occupy valuable office space. Industry has been implored by the Government to set about putting its house in order to bring in experts—McKinseys and others—to put a fine tooth-comb through the business. Shell, I.C.I. and Courtaulds have had this. Why not the Government? I am connected with a company which has disposed to 2,500 people in the last 18 months—every company in British is having to do it today to make itself more efficient—to try to get these valuable people into other export industries. Why not in Government Departments and why not in local government?
I am far from convinced when the Prime Minister says at the Dispatch Box, "If hon. Gentlemen opposite want new hospitals, etc., they must have extra civil servants". I do not accept that. The Conservative Government reduced the numbers over a period of time and they reduced taxation at the same time. This will not do. Whereas the Labour Government think that they have convinced the country how all-powerful they are and that they are in office for a great many years, I warn right hon. and hon. Gentlemen opposite that the Prime Minister's image has been severely dented and the Labour Government are rapidly becoming discredited. Something will have to be done by the rank and file of the party opposite. [Laughter.] Hon. Member opposite may laugh, but they will not laugh at the next General Election.
Mr. Russell Kerr: Come over here.
Sir A. V. Harvey: If the hon. Gentleman wants to interrupt my speech he should stand up. Can we be told what is being done to bring about economies
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in Whitehall and in local government? Can we have a clear answer about what is being done and about the Government's intention? In diagnosing the problems of the economy we have also to consider confidence—[Interruption.] I wish that the hon. Member for West Ham, North (Mr. Arthur Lewis), who is so rarely aroused, would stop chattering.
Mr. Arthur Lewis: I said that Dr. Kaldor had resigned, which was one 50 per cent. reduction. I was helping the hon. Gentleman.
Sir A. V. Harvey: I am glad to have the hon. Gentleman's support. I hope that he will make his own speech. If he does, I will stay to listen.
Confidence throughout the country is now at a low ebb. Private industry is now investing 8 per cent. or 9 per cent. less than it did last year. People are not in industry for fun, but to make a go of it. They are not always there even to make profits; they are in industry because it is their life's work. But now there is a lack of confidence and they are not certain whether the decisions which they now have to take are right.
If industry is to be encouraged, from the people running it right down to the man on the bench, more incentives must be provided. Why are savings down more than £200 million on last year? It is because people are spending their money. They are buying furniture or pictures rather than invest in good equity shares, and this is because they are frightened of the future, because they completely lack confidence.
Under the Labour Government we have had numerous Budgets which have so complicated the taxation system that many responsible people in industry have to spend a great deal of time with accountants and lawyers trying to unravel the meaning VL successive Finance Acts. In my own business I have recently had dealings with a large British concern which might earn a considerable amount of foreign currency. We spent most of last week with lawyers and accountants and we still do not have the answer to how the taxation may work out vis-á-vis an American company. Our legislation must be simplified so that firms do not spend so much of their time getting advice from top lawyers and accountants.

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I agree with the Chancellor of the Exchequer that world trade is not helping Britain. There has been a mild recession in the United States and a certain mild recession in France and Germany, but this country has no fat on which it can fall back, because taxation is too high. The cost of living continues to go up. For the twelve months during the freeze, it was not too bad, but as from 1st July everyone in this country, it seems, is to get a rise, except the staff of the House of Commons for whom, we were told at Question Time, the date of any increases is uncertain. I do not know why they should be excepted from the general rule.
The trade figures for June are bad and they do not take account of the closing of the Suez Canal. The Suez Canal may be closed for years rather than months, and I would not reckon on its being open next year. However it is regarded, the performance for June was bad.
Taking the value of the £ in October, 1964, as 20s., in June this year it was worth 18s., a decrease of 2s. despite a year's standstill in prices. According to the Ministry of Labour Family Survey, where the average family spent £19 10s. a week in 1964, to buy the same things at 1967 prices would cost £21 13s. 4d. I am fearful for the 500,000 people of whom the Minister without Portfolio spoke today. They are in a desperate situation. There are many people in Britain who still earn about £12 a week, some of them on the railways. How are these people with these miserable wages to face vast increases in costs?
There is not much wrong with British industry. It must be given incentives and it must pay far more attention to delivery dates and adhere more strictly to them. I am constantly told that, while quality is good, deliveries are not made on time. But a successful export business is impossible without a good home market to back it up, and that is true of textiles, motor cars or chemicals. There must be a thriving home market and that is why it is necessary to inflate the economy to some extent.
Most of the responsibility for our present position rests with the Prime Minister. I do not like the politics of South Africa, but there are many countries in Eastern Europe whose politics
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I do not like, but with whom we have to trade to live. We have a favourable trade balance with South Africa of nearly £70 million and we are glad to be able to use its ports now that the Suez Canal is closed. But in the last few years the Prime Minister and others have gone out of their way to insult South Africa and to refuse to supply it with this and that. The same is true of Spain. Our trade with Spain is on a lesser scale, but we still have a very good balance of payments with Spain. We all know that the Rhodesian situation is probably costing us £100 million a year, and yet last week I read that the Rhodesian budget has been practically balanced and that Rhodesia's standard of living is going up. We have done our best to ruin our trade with many overseas customers, and it is about time that we patched up these differences.
What can we do to encourage home industry? Last week we were told that there was to be more nationalisation, although we were not told how or when. We did not hear much about the Industrial Reorganisation Corporation which was set up last November and which was supposed to have all the powers needed to acquire industrial equities by the back door. We are now told that there is to be more legislation of this kind. If industry is to do its stuff—and it is in industry where the solutions to our problems lie—it must be given a square deal.
I can well understand the Prime Minister's dilemma. He is constantly looking over his shoulder to his Left wing which he has to pacify. Last week he did it with the Defence White Paper. He is looking ahead to the Scarborough Conference by which time he has to get the climate right. He is trying to satisfy three or four different parties behind him. A country cannot be run like that, when 80 or 90 of his supporters are prepared to stab the Prime Minister in the back at the slightest provocation.
Britain's stock abroad is extremely low, and I am not surprised when the readers of Continental newspapers can discover that 71 Labour Members are putting forward proposals which are contrary to Government policy. The Prime Minister has boasted about his 1,000 days, but they have been the most miserable thousand days that Britain has had since the war. The Government have been rumbled

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by the British public, and it is only a question of time before the public has the lot out, lock, stock and barrel.
7.48 p.m.
Mr. Russell Kerr: Having listened to the remarks of the hon. Member for Macclesfield (Sir A. V. Harvey), I am tempted to tear up my speech notes and spend my limited time dealing with some of the points with which he has entertained the House. I was particularly moved by his eloquent plea on behalf of the £12-a-week people in our midst, and I hope that this new-found conversion to advocating on behalf of the poor in our community will not be short-lived.
I also admired the hon. Gentleman's courage in pleading for Government encouragement of private enterprise. As a prominent member of the aircraft industry, which has had about £4,000 million of public money lavished upon it since 1950, sheer simple gratitude should have given him pause on this occasion.
Sir A. V. Harvey: I have not been connected with the aircraft industry for more than 10 years.
Mr. Kerr: I apologise. The hon. Gentleman's eloquent pleadings on behalf of that industry must have misled me.
However, tonight we are discussing more important things, and as one of the Government's occasional critics, especially of their economic policy, it gives me no pleasure to have to take such a strongly critical line as I feel bound to take this evening. Of course, I recognise that a sizeable part of the difficulties which my right hon. Friends have encountered has been bequeathed to them by right hon. Gentlemen opposite, and it therefore hardly lies in the mouths of the Opposition to criticise the Government.
Their own prodigies of mismanagement, particularly during the period when all considerations of national welfare were being subordinated to a desperate attempt to hang on to power at all costs, was equalled only by the "brass" with which they have sought to deny it ever since. The truth is that, whether or not hon. Gentlemen opposite have confidence in the Government's economic policies is of very little consequence—of no more
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importance than whether the teen-agers are these days screaming for John or Paul or Ringo, or for that matter my hon. Friend the Member for Smethwick (Mr. Faulds).
As the right hon. Member for Enfield, West (Mr. Iain Macleod) was kind enough to imply, although he did not specifically say it, the real argument in this debate is between the Government and the 70 or so of my hon. Friends who signed the much-mentioned Tribune manifesto, some of whom, including myself, are the sponsors of the Amendment to the Motion before us, which Mr. Speaker, in his wisdom, though no doubt impressed by the cogency of the argument and the percipience of its analysis, felt unable to call.
May I take as my starting point the draconic measures announced by the Prime Minister just over 12 months ago, and which descended on this country like a bolt from the blue. Despite denials at the time, there is now little doubt that the savage deflationary measures announced were owed almost wholly to a panic desire to placate international banking opinion in general and the United States Treasury in particular, to ensure that loans would be forthcoming from international sources to shore up a badly threatened £-sterling.
Some little while afterwards the line changed and Government spokesmen suddenly discovered that these measures, far from being a hypersensitive reaction to admittedly difficult circumstances, were designed as part of a plan to lay the groundwork for more rapid growth—or something like that. This claim has been repeated many times since in one form or another.
Coupled with this claim, particularly in recent months, has been the confident assertion by a number of Treasury and economic Minister, to the effect that happy days are here again, and that the economy is again back on course. The basic balance of payments problem has now been solved, and according to the Chancellor at least, we are moving steadily ahead, on and on and up and up, as a former distinguished Member of this House would, I am sure, have put it.
This view is, to put it mildly, out of accord with the facts. Even if it were true that the deficit on our current

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account was being steadily reduced, which is not the case as I see it, such a development would have been achieved only at the quite unacceptable cost of sacrificing economic growth, of deliberately creating unemployment, and of cutting overseas aid—in short, by embracing all of the dreary, fly-blown, discredited policies of Professor Paish, whose resurrection from a Tory grave by a Labour Government has had no parallel for nearly 2,000 years.
Certainly, the economic philosophy of this vastly over-rated economist ought to have had no part in the plans of a Labour Government, except perhaps by way of illustrating where our predecessors in office went wrong. Presumably, as a result of pressures from the Bourbons of the Treasury, yesterday's bad joke seems to have become today's considered wisdom, so that the worthy Professor Paish, from being a name to avoid mentioning in polite Socialist society, is today apparently being given the Hallelujah treatment across the way at the Treasury.
As my right hon. Friend the hon. Member for Belper (Mr. George Brown) would put it "Brothers, we have come a long way." I bear no personal animosity to either the Chancellor or the worthy Professor Paish in saying this, but the fact is that the economic policies associated with this gentleman's name are likely to prove no less than disastrous for this country, and no amount of sunshine talk by our Chancellor will alter that fact. In our present situation there is no solution along this road. The fact is that we can have a supposedly "healthy" balance of payments surplus of this kind only by having a basically unhealthy economy.
In the words of the Tribune manifesto, signed by over 70 of my hon. Friends:
"Only when we can maintain a payment surplus, full employment and economic growth, all at the same time, will our economic problem be solved."
I heartily agree with those sentiments.
Looking again at the ill-conceived July measures of a year ago, it is obvious that they won us no more than a temporary respite, by holding back imports as production levelled off and unemployment rose. Certainly, if the Chancellor were
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to change his mind and to begin to reflate the economy to any serious extent, as the hon. Member for Macclesfield has just been recommending, and I agree with him on that one point, there is no doubt that another payments crisis would be the almost immediate result.
The fact that our economy now has built-in into it the assumption that a permanent level of over half a million unemployed, in other words, about 2 per cent. plus of the total labour force of the country, is quite acceptable, is a further indication of the Government's retreat from the pledges made to the people prior to our election, and the abandonment of our commitment to a policy of full employment.
Perhaps the most serious criticism of the July measures is that far from improving our overall economic situation, they have actually made it much worse. As the party opposite demonstrated on many occasions during their period of office, every time that they have resorted to these deflationary bouts, the inevitable result has been the raising of unit costs and an increase in unemployment, coupled with a step up in our export prices, which is what has happened as a result of these July measures.
Perhaps the most important casualty of Paishism has been its effect on industrial investment, which has dipped quite alarmingly during the past year, with the result that the modernisation of our industrial structure, on which so much of our economic future depends, has been still further retarded. At a time when investment in our future screams out for priority, the Government seem to have turned common sense on its head by giving priority not to the things that matter, in other words investment in things like technical education and scientific research as well as in modernisation, but to the sacred cow of maintaining an exchange rate of 2 dollars 80 cents to the £ sterling.
The present economic policies of the Government provide no kind of a permanent policy for getting the economy of the country out of its present stagnation. We are deluding ourselves if we imagine that our commitments to the people who put us in Government is adequately discharged by our obtaining a so-called balance of our international payments.

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Surely for a Labour Government, as opposed to the party opposite, which inevitably talks through its pocket on economic matters, this matter of sterling and the balance of payments ought to be a problem which we take vigorous steps to solve in the shortest possible time, using such methods as are judged necessary to effect a permanent solution to our difficulties.
There are some Jeremiahs on both sides of the House who say that the situation is now beyond recall and that Britain is now so heavily in pawn to the United States and the international banking community that we no longer have sufficient elbow-room to work our way free of our present difficulties, and so achieve the economic autonomy which is the necessary pre-condition of our political independence.
I imagine that the logic of their position is that we should pack the game in internationally and make early application to become the 51st State of the American Union. I regard this kind of talk as a counsel of despair. Though our present economic and financial difficulties are by no means under-estimated, I believe that they are perfectly capable of solution, provided that they are tackled with the courage and resolution that the people expect of a Labour Government, and provided that we are prepared to throw out of the window some of the imaginative, discredited advice which Professor Paish and his friends at the Treasury have been selling to the Treasury during the past year and to his predecessors during the years before.
I will not weary the House with a detailed recitation of the steps which I believe to be necessary to escape from the present dilemma in which we find ourselves. They have been outlined both in the Amendment standing in the name of my hon. Friends and myself and at somewhat greater length in the excellent Tribune manifesto signed by more than 70 of my hon. Friends last week and which has become "required reading" for Members on both sides of the House who aspire to an understanding of the present situation.
I should like briefly to draw attention to only two of the suggestions which we make in that publication. First, we advocate measures, to use an expression beloved of my hon. Friend the Member
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for Lewisham, West (Mr. Dickens), to "get the bankers off our backs", and to that end we ask that the nation should immediately acquire, with fair compensation to those affected, a suitable selection of our overseas portfolio investments so that a large proportion of the present international debts can be quickly repaid. Although this proposal is unlikely to cause the City of London to hang out the flags in unrestrained joy, none the less it would go a long way towards giving us the financial elbow room which we so conspicuously lack.
The second proposal to which I should like particularly to draw attention is our suggestion that selective import controls —I say this despite what the Chancellor of the Exchequer said today—should be one of the economic weapons to which the Government resort during the difficult months ahead. I am well aware that this is an idea which finds, or at least used to find, little favour in Treasury circles, but the objections raised by the Paishites have already, and very effectively, been answered by a person who is now, most happily, "one of their own".
I refer to a very brilliant economist of the younger school, Mr. Michael Posner, who has recently been appointed economic adviser to the Chancellor of the Exchequer and who, more importantly, set out in an article in the New Statesman, just two years ago, the means whereby, with the very minimum of economic retaliation, it is possible for this country to save well above £300 million on the balance of payments by the institution of selective import controls. Any hon. Member who doubts the wisdom of Mr. Posner—and on this point that may, on this one point, even include the Chancellor of the Exchequer—should acquaint himself with this article which, like the Tribune manifesto of last week, should be required reading for those of us interested in economic matters.
What I am pleading for is a new national plan based on national economic priorities and not on the often misleading forecasts of the business community. Surely the main problem afflicting British industry is that our national supply of capital is being channelled to the wrong places, into the wrong areas of the country and into providing things of low rather than high economic and social priority—in other words, into making

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luxury goods instead of into building schools and hospitals.
Surely we now need a frontal attack, using the weapons of Socialist planning, to eliminate from our midst, with all speed, the gross inequalities of wealth and income which still distort and disfigure our society. Surely the ordinary people of this country have a right to expect their own Labour Government, to which they gave a massive mandate for change 15 months ago, to show them the way and to lead them from the present valley of despair into the better and fairer society which was not the least of the reasons for which people placed their trust in this Government a year or so ago.
8.5 p.m.
Sir Cyril Osborne: I hope that hon. Members will allow me to remind them that we are discussing a Motion of censure which says:
"That this House has no confidence in the economic policies of Her Majesty's Government."
The hon. Member for Poplar (Mr. Mikardo) made a brilliant speech in support of the Motion. He slaughtered the Government with his arguments and only regretted that he could not come into the Division Lobby with us to support his arguments. Then we had the speech of the hon. Member for Dewsbury (Mr. Ginsburg) who made the extraordinary statement that we do not want unemployment to rise too sharply or too soon. Of course we do not. But how are we to stop it?
What the hon. Member for Dewsbury does not seem to realise is that roughly 5 million jobs depend on exports, and since no Government of any party can compel the foreigner to buy British, how can any Government guarantee full employment to the people who have elected them? How can we stop unemployment in a free society? One can guarantee full employment only in a prison or in a concentration camp. In a free society in which one-third of the manufacturing jobs depend on the foreigner buying the goods, it is utterly impossible to guarantee full employment. This is what I beg the Government honestly to tell the people.
The speech of the Chancellor of the Exchequer today was extremely disap-
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pointing. He painted such a rosy picture that I wondered what all the fuss was about. Why have we such a large number of unemployed? Why do we have a freeze policy? Why are 70 of the right hon. Gentleman's supporters ready to stab him in the back over his economic policy? Why has there been a run on sterling? According to the Chancellor of the Exchequer, everything in the garden is rosy; we have to wait only another three or four months and it will be self-evident to us all.
The Chancellor has said that to us over three successive years and every time he has been wrong. But why should we believe him now when he has been proved to have been wrong before? This is why his hon. Friends, who have been more honest with the electors about economic affairs than he has, have been driven to revolt. But for the fact that they would drag the Government down, they would vote against him tonight.
Mr. Russell Kerr: Not with the hon. Gentleman.
Sir C. Osborne: I am treating the hon. Gentleman as an honest and sensible person. He may not be, but I am trying to treat him as one.
Hon. Members opposite would vote with us, because of their own arguments. Nobody put the case more forcefully than the hon. Member for Poplar.
One extraordinary omission in the speech of the Chancellor of the Exchequer was that he never once uttered the word "exports". We live on exports. By our exports we pay for all the raw materials which keep us employed. Every third bite of food which we have is paid for by exports. Yet the right hon. Gentleman never once mentioned exports, which are the key to our whole position. What is the good of manufacturing articles which we cannot sell. I hope that the President of the Board of Trade will say something about this matter. About 30 per cent., or one in three, of the articles which we produce must be sold abroad, and they can be sold only on quality, price and delivery. No Government can guarantee those three things. If we have inflation, we shall price ourselves completely out of the market.
I was hoping for better things from the Chancellor of the Exchequer. I regard

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him as the most honest man in a disreputable Government. But today he disappointed me. He did not say what I expected from him and I do not know why. It gives me no pleasure to see my country's affairs in this mess or to support the Motion. If there were a free vote, we would have a majority of 100, and if there were a secret ballot and no political consequences, we would have a majority of 200. Otherwise the Amendment signed by the Tribune rebels does not mean what it says. They would have to vote for us.
Any hon. Member who talks to the ordinary people in his constituency will have to admit that they have no confidence in the Government's economic policy. They are bewildered by it. It is not the policy which they were promised and which won the Labour Party votes. Speaking as a businessman, and not as a politician, I would warn the House—I was trying to deal with the difficult problem of exports across the Iron Curtain, where we are making great efforts, in a factory this morning—that the outlook today is worse than at any time since the 1930s—[Interruption.] I am speaking for myself. I am not like the hon. Gentleman, who thinks he knows everything.
I am connected with quite a number of businesses—[AN HON. MEMBER: "Oh."] I am proud of it. I am proud of being successful. I leave it to the hon. Members opposite to be proud of being failures. An accountant who has specialised in bankruptcies for many years told me recently that his office is beginning to remind him of the bankruptcies of the 1930s—[Laughter.] Stupid empty-heads will bring empty bellies in the end, if they are not careful. As you must know from your personal experience, Mr. Deputy Speaker, there is a lack of confidence in the future in industry. Anyone in trade and business knows that turnover is down, Profit margins are smaller, overheads, over which we have no control, have increased, and management is working harder than ever. It is running hard to stand where it was.
I believe that if we have a hard winter this winter, instead of a mild one as we had last, unemployment will top 1 million. The figure of half a million today is only of those who are fully unemployed and does not take into account those who are under-employed and working short-time
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or those who were previously working overtime and are not now and are suffering the consequences. The position in industry and trade is much worse than the figure suggests. Whoever is in power, the problem is to increase the national wealth by greater, longer, more efficient work and by offering rewards to those who work. I asked a manufacturer this morning, "Are they coming in on Saturday morning to work?", and he answered, "If they make a couple of pounds and pay 18s. in tax, they are not so keen." Of course they are not.
We are over-taxed and over-governed and there is no incentive, which is why our economy is in its present bad state. The Government's economic policy stands condemned largely because they have failed to make the ordinary people understand the problems and how to solve them and the consequences of not solving them. They have failed in public relations. When we talk or the economists write clever articles about the terms of trade, the overseas trade balance or sterling convertibility, these mean nothing to the man on the shop floor and he does not care. All he is bothered about is his job and his wage. The Government have failed to tell the industrial worker that, unless production increases considerably, the quality of our goods is raised and prices come down, their jobs will be at stake.
I condemn the Government for not having said this brutally. I have told the Chancellor several times that, collectively and individually, we are living above our means, spending more than we are earning, and this cannot go on. In terms that the ordinary people would understand, we are eating and drinking, smoking and gambling, spending on sport more than we are earning—
Mr. Russell Kerr: Speak for yourself.
Sir C. Osborne: I am speaking for myself. The Chancellor has admitted this once or twice, but he has failed to find the cure. We are faced with this alternative: either the nation accepts a considerably lower standard of living or it must work much harder— —
Mr. Arthur Lewis: Did the hon. Gentleman hear his hon. Friend the Member for Macclesfield (Sir A. V. Harvey) say earlier that thousands of workers in his constituency get only £12 a week? How

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can they gamble and drink as the hon. Gentleman says?
Sir C. Osborne: The £12 limit does not apply to the hon. Gentleman, and there are many like him. On the whole, we are spending roughly £3,000 million a year in the way I have indicated which we are not fully earning. We should tell our workpeople and ourselves: either we cut down or the foreigner will cut it down for us. The Chancellor was like Gracie Fields, "Painting the Clouds with Sunshine"—[Laughter.] Hon. Members may giggle, but we still face the possibility of petrol rationing, which is the first thing which will jerk the country to its senses. Unless we can sell more abroad, we may be faced with wartime rationing again on everything. The world will not give us a living. We must earn it and at present we are not.
This is why I have no confidence in the Government's economic policy. The policy is wrong, they have failed to explain it to the country and thus they stand condemned. I shall gladly vote against them tonight.
8.20 p.m
Mr. Charles Mapp: This has been a good debate. The speech of the right hon. Member for Enfield, West (Mr. lain Macleod) was an extremely effective debating one, but not much more. It was a speech for the Tory Party. The speech of my right hon. Friend the Chancellor of the Exchequer was a good holding operation, but not much more. Many of the speeches of hon. Gentlemen opposite have been directed to the Tory Party. Many of the speeches of my hon. Friends have been directed to the Labour Party conference. Although my right hon. Friend conducted a holding operation on the economy, I will not comment on whether that should be in a holding or developing position.
Had I been writing the Opposition Motion, and thinking in terms of the North-West, I would have used the words:
"That this House has not much confidence in the economic policies of Her Majesty's Government."
I will explain why I would have used that phraseology. Certainly, in the North-West there is restrained confidence, if that is the right way to put it, in the Government. It is apparent that the
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phrase "grey areas" has reached Whitehall only during recent weeks. But Yorkshire and the North-West have been constantly nearly at the bottom of every table of useful criteria when judging employment, factories and all other forms of job provision. While Scotland, Wales and the North-East might have been at the bottom, Yorkshire and the North-West have never been far from it. These areas have been getting the worst of both worlds all the time.
The Lancashire and Merseyside Development Association, an unpolitical body—in that it is comprised of members of the three political parties—has been trying for the last three years to discover why, with the industrial background and history of this part of the country, it has not shared in the industrial growth of Britain. This matter has for a considerable time been causing serious concern to hon. Members who represent North-West constituencies.
I say openly that the Government have been remiss because they have spent months listening to the case being made by this area, but only a few weeks ago have they recognised its validity. They have they recognised the need to channel new blood into the development areas, even though this means causing a haemorrhage in some of the more affluent areas. In Stoke and Yorkshire, too, it is being discovered that most of the blood letting to the development areas is not taking place in the Midlands and the South-East, but at the expense of the older industrial areas. I regret that it has taken the Government so long to recognise what is happening.
I was seriously disturbed the other day when I met representatives of both sides of industry in Manchester and discovered that there is a possibility that this study group might be comprised of groups of civil servants. I trust that the Government have not made any such decision, even though I understand that the chairman's name has been announced. I understand that he comes from the West Midlands. If the Government appreciate the thinking of the older industrial areas, they will decide that studies of this kind must comprise representatives of these areas. I could quote many examples to show how the North-West is haemorrhaging in the interests of the development

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areas, and I am sure that this is not the intention of the Government.
Mr. Charles Fletcher-Cooke: I agree with everything the hon. Gentleman is saying. Does he think that any further study is necessary? Are not the facts already well known?
Mr. Mapp: I agree that many of the facts are known. I am not impatient. I appreciate the need for a study. However, I would have thought that an inquiry lasting six to eight months would be adequate to discover the facts that are not known.
I am speaking of a problem that affects not only the North-West, but all the older industrial areas. I have with me a document which is appropriate to Lancashire and which contains many figures relating to the cotton and coal mining industries. These figures, which apply to manpower in the last 16 years, show what has been happening. In 1951, the cotton industry employed 314,000 people. By the end of 1966 it employed 191,000. During those 16 years the coal mining industry lost 10,000 people. These figures apply to the North-West and the years are in no way political. They reveal the facts. They show that during 16 years 214,000 jobs were lost in the North-West in coal mining and textiles. Has any other industry in any other part of Britain suffered equally in those 16 years?
The figures of the employment population in those 16 years are equally significant. In London and the South-East the employee population increased by 20·9 per cent. In the south-western area it increased by 27·8 per cent. In the Midlands and the East and West Riding it increased by 14·7 per cent., while in the Northern area, Scotland and Wales it increased by 7·6 per cent., 4·2 per cent., and 9·3 per cent. respectively. Instead of the North-West being somewhere towards the bottom of the table, it went down even lower because its employee population increased by only 3·7 per cent. Therefore, the Government's economic policies do not at present very much commend themselves to the North-West.
I hope that the President of the Board of Trade will not overlook what was said in a document issued by the Economist on 1st July to Connection with this Lancashire study. The last words read:
" The object of this brief "—
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meaning the article—
"has not been to suggest what, if anything, should be done about this. It has merely tried to show what can happen when economic change takes place very quickly. Nationally, we are committed to economic growth, and therefore change. But we should be aware of the price—and who pays it."
The policy of Governments for the textile industry for the last X number of years is open to a grave charge. I have no financial interest in the industry, but I have a cotton interest electorally, as have 30 other hon. Members. Of those 30 Members, 27 are on this side of the House. Having acted at times in some advisory capacity to those hon. Members, I know that they are very critical of the action of the President of the Board of Trade in connection with the textile industry. The confidence of those hon. Members in Government policy, which is now so low, will certainly not be raised if, when we return in October, very little has been done to change what is now taking place.
It would bore the House if I were to go into the technicalities of the industry, but it seems that an impasse has been reached. On the one hand, the Government say that the root cause of the industry's problem is not imports, and I think they are right if "root cause" has its literal meaning. On the other hand, the industry believes that the biggest cause of the problem is imports. There is a strong case within the industry for that argument, but both sides cannot be right.
A very large measure of reform is required in the industry. It has more than enough inefficiency, but it also has highly efficient firms which are being exposed to short-term working when their efficiency could compete with anything on the Continent or in America. If such firms are exposed to conditions like this, there must be something wrong in Government policy. Equally, there is something wrong when 13,500 operatives have left the industry since the turn of the year. None of us is prepared to defend inefficiency in the textile industry, but when so many men are leaving month by month we must look to the Government to try to deal with inefficiency where it exists.
Some little time ago I attended a seminar in Manchester, when I and the

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hon. Member for Clitheroe (Sir Frank Pearson), who is not with us at present, put the views of the two sides of the House. I was very proud to find acceptance of the view of the 27 textile industry Members on this side that what was needed to resolve the difficulty was a deep, quick and effective study. An internal study on productivity and efficiency is now going on within the industry, but I do not believe that it can make the close, deep diagnosis that is wanted, nor can an industrial study of itself be credible to the House and the country.
In our present economic climate as a whole the Government will ignore at their own peril the old industrial areas, and think of the problem all in terms of black and white. It is nothing like that at all. No fewer than one-eighth of the people and workers are in the North-West alone, and their voice is not often heard here. It is being heard tonight, I think, in a very firm and definite way. I do not align myself with either 51 or 71, but in terms of the prosperity of the county I am proud of I do not find any inconsistency in my being a Socialist and demanding that in the 'seventies the textile industry should be viable, and beneficial to all engaged in it.
8.35 p.m.
Mr. John Hall: One of the principal things about this debate is the fact that hon. Members opposite who have spoken so far have been divided into two classes—those who, with some difficulty, have tried to come to the defence of the Chancellor of the Exchequer—after his speech he needed some defending—and those who have spoken very strongly and with conviction and eloquence against the Chancellor and all the policies he stands for. An impartial listener to this debate would undoubtedly give the voting to those who have spoken against the Chancellor, because their arguments have carried far more conviction than the arguments of those who have tried to defend the right hon. Gentleman.
The debate is the latest in a series of debates which have all been basically concerned with the failure of Governments to break out of the stop-go cycle and find a formula which can ensure eco-
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nomic expansion without galloping inflation and without first running into balance of payments difficulties. No postwar Chancellor of the Exchequer has succeeded in finding a lasting answer to this problem, although my right hon. Friend the Member for Barnet (Mr. Maudling) made a very brave attempt which might well have succeeded if the electorate had not completely misjudged the situation in October, 1964.
The hon. Member for Dewsbury (Mr. Ginsburg) was more than a little unfair to my right hon. Friend the Member for Barnet in quoting a letter my right hon. Friend wrote to the Observer, because my right hon. Friend said in that letter that he had advocated a spring election because he realised that his policy would be at its height getting on towards the autumn and that an election coming at the same time as that would create considerable complications and difficulties. That occurred. The difficulties were made much worse by the fact that the wrong Government were returned to office.
The problem facing this or any other Government is very easy to state, and it has been stated by many economists many times. It can be summed up by saying that as a nation with few natural resources we have been trying to increase our standard of living, trying to expand our overseas investment, trying to aid under-developed countries, trying to maintain those overseas defence bases which are still left to us, and at the same time trying to maintain sterling as a reserve currency and to maintain our position as international bankers. We have been trying to do all that with liquid reserves which are quite inadequate for the purpose, even with the borrowing facilities which are available to us. Our liquid reserves are inadequate partly because over the long term our economy seems unable to expand and increase its foreign earnings in step with our demands on foreign resources.
It must be remembered that Britain has run a visible deficit of trade since about 1850. It was running at about £150 million per annum, at current values, in the ten years up to 1914. This was at a time when Britain was the major manufacturing country in the world, accounting for one-third of the world's exports of manufactured goods. Our invisibles at that time more than covered

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the balance. Indeed, up to 1939 our invisible earnings covered about 25 per cent. of our import bill. In 1964, our invisible earnings covered no more than 4 per cent. of our import bill, and I imagine that they cover very little more today.
To build up satisfactory reserves to do all that we are trying to do, and particularly to maintain our commitments overseas, we would have to average a surplus on current account of about £300 million per annum. I think that the N.E.D.C. put the figure at £300 million and reduced it afterwards to £225 million. I suggest that we need £300 million to build up satisfactory reserves to do all we want to do. From 1955 to date the surplus has averaged about £30 million a year. How do we build up the kind of reserves we must have if we are to maintain, much less to improve, our standard of living and carry all the responsibilities to which I have referred?
As the Chancellor said this afternoon, economists tend to differ. He should have had much experience in that respect because he has been advised by a number of apparently differing economists. An hon. Member opposite complained that the Government appear to be advised by Professor Paish. The Government have gone part of the way towards the Paise doctrine, but only part of the way. They have created unemployment of about 2 per cent., but when Professor Paish pointed out that if competitive conditions were enforced the margin of unutilised capacity need be only 2 per cent., he meant that we have to do away with restrictive practices so that we have a genuine 2 per cent. unemployed after that. At present, we have not a genuine 2 per cent., because nearly 1 per cent. of the present unemployed figure is a fixed unemployed percentage which we cannot get rid of because they are unemployable. The real figure is perhaps 1 per cent. or 1·2 per cent.
Whatever the Government have in mind, and whether they intended to follow all Professor Paish's policies, I think, is coincidental, for their policies have resulted in stagnant production and growing unemployment. I forecast in the autumn of last year that by the end of 1967 we should have at least ¾ million unemployed. Other hon. Members in
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this debate have put the figure even higher. I do not want to be over-pessimistic, but I think it safe to say that there will be ¾ million by the end of the year. I noticed that when the Chancellor forecast an increase in unemployment he was careful not to give an estimate of the number.
One must pay tribute to the Chancellor's courage, but it is rather like paying tribute to the courage of the Light Brigade charging at Balaclava. They were charging at the wrong objectives. One is almost tempted to make the same remark and to say that this is magnificent but it is not economics. The situation is becoming far too serious to be a matter of party points bandied across the Floor of the House. It is not a question of whether we choose devaluation as a possible means of overcoming present difficulties; if we are not careful present policies will force devaluation upon us. If we do not take advantage of whatever limited opportunity that devaluation may bring, we shall be facing this problem again and again.
The Prime Minister may be the last to want this. He was very intimately concerned with the last devaluation, in 1949. I am certain that he would do everything possible to ensure that we did not go through the same again, but I find it very hard to understand how we can avoid it if the Government persist in their present policies. Nothing the Chancellor said this afternoon gave any hope that we were likely to follow policies which would improve the economic conditions of the country.
The problems which face the country are made more difficult because we have a mixed economy. The salutary and stimulating effect of restoring truly competitive conditions is offset by the fact that a very large part of the economy, the public sector, is insulated from the effect of competition. Therefore, there is a problem in trying to introduce the more traditional methods of stimulating efficiency. Nevertheless, I still believe that the answer to our problem is a revival of competitive conditions.
After all, this is what the Government are hoping for in applying for entry to the E.E.C. They hope that entry will force on the country the kind of competitive conditions which they think will

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stimulate industry to become more efficient and which they are reluctant to impose themselves because that would be against their political philosophy.
The introduction of competitive conditions means more than the abolition of restrictive practices. It means such things as not subsidising dying industries. It means providing far better retraining facilities and encouraging much greater mobility amongst labour of all kinds. It means having a different housing policy with the availability of far more rented accommodation. It means also a change in the Rent Acts to encourage private owners as well as councils to provide rented accommodation.
It means recasting the tax system, abolishing S.E.T. and changing the form of the regional employment premium. Above all, it means remembering that economics are, in the long run, about people. We sometimes forget this when we are involved in policies and formulae which are designed to affect the livelihoods and activities of thousands of people. These policies will not work unless we get the people to support them.
I am not attempting to provide a blueprint, which everybody has failed to provide over many years, for dealing with our problems, but, speaking as an industrialist, I should like to mention some things that I should like to happen. I should like to see S.E.T. abolished. It encourages manufacturers and industry to hoard labour, which is just the thing they should not do. It discourages some of the so-called service industries, which are playing a considerable part in earning foreign currency.
I should like to see industry streamlined far more effectively than it is now. S.E.T. and R.E.P. have the opposite effect. One should be encouraging industry to disgorge unproductive labour, because labour is a valuable commodity and should not be shut up in a firm merely because that firm wants a large source of labour in case it should run short at any time.
Firms should be encouraged to disgorge labour which they do not require. We could do one of two things to encourage them to do that. We should either introduce a small tax per head over the whole
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of industry, without any rebates at all, or, alternatively, and to my mind far better, we could place on industry a far greater proportion of the burden of social insurance. This would mean that every employee would carry a much higher on-cost of social insurance than he does at the moment. This would encourage firms not to keep labour which they do not require.
We should replace the regional employment premium by a form of expanded tax concession for plant and machinery for businesses setting up in the development areas. The present system of giving a premium to firms already there to keep labour they have already got seems to me to be economic nonsense. We must also have a much greater supervision of public expenditure by Parliament. This is a job we should do, but are not doing. The value of fiscal weapons which the Government use to soak up what is called surplus spending power is now offset by the fact that that money is spent by the Government in other forms, thus recreating the inflationary pressures which they have been trying to avoid.
I could continue with many ideas of this kind. We must have much greater tax incentives to work and to save. Much scorn has been poured on the effect of tax reductions as an incentive to work. Curiously enough, experience in industry shows that at the moment it is the kind of incentive that works best, especially if one has a tax incentive that encourages a man to save. If we could do far more to provide tax-free benefits to people to save money, this more than anything else would encourage people to work harder and save.
I come back to a point that I made earlier. We must remember that in dealing with economic policies, we are dealing with human beings. It is no use applying a policy which does not get the wholehearted support of employer and employee—indeed, of the country as a whole. Otherwise, that policy will fail lamentably, and will deserve to do so.
We must try to change attitudes of mind throughout the whole of industry. In the various studies which have been made, particularly in the United States, comparing industries there with similar industries in this country, it has been found time and again that the difference

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in productivity per individual or per productive team has depended entirely on a complete difference of attitude between the American team and a similar team in this country—a difference of attitude to the earning of money, to the part which the individual plays as a member of the team or firm, a difference of attitude towards restrictive practices, and so on. All these things have played a part in increasing the productivity of some of our industrial rivals.
We must through every propaganda means at our disposal try to change attitudes of mind. Responsibility for this lies largely with management. We must ensure that advantage is taken of all the management schemes for young executives and other members of management teams so as to get the best out of the people who are employed.
I apologise for having taken longer than I intended. I have cut a good deal out of what I had in mind to say in order to let impatient hon. Members opposite have a chance to get in.
8.57 p.m.
Mr. Robert Sheldon: I am grateful to the hon. Member for Wycombe (Mr. John Hall) for keeping his speech so short. Mine will have to be kept short by the clock.
I turn at once to certain aspects of the prices and incomes policy. I am interested in this because, as I see it, one of the great disadvantages is that our present prices and incomes policy has diverted us from some of the real solutions which might have been attempted over the past 12 months. I believe that the Government cannot be neutral about prices and incomes. Just as they cannot be neutral about the economy, just as they cannot he neutral shout the level of manufacturing investment, and just as they cannot be neutral about imports and exports, so they cannot afford to, be neutral about prices and incomes. If they are unable to control them, at least they are entitled to make a move towards understanding them and learning to control them in the long run.
A policy of this kind would have been admirable, but, faced with the economic difficulties of last July, the Government have tried to make long-term solutions serve short-term ends. There has, therefore, been too much emphasis, with con-
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sequent damage to our longer hopes, on the prices and incomes policy. I have always held that the most we could hope for from a prices and incomes policy, at least in the short term, was a marginal reduction in the level of inflation by about ½ to 1 per cent. of what it would otherwise be, and I have always regarded this as valuable if limited.
The attempt to control prices, however, has led us into a difficulty. It is not too difficult to control the prices of certain basic commodities, but they are now becoming a smaller proportion of all goods sold, as goods become more complex, and, if prices were to be set too low, either these goods would disappear from the shops or there would be quality changes in the goods which would justify higher prices.
A further difficulty in controlling prices is that prices are intimately linked with profits, and, whatever we may wish, at present it is profits which make the private sector work. It is profits which decide the level of manufacturing investment. Therefore, as we control prices and as we control profits so we also, unfortunately, reduce the level of manufacturing investment and defer the modernisation of industry which we sorely need.
For those reasons, the control of prices can be only marginal, and we cannot affect the situation very much. When we come to the control of incomes, however, with its consequent unfairnesses and, in certain individual cases, quite shameful results, from the purely narrow point of view of the economy it does produce benefit. It produces benefit as inflation is reduced and costs are held down.
Thus, although price control is impracticable, income control is beneficial to the economy, and, for this reason, by an inexorable process a prices and incomes policy becomes in the end an incomes policy. It has not taken a large section of the trade union movement long, and it will not take the rest of the movement long, to realise the inequity of this, with consequent grave effect on our chances of ultimately having a working prices and incomes policy.
During the next few minutes I should like to deal with certain misunderstandings about devaluation as I see them. My right hon. Friend the Chancellor of the

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Exchequer said that he would welcome more discussion about sterling, saying that because of its present strong position nothing can damage it. I accept this. But we must remember that one of the most important reasons for avoiding devaluation is political and not economic. If the position changed in the future, the economic case should be rather better understood than perhaps appears from what we have heard here today.
The first misunderstanding with which I should like to deal is that devaluation is a short-term answer. Given a hypothetical devaluation of 20 per cent., even an inflation of an extra 3 per cent. a year for seven years would mean that the effects of a 20 per cent. devaluation would last seven years. That rate of inflation would be economic madness, because obviously devaluation would have to be coupled with the deflationary measures, but even in that extreme circumstance it could last seven years and, therefore, it is not just a short-term answer.
Second, there is the fear of retaliation. France has extremely large gold reserves, so large that they have caused embarrassment to many other countries. Germany, despite problems at home, still has a higher balance of payments surplus than ever. I do not believe that the United States is so dependent on us as to be so much guided by what we do. If it did not follow us in 1949, it is probably as unlikely to follow us now. These are three countries which could well set the standard for no widespread retaliation.
The other point is the question of our prices being competitive. Speaker after speaker has said that our prices are broadly competitive with those overseas. If a factory cannot pay its way, cannot sell the goods it requires to sell, I would call it uncompetitive in its pricing. I should have thought that a reasonable definition of prices being uncompetitive is that the country concerned is unable to sell enough of its goods. This is our position.
Another misunderstanding is that devaluation depresses living standards at home. If we consider £6,000 million of imports against £30,000 million of G.N.P., we see that we have a ratio of about one to five of imports to what is produced in goods and services at home. A devalua-
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tion of 20 per cent. would mean that the cost of living would rise by one-fifth of that 20 per cent., or about 4 per cent. There would be a rise in the cost of living of about 4 per cent., which we should not be particularly worried about in view of similar recent rises. This is borne out by what happened in 1949. Following the devaluation then of 30 per cent., we had a rise in the cost of living of about 6 per cent. There again, the ratio was much the same.
The next point of misunderstanding is the lack of certainty of exports rising. Here, I am on much less sure ground. I believe that there is, roughly, an elasticity of two in the matter. That means that if we devalue and drop our prices by about 20 per cent. our exports will rise by 40 per cent. This may be only a guess of mine, and I should not be prepared to ask anybody to let me carry him with me on this.
I suggest that those who pressed that things like delivery dates were more important should remember that with the present degree of deflation delivery dates have been vastly improved, but that we have not had the increase of exports that might have justified the argument that delivery dates were one of the important factors preventing our exports from rising.
The last misunderstanding that I have time to deal with is that we may not have the capacity to produce the expansion of exports required to pay for the quantity of imports. In fact, if we increased exports by 40 per cent. this would lead to an increase of gross domestic product of about one-sixth of 40 per cent., that is, 6½ per cent. in two years. I do not consider that that is a particularly startling increase to expect. This is also brought out by comparison with the 1949 situation.
In view of the assurances that we have received all this is academic at the present time, but it is important for the House to understand the economic reasons as opposed to the other reasons—the reasons of undertakings and trust that have been advanced. I do not believe that either party can talk with very much pride of its economic performance. Both have underestimated the deep-seated problems with which we have been faced. But ours has been the much harsher inheritance. Because of this, and

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because of the useful reforms that the Government have initiated in the economic field, I believe that the Government still have the support of the people of the country, and that they must now show themselves fully worthy of that support.
9.0 p.m.
Mr. Edward Heath: No one in this debate has challenged the fundamental seriousness of the present position. In this respect the debate has reflected the anxiety now prevalent in the country. The Chancellor of the Exchequer very fairly said that he thought there were justifiable reasons for understandable anxiety about aspects of the economy. It was exactly this seriousness of the situation that I analysed in the first half of the speech that I made recently at Carshalton.
The Chancellor of the Exchequer immediately stepped in to repeat publicly that the Labour Party is the party of high taxation, wants it, likes it, believes in it and is going to make certain that everybody else likes it whether they want it or not. But the Chancellor was very careful in his intervention two hours after my speech not to challenge one single part of the analysis of the present economic situation. Nor in his speech today has he challenged any single item in it. Nor do I believe that the President of the Board of Trade, when he winds up—it is perhaps a little strange that the First Secretary is not even here, let alone winding-up—can challenge any part of it.
I can summarise it very briefly by saying that the trend of unemployment is still steadily upwards, with the highest figure for July for nearly 30 years. The winter is to be at a very high level. Then the Prime Minister's specious comparisons with the figures for 1962 will stand him in precious little stead. Production is back to 1964 and still falling, although productivity may be rising.
But if the Chancellor had really wanted to talk about productivity he ought also to have admitted that in 1963 and 1964, the years which he was criticising, productivity was rising even faster and total production—the total wealth of the country—was rising faster whereas now there is no increase in wealth at all. Private industrial investment is down and still
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falling. Prices are up and still rising—the largest jump between May and June since 1962. The most Astonishing fact of all is that in the nearly three years in which the Labour Government have been in power real incomes—the real incomes for the people of the country—have fallen, and where people are maintaining their standard of living they are doing it by drawing on savings. I do not believe that anybody in the House can recall any period since the war in which real incomes throughout such a period were falling. These are the results of nearly three years of the Labour Government.
But there might be some who would say that this was being done for two purposes and that if the purposes were successful then it could all be borne. The purposes were to secure a surplus on the balance of payments and to keep sterling strong. The plain fact today is that the policy has not succeeded in either of those two purposes, and that is the fundamental cause of the anxiety in the House and outside it. The Government's policies have been costly and they have not achieved their purpose.
So we have put down this Motion of no confidence in those policies and the hon. Member for Poplar (Mr. Mikardo) has put down an Amendment of no confidence in them. Whatever happens in the Lobbies tonight, the plain fact is that the Government and their supporters do not have a majority in this House of confidence in their policies. The Chancellor today conceded the case of those who have put down the Motion and the Amendment. He told us that unemployment will rise to fresh peaks in January. What will the figure be? He did not say. Will it be 750,000 or more, with the commensurate loss of production as a whole?
The right hon. Gentleman said that the growth rate of 3 per cent. will not be reached this year. He is now being frank. He has admitted the misjudgment. He set out to get 3 per cent. and is not going to get it. He has conceded the case.
Nor is the right hon. Gentleman going to get his expected surplus on the balance of payments this year. He may not get a surplus at all, and he knows it. First, it was to be a balance of payments surplus in 1966. Then it was to be a surplus by the end of 1966. Then it was to be

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a surplus in 1967 of £200 million. Now it is to be a surplus in 1968 without a surplus in 1967. Always tomorrow and never today.
What is more, the fault is always somebody else's. Last time, in the Prime Minister's dramatic words, the Government were "blown off course" by the non-existent ships in the shipping strike. This time the Government are stranded in the Suez Canal. But the Chancellor knows full well that before the Middle East crisis could have any effect his balance of payments surplus had gone and that the deficit on current account for the first six months of this year was greater than the total deficit on current account for the whole of last year; that is, on trading account.
This is the latest of the list of illusions under which the Government have laboured for three years. It all started, as my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) pointed out, when the Government, having taken over and looked at the books, said that there was no undue pressure on resources calling for action. Then, in 1965, the Prime Minister said that the decks had been cleared for action—another dramatic naval metaphor. This was before the Government were blown off course.
Then the present Foreign Secretary said, "We are winning through". Later he said, "The decline is over". Not to be outdone, in February, the Prime Minister said that the economic crisis was over. What have we been debating for three years? He added:
"Production is now picking up again."
The Chancellor's finest hour was when he said to the nation,
"I think that we are round the corner."
A moment later, he added:
"At least, turning the corner."
Then the Prime Minister again:
"The economy is getting better … Britain is on the move again."
The Prime Minister castigated the Press for its "defeatist cries", "wet editorials" and as "moaning Minnies".
The Prime Minister (Mr. Harold Wilson): Hear, hear.
Mr. Heath: Just ten days later he introduced his 20th July package. Of course, the Press did not pay attention to
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what he said over that weekend and were proved to be right.
Then, a month ago, the Chancellor said, with real panache,
"The standstill is finished. … From now on we can begin to reap the benefits."
There was not much about benefits in his speech today. He said, in one breath, "Production is falling", and in the other breath, "Expansionary forces are beginning to work". These are illusions. The Government are just a gang of addicts suffering the effects of hallucinatory drugs—the Chancellor from an overdose of £s. d. These are the ones that the Home Secretary ought to be after if he were not so preoccupied preparing for his own takeover bid to carry out remedial treatment on his colleagues.
We have heard a speech—and I am sorry that it should have been so—from a weary and disillusioned, almost punch-drunk, Chancellor. I have every sympathy with him, because no Chancellor for a long time has been in as weak a position as that Chancellor of the Exchequer. He has been pipped at the post by the First Secretary, who takes priority over him. How he has paid for that premature bid for power last July! He is defied now in public by all the spending Ministers at the same time as he is trying to deal with Government expenditure and he is defied in public by the Secretary of State for Education and even by the Minister of Health outside the Cabinet. Why? Because he has not got the support of his Prime Minister.
But the Chancellor's failure is not his alone. It is that of the Government and in particular that of the Prime Minister. He was prepared to come to the Box and take the credit for the measures. The Press was to write how courageous of the Prime Minister to make this dramatic announcement, how courageous to knock the trade unions over the head, how courageous to see all these things through, but he is not prepared to answer this debate, those policies having failed to achieve their purposes.
In the seriousness of the situation what does the Chancellor of the Exchequer announce that he proposes to do? He comes to the Dispatch Box and the first thing that he says is that he proposes to do absolutely nothing. He started his speech by saying that he had no economic

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proposals of any kind to make in the seriousness of this situation. He has rejected devaluation. I have always said—and I disagree with the hon. Member for Ashton-under-Lyne (Mr. Sheldon)—that there is no rational justification for devaluation. Nor do I believe that a floating rate is the solution for Britain in the modern world. Certainly we cannot enter the European Economic Community with a floating rate. The Chancellor of the Exchequer welcomed the discussion on this subject. I think he called it therapeutic. I suggested to him two years ago that much the best way of dealing with the problem was to discuss it frankly and set out the reasons why he rejected it. We were immediately accused of selling Britain short, which was then the parrot cry of the right hon. Gentleman. It is a pity that he did not follow our advice earlier, together with much else that we have said.
He has rejected import controls. He has said that it is not in keeping with our international obligations and it demands more deflation. He is right. He has rejected more deflation. What is more, he has said that there is no hope of reducing taxation. Indeed, the right hon. Gentleman, with extraordinary frankness, went much further, because he said that unless there is increased growth or increased savings it will be necessary to increase taxation. Probably the most serious thing which the Chancellor of the Exchequer said in his speech today for the future of this country is that under the present Administration there is no hope of reduced taxation and, indeed, that there may well be increased taxation. That is the most serious thing he could have said on the proposals which he put forward for Government expenditure.
Let us glance at them for a moment. He said that expenditure this year would go up by 7·8 per cent. When asked if he would adhere to the 4¼ per cent. increase per year in Government expenditure he said that he would, because each of the three years afterwards was to be at 3 per cent. increase. So we have a simple sum: 7·8 plus three times three—nine—gives 16·8 which, divided by four, comes to 4¼ per cent. It is just too simple. We shall believe it only when we see it. The right hon. Gentleman said that the Government are to cut growth expenditure to a 3 per cent. increase a
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year, and, after their previous performance, only when we see that cutback shall we believe that the Chancellor is in earnest.
Today he has rejected all possibilities of incentives to companies or to individuals in the years of the Labour Government, and that is fundamentally the future of the British economy. What the right hon. Gentleman has done today is to repeat his closing Budget sentence—"Steady as she goes", those immortal words, except that she is not all that steady. Two men gave that order last April—the Chancellor of the Exchequer and the master of the "Torrey Canyon". On the second occasion the Government were saved by the wind, but the Chancellor had better not rely on the wind.
To emphasise the seriousness of the occasion and to say that he proposes to do nothing about it is not good enough, and I will tell the right hon. Gentleman why. Neither he nor the Government have faced the facts of the situation as they affect the balance of payments today. When the Chancellor says that he is to have a growth rate of 3 per cent. and a surplus of £200 million, which was his original objective— —
Mr. Callaghan: I never said that.
Mr. Heath: If he is to have a growth rate of 3 per cent., he has to have a surplus of £200 million and if he has to have a surplus at all, it has to be an increase on that. The Chancellor has never explained how, on past history with only the small changes which have been made, he has any possibility of achieving those figures.
Mr. Callaghan: Like my predecessor, I have consistently refused to give any balance of payments forecasts, because they are known to be inaccurate, and I should therefore like the right hon. Gentleman to make it clear that he is taking responsibility for the figure of £200 million which is not a figure which I have ever used.
Mr. Heath: I accept entirely that the Chancellor has never publicly announced that figure. It has always been the figure generally discussed for 1967. But what I am saying is that if he is to have a growth rate of 3 per cent., then he will have to have an increase of imports of, broadly speaking, £200 million, which he

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has to cover and he has never shown how that is to be achieved.
The second fact which he has never faced is that he has never acknowledged the benefits which he and the Government and the country have received from the improvement in the terms of trade. He had to be challenged by my right hon. Friend the Member for Barnet (Mr. Maudling) this afternoon before he even mentioned it in his analysis, and when asked for the figure he said that he could not carry such figures in his head. What an extraordinary situation that is, when the figure is £250 million, when it almost entirely accounts for the improvement in the trade position under that Government, the improvement in the terms of trade, combined with the lack of stockpiling because the country has been using up stocks which were accumulated under my right hon. Friend in 1964. So the right hon. Gentleman has not faced the second fact that the real benefit in the trade balance has come from the improvement in the terms of trade. They are fortuitous factors.
On the other hand, the fundamental position of exports has changed only for the worse. This has been stated by the President of the Board of Trade in answer to a Question when he said that exports under that Government were ½ per cent. less than they could have been expected to be under the performance of the last ten years. That is an official statement from the Board of Trade and that is the basic fact about the country's export position.
This afternoon, the Chancellor blamed the situation on the United States and Germany and gave that as the reason why exports were not expanding and why a surplus was not accumulating. Of course, neither he nor the Prime Minister gave Germany and the United States credit when exports were increasing. That, they said, was of course due to Government policy. Now that exports are declining they say that it is all due to the situation in those other countries.
What was the situation when exports increased and the Prime Minister boasted of them increasing in the United States? He said that our exports went up by 50 per cent. The imports of manufactured goods into the United States went up by
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59 per cent. as a whole, so that we got less than our share of the improved imports into the United States. That is the situation on imports.
These are the basic facts. One question that I want to ask is why, when we do have deflation, our exports do not expand in the same way as they do for example in the Federal Republic or Italy? This is one of the problems to which the Government ought to give more attention. One of the reasons is that manufacturers do not take account of the reduction in unit costs which can be brought about by increasing exports. The second reason, much more important, is that they have not got the export organisation in other countries to take advantage of the situation arising from deflation. They have not got the finance at their disposal to organise that export system. This is fundamental, and this is the reason why we have not gained, as have other countries, over deflation.
Looking at the other side of the coin, imports remain high. Imports remain high without an expanding economy. That is the seriousness of the situation. We always used to hear a great deal of what the Prime Minister would do in order to put this right, to remove the taint of the candy-floss society. He said:
"If I were President of the Board of Trade I should sit down and work out in detail from the Trade Returns all those imports which rise sharply when production increases. Then each would be examined to see whether we could, economically and competitively, find means of producing them in our own factories."
It is very interesting, because I have been looking at the figures for the imports, at which no doubt the Prime Minister or the President of the Board of Trade has been looking, in order to deal with this. What do I find? Without expansion, in the first two years of Labour Government, which was the import which trebled in quantity? It was flavoured and coloured sugar! Candy floss itself. There sits the master of the new candy-floss economy.
So, the problems which face the Chancellor and to which he has to produce an answer are first, whatever the level of spending at home, too high a proportion is covered by imports. Secondly, whatever the level of world trade, too small a share of it is gained by our exports. These are still the fundamental

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problems. Thirdly, whatever the demands for labour, costs of labour still rise too rapidly compared with productivity. Fourthly, whatever the demand for goods in this country, the prices rise too quickly and are still doing so. Fifthly, whatever the growth here, too little comes from increased productivity.
These are the problems which the Chancellor is facing, which he has not analysed, and to which he has put forward no solution. The Government now find themselves faced with two different ways of handling the economy. There is the Amendment on the Order Paper and there is the Tribune declaration, signed by 70 members of the party opposite.
What those hon. Members want is quite clear. They want nationalisation and sale of overseas private holdings; they want import controls, capital controls, heavier taxation, more nationalisation at home, less and less defence and they question the parity of the £. That is the very clear policy of the 70 hon. Gentlemen opposite.
The alternative is to follow the policy which we have put forward continuously on this side of the House. [Interruption.] This is an entirely different approach from that of the Government and of hon. Gentlemen below the Gangway. Are the Government to sit there doing nothing in this situation, or are they to move and in which case, in which direction? If past history means anything at all, it is quite clear in which direction they will go.
The defence policy announced last Thursday was nothing to do with the commitments of this country or with the defence forces which this country can justifiably support. It was connected only with 60 abstentions on the Government benches. If hon. Members below the Gangway opposite have the courage to abstain tonight they will find the Government moving in their direction faster than they think. I, for one, hope that the Chief Whip will be effective and that they will be in the Lobby, because the thought of moving towards that policy I believe would do more damage to this country than anything else I can think of. The Prime Minister himself has already done damage by his statement last week that the Government in-
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tend to take powers under an enabling Bill for the Government to go into any sector of British industry into which they want to go. Again, there was the statement made this afternoon by the Minister without Portfolio and its impact on Government expenditure.
I believe that the proposals put forward below the Gangway are wrong and that what is essential to deal with the problems which I have outlined to the Chancellor is a new framework for the economy of this country, and it is one which I believe will enable us to achieve our objectives. The first point in it is the reduction of taxation. We have said so constantly and repeatedly, but the Chancellor and the Government have now completely rejected it.
The argument of the Secretary of State for Education deserves examination, but it is a mistaken argument. He said that the Conservative Party believe that all private expenditure is better than public expenditure. That is a gross distortion of the argument. But what we do believe is that we must give individual people reasonable expectations in order to persuade them to make the effort which will allow greater public benefits to become possible. That is what we believe, and it is because the Government flatly refuse to recognise this fact—though individual hon. Members opposite recognise it—that they are unable to get the growth they want and therefore will not be able to carry out the social service policies to which they are committed.
There are others who say—as the Minister without Portfolio said—that this is only a question of Surtax payers. I ask the right hon. Gentleman to go and look at industry for himself. There he will find that this goes right down the line. In fact, it is those who are paying Surtax and running the great companies who say that much the most important thing is that the tax on those who are just taking on responsibilities, who are asked to be foremen or who are asked to move about the country on promotion, should be reduced. They, and the young technicians and the young executives, are working out what their expectation of income can be after taxation at certain ages and comparing it with what they would get in other countries, and they are

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forming part of the brain drain as a result. This is what underlines the whole of this policy.
Continuing on the subject of taxation for a moment, I recognise that the Chancellor of the Exchequer must have room for manoeuvre to reduce taxation—if he were willing to do so. He can get that through selectivity of social service benefits. What an extraordinary argument we heard this afternoon from the Minister without Portfolio—almost unbelievable coming from a member of the Treasury Bench of a Labour Government. It was the argument that the poor should not be helped because otherwise they would not go to work. In which century are we living with the right hon. Gentleman? It is Mr. Gradgrind all over again. Here we have the right hon. Gentleman, a hard-faced gentleman who has done well out of the Labour Party.
Look at the three years' work done by himself and his predecessor. What a fascinating account the Leader of the House will be able to give of it in his autobiography when it is published. What has this work produced? A further instalment of a universal increase of family allowances and more free school meals and free welfare milk for those who do not need it. That is what it has produced, costing the Chancellor of the Exchequer £83 million—nearly £60 million altogether—whereas children who are in real poverty could have been helped with £1 each at a cost of £23 million. The impact on those watching this country of the Prime Ministers' statement about further nationalisation and the Minister without Portfolio's statement of another £60 million on public expenditure at this time is indeed grave, and they are responsible.
This new framework must also include a reform of industrial relations and of trade union law in an industrial context, as well as a massive retraining of management and those who are redeployed, and, of course, a new machinery in Government contracting. Those are all things which are not being tackled by the Government.
So we see tonight that the Chancellor of the Exchequer refuses to change or to adapt his policies. He holds out no hope to this country for the future. The
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hon. Gentlemen below the Gangway do want to change and they know the direction that they want to move and I pray that the Prime Minister will not follow them. We on this side are prepared to put forward a new framework, but the Government will not accept that and therefore they can offer no way out of the serious situation which now faces this country. I recognise that a short-term solution is just as necessary as a medium-term one, but what the Chancellor ought to realise is that he will get his best short-term solution when he can give confidence to those abroad that the five fundamental problems which I have outlined are being tackled by the Government.
When the Prime Minister came back from the "Tiger" talks, he told the world, "God knows, we have tried." They have tried. They have tried on Rhodesia, they have tried to get economic growth, they have tried to keep down the cost of living, they have tried the National Plan and they have tried inflation. They have tried them all, and God knows, they have failed. That is why we are censuring them tonight.
9.32 p.m.
The President of the Board of Trade (Mr. Douglas Jay): Of all the July economic debates to which I have listened, and that is quite a few, I can remember none in which so lamentably few suggestions for any practical policy have come from the Opposition Front Bench. Indeed, the right hon. Member for Enfield, West (Mr. Iain Macleod) told us that he was opposed to any practical policy whatever and after the two speeches which we have heard from right of Gentlemen opposite the country will have no reason for believing that, if they had the chance, they would lead our economy in future anywhere other than they led it in the autumn of 1964.
It is, of course, extremely easy to say, "Let us have a balance of payments surplus and expansion at the same time," or, alternatively—this is what right hon. Gentlemen have been saying today—"Let us cut Government expenditure and taxation, but let us also spend more both on the social services and on defence." The right hon. Gentleman implied that he was opposed to the economies which the Government propose in defence east of

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Suez. The hon. Lady the member for Melton (Miss Pike), responding to the announcement today on family allowances, said that they were mean and inadequate; and, presumably, she intends to spend more. No one inside the House or outside, will be deceived into thinking that that is a serious attitude to the nation's problems.
Yet there are serious lessons to be learned from the experience of the last year, and there are facts which must be clearly understood if we are to steer through the difficulties ahead. The first fact is that a marked pause has occurred this year in the economic expansion of the great industrial countries, notably the United States and Germany, which has slowed down the rise in world trade during the last few months and affected the demand for our exports.
In the United States, expansion of demand and output has slowed in 1967 to under 2 per cent. a year and in Germany there has been an absolute fall. Indeed, total German exports have been falling for most of the year. The first quarter of this year was the worst in O.E.C.D. history for growth in the O.E.C.D. area. Both the United States and the United Kingdom have been compelled, by the inadequacy of the world credit system, to protect their reserves; and world trade, which had been rising by about 9 per cent. a year in value in 1965 and 1966, showed in the first quarter of 1967 a rise at an annual rate of only about 6 per cent. This, together with the temporary effect of the Middle East crisis, must inevitably—and we must face this—with higher oil costs, postpone full recovery in the United Kingdom balance of payments.
Secondly, we have learned in recent years that, until the United Kingdom economy is more thoroughly reorganised and we are exporting an even greater share of our output, uncontrolled expansion is bound to push up rapidly into deficit again. If one adopted today the policy the Opposition followed in the spring and summer of 1964, one would again plunge the country, in a matter of months, into a deficit from which it would take years to recover.
Thirdly, we have learned during the last four years that, though a too-deflated economy is not good for exports because
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unit costs rise, it is also true that excessive home demand can hold exports back. The right balance between these two hazards is exceedingly hard to achieve. But I have no doubt, on the evidence, that in the summers of 1964 and 1966 home demand reached an excessive level which was certainly frustrating exports. If people still question whether this can happen, they should study the experience of Germany in the past year, where a sharp disinflation, which has brought output down, has also generated a startling visible export surplus running in January-May of this year at an annual rate of about £1,500 million.
Fourthly, we should have learned that long-term growth, which is the Government's firm declared aim, can only be combined with an overseas surplus if the share of our output sold in export markets is steadily increased and the power to compete with imports steadily grows. More vigorous export promotion has already yielded results, and genuine import-saving is a long term aim of N.E.D.C., the "Little Neddies", the work of the Ministry of Technology, the support given to the shipbuilding computer and a host of other measures.
We must, therefore, stick resolutely to all those policies which are likely to achieve this basic improvement, and not be deterred by temporary checks in the growth in world trade, still less by erratic monthly movements in our own trade returns—such as the surprisingly good export figure of last December and January or the disappointing ones of last month. And industry must be prepared to innovate even more vigorously and find out what the outside world wants and go out to sell it—not just wait for others to buy what we produce.
Over the whole period since the war, Britain's overall export record is far better than many have yet realised. This record justifies the confident belief that, if present strategies are vigorously pursued, the rise will again be resumed as the upswing in the U.S. economy gains force this autumn. In 1966, British exports were two and a half times higher in volume than they had been in the first post-war year or in 1938—even though there had been no rise between 1900 and 1938. We are exporting today a higher proportion of our national output than

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any great industrial country except West Germany; and our exports per head are twice those of the United States and nearly three times those of Japan.
During the past two and a half years the Government have introduced a whole series of new export incentives, services and promotion measures, from the export rebate and far better E.C.G.D. facilities, which have been particularly valuable to ships and aircraft exports, to the rising programme of export missions, store promotions, British weeks and sales efforts of all kinds all over the world. We are still intensifying these, and will continue to do so. Thirty per cent. of our exports today are now covered by E.C.G.D.: and the total cover has risen from £1,081 million in 1963–64 to £1,576 million in 1966–67.
Thanks to all these measures and an excellent response by British industry, our exports, both in 1965 and 1966, increased by 7 per cent. in value and in the first half of 1967, despite the slower rise in world trade—exports have been 5 per cent. in value higher again than the average rate for 1966. It is also perfectly clear from the figures that since 1964 our exports have not merely done better absolutely, but better in relation to the rise in world trade than they did before. In 1964, world trade rose by 12½ per cent. in value, but British export by only 5 per cent. In the two years 1965 and 1966 world trade rose by 9 per cent. a year and British exports by 7 per cent. a year.
In the first half of this year, our exports have actually been 20 per cent. higher than in the disastrous six months of May-October 1964. This is equal— —
Sir C. Osborne: Are we exporting enough to pay our way? If we are, why have we got this crisis?
Mr. Jay: The hon. Gentleman knows perfectly well that we want to export at a greater rate than at present. I shall come to that point, but I am now giving the facts.
We are now exporting 20 per cent. more than in 1964, and that is equal to a rise in exports at a rate of about £1,000 million a year since three years ago. Our exports to Canada this year, for instance, have been 23 per cent. higher than they
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were in the six months to October, 1964; to the E.F.T.A. countries, 26 per cent. higher; to Japan, 30 per cent. higher; to the United States, 54 per cent. higher, and to both the Soviet Union and Eastern Europe 65 per cent. higher. Our exports to South Africa this year—and this may surprise some hon. and right hon. Members opposite—are actually 17 per cent. higher than the average rate for last year, and are an easy all-time record. Therefore, ever since the right hon. Gentleman the Leader of the Opposition left the Board of Trade, our exports have been rising faster than at any time when he was there, although world trade has been rising more slowly.
Let us look at some other aspects of the right hon. Gentleman's record. He told us in his economic speech at Carshalton on 8th July—which, I am sure, we have all been studying—that when he was at the Board of Trade he pursued what he called
"The first nation-wide programme of regional development …"
and promised that he would pursue in future a
"… proper programme of regional development".
Here, again, actions speak louder than words. It is, therefore, worth comparing the right hon. Gentleman's performance here with our own, for in my view it is vital to our economic future that employment should be spread out more evenly over the whole country.
Let us, therefore, look at the facts, and, first, at the balance of I.D.C. approvals in different parts of the country, since these are almost wholly under the control of the Board of Trade. During the three years up to October, 1964, the five underemployed regions—Scotland, the North-East, the North-West, Wales and the South-West—got about 40 per cent. of the total new development. During the year ended June, 1967, they got nearly 50 per cent. The Midlands and the South-East got about 50 per cent. in the year before October, 1964, and only 35 per cent. in the year up to June, 1967. The total of new factory space approved in Scotland, Wales, the North-East, the North-West and the South-West has actually been 35 per cent. greater—that is absolutely, in square feet—in the past year than under the right hon. Gentleman's administration at the Board of Trade.
Mr. Michael Heseltine Mr. Michael Heseltine (Tavistock) rose—
—
Hon. Members: Sit down.
Mr. Jay: In Scotland, Mr. Deputy Speaker— —
Mr. Deputy Speaker (Mr. Sydney Irving): Order. The right hon. Gentleman is obviously not giving way, so the hon. Gentleman must not persist.
Mr. Jay: In Scotland, since the right hon. Gentleman's time, the total has doubled, and in Wales it has actually trebled. Or take Board of Trade factory building alone, which is even more completely under the Government's control. [Interruption.]
Mr. Deputy Speaker: Order. The House gave an uninterrupted hearing to the Leader of the Opposition. I hope that it will extend the same courtesy to the right hon. Gentleman.
Mr. Jay: Hon. Members opposite do not like facts, as I have always known.
I was about to ask the House to consider Board of Trade factory building alone, which is even more completely under the Government's control. The total started in development areas in the year ended 30th September, 1964, was 1,483,500 sq. ft. and the total in the year ended 30th June, 1967, was 2,742,750 sq. ft. This is a rise of 85 per cent. since the right hon. Gentleman was responsible. We have done 85 per cent. better than him, even though I think that his Ministerial title was about three times as long.
Take the advance factory programmes, which we have cited particularly in coal mining areas. During the 13 years under Tory control, the total of advance factories launched in development areas was 49, or fewer than four a year. Over the past two and a half year the total has been, 124, or 50 a year, of which 35 have already been completed, 45 are now building, and 28 are already allocated.
Take the right hon. Gentleman's figure of capital expenditure on factory building and industrial estate development in development areas. The total for 1964–65, including grants for private factory building, was £11·3 million. The total expenditure last year was £24·1 million,
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and already for the first quarter of the present financial year it has been £7·7 million, or a rate of about £30 million a year.
These enlightening facts will show what the right hon. Gentleman means by "proper programme of regional development".
Mr. Stanley R. McMaster Mr. Stanley R. McMaster (Belfast, East) rose—
Hon. Members: Sit down.
Mr. Jay: The best tribute—
Mr. McMaster: On a point of order.Mr. McMaster: On a point of order.
Mr. Jay: The best tribute—
Mr. Deputy Speaker: Order. I hope that the hon. Member for Belfast, East (Mr. McMaster) will bring himself into order before he raises a point of order.
Mr. McMaster: On a point of order, Mr. Deputy Speaker. I have sat right through this debate, as have my hon. Friends representing divisions in Scotland and Northern Ireland, where unemployment is deplorably high. Is it to be assumed that we are accepting these facts?
Mr. Deputy Speaker: That is not a point of order. I hope that the hon. Gentleman will listen to the debate.
Mr. Jay: I was saying, Mr. Deputy Speaker, that the best tribute to our regional policies is that, despite a rapid decline in coal mining employment, which has been just over 70,000 down in the past three years in Scotland, the North-East, and Wales alone, unemployment since July a year ago has risen much less in the five Northern and Western Regions than in the Midlands and the South-East.
Actually, from July last year to July this year the rise in the five Northern and Western Regions was, as a percentage, only about half that in the Midlands and the South-East. The fact is that, but for the policies pursued in the past three years, the drop of just over 70 per cent. in mining employment would have meant a really disastrous rise in unemployment in these areas.
Nor have right hon. Members opposite much to boast about if their record on social services and public investment is compared with the record of the past two and a half years, for the truth is that,

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simultaneously with the improvement in the balance of payments since 1964, a far larger expansion of social expenditure and investment has been achieved than seems yet to be fully realised, perhaps even in the House.
So far from there having been any general cut, there has been a most remarkable increase. The total of all social security payments has risen from £2,047 million in the financial year 1964–65 to £2,826 million in 1967–68—a rise of nearly £800 million, or 40 per cent. in the three years. This increase of £800 million includes all pensions, family allowances, national assistance and supplementary benefits, and industrial injury benefits.
Look at housing. During the two and a half years up to October, 1964, 850,000 houses were completed. During the same period since October, 1964, 1 million houses have been completed. The right hon. Member for Birmingham, Handsworth (Sir E. Boyle) this afternoon claimed that he and his right hon. Friends had approved various programmes just before the General Election. What we have done is to put programmes into effect. I therefore give now some figures not of programmes approved, but of results actually achieved.
Take education. During the academic year 1963–64 there were 141,000 students in universities and colleges of advanced technology. This year there are 187,000. The number of primary schools completed has risen from 343 in 1963, to 472 in 1966, and the number of teachers in initial training from 64,370 in 1963–64 to 97,658 in the present academic year.
So, also, with health and hospitals. Capital expenditure on hospitals has risen from £162 million in the three years ending 1964–65 to £257 million in the current three years, and the number of hospital beds completed has risen from 6,797 in the two years before September, 1964, to 9,375 in the two years since that date.
As part of those improvements to date, the standard rate of all National Insurance, pensions and benefits is, as the House knows, to be raised this autumn by a further 10s. This means a total rise since October, 1964, from 67s. 6d. to 90s., which is far greater than the rise in the cost of living over the period.
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Not all of this seems to be realised by those who have been talking and writing somewhat wildly in the last week or two about what they call "cuts" in social service expenditure. Not merely have there been no general cuts in services: but none is in prospect. All that is in discussion is whether, in the period between now and 1971, Government expenditure shall rise at this or that rate and what shall be the rate of increase of the individual services.
We all know that if the country is to pay its way in the world, and balance its overseas payments, and if personal consumption is to rise now, obviously any rational policy must relate the annual rise in Government expenditure both to the resources we have got, and to the priority needs of the different claimants.
After listening to the two right hon. Gentlemen opposite, what sort of alternative policy is the Opposition offering to us? First, all direct taxes are to be reduced; and all sorts of social expenditure, as well as the defence bill—including aircraft carriers—are to be increased at the same time.
I quote from the speech of the Leader of the Opposition at Carshalton on 8th July:
"We will seek to reduce all direct tax rates".
But apparently not increase indirect tax rates. And the right hon. Gentleman "will cut public expenditure". But, at the same time, he says that he will
"improve the infrastructure of the regions by more effective communications, better housing, schools and public works, together with greater facilities for retraining manpower etc."
More expenditure, but lower taxes is the policy of the Opposition.
On incomes and prices, the Opposition's new policy is to apply a squeeze to the public sector and leave the private sector to chance—which, of course, is grossly unfair. This is precisely what was so much resented in the policy of the right hon. and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd).
On import control, the Opposition's record is as follows. They prepared the import surcharge while they were in power. When we first introduced it, the right hon. Gentleman the Member for Barnet (Mr. Maudling) approved it. Then the right hon. Gentleman the Member for

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Bexley (Mr. Heath) condemned it. Then they said that it was having no effect on imports at all; and in his Carshalton speech this month the right hon. Gentleman the Leader of the Opposition told us that its removal is one cause of the rise in imports this year.
Finally, on export promotion, the Opposition have put forward absolutely no shred or iota of a practical idea, either today or at any other time. I have searched the right hon. Gentleman's exceedingly important Charshalton speech, right through the copies sent out by the Conservative Central Office, in vain for any suggestion of export promotion whatever. So much for the utter failure of right hon. Gentlemen opposite to contribute anything practical to the serious debate about this country's economic future.
To those others who have expressed anxiety today about the real prospect for the months immediately ahead. I would say this. I think that they underrate the effects of the whole series of reflationary measures already taken by the Government since last autumn. Since then, there have been three reduction in Bank Rate, a rise in the rate of investment grant for the whole country, two accelerations in the payment of investment grant, a Budget which increased expenditure without increasing taxation and, most important of all, a major relaxation last month in the hire-purchase restrictions on motor car sales. The latter represented the complete reversal of the most potent single restraint imposed by the measures of July a year ago.
On investment grants. £58 million has already been paid to industry by 20th July, £28 million of it in development areas. The full effect of all these measures, particularly the last hire-purchase relaxation, has not yet been felt, but it is bound to be felt over the coming months. At the same time, public investment has risen strongly and is likely to be 10 per cent. higher this financial year than last,
and local authority house building has actually been over 20 per cent. greater in real terms this year than the 1964 monthly average. The rise in both pensions and family allowances this autumn will add to purchasing power and demand still further, and so will the regional employment premium.
With these internal measures directed both to investment and consumer spending, strong expansionary forces will be working at home in the coming months, and, with the recovery in the United States economy this autumn foreseen by O.E.C.D., we can reasonably expect the rise in exports of the past two years to be resumed. Over a longer period the Kennedy Round tariff cut of 30 per cent. so so over a very wide field offers a tremendous opportunity to British exports, which it is essential to seize because they offer an opportunity to imports, also.
Mr. Heath: I am grateful to the right hon. Gentleman for giving way. The Chancellor of the Exchequer said that the President of the Board of Trade would announce new economic measures. May we be told when we shall hear them?
Mr. Jay: In addition to what I have already said, I will say this. As a Government, we shall keep up the export promotion campaign by every possible method and take further measures to stimulate domestic demand as and when they are needed. But we shall not return to the free-for-all slide into deficit and disaster which temporarily damaged the country and permanently discredited the Tory Party back in 1964. [Interruption.]
Mr. Speaker: Order. It is not end of term yet.
Question put:—
That this House has no confidence in the economic policies of Her Majesty's Government.
The House divided: Ayes 240, Noes 333.

Division No. 484.]

AYES

[10.0 p.m.

Alison, Michael (Barkston Ash)

Beamish, Col. Sir Tufton

Bossom, Sir Clive

Allason, James (Hemel Hempstead)

Bell, Ronald

Boyd-Carpenter, Rt. Hn. John

Astor, John

Bennett, Sir Frederic (Torquay)

Boyle, Rt. Hn. Sir Edward

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

Bennett, Dr. Reginald (Gos. & Fhm)

Braine, Bernard

Awdry, Daniel

Berry, Hn. Anthony

Brewis, John

Baker, W. H. K.

Biffen, John

Brinton, Sir Tatton

Balniel, Lord

Birch, Rt. Hn. Nigel

Bromley-Davenport, Lt.-Col. Sir Walter

Barber, Rt. Hn. Anthony

Black, Sir Cyril

Brown, Sir Edward (Bath)

Batsford, Brian

Body, Richard

Bruce-Gardyne, J.

Bryan, Paul

Heath, Rt. Hn. Edward

Osborn, John (Hallam)

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

Heseltine, Michael

Osborne, Sir Cyril (Louth)

Buck, Antony (Colchester)

Higgins, Terence L.

Page, Graham (Crosby)

Bullus, Sir Eric

Hiley, Joseph

Page, John (Harrow, W.)

Campbell, Gordon

Hill, J. E. B.

Pardoe, John

Carlisle, Mark

Hirst, Geoffrey

Pearson, Sir Frank (Clitheroe)

Carr, Rt. Hn. Robert

Hobson, Rt. Hn. Sir John

Percival, Ian

Cary, Sir Robert

Hogg, Rt. Hn. Quintin

Peyton, John

Channon, H. P. G.

Holland, Philip

Pike, Miss Mervyn

Chichester-Clark, R.

Hordern, Peter

Pink, R. Bonner

Clegg, Walter

Hornby, Richard

Pounder, Rafton

Cooke, Robert

Hunt, John

Powell, Rt. Hn. J. Enoch

Cooper-Key, Sir Neill

Hutchison, Michael Clark

Price, David (EastNeigh)

Cordle, John

Iremonger, T. L.

Prior, J. M. L.

Corfield, F. V.

Irvine, Bryant Godman (Rye)

Pym, Francis

Costain, A. P.

Jenkin, Patrick (Woodford)

Quennell, Miss J. M.

Craddock, Sir Beresford (Spelthorne)

Jennings, J. C. (Burton)

Ramsden, Rt. Hn. James

Crawley, Aidan

Johnson Smith, G. (E. Grinstead)

Rawlinson, Rt. Hn. Sir Peter

Crouch, David

Jones, Arthur (Northants, S.)

Rees-Davies, W. R.

Crowder, F. P.

Jopling, Michael

Renton, Rt. Hn. Sir David

Cunningham, Sir Knox

Joseph, Rt. Hn. Sir Keith

Ridley, Hn. Nicholas

Currie, G. B. H.

Kaberry, Sir Donald

Ridsdale, Julian

Dalkeith, Earl of

Kershaw, Anthony

Rippon, Rt. Hn. Geoffrey

Dance, James

Kimball, Marcus

Robson Brown, Sir William

d'Avigdor-Goldsmid, Sir Henry

King, Evelyn (Dorset, S.)

Rodgers, Sir John (Sevenoaks)

Dean, Paul (Somerset, N.)

Kirk, Peter

Rossi, Hugh (Hornsey)

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

Kitson, Timothy

Royle, Anthony

Digby, Simon Wingfield

Knight, Mrs. Jill

Russell, Sir Ronald

Dodds-Parker, Douglas

Lambton, Viscount

St. John-Stevas, Norman

Doughty, Charles

Lancaster, Col. C. G.

Sandys, Rt. Hn. D.

Douglas-Home, Rt. Hn. Sir Alec

Langford-Holt, Sir John

Scott, Nicholas

Drayson, G. B.

Legge-Bourke, Sir Harry

Sharples, Richard

du Cann, Rt. Hn. Edward

Lewis, Kenneth (Rutland)

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

Eden, Sir John

Lloyd, Rt. Hn. Geoffrey (Sut'n C'd field)

Smith, John

Emery, Peter

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

Stainton, Keith

Errington, Sir Eric

Longden, Gilbert

Steel, David (Roxburgh)

Eyre, Reginald

Loveys, W. H.

Stodart, Anthony

Farr, John

Lubbock, Eric

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

Fisher, Nigel

McAdden, Sir Stephen

Summers, Sir Spencer

Fletcher-Cooke, Charles

MacArthur, Ian

Tapsell, Peter

Fortescue, Tim

Maclean, Sir Fitzroy

Taylor, Sir Charles (Eastbourne)

Foster, Sir John

Macleod, Rt. Hn. Iain

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

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

McMaster, Stanley

Teeling, Sir William

Galbraith, Hon. T. G.

Macmillan, Maurice (Farnham)

Temple, John M.

Giles, Rear-Adm. Morgan

Maddan, Martin

Thatcher, Mrs. Margaret

Gilmour, Sir John (Fife, E.)

Maginnis, John E.

Thorpe, Rt. Hn. Jeremy

Glover, Sir Douglas

Marples, Rt. Hn. Ernest

Tilney, John

Glyn, Sir Richard

Marten, Neil

Turton, Rt. Hn. R. H.

Godber, Rt. Hn. J. B.

Maude, Angus

van Straubenzee, W. R.

Goodhew, Victor

Maudling, Rt. Hn. Reginald

Vaughan-Morgan, Rt. Hn. Sir John

Gower, Raymond

Mawby, Ray

Vickers, Dame Joan

Grant, Anthony

Maxwell-Hyslop, R. J.

Wainwright, Richard (Colne Valley)

Grant-Ferris, R.

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

Walker, Peter (Worcester)

Gresham Cooke, R.

Mills, Peter (Torrington)

Walker-Smith, Rt. Hn. Sir Derek

Grieve, Percy

Mills, Stratton (Belfast, N.)

Wall, Patrick

Griffiths, Eldon (Bury St. Edmunds)

Miscampbell, Norman

Ward, Dame Irene

Grimond, Rt. Hn. J.

Mitchell, David (Basingstoke)

Weatherill, Bernard

Gurden, Harold

Monro, Hector

Webster, David

Hall, John (Wycombe)

Montgomery, Fergus

Wells, John (Maidstone)

Hall-Davis, A. G. F.

Morgan, Geraint (Denbigh)

Whitelaw, Rt. Hn. William

Hamilton, Marquess of (Fermanagh)

Morrison, Charles (Devizes)

Wills, Sir Gerald (Bridgwater)

Hamilton, Michael (Salisbury)

Mott-Radclyffe, Sir Charles

Wilson, Geoffrey (Truro)

Harris, Frederic (Croydon, N. W.)

Munro-Lucas-Tooth, Sir Hugh

Wolrige-Gordon, Patrick

Harris, Reader (Heston)

Murton, Oscar

Wood, Rt. Hn. Richard

Harrison, Brian (Maldon)

Nabarro, Sir Gerald

Woodnutt, Mark

Harrison, Col. Sir Harwood (Eye)

Neave, Airey

Worsley, Marcus

Harvey, Sir Arthur Vere

Nicholls, Sir Harmar

Wright, Esmond

Harvie Anderson, Miss

Noble, Rt. Hn. Michael

Wylie, N. R.

Hastings, Stephen

Nott, John

Younger, Hn. George

Hawkins, Paul

Onslow, Cranley

Hay, John

Orr, Capt. L. P. S.

TELLERS FOR THE AYES:

Heald, Rt. Hn. Sir Llonel

Orr-Ewing, Sir Ian

Mr. R. W. Elliott and

Mr. Jasper More.

NOES

Abse, Leo

Ashley, Jack

Beaney, Alan

Albu, Austen

Atkins, Ronald (Preston, N.)

Bellenger, Rt. Hn. F. J.

Allaun, Frank (Salford, E.)

Atkinson, Norman (Tottenham)

Bence, Cyril

Alldritt, Walter

Bacon, Rt. Hn. Alice

Benn, Rt. Hn. Anthony Wedgwood

Allen, Scholefield

Bagier, Gordon A. T.

Bennett, James (G'gow. Bridgeton)

Anderson, Donald

Barnes, Michael

Bidwell, Sydney

Archer, Peter

Barnett, Joel

Binns, John

Armstrong, Ernest

Baxter, William

Bishop, E. S.

192

193

Blackburn, F.

Galpern, Sir Myer

McMillan, Tom (Glasgow, C.)

Blenkinsop, Arthur

Gardner, Tony

McNamara, J. Kevin

Boardman, H.

Garrett, W. E.

MacPherson, Malcolm

Booth, Albert

Ginsburg, David

Mahon, Peter (Preston, S.)

Boston, Terence

Gordon Walker, Rt. Hn. P. C.

Mahon, Simon (Bootle)

Bottomley, Rt. Hn. Arthur

Gourlay, Harry

Mallalieu, E. L. (Brigg)

Bowden, Rt. Hn. Herbert

Gray, Dr. Hugh (Yarmouth)

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

Boyden, James

Greenwood, Rt. Hn. Anthony

Manuel, Archie

Braddock, Mrs. E. M.

Gregory, Arnold

Mapp, Charles

Bradley, Tom

Griffiths, David (Rother Valley)

Marquand, David

Bray, Dr. Jeremy

Griffiths, Rt. Hn. James (Lianelly)

Marsh, Rt. Hn. Richard

Brooks, Edwin

Griffiths, Will (Exchange)

Mason, Roy

Broughton, Dr. A. D. D.

Gunter, Rt. Hn. R. J.

Maxwell, Robert

Brown, Rt. Hn. George (Belper)

Hamilton, James (Bothwell)

Mayhew, Christopher

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

Hamilton, William (Fife, W.)

MeNish, Robert

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

Hamling, William

Mendelson, J. J.

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

Harper, Joseph

Mikardo, Ian

Buchan, Norman

Harrison, Walter (Wakefield)

Millan, Bruce

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

Hart, Mrs. Judith

Miller, Dr. M. S.

Butler, Herbert (Hackney, C.)

Haseldine, Norman

Milne, Edward (Blyth)

Butler, Mrs. Joyce (Wood Green)

Hattersley, Roy

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

Callaghan, Rt. Hn. James

Hazell, Bert

Molloy, William

Cant, R. B.

Healey, Rt. Hn. Denis

Moonman, Eric

Carmichael, Neil

Henig, Stanley

Morgan, Elystan (Cardiganshire)

Carter-Jones, Lewis

Herbison, Bt. Hn. Margaret

Morris, Alfred (Wythenshawe)

Castle, Rt. Hn. Barbara

Hilton, W. S.

Morris, Charles R. (Openshaw)

Coe, Denis

Hobden, Dennis (Brighton, K'town)

Morris, John (Aberavon)

Coleman, Donald

Horner, John

Moyle, Roland

Concannon, J. D.

Houghton, Rt. Hn. Douglas

Mulley, Rt. Hn. Frederick

Conlan, Bernard

Howarth, Harry (Wellingborough)

Murray, Albert

Corbet, Mrs. Freda

Howarth, Robert (Bolton, E.)

Neal, Harold

Craddock, George (Bradford, S.)

Howell, Denis (Small Heath)

Newens, Stan

Hoy, James

Cronin, John

Huckfield, L.

Noel-Baker, Francis (Swindon)

Crosland, Rt. Hn. Anthony

Hughes, Rt. Hn. Cledwyn (Anglesey)

Norwood, Christopher

Crossman, Rt. Hn. Richard

Hughes, Emrye (Ayrshire, S.)

Oakes, Gordon

Cullen, Mrs. Alice

Hughes, Hector (Aberdeen, N.)

Ogden, Eric

Darling, Rt. Hn. George

Hughes, Roy (Newport)

O'Malley, Brian

Davidson, Arthur (Accrington)

Hunter, Adam

Oram, Albert E.

Davies, Dr. Ernest (Stretford)

Hynd, John

Orbach, Maurice

Davies, G. Elfed (Rhondda, E.)

Irvine, A. J. (Edge Hill)

Oswald, Thomas

Davies, Ednyfed Hudson (Conway)

Jackson, Peter M. (High Peak)

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

Davies, Harold (Leek)

Janner, Sir Barnett

Owen, Will (Morpeth)

Davies, Ifor (Gower)

Jay, Rt. Hn. Douglas

Padley, Walter

Davies, S. O. (Merthyr)

Jeger, George (Goole)

Page, Derek (King's Lynn)

Delargy, Hugh

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

Paget, R. T.

Dell, Edmund

Jenkins, Hugh (Putney)

Palmer, Arthur

Dempsey, James

Jenkins, Rt. Hn. Roy (Stechford)

Pannell, Rt. Hn. Charles

Dewar, Donald

Johnson, Carol (Lewisham, S.)

Park, Trevor

Diamond, Rt. Hn. John

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

Parker, John (Dagenham)

Dickens, James

Jones, Dan (Burnley)

Parkyn, Brian (Bedford)

Dobson, Ray

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

Pavitt, Laurence

Doig, Peter

Jones, J. Idwal (Wrexham)

Pearson, Arthur (Pontypridd)

Donnelly, Desmond

Jones, T. Alec (Rhondda, West)

Peart, Rt. Hn. Fred

Driberg, Tom

Judd, Frank

Pentland, Norman

Dunn, James A.

Kelley, Richard

Perry, Ernest G. (Battersea, S.)

Dunnett, Jack

Kenyon, Clifford

Perry, George H. (Nottingham, s.)

Dunwoody, Mrs. Gwyneth (Exeter)

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

Prentice, Rt. Hn. R. E.

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

Kerr, Russell (Feltham)

Price, Christopher (Perry Bar)

Eadie, Alex

Lawson, George

Price, Thomas (Westhoughton)

Edelman, Maurice

Leadbitter, Ted

Price, William (Rugby)

Edwards, Rt. Hn. Ness (Caerphilly)

Lee, Rt. Hn. Frederick (Newton)

Probert, Arthur

Edwards, Robert (Bilston)

Lee, Rt. Hn. Jennie (Cannock)

Pursey, Cmdr. Harry

Edwards, William (Merioneth)

Lee, John (Reading)

Randall, Harry

Ellis, John

Lestor, Miss Joan

Rankin, John

English, Michael

Lever, Harold (Cheetham)

Rees, Merlyn

Ennals, David

Lever, L. M. (Ardwick)

Reynolds, G. W.

Ensor, David

Lewis, Arthur (W. Ham, N.)

Rhodes, Geoffrey

Evans, Albert (Islington, S. W.)

Lewis, Ron (Carlisle)

Richard, Ivor

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

Lipton, Marcus

Roberts, Albert (Normanton)

Faulds, Andrew

Lomas, Kenneth

Roberts, Goronwy (Caernarvon)

Fernyhough, E.

Loughlin, Charles

Roberts, Gwilym (Bedfordshire, S.)

Finch, Harold

Luard, Evan

Robertson, John (Paisley)

Fitch, Alan (Wigan)

Lyon, Alexander W. (York)

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

Fitt, Gerard (Belfast, W.)

Lyons, Edward (Bradford, E.)

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

Fletcher, Ted (Darlington)

Mabon, Dr. J. Dickson

Rodgers, William (Stockton)

Floud, Bernard

McBride, Neil

Rogers, George (Kensington, N.)

Foley, Maurice

MacColl, James

Rose, Paul

Foot, Sir Dingle (Ipswich)

MacDermot, Niall

Ross, Rt. Hn. William

Foot, Michael (Ebbw Vale)

Macdonald, A. H.

Rowland, Christopher (Meriden)

Ford, Ben

McGuire, Michael

Rowlands, E. (Cardiff, N.)

Forrester, John

McKay, Mrs. Margaret

Ryan, John

Fowler, Gerry

Mackenzie, Gregor (Rutherglen)

Shaw, Arnold (Ilford, S.)

Fraser, John (Norwood)

Mackintosh, John P.

Sheldon, Robert

Freeson, Reginald

MacMillan, Malcolm (Western Isles)

Shinwell, Rt. Hn. E.

194

195

Shore, Peter (Stepney)

Taverne, Dick

Wigg, Rt. Hn. George

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

Thomas, George (Cardiff, W.)

Wilkins, W. A.

Short, Mrs. Renée (W'hampton, N. E.)

Thomson, Rt. Hn. George

Willey, Rt. Hn. Frederick

Silkin, Rt. Hn. John (Deptford)

Thornton, Ernest

Williams, Alan (Swansea, W.)

Silkin, Hn. S. C. (Dulwich)

Tinn, James

Williams, Alan Lee (Hornchurch)

Silverman, Julius (Aston)

Tomney, Frank

Williams, Clifford (Abertillery)

Silverman, Sydney (Nelson)

Tuck, Raphael

Williams, Mrs. Shirley (Hitchin)

Skeffington, Arthur

Urwin, T. W.

Willis, George (Edinburgh, E.)

Slater, Joseph

Wainwright, Edwin (Dearne Valley)

Wilson, Rt. Hn. Harold (Huyton)

Small, William

Walden, Brian (Alf Saints)

Wilson, William (Coventry, S.)

Snow, Julian

Walker, Harold (Doncaster)

Winnick, David

Spriggs, Leslie

Wallace, George

Winterbottom, R. E.

Steele, Thomas (Dunbartonshire, W.)

Watkins, David (Consett)

Woodburn, Rt. Hn. A.

Stewart, Rt. Hn. Michael

Watkins, Tudor (Brecon & Radnor)

Woof, Robert

Stonehouse, John

Weitzman, David

Wyatt, Woodrow

Strauss, Rt. Hn. G. R.

Wellbeloved, James

Yates, Victor

Summerskill, Hn. Dr. Shirley

Wells, William (Walsall, N.)

Swain, Thomas

Whitaker, Ben

TELLERS FOR THE NOES:

Swingler, Stephen

White, Mrs. Eirene

Mr. William Howie and

Symonds, J. B.

Whitlock, William

Mr. John McCann.

CIVIL AND DEFENCE VOTES
Mr. Speaker: In accordance with Standing Order No. 18 I am now entitled, if I have the assent of the House, to put a single Question on the total sum of all the Civil and Defence Votes for 1967–68.
I shall, in addition, have to put three separate Questions on the three Motions relating to Navy, Army and Air Services Expenditure, 1965–66.
Mr. SPEAKER then proceeded, pursuant to paragraphs (6) and (7) of Standing Order No. 18 (Business of Supply), to put forthwith the Question, That the total amount of the Votes outstanding for the year 1967–68 be granted out of the Consolidated Fund for the services defined in those Votes.

CIVIL AND DEFENCE ESTIMATES AND SUPPLEMENTARY ESTIMATES, 1967–68
Question,
That a sum, not exceeding £5,851,298,950, be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges for Civil and Defence Services for the year ending on the 31st day of March, 1968, as set out on the Order Paper, put and agreed to.
Mr. SPEAKER then proceeded, pursuant to paragraph (6) of Standing Order No. 18 (Business of Supply), to put severally the Questions on Motions relating to Navy, Army and Air Services Expenditure.

NAVY EXPENDITURE, 1965–66
Question,
That sanction be given to the application of the sum of £2,335,388 15s. 9d. out of surpluses arising out of certain Votes for Navy Services for the year ended 31st March, 1966, to defray
196
expenditure in excess of that appropriated to certain other Votes for those Services and to meet deficits in receipts not offset by savings in expenditure from the respective Votes as set out in and temporarily authorised in the Treasury Minute of 1st February, 1967 (H.C. 332) and reported upon by the Committee of Public Accounts in their Fourth Report (H.C. 529), put and agreed to.

ARMY EXPENDITURE, 1965–66
Question,
That sanction he given to the application of the sum of £7,366,160 13s. out of surpluses arising out of certain Votes for Army Services for the year ended 31st March, 1966, to defray expenditure in excess of that appropriated to certain other Votes for those Services and to meet deficits in receipts not offset by savings in expenditure from the respective Votes as set out in and temporarily authorised in the Treasury Minute of 30th January, 1967 (H.C. 331) and reported upon by the Committee of Public Accounts in their Fourth Report (H.C. 529), put and agreed to.

AIR SERVICES EXPENDITURE, 1965–66
Question,
That sanction be given to the application of the sum of £4,835,458 19s. 7d. out of surpluses arising out of certain Votes for Air Services for the year ended 31st March, 1966, to defray expenditure in excess of that appropriated to certain other Votes for those Services and to meet deficits in receipts not offset by savings in expenditure from the respective Votes as set out in and temporarily authorised in the Treasury Minute of 24th January, 1967 (H.C. 304) and reported upon by the Committee of Public Accounts in their Fourth Report (H.C. 529), put and agreed to.
Bill ordered to be brought in upon the Resolution relating to Civil and Defence Estimates by the Chairman of Ways and Means, the Chancellor of the Exchequer, and Mr. MacDermot.

CONSOLIDATED FUND (APPROPRIATION) (No. 2) BILL
Bill to apply a sum out of the Consolidated Fund to the service of the year
198
ending on 31st March, 1968, and to appropriate further supplies granted in this Session of Parliament, presented accordingly and read the First time; to be read a Second time Tomorrow and to be printed. [Bill 305]

BUSINESS OF THE HOUSE
Ordered.
That the Proceedings on the Consideration of the Lords Amendments to the Water (Scotland) Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Howie.]

SOCIAL SECURITY (SUPPLEMENTARY BENEFIT)
10.18 p.m.
The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Charles Loughlin): I beg to move,
That the Supplementary Benefit (Determination of Requirements) Regulations 1967, a draft of which was laid before this House on 28th June, be approved.
The Regulations are relatively self-explanatory. I do not propose to make a statement at this stage. If hon. Members wish to put questions, I shall be glad to ask leave to reply later.
10.19 p.m.
Mr. Bernard Braine: I shall not detain the House unduly, partly because we have a deal of business yet to transact and partly because we on this side support the improvements in supplementary benefit authorised by these Regulations. As I understand, the improvements are timed to come into effect at the same time as the increase in National Insurance benefits and contributions authorised under the National Insurance Bill, which we considered recently.
I am sure that the Parliamentary Secretary would be the first to agree that we did not have a lengthy discussion on that Measure. We on this side of the House, paralleled by hon. Gentlemen on the other side, did our best to get the Bill through as quickly as possible. Therefore, he will understand when I say that it is useful to both sides of the House to have this opportunity of discovering how those who will be entitled to increases in supplementary benefit are affected by the Government's proposals. It is all the more important that we should have an explanation at a time when there is increasing public interest in, and scrutiny of, our social security arrangements.
There may be a perfectly good explanation, but there is one query which
200
I should like to put to the Parliamentary Secretary. The new rates of supplementary benefit are to be paid as from the 30th October, at the same time as the changes proposed in National Insurance benefits. However, it is odd that those who draw supplementary benefit and, by virtue of that fact, are clearly most in need, will get a smaller increase. National Insurance benefits will be increased by 8s. for a single person and 16s. for a married couple and supplementary benefits will be increased by only 5s. and 8s. respectively.
At a time when there is so much talk in social service circles of selectivity—and we had an expression of this earlier today—it seems strange that the principal seems to be operating here against, rather than for, the poorest of our people, especially pensioners. Some will riot even get the 5s. and the 8s. increase because of the application of the wage stop. I should like to ask the Parliamentary Secretary, when he comes to reply, to tell us how many people are affected in that way.
I do not wish to detain the House, but all of us have illustrations of the way in which the present principle of universality seems to operate to the detriment of a number of our constituents. I had a letter the other day from one of my constituents who said that her husband was badly disabled and is now capable of working only at a limited form of employment. His normal wage is £9 11s. 8d. per week. From this amount must be deducted the standard insurance stamp, the special sickness stamp and the usual expenses involved in a handicapped person going to work. She says:
"The position seems to be ludicrous, but he is not entitled to any supplementary allowance from the Ministry of Social Security to bring his income up to the level of an employed person, because he is in full-time employment."
She adds, rather sadly:
"He would, in fact, be much better off financially if he were willing to be unemployed."
But if he were unemployed the wage stop would reduce his supplementary benefit.
I am wondering how many people there are like this. Here is somebody

201
badly disabled who, by virtue of that disablement, is earning less than he would if he were physically fit and, because of this, is limited in the amount of supplementary benefit that he can claim when he is unemployed. I am not trying to make a party point—the point has been expressed from time to time on both sides of the House—but it seems hard that some of the poorest and most deserving of our people are left out of these arrangements.
As for those who are eligible to receive the new rates of supplementary benefit, it may be that the discrepancy that I have mentioned as between supplementary benefit, on the one hand, and National Insurance benefits, on the other, is easily accounted for. The House will recall that the supplementary benefit was increased in May last year. I agree that the Ministry of Social Security Act, 1966, also provided a 9s. addition to the supplementary allowance for those who are of pensionable age and have been in receipt of that allowance for two years.
However, there is a psychological point of some substance here and this is the moment to make it. Some people may well wonder why the supplementary benefit increase is not the same as that for the basic insurance pension. I would not have raised the point but for the fact that the Parliamentary Secretary's colleague, the hon. Member for Chester-le-Street (Mr. Pentland), said in December, 1964:
"In recent years, both sides of the House have considered it very desirable that the increases"
—that is, the increases in national insurance rates and in the then National Assistance—
"should operate at the same time in order to avoid the confusion and misunderstandings which occur if … National Assistance allowances which have been increased have to be reduced again after a short time for those receiving the National Insurance benefits. Those people would naturally feel disappointed and frustrated when they found that they received no advantage, or less than the full advantage, from National Insurance increases."—[OFFICIAL REPORT, 15th December, 1964; Vol. 704, c. 323.]
In 1963, the right hon. Member for Sowerby (Mr. Houghton), who speaks on these matters with such authority, made the point very strongly when on an occasion when there had been increases in
202
both of National Insurance and National Assistance he said:
"I think that it is agreed, by what the Minister is now doing and by what has been done on every previous occasion, that, when National Insurance goes up, National Assistance must go up. The question is not whether it goes up at the same time—because it does and has done—but whether it is to go up by the same amount, which it sometimes has and sometimes has not."
The right hon. Gentleman went on to say how odd this would strike the ordinary man in the street when he would naturally expect to get the same rise in his National Assistance as was being received by recipients of National Insurance benefits. He also said:
"That is the view that hon. Members on this side of the House take on this occasion.…That is how the position strikes the ordinary person on National Assistance. He is not able to distinguish between National Insurance benefits, which are given, as of right, in return for contributions, and National Assistance, which is not—because these two things are inextricably bound together in any thinking about social security at present. When one rate does not rise with the other there is a cry that there is a catch in it somewhere."—[OFFICIAL REPORT, 18th Feb., 1963; Vol. 672, c. 42–4.]
It is relevant to ask, therefore, whether it is the Government's intention at long last to ensure that, as from the implementation of these regulations, the point of the right hon. Member will be taken and the rates of both National Insurance and supplementary benefits will rise together, in order clearly to demonstrate that there is no catch in it.
Finally, it is relevant too to make this point since a great many people are applying for supplementary benefit for the first time. The Minister has claimed with some justification that the campaign to make people aware of their entitlement has been highly successful, and I give the right hon. Lady full credit for that. But what are those who are eligible for the increases in supplementary benefit to think when they see that their increases are less than those in National Insurance benefits? I am certain that there is an explanation and I hope that the Parliamentary Secretary can give it. In doing so, I hope that he will be able to give some information of the numbers of persons likely to get the full increase in supplementary benefit, the numbers of them who will be affected by the wage stop, and the numbers of these who

203
though in need, according to the Explanatory Memorandum, may get nothing at all.
10.29 p.m.
Mr. Loughlin: By leave of the House, I should like to deal with two significant matters raised by the hon. Member for Essex, South-East (Mr. Braine). Perhaps I can deal, first, with how many do and do not get it and then deal with the general issue of the simultaneous application of benefit increases. There are about 2½ million families who receive supplementary benefits and who will be affected by these draft Regulations, and about 107,000 cases who will not get the total amount. Breaking down this figure, about 30,000 people will pay an inclusive charge for board and lodgings.
In such cases, their needs are met by the Commission, whatever the board and lodgings paid might be. Over and above that, they have personal allowances which, on this occasion, have been increased by Is. There are in addition to the 30,000 people to whom I have referred, approximately 50,000 of the old cases, under the National Assistance Regulations, who were, for one reason or another, in receipt of an amount higher than that laid down by the Ministry of Social Security.
Here we apply what in industry we used to call the "non prejudice clause" because their benefit under the existing scheme is safeguarded by the level that it was under the National Assistance Board scheme. This is one of those anomalies we get in social security. They will either get part, or none, of the benefits now proposed.
Then we have approximately 25,000 wage-stop cases. Both sides of the House appreciate the inherent difficulties in trying to deal with wage stop problems. I can give the House the assurance that we intend to examine, as far as it is possible, every single case affected in this way, to ensure that the up-to-date earnings are applied in the job or industry in which they were employed, so that there can be no question that they will get the maximum benefit if the earnings have gone up and consequently the wage stop ceases to apply.
When looking at the present proposals, it should be borne in mind that the
204
basic supplementary benefits were raised in November last. These draft Regulations contain proposals for further increases in the rates. The House must see these proposals as an extension of the improvements we then made. The main increase then was 5s. for a single householder and 7s. 6d. for a married couple. These Regulations provide for a further increase of 5s. for the single householder and 8s. for a married couple. It is pertinent to note that these increases represent about a 6 per cent. increase, as against a 1½ per cent. increase in the Retail Price Index.
I realise that what the hon. Member for Essex, South-East says is true. There is bound to be some dispute that the proposed increases in the supplementary benefit scales are less than the increase in the National Insurance benefits, so that at the end of October those on supplementary benefit will generally have a smaller increase at that time than other National Insurance beneficiaries.
I know that the hon. Gentleman can quote statements made by other Members on this side of the House, but we have to be a little careful in this argument. There is an extreme danger of pursuing an argument of this kind too far. If the increases have always to equate, it may inhibit any Government from making an increase to that section of the community which really needs it at any given time. This dispute could have been avoided on this occasion if the Government had taken this point of view.
All those receiving National Insurance benefit with supplementary benefit will have a leaflet explaining these things sent to them. We will do so as quickly as possible. If the Government had said that they would introduce the earlier revisions of the scales, and then, at this time, had made the addition, then instead of getting 5s. and 7s. 6d. in November the supplementary beneficiaries would have got nothing and at this time we could have given them the full increased scale for National Insurance beneficiaries. If we had done that, waiting until we could put up the National Insurance and supplementary benefits at the same time, the increases in supplementary benefits would have been 10s. for a single householder and 15s. 6d. for a married couple, which are virtually

205
the same increases as those given in the standard National Insurance rate.
If we look at the total increases which these beneficiaries have had since the Government took office in 1964 we can disabuse those people who feel, in the hon. Member's words, that there is a catch in it. The National Insurance beneficiaries will have received increases of 22s. 6d. for a single person and 37s. for a married couple and those on supplementary benefits will have received 22s. 6d. for a single householder and 36s. 6d. for a married couple. The hon. Member made my case for me.
While the scales are an important feature of supplementation, we have to recognise that there are additions which increase the total income of supplementary beneficiaries. Since we have been in office the rent allowance has increased and we have consolidated the small benefits which were given to those who had been in receipt of supplementation for two years or more, and instead of their receiving 6s., we fixed it at 9s. Out of the total number of retirement pensioners who received 9s., two-thirds got an increase in consequence of the 9s. addition.
The scale rates proposed in the Regulations made the position of both National Insurance and supplementary beneficiaries as equitable as possible, and I hope that the House will approve the Regulations.
Question put and agreed to.
Resolved,
That the Supplementary Benefit (Determination of Requirements) Regulations 1967, a draft of which was laid before this House on 28th June, be approved.

WATER (SCOTLAND) BILL
Lords Amendments considered.
WATER (SCOTLAND) BILL

  Clause 2.—(TRANSFER REGIONAL WATER BOARDS OF FUNCTIONS OF LOCAL WATER AUTHORITIES.)
  Lords Amendment: No. 1, in page 2, line 15, at beginning insert:
  "subject to the provisions of this Act,".
  10.38 p.m.
  The Minister of State, Scottish Office (Dr. J. Dickson Mahon): I beg to move, That this House doth agree with the Lords in the said Amendment.
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  It would be convenient if, at the same time, we could discuss Lords Amendment No. 2, in page 3, line 1, at beginning insert:
  "subject to the provisions of this Act,".
  Mr. Deputy Speaker (Mr. Sydney Irving): That is satisfactory.
  Dr. Mabon: We have been advised by the draftsmen that these caveats ought to be inserted in Clauses 2 and 4. They relate to transfer of functions from local authorities to regional water boards and the Central Scotland Water Development Board, because the effect of later provisions may be that some existing functions are extinguished and not replaced, in which case they will not transfer. I always defer to the draftsmen on these matters, as did their Lordships.
  Question put and agreed to.
  Subsequent Lords Amendment agreed to.

  New Clause "A".—(MAPS OF REGIONS.)
  Lords Amendment: No. 3, in page 4, line 2, at end insert:
  "A.—(1) The Secretary of State shall, as soon as practicable after each regional water board established by virtue of section 1 of this Act come into existence, send to the board a map of their region and shall, as soon as practicable after an order under section 5 of this Act relating to the region of a regional water board comes into operation, send to the board a map of the region as altered or, as the case may be, designated by the order.
  (2) Any map sent to a regional water board under this section, except a map which has been superseded by a subsequent map sent thereunder, shall be kept at the principal office of the board; and the board shall provide reasonable facilities for the inspection of the map by any person wishing to inspect it, and for the taking of copies of, and extracts from the map.
  (3) Any map sent as aforesaid shall be taken to be a document within the meaning of the Documentary Evidence Act 1868, as applied to the Secretary of State for Scotland."
  Dr. Dickson Mabon: I beg to move, That this House doth agree with the Lords in the said Amendment.
  The new Clause provides for an up-to-date map prepared by the Department, showing the boundaries of each region to be kept and made available at the Board's office for reference by anyone who wishes to see it. It will reduce the possibility of dispute about boundaries. Hon. Members who were on the Committee will recall that not

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  all the boundaries coincided with local authority boundaries and they are mostly described in the Bill by reference to existing limits of supply. The new Clause will facilitate the consolidation which we hope to promote later under the Water (Scotland) Acts.
  I hope that it will not be too delayed, but this Clause will be useful on both counts.
  Mr. Ian MacArthur: I do not want to argue with the hon. Gentleman, but is this really necessary, when the delineation of the water boards and their undertakings is quite clear? There may perhaps be some difficulty in determining their delineation at some time in the future, but I find it hard to believe that such difficulty would arise. Nevertheless, since the new Clause is harmless, and could conceivably be of some help in some future eventuality, I trust that the House will agree with the Lords.
  Mr. Michael Clark Hutchison: If anyone wants an extract or a copy, will he be charged for it?
  Dr. Dickson Mabon: If I may speak again, with permission of the House, I suspect that that last point would depend on the generosity of the regional board concerned or of the Central Board. I express no preference. If there were a great demand, a board might be entitled to charge a small fee.
  I am sorry that the hon. Member for Perth and East Perthshire (Mr. MacArthur) does not think that the Clause is useful. Earlier, he regarded the division of Perthshire—rightly—with great concern, and a map would have been needed to decide which part of the country came under which board. That does not arise here, but it does arise in places like Fife and Kincardine, and a map would be useful. I am glad that the hon. Gentleman does not recommend that this should be opposed.
  Question put and agreed to.

  New Clause "B".—(POWER OF REGIONAL WATER BOARDS AND WATER DEVELOPMENT BOARDS TO PROMOTE OR OPPOSE PRIVATE LEGISLATION).
  Lords Amendment: No. 4, in page 15, line 22, at end insert:
  "B.—(1) Subject to the provisions of this section, a regional water board or a water development board (in this section referred to as 'a board') may petition for the issue of a provisional order under the Private Legislation Procedure (Scotland) Act 1936 or oppose any private legislation in Parliament where they are satisfied that it is expedient so to do, and may defray the expenses incurred in relation thereto.
  (2) A board shall not petition for the issue of a provisional order as aforesaid without the consent of the Secretary of State, and the Secretary of State shall not give such a consent unless he is satisfied that the powers sought by the proposed order cannot be obtained by means of an order under the Water (Scotland) Acts 1946 to 1967.
  (3) An application for the consent of the Secretary of State for the purposes of this section shall be accompanied by a concise summary of the purposes of the proposed order.
  (4) In the section 'private legislation in Parliament' includes a provisional order, and the confirmation Bill relating thereto under the said Act of 1936, and any local or personal Bill."
  Dr. Dickson Mahon: I beg to move, That this House doth agree with the Lords in the said Amendment.
  The purpose of the Amendment is to ensure that the boards all have the same power to promote and oppose private legislation, which would not be so if we relied on the simple transfer to them of the existing functions of local authorities, some of which have very restricted powers in this respect, while others are virtually unrestricted. The boards are unlikely to need to promote private legislation, but we agree that they should be able to do so when the powers which they want cannot be provided under the Bill.
  10.45 p.m.
  Mr. Norman Wylie (Edinburgh, Pent-lands): I commend the Amendment, particularly in view of the position of a water development board. As I understand, this is a new creature of statute and is not a successor to any statutory body, although it could be argued that regional water boards which fall heir to the functions of water authorities under Clause 2 would fall heir to the promotion of private orders.
  As I say, I believe this to be desirable and necessary in the case of water development boards.
  Question put and agreed to.

  New Clause "C".—(CONSULTATION WITH AUTHORITIES IN ENGLAND.)
  Lords Amendment: No. 5, in page 15, at the end insert:
  "C.—(1) Where a region adjoins any part of England, and it appears to the regional water board that there may he water in watercourses or underground strata in that part of England, or in the region, which could be transferred from that part of England to the region, or from the region to that part of England, as the case may be, the regional water board shall, in so far as they consider it appropriate to do so, consult with the river authorities and other appropriate authorities in that part of England with a view to securing the best use of that water in the public interest.
  (2) In the foregoing subsection the reference to water in underground strata shall be construed as a reference to water contained in strata subjacent to the surface of any land otherwise than in a sewer, pipe, reservoir, tank or other underground works constructed in any such strata."
  Dr. Dickson Mabon: I beg to move, That this House doth agree with the Lords in the said Amendment.
  In another place Lord Inglewood tabled an Amendment which was designed to ensure that there would be consultation about the possibility of moving water across the Border. He intended the proposal to be a counterpart to Section 127 of the 1963 Act, which requires water authorities in England to consult with river authorities in Scotland. Being friendly to the English, the Government felt that we should accept a requirement that a water board in Scotland should be in the same position, and this proposal makes complete the provision of reciprocity between both countries.
  Mr. Clark Hutchison: What will happen if there is a dispute? Who will decide between the English and Scottish authorities? What provision is the Minister making to ensure that Scottish authorities do not lose out?
  Mr. MacArthur: Having heard the English argument in favour of this proposal, I am surprised that we did not stumble on this point in Committee, when we were preoccupied with the question of consultation between Scottish regional water boards. We must have forgotten that England existed somewhere to the south. Perhaps we were more comfortable in that attitude of mind than we would otherwise have been.
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  It is right that consultation should take place with authorities in England. I hope, however, that the Minister will watch Scotland's interest in this matter in dealing with the question raised by my hon. Friend the Member for Edinburgh, South (Mr. Clark Hutchison). If any water is to be taken from Scotland, it should be paid for at a good price. We do not want it going to England for nothing.
  Dr. Dickson Mabon: I understand the concern expressed by the hon. Member for Edinburgh, South (Mr. Clark Hutchison). Since the South East and South West Boards would be the regional boards, they would obviously be involved in these negotiations. I imagine that there will be every chance of a settlement being reached in these matters between the Scottish and English authorities; all the more so when I remember how, in Committee, Scottish hon. Members often had difficulty in agreeing among themselves. I am sure that Ministers are bound to become involved at some stage in the negotiations between the regional board in Scotland and the local authority in England. I am equally sure that a successful arbitration or negotiation will prevent difficulty arising.
  Mr. Wylie: My understanding of this matter is that the provision contains only a duty to consult. There is no obligation to allow water to go south of the Border. This appears to be the obverse of Section 127 of the 1963 Act, which imposes a duty on English local water authorities to consult Scottish water authorities. I would not have thought that the question of arbitration comes into the picture.
  Question put and agreed to.

  Clause 33.—(SHORT TITLE AND EXTENT.)
  Lords Amendment: No. 6, in page 18, line 20. after "Act" to insert:
  "(except paragraph 14B of Schedule 2)".
  Dr. Dickson Mahon: I beg to move, That this House doth agree with the Lords in the said Amendment.
  It might be convenient, Mr. Deputy Speaker, if, with this Amendment, we also discuss Amendment No. 11.
  Mr. Deputy Speaker: If that is convenient to the House.
  Dr. Mabon: The general adaptation made by Schedule 2 (2,a), which states
  "… general references to a local water authority or to the limits of supply or to the area or district of such an authority shall be construed respectively as references to a regional water board or the region of such a board …"
  applies only to Scotland because this is a purely Scottish Bill. However, I am informed that a similar adaptation is required to Section 127 of the 1963 Act, to which reference was made when we were discussing Amendment No. 5, and that it is necessary for a new paragraph to be added to Schedule 2. That is the purpose of Amendment No. 11.
  Equally, it is necessary to insert in Clause 33 a reference to the new provision, which is the purpose of Amendment No. 6. I realise that some may argue that this may not be necessary but, for the sake of tidiness and because we are looking to consolidation Measures which we want to get clear, I think that the House should concur in the Amendment.
  Mr. Wylie: I have had the advantage of a short discussion with the hon. Gentleman on this Amendment. I accept what he says about tidiness, but the Amendment is not really necessary because under the provisions of Clause 2 it is specifically provided that the regional water board will succeed to all the functions of the local water authority. In those circumstances, therefore, it does not seem to me to be at all necessary to rewrite the provisions of the Water Resources Act, 1963.
  In so far as that Act refers to local water authorities, and these are abolished and successor bodies are set up by this legislation, it would inevitably follow that their obligations under that Act were confined to negotiations with the new water authorities under this Measure, namely, the regional water boards. Both these Amendments seem to be entirely unnecessary, therefore, but probably the Minister is right when he says that it is tidier this way, and probably easier to follow.
  I think, therefore, that we should agree to the Amendment.
  Question put and agreed to.

  Schedule 1.—(REGIONAL WATER BOARDS AND THEIR REGIONS, AND THE AREA OF THE CENTRAL SCOTLAND WATER DEVELOPMENT BOARD.)
  Lords Amendment: No. 7, in page 22, leave out lines 20 to 23.
  Dr. Dickson Mabon: I beg to move, That this House doth disagree with the Lords in the said Amendment.
  Perhaps, Mr. Deputy Speaker, it might be for the convenience of the House if, at the same time, we discussed Amendment No. 8, in page 22, leave out line 27, and Amendment No. 9, in page 23, line 24, at end insert:

  "10A.

  The Orkney and Zetland Water Board.

  Limits of supply of:—

  Kirkwall Town Council

  Orkney County Council

  Stromness Town Council

  Lerwick Town Council

  Zetland County Council"

  I hope that the House will forgive me if I spend a little time in discussing the reasons why the Government wish to persuade the House that we should disagree with the Lords in the said Amendment. In the Government's view, the Amendment would deny to the North of Scotland the benefits that derive from the establishment of a regional water board covering the four counties of Sutherland, Caithness, Orkney and Shetland. I have spent a great deal of time in discussion, and a great deal of time going into the matter thoroughly, as has my right hon. Friend the Secretary of State, who has, naturally, taken into account, not only the correspondence he has had on the matter since the Report stage, and the discussions, not only in the other place but with Members of the other place.
  I read with a great deal of interest the letter in The Times of 6th July, signed by a number of their Lordships, whose signatures were headed by the signature of the hon. Member for Moray and Nairn (Mr. G. Campbell). I would point out that there are at least three errors in that letter—which, I quite understand, was written in a completely non-partisan frame of mind, and with the serious intent of persuading the Minister to think again. But it is rather important that I should highlight the errors in the letter.
  First of all, it is not fair, though it is the custom in all these arguments, to imagine that the place from which the united board will be administered is settled by Ministers. It is not. At no time has any Minister ever said that the board would be settled at Wick. It could just as well be settled in any town chosen by the united authority. Indeed, at one time I said that there is no reason why the authority should not meet on a rotating basis, as is the case with the fire authority which unites not just four counties but many more in the Highlands. It is wrong, therefore, for the following to be said in that letter, signed by two former Secretaries of State and several ex-junior Ministers, who should have known better, or should have been advised better about what is done in these matters. First, the letter says:
  "which will be administered from Wick".
  That is an error. Secondly, it goes on to talk about this being the combination of a water authority which would be as sensible as combining Cumberland and Cornwall. What is meant by that is beyond my comprehension. If it is meant to refer to geographical distance it might have a point, but I do not see its relevance. Thirdly, it talks about piping "water across the sea". No one has ever recommended—no committee, be it 23 years ago or last year—that we should pipe water from any part of the mainland to these islands.
  The fourth and most serious error is this. The letter says:
  "The Government, recognising the common sense and the unanimous wishes of the island local authorities…"
  It is not true that at the time we discussed it on 31st March the wishes of the authorities were unanimous. The authorities agreed that they would go home and discuss it. The representations made to me—I have a whole file of representations here to give to my right hon. Friend the Secretary of State—were against that. Indeed, on the evening of our debate on Report the right hon. Member for Orkney and Shetland (Mr. Grimond) was the first person to inform us of the unanimous wishes of the island authorities. At that time the correspondence we had received the day before was to the contrary.
  Mr. Gordon Campbell: I was about to ask whether later the island authorities were unanimous. The hon. Gentleman has now answered that.
  Dr. Mabon: That is quite true, but it was after our debate. [HON. MEMBERS: "Oh."] No, it is absolutely true. The Government were at no time informed, either up to Report stage or on the day of Report stage, except through the mouth of the right hon. Member for Orkney and Shetland. I have all the correspondence. I have reminded various hon. Members that we all had had a letter signed by two distinguished members of the local authorities on the Island of Shetland saying that they were against unification with anyone else. This is the point of departure for the House.
  Mr. G. Campbell: This was 6th July, much later. So in saying that the island authorities were unanimous then we were absolutely right.
  Dr. Mabon: The point is the situation when we were discussing this on Report on 25th April. We were referring to the meeting which I held—a meeting which, incidentally, I did not have to hold but which I wanted to hold and which involved not merely Orkney and Shetland but the other three counties. The letter says:
  "the unanimous wishes of the island local authorities … on 31st March".
  By no means would I have held Orkney and Shetland to a pledge that they were unanimous on 31st March. They said that they were agreeable to go back and discuss it. Some of them were even willing to recommend it to their respective authorities. As I told the House in April, that was repudiated by everyone. It seems to be forgotten as we go on discussing this affair that there are three other counties. The missing signatories are my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) and the hon. Member for Ross and Cromarty (Mr. Alasdair Mackenzie).
  Mr. G. Campbell: They are missing now.
  Dr. Mabon: There are reasons why those hon. Members are not here tonight. The hon. Gentleman should think of that

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  before he attacks them. [HON. MEMBERS: "Why?"] The hon. Gentleman should know about the hon. Member for Ross and Cromarty. I certainly know about my hon. Friend the Member for Caithness and Sutherland.
  Mr. J. Grimond: My hon. Friend the Member for Ross and Cromarty (Mr. Alasdair Mackenzie) is ill.
  Dr. Mabon: That is a very good reason for his being absent, and it is also a very good reason why he should not be attacked for his absence. My hon. Friend the Member for Caithness and Sutherland is on other parliamentary duties at the moment. It is a little unfair to attack hon. Members who may be absent for quite legitimate reasons. Those are the two missing signatories.
  I cannot help feeling a little alarmed at one of the remarks made in the summing up for the opposition, that what we are concerned with are the needs of of the islands and that to a certain extent what happens on the mainland is irrelevant. The Government have to consider the whole of Scotland when we are discussing Scottish Bills and not just consider the welfare of the islands and ignore the welfare of the other counties.
  11.0 p.m.
  Going back to the reason why the Schedule should be as it was before the other place amended it, we accept that the Scottish Advisory Committee, in its Report, The Water Service in Scotland, was reasonably impartial and authoritative. In the opening pages of the Report the Committee makes three major recommendations. It says:
  "First, we consider that a major overhaul of the administrative structure of the water service is urgently necessary. To a substantial extent responsibility at present rests in the hands of small authorities without adequate resources to match modern needs. Alongside this in several districts there are separate water systems which could in the public interest be more efficiently and more economically operated as one. We believe that the solution lies in the creation of larger water supply areas by the amalgamation of local water authorities within a stronger financial, administrative and technical structure. We therefore recommend that the Scottish water service should be regionalised …"
  It must be all Scotland, not in some parts.
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  It is always difficult to deal with administration in these parts of the British Isles which are separated from the mainland, but that is not a reason why we should exclude them from county administration. The Government base their arguments on the three matters I have mentioned in the Report. The area outside the central belt is the most challenging part of our country to administer whether it be by local authorities, of which there are 93 with populations of less than 10,000 in the area, or whether it be by regionalisation.
  Of the total population of Scotland, 5 per cent. are in the Highlands and Islands and their rating resources are even smaller in proportion. The conclusion of the Committee was that the Highlands and Islands area should be divided into four regions, first, Argyll, which has about 1 per cent. of Scotland's population, then Inverness-shire which has 1½ per cent., then Ross and Cromarty which has 1 per cent. and the area of the remaining four counties, which together have about 1½ per cent. of the population. Each of the regions would have a smaller population and smaller rateable value than any of the nine regions among which the remaining 95 per cent. of Scotland's population is to be divided.
  The Committee's Report made it clear that in its view any smaller groupings than it proposed would not be viable units, would be unable to recruit trained staff and use it to the best advantage, and would be unable to take full advantage of modern technical facilities. That is the view which the Government have agreed all along. Despite these firm recommendations I, perhaps unwisely although I do not regret it, thought it useful to bring the Members of Parliament concerned and the local authorities concerned to a meeting involving the five counties, the four in the first group and Ross and Cromarty, and sought to get what I have called a second-best solution, but which was politically more acceptable to Orkney and Shetland and to some extent Ross and Cromarty, but which certainly did not satisfy Caithness and Sutherland.
  Of the five counties, when we entered the room two were in favour of the Committee's recommendation, endorsed by the Government, and three were

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  against. When the meeting broke up, four were in favour of the compromise, which did not square with what I have read out but which I was prepared to recommend to my right hon. Friend the Secretary of State, and one was in disagreement. After the meeting every one repudiated that agreement and only after the Report stage did we have this agreement with Orkney and Shetland, endorsed elsewhere, that they would form their own region leaving Caithness and Sutherland and Ross and Cromarty to "gang their own gait".
  What seems to be forgotten is that no one has ever written letters asking what happened to the views of the people of Ross and Cromarty as a consequence of this Amendment in the other place. Every single authority has written to represent that it should not be included in a larger area. I have said emphatically that this cannot be done, which means that it will be impossible to leave Caithness and Sutherland in their position. Sutherland wants to be dealt with Ross and Cromarty, and it would seem that nobody is a friend of Caithness. But the Government cannot go into these almost internecine arguments. They must come out with a practical, workable and sensible arrangement.
  That is why it is best, the compromise having failed, that the second best solution, which was technically unwise perhaps but politically more acceptable, is now not one that we can return to, and it is with a certain amount of regret that I recommend to the House that we disagree with the Lords in this Amendment and see Schedule 1 restored, so that the North of Scotland Board will consist of the four counties.
  Mr. Grimond: The madness, which I think is the correct word, of the attitude of the Government could not be better illustrated than in the major reason now advanced by the Minister of State for asking the House to reject the Amendment from the Lords. His reason is that if Ross and Cromarty had agreed to go with Caithness and Sutherland all would be well, but because Ross and Cromarty refused to go in, Orkney and Shetland, who have a much stronger case for not going in, should be dragooned into this arrangement. That has only to be said to be seen to be ridiculous.
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  I turn at once to the account that the hon. Gentleman has given of these negotiations and the criticisms that he has made of the letter to The Times. His account, to say the least, is disingenuous. To begin with, anyone who refers to the Second Reading or the Committee stage will find no indication that it would be only after a meeting with all the authorities concerned that he might consider amending the Bill. On the contrary, from the Second Reading onwards and at various meetings that I had with him he held out not an undertaking, but a clear indication that the Bill could be amended.
  Secondly, I refuse to have the local authorities of Orkney and Shetland blamed because at this meeting in Edinburgh they went further than they had gone before to try to meet the Government's wishes. It is perfectly true that they would have preferred to have had a separate authority for Orkney and a separate authority for Shetland. On the Second Reading, the Minister of State said that that was his view, too. Never until we arrived at Edinburgh did he indicate that what he wanted was what he called a second best solution of a joint board for Orkney and Shetland.
  At that meeting the local authority for Orkney and Shetland said that it must consider the suggestion. It took a fortnight or three weeks to consider it. I believe that the authority had actually written to the Minister of State before the Report stage. If the Scottish Office complains of the local authority taking three weeks to make up its mind, the Scottish Office ought to look to its own affairs. It took the Secretary of State six weeks to tell me what it intended to do on Report.
  So we come to the letter in The Times. The first objection made by the Minister is that it is not true that the authority will be administered from Wick. I hope that he is right. I trust that if it is administered from Wick he will apologise for indicating that this was a ridiculous suggestion. But our argument is that the position is not made any better wherever it is administered from. Our argument is that to administer an area of this size 250 miles long and much of it across the sea, even from Kirkwall or Lerwick, is ridiculous. If the Minister of State has not grasped that by this

  219
  time, I despair of getting any argument through to him at all.
  The Minister of State complains about the suggestion that the proposal is tantamount to a board administering Cumberland and Cornwall. The point is that these places are very far apart. But it is far easier to get from Cumberland to Cornwall than it is to get from Sutherland to Shetland. The simple point is that these centres are very far apart and I do not think that the Scottish Office would seriously consider such a Board.
  Then there is the allegation that he was not told about the decision of the local authorities; but the local authorities took this decision in an effort to please the Scottish Office, and the right hon. Gentleman was informed of it at an early stage. They were not told until the meeting in Edinburgh that they would be joined to Caithness and Sutherland unless they combined when he says that he was not told of their reaction in time, well, I can only say that he has known of this decision for three months and he has had plenty of time in which to change his mind.
  As one who is very jealous of the reputation of this House, I must say that I find it most disturbing to see that both reason and democracy appear to have far more effect in another place than they do here; at least, so far as the Scottish Office is concerned. I do not want to go all over the argument again, but it would seem that the Scottish Office insists on raising new points. There is the issue of population now introduced, but that was not mentioned by the Minister of State during the Commons proceedings. Nor did he then say that a separate Board for Orkney and Shetland was something which might have commended itself.
  Throughout these proceedings the Scottish Office has shown that sort of attachment to some of the worst features of government; and this attachment is a sign, not of strength, but of weakness. First, we have this passion for uniformity—the attitude of mind which thinks in terms of circulars and the Civil Service hierarchy we are asked whether we should not like to have trained staff. But where do we go from there? Of course there will have to be trained staff. There will have to be trained staff in the four
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  counties whether we join or not as there is now. This is the sort of argument which alienates serious-minded people from government in this country today. There are two former Secretaries of State for Scotland who have had some experience in this matter and who know that the creation of a Water Board for Caithness and Sutherland, with another for the islands is nearer common sense, but they are also ignored. The Scottish Office insist on a proposal which cannot he supported by physical facts nor by the wishes of the people.
  The Minister of State now comes up with that well-worn phrase, "The administration of this will be a great challenge". Well, let him give up the challenge. Do not let him bestir himself with this challenge because it is something which he is incapable of meeting. His ideas could only exist in a Government Department which fails to look at the world as it is.
  In another place there was some talk of principle. That seemed to me to be a most curious use of inappropriate words because the only principle is that contained in the evidence of the engineers to the Select Committee which was that where an area is in a well-defined watershed there would seem to be no reason for going outside the boundaries of that watershed and introducing what is called regionalisation merely for the sake of creating a larger unit of authority. Yet this principle has been wholly violated by this plan for two large mainland counties and two separate groups of islands to be brought within the control of one Board.
  Let me draw the attention of the Minister of State to the fact that, also in another place, the Government suddenly started producing figures not produced at any stage in this House, and the claim was then made that the water rate would be higher in Orkney and Shetland if the islands were left on their own than it would be if there was a joint Board. Goodness knows where these figures came from, or what relevance they have, but the fact that must be considered is what will happen when a large new layer of bureaucracy is put over these four counties.
  11.15 p.m.
  We know what will happen. Even the Minister of State admits it. Always, in the House of Commons, it was the

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  Government's view that the water rates would go up and the scheme would make water rates more expensive. We know that only too well. We have experience already of what has happened in the fire services—apparently, one of the Government's triumphs—for which the expenses have gone up enormously.
  There is then the curious suggestion that objections to this extraordinary spread over four counties and across the sea would be met if we had some sort of peripatetic board. We have one such already. We have a sort of biennial jamboree by the people who are supposed to look after the fire service and who come up in the height of the summer to look round Orkney and Shetland. It makes no sense, and it would be extremely expensive. If the Government are content with that idea, they should look at their information again.
  All the proceedings over this matter have shaken my faith in the reliability of Ministers at the Scottish Office. I have already dealt with the extraordinary argument that the main reason, or the only reason, why this nonsense has to be perpetrated and why Orkney and Shetland have to be landed in with Caithness and Sutherland is that Ross and Cromarty refused to do it. It is such a contemptible argument that it need not be set out at length. It is seen as even more ridiculous when one remembers that, at least, Ross and Cromarty are contiguous on land with Sutherland and, therefore, with Caithness, while Shetland is over 100 miles away across the sea. As for figures of population, Ross and Cromarty are no larger than Orkney and Shetland. If they are allowed or encouraged to have a board of their own, why should not these two separate groups of islands have one of their own, too?
  What is anyone to make of this experience in relation to the Government's ostensible campaign for economy and efficiency? We have been debating these questions all day. There are discussions about whether it will be necessary to cut essential services such as education or pensions. In my constituency, we need other things, like piers and lower freight charges. These are infinitely more important to us than the creation of some large headquarters or even a peripatetic headquarters of officials going round four counties. The Chancellor is right to say
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  that Government expenditure will probably rise. That makes it all the more necessary to concentrate it on those purposes which are really essential.
  But, as I have said before, the Scottish Office admits that this new arrangement will not cheapen the water. On the contrary; it will make it more expensive. Moreover, they seem to be quite happy to add this extra top-hamper to an area in which it will still be necessary to keep a staff based in Orkney and Shetland and in Caithness and Sutherland. Those staffs will remain, and all that will happen is that one will then have a lot more senior officials and new buildings, no doubt, with the peripatetic committee as well.
  As I have said, we who have supported the plea by Orkney and Shetland to have a separate board have tried in every way and at every stage to be reasonable. We have been met again and again with new and different excuses—I do not call them arguments. None of the stuff which is trotted out today was trotted out at earlier stages of the Bill. On Second Reading, the Government were, apparently, prepared to consider this sensible suggestion.
  The local authorities have compromised twice in an attempt to get at least some sense into the proposals. They have tried, as far as they could, to do what the Scottish Office wanted. However, in a manner which has become familiar to those who study the behaviour of Governments, the further we went the further the Government withdrew. Nothing, no promise which we have suggested, would satisfy the bureaucrats at St. Andrews House.
  Why? Again, this weakens people's faith in the whole machinery of government and the ability to conduct affairs by argument and reason. No doubt, in a secret session in St. Andrews House, it was decided that the Government must stick by their proposals, that it would throw out the whole structure of the water services if Orkney and Shetland were treated as islands and not as part of the mainland. But the Government cannot expect this to commend itself to reasonable people in the North of Scotland.
  It is a very sorry story. I am glad that it is not repeated by all Ministries, but it is repeated too often to encourage

  223
  people to believe either that the Government are open to reason—or, at least, that the Scottish Office is open to reason—or that they take the slightest notice, when they do not want to, of the wishes of local people and their local authorities. This has done the Scottish Office great harm, and I hope that the opposition in this House will continue to the end.
  Mr. G. Campbell: The House should agree with the Lords in the Amendment, and I therefore oppose the Government's motion. It is most depressing that the Government have not taken the course of common sense which is now open to them and accepted the Amendment. For anyone who looks into the position of the two groups of islands can see that it is entirely unnecessary to amalgamate them with the mainland. They are separated by many miles of sea water.
  Here I should like to take up the Minister's third point about our letter in The Times of 6th July—the right hon. Member for Orkney and Shetland (Mr. Grimond) has dealt very adequately with the Minister's first two points. When we said that water could hardly be piped across the sea we were not suggesting that the Government would do this. We were simply pointing out that as there could be no supplies of water in either direction and that this reason for amalgamation which applied in many other amalgamations, could not apply here. To use that point as if we were suggesting that the Government proposed to do this just shows the weakness of the Government's case.
  There are also all the difficulties of travelling between the islands and the mainland, wherever the headquarters will be. These difficulties have already been dealt with in previous debates.
  There is a cast-iron case—perhaps one could say "water-tight"—for Orkney and Shetland to have their own amalgamation and regional water board. But the Government have slavishly adhered to the 13 regional boards suggested by the Scottish Water Advisory Committee long before the Bill was drafted. There is general agreement that there should be amalgamations on the scale suggested by that Committee. But it could never have expected that its exact proposals would be steam-rollered through Parliament by
  224
  the Government. In some cases there were finely balanced arguments about what the amalgamation should be, which the Committee outlined in its Report, and some of the chief factors in those arguments have since changed considerably.
  As I said on Report, the Government's evident determination to stick to the number of 13 was a major error. Why are they still using the steam-roller to retain exactly these original proposals?
  Mr. Archie Manuel: I am grateful to the hon. Gentleman for giving way. Is he convinced quite sincerely that the rating strength of Orkney and Shetland is sufficient to give a full and pure water supply in an expanding economy for the future, embracing whatever industry, agriculture and tourist trade could take place there? I think that the cost would be a terrible burden to the people of the islands, and that a larger structure is needed, with a greater rating ability to provide them with sufficient water for these projects.
  Mr. Campbell: I am glad to be able to tell the hon. Member that I believe that the islands can certainlly do that, if they have their own regional board, as I hope that they will when the Amendment is accepted. Their problems are very different from those of the highly-populated industrial area in the South of Scotland, where there may be the kinds of problem which the hon. Gentleman has raised.
  Mr. Grimond: I do not know whether the hon. Gentleman opposite realises that Caithness has the highest water rate in Scotland— —
  Mr. Manuel: Yes.
  Mr. Grimond: —and that the Government's view is that Orkney and Shetland should subsidise Caithness and Sutherland.
  Mr. G. Campbell: I am grateful to the right hon. Gentleman for putting that point. I hope that the hon. Member opposite will now listen to what is said from this side and learn a bit more about these problems of the north of Scotland.
  When the Government appeared to relent and consider what is called the compromise solution, it was suggested, at the same time, that Caithness and Sutherland should be put in with Ross and

  225
  Cromarty, which had nothing to do with this. Therefore, it was understandable that Ross and Cromarty should object and ask why they should be brought into this and be made to amalgamate with Caithness and Sutherland. The only answer that we can see is that the Government were still wedded to the figure of 13 and found it impossible to make it 14.
  The Minister appeared not to realise that the Amendments which have come from another place are for an additional amalgamation, an additional regional board, which would produce 14. The Amendments from the other place are not suggesting that Ross and Cromarty should be pushed in with Caithness and Sutherland. That was a mad suggestion which came forward from the Government as part of what they called the compromise.
  To illustrate this, I will read from page 40 of the Water Advisory Committee's Report where it says:
  "As regards the first we came to the conclusion that a combination of Sutherland with Ross and Cromarty—two Counties of extensive and difficult areas each with a large number of scattered local sources—would aggravate rather than ease the task of day-to-day management in them both."
  So this suggestion did not have the backing of the Report of the Water Advisory Committee.
  We cannot understand why the Government were not prepared to have 14 or 15 boards when they were making such reductions in the large number of water authorities, with which there was general agreement. To fear an addition to the Schedule, because this might open the flood gates for other proposals for additional boards, was, as the right hon. Gentleman said, a sign of weakness in the Government. It is weak and flaccid government which tries to steamroller something through without any change, despite the arguments, because they fear there would be a whole lot more proposals being pressed if they accepted one.
  The Amendment would leave Ross and Cromarty on its own and it would also leave Caithness and Sutherland on its own. The Government have never explained why Caithness and Sutherland, a very large area, could not have a separate regional board.
  226
  There is another cause of dismay on this side of the House. This is an entirely Scottish matter. The proposals in the Bill and the objections that have been raised to Amendments to the Bill have all followed from decisions by Scottish Ministers in Edinburgh. There is no question of Whitehall or the Treasury being involved, which is sometimes made an excuse for this kind of over-centralisation. Labour Ministers at the Scottish Office have made it clear that they have no understanding of the problems of the north of Scotland or of the special difficulties caused by geography there. Moreover, it appears that they have no sympathy with those problems.
  Mr. Manuel: Rubbish. That is nonsense.
  Mr. Campbell: The Minister who was dealing with this in the other place advanced as an explanation that those who were putting the case from Orkney and Shetland were against any change. [HON. MEMBERS: "Hear, hear."] I hear assent from the other side. All it does is prove that the Ministers concerned have totally misunderstood the feelings of the Islanders in putting forward their proposals which were based on common sense.
  However, it is still not too late. If the Government want to indicate that they have some understanding of the problems of the north of Scotland and some sympathy for them they can, even at this stage, decide to change their mind and accept the Amendment. It would be a good Amendment and widely welcomed not only in the north of Scotland, but in the rest of Scotland, too.
  11.30 p.m.
  Mr. Donald Dewar: I intend to detain the House only briefly. I have listened with interest and incasing alarm to the notes struck some of the speeches from the benches opposite and listened with some puzzlement to the sinister principles which some hon. Members have managed to see in the proposal by the Government. I think that the Opposition have been rather more enthusiastic critics of the Government's motives than accurate.
  They have painted a picture of the unfortunate County Council of Orkney and Shetland specifically, uniquely and

  227
  deliberately victimised and pulled into a kind of unworkable forced marriage, with the mainland inevitably the more dominant of the partners in this unfortunate match.
  This, I think, is not a fair interpretation of what has happened. I accept that the Minister of State has spent an enormous amount of time—indeed, there must have been periods in the last months when he could have been doing little else—on this problem when one takes into account the enormous number of meetings and consultations that there has been on the admittedly vexed business.
  We had five parties. Five counties were involved and there are so many permutations that the only thing proved is the number of mathematical combinations possible with five units. The one factor which emerged ultimately from all the proposals and all the possibilities was that everyone was unpopular with the parties concerned.
  I am sorry that my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) is not here. He is unavoidably detained abroad on important business. The attacks made on him in interventions from the benches opposite were uncharitable and unjustifiable. He would have wished to forcefully put forward the point of view of other local authorities in his area, particularly that of Caithness, who feel every bit as strongly, justifiably from a local point of view, as did the right hon. Member for Orkney and Shetland (Mr. Grimond) from his local point of view.
  It is impossible to get a solution which is satisfactory to all the parties. It is one of tragedies of regionalism in any form that one stamps on toes and offends local interests. But ultimately the Government have to listen to their technical advisers and technical experts as to the best solution. I would like to think that I was justified in thinking that hon. Members opposite listened to their experts, but, considering the policies which they produced in the past, one wonders if they did.
  It is no good expecting the Government to accept as a principle, as some of the speeches have almost suggested that they should, that if local authorities in a specific area object to a Govern-
  228
  ment proposal then the proposal should be dropped. If we were to accept that principle and follow that line we would have given way over Banff and the hon. Member for Moray and Nairn (Mr. G. Campbell) fought very hard for Banff. We would have given way over Kincardine, and we all listened with sympathy to the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) arguing eloquently that we were splitting his county. The technical arguments were heavily on one side and the Government had to stand their ground in the same way as they have to stand their ground tonight.
  Mr. Michael Noble: Could the hon. Member tell us of one technical expert either inside or outside the Scottish Office who today believes that the Government are right?
  Mr. Manuel: How do you know?
  Mr. Deputy Speaker: Order. I hope that we will not have debate by interventions shouted across the Chamber.
  Mr. Dewar: If the people who wrote the Scottish Water Advisory Committee Report are now wearing sackcloth and ashes and are repenting of their views in public, it is news to me. If the right hon. Member for Argyll (Mr. Noble) can produce evidence to show that those who wrote the Report are now saying that they were wrong, I shall listen with a great deal more sympathy to the arguments of hon. Members opposite.
  No doubt the right hon. Gentleman will intervene later in the debate, or one of his colleagues on the Opposition Front Bench will, when I shall be interested to hear the evidence that those who produced the Report, and who are acknowledged experts and who have done the work in the field, are now saying that the Government are wrong and that hon. Members opposite are right.
  When the Bill was last before the House, the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) said that he saw a sinister trend emerging from this whole affair. He saw an increasing tendency by the Government to ignore the obvious interests of Members of Parliament and he went on to ask—and I suppose that it was a cri de coeur—which of us was to be next. I suppose that on many future occasions the Government will be committing an

  229
  offence against the obvious interests of a Member of Parliament—and presumably this was in the back of the mind of the hon. Member's right hon. Friend the Member for Orkney and Shetland (Mr. Grimond).
  But any Government worth their salt when they believe that they are right and when their technical ground is correct will be prepared to do this. The hon. Member for Roxburgh, Selkirk and Peebles is an enthusiastic supporter and a very persuasive advocate of regional government and regional planning authorities and wants more teeth put into them, but ultimately that can only be at the expense of local authorities to some extent. Regionalism is bound to involve exactly this kind of tendency.
  Mr. David Steel: I trust that the hon. Gentleman will do me the credit of recognising that what I said was that where there was an obvious conflict between the Government on the one hand, and the local authorities and the Member of Parliament, on the other, and the local authorities and the Member of Parliament, on the other, then the burden of proof and the burden of argument lay heavily with the Government. We have had no such burden or argument from the Government.
  Mr. Manuel: The hon. Gentleman does not understand it, but he has had it.
  Mr. Dewar: I do not accept that. I accept that the burden of proof is on the Government. but the fact that there is an enormous amount of local opposition means merely that the Government have a duty to consult, as they have, and to listen, as they have, and if they can find some kind of compromise which is acceptable to local opinion, they should implement it. But the Government have made every possible concession and the compromise has been even more unacceptable. The right hon. Member for Orkney and Shetland himself said that it was only second best and with that stark choice the Government must accept the advice of the technical committee.
  If my memory is right, the Minister of State did not say that the administrative centre would be at Wick. He said that it would not necessarily be at Wick and that the decision would lie
  230
  with the authority itself, which is very different. I do not accept the discouraging message which the right hon. Member tried to put across and which was that any kind of regionalism involving Orkney and Shetland would ultimately be unworkable. I do not agree that the Fire Board, for example, has been the disaster which he has suggested it to be. It has led to a much more efficient service for everybody and I do not see why the analogy should not be usefully followed in the present case.
  The right hon. Gentleman made a powerful stand about the high level of the water rate in Caithness. It is well known and the calculations have been published and, as far as I know, have not been disputed by hon. Members opposite, that, if the Government's proposals go through, the domestic water rate for the new area will be 4s. 9d. whereas for Orkney and Shetland on their own it would be 6s. 2d., for Orkney separately, 5s. 2d., and for Shetland separately, 7s. 2d. I am prepared to listen to argument refuting those figures which have been authoritatively published for some time and not so far disputed. If they stand, one important plank on which the right hon. Gentleman rested his case will have turned out to be rotten, and I suspect that that is symptomatic of a large number of other planks in the platform on which he has been desperately and parochially balancing.
  Mr. George Younger: I do not know whether the hon. Member for Aberdeenshire, South (Mr. Dewar) was speaking of Government policy in his last remarks, but if he was I can only say that he has rather weakened the Government's case. It seemed that the burden of his remarks was built round the proposition that, because the compromise solution was unacceptable to every local authority, therefore the Government should stick rigidly to their original suggestion.
  This seems to be a very strange argument. The question is: are the Government doing the right thing? The burden of our case, as argued by the right hon. Member for Orkney and Shetland (Mr. Grimond) and other hon. Members on this side of the House, is that the Government are proposing to do the

  231
  wrong thing for Orkney and Shetland, for water suppliers in the area, and the wrong thing within the scope of their own Bill.
  Ross and Cromarty were perfectly right, in their own interests, to say that they did not wish to go into this compromise solution. The whole question of Ross and Cromarty is a red herring. The interest of Ross and Cromarty as a counter-balance to the argument is a blatant attempt to play one local authority against another. Ross and Cromarty can be left out of the consideration.
  We have to consider whether the proposals that the Government want to stick to are right in the interests of the water undertakings generally, and in the interests of the people of the area. I submit that they are not in any sense right in either case. The chief reasons for the amalgamations, with which I entirely agree, were that to get a better arrangement of water suppliers, in collecting and distributing, larger units would be necessary. We all accept that. This surely does not mean that because the principle is right, it should be rigidly and blindly pursued in every corner of the country, irrespective of any other consideration?
  It is the function of the Government not merely to lay down principles, but to interpret them intelligently, and they are not doing so in the case of Orkney and Shetland. I hope that by now we have dismissed the absurd argument about the question of piped water supplies. This is not an issue, but it is germane and relevant to the extent that one of the advantages of larger administrative water areas in Scotland generally is the ability, in mainland areas, to connect and inter-connect water supplies within large areas, to combine catchment areas and to get them spread to the most economic parts.
  After all, what is the Loch Lomond scheme other than that? It is the whole object of it. This is totally impractical and cannot apply in any sense at all to an authority which comprises the islands of Orkney and Shetland, and the mainland counties of Caithness and Sutherland.
  Mr. Manuel: Would the hon. Gentleman not agree that the strongest and most salient point in favour of larger unit amal-
  232
  gamations is the greater financial rating strength that can be achieved in order to carry out the necessary schemes?
  Mr. Younger: That reason exists, but I would not put it next. We have dismissed the common water supply angle. The second reason is mentioned, at page 40, paragraph 81 of the fourth Report of the Water Service in Scotland, which recommends that these should be amalgamated to provide the skilled management of other facilities necessary for the purposes of improving the water supply.
  Mr. A. Woodburn: Is the hon. Gentleman advocating that every little local authority should have special water engineers, and that design staffs of reservoirs should be duplicated in every local authority? The other point he made was that these people would be peregrinating round the islands. Is there not a greater distance between Orkney and Shetland than between Orkney and the mainland? If the argument on separation of water was introduced than there would be more reason to separate Orkney from Shetland than separate Orkney from Caithness?
  11.45 p.m.
  Mr. Younger: I am sorry that the right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn) produced, albeit in his charming way, that irrelevant argument. I hope that, as time is short, he will forgive me if I do not digress to deal with it.
  If there is a need for larger authorities, as I think there is, so that there should be better qualified water engineers, that cannot apply to anything like the same extent where the total area and size of the water undertaking and the land mass are so small as in Orkney and Shetland. If there were a huge new water area and if there were to be a scheme of the magnitude of a barrage or the Loch Lomond scheme, then a much larger staff, highly qualified, would be needed than in the case of a small water authority.
  But as there is no possibility of this arising in Orkney and Shetland, and as we are dealing with small, locally contained islands which will always have their own water supplies on a comparatively small scale, then the existing staff are quite capable of carrying out the necessary water undertakings within the area of the islands.

  233
  All the arguments have been adequately rehearsed and the only possible conclusion is that there is only one reason why the Government are pressing this proposal—that it looks tidy on paper. Someone looked at the population of the islands and said that it could not justify anything other than amalgamation with a mainland company. Administrative tidiness is the only reason for the proposal. I echo the point made so admirably by my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell): in no sense can we blame this on our old friend the gentleman in Whitehall for it is the sole responsibility of Scottish Ministers at St. Andrews House. It is they who are doing the wrong thing by the Islands of Orkney and Shetland.
  Mr. MacArthur Mr. MacArthur rose—
  Sir Gerald Nabarro: Divide.
  Mr. MacArthur: When the Minister moved this wretched and indefensible proposal that the House should disagree with the Lords Amendments he appeared to complain that we had spent a lot of time discussing this question during the various stages of the Bill. [HON. MEMBERS: "Too much."] I wish that we could spend much more time discussing it, because the more we discuss it the greater the opportunity the Minister has to advance valid or technical reasons for disagreeing with the Lords. So far, we have heard no such reasons in support of the Government's view.
  We have heard a series of most extraordinary arguments from the Minister. He made a great point about the place from which the board would be administered, suggesting that there was no certainty that it would be administered from Wick. But is there any likelihood that it will be administered from somewhere other than Wick? Is he prepared to tell us that it will be administered from one of the islands? If so, what would be the reaction in Caithness and Sutherland? The argument has no substance.
  The Minister made great play about the point during the earlier proceedings at which the local authorities in Orkney and Shetland had agreed to the alternative proposal that Orkney and Shetland should form a separate board.
  Sir G. Nabarro: Divide.
  Mr. MacArthur: The time when this agreement was reached is completely irrelevant. The fact is that the local authorities agreed to this alternative, and it does not matter if they did so in April, May or June. We support the local authorities not just because this is what they want but because what they want is right. It is no good the Minister arguing that because they took so long to reach a decision it is now too late for the Government to go back and meet their proper and legitimate wishes.
  I suspect that one of the reasons for their obstinacy is the argument used in another place by the Joint Under-Secretary of State, that the Government's view was that the reaction of the local authorities in Orkney and Shetland was simply against change and not founded on principle. It is because it is founded on a good and right principle that we oppose the Government. In his previous pleasant manner, the Minister of State suggested earlier in our proceedings that he would be flexible and that there was plenty of time before our debates on Schedule I, when we could discuss the composition of the regional boards, and that, if a reasonable case were advanced, he might give way.
  In the debate on the principle on the Tuesday, he indicated that he would have something to say in his reply which would please the right hon. Member for Orkney and Shetland (Mr. Grimond) very much, but to my disappointment that open mind had changed to a closed mind by the Thursday, when all he said was that he would look further into the position. The more time passed, the more his flexibility changed into obstinacy.
  The hon. Gentleman's objection is also based on the consequential problems which a change would produce on the mainland, but he has power, under Clause 5, to reorganise the mainland. This is no defence of his argument. The Government objections are based on tiredness and tidiness. I can understand the hon. Gentleman being tired of the Bill, on which he has worked hard for a long time, but he must reconsider this in the light of his powers under the Bill.
  I cannot accept the case for tidiness. The hon. Gentleman said that the grouping in the Bill was workable, practical and sensible. I dispute that.

  235
  Rather than workable, it is clumsy and expensive. The Government have already said that the local officials will continue as before and there has been no technical argument in support of the Government's view.
  If the right hon. Gentleman says that it is practical, he can never have looked at the map. It will take a member of the board from the islands two nights and three days to attend a meeting on the mainland, and when these public-spirited people leave the islands, it is not to Wick that they go but to Inverness and Aberdeen, where the main mainland interests of the islands lie. Air travel is uncertain and there is no direct sea communication between Caithness and Sutherland.
  Sir G. Nabarro: On a point of order. May the English hon. Members, who are waiting patiently, be protected against the verbal diarrhoea of the Scots?
  Mr. Deputy Speaker: That is not a point of order, however tempted the Chair may be to agree with the hon. Gentleman. I have no doubt that the hon. Gentleman heard what has been said.
  Mr. MacArthur: I know that my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) supports common sense and rightness in Governmental matters. He will, therefore, I trust, support his other hon. Friends in the Lobby.
  Orkney and Shetland are being regarded by the Government as little pieces which must be tidily placed on the administrative chequer board. The Government are preoccupied with the convenience of the "centre" and this is causing growing wonder and resentment in the outlying parts of these islands. Never has this tendency been more obvious than it is in this proposal, which I invite my hon. Friends to reject.
  Dr. Dickson Mahon: I have been asked a number of questions, and I will—
  Sir G. Nabarro: Not without permission. [Interruption.]
  Mr. Deputy Speaker: Order. There are two matters. First, the Minister needs the permission of the House to speak again. Secondly, a little patience on the part of hon Gentlemen would bring the House to the point of a Division much earlier.
  Dr. Mabon: With permission—
  Sir G. Nabarro: No.
  Mr. Deputy Speaker: Order. The leave of the House has not been granted. The Minister cannot speak again.
  Question put, That this House doth disagree with the Lords in the said Amendment:—
  The House divided: Ayes 143, Noes 102.

  Division No. 485.]

  AYES

  [11.58 p.m.

  Abse, Leo

  Culfen, Mrs. Alice

  Harrison, Walter (Wakefield)

  Albu, Austen

  Darling, Rt. Hn. George

  Hattersley, Roy

  Armstrong, Ernest

  Davidson, Arthur (Accrington)

  Hazell, Bert

  Atkinson, Norman (Tottenham)

  Davies, Dr. Ernest (Stretford)

  Howarth, Robert (Bolton, E.)

  Bacon, Rt. Hn, Alice

  Davies, Ifor (Gower)

  Howell, Denis (Small Heath)

  Bagier, Gordon A. T.

  Dempsey, James

  Howie, W.

  Beaney, Alan

  Dewar, Donald

  Hoy, James

  Benn, Rt. Hn. Anthony Wedgwood

  Dickens, James

  Huckfield, L.

  Bennett, James (G'gow, Bridgeton)

  Dobson, Ray

  Hughes, Roy (Newport)

  Bidwell, Sydney

  Doig, Peter

  Hunter, Adam

  Binns, John

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

  Hynd, John

  Bishop, E. S.

  Eadle, Alex

  Jackson, Peter M. (High Peak)

  Blackburn, F.

  Ellis, John

  Jenkins, Hugh (Putney)

  Blenkinsop, Arthur

  English, Michael

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

  Bray, Dr. Jeremy

  Ennals, David

  Jones, T. Alec (Rhondda, West)

  Brooks, Edwin

  Elisor, David

  Judd, Frank

  Brown, Rt. Hn, George (Belper)

  Fitch, Alan (Wigan)

  Lawson, George

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

  Fitt, Gerard (Belfast, W.)

  Lee, Rt. Hn. Frederick (Newton)

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

  Fletcher, Ted (Darlington)

  Lestor, Miss Joan

  Brown, ft. W. (Shoredicoh & F'bury)

  Forrester, John

  Lever, Harold (Cheetham)

  Buchan, Norman

  Fraser, John (Norwood)

  Lever, L. M. (Ardwick)

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

  Freeson, Reginald

  Lomas, Kenneth

  Cant, R. B.

  Galpern, Sir Myer

  Loughlin, Charles

  Carmichael, Neil

  Gardner, Tony

  Lyon, Alexander W. (York)

  Coe, Denis

  G our lay, Harry

  Lyons, Edward (Bradford, E.)

  Coleman, Donald

  Gregory, Arnold

  Mabon, Dr. J. Dickson

  Conlan, Bernard

  Griffiths, David (Rother Valley)

  McCann, John

  Cronin, John

  Hamilton, James (Bothwell)

  MacColl, James

  Crossman, Rt. Hn. Richard

  Harper, Joseph

  MacDermot, Niall

  Macdonald, A. H.

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

  Summerskill, Hn. Dr. Shirley

  Mackintosh, John P.

  Page, Derek (King's Lynn)

  Tinn, James

  McMillan, Tom (Glasgow, C.)

  Park, Trevor

  Urwin, T. W.

  McNamara, J. Kevin

  Pavitt, Laurence

  Wainwright, Edwin (Dearne Valley)

  MacPherson, Malcolm

  Pentland, Norman

  Walden, Brian (All Saints)

  Mallalieu, E. L. (Brigg)

  Perry, George H. (Nottingham, S.)

  Walker, Harold (Doncaster)

  Manuel, Archie

  Price, William (Rugby)

  Wallace, George

  Mendelson, J. J.

  Roberts, Goronwy (Caernarvon)

  Watkins, David (Consett)

  Millan, Bruce

  Roberts, Gwilym (Bedfordshire, S.)

  Wells, William (Walsall, N.)

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

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

  Whitaker, Ben

  Moonman, Eric

  Rodgers, William (Stockton)

  Whitlock, William

  Morgan, Elystan (Cardiganshire)

  Rose, Paul

  Williams, Alan Lee (Hornchurch)

  Morris, Alfred (Wythenshawe)

  Ross, Rt. Hn. William

  Williams, Mrs. Shirley (Hitchin)

  Murray, Albert

  Rowlands, E. (Cardiff, N.)

  Wilson, William (Coventry, S.)

  Noel-Baker, Francis (Swindon)

  Shaw, Arnold (Ilford, S.)

  Winterbottom, R. E.

  Oakes, Gordon

  Shore, Peter (Stepney)

  Woodburn, Rt. Hn. A.

  Ogden, Eric

  Silkin, Rt. Hn. John (Deptford)

  O'Malley, Brian

  Silverman, Julius (Aston)

  TELLERS FOR THE AYES:

  Oram, Albert E.

  Slater, Joseph

  Mr Charles R. Morris and

  Oswald, Thomas

  Spriggs, Leslie

  Mr. Neil McBride.

  NOES

  Alison, Michael (Barkston Ash)

  Grant-Ferris, R.

  Pink, R. Bonner

  Allason, James (Hemel Hempstead)

  Grimond, Rt. Hn. J.

  Pounder, Rafton

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

  Hall-Davis, A. G. F.

  Powell, Rt. Hn. J. Enoch

  Awdry, Daniel

  Harris, Reader (Heston)

  Pym, Francis

  Baker, W. H. K.

  Harrison, Brian (Maldon)

  Ridley, Hn. Nicholas

  Bennett, Dr. Reginald (Gos. & Fhm;

  Harrison, Col. Sir Harwood (Eye)

  Rodgers, Sir John (Sevenoaks)

  Berry, Hn. Anthony

  Harvie Anderson, Miss

  Rossi, Hugh (Hornsey)

  Boyle, Rt. Hn. Sir Edward

  Hawkins, Paul

  Royle, Anthony

  Braine, Bernard

  Hiley, Joseph

  Russell, Sir Ronald

  Hobson, Rt. Hn. Sir John

  Brinton, Sir Tatton

  Holland, Philip

  Scott, Nicholas

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

  Hunt, John

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

  Buck, Antony (Colchester)

  Hutchison, Michael Clark

  Smith, John

  Campbell, Gordon

  Jenkin, Patrick (Woodford)

  Stainton, Keith

  Carlisle, Mark

  Kimball, Marcus

  Steel, David (Roxburgh)

  Chichester-Clark, R.

  King, Evelyn (Dorset, S.)

  Stodart, Anthony

  Clegg, Walter

  Kirk, Peter

  Taylor, Sir Charles (Eastbourne)

  Cooke, Robert

  Kitson, Timothy

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

  Crowder, F. P.

  Lambton, Viscount

  Thorpe, Rt. Hn. Jeremy

  Currie, G. B. H.

  Lubbock, Eric

  Tilney, John

  Dalkeith, Earl of

  MacArthur, Ian

  Turton, Rt. Hn. R. H.

  Dance, James

  Maginnis, John E.

  Wainwright, Richard (Colne Valley)

  Dean, Paul (Somerset, N.)

  Maxwell-Hyslop, R. J.

  Walker, Peter (Worcester)

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

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

  Wall, Patrick

  Doughty, Charles

  Mitchell, David (Basingstoke)

  Weatherill, Bernard

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

  Montgomery, Fergus

  Whitelaw, Rt. Hn. William

  Emery, Peter

  More, Jasper

  Wilson, Geoffrey (Truro)

  Errington, Sir Eric

  Nabarro, Sir Gerald

  Wolrige-Gordon, Patrick

  Farr, John

  Nicholls, Sir Harmar

  Worsley, Marcus

  Fisher, Nigel

  Noble, Rt. Hn. Michael

  Wright, Esmond

  Galbraith, Hon. T. G.

  Nott, John

  Wylie, N. R.

  Gilmour, Sir John (Fife, E.)

  Osbom, John (Hallam)

  Younger, Hn. George

  Glover, Sir Douglas

  Page, Graham (Crosby)

  Goodhew, Victor

  Pardoe, John

  TELLERS FOR THE NOES:

  Gower, Raymond

  Percival, Ian

  Mr. Reginald Eyre and

  Grant, Anthony

  Pike, Miss Mervyn

  Mr. Hector Monro,

  Lords Amendment: No. 8, in page 22, leave out line 27.
  Question put, That this House doth disagree with the Lords in 'the said Amendment:—
  The House divided: Ayes 133, Noes 98.

  Division No. 486.]

  AYES

  [12.6 a.m.

  Albu, Austen

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

  Dempsey, James

  Armstrong, Ernest

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

  Dewar, Donald

  Atkinson, Norman (Tottenham)

  Buchan, Norman

  Dickens, James

  Bacon, Rt. Hn. Alice

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

  Dobson, Ray

  Bagier, Gordon A. T.

  Cant, R. B.

  Doig, Peter

  Beaney, Alan

  Carmichael, Neil

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

  Benn, Rt. Hn. Anthony Wedgwood

  Coe, Denis

  Eadie, Alex

  Bennett, James (G'gow, Bridgeton)

  Coleman, Donald

  Ellis, John

  Bidwell, Sydney

  Contlan, Bernard

  English, Michael

  Binns, John

  Cronin, John

  Ennals, David

  Bishop, E. S.

  Crossman, Rt. Hn. Richard

  Ensor, David

  Blackburn, F.

  Cullen, Mrs. Alice

  Fitch, Alan (Wigan)

  Brooks, Edwin

  Darling, Rt. Hn, George

  Fitt, Gerard (Belfast, W.)

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

  Davidson, Arthur (Accrington)

  Fletcher, Ted (Darlington)

  Blenkinsop, Arthur

  Davies, Dr. Ernest (Stretford)

  Forrester, John

  Bray, Dr. Jeremy

  Davies, Ifor (Gower)

  Fraser, John (Norwood)

  Freeson, Reginald

  McCann, John

  Roberts, Goronwy (Caernarvon)

  Galpern, Sir Myer

  MacColt, James

  Roberts, Gwilym (Bedfordshire, S.)

  Gardner, Tony

  MacDermot, Niall

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

  Gourlay, Harry

  Macdonald, A. H.

  Rose, Paul

  Gregory, Arnold

  Mackintosh, John P.

  Ross, Rt. Hn. William

  Griffiths, David (Rother Valley)

  McMillan, Tom (Glasgow, c.)

  Rowlands, E. (Cardiff, N.)

  Hamilton, James (Bothwell)

  McNamara, J. Kevin

  Shaw, Arnold (Ilford, S.)

  Harper, Joseph

  MacPherson, Malcolm

  Shore, Peter (Stepney)

  Harrison, Walter (Wakefield)

  Mallalieu, E. L. (Brigg)

  Sifkin, Rt. Hn. John (Deptford)

  Hattersley, Roy

  Manuel, Archie

  Silverman, Julius (Aston)

  Howarth, Robert (Bolton, E.)

  Mendelson, J. J.

  Slater, Joseph

  Howell, Denis (Small Heath)

  Millan, Bruce

  Spriggs, Leslie

  Howie, W.

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

  Summerskill, Hn. Dr. Shirley

  Hoy, James

  Moonman, Eric

  Urwin, T. W.

  Huckfield, L.

  Morgan, Elystan (Cardiganshire)

  Walden, Brian (All Saints)

  Hughes, Roy (Newport)

  Morris, Alfred (Wythenshawe)

  Walker, Harold (Doncaster)

  Hunter, Adam

  Murray, Albert

  Wallace, George

  Noel-Baker, Francis (Swindon)

  Watkins, David (Consett)

  Hynd, John

  Oakes, Gordon

  Wells, William (Walsall, N.)

  Jackson, Peter M. (High Peak)

  Ogden, Eric

  Whitaker, Ben

  Jenkins, Hugh (Putney)

  O'Malley, Brian

  Whitlock, William

  Jones, T. Alec (Rhondda, West)

  Oram, Albert E.

  Williams, Alan Lee (Hornchurch)

  Judd, Frank

  Oswald, Thomas

  Williams, Mrs. Shirley (Hitchin)

  Lawson, George

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

  Wilson, William (Coventry, S.)

  Lestor, Miss Joan

  Page, Derek (King's Lynn)

  Winter-bottom, R. E.

  Lever, L. M. (Ardwick)

  Park, Trevor

  Woodburn, Rt. Hn. A.

  Lomas, Kenneth

  Pavitt, Laurence

  TELLERS FOR THE AYES:

  Loughlin, Charles

  Pentland, Norman

  Mr. Charles R. Morris and

  Lyons, Edward (Bradford, E.)

  Perry, George H. (Nottingham, S.)

  Mr. Neil McBride.

  Mabon, Dr. J. Dickson

  Price, William (Rugby)

  NOES

  Alison, Michael (Barkston Ash)

  Cower, Raymond

  Ridley, Hn. Nicholas

  Allason, James (Hemel Hempstead)

  Grant, Anthony

  Rodgers, Sir John (Sevenoaks)

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

  Harvie Anderson, Miss

  Rossi, Hugh (Hornsey)

  Awdry, Daniel

  Hawkins, Paul

  Royle, Anthony

  Baker, W. H. K.

  Hiley, Joseph

  Harris, Reader (Heston)

  Bennett, Dr. Reginald (Gos. & Fhm)

  Holland, Philip

  Harrison, Brian (Maldon)

  Berry, Hn. Anthony

  Hunt, John

  Harrison, Col. Sir Harwood (Eye)

  Boyle, Rt. Hn. Sir Edward

  Hutchison, Michael Clark

  Grant-Ferris, R.

  Braine, Bernard

  Jenkin, Patrick (Woodford)

  Grimond, Rt. Hn. J.

  Brinton, Sir Tatton

  Kimball, Marcus

  Hall-Davis, A. G. F.

  Buchanan-Smith, Alick Angus, N & M)

  King, Evelyn (Dorset, S.)

  Russell, Sir Ronald

  Buck, Antony (Colchester)

  Kirk, Peter

  Scott, Nicholas

  Campbell, Gordon

  Kitson, Timothy

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

  Carlisle, Mark

  Lambton, Viscount

  Stainton, Keith

  Chichester-Clark, R.

  MacArthur, Ian

  Stodart, Anthony

  Clegg, Walter

  Maginnis, John E.

  Taylor, Sir Charles (Eastbourne)

  Cooke, Robert

  Maxwell-Hyslop, R. J.

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

  Crowder, F. P.

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

  Thorpe, Rt. Hn. Jeremy

  Currie, C. B. H.

  Mitchell, David (Basingstoke)

  Tilney, John

  Dalkeith, Earl of

  Monro, Hector

  Wainwright, Richard (Colne Valley)

  Dance, James

  Montgomery, Fergus

  Walker, Peter (Worcester)

  Dean, Paul (Somerset, N.)

  More, Jasper

  Wall, Patrick

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

  Nabarro, Sir Gerald

  Weatherill, Bernard

  Doughty, Charles

  Nicholls, Sir Harmar

  Whitelaw, Rt. Hn. William

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

  Noble, Rt. Hn. Michael

  Wilson, Geoffrey (Truro)

  Emery, Peter

  Nott, John

  Wolrige-Gordon, Patrick

  Errington, Sir Eric

  Page, Graham (Crosby)

  Worsley, Marcus

  Eyre, Reginald

  Pardoe, John

  Wright, Esmond

  Fair, John

  Percival, Ian

  Wylie, N. R.

  Fisher, Nigel

  Pike, Miss Mervyn

  Younger, Hn. George

  Galbraith, Hon. T. G.

  Pink, R. Bonner

  Gilmour, Sir John (Fife, E.)

  Pounder, Rafton

  TELLERS FOR THE NOES:

  Glover, Sir Douglas

  Powell, Rt. Hn. J. Enoch

  Mr. Eric Lubbock and

  Goodhew, Victor

  Pym, Francis

  Mr. David Steel.

  Lords Amendment: No. 9, in page 23, line 24, at end insert:

  "10A.

  The Orkney and Zetland Water Board.

  Limits of supply of:—

  Kirkwall Town Council

  Orkney County Council

  Stromness Town Council

  Lerwick Town Council

  Zetland County Council"

  Question, That this House doth disagree with the Lords in the said Amendment, put and agreed to.

  Schedule 2.—(ADAPTATION OF STATUTORY PROVISIONS AND ENACTMENTS IN CONSEQUENCE OF TRANSFER OF FUNCTIONS.)
  Lords Amendment: No. 10, in page 27, line 22, at end insert:
  "14A. In the New Towns Act 1946—

  (a) in section 9 as read with section 25(11)—

  (i) in subsection (1), the word "water" shall he omitted, and

  (ii) in subsections (2), (3) and (4), after the words "local authority" wherever occuring there shall be inserted the words

  241
  or, as the case may be, the regional water board ",

  (b) in section 25(23), after the expression "local authority" where first occurring there shall be inserted the words "or, as the case may be, a regional water board", and

  (c) in section 26(1), there shall be inserted the following definition—

  "regional water board" has the meaning assigned to it by section 31(1) of the Water (Scotland) Act 1967."
  12.15 a.m.
  Dr. Dickson Mahon: I beg to move, That this House doth agree with the Lords in the said Amendment.
  The technical device available to us on the last Amendment, which I am glad the House disagreed with, is available to us in this regard, too. It simply corrects a new paragraph in Schedule 2 to make adaptations to the New Towns Act which has been found to be needed as a consequence of this Bill.
  Question put and agreed to.
  Remaining Lords Amendment agreed to.
  Committee appointed to draw up reasons to be assigned to the Lords for disagreeing to certain of their Amendments to the Bill: Mr. James Bennett, Mr. G. Campbell, Mr. Gourlay, Dr. Dickson Mabon and Mr. MacArthur; Three to be the quorum.—[Dr. Dickson Mabon.]
  To withdraw immediately.
  Reasons for disagreeing to certain of the Lords Amendments reported, and agreed to: to be communicated to the Lords.

FURNITURE INDUSTRY
12.16 a.m.
The Minister of State, Board of Trade (Mr. George Darling): I beg to move,
That the Furniture Industry Development Council (Amendment No. 3) Order 1967, a draft of which was laid before this House on 5th July, be approved.
The Order has been approved in another place, but not before one aspect of the Order has been somewhat criticised. As I understand that similar criticisms may be directed at the Order in this House, I will try to meet what I think is the criticism in my explanation of the Order. I regret that my speech will, therefore, be somewhat longer than I had intended, but I will be as brief as I can.
This Order is made under the Industrial Organisation and Development Act, and it amends the original Order made in 1948 which set up the Furniture Development Council. The Council, as the House will know, was created to help the industry to become more efficient, more productive, to improve its designs and materials and the service that it gives to the public. Since it was set up, the Council has helped industry in many ways. It has developed useful ideas on production, management and engineering, financial control, costing, marketing, and so on, in all of which it is generally admitted that the Council's work has been very valuable.
Since 1961 the Furniture Industry Research Association, known as F.I.R.A., has been responsible for the industry's scientific and technical research. The Council and F.I.R.A. work very closely together and a large part of the levies which the Council collects from the industry is passed on to the Research Association to help with its work.
By Statute the work of the Council has to be reassessed every five years. The last review took place in 1966, and certain changes were then decided on. The object of this amending Order is to give effect to those changes. The first proposal is that the amount of the levy should be slightly increased. The second proposal is that the catchment area should be spread a little wider so as to bring in those firms which make certain types of built-in furniture and which have hitherto not paid the levy. As a

243
result, the Council will have rather more funds at its disposal.
Mr. John Hall Mr. John Hall (Wycombe) rose—
Mr. Darling: It is all right; I am not repeating the speech which was made in another place—only up to this point, at any rate.
Sir Douglas Glover: Is the right hon. Gentleman quoting?
Mr. Darling: No.
Of course, this will mean that it will be able to give better service to the industry. Incidentally, as the hon. Member for Ormskirk (Sir D. Glover) knows very well, the other development council to survive since the Act was passed in 1948, the Cotton Board, has also recently extended its coverage to manmade fibres to take account of the technical changes which are taking place in the textile industry. Of course, it has had to change its name to the Textile Council.
Sir Gerald Nabarro: If the Minister would permit me to interrupt, I ask him this. He has twice referred to "built-in furniture". I declare an interest straight away in that I believe most hon. Members know that I have been associated with the timber trade all my life, but what is "built-in furniture"? Where does one find the definition? May I ask for clarification on this before we go any further?
Mr. Darling: The hon. Member will find it in the draft Order.
Sir G. Nabarro: Would the right hon. Gentleman permit me again? I see that there is in paragraph 3 on the third page —the pages are not numbered—a copious definition of the word "furniture" but that does not seek to cover "built-in furniture". I simply want to know what is "built-in furniture" in this context.
Mr. Darling: The definition is in paragraph 3 which states:
"furniture' means furniture made of any material, whether assembled or not"—
leaving out what is not relevant at the moment—
"… and whether designed to be free-standing or to be affixed to premises …".
"Built-in furniture" is that fixed to premises, and that, I think, adequately
244
covers the furniture which the hon. Gentleman has in mind.
Sir G. Nabarro: I am grateful to the Minister, but he will be aware that tens of thousands of houses built in this country each year have an alcove. If a nest of wood shelves is put in that alcove, do they become "built-in furniture" or are they part of the builder's equipment?
Mr. Darling: It is "built-in furniture".
The main purpose of this Order, as I was about to say, is not an extension of its scope, and the more important purpose is to take account of the many and various technical changes which have taken place in the industry in recent years.
To come to the main points which I think may well be raised by hon. Members, I should mention that this Order safeguards the position of the "small" man, whether he makes traditional furniture, metal furniture, or "built-in furniture" so long as it is all on a small scale. The Order provides that he should be excluded from levy payment if his turnover in leviable items is £3,000 or less a year.
Mr. John Hall: On a point of order. Is it in order for the Minister to quote verbatim from a debate in another place? Consistently, he quotes from what is obviously the same speech used by his noble Friend in the debate on this Order in another place.
Mr. Darling: My speech is obviously about the Order.
Mr. Deputy Speaker (Mr. Sydney Irving): It is not out of order for an hon. Member to quote Ministerial speeches made in another place, but it would be better if they were paraphrased.
Mr. Darling: I accept your Ruling, Mr. Deputy Speaker, but I have either to paraphrase or use some of the words used in the other place, because this is the same Order as was debated in another place. However, I will paraphrase.
This is a new provision. I do not think that any hon. Member can tell me how I can paraphrase that. It will mean that the small man will pay the levy, and get all the benefits of research, and so on, but will make no payments by way of contributions towards that. It is right that we should understand the services

245
which all firms, large and small, will receive from the contributions which all but the small firms will now be required to pay. No hon. Member who has know- ledge of the industry will deny that the Furniture Development Council and the Furniture Industry Research Association provide excellent services to any and every firm in the industry which wishes to take advantage of them.
It was suggested in the other place, if I may paraphrase not the speech of my hon. Friend but that of another hon. Lady, that all that is done at the Research Association is to test pieces of traditional furniture and bring out ideas for improved designs or for better materials. That is an important field, but it is only a small part of the Council's work. I have been to the Research Association's premises, and I am sure that all hon. Members who have been there will agree that the scope of the work undertaken by the Association is most impressive.
Sir D. Glover: What the right hon. Gentleman has said about the inclusion of built-in-furniture covers every builder who builds a house. Is that so?
Mr. Darling: All the manufacturers of furniture items, like cupboards, which are affixed to the premises by the builder will be covered. I agree that the fixing is done by the builder, but he has to build the furniture and affix it to the premises. This is what is known as built-in furniture.
Sir D. Glover: Then it means every builder.
Mr. Darling: No. May I continue with the argument?
I am asking the House to approve an Order of which this extension of cover- age is only a small part. The scope of work of the Research Association covers much of the activities of, and will be very helpful to, the manufacturers of what we are calling built-in furniture.
Sir G. Nabarro: But we must have this point cleared up now. A builder puts up a house. He puts an ordinary wooden dresser in the kitchen. That builder is not a furniture manufacturer. He puts together a few pieces of wood and affixes them to the wall. If the right hon. Gentleman's argument holds water, how- ever, it leads to the conclusion that every
246
builder putting up a house anywhere with a few wood fittings inside it is then required to contribute to this levy as though he were a furniture manufacturer, which he is not. That is manifest nonsense.
Mr. Darling: I do not think it is nonsense, because— —
Sir D. Glover: But it applies to every builder.
Mr. Darling: No. Wait a minute.
The items of built-in furniture in every house can be defined. There are some cases in which the definitions will, perhaps, be a bit blurred, and I was coming to that point in its appropriate place. But, generally speaking, I understand that one now has, in the building not only of houses but of other residential property, quite a lot of furniture which is built in by the builder. I understand that this is the work which is done usually by the firms which belong to the Woodwork Manufacturers Association.
Sir G. Nabarro: No.
Mr. Patrick Jenkin: There is some confusion here. I have the impression that the right hon. Gentleman has not read on in the definition paragraph. In paragraph 3(a, i) it is made clear that this Order is not to include
"furniture designed to be affixed to premises and made … by any person pursuant to a contract entered into by him to supply and affix such furniture".
Will not the right hon. Gentleman agree, therefore, that the example put by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) cannot be included, whatever other obscurities there may be and despite what the right hon. Gentleman is now saying in arguing that it should be included?
Mr. Darling: No. I was coming to the point, perhaps in rather a clumsy way, of the builder who puts into the house a certain amount of what I have been calling built-in furniture. I understand that the furniture is supplied by the manufacturer, a person who calls himself a joiner or carpenter. The words "supply and affixed" look after this point. If the manufacturer supplies the furniture to be affixed by the builder he is caught by the levy. If a person supplies and affixes he

247
is not caught, because he is in the building industry. That is the point.
Sir Harmar Nicholls: Is the right hon. Gentleman saying that in this sense furniture is built-in only if it is supplied to the main contractor by another firm, and that if the builder affixes shelves or a cupboard it is not built-in furniture under the definition?
Mr. Darling: It must be supplied by a manufacturer to the builder.
Mr. John Hall: It does not seem at all clear from paragraph 3 of the Schedule that what the Minister says is necessarily correct. Would it not be a fact that in the case of a firm of joiners making built-in furniture to supply to builders to instal themselves, if it were done pursuant to a contract to supply and affix such furniture it would not come under the levy system?
Mr. Darling: It must be supplied by a manufacturer to the builder. It then becomes built-in furniture. That is what I said.
I was going on to say that the Research Association undertakes a considerable amount of research of direct benefit to the member firms of the British Woodwork Manufacturers Association involved. I have a full list of its research projects for this year. I do not want to read them out, but I can say that a considerable part of them are of benefit to the manufacturers of what I have called built-in furniture, if the firms concerned wish to take advantage of them.
But this is not the whole work done by the Development Council and the Research Association. There are many other technical advisory services, on management, accountancy, and so on, of tremendous benefit to the firms concerned. Some member firms of the Woodwork Manufacturers Association make use of these research services directly and pay directly for them. Their inclusion in the levy scheme will enable the services to be provided for them on the basis of the levy instead, and will enable the Development Council and the Research Association to extend their special assistance to the firms which object to the levy.
I understand that the burden of the criticism and complaints by the Woodwork Manufacturers' Association is not that it did not wish to participate in
248
research services of this kind, which could be of great benefit to it, but that it was not properly consulted in the preparation of the Order. I understand that its first complaint is that it was not in the working party which brought forward the proposals forming the basis of the Order. I think that there is some misunderstanding here, because the working party reviewed every aspect of the work of the Development Council, as it is required to do under the Act, and was, therefore, drawn from the trades and trade unions already covered by the Council.
One among many of the working party's proposals was that the scope of the Development Council should be extended to cover built-in furniture. This and the other proposals in the Order were approved by my right hon. Friend the President of the Board of Trade. As soon as approval was given, Board of Trade officials so informed the Woodwork Manufacturers' Association on 28th February, five months ago, suggesting that there should be discussions about the matter, and a meeting was held on 22nd March. Since then there has been considerable correspondence and several offers of further meetings from the Board of Trade.
There has also been a meeting at the Ministry of Public Building and Works, which is the sponsoring Ministry from the complaining organisation, to consider the Association's objections to being included, concerning its production of this kind of furniture. Discussions have taken place and the Ministry of Public Building and Works supports the Order.
Having examined all the correspondence, the offers to meet and consult and the minutes of the meetings which have been held, I am completely satisfied that everything possible was done to have formal discussions with the Association to iron out any difficulties or objections that it might wish to put forward.
I can understand the point of view of the woodwork manufacturers. It is only in recent years that this kind of furniture has grown and become a significant part of the furniture industry. It is held that as they are manufacturers of some kind of furniture they should be brought into the scheme and allowed, within the aegis of the Development Council and the Research Association, both to pay their

249
contributions and to get the advantages that the Council and the Association can provide.
There is bound to be a bit of overlapping between the joinery trade, which is what I understand the hon. Member for Worcestershire, South has in mind, and what we look upon as the furniture industry. There is bound to be some blurring of any distinction between furniture as supplied to be built into buildings and the traditional free standing furniture which up to now has been the sole furniture to come within the Development Council's activities. There is no dispute that the development Council and the Research Association can provide great services to every section of the furniture industry, including the section that is complaining.
The cost will amount to about a packet of cigarettes for every £500 worth of built-in furniture that they may produce. This struggle is about one-twentieth of 1 per cent. of their output.
Sir G. Nabarro: The right hon. Gentleman referred a few moments ago to "every section of the furniture industry." Would he define the position of, first, school furniture and, secondly, garden furniture made of wood?
Mr. Darling: It does not include school furniture. This is still left out of consideration, because we thought that it would be extremely difficult to carry the definition forward when dealing with schools rather than with residential premises. However, it will include, for instance, residences provided by universities for their students, because these would count as residences and not as schools.
Sir G. Nabarro: What about garden furniture?
Mr. Darling: Garden furniture is not built-in furniture. I would have thought that even the hon. Member would have understood that.
Several Hon. Members Several Hon. Members rose—
Mr. Darling: I must get on.
Mr. Sneaker: Order. We cannot have backchat across the House on the subject of built-in furniture.
Mr. Darling: I have tried to deal with the arguments put forward in another place about the lack of consultation and the reasons which have been put forward to show why this Association does not want to join the scheme. But this is only a small part of the Order.
I think that it would be desirable, and that I would have the support of the whole House, in congratulating the directors of the Development Council and the Research Association on the good job of work that they have done over the years for the industry. This is generally admitted and accepted. I do not think that an opportunity like this should pass without the sponsoring department, the Board of Trade, putting on record its appreciation of the work which has been done by the chairman, Mr. Robert Faulk and by the Research Association under Mr. Keith Wrighton. They have done an excellent job of work and by approving the amendment Order we will enable them to make an even greater contribution to the future of the industry.
With the backing of hon. and right hon. Members on the last two points, at any rate, I commend the Order to the House.
12.45 a.m.
Mr. Patrick Jenkin: The right hon. Gentleman has made it abundantly clear that there is strong opposition to the Order. In contradistinction to his usual lucid self that is about all he has made clear. The fact is that a section of the joinery industry which has always been part of the building trade is for the purposes of the Order to be treated as part of the furniture industry.
We are critical of the Order on two counts. One is the technical problem involved with built-in furniture. The other is the procedural point and the question of consultation. On the technical issue, there can be little doubt that the Order is misconceived and that it seeks to treat built-in units as furniture. Like my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro), I notice that the Minister of State referred throughout to built-in furniture. That is almost a contradiction in terms. These are built-in units and are to he treated artificially as furniture in the Order.

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On the procedural point, the consultation which the right hon. Gentleman's Department had with the principal trade associations concerned and with the trade union, the Amalgamated Society of Woodworkers, which is opposed to the Order, has been totally inadequate. The joinery industry was not represented on the working party which was set up to advise the President of the Board of Trade on the technical content of the Order. The result of this was the right hon. Gentleman got into difficulties in dealing with the points of my hon. Friends.
The effect of the Order is obscure, and as explained by the officials of the Board of Trade to the B.W.M.A. is illogical and cannot be supported on any grounds. There is no obligation to secure the consent of any part of an industry to be be brought within the ambit of the development council. However, the Act says that whenever a new council is to be set up not only must the Government consult with that industry, but must not set up the Council unless they are satisfied it is wanted by a substantial proportion of that industry. I would have thought that the Government would have gone to great lengths to secure agreement when they were proposing to tack part of an industry onto an industry already there. The Order is, therefore, probably not ultra vires.
I cannot congratulate the right hon. Gentleman on the way in which the matter has been handled by his Department, because the B.W.M.A. has been only partially consulted and the consultation did not extend to the technical details. Even the broad merits of the consultation were left incompete and interrupted just after they started when the Government tabled the Order and debated this matter in another place.
I should like briefly to run over what has happened. It is common ground that the initiative for this change came from the Furniture Industry Development Council. It is not disputed that the Council was anxious to increase its funds and was looking for new sources. Hitherto it had been acting for free standing furniture only and since 1948, under the first Order, this has been the definition of furniture.
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The joinery industry, which makes things like doors, window frames, stairs and cupboards, had always been quite separate, but it was the joinery industry which first developed built-in units. It developed the whole market for kitchen units and bedroom units and for built-in cupboards and developed the standards in conjunction with the building industry and the British Standards Institution and other bodies, and the industry enjoyed rapid growth as a result. Therefore, it was not for some years that the traditional furniture industry, the freestanding furniture industry, moved into this new trade, and it is this industry which is the newcomer, whereas the joinery industry has been making these things for 20 or 25 years.
It is conceded by the Government, and was conceded in another place, that the joinery industry accounts for more than half the present market for built-in units. I believe that the figure is 60 or 70 per cent., with only the remaining minority being made by the furniture industry proper.
I have mentioned these things at some length because there appears to be a fundamental misapprehension in the Board of Trade. Speaking for the Government in another place, the noble Lord, Lord Walston, said:
"… over the past years those who are normally engaged in the joinery trade have become increasingly involved in the furniture trade. A larger amount"—
and this is the crucial sentence—
"of the built-in furniture specifically is now being manufactured by people who normally are joiners and woodworkers ….—[OFFICIAL REPORT, House of Lords, 17th July, 1967; Vol. 285, c. 153.]
I emphasise the word "now". The implication is that this was originally a development of the furniture industry and that the joiners and the woodworkers muscled in later, whereas the exact contrary is the truth.
This was made very clear in a letter to the B.W.M.A. by Mr. Thomas Sibthorp, who is the architect adviser and was chairman of the B.S.I. committee on kitchen fitments. He wrote:
"… in fact, the reverse is true so far as built-in units are concerned because it was the work of the E.J.M.A."—
the B.W.M.A.'s predecessor—
"in first of all bringing out the Standard for these units, producing them, selling them and

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fostering a British Standard, that created the market for this particular form of built-in unit which certain sections of the furniture industry have now copied for their own use. In this particular field they have contributed practically nothing and taken a considerable amount".
Sir D. Glover: Why did not the Development Council, which is supposed to be so valuable, get the furniture industry to produce built-in furniture much earlier instead of leaving it to the joinery side?
Mr. Jenkin: I imagine that the joinery industry, with various other trade and research associations, was doing all the work necessary in this respect and there was no reason for the Development Council to get into it. However, the Board of Trade appears to have accepted from the outset the view that it was, as it were, a natural extension of the furniture industry and to think that it should now swallow this section of the joinery industry.
Lord Walston also said that it was obvious on pure grounds of simple logic. It was obvious to no one except himself. But I have no doubt that that is why in their dealings with the B.W.M.A. the Board of Trade official did not think it necessary to embark on detailed comprehensive consultations from the beginning, thinking that this was a development by the furniture industry, not recognising that it had been an integral part of the building industry for many years.
The first approach was, the right hon. Gentleman said in March, to discuss built-in units. The B.W.M.A. thought that this was a purely fact-finding and informal meeting, although it clearly discussed the sort of suggestions which are now involved in this Order. This was followed by a letter of 14th April in which it was stated that the Board of Trade proposed to bring within the scope of the Order domestic type built-in furniture.
In that letter the B.W.M.A. was promised consultations when the full draft was available. By now it was very concerned. It consulted counsel, and as a result of that it sought the help of the Ministry of Public Building and Works. The Ministry agreed to help, and a meeting was fixed for 26th June. In the meantime, the draft Order had been prepared and as I have said the B.W.M.A.
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was not represented on the joint working party. The Order was sent to the B.W.M.A. on 9th June.
I will read an extract from a letter of 9th June. It said:
"If it is your wish to discuss the draft with the Board of Trade as a separate matter from the discussion to be held on 20th June with the Ministry of Public Building and Works the necessary arrangements will be made on receipt of a telephone call here."
The B.W.M.A. promptly wrote back that a further meeting would be required. A meeting was held on 26th June and the B.W.M.A. at that stage tabled a very full memorandum setting out in detail its objection to the Order. It asked three principle questions of the Board of Trade Officials attending the meeting.
First, it wanted a comprehensive list of the items which were to be included in the Order. Secondly, it wanted a definition distinguishing those which were to be in, and those which were to be out of the scope of the Order. It asked for the logical grounds for a definition. Thirdly, it wanted the Government's reasons why the Development Council felt it necessary to widen the definition.
This meeting was followed by a long letter from the Board of Trade, in which it answered the first of those questions. It set out a list of items that were to be in and out, and the products that were to be covered. This is a very obscure, illogical division. The ordinary wall and cupboard units, dressing table units, drawer and cupboard base units, sink units, were to be included. Airing cupboards, hob and oven cupboards, and refrigerator casing units and things of that sort were to be out. There is no rhyme or reason in this.
Every firm making a comprehensive range of built-in units produces such units, yet some are to be in and some out. In addition, there is a substantial area of doubt. What about shelves in a cupboard? Or an alcove to be enclosed by a cupboard door, or hot air cupboards, built-in units, meter containers? What about this new development in movable partitions, with the partitions consisting of fitted wardrobes? Are those to be regarded as built-in units, or part of the joinery of the house?
The Order is clearly defective in this respect. The reason is because the

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B.W.M.A. was not consulted on the technical content.
Mr. Darling Mr. Darling indicated dissent.
Mr. Jenkin: The Minister shakes his head, but he admitted this, and this is the consequence of failing to consult the B.W.M.A. It is also on the face of it, incomplete. It is worth while looking at the opening paragraph of the letter of 3rd July, when the Board of Trade wrote as follows:
"I am also taking the opportunity of commenting on some of the major points made in your memorandum tabled at that meeting, although you will appreciate that it is not proved possible in the time available to deal with them comprehensively."
There we have so far no sign of the second meeting offered, and that offer had been accepted. We have no full reply to the comprehensive memorandum tabled by the Association. On 5th July two things happened. The first was— —
Mr. Speaker: Order. The hon. Gentleman must not pursue this in too great detail at this stage.
Mr. Jenkin: If I am wearying the House I will hurry on, Mr. Speaker.
The fact is that on 5th July there was a long commentary by the Association. On the same day the Board of Trade laid the Order. That was greeted by a reaction by the Association of shock and anger. It realised at that point that the Board of Trade had no intention of consulting the Association on the content of the Order. The Board of Trade has made it clear that it was not prepared to withdraw the Order, and it is well known that it cannot be amended in either House. The Association tried again, for it was anxious to have a further meeting. It reiterated its request for an answer to the two questions which had not been answered. However, six days later the debate took place in another place.
Were the Board of Trade still prepared to meet them? I telephoned the right hon. Gentleman and asked him whether he would meet representatives of the Association after the debate in the House of Lords.
Mr. Darling: The hon. Member ought to tell the House when and at what point that meeting was suggested. He asked me to meet a deputation this morning.
Mr. Jenkin: The only possible object of such a meeting would have been to persuade the right hon. Gentleman, even at that stage, to withdraw the Order. He refused to receive a deputation from the Association. I wonder why.
The result is that we have an important trade association with serious objections to the Order, which will affect it to no considerable extent. It objects in principle and in detail, and its representations went largely ignored and its complaints of inadequate consultation have been scouted. The Board of Trade wrote a letter stating that the original consultation in May was intended to be the consultation. The result is that we have an angry and resentful industry which is being frog-marched into a Council to which it has no wish to belong and to which it has no desire to pay a levy.
This brings me to the objections in principle, which I will deal with briefly. This industry, joinery, is part of the building industry. For decades it has been part of the building and construction industry and working hand in glove with it. The two have common standards and they have taken part in the building industry's efforts at metricisation. All that is quite irrelevant to freestanding furniture.
It contributes to the Construction Industry Training Board, its standards come under the Building Divisional Council of the B.S.I. and its labour negotiates through the National Joint Council for the Building Industry. Its research is done by the Forest Products Research Laboratory, the Timber Research and Development Association and the Building Research Station. It works on inter-firm comparisons—and all this is closely interwoven with the building industry.
Lord Walston suggested in another place that those who were opposing the Order were guilty of pigeon-holing and suggested that this was a restrictive practice. That is a highly specious appeal to prejudice. No one is seeking to remove pigeon-holes, but merely shifting an unwilling section of one industry into the pigeon-hole occupied by another.
That sort of argument merely makes people angry. The Minister could redeem the situation even now. This is a draft Order. There is no case for urgency.

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I beg him even at this stage to withdraw the Order and to inform himself fully, as obviously he is not informed now, of the full details of the case and all the facts and to embark on genuine consultations both with the B.W.M.A. and with the trade unions who are opposing this Order.
If the right hon. Gentleman is still convinced that he is right, at any rate he will be on firmer ground, but if he presses on with the Order regardless of all the arguments addressed to his Department, then he will attract a totally uncharacteristic reputation for a high-handed dictatorial attitude wholly foreign to his character. I earnestly beg of him to think again.
12.59 a.m.
Mr. Ted Fletcher: I hope that I shall not detain the House long, but many workers in my constituency are employed in the joinery trade and, in addition, a local firm of standing in the locality have asked me to make representations on this Order. The purpose of the Order appears primarily to be to increase the finances of the Furniture Industry Development Council and the effect would be that all built-in units such as kitchen storage units would be classed as furniture and would be liable for levy payment to the Furniture Industry Development Council. Consultation between the Department and the employers' association seems to have been inadequate. A Ministry official gave this assurance on 24th May:
"We shall be formally consulting the British Woodwork Manufacturers' Association as an interested organisation."
In another communication on 9th June an offer was made to discuss the draft of the Order, which is like a judge who has found a criminal guilty consulting him on the words he should use in the sentence. It had been decided to bring certain sections of the industry within the Order and the association was to be consulted only on the form of words.
I do not know whether there has been any consultation with the Amalgamated Society of Woodworkers, but I know that there has been none with the Amalgamated Society of Woodcutting Machinists. The Department has not done everything possible to consult all interested parties. Section 1(4) of the original
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legislation, the Industrial Organisation Development Act, 1947, says:
"A development council order shall not be made unless the Board or Minister concerned is satisfied that the establishment of a development council for the industry is desired by a substantial number of the persons engaged in the industry."
There have been no consultations in the broad sense of the word. To me, as a former trade union official, consultation does not mean simply an assurance that one will be consulted, followed by consultation only on the draft of an Order which has already been laid.
It is suggested that a contribution from the joinery industry will greatly improve research, but the Manufacturers Association has a good record in research, spending many thousands each year and engaging consultants and advisers. This work may be duplicated if it has to pay additional levies for further research connected mainly with the furniture industry. There are bound to be difficulties over the definition of moving and non-moveable furniture, but that in the 1947 Act is quite clear and there seems no case for changing it. What special circumstances have led the Ministry to decide on a new definition?
There is no urgency about this. I hope that the Ministry will have second thoughts and, after consultation, will try to persuade the interested parties that it is in their long-term interests for sections of the joinery industry to pay a levy to the Development Council.
If there is no great urgency, is it possible for the Ministry to reconsider this whole matter? We are jealous of our privileges and we want decisions to be made only after the widest consultation with all the bodies concerned. Having gone into the matter in come detail, I cannot say that the widest possible consultation has taken place and I therefore appeal to the Minister to look at the matter again.
1.6 a.m.
Mr. John Hall: The Minister may gather, from my remarks, that I am likely to be the only friend he has; although I assure him that the friendship will be lukewarm. Not unnaturally, the furniture trade welcomes the Order, and since I represent a furniture-making constituency—we make some of the best furniture in the world;

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this is not just a commercial, but a fact—I must put forward the trade's point of view.
There is a definite case for the inclusion of manufacturers of furniture, whether fixed or free-standing, although I agree that there is something in the objections voiced by several hon Members about the way in which the Order has been handled. Nothing said by the Minister so far leads me to believe that there has been consultation in the full sense of the word with the various interests.
The Board of Trade has carried out some consultation and has complied with the provisions of the Act. Without suggesting that anything illegal has been done and while agreeing that the Act has been complied with, I cannot believe that the fullest consultation has taken place. As a result, as has been suggested, organisations will be brought in screaming.
Knowing that objections would be raised, one would have thought that the Ministry would have gone out of its way to make certain that the most comprehensive consultation took place before the Order was laid and that all possible doubts were satisfied. Can the Minister assure us that all possible consultation took place?
There is a case for including the manufacturers of fixed furniture with the manufacturers of other furniture. The difference between fixed and freestanding furniture is that one piece stands by itself while the other is fixed to a wall or floor. In other respects, they may be absolutely identical. It seems illogical that they should be dealt with differently, with different research organisations handling their work.
Sir D. Glover: Is my hon. Friend aware that one can produce a so-called built-in wardrobe by placing a door over a brick-built alcove?
Mr. Hall: I doubt whether that would be defined as a piece of built-in furniture, not even in the obscure definition contained in this provision.
Manufacturers of built-in furniture enjoy certain advantages over their freestanding furniture counterparts. For example, by producing furniture which is virtually identical to free-standing pieces, because it is fixed to a wall in a house it
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can be included in the purchase price of the property, so enabling the purchaser to pay for it over a long period on mortgage, thus avoiding the hire-purchase restrictions to which the purchaser of freestanding furniture has been subjected.
Mr. Speaker: Order. The hon. Gentleman must not broaden the debate. We are considering the question whether this group of manufacturers should pay the levy for the Development Council.
Mr. Hall: I was pointing out that the manufacturers of free-standing furniture have not enjoyed certain privileges which manufacturers of built-in furniture have enjoyed. I see no reason why they should not make similar, virtually identical, pieces of furniture.
I should like some clarification of the definition in paragraph 3 of the Schedule. In an earlier exchange when the Minister was explaining the Order some doubt arose in my mind as to what liability would arise in the case of a joiner making built-in furniture and providing it on contract to the house builder. I can understand that a builder himself making and fixing furniture to the houses he built would be excluded from the definition in the paragraph, but what about the joiner who has a contract to provide built-in furniture to builders? Is he not excluded from the provisions of the Schedule, which speaks of it being pursuant to a contract entered into by him to supply and fix such furniture?
If so, would it not be possible for the manufacturers of built-in furniture in most cases to evade altogether the levy that might otherwise be charged? In most cases, they could enter into contract with the builders of houses or other premises to provide, design and fix in premises this type of furniture for which they would be responsible—
Sir Myer Galpern: I am sure that the hon. Gentleman knows full well that most white wood furniture without backs on it, to which we are referring—which is not the same as free-standing furniture—would largely be supplied by way of contract. The suppliers would have entered into a contract to fit these pieces of furniture into houses.
Mr. Hall: The hon. Gentleman is quite right—that is my point. As far

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as I can see, the suppliers of furniture of that kind would be excluded from the effects of the Order by that paragraph.
I should have thought that in most cases the manufacturers of built-in furniture would be able to evade the full implications of the Order by entering into the contracts which he describes. That is one reason why the definition must be made clearer; it is not at all clear to manufacturers of either free-standing or fixed furniture what is covered by kite definition. The Minister would help the House greatly if he could give an interpretation of what it means.
1.13 a.m.
Colonel Sir Harwood Harrison: A factory in my constituency will be affected by the Order. I have had a letter from the chairman of the company, a man whom I regard as being very able in that line. He was the first president of the British Woodwork Manufacturers' Association when it was formed. I have listened very carefully to the Minister, and unless I am very much mistaken he has contradicted himself, though not intentionally, by what he has suggested comes or does not come within the definition.
Having been approached by those having the factory, I know that we are changing something that is long established. What was furniture and what was joinery was laid down by the late Sir Stafford Cripps, and the definition has never been departed from. From the papers with which I have been supplied, it seems to me that the joinery people have been extremely clever. They have been able to develop without any help from the Furniture Council, and, because they have been successful, they are asked to pay the levy.
I am sure that we all have a high regard for the Minister, but I believe that on this occasion he has been badly briefed. It is not like him to make that sort of speech. I also believe, from what I have been told by the people in the trade—and I will not go into details of how much consultation there has been—that even his officials in the Ministry do not understand the distinctions existing at present. The Order has been produced in a great hurry. What is the urgency of it? We are at the end of a long Session. This is produced
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as the third Order after ten o'clock on a July night. It is an Order of importance to many people and should, therefore, receive proper consideration.
I ask the Minister of State to reconsider this and consult everyone involved. If he came back next Session and told us that he had gone into it and that this was right, I, for one, would then be prepared to accept it, but I do not believe that full discussion has taken place.
My constituents have told me that, much as they dislike the Order, they would be satisfied if another exception clause were inserted after sub-paragraph (c) in paragraph 3 of the Schedule. I do not say that my constituents have drafted this correctly. They are not draftsmen, nor am I. I commend to the Minister of State the words they would like to be inserted after paragraph 3(c) of the Schedule.
Mr. Speaker: Order. The hon. and gallant Gentleman knows that he cannot amend the Order. He can only speak against it.
Sir H. Harrison: I apologise, Sir.
It is the question of the so-called units of kitchen storage which is causing all the worry. I beg the right hon. Gentleman to withdraw the Order and bring it back next Session after having fully considered it and satisfied himself that it is right, because I believe that he will find that it is not so.
1.17 a.m.
Mr. Brian Harrison: I think that the Minister has made a great mistake in bringing the Order forward at this stage without having had the right consultation and without having got it clear. We all admire the right hon. Gentleman's lucidity, but his speech tonight showed considerable confusion in definition, a confusion which is shared by all those who have examined the Order. This includes the manufacturers. It seems as if the Furniture Industry Development Council suddenly decided that it wanted some more money and looked round to see how it could cast its net a little wider and then decided that it would include built-in as well as freestanding furniture, irrespective of the fact that traditional built-in furniture has been dealt with by separate trade associations and. in many cases, by separate trade unions.

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The definitions have caused much difficulty. Although the consultation may have been full and comprehensive by departmental standards, certain organisations think that there has not been adequate consultation. One trade union was consulted, but thinks that its views have not been taken notice of. Another trade union has not been consulted. The fact that the Association has not been fully consulted means that there is a grievance and a feeling that something is being swung on the industry.
All sorts of things look wrong and odd in this Order. All of us must be pleased that musical instruments, freestanding or built-in, are exempt. So is pottery. But all sorts of things should be considered in an Order such as this. For example, kitchen units made by joinery manufacturers whose workers are employed under the terms of the National Joint Council for the Building Industry, ought not to be included. This is another section which the right hon. Gentleman should look at. The Order will affect many efficient and able manufacturers. I beg the right hon. Gentleman to withdraw it.
I give another reason why it should be looked at again and the definitions made clearer. An industrialist or firm which has a wide range of manufacturing and a big joinery works will have to set up a special accountancy department to sort out just how much of its output is liable for the levy. This will lead to all sorts of skulduggery and sorting out to find what part of the output of the joinery works should be included. In my constituency a firm may be building not only furniture units, but staircases. These things will have to be itemised separately and a special form of accounting will have to be used.
All of us would agree that the Development Council has done a wonderful job, but this is a clumsy way of increasing its revenue. It has not been carefully thought out. There is the grossly unfair situation whereby many joinery organisations will belong to the Council and be paying into separate organisations. I beg the Minister to think again, to withdraw the Order now, have fuller consultation and bring an Order back after the Recess, when it can have the support of both sides.
1.22 a.m.
Sir Gerald Nabarro: The largest import into the United Kingdom of any single commodity is timber, which accounts for more than £200 million per annum. Furniture manufacture, joinery and saw-milling are all branches of the timber trades of the United Kingdom. The difficulty of doing what the Minister of State is seeking to do tonight is to differentiate by definition between furniture and joinery. I say that it is impossible to differentiate within the compass of the relatively short definition in this Statutory Instrument.
I declare an interest at once. I am a director of quite a large number of firms engaged in the wood-working trades and industries of one kind or another. I have been associated with those trades nearly all my life outside the Army.
I intervened in the Ministerial speech and asked the right hon. Gentleman to define the term "built-in". Of course, he side-stepped. It is incapable of definition, like smoke. When the Clean Air Act was going through the House, I asked for a definition of smoke. It was said to be indefinable. The term "built-in" is equally indefinable. We have been talking tonight about kitchen cabinets. We may say that they are items of built-in furniture in that they are prefabricated. My hon. Friend the Member for Ormskirk (Sir D. Glover) countered that if there were an aperture in a wall in a house, and it was lined with block-board and a door placed on the front of it, that would represent an item of built-in furniture. I do not know. Nor do I know if, in a kitchen of a new house, shelves are erected by the builder of the house, that nest of shelves is to be regarded as built-in furniture. In my view, it is impossible of definition.
Here I come to my hon. Friend the Member for Maldon (Mr. Brian Harrison). He is correct. A very large number of joinery works in this country manufacture prefabricated items such as kitchen units, on the one hand, and, on the other, they carry out a miscellany of joinery work on the sites of houses being erected. Such a firm would then have to set up some kind of accountancy organisation, however crude, to distinguish between the built-in units and the direct joinery items.

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Of course, this is not a new controversy. My mind goes back 11 years, to 1956, when I was assaulting the Chancellor on the question whether Purchase Tax was chargeable on garden furniture. I ask this evening: is garden furniture included or is it not? I will give way at once if the right hon. Gentleman will tell me.
Mr. Darling: It is in.
Sir G. Nabarro: It is in. Garden furniture is in this Order now. But near my home in Worcestershire is the Wye forest, where thinnings are taken out of the forest and four poles of wood are nailed together to make a garden rustic arch. Purchase Tax is charged on it and, therefore, that little local rural industry will now be called upon to pay a levy.
Mr. Darling: The small man is left out.
Sir G. Nabarro: At what point he pays it I know not, but he will have to pay it eventually if he makes garden furniture. None of them has been able to distinguish when a piece of wood dressed, sawn and attached to another piece of wood becomes an article of furniture. That is really the point in this Order.
I am against this Order. It is very clumsily put together, in a most slipshod fashion. I shall not go over all the ground that has been covered already by both sides of the House, notably by the hon. Member for Darlington (Mr. Ted Fletcher), who alluded to the lack of consultation in this matter. I could tell the Minister of a dozen experts in timber and wood-cutting processes who could give him a far finer definition of the difference between joinery and furniture than that contained in this Statutory instrument. But there has not been reasonable time allowed for these consultative processes to go forward. The Minister is nodding. I do not want to delay the House. [An HON. MEMBER: "Divide."] My hon. Friends and I do not intend to divide.
Mr. Speaker: Order. Interruptions from hon. Members will only provoke the hon. Member who has the Floor to delay the House.
Sir G. Nabarro: I will not be provoked, Mr. Speaker.
My hon. Friends and I do not propose to divide the House on this mattes because we still believe that this is a non-party political issue. My hon. Friends and I do not object to the levy on the furniture industry at all, but we do object to the addition which is being made in this Order because it is so ill-defined as to lead to great confusion in the future.
It is on those grounds that we think it reasonable to say to the right hon. Gentleman, "Take your Order away. Do some more homework on your Order. Withdraw it tonight; this will incommode nobody." I have consulted various branches of the industry. They do not mind waiting three months. I am in the industry and I am much better informed than the right hon. Gentleman. [An HON. MEMBER: "Oh."] I am very modest about it. If I am provoked, I shall go on, keeping the hon. Member for Gravesend (Mr. Murray) out of his bed.
I say again, the industry would not mind a delay of three months, and I suggest that this Order is brought back in revised form in the last week of October with a clear distinction in it to show what is joinery and what is furniture. Then it would be a much more sound Statutory Instrument, both to my hon. Friends and to myself.
1.31 a.m.
Mr. R. W. Brown: I will intervene only briefly, but I want to say that the criticism of my right hon. Friend is extremely unfair, especially in the matter of consultation. Listening to this debate tonight, and reading what was said in another place, it is quite clear that the Board of Trade cannot truthfully be accused of having failed to have proper consultations.
One sees from the debate in another place that there was a discussion on 22nd March, and continuing discussions on 14th April, 24th May, when further letters were sent on the subject, and further discussions were offered by the Board of Trade. On 9th June, the Board of Trade sent a copy of the draft Order to the B.W.M.A., and at a further meeting on 26th June, various points were made.

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There was further correspondence on 3rd and 10th July, and it would seem that under no stretch of the imagination could it be said that my right hon. Friend failed to consult.
Mr. Patrick Jenkin: Would the hon. Gentleman give way?
Mr. Brown: I have only just started.
Mr. Jenkin: Was the hon. Member here when I said that a second meeting was offered, and accepted, but that that meeting was never held?
Mr. Brown: I have been here during the whole of the debate, but I did not interrupt the hon. Member. I wanted to do so, but I gave him the courtesy of allowing him to continue his argument, although hon. Members interrupted continuously during the speech of my hon. Friend.
The President of the Board of Trade has endeavoured right through these negotiations, which began in early March, to put his proposals before the organisations concerned. The problem he faced was how to meet people if they started from the very first with the premise that they would not have it. It does not matter if there is a three months' delay as suggested by the hon. Member for Worcestershire, South (Sir G. Nabarro) or three years' delay, but quite clearly, this organisation will not accept it, and what is proposed should be brought in within the terms of the present Order.
It is completely unfair for hon. Members opposite to keep on about "failing to consult". They have failed to consider at all what this Order is about. It is an attempt to ensure that people manufacturing furniture shall pay a levy. So, whether it is built-in or free-standing, the criteria are that if one is getting benefit from the work of a Development Council, then one should pay a proportion of the levy for it. It is as simple as that, and it is what was said in another place. It was there said that it was only logical that, if one manufactures furniture and one gets benefit from the Development Council, then one should pay one's proportion of the levy.
Here are some examples of work which the Development Council has done. It has done research into panels that warp. Is it suggested that built-in furniture has
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no panels, doors or shelves that warp? Of course it has. The Council has prepared basic data regarding storage space. Is this of no value to the manufacturer of built-in furniture? Of course it is. He uses those data. The problem of sticking drawers and sliding doors occurs in both built-in and free-standing furniture, and research in this respect, also, is much valued. Is it argued that the manufacturer of built-in furniture derives no advantage from the research into adhesives and the stability of joints?
Plainly, those who make joinery products—they are in competition with furniture products—ought to take their share in paying the levy. I hope that my right hon. Friend will stand firm. Research and development in this industry needs to go ahead. We need an efficient organisation. We need greater productivity. Research and development is being undertaken. Everyone in the industry who derives a reward from it ought to contribute towards it.
1.37 a.m.
Mr. Graham Page: The Act which this Order is made is one of those in which Parliament trusts the Department concerned to have consultations before an Order is made. Nothing is laid down regarding what sort of consultation it shall be, but Parliament trusts the Ministry to have reasonable consultation.
In this case, the consultation was insufficient from that standpoint. It was not insufficient from the legal point of view. The Minister could bring an Order to the House in draft and then go away and consult. That would still be legally right. He only has to consult the organisations concerned before he makes the Order. But, undoubtedly, in giving the Minister power to make Orders of this sort, Parliament intended that he should have proper consultations.
In this case, I cannot think that either side of the House is satisfied that proper consultations took place. It may have been something of the fault of the organisation concerned, which was antagonistic towards the Order. But it was antagonistic, I understand, towards the definition of the activity to be brought under the Order, and it wanted an opportunity to be consulted on that definition.

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No one can be happy about the definition in paragraph 3 of the Schedule. It describes an activity of making furniture for domestic purposes, and then describes activities which are excepted from that definition. It should be noted that the Order affects the people who are carrying out these activities. We are not defining what comes under the Order by defining an activity; it is those who carry out the activity. To escape, they must always fulfil three conditions. The first is that they must design furniture which is to be affixed to premises. The second is that the furniture must always be made pursuant to a contract, and the third that that contract must be for the supply and affixing of the furniture.
If, in any contract during the year, they do not carry out any of those three conditions in supplying built-in furniture they are carrying out an activity which brings them within the levy for the Council. I understand that this is merely to get more money for the Council. If so, it is taking money from the builders of houses to give to the manufacturers of furniture, and is more than likely to increase the cost of houses.
I am not sure how the Order will work in connection with those building houses. I understand that those who have been installing built-in furniture have from time to time consulted the Council, and have paid a fee. They have, therefore, contributed to the money required by the Council. The levy imposed by the Order is for the year 1967, no matter at what time of the year it is imposed. No doubt those who have been installing built-in furniture have been consulting the Council during the year and paying fees. Now that they are called on to pay the levy for the year, will they get a rebate of those fees? It is a small point, but it affects the kind of Order we are discussing, which is retrospective and which the House should, therefore, study carefully.
If the House is to study it carefully, have one little teaser for the right hon. Gentleman. The fourth line of paragraph 2(2) of the Schedule includes the words "intends", which is obviously in the present tense instead of the past. It is a grammatical error which can be corrected in the reprinting, but these sort of things should not occur.
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The right hon. Gentleman is wrong in asking the House to accept the draft with a definition such as there is in paragraph 3 of the Schedule, which will obviously cause immense trouble. It does not really go to the root of the matter and it is not helpful to those who must work it in practice. We are dealing with practical men involved in the building and furniture industries, not a lot of lawyers. They must work out the Order themselves without running to their legal advisers whenever a point arises. Therefore, we should give them a thoroughly understandable definition, which we have not done in the Order.
1.44 a.m.
Mr. Darling: I should like to reply briefly to some of the questions. First, a very sensible definition was proposed to the Association on 14th April. It was that
"Built-in furniture includes all furniture or parts of furniture of a type commonly used for domestic purposes whether or not supplied for domestic purposes and manufactured under factory or workshop conditions and taken to buildings and installed in such a way as to be fixed to the building or part of the structure."
That was one definition we were prepared to discuss. There is another mention of built-in furniture in a Statutory Instrument which I am sorry the hon. Member for Crosby (Mr. Graham Page) cannot remember, that is the Industrial Training and Furniture Industry Board Order, 1965.
The reason why we are leaving it fairly vague is that the Order will bring in the manufacturers of built-in furniture. There may be many questions of borderline cases and so on which we would prefer to discuss with them in consultations which have been denied us up to now by the Association.
Mr. Patrick Jenkin: No.
Mr. Darling: Yes. It is very difficult to have consultations with people who do not want to consult, and this is what has happened. Time and time again the Board of Trade has said, "This is what is proposed. Please come along and discuss it." The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) quoted a letter of 9th June in which we said, "If there are any further points, come along and discuss them". Time and time again difficulties were raised.

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In a way I do not blame the industry. I can understand that this is its point of view. It does not want anything to do with this Order, so why should it come and consult. As I say, from its point of view it is understandable.
I do not want to go over the whole story. I have the facts here. I would prefer this Order, which is extending the levy to the manufacturers of built-in units, to come into operation in a much more friendly atmosphere than has been created by the debate.
I refer now to the points raised by my hon. Friend the Member for Darlington (Mr. Ted Fletcher). The Amalgamated Society of Woodworkers and the Amalgamated Society of Woodcutting Machinists were in effect in the working party from the beginning, because they are members of the trade union federation which is represented on the Furniture Development Council, and they were informed all the way through of what was going on. In addition, because we had heard that the Amalgamated Society of Woodworkers was not quite happy about the way things were going, we asked it to come along and we would explain things. We understand that no representations have been made by the Amalgamated Society of Woodcutting Machinists against the Order. Consultation has taken place with the A.S.W. We had a meeting on 9th June.
I pay tribute to the joinery industry for the way it has progressed and developed in the production of built-in furniture, or built-in units as they have been called, but the point which has been raised by one or two hon. Members is that this is no reason why this part of furniture production should be left out of the levy. We are quite confident that when this rather difficult discussion is over the Order will go through and the levy will, as the industry would say, be imposed on it, but it is a very modest contribution that it will be making. It will have its opportunities, as a constituent partner of the Furniture Development Council, to help to sort out and perhaps solve many of the problems we would have wished to discuss with
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it ever since February of this year. I have made it plain that we have attempted time and time again to discuss the problems which the industry wished to raise.
One issue which has been raised is that the Furniture Development Council is so short of funds that it wants to extend its levy arrangements. This is not true. The F.D.C. is not seriously short of funds, but if its ambitious programme of research and development is to go on there will have to be additional funds, because the previous Order limits its income to £75,000 a year. It cannot raise more than that. As I am sure the hon. Member for Darlington will agree, leaving out the question about the woodwork manufacturers coming in, this sum of money is probably now much too small for the purpose that it has in mind.
We offered consultation all the way through. This Order is urgent because of the time factor. When the present Order ceases to operate, a new Order must come into operation. We think that it is very fair and the woodwork manufacturers concerned with unit furniture will see the necessity of it and play their part in helping to extend the research and other services which the Development Council can provide not only for the traditional furniture makers but the manufacturers of built-in units as well.
Mr. Patrick Jenkin: Before the right hon. Gentleman sits down, will he accept that we on this side would sincerely join with him in hoping that whatever may be the outcome of the Order, all those concerned with working it will co-operate. Although there may have been ruffled feathers on the part of the industry, will the right hon. Gentleman give an assurance that he and his Department will do their utmost to operate it in the interests of the industry so that everything may go as smoothly as it can.
Mr. Darling: Certainly, Sir.
Question put and agreed to.
Resolved,
That the Furniture Industry Development Council (Amendment No. 3) Order 1967, a draft of which was laid before this House on 5th July, 'be approved.

CONSOLIDATED FUND (REDUNDANCY FUND)
1.51 a.m.
The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley): I beg to move,
That the Redundancy Fund (Advances out of the Consolidated Fund) Order 1967, a draft of which was laid before this House on 13th July, be approved.
The purpose of the Order is simple and specific. I am sure that it would be the wish of the House at this stage if I did no more than simply outline the intention of the Order and the reasons for placing it before the House.
If the House approves the Order, and if it is approved in another place, the result will be that my right hon Friend, after consultation with the Treasury, will be empowered to obtain loans out of the Consolidated Fund for the Redundancy Fund up to a new ceiling limit of £12 million. I would emphasise that there is no reason for the House to assume that if this permission is granted the new ceiling limit would be reached. What I am asking the House to approve is a contingency plan. We are making plans for a situation which may not come about. I am sure the House will understand that the Government are obliged to make sure that in any conceivable circumstance—and it is no more than a conceivable circumstance—the solvency of the Redundancy Fund is preserved.
I am sure the House will also understand that what I am asking the House to do is in accordance with the provisions of Section 35 of the Redundancy Payments Act. This section enables my right hon. Friend at any time to borrow from the Consolidated Fund up to a maximum figure of £8 million and also enables him, with Parliamentary approval, to increase the borrowing powers to a maximum of £20 million.
I am therefore asking the House to approve something which is in accordance with one of the original provisions in the Act, but which does not go as far as the Act will allow my right hon. Friend were he to regard it as necessary. We are not asking for permission to borrow up to the limit of £20 million as specified in the Act, but only to borrow, should
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it prove necessary, up to a limit of £12 million. This is a modest increase on the original figure of £8 million and I hope I can explain why it is prudent and necessary.
When the Redundancy Payments Act came into operation and the weekly contribution to the Fund from industry was 5d. and 2d. for men and women respectively, the average weekly income was about £330,000. By the autumn of 1966 the outgoings were greater than the income and the Fund was in deficit. In February 1967, when new weekly rates of 10d. and 5d. came into force, weekly income rose to about £686,000. Estimates which resulted in my right hon. Friend asking the House for, and obtaining its approval to, these increased contributions were based initially on average weekly outgoings between October 1966 and March 1967 of about £650,000. My right hon. Friend then estimated that the deficit in the Fund would reach a peak of £4½ million in February 1967, that outgoings would be reduced to £600,000 per week by March 1967, that in the same month the accrued deficit would fall to £4 million, and that the deficit would be eliminated altogether by March 1968.
The first part of my right hon. Friend's estimate proved to be right. The February deficit reached a peak at £4½ million, but since that time weekly outgoings have averaged something in excess of £700,000. In consequence, the Fund has had increasingly to rely on borrowing, and the total sum now on loan is £5,300,000.
It is always difficult to estimate the outgoings from the Fund, partly because it is not dependent simply on the number of unemployed. There may be a statistical correlation between outgoings from the Fund and the number of unemployed. It is not, however, a direct correlation, because there is no direct connection which it is easy to quantify and assess.
It is not even dependent strictly on the number of men made redundant at any one time. It is dependent on that factor, on the age of the men made redundant and on their length of service in the job which they occupied before being made redundant. Therefore, at any time it is difficult to estimate the actual outgoings from the Fund and

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what income is necessary to match those outgoings.
However, I should remind the House that my right hon. Friend asked for permission to increase the contributions last year to 10d. and 5d. Initially he believed, and told the House so, that the Fund would best be served if contributions were increased not to 10d. and 5d. but to 1s. and 6d. However, before he brought the Order to the House, he rightly and properly consulted both the Confederation of British Industry and the Trades Union Congress about what contributions they regarded as appropriate.
The Redundancy Fund is in no small measure the property of industry, whose concern it should be to see that the Fund is properly managed and supervised. It was altogether right for my right hon. Friend to take that advice, which was that the increase in contributions should be scaled down to 10d. and 5d. Of course, the eventual decision was his and the Government's and their decision alone, but I ought to tell the House that had the original figures of 1s. and 6d. been presented to the House and accepted, this request for additional borrowing powers would not now be necessary.
I re-emphasise that in my opinion and in the opinion of my right hon. Friend it was right for us to consult industry and, having consulted it, right for us to take note of its views and expressed opinions. Not least was it right for us to do that because we knew very well that if its estimate of what was necessary to keep the Fund solvent and in balance proved to be rather less than accurate, we had the power to present an Order such as this to give us additional borrowing powers to tide us over any temporary difficulties.
I emphasise again that any problems of tiding over difficulties are in a sense hypothetical. Certainly they are hypothetical in terms of a £12 million ceiling. My right hon. Friend believes that that £12 million ceiling will never be reached. It is certainly possible that the existing ceiling of £8 million may prove adequate, but I am sure that the House will agree that prudent management of the Fund requires us to make sure that sums are available to bolster and buttress the Fund to keep it out of deficit.
We know very well the disadvantages of financing the Fund out of increased
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borrowing. Not the least of these disadvantages is the necessity to finance the interest payments which will be charged on the Fund if borrowing is increased. The Fund must and should be self-financing. Clearly it may occasionally wish to finance its peaks and troughs by off-setting one against the other, but the basic principle of the Fund is and must be one in which the contributions finance the outgoings. I emphasise to the House that it is our intention to examine the nature of the Fund, the nature of the contributions, and to report to the House where the contribution level stands and what are the best long term interests of the Fund and how its solvency can and should be preserved.
What I am asking for tonight is permission to provide for a contingency, the permission to make sure that my right hon. Friend can authorise borrowing up to that limit if it should prove necessary. There is no reason to assume that that will automatically be the case, but there is every reason to believe that it is right and prudent for the Government to make provision in case that situation develops. I hope therefore that the House will agree that the Order which I have placed before it is one which any Government concerned with the solvency of the Fund would present at this stage.
2.2 p.m.
Mr. Nicholas Ridley: We certainly have no objection on this side of the House to the Government letting the Fund borrow from the Consolidated Fund in view of what has happened. In the light of what the Minister has said about the need for the contributions, perhaps to have been fixed a little higher last November, than the rate of 1s. 6d. originally suggested by the Minister, I am bound to ask whether it is his intention, at a later stage, to raise the contributions still further.
This obviously is something of the greatest importance to the industry and all concerned. When we had the increase in contributions last November the right hon. Gentleman gave us some very concise estimates of how the contributions and the payments in and out of the Fund would go in the period ahead. From that I have been able to work out exactly what he expected the deficit to be now.

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Doing this, I have reached a deficit of £2·15m., £2,150,000. The hon. Gentleman has told us that the deficit is now £5·3m., and this shows how remarkably erratic the Government's forecast has been as to the effect of redundancy payment on the Fund. The original estimate proved wrong, being too low by half. Now, instead of having a deficit of £2m. which the right hon. Gentleman forecast, we have a deficit of £5m.
Why is there such great difficulty in forecasting the effects on the Fund? This has nothing to do with the fact that the Government, quite rightly, reduced the increase in contributions, at the request of the C.B.I. These estimates were made by the right hon. Gentleman after he had taken the decision to adopt 10d. and 5d. It is worth probing a little more about these forecasts before agreeing to the Order.
The right hon. Gentleman said that by now the Fund would definitely be on account, going back into the black, because by now the contributions would be exceeding payments out. From the hon. Gentleman's figures the reverse is happening, and the contributions are running at about £600,000 a week, whereas the payments out of the Fund are at about £700,000, making a weekly loss of £100,000. I would be grateful if the Minister could tell us, if this is so, what the effect is. Clearly the deficit will worsen. When does he calculate that the Fund will turn and begin moving towards profitability and away from further deficits? At what figures is the annual cost of redundancy pay running now? If the estimate in November had been accurate, it would have been costing industry £48 million—£36 million for contributions into the Fund and a further £12 million direct from employers' pockets to make up the quarter. That is a large sum of money, and I take it from what we have heard this morning that the total rate at which the project is running is well over £48 million.
I have tried to understand the possible causes for the Fund to have taken so much greater a down-turn than had been expected. It is several times worse than expected when the legislation was passed, and even after six months' experience of the Fund it is clear that we were not able to estimate how much it would cost. One gets little information from studying
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the unemployment figures. Between November and now there is very little difference in the total number unemployed or in the total number being declared unemployed month by month. One cannot assume that the change in the pattern of employment has much to do with it.
The other possible variant would be the fact that more older workers were being made redundant, but we have no information about that and I shall be interested to hear whether the Minister has. The right hon. Gentleman told us last November that it was running at £180 per claim, and if that figure has been exceeded recently it indicates that there has been a shift towards discharging older workers rather than younger workers, which is not very satisfactory. We ought to be aware of these trends so that we better understand what is happening to the labour force.
I suggest that by far the greatest cause of the increase in drawings from the Fund has been the greater awareness by people that it exists. We have had more and more cases coming to our notice in which people have been deliberately getting their entitlement to redundancy pay by means which, to say the least, are rather dubious. The Rootes case was subject to Questions in the House. The hon. Member for Jarrow (Mr. Fernyhough) admitted that of 99 workers re-engaged by Rootes, 80 had received redundancy payments—at a cost of £18,000 to the Redundancy Fund—who had previously been employed by Rootes, and the suggestion in that case was that people had even volunteered to be made redundant knowing that they would be able to get back to their jobs quickly and that they could collect their redundancy pay in the process. I have heard of people who, sometimes with the agreement of their employers, have left their employment for a few days or a week in order to claim redundancy benefit and have then somehow managed to get back into the same employment. There were a series of cases not long ago in which it was exposed that employees had been transferred from one subsidiary company of a parent company to another subsidiary thereby technically changing their employer and collecting redundancy payments, although doing exactly the same work and in no sense being truly redundant.

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These anomalies have recently come to notice, but there are more well-known cases of people who have made arrangements to be made redundant for a few months or a year or two before reaching retirement age. I have every sympathy with them. I think that the difference between the man who collects redundancy pay and retires and the man who retires at, say, 64 without collecting redundancy pay is one which the House should not tolerate. I have heard of cases in which people who have left of their own free will have persuaded their employers to describe them as sacked so that they could get redundancy pay and be refunded the quarter which comes direct from the employer's pocket. People are getting up to obvious tricks. I am not being moral. I do not object to people extracting the lawful maximum, but— —
Mr. Deputy Speaker (Mr. Sydney Irving): Order. The hon. Gentleman knows that the Order is concerned only with the increase from the Consolidated Fund and he must relate his remarks in this respect to the purpose of the increase.
Mr. Ridley: I am doing so, Mr. Deputy Speaker. It would not have been necessary without these circumstances. The reason that we must advance £12 million to the Redundancy Fund is that the Fund is being abused in these ways, which destroy the potency of benefits as a weapon to those who have already benefited on previous occasions and are effectively debarred from receiving them again for a number of years before the pay has any worth-while effect.
Has the hon. Gentleman studied what his right hon. Friend called the anomalies under the Act? I would not begrudge the Order if the money were going entirely on redundancy, but there is a general suspicion that the Act is being abused, and before we agree that more and more money should be lent from the Consolidated Fund, we are entitled to ask how the Government will revise some of the arrangements under the Act, which now cost industry £50 million or £60 million a year, whereas only £4 million a year is spent on retraining and mobility grants. This may be distorted, which is why I ask the hon. Gentleman—
Mr. Deputy Speaker: Order. The hon. Gentleman is getting into a wider debate about the whole Act. He must speak about the increase, which is only £4 million.
Mr. Ridley: That is why I ask the hon. Gentleman, Mr. Deputy Speaker, to answer some of these questions before we can be satisfied that he should have this extra £4 million without some revisions of the Scheme.
2.13 a.m.
Mr. Hattersley: The crucial question of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) was whether the Order is a prelude to a decision to increase the contributions to the Fund. I can only say that the Order is intended to ensure that the Fund remains solvent while the entire position of the Fund is examined. It is axiomatic that, if the present position of outgoings exceeding income continues, contributions will have to be fundamentally revised. Since I cannot predict whether this position will continue, or what the state or nature of the unemployed in the immediate future will be, which is crucial. I cannot answer in these precise terms. I can only reiterate that the Order is intended to safeguard the Fund while this further and more intensive examination of the position is made and while, if any alteration proves necessary, the appropriate and essential consultations are carried out.
Perhaps predictably, the hon. Gentleman said that one of the contributory factors to the Order was the "remarkably erratic" forecasting of the outgoings. I will explain why it is difficult to forecast with precision what those outgoings will be. The forecast is, first, dependent on the number of men made redundant during any one week or month. That is, in itself, a difficult prognosis to make. Not only is it dependent on that figure, it is dependent on the age of the men made redundant in any one week and on their length of service. The House will understand the difficulties involved in making that sort of estimate.
Had our estimate not been based on the figures adopted when my right hon. Friend made the Order in November 1966—had we based our estimate on the sort of statistics apparently used by the hon. Gentleman—the Fund would now

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be in a very bad state, for the hon. Gentleman's estimate led him to suggest that there was no need at that time to increase the contributions at all. If, therefore, we are playing a game of whose estimate is the worst, his would come out bottom in the league.
We made our estimate on the best information and advice at our disposal. I reiterate that our original estimate—of the need to increase contributions to 1s. and 6d. respectively—has been remarkably accurate, considering all the difficulties involved in making this sort of calculation. Whatever the hon. Gentleman says about our forecasting, he must agree that we achieved a high degree of accuracy.
The hon. Gentleman asked me to specify the present difference between the outgoings of the Fund and the present rate of income. He will recall that I said that income at the new figure of contributions was running at about £690,000 a week. In the three weeks ending 21st July, the average weekly outgoings were £725,000, giving a weekly deficit of about £35,000. Were it to continue to run at that figure some sort of additional provision would have to be made.
He asked about the total cost of the scheme as it now affects industry and he forecast that this was between £50 million and £60 million a year. His first figure is more accurate. We estimate—and I admit it is a rough one—that it is about £51 million. That seems to be about the total cost of the scheme to industry.
The hon. Gentleman then asked whether the increased outgoings from the Fund were in part the result of payments obtained by what he described as "dubious means". I agree that it is not difficult for any hon. Member to provide individual examples of men who have obtained from the Redundancy Fund payments which might be regarded as dubious. While such examples can be found, I do not believe that they are at all characteristic of the vast majority of the payments that are made from the Fund to legitimately, realistically and practically redundant men.
The case of Rootes has been quoted. That case represents only a tiny fraction of the number of men who, in the Midlands alone, have legitimately received redundancy payments. On reflection, the hon. Gentleman will agree that
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the number of people who might be said to be abusing the scheme could not possibly have contributed towards the increased deficit. They represent only a very small fraction of the number of people who receive redundancy payments legitimately. In any case, many of the instances he quoted are of people who are obtaining payments legitimately. The fact that a man is declared redundant and is then re-employed three weeks, three months or even three years afterwards, does not disqualify him from his redundancy payments.
The redundancy payment is intended to compensate a man for losing a job, not for being unemployed. I very much regret the great deal of misinformed and unenlightened criticism of the scheme, which stems from a misunderstanding that the payment goes to a man because he is unemployed. It does not. It goes to him because he loses his job. It has important humanitarian and economic functions—functions which, I believe, have been carried out well and practically over the last year. It is, therefore, essential that we should preserve the solvency of the Fund by approving this Order.
Resolved,
That the Redundancy Fund (Advances out of the Consolidated Fund) Order 1967, a draft of which was laid before this House on 13th July, be approved.

SUNDAY CINEMATOGRAPH ENTERTAINMENTS
Order made by the Secretary of State for the Home Department, extending section 1 of the Sunday Entertainments Act 1932 to the Urban District of Driffield [copy laid before the House 14th July], approved.—[Miss Bacon.]

NURSES ACT 1964 (AMENDMENT)
Deferred proceeding resumed:
Mr. DEPUTY SPEAKER, pursuant to Order (Sitting of the House (Morning Sittings)), put forwith the Question,
That leave be given to bring in a Bill to make provision for separate rolls of nurses for general and for psychiatric nursing; to make provision for the inclusion of one registered nurse for the mentally subnormal in the statutory composition of the mental nurses committee; and for other purposes.
Question negatived.

SCIENCE AND TECHNOLOGY (ANGLO-EUROPEAN CO-OPERATION)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harold Walker.]
2.21 a.m.
Mr. Eric Moonman: It is a curious reflection on the interest of the House that in the last 12 hours we have had a range of subjects, including a full-scale economic debate, a reference to the situation and problems of Scotland and to the difficulties of particular industries, without real reference to some of the future planning and technology with which many of those industries and much of the economy is concerned.
For many years, science and technology have failed to make the impact in Western Europe which might have been expected. People holding key positions in Government and industry have failed to pay science and technology due attention. Decisions have been taken about short- and long-term planning without reference to those sections of Government that were encouraging scientific projects, albeit modestly, whilst in industry large numbers of companies in Europe felt it undesirable or unnecessary to appoint scientists or technologists to key positions or on boards of executives. As a result, their voice was not heard, or was not loud enough.
A further consequence of this ignorance by Government and industry has meant that the motivation of successive generations of engineers and scientists has been affected, in particular with regard to industry, management and company strategy. The difficulty in recognising the relative importance of science and technology to a nation is to some extent aggravated by the lack of clarity in definition.
I shall try to be specific. In scientific discovery, Western Europe has contributed greatly, and a great deal of the thinking and stimulus is still to be found here. But in the adaptation of scientific material, the "technology", Western Europe has not been able to keep up with the pace of change, the dynamic, which has pushed the United States and the Soviet Union to the powerful position they are in today.
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The case for scientific and technical collaboration in Europe may be best opened by examining the British commitment. Britain, in some fields, is an exception to the trend in Western Europe, due in part to the pressures during the last war, which brought together industry, science and Government. The actual quality of British science is impressive. European politicians and scientists are struck by the range of our advance in nuclear engineering, aerospace and computers, to mention but three fields. This has meant that whatever the outcome of Britain's applications for membership of the E.E.C., there is an increasing interest in what Britain can offer Europe. Britain has consistently advanced her targets and budgets in research and development. We are spending in the public and private sectors close on £1,000 million, which is two-thirds of the total amount spent on the Continent of Europe.
However, another comparison is also relevant. Western Europe as a whole, if we include E.E.C. and E.F.T.A. countries, spends about one-quarter as much as the United States on research and development. Therefore, the scale of science and technology is becoming increasingly uncertain and expensive and, despite the undoubted lead which Britain has given to the world, and to Europe in particular, it now becomes necessary to consider ways and means of rationalising our resources, a question which has been given a great deal of attention by other nations in Europe.
The second broad stream of thinking on this concerns the technological gap. To close this must be the second facet of the plan of campaign. The technological problems of the Western world and the gaps occurring between certain countries, and in particular between Europe and the United States, have raised political as well as industrial questions. It would be a grave error of judgment to imagine that the "gap" could be overcome by either legislating against American firms or that the co-operation of scientific bodies or workers alone would meet the need.
What I would suggest is that European firms and governments will need to devise ways of matching the United States. There should be plans for responding to the challenge, rather than merely reacting. There has been much debate

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since the subject was, perhaps, first formally presented by the Italian delegation to the Atlantic Council in Brussels in June, 1966. It seems that there are several matters which have to be given prime consideration. There is the question of the disparity, not only in technology, but also in marketing, management and higher education. In many respects, the question of the technological gap can be best seen in terms of the marketing concept.
There must also be a real understanding of what is meant by "collaboration". The question of collaboration amongst European nations and firms must be meaningful. When the term "collaboration" has been used both inside and outside the House, I have often wondered whether the speaker concerned distinguished sufficiently between "collaboration" and "co-operation". Practical forms of collaboration in Europe have already taken place where a project has met the aims of the contributing industries or countries. In other words, it is possible for two or three countries to come to a deal on those aspects of a project of which they have some specialised knowledge or interest. This also provides a larger market. This, again, is a very important question.
It will be seen that such collaboration does not depend on Britain's membership of the Economic Community, but I would suggest that such an association would be enhanced if Britain was a member, because of the larger trading community.
There are two other things that I ought to mention. First, collaboration in Europe does not exclude working with the United States. I think that the phrase "sector co-operation" is of particular relevance here. Sector co-operation can have its advantages, not only as an alternative to a specific project, but, rather, as a complementary element. One immediately thinks, in the field of electronics, of the difficulties entailed in building complete electronic computers on a European basis alone, which can be avoided by a form of collaboration which includes the specialisation of European industry in the production of certain components within a framework of production agreements with the United States.
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There is also the question of harmonisation of laws. Real collaboration on a European scale means a great deal of thinking in terms of problems of laws—patents, and so on—which have been considered by countries in the Community. This question must be looked at on a European scale.
A third and last question which must be examined in terms of the case for European collaboration depends on the study of and planning for European industry. The scattering of firms within an industry, the duplication of processes and models, the lack of standardisation, hinder British and European industry in making the best possible use of scientific knowledge. The size of the industrial unit has raised a great deal of debate, and this is fully justified. Whilst I believe that progressive firms will take measures to deal with these problems—and some already have—the cost of R. and D. is becoming such that Government action is required.
Mergers are taking place. This is true in both France and Italy. In France, tax incentives and State loans are encouraging the concentration of industry. In Italy there are tax incentives. Quite apart from the Government measures I have welcomed over the last year, there is also this unique organisation—the I.R.C.—which has done much to promote mergers in Britain.
However, firms are not merging on an international scale. Clearly, discovery has no material value without application. Hence the importance of establishing firms to a size where they can use the existing pool of technology more effectively. One other side effect of the enormous interest of the United States in Europe is the way in which they are able to utilise the trans-national company in Europe itself. This is something with which we are unable to compete because of the structure of British industry. I hope that in his reply my right hon. Friend will give attention to this.
I raise three specific questions. Bearing in mind that any form of technical collaboration will demand close association with industry, what research or studies has the Ministry undertaken either independently or with other Departments or with universities? Modern technology

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will mean greater rationalisation of resources. Would it not be wise for the Government to remind companies of the need to keep employees informed at key points in the change over? Would it not enhance the aims of the I.R.C. if it were advised to convene a conference of similar bodies in Europe to deal in depth with the need to create a trans-national company outlook? The Minister might make other suggestions on how it is likely to develop in future, but many hon. Members, on both sides of the House, I hope, feel strongly that the I.R.C. has a very important rôle to play in the development of a trans-national company.
For all the reasons stated, I hope that the case for scientific and technological collaboration is made. Britain is a key country in Europe. Because I believe that the degree of collaboration is likely to be more effective with Britain in the Common Market, I hope that those negotiating for the E.E.C. on Britain's application will have regard to the close association between economic and industrial development and technological collaboration.
2.32 a.m.
The Minister of Technology (Mr. Anthony Wedgwood Benn): I am very sorry that my hon. Friend the Member for Billericay (Mr. Moonman), who has this Adjournment tonight, should have addressed such an empty House, because I share his view that this is a very important issue and I know that he is intensely interested in it. I find myself in agreement with almost all he has said. He was touching on one of the issues which is central to the work of my Department.
In particular, I want to say how much I agree with him about the price we are paying in Britain still, and may be in Europe still, for the neglect of science and technology in our educational system and also in some of our industries over the years. We have, however, got a very considerable investment in research and development in Britain and I agree with my hon. Friend that this country has a great deal to offer to Europe as a member of the European Economic Community.
My hon. Friend referred to the technological gap and said, quite rightly, that this is not so much a matter of tech-
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nology alone so far as it is technology at all, but involves us very intimately in marketing and management problems which are equally important. He also laid great stress on the link between these things and the fragmentation of British industry and European industry as compared with the United States.
Before I try to answer his argument with a presentation of my own outlook on these problems, may I deal with the questions he put to me. First he wanted to be satisfied, and I am quite sure that this is right, that we keep in close touch with industry and asked what joint projects we have with them involving a study of the effect of British entry to the European Community. I can answer him in only one way. My Department is in continual contact with all the industries for which we are responsible, with all the industries which we sponsor. My industrial divisions in the Ministry are therefore very well acquainted with the views of the industries we work with about the problems of entering Europe and about the opportunities which will be created by that. I shall certainly take account of his suggestion that there should be further more detailed joint studies. He will know that industry itself has done quite a lot of work in this respect. There has recently been the C.B.I. Report on entry into Europe, and a number of other interested industries and firms which are concerned have devoted their own resources to this problem.
The second point that he put was about the rationalisation that would follow from the creation of larger European firms, and he wanted to know what would happen to those people likely to be concerned by such rationalisation. This does not depend upon our entering Europe, of course. There are already some firms that stretch across the European frontiers. There is the new Ford of Europe which was established recently. The problem that he referred to is equally serious inside this country. Some recent examples have been brought to my attention by hon. Members and, indeed, one has occurred in my own constituency where rationalisation has led to the sudden closure of a plant. This can cause very serious problems for those working in that plant and raises in an acute form the need for adequate consultation.

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I should like to stress to those firms which are engaged on the rationalisation process that if they really want people to make an intelligent approach to the problem of rationalisation it is up to the firms themselves to consult the unions at every stage in the operation. It would set back the cause of rationalisation and hence the cause of efficiency in British industry if this consultation were neglected.
The third point my hon. Friend made related to the possible rôle of I.R.C. in trying to bring about stronger European firms. He will know from the way in which I.R.C. was established that it is responsible to my right hon. Friend the First Secretary and Secretary of State for Economic Affairs. I do not want to say anything tonight which would indicate that I have responsibilities for I.R.C. that I do not have. It is true that I.R.C. is able to operate internationally and I know from my talks with I.R.C. board members that they are very conscious of the fact that they are able to do that. Whether it would be wise for the Government to put a special responsibility upon I.R.C. in the sense that my hon. Friend said, I would somewhat doubt, but I can assure my hon. Friend that I.R.C. is aware of this and it regards it as part of its function to keep its eyes open for international grouping.
May I turn to the problems raised by this debate and put the argument as it appears to me. Perhaps I should begin by saying that this is a Government that really does not need any encouragement on the desirability of scientific and technological collaboration with Europe. Many of my right hon. Friends, including the Prime Minister in his famous Guildhall speech, and the Foreign Secretary in his recent speech at The Hague on 4th July, have laid great emphasis on the rôle of science and technology in building for us a new and bigger community in Europe.
As has been said already tonight, we are driven to this by two factors: first of all, the very high cost of research which makes it necessary to establish companies lame enough to be able to afford it; and secondly, the high cost of marketing and the need to have very large markets in order to be able to sustain this research and development and produce an economic product. We are handicapped here,
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as my hon. Friend said, by the fragmentation not only of European firms but of firms in this country. When we talk about the American economic strength in Europe, we are not only thinking of the United States as a political unit. We are thinking of the very large American corporations — Westinghouse, I.B.M., Ford, General Electric, Pratt and Whitney, to name only a few of them.
In Britain, although some of our large corporations are of world size, it is broadly speaking true that the scale on which they operate is too small. It is one of the principal objects of Mintech to try to bring about larger units in the British engineering industry. We are now engaged in carrying through the Geddes operation with the help of the Shipbuilding Industry Board. That is an act of consolidation, designed to give greater strength to our ship building. We have achieved some consolidation in the aircraft industry—not, in this case, through Government action—in the fusion of Rolls Royce and Bristol Siddeley to create an engine company of world size. In telecommunications, I.R.C. has been asked to examine the position, and in computers, there has been a link up between Elliot Automation and English Electric.
These actions have provided a framework in which we can play a much larger part in the European programme, to which my own Department is so deeply committed and involved. But, when our share is examined, it is still true that international frontiers hinder the establishment of wider groupings. One calls to mind the recent attempt at bringing more closely together Agfa and Gevaert—an attempt which resulted—because of differences in national company law—only in a loose association.
We want a climate favourable to large companies, if we are to stand up to the very strong competition from across the Atlantic. It is this type of argument which shifted the Government's view of Britain's entry and which, frankly, shifted my own view on the European question and on the issue of our joining the E.E.C. It was the acceptance of the fact that technology imposes an inexorable scale in our economic life, making it necessary for us to think in bigger terms than in the past, that made us change our views. It is not so much

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that one was attracted by new institutions but that we believed that a wider Europe was Britain's proper place and inevitable place.
We were influenced, too, by looking at Europe with its potential market of 300 million in the 'seventies and believing that it was right for this country to develop its technology even farther. If we stayed out we should find ourselves committed to the production only of the less sophisticated equipment of the 'forties, 'fifties and the early 'sixties, whereas, as the Prime Minister said earlier this year, the United States would be able to establish itself firmly as the producer of those things needed in the 'seventies and the 'eighties.
I have never seen the idea of a special institution created for this purpose as being absolutely central to the acceptance of this task; and indeed, if one looks at the organisation of the European Communities, one sees that there is no new Executive following the fusion of the European Coal and Steel Community with Euratom. It is more important to see that there is the machinery and the proper agencies available to deal with the research which will be necessary, and to see that there are proper industrial links between firms designed to strengthen their marketing position, and to deal with such matters as metrication, standards, calibration, law, patents, contract provisions, licensing and sub-licensing, the deployment of skilled manpower, and problems associated with the "brain drain". These are the matters which are important, and they are the very subjects with which Mintech is concerned.
If I may use the term, it is a sort of "Eurotech" administration that is needed, linked to industrial policy through the machinery of administration and to some sort of detailed work in industry and technology such as we are tackling at home. I am sure that there is huge scope for this, because we already have some projects—Concord and the airbus—in being and a great deal in computers, machine tools, telecommunications and electronics still to be done.
But we must not think of this prospect only in terms of institutions. We must think of it in a much broader sense, in the sense of the development of closer co-operation between nations and between firms within nations. This is
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really the key to Britain's application to join the Community. Bilateral collaboration, valuable though it is, is no substitute for the things of which I am speaking, and for Europe the advantage of having Britain as a full member of the Community is great just because we are able to contribute so much from our side to the links which we need to build up.
Now, another general word about the role of technology in international relations. What excites me in the job which I now have to do is the way in which technology is opening up what is called in the jargon, the "interface" between societies. In earlier days, international relations depended on explorers, then on soldiers, then on minstrels, on missionaries, on scholars, on diplomats and on traders. Now, we have the advantage of co-operation and contacts between technologists, which open up far more fruitful avenues for collaboration than ever before. When a missionary or explorer came home from a. strange country, he reported how different things were there. Now, wherever we go, we are surprised and delighted to find how similar the problems are.
One feels a sense of excitement—I say this having led a mission to the Soviet Union earlier this year—at going to a country with a different ideological and historical background and yet finding how the problems there are the same as ours. In our relations with the E.E.C., the Soviet Union, the United States or Eastern Europe, wherever it may be, there is this superb opportunity for cooperation. Essentially, there is no controversy, there are opportunities for cooperation in research, in know-how and in planning, and, moreover, there is a vested interest in seeing that the other side succeeds in what it is trying to achieve.
If we are to give a little life and vitality to technology, if we are to make it more than a hard inhuman record of man's achievement in building hardware, we ought to remember that it is opening up for us great political opportunities not only in our relations with Europe but in relations with every other country of the world. This is not at all a bad basis for the policy upon which we have now set ourselves.
Question put and agreed to.
Adjourned accordingly at eleven minutes to Three o'clock a.m.