HC Deb 21 June 1967 vol 748 cc1821-70

7.59 p.m.

Mr. Gordon Campbell (Moray and Nairn)

I beg to move Amendment No. 1, in page 1, line 7, to leave out from 'be' to the end of line 9 and to insert: 'a unit of sterling, of the value of ten shillings, and a cent, the cent being one-hundredth part of the unit'.

2 cents 3.56400 2.0320 Mixed metal copper, tin and zinc .0750
cent 1.78200 1.7145 .0375
Mr. Campbell

Yes, Mr. Deputy Speaker.

This Amendment, with the other three, would insert into the Bill a 10s. system instead of the Government's £1—new penny—½ system. This is still the main issue among all those who are concerned about the decimalisation of our currency.

Before the Second Reading in March there was considerable speculation and conjecture as to what would happen in this House, because it was known that a large majority of Members on both sides, upon their own judgment after considering the subject, which is free from party politics, were opposed to the Government system and in favour of a 10s. unit. Recent history of what, in the event, did happen can be summed up in the one word "steamroller". The Whip was imposed by the Government on Second Reading and in Committee, where the Government rejected all Amendments.

But this has not altered the arguments, or the strength of the arguments in favour of the 10s. system. That the Government have continued to press their system on Parliament and the country does not mean that Australia is wrong, or that South Africa and New Zealand are wrong either, in having adopted a 10s. system. These countries are reaping the benefits of their wise choice.

I will briefly remind the House of some of the main advantages of the 10s. system. First, as is demonstrated by the table in Amendment No. 8, there would be only two new coins, which would

Mr. Deputy Speaker (Mr. Sydney Irving)

With this Amendment we can take Amendment No. 3, in Clause 2, page 1, line 13, leave out 'all'.

Amendment No. 4, in page 1, line 17, at end insert: (2) The other coins of the new currency shall be the existing half-crown, two shilling, one shilling and sixpenny pieces, bearing the denominations twenty-five, twenty, ten and five cents, respectively. and Amendment No. 8, in Schedule 1, page 6, leave out lines 8 to 17 and insert:

replace the three smallest coins in our present currency. The Government system contemplates five new coins, with a sixth coming in later. There is no dispute that the 10s. system would thus make the change-over very much easier for the general public. It would also mean that very few vending or service machines would need alteration—and probably no meters or telephones.

Another advantage of the 10s. system is its simple relationship with the present currency. It would be easy to make a rough conversion in one's head from one to the other. Another advantage is that there is no fraction, no half, included in the system, as there is in the Government system. The Government have estimated that the half will remain in their system for about 30 years.

A further advantage is that the 10s. system provides the fundamental benefit of a decimal system, namely, that with a major unit divided into 100 minor units, any sum of money can be expressed in not more than two separate figures, while the minor unit is small enough not to have to be subdivided. As my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) pointed out on Second Reading, this is impossible with a unit as large as the £.

Because of these advantages, it is not surprising that the 10s. unit has been advocated by many bodies representing wide sections of industry and commerce, distribution and transport, and by trade unions and consumer organisations. Those concerned with cash transactions have been especially anxious, and still are, about the effect of the Government's choice of system. A few of these concerns have recently taken a second position This is that if the Government are adamant in obtusely sticking to the £, and are determined to ignore the advantages of a 10s. unit, they suggest trying to alter and improve the £ system as a second best. This illustrates that almost everyone agrees that the Government's £-new penny system is objectionable. It is quite clear—and this is the important point—that if the Government now changed to the 10s. system they would have almost universal support.

I would refer to one representative body, in particular, which has given extensive study to the whole question of the decimalisation of the currency in relation to cash transactions. This is the Retail Decimal Committee. Representatives on the Committee come from the Co-operative Union, the National Chamber of Trade, the Multiple Shops' Federation, the Drapers' Chamber of Trade and the Retail Distributors' Association—bodies with very wide experience of handling cash. The Committee feels strongly today, as it did before, that the 10s. system is by far the best. The House will also know that organisations representing consumers have already made abundandtly clear their preference for the 10s. system.

Up to five years ago, while a number of people could see advantages generally in decimalisation there were very few who had had the time or the opportunity to examine the details of possible systems. The Halsbury Committee, almost four years ago, was unable to agree on the choice of a system, but it did have focus attention on this point and presented two alternative—a £ system and a 10s. system.

It was not then an easy decision for a Government to take immediately, but the Halsbury Report promoted examination in considerable depth by a great many bodies representing those who would be affected. The result was that the l0s unit emerged as a clear favourite in the field. It has been recognised that arguments in its favour have carried more weight, while the international case for the £, and the supposed desirability of a heavy unit, have been receding in importance.

In taking a decision that could last for 200 years or more it is important for the Government to get this choice right rather than simply to fit it into their immediate programme. I should like the Minister to explain or expand on the statement which the Chancellor of the Exchequer made in the House on 7th March. This was before the House had had an opportunity to discuss the Government's proposals. On that occasion. the right hon. Gentleman said: Administrative decisions have, of course. been taken—[HON. MEMBERS: "Oh."]—and a number of companies…have already entered into particular commitments on this matter." —[OFFICIAL REPORT, 7th March, 1967; Vol. 742, c. 1243.]

That was given as a reason for the Government forcing their proposals through the House, and not permitting prior debate. It was a reason given for not taking into account the freely expressed views of the House on a subject that is divorced from party politics but which will affect every citizen in the land.

If the Government are still sticking to their £-new penny-½ system, is it because administrative decisions have already been taken, as the Chancellor of the Exchequer appeared to indicate on that day? Apart from the question of the propriety of this having been done before the House could consider the matter, this is not a serious obstacle where such a far-reaching decision is involved. At other times, Ministers have stated that no decisions have been taken or work done which would prejudice, or be nullified by, the choice of system. I hope that the Minister will deal with this point.

The case for the 10s. unit has always been compelling. On all sides it has been accepted as being superior for internal use within Britain. I believe that the Government were at one time within an ace of adopting it. Now, after so much further consideration has been given to the subject by so many who will be affected by the decision, the case is overwhelming. Again, today, I ask the Government to reconsider their decision on a matter of such importance for the future.

The Financial Secretary to the Treasury (Mr. Niall MacDermot)

The hon. Gentleman the Member for Moray and Nairn (Mr. G. Campbell) has moved the Amendment, if I may say so, with commendable brevity. When I recall the very full discussions which we had in Committee on this problem—and very interesting ones, too, I thank him for deploying it so shortly. I shall seek to deal with his arguments and to do so at similar length.

The hon. Gentleman makes the point, and very fairly, that since the publication of the Government's proposals there has been growing support for the alternative solution which this Amendment proposes, namely, to have the 10s. unit as the major unit. We have to call it the 10s. unit because nobody can suggest a suitable name for it, and that is one of the minor problems. The "new £" certainly cannot be a satisfactory solution, whatever else one wanted to call it.

Mr. G. Campbell

It was not simply since the Government introduced their proposals on 12th December. There has been this growing feeling that the 10s. system would be best, and it has been growing ever since the Halsbury Committee Report was produced and focused attention on this nearly four years ago.

Mr. MacDermot

The hon. Member is entitled to his own view on that, but I do not share it, because I think that it was the Government's publication of their own proposals which really revived interest in the 10s. system and stimulated people to consider it.

The reason, I think, why there has been this growing support to the extent there has been is the extremely skilful campaign mounted by those who have always supported the 10s. system and argued it before the Halsbury Committee and who, in the forefront of their campaign, quite deliberately put the associability argument, that the change-over would be easier.

That is a perfectly valid argument in support of the system. We have never sought to deny it. What we say is that we do not think that it weighs very heavily on the scales, that the change-over is a temporary problem and will prove to be a temporary problem, and that people's fears on this score have been exaggerated. We went into this in detail in Committee and I do not want to redeploy the arguments now. We remain very firmly convinced of this fact.

But, of course, it is a point on which it is easy to arouse fears, and to make people think that the problems of transition will be very much greater than they are, particularly if they are not aware of all that will be done in the way of education as a result of the activities of the Decimal Currency Board and the facilities by way of conversion tables, a dual pricing system, special training for people like shop assistants and bus conductors, and so on, with whom people will be dealing in cash transactions. All these things will mitigate the problem enormously. But as I say, it is an objection to the £ system which propagandists rightly judged was a useful one to get across to the public.

But no one who seriously argues this 10s. case, when it comes to the point, admits that this is the real argument. The real argument, the strongest one—and the right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod) made this perfectly clear in his speech on the Second Reading debate—is that it avoids the fraction, it gives one the benefit of a pure decimal system from the start. This is the advantage.

I made it perfectly clear in Committee that the main disadvantage of the Government's system is that for quite a long time—people estimate it at about a generation—we shall have the ½-cent and a fraction, and it will not be till it whittles away we shall get the full benefit of a pure decimal system. We have to weigh the disadvantages of the fraction against the disadvantages of the 10s. system with, above all, the disadvantage of abandoning our major unit of value, which has the advantage over all other major units of being a big, heavy one—and for an industrial country like ours and a big trading country it is a great advantage to have a heavy main unit. It would, in our view, require very strong arguments indeed to justify abandoning those advantages in favour of a 10s. system.

8.15 p.m.

The hon. Member for Moray and Nairn spoke in terms of having a system to last about 200 years. I would agree with him. My right hon. Friend the Chancellor at one time talked, I think, in terms of 1,000 years. Remembering the experience of someone who within living memory thought he was legislating for a 1,000 years and came to a sticky end, I prefer to take a more modest estimate. I think that we can speak in terms of 200 years, a period of that order.

Mr. Eric Lubbock (Orpington)


Mr. MacDermot

The hon. Member will have an opportunity to speak. I am sorry, but I do not want to give way for the moment. I am in the middle of a controversial argument. I will give way at the end. It will be much easier if the hon. Gentleman does not keep up that running murmer of interruption.

If we face reality, face what the Halsbury Committee called the logic of history, face what has happened in the last 50 years in terms of the decline in the value of money, we must all face the prospect that, whatever our efforts may be, there will be some continuing decline in the value of money. But we also face the prospect of increasing prosperity, in which case we shall want heavier units of value. If it be said and accepted, as it generally is, that the ½-cent in our system will wither away at the end of a generation—say, 25 years or so—it follows that if we adopted the 10s. system the cent would itself become a vestigial coin at the end of the same period. But although it was a coin which had outlived its usefulness, we would have to retain it for change giving purposes. So that at the period when we were coming to the full advantage of our system and we would have the prospect of a large heavy unit, the 10s. system would already be beginning to wither, and to suffer from the disadvantage which is inherent in too small a unit.

There are, of course, other advantages in retaining the £, as, for example, the advantage for all accounting and record purposes, which is a continuing advantage, and not just a temporary and transitional problem, because of the need to compare statistics over a long period of time.

Weighing up the arguments, we have never taken a black and white view about this; it is a matter of balance of argument, we take the advantages of retaining the heavy coin in our currency. We stress more the internal advantages than external, where there is an international argument although this is also an argument to be weighed in the scales. But we consider that these advantages greatly outweigh the temporary disadvantage of having a fraction in the system, and we believe that when one pares away all the minor arguments this is the major issue on which a judgment is required.

The hon. Member can now make his point.

Mr. Lubbock

I had not intended to intervene in this debate, but since the hon. and learned Gentleman the Financial Secretary did not have the courtesy to give way when I was wishing to raise a very important point with him, and one which was material to the argument he was presenting to the House, I think that I owe it to the House to deal with some of those arguments and not let them go by as if they would be accepted, not requiring correction.

The hon. and learned Gentleman said that one of the advantages of the £ unit was that it gave a heavier major unit than that of any other major industrialised country. That is true. But he omitted to add that the 10s. major unit would also be heavier than that of any other major industrialised country. It would be heavier than the dollar and much heavier than the franc or the mark. The hon. and learned Member may intervene in my speech if he likes, although he would not allow me to intervene in his, and I challenge him to name one civilised country in the world which has a major unit larger than 10s. He cannot do it, because there is none.

The argument about the decline in the value of money is a most depressing argument to hear. Moreover, it does not stand up when we look at the arithmetic. Lord Halsbury said that the value of money historically has been declining by a factor of about two per century. That means, according to my calculations, that it is not only for a generation that we shall have to put up with this beastly half. It will be a much longer period than that. I worked it out at well over 100 years, and I will show the hon. and learned Gentleman the arithmetic if he likes.

But at this stage he is not amenable to argument. We can tell him, but he is not prepared to listen. As the hon. Member for Moray and Nairn (Mr. G. Campbell) said in introducing the Amendment, the Chancellor will not listen because of administrative decisions which were taken long before this matter ever reached the Floor of the House. That is what is so monstrous about the way in which the whole subject has been handled. The hon. and learned Gentleman and the Chancellor of the Exchequer have not been prepared to listen to logic and to the views of people outside the House who might be expected to contribute to the discussion. They have all been dismissed as a lobby, as the Chancellor once described them in reply to a Question. If large numbers of consumers who are represented by the Consumer Council are a lobby, one can call anything a lobby. But it would be much better if the Government sometimes listened to the so-called lobbies outside the House instead of living in their ivory towers and foisting on the country decisions which will be so harmful.

I do not take the view which the hon. and learned Gentleman takes that the arguments for the consumer interests are insignificant and that people will get used to this —cent.-½ system practically as quickly as they would to the 10s.—cent. system. The hon. and learned Member forgets the work done by Dr. Sheila Jones and Mr. Broadbent at the time of the Halsbury Committee, and the reiteration of the arguments by Dr. Sheila Jones just before we debated the Second Reading. She is absolutely convinced still that it will take much longer for people to get used to the —cent.—½ system than to a pure decimal system. She has added that there are some old people who will never get used to the new system throughout their lives. I do not think that one can dismiss the consumer argument as being of little significance.

As the hon. Member for Moray and Nairn said, we shall have to put up with the beastly half throughout the whole of our lives, and that is the main argument against the Government system. It would require very much stronger reasons in favour of retaining the £1 as the major unit, in my opinion, to counteract that argument.

Another point which has escaped notice, at least in the Treasury, is the vastly greater expense of the £ system compared with the 10s. system. There is a substantial number of half-crown and sixpenny pieces in circulation, as one can see by reference to the report of the Royal Mint. There are 455 million half-crown pieces, valued at £56.97 million. There are no fewer than 1,065 million sixpences, valued at £53.25 million. The abolition of these two coins, therefore, means that we shall be faced with heavy minting costs which could easily have been avoided. Furthermore, at the bottom end of the scale the expense of minting new coins would have been much lower in the bronze coins.

I do not think that all these arguments were thoroughly explored by the Treasury before they reached their decision. They said to themselves, "The Halsbury Committee was in favour of this system and our friends in National Cash Register say that this is what we should do. We shall take no advice from outside, and we shall not listen to what the public say or even to what the House of Commons says. We shall go ahead and steam-roller it through the House of Commons". That is exactly what the Government have done.

Mr. Terence L. Higgins (Worthing)

The Financial Secretary to the Treasury suggested that one argument against the 10s. unit is that no one could think of a name for it. It would be more accurate to say that those names which were suggested, such as royals and nobles, had not a sufficiently Socialist ring about them. Nevertheless it is typical of the kind of argument which he has been advancing. I strongly support my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell) in proposing the 10s. unit.

The question of timing is crucial. I do not think that the Government have given sufficient attention to it. It is clear that the 10s. unit has a considerable advantage in associability in the short run and that this would be likely to lead to general acceptance of the new coinage, compared with the confusion which is likely to arise if we adopt the Government's system. Similarly, in the short run the 10s. system would involve the introduction of only two new coins. The other system, in contrast, would be more expensive.

As has been pointed out, it is likely that the 10s. unit will have an advantage for some time, because the machines which will be used under this system will be compatible with those abroad whereas those under the Government's system will be less compatible. As a result we shall find that economies of scale introducing business machines would not be as great under the Government system as under the 10s. system, and they must, therefore, be less competitive in international markets.

Turning from the short or medium term to the long term, I am sure that the argument which has been put forward that we shall not lose the fraction for at least a generation is very important. We ought to give due consideration to immediate and medium-term advantages rather than to those which will be achieved only after a generation. On that basis, it seems to me that the arguments which have been put forward, and which have not been rebutted by the Government, come out very firmly in favour of the 10s. unit. The only argument on the Government side seems to be the ridiculous argument about the heaviness of the £1 unit, an argument which has frequently been rebutted. In addition, there is the whole question of the international case for the £.

This is only by way of looking at it in terms of the timing of the advantages and disadvantages. It seems to me that if we weight the argument to take account of the time when the advantages and disadvantages will be effective, then however much we may have thought otherwise, it brings the argument down very much in favour of the 10s. unit. I therefore do not think that we should be persuaded, as the Halsbury Committee suggested, by looking at the question merely in an historical context. We should also take account of the economic and other arguments which have been advanced.

If the House were given a free vote—which it has been denied—I am sure that it would vote against the Government's proposal and in favour of the Amendment.

8.30 p.m.

Mr. R. B. Cant (Stoke-on-Trent, Central)

Some time ago I came to the conclusion that hitting one's head against even the leather seats of the Chamber was both painful and unrewarding. There is a great feeling of anticlimax in the House tonight. Many people. including myself, had high hopes that the Chancellor was doing something which would make a contribution to the theme of modernising Britain by introducing decimal currency. I thought that this "something" was out of all proportion to the thing itself; that it was, in a sense, symptomatic of what I thought were to be great changes. Unfortunately, soon after my right hon. Friend announced that he intended to do this, it became obvious that there was to be a considerable concession to tradition.

I have played some part in trying to persuade my hon. Friends—who are conspicuous tonight only by their absence —that the 10s. unit was the right unit to adopt. As this stage of the Bill approached, last Sunday I went into something approaching decimal purdah. I read the OFFICIAL REPORT of our debates in the House and in Committee and began to wonder whether I might change my mind. I even flirted for a few fleeting seconds with the £—florin—cent system in the hope that that would be a compromise—something of a bridge between the ten-bobbers and the Chancellor's £ unit. However, I came rapidly to the conclusion that those who had supported the 10s. unit had been right all along.

I do not want to repeat all the arguments, which have been put adequately in different places from time to time. I hope that I am not being disloyal in saying that the statement of the Financial Secretary tonight was rather threadbare; although, perhaps, it was given in the spirit of, "The victory is already won. We need not bother too much". However, some of the arguments are positively inaccurate, and for the Financial Secretary to say that we have this half for only a generation is confounded by simple arithmetic.

I had hoped that my hon. and learned Friend would reply to the one major contribution to the debate that I made on Second Reading, when I spoke of the number of coins involved. I thought that, having done a stimulating piece of research, which indicated clearly that the £ system would involve the use of 1.6 billion extra units of cash each week, the Treasury would do some research and at least either deny or confirm what I had said. But nothing has been done in this respect.

My main point in speaking tonight is to draw attention to the fact that the very way in which the Treasury Bench plays down the international case makes me think that my colleagues in office are protesting too much—that this is the factor which finally persuaded the Government to adopt the £ system. We have had inspired and other types of leak, even from the author of the great Report, Lord Halsbury, who also now plays it down, although he gave it a prominent position in the case he presented in his Report.

People have pressed him to say why, if he attached so much importance to the international case for the £ and why, if he had to reach a conclusion about whether it was a significant matter, he did not go abroad and ask the people who use sterling in import-export transactions whether they considered it to be a decisive factor. He conceded that he had gone to the source of all inspiration, the Bank of England, and had asked for people there if they thought it a good idea that he should go abroad and question those who use sterling; but they told him that it was unimportant. In any case, he could only go to the people to whom the bank introduced him, who were unlikely to think differently. This is how history is made, and it is regrettable.

Another matter which distresses me and another reason why I support the 10s. unit is that, whatever the case for the £ as a reserve trading currency, its rôle as a unit of account will have to be abandoned in international finance. The Chancellor says that he is ready for change. If he had adopted the 10s. system, he could have made a firm declaration of intent that this country was willing and anxious to negotiate for change and did not attach the importance to the £ sterling which it appeared to do, and was prepared, by using the 10s. unit, to accept that the £ was not as internationally important as was thought.

For the domestic reasons, but also because, in the last resort, we will be saddled with a £.—cent—½ system, because the mandarins of the Treasury and the financial interests of the Bank of England have finally persuaded my right hon. Friend, I regret this decision. I shall, of course, support the Chancellor, not because the Bill shows that great Socialist faith which we share, or because it is intellectually attractive to me, but because the Chancellor has done a great job and, above all, he is a charming man with a smile which I find it hard to resist.

Mr. Iain Macleod (Enfield, West)

We have listened to a very sad speech from the hon. Member for Stoke-on-Trent, Central (Mr. Cant). There are only two runners in this race. That was the conclusion of the Halsbury Committee and of the Government's Blue Paper, which quoted informed opinion—rightly I think —as agreeing with that, and of comparable countries which have had this problem and reached their answer—invariably the 10s. answer.

It was the Chancellor's view on Second Reading when he declined even to comment on the £-florin-mil system. In spite of the skill of the advocate who assisted me so wonderfully on the Finance Bill, the effort to import into Committee a system more suitable to the bazaars of the Middle East had an air of pantomime as it was discussed. What has amazed me, after having studied and read twice every word said in Committee, is the astonishing brevity of this evening's speeches after the astonishing length of those upstairs.

I begin with a most serious point. When my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell) was complaining about the steamrollering of the Bill, the Financial Secretary said, whether or not with his tongue in his cheek I do not know— Is the hon. Member saying that the House of Commons is a cipher?"—[OFFICIAL REPORT, Standing Committee A, 20th April, 1967; c. 61.] The answer is that, when a Government with a majority of 100 put a three-line Whip on a matter which is deeply controversial, the House of Commons becomes a cipher. We had proof of that just now, in the speech of the hon. Member for Stoke-on-Trent, Central—

The Chancellor of the Exchequer (Mr. James Callaghan)

On a point of information. It was not a three-line Whip.

Mr. Macleod

I am sorry. It was a strong Whip, a two-line Whip.

When the Government put a Whip on this, the House of Commons becomes a cipher. The proof of this is in the Second Reading debate. Fifteen hon. Members spoke and eight of those declared themselves as ten-bobbers, five—including two Treasury Ministers—for the £-cent system and two for individual systems. Not only was there a very clear majority of tenbobbers over the £-cent, but a clear majority over all the other systems put together. I do not doubt that that is the genuine view of the House of Commons.

Anyone with any doubts about it has only to read the speech of the hon. Member for Stoke-on-Trent, Central. He must have hated doing it and I cannot say that I admired the end of his speech tonight. He must have hated ending his speech as he did. The result was that three of those ten-bobbers, having declared themselves against the Government, voted with the Government and the net voting figures turned up five hon. Members for the 10s. unit and 10 having been swept up by the Whip, whatever its strength, for the £-cent system. I say that is turning the House of Commons into a cipher.

The international case which matters is the one to which my hon. Friend the Member for Worthing (Mr. Higgins) referred and to which I referred on Second Reading. The true international case is not the trivial case put forward by the Bank of England to the Halsbury Committee. It is that as we plan our currency for the future, and perhaps for future centuries, we should not be too far out of step with all the other countries of the world. As it is, we are to have a unit vastly heavier than any other in the world. Even the 10s. unit which we advocate would be the heaviest unit. It is said by the Financial Secretary, and has been said on a number of occasions, that if only the other countries could start again they would perhaps opt for a heavier unit. I doubt it. I know of no great pressure to increase the value of the dollar. Yet, if they wished to do it, their present 7s. 2d. would go to 14s. 4d., which falls between the stools of the argument, and they could easily do it.

What really matters is that if this proposal of the Government is right, then everybody else is wrong and every other country is wrong. The Chancellor, even at this stage, ought to pause before he comes to this particular conclusion. Many countries—Australia, New Zealand, South Africa and Eire—each with a standard of living different from but broadly comparable in the band to ours, have faced this problem. Each of them came up with the same answer, the 10s. unit.

The reason is that the whole point of having decimal currency is that the main unit should be divisible into 100 cents, without a fraction. The only other system which meets this requirement in full—this was the system which ran second in the reports from Australia and the other countries I have mentioned—is the system of 100 pennies in which the main unit is 8s. 4d., which divides automatically, easily and straight away into 100 pennies. I think that is easily the second best system.

On the question of education, of course the system the Chancellor has put forward is easier for the schools than the system we have at the moment. I do not dispute that for a second, but it has the overwhelming disadvantage of having a fraction in it. Education authorities which have expressed themselves on this matter have pointed to the great ease and simplicity that attends a 10s.-cent system.

8.45 p.m.

To sum up, I believe that the truth is this. I have analysed what happened on Second Reading. If we could have a genuine free vote tonight—I know how difficult a free vote can be; I have been Leader of the House; even on a free vote there are complications—I believe that that pattern of 8, 5, 1, 1, is something like the pattern which would be reproduced. Whatever the figures turn out to be—we on this side are genuinely unwhipped; as we shall no doubt demonstrate on the next Amendment, some of us hold very different points of view—no doubt the victory will go automatically to the Government. But the truth is that the House will be taking what is basically a wrong and a minority decision.

We know full well that the great majority of the Press which has expressed itself on this matter has expressed itself in favour of the 10s. unit. The consumer authorities which have expressed themselves have done the same. The original thought of the C.B.I.—I will not go into all the details; they are more appropriate on the next Amendment—was for a 10s. unit. Perhaps I could simply quote from the letter that the T.U.C. sent to the Chancellor: The bulk of industry, trade and commerce supported the 10s. system. That was true then, it is true now, and it is plain daft of the Government and the Chancellor to ignore what is, in tact, an overwhelming expression of opinion.

Mr. Callaghan

The right hon. Member for Enfield, West (Mr. Iain Macleod) has conveyed a very false impression of the nature of our internal arrangements in the House, which are not as well understood outside as they are here. He hastily corrected himself when I interrupted to point out that there was no three-line Whip and never has been on this issue. This is an important distinction.

Mr. Iain Macleod


Mr. Callaghan

Anybody who disobeys a three-line Whip is assumed to want to eject the Government. That is what is understood from our normal internal arrangements. I am talking about our side. It may be that an Opposition Member can disregard a three-line Whip or vote against the party line. Indeed, it looks as if it is getting to be that way on my side. There is all the difference in the world between a three-line Whip and a two-line Whip.

The theory is that an hon. Member does not disobey a three-line Whip. On a two-line Whip, which is what we have had all the time, an hon. Member compares the arguments. I should not go into too many of the mysteries of the Whips' Office, but it is well known that the two things are very different, as the right hon. Gentleman recognised. In recognising it, he destroyed his own case.

Mr. F. A. Burden (Gillingham)

Would the right hon. Gentleman agree that the two-line Whip in effect is responsible for at least the hon. Member for Stoke-on-Trent, Central (Mr. Cant) voting for the Government when all his views are against them?

Mr. Callaghan

That is a matter entirely for my hon. Friend. Neither the right hon. Member for Enfield, West nor the hon. Gentleman does the House any service by saying that it is turned into a cipher under a two-line Whip. [Interruption.] The right hon. Gentleman persists in saying that under his breath, but he knows that I am right. On the R.P.M. Bill, when the present Leader of the Opposition had a two-line Whip, the Tory Government had a majority of only one. Was the House showing itself to be a cipher then?

Mr. Burden

Not this side.

Mr. Callaghan

Not any side. It has already been pointed out that 39 Members apparently abstained on a three-line Whip. The right hon. Gentleman does not do anybody any good by pretending that the House is a cipher in these matters, especially when he is inaccurate in his reference to the nature of the Whip.

Mr. Iain Macleod

In that case, will the Chancellor comment on two points? If it was a two-line Whip—we all know what a two-line Whip can be—I accept what he says, but will he then explain how three out of the four back benchers who were called from his side of the House declared their view on the 10s. unit and then voted in the Government lobby?

Second, will he explain what the Prime Minister said, as quoted in The Times: In another unsparingly ruthless burst, Mr. Wilson said that there would be no abandonment by the Government of their position…there would be no preliminary debate, there would be no free vote"?

Mr. Callaghan

A report in The Times, or any newspaper, whichever it might be, is not something on which I have to comment. We all know how inaccurate the newspapers are in these matters. [HON. MEMBERS: "Oh."] The Times itself changed its attitude on the £ and 10s. unit on the day that it changed its proprietor and editor. Am I supposed to regard that as a serious commentary on public opinion? I do not see any reason why I should listen to The Times on this matter. Where is the cipher in that great organ of public opinion? However, that is another question.

I deprecate the pretence that the House is turned into a cipher because Governments, in successive generations, have put two-line Whips on their own business. It does no service to democracy to suggest that, and the right hon. Gentleman knows it. The Government have a responsibility to give a lead to the House in this matter. They gave that lead, and it was for their own supporters to make up their mind whether they supported it or not.

Now, one other matter on which a great deal has been hung but which really arose out of an answer which I gave to a supplementary question put to me by the hon. Gentleman the Member for Kidderminster (Sir T. Brinton). It was not a prepared answer, but it was given in reply to a question he asked me about administrative commitments. This has been turned by the hon. Member for Moray and Nairn (Mr. G. Campbell) into not a great conspiracy—I do not say that —but an impression that I had already given private indications and, therefore, the Government could not go back on their decision even if they wanted to. In fact, what I was commenting on, the fact that commitments had been entered into by companies, was a matter of public knowledge. It was not a matter for which the Government had taken responsibility or in which they had encouraged companies to enter into commitments. It was in the public Press that companies and organisations had entered into commitments, and what I was doing, in, I hope, my usual way, was pointing out to the hon. Member for Kidderminster that it was true that certain companies had entered into commitments. I took no responsibility for it, and I had not encouraged them to do it. It was on that matter of public knowledge that I was commenting.

Certain business machine companies had announced their intentions in the Press, and in discussions with officials of the Treasury. I was informing the House as accurately as I could that they had done so, but this did not mean that I or they had thereby entered into certain commitments which would prevent this House, if it wished, from expressing a different view. They are not obliged to inform the Government of their plans or commitments. The Government have no powers to give instructions to any business machine companies or other organisations on what they should do in preparing for decimalisation.

Mr. G. Campbell


Mr. Callaghan

I shall now give way to the hon. Gentleman, especially if he wishes to withdraw.

Mr. G. Campbell

What my hon. Friend the Member for Kidderminster (Sir T. Brinton) asked was this: Is not the reason for the Government's obstinacy about this free vote…that they"— that is, the Government— have already taken administrative action…", and it was in answer to that that the Chancellor said: Administrative decisions have, of course, been taken"— and he then went on to talk about the companies.

Mr. Callaghan

That is exactly what I am saying—administrative decisions—

Mr. G. Campbell

By the Government.

Mr. Callaghan

No, it does not say "by the Government". My answer is there, and these are the facts. Hon. Members can go on twisting them if they want to, but I am trying to give the facts. I hope that they will accept what I say about it because I do not like the suggestion that I entered into a conspiracy with anyone which prevented my being frank with the House. My answer was perfectly straightforward.

Administrative decisions have…been taken"— and then there were loud shouts of "Oh", because the Opposition thought that they had got me on the hook. When the shouts had died down, I went on to say— and a number of companies, based on the decision announced by the Government over 12 months ago, have already entered into…commitments on this matter. That seems to me to be a matter of elementary prudence and common sense on their part."—[OFFICIAL REPORT, 7th March, 1967; Vol. 742, c. 1243–4.] That was all it was, neither more nor less.

At this late stage, I only repeat once more that there was no commitment—

Mr. G. Campbell


Mr. Callaghan

If the hon. Gentleman does not wish to withdraw I am not giving way. I have now made it clear on three occasions and he has gone on repeating that there were some—I will not say conspiracy—arrangements between me and the companies.

Mr. G. Campbell

The Chancellor has misunderstood me. I will withdraw that, because I have never said it. All that I asked, which is what I said this evening, was whether this was the reason—whether the Government found themselves in a position where administrative decisions had been taken. I thank him for explaining tonight that they were not Government decisions. That was not clear from the record. I asked whether the decisions taken by companies did influence him in deciding that it was too late to change. I only asked the question. I have not accused him of any conspiracy, and therefore I have nothing to withdraw on that.

Mr. Callaghan

The hon. Gentleman having started by saying that he withdrew something that he had not said, and having ended by saying that he was not withdrawing what he had said, I do not think that I can carry it further. If he refers back to what he said in his original speech—he has it pretty well written down—he will find that he alleged that it was because of these arrangements that had been made. I have made the position clear to the Committee, and I hope that it will accept what I have said about the matter.

I now turn to the question of public opinion. The right hon. Member for Enfield, West said that there was nobody on the Government's side except the Halsbury Committee. For some reason the Halsbury Committee is entirely discounted. I repeat once more what I have said before in the House that the body which has spent most time on the issue is the Halsbury Committee. It examined 25 possible systems, one of which was the E—cent—½. Therefore, it examined 24 other systems. It held 57 meetings, studied 400 memoranda, examined and questioned 150 machine companies and saw 120 witnesses. Nobody spent more time on the problem than the Committee. It reached a conclusion which the Government after considering the matter finally decided to adopt.

No one can say that there has been a hasty decision. It can be argued that there are alternative decisions but some things stand out clearly. First, there is a very substantial difference of view. Secondly, the Halsbury Committee examined the matter more thoroughly than anybody else. Thirdly, the consumer interests to which the hon. Member for Orpington (Mr. Lubbock) referred are not only extremely well-organised but extremely important, and their interests should be taken into account. They put them to Halsbury and the Committee considered them. They probably gave as much evidence to Halsbury as anybody else and in the end the Committee came down against them, because there are other interests apart from retail traders and other organisations concerned in the matter.

Mr. Lubbock

It is not just retail traders.

Mr. Callaghan

It is all there. Mr. Lubbock: The consumers?

Mr. Callaghan

The Consumer Council too. I am saying that this was not the only interest affected. Halsbury, having considered all the interests, reached a decision which the Government endorsed. That is the position.

Mr. Lubbock

Why does the Chancellor always try to insinuate that only the traders, and not a vastly greater number of people who buy from them, are affected by the proposal?

Mr. Callaghan

Both are affected, of course, and the Consumer Council is trying to represent consumer interests. But these are not the only interests—these relatively small purchases. I make no insinuations about the matter.

The plain truth is that the argument has been conducted very fully. I see no reason, and no more do the Government, to depart from the Committee's conclusions reached after the most careful and dispassionate consideration that the problem could have had.

Mr. G. Campbell

I am disappointed that neither the Chancellor nor the Financial Secretary has budged an inch. The Financial Secretary's reply simply agreed with the arguments about associability in favour of the 10s. unit and also the argument about the fraction, both of which were included in my concise speech.

The Chancellor has replied to my question about administrative decisions having been taken and I am grateful to him. In saying that I withdraw, I withdraw any imputation that he has read into my remarks, because my inquiry was, in fact, whether the Government found themselves in a position where they thought that it was too late to change. He has gone some way towards answering that, which means that the Government have been even more obtuse than I had originally thought.

The hon. Member for Stoke-on-Trent, Central (Mr. Cant) spoke for many of his hon. Friends when he clearly said that he was in favour of the 10s. system, but felt obliged, as he had on Second Reading, to vote with the Government. A matter which is not connected with party politics, but which will affect every one of our constituents in three and a half years' time, should not have been made a sub-

ject—whether it was with a two-line Whip or not—on which hon. Members have been put into the position, as the hon. Member clearly felt that he was, in which their party loyalty was in question. That should never have been allowed to happen and I ask my right hon. and hon. Friends to divide the House.

Question put, That the words proposed to be left out, to "and" in line 8, stand part of the Bill:—

The House divided: Ayes 170, Noes 73.

Division No. 381.] AYES [9.2 p.m.
Abse, Leo Fowler, Gerry Milne, Edward (Blyth)
Allaun, Frank (Salford, E.) Freeson, Reginald Mitchell, R. C. (S'th'pton, Test)
Alldritt, Walter Gardner, Tony More, Jasper
Anderson, Donald Ginsburg, David Morgan, Elystan (Cardiganshire)
Archer, Peter Gourlay, Harry Morris, Alfred (Wythenshawe)
Atkins, Ronald (Preston, N.) Gower, Raymond Moyle, Roland
Atkinson, Norman (Tottenham) Gray, Dr. Hugh (Yarmouth) Neal, Harold
Bacon, Rt. Hn. Alice Grey, Charles (Durham) Newens, Stan
Bagier, Gordon A. T. Griffiths, David (Rother Valley) Noel-Baker, Rt.Hn.Philip(Derby,S.)
Beaney, Alan Griffiths, Rt. Hn. James (Llanelly) Norwood, Christopher
Bell, Ronald Hale, Leslie (Oldham, W.) Oakes, Gordon
Bence, Cyril Hamilton, James (Bothwell) Ogden, Eric
Bennett, James (G'gow, Bridgeton) Hannan, William O'Malley, Brian
Bishop, E. S. Harper, Joseph Orbach, Maurice
Blackburn, F. Harrison, Walter (Wakefield) Oswald, Thomas
Boardman, H. Haseldine, Norman Owen, Dr. David (Plymouth, S'tn)
Booth, Albert Heffer, Eric S. Park, Trevor
Braddoek, Mrs. E. M. Hooley, Frank Parkyn, Brian (Bedford)
Brooks, Edwin Horner, John Pavitt, Laurence
Brown, Hugh D. (G'gow, Provan) Houghton, Rt. Hn. Douglas Pearson, Arthur (Pontypridd)
Callaghan, Rt. Hn. James Howarth, Robert (Bolton, E.) Pentland, Norman
Cant, R. B. Howie, W. Price, Thomas (Westhoughton)
Carmichael, Neil Hoy, James Price, William (Rugby)
Chapman, Donald Huckfield, L. Rhodes, Geoffrey
Coleman, Donald Hughes, Emrys (Ayrshire, S.) Robertson, John (Paisley)
Concannon, J. D. Hynd, John Ross, Rt. Hn. William
Conlan, Bernard Johnson, James (K'ston-on-Hull, W.) Shore, Peter (Stepney)
Craddock, George (Bradford, S.) Jones, Dan (Burnley) Short,Rt.Hn.Edward(N'c'tle-u-Tyne)
Crawshaw, Richard Jones, J. Idwal (Wrexham) Short, Mrs. Renée(W'hampton,N.E.)
Crosland, Rt. Hn. Anthony Jones, T. Alec (Rhondda, West) Silverman, Julius (Aston)
Cullen, Mrs. Alice Kerr, Russell (Feltham) Slater, Joseph
Dalyell, Tam Lestor, Miss Joan Small, William
Davies, Dr. Ernest (Stratford) Lever, Harold (Cheetham) Snow, Julian
Davies, G. Elfed (Rhondda, E.) Lomas, Kenneth Steele, Thomas (Dunbartonshire, W.)
Davies, Ednyfed Hudson (Conway) Loughlin, Charles Swain, Thomas
Davies, Ifor (Gower) Lyon, Alexander W. (York) Taverne, Dick
Davies, S. 0. (Merthyr) Lyons, Edward (Bradford, E.) Thornton, Ernest
Delargy, Hugh Mabon, Dr. J. Dickson Tinn, James
Dempsey, James McBride, Neil Tuck, Raphael
Diamond, Rt. Hn. John MacColl, James Urwin, T. W.
Dickens, James MacDermot, Niall Varley, Eric G.
Dobson, Ray Macdonald, A. H. Wainwright Edwin (Dearne Valley)
Dunn, James A. Mackenzie, Gregor (Rutherglen) Walden, Brian (All Saints)
Dunwoody, Mrs. Gwyneth (Exeter) Mackie, John Wallace, George
Dunwoody, Dr. John (F'th & C'b'e) Mackintosh, John P. Watkins, Tudor (Brecon & Radnor)
Eadie, Alex Maclennan, Robert Wellbeloved, James
Edwards, Rt. Hn. Ness (Caerphilly) McNamara, J. Kevin Williams, Alan (Swansea, W.)
Ellis, John MacPherson, Malcolm Williams, Clifford (Abertillery)
English, Michael Mahon, Peter (Preston, S.) Wilson, Geoffrey (Truro)
Ennals, David Mahon, Simon (Bootle) Wilson, William (Coventry, S.)
Evans, loan L. (Birm'h'm, Yardley) Manuel, Archie Winterbottom, R. E.
Fernyhough, E. Mapp, Charles Woodburn, Rt. Hn. A.
Fitch, Alan (Wigan) Marquand, David Woof, Robert
Fletcher, Raymond (Ilkeston) Marsh, Rt. Hn. Richard Yates, Victor
Foley, Maurice Mason, Roy
Foot, Michael (Ebbw Vale) Mendelson, J. J. TELLERS FOR THE AYES:
Ford, Ben Millan, Bruce Mr. Ernest Armstrong and
Forrester, John Miller, Dr. M. S. Mr. Harold Walker.
Astor, John Hobson, Rt. Hn. Sir John Pearson, Sir Frank (Clitheroe)
Bessell, Peter Hooson, Emlyn Peel, John
Buchanan-Smith,Alick(Angus,N & M) Jennings, J. C. (Burton) Percival, lan
Buck, Antony (Colchester) Johnston, Russell (Inverness) Pink, R. Bonner
Burden, F. A. Kaberry, Sir Donald Pym, Francis
Chichester-Clark, R. Knight, Mrs. Jill Shaw, Michael (Sc'b'gh & Whitby)
Clegg, Walter Lloyd, Ian (P'tsm'th, Langstone) Sinclair, Sir George
Cooke, Robert McAdden, Sir Stephen Steel, David (Roxburgh)
Crawley, Aidan MacArthur, Ian Stoddart-Scott, Col. Sir M. (Ripon)
Cunningham, Sir Knox Macleod, Rt. Hn. lain Thatcher, Mrs. Margaret
Currie, G. B. H. McMaster, Stanley Turton, Rt. Hn. R. H.
Dalkeith, Earl of Mawby, Ray van Straubenzee, W. R.
d'Avigdor-Goldsmid, Sir Henry Maxwell-Hyslop, R. J. Wainwright, Richard (Colne Valley)
Deedes, Rt. Hn. W. F. (Ashford) Maydon, Lt.-Cmdr. S. L. C. Walters, Dennis
Dodds-Parker, Douglas Mitchell, David (Basingstoke) Ward, Dame Irene
Doughty, Charles Monro, Hector Weatherill, Bernard
Elliott,R.W.(N'c'tle-upon-Tyne,N.) Montgomery, Fergus Whitelaw, Rt. Hn. William
Eyre, Reginald Morgan, Geraint (Denbigh) Wills, Sir Gerald (Bridgwater)
Farr, John Morrison, Charles (Devizes) Winstanley, Dr. M. P.
Grant, Anthony Murton, Oscar Wolrige-Gordon, Patrick
Gresham Cooke, R. Nicholls, Sir Harmar Younger, Hn. George
Gurden, Harold Nott, John
Hall, John (Wycombe) Orr-Ewing, Sir Ian TELLERS FOR THE NOES:
Harris, Frederic (Croydon, N.W.) Osborn, John (Hallam) Mr. Eric Lubbock and
Higgins, Terence L. Page, Graham (Crosby) Mr. Gordon Campbell.
Hiley, Joseph Page, John (Harrow, W.)
Mr. Patrick Jenkin (Wanstead and Woodford)

I beg to move Amendment No. 2, in page 1, line 8, to leave out from 'sterling' to end of line 9 and to insert: 'the florin, the florin being one-tenth part of the pound sterling and the cent, the cent being one-hundredth part of the florin'.

100 cents (florin) 11.31036 2.8500 Three-quarters copper one-quarter nickel .0646
50 cents 5.65518 2.3595 .0375
25 cents 2.82760 1.9405 .0188
10 cents 8.91000 2.7380 Mixed metal copper, tin and zinc .1875
5 cents 4.45500 2.1440 .0938
2 cents 1.78200 1.7145 .0375
1 cent .89100 1.7500 Mixed metal aluminium and magnesium .0282
Mr. Jenkin

It was my misfortune on a previous occasion to follow the debate and defeat of the 10s. Amendment. It is right to point out that the arguments for the florin-cent system are quite different from those for the 10s. system, and that they have not had anything like the same amount of public attention. They were canvassed at great length in Committee, where we had the Treasury's answers for the first time. However, this is the first occasion on which the argument for the florin-cent system has been deployed on the Floor of the House, and I welcome the fact that Mr. Speaker found it possible to select the Amendment for debate.

The supporters for the system now include not only a great many £ supporters,

The Chairman

With this Amendment it would be convenient for the Committee to discuss Amendment No. 9, in Schedule 1, page 6, leave out lines 8 to 17 and insert:

who have always recognised that the major unit should be the £ but who disagree with the Government's sub-division, but a growing number of those who hitherto supported the 10s. system, but who, having heard Treasury Ministers again and again, now believe that there is no hope of budging the Government from the £.

My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) referred to the C.B.I. as having been originally a £ supported. Its Technical Director, Dr. Sharp, made it clear in a letter to the Financial Times that the C.B.I. had always been in favour of a halfpenny equivalent and had always supported the 10s.—cent—½ I system. But, as the Financial Secretary rightly pointed out, the presence of the non-decimal half coin is one of the strongest arguments against any system which the Government have adopted and, therefore, it is unlikely that anyone would seriously look at the 10s.— cent—½ system now.

The £—florin—cent system has come to be known as the "mil system", because that was how the Halsbury Committee described it. But I hate that name because it has an impersonal, scientific ring. If I may describe it briefly, the £ is divided into 10 florins, and the florin is divided into 100 cents. As for coins, the florin is retained, the shilling becomes 50 cents, 6d. becomes 25 cents and, below that, there are three bronze coins valued at 10 cents., 5 cents and 2 cents, and a white metal coin for 1 cent. The 1 cent coin is necessary for reasons which I shall not go into now, but which the Financial Secretary said he accepted as being valid if the system was to exist at all.

The main advantages are, first, that it retains the £. I speak as one who voted with the Government on Second Reading. It is one with which the Government must have sympathy and, as a result, I hope that they will look favourably upon this system.

The subsidiary advantage is that it allows the retention of the 6d. coin, which is most important for all coin-operated machine transactions. I shall be saying something about telephones in a moment. The argument which has weighed with most people, and is increasingly weighing with those who are coming to grips with the realities of the decimal system, is that it allows the retention of a ½d. equivalent. The main disadvantages, which were summarised by the Financial Secretary in Committee at column 131, were, first, that it involved the resurrection of the farthing equivalent. I admit that, but I do not necessarily regard it as a serious disadvantage. It would be no smaller, and a good deal larger, than some of the smallest coins of most of the European countries.

9.15 p.m.

The second objection was that calculations would be more difficult because of the intermediate unit. It is interesting to note that the Halsbury Committee dismissed the system early on because it thought that it involved three places of decimal after the £, and it said that it was impossible to do mental arithmetic to three decimal places. I am not asking anybody to do that, because we have the intermediate unit, the florin. I confidently expect that any prices below £1 will be expressed in terms of florins and two decimal places of cents, and when we got to sums above £1 ordinary amounts will be expressed in florins and two places of decimals, just as, at present, if one buys a pair of shoes the cost in never £5 3s. 6d., but 103s. 6d. In the same way we could have 10 florins and two places of decimals, so I do not give much weight to the difficulty of calculation.

The hon. and learned Gentleman relied on the Broadbent experiments, reported in the Halsbury Report, but Dr. Broadbent was looking at the intermediate system and the two decimal place system, that is to say a major unit divided into ten intermediate units, which are then divided into ten minor units. Clearly, there is no advantage in that, and his experiments confirmed that view.

The Financial Secretary's third argument was poorer associability, so far as it is important, and on the whole I agree with the Government that it is relatively unimportant. I accept its validity, but it does not add up to much. The major argument centres around business machines. I concede that the existing press-down machine registers could not be adapted to take a £—florin—cent system and would all need to be renewed. The total figure involved is about £30 million, set against the other expenses which are likely to be incurred, which includes a substantial sum for the modification of business machines, of about £130 million, which perhaps need not be an insuperable obstacle.

The hon. and learned Gentleman's next objection was that it would require additional coins. I admit this, but this is an inevitable feature of any system which will give the added flexibility which I regard as essential for any decimal system.

Reference has been made to the speeches of Gladstonian length in Committee. I shall do my best to avoid that. Nobody seemed to mind in Committee, but after two late nights I shall do my best to keep my speech short. The arguments are general, and I must deploy them, but I shall be as brief as possible.

I need say nothing about the argument for the £, because that is not germane to my case. I want to concentrate primarily on the case for the halfpenny equivalent, because the Amendment stands or falls by the strength of that. The Government's half new penny is equivalent to 1.2d. of our existing currency. This would be the smallest unit. It would be the smallest coin at which any price could be expressed, or any price variation could be achieved. The Financial Secretary said that the present halfpenny would be demonetised before D-day, probably in 1970. The Halsbury Committee, in Chapter IV of its Report, examined the question of the usefulness and value of the halfpenny, and said in paragraphs 130 and 131: It is equally clear, in our view, that a halfpenny is declining in usefulness and popularity and that its equivalent will not be needed as a permanent feature of a decimal system… The question remaining in our minds was whether the halfpenny or its equivalent should, and could, be incorporated temporarily into a decimal system, perhaps, as a fraction of a cent, without damage to the permanent structure. We concluded on balance there was no strong reason for retaining the halfpenny equivalent if the structure of a new decimal system would be sounder without it…

All I would say about that is that the conclusion of the Halsbury Committee was reached after it had dismissed any system based on the division of the £ into 1,000 sub-units. It had clearly in mind that if it had to have a halfpenny equivalent, there would have to be a quarter cent in addition to the half cent. Perhaps it is not surprising that it did not find arguments favouring this.

The Halsbury Committee's examination was based on the frequency of use and importance of the halfpenny and it argued that it had a declining usefulness, based en the fact that the farthing went out in 1960 and the halfpenny would be out by 1972. For the frequency of use it looked at the retail price index and four representative household budgets. In examining the index it found that 10 per cent. of all items and 13 per cent. of food items were quoted in amounts that ended in a halfpenny, but of the budgets they found that 16 per cent. of all purchases ended in a halfpenny. The Committee concluded that the immediate effect of a change from our present system to a decimal currency that did not have a halfpenny equivalent would be an increase in the cost of living three times as great as if there were no halfpenny involved.

The Financial Secretary argued that this would be a once-for-all costs and pointed out the recommendation of the Halsbury Committee that the lower income groups will have to be protected against this increase. What the Committee did not advert to—but which, nevertheless, is coming to be regarded as one of the strongest arguments for retaining a halfpenny equivalent—is that the absence of any halfpenny equivalent will be a continuing disadvantage for many years. Many items which are brought daily, or certainly weekly, by families, are in small quantities or units which will require either the use of a halfpenny in the price or price changes taking place in variations of 1…2d.

I quoted the Committee's conclusion that 66 per cent. of all money transactions involve prices less than 4s. If the smallest price movement has to be the new halfpenny—equivalent to 1…2d.—the consequence in all these small transactions will be that rises in prices will tend to be delayed longer than they should, and when they come they will be very much larger than they otherwise would have been. But, perhaps more important, price reductions will become almost impossible. People are prepared to reduce prices by small amounts, but if the amount is likely to be 5 per cent. or 10 per cent. of the price of the product a price reduction is most unlikely.

This covers most of the normal consumer goods involved in daily and weekly purchases—bread, milk, eggs, processed food, confectionery of all sorts, cakes, cigarettes and beer. Narrow price phasing is essential for all these products and, furthermore, will continue to be essential for many years to come. I cannot agree with the conclusion of the Halsbury Committee that the halfpenny will have outlived its usefulness in another five years' time. Evidence is now to be found that many trade organisations are recognising that their businesses and customers will be badly hit if the halfpenny is demonetised three years from now and an equivalent is not provided.

The dairyman with milk, the Confectionery Alliance over the whole range of chocolates and sweets, many retail food organisations, particularly those which deal in processed foods, which come in very small quantities, laundries, breweries, the tobacco industry—a packet of 10 cigarettes never changes in price, apart from duty, by less than a halfpenny—all these must have flexibility of pricing, and the halfpenny equivalent would permit the necessary price changes. For instance, 1.2d. on something priced at ls. is a very large rise—or half a new penny on a commodity that costs 5 new pennies.

One must also remember that we will be dealing in the not-too-distant future with Continental measures. If a litre of petrol has to change in price by a minimum of half a new penny that is equivalent to a change of 5½d. a gallon. I just quote that as one example, but I have here an extract from a letter from a well-known economist, Mr. Maurice Zinkin, who writes: The very fact of price changes as great as 10 per cent. on mass consumption goods would be upsetting in a marketing sense and might well necessitate the very kind of heavy promotional spending the Government is anxious to discourage. In a sense the 1.2d. minimum unit operates against price competition and in favour of other marketing devices. Dutch experience, for example, reinforces this point: there you find much more intense price competition within the retail trade than here and much of this would be completely impossible if the minimum unit were 1.2d.

The weight of the case is conceded by the Government, because the Financial Secretary devoted a considerable part of his speech in telling traders how they could get round this difficulty. He suggested a number of elaborate and more or less cumbersome devices to overcome what he tacitly admitted was a lack of flexibility in the Government system. He said that traders could vary the size or quantity of the goods they were selling so as to vary prices for smaller amounts. He said that they could sometimes sell two or three items at a time.

I hope that he will forgive me if I remind him that he applied that idea to stamps, but that when I asked him what would be the amount of the stamp that could be bought two or three at a time he got tied up in knots. He said that traders could vary the price of some products but not of others so as to leave them with the same overall profit margin.

One must point out that variation of size or quantity is totally illegal in the case of quite a large number of products, where consumer protection legislation lays down the sizes or quantities in which goods must be sold. I was interested to hear this morning, in the programme "Today", an inspector of weights and measures complain bitterly that some traders had used the period of price freeze to vary the size or quantity of goods, thus circumventing the Prices and Incomes Board. He evidently thought that the Board legislated in these matters. Halsbury conceded that there was no great alleviation here.

There is the Financial Secretary's suggestion about selling two or three at a time. What happens with people's impulse buying of confectionery—a Mars Bar or a packet of chocolate? If they have to take two or three in order to take advantage of a price change they will not buy in that way. Are people who want a collar laundered by a laundry that wants to change its charge to wait until they have three collars to be laundered? What about beer? I had a letter from one of the smaller brewers. Have we to buy two pints of beer instead of one because the currency system is not sufficiently flexible to allow the purchaser of one pint an advantage?

Seriously, I must say that the reverse is the case. That is where the Halsbury Committee went wrong, because it did not appear to take account at all of the fact that there are a large number of our fellow citizens who already, because of circumstances, have to buy in very small quantities indeed. They buy one egg. They buy apples in ones and twos, and buns from the baker in singles. If the prices of such things as these have to be changed by 1.2d. a time, those are the people who will be hit harder than most.

This is, let me repeat, not once for all. It is continuing the disadvantage of an impracticable price system. One knows, one has had complaints from people who buy fuels in prepacked packages, of the uplift which has to be paid if one buys fuels in 14 lb. or 28 lb. packages. The same would apply to eggs and everything else if the unit were small.

9.30 p.m.

The third suggestion was that varying prices of some products and not others would maintain profitability. All I can say is that this is quite unrealistic. Take one example, processed meat, products which, I believe, are called in the trade balancing pig. I am glad to see the Joint Parliamentary Secretary to the Ministry of Agricuture here, for he will appreciate the argument. If one makes a large number of different products from one basic starting point, pig, the relationship of the prices of the different products one makes is absolutely crucial to making sure that one's sales, overall, balance, and that one is not left with a large quantity of something, having sold out of something else. The idea that one can increase the size of sausages, and leave aside the price of bacon or pork, is ludicrous. Retail prices must reflect very closely availability of and pattern of demand for products. Where they are disconnected products, one simply cannot alter the pattern of demand and upset the whole of the marketing arrangements.

Honestly, this one is totally impracticable. If I may say so without offence to the Financial Secretary, it really reeks of the cloister of seclusion of the Treasury and of men who have never had to sell anything in their lives at all. I am bound to conclude from the weight of objections which have been aroused that the Government system on this point really constitutes a major disadvantage, and one of which I believe the Government have got to take account.

But it does not stop there. I have dealt with this merely from the domestic aspect, but there is what I called in Committee the international case for the ½d., and this the Financial Secretary persistently chose to misunderstand, but I believe that it is one of considerable validity.

We start from the fact that on the Continent they will have for many years, till they have reforms, minimum units of currency very much smaller than the 1.2 cent which we are being threatened with, and of course, in individual markets, goods will be competing in terms of currency. Where we are exporting to France we will sell goods for francs and centimes, and if we are exporting to Germany, it will be marks and pfennigs. Correspondingly, for imports we shall be paying in the new £ new pence and half new pence. But the fact that they in their countries will have a more flexible currency system, one which will allow smaller price gradations, is an advantage to them in selling to us. The fact that we will have a less flexible system will put our manufacturers and traders under a penalty and a difficulty which they ought not to have to face. The hon. Member for Chislehurst (Mr. Macdonald) shakes his head. He shook his head a great deal during my speech in Committee. I hope he will let me finish my point. I shall not elaborate it. I will illustrate it with one example.

Let the example be confectionery. A great deal of confectionery is exported. It is produced on highly automatic production lines—produced and packed. Obviously, it is to the advantage of the trade if it can produce and pack for both the home market and the export market on the same production lines. This is what it will always aim to do. Suppose it did what the Financial Secretary recommended, because it wanted to make a price variation. It would have to alter the size of a pack or the size of a product in order to produce for the British market. It would be totally impracticable to produce the same pack for both the continental and the British markets.

Therefore, the trade would be landed with two lines of production, one for the home market and one for the export market. That is simply because the currency system—the coins—which their customers would have to use in retail shops in this country was not as flexible as the currency in the export market. This will be to their disadvantage.

I beg the Treasury to listen to the case which has been put to me with great force from a number of industries which feel that their competitive position will be threatened and that the efficiency of their operations will be hampered if they have to deal with less flexible currencies than their competitors have in their own markets. Just as a country with a sophisticated and flexible capital market has a competitive edge over a country with a poor and inflexible capital market, so a country with a flexible currency system will be better placed to compete internationally than will a country with an inflexible system.

Mr. Iain Macleod

May I ask my hon. Friend why in Australia they have no halfpenny equivalent and do not intend to have one, and yet they have not had rises in prices?

Mr. Jenkin

I do not think that one can take the argument from other countries. I suggest that a higher proportion of our population than in Australia are the people to whom I was referring earlier, who buy in one's and two's. No doubt, my right hon. Friend saw the article by Harold Wincott in the Financial Times the other day in which he said that the Australians were selling cars and houses in £s and guineas because it was too difficult to operate in 10s. An inflexible currency is just as much a restrictive practice as is an inflexible labour force.

That is the international case, which many industries are pressing hard, and it will be made worse if we have an added-value tax. At the point at which the tax is paid, it is a paper transaction—

Mr. Speaker

Order. I do not want to appear discourteous, but I remind the hon. Member of what he said at the beginning—that other hon. Members hope to take part in the discussion and that we cannot debate now the added-value tax.

Mr. Jenkin

I was not seeking to make a case for the added-value tax but merely pointing out, as I did on Second Reading, that the existence of an added-value tax and the need to have flexible price phasing to take account of it at the retail level is a point of great importance. I believe that we shall need the halfpenny whether we go into Europe or not—I very much hope that eventually we shall go into Europe—and that if we go into Europe the case for it becomes even stronger.

Mr. J. T. Price (Westhoughton)

During the afternoon I spent several hours in the Royal Mint at Tower Hill witnessing the production of a new breed of halfpennies. Millions of them were pouring off the Royal Mint at the order of the Treasury. Millions of new halfpennies are being minted at the moment, and they must be put to some use.

Mr. Jenkin

I am grateful to the hon. Member for Westhoughton (Mr. J. T. Price) for his intervention. I had not intended to make the point, but perhaps I may do so in one sentence: the number of halfpennies minted in each of the last four years has increased substantially over the year before. If we wish to consider foreign comparisons, then the number of very small coins—pfennigs in Germany, cents in Holland and cents in the United States—which other countries find it necessary to mint every year is adequate evidence of the value of these coins. The Financial Secretary tried to laugh it off by saying, "Every time you come back from abroad you have your pockets full of useless little coins". Of course, once one comes out of a country one no longer needs the currency of that country. But while in that country one is using the currency all the time. All hon. Members who travel on the Continent have experience of that.

I believe that both the domestic and the international arguments are of great weight and are supported by an increasing number of trades, and would be supported by their customers if the issues were properly appreciated. May I refer briefly to the 6d.? The hon. Member for Orpington (Mr. Lubbock) referred to the point about telephones on Second Reading. He said that there would inevitably be a 1s. telephone call.

We went into this in Committee. I have received a long explanatory letter from the Financial Secretary, but I will not bore the House by reading it. It points out that the Post Office has a problem which it has not yet solved; either it will have to vary the amount of time given for different coins or eventually go in for the ls. telephone call. The Post Office has not yet decided what will be done, and, although it could alter all the machines in such a way to solve this problem, there is no indication that that will be done.

Fun was made of the fact that only a few Middle Eastern countries have so far divided the £ into 1,000 units or into an intermediate florin and 100 units. I remind hon. Members that many centuries ago we adopted the Arabic system of numerals. Would it be so odd if we were to adopt a system of currency not all that different from the Arabic?

The Halsbury Report mentions something of significance and it is astonishing that little importance has been attached to it today. Appendix 3 sets out the currency systems of a number of countries. It shows that, without exception, every country that has a currency system which is divided by 100 has a main currency unit worth 10s. or less. It also shows that every country with a main unit worth more than 15s. divides it either by 240 or 1,000. On this basis the 10s. system conforms, the £-florin-cent system conforms, but the £-cent-half system does not conform.

If the Government are determined to press ahead with their present proposal, we will be the only country in the world which denies what appears to be the logic of history or of common sense. By choosing the £ and a system of cent-half cent, they are at once denied the flexibility which any currency system, particularly in a country as advanced as ours, should contain. The Government must accept the corollary that if they are determined to keep to the £—and I trust that those who recognise the inevitability of this will also accept the logic of dividing it in a more sensible and rational way: the florin and the cent—both in the short-term and long-term they would be wise to heed the arguments of my hon. Friends and myself. Ultimately, we may have a European currency. It is essential that, in the intermediate period, we should have a currency with which we can work and which represents the logic of the Government's choice of the £.

That is the case for the £-florin-cent system. The Government should take note of our remarks, even at this late stage; but if they do not listen to us, perhaps they will listen to what is said in another place.

Earl of Dalkeith (Edinburgh, North)

My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) advanced the case for the Amendment with such cogency and so comprehensively that I need detain the House only momentarily. I support the Amendment, although I was at first somewhat loath to add my name to it because it appeared to be an admission of defeat on the issue of the 10s. unit. However, the pill is made slightly sweeter when one realises that if the Government go on in the way they have been going on, by the time we become decimalised the £ will be worth only 10s., anyway.

I am pleased to see the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food in his place, because what I have to say concerns him. I am sure that he is well acquainted with the views of certain parts of the farming industry, especially those concerned with milk. They fear that, if the Government have their way the minimum unit will be too large, and I therefore welcome my hon. Friend's suggestion for a smaller one. I hope that the Parliamentary Secretary will talk seriously with the Financial Secertary and that I can wrest his mind away from a previous argument about whisky to the subject of milk.

Another attraction of the florin is that, according to my information, when it was first struck, about 100 years ago, it was solely to facilitate a change to a decimal system, which shows that our forefathers had a good deal of sense. The florin makes for an easy subdivision and the continued use of shillings and sixpences would be a great advantage in telephone boxes and other coin machines. I beg the Government to think seriously before digging in their toes as they have on so many other parts of this Measure.

9.45 p.m.

Mr. James Allason (Hemel Hempstead)

I did not serve on the Standing Committee, so this is my first opportunity of warmly supporting this proposal. A minimum unit of 1.2d. is thoroughly unsatisfactory. The Government propose a new halfpenny, which they will then get rid of as soon as possible, which shows a guilty conscience about it. My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) has shown the grave disadvantages of this coin and the prospect is terrifying. I would much prefer 1,000 units to the £, which would give infinite gradations and changes of price.

Perhaps the cloistered Treasury officials believe that it will be necessary to provide precisely the right number of coins for a 7-cent Mars Bar or any other item, but a large number of items are bought in supermarkets. One is charged on one bill for a large number, and although each may cost very little, there will be no difficulties in giving change if the bill is for 139 cents and the customer offers 140. Long ago, when a farthing was the equivalent of 1 cent, I was given a box of matches in change instead. I do not know what it is now, having given up smoking, but it is certainly not a farthing.

Another great merit concerns slot machines. It will be difficult for manufacturers if a significant number of these coins is withdrawn. The retention of the 6d. would be extremely valuable.

A third consideration is the ease with which people can translate the old coins into the new coins; one cent is a farthing, four cents the present Id. How people are to calculate what one new penny will be and to work out that it is 2.4 old pennies, I do not know. I think that they will get into as much muddle as the French did when they changed from old to new francs. There is a complete absurdity in the Government's proposal to have a new halfpenny. I do not know whether it will always be written as a fraction. In some cases it will have to be written as a decimal. If we have 0.5 we might as well have the whole range from 0.1 to 0.9. Why not accept one to nine cents? That is a possibility. I hope that there is still a chance of a deathbed repentance by the Government.

Mr. John Tilney (Liverpool, Wavertree)

I support my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin). I have come to the conclusion, having been an opponent of the 10s. unit, that there is a strong argument for the £, but it is a completely different one. I want to see the consumer protected. I believe this new currency will not protect the consumer as much as he or she should be protected.

I accept what my hon. Friend said about the extra cost of machines. My hon. Friend mentioned the sum of £30 million. I remember arguing with a friend on the Exchange flags in Liverpool when we discussed what had happened to various historic currencies in Europe and what might be the danger signal for the currency of this country. I remember him saying "When the halfpenny goes out that will be a danger signal". That is exactly what is happening. It is bound to lead to inflation.

The hon. Member for Westhoughton (Mr. J. T. Price) mentioned the number of halfpennies which are still being minted. I think there are 800 million at present in use. I am certain that we should retain the equivalent. My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) spoke of Australia, but Australia is a richer country than we are. Unfortunately, we are now the poorest white English-speaking people in the world in income per head. That is a sobering thought. I want prices to be no higher than necessary. The halfpenny enters into wage rate negotiations and into piecework rates. Although the Financial Secretary may argue that there can be a notional halfpenny for discussing wages, it would be better to have a real unit.

We have to compete in the markets of the world, and to do so we must be able to shade prices. We have to do that at home as well as overseas. Some of us want to see a European currency, but that is a long way off. In the meantime I want capitalism to work well, but it will work well only if it is flexible and not rigid. My hon. Friend the Member for Wanstead and Woodford referred to a value-added tax. I think a sales tax might come if we could get into the Common Market. I point out to the Financial Secretary that if we have to have a sales tax it will not be workable on values less than 120 cents. On an item which might cost 17½ new cents, the equivalent of 3s. 6d., a sales tax at the rate of 1 per cent. would require payment on it of .175 new cents and that could not be levied.

I am a non-smoker. But the manufacture and the smoking of cigarettes is important to many people on Merseyside. This example has already been sent to the Treasury, but the House should be aware of it. A change in the retail price of cigarettes of a halfpenny for 10 would make a difference to the public of about £24 million a year, but if one cent valued at 1.2d. were the smallest coin, the minimum change in retail expenditure would be about £58 million. About half the 21 million purchases of cigarettes which are made every day consist of individual purchases of 10 packings. This is a sobering thought. If the smallest coin were the equivalent of 1.2d. future changes in price would present a very difficult position for the tobacco industry. The halfpenny per unit of transaction is a comparatively large figure compared with the cost, profit and distribution margin.

It is no good saying that the industry could vary the weight of cigarettes, because I understand that this is very difficult to achieve technically and would alter the character and the acceptability of such cigarettes. I fear that the Government will go down in history as one who have not only put up the cost of living but who have gone out of their way by the Bill to put it up even further.

Mr. Iain Macleod

In a very brief speech I can at least demonstrate that we on this side have a free vote by disagreeing, with all my hon. Friends who have spoken on the Amendment. My right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) said in Committee that until he met my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) he thought that he was the only £—mil—er in the kingdom. Personally, I wish that he had remained so.

We are urged to accept a currency, or something similar to it, that is in use in Egypt, Jordan, Iraq, and one or two other countries. They sound to me more like a list of General Dayan's battle honours than countries whose currencies we should seek to emulate, because the unhappy truth is that the standard of living in those countries is so lamentably low that they have to have a lamentably low coin to match it.

We are told, secondly, that as a matter of tactics, because the Government have decided on the £, which so many of us on this side think is wrong, we should abandon what we think is right. With due respect to my hon. Friends, I cannot think that this is an excellent posture for the Opposition to take. I entirely agree with my hon. Friend the Member for Wanstead and Woodford about the attitude of the C.B.I. Its attitude was that it preferred the 10s., but it wanted the 10s.—cent—½—cent. I quote from a C.B.I. document: If the Government insisted on retaining the £ as the major unit, as seems the more likely on the evidence to date, then it was recommended, but again not unanimously, that the C.B.I. should advocate some form of £—florin—mil system. The only case for the £—mil is the halfpenny equivalent.

With all respect to very eloquent advocacy—I have read with great care everything my hon. Friend said in Committee—I believe that my hon. Friend's case is hopeless. First, he does not just reinstate the halfpenny. He reinstates the farthing. He reinstates a coin even smaller than the farthing, which we demonetised some years ago. I am told that the cost of making the one—mil piece would be 50 per cent. greater than the face value of the coin. That does not seem to me to be a very rewarding exercise on which to embark.

The second point is that of associability. Whatever strength it is given, and I give it a good deal—

It being Ten o'clock, the debate stood adjourned.

Ordered, That the proceedings on the Decimal Currency Bill and the Public Works Loans (No. 2) Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. MacDermot.]

Question again proposed, That the words proposed to be left out stand part of the Bill.

Mr. Macleod

On the question of associability, the advantages of the mil system are nil. Also, it introduces an intermediate unit of account in the florin. I thought that my hon. Friend skated over the difficulties of doing this. An intermediate unit of account was rejected, rightly, in my view, by Halsbury. Fourth, it would greatly increase the cost of conversion.

All this is to be accepted for the benefit—I do not deny it for a moment—of having a halfpenny equivalent. I have pointed out that the countries most closely comparable with ours with experience of this problem—Australia is an example—have not got a halfpenny equivalent, they do not intend to have a halfpenny equivalent, experience has not shown that they need it, and there has been no marked rise in prices. It is difficult to see what is left of my hon. Friend's case, apart from his skill in advocacy, when one looks at it in that way.

I do not even consider that the £—mil system is second in the list. I even prefer the Government's £—cent—½—cent system to it. [HON. MEMBERS: "No."] I do. We have a free vote, and that is what I say. In several speeches, I made my own order of priorities clear. First, the 10s. unit. I have been called the "arch-ten-bobber". Second, the 100 pennies. Third, the Government's system. Fourth, the florin—mill system. That is my view, and I think that the experience of all comparable countries bears it out.

I pay a genuine and warm tribute to my hon. Friend the Member for Wanstead and Woodford, but I am sure that he is chasing an illusion on this matter. Strange to say, after the Committee stage of the Finance Bill, I urge the Financial Secretary not to listen to my hon. Friend's skilled advocacy.

Mr. MarDermot

The right hon. Member for Enfield, West (Mr. Iain Macleod) has put the arguments concisely and clearly, stealing my thunder.

The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) claims that his £—mil system, in whatever guise he dresses it up, is now winning the support of "ten-bobbers". With respect, it is not, if one means by that those who supported the 10s.—cent system. There were people who wanted a 10s. major unit for another system, the 10s.—cent—½ cent system, namely, those who wanted to preserve the halfpenny equivalent and who thought, rightly, in my view, that the best system for preserving a halfpenny equivalent would be the 10s.—cent—½ cent system. For reasons which I need not go into in detail now, it would be very much easier and simpler to graft a half cent on to the 10s.—cent system than to endure all the complications of the £—florin—mil or £—florin—cent system. All that has happened is that, having lost the battle on the 10s. major unit, those who want the halfpenny equivalent are now rallying for some form of £—florin—mil system.

As everyone agrees, the whole case turns on the question: Do we need to retain a halfpenny equivalent? The Halsbury Committee, examining matters in 1962 and thereabouts, estimated that our present halfpenny would reach the term of its natural life in about 1972. Hon. Members are horrified at the prospect of our having a currency without a halfpenny equivalent. I do not know what they would have felt living in this country in 1914, when the smallest coin was the farthing. In fact, the farthing of 1914 was worth more than double the halfpenny of today, which hon. Members are so terrified of losing. [Interruption.] I know that the right hon. Member for Flint, West (Mr. Birch) would far prefer to be living in 1914. He reflects that in nearly every speech he makes in the Chamber. I am glad to be carrying him with me on this occasion.

What is the strength of the case for the halfpenny equivalent? It is put forward with three arguments. The first is that if we get rid of the halfpenny the immediate effect will be inflationary and there will be a continuing inflationary effect thereafter because of rigidity of price changes. Secondly, it is said that it will prevent proper price competition, and consequently will reduce industrial efficiency. Thirdly, it is said that it will prevent refinement of our indirect tax system, especially in relation to a value-added tax.

In so far as there is substance in any of those arguments, I believe that they have been grossly exaggerated, and in some there is no substance at all. On the alleged inflationary effect, the fact is that for many items we are not tied to the smallest unit of currency for pricing purposes any more than we are tied to the halfpenny today. As I pointed out in Committee, we can and do buy eggs priced in terms of a farthing unit. We must buy more than one egg at a time, but people do this every day.

The manufacturer can and does sell goods in units of very large numbers, and can now price his article in terms of several decimal places of a penny if he wishes. It is only at the retail end that the problem arises, namely, when one must express a price in actual cash. Even then it is only with the kind of items sold in single numbers that the problem arises in particular.

But there are many ways in which the problem can be overcome. There can be adjustments by various forms of price variation, variation in size and quantity of the product, and variation in the price of other products—what the hon. Gentleman calls balancing the price of the pig. That is the way that retailers approach their whole pricing system today.

The hon. Gentleman asked what we would do if we were to adopt the continental system and sell petrol by the litre. He asked how it would be possible to raise the price of petrol if it must be expressed in terms of a unit with which the smallest increase is 1.2 of our present pence. The answer is that people do not buy petrol by the litre, but by £1 or £2-worth, or get their tank filled up. There is a machine which clocks up the cost, and petrol can be priced at 5.24 new pence per litre, or something like that, without any difficulty.

We hear of the problem of pricing beer. Here the problem is not how to price the pint but the half-pint. I do not know how they solved this problem in Australia, but I lived there for five years, and I recollect that the Australians drink a lot of beer. Perhaps they do not drink many half-pints, but in any event they have found a solution to the problem.

As the right hon. Member for Enfield, West pointed out, Australia and New Zealand have this experience and are comparable industrial countries to us—indeed, we are given to understand that they have a higher standard of living than we have—and they have not found such a need. It would be very easy for them to graft on the ½-cent if they wanted to, but they prefer to retain the advantage they have from taking the 10s. unit of having a system without the fraction.

I concede that there will be areas, particularly in certain foods and household items—cigarettes have been mentioned —where there will be problems to be overcome. It is not fair or true to say that the Halsbury Committee was insensitive to this problem. It pointed out that it would particularly affect, for example, the single person living alone and with a small income, the old-age pensioner. It said that the effect on persons of that kind would have to be watched carefully at the time of transition and that the Government would have to make suitable social security adjustments to meet any adverse changes which might occur. This is dealt with in paragraph 171 of the Report. Experience in Australia and New Zealand shows these fears to be unfounded, for the changes there have not led to these price rises.

In general, the same argument applies to the second criticism, which is that the system would produce too great a rigidity of price, prevent keenness of competition and prevent efficiency in industry. There was a very interesting article in the Economist of 6th May, called "Cuts and Gimmicks", showing the way in which a modern retailer prices his goods, how he considers the totality of his turnover and works out the profit margin which he thinks he will need. He then has to consider what local prices are for the items of which he is to sell a lot, and what are the attractive leading items, and he assesses his prices overall to produce the profit margin which he requires. In other words, he does not investigate each price individually. This, to repeat the hon. Member's phrase, is balancing the pig. The retailer will overcome the problems by these means, and this is where the efficient trader will benefit.

I come now to the tax position. The T.V.A.—the value-added tax—is not levied at the retail stage in any country. In some of the countries where it is in force there is a positive prohibition on showing the tax as a separate element in the price at the retail stage. It is collected at every stage up to that of the retailer, up to which there is no problem because it can be stated in several decimal places as one is dealing with large quantities and there is no problem of having to express an individual unit in an individual coinage. I predict that it is exceedingly unlikely that any country would adopt a system of compelling the value-added tax to be shown as a separate item at the retail stage, and it would be an administrative nightmare if it were to do so.

The hon. Member for Liverpool, Wavertree (Mr. Tilney) spoke of a sales tax at the retail price stage. I do not want to take up the time of the House, so I urge the hon. Gentleman to read what I said in Committee on this subject, when I quoted what certain American States with a sales tax did about this problem. With cents, they do not have a unit as small as the halfpenny and I have explained how they deal with this problem.

The disadvantages of getting rid of the halfpenny have been enormously exaggerated. They certainly contain nothing to make us change the system in favour of one with the immense disadvantages of the mil system, which would mean introducing from the outset a vestigial coin which nobody would require or want, but which we would have to have under that system for change-giving purposes and none other. When the present halfpenny became no longer needed, whether by 1972 or slightly later, there would be a second vestigial coin. On the proposal to call the mil the cent, or, in other words, to subdivide the florin into cents, when the time came to demonetise the cent we should be in a mess, because we would have to have a major overhaul once again in the currency system. If we were to have the £—florin—mil system, when after a number of years we dropped the mil, we would be left with the £—cent system, which the Government propose.

For all these reasons I am happy to find myself, for once, in full agreement with the right hon. Gentleman the Member for Enfield, West (Mr. lain Macleod), but I must advise the House to reject the Amendment.

Mr. Patrick Jenkin

Having sat through eight days on the Finance Bill with the assistance of my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) against the Financial Secretary, I now find I am faced with them both against me. I am not dismayed. I am not in the least dissuaded by any arguments which have been produced about the lack of validity of the main core of the case which I put, I fear, at too great length.

I believe that the case for the halfpenny is good. It is supported with increasing

intensity by a number of important trades covering a wide variety of products in daily use. I believe that people will rue it when they find that the prices change in units equivalent to 1.2d. years earlier than we would otherwise have disposed of the halfpenny.

We want a system of currency which will be practicable and useful within the lifetime of hon. Members and beyond. The Government's system does not come into its own until they get rid of the half-cent, which will be a minimum of a generation, and many hon. Members have said it would be later than that. By that time I bet that we shall have a European currency.

I believe that the need to keep a flexible system now is paramount. I would, therefore, ask all those who have felt the weight of the case—whether they are ten-bobbers or pound men—and who believe that we must have a halfpenny equivalent, to join me in the Lobby in voting for the Amendment.

Question put, That the words proposed to be left out stand part of the Bill:—

The House divided: Ayes 163, Noes. 37.

Division No. 382.] AYES [10.18 p.m.
Abse, Leo Davies, S. O. (Merthyr) Howie, W.
Allaun, Frank (Salford, E.) Delargy, Hugh Hoy, James
Alldritt, Walter Dempsey, James Huckfield, L.
Archer, Peter Dobson, Ray Hynd, John
Atkins, Ronald (Preston, N.) Dunn, James A. Johnson, James (K'ston-on-Hull, W.)
Atkinson, Norman (Tottenham) Dunwoody, Mrs, Gwyneth (Exeter) Johnston, Russell (Inverness)
Bacon, Rt. Hn. Alice Dunwoody, Dr. John (F'th & C'b'e) Jones, Dan (Burnley)
Bagier, Gordon A. T. Eadie, Alex Jones, J. Idwal (Wrexham)
Beaney, Alan Edwards, Rt. Hn. Ness (Caerphilly) Jones, T. Alec (Rhondda, West)
Bence, Cyril Ellis, John Kelley, Richard
Bennett, James (G'gow, Bridgeton) English, Michael Lawson, George
Bishop, E. S. Ennals, David Lestor, Miss Joan
Blackburn, F. Evans, loan L. (Birm'h'm, Yardley) Lever, Harold (Cheetham)
Boardman, H. Fernyhough, E. Lomas, Kenneth
Booth, Albert Fletcher, Raymond (Ilkeston) Lubbock, Eric
Brooks, Edwin Foley, Maurice Lyon, Alexander W. (York)
Brown, Hugh D. (G'gow, Provan) Foot, Michael (Ebbw Vale) Lyons, Edward (Bradford, E.)
Callaghan, Rt. Hn. James Ford, Ben Mabon, Dr. J. Dickson
Cant, R. B. Forrester, John McBride, Neil
Carmichael, Neil Fowler, Gerry MacColl, James
Carter-Jones, Lewis Freeson, Reginald MacDermot, Niall
Chapman, Donald Gardner, Tony
Coleman, Donald Gourlay, Harry Macdonald, A. H.
Concannon, J. D. Gray, Dr. Hugh (Yarmouth) McGuire, Michael
Conlan, Bernard Grey, Charles (Durham) Mackenzie, Gregor (Rutherglen)
Craddock, George (Bradford, S.) Griffiths, David (Pother Valley) Mackie, John
Crawshaw, Richard Hamilton, James (Bothwell) Mackintosh, John P.
Crosland, Rt. Hn. Anthony Hannan, William Maclennan, Robert
Cullen, Mrs. Alice Harper, Joseph McNamara, J. Kevin
Dalyell, Tam Harrison, Walter (Wakefield) MacPherson, Malcolm
Davidson, Arthur (Accrington) Haseldine, Norman Mahon, Peter (Preston, S.)
Davies, Dr. Ernest (Stretford) Heffer, Eric S. Mahon, Simon (Bootle)
Davies, G. Elfed (Rhondda, E.) Hooley, Frank Manuel, Archie
Davies, Ednyfed Hudson (Conway) Horner, John Marquand, David
Davies, Ifor (Gower) Houghton, Rt. Hn. Douglas Mason, Roy
Mendelson, J. J. Parkyn, Brian (Bedford) Urwin, T. W.
Millan, Bruce Pearson, Arthur (Pontypridd) Varley, Eric G.
Miller, Dr. M. S. Pentland, Norman Wainwright Edwin (Dearne Valley)
Milne, Edward (Blyth) Price, Thomas (Westhoughton) Wainwright, Richard (Colne Valley)
Mitchell, B. C. (S'th'pton, Test) Price, William (Rugby) Walden, Brian (All Saints)
Morgan, Elystan (Cardiganshire) Rhodes, Geoffrey Walker, Harold (Doncaster)
Morris, Alfred (Wythenshawe) Roberts, Albert (Normanton) Wallace, George
Morris, Charles R. (Openshaw) Robertson, John (Paisley) Watkins, Tudor (Brecon & Radnor)
Moyle, Roland Ross, Rt. Hn. William Wellbeloved, James
Neal, Harold Short, Rt.Hn.Edward(N'c'tle-u-Tyne) Williams, Alan (Swansea, W.)
Newens, Stan Short, Mrs. Renee(W'hampton,N.E.) Williams, Clifford (Abertillery)
Noel-Baker, Francis (Swindon) Silkin, Rt. Hn. John (Deptford) Wilson, William (Coventry, S.)
Noel-Baker,Rt.Hn.Philip(Derby,S.) Silverman, Julius (Aston) Winstanley, Dr. M. P.
Norwood, Christopher Slater, Joseph Winterbottom, R. E.
Oakes, Gordon Small, William Woodburn, Rt. Hn. A.
Ogden, Eric Snow, Julian Woof, Robert
O'Malley, Brian Steel, David (Roxburgh) Yates, Victor
Orbach, Maurice Steele, Thomas (Dunbartonshire, W.)
Oswald, Thomas Swain, Thomas TELLERS FOR THE AYES:
Owen, Dr. David (Plymouth, S'tn) Taverne, Dick Mr. Alan Fitch and
Park, Trevor Tuck, Raphael Mr. Ernest Armstrong.
Astor, John Longden, Gilbert Pearson, Sir Frank (Clitheroe)
Bennett, Sir Frederic (Torquay) McMaster, Stanley Percival, Ian
Bessell, Peter Maude, Angus Russell, Sir Ronald
Buchanan-Smith, Alick(Angus,N&M) Mawby, Ray Stoddart-Scott, Col. Sir M. (Ripon)
Chichester-Clark, R. Maxwell-Hyslop, R. J. Taylor, Sir Charles (Eastbourne)
Cooke, Robert Maydon, Lt.-Cmdr. S. L. C. Teeling, Sir William
Dalkeith, Earl of Miscampbell, Norman Whitelaw, Rt. Hn. William
Dodds-Parker, Douglas Mitchell, David (Basingstoke) Wilson, Geoffrey (Truro)
Eyre, Reginald Montgomery, Fergus Younger, Hn. George
Farr, John Morrison, Charles (Devizes)
Higgins, Terence L. Nott, John TELLERS FOR THE NOES:
Hiley, Joseph Orr-Ewing, Sir Ian Mr. James Allason and
Hobson, Rt. Hn. Sir John Page, Graham (Crosby) Mr. Patrick Jenkin.
Knight, Mrs. Jill Page, John (Harrow, W.)