Commons Sitting of 11 February 1969

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  BRITISH RAILWAYS BILL (By Order)
    BRIGHTON CORPORATION BILL (By Order)
    Second Reading deferred till Tuesday next.
CITY OF LONDON (VARIOUS POWERS) BILL (By Order)
Read a Second time and committed.
GREATER LONDON LOCAL RADIO AUTHORITY BILL
(By Order)
LONDON TRANSPORT BILL
(By Order)

WALSALL CORPORATION BILL
(By Order)
WELLAND AND NENE (EMPINGHAM RESERVOIR) AND MID-NORTHAMPTONSHIRE WATER BILL
(By Order)
WEST BROMWICH CORPORATION BILL
(By Order)
WOLVERHAMPTON CORPORATION BILL
(By Order)
YORK CORPORATION BILL
(By Order)
Second Reading deferred till Tuesday next.

GREATER LONDON COUNCIL (GENERAL POWERS) BILL)
(By Order)

LUTON CORPORATION BILL
(By Order)
Second Reading deferred till Thursday next at Seven o'clock.

ORAL ANSWERS TO QUESTIONS
  COAL

    Production and Employment
    Sir G. Nabarroasked the Minister of Power what was aggregate coal production, respectively, during 1967 and 1968; what production is planned and forecast for 1969; and by how much the present level of employment in the coal industry is to be reduced by the end of 1969 consequent upon pit closures or otherwise.
    The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): Aggregate coal production in 1967 was 174·8 million tons and in 1968, 167·1 million tons. Year to year forecasts of coal production and employment are matters for the National Coal Board acting within the framework of Government policies.
    Sir G. Nabarro: The re-employment of displaced men is a matter for the Minister. Is it not a fact that coal mining labour will drop from 350,000 to fewer than 300,000 during 1969? Have the Government got jobs for all these displaced men?
    Mr. Freeson: That question should be addressed to my right hon. Friend the Secretary of State for Employment and Productivity.

    North Sea Gas (Coal Equivalent)
    Sir G. Nabarroasked the Minister of Power what value of North Sea gas was utilised in 1968 expressed in £ million, correct to the nearest £ million; what are comparable figures planned for 1969 and 1970, respectively; and what impact, measured in millions of tons of coal equivalent, such North Sea gas consumption will have on the coal industry, notably in the matter of pit closures and diminution of coal mining labour.
    Mr. Freeson: The estimate for the financial year 1968–69 is £15 million and for the two following financial years, £36 million and £62 million, respectively. The greater part of the North Sea gas available to us in the next two years is likely to replace oil and the impact on the coal industry will be slight.
    Sir G. Nabarro: Will the Minister undertake to publish in a suitable form in the OFFICIAL REPORT the number of contracts he has made for North Sea gas, with whom the contracts have been made, what is the coal equivalent in millions of tons that this gas represents and when the balance of the contracts is expected to be completed?
    Mr. Freeson: If the hon. Gentleman puts down a Question on those points we will do our best to give him the details he requires.

    Scottish Coalfields (Manpower)
    Mr. Eadieasked the Minister of Power if there has now been revision of manpower estimates in the Scottish coalfield for the current year; and how many miners he estimates will be employed in Scottish pits at the end of 1969.
    Mr. Adam Hunterasked the Minister of Power, in view of the recent policy decision on the rate of pit closures in 1969, what he anticipates will be the number of closures in Scotland in 1969.
    Mr. Dalyellasked the Minister of Power what revision of manpower estimates he has made in the Scottish coalfield for 1969; and how many miners he estimates will be employed in Scottish pits by December 1969.
    The Minister of Power (Mr. Roy Mason): The National Coal Board expects the net manpower reduction in Scotland this year to be somewhat less than the 1968 figure of 5,800. This would mean end year manpower rather more than 26,000. As my hon. Friends know, colliery closures are a matter for the Board.
    Mr. Eadie: Is the Minister aware that in Scotland there is a crisis of confidence in the mining industry which is shared by miners? Would he agree that he has Ministerial responsibility to do something immediately about this position to avoid the nation being involved in very heavy cost resulting from further contraction this year?
    Mr. Mason: My hon. Friend has no doubt noticed the speeches made of late by the Chairman of the N.C.B. and myself and the indication given in them that there will be a slower run-down in 1969 than in 1968. I will be able to judge
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    morale for myself when I visit Scotland on Friday.
    Mr. Hunter: What discussions are taking place with other Ministerial Departments to ensure that alternative industry is brought to areas where pits are closing?
    Mr. Mason: There is a continuing dialogue between the Board of Trade, the D.E.P. and my Department on this matter.
    Mr. Dalyell: Is it not a fact that, thanks to Government policy such as the Redundancy Payments Act and development policy, closures such as that involving the Riddochhill Colliery have gone more smoothly and more satisfactorily than one would have conceived possible five years ago?
    Mr. Mason: I am obliged to my hon. Friend for that comment, which is absolutely true. It is also noticeable in mining areas where the unemployment figures look relatively high, for one must take notice of the fact that some miners have been prematurely retired on redundancy pay while others are enjoying weekly take-home amounts of a high rate flowing from the over-55 scheme, which means that many men are taking home £15 to £20 a week although they are recorded in the figures of unemployed.
    Mr. Emrys Hughes: Are these miners likely to have increased confidence in the N.C.B. when the Board increases their rents?
    Mr. Mason: That is a matter which my hon. Friend must take up with the N.C.B., although I am aware of the anxiety which it is causing in mining districts.

    Manpower and Redundancy
    Mr. Edwin Wainwrightasked the Minister of Power to what extent the rate of net decline in manpower and in redundancy in the coal industry changed during 1968, comparing the first quarter with the final quarter.
    Mr. Mason: Net decline in manpower fell from an annual rate of 67,800 in the first quarter of 1968 to one of 39,600 in the last quarter. Redundancy in the first quarter was at an annual rate of 27,300 and in the last quarter 16,200.
    Mr. Wainwright: Are not the rundown figures still far too great? How many collieries have been closed in the two quarters concerned?
    Mr. Mason: In the whole year of 1968, 70 pits closed and 25,133 men were made redundant. As I have said recently, this should be slowed down this year.
    Mr. Swain: Does not my right hon. Friend's Answer prove beyond doubt that the estimates in the 1967 White Paper were hopelessly out? Has not the time arrived for an immediate review of the whole of our fuel policy?
    Mr. Mason: No, Sir. It was expected that the manageable rundown over four years would be 140,000. Although in 1968 57,000 men left the industry altogether, this year the figure should be less than 35,000. Therefore, overall in the four years we may well maintain the figure of 140,000.
    Sir C. Osborne: Why are coal miners, who are traditionally the most loyal supporters of the Labour Party, so bitterly disappointed with the Labour Government's policy over the closure of coal mines? What can the Minister do to restore the confidence of these loyal supporters in his Government?
    Mr. Mason: The facts do not bear out what the hon. Gentleman says. The fact that last year the industry lost less tonnage through disputes than has happened in the history of coal mining and the fact that output per man shift increased by 9·5 per cent. refute absolutely what the hon. Gentleman says.
    Mr. Ogden: Will my right hon. Friend tell hon. Members opposite that we on this side can disagree with my right hon. Friend without any interference or help from the hon. Member for Louth (Sir C. Osborne)? However, it is not merely a question of redundancies. Will my right hon. Friend list in the OFFICIAL REPORT the periods for which those members of the industry who are made redundant remain unemployed, the industries in which they become re-employed, and what their earnings are on re-employment as compared with their earnings in the industry?
    Mr. Mason: This would necessitate a major exercise. As I have tried to indicate, a number of people who are registered
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    as unemployed in mining districts may have prematurely taken their retirement. Further, because of the very generous scheme under the Coal Industry Act, 1967, miners over 55 who cannot easily find work can take three years on up to 90 per cent. of their previous take-home pay; and they, too, are regarded as unemployed. So the total figure is false. Nevertheless, the miners greatly appreciate what this Government have done, as distinct from the previous Government, who closed 230 pits and never paid a penny to the miners or to the Board.

    Power Stations (Coal Consumption)
    Mr. Edwin Wainwrightasked the Minister of Power how much coal was used in the Central Electricity Generating Board's power stations in 1968; and how this compares with the previous year.
    Mr. Mason: 67 million tons, compared with 62 million tons in 1967. This was a record level of consumption.
    Mr. Wainwright: How much of the total tonnage is due to the 1967 Act? Will my right hon. Friend now start discussions with the National Coal Board to secure at least a continuation of, if not an improvement in, the 1967 Act beyond 1971?
    Mr. Mason: Almost 6 million tons are attributable to assistance arising under the Coal Industry Act, 1967. This boosted the power station burn. We have not yet given the question of post-1971 assistance the detailed consideration that it requires.

    Productivity and Consumption
    Mr. Adam Hunterasked the Minister of Power if, in view of the 9 per cent. increase in coal productivity in 1968, he will take steps to ensure consumption by coal consumers is increased in 1969.
    Mr. Freeson: This fine achievement will strengthen the coal industry's marketing position and the N.C.B. is already acting on this. The Government will continue to help increased coal consumption at power stations and gas works in 1969.
    Mr. Hunter: Does not my hon. Friend agree that it is futile to keep on increasing productivity without a corresponding

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    increase in marketing opportunities? Does not he agree also that the former without the latter only accelerates closures?
    Mr. Freeson: It is axiomatic that, if one increases production levels and productivity, one must relate marketing possibilities to them. This is why the Government will continue in the coming year the increased consumption of coal at power stations.
    Mr. Speed: Is the hon. Gentleman aware that, in Warwickshire and the South Midlands area, output per man-shift is breaking new records? How is the Coal Board helping? Can it not offer more district heating schemes? Or will it cut back the increased production so that the miners will not work themselves out of jobs?
    Mr. Freeson: This sort of project can well be encouraged among local developers and others. There has been the excellent move by the National Union of Mineworkers itself recently. It will put cash into such schemes if local authorities and others seek investment for them.
    Mr. Ashton: Will my hon. Friend ask the N.C.B. to give wide publicity to the district heating scheme at the Kelvin block of flats in Sheffield in order that local authorities generally may see the value and efficiency of such schemes?
    Mr. Freeson: We can draw the attention of the National Coal Board to that suggestion but I am not aware that it is failing to publicise its interest in and the potential of such projects. These are developments which could also be followed up by others.

  ELECTRICITY

    New Power Station (South-West England)
    Dr. John Dunwoodyasked the Minister of Power if he will make a statement about his policy regarding the site for a new power station in the South-West of England.
    Mr. Mason: C.E.G.B. has been making preliminary investigations in Devon and Cornwall and has consulted local planning authorities and the
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    regional economic planning council. It has not made any application to me.
    Dr. Dunwoody: Does my right hon. Friend accept that the decision on the siting of the power station will have very serious implications for the South-West development area? Can he assure the House that before a final decision is taken he will consult the regional economic planning council, the local authorities concerned and other Government Departments?
    Mr. Mason: The C.E.G.B. has already surveyed several sites. The regional economic planning council and other planning authorities can, if they desire, make representations to the Ministry before any decisions are made.
    Mr. Emery: As there is often criticism that this policy is dictated from Bristol without consultation with Devon and Cornwall, will the Minister ensure that the County Councils of Devon and Cornwall are directly consulted?
    Mr. Mason: Whilst I take note of what the hon. Gentleman says, I have no desire to get involved in an inter-district wrangle.

    Electricity Demand
    Mr. Ridleyasked the Minister of Power upon what estimate of economic growth for the next five years are the forecasts of electricity demand based.
    Mr. Silvesterasked the Minister of Power what estimate he has made of the capacity required by the electricity industry by 1973–74 on the basis that the national growth rate will be 2½ per cent. per annum.
    Mr. Blakerasked the Minister of Power upon which of the assumptions of economic growth, postulated in his document submitted to the National Economic Development Council in December, 1968, are the electricity demand forecasts for the next five years based.
    Mr. Freeson: Many factors besides the economic growth rates enter into the forecasts of electricity demand and there is no exact correlation between demand and economic growth. However, the Electricity Council's forecast last year was regarded as consistent with an average annual rate of economic growth of 3 to 3¼ per cent. during the next

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    five years. Future forecasts of electricity demand will have regard to the Government's latest views on prospects for economic growth.
    Mr. Ridley: Is the Minister aware that the annual growth in demand has averaged 3·7 per cent. over the past five years? Why, then, is the Electricity Council planning to spend more thousands of millions of pounds of the taxpayers' money to meet demand based on the rate of 8·2 per cent., which is what the present estimates represent?
    Mr. Freeson: The electricity industry makes the most careful calculation possible on the growth of electricity consumption expected. It is on that basis that investment policies are made.
    Mr. Silvester: Is not it true that the present over-capacity has partly arisen because of the 1965 forecast in the growth of G.N.P. of 4¼ per cent.? Would not it be more realistic to scale down the estimates for future years?
    Mr. Freeson: The investment which is being provided should be sufficient to allow for a somewhat higher economic growth rate than we have been experiencing.
    Mr. Blaker: Is it not a fact that the likely surplus in capacity results from the fact that the Government's forecast of growth rate in the past have been so wildly wrong? What assurance have we that in the new document which has been presented to the economic development council a similar mistake will not be repeated?
    Mr. Freeson: I do not know why so much astonishment is being expressed. For some time there has been in the industry and in Government an attempt to reach a 17 per cent. capacity margin. We have now moved into the period when we are achieving the 17 per cent.
    Sir J. Eden: Will the Minister tell the House that that margin of capacity has been exceeded? Can he say what the forecast is for the years ahead? Is it not likely to be a substantial excess margin of capacity, and does not that represent a gross waste of resources?
    Mr. Freeson: I think that the hon. Gentleman did not clearly hear what I said earlier in reply to a previous supplementary
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    question, which is that capacity should be sufficient to allow for a somewhat higher growth rate than has been experienced in the past to be sure that when that growth rate expands to a given degree the capacity is there.
    Mr. McGuire: Is my hon. Friend aware that forecasting in this field has been described as the graveyard for forecasters, never more so than when one is forecasting the cost per unit sent out in electricity production? Instead of repeating their errors, will the Government make calculations which facts will support, and not theory?
    Mr. Freeson: I believe that there are other Questions on unit costs later in the Order Paper.
    Mr. Palmer: Does my hon. Friend agree that because many of the new generating sets coming into commission are not available the excess of capacity is probably not as large as it should be?
    Mr. Freeson: There have been teething troubles in a number of the larger units, and at the points in time when these troubles occur the margin drops. As they are put into full commission, the margin goes up again.

    Generating Capacity
    Mr. Silvesterasked the Minister of Power if he will reduce the planned future excess of electricity generating capacity on maximum cold-spell demand to 14 per cent.
    Mr. Freeson: No change is envisaged at present, but the planning margin is kept under review.
    Mr. Silvester: As the Parliamentary Secretary has overshot the 17 per cent. included in the plans made so far, might it not be better to aim for 14 per cent. in the hope of coming a little nearer to the target he now has in mind?
    Mr. Freeson: I wish hon. Members opposite would listen carefully to the Answers which are given. In a previous Answer I said that we were running in the area of 17 per cent. but that it would vary from time to time according to the teething troubles experienced in the larger units. That is the present position. It

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    is inaccurate to suggest that there is a massive excess of capacity.
    Mr. Ridley: Is the Parliamentary Secretary aware that at present it is 21 per cent.? As he says that electricity capacity will allow of higher growth in future than has been experienced in the past, will he say upon what higher rate of growth it will be based?
    Mr. Freeson: On the last point, I must ask hon. Members to await the planning document which will be published as a Green Paper in the near future. On the first point, the hon. Gentleman is wrong.

    Generation (Comparative Fuel Costs)
    Sir J. Edenasked the Minister of Power what is the outcome of his inquiry into the comparative fuel costs in electricity generation; and whether he will make a statement.
    Mr. Mason: Comparative fuel costs are kept under continuing review. Recent studies have confirmed the basis of present policies.
    Sir J. Eden: Would there not be value in having a further independent investigation into comparative fuel costs? If not, why not?
    Mr. Mason: No, Sir. As the hon. Gentleman must know, I told the Select Committee recently that this would be a heavy task for an outside body which would not yield commensurate benefits.

    Peak Demand (Cold Weather Conditions)
    Mr. Blakerasked the Minister of Power what was the growth of the peak demand upon the electricity supply system over the three winters 1965–66 to 1967–68.
    Mr. Mason: The maximum demand on the Central Electricity Generating Board's system, adjusted to average cold spell weather conditions, rose by 3·7 per cent. between the 1965–66 and 1967–68 winters.
    Mr. Blaker: Will the Minister say whether those figures relate to demand actually made, or demand if there had been no voltage reduction? Are not his plans for growth in capacity in coming years greater than would be justified by
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    recent trends in demand? Is it not a fact that every 1,000 megawatt extra surplus capacity costs the nation £50 million?
    Mr. Mason: The hon. Member would be quite right if the margin went too high—the margin at present is just over 17 per cent. Although hon. Members opposite would blame the present Government because economic growth is not coming along fast enough to justify that plant margin, many of the stations coming into stream this year and next were ordered and commissioned when they were in office.
    Mr. Ogden: Are not hon. Members opposite tempting my right hon. Friend to cut back on capacity so that the first time there is a power cut they can scream their heads off at him?
    Mr. Mason: I think it better to have a planned margin and that the forecast should be on the high side, when one considers the seriousness of underestimation.

    Dungeness B Power Station
    Mr. Palmerasked the Minister of Power if he will make a statement about the progress of work at Dungeness B Nuclear Power Station.
    Sir J. Edenasked the Minister of Power if he will make a statement about the progress of the Dungeness B power station.
    Mr. Gregoryasked the Minister of Power what progress has been made on the Dungeness B nuclear power station contract; and if he will make a statement.
    Mr. Woofasked the Minister of Power what effect he expects the need to redesign the boilers at the Dungeness B nuclear power station will have on the capital and operating costs of the Seaton Carew station.
    Mr. Freeson: Work is in hand to remake the upper part of the metal liners of the pressure vessels which were distorted during welding. The first reactor may be delayed by at least 18 months and the second by a year. This was a defect in mechanical engineering, not in the technology of the A.G.R. It therefore carries no implications for later A.G.R. stations.
    Mr. Palmer: Does my hon. Friend agree that some of the difficulties at Dungeness B have been aggravated by the slowness of the Government in undertaking the reorganisation of the nuclear power industry, and thus pinning down responsibility?
    Mr. Freeson: Whatever hon. Members may feel about the history of that industry, questions on the subject should be addressed to my right hon. Friend the Minister of Technology, and not to me.
    Sir J. Eden: Can the hon. Gentleman say whether management matters have been resolved with the companies concerned? In view of the great potential for exports of nuclear systems and components, would he not agree that it is very urgent to press ahead with this as rapidly as possible?
    Mr. Freeson: I certainly agree that it is important to smooth out this kind of problem as rapidly as possible, but, as I indicated in my main Answer, there are no indications of these problems in the technology of the A.G.R. stations.
    Mr. Gregory: Is my hon. Friend aware that the continued delay in sorting this matter out at Dungeness is giving great concern to the firms and the workers employed in the two consortia in the project? What help can be given? What assurances can be given to the workers in this vital industry?
    Mr. Freeson: As I indicated earlier, Questions about the position of people and resources inside the production industries are for my right hon. Friend the Minister of Technology and not for us.
    Mr. Lubbock: Who is going to pay?
    Mr. Freeson: The matter will in due course be sorted out between the Central Electricity Generating Board and the private companies concerned.

    New Generating Station (Scotland)
    Mr. Eadieasked the Minister of Power what decision has been reached as a result of his consultations with the Secretary of State for Scotland regarding the Scottish Electricity Board's proposal for a new generating station after 1970; and what estimates the National
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    Coal Board have submitted to him of coal production in Ayrshire to enable him to reach a decision.
    Mr. Mason: My right hon. Friend the Secretary of State for Scotland is responsible for electricity generation in Scotland, and I have nothing to add to the Answer he gave to a Question by my hon. Friend on 20th January.—[Vol. 776, c. 30.]
    Mr. Eadie: Is my right hon. Friend aware that a body of opinion in Scotland believes that coal has not been given proper consideration in any decision which may arise on how the new power station should be fuelled?
    Mr. Mason: I am sorry to hear that but I assure my hon. Friend that my right hon. Friend the Secretary of State for Scotland and I will not let the case for coal go by default.

  MINISTRY OF POWER

    Boards of Nationalised Industries (Salaries)
    Mr. Kenneth Bakerasked the Minister of Power (1) whether he is satisfied that the salary structure for the boards of the nationalised industries for which he is responsible, when compared with corresponding salaries in the private sector of industry, is adequate for the attraction of persons of suitable calibre to those industries; and if he will make a statement;
    (2) what proposals he has for changing the salary structure of Board members in the gas industry; and if he will make a statement.
    Mr. Crouchasked the Minister of Power whether he is satisfied that the present salary structure of the National Coal Board is adequate for the appointment of persons of the necessary calibre as members; and if he will make a statement.
    Mr. Laneasked the Minister of Power whether he is satisfied that the salaries of board members of the nationalised industries for which he is responsible compare favourably with the salaries of board members in other nationalised industries; and what action he proposes to take in this matter.
    Mr. Ridleyasked the Minister of Power what proposals he has for changing the salary structure of Board members in the electricity industry; and if he will make a statement.
    Mr. Youngerasked the Minister of Power what proposals he has for changing the salary structure of the National Coal Board; and if he will make a statement.
    Mr. Mason: We should wait for the report of the National Board for Prices and Incomes.
    Mr. Baker: Does not the Minister agree that one of his main responsibilities is to create a salary structure that will enable him to recruit and retain staff of the right calibre? Why does he shrug this off to Mr. Aubrey Jones? He is the Minister responsible. Why does not he have the courage to increase salaries for nationalised industries, or is he the obedient slave of his Left wing?
    Mr. Mason: There are a number of Ministers responsible for nationalised industries. I am aware that major British nationalised industries should be regarded as first rate, and that we cannot do with second raters to ran them. I am aware of the salary problem, which may cause difficulties in recruitment as well as retention of staff, but the N.B.P.I. is examining all of this.
    Mr. Crouch: The right hon. Gentleman must be aware of the size and importance still of the National Coal Board. Is not he aware of the difficulty he had early this year in finding three recruits for that Board? Is not there something wrong with its salary structure? Will he do something to put it right?
    Mr. Mason: I am not aware that I had any difficulties in finding staff at that time. The Chairman of the National Coal Board has let his views be known to the Chairman of the N.B.P.I. already.
    Mr. Lane: Will the Minister accept that the present illogical structure of these top level salaries is the worst possible advertisement for the nationalised industries in attracting new recruits at all levels? Will he assure the House that as soon as the report of the N.B.P.I. is received the Government will act on it with absolute urgency?
    Mr. Mason: I am aware also that if there is a depressed level of salaries at the top it causes a log-jam beneath, but the Chairman of the N.B.P.I. will be aware of this.
    Mr. Ridley: Since two deputy chairmen of the National Steel Corporation are paid over £20,000 a year, how can the Minister justify waiting for Aubrey Jones to report? Surely it is time he made up his mind and put up the salaries on his own account?
    Mr. Mason: I do not see any reason why we should not wait. We are to get a report before long, in April.
    Mr. William Hamilton: Will my right hon. Friend give an assurance that he will resist the pressure from hon. Members opposite to increase public expenditure, and give an undertaking that any increases suggested by Aubrey Jones or anyone else come within the 3½ per cent. of the prices and incomes policy?
    Mr. Mason: I cannot give my hon. Friend the latter assurance, but as a spending Minister I am aware of the belly-aches about public spending.
    Mr. Hugh D. Brown: Does my right hon. Friend agree that hon. Members opposite are very active on behalf of the underpaid workers in nationalised industry, with a view to embarrassing us politically? Will he assure the House that he will consult his right hon. Friends with responsibility for the matter to make sure that we can also participate in this discussion?
    Mr. Mason: I am sure that there will be a lot of participation before any new salary scales are agreed.
    Sir J. Eden: In view of the right hon. Gentleman's own phrase about "first class" and "second class", does he regard the present chairmen of the nationalised power industries as being first-class? If so, why does not he pay them accordingly?
    Mr. Mason: My chairmen are first rate.
    Mr. Crouchasked the Minister of Power whether, in order to assist the National Board for Prices and Incomes in its current investigation of salaries in nationalised industries, he will make a

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    Statement of his policy on ministerial control of these industries.
    Mr. Mason: The Board is free to approach me for any information it requires.
    Mr. Crouch: Does the Minister agree that in view of the recent fiasco in recruiting three new members to the National Coal Board, the time has come for him to give proper pay and conditions of works for such members?
    Mr. Mason: I must refute absolutely that comment of the hon. Gentleman, both in a previous supplementary question and now. There was no fiasco. There was no difficulty, and we recruited on time.
    Mr. Swain: Is my right hon. Friend aware that the Chairman of the National Coal Board accepted a job and the attendant salary under a Tory Government, and made no complaints at the time? Is he aware that the miners feel that the National Coal Board Chairman is adequately paid in comparison with the wages of the lower-paid workers?
    Mr. Mason: I am sure that the Chairman of the National Coal Board will take full cognisance of what my hon. Friend has said.

    Gas and Oil (Exploration Licences)
    Mr. Laneasked the Minister of Power what steps he is taking with a view to further exploration for gas and hydrocarbons in the North Sea, Irish Sea and British Channel; and how many exploration wells he estimates will be drilled during 1969, 1970 and 1971.
    Mr. Freeson: Substantial further exploration of the Continental Shelf areas under licence is assured until 1970–71 by the terms and conditions of the licences. The basis on which exploration of new and surrendered areas should be undertaken is being considered.
    Current licence work programmes call for a minimum of 65 further exploration wells during the period 1969–71.
    Mr. Lane: Would it not be a great encouragement to further exploration of new areas in these offshore parts of the Continental Shelf if the Parliamentary Secretary were to say plainly that he does not necessarily regard the price contracts
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    so far agreed as precedents for any future contracts for either gas or oil?
    Mr. Freeson: It is for the Gas Council to negotiate the best possible results on behalf of the nation and the industry.
    Mr. Emery: Does the Parliamentary Secretary realise that since the last application for licences was received a considerable amount of new information has been obtained? Therefore, there might be great advantage in allowing some of those areas which have not at present been licensed to be claimed for licence, thus encouraging the best use of drilling in this period?
    Mr. Freeson: As I have said, the basis upon which further exploration licences are to be granted is now being considered.
    Mr. Ashton: What progress is being made towards the setting up of a National Hydrocarbons Corporation, as recommended by the Labour Party Conference in 1968?
    Mr. Freeson: This matter is being very seriously considered by my Department.
    Mr. Hector Hughesasked the Minister of Power what is the present number of applications, and by whom, for licences to drill for oil and gas in the Irish Sea, indicating the locations and names of applicants.
    Mr. Freeson: No applications are outstanding. When applications were last invited in 1965, one licence in the Irish Sea comprising five blocks was issued to Gulf Oil (Great Britain) Ltd.
    Mr. Hughes: Are the terms and conditions of the licences granted for drilling for oil and gas on the Scottish shelf of the North Sea the same as those contained in the licences granted for drilling for oil and gas in the North Sea? What steps are taken to protect British trade, industry and commerce and to ensure that they get a fair share of the oil and gas from the Irish Sea?
    Mr. Freeson: On the question of oil coming forward, no commercial exploitations have been shown up yet. On the position as between one part of the North Sea and another, or between the North Sea and the Irish Sea, the regulations are common to all the companies which are operating.
    Mr. Lane: Can the Parliamentary Secretary throw any light on a Press report last Friday that the Irish Government are willing for a price of well over 4½d. per therm to be paid for any gas discovered in the Irish half of the North Sea? Is it true, or is it just Irish?
    Mr. Freeson: I am not responsible for Press speculation, and certainly not for activities which are the concern of the Irish Government.

    Energy Policy (Overseas Experience)
    Mr. Palmerasked the Minister of Power what arrangements have been made to enable his Department to draw upon overseas experience in its work on energy policy.
    Mr. Mason: My Department plays a full part in the work of the Energy and related Committees of the Organisation for Economic Co-operation and Development; in the work of the fuel committees of the United Nations Economic Commission for Europe; and maintains close contact with the European Commission notably through the Council of Association with the European Coal and Steel Community.
    Mr. Palmer: Would not my right hon. Friend agree that in addition to drawing on overseas experience we should be encouraging the nationalised fuel industry to visit consultancy services abroad?
    Mr. Mason: Yes, Sir. I am not aware of the extent to which this ought to go, but I am willing to look at it.
    Sir G. Nabarro: Do all these things lead to cheaper electricity, which is what we all want, and improvement in electricity load factor, which is the only way by which greater efficiency can be achieved?
    Mr. Mason: If I were generalising I would say, yes, because it enables our Department and the fuel industries to draw on the widest possible experience, especially of European nations who have similar problems to ours.
    Mr. Woodburn: Is my right hon. Friend aware that the Scottish Gas Board is being consulted by the Greek Government and others in regard to its experience?
    Mr. Mason: I was not, but I thank my right hon. Friend for the information.

    European Economic Community
    Mr. James Johnsonasked the Minister of Power what recent discussions he has had with the European Economic Commission; and if he will make a statement.
    Mr. Mason: Together with my noble Friend, the Minister of State at the Board of Trade, I attended a meeting of the Council of Association with the Commission of the European Communities only 12 days ago. I have placed a copy of the communiqué issued after that meeting in the Library.
    Mr. Johnson: Is there anything useful to learn for United Kingdom policies from these energy proposals put to the E.E.C.?
    Mr. Mason: Yes, Sir. One in particular is whether there should be joint examination by the coal and steel groups of whether there is likely to be a serious shortage of coking supplies in future to the steel industries of Britain and Europe. This will be helpful to the N.C.B. to the British Steel Corporation and the Government.
    Sir J. Eden: Is this likely to lead to changes in the rate of pit closures'?
    Mr. Mason: We shall have to await the outcome of the examination.

  GAS

    Natural Gas
    Mr. Dudley Smithasked the Minister of Power what complaints he has received from users of natural gas that it is less efficient in its working than the former town gas; what reply he has sent; and if he will make a statement.
    Mr. Freeson: Twenty-four complaints since last April which my right hon. Friend has referred to the Area Boards to investigate. While natural gas gives rise to problems of adaption for consumers and appliances, these are due to its different calorific value and composition, and not to any technical inferiority to town gas.
    Mr. Dudley Smith: Will the Parliamentary Secretary bear in mind that this gas presents very difficult ignition problems and as a result many people are now unable to use the pilot light on their equipment? Will he encourage extra research into this aspect?
    Mr. Freeson: This is one matter among a number which the gas industry is taking into close account and I am quite sure it is capable of handling it.
    Mr. Mapp: Is my hon. Friend aware of a recent case where the inadvertent use of facilities, possibly by negligence of the consumer, led to the escape of this type of gas which has very severe lethal qualities compared with other kinds of gas? Is that taken into account and proper warnings given and precautions taken about its use?
    Mr. Freeson: The gas boards and the Gas Council are investigating this fault and others which have developed during the introduction of the conversion programmes. If there are particular points my hon. Friend would like looked at I or the industry will do so. If he writes to us, I shall certainly arrange that.
    Mr. Dudley Smithasked the Minister of Power if he is satisfied with the standards and techniques being applied by the gas boards in the natural gas conversion programme in various parts of the country; and if he will make a statement.
    Mr. Emeryasked the Minister of Power how many representations he has received on the conversion of domestic appliances for the use of North Sea gas; what number and percentage of the conversions have initially worked unsatisfactorily and necessitated further maintenance; and what is the percentage increase set against the estimated unit cost for each conversion.
    Mr. Freeson: My right hon. Friend has received 45 representations since the programme began last April. Standards and methods are continually improved by the boards in the light of experience and research but some further servicing, at present about 25 per cent. of conversions must be expected. Costs per consumer in these early stages, have averaged £34–£35, but they are estimated at about £30 for the whole 10-year programme in real terms.
    Mr. Dudley Smith: Is the Parliamentary Secretary aware that thousands of conversion mistakes have been made purely because the workmen concerned were inefficiently trained, and as a result many of my constituents have been without water or heating for three weeks or a month? As only 5 per cent. of the country so far has been converted, will the hon. Gentleman ask the boards to give special attention to the training of workmen involved?
    Mr. Freeson: This point has been raised by my Department with the gas boards and by the gas boards with the contractors they are employing. I have spent some time visiting some of the conversion areas to see what was being done, to pick up on the mistakes and difficulties initially experienced. I am confident that the gas industry will get over them.
    Mr. Emery: Does not the Minister realise that, particularly in North London, there have been major outcries against the unsatisfactory nature of the conversions? What steps is he taking to ensure that a conversion can be done in one visit and not by having workmen returning a number of times to readjust the sets? Is he concerned that the cost of this conversion is running at about one-seventh greater than was estimated?
    Mr. Freeson: I am not over-anxious at this stage about the increased cost in the early stages of the programme because in real terms it will adjust along the lines originally estimated. As to having no return calls or visits, this is impossible. The industry expects that there will be further servicing required, bearing in mind the tremendous range of equipment to be put in hand for these conversion programmes.
    Mr. Sheldon: Is my hon. Friend aware that people in a number of places where conversion programmes have been started feel deeply resentful that they have been chosen as guinea-pigs for what is apparently an unprepared scheme, so that there has to be recourse to private firms to do the installation, and many of those private firms do not come up to the standard requisite and obtainable?
    Mr. Freeson: I am aware of the anxiety my hon. Friend has expressed and the inconvenience that has been experienced by a number of people in the

    1113
    early stages of this programme. I am also aware, however, that the vast majority of the conversions have been undertaken smoothly. I am also aware that there are not guinea-pig areas, but a start with these programmes has to be made somewhere. There are inevitably difficulties in the early stages, but there is every reason to believe, according to my contacts with the industry, that these problems will be overcome soon.
    Mr. Gurden: Will the hon. Gentleman look at the efficiency, or lack of it, in the gas consumer councils in this respect to see that they are looking after consumers properly and not being just servants of gas boards?
    Mr. Freeson: I should say bluntly that in his last remark the hon. Member was talking nonsense. If he has a particular case in which he thinks these matters are not handled properly by a local consultative council and he writes to us, I shall have it investigated. The job these councils are doing, particularly in these areas, is excellent.

    Gas Council (Borrowing)
    Mr. Emeryasked the Minister of Power how much of the total borrowing powers authorised by the 1968 Act have been so far taken up by the Gas Council; and what further sum he estimates will be required by the end of 1969.
    Mr. Mason: The estimates published last March in the White Paper on Loans from the National Loans Fund show that by, 31st March next, the end of its current financial year, the Gas Council expected to have borrowed £1,357 million. Revised estimates for 1968–69 and estimates for 1969–70 will be published in a White Paper next month.
    Mr. Emery: Does the right hon. Gentleman realise that his predecessor gave an undertaking during the passage of the Act that he would be open to be questioned so that the House could keep a rolling review of the amount? As it appears that there is considerable under-expenditure of the capital amount, would it not be reasonable for the House to reduce the total borrowing power allowed to the gas industry?
    Mr. Mason: I would not have thought that would be wise, since the House gave
    1114
    the Gas Council a limit of £1,600 million, which covers the requirements to spring 1970. As for questioning—the hon. Gentleman seems to be doing pretty well.

    AIR ACCIDENTS (INQUIRIES)
    Mr. Wyattasked the Prime Minister when the hon. Member for Bosworth may expect a reply to his letter dated 13th January, 1969, about co-ordination between the relevant Government Departments in inquiries into air accidents.
    The Prime Minister (Mr. Harold Wilson): My hon. Friend's letter to which I am replying referred to the accident at Gibraltar in 1943, in which General Sikorski was killed, and certain current allegations of British complicity in this matter. He will realise that I must not prejudice the legal proceedings which are now pending in this connection. But I can say that I know of no evidence to imply that the crash of the Liberator at Gibraltar was other than a genuine accident.
    Mr. Wyatt: Would it be possible to have another inquiry, in view of all the technological advances which have been made since the war, so that there can be disposed of the monstrous charges that Mr. Churchill organised the murder of his friend, General Sikorski, based on allegations made by a German playwright and founded on a document which he says exists in a Swiss bank and which he will not allow anyone to see; nor will he give the name of the bank?
    The Prime Minister—
    Sir G. Nabarro: Send it to a Select Committee.
    The Prime Minister: Despite the levity of the hon. Member for Worcestershire, South (Sir G. Nabarro), this is a very serious matter. [HON. MEMBERS: "Hear, hear."]
    There was a report to the House of Commons at the time by the then Under-Secretary of State for Air. I have read—and it took some hours—the whole of the inquiry and every single deposition and answer by every witness. I stand by what I have said. There is no evidence at all that there is any need or reason to reopen the inquiry.

    1115
    In the light of what I have said, the allegations to which my hon. Friend has referred should be dismissed and brushed aside with the contempt they deserve.
    Sir A. V. Harvey: In view of the wide publicity the matter is getting and since, as the Prime Minister rightly said, there will probably be law suits pending, could not the Government help to give a lead by publishing documents which will be available?
    The Prime Minister: I do not think that that is necessary. It would be totally opposed to all our practice in these matters. There was a report to the House. I have read the information in great detail and it really is for those who are bandying these allegations about to produce some shred of evidence to suggest that the wartime Government, the then Under-Secretary of State for Air and those responsible for the inquiry were wrong in their findings. If there were such evidence, it would have to be considered, but so far not a single shred of evidence has been produced apart from a highly scurrilous play and some rather silly letters about it in the Press.

    SIR WINSTON CHURCHILL (STATUE)
    Mr. Tilneyasked the Prime Minister whether Her Majesty's Government will offer a site in Parliament Square or elsewhere for a statue to the late Sir Winston Churchill, subject to suitable arrangements being made for defraying the cost of making and erecting such a statue.
    The Prime Minister: As I said in my reply to an earlier Question by the hon. Gentleman on this subject on the 14th of May last year, these are matters in which the House prefers to move by agreement. Although some publicity was given to the hon. Gentleman's proposal at the time of my earlier Answer, there has not so far been convincing evidence of broad support for it, either in the House or among the public generally.—[Vol. 764, c. 1030–2.]
    Mr. Tilney: Does not the Prime Minister agree that there is no statue to this very great man in the centre of London that the public can see? Those who remember his splendid speeches would
    1116
    like to see such a statue before we are all dead. How can we find out whether there is public support unless there is a public appeal and discussion as to where the site should be.
    The Prime Minister: I agree that there is no statue as yet but no doubt there will be in due course when there is sufficient public demand for it. The hon. Gentleman has had a number of Questions on the Order Paper on this matter, which have resulted in publicity. Answering those Questions, I made it clear that I would be glad to receive representations from any right hon. or hon. Members in the House or from any other sections of public opinion on this matter. But so far there has not been the response which the hon. Gentleman hoped for when he first raised the matter.
    Mr. Swain: Would my right hon. Friend consider an application to build a statue in Parliament Square to the hon. Member for Worcestershire, South (Sir G. Nabarro) to frighten the pigeons away?

    PORTUGAL
    Mr. John Fraserasked the Prime Minister what plans he has for an official meeting with the Head of Government of Portugal.
    The Prime Minister: None, Sir.
    Mr. Fraser: Is my right hon. Friend aware that I have in my hand a piece of shrapnel from a rocket fired by a Portuguese aircraft in Zambia? Bearing in mind the very close ties that Portugal has with this country, is it not a disgraceful state of affairs that Portugal, in Mozambique, should blatantly evade sanctions, and not only that, but kill the citizens of a country which opposes the sanctions?
    The Prime Minister: I have been in close and personal touch with the President of Zambia on this and all other related questions. I have had discussions with him on this in July of last year and again at the time of the Commonwealth Prime Ministers' Conference. I should be glad to respond to any proposals made to me by the President of Zambia, particularly if he produces evidence of the kind that we require, and take it up with the Portuguese.

    1117
    My hon. Friend will know that it is the policy of Her Majesty's Government not to supply arms to Portugal for use outside her N.A.T.O. responsibilities in Europe. No arms go to Portugal for use in Africa. [Interruption.] No arms go for use in Africa. If this is being circumvented or broken I would be glad to receive evidence and we should certainly take it up.
    Mr. Hastings: Is not the prosperity of these two Portuguese provinces in Africa of direct British interest? Is there not a great opportunity for British exports there, and would we not stand a better chance if we were seen to treat this old and loyal ally with a little more respect and understanding than we do?
    The Prime Minister: Portugal is, of course, an old and loyal ally within N.A.T.O. This does not mean that we support her policies in Africa, and we have made plain in successive Commonwealth Conference communiqués—I may be wrong in this—going back to before this Government came into office, that we do not agree with her policy in Africa. Certainly we would not approve of arms supplied for N.A.T.O. purposes being used there. There are allegations; when we get the evidence we will investigate them.
    Mr. Lubbock: How can the Prime Minister possibly make a check on whether these arms, supplied to Portugal, ostensibly for N.A.T.O. purposes, are not being sent from that country to repress the Africans in Angola and Mozambique? Since it has been impossible to make such a check, will he not now impose an embargo on the export of arms to Portugal?
    The Prime Minister: It is not impossible to make a check. We have throughout had this on the shipments to Africa. This would certainly apply to Angola and Mozambique—
    Sir Knox Cunningham: Nigeria.
    The Prime Minister: Nigeria is not in that part of the world—it is several thousand miles away. It applies a fortiori to any possible use involving the strafing of Zambian villages. That there have been Portuguese attacks on Zambian villages is not in dispute. We are prepared to receive evidence from the
    1118
    Zambian Government if it would lead to the suggestion that these were N.A.T.O. arms being used.
    Mr. John Lee: Apart from this question, is there not enough evidence of Portuguese connivance at sanction-breaking in Rhodesia to merit a meeting at which my right hon. Friend should have some very straight things to say to the Portuguese Government?
    The Prime Minister: We have been in very close touch with the Portuguese Government on many of these questions over a period of time. The enforcement of the Security Council resolution dealing with this matter is for the Security Council.

    COMMONWEALTH AFFAIRS
    Mr. Martenasked the Prime Minister what plans he has following the Commonwealth Prime Ministers' Conference for altering the structure of the Government to give greater attention to Commonwealth affairs.
    The Prime Minister: My right hon. Friend the Foreign and Commonwealth Secretary and his colleagues in the Foreign and Commonwealth Office will continue to give the fullest attention to Commonwealth affairs and no further alterations in the structure of government are required for this purpose.
    Mr. Marten: In view of the growing importance of the Commonwealth, would the right hon. Gentleman not arrange for one Minister of State in the Foreign Office to oversee Commonwealth affairs generally and to be responsible for answering Commonwealth Questions, in principle, in this House?
    The Prime Minister: The hon. Gentleman, if he thinks hard about this, will probably feel that our present arrangement is better, in the interests of the Commonwealth as well as in the interests of this House. Certainly this was the view very strongly put to me by Commonwealth representatives at the recent Conference. They liked to have one Department to deal with, whether they are talking about direct bilateral matters, or of course foreign matters affecting third countries. It is far better, and I think that my right hon. Friend's decision to

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    divide responsibilities on a geographical basis means that we no longer have some of the anomalies of having two Ministers dealing with contiguous areas because one happens to be Commonwealth and the other foreign.
    Mr. Cant: Would my right hon. Friend accept that there is a considerable realignment of economic forces taking place in the world? Would he agree that there might be some wisdom in setting up a Committee to look into the implications of Commonwealth trade as a whole, with the possible inference that we are paying a very heavy price for it?
    The Prime Minister: I am not sure if my hon. Friend is saying that we are paying a heavy price for Commonwealth trade. I would certainly not agree with that. The question of Commonwealth trade—as well as questions of Commonwealth development—is discussed regularly at Commonwealth Prime Ministers' Conferences and also at the regular meetings of Commonwealth Finance Ministers. Following the 1965 Conference, I proposed, and it was accepted, that there should be a specific meeting of Commonwealth Trade Ministers to review all these questions. I certainly cannot agree, either that Commonwealth trade is too high, or that we are paying an excessive price for the Commonwealth trade which we enjoy.
    Mr. Heath: Is the right hon. Gentleman aware that there is some anxiety about the position of dependencies under the new arrangement? Could he give an assurance that representatives of dependencies would have direct access to the Foreign Secretary on major matters concerning them?
    The Prime Minister: This is exactly the position. Just as they had direct access on appropriate occasions to the Commonwealth Secretary, they will certainly have direct access to the Foreign and Commonwealth Secretary and, of course, on appropriate occasions, to myself as well.

    EUROPEAN ECONOMIC COMMUNITY
    Mr. Henigasked the Prime Minister what further initiatives he proposes in 1969 with a view to further Great Britain's
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    application to joint the European Economic Community.
    The Prime Minister: I have nothing to add to the Answer I gave on the 4th of February to Questions by the hon. Member for Chelmsford (Mr. St. John-Stevas) and the Answer my right hon. Friend the Minister of State for Foreign and Commonwealth Affairs gave to a Question by the hon. Member for Cheltenham (Mr. Dodds-Parker) yesterday.—[Vol. 777, c. 203–5; c. 879–80.]
    Mr. Henig: Is my right hon. Friend aware that there is some alarm about increasing reports from Europe that our further efforts to get into the Community are resulting in a complete worsening of Anglo-French relations? Does he not think that British Government strategy should be reconsidered and that the way into Europe is through a deal with the French, rather than trying to fight them?
    The Prime Minister: If my hon. Friend has any constructive proposals to make for a way into Europe, by a deal with the French, I should be very glad to have either a long or a short memorandum on the subject. Of course these matters are discussed in an amicable way with the French Government but that does not, of itself, remove the fundamental cleavage of view between the French Government on the one hand and ourselves and out friends in Europe on the other. My hon. Friend will further be aware that I shall be discussing some of these questions with the German Chancellor later this week.
    Mr. Ronald Bell: How is the momentum getting on? If it is still there, could it not be applied to a more fruitful objective, such as the investigation of an alternative trading arrangement, like the Atlantic Free Trade Area?
    The Prime Minister: The momentum, which we use our efforts and energies to generate and to keep moving, with the help of our friends in Europe, has up to now suffered the fate that all momenta suffer when they run into an irresistible object.
    Mr. Raphael Tuck: Does my right hon. Friend not think that a community embracing, say, the United States, Canada, Australia, New Zealand and those of the Commonwealth and E.F.T.A. countries that wanted to join, would be a

    1121
    far more outward-looking and advantageous community than the narrow, inward-looking E.E.C.?
    The Prime Minister: Naturally, a community embracing the whole world would be even better. There are questions of the realities and the likelihood of achieving such a community at reasonable speed. Many of us who support British entry into the Common Market regard that as the best means of securing freer trade within the world community as a whole.
    Mr. Heath: Can the right hon. Gentleman tell the House anything more about the political consultations which were agreed upon by the Foreign Secretary at Luxembourg? Is it correct that these are to take place in the context of the Western European Union and, if so, can the Prime Minister say what is new about this, because political discussions have always been going on in W.E.U., and that was one of the purposes of the Treaty? What is the point of describing them now as "compulsory discussions"? How can anyone be compelled to discuss a subject if they do not wish to do so?
    The Prime Minister: The right hon. Gentleman will remember that, after the first veto in 1963, his own Government turned to W.E.U. hoping that would provide a way around the veto. It did not, and they have been no more successful in that particular move. The right hon. Gentleman will feel that some progress was made at Luxembourg last week. There was my right hon. Friend's invitation to the Six to send representatives to a meeting in London later this week on the subject of the Middle East, on which there has been a complaint from France that we are not all agreed with one another—this is probably true. With regard to the so-called compulsory meetings, what is being sought is an arrangement under which the Six as a whole plus Britain, if the Six as a whole will agree, if not then as many as will agree, will pledge themselves in advance to have discussions on all matters of common world concern, political concern. This has not been the case in W.E.U. up to now.
    Mr. Roebuck: Yes, but how do the Government reconcile, in their continued desire to make the Six into Seven, the two recent speeches of the Minister of
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    Agriculture, in which he criticised the Common Agricultural Policy because it would send prices sky high, and the Prime Minister's acidulous observations in the House last week about the added value tax? Will my right hon. Friend not retreat to reality on this issue, give his hon. Friends something to cheer about and withdraw this wretched application?
    The Prime Minister: I hope one day, perhaps not yet, to take my hon. Friend cheering forward to reality on this question with us. There is a Question on the Order Paper about the speech of my right hon. Friend the Minister of Agriculture. He sets out what would be the consequences for Britain of the unilateral acceptance by us of the Common Market agricultural programme if it were not part of our entry into a Common Market in which we would at the same time get very signal advantages in return. In any case the C.A.P. as it is at present is due to be renegotiated before we are likely to be in the Common Market.
    Mr. St. John-Stevas: Whilst moderately congratulating the Prime Minister on the modest momentum achieved at Luxembourg, will he say what exactly are the topics on which it has been agreed to have consultation and what are the means of consultation it is intended to use?
    The Prime Minister: I hope that the hon. Gentleman will not strain himself with his congratulations, but I appreciate them as far as they go. The first case is, of course, the Middle East. There are already, and have been, a number of discussions on other world affairs, but what we inferred from Luxembourg, as I understand it—I have no doubt that my right hon. Friend will give the House more information later in the week—was the proposal of a schedule of subjects for more organised discussions, and these will be continued at the next meeting of the W.E.U.

    "QUEEN ELIZABETH 2" TURBINES (INDEPENDENT ASSESSMENT)
    Mr. David Price(by Private Notice) asked the Minister of Technology whether he will make a statement about his appointment of Sir Arnold Lindley to undertake an assessment of the faulty turbines in the QE2.
    The Minister of State, Ministry of Technology (Mr. J. P. W. Mallalieu): Yesterday, my right hon. Friend appointed Sir Arnold Lindley, President of the Institution of Mechanical Engineers, to undertake an independent, technical assessment of the faults in the turbines of QE2 and the measures being taken to correct them.
    With permission, I will circulate a copy of Sir Arnold's terms of reference in the OFFICIAL REPORT. He will have consultations with all the parties involved and is, in fact, arriving in Glasgow this afternoon.
    Sir Arnold will have access to all the reports that have been made and will be free to consult anyone he wishes.
    The full engineering resources of the Ministry of Technology and the Board of Trade will be at his disposal and his report will be made to my right hon. Friend, who will make it available to all the companies involved.
    I have spoken to my right hon. Friend on the telephone an hour ago, at John Brown Engineering, in Glasgow, where he is himself having discussions with the company. He asks me to apologise for his absence today and to express the hope that the House will feel that those involved in this difficult technical task will now be allowed to get on with it.
    Mr. Price: Is the Minister aware that we on this side of the House share the legitimate public concern about these turbine difficulties, and, therefore, concur in the decision to ask Sir Arnold Lindley, as President of the Institution of Mechanical Engineers, to make this independent assessment?
    Will the Minister answer two questions. How long are Sir Arnold's inquiries expected to take, and will the hon. Gentleman confirm that an independent assessment of the viability of the turbines can be made without sea trials of the QE2?
    Mr. Mallalieu: It is difficult to give an answer. The answer to the first part of the question is that I should hope about three weeks. I think that the final test will have to be sea trials.
    Mr. Rankin: May I congratulate my hon. Friend on the statement that he has made, in view of the fact that on two occasions he refused, at my request, to hold the inquiry which he is now undertaking?
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    Are we to conclude from that that he is now recognising and admitting that the attempt to blame the men for the troubles that befell the Cunarder was quite wrong, and that blame rests where it has rested all along—with management, not only in John Brown but also in Cunard?
    Mr. Mallalieu: This assessment has nothing whatever to do with apportioning blame. It is to find out what is wrong and to help to put it right as quickly as possible, which is an entirely different proposition.
    Mr. Wingfield Digby: While welcoming this appointment and recognising that the cause of the trouble could be in the propellers or in the ship, may I ask whether it is correct that these turbines were not fully tested on land, as has been stated, and, also, that there are facilities for testing turbines of this type on land?
    Mr. Mallalieu: So far as I understand, they were tested on land, but the hon. Gentleman knows that the final test must be at sea.
    Mr. William Hamilton: Will my hon. Friend say what will be the additional costs, if any, to public funds?
    Mr. Mallalieu: I could not, off hand, but very small.
    Mr. Edward M. Taylor: While the technical inquiry is going ahead, will the Minister encourage all concerned to realise that the kind of headlines which were published yesterday can cause a great deal of unjustified damage to a firm which, only yesterday, was given an award for its export efforts with gas turbines, and might also affect the commercial future of this great ship when it sails?
    Mr. Mallalieu: I entirely agree with the hon. Gentleman. The matter has been mentioned to the parties concerned in appropriate language.
    Mr. Lubbock: Is the Minister aware that we welcome the appointment of Sir Arnold Lindley, who is an extremely distinguished engineer? Will he say whether the report which Sir Arnold will submit to the Minister will be published, so that we may learn lessons for the future?
    Mr. Mallalieu: It will be sent to the companies involved. We had better leave the matter of publication until we have seen the report.
    Sir H. Legge-Bourke: Will the hon. Gentleman give an assurance that this inquiry will be essentially a technical one and, secondly, that, if Sir Arnold comes to the conclusion that to give a correct assessment it is necessary to publish the Chandos Committee's Report on the earlier QE3, he will be at liberty to do so?
    Mr. Mallalieu: I would like notice of the latter part of the question. In reply to the first part, it is a technical assessment.
    Mr. Woodburn: Is the hon. Gentleman aware that every step ahead in technology involves risk of unknown factors causing trouble such as this, and that there has been much exaggeration in the matter of blame?
    Mr. Mallalieu: Certainly, advances in technology involve risks. I must repeat to the House that we are not concerned in any way with apportioning blame, but in finding out what mistakes were made and how they can be put right.
    Mr. Albu: Would not my hon. Friend agree that what has taken place only
    1126
    confirms the inadvisability of giving contracts on the basis of political considerations and not on the basis of the lowest tender?
    Mr. Mallalieu: I very much doubt that assertion; this is a technical problem and not a political one.
    Several Hon. Members—
    Mr. Speaker: Order.
    Following are the terms of reference:

    (a) To receive reports from Upper Clyde Shipbuilders Ltd., John Brown Engineering (Clydebank) Ltd., and the Cunard Steamship Co., Ltd. about the faulty performance of the turbines during the recent trials of the QE2;

    (b) To receive reports from the three companies about their investigations of the causes of these faults together with the advice given them by independent experts;

    (c) To receive and assess reports from John Brown Engineering (Clydebank) Ltd., on the measures they have taken to correct these faults;

    (d) To ensure that the information available to him is also available to the three companies;

    (e) To report to the Minister whether, in the light of the remedial action being taken, the further sea trials should, in his view now take place;

    (f) To make any further recommendations that may seem desirable in the light of the facts revealed.

IMMIGRATION
3.40 p.m.
Mr. Duncan Sandys: I beg to move,
That leave be given to bring in a Bill to amend the law with respect to immigration.
The purpose of my Bill is to make certain amendments to the Commonwealth Immigrants Acts. Everyone is agreed, of course, that all who live in Britain must be treated fairly and equally, regardless of nationality, race or religion. But that does not mean that we have an obligation to keep an open door to new settlers. In deciding who, and how many, to admit our first duty is to consider the interests and wishes of our own people.
There is a tendency to highlight the racial aspect of immigration. Basically, however, this is not so much a problem of race as one of numbers and distribution. If the size of our immigrant population were smaller, and it were more widely spread over the whole country, its racial composition would be of little importance. Unfortunately, we have already admitted more immigrants than we can properly absorb, and most of them are concentrated in heavily overcrowded areas.
As a result, greatly increased demands have been made upon the not unlimited resources of the community. Inevitably, this has prejudiced the interests of the indigenous local population and created tension between them and the newcomers. Though racial differences are not the basic cause of the tension, we all know that they tend to heighten it.
Both parties share responsibility for allowing the present situation to develop. Therefore, we have a joint responsibility to do all that is still possible to prevent the problem reaching unmanageable proportions.
The Bill which I wish to introduce will provide, first, that in future all Commonwealth immigrants, like aliens, initially shall be admitted on a temporary basis without any automatic right to settle here permanently and without any automatic right to bring in dependants; and. secondly, while maintaining the right of immigrants who are already here to bring in their dependants, that the Home Secretary shall have power to phase their
1128
entry with due regard to the availability of houses, hospitals and schools in the areas concerned.
I know that there are some who feel that it is wrong to restrict in any way the entry of dependants, whatever may be the consequences. I submit that we have no right to ignore the consequences of our action or inaction. If, through our failure to face the issue now, Britain is allowed gradually to become a racially divided nation, like the United States, the blame and the shame will rest upon us.
Apart from that, it is really no kindness to allow tens of thousands more women and children to be crammed into our congested cities where, as we all know, they will be disgracefully overcrowded and in many cases forced to live in intolerable sub-standard slum conditions.
I agree with those who consider that the Government should have the same powers of control over immigrants from the Commonwealth as they have over aliens. There is a good case for extending the application of the Aliens Acts to Commonwealth citizens. The right time to make this change will be when the Aliens Acts, which are at present renewed annually, are replaced by comprehensive permanent legislation. But, since that is obviously beyond the scope of a Private Member's Bill, and since we cannot afford any further delay, I propose that in the meantime the Government be given the necessary powers by amending the Commonwealth Immigrants Acts in the manner I have suggested.
More effective immigration controls will limit the rate of new entries and, to that extent, will relieve pressure. But in the end, the solution of the problem will depend upon the patience and tolerance of the British people. We cannot, however, expect this of them, unless we can convince them that we in Parliament understand and share their anxieties and are doing everything in our power to prevent an already big problem from becoming still bigger.
That is the purpose of the Bill which I seek leave to introduce.
3.46 p.m.
Miss Joan Lestor: Yesterday, the Evening Standard referred to the right hon. Gentleman's proposed

1129
Bill of the right hon. Gentleman the Member for Streatham (Mr. Sandys) as
"… a bad Bill with a worse purpose."
I would go further than that and say that the Bill. is one which pays lip-service to a principle which it does not intend to implement, which is to bring Commonwealth immigrants into line with aliens.
Like many other hon. Members who have contributed to recent debates on immigration, the right hon. Gentleman referred to our keeping an open door. He gave the impression that there is little or no control of immigration, particularly in relation to coloured immigration. That is quite untrue, and the right hon. Gentleman knows it.
I share the view that there is a great deal to be said in favour of bringing Commonwealth immigrants and aliens into line, if it is operated properly. However, what we have to face, and what the right hon. Gentleman did not face, is that, to be logical, we would have to remove the present ceiling on the number of coloured Commonwealth immigrants coming in, since a similar ceiling is not applied to aliens. In theory, therefore, it is conceivable that we should have even more coloured people coming into the country. That is a possibility which the right hon. Gentleman has to face, and I do not believe that is what he intends.
The right hon. Gentleman said that his Bill provided for the number of dependants to be admitted, and, in that connection, I would refer him to Cmnd. 3830. The inference from what the right hon. Gentleman said is that Commonwealth citizens bring in dependants whereas aliens do not. But aliens do bring in dependants. They have the right to bring in their wives and children and, in certain circumstances, their husbands. They can bring in children up to the age of 18, whether they come here as temporary or permanent residents. Let us face the facts. We cannot have it both ways if Commonwealth immigrants are to be brought in line with aliens.
The difficulty of admitting dependants is one about which we hear again and again. My hon. Friend the Under-Secretary of State for the Home Department has said that 50 per cent. of the dependants of Commonwealth citizens now coming in are the dependants of those
1130
who came here before 1965. The number of immigrants who have taken up work vouchers is less than 8,500, which means that the number of dependants coming in has declined and will continue to decline.
My fear about this propaganda on dependants is that the right hon. Gentleman will create the same situation as he created over the Kenya-Asians. People will bring in their dependants at a far quicker rate because they will be afraid that the Government will be panicked into bringing in legislation to phase their entry, as he suggests. This is absolutely indefensible. If we bring somebody here to work, as we have, on the assumption that he can stay if he wishes, then to turn round and say, "I am sorry, but you cannot bring your children in", or "You can only bring in your children up to the age of 13", is the sort of thing which took place in Southern Rhodesia under the Urban Areas Act, which prevents African servants having their wives and children living with them on white premises. Some people seem to have been taught by very interesting masters.
I should like to mention two other points on bringing immigrants into line with aliens. Commonwealth citizens have the right of permanent settlement which is not given to aliens. After four years aliens may apply to have their conditions removed and they may stay here. But this would not affect numbers if we are bringing one in line with the other. Most aliens who ask to stay permanently are granted leave to stay permanently. Roughly 18,000 a year during the last five years have had this permission granted. It follows logically that Commonwealth citizen who, after four years, say that they would like to stay here permanently will get that permission, unless we bring in colour, which the right hon. Gentleman the Member for Streatham said that he does not wish to do. It will not affect the numbers in any way. This is a red herring to "kid" people that this is an effective way of limiting the numbers of coloured faces coming into the country. I do not share the feeling about colour, but this is behind it. Therefore, numbers will not be affected at all.
My last point on bringing one in line with the other is the right to vote which the Commonwealth citizen has when he comes once he is on the register. Apart from the obvious argument about wanting

1131
to extend certain rights and privileges to members of the Commonwealth, the strongest argument against removing that right is that if people come here and intend to stay permanently, as most Commonwealth people do, I think that they will make far better citizens if we extend to them the right to participate, to vote and to play a part in the community than if we just say, "You are here for only a few years. You may work here, but we do not want you to play any part in our community." If we bring in people to work, and pay taxes, this is something which should be considered in terms of integration.
The right hon. Gentleman referred to overcrowding and education. These matters have been with us for a very long time. The Government have begun to deal with overcrowded areas by means of the Local Government Grants (Social Need) Bill. The danger is that we are repeating history, because we are making scapegoats of people instead of tackling the real problem. If we make scapegoats we will never get down to tackling the problem. We should encourage industry in people. We should encourage them to move out of overcrowded areas and build up those areas that are already in a bad state. If the Race Relations Act works properly, and immigrants who are identified by colour can move into areas which previously they have been prevented from doing, we will see them moving into the Streathams, the Bexleys, the Belgravias and the Westminsters.
Recent speeches both in and outside the House have made no contribution to the policy of improving race relations, and neither has the right hon. Gentleman
the Member for Streatham. They have contributed towards separating society into black and white. In my view, from the first speech that was made, in the late 1950s, calling for legislation to limit the number of coloured immigrants, the discussion on immigration has been conducted almost solely in the context of colour—limit, stop, send them back. What will we do in the end? This is the road along which we are travelling. We have never got down to discussing immigration; only coloured immigration. That is why so many in this country believe that all immigrants are black and that all people who have black faces are immigrants.
I urge hon. Members to vote against the Motion because some have seen fit to identify themselves, both in the House and outside, with the forces of reaction now clearly containing, in my view, all the elements of racialism. Others recognise that racialism can become a cancer that will destroy all that is decent in our society. If we fail to attack this problem we will share the responsibility for the tragic social consequences that will accompany its growth. It is high time that hon. Members and people outside the House who care about the quality of life in this country and the social fabric that they are handing on to their children, stood up and were counted on this issue, because their numbers are far greater than many would have us believe.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—
The House divided: Ayes 126, Noes 247.

Division No. 60.]

AYES

[3.56 p.m.

Allason, James (Hemel Hempstead)

Burden, F. A.

Drayson, G. B.

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

Campbell, B. (Oldham, W.)

Eden, Sir John

Baker, Kenneth (Acton)

Carlisle, Mark

Elliot, Capt. Walter (Carshalton)

Barber, fit. Hn. Anthony

Cary, Sir Robert

Eyre, Reginald

Baxter, William

Chichester-Clark, R.

Farr, John

Bell, Ronald

Clegg, Walter

Gibson-Watt, David

Bennett, Sir Frederic (Torquay)

Cooke, Robert

Giles, Rear-Adm. Morgan

Berry, Hn. Anthony

Cordle, John

Goodhart, Philip

Bitten, John

Corfield, F. V.

Gower, Raymond

Biggs-Davison, John

Costain, A. P.

Grant, Anthony

Blaker, Peter

Craddock, Sir Beresford (Spelthorne)

Grant-Ferris, R.

Boardman, Tom (Leicester, S. W.)

Crouch, David

Hamilton, Lord (Fermanagh)

Bossom, Sir Clive

Cunningham, Sir Knox

Hamilton, Michael (Salisbury)

Boyd-Carpenter, Rt. Hn. John

Dalkeith, Earl of

Harrison, Col. Sir Harwood (Eye)

Brews, John

Dance, James

Harvey, Sir Arthur Vere

Bromley-Davenport, Lt. -Col. Sir Walter

d'Avigdor-Goldsmid, Sir Henry

Hastings, Stephen

Brown, Sir Edward (Bath)

Digby, Simon Wingfield

Howell, David (Guildford)

Buck, Antony (Colchester)

Dodds-Parker, Douglas

Iremonger, T. L.

Bullus, Sir Eric

Douglas-Home, Rt. Hn. Sir Alec

Irvine, Bryant Godman (Rye)

Jennings, J. C. (Burton)

Nicholls, Sir Harmar

Speed, Keith

King, Evelyn (Dorset, S.)

Onslow, Cranley

Stodart, Anthony

Kirk, Peter

Osborne, Sir Cyril (Louth)

Stoddart-Scott, Col. Sir M.

Kitson, Timothy

Page, Graham (Crosby)

Taylor, Sir Charles (Eastbourne)

Knight, Mrs. Jill

Page, John (Harrow, W.)

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

Lancaster, Col. C. G.

Pearson, Sir Frank (Clitheroe)

Taylor, Frank (Moss Side)

Langford-Holt, Sir John

Peel, John

Temple, John M.

Lewis, Kenneth (Rutland)

Peyton, John

Thatcher, Mrs. Margaret

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

Powell, Rt. Hn. J. Enoch

Tilney, John

Longden, Gilbert

Prior, J. M. L.

Waddington, David

McAdden, Sir Stephen

Pym. Francis

Walker-Smith, Rt. Hn. Sir Derek

Macmillan, Maurice (Farnham)

Ramsden, Rt. Hn. James

Ward, Dame Irene

McNair-Wilson. Patrick

Renton, Rt. Hn. Sir David

Weatherill, Bernard

Mawby, Ray

Ridley, Hn. Nicholas

Wells, John (Maidstone)

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

Ridsdale, Julian

Whitelaw, Rt. Hn. William

Mills, Stratton (Belfast, N.)

Robson Brown, Sir William

Williams, Donald (Dudley)

Mitchell, David (Basingstoke)

Rodgers, Sir John (Sevenoaks)

Wilson, Geoffrey (Truro)

Monro, Hector

Royle, Anthony

Wood, Rt. Hn. Richard

Montgomery, Fergus

Russell, Sir Ronald

Worsley, Marcus

More, Jasper

Sandys, Rt. Hn. D.

Younger, Hn. George

Morgan, Geraint (Denbigh)

Scott-Hopkins, James

Mott-Radclyffe, Sir Charles

Sharples, Richard

TELLERS FOR THE AYES:

Monro-Lucas-Tooth, Sir Hugh

Silvester, Frederick

Mr. Victor Goodhew and

Murton, Oscar

Smith, Dudley (W'wick & L'mington)

Mr. Harold Gurden.

Nabarro, Sir Gerald

NOES

Albu, Austen

Edwards, William (Merioneth)

Jones, Dan (Burnley)

Allaun, Frank (Salford, E.)

Ellis, John

Jones, T. Alec (Rhondda, West)

Alldritt, Walter

English, Michael

Judd, Frank

Archer, Peter

Ennals, David

Kelley, Richard

Ashley, Jack

Evans, Fred (Caerphilly)

Kenyon, Clifford

Ashton, Joe (Bassetlaw)

Evans, Gwynfor (C'marthen)

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

Atkinson, Norman (Tottenham)

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

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

Bagier, Gordon A. T.

Faulds, Andrew

Kerr, Russell (Feltham)

Barnett, Joel

Finch, Harold

Lawson, George

Bence, Cyril

Fitch, Alan (Wigan)

Ledger, Ron

Bennett, James (G'gow, Bridgeton)

Fletcher, Raymond (Ilkeston)

Lestor, Miss Joan

Bessell, Peter

Foley, Maurice

Lever, Harold (Cheetham)

Binns, John

Foot, Rt. Hn. Sir Dingle (Ipswich)

Lewis, Arthur (W. Ham, N.)

Bishop, E. S.

Foot, Michael (Ebbw Vale)

Lewis, Ron (Carlisle)

Blackburn, F.

Ford, Ben

Lipton, Marcus

Blenkinsop, Arthur

Forrester, John

Loughlin, Charles

Booth, Albert

Fowler, Gerry

Boston, Terence

Fraser, John (Norwood)

Luard, Evan

Bottomlay, Rt. Hn. Arthur

Freeson, Reginald

Lubbock, Eric

Bray, Dr. Jeremy

Galpern, Sir Myer

Lyons, Edward (Bradford, E.)

Brooks, Edwin

Gardner, Tony

McBride, Neil

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

Garrett, W. E.

McCann, John

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

Ginsburg, David

MacColl, James

Buchan, Norman

Gray, Dr. Hugh (Yarmouth)

Macdonald, A. H.

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

Greenwood, Rt. Hn. Anthony

McGuire, Michael

Butler, Herbert (Hackney, C.)

Gregory, Arnold

McKay, Mrs. Margaret

Callaghan, Rt. Hn. James

Grey, Charles (Durham)

Mackie, John

Cant, R. B.

Griffiths, Rt. Hn. James (Llanelly)

Maclennan, Robert

Carmichael, Nell

Grimond, Rt. Hn. J.

McMillan, Tom (Glasgow, C.)

Carter-Jones, Lewis

Hamilton, William (Fife, W.)

McNamara, J. Kevin

Chapman, Donald

Hamling, William

MacPherson, Malcolm

Coe, Denis

Harper, Joseph

Mahon, Peter (Preston, S.)

Coleman, Donald

Concannon, J. D.

Harrison, Walter (Wakefield)

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

Conlan, Bernard

Hart, Rt. Hn. Judith

Manuel, Archie

Crossman, Rt. Hn. Richard

Hattersley, Roy

Mapp, Charles

Cullen, Mrs. Alice

Hazell, Bert

Marks, Kenneth

Dalyell Tam

Heffer, Eric S.

Marquand, David

Darling, Rt. Hn. George

Henig, Stanley

Marsh, Rt. Hn. Richard

Davies, G. Elfed (Rhondda, E.)

Herbison, Rt. Hn. Margaret

Mason, Rt. Hn. Roy

Davies, Dr. Ernest (Stretford)

Hilton, W. S.

Maxwell, Robert

Davies, Harold (Leek)

Hobden, Dennis

Mayhew, Christopher

Davies, Ifor (Gower)

Hooley, Frank

Mendelson, John

Davies, S. 0. (Merthyr)

Horner, John

Mikardo. Ian

Dell, Edmund

Howarth, Harry (Wellingborough)

Millan, Bruce

Dempsey James

Hoy, James

Miller, Dr. M. S.

Dewar, Donald

Huckfield, Leslie

Milne, Edward (Blyth)

Diamond, Rt. Hn. John

Hughes, Emrys (Ayrshire, S.)

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

Dickens, James

Hughes, Hector (Aberdeen, N.)

Molloy, William

Dobson, Ray

Hughes, Roy (Newport)

Moonman, Eric

Doig, Peter

Hunter, Adam

Morgan, Elystan (Cardiganshire)

Driberg, Tom

Hynd, John

Morris, Alfred (Wythenshawe)

Dunnett, Jack

Irvine, Sir Arthur (Edge Hill)

Morris, Charles R. (Openshaw)

Dunwoody, Mrs. Gwyneth (Exeter)

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

Murray, Albert

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

Johnson, Carol (Lewisham, S.)

Newens, Stan

Eadie, Alex

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

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

1134

1135

Oakes, Gordon

Reynolds, Rt. Hn. G. W.

Thomson, Rt. Hn. George

Ogden, Eric

Rhodes, Geoffrey

Thornton, Ernest

O'Malley, Brian

Roberts, Albert (Normanton)

Thorpe, Rt. Hn. Jeremy

Oram, Albert E.

Roberts, Rt. Hn. Goronwy

Tinn, James

Orbach, Maurice

Robertson, John (Paisley)

Varley, Eric G.

Orme, Stanley

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

Wainwright, Edwin (Dearne Valley)

Oswald, Thomas

Rodgers, William (Stockton)

Wainwright, Richard (Colne Valley)

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

Roebuck, Roy

Walker, Harold (Doncaster)

Owen, Will (Morpeth)

Ross, Rt. Hn. William

Watkins, Tudor (Brecon & Radnor)

Padley, Walter

Rowlands, E.

Weitzman, David

Page, Derek (King's Lynn)

Shaw, Arnold (Ilford, S.)

Wellbeloved, James

Palmer, Arthur

Sheldon, Robert

Wells, William (Walsall, N.)

Pannell, Rt. Hn. Charles

Shore, Rt. Hn. Peter (Stepney)

Whitaker, Ben

Pardoe, John

Silkin, Rt. Hn. John (Deptford)

White, Mrs. Eirene

Park, Trevor

Silkin, Hn. S. C. (Dulwich)

Whitlock, William

Parker, John (Dagenham)

Silverman, Julius

Wilkins, W. A.

Parkyn, Brian (Bedford)

Skeffington, Arthur

Williams, Alan (Swansea, W.)

Pearson, Arthur (Pontypridd)

Slater, Joseph

Williams, Alan Lee (Hornchurch)

Peart, Rt. Hn. Fred

Small, William

Williams, Clifford (Abertillery)

Pentland, Norman

Snow, Julian

Willis, Rt. Hn. George

Perry, Emest G. (Battersea, S.)

Spriggs, Leslie

Wilson, William (Coventry, S.)

Perry, George H. (Nottingham, S.)

Steel, David (Roxburgh)

Winnick, David

Prentice, Rt. Hn. R. E.

Stewart, Rt. Hn. Michael

Woodburn, Rt. Hn. A.

Price, Christopher (Perry Barr)

Stonehouse, Rt. Hn. John

Wyatt, Woodrow

Price, William (Rugby)

Strauss, Rt. Hn. G. R.

Probert, Arthur

Summerskill, Hn. Dr. Shirley

TELLERS FOR THE NOES:

Randall, Harry

Swain, Thomas

Mr. John Lee and

Rankin, John

Taverne, Dick

Mr. Sydney Bidwell.

Rees, Merlyn

Thomas, Rt. Hn. George

ORDERS OF THE DAY

  REDUNDANCY REBATES BILL
  Considered in Committee.
  [Mr. HARRY GOURLAY in the Chair]

  REDUNDANCY REBATES BILL
    Clause 1

      REDUCTION OF REBAT
      4.6 p.m.
      Mr. Nicholas Scott: I beg to move Amendment No. 1, in page 1, line 10, leave out "three-quarters of one week's" and insert "0·9 of one week's".
      The Deputy Chairman (Mr. Harry Gourlay): I think that it will be convenient if, with that Amendment, we discuss Amendment No. 2, in page 1, line 10, leave out "one-half" and insert "0·6"; Amendment No. 3, in line 11, leave out "one-quarter" and insert "0·3"; and Amendment No. 6, in line 13, leave out "one half" and insert "0·6".
      Mr. Scott: Thank you, Mr. Gourlay.
      All the Amendments have the same principle behind them. First, they express the rebate to be paid under the Bill as a decimal. Secondly they increase the percentage proposed by the Government. The first point is not an important one, but we felt that as the Government were committed to a programme for the decimalisation of our currency, and as they had announced a system for the adoption of metric weights and measures, the time was approaching for the Government, when introducing legislation, to cease to use fractions, and to begin to use decimals, or at least to use percentages. We have, therefore, expressed the proportion of payment which should be repayed as rebate as a decimal, and perhaps it is not inappropriate to mention that the Department of Employment and Productivity might be asked to give a lead on this matter.
      The main argument contained in these four Amendments is much more serious and fundamental. The Amendments will alter the proposed relationship of rebate to payments. The Government propose to alter it downwards, from two thirds to one half. Our proposal is that, for a
      1138
      variety of reasons, 60 per cent. will be very much more appropriate.
      Both sides of the House have accepted the reasons for continuing with a scheme on the lines outlined in the Bill. It is accepted that there are two sides to the case—first, a social reason, and secondly, an economic reason. The social reason is that it eases the burden on a man who loses his job and has to seek employment elsewhere. The economic reason is that it encourages the mobility of labour.
      Neither the Government proposals, nor the Amendments, affect the social aim in any way. A person who loses his job will continue to receive the same payment under the new scheme as under the old, but, on the economic side, we believe that the mobility of labour is bound to be adversely affected by the Government proposals, and we seek in some way to mitigate their impact.
      If the Government argue, as they have, that the scheme has made a considerable contribution to the mobility of labour; if they argue that not only does it make more bearable the effects of the higher rate of unemployment we have suffered under the present Government, but that they have contributed to a higher level of unemployment because work people are more prepared to move, and employers are more prepared to declare work people redundant; they must accept that the alterations they have proposed in the Bill will reduce the amount of good the scheme can achieve.
      The Economist in its description of the Government's proposals, described the payment that an employer must make when he declares somebody redundant as a fine on that employer when the redundancy is declared. One does not have to accept that language to accept the idea that the employer is being asked to bear a burden at the point when he is probably least able to bear it, when he is being forced to declare people redundant. By the Bill the Government are increasing the burden—or, if one uses the Economist's language, the fine—levied on the employer at that time. It may be necessary. To maintain the solvency of the Fund, perhaps some increased burden on employers is unavoidable, but the Government are seeking to do rather more than that, and this is really our quarrel with them.

      1139
      In the Explanatory and Financial Memorandum to the Bill they estimate that it will
      "… reduce the annual level of expenditure from the Redundancy Fund by rather more than £17 million, that is by about one-third; and that the effect will be to reduce the annual rate of expenditure to about £9 million below income, thus enabling the Fund to begin repayment of its borrowing from the National Loans Fund at this rate."
      That is what we quarrel about, and what we seek to rectify in the Amendments.
      We believe that the Government are seeking to repay much too quickly the debts which have been incurred by the Redundancy Fund to the National Loans Fund, and that it would be much better to seek to fix a level of rebate which would stabilise the Fund at its present level of indebtedness; perhaps to have a trickle of money back into the National Loans Fund, but certainly not to aim at a rate of repayment with about half the reduction in expenditure being used to repay past debts to the National Loans Fund.
      Our figures are only estimates of what is likely to achieve this stabilisation. The Government's past estimates on the Fund have been wildly wide of the mark. Our quarrel with them here is not that their estimates are wrong, but that their starting point is wrong. They are aiming to repay £9 million a year into the Fund, and this is placing an excessive burden on employers and making necessary a very large reduction in the rebate which will become payable under the Bill. We prefer to propose a slightly higher level of rebate to continue and to accept a slower rate of repayment into the Fund.
      There are four reasons why I hope that the Government might be prepared to have second thoughts on the matter. First, the Government have always told us that this is a Fund which belongs to industry. The C.B.I., which represents the side of industry on which the burden of redundancy payments fall, has made clear its disagreement with the Government's proposals. When it entered into the scheme, it did so on the basis of a given level of payments and a given level of rebates.
      Now the Government seek unilaterally to alter the rebate, not only to keep the Fund solvent, but also very quickly to repay past indebtedness. We believe that
      1140
      there would be a much better chance of keeping this as an agreed scheme within industry if the Government were prepared to show that they simply wanted the minimum alteration so as to maintain the solvency of the scheme and get by.
      4.15 p.m.
      Secondly, if we accept the economic aim of a redundancy Bill, we need to keep to the minimum any disincentives to employers to declare redundancies.
      Thirdly, the reduction of the rebate will bear most heavily on the small employers, the small firms. There is another Amendment on that subject, but it is relevant to the present group of Amendments that we are discussing. We believe that there is a case, if we accept that some increased burden must be accepted, for keeping it to the minimum, particularly in view of its impact on the small employer.
      Fourthly, we believe that it is wrong to impose repayment of indebtedness at the rate envisaged by the Government until we have had the review of the scheme which the Under-Secretary of State promised on 30th January—first, a review of the anomalies which continue to exist in it, and, second, a more fundamental review of how redundancy payments schemes fit into other policies to achieve mobility of labour—and that we should not commit ourselves to anything like this level of repayment until we have had a much more fundamental look at the whole future of redundancy payments.
      I therefore hope that the Government will be prepared to look at the level of rebate, and perhaps to modify it, so that the scheme is stabilised at its present position, and to remove the burden of the duty to repay money into the National Loans Fund at the rate envisaged in the Explanatory and Financial Memorandum.
      Mr. Nicholas Ridley: I support the Amendments which, if anything, are very modest and do not go quite as far as they should. I should have liked to see a shade more of the money for redundancy payments coming from the Fund and a shade less as the direct responsibility of the employers. The Amendments would result in 60 per cent. of the payments

      1141
      coming from the Fund, whereas the Government propose that 50 per cent. should come from it. We could perhaps talk in terms of the small increase from 50 to 60 per cent. being the difference between the two sides in the debate.
      We have met the Under-Secretary of State's argument in one respect. The system before the Bill was introduced had the effect of almost encouraging employers to dispense with the services of older workers first, and we all agree that that is most undesirable. The Minister therefore proposes that the rate of rebate should be the same for the over-41s and under-4ls at 50 per cent. of the total cost. Our Amendments do not depart from that, because we believe that it should be 60 per cent. in each case, therefore carrying into effect his principle.
      When one considers the share that would have to be paid by the employer, one sees that with our Amendments it would cost the employer slightly more to dispense with older workers than with younger people, because he would have to pay 0·6 per cent. of a week's pay for each year's employment if the man was over 41, and 0·4 per cent. if the man was under that age. Therefore, we have a built-in incentive to do what everybody would agree is the right thing to do, and to concentrate any unavoidable redundancy on the youngest members of the work force rather than the older. On that point, therefore, the argument is met.
      But the powerful reason why the Amendments are right and why I hope the Minister will accept them is that the economic point of redundancy payments, as opposed to the social point, is to shift the emphasis on to industry as a whole in meeting redundancy payments. Quite clearly, if the employers have to meet too high a proportion directly, it will be a disincentive to declaring redundancies which should be declared in the interests of nationalisation, technological progress, and so on.
      There are two completely separate sets of circumstances where this would apply. First, in the ordinary course of meeting the productivity and efficiency of a business or a factory, the incentive will be reinforced if the cost of redundancy pay does not come all the time from the employer's pocket but a higher proportion of it comes from the Fund. Secondly, and more important, in the case of a
      1142
      declining industry—an industry which, whatever it does, has to dispose of and shed labour—it is even more important that it should not be asked to find too great a proportion of the cost of redundancy payment which is paid out. This aggravates the difficulties of its decline and it is less easy to make an orderly and solvent decline as it contracts. The principle in the original Bill, therefore, that the greater proportion of redundancy pay should come from the Fund, i.e., from the whole of industry, is an absolutely right one.
      The argument was very strongly reinforced in an article in the Economist which put it in very much stronger terms than I have been using. This is the fundamental economic reason why it is right to take a much greater proportion from the Fund than the proportion which the employer finds directly from his own pocket. To reduce it as low as 50 per cent. which the Government are proposing in the Bill is going far too low. I would prefer to see it higher still and see the proportion of the Fund in the region of 75 per cent. But, for the sake of harmony on these benches, I am pleased to support the compromise of 60 per cent. which my hon. Friend moved from the Front Bench.
      It is implicit in what I have been saying that this would mean an increase in the weekly contribution of employers. I am prepared to face up to that. It is much more desirable that the increased costs—and, after all, we are talking about meeting an increased cost—should come from the employers directly on the redundancy levy rather than from the employers directly in terms of pay for each redundancy. I accept that the consequence of what I am saying means slightly increased contributions, but I believe that we are on the right lines here in pressing to reduce the share directly for the employer and increase the share which comes from the Fund.
      The Under-Secretary of State for Employment and Productivity (Mr. Roy Hattersley): Those of us who pay proper respect to parliamentary democracy ought to acknowledge Parliament's indebtedness to the Economist for the criticism it made of this Bill. Until that journal published its remarkable article nearly a fortnight ago none of the arguments which hon. Gentlemen opposite have offered in terms of the principle of the Bill were heard

      1143
      in this House. The hon. Gentleman will forgive me for wondering how the debate would have gone a week ago, or would have gone today, had the Economist not chosen to draw the distinction between what it thought the Government should be doing and what, in fact, the Government are doing.
      The Economist brought to light in its article the principle which both characterises the Bill and this debate on the first Amendment to the Bill. It concerns how much of the cost of redundancy should be borne by individual companies at the point of making their employees redundant and how much of the cost should be shared by industry as a whole.
      I disagree with the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who said that the whole point of redundancy payments was to shift the cost of redundancy from individual firms to industry as a whole. The point of the redundancy payments scheme is to provide a payment at the point of redundancy. It has a social and an economic objective, but the object is to make that payment possible.
      A second object of the parent Bill—which we are perhaps only vicariously discussing this afternoon, but discussing, nevertheless—is to make some arrangements whereby the cost of that redundancy payment is shared to a greater or a lesser degree between industry.
      The hon. Member for Paddington, South (Mr. Scott), who moved the Amendment said that one of the objects of the Bill and of the scheme, and one of the objects which he hoped was still achieved by his Amendment, was the improvement of the levels of mobility of labour. I concede that his Amendment, no more than our amending Bill, changes the willingness of individual men to become redundant and move to expanding industries and more productive jobs. But he has to understand, when considering our attitude to this Amendment, that one of the objects of the Bill is not only to preserve the willingness of individual employees to accept redundancy when it comes and to agree willingly to a change of industry, but is also to make individual employers think more carefully about the type of person they make redundant and the occasion of that redundancy.
      1144
      This must be borne very clearly in mind when we consider the appropriate level of rebate—50 or 60 per cent. Equally, it is important to bear in mind exactly the extra liability which we are placing on industry if we ask them to accept a rebate of 50 per cent. rather than 66⅔ per cent. The average redundancy paid during the second half of 1968 amounted to £245. That is the amount paid in gross to the individual redundant worker. The average rebate contributed by the Fund to the employer who made that individual worker redundant was about 75 per cent. That is allowing for those in the total who got large rebates because their employees were 41 or over and those who got rather smaller rebates because they were under that age.
      That means what we are asking today, comparing that level of rebate with what we now propose, is that the employer's share of each average redundancy payment should be increased from about £60 to about £120. After necessary and appropriate deductions for Corporation Tax, we are saying that the employer's share should be increased from £35 to £70—not anything like as substantial an increase as some of the critics of our proposals have suggested. It is very important that we should bear that in mind when we consider how great or how small the rebate from the Fund should be.
      It is also important to bear in mind the nature of the intention of the Fund. The Fund is intended, in part, to share the cost of redundancy amongst industry as a whole. It was certainly intended to ensure that industry, as a whole, was responsible for the cost of redundancy. It was never the Government's intention that the existence of that Fund should result in the Government, and therefore the taxpayer, carrying for a substantial period the cost of redundancy payments.
      For over two years the Fund has been in deficit. I put it to the Committee that the logic of the Fund—and certainly the logic of the sort of financial prudence which hon. Gentlemen opposite have urged on us—is that this element should no longer be properly charged to public borrowing, but should return, as intended, to be the liability of industry as a whole. For, while the deficit on the Fund is borrowing in virtually every sense, it represents public expenditure. Certainly,

      1145
      in the sense that it increases the amount of money available in an artificial way, it is inflationary.
      [Mr. BRYANT GODMAN IRVINE in the Chair]
      4.30 p.m.
      Hon. Gentlemen opposite who have urged us to cut public expenditure now as a necessary and natural economic measure would not wish us to inflate the Fund by Government lending. They want it to be financed by industry. When we consider the appropriate level of rebate, we must bear in mind the fact that the principle, intention and purpose of the Fund—and certainly the economic objects which, I suspect, all hon. Members share—are best served by ensuring that public lending to meet the deficit of the Fund should be extinguished at the first opportunity. We believe that the first opportunity is best achieved by a reduction of the rebate from 66⅔ to 50 per cent.
      I concede immediately that it is not easy to conjure up a figure. One might suggest 50, 55, or 60 per cent. as an automatic and absolute figure which has virtues and which one can demonstrate is right in terms of logic. Any figure which one might choose is bound in part to be arbitrary and can be supported by arguments which are, in a sense, only partial. The figure of 50 per cent. was arrived at because we anticipate that to meet the outgoings from the Fund next year we will need a saving on the Fund's expenditure of between £8 and £9 million.
      Equally, we anticipate that the extra savings which will accrue from a reduction of rebate to 50 per cent. will produce, in addition to this £8 million, a further £8 to £9 million which can be used to liquidate the deficit of the Fund. It seems only right to us that not only should the outgoings be preserved, but that the Fund's deficit should be liquidated at some speed.
      It also seems right to us that if we anticipate a need to make savings of rather more than £8 million next year, the total saving of £10 million—which is all the saving that a rebate of 60 per cent. would produce—is far too near the margin to be prudent. I concede without hesitation that it is far too near the margin to be recommended by hon. Members who—they are to be found on both sides—miscalculated the possible
      1146
      expenditure from the Fund and who are now determined to ensure that the Fund is in regular and permanent solvency.
      I argued on Second Reading that there was a theoretical case for making sure that the income to the Fund, the levy, was so large as to meet all eventualities, no matter how inaccurate the calculations might be. I tried to refute that argument by saying that a large levy, though covering every contingency, might become an excessive charge on industry because it would be reflected by a surplus in the Fund. This criticism is not appropriate to the proposal that the rebate should be reduced from 66⅔ to 50 per cent., for these reasons.
      If we had been so cautious as to over-calculate the levy, and if the total number of redundancies had been substantially fewer than we anticipated, the result would have been that the levy would have proved larger than we needed and there would have been a surplus on the Fund, drained out of industry and used for no immediate purpose. If, on the other hand, because of a fall in the number of redundancies the savings from a reduced rebate are greater than we anticipated, then the savings are entirely to the benefit of industry which will never have had to make its 50 per cent. contribution to the rebate.
      If, therefore, we are estimating over-cautiously, this caution reflects not only to the solvency of the Fund, but to industry as a whole. By using the phrase "industry as a whole" I refer in this context to industry, globally; the whole of industry which, in part, makes redundancy payments to the Fund and which, in part, makes contributions to individual redundancy payments.
      In other words, I am saying that if we are to preserve the solvency of the Fund, we need more than a £10 million additional saving which a general rebate of 60 per cent. would produce. I am therefore also saying that by increasing the individual company's indebtness to 50 per cent. and reducing the rebate to 50 per cent. we are achieving three objectives. The first is to secure and preserve the Fund's solvency in the coming year. The second is to pay off the deficit in the Fund, which operates against our economic objectives and which is contrary to the objects of the Scheme. The third is to make sure that if we have

      1147
      over-estimated and have been more cautious than we need have been, the beneficiary is not the Fund, preserving a large surplus, but the companies which are not actually paying the 50 per cent. rebate.
      I come to the suggestion that this charge should not be made to individual companies until two points have been answered from the Second Reading debate. It was said that we should ask for the minimum to keep the Fund in balance until, first, the anomalies to which reference has been made have been examined and rectified and, secondly, until we have decided how the Fund fits into our general industrial strategy.
      If hon. Gentlemen opposite want the very minimum to keep the Fund in balance, a 60 per cent. rebate would not do it. It would have to be smaller than that. However, leaving that point aside, the Government are entitled to ask for this adjustment before the two objectives which have been mentioned from the benches opposite are met. We are entitled to ask for this adjustment because, as I have made clear, while any anomalies may need to be rectified in terms of equity, it is wrong to imply that the outgoings from the Fund are substantially changed by the existence of those anomalies. The Government wants to rectify them not because they are a genuine and material drain on the Fund—to confuse the anomalies with the Fund's outgoings is to misunderstand the need to change them—but simply to achieve equity.
      We were then asked to postpone anything but minimal changes until the Government knew exactly how the scheme fitted into their general strategy. The Government believe that they know how the scheme fits into their general strategy. We believe that we can demonstrate that many of the changes which have operated in the last four years—the willingness of men to leave contracting industries and move into expanding industries, their willingness to leave old trades and enter new professions and their willingness to undergo periods of retraining at less earnings than they enjoyed during their previous working lives—have been helped by the scheme.
      That is why we would not choose to change the individual payments made to
      1148
      individual redundant workers. It is also why, on a simple actuarial calculation, we believe that the rebate must be 50 per cent. if our two overriding principles are to be preserved. They are, first, that the Fund should be put into balance without a general increase in industrial costs, which would come about from an increase in the levy, and, secondly, that it is appropriate and right that a larger share of the responsibility for individual redundancies should be borne by the firms which make the men redundant rather than by industry as a whole.
      In the light of these principles, I ask my right hon. and hon. Friends to reject the Amendment.
      Colonel Sir Harwood Harrison: The Under-Secretary stressed that the extra cost to firms concerned is recovered in respect of Corporation Tax. He made the point as if it applied to everyone, but I do not think that that is technically right. Perhaps the hon. Gentleman will say what percentage of workers are not employed by those firms?
      Mr. Hattersley Mr. Hattersley The figures I quoted were for Corporation Tax, but they apply entirely to individuals who employ and eventually make individual employees redundant if they pay Income Tax at or about the same rate. The area of doubt concerns companies which are making employees redundant because of inability to make profits.
      The figures I quoted are more or less correct. The hon. and gallant Member is absolutely right to draw our attention to this matter. If one is considering the issue of a non-profit-making company one has to decide whether it should be subsidised as against a firm which is making profits. I suspect that the hon. and gallant Member does not want that to happen; neither do I.
      Mr. James Dempsey: My hon. Friend the Under-Secretary takes the view that firms should accept their due and proper share of the cost of redundancy. He rightly argues that the Government levy should be pegged at 50 per cent. It is contended that this would help to offset the deficit on the Redundancy Fund in general.
      Will my hon. Friend deal with the question of who is responsible for these

      1149
      payments when a firm becomes bankrupt? I have had a most regrettable experience of a firm going bankrupt and laying off 140 workers with neither holiday pay nor anything else to make a contribution to the Fund. I understand that in this case the redundancy is paid solely from the Fund. That is bound to create a deficit in the Fund because the firm is unable to pay its part of the redundancy contribution. Very much to my surprise, when I investigated the matter more fully I discovered that there are only a small number of bankruptcies in a year and very few firms which make no contribution whatever.
      Will my hon. Friend explain, in such circumstances, where the money comes from? Who is responsible, directly or indirectly, for meeting the cost of those redundancy payments? This is bound to have an effect on the Fund, and in all probability some effect on the Government contribution. If so, it surely means that if the Government contribution is pegged it should be much more than 50 per cent. as the Government would have to meet the share which should be contributed by a firm which goes bankrupt.
      I discussed this matter with one of my hon. Friend's colleagues and I was very surprised to hear of the number of bankruptcies which take place in the United Kingdom in a year. They must have some influence on the solvency of the Fund. There are bound to be deficits. I am curious to ascertain how any fund can be solvent in such circumstances. I recognise that perhaps one can anticipate avoiding redundancy and have some little balance in the Fund, but I do not think that one can anticipate the bankruptcy of a firm. It is bound to have an upsetting effect on the successful administration of the Fund. Is it possible to ascertain the number of bankruptcies which affect the Fund,: the cost to the Fund, how that cost is borne, and to what extent by employers and to what extent by the Government?
      It must be obvious to all that this is one of the contingencies which should be provided for in the compilation of a fund of this nature, the purpose of which is to ensure that workers receive some redundancy payment to help them over that economic stile until such times as they can find new employment.
      4.45 p.m.
      Mr. Kenneth Lewis: I think that the Under-Secretary, in using the argument that costs to the employer are allowed against tax, was rather panning out his speech, because that is an argument one could use about anything. It can be used about S.E.T., but it does not impress a businessman, because it is the cost to industry that matters. The cost against industry of a payment of this kind, or of a tax such as S.E.T., is a charge on the goods and affects the price of the goods and the competitiveness of the industry concerned.
      Although it is useful to have this debate, it is arguable whether the amount should be 50 or 60 per cent. Having pressed the Government to get this equation right at last, I would not take the argument too far, but industry is having this imposition placed upon it because the Government up to now have got their calculations wrong. Because the Government miscalculated they are having to pay out. The Under-Secretary was joyful about the prospect of a profit on the Fund, and we certainly would be joyful about that, but if the Government have got their calculations right this time and in due course there is a profit on the Fund, what will happen when the Fund does run into profit?
      If the Fund is in deficit industry has to pay more out. What is to happen when it runs into profit? Is the advantage to be given to industry, and how will it be given to industry? Industry should know this in advance. Normally, industry is suspicious of Governments. It is particularly suspicious of this Government. It takes the view that when there is over-spending industry has to pay, but when it contributes towards getting a balance the Government take advantage of that balance. It would be useful if the Parliamentary Secretary could summon up courage and look ahead so that he could say what he intends to do if the change of amount set out in the Bill in due course leads to a surplus on the Fund.
      As on Second Reading, the hon. Gentleman was disinclined to accept that there was very much misuse of the Redundancy Payments Scheme. I think that he is wrong. I am not sure whether he was actually serious about the inquiry which he said has been started on this

      1151
      matter. I do not know how quickly we shall have the results of that inquiry. There has been considerable misuse of this scheme. People have been made redundant when near to the time of their retirement so that they could get both a pension and a golden handshake. Not only do I think that this is so, but I am sure that many workpeople think it is so. In various factories one is told, "John is lucky, because he will get £1,000". This is the peak amount, which is paid at about age 62. One's informant—George—hopes that when he becomes 62 or 63 the same will happen to him.
      I hope that the Minister recognises that in changing the scheme in this way because of his miscalculation he will probably affect George's prospects. George's pal Bill has already got away with a good payment, plus his pension. The employer, who must now contribute more, will say to George, "I am sorry. This will cost me more. Although your friend got the payment, we cannot pay it to you. You must struggle on until retirement, when you will get nothing".
      The weakness of the scheme is that it is open to abuse. It is not really abuse. It is playing the scheme as it is drafted. The only way to abolish such abuses is to phase the scheme. I believe that there is an Amendment down which would provide that a certain amount of the capital sum which is paid should be phased over a period of months. I hope that the Minister will quickly examine the whole question of anomaly, because any scheme which is ridden with anomalies is open to suspicion by those who do not get advantage from it as against those who do. It cuts at the very root of the objectives of securing mobility of labour and giving help where there is need.
      Many of the payments which have been made have not been made on the basis of need but on the basis of the advantage accruing to an employer from making a payment to an individual because it suited the employer at that time, although it had nothing to do with the individual's needs. In certain cases employers thought that payments could be justified because advantage would accrue to the employers, perhaps because they intended to re-employ the recipients, or perhaps because they had younger men coming on.
      Mr. Ridley: The Under-Secretary's reply was very weak. He did not meet the economic case which I put. He simply made a few offensive remarks about hon. Gentlemen who did not raise this matter on the last occasion. The Under-Secretary should address himself to the argument instead of trying to bamboozle us with many words which added up to a very weak case.
      The hon. Gentleman said, first, that there was no harm in employers being asked to pay more. The share which employers will have to pay is being doubled. The hon. Gentleman justified this on the ground that employers got much of it back in Corporation Tax. The private employer who employs people out of his own income cannot make a charge against Income Tax for redundancy payments. It will hit very hard small employers and employers who are not companies or corporations. That is one social effect which the Under-Secretary should consider.
      Sir H. Harrison: I understood the Under-Secretary's reply to mean that the private employer could set this payment against his own private Income Tax.
      Mr. Hattersley Mr. Hattersley indicated assent.
      Mr. Ridley: If he can set against his Income Tax the wages he is paying, he can obviously set this payment against Income Tax. If he cannot set against Income Tax the wages he is paying, presumably he cannot set this payment against Income Tax. I am thinking of people who employ housekeepers, cooks or other such people, and who may have to do so for perfectly good reasons. They will find this a great burden if they have to pay double their share out of their taxed income.
      The Under-Secretary went on to adduce the extraordinary argument that the Fund would not come out of deficit quickly enough if the Amendment were accepted. He did not address himself to my point that if the contribution were increased the Fund would be brought out of deficit. His reason for not wanting the deficit to remain is that it would be inflationary and this would be bad for money supply. The hon. Gentleman then argued that if the contribution were increased it would be bad because it

      1153
      would create a pool of industry's money which was not being employed—that is, it would be deflationary. The hon. Gentleman is trying to have the argument both ways. If he complains about the Fund's being in deficit having inflationary effects, he should welcome the Fund's being in surplus having deflationary effects.
      Further, the Under-Secretary must deal with the argument that we must encourage people to declare redundancies, for the very best economic reasons that we must secure a greater turn-round of labour, aid the decline of industries which should decline, and aid the rationalisation of plants that should be rationalised. This afternoon's work will have a big deterrent effect upon employers, who are sluggish enough as it is about modernising their factories and improving their manning schedules.
      I believe that the case for the Amendment stands unchallenged by anything that the Under-Secretary said.
      Mr. Joel Barnett: I want to talk not about the general situation, but about one or two anomalies. My first point concerns companies which go into liquidation, or which are in the process of doing so, or which are nearing that stage. My hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) referred to this point. If they go into liquidation, and have not sufficient funds to make their redundancy payments, the Fund must do so. It frequently happens in such cases that another company takes over the bankrupt company, in which case there is no redundancy and the same company continues in being, the company which does the taking over buying from the existing shareholders at a price which takes account of the acquired company's finances.
      Another way in which it can be done is for a completely different company to be formed. It buys the business, including the tax losses which go with it. Then the old company does into liquidation and the workers do not lose their jobs but stay in the same building and work for a new company under a different name. All those workers receive redundancy pay, and I believe that this is completely against what the Act intended. I know from my professional experience that this
      1154
      happens, and I should be interested to know if it happens on a much grander scale and what the Minister plans to do to prevent this from happening in future.
      My second point concerns a recent case which occurred in the shipbuilding industry and which went directly against the intention of the Act. In this case it was clearly in the interests of the economy, of the industry, and of the company concerned from a productivity point of view, that a worker should do a particular job. On appeal, it was held that the man was really redundant because a totally different job was being offered him. But we cannot leave it at that.
      I should be interested to know what my hon. Friend proposes to do to prevent these actions, which, clearly, are directly contrary to the purposes of the Act.
      5.0 p.m.
      Mr. David Mitchell: If the Amendment were carried, a firm facing redundancies would not have to pay so much. If the Bill is passed without it, we shall create a growing deterrent to the firm which should be making workers available to other firms from doing so. One of the main difficultes about the country's labour problems is a shortage of labour in the right places at the right time. It is, therefore, very much to the nation's advantage that labour should not be tied up in firms where it should be made redundant and moved on.
      I came across this weekend the case of two factories owned by the same company, five miles apart. One was sold to another company and the vendor asked some of its workers to work at the other factory. They agreed to do so. As a result, those who had moved, with all the problems of travelling five miles across country, with not particularly good transport, received no payment, while those who stayed doing the same job as they had done for the last 30 years suddenly found, to their absolute astonishment, that, at the end of the week, they received a great big bundle of money which they had never expected. Yet they were doing the same job, pulling the same handles and pushing the same pedals.
      This was manna from heaven, the glory of this Government. But is it in the country's interest? I ask the Under-Secretary to look more closely at this matter.
      Mr. Scott: Three points require a different answer from that which the Under-Secretary has so far given. First, he said that, because of the Bill, employers would have to think more carefully about redundancies, which means that the Bill's impact on mobility of labour will be diminished and it will not be so effective as it has been hitherto. The hon. Gentleman, who has been trying to have this both ways, must recognise this. By accepting our Amendments, he would mitigate the impact of the need to alter the scheme in this way.
      Secondly, the hon. Gentleman said how little this would cost employers. Every time the Government bring forward an additional tax or levy, they say how little extra it will add to industry's burden, but the burden, particularly on the small firm, is becoming intolerable.
      Finally, the hon. Gentleman should be reminded that the fact that the Fund is in deficit is due above all to the Government's inability to forecast the demands. Its indebtedness at the moment is their reponsibilty and it is wrong to bring forward a proposal which will not simply stabilise the Fund, but will ask industry to find money to repay past debts at the rate of £9 million a year.
      Mr. Hattersley: My hon. Friend the Member for Heywood and Royton (Mr. Barnett) asked about the liabilities of the Fund to insolvent firms. I am advised that, during 1967–68, the Fund, which is directly responsible for redundancy payments to individuals made redundant but who do not receive the payment because their parent company is bankrupt, faced a total liability of £2½ million. This is a substantial sum, amounting to 7 or 8 per cent. of the total rebates to employers of £37½ million.
      Mr. Barnett: How many companies?
      Mr. Hattersley: That information is not readily available, but I will try to let both my hon. Friends know it. I can justify these payments—I suspect that my hon. Friends share my view—in terms of social justice rather than economic mobility. They are the entitlement of redundant men, irrespective of our feelings about their parent companies' willingness or ability to meet their liabilities.
      My hon. Friend also asked about companies going into liquidation and being
      1156
      taken over, and about employees still doing virtually the same job but under the new company, I am advised that, if they are continuing in the same job under the same conditions and on the same basis, they are not entitled to redundancy payments, but I know that, in this area of transfer from one ownership to another, there are anomalies, some of which have been drawn to our attention and many of which we know about from our own experience.
      When liquidation was not the issue, but change of ownership, we feared that this would happen when farms changed hands, but a High Court ruling absolved us of responsibility for that anomaly. We also thought that it might happen when a television franchise moved from one company to another. That anomaly persists. There are anomalies and, as part of our study of them, we want to do our best to identify and eradicate them. But, generally, continuation of employment on the same basis and conditions does not, simply because of change of ownership, entitle someone to redundancy payments.
      On the other hand, of course, the offer of another job some miles away from the original place of employment may do so, because the rules of the scheme say that the alternative offer must be reasonable and it is up to the industrial tribunals to interpret what "reasonable" means in that context. Interpreting what is reasonable is very difficult, as anyone who has heard this debate will confirm. It is not always a job which the tribunals do to universal satisfaction, but it is their task, imposed on them by the House and the Government, to determine what is reasonable alternative employment. Sometimes, the distance of that employment from the original place of work is crucial.
      I was asked what would happen if, on the presumption that we had been overcautious in our treatment—
      Mr. Barnett: Will my hon. Friend deal with the shipbuilding case?
      Mr. Hattersley: My hon. Friend will have to let me look at that in more detail and let him know our conclusions later. He knows the difficulties of commenting on and judging it at this stage. It is right to draw our attention to it, but I will comment on it later. I would much

      1157
      rather turn to the point about the possibilities of surplus on the Fund.
      Mr. David Mitchell: Does the hon. Gentleman intend to say something about the man who is carrying on the same job and suddenly receives manna from heaven?
      Mr. Hattersley: I thought that I had done so. I do not like the hon. Gentleman's description, "manna from heaven", or his phrase, "carrying on the same job". I sought at least to deal with the situation in which a company changes hands. Perhaps the hon. Gentleman will be comforted by repetition. I will tell him again that, by and large, redundancy payments are not made or received in such circumstances but that there are anomalies which we are looking at and intend to rectify. If that meets the hon. Gentleman's "manna from heaven" point, I am glad.
      I am particularly anxious to meet the point put by the hon. Member for Paddington, South (Mr. Scott) about a possible surplus in the Fund. I repeat that, by solving the deficit problem with the formula we proposed—that is, by increasing the individual company's contribution rather than by increasing the general levy—we are less likely to have a large deficit on the Fund. But, if I assume that the hon. Gentleman is right and a surplus is possible, I would point out that my speech earlier was intended to convey that we have no wish to run a substantial and continuous surplus either.
      From time to time, there is bound to be a surplus if the Fund is properly managed. It is intended to average out between periods of large payments and periods of small payments. My right hon. Friend wrote to the C.B.I. on 29th July making it clear that, if there were such a substantial surplus, she would regard it as her duty to examine again the rate of levy in order to ensure that the surplus did not simply continue and grow.
      I have been asked to make comments on three specific points. The hon. Member for Paddington, South referred to my suggestion that one of the objectives of the Bill was to get companies to think more carefully about redundancies. I do not withdraw from that hope one iota. One of the objectives is indeed to make
      1158
      them think more carefully about redundancies and to be less enthusiastic than in the past to make older men redundant. It would be out of order to deal at length with the tendency over the last three years for older men, the recipients of larger redundancy pay, to form an increasing proportion of those made redundant. One of the objectives of the Bill is to make companies think twice before they contribute to that undesirable process.
      The second point is how little or how much this is going to cost employers. We are faced with three alternatives. The first is to do what the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) advocates consistently and rationally—that the deficit on the Fund should be financed by a larger general contribution. I reject that solution, although it is a cogent one. The second solution is that we should increase the individual commitment of the individual company and reduce the rebate from the Fund. The third and only other alternative is that there should be a substantial alteration to the level of payments received by the individual employees.
      I reject the first proposal, advocate the second and overwhelmingly reject the third. One cannot have it each way. One must decide which way one believes the redundancy payments scheme should be put into balance.
      The hon. Member urged me to remember that the deficit on the Fund is the Government's responsibility and that industry has now to make good what he described as our miscalculation. I ask him again to consider the nature of the Fund, to realise that it is industry's fund, contributed to by industry in two different ways. I urge him to reflect also on the proposition that I made on Second Reading—that, had we been entirely precise in the estimate of outgoings from the Fund, the total bill for industry either in the form of levy or of direct contributions to redundancy payments, would have been exactly the same.
      Our miscalculation, if that is what it was, has not caused industry, as a whole, to pay an extra penny but, indeed, to pay rather less than it would otherwise have done, because it has been financed by £17 million worth of borrowing. Had we had the calculation right from the

      1159
      word "go", industry would have made not only the payments it has made but the £17 million as well. If the Amendment is moved because it is claimed that our miscalculation has somehow caused industry extra expenditure, then the argument behind it is misconceived and misunderstands
      the nature of the Fund. I must again ask my right hon. and hon. Friends to reject it.
      Question put, That the Amendment be made:—
      The Committee divided: Ayes 152, Noes 195.

      Division No. 61.]

      AYES

      [5.15 p.m.

      Alison, Michael (Barkston Ash)

      Grimond, Rt. Hn. J.

      Peel, John

      Allason, James (Hemel Hempstead)

      Gurden, Harold

      Percival, Ian

      Astor, John

      Hall, John (Wycombe)

      Peyton, John

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

      Hall-Davis, A. G. F.

      Powell, Rt. Hn. J. Enoch

      Baker, Kenneth (Acton)

      Harris, Frederic (Croydon, N. W.)

      Price, David (Eastleigh)

      Balniel, Lord

      Harrison, Col. Sir Harwood (Eye)

      Prior, J. M. L.

      Barber, Rt. Hn. Anthony

      Harvey, Sir Arthur Vere

      Pym, Francis

      Bell, Ronald

      Hawkins, Paul

      Ramsden, Rt. Hn. James

      Bennett, Sir Frederic (Torquay)

      Heath, Rt. Hn. Edward

      Renton, Rt. Hn. Sir David

      Bessell, Peter

      Higgins, Terence L.

      Rhys Williams, Sir Brandon

      Bitten, John

      Hill, J. E. B.

      Ridley, Hn. Nicholas

      Biggs-Davison, John

      Holland, Philip

      Rossi, Hugh (Hornsey)

      Black, Sir Cyril

      Hooson, Emlyn

      Royle, Anthony

      Blaker, Peter

      Hordern, Peter

      Russell, sir Ronald

      Boardman, Tom (Leicester, S. W.)

      Hornby, Richard

      St. John-Stevas, Norman

      Boyd-Carpenter, Rt. Hn. John

      Howell, David (Guildford)

      Scott, Nicholas

      Braine, Bernard

      Hunt, John

      Brewis, John

      Jennings, J. C. (Burton)

      Scott-Hopkins, James

      Bromley-Davenport, Lt. -Col. Sir Walter

      Johnson Smith, G. (E. Grinstead)

      Silvester, Frederick

      Jopling, Michael

      Smith, Dudley (W'wick & L'mington)

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

      Kaberry, Sir Donald

      Smith, John (London & W'minster)

      Bullus, Sir Eric

      Kershaw, Anthony

      Speed, Keith

      Campbell, B. (Oldham, W.)

      Kirk, Peter

      Steel, David (Roxburgh)

      Campbell, Gordon (Moray & Nairn)

      Knight, Mrs. Jill

      Stodart, Anthony

      Carlisle, Mark

      Lancaster, Col. C. G.

      Stoddart-Scott, Col. Sir M.

      Carr, Rt. Hn. Robert

      Lane, David

      Summers, Sir Spencer

      Channon, H. P. C.

      Langford-Holt, Sir John

      Tapsell, Peter

      Clegg, Walter

      Legge-Bourke, Sir Harry

      Taylor, Sir Charles (Eastbourne)

      Cooke, Robert

      Lewis, Kenneth (Rutland)

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

      Corfield, F. V.

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

      Taylor, Frank (Moss Side)

      Costain, A. P.

      Lubbock, Eric

      Temple, John M.

      Craddock, Sir Beresford (Spelthorne)

      Mackenzie, Alasdair (Ross&Crom'ty)

      Thatcher, Mrs. Margaret

      Crouch, David

      Maclean, Sir Fitzroy

      Thorpe, Rt. Hn. Jeremy

      Cunningham, Sir Knox

      Mawby, Ray

      van Straubenzee, W. R.

      Dalkeith, Earl of

      Maxwell-Hyslop, R. J.

      Vaughan-Morgan, Rt. Hn. Sir John

      Davidson, James (Aberdeenshire, W.)

      Mills, Peter (Torrington)

      Waddington, David

      Dodds-Parker, Douglas

      Mills, Straiten (Belfast, N.)

      Wainwright, Richard (Come Valley)

      Drayson, G. B.

      Mitchell, David (Basingstoke)

      Walker-Smith, Rt. Hn. Sir Derek

      Eden, Sir John

      More, Jasper

      Wall, Patrick

      Elliot, Capt. Walter (Carshalton)

      Morgan, Geraint (Denbigh)

      Walters, Dennis

      Eyre, Reginald

      Mott-Radclyffe, Sir Charles

      Ward, Dame Irene

      Farr, John

      Munro-Lucas-Tooth, Sir Hugh

      Weatherill, Bernard

      Fletcher-Cooke, Charles

      Murton, Oscar

      Whitelaw, Rt. Hn. William

      Foster, Sir John

      Williams, Donald (Dudley)

      G'bson-Watt, David

      Nabarro, Sir Gerald

      Wilson, Geoffrey (Truro)

      Cilmour, Ian (Norfolk, C.)

      Nicholls, Sir Harmar

      Wolrige-Gordon, Patrick

      Clover, Sir Douglas

      Noble, Rt. Hn. Michael

      Wood, Rt. Hn. Richard

      Godber, Rt. Hn. J. B.

      Onslow, Cranley

      Worsley, Marcus

      Goodhew, Victor

      Osborne, Sir Cyril (Louth)

      Younger, Hn. George

      Cower, Raymond

      Page, Graham (Crosby)

      Grant, Anthony

      Page, John (Harrow, W.)

      TELLERS FOR THE AYES:

      Grant-Ferris, R.

      Pardoe, John

      Mr. Timothy Kitson and

      Gresham Cooke, R.

      Pearson, Sir Frank (Clitheroe)

      Mr. Hector Monro.

      NOES

      Albu, Austen

      Brooks, Edwin

      Davies, G. Elfed (Rhondda, E.)

      Ashley, Jack

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

      Davies, Dr. Ernest (Stretford)

      Ashton, Joe (Bassetlaw)

      Buchan, Norman

      Davies, Harold (Leek)

      Atkinson, Norman (Tottenham)

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

      Davies, Ifor (Cower)

      Barnett, Joel

      Cant, R. B.

      Davies, S. O. (Merthyr)

      Bence, Cyril

      Carmichael, Neil

      Dell, Edmund

      Bennett, James (G'gow, Bridgeton)

      Chapman, Donald

      Dempsey, James

      Bidwell, Sydney

      Coleman, Donald

      Diamond, Rt. Hn. John

      Bishop, E. S.

      Concannon, J. D.

      Dickens, James

      Blackburn, F.

      Conlan, Bernard

      Doig, Peter

      Blenkinsop, Arthur

      Crossman, Rt. Hn. Richard

      Driberg, Tom

      Boardman, H. (Leigh)

      Cullen, Mrs. Alice

      Dunnett, Jack

      Booth, Albert

      Dalyell, Tam

      Dunwoody, Mrs. Gwyneth (Exeter)

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

      Kerr, Russell (Feltham)

      Parkyn, Brian (Bedford)

      Eadie, Alex

      Lawson, George

      Pearson, Arthur (Pontypridd)

      Edwards, William (Merioneth)

      Ledger, Ron

      Peart, Rt. Hn. Fred

      Ellis, John

      Lee, Rt. Hn. Frederick (Newton)

      Pentland, Norman

      English, Michael

      Lee, John (Reading)

      Perry, Ernest G. (Battersea, S.)

      Evans, Fred (Caerphilly)

      Lestor, Miss Joan

      Perry, George H. (Nottingham, S.)

      Evans, Cwynfor (C'marthen)

      Lewis, Arthur (W. Ham, N.)

      Price, Thomas (Westhoughton)

      Ewing, Mrs. Winifred

      Lewis, Ron (Carlisle)

      Price, William (Rugby)

      Faulds, Andrew

      Upton, Marcus

      Probert, Arthur

      Finch, Harold

      Lomas, Kenneth

      Rankin, John

      Fletcher, Raymond (Ilkeston)

      Loughlin, Charles

      Rees, Merlyn

      Foot, Michael (Ebbw Vale)

      Luard, Evan

      Reynolds, Rt. Hn. G. W.

      Ford, Ben

      McBride, Neil

      Rhodes, Geoffrey

      Forrester, John

      McCann, John

      Richard, Ivor

      Fowler, Gerry

      MacColl, James

      Roberts, Albert (Normanton)

      Fraser, John (Norwood)

      MacDermot, Niall

      Robertson, John (Paisley)

      Freeson, Reginald

      Macdonald, A. H.

      Rodgers, William (Stockton)

      Galpern, Sir Myer

      McGuire, Michael

      Roebuck, Roy

      Gardner, Tony

      McKay, Mrs. Margaret

      Ross, Rt. Hn. William

      Garrett, W. E.

      Maclennan, Robert

      Rowlands, E.

      Ginsburg, David

      McMillan, Tom (Glasgow, C.)

      Sheldon, Robert

      Gray, Dr. Hugh (Yarmouth)

      McNamara, J. Kevin

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

      Greenwood, Rt. Hn, Anthony

      Mahon, Peter (Preston, S.)

      Silkin, Rt. Hn. John (Deptford)

      Gregory, Arnold

      Manuel, Archie

      Silkin, Hn. S. C. (Dulwich)

      Grey, Charles (Durham)

      Mapp, Charles

      Silverman, Julius

      Griffiths, Rt. Hn. James (Llanelly)

      Marks, Kenneth

      Small, William

      Hamilton, William (Fife, W.)

      Maxwell, Robert

      Spriggs, Leslie

      Hamling, William

      Mayhew, Christopher

      Steele, Thomas (Dunbartonshire, W.)

      Harper, Joseph

      Mendelson, John

      Summerskill, Hn. Dr. Shirley

      Harrison, Walter (Wakefield)

      Mikardo, Ian

      Taverne, Dick

      Hart, Rt. Hn. Judith

      Miller, Dr. M. S.

      Thomas, Rt. Hn. George

      Hattersley, Roy

      Thornton, Ernest

      Hazell, Bert

      Milne, Edward (Blyth)

      Tinn, James

      Molloy, William

      Heffer, Eric S.

      Moonman, Eric

      Varley, Eric G.

      Henig, Stanley

      Morgan, Elystan (Cardiganshire)

      Wainwright, Edwin (Dearne Valley)

      Herbison, Rt. Hn. Margaret

      Morris, Alfred (Wythenshawe)

      Walker, Harold (Doncaster)

      Hobden, Dennis

      Morris, Charles R. (Openshaw)

      Watkins, David (Consett)

      Hooley, Frank

      Murray, Albert

      Watkins, Tudor (Brecon & Radnor)

      Homer, John

      Newens, Stan

      Wellbeloved, James

      Howarth, Harry (Wellingborough)

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

      Wells, William (Walsall, N.)

      Hoy, James

      Ogden, Eric

      Whitaker, Ben

      Huckfield, Leslie

      Wilkins, W. A.

      Hughes, Emrys (Ayrshire, S.)

      O'Malley, Brian

      Williams, Alan Lee (Hornchurch)

      Hughes, Hector (Aberdeen, N.)

      Orbach, Maurice

      Williams, Clifford (Abertillery)

      Hughes, Roy (Newport)

      Orme, Stanley

      Willis, Rt. Hn. George

      Hunter, Adam

      Oswald, Thomas

      Wilson, William (Coventry, S.)

      Hynd, John

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

      Winnick, David

      Johnson, Carol (Lewisham, S.)

      Owen, Will (Morpeth)

      Woodburn, Rt. Hn. A.

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

      Padley, Walter

      Woof, Robert

      Jones, Dan (Burnley)

      Page, Derek (King's Lynn)

      Judd, Frank

      Palmer, Arthur

      TELLERS FOR THE NOES:

      Kelley, Richard

      Pannell, Rt. Hn. Charles

      Mr. Alan Fitch and

      Kenyon, Clifford

      Park, Trevor

      Mr. loan L. Evans.

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

      Parker, John (Dagenham)

      Mr. John Page: I beg to move Amendment No. 4, in page 1, line 13, at end insert:
      (2) Subsection (1) of this section shall not have effect where an employer employs less than ten employees.
      When, at half-past one this morning, I was turning over the leaves of the bound volume of the Committee stage of the original Bill, I was amazed to find that the Under-Secretary of State was not then the anchor man of the Ministry, and that it was not until later that he joined the right hon. Member for Southwark (Mr. Gunter) at the then Ministry of Labour, of blessed memory. Ever since he has been the anchor man of the Ministry, the great explainer of the reasons why, once every six months or so, the Redundancy Fund goes wrong.
      1162
      This afternoon there is an opportunity for the hon. Gentleman to take a real step forward in making this new Bill and the effect that it will have on the redundancy scheme much more acceptable. The object of this Amendment is to leave the position as it is now for the man employing fewer than 10 persons, even though now, by the previous Vote, we have to accept that changes will be made in the scheme as a whole.
      It was during the last 20 minutes of Committee in 1965 that a Government Amendment was discussed, altering the scheme from a half and half payment by individual companies and the Fund, to a one-third and two-thirds basis in general. This was after much discussion and great pressure and pleading on the part of my right hon. Friend the Member

      1163
      for Grantham (Mr. Godber), who pointed out that the 50–50 arrangement meant that the full impact of the cost of the scheme would fall on declining industries first, and secondly, and most important, on the small employer. The then Minister of Labour accepted this view, and it was for this specific reason that the change was made to one-third and two-thirds.
      [Mr. SYDNEY IRVING in the Chair]
      5.30 p.m.
      We so often in our debates forget the small employer; we talk about I.C.I. B.L.M.H., oil companies and so on and forget the small contractor, the small shopkeeper and the small businessman. I do not believe that the hon. Gentleman can contradict me when I say that a large number of the bankruptcies which caused the Fund to pay out £2½ million last year were of small employers. This is an apposite example of the point which I am laboriously trying to make.
      We have frequently asked for more information about where redundancies take place, and we must wait for another nine or ten months before the Minister will tell us the size of the firms in which redundancies occur and the percentage of employees in each firm who have been declared redundant. The hon. Gentleman is not sure that he will do that, but I am informed by the Library that his office has promised the information within the year, which is a long time to wait. We must, therefore, stick to supposition. I am sure that the Minister cannot deny that redundancies cause a greater impact on small companies than on large companies. If one employee in a firm employing four people is declared redundant, that represents a 25 per cent. redundancy rate. An employer employing 20,000 people would have to declare redundant 5,000 employees to reach the same proportion.
      The reason why the change was made from half and half to one-third and two-thirds was mainly to protect the interests of the small employer, and that was on the evidence of 1965. There is further evidence in The Times this morning, which reports a pact on redundancy made in France, and I wonder whether this has been drawn to the attention of the hon. Gentleman. It is a relief that
      1164
      this refers to France and not to Sweden; it is a nice change to be able to get away from Scandinavia for all the examples of progress in this area which we have so often considered. The agreement made yesterday in France between employers' organisations and trade unions was as follows: for mergers or rationalisation, three months' notice of dismissal would be given; for compulsory closure or winding up of a firm for lack of orders, it would be eight days if fewer than 100 employees were involved, and 15 days if there were more. Here again, differentiation is made between small employers employing small numbers and large employers employing large numbers, and this is worthy of consideration.
      Who are the small employers whose interests we are considering in this Amendment? One of the large groups of small employers are the small farmers. A previous candidate for my seat in Harrow, West was Sir Alan Herbert, a man whose originality and example we all wish to emulate, particularly the fact that he sold his election address, from which I will quote, for 1s. to his potential constituents. In this address he said:
      "Agriculture. I know nothing about agriculture."
      I am in the same position, but I hope that my hon. and gallant Friend the Member for Eye (Sir H. Harrison) will catch your eye, Mr. Gourlay, and explain how the farming community and the small farmer would be affected. All one can tell from statistics is that there are a great many small farmers who employ one or two farm workers whose income is far below that of the national average wage of those employed in productive industry.
      A small shopkeeper who, through illness, had to give up his business and declare redundant one or two of his employees, who may have been with him for many years, would under the Bill have to pay 50 per cent. of the redundancy payment. I beg the Government to realise what a great emergency this would be for him.
      Let us also take, for example, a plumber, who may die while running a small company. Small plumbers and small builders work to narrow margins, with grossly inadequate working capital. It will be within the experience of many

      1165
      hon. Members who have had work done in their homes by a small builder or plumber that on Friday morning he will ask for something on account for the work which has already been done so that he may pay his employees. This happened to me a fortnight ago. Such a man, or his widow, will not be able to shoulder the extra burden.
      Finally, let us consider the position of an elderly vicar and his wife who for many years have employed a housekeeper. When the ageing man retires, they find it impossible to keep on their housekeeper. Surely it would be the wish of the House and of those other companies which have paid in to the Fund to ensure that this new burden is not placed upon people just when they are least able to bear the extra expense.
      The Minister has said that the average payment for redundancy is £250. But averages are not very helpful, and many an intrepid explorer has drowned in a river with an average depth of two feet. In the same way, there are many small employers who will drown when the level of the redundancy payments that they have to make is raised by the amount suggested.
      If this Amendment is accepted, I cannot believe that the exclusion of those employing fewer than 10 people will endanger the viability of the Fund under the new Gladstonian regime of the Government. However, if the hon. Gentleman cannot accept the figure of 10, let us have a go at five. Let us exclude employers who employ five or fewer, if he cannot give in to 10 or fewer. Let his heart of stone be changed to one of warmth and outgoing goodness. Let him accept the spirit of the Amendment because, by doing that, he will be able to leave the Chamber today feeling that he has done a good deed in ensuring the greater success of this Measure and the happiness of many.
      I hope very much that the hon. Gentleman will rise soon to say that he accepts the Amendment.
      Sir H. Harrison: I rise to support my hon. Friend the Member for Harrow, West (Mr. John Page), though I should have preferred to see the insertion of the figure of 25 employees. However, I am sure that my right hon. Friend the Member for Mitcham (Mr. R. Carr), with his
      1166
      great knowledge of these matters, has taken soundings through the usual channels and knows that whereas 25 will not be acceptable, 10 may be. I was a little alarmed, however, to hear my hon. Friend come down as low as five in his bidding.
      I suppose that in my constituency there are as many small businesses of all sorts as in most. In that connection, I want to correct my hon. Friend on one minor point. He spoke about small fanners. In my part of the world, a farmer employing two or three men today is quite big. A farmer employing eight or nine men is extremely big. However, we have to consider not only small farmers, because there are a large number of young men who have set themselves up as contractors to help small farmers and employ five, six or even eight men. In addition, there are still one or two small corn merchants, and in the larger villages of a scattered constituency like mine one finds many shopkeepers who employ three, four or five people.
      5.45 p.m.
      The Government have hit small businesses harder than they realise. It is the small business which has borne the brunt of the Government's anti-private enterprise legislation. The big firms can sustain the attacks made upon them, but I do not think the smaller firms can.
      In my view, the reason why the figure of 10 has been chosen is that it is probably businesses employing fewer than that number which cannot afford full-time secretaries. Farmers, shopkeepers and contractors in that position do their own book work, assuming that their wives do not help. Whenever I talk to such people, my advice to them always is to pay the greatest attention to keeping their accounts and answering Government forms. These are the very people who are so keen to get out and seek new business that they tend to neglect this aspect.
      In recent weeks, the Minister has been having a battle about one extra charge which is to be placed upon the shoulders of our small farmers. It would be a nice gesture if the hon. Gentleman could give way on this Amendment, in view of that.
      My hon. Friend mentioned the problems of the private employer, but I do not think that his example of an elderly vicar was a very apt one, especially when

      1167
      one considers what we pay our vicars. I much prefer the word "rector". I have always thought it to be a better word. In any event, we do not pay them anywhere near the remuneration which would enable them to afford to employ housekeepers. A better example might have been a richer retired widower who employs a housekeeper. The fact remains that my hon. Friend's point is a very real one to some people.
      I want to add my support to what my hon. Friend said on behalf of our farmers, who are still producing an enormous amount of food, on behalf of young men starting in business as contractors or garage proprietors, who are so essential in keeping our farming industry going, and on behalf of our small shopkeepers. It must be remembered that while the Government attack small businesses, it is from small businesses that flourishing companies are built. Morris Motors and Dunlop are but two examples.
      The Government are hitting too much at the enterprise of those who run smaller businesses, and many younger members of our community find it less and less worth while to go into business on their own. I hope that the hon. Gentleman has discussed the matter with his right hon. Friend and is in a position to give way on this point. It would be a useful and encouraging concession to a very hard working section of our society.
      Mr. Ridley: It is the fact that the Government took the wrong decision on the last Amendment which prompts me to support this one. If contributions had been increased instead of the payments of individual employers, there would not be this problem facing the small employer.
      I would endorse what my hon. and gallant Friend the Member for Eye (Sir H. Harrison) said, and I would add only a word on behalf of our farmers and small shopkeepers, because they are the people who will suffer most of all.
      The problem is that so often these people retire at the end of a long working life, the business comes to an end, and they have to declare their workers redundant. The shop or firm employing two, four or six people often comes to an end in that way. Therefore, the cost
      1168
      of redundancy will fall at the same time on the whole work force just as a man is retiring.
      The Under-Secretary made some play about taxation on the last Amendment. But surely in this case the farmer's or shopkeeper's income will not be enough to cover his liability for the employer's contribution to the redundancy payments in one year's taxable income. This is already a serious problem.
      I have a letter here from a Mr. Harold Brown, a farmer in Huntingdonshire, who says:
      "We had decided to retire this year, and as the average length of service of our employees is nearly 40 years I was only too pleased to budget for a contribution of two-ninths towards their redundancy payments. Under this Bill the employer's contribution will be more than doubled and this must be a great hardship to the small businessman on the point of retirement."
      I am sure that Mr. Harold Brown is typical. This bites harder than on the larger industrial firm or the corporate company because all the employees will be made redundant at the same time on the expiration of the life of the business. In many cases the shop or the farm will be purchased by someone else and there will be continuity of employment for the employees. Therefore, we have genuine hardship here.
      The Under-Secretary may not want to make an exception about the number of employees, be it 25, 10 or five. I do not wish to enter the bidding, but I see objections to defining the small employer in terms of the numbers that he employs. However, there is a point that needs to be looked into to see whether some way can be found of getting special help for the people who will be adversely affected. Representing an agricultural constituency, I can assure the hon. Gentleman that there is widespread alarm about the proposals in the Bill. I think that this is a genuine point to which he should address himself in an endeavour to clear it up.
      Mr. Kenneth Lewis: I support my hon. Friends in pressing the Amendment. It will obviously not have any effect on a nationalised industry or any other great corporation, but it will be helpful to the man employing a small number of people, and, more important, it will be of advantage to the employee in a small business.

      1169
      I do not want to press the Under-Secretary unduly about farmers, although they are important in this connection. However, if he has much more trouble from the farmers, after the trouble with the training levy, he will begin to wonder in which Ministry he is working. On top of all the other things a farmer has to bear today—a high Bank Rate with which he must contend to finance his business, the training levy and all the rest—he finds it difficult to budget for redundancy payments which may be involved where an employee has been with him for many years. A good deal of advantage is gained by small businesses in particular by retaining employees for many years. A case can be made out for getting mobility of labour amongst the larger firms, but amongst the smaller firms the contribution which they make to the economy of the country as a whole largely depends on retaining one or two men of good skill over a long period and having the advantage of their services.
      We are not asking that the small businesses should be absolved from payment altogether. This was settled long ago in the Act. All we are asking is that they should be exempt from the Bill by not having to contribute the increased amount.
      As I say, I think that the Amendment is of advantage not only to the employer but to the employee. I have known a number of cases where a small employer has tried to avoid making a redundancy payment. He can avoid making a redundancy payment in a number of ways. One case which came to my attention concerned a man who had been away from work for a period through sickness. When he went back to work he found that his position had been filled and the employer simply said that he had not the kind of work available for this man that he was previously doing, and so the man got the sack. This was a very hard case. Because it was a small business the employee had not been given the information which indicated his full rights under the Act. He, therefore, did not appeal in time and got no payment whatsoever. I believe that the advantage of assisting the employer in this case will also assist the employee. Because the small business is given this kind of exemption it will be less inclined to try to dodge the payments. The small business employing a few people finds these burdens
      1170
      particularly hard. I hope, therefore, that the Minister will think in terms of assisting both the small business and employees by accepting the Amendment.
      Mr. Cyril Bence: I have a great deal of sympathy for the view expressed by hon. Gentlemen opposite about the small business, but I am sorry that they have limited their sympathy to the man employing five, 10 or 25 people. My experience in the industrial and agricultural world is that some of the problems involved in the type of legislation that we have had over the last 20 to 30 years affect the man employing between 50 and 200 or 300 men. The small industrial or commercial enterprise employing between 50 and 200 men is finding itself in a highly competitive world. Liquidity for such organisations is very difficult. Bank credit is not so easy to come by, and they have a hard life. This may be for technological reasons. I do not think it is for Government reasons.
      I believe that the Government are as sympathetic as any Government have been to the small entrepreneur. We are living in a world where the small entrepreneur is being driven out by the large one. I could mention cases over the last 40 years where the large entrepreneur has crushed, by all kinds of methods, the small entrepreneur. I could give instance after instance where the small business has been crushed not by actions of the Government but by actions of the large entrepreneur. The most famous one is the Birmingham artificial jewellery industry. I do not want to name the companies concerned, but they were crushed between 1926 and 1936. In a decade those small jewellery manufacturers were smashed, not by the Governments of the period—they had nothing to do with it—but by some very large entrepreneurs and distributors of artificial jewellery.
      This is a continuing process. With all the sympathy in the world, I do not think that acceptance of the Amendment will give one iota of benefit to the small industrial concern employing between 25 and 200 men. Other factors in our society could help the small manufacturer. I do not say that no one will benefit. It is an ill wind that blows no good, but I do not think that the Minisster can breach a principle on the basis

      1171
      of doing this for those who employ fewer than ten men, because, as I have said, the hardest hit is the man who is trying to run a small industrial enterprise with between 100 and 300 men.
      6.0 p.m.
      Mr. Hattersley: As one would expect, the hon. Member for Harrow, West (Mr. John Page) quoted three of the best examples that he could possibly create to substantiate his case. Perhaps I might remind the House of the three examples. The first was the widow of a plumber whose company survived only on the advance payment of the eventual settlement. The second was a shopkeeper who, because of death or illness, must dismiss a servant of long standing. The third was a clergyman who must make an elderly retainer redundant. I think the Committee will agree that no matter how diligently the hon. Gentleman searched he could not have found three harder cases than those. I do not diminish their importance because of that, but I say that those cases were properly and carefully constructed to draw the attention of the Committee to what might well happen in the case of an employer of a small number of employees.
      The hon. Gentleman's case was based on the assumption that a small company, or an individual, employed only a few people, and that if one or some of them had to be made redundant it was due to economic difficulties and hardship. That does not conform with the facts. Sometimes it may be true, but, equally, often it may not be true.
      The plumbing contractor may, for instance, be making his plumber redundant because he is planning to move from using traditional methods to mass-produced, factory constructed sanitation systems. The shopkeeper may be changing from his corner shop to a more profitable self-service system. The vicar or the rector may be discharging his servant because he is moving from the vicarage to a bishop's palace. All these things can happen, and if the hon. Gentleman suggests that my hypotheses are wildly improbable, I can only say that I suspect that they are about as improbable or probable as his. The two happen to be at the opposite ends of the spectrum of need and the spectrum of difficulty.
      1172
      The point that I wish to try to make by offering the hon. Gentleman an example diametrically opposed to those he gave is that the problem to which he draws attention is one not of size of units but of circumstances of redundancy. The Committee is sympathetic to those employers who find hardship in making redundancy payments to their employees. But if the House is sympathetic to their needs, it must be borne in mind that if their needs are to be met by sources other than the resources of the employer, it is necessary to decide how that payment is to be made, and how an employer's contribution to his employee's redundancy payment is to be financed.
      To take the examples given by the hon. Gentleman, hon. Members must clearly say that if we wish to make an exception for the plumber who has gone out of business because it is no longer profitable simply because he employs only nine men, we must equally, according to the Amendment, make an exception for the plumber who is changing his business because he is expanding from nine to 90 men. We must also make an exception for the shopkeeper who discharges men not because his is no longer a profitable organisation but because he is becoming more profitable with a smaller labour content.
      The argument should be not about size but about circumstance, and if we are talking about hardship of circumstance, we have to answer two questions. First, what are the criteria of hardship? Secondly, who is to meet the payments made by people in these circumstances? If we support the Amendment, we are in effect saying that as the small employer shall not be required to pay the same proportion of the individual redundancy payment as the larger employer, the difference must be paid for him by the rest of industry.
      Mr. Robert Carr Mr. Robert Carr (Mitcham) indicated assent.
      Mr. Hattersley: The right hon. Gentleman agrees with that concept. I have to tell him that I do not, and that I very much doubt whether industry as a whole agrees with it. I could not suggest that the small company, simply because of its size—I emphasise, not because of hardship—should get a special concession. I

      1173
      do not think that it would be right for small companies to be subsidised by large ones. Nor can I suggest that the payment made to individual employees should be different if they are employees of small companies rather than of large ones. If the subsidy cannot be paid by other companies, and if the payment cannot be changed, the only conclusion that I can draw is that the payment and the rebate must remain the same for companies of all sizes.
      This does not seem to me to be an unduly harsh provision. Nor does it seem to batten unduly on the difficulties and problems of the small companies. They all have the same obligation in terms of industrial efficiency and social equity, and I must ask my hon. Friends to accept that a small company must discharge this obligation, and accept, too, that we must resist the Amendment.
      Mr. R. Carr: I must protest at what I think is a shallow and semantic argument for rejecting the Amendment.
      The hon. Gentleman said that he could not agree that it would be right for a large company in any way to subsidise a small one in a matter of this kind. I cannot help pointing out that there are many respects in which the small company, merely because it is a small company, in effect subsidises large companies. Consider the operation of the Industrial Training Boards. There are many aspects of the grants available under this scheme—for example, grants for management training—which simply are not available to the very small company merely because of its size. That is because it cannot allow its only manager to go on a course, simply because he is the only manager, whereas a large company does, and can, and should allow its managers to go on appropriate courses. This argument about the large company subsidising the small one is extremely narrow and inconclusive, and it really is a matter of degree and not of absolutes.
      The other argument which the hon. Gentleman used was one which I likened to what I was told in the days long ago when I was taught geometry, about proof by reductio ad absurdum. To say that a smaller man may have to declare people redundant because his business is growing in prosperity, or to say that a vicar may have to discharge a retainer
      1174
      because he is moving from his small rectory to the bishop's palace, may, hypothetically, be an argument. I know that my hon. Friend the Member for Harrow, West (Mr. John Page) chose cases at the other extreme, but if we are to consider extreme cases at all, surely we ought in common humanity to consider the unfortunate extremes rather than the fortunate cases, and give benefit to the unfortunate side?
      More important, rather than consider extremes, surely we ought to consider the average overall situation. If a man employs five people and gets rid of two of them, he loses 40 per cent. of his labour force. That is the equivalent of a firm employing 10,000 people getting rid of 4,000 of its labour force. The liability on the small employer to make redundancy payments in respect of two people may seem small if we regard it just as a matter of two people, but if we regard it in terms of 40 per cent. of his labour force we see that a relatively small redundancy in terms of numbers places very much heavier burdens on the really small employer than on the large one.
      I am not without sympathy for extending this definition of "small" upwards, although in principle I do not like the definitions of small or large. Where does one draw the line? I agree therefore that one is only trying to do rough justice, but some rough justice is better than no justice at all. If I am correctly informed, one of the major reasons for having the initial rebate scales at the level they were rather than the level now proposed was simply the problem of the small employer. I believe one of the substantial reasons in the mind of the present Government when bringing forward the 1965 Bill, now the Redundancy Payments Act, and in fixing the old level of rebates was the position of the small employer. All we are asking is that since, because of the position of the Fund, the Government, in their wisdom—or lack of it—are saying that the level of rebate should now be reduced to 50 per cent., we must go back to the initial realisation that this creates a special and greater problem for the small employer.
      We do not like discriminating in principle between small and large employers. But since the conditions which made that lack of discrimination possible—the

      1175
      placing of the level of rebate originally at a level far higher than 50 per cent.—are now being removed, we think common justice requires that the discrimination in favour of the small employer should be introduced.
      I cannot believe that there are any sizeable companies in this country which would object in any substantial way to the very small amount of subsidy that they would be giving if the Amendment were accepted. If one extended it up to the sort of level suggested by the hon. Member for Dunbartonshire, East (Mr. Bence), the position might be different. A firm of 200 or 300 people can be a very real competitor even to the big giants in certain industries. In those
      circumstances, one might get objections in principle from the large companies to subsidising that scale of competitor. There is no substantial company, however, which would object to giving this extra help to the scale of employers suggested in the Amendment.
      I ask the Government to think about this matter again. The consideration which has been given is not really worthy of what it deserves. If the Government will not reconsider the matter, I shall certainly have to ask my right hon. and hon. Friends to divide the Committee.
      Question put, That the Amendment be made:—
      The Committee divided: Ayes 130, Noes, 175.

      Division No. 62.]

      AYES

      [6.13 p.m.

      Alison, Michael (Barkston Ash)

      Gurden, Harold

      Peel, John

      Allason, James (Hemel Hempstead)

      Hall, John (Wycombe)

      Peyton, John

      Astor, John

      Hall-Davis, A. G. F.

      Powell, Rt. Hn. J. Enoch

      Baker, Kenneth (Acton)

      Harris, Frederic (Croydon, N. W.)

      Price, David (Eastleigh)

      Barber, Rt. Hn. Anthony

      Harrison, Col. Sir Harwood (Eye)

      Prior, J. M. L.

      Bell, Ronald

      Harvey, Sir Arthur Vere

      Pym, Francis

      Bennett, Sir Frederic (Torquay)

      Hawkins, Paul

      Ramsden, Rt. Hn. James

      Bessell, Peter

      Heald, Rt. Hn. Sir Lionel

      Rhys Williams, Sir Brandon

      Biffen, John

      Heath, Rt. Hn. Edward

      Ridley, Hn. Nicholas

      Biggs-Davison, John

      Higgins, Terence L.

      Rossi, Hugh (Hornsey)

      Black, Sir Cyril

      Hill, J. E. B.

      Russell, Sir Ronald

      Blaker Peter

      Holland, Philip

      St. John-Stevas, Norman

      Boardman, Tom (Leicester, S. W.)

      Hooson, Emlyn

      Scott, Nicholas

      Boyd-Carpenter, Rt. Hn. John

      Hornby, Richard

      Scott-Hopkins, James

      Braine, Bernard

      Hunt, John

      Sharples, Richard

      Brewis, John

      Jennings, J. C. (Burton)

      Silvester, Frederick

      Bruce-Gardyne, J.

      Johnson Smith, G. (E. Grinstead)

      Smith, Dudley (W'wick & L'mington)

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

      Kaberry, Sir Donald

      Smith, John (London & W'minster)

      Kershaw, Anthony

      Speed, Keith

      Bullus, Sir Eric

      Kirk, Peter

      Steel, David (Roxburgh)

      Campbell, Gordon (Moray & Nairn)

      Knight, Mrs. Jill

      Stodart, Anthony

      Carr, Rt. Hn. Robert

      Lancaster, Col. C. G.

      Stoddart-Scott, Col. Sir M.

      Chichester-Clark, R.

      Lane, David

      Summers, Sir Spencer

      Clegg, Walter

      Lewis, Kenneth (Rutland)

      Tapsell, Peter

      Cooke, Robert

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

      Taylor, Sir Charles (Eastbourne)

      Costain, A. P.

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

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

      Craddock, Sir Beresford (Spelthorne)

      Lubbock, Eric

      Taylor, Frank (Moss Side)

      Crouch, David

      Mackenzie, Alasdair (Ross&Crom'ty)

      Temple, John M.

      Dalkeith, Earl of

      Mawby, Ray

      Thatcher, Mrs. Margaret

      Davidson, James (Aberdeenshire, W.)

      Maxwell-Hyslop, R. J.

      van Straubenzee, W. R.

      Dodds-Parker, Douglas

      Mills, Peter (Torrington)

      Waddington, David

      Drayson, G. B.

      Mills, Stratton (Belfast, N.)

      Wainwright, Richard (Colne Valley)

      Eden, Sir John

      Mitchell, David (Basingstoke)

      Walker-Smith, Rt. Hn. Sir Derek

      Elliot, Capt. Walter (Carshalton)

      More, Jasper

      Wall, Patick

      Eyre, Reginald

      Morgan, Geraint (Denbigh)

      Ward, Dame Irene

      Farr, John

      Mott-Radclyffe, Sir Charles

      Whitlock, William

      Gibson-Watt, David

      Murton, Oscar

      Williams, Donald (Dudley)

      Nicholls, Sir Harmar

      Wilson, Geoffrey (Truro)

      Glover, Sir Douglas

      Noble, Rt. Hn. Michael

      Wolrige-Gordon, Patrick

      Godber, Rr. Hn. J. B.

      Wood, Rt. Hn. Richard

      Goodhew, Victor

      Onslow, Cranley

      Younger, Hn. George

      Cower, Raymond

      Osborne, Sir Cyril (Louth)

      Grant, Anthony

      Page, Graham (Crosby)

      TELLERS FOR THE AYES:

      Grant-Ferris, R.

      Page, John (Harrow, W.)

      Mr. Timothy Kitson and

      Gresham Cooke, R.

      Pardoe, John

      Mr. Bernard Weatherill.

      Grimond, Rt. Hn. J.

      Pearson, Sir Frank (Clitheroe)

      NOES

      Albu, Austen

      Bence, Cyril

      Blenkinsop, Arthur

      Ashley, Jack

      Bennett, James (G'gow, Bridgeton)

      Boardman, H. (Leigh)

      Ashton, Joe (Bassetlaw)

      Bidwell, Sydney

      Booth, Albert

      Atkinson, Norman (Tottenham)

      Bishop, E. S.

      Bray, Dr. Jeremy

      Barnett, Joel

      Blackburn, F.

      Brooks, Edwin

      Buchan, Norman

      Herbison, Rt. Hn. Margaret

      Orbach, Maurice

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

      Hobden, Dennis

      Orme, Stanley

      Callaghan, Rt. Hn. James

      Hooley, Frank

      Oswald, Thomas

      Cant, R. B.

      Horner, John

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

      Carmichael, Neil

      Howarth, Harry (Wellingborough)

      Owen, Will (Morpeth)

      Chapman, Donald

      Howarth, Robert (Bolton, E.)

      Padley, Walter

      Coleman, Donald

      Hoy, James

      Page, Derek (King's Lynn)

      Concannon, J. D.

      Huckfield, Leslie

      Pannell, Rt. Hn. Charles

      Crossman, Rt. Hn. Richard

      Hughes, Emrys (Ayrshire, S.)

      Parker, John (Dagenham)

      Cullen, Mrs. Alice

      Hughes, Roy (Newport)

      Parkyn, Brian (Bedford)

      Dalyell, Tam

      Hunter, Adam

      Pearson, Arthur (Pontypridd)

      Davies, G. Elfed (Rhondda, E.)

      Hynd, John

      Peart, Rt. Hn. Fred

      Davies, Harold (Leek)

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

      Davies, Ifor (Gower)

      Jones, Dan (Burnley)

      Pentland, Norman

      Perry, Ernest G. (Battersea, S.)

      Davies, S. O. (Merthyr)

      Judd, Frank

      Perry, George H. (Nottingham, S.)

      Kelley, Richard

      Dell, Edmund

      Kenyon, Clifford

      Price, Thomas (Westhoughton)

      Dempsey, James

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

      Price, William (Rugby)

      Diamond, Rt Hn. John

      Kerr, Russell (Feltham)

      Probert, Arthur

      Dickens, James

      Lawson, George

      Rankin, John

      Doig, Peter

      Ledger, Ron

      Rees, Merlyn

      Driberg, Tom

      Lee, Rt. Hn. Frederick (Newton)

      Rhodes, Geoffrey

      Dunnett, Jack

      Lestor, Miss Joan

      Richard, Ivor

      Dunwoody, Mrs. Gwyneth (Exeter)

      Lewis, Arthur (W. Ham N.)

      Roberts, Albert (Normanton)

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

      Lewis, Ron (Carlisle)

      Robertson, John (Paisley)

      Eadie, Alex

      Lomas, Kenneth

      Roebuck, Roy

      Edwards, William (Merioneth)

      Loughlin, Charles

      Rogers, George (Kensington, N.)

      Ellis, John

      Luard, Evan

      Ross, Rt. Hn. William

      Evans, Fred (Caerphilly)

      McBride, Neil

      Rowlands, E.

      Evans, Gwynfor (C'marthen)

      MacDermot Niall

      Ryan, John

      Ewing, Mrs. Winifred

      Macdonald, A. H.

      Sheldon, Robert

      Faulds, Andrew

      McGuire, Michael

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

      Finch, Harold

      McKay, Mrs. Margaret

      Silkin, Rt. Hn. John (Deptford)

      Foley, Maurice

      Maclennan, Robert

      Silverman, Julius

      Foot, Michael (Ebbw Vale)

      McMillan, Tom (Glasgow, C.)

      Small, William

      Ford, Ben

      McNamara, J. Kevin

      Spriggs, Leslie

      Forrester, John

      Mahon, Peter (Preston, S.)

      Steele, Thomas (Dunbartonshire, W.)

      Fowler, Gerry

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

      Summerskill, Hn. Dr. Shirley

      Fraser, John (Norwood)

      Manuel, Archie

      Thomas, Rt. Hn. George

      Freeson, Reginald

      Mapp, Charles

      Thornton, Ernest

      Galpern, Sir Myer

      Marks, Kenneth

      Tinn, James

      Garrett, W. E.

      Maxwell, Robert

      Varley, Eric G.

      Ginsburgh, David

      Mayhew, Christopher

      Watkins, David (Consett)

      Grey, Dr. Hugh (Yarmouth)

      Mendelson, John

      Watkins, Tudor (Brecon & Radnor)

      Whitaker, Ben

      Greenwood, Rt. Hn. Anthony

      Mikardo, Ian

      Wilkins W. A.

      Gregory, Arnold

      Miller, Dr. M. S.

      Williams, Alan Lee (Hornchurch)

      Grey, Charles (Durham)

      Milne, Edward (Blyth)

      Williams, Clifford (Abertillery)

      Griffiths, Rt. Hn. James (Llanelly)

      Molloy, William

      Willis, Rt. Hn. George

      Hamilton, William (Fife, W.)

      Moonman, Eric

      Wilson, William (Coventry, S.)

      Harper, Joseph

      Morris, Alfred (Wythenshawe)

      Winnick, David

      Hart, Rt. Hn. Judith

      Morris, Charles R. (Openshaw)

      Woodburn, Rt. Hn. A.

      Hattersley, Roy

      Murray, Albert

      Hazell, Bert

      Newens, Stan

      TELLERS FOR THE NOES:

      Heffer, Eric S.

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

      Mr. John McCann and

      Henig, Stanley

      O'Malley, Brian

      Mr. loan L. Evans.

      Mr. Kenneth Lewis: I beg to move Amendment No. 5, in page 2, line 15, leave out 'second' and insert 'fourth'.
      The Government have turned down all Opposition Amendments so far, and I hope they will let us complete the Bill by accepting this very simple one. In short, it gives employers a little more time. The Bill was introduced on 21st January. It is now 11th February, and if it should go through speedily—the Opposition will have contributed to this—there would be considerable advantage in employers having a little longer than just one week.
      At present, the operative phrase in the Clause is "the second Monday after". This means that, if the Bill went through at the end of the week, it would be one week on the following Monday, or one week plus the weekend. This is not very
      1178
      long for employers to sort out the administrative details, quite apart from any other considerations. Obviously, they have Redundancy Fund accounting procedures and some staff dealing with this matter; so this should be conceded from a purely administrative point of view.
      On the other hand, considering the scheme as a whole, the Under-Secretary should also remember that some firms may already have made redundancy agreements, with schemes in the pipeline and employees notified of leaving dates. They might have a month's notice or more or less and may not leave on the date of the Bill; so the employers would pay out on the old basis. This may mean a small extra cost on the Fund, and the Government might hesitate to provide it, but, on two counts—administration and the fact

      1179
      that some schemes may be in the pipeline—I hope that they will consider the Amendment favourably.
      Mr. Hattersley: I should like to oblige the hon. Member for Rutland and Stanford (Mr. Kenneth Lewis), not least because he has referred to the kindness with which the Opposition have met the Government's belief that the Bill should go through reasonably quickly. Despite their stated objections to many of the Bill's principles, I would like to acknowledge their support for many of the objectives to make the Fund solvent.
      But I cannot accept the hon. Members reasoning. He drew attention to the fact that the House—and, therefore, one hopes, the country and industry has been aware of our desire to make these provisions since 20th January. At the same time, both sides of industry, as represented by the T.U.C. and the C.B.I., were informed in advance of our intentions. It is reasonable, therefore, to date industry's knowledge from that time. Because of the processes which the Bill must still face, it is inconceivable that it will pass into law this month. So it is more than likely that from 20th January industry will have had about six weeks to make any adjustments, which are not, in any case, as great as the hon. Gentleman suggested.
      They are not administrative adjustments in the normal sense of the word but calculations, which I agree will involve financial forecasting of how much companies are likely to receive from the Fund in rebate. The situation will rarely arise that the only companies which wish to make substantial alterations in their redundancy plans because of the knowledge of what we are doing are those which seek to bring forward redundancies to benefit from the higher rate of
      1180
      rebate rather than the lower rate which will operate after the Bill becomes law.
      I am sure that we are agreed that there are few companies of that sort, perhaps none at all. If such hypothetical companies exist, I am sure that neither side of the House wants to provide for them to take that sort of advantage. What both sides want is to make the Fund solvent at the first opportunity so that the benefit of this to the economy becomes available as quickly as reasonably possible. It cannot be before March, which gives industry six weeks' notice of our operations. I hope that the committee will regard that as adequate and, therefore, not wish to accept the Amendment.
      Amendment negatived.
      Clause ordered to stand part of the Bill.
      Clause 2 ordered to stand part of the Bill.
      Bill reported, without Amendment.
      Motion made and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.
      Bill accordingly read the Third time, and passed.

      SHIPBUILDING INDUSTRY BILL
      Not amended (in the Standing Committee), considered.
      Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.
      Bill accordingly read the Third time, and passed.

NATIONALISED INDUSTRIES (SELECT COMMITTEE)
Mr. Speaker: I wish to announce that I have selected the Amendments standing in the names of the hon. Member for Poplar (Mr. Mikardo) and the hon. and gallant Member for South Fylde (Colonel

5

That a Select Committee be appointed to examine the Reports and Accounts of the Nationalised Industries established by Statute whose controlling Boards are appointed by Ministers of the Crown and whose annual receipts are not wholly or mainly derived from moneys provided by Parliament or advanced from the Exchequer; and of the Post 5 Office, the Independent Television Authority and Cable and Wireless Ltd.; and to examine such activities of the Bank of England as are not—

(i) activities in the formulation and execution of monetary and financial policy, including responsibilities for the management of the gilt-edged, money and foreign exchange markets;

10

(ii) activities, as agents of the Treasury, in managing the Exchange Equalisation Account and administering Exchange Control; or

(iii) activities as a banker to other banks and private customers.

I welcome this opportunity tonight to move this Motion because it provides an opportunity to deal with suggestions that the Government are dragging their feet over the question of Select Committees in general and this one in particular. This is not so.
Speaking first for myself, those who care to look at the relevant passages of the OFFICIAL REPORT and at my speeches outside the House will know that for many years, both in opposition and in Government, I have been a consistent advocate of the vital need to provide new Parliamentary checks to executive Government and the importance of Select Committees in that rôle.
Moreover, the Government have been vigorous in pursuing the experiment of specialist Select Committees. I appreciate that this is a matter in which the House naturally takes a great deal of interest. In addition to the proposal to set up a Select Committee on Scottish Affairs, I have it in mind to propose another Select Committee on overseas aid and development when the Committee on Agriculture has completed its work.
I am informed by the House authorities that, with these developments and the recent establishment of a number of sub-committees, we have now reached the absolute limit of the facilities available, not only in terms of clerks, but also of accommodation, shorthand writers, and even the printing of proceedings. Of course if, when the time comes, the House decides to establish
Lancaster). I suggest that as they are linked we may discuss the two together. I call the Leader of the House to move the Motion down to line 12.
6.30 p.m.
The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): I beg to move,
the specialist committee system on a permanent basis and of a certain magnitude, the necessary facilities would have to be provided. But it is evidence of the Government's determination to give the experiment a fair wind that they are setting up these committees to the absolute limit of the available resources.
I regret the delay in setting up this particular Select Committee this Session. The reason for this, however, was the reverse of a snub to the Committee. I hold my hon. Friend the Member for Poplar (Mr. Mikardo) and his colleagues in very high regard. They have worked hard in this Select Committee and have produced some excellent reports. I pay tribute to their work and once again confirm that there is no attempt to snub the Committee in any way.
The House knows that the Committee proposed a sweeping extension of its order of reference. The Government have not been able to accept such a sweeping extension, for reasons which I shall explain. Rather than appear to ignore the Committee, however, I have taken every opportunity to try to resolve the differences of opinion. These attempts have naturally taken quite a time. I fear that they have not been successful, though I believe that the terms of the Motion reflect the Government's wish to meet as far as possible the Select Committee's proposals without compromising the essential safeguards for other interests.
As the House will be aware, the background to the present proposed terms of reference lies in the special Report of

1183
the Select Committee on its terms of reference published in June of last year. Since 1956, when the Select Committee on Nationalised Industries was first set up, the terms of reference have remained unaltered each Session, except that, from the Session 1965–66 the Post Office has been specifically included by name. The Order of Reference has been:
"To examine the reports and accounts of the nationalised industries established by statute, whose controlling boards are appointed by Ministers of the Crown, and whose annual receipts are not wholly or mainly derived from monies provided by Parliament or advanced from the Exchequer".
The Select Committee came to the conclusion in 1968, in its special Report, that these terms of reference were unduly restrictive. It concluded that the terms of reference should be extended to provide for far more generalised terms of reference. Such generalised terms of reference would enable the Committee to examine all bodies which are or could be subject to control by the Government, other than those already falling within the scope of the Estimates Committee or the traditional field of the Committee of Public Accounts. In particular, the Committee listed 11 bodies which it considered suitable for its investigation. Of these, three were accepted by the Committee as not being of pressing concern—the National Seed Development Organisation, Letch-worth Garden City and the General Practice Finance Corporation. [HON. MEMBERS: "Hear, hear."] I am glad to acknowledge support from both sides of the House.
Then there is the Horserace Totaliser Board, which is an important category of its own. To be frank, the Government thought that the activities of this Board were relatively so limited that it was most unlikely that the Select Committee would wish to give high priority to an inquiry into it. I now understand that this may not be so. I at once give this assurance, therefore: if the Select Committee, when it has examined the possibilities, wishes to inquire into the Horserace Totalisator Board, I would at once propose an addition to its order of reference to enable it to do so immediately. [HON. MEMBERS: "Hear, hear."] As hon. Members will see, I am in a conciliatory mood tonight.
There are seven other bodies into which the Committee wished to have new
1184
powers to inquire. First, there are individual companies operating in competitive situations in their particular industries; British Petroleum and the three aircraft companies, Beagle Aircraft Ltd., S.B. (Realisations) Ltd., and Short Bros. & Harland. Secondly, there are three bodies—the Independent Television Authority, Cable & Wireless, and the Bank of England—which have some parallels with the nationalised industries insofar as they are governed by statute on lines somewhat similar to those of a nationalised industry, and contain some element of monopoly. The Government accept that, in principle, the Committee's order of reference should be extended to cover this latter group.
The conflict of opinion therefore resolves itself in practice into two questions. First, should the Committee be empowered to inquire into these individual companies operating in competitive industries, and secondly, should there be any limitation to its powers to inquire into the Bank of England?
The Government have given the most careful and detailed consideration to the views of the Committee on these points, and I will, in the rest of my speech, concentrate on them.
As a preface, however, let me say publicly what I have already told my hon. Friend the Member for Poplar, the former Chairman of the Committee, privately; that if the order of reference I propose is accepted by the House, my right hon. Friend the Chief Secretary and I would be happy to appear before the Committee to be examined further in the details of its order of reference. I see that my hon. Friend the Member for Poplar is in his place. If he was not here earlier, I would like to inform him that I paid tribute to him and the work of his Committee.
The Government have concluded that it would be contrary to the public interest for either British Petroleum or the aircraft companies concerned to be also included. The fundamental point about British Petroleum and the aircraft companies is that they are commercial concerns operating in highly competitive markets at home and overseas. For them to be subjected to this sort of public examination would seriously hamper them in competing in these markets.

1185
Their competitors of course would not be subject to scrutiny in this way. It would also leave room for misunderstandings.
Mr. Joel Barnett Mr. Joel Barnett (Heywood and Royton) rose—
Mr. Peart: My hon. Friend can make his point later. My right hon. Friend the Chief Secretary will reply to the debate in detail. I will, however, give way to my hon. Friend the Member for Heywood and Royton (Mr. Barnett) if he wishes.
Mr. Barnett: The Public Accounts Committee, for example, considered the Bristol Siddeley affair and matters were sidelined which could have been of harm to the company concerned.
Mr. Peart: I understand that hon. Members will argue about sidelining, but this is the view and I confirm it. This is the Government view and no doubt it will be explored in greater depth by my right hon. Friend the Chief Secretary who will reply. We feel that this is a fundamental point which could harm those concerns which operate in a highly competitive market. It would also leave room for misunderstandings which could damage those concerns about the nature of the Government's relationships with them.
For example, it is a well-known fact that the Government do not use their shareholding in British Petroleum to interfere in the commercial management of the company. It could damage the company if any impression got around that there were any change in this respect. For all these reasons the Government consider that this is not the time for the Select Committee on Nationalised Industries to start its inquiries into these companies in the competitive field.
Turning to the Bank of England, the House will see that the Government proposes that three areas of the Bank's activities should be outside the Committee's remit. The first of these—and it also comes into the second—concerns its activities in the formulation and execution of monetary and financial policy. Here I should emphasise an important difference between the Bank of England and the nationalised industries with which the Committee has been hitherto concerned.
The nationalised industry boards have definite statutory responsibilities for
1186
which they bear the final responsibility; the Ministers concerned have supervisory responsibilities, but do not share the executive function. The Bank of England, on the other hand, has no similarly defined exclusive field of responsibility. Instead, on the formulation and execution of monetary and financial policy, it is essentially and inextricably linked with other bodies, principally the Treasury and other Government Departments, in advising on policies for which it is the responsibility of Ministers to answer to Parliament.
For the Select Committee to examine the Bank on its part in all this would be arbitrarily to separate out what is one contribution only to the essential amalgam of formulation and execution of a policy which it is for Ministers, and specifically for my right hon. Friend the Chancellor of the Exchequer to expound and defend to Parliament.
Perhaps I could briefly refer to the other two exclusions. For the second one—managing the Exchange Equalisation Account, and administering exchange control—in addition to being concerned with the arguments I have just been making, there is a supplementary formal reason for its exclusion: the Bank conducts these activities as the agent of the Treasury which is statutorily responsible and is subject to examination on this by the P.A.C. The third exclusion, relating to the Bank's activities as a banker to other banks and private customers, speaks for itself. There must be complete confidentiality of the banker-customer relationship. This is in fact a legal right of the other parties concerned.
It has been represented to me that the effect of these restrictions—which apart from the terms of reference would in any case also be embodied in Ministerial instructions of guidance to official witnesses in their evidence to the Committee—will be to leave the Committee with a purely residual function. It has been said that it has been left with little more than conducting an inquiry into the Bank's note-producing activities. This criticism is quite unfounded. The Select Committee will be able to examine the general relationship between the Treasury and the Bank, in terms both of constitutional position and of actual working relationships, so long as the examination does not seek to inquire into particular

1187
occasions or specific aspects of policy. In this connection, my right hon. Friend the Chancellor of the Exchequer authorises me to say that he would be happy to appear before the committee, possibly accompanied by the Governor and senior Treasury officials, to discuss his own views on the relationship between the Bank and the Treasury.
The Committee will also be able to examine the way in which the Bank is organised to discharge its various responsibilities. If, therefore, the Committee concentrates on the Bank's position in general, and does not seek to discover what advice it has given, or what action it has taken, on a particular issue, I do not think any serious difficulty should arise.
Mr. Speaker, as a consistent advocate of the need to extend Parliament's control over the executive, I have considerable sympathy with the view that as a matter of principle the terms of reference of such a well-established and well-tried Committee as this should be in entirely general terms. However, I think I have shown that this cannot be done at this stage—
Mr. Ian Mikardo: Why not?
Mr. Peart: —without danger to the other parties involved. Certainly, it marks no lack of confidence in the proposed Select Committee which has earned a justified reputation in these matters. Indeed, I would like to put the Motion to the House in the following spirit. We are not in a static situation. I mentioned earlier the setting up of another new Committee to deal with overseas aid. I believe this experiement should be given a fair wind because we believe it right that committees should be introduced in that spirit. As experience grows, circumstances change. In the meantime I propose a substantial and, I believe, a very valuable extension to the Committee's powers and so I commend it to the House.
Mr. Speaker: May I announce to the House, since many hon. Members present did not hear me at the beginning of this debate, that I have selected the Amendments in the name of the hon. Member for Poplar and the hon. and gallant Member for South Fylde. I suggest that we take them together because
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they are linked. I will invite the hon. Member for Poplar to move his Amendment if he wants to do so at this moment.
6.48 p.m.
Mr. Ian Mikardo: I beg to move, in line 2, leave out from 'Industries' to 'whose' in line 3 and insert:
'and other bodies in which the State has a controlling interest'.
I thank you, Mr. Speaker, for selecting this Amendment. As you, Sir, have said, this and the following Amendment—in line 4, leave out from 'Exchequer' to end of line 12—stand together. The effect of the two taken together would be to substitute for the order of reference for the Select Committee which in the Motion is proposed by the Government the one which the Select Committee itself recommended in the special report which it made to the House during last Session. That is to describe the effect of the Amendments.
May I now say what is the purpose of the Amendments? Their purpose is not as some commentators have thought to open up—certainly their purpose is not primarily to open up—the secret places of the Bank of England to public gaze. If that is a purpose at all, and I shall try to show it is not a principal one, it is a secondary and narrow part of the problem. The purpose of these Amendments is to establish the principle that Select and Specialist Committees of the House are independent bodies responsible to the House, and responsible only to the House, and are not creatures of Ministers who can limit their activities.
I fear that I must weary the House for a few minutes by going back over the history of the matter. It is familiar to most hon. Members, but there may be one or two who, in the pressure of other affairs, have not followed it closely. The difficulties and differences which have arisen over the order of reference of the Select Committees stem from the very worthy attempt which was made by my right hon. Friend the Member for Coventry, East (Mr. Crossman), when he was Leader of the House of Commons, and in which he had the enthusiastic support of the House, to improve our procedures to give the House a better check on the decisions and actions of the Government.
The thesis which was advanced by my right hon. Friend the then Leader of

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the House, and which was approved by the great majority of the House was that, over recent years the imbalance of power between the Executive and the Legislature has widened and that within the House the imbalance of power between the Front Bench and the back benches has widened. The thesis of my right hon. Friend was that that one way in which that imbalance could be adjusted, if not corrected, was through the use of Select and Specialist Committees acting as invigilators—I think "watchdogs" was the in-phrase—of at least some of the work of Ministers.
This goes back a long way. The Select Committee on the Estimates and the Select Committee on Public Accounts have exercised, in one form or another, that sort of watchdog activity over the direct work of Government Departments. Over the years, and for many years before I had the honour to be a member of it, the Select Committee on Nationalised Industries has fulfilled the same functions in respect of the public corporations.
But there are some enterprises, there are some parts of our economic public life, in which Ministers exercise control and in which they are responsible for spending a good deal of public money but which are neither Government Departments nor public corporations; and up to this very day there has been no machinery for scrutiny, except, in some cases, the ex post facto examination by the Select Committee on Public Accounts, which, if I may say so in the presence of its distinguished Chairman, does a great job but which by its order of reference is limited to examining things after they have happened. Except for a partial examination by the Select Committee on Public Accounts, in some cases only, these public enterprises, which are neither Government Departments nor public corporations, but in which—I repeat—Ministers exercise a great deal of control and power and in which they spend a great deal of the taxpayers' money, are free from the surveillance of the representative of the taxpayers, namely, Members of the House of Commons.
My right hon. Friend the Member for Coventry, East drew the attention of the House to this gap in our machinery of control, to this gap in the relations
1190
between Parliament and the Executive. He did so in the most graphic terms in a debate on the procedure of the House which took place on 14th December, 1966, and in which he said this:
"… we have to face the growing power of the State, the ever-widening expansion of Whitehall's activities, the ever-enlarging number of civil servants and agents of the State. At present"—
I emphasise this next passage—
"huge tracts of this public sector are virtually screened from accountability to the House of Commons."—[OFFICIAL REPORT, 14th December, 1966; Vol. 738, c. 485–86.]
In a later debate on the same theme, when my right hon. Friend had started us off on this process of procedural reform, which overtook us like some sort of fever but which maintained its temperature for all too short a period, he said this—and in what ringing terms:
"The spirit of inquiry, without which a revival of Parliamentary control of the Executive cannot be achieved, is making itself felt in Whitehall."—[OFFICIAL REPORT, 19th April, 1967; Vol. 745, c. 605.]
Paradise is just around the corner.
My right hon. Friend later, under questioning from another of my right hon. Friends, made it clear—I know that he was speaking with complete sincerity—that he did not see the use of Specialist and Select Committees as being an effective instrument in this process of correcting the imbalance between back benches and Front; he did not see the use of Specialist and Select Committees as an effective instrument for creating accountability of Ministers to the House in those areas where previously there had been no accountability; he did not see them as being as effective instrument, unless their activities were free from limitation by Ministers.
During questions on the Business Statement on 29th June, 1967, my right hon. Friend the Member for Easington (Mr. Shinwell) asked the then Leader of the House this question:
"… may we have an assurance that these Specialist Committees … are independent and that they have the right to determine their own functions and activities without any interference or restriction on the part of the Government?"
My right hon. Friend the then Leader of the House replied in this way:
"I can give my right hon. Friend that assurance ".—[OFFICIAL REPORT, 29th June, 1967; Vol. 749, c. 761.]

1191
The present Leader of the House is a friend of mine in much more than the conventional sense in which we use the word in the House. I am most indebted to him for the kind and courteous way in which he moved the Motion and for his more than friendly references to the Select Committee. I nevertheless want to ask him how he squares what he said today, when he reserved the right to use the rein—he said "I will exercise a light touch. I shall not pull the brake up hard or drag at the bit, but I do reserve the right to hold the reins"—with what his predecessor said about giving these Committees the right to determine their own functions without any restriction on the part of the Government. How can my right hon. Friend, by any conceivable stretch of the imagination, find the very detailed Motion which he moved to be not in conflict with the quite specific undertaking which my right hon. Friend the previous Leader of the House gave?
Since we all thought—and I am sure that we were right—that my right hon. Friend the Member for Coventry, East meant what he said at the time, some of us wondered how we could help him to close this gap which he had mentioned. We started some discussion with him. They were very good, friendly and productive discussions, as one would expect. There were some differences of view—much the same as those to which we have listened in this debate.
In the end, the then Leader of the House said, "No one has had a close look at this gap. Someone ought to have a look at it. Why don't you"—he was speaking to me—"ask your Committee to examine their own order of reference? You can start by getting expert evidence about what are all these bodies which are neither Government nor public corporation and which therefore fall outside the ambit of control, but in which Ministers nevertheless exercise at least some measure of control and spend some money." I am speaking of a period almost precisely 12 months ago.
We were both anxious to avoid the situation which happened last year in which the Select Committee was not set up until about this time and did no work at all for several months. My right hon.
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Friend said to me, "If you ask your Committee to do this job of examining the gap in its own order of reference, and if you will report, say, at the beginning of July, that will give the Government the month of July in which to examine your Report and to reach a conclusion in the matter so that the Committee can then be set up immediately the new Session starts, without any delay, and we can avoid this long gap."
The Committee carried out faithfully its part of the bargain. A Sub-Committee under the chairmanship of the hon. and gallant Member for South Fylde (Col. Lancaster) made a close, a careful and, if I may be allowed to say so, an extremely well-balanced study of the order of reference and the whole field of activities of the Select Committee, where they overlapped and where points were not covered. We presented our Report, as we had been asked to do, in the first week of July, to be precise on 4th July last year.
We have not yet had any rejoinder from the Government to that Report. Not only did the Government not carry out their undertaking to reach a conclusion on the matter before the end of the Recess, so that we could be set up immediately the new Session began, but we are still waiting for their reply to the Report. Although my right hon. Friend the Leader of the House has spoken kindly of the Committee, I do not believe that it can be said that he has treated the Committee with courtesy if the first reply which we get to a carefully considered document is for us to see a Motion slapped down on the Order Paper.
Mr. Peart: I hope that my hon. Friend will not make that accusation. He knows that time and again I had informal consultations with him. I am rather surprised at that accusation.
Mr. Mikardo: My right hon. Friend should not be surprised. Of course we had informal consultations, but there is a limit to the extent to which that represents a reply to a submission by a Committee in a Report. Such consultations inevitably have a large amount of confidence attached to them. I see that my right hon. Friend nods agreement. I should not feel free after such consultations to go out and discuss with a lot

1193
of people what had been said at them. There are 17 other members of the Committee, besides myself. I am not the boss of the Committee. I am its servant. Although my right hon. Friend may have spoken to me, there are 17 members who have a justified grievance in the fact that, having carefully examined this matter of our order of reference, and presented a detailed and considered Report, they did not receive what it is normal for a Select Committee to receive, a Government reply to their Report. And they have never had it to this day.
I must describe our examination. We had the advantage of being given by the Treasury a list of all the bodies which might conceivably fall within the area which we were considering. We were very surprised to find, and I am sure that hon. Members will be surprised to hear, that there were and are as many as 34 of them. This was the list which we received from the Treasury and which they annotated most helpfully, and which was further explained in the most helpful evidence given by a witness from the Treasury.
We looked at them all very closely, one by one. We ruled many of them out of our purview because they fell or ought to fall more appropriately within the terms of reference of some other Select or Specialist Committee. Others were ruled out, as my right hon. Friend said, because they are so small and their activities are so limited that manifestly it would be wrong to bother the House with reports upon them.
But that left seven which we wanted included. There were the Bank of England, B.P., the Independent Television Authority, the Horserace Totalisator Board, Cable and Wireless, Beagle Aircraft and Short Bros. and Harland. There are two Short Bros. companies but, for simplicity, I have put them together. on six of the seven—all of them except the Horserace Totalisator Board—the sponsoring Ministers put up the same sort of objection to their being included within the Committee's order of reference as that which my right hon. Friend put up tonight.
It would take far too long, it would weary the House far too much, and I should be abusing your kindness far too greatly, Mr. Speaker, if I went over all
1194
the details of those grounds. That is a job for Committee and not for the House. But the Committee came to the conclusion unanimously—and all its Reports since I have been a member have been unanimous Reports—after examination in detail, and sympathetically, of all the objections advanced by Ministers to the inclusion of these bodies within the order of reference, that these objections did not stand up to serious examination. I invite hon. Members to read the transcript of the evidence, which is appended to the Report. I am sure they will agree with me when they have read it that the objections put forward by Ministers did not stand up to examination.
No doubt it is because they did not stand up to examination that the Government have changed their mind—it is always good to see people change their minds, for it shows a welcome lack of inflexibility—and have included in the order of reference three of the bodies which the Ministers said could not possibly be included in the order of reference without doing desperate damage. When I hear my right hon. Friend talking about the aircraft companies and B.P. being commercially damaged by their being included, I am a little sceptical, because that is exactly what we were told about the other three bodies which the Government have now decided to include. They have now included Cable and Wireless, the Independent Television Authority and, with the limitations set out in the Motion, the Bank of England.
Those limitations really are a subject for careful study and consideration. I think that they require the minds of Aristotle and of Maigret in order to figure out what they really mean and what the effect of them would be in practice. My right hon. Friend says that within the framework of them there can be a meaningful examination of the Bank of England.
Since the Motion has been on the Order Paper—and it has been there for some weeks—all sorts of people have had a look at it and have tried to make an assessment of whether a meaningful examination of the Bank of England could be carried out within the framework of the Order. So far, the voting is as follows: for the proposition that a meaningful examination could be conducted

1195
with these terms of reference, a member of Her Majesty's Government; against the proposition, everyone else who has had a look at the Motion.
Even if my right hon. Friend can command a majority in the Lobby tonight, and I have little doubt that he will be able to do so—he finds himself in a tiny minority everywhere else. I have consulted a number of people who are wise in the procedures of the House and in these matters. Not one of them believes that a meaningful inquiry could be carried out.
I do not know whether my right hon. Friend has read the article in the Financial Times the other day by Mr. David Watt, the very well-informed political editor. Mr. Watt wrote:
"… the Treasury has come up with new terms of reference for the Committee which are drafted so as to exclude almost any meaningful discussion of the Bank's affairs.
As they stand, these terms of reference … leave precious little for the Committee to discuss except the price of the doorkeepers' uniforms and the decor of the canteen."
That sounds a bit like a journalistic flight of fancy, but I assure the House that on the basis of the serious examination I have made of these terms, with the help of a lot of advice, I think that Mr. Watt's description is not far short of the truth.
My right hon. Friend says—and he says that he says it with the support of my right hon. Friend the Chancellor of the Exchequer—that he is quite happy to have a meaningful inquiry into the Bank. My right hon. Friend the Chancellor, friendly-like and a bit condescending, has said, "Yes, you can have a meaningful inquiry". That is what I will not accept. I do not think either the Chancellor of the Exchequer or the Leader of the House has the right to make us this concession or to deny us anything. This is the principle of the issue.
Of course, I say at once—because I am not a babe in arms, whatever other defects I may have—that any examination by any Committee of this House into the Bank of England would have to be carried out with a great deal of discretion, and of course it would have to be carried out within limitations. But every one of the inquiries we have carried out has been carried out with discretion and every one
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of them has had to be carried out within limitations, because every nationalised industry has confidential transactions.
I have no doubt that the confidential transactions of the Bank of England are both larger in number, larger in scale and perhaps more sensitive than the confidential transactions of other nationalised industries. But it is all a difference of degree and not of kind; of size and not of principle.
Every nationalised industry has confidential relations with customers. It buys and sells land and property and premature disclosure of that could be damaging. Some of the industries have confidential relationships with Governments and other public bodies in other countries, and in my years of membership of Committees of this House I do not recall a single question put to any witness which caused him the least embarrassment. I do not recall a single question put to any witness which he appeared to have any hesitation in answering. And, of course, any request from a witness to add a footnote to what he had said—perhaps a little thoughtlessly at the time—or to excise from the published version something that he had said—because it was a bit sensitive, has virtually without exception been granted.
So the question is not whether an investigation into the Bank of England should be carried out within limits. That goes without saying. The question is—who decides the limits? I do not believe that it can be seriously held that a Committee of this House is not capable of deciding its own limits.
The limitations included in the Motion arise from the fact that, initially, the Treasury resisted having an inquiry into the Bank of England at all. It put up a number of reasons, and, like the reasons put up by other Ministers in respect of other industries, they did not stand up to examination. I do not want to go through them. I shall mention only two, because they are highly germane to what my right hon. Friend the Leader of the House said about the relationship between the Bank of England and the Treasury.
First, he said that the Governor of the Bank of England is in a sort of rather special relationship, a kind of civil servant relationship, to the Treasury as an adviser and that the advice which a Permanent

1197
Secretary gives to a Minister is necessarily confidential and not the subject of inquiry. That does not stand up. The Select Committee, like all other Select Committees, is constantly taking evidence from senior civil servants and has never failed to distinguish between what questions are proper to the civil servants and what questions should only be asked of the Minister.
In any case, if the Governor of the Bank of England is a civil servant he should not be running around the world making speeches about policy. No other civil servant does it. He cannot have it both ways. He cannot sit on that fence.
Then my right hon. Friend said that some of these enterprises have competitors who are not subject to the same sort of Parliamentary scrutiny in their own country. That was said about the Bank of England. It was said that if we did this it would be the only central bank susceptible to Parliamentary surveillance. That is not true either. Those hon. Members who are familiar with the scene in the United States will know that the Federal Reserve Bank appears before the Banking and Finance Committee of the Senate and several of its sub-committees with very great frequency indeed, and—I quote Mr. Watt again—
"Almost every other Western country provides for some Parliamentary oversight of its Central Bank precisely because they are independent."
I cannot understand why the Government are making an issue of the enterprises which they have left out. Indeed, that interests me more than the Bank of England, which they have partially put in. My right hon. Friend said that some of them are commercial organisations competing in a highly competitive market. But what on earth is B.E.A. if it is not a commercial organisation competing in a highly competitive market?
What is the difference of principle between B.P. and B.E.A.? My right hon. Friend has said nothing to answer that. I cannot help feeling that the Government have made rather an ass of themselves over this whole business. They have thrown into question the sincerity of their attitudes towards Select and Specialist Committees in general, which I quoted earlier. To return to the thesis of the former Leader of the House, we cannot use these Committees as a check on the
1198
escalating powers of Ministers if these same Ministers are to decide on their own say-so what the Committees are or are not allowed to examine.
The editor of the New Statesman put it very well over the weekend when he said:
"What is the good of having a watchdog if he is only allowed to bark when the burglar gives permission?"
That is particularly true in this case, because over the years the watchdog has proved to be such an amiable and well-behaved watchdog. This is throwing into question the whole of the Government's sincerity in their attitude towards the House, towards the surveillance of the House.
I have not followed it closely, but I believe that there were some Members who thought that the Government's treatment of the Select Committee on Agriculture left something to be desired. I read the other day with interest the Third Special Report of the Select Committee on Education and Science, which also seemed to be chafing a little under the reins held by my right hon. Friend.
Mr. Peart: Is my hon. Friend not aware that Agriculture and Education were set up as experimental Committees and it was agreed that they should extend the experiment by a further period? Extensions were given and they were enabled to complete their work. Agriculture is nearly finished—
Mr. Derek Page: Nonsense.
Mr. Peart: The hon. Member should not say "Nonsense". As the Minister responsible for supporting and attending the Agriculture Committee, I can say that we gave every assistance as a Government. If my hon. Friend repeats that charge from a sedentary position, he is wrong.
Mr. Mikardo: I will not argue with my right hon. Friend about that. I have never been a member of that Committee and I have not followed its affairs very closely, but what I said is within the recollection of the House. I will say it again, and I think it stands up. I believe that some hon. Members thought that the Government's treatment of the Select Committee on Agriculture left something to be desired. As a statement of fact that

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is absolutely incontrovertible. What the Select Committee on Education and Science said in its Third Report is on the record, and "he who runs may read". It is not very happy with the treatment given it by the Government.
What convinced me that it is time to worry about the Government's sincerity in these matters is the fact that they have put the Whips on this discussion tonight. This is, above all, a House of Commons matter. I do not recall seeing anywhere in the election manifesto of my party or any other party anything about whether the House should have Select Committees. I do not recall any occasion on which this has been a matter of controversy between the parties and that is what Whips are about. I would have thought that this was a pure House of Commons matter and if this is not the sort of matter on which there should be a free vote I cannot think of one.
If the Government are to devalue the Committees in this way they will have difficulty manning them. Already those responsible for manning them have found some difficulties. It would be quite impossible to get hon. Members to serve if they are to be thought of as stooge organisations which can never really influence the course of events and can never decide for themselves what to do. I certainly would not want to serve under those conditions. Like every other hon. Member I am ready to put in time and effort if there is the possibility of a worthwhile end but if it is a question of having to dance like the organ-grinder's monkey then I can find other ways of putting my time and effort to better use in the service of my constituency.
I end by saying that I deeply regret, not only for its own sake but because of the implications which I have described, the Government's decision not to make this a free vote. I urge hon. Members on both sides of the House to take a free vote, to treat it as a free vote, because if we cannot consider a Parliament issue as Members of Parliament we do not deserve our jobs.
7.28 p.m.
Colonel C. G. Lancaster: I want to support the hon. Member for Poplar (Mr. Mikardo) and say that I think he dealt with the problem
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in a most reasonable and helpful way. I have worked with him now for two years, and have gained a great respect for his impartiality and obpectivity in dealing with these matters. Tonight he was both impartial and objective, although he said some strong things. No doubt he feels very strongly.
I want to talk about the Bank of England, not because I consider it the most important issue for us, but it is one over which there have been more misunderstandings and mishandlings than others. As a result it has become something of a cause célèbre. I want to spend a little while in trying to get clarification on something which is far from clear not only to myself, who may have to carry out this inquiry, but to the Clerks to the Committee and to the Committee generally. As the hon. Member said, it is far from clear to the Press and people elsewhere. I join with the hon. Member in this Amendment in order to get this clarification.
I want to confirm what happened first. As the hon. Member said, we discussed this with the then Leader of the House, now the Minister for Social Security, in February. He suggested that we should have a review of the various matters which escaped the consideration of the House in one form or another, and Sub-Committee B was instructed by the Select Committee as a whole to undertake this review. The Select Committee has two Sub-Committees, A and B. Co-ordination is maintained by the Chairman of the Committee taking part in the activities of Sub-Committee B and my taking part in the activities of Sub-Committee A. When we submit our report in draft form it is considered by the Select Committee as a whole. Whatever goes out from the Select Committee is the work and decision of the Committee as a whole.
We carried out that order of reference more than six months ago and we have not yet received an answer to the recommendations which were embodied in the report. We said in that report:
"Future Nationalised Industries Committees will not wish to act otherwise than within the intentions of the House in appointing those Committees; and they will accordingly not wish to start inquiries in an atmosphere of doubt as to the propriety of their proceedings."
It is in that position we find ourselves this evening. It is by no means clear

1201
what the order of reference in regard to the Bank means, and I want to ask one or two questions, which I hope will be answered from the Treasury Bench at the end of the debate, so that we can be aware not only of what our responsibilities are in carrying out this inquiry into the Bank, but also what will be the position of those giving evidence from the Treasury, the Bank or elsewhere, so that they know the intention of the Committee and the framework within which it will operate.
The Order Paper refers to:
"(1) activities in the formulation and execution of monetary and financial policy, … the management of the gilt-edged, money and foreign exchange markets."
We should like an explanation of the meaning of the words "activities", "execution" and "management". If this means that we are not to inquire into discussions between the Treasury and the Governor of the Bank, we recognise that we are not concerned with past, present or future discussions. We assume such discussions must go on all the time, and we are not party to those discussions. Additionally, we realise that we have no concern with the current operating policies of the Bank in the gilt-edged, money and foreign exchange markets. The Committee presumably would not expect to be told at what point the Bank might intervene to support gilt-edged, or what action it might take to support sterling. Those are matters with which we would not concern ourselves. What we concern ourselves with, once policy matters have been decided, is how the machinery works; how the Bank carries out its activities; how free it is to operate in regard to the joint stock banks; and its relationship with the I.M.F. There is a whole range of matters which, if denied to the Committee, would make a review almost valueless.
The Leader of the House, from what he said this afternoon, does not intend that that should happen, but it would be valuable to have a discussion with him, the Chancellor of the Exchequer and possibly the Governor of the Bank, so that we may be clear about our position. I hope that those discussions will not take a form which will go further to make our position a hopeless one, since we do not wish to embark on an inquiry of that sort, nor would we serve any good purpose by doing so.
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My mind goes back to 1955 when the Select Committee was first set up. At the end of a short period we found that our terms of reference were so tight that we served no good purpose. A year was lost, and it was not until those terms were extended that we settled down to do the work we have done in the ensuing 12 years. We recognise that there are areas of confidentiality, with which I will deal later.
I want read out what is our general view on how that inquiry might be undertaken:
"If a future Nationalised Industries Committee were empowered to investigate the Bank, your Committee believe that the inquiry would, in general, be addressed to the question of how Government policy, as devised by Governments and administered by the Bank, was actually put into effect; equally the question might arise of how far other policies, if decided upon, would be workable; but they believe that, if future Committees followed the principle of their predecessors they would not seek to establish either what economic policies, past, present or future, ought to be followed."
That is perfectly clear. We are not concerned with policy as such; we are concerned with how policy, having been made, is put into effect.
As the hon. Member for Poplar said, over a period of years confidential matters have come before the Select Committee on many occasions. We have on one or two occasions asked questions which were necessary in the context of what we were considering but which witnesses have not been unduly anxious to answer. As as example, I remember some years ago asking one of the air corporations how many of a particular type of aeroplane it had ordered. The witnesses were not particularly anxious to give us the answer, but we wished to have it merely to get the matter into context. The number did not appear in our report; nevertheless, it enabled us to go on with our inquiry in a much more efficacious way than would otherwise have been the case.
Perhaps I might give a unique example of confidentiality. In the course of inquiring into the telecommunications side of the Post Office, a small sub-committee, of which I and the hon. Member for Poplar were members, went to the United States for discussions with American Telephone and Telegraph. Although that is a very large concern which has a large sector of the industry under its control, it has some competitors in what is a highly competitive industry. We explained that we had

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come to America on a grant and that we must take a full note of all that the company was prepared to tell us. The company was most generous and disclosed almost everything we asked. On our return to this country we wrote out a full note but we told the American Telephone and Telegraph that before the note appeared in our report we would ask it to delete anything which was inimical to its commercial interests. We sent that note, and it did not alter a syllable. That is an example showing that we can deal with confidential matters in a responsible way.
But it is not for me to speak for the Select Committee. The Press have said all that needs to be said, and have always treated the Committee in a most generous way, paying tribute to the objective and impartial manner in which the Committee has carried out its duties; never more so than during the two years in which the hon. Member for Poplar has been Chairman. During that period the Committee has carried out four major inquiries, without division within this all-party Committee, but in the same objective and dispassionate manner as had been the experience hitherto.
Of course, there are differences of opinion and we have different political philosophies on either side of the Committee, but we have learned to work together, to discard our personal feelings and to work within the framekork of the conditions which is laid down by the Government of the day. As a result, we have not concerned ourselves with policy matters in general, although there is a grey area where policy cannot be discarded. We set about seeing how these corporations carry out their activities, what are their functions, where they are free agents, where are they servants of the Treasury and how they operate in various conditions.
I, and probably most hon. Members, do not pretend to know a great deal about the Bank. I should like to know more, as would most hon. Members, and it is the purpose of this inquiry that we should have a clearer picture of how it carries out its functions.
With the intervention by the Government more and more into commercial and industrial activities, it is necessary to have these Select Committees. The
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work of the Estimates Committee and the Public Accounts Committee is invaluable, and I hope that the work which we have done has been useful. The specialist Committees also are doing valuable work, and it would be a healthy situation if it was recognised that they can and do play an important part. If that recognition is forthcoming and at the termination of this debate we can have some clarification of our terms of reference with regard to the Bank of England and if in the subsequent discussions which have been suggested by the Leader of the House we can thrash out the matter effectively with the Chancellor, the Governor and the Leader of the House, today's debate will have served a good purpose.
7.41 p.m.
Mr. J. T. Price: We have listened to two very temperate speeches from my hon. Friend the Member for Poplar (Mr. Mikardo) and the hon. and gallant Member for South Fylde (Colonel Lancaster). If I cannot speak with the weight of experience in the matter from which they have drawn in addressing the House, I hope to follow them in temper and tone and put to the House a serious issue about which many of us are deeply concerned.
During my period of years as an hon. Member, I have served on many Committees of the House, both Select Committees and others which were perhaps not so select. One does not speak as a novice in these matters, and no hon. Member who has served on the Select Committee on Nationalised Industries would make an issue of this one if there were not some real reason which the House should know.
From my contacts with public life and public affairs, it has always been my understanding that a central bank is a very important institution. In all highly developed countries, it is the cornerstone of commercial and economic activities. Often, from our varying philosophic points of view on the different sides of the House, we have made different cases about the attitudes which society should adopt towards the banking system, and I would not be so reckless as to make any wild dogmatic statements about it today. We are not here for that purpose. However, I say with all sincerity that

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the banking system—not only of this country, which is one of the key financial countries, but of all the civilised countries—is such that it is greatly misunderstood. The reason is that it is cloaked in secrecy. We tend to regard our financial institutions as sacred white elephants, and it is that which causes a great deal of dismay and worry to people who should know more about it.
We are not always dealing with these matters theoretically. Very often, we have to deal with the economic consequences of vital information being withheld from the public. On this Motion, there is no party division of opinion. It is one of those rare occasions where I hope that we can present what is perhaps a genuine concensus view without being charged with selling the past in some way. We are of one mind on these matters.
The Select Committee has been described as a watch-dog. We are regarded as having some kind of function to report to the House on matters of vital interest which cannot be discussed within our normal programme on the Floor of the House. We are not alone in that respect. My hon. Friend referred to the system in the United States of America If this matter were looked at ideologically, it might be said that, of all the highly developed civilised countries, America is regarded as a typical citadel of capitalism, as distinct from this country, which has a very mixed economy in which public enterprise and private enterprise operate side by side.
It must be remembered that hon. Members who serve on the Committee are volunteers. We are not press-ganged into service. We have many other duties, and we are not very happy about being charged with a function if we are not allowed to operate in the way that we should. According to the Motion, it appears that we are not to be allowed to inquire into any operations of the Bank of England except its mechanics as they affect the ordinary day-to-day bookkeeping and administration. One journalist has described it rather caustically as "looking after the doorkeeper's uniform." I am not interested in that sort of activity. I do not want to see the Committee sitting solemnly for months on end and bringing all kinds of important and highly-paid people
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before it to give evidence about such triviata. I want the Committee to be able to report to the House on such matters as the relationships between the Government and the Bank. I want the Committee to be able to learn how accountability is made to Parliament through the aegis of the Government by the Bank. I want the Committee to discover which of the two rules of the House—the Government or the Bank.
Those in Government circles who disagree with us may define these as matters of policy. I disagree. We cannot function unless we are able to discover the motions which are gone through to make an institution like the Bank answerable to this House. At the moment, we do not know. It is one of the higher mysteries.
Recently, we experienced a very painful setback in the shape of devaluation. Much to our sorrow and regret, no one knows publicly what happened at the time of devaluation, except that, through the operation of some force majeure, devaluation became inevitable. It would be good to know more about it. It would be good if some information were made available to us, for example, about the period of time that the Bank of England kept its doors open for business after the devaluation announcement. One is advised from quite responsible quarters that there was a period during which a great eflux of finance that should have remained here left the country under the pressure of devaluation.
I disagree that these are matters of policy. They are matters about which the Committee should be able to report, on the basis of inside knowledge of what is taking place. I repeat, we are not a collection of novices who fail to understand the need for the greatest discretion in matters concerning private arrangements with bank customers. We do not want to know about them. We want to know how the machinery works and how Government decisions are put into practical application once they have been through the financial institution. These critical questions condition a great deal of the commercial and economic activity of this country, but nobody really knows what they are.
I understand, although I could not cite references—and if I were hauled before

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another Select Committee to produce witnesses I could not do so—that there is a deep feeling among well-informed people on these matters that, unfortunate though the difference may be between the Committee and the Government about its functions—and that they should be more closely defined in the Motion goes without saying—the opposition may not be coming from the Bank of England. I say that with great reserve. There is a feeling that the real opposition is from the old soldiers in the Treasury who just do not want transferred to this House the power which has previously been their prerogative. I think that ought to be said, and I hope that I have said it without malice and without offence to anybody concerned. Civil servants have the protection of this House, which is a good thing, but I sometimes want protection from civil servants.
I have sat in other capacities and examined very high top-level civil servants. I hope that I have done it with courtesy and with some sense of proportion considering to whom I was talking and what information I was trying to elicit by my questions. At the same time, I think that it is wrong for a senior Committee of this House to be placed in the invidious position of being at the receiving end of decisions about which we know so little. That is as high as I would put it tonight.
I hope that my right hon. Friend does not think that we are necessarily directing our fire at him. We are directing our fire at the Government collectively. As a Committee we have a collective responsibility for the affairs of the Select Committee on Nationalised Industries. I have always thought it a good democratic principle, if I was on a Committee, to share collective responsibility for it. Indeed, the Government must share collective responsibility for the rather unfortunate and obtuse attitude that they have taken on these matters. I do not want to be offensive. We had a lot of offensive talk yesterday in which I took part. Afterwards I felt that perhaps I had spoken a bit too strongly about things. I want to put the matter in a different idiom tonight. I want to persuade the Government to put away childish things and to grow up and be a little more mature about these matters.
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The Chief Secretary will have his opportunity later. I hope that he disagrees with me, but I hope that he will agree I am putting a collective view, not a party view. I have tried religiously to avoid the sort of ideological and dialectic argument sometimes flung about the Chamber. This is a key matter for us. We are in the dark about our financial institutions. We in Great Britain are more in the dark than people in the United States of America, as has been rightly said. We ought to know more about them. We are not in a position to demand to know more, but we are in the strong position that, having been constituted a Committee with, I hope, the confidence of this House on all sides, we ought not to be put into the position, as my hon. Friend the Member for Poplar said, of being a set of stooges who will merely be regarded as some kind of veneer for saying that an investigation is going on in the public interest into all these matters when nothing of any account is being investigated. This is the kind of situation that I want to avoid.
Mr. Michael Foot: My hon. Friend says we are not in a position to demand. Is it not the case that if this House of Commons tonight were to demand by our vote that we should have what my hon. Friend the Member for Poplar (Mr. Mikardo) is asking for so politely, we would get it?
Mr. Price: That is quite true. But, as my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) knows, the mechanics of this House do not work like that. I say this with great trepidation because, in a previous incarnation, I served for seven years in the Whips' Office—and it took me another seven years to live that down. I was the most humane Whip who ever served in that office. I left with regret in a way, but it creates an aura behind it that needs a bit of living down as the years go on. My hon. Friend the Member for Ebbw Vale is right that if the House reinforced our hand and strengthened our position vis-à-vis the Government, we should be very grateful. I do not know how discipline runs sometimes, but if anyone wants to discipline me about a matter like this they are welcome to try.
I am not hoisting the Jolly Roger or anything like that. To me this is a matter

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of deep principle and public interest, more important than the administrative convenience of civil servants, whoever they may be. Civil servants are answerable to the Government and the Government are answerable to the House. I have said many times—and I hope that I do not bore anyone by saying it again—that all Governments, whatever colour they may be—whether they are red, white, blue or pink in the spectrum of politics—tend to gather to themselves more and more power and to hive off from the majority of back bench Members any effective check on those powers. These Select Committees have been set up for the purpose of creating some kind of check on the Executive. Whether it is of my own political persuasion or that of hon. Gentlemen opposite in another context, it does not make a scrap of difference, because I know from my experience of life that any Civil Service institution based on the bureaucratic Administration will always abuse its powers if there are not sufficient checks on it from below. I do not want to get polemical, but it is a sound argument. Therefore, I will sit down and wait to see if I get a sensible answer.
7.57 p.m.
Mr. John Boyd-Carpenter: Perhaps particularly because I was a member of the Government responsible for setting up the Select Committee on Nationalised Industries, I think it is an awful pity that a situation has been allowed to develop in which this very valuable Committee has not yet been set up for this Session. The Leader of the House knows, because he has had representations on behalf of Select Committees generally, that those of us who serve on these Select Committees attach the greatest importance to their being set up very early in the Session. Otherwise valuable time is lost.
Another regrettable aspect of this unhappy affair is that the Government seem to be drifting into a position of showing a certain lack of confidence in the ability of a Select Committee of this House to handle properly and appropriately difficult and delicate matters. That certainly would turn this very much into a House of Commons matter going far beyond the immediate problem of the particular Select Committee that we are discussing.
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Perhaps I might be allowed, without impertinence, because I have seen a certain amount of its work, to say that my experience is that it has done a remarkably good job, particularly under its present Chairman.
I think that most hon. Members will accept two general propositions. The first is that the onus of proof must be on anyone who seeks to limit the sphere of a Select Committee of this House. I am not saying that certain matters ought not to be excluded. All the same, I think that the onus of proof is on those who would exclude them. It must be so as a general proposition. I rely particularly on the most eloquent speeches on this point of the Secretary of State for Social Services that, on the whole, it is important to strengthen the supervision of this House over the Administration, and Select Committees undoutedly do a great deal. Therefore, I will not suggest—I see that the Chief Secretary is taking a note—that the onus of proof, which he may be able to discharge, lies on him.
Secondly, anybody who is likely to be exposed to this examination kicks like a steer at that prospect. I remember the nationalised industries did so very much when the Government of which I was a member set up this Committee. They said that the most terrible things would happen if a Select Committee were established. From my experience of the Public Accounts Committee—and I see present one or two hon. Members who will recall it—I know that when that Committee was considering a recommendation, which the Government, to their credit, subsequently accepted, to extend our sphere to cover the universities, the response from the universities was not one of unqualified enthusiasm.
We therefore start from the basis that the bodies which, on the proposal of the Select Committee, would be brought within its purview can be expected to react against it, but it is the duty, first of Ministers, and secondly of the House, to weigh those objections and see whether they are really valid.
I have the greatest respect for the Chief Secretary, and no doubt he will produce a considerably better argument than the Leader of the House did for the proposed exclusion. To be honest, the objections made by the Leader of the House do not stand up to examination for a moment.

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He said, first, that B.P. and the aircraft companies concerned should not be exposed to this examination because they lived in a competitive world. As the hon. Member for Poplar (Mr. Mikardo) said, the best-known of our nationalised industries in the competitive world, the air corporations, have to fight for their lives in competition, and yet it has not been thought necessary to exclude them.
Last Session the P.A.C. examined the trading accounts of a projection of the Atomic Energy Authority, which had been deliberately set up so that it should operate in a competitive world. It therefore does not begin to make sense to say that the mere fact that a body has to operate in competition should exclude it from examination by a Select Committee.
It means, of course, that that Select Committee must be particularly careful, I suggest, very often not to sit in public when such matters are being taken, and that it must give great respect to requests that particular passages from the evidence which would commercially damage the concern should not be published. But this is what the P.A.C. has been doing for years. I should not be so conceited as to suggest that what we were able to do the Committee on the Nationalised Industries cannot do equally well, and has not been doing equally well for rather fewer but still quite a number of years, and this argument about living in a competitive medium and being unable, therefore, to be subjected to examination by a Select Committee does not stand up to examination.
The other position is that of the Bank of England. The Chief Secretary would be surprised if his predecessor did not accept that there were special aspects of the Bank of England, but here again perhaps I might take first the argument of the Leader of the House. It was, I thought, a very unimpressive one. The right hon. Gentleman said that because the Bank of England was more under the control of the Treasury than a nationalised industry is of its sponsoring Minister, that was an argument against examination. It seems to me that the argument goes the other way. Other Select Committees of this House, for example the Estimates Committee and the P.A.C, spend a great deal of time examining the affairs of Departments of
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State. The fact that a nationalised industry might be described as closely related to the Government machine seems to strengthen rather than to weaken the argument for subjecting it to examination by the appropriate Select Committee.
I understood from the hon. Member for Poplar that the objection had been made that as the Governor of the Bank of England was a civil servant he could not be examined. I hesitate to accept that description of the Governor. I believe—and I hope that the Chief Secretary will agree with me on this—that his value to the Government will be very much diminished if he is so regarded. His independence includes the right to make speeches. Some hon. Gentlemen opposite may not like them, but one aspect of his value is that he is not a civil servant. He has some independent standing—[Interruption.] The suggestion was made that because the Governor of the Bank of England was a civil servant he should not be examined. I am saying that he is not a civil servant. If the House accepts that view, the argument of the Leader of the House collapses.
Alternatively, if the right hon. Gentleman is right and the Governor of the Bank of England is a civil servant, then surely it is a most extraordinary doctrine that that should exclude him from examination. I do not want to overemphasise the P.A.C, but we spend most of our working hours examining civil servants, as my colleagues on that Committee know. Therefore, on either view, whether the right hon. Gentleman is right or wrong, this is an extremely weak argument against putting the Bank of England within the terms of reference.
I must accept—and here, perhaps, 1 part company from the hon. Member for Poplar—that there are special aspects of the Bank which probably should not be disclosed even to a Select Committee of this House. But it is surely possible to deal with that problem other than by the very wide exclusion proposed in the Motion. There could be a convention, or an understanding, such as has grown up in many aspects of our parliamentary life, that certain matters are not pressed. Alternatively, if the Government were doubtful in the earlier years, let them, instead of sending the Governor as a civil servant, send the Chancellor or

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a Treasury Minister. Treasury Ministers can do anything. They can stand up and say nothing. This is an essential condition of their survival, and I suggest that some of that skill—and the present Chief Secretary has it in supreme degree, something to which his predecessors could never hope to aspire—could be used in this respect. Do not have terms of reference which exclude discussion of these matters, but in the earlier years send a Treasury Minister along and rely on his stonewalling powers. Surely that is a more sensible way to deal with this.
I agree with what my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) said about confidentiality. From time to time all Select Committees of this House deal with matters affecting national security or commercial security. They deal with them by accepting that there may be sidelining, and that if a serious case is made for evidence not being published, it should not be. In my Committee we have established a relationship with Whitehall which enable Whitehall to tell us in confidence what it would be unfortunate to publish, and it never is published. I have no reason to doubt that the Nationalised Industries Committee, which is a very well-established Committee, is capable of doing this. For all I know, it has established this relationship with the nationalised industries. I think that the right hon. Gentleman ought to show more confidence than he did in the capacity of hon. Members serving on Select Committees to treat these matters with care and discretion.
This really becomes quite an important House of Commons matter. It raises the question whether we should exclude from a Select Committee's consideration matters which it wants to consider, unless one can show an overwhelming case to the contrary. So far, that case has not been established. I shall listen to what the Chief Secretary has to say, and if he does not satisfy me that there is an overwhelming case for exclusion I shall feel bound, if a Division is called, to go into the Lobby with the hon. Member for Poplar.
8.9 p.m.
Mr. James Dickens: I think that my hon. Friend the Member for Poplar (Mr. Mikardo) made a comprehensive, indeed an unanswerable, case
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for greater public accountability to the House on the part of a variety of both publicly-owned industries or enterprises and those which are partly owned. I want to confine myself, not to the great issues of principle about which I agree with my hon. Friend, and with the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter)—and I shall vote accordingly—but to the rôle of the Bank of England. This is the nub of the matter. There are also important issues of principle involved here.
The House will recall that in 1946 the Bank was nationalised by the Attlee Labour Government. Unlike every other enterprise nationalised by that Government, this House on not one occasion in the intervening 23 years has found time to debate the Annual Report and Accounts of that Bank. There has been virtually no public accountability at all, so far as I can gather, over the Bank's many activities. It is wholly desirable that there should be.
If one looks at the recent past in this country, one can see that the formulation of economic policy has frequently stemmed from precisely the sort of examination of the Bank of England which is here excluded by the terms of the Government Motion on the Order Paper. In 1930 Mr. Philip Snowdon, the then Chancellor of the Exchequer, set up the Macmillan Committee to consider financial matters. The Committee called before them the late Lord Norman on some five specific occasions. The evidence that he gave to that Committee, in response to intensive probing from Lord Keynes and Mr. Ernest Bevin was a major factor in the '30s in influencing Lord Keynes before he brought out The General Theory in 1936. There is no doubt at all that the answers given by Montague Norman on that occasion to Lord Keynes, the fact he told Lord Keynes he had not the slightest idea of what the effect of changes in Bank Rate would be on the level of unemployment, were a decisive factor in the formulation of employment policy in the 1930s, and subsequently.
That Committee also discovered from the Governor of the Bank some of the extremely amateurish reasons given for the catastrophic decision of April, 1925, to return to the gold bullion standard and all the repercussions that flowed from that

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late 1920s and early 1930s. Thus I should find the very first item that the Government want to exclude—the formulation and execution of monetary and financial policy—totally unacceptable.
In the post-war world we have had the examination in the 1950s by the Radcliffe Committee of certain functions of the Bank of England in the City of London and its rôle in foreign exchange markets. That also brought out a lot of useful information.
What then could the Select Committee on Nationalised Industries concern themselves with today in this respect? Amongst other things, we could have from the Bank of England some of the ideas which led the Bank in the early 1950s to convince the Conservative Government of that time to adopt full convertibility of sterling—a decision which has had the most profound repercussions on the development of the British economy in the 1960s. It should lead to an examination of what has happened since 1964 vis-à-vis the Bank of England and the City of London on the one hand and the Treasury and this Government on the other. I make no personal criticism of Sir Leslie O'Brien. I have not been one of those in the past who has personally attacked the present Governor of the Bank of England. He is not a Montague Norman-type figure but a man who has risen from the ranks in the Bank.
But if it is argued, as apparently it might be, that the Governor of the Bank of England is simply another Permanent Secretary—one of a number of Permanent Secretaries advising the Chancellor—this will certainly mean instructions will have to be given to Sir Leslie forthwith to cease making public pronouncements on important matters of public policy. I would regard this as a very great pity. Life would not be quite the same for me without Sir Leslie O'Brien and his speeches, especially his pronouncements on a Friday evening—normally at London Airport setting out for a weekend conference of bankers in Basle—remarks which have been somewhat unfortunate in the recent past. Whatever criticisms one may have of Sir Leslie O'Brien and his public speeches, they are as of nothing compared to the criticisms which will develop in years to come of the attitude taken by Lord Cromer, when he was Governor of the Bank of England,
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towards the Labour Government between 1964 and 1966.
I have said before and I say again that I regard Lord Cromer's conduct during that period as being nothing short of a public scandal. I want that scandal revealed. I do not want to have to rely upon the researches, however diligent, of Mr. Henry Brandon in the Sunday Times to show me that Lord Cromer brought undue pressure to bear upon this Government during those two years when they had a small parliamentary majority, to change their financial policy abroad and social policy at home. To my great and bitter regret Lord Cromer substantially won the argument.
Mr. Nicholas Ridley: Could I make it entirely clear to the Chief Secretary that members of the Select Committee do not want to inquire into Lord Cromer's political opinions or the opinions of Sir Leslie O'Brien. That is not the sort of inquiry we want to carry out.
Mr. Dickens: Be that as it may, I express my own views as a Member of this House on the sort of functions I would like to see the Committee carry out, certainly so far as policy-making function are concerned.
On the wider aspects of policy formulation, perhaps I shall be less controversial if I say this: that I should want to know how the Bank does formulate economic and financial advice to this Government. What resources do they draw upon? Are they expert or are they, as many of us suspect, somewhat amateurish? Some of us take the view—indeed it was the view of the present Secretary of State for Economic Affairs writing a little over three years ago—that the advice given to the Government then and the advice given to Governments since the war on economic matters had been disastrously bad advice. If this is so, we have to look at the economic intelligence behind the Bank of England in terms of the advice, the way in which it was formulated and the way in which it is presented to the Government.
What consultations are there, for example, between Sir Leslie O'Brien on the one hand and Mr. Fred Catherwood. the Director General of the National Economic Development Council, on the

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other? What account is taken by the Bank of the effect of their advice on, for example, the rate of investment in the economy, on the level of unemployment in the economy, and so forth? These are all perfectly proper matters for this House to concern itself with.
On the second matter that the Government think the Select Committee should not examine, namely the administration of exchange control, I believe that here again we are fully entitled to know how the Exchange Control Acts are being administered by the Bank of England; how effective they are in doing so. How successful have they been in recent years in closing up the tax-free havens in the Bahamas, in the Virgin Islands or in the Channel Islands, with the resultant outflow of private capital abroad from this country? These are all perfectly proper matters for this House and the Select Committee to be concerned with.
The third aspect of the provisions laid down in the Motion concerns the Bank's activities as a banker to other banks and private customers. It is well known in this House that I am strongly critical of the Government's present economic strategy. However, in recent weeks there has grown up a position of some delicacy, one might say of acute controversy, between the Bank of England on the one hand and the central clearing banks on the other, on how the central clearing banks are going to carry out the Chancellor's instruction to the Bank of England to ensure that Banks restrict advances. Are we to assume that, under these circumstances, the Bank would wish to issue a policy directive to the Central Banks, as it is empowered to do? What is the relationship in this respect between the Bank and the clearing banks? I repeat, these matters are all perfectly proper matters for us to consider.
Many of us have suspicions about the rôle of the Bank of England not only in the City of London but in the advice which it has tendered to this and other Governments. These suspicions are historically well-founded. Moreover, when the history of the 1960s comes to be written, I do not believe that the Bank will come well out of it. When we review these matters, as I hope we shall, either as a House or through the agency of a
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Select Committee, either in this Session or in succeeding Sessions, I believe that we shall uncover much information which will surprise us.
One newspaper suggested this morning that perhaps a more fitting way of examining this problem would be to set up, through the Confederation of British Industries, a committee to report to the Government on the work of the City and the Bank. I reject that view. There are certainly occasions when the Bank and the City as a whole should be accountable to Parliament and the nation for their activities. A Select Committee may not be the best way of approaching the matter. I think that perhaps a better way would be through a "Little Neddy" for the City of London and its functions in the world economy.
However, whatever course of action we take, we must recognise that, increasingly, in this Session and in the years ahead, Parliament will inevitably become involved in the supervision not only of the functions of the Bank but of all the functions of finance in the economy and of bringing to public account and attention the detrimental functions—so far as Britain is concerned—which these institutions have performed in the world economy in recent years.
8.23 p.m.
Sir Henry d'Avigdor-Goldsmid: The speech of the hon. Member for Lewisham, West (Mr. Dickens) had this in common with all those which preceded it—that he was, I understood, in favour of the Amendment. But it had little else in common with them, because all others who have spoken have had experience of Select Committee work, which, I believe, has, up to now, been denied the hon. Gentleman. One of the features of Select Committee work is that there must be a measure of confidence between the Committee and its witnesses and the idea that a witness facing a Select Committee is facing a "hanging jury" will not advance the Committee's inquiry. Thus, whatever fame lies in store for the hon. Gentleman, I hope that he will get into the arena direct and there no doubt be able to find some glory.
However, on a Committee of inquiry, I do not think that his fervour would

1219
lead to the sort of results which he has in mind and which many people would like to see. One of the interesting things about this debate is that we are having a debate on the nationalised industries at which hon. Members have been present. We have had the speech of the hon. Member for Lewisham, West and that of the hon. Member for Ebbw Vale (Mr. Michael Foot) who, assiduous though he is in his attendance, has not, I think, honoured us with his presence at previous Select Committee debates.
It is a good many years since we had a Select Committee debate. The fact is that the work of a Select Committee is really more honoured in volume form than it is in speech. The volumes which we produce are monuments of erudition, and it is only appropriate that credit should go not only to the Members of the Committees but also to the clerks who look after them and play such an important part in these matters and in the production of volumes of such undoubted importance. I would instance the Select Committee's Report on the Post Office, which the Government announced that they were taking into account in their plans to convert the Post Office to a corporation. Probably many of the ideas of that Report have been incorporated in the Post Office Bill. On the Committee, we can feel that our efforts not only get polite recognition on the Floor, but sometimes achieve an approach to the Statute Book.
Ever since the hon. Member for Poplar (Mr. Mikardo) has been Chairman of the Select Committee, he has had one special objective in mind, what he calls "lunchtime directives", which cover the relation between the Minister and the nationalised industry in question. He has been at considerable pains—I think rightly—to emphasise that extra-statutory directives, if given, should be drawn attention to. This is, basically, what this debate is about.
In examining the bones of contention, I find that the only real issue is the Bank of England. I am absolutely amazed at the Government's attitude with regard to B.P., the Select Committee's Report having said, in paragraph 71:
"The inclusion of B.P. in the Order of reference seems therefore a logical consequence
1220
of the Government's retention of the power of veto … But in making this recommendation they have it in mind, that if the power of veto continues never to be exercised by the Government, this fact will obviously give B.P. a very low priority in Your Committee's selection of matters to be considered by them."
So when the Government do not intervene, the Committee has nothing to say. This shows that the words "Select Committee" cause a thrill of horror to go through all these distinguished gentlemen who run these great industries. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) referred to chairmen of other nationalised industries "kicking like steers in a rodeo".
The opposition to the Committee's recommendation at the moment is fictitious and based on nerves. On the lunchtime directives, I am struck by the fact that, over the years, relations between the House and the Bank of England have changed very much. After all, it is only 11 years since we had a tribunal of inquiry into the so-called Bank Rate leak. Hon. Members will recall that the result of that inquiry was the discovery by the Tribunal that everyone concerned had acted honourably, honestly and in good faith. Subsequently, the Prime Minister produced another good result from the inquiry when, referring to the lady who is now the wife of my hon. Friend the Member for Horsham (Mr. Hordern), he said:
"Our main difficulty … was to protect … the Central Office employee from possible victimisation."
He added:
"… the fear of victimisation was a very real one."—[OFFICIAL REPORT, 3rd February, 1958; Vol. 581, c. 838.]
Thus he protected an 18-year-old employee of the Conservative Central Office from victimisation. It also had the result that while the fixing of the Bank Rate had been done by the Bank of England it is now done by the Chancellor of the Exchequer. That Tribunal was responsible. Clearly, the activities of the Bank of England and the Treasury are hard to separate. When the Treasury puts out this great defence of the Bank of England, as it is doing in the terms of the Motion, I interpret it as being a defence of the Treasury itself.
Almost exactly 30 years ago something happened in Europe which proved

1221
to me that a change in the relationship between the Bank of England and the Government was necessary. It happened in March, 1939, as Hitler and the Germans moved into Prague and as the Czech State, as it was, came to an end. Shortly after that event the Bank of England, without any noise, transferred to the German Government the gold reserves that it was holding for the then Czech Government. There has since, to my knowledge, been no suggestion that those reserves should be given back to the Czechs. Hon. Members will also remember that as a result of that transfer a fund was established in this country to compensate the Czechs. One person who did not benefit from it was the noble Lord, Lord Boothby, but that is another matter.
We are in a totally different position now. Only the other day we had an open discussion about Baltic gold. I do not wish to argue which way the decision should have gone. A decision in that matter was taken by Parliament in public discussion, and that is the important fact. The disposal of Czech gold to Germany at a time when war was imminent—indeed, we were virtually at war with the Germans—was never a subject of public discussion in the House in those days. There have, therefore, been some improvements.
We do not need to pursue that matter before us on ideological grounds. It is clear why this limitation on the Select Committee's powers to look into the affairs of the Bank of England exists. If B.P. becomes a low priority to the Committee, then, as far as I am concerned, the Bank of England should have a nil priority in its consideration. Perhaps that is the object of the Government tabling the Motion. I do not think that any hon. Member, including the hon. Member for Poplar, would wish us to spend our time discussing the Bank of England within the terms of the Motion.
In view of what the Select Committee has recommended and the feelings of hon. Members on both sides who have spoken—I draw particular attention to the remarks of the hon. Member for West-houghton (Mr. J. T. Price), who has had many long years in the Whips' Office and is a loyal supporter of the Government—hon. Members should reflect that,
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as even hon. Members like the hon. Member for Westhoughton are prepared to defy the party Whip and vote for what is obvious equity, other hon. Members may feel it right to do the same. I have great pleasure in being associated with the Amendment.
8.34 p.m.
Mr. Edwin Brooks: It has been said on many occasions that our parliamentary system is a compendium of illogicalities and anomalies but that it works. It could be fairly said that the first half of that statement might apply to the speech of the Leader of the House. A procession of speakers since my right hon. Friend spoke has borne testimony to the fact that we have had from the Government the thinnest possible case that could be deployed to justify their action in this matter.
Many hon. Members have already spoken at some length, and I do not wish to recapitulate their arguments, about the sheer illogicality of excluding Beagle, where the Government will have a 100 per cent. interest, while having for many years been able without any difficulty to investigate the affairs of B.E.A. It is quite indefensible that in a matter like this—the same applies to Shorts where nearly 70 per cent. of the capital is owned by the Government—we should have an attempt made to block the perfectly legitimate demands of a Select Committee that it should have the right to see just what the Government are doing with the controlling interest they have acquired in our name.
There is another minor illogicality, but an indefensible one, in the action the Government ask the House to support this evening. Reference has been made, but I think a word or two more should be said about it, to the extraordinary position of the Horserace Totalisator Board. So far as one can tell from paragraphs 112–115 of the Special Report from the Select Committee, no objections at all were made—certainly not of any substance—to the proposal that this Board should have its affairs investigated. It is said that
"The Treasury indicated in evidence that Ministers had no strong views on whether or not the Board should be included … and the Home Office … confirmed in a letter that there was no objection to the Board's inclusion."

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That is splendid, but apparently at some stage subsequently, perhaps because the Select Committee took the lack of objection by Ministers seriously, we find that this Board is to be excluded from investigation. It may seem a small matter, but it seems to expose the Government once again to a perfectly legitimate charge that the right hand does not know what the left is doing. The Committee at that time said that it welcomed
"the co-operative attitude of the Home Office."
Now I suppose we should exclude that sentence. Why did the Committee welcome that co-operative attitude? It said
"The Board's accounts are in fact published and laid before the House, but as they are not audited by the Comptroller and Auditor General, they may be regarded as outside the traditional field of the Committee of Public Accounts."
I should have thought that a fair supposition, but whether or not the Public Accounts Committee will have the opportunity to investigate the Board's affairs, which is in itself a serious matter—the Comptroller and Auditor General does not have any control over the activity—the Report says:
"The Board appears to have a statutory monopoly and a substantial income arising from it, as well as a large number of customers among the general public who are entitled to be satisfied—so far as a Parliamentary Committee can satisfy them—that the Board's affairs are managed in accordance with the general interest."
We must ask the Government just what is happening. We have here a Board which has been set up with considerable powers and, we understand, a considerable income. I should have thought it essential that the principle of parliamentary accountability should be maintained in dealings of this sort.
Even if I did not think so, apparently the Home Office thought there was no objection and apparently the Treasury said that the Ministers had no objection. From where has the objection come? On the single query alone we are entitled to say to the Government that we shall not support them in the Lobby this evening. If they know what they are doing they will take this matter back and think about it a lot more carefully, because many of us are beginning to wonder just what was meant in 1945 when we on this side of the House said, among
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other things—I must stray to party matters—
Mr. Peart: I hope my hon. Friend heard me when I made the statement about the Totalisator Board and said that there was no objection to it being examined and that it could be added for investigation.
Mr. Brooks: I am grateful to my right hon. Friend for elucidating that, but hon. Members came to the House today fully assuming that the Motion, which has been on the Order Paper for many long weeks, meant something and there is no reference whatever to the Totalisator Board in this Motion. The inference must be that this was excluded as a result of policy. I wish not to flog this argument but simply to state the facts.
The argument about the Totalisator Board is not the essence of the case. The basic argument has fallen into two related sections: accountability, and the Bank. This is why a moment ago I began to refer back to 1945. In a moment I shall go back to 1937. The first argument has been on the principle of parliamentary accountability. This is the essential point. It is one on which we as a Parliament cannot compromise. We cannot compromise on this point because, as the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) made clear, the onus of proof must be accepted by those who seek to exclude Parliament from such consideration.
In 1945 it was said—it was long overdue—that the Bank of England was such a powerful body that it should have itself subjected to public ownership. In those days we used to use a rather old-fashioned word—nationalisation—but it meant the same thing. The principle presumably was that the public had a right to own and control this great manipulative instrument of financial control. If it did not mean that, why did we bother to nationalise it at all? [An HON. MEMBER: "That is a good question."] It is. So far we have not had a good answer. This is where the argument about public accountability—that is, the general argument—becomes focused upon the particular instance.
The Motion states—I hope that this part has not been amended—that a list of activities of the Bank of England is to

1225
be excluded. As my hon. Friend the Member for Poplar (Mr. Mikardo) said, it is difficult to see what is left. Amongst those which are to be excluded are:
"activities, as agents of the Treasury, in managing the Exchange Equalisation Account and administering Exchange Control".
This made me a little curious, because as a member of the Public Accounts Committee I have the opportunity, which I have not so far taken, to examine the Exchange Equalisation Account. It is a highly secret document. It is a document which can be examined only under conditions of extreme care—this is understandable and proper—but the document is available for inspection. It is also available for detailed scrutiny by the Committee as such.
On checking, I found that it was last examined in 1962. It is only a very brief account in the published Minutes of the Public Accounts Committee, for reasons which will become apparent in a few moments. Three questions and answers were published. The first two were purely formal, welcoming the Treasury. Then came this third question by the Chairman of the Committee:
"We do not every year take the Exchange Equalisation Account in the course of our enquiries but I think it is usual when the Public Accounts Committee does examine this Account, that the Treasury should introduce it with a short explanatory statement of how it works. If you are ready to make one, I think it would be helpful to the Committee?"
Then follows a series of asterisks and these words:
(remaining evidence not printed).
But, of course, the discussion went on. There was an exhaustiive analysis of the Exchange Equalisation Account, this highly secret document, this document which has been described as a shock-absorber to cushion all the vicissitudes to which the currency exchanges are subjected.
How should I know that this was a searching scrutiny? I was not there, and it is impossible to read the account. There is one good reason for my knowing. The Chairman who put that question was the present Prime Minister. I assume that the present Prime Minister would have carried out, as he did in those cases where the report gives full details of his interrogation, a searching examination of this highly secret document. But no one in the House knows what went
1226
on. Presumably the members of the Committee exercised discretion in the way they handled that highly confidential and secret information.
It is a little odd now to say to one Committee of the House, "Your members apparently are not to be trusted in their examination of certain aspects of the Exchange Equalisation Account, although other Committees have been doing the same thing for many years". But for how many years?
This is where the research gets a little more interesting. It did not follow automatically that the Public Accounts Committee was handed the Exchange Equalisation Account on a platter, that it had it offered to it. The Account was set up in 1932, when the Government of the day refused adamantly to let the Committee look at it or to let the House in any way have access to the information. One can understand that. It was a new development in a situation of great financial uncertainty, which is not a situation that we are unfamiliar with today. For five years the Government said adamantly that they were not prepared to have the Committee look at the document. They said that it was too confidential and that it was far too dangerous to let Members of Parliament look at it.
Eventually Parliament, being Parliament, decided that the Government could not get away with it any longer, and so on 28th June, 1937, the members of the Public Accounts Committee put down an Early Day Motion. Apparently in those days Early Day Motions had much more effect than they have today because, by an extraordinary coincidence, that very same day, within hours, the Government accepted the argument. Sir John Simon, then Chancellor of the Exchequer, made a speech in the House beginning at 3.46 p.m. that I can recommend to all hon. Members. I was very tempted to read the whole of it, but time forbids and the patience of the Chair would not enable me to go through it. Probably my right hon. Friend read the speech before he came here tonight, because I felt that whole extracts had been lifted bodily from the earlier sections, where Sir John reiterated the earlier, time-hallowed arguments.
But my right hon. Friend should read on and see the second part of Sir John Simon's speech, because there he said

1227
magnanimously that the time had come when sense should prevail and the Public Accounts Committee should, at long last, have the opportunity of looking at the Exchange Equalisation Account. He added some very nice things about the Committee. He said:
"I think the time has come when the Public Accounts Committee, a most responsible Committee which has to be appointed every Session, and which guards these matters in the interests of us all, might reasonably desire an opportunity of examining, after a suitable interval,"—
a period of several months—
"the state of the Account itself, together with the amount of its surplus or deficit."
He later said:
"We in the House of Commons naturally place great confidence in the Public Accounts Committee. It is a most important Committee of the House, and one of its duties is to report, if it finds on examination of the public accounts anything irregular. Therefore, while stipulating that the information shall be given confidentially, I should be prepared to agree that that would not alter their right, if they found any point in the statement put before them "—
this is the Exchange Equalisation Account, a highly secret document—
"which they consider to be irregular and for that reason calling for special mention, to make a report on it to the House of Commons."—[OFFICIAL REPORT, 28th June, 1937; Vol. 325, c. 1662–1664.]
The Public Accounts Committee enjoyed that right as recently as the occasion I mentioned a moment ago. Presumably—I have no means of knowing—the Committee decided, having investigated something which must have aroused its curiosity or concern, that there was no point in pursuing the matter further. If it had wished to do so, it could have come to the House.
I have dwelt at some length upon this historical anecdote because it is highly relevant to what we are debating, which is the very thing mentioned in the Motion. I do not know whether there would be problems of overlap between the Public Accounts Committee and the Select Committee on Nationalised Industries. However, that is not the argument with which we are presented, because there are many other things that the Select Committee on Nationalised Industries is excluded from considering, and therefore there must be an underlying, different reason to that of overlap.
The reason is the ancient reason why it took us about 600 out of 700 years' parliamentary history to have democracy at all in this country. It is the fear of those who govern, who think that they have some God-given right to govern, and to be immune to the criticism and surveillance of us, the people.
I believe that on this issue the Government must think again. If tonight they do not, they will do so sooner or later. This is going to happen, it has to happen, and I only wish that it were going to happen tonight.
8.50 p.m.
Mr. David Crouch: For two consecutive days the House has given consideration to the problems of Select Committees. The House, as we all know from its history, has its ups and downs and the quality of the debate tonight has been very high. It has been the House concerned about its future, about its reform, about its function; it has been Members of Parliament concerned about meaning to be representatives of the people, acting in the mid-twentieth century amidst the complexity of government and recognising the very important tasks which we have to perform. Many of those tasks have to be performed outside this Chamber.
I am glad that the hon. Member for Bebington (Mr. Brooks) took us back to 1937, quoting a very relevant case in support of the argument, put so well, lucidly and forcibly, but so fairly, by the hon. Member for Poplar (Mr. Mikardo). I did not begrudge the hon. Member for Poplar one minute of his long exposition of the problem facing the House and the Government.
As I have said, I was glad that the hon. Member for Bebington reminded us of a precedent of over 30 years ago. I agree with him that the House may reach the wrong decision tonight because of the force of the Whips, but I also agree with him that it will change its decision and recognise its mistake a few years from now.
Perhaps the strength of our debate has been because we have in the main been speaking as members of Select Committees, aware of an even heavier responsibility when we sit in Committee, aware of our responsibility to be impartial, to be cautious and confidential and to be wise.

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At the moment, there is not a member of the Treasury team on the Government Front Bench. I do not criticise the Chief Secretary to the Treasury for not being here, since he has been present throughout most of the debate. We were also visited for a short time by the Chancellor of the Exchequer himself, whom I was glad to see here. It is no criticism when I point out that they are not here now.
I want to acknowledge that they have been here and have been making a considerable interest in what we have to say—as is only right—but I must add that I have been watching their faces. How solemn and how grim they have looked! The right hon. Gentleman the Leader of the House never looks solemn and grim but his two colleagues have presented tonight an entirely different look. It is the look I have seen, and I am sure that every chairman of every nationalised industry has seen, when dealing with the Treasury, because it is the Treasury which really rules the nationalised industries and it is the Treasury which I believe really rules the reform of this House.
It is this House which has to push the Treasury into reform, which has to find the money to give us sufficient facilities to carry out our functions in Select Committees. I am here recalling the words of the right hon. Gentleman the Secretary of State for the Social Services, the former Leader of the House, who said in Select Committee that we would have to find such funds and would have to persuade the Treasury.
It is the Treasury which is the slowest to move forward on the whole question of reform, and I can well understand the Treasury feeling reluctant over the last six or seven months when we have been pressing for the Bank of England to be included in the list of Government bodies which we as a Committee feel we have a right to investigate. But this slowness to move has come from the Treasury itself, and I hope that the presence of the Chancellor and of the Chief Secretary during the debate will at least encourage them to go forward and recognise the mood in the Chamber tonight and the mood in the speeches which have been made.
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What I have to say is concerned purely with reform. One member of the Government Front Bench who has always excited my interest on this question of reform is the Secretary of State for Social Services, particularly when he was Leader of the House. While I could not agree with all of his experiments, I was always prepared to try them. While I felt that morning sittings would prove a failure, I was prepared to go on with the idea. I was one of a few hon. Members on my side prepared to give a trial to sending the Finance Bill upstairs. I believe in giving things a trial.
I have often been encouraged when listening to debates in this Chamber, or at meetings with the right hon. Gentleman, when he has talked about reform. The most important thing he felt about reform during his tenure as a reformer in the Cabinet was the need for the reform and strengthening of the Select Committees and the establishment of the new specialist Committees. He encouraged me to believe that at this time in our history, when Parliament must show that it can succeed as a parliamentary democracy, the place where it can succeed, apart from in this great debating Chamber, is in investigating committees which investigate events before they happen.
We are discussing reform and the revitalisation of the work of the House of Commons. The former Leader of the House used to speak of the Select and Specialist Committees as providing a continuous check on the power of the Executive. The Select Committees should grow into the hidden strength of the House of Commons.
I am concerned that for six months there has been delay in setting up the Select Committee on Nationalised Industries. I accept the apologies given by the right hon. Gentleman at the beginning of his speech. I know his difficulties. He ran into an impasse, conditioned not really by himself, because I believe that he wants to carry on the reforms of his predecessor. That impasse was between the ideals of our Committee, inspired by his predecessor; and led by the hon. Member for Poplar, on the one hand, and the Treasury, on the other, which had dug its toes in absolutely.
Mr. Peart: The decision to reform our procedure, and, linked with it, the decision to set up two new Select Committees was a decision of the Government. I pay tribute to my predecessor. It is my wish that we should continue with these experiments. This evening I have announced that I wish to set up another Committee, because the experiment is not yet over. Inevitably there will be a time when Parliament and the Government will have to make a final decision about the future of Select Committees.
Mr. Crouch: The right hon. Gentleman will always have my support when he stands up, as he has done, and speaks of moving forward and reforming. He will not have my support, however, unless, in addition to standing up at that Box, he stands up in Cabinet and meetings with his colleagues and leads them forward in reforming the functions of this House.
One of the most impressive witnesses to give evidence during the last sitting of the Select Committee was the predecessor of the Leader of the House. He came into the Committee after two all-night sittings a very tired man, but he was not tired when we woke him up to answer our questions, as can be seen from his replies. I should like to quote from Vol. 2 of the Minutes of Evidence taken before the Select Committee on 12th July, 1967, when the predecessor of the Leader of the House said this:
"This is why I have been so keen on Committees like your own meeting in public with the Press present so that in a sense what you are doing is hot news, and people feel this. There is a great difference between discussing things when they are hot and discussing things when they are cold."
This evidence is already cold, as the hon. Member for Poplar has said. There are many more passages I should like to quote from that evidence, but it is too late. I think that the House senses from what I have said that the predecessor of the Leader of the House wanted to revitalise Specialist and Select Committees and to give then strength. He asked for continuous change; he spoke of Parliament reasserting itself, and of more effective Parliamentary control.
I am often asked by constituents and members of the public what I think is
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happening to Parliament. I am not depressed about the criticisms made of the function of Members of Parliament. My answer is always that Parliament will go forward with its reforms and has strength in its new Committees. The future of Parliament and of the service which it provides as a check on the Executive is in making stronger the Select Committees. My criticism of the Government is that they have stopped in their tracks—
Mr. Michael Foot: It is an extension.
Mr. Crouch: It is not only an extension; it is an emasculating extension, whatever that is. The Government have stopped in their tracks, I cannot support them tonight and I will go into the Lobby against them.
9.3 p.m.
Mr. Michael McGuire: I have listened with interest to the good humoured speech of my hon. Friend the Member for Poplar (Mr. Mikardo) and of my hon. Friend the Member for Bebington (Mr. Brooks), who pointed out the magical effect of the Early Day Motion as long ago as 1932 in bringing the then Chancellor to the House to make a statement that one of the barriers that had been placed by the Treasury in front of the Public Accounts Committee would be removed. He said, in so many words, "We know that you are grown up men and women and you will act accordingly."
The limitations in the terms of reference we are debating tonight, imply that there will be first-class and second-class members of Select Committees. The Public Accounts Committee has had the power which we seek since 1932, and it has never been withdrawn. My right hon. Friend the Prime Minister looked into the matter when he was Chairman of the Committee in 1962. Bound up with the Bank's activities in managing the Exchange Equalisation Account and administering Exchange Control there must be its responsibilities for the management of the gilt-edged, money and foreign exchange markets. I cannot see how it can be suggested that one does not include the other. If the Public Accounts Committee has the power to investigate those functions and we are denied it, it is tantamount to saying that

1233
we are not responsible enough and, therefore, are second-class Select Committee members.
The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) said that, in reality, we are engaged upon a debate on the nationalised industries. I would put it rather differently. We are debating the lack of any considered reply from the Government to the Select Committee's Report of September last on the need to include in the terms of reference of the Select Committee the seven bodies which it felt should fall within its purview. The only response has been this Motion setting out the proposed terms of reference. If we had had a considered reply in the form of a statement by the Leader of the House, it could have been debated and, presumably, we would not have had these restrictive terms of reference. That is why I suggest that what we are debating tonight is the lack of a considered reply to our Report.
My hon. Friend the Member for West-houghton (Mr. J. T. Price) said that hon. Members are not drafted to serve on Select Committees. Soundings are made. When they were made to me, I was enthusiastic, because I regarded membership of a Select Committee as being something more than membership of our ordinary committees. It occurred to me that membership of this Select Committee would enable me to draw on my industrial background, which would be useful when the Committee inquired into such matters as fuel policy, the Coal Board, and possibly the nationalised industries generally. I suppose that the members of the Select Committee are intended to represent the broad knowledge and varying experience of hon. Members.
As I say, I was enthusiastic when I was first appointed to serve on the Committee. However, as time went on, one's enthusiasm was somewhat dampened, even though one was able to contribute to its proceedings and learn something from them. The stage has now been reached when the Select Committee reports, and the Government act upon it at their leisure by giving hon. Members a debate on the Report. Apart from that, very little is done about it. I suspect that the Government regard Select Committees as performing a useful function in that hon. Members are able, to use
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one of the cant words of the day, to "participate". The fact remains that nothing much flows from a Select Committee's Report.
The Sub-Committee on which I served debated the policy of the Gas Council and the way in which it was going forward with its plans. The House has not yet had an opportunity to debate our Report, though there are a number of points in it which are extremely relevant.
The Public Accounts Committee does not seem to have any limitation, except that of any Committee, namely, prudence in exercising judgment on matters of vital importance or security or whatever it may be. We have exercised prudent judgment, as I think has every other Committee. But if the Public Accounts Committee has power to do what is being denied to us, the House should reject the Motion out of hand. If it comes to the question whether we shall vote in favour of the Motion, as a loyal supporter of the Government it is not easy for me to say that I will reject what, after all, is the Government's policy, but I will, quite unashamedly, reject it.
I think that the best thing to do is to withdraw the Motion and to bring it back next week in the form asked for by hon. Members who have spoken. If we defeat it—and it is quite possible—we shall simply be in a vacuum. We shall have no Select Committee because we have refused the terms of reference and the Committee will not be set up until an even longer period has gone by. To use a homely phrase, I think that my right hon. Friend is carrying the can. I do not know for whom, but I have a suspicion that it is probably for the Treasury and the Bank combined. I think that the Motion should be withdrawn and the terms of reference revised.
We have been delayed three months. In the last two years the Committe has been set up three months after other Committees. It means that it has to examine matters in a short period of time. Therefore, I do not think that it can do justice to the subjects that it is supposed to investigate. I do not see why the Committee should be set up so late—much later than the ordinary run of Committees. We could get under way very quickly after the Queen's Speech, but we have been hampered and restricted.

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All hon. Members who have spoken have explained their objections. I support those objections. I have outlined the power of examination that is given to one Committee, which will presumably be denied to this Committee. Unless the terms of reference in the Motion are withdrawn and drafted in a sensible manner, I will oppose it.
9.13 p.m.
Mr. Nicholas Ridley: I can put the mind of the hon. Member for Ince (Mr. McGuire) at rest on one point. The proposition before the House would be to vote on the Amendment first. If the Amendment is carried, we can then vote the Committee into existence. Therefore, if we succeed in the Lobbies tonight, there will be no further delay such as the hon. Gentleman fears.
It is pleasant when the House is what I call anti-consensus; that is, when the two major parties are battering away at the two Front Benches. It always seems to produce by far the best and most interesting debates. Students of politics might ponder the fact that the consensus under fire produces a real live debate which is often more impressive than the organised orthodox party debates across the Floor of the House.
I should like to say something about the three industrial companies, B.P., Beagle and Short Bros. I do not think that the Leader of the House put forward the right argument for excluding them. The right hon. Gentleman suggested that because they are in a competitive situation—and all of them are—it would be wrong to go into their affairs. Practically all the nationalised industries are in a competitive situation. We are used to handling delicate commercial matters in such a way that they are not used against the industries. Therefore, the right hon. Gentleman has totally failed to produce an argument for excluding these three companies.
Clearly there is a limit to the industrial companies that the Select Committee can examine. I believe that there are 200,000 to 300,000 industrial companies in the country. I cross swords here with the right hon. Gentleman's predecessor who suggested that the Select Committee should examine all private industries at one time or another in future.
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I believe that the market is the correct test for private industry—whether its shares go up or down, whether it can borrow more money, whether it goes bankrupt or is taken over, and so on. This is the accountability for private industry, and therefore my test as to whether an industry should be examined by a Select Committee is simply whether it is controlled by the market or by the Government. There is no doubt that Short Brothers and Beagle Aircraft are controlled by the Government. They are wholly-owned and controlled by them. B.P., on the other hand, seems to be nearer a private industry than a nationalised one. I am not thinking of its 49 per cent. as opposed to 51 per cent. I am not making that point. I am saying merely that it has a share quotation, it raises new capital in the market, and it behaves in every respect like Shell, Esso, or any other private oil company. On that basis, the Leader of the House could make a good case for examining B.P., but it would not apply to the other two companies.
Dealing with the question of the Bank of England, it seems to me that the Leader of the House has insufficient trust in members of the Committee, and the point which I have just made about industry bears this out. The right hon. Gentleman feels that we cannot be trusted to keep to ourselves confidential information which we might get about B.P., or Short Brothers, or Beagle Aircraft. It is because of this that he thinks that we should not be allowed to consider them. This is a slightly derogatory attitude to take, that members of the Select Committee cannot be trusted to deal with these matters in this way. I believe that this is the motive behind the whole of the Government's attitude over the Bank and the other institutions which they want to exclude. They do not believe that we can be trusted.
I think that we have developed a very good way of deciding what is policy and what is administration. It is curious, but if one asks a witness a question of policy, one's colleagues begin to bridle very quickly, particularly if it is a political matter. It is surprising how very few political questions are asked of witnesses, and how we are able to concentrate almost entirely on administration. I think that where we have got into difficulties

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over the Bank is that Ministers have simply given up the job of trying to sort out how much of the Bank's activities are policy and how much of them are administration. I agree that this is a difficult matter. We have to do the job for the Government.
The value of the Select Committee's investigation into the Bank would be that we would be able, rather shakily and not very exactly, to determine those areas which were administration and those which were policy. I believe that this is the service which the Select Committee has done for the nationalised industries it has investigated. It has forced the Government to consider what part of their dealings with other nationalised industries have been policy and what part have been administration, and we now have a healthily developing move towards public directives if the industries are to do something which is not commercial, payment for carrying out social services, and the identifying of the exact thing which each of these industries is to do.
The effect of an investigation into even such a highly delicate thing as the Bank of England would be to force the Government to begin to think about what they are trying to make the Bank do, and we would force them to use mechanisms which could be discussed and investigated to see whether they were effective. Sir William Armstrong, when talking to the Committee about the Bank's function in managing the gilt-edged market, said:
"… the way it is managed in the market is the business of the Bank and we cannot interfere with it."
He said that one has to give the man on the spot a general indication of one's policy and leave him to manage the market. This is exactly right, but what we say is that the means by which this general indication of the policy is given is the crux of the inquiry. The policy is a matter for the Government. If I may repeat the slight criticism I made of the hon. Gentleman the Member for Lewisham, West (Mr. Dickens), he was trying to dictate what the policy should have been. If we tried, as a Select Committee, to decide how to run the Exchange Equalisation Accounts or the interest policy, or something like this, we would get into the most appalling trouble. I accept that immediately.
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What we are trying to do is to decide how the Bank is divided up into its various parts; how communication is established with each part and how the accountability of each part can be improved. This is something which could be undertaken without any risk at all.
I must end by underlining what has been said by the hon. Member for Poplar (Mr. Mikardo). The witness from the Treasury said that the Bank had seven main functions; four were as an agency for the Government and three were independent of the Government. If I may read them out, then we can check each against the exclusions which have been named. The issue of notes is the only one which is not excluded. The management of the National Debt is specifically excluded; the management of the Exchange Equalisation Account is specifically excluded; the administration of exchange control is specifically excluded; the central bank and banker to the banks of this country is specifically excluded; commercial bank to a very small number of customers is specifically excluded, and banker to the central Government is specifically excluded. So that on all the major subjects we are excluded and the only one which is open to investigation is the question of the issue of notes. I cannot understand how a full-scale and meaningful inquiry can take place with those restrictions.
The House has made it extremely clear it believes that these terms of reference are not wide enough. There has not been one speech supporting the point of view of the Government and the supporting position which the right hon. Gentleman has taken. Other central banks round the world are scrutinised. The Radcliffe Report itself dragged all these out into the open. Why the members of the Radcliffe Committee are worthy of being trusted in a way we are not in this House I do not understand, especially when I see several people who were on that Committee have since come into severe disfavour with the present Administration.
I am quite certain that the attitude of the Leader of the House is wrong. If he were to trust the Committee he could exclude areas, perhaps even bigger areas than he might imagine, without the slightest difficulty where he had a genuine

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case that it was a delicate matter. If, on the other hand, he insists on not trusting the Committee, in leaving it so narrow that no investigation is worth supporting, he will find this agitation will gain against him. As the hon. Member for Bebington (Mr. Brooks) has said, he will find it extremely difficult to evade having to climb down from the position he has taken, which is really rather short-sighted.
9.24 p.m.
Mr. Brian Parkyn: I warmly support the Amendment put down by my hon. Friend the Member for Poplar (Mr. Mikardo) and also the hon. and gallant Member for South Fylde (Colonel Lancaster). In taking part briefly in this extremely interesting debate, I would say I was delighted when my right hon. Friend the then Leader of the House pushed for the setting up of the specialist Committees two years ago. I was even more delighted when I found myself appointed to the Select Committee on Science and Technology, which in many ways is unique because it genuinely is a Select Committee covering one area of activity, science and technology, but going interdepartmentally and with a great deal of freedom.
This debate is concerned not alone with the question of the Bank of England, about which I know nothing. I believe, with my hon. Friend the Member for Poplar, that this is a matter of what Parliament is all about, of democracy and of the taxpayers who sent us her to look after their interests, which is, in the final analysis, why we are here. It is a question of ensuring final accountability on the money which the taxpayers give the Government. A Select Committee, and particularly a specialist Committee, is more than just a body to ensure the accountability of the Executive. The hon. Member for Canterbury (Mr. Crouch) touched on the other important aspect, that it is a Committee which should take part in the process while things are still warm and policy is developing within the Government.
I have the honour to chair a small, quick inquiry, which is still going on in the Select Committee on Science and Technology in connection with carbon fibres. We shall come out with a report
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quickly, because things are moving. It is a question not just of getting Government accountability to Parliament, but also of enabling the right decisions to be made. The question is whether the whole concept of a Select Committee on Nationalised Industries should not be reconsidered and whether we might not have a Specialist Committee concerned with finance and one concerned with power and energy policy rather than taking the various constituent power industries.
We should take a much more basic look, now that we have started specialist Committees, at whether we need a Public Accounts Committee of the type that we have now. A great deal of what it can do, and has done effectively, could be done by the Executive and need not involve Parliament. Perhaps we could consider the kind of Specialist Committees and accountability and involvement of Members of Parliament that is needed. It is very hard work, and we must feel that it is justified.
If we want full accountability, we must allow M.P.s to be free to decide their area of operation. We have been involved many times—I see the Chairman present—on the Select Committee on Science and Technology in matters concerning national security and commercial sensitivity. On the whole, we have been discreet and responsible, as all hon. Members must be, but it must be for hon. Members to decide. If the Amendment is carried, the Government, the Executive, the Treasury and the Bank of England will be satisfied with the honourable intentions and the discretion of hon. Members in carrying out their responsibilities for their nation.
9.30 p.m.
Mr. J. Bruce-Gardyne: It is with some trepidation that I enter into the debate because I am the first hon. Member to speak from this side of the House who is not, and has never been, a member of the Select Committee. Perhaps it is not a bad thing that my hon. Friends who are members of the Committee should receive a word of support from outside their ranks. I agree entirely with what they have said.
My excuse for intervening is that I believe that the decision which we shall take tonight will be of considerably

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greater importance by implication than might appear from the subject matter of the debate. I will explain why, but first I must comment on the question of including B.P. within the Committee's terms of reference.
The hon. Member for Poplar (Mr. Mikardo) said that he could see no reason, if B.E.A. was to be included—after all, he pointed out, B.E.A. was in a competitive position—why B.P., which was also in a competitive position, should be excluded. There is a vital distinction between the two to which my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) pointed. In the case of B.E.A. there is only one shareholder, Her Majesty's Government. In the other case, however, there is a vast mass of private shareholders who are the effective owners of the company.
The main argument against including B.P. is of doubtful validity, and since it has a certain relationship to the major matter under discussion—namely, the Bank of England—I wish to draw attention to it. The main argument against including B.P. seems to be that B.P. might be embarrassed in many of its overseas markets and areas of production by emphasis being laid on the fact that it is Government-controlled. In this context, what the Committee has proposed is highly significant, for we read in paragraph 70:
"Your Committee would see advantage … in their having the power to discover … the extent to which the limited powers of the Government over the Company have been or could be used, and to inform the House accordingly."
If the Committee had the power to do this, I believe that it would establish clearly the really minimal, almost non-extant, amount of Government interference in the control and operation of the company. Far from this being to the disadvantage of B.P. internationally, it might be to its advantage.
The lesson I draw from this—and this is where the matter becomes relevant to the main subject under discussion, to which I shall come—is that on many occasions an atmosphere of secrecy and exclusion from the investigations of the Committee: diminish rather than enhance confidence. There is a great deal in the old French saying that to know all is to understand all, and I urge the Leader of
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the House to pay more attention to this aspect.
The main argument tonight concerns the extent to which the remit of the Select Committee should empower it to investigate the workings of the Bank of England. It is here that we are possibly dealing with what could be a turning point in the whole development of the system of specialist Committees. It is for this reason that the outcome of this debate and the result of the Division may have a much wider significance. If we accept the Motion without amendment we shall, in effect, be saying that the movement towards the development of specialist Committees is to be conclusively reversed.
We have inevitably heard a certain amount about watchdogs, and various analogies have naturally been drawn. This seems a good test case, for if we are to allow the Select Committee on nationalised industries to have its field of investigation circumscribed in the way proposed by the Government, we shall be saying that watchdogs are permitted provided they have no teeth.
On the other hand, if we accept these Amendments which, as several hon. Members have pointed out, were most temperately proposed and supported by the hon. Member for Poplar and my hon. and gallant Friend the Member for South Fylde (Col. Lancaster), I hope we shall be setting a very important precedent for the future. I have always believed that the coping-stone of the edifice of Specialist Committees which have been developed on a very small scale in the last year or two would be a Specialist Committee with responsibility for scrutinising the management of the nation's economy. We are a long way from that.
I accept and recognise, as we all must, that we have to move by small steps. We cannot hope to get the full extent of what some of us would like to see by way of proper scrutiny of the actions of the Government in one bound, but, if we accepted the Amendments we should be taking a vitally important step forward. In doing so we should recognise a process of progression which could eventually end with the establishment of a Specialist Committee charged with the duty of scrutinising the Government's control of the national economy.

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We have obviously got to move gradually, particularly in a matter which hon. Members recognise is in many respects a delicate one. I need not read paragraph 49 on page 14 of the special report because my hon. and gallant Friend has read it. It seems absolutely clear that what the Select Committee proposes is very modest, cautious and reasoned. The objections advanced by the Leader of the House are twofold. The first amounted, although he did not put it this way, to the argument that we could not be sure that the Select Committee could be trusted to behave with proper discretion. Most hon. Members who have spoken from either side of the House have disposed of that argument. Many have pointed out that the whole record of the Select Committee disposes of that argument.
The second objection advanced by the Leader of the House could be fairly summarised by saying that we cannot split the operations of the Bank of England from the operations of the Treasury. I recognise that we cannot make exact parallels between the Select Committee on Nationalised Industries examining the affairs of the Bank of England and the Federal Reserve Board going before Congress. This was clearly set out in answer to question No. 19 in the evidence in an answer by Sir William Armstrong to my hon. Friend the Member for Barkston Ash (Mr. Alison). Sir William Armstrong pointed out that while:
"it is perfectly true that the Governor is not a civil servant and has had by custom a position which he has felt able to use for making public statements. However, that is quite a different thing from the position of the Chairman of the Federal Reserve Board and the Federal Reserve Board itself which will settle its own affairs whatever the view of the President."
We have to accept that there is a distinction here, and to that extent the activities of the Bank and the Treasury are much more closely intertwined and interdependent.
By saying that he had the authority of the Chancellor of the Exchequer for saying that it would be possible to arrange for the Governor and the Chancellor to appear before the Committee together, the Leader of the House destroyed his case for rejecting these Amendments.
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My hon. Friend the Member for Cirencester and Tewkesbury said that this is one of those occasions when the argument is across the Floor of the House and that consequently we have a much better debate. This is an argument between the back benches and the Front Benches. I hasten to exonerate my hon. Friend the Member for Barkston Ash. There is a large measure of common ground between the two sets of back benches. I hope that we shall go into the Lobby and secure the passage of these Amendments. If we do so, we shall advance a long way.
9.41 p.m.
Mr. Frank Hooley: I go a long way with the hon. Member for South Angus (Mr. Bruce-Gardyne), particularly on the issue of the reform of our procedure and the powers of Parliament. It is, perhaps, an unhappy coincidence that this is the second time this Session that there has been a quarrel between the Treasury Bench and the back benches on both sides on the issue of the competence of a Specialist Committee. There was serious dissent on the issue of the prolongation of the life of the Select Committee on Agriculture. Many of us believe that a similar issue arises on the Amendment.
Mr. Peart: I tried to explain earlier, as I have explained on many occasions, that the Select Committee on Agriculture was set up as an experiment. The idea was that we would make more experiments. I have announced one tonight.
Mr. Hooley: My right hon. Friend has made that point before. There was a powerful feeling in the House that the Government were interfering arbitrarily and unnecessarily in what the Select Committee on Agriculture wished to do, though I do not challenge that it was an experimental Committee. There is a similar feeling tonight that the Government are retreating from a position which was adopted primarily by my right hon. Friend the present Secretary of State for Social Services who, when he launched this programme, I am sure expected it to develop and expand and not encounter this kind of hesitation in an attempt by the Government to circumscribe the powers of a Select Committee.
Traditionally the techniques used by the House to control the Executive have

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been those of obstruction and delay. These techniques undoubtedly have certain effects and, possibly, certain merits. I have always believed that the most important technique which the House should adopt is that of investigation, because, with the complexity of modern government, the techniques of destruction and delay alone are far too clumsy and imperfect to enable the House to exercise any sensible control over what the Government are doing. It is essential that there should be instruments such as Select and Specialist Committees—for example, the Select Committee on Nationalised Industries—which are competent and designed to investigate the Government's activities in considerable detail. I would go much further than the House has gone so far. I should like to see the House armed with a coherent and powerful system of Committees to investigate the whole of Government activities. But we are quite a long way from that yet.
Much reference has been made tonight to the work of the Public Accounts Committee. As a fairly new but, I hope, tolerably conscientious member of the Committee, I support what has been said about its powers and effectiveness. One thing that stands out about the Committee is its robust independence. Over the past three years it has investigated many matters of great confidentiality and great commercial significance, particularly, for example, in the aero-space industry.
I am sure that the House would have regarded it as an absolute outrage if the Government had one day said, "We find it highly inconvenient that the aero-space industry should be subjected to this kind of detailed investigation. We propose to stop you looking at the development of Concorde, we shall not have you investigating the purchase of Phantom aircraft, or talking about the Beagle Bassett and things of that kind. You will kindly stay out of that". The House would not have tolerated that for a moment. Yet in effect the force of the restrictions the Government now seek to place on investigations of the affairs of the Bank of England would be parallel to that kind of proposition. They are saying ab initio, "You are not to look at this, this and this in relation to the affairs of the Bank of England, and we shall impose arbitrary
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limits which we, the Government, have selected on the matters you may investigate". It is completely contrary to the spirit and purpose of Select Committees, and certainly entirely contrary to the spirit and purpose of the reforms introduced by my right hon. Friend the present Secretary of State for Social Services, to accept such limitations.
Various practical arguments have been advanced as to why these limitations are necessary in the case of the Bank of England. They range from confidentiality and commercial secrecy to problems of State affairs, such as the undesirability of scrutiny of the Exchange Equalisation Account. But not one of those arguments will stand up to examination in the light of the long-established practice of the House in relation to existing Select Committees, such as Public Accounts and Science and Technology, and a good deal of the work which the Committee on Nationalised Industries has already done.
I should like to say a brief word on the Bank of England, but it will be brief because I claim no expertise here. I understand that a central part of the Government's argument is that the Bank of England is a special case, that it is a rare and peculiar animal which is not a Department of Government and not a public corporation, but which hovers somewhere in mid-air between the two and has similarities with the one and the other and peculiarities of its own. I should have thought that that was a good argument for investigating it. So far from being a reason why we should be excluded from looking at its activities, it is a very good reason why the House should begin to take a close, careful and, of course, responsible interest in what the Bank does, what it purports to do and perhaps even what it might do in addition to its existing powers.
Great play has been made with the position of the Governor. To my mind, Sir Leslie O'Brien is a distinguished and shrewd public servant, and perfectly capable of looking after himself, even before so magisterial an inquisitor as my hon. Friend the Member for Poplar (Mr. Mikardo). It is no compliment to him to suggest that he must be protected in some way by the Treasury from questioning by hon. Members and from giving evidence to them.

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It has been hinted that somehow an inclusion of this kind would derogate from the Governor's position vis-à-vis his opposite numbers in other countries with whom he has to meet to discuss essential banking matters. But it has been demonstrated that other men in similar positions in other advanced industrial countries have to face the same kind of questioning and accept the same responsibilities vis-à-vis their legislatures.
Mr. Tarn Dalyell: In which countries do the governors of the central banks have to face public questioning on their relations with other central banks?
Mr. Hooley: I was not referring necessarily to public questioning. It is not necessarily part of the argument that the questioning would be public. I am fairly certain that there are comparable situations where the governors of the central bank institutions of industrial countries are required to give accounts to their Parliaments of the work of those institutions. It does not follow that this matter would necessarily have to be in public.
It is well known that the international civil servants of the International Monetary Fund have authority to come here and make detailed inquiries into the state of our finances and the management of our monetary affairs and to discuss with the Chancellor, and, no doubt, the Governor of the Bank of England and other senior officials, how we are managing our fiscal affairs. I have no quarrel with that. I welcome it as an advance in international co-operation. I see nothing sinister in it.
But it is an astounding proposition that these gentlemen should be allowed to scrutinise the most intimate details of our national housekeeping but, that when a few Members of Parliament would like a somewhat similar privilege the House is told that it is an outrageous demand and that the Government of the day will have none of it. That is a proposition which I will not tolerate for one moment and I propose to go into the Lobby tonight against it.
9.52 p.m.
Mr. Michael Alison: In contributing to the debate, I find myself cast in the rather unnerving rôle of a Parliamentary hybrid. In one incarnation I sit dutifully and admiringly at the
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feet of the hon. Member for Poplar (Mr. Mikardo) in his capacity as chairman of the Select Committee on Nationalised Industries, of which I am a loyal and conscientious member and attender. In another incarnation, which I am now manifesting in speaking from the Opposition Front Bench, I find myself, in however junior a capacity, as a spokesman of that Shadow Executive which, in terms of the Executive as such, has come in for such scathing denunciation and which has been painted in such stark contrast with the rôle of the ordinary back benchers.
Mr. Russell Kerr: Let the hon. Gentleman throw his second cap away.
Mr. Alison: I hope that the hon. Member for Poplar and my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) will not think that I am entering into any sort of dubious compromise or am attempting to go over to the enemy if I try to find some common ground between the two sides of this dispute, the House of Commons as such and the Executive. I believe that there is some common ground and, for this reason, I shall tend rather to concentrate on the Bank of England and follow the lead given by my hon. and gallant Friend rather than go into the more philosophical area which the hon. Member for Poplar delineated in the wide-ranging contrasts which he drew between the needs and aspirations of Parliament as such and the Executive.
We have to bear in mind that the Select Committee recommended in its Report that the Orders of Reference should be widened to include the Bank of England.
To do them justice, the Government have brought forward a Motion including the Bank of England within the terms of reference of the Select Committee. It may not have come very graciously, but at least it has come, and this is common ground on which we should try to build. I have listened carefully to what the hon. Member for Poplar has said tonight, and I read his article in the Guardian carefully. Perhaps I can hope to carry him and some of his hon. Friends with me in what I have to say. Speaking as a backbencher, and I am very much a backbencher, I confess that my heart beat when he sounded so clarion a call in

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support of the championship of Parliament. What hon. Member of this House, what back-bencher, would not instinctively react to such a clarion call? Having sounded no uncertain note on that trumpet, may I express the hope that he will not press forward too vigorously into the Lobby.
I say this for two reasons. First, the right hon. Gentleman the Secretary of State for Social Services was right in saying, as he did in that memorable debate of December 1966, that in a straight clash between the Executive, backed as it is, by the great party Caucasus, and the back-bencher isolated as such as the individual elected representative, when the crunch comes the Executive at the present stage of our democratic evolution, with its organised and controlled political parties, will unfailingly win. I would regret to see the hon. Member and all that he is expressing brought to possible defeat in the Lobby on that score.
There is a second and more subtle reason why I would urge this cause upon the hon. Member. In putting this forward, I would remind him of what I consider to be the crucial words spoken by the right hon. Gentleman the former Leader of the House in that basic debate on 14th December, 1966, when he said:
"Some people talk as though it were still possible to make a sharp distinction between policy and administration and to lay down that Select Committees and Specialist Committees should deal only with the matter and be excluded from consideration of the former."
I ask the House to mark these next words well:
"But even a superficial study of the work of the Committee on Nationalised Industries, for example, will reveal that this distinction between policy and administration is often very blurred, and that it is the blurring which enables the Committee to do its most valuable work."—[OFFICIAL REPORT, 14th December, 1966; Vol. 738, c. 485]
I hope that the hon. Member and his supporters on both sides of the House will ponder this concept of the blurring. What the Government are offering us is half a loaf. My experience of the Select Committee on Nationalised Industries, particularly under the chairmanship of the hon. Member for Poplar, is that the Committee is able to extract a great deal of bread out of half a loaf—
Mr. Russell Kerr: Only the crumbs.
Mr. Alison: Even if it was only crumbs, the hon. Member for Poplar can make a meal out of crumbs cast from the Executive table into his lap as Chairman of that Committee. I recall the contribution which the Select Committee, under his chairmanship, made in the scrutiny of Ministerial control of nationalised industries—the Report which has been issued and not yet commented on by the Government. This we all regret.
The hon. Member will recall that in going into the rationale which lies behind the selection of a rate of return for the nationalised industries, the rate of return which should be applied in calculating the D.C.F.—
It being Ten o'clock, the debate stood adjourned.
Ordered,
That the Proceedings on the Motion relating to Nationalised Industries may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Peart.]
Question again proposed, That the Amendment be made.
Mr. Alison: I was reminding the hon. Member that, in considering the crucial question of the rate of return which should be applied to the D.C.F. calculation of the consequential pricing policy based upon long-range marginal forecasts, which was given an exhaustive examination by the Select Committee, he was going to the very heart of Ministerial policy on the conduct of one of the largest areas of economic activity in the country, and his Committee has made recommendations which are presumably being seriously weighed.
In what I think the hon. Member would, in terms of the Bank of England, have described as sacrosanct areas, these high matters of policy, rates of return and pricing policy, the hon. Member and members of his Committee, like, for example, the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), ride with the sovereign freedom of kings in then-own kingdom, and nobody gainsays them. It was precisely that sort of practice which was manifested in the Select Committee I referred to and to which I am sure the right hon. Member for Coventry, East (Mr. Crossman) was referring when

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he said that this sort of blurring between policy and administration is what makes the rôle of the Committee so valuable. This is the proper pattern for developing the power and prestige of Parliament.
Mr. Mikardo: I am most grateful to the hon. Gentleman for the kind things he is saying, but I am trying hard to interpret the road which he is trying to get us to follow. What he is really saying is that a Select Committee and an astute Chairman can always fiddle the terms of reference and if we were to accept these terms of reference it would be very difficult for Government witnesses to wriggle out of any questioning. I think that is probably true, but I do not think that is a procedure which is conducive to the dignity and decency of the House, and I for one will not engage in it.
Mr. Alison: I am sorry that the hon. Member for Poplar should again have been so stark in his attempt to clarify what is perhaps properly and decently left blurred. I genuinely feel that a case can be argued for saying that for each specific investigation which a Select Committee makes there is built, brick by brick, a case history of precedent for the scope of an examination, and it is surely by these means that historically the English Common Law by analogy has evolved. Should not this be the means by which the scope of the Select Committees on Nationalised Industries should evolve? It might be adopting Fabian tactics, but I do not think that would be any less a commendation for it in thinking of it in its widest terms. We will not get power and prestige for the Select Committees by frontal assault in the way which the hon. Member for Poplar may seek to persuade the House to adopt tonight.
Nevertheless, having sounded the trumpet note, if we continue to build brick by brick upon a precedent for each examination made, we shall be opening an area of Parliamentary prestige and power which the hon. Member has already substantially increased by the highly responsible and highly commended examination which has been done before. I appreciate, and can understand, that the attractiveness of this line of argument, if it has any attractiveness, to the House and to the hon. Member must depend entirely in the last analysis in the case of the
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Bank of England on how much bread the Government are offering us tonight in this half-loaf Motion which they have put before us. One must admit that one's first reaction is that it cannot be as little as the bald terms of reference at first sight suggest.
Looking at them for the first time, as I did, one got the impression that the Government had gone to the Radcliffe Report, turned up that passage where the scope and work of the Bank of England is given a very comprehensive definition and had then simply transposed that definition to the Order Paper to define what should be excluded from the examination of the Select Committee.
One cannot believe that that is the Government's intention, otherwise they would be so insulting the intelligence and wasting the time of the House of Commons—if they meant the terms of reference to be taken at face value—that they would be guilty of doing far graver damage to the House than any of the alleged misdemeanours of my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro). To come before the House and seriously to mean that the terms of reference should be taken at face value cannot be the full purpose and intention of the Government.
Therefore, we are entitled to expect from the Chief Secretary some sort of gloss upon these terms. However, I must warn him that the gloss which the leader of the House imparted to the terms of reference in his introductory, helpful and obviously forthcoming speech defining the scope and aim of the Select Committee's activities to be to examine the relationship between the Treasury and the Bank of England is not quite enough. We expect more from the Chief Secretary on the point.
Perhaps I might be allowed briefly to say what I believe is the general approach of my right hon. and hon. Friends to these terms of reference, on the assumption that a gloss will be added to them. First, I am sure that all right hon. and hon. Members on this side of the House are convinced that the Select Committee on Nationalised Industries wants to be and means to be constructive and helpful to the Government and the Bank of

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England in the scrutiny which it is allowed to conduct in however limited a way. I hope that the Chief Secretary will give the Select Committee credit for setting out to be constructive and helpful.
I shall try to give immediate tangible evidence of this approach by saying that, speaking for myself, I appreciate any reasons for the Government's hesitancy in bringing forward explicit and open-ended terms of reference for an examination of the Bank of England. It will not need an hon. Member of super intelligence to perceive that at present, and for the past few months if not years, the Governor of the Bank has had a considerable burden of anxiety, duty and obligation to bear which few of us would envy. Prima facie, it must be a heavy burden to be faced with the prospect of organising the attendance of witnesses and the presentation of evidence to the Select Committee, in addition to all the other duties and travelling that he has to undertake. That may be gainsaid, but I think (hat any declaration by the Select Committee that it means to be constructive and helpful must take this into account and show that members of the Select Committee feel that this must be a difficulty for the Government.
At the same time, I hope that the Leader of the House and the Chief Secretary will have recognised that the Select Committee is perfectly capable of being fully aware of those difficult areas of sensitivity such as the confidence factor which enters into the attitudes of foreign holders of sterling or investors in the gilt-edged market. We are aware of the sensitivity underlying those areas and, either by sidelining or any other means appropriate, it is possible to steer clear of any real difficulties which the Bank may face in giving evidence to the Select Committee.
Secondly, I hope that in giving his interpretation of these terms of reference, the Chief Secretary will draw a distinction between what the hon. Member for Poplar in his Guardian article called the business or that part of the business of the Bank of England which
"is hidden behind a veil of carefully guarded hush-hush"
and the really enormous volume of open information which can be openly arrived at by any serious student in or outside
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the House of the procedures of the Bank of England.
In hoping that the Chief Secretary will cast some light upon the scope that the Select Committee will have over the area of open information openly arrived at, perhaps I might highlight three particular areas which the terms of reference touch on. First, I hope that the Chief Secretary recalls that there was, on the subject of the Bank of England's day-to-day management of the money market, an extremely full and revealing article in the Bank of England Quarterly Bulletin of June 1963.
Secondly, there was an extremely comprehensive article on the management of the gilt-edged market in the Quarterly Bulletin of June 1966. Indeed, for serious students, it is one of quite fascinating revelation. The ex-Chancellor of the Exchequer said that he inspired it. I am not certain whether he wrote it.
The Secretary of State for the Home Department (Mr. James Callaghan): No.
Mr. Alison: It is certainly an extremely revealing and interesting article.
Thirdly, on the Exchange Equalisation Account, we have only to look at the Bank of England Quarterly Bulletin for September 1968 to find an extremely valuable historical and practical study of how the Exchange Equalisation Account operates. I need hardly add that all these subjects were touched on in great detail and depth in the Radcliffe Report, which again is openly available to all Members to scrutinise.
I hope that the Chief Secretary, in noting what I have said about these three areas and the extent to which there is a lot of open information about them already available, will note two other things. First, the articles that I have described in the Bank of England Quarterly Bulletins have laid bare what I might describe as the mechanics, the nuts and bolts, the engineering of the way that the Bank of England operates. It is rather like one of those semi-dismantled motor vehicles used for teaching driving and maintenance on in the Army. It is not fit to drive, but it can be looked at in careful detail to see how the bits and pieces fit together.
Secondly, I hope that the Chief Secretary appreciates that, in the terms of the

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articles to which I have referred, it is open to any Member of the House of Commons, presumably like any member of the public, immediately to enter into personal correspondence with the Governor of the Bank of England, or one of his subordinates, asking specific questions of detail and on points of information about the sort of material discussed in these articles. It would hardly be rational or politic to suggest that it would be impossible for a formal Select Committee to do the same kind of exercise of investigation, discussion, examination and scrutiny of the material already open to the public when this can be done by members of the public individually and privately. Surely all these matters, which have been openly laid bare in specialist articles at least, should be within the scope of the terms of reference of the Select Committee and should be given that gloss of interpretation by the Chief Secretary. I hope that he will be able to do that.
I will elaborate briefly on the three aspects of the Bank of England's mechanics upon which I have touched. First, on the money market article to which I have referred in the Bank of England Quarterly Bulletin of June, 1963, I hope that the Chief Secretary will agree that it would be reasonable for the Select Committee on Nationalised Industries to carry out a discussion or examination with the Governor of the Bank, or any Treasury official, of whether there is any means of increasing the efficiency of the money market.
One obvious point to discuss is the value or necessity of that unique feature of the London money market, namely, the discount houses. The monetary authorities in America operate satisfactorily without one. I hope the Chief Secretary will agree that this is the sort of question which the Committee should go into. No matter or question of the ends of monetary policy is concerned, but simply the efficiency of the means which are adduced to carry forward that policy. So much for the money market.
The June, 1966 article in the Bank of England Quarterly Bulletin gave us a straightforward and perfectly explicit definition of the policy of the Bank, or rather of the Government, in the gilt-edged market. It said:
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"… the dominant long-term consideration in debt management … is rather to ensure so far as possible that suitable finance for the Exchequer is available, and will continue to be available in the future, so that there need be no excessive recourse to short-term borrowing from the banks on Treasury bills and accompanying increase in money supply."
That is an open and fair definition of the objective of the Bank, and of the Government, in operating the gilt-edged market, and I hope the Chief Secretary will agree that it would be fair for the Select Committee to inquire into the extent to which, for example, the local authority bond market may, or may not, interfere with, detract from, or complicate this objective. This is a question of detail of the mechanics of the structure, and its efficiency, which should surely be within the scope of the Select Committee's remit. I am sure the right hon. Gentleman will agree that on the basis of the terms of reference as spelt out that would, prima facie, be excluded. That can hardly be the right hon. Gentleman's purpose.
Mr. Crouch: I recognise the difficulties confronting my hon. Friend, but I am not following him completely. I am not quite clear what he is asking the House to accept. Is my hon. Friend asking the Chief Secretary to accept at least two parts of the Amendment, or is he asking him merely to gloss over what is already in the Motion?
Mr. Alison: I hope that my hon. Friend will accept the term "impart a gloss" in the rather more technical sense, namely, in the sense of giving a fuller and more rational interpretation of greater scope for examination than the terms of reference, baldly spelt out, could possible mean. I should be prepared to accept that the Government were taking a helpful and constructive step in the right direction towards helping Parliament by going so far as to respond to the Committee's invitation to let the Bank come before it, but I hope that the terms of reference will receive a gloss. I cannot believe that they can be so negative or exclusive as they at first sight seem to be, but we shall see.
Finally, on the question of the Exchange Equalisation Account, again the right hon. Gentleman will be aware that

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the article of December, 1968, was extremely interesting in showing the historical evolution of the Account, and particularly in showing—though perhaps this is not appreciated by everybody, but the Bank of England has illuminated us on this—how it originally came into existence at a time when, for better or for worse, England had a floating exchange rate. It was introduced to prevent an undue appreciation of sterling at a time when foreign currency was coming here to seek a currency haven.
The fact that the Exchequer Equalisation Account is still in use, but presumably for precisely the opposite purpose, namely, in a period of fixed exchange rates to prevent an undue diminution of the rate of exchange of sterling, must, prima facie, bring into question the possibility that this is not the most efficient instrument for attaining the objectives of Government policy, whatever they may be. We shall not look into them, but we should be entitled to examine the efficiency of the instrument as such. So much has been laid bare by the Bank of England Quarterly Bulletin that it must be open no hon. Members to press for further information.
Mr. R. B. Cant: Does not the hon. Gentleman think it a remarkable coincidence that the Exchequer Equalisation Account was accumulating gold more rapidly at a time when its operations were cloaked in complete secrecy in the 'thirties?
Mr. Alison: The hon. Gentleman is referring to the pre-war period. I think that circumstances were very different then. The hon. Gentleman has asked a question which I should like to deflect to one of the Treasury Ministers, or perhaps to the Governor himself, if we can persuade them to come before the Select Committee.
I conclude by hoping the Chief Secretary will recognise and acknowledge that the Select Committee proposes to take a constructive and responsible approach towards the examination of the Bank of England which, at face value at any rate, the Government are going to allow us to conduct. I hope the Chief Secretary will be able to reassure us that the power to carry out an examination of the Bank of England will at least include further investigation into some of the published
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material about its activities which have come from official sources.
I hope that the Chief Secretary will appreciate, even if the rather narrow interpretation of the Leader of the House—namely, the examination of the relationship between the Treasury and the Bank of England—is always to be followed, that this will nevertheless involve an examination of some of the nuts, bolts and mechanism of the Bank of England in the ways and in the areas I have referred to. We look to him now—I tried to give him a halfway response to the gesture he made us—to give us an assurance that we are going to get more than half a loaf, something to really dig our teeth into.
10.21 p.m.
The Chief Secretary to the Treasury (Mr. John Diamond): I recognise that the hon. Member for Barkston Ash (Mr. Alison) has made my task somewhat easier in the sense that I can understand some of the difficulties he is feeling, both speaking from where he is speaking and as a member of the Committee. I want to make it clear that I am proposing to say what I had intended to say, which is very much in line with what he is inviting me to say.
I have listened to every speech with one exception. It has been a long but most interesting debate. It is one which I propose to answer not as a well-briefed Treasury Minister but as somebody who has been a back-bench Member of Parliament for a great number of years, has served on a Select Committee for a number of years and has a respect for this House, for its Select Committees and for the capacity of individual Members of Parliament to perform a worthwhile job. They carve out a portion of their very busy lives in doing so and in serving their fellow Members. I would speak from my experience rather than from pieces of paper.
I start in a difficulty. I recognise as an old hand that this is one of the occasions when there is a natural affinity between all hon. Members of the House, with one minor exception. There is a natural affinity between all hon. Members on all sides of the House, with the exception of the Government Front Bench. This is an occasion when hon. Members feel it is appropriate to share a little more

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fully with the Government some executive, probing and examining functions; that their natural enemy in this case is the Government, who are withholding that ability and restricting the capacity of hon. Members to extend their usefulness. It has been obvious from all the speeches that this has been a natural, underlying motivation. I understand that very well. I hope, nevertheless, to demonstrate to all those who have spoken and those who have not participated in the debate that there is not a sufficient difference between the movers of the Amendment and the Government to justify a Division. I do not say that for the reason that the hon. Gentleman suggested, cautiously and in a manner befitting an hon. Member speaking from the Front Bench that it is unwise for back-benchers to rush into the Division Lobby lest they be defeated by the Government machine. I have listened to all the speeches; my anxieties are quite the other way round. I say it because I think I know how all hon. Gentlemen feel. I can understand and satisfy their reasonable wishes.
The first question with which I must deal is the general one: Do the Government trust hon. Members when they are gathered together in their Select Committees and carrying out their functions? The answer is, "Yes", and, if a monument is sought, I ask hon. Members to look around, to consider the P.A.C. I will not embarrass the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) by referring, as I did recently, to the value of his work and that of his Committee, except to say that he will know that there are certain areas of Government activity which are examined by the P.A.C. and not even examined by the House, that they are confidential in the extreme, and that that has never been a reason for the Government to withhold any information which he, his Committee or his officers have asked for in that regard. I hope that I am right. I will give way gladly if the right hon. Gentleman wishes to correct me.
Mr. Boyd-Carpenter: I wish to say only that I wholly agree with the right hon. Gentleman. During my tenure as Chairman of the P.A.C, the Government have treated us with complete confidence, and I hope that we have justified it.
Mr. Diamond: I am grateful. I would make only one comment about the dates—that this has been only during the period of this Government. I am making not a party point but only a historical observation, that the present Government have been in power during the whole of the time that the right hon. Gentleman has said that the Government has not withheld information of a most confidential kind from him or his Committee.
I ask the House and hon. Members to dismiss from their minds utterly and completely—because there is not a syllable of foundation for it and we shall make no progress if we approach one another with suspicion—any idea that in proposing the words which we have put on the Order Paper the Government are suspicious towards Select Committees and the way they do their business. We have not, and we can demonstrate it in a way which should appeal to the House more than any other: to wit, we are answerable to the House of Commons in all things, and in one thing we are answerable, and accepted as being answerable, alone to the P.A.C. and its members.
I therefore hope that we can proceed from this point on the basis that we are moving into new territory and that we want to do so with wisdom and with some caution, but not in any sense with suspicion. I hope, therefore, that my hon. Friend the Member for Poplar (Mr. Mikardo), the hon. and gallant Member for South Fylde (Colonel Lancaster) and all the members of the Committee will not feel in any degree that any limitations apparent in the words are limitations which have regard to our sense of lack of confidence in the way that members of this Committee or any other Select Committee behave.
Having said that, I must add that my belief is not only in Members of Parliament who are members of Select Committees but in Members of Parliament as such. Many Members of Parliament have spoken today. Some of them have taken the view that the scope of inquiry, for example with regard to the Bank of England, should be entirely different to what other hon. Members have considered. Several have said, "I hope the Chief Secretary will not think that what any particular hon. Member has

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said is what we want, because we do not."
All that I am saying, therefore, is that, although there is not the slightest question of lack of trust or confidence, there must be some indication of what the responsibilities of the inquiring members of the Committee are. Otherwise there will be disagreement as between members of the Committee about their function. If I were to describe their function, first as the hon. and gallant Member for South Fylde has laid it down and, secondly, as my hon. Friend the Member for Lewisham, West (Mr. Dickens)—
Mr. Russell Kerr: Who is not a member of the Committee.
Mr. Diamond: I do not know if a new proposal is being put forward; that there are certain hon. Members who should be permanently excluded from membership of this Committee or any other Select Committee. It is not a proposition to which I would assent.
Mr. Russell Kerr: Nor would I.
Mr. Diamond: I do not distinguish in this way between hon. Members. My respect is for hon. Members, all hon. Members.
It is necessary for a Government who are inviting hon. Members to do a serious job of work to indicate the nature of that job. I have, therefore, dealt fully with the question of trust and confidentiality.
There is one thing which is as bad as if not worse than not trusting an hon. Member, and that is giving him a worthless task to do. That is deceiving him and wasting his time. No hon. Member who has the kind of experience which I have of the way in which hon. Members are pressed almost beyond endurance to cope with their many responsibilities would ever ask an hon. Member to undertake a task which was not worthwhile. To do so would be deceit on the part of the Government, and the Government are not proposing to do that.
Thus, both in terms of trust and confidentiality, and a belief that hon. Members should be invited to do a worthwhile and not a worthless job, I hope that I shall carry the whole House with me when I have explained what the
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words with which we are concerned are intended to mean.
The first question I must answer is the one put by the right hon. Member for Kingston-upon-Thames, who said that the onus of proof rested on those who would seek to limit the work of Committees. I refer to this question because it was put shortly and well. It has been the assumption behind many speeches that we are limiting the work of Committees. It is an assumption which does not bear looking at. Any hon. Member who glances at the Notice Paper will see that we are, for the first time in the history of the Select Committee on Nationalised Industries, proposing a major extension of its responsibilities.
The right hon. Member for Kingston-upon-Thames said that he had been a Member of the Government who had appointed this Select Committee. But he did not give it the power, either in 1955 or at any time between 1955 and 1964, to examine the Bank of England in any respect. We are proposing that it should undertake that task, if it is willing and good enough to do so. We are extending in a major way the responsibilities of this Committee.
Mr. Boyd-Carpenter: The right hon. Gentleman says with truth that he is extending these powers. Will he address himself to the fact that he is restricting the powers to a lower level and scope than the Committee has asked. It is on that matter that the onus of proof lies with him.
Mr. Diamond: I will, of course, come to that point. The right hon. Gentleman will agree that one must first deal with a matter in principle and perhaps then come to its detail.
The first principle I wish to establish is that the assumption behind many speeches—that we are limiting the powers of a Select Committee—is entirely wrong. What we are doing is proposing, for the first time in the history of this Committee—and it has been going for 12 years—a major and wide extension of its responsibilities.
The next question is whether we are proposing as large an extension of its responsibilities as some hon. Members would wish. I say "some hon. Members" because we are not proposing an extension as great as certain other hon.

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Members would wish. We are not proposing an extension to the degree that my hon. Friend the Member for Lewisham, West would wish because he would wish it to examine the formulation of policy.
Mr. Dickens: Precisely.
Mr. Diamond: My hon. Friend has been good enough to help me by saying "Precisely". He and every hon. Member knows, particularly those who have served on these Committees, that this is the major distinction which in practically every Select Committee is denied in the examination by members of that Committee because they realise that this is the area for which Ministers are responsible to the House and they must come to the Box to answer for their responsibilities. On a whole field they are connected with monetary and fiscal policy and matters for which the Bank of England offers advice to Ministers. The Chancellor of the Exchequer is the one who wants to, and should, come here and answer for the policy and the way in which it is being carried out. It is his responsibility to do so and not that of anyone else on any Committee whose work is committed to paper rather than being discussed in the House openly. It is not anyone else's responsibility to do that.
Mr. Michael Foot: Hear, hear.
Mr. Diamond: I know that I carry my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) with me in everything I am saying because it is broadly what he said on an earlier occasion and he is always consistent in his view.
Mr. Hooley: Would not my right hon. Friend agree that in one important incident recently the Committee on Public Accounts has pursued investigations in relation to Government contracts with industries which led to certain inescapable conclusions about policy?
Mr. Diamond: I agree that there were examinations and that they led to certain inescapable conclusions about what ought to be done. Some of us thought that should have been done before, but they led to those conclusions. My hon. Friend and I are talking about the same thing. That does not affect the argument in the slightest.
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It is perfectly clear that we are inviting the Committee for the first time to extend its responsibilities in a major and meaningful way. The question is: Are we going as far as all the members of the Committee would wish and as all hon. Members would wish? I have already indicated that some hon. Members would wish us to go beyond what we think is right and what a large number of hon. Members would think right. Therefore, I cannot hope to carry every hon. Member with me on that point.
Mr. Dickens: Would not my right hon. Friend appreciate that there is a distinction between examining formulation of policy in any contemporary sense with a review of how policies have been arrived at and the resources behind the Bank both in the past and currently for advising the Government on the development of economic policy now? That is the case I was arguing.
Mr. Diamond: I agree that there is a difference. It is very slight and I do not know what words would be used which would indicate that the House of Commons would be anxious for one of these Committees to examine policies up to a particular date and not beyond that date.
I want to deal with the words on the Order Paper against the background of the attitude of the Government, which I have described, and see whether there is a real difference between those members of the Select Committee on Nationalised Industries who have spoken as to the kind of work they think that the Committee ought to undertake and who have interpreted those words in a very restrictive way and what the Government are anxious and willing that the Select Committee on Nationalised Industries should do. First, certain things have been added and they are new. The Post Office, the Independent Television Authority, Cable and Wireless and the Bank of England, with certain limitations—all that is new. It is additional and has not been done before. [HON. MEMBERS: "The Post Office?"] I should have said, the Post Office in its new garments. What has not been included—this has caused some hon. Members some anxiety—is some individual quasi-private sector companies. The most easily defended exclusion is that of B.P. Two or three hon. Members have

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said that they think that B.P. should be excluded. We think that it should be excluded, because it functions as a private sector company. It is known that that is so. To include it in the terms of reference for examination by a Select Committee would confuse that issue and would embarrass the company. That is our honest belief. That is shared by a large number of hon. Members. The Select Committee itself has said that it does not regard this as very important. The words are these:
"… if the power of veto continues never to be exercised by the Government, this fact will obviously give B.P. a very low priority in Your Committee's selection of matters to be considered by them"
I therefore hope I can say that there is not much between us on the B.P. question and that it is not unwise that B.P. should be excluded.
Then I was asked why we have excluded a company such as Beagle, which is completely different from B.P., where the Government have only a minority interest in the shares, and which is wholly owned and which carries on admittedly in the private sector; but other wholly-owned nationalised interests carry on in the private sector. There is a real distinction to be drawn between Beagle and B.E.A., but it is not on that distinction particularly that I invite the House to agree that Beagle should be excluded—I go on to say, and I say with care, certainly for the time being.
Beagle is a fairly new organisation, newly acquired by the Government, not in any policy of nationalisation but as part of the Government's policy of maintaining that section of the aircraft industry which would otherwise have died and of maintaining employment which would otherwise have discontinued. Beagle is carrying out its function as a private company entirely in the private sector. I want it to have all the compulsions of private sector enterprise and competition brought to bear, and I want it to have no excuses whatsoever for coming to the Government for undue aid.
I do not think that it would be consistent with what we want from that company, certainly in its early stages, to invite it to explain its attitude, its policies, the way it is carrying them out, to a Select Committee with the knowledge
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—this is the important point—that every decision it made in its management next week, the following week, and the week after that, after it had given evidence, might be subject to the same cross-examination, inquiry and justification that it had already undergone. This is a very valid differentiation. [Interruption.] It was not carried out in terms of a major policy of nationalisation. I have explained exactly how it happened. In those circumstances I think it is right to continue the exclusion of Beagle, at all events for the time being; and I hope that the House will help me and will help the company in carrying out its functions in the most competitive way for the time being.
Mr. Ridley: Does not the right hon. Gentleman realise that all those considerations could be borne in mind by the Select Committee and that the Committee considers carefully when it is an opportune moment to inquire into an industry? This is the point that hon. Members have tried to make. The Government must trust the Select Committee to make the right decision in a matter like this.
Mr. Diamond: Of course I realise that it is the sort of thing that the Committee would take into account. But does not the hon. Gentleman realise that the people who read what goes on on the Order Paper and in Resolutions of the House are not only Members of Parliament? We have to deal with the public as a whole. We have to think of the impact on other men and their attitudes. I hope that the House will, therefore, support us in excluding this company, at all events for the time being.
Mr. Brooks: I am grateful to my right hon. Friend. He has been most generous in giving way. This is a very important point. He had said repeatedly "for the time being". But Beagle may well be a precedent for other companies which will be injected with public money. What criteria are the Government going to apply upon which it will be thought appropriate for the Select Committee to inquire?
Mr. Diamond: I hope that hon. Friend will allow me to go on to speak of the Bank of England and give my general

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conclusions, when I will, of course, come to that issue.
I come now to the Bank of England, which, as many hon. Members have said is the crux of the argument. Here in particular I want to engage the attention of the hon. and gallant Member for South Fylde, because he asked his questions in a very different way from those which have been asked by others. What he said was not that the words could not bear any interpretation other than that the Government were inviting the Committee to do a wholly worthless task. He said, "What do these words mean?" The hon. Member for Barkston Ash speaking for the Opposition, again asked me to interpret the words.
I have already indicated that it would be deceit on the part of the Government to invite the Select Committee to carry out an all-party task which was wholly worthless, and therefore this must mean that I interpret the words as giving it a worthwhile task to do, and a meaningful task.
The hon. and gallant Gentleman asked whether, if his Committee would entirely agree that it did not expect to be told details about policy, that it was not concerned with policy and that there were certain recognised areas of confidentiality which it would not seek to inquire into itself, it could inquire not how the policy was arrived at, but, the policy having been arrived at, how the machinery worked. He asked, "Do these words mean that the Select Committee could inquire into how the machinery works?" The answer is, "Yes". Do the words mean that the Committee could inquire into the efficiency of the machine? The answer is, "Yes". It is no use any hon. Member saying "No", because if the Committee undertakes its task and starts work, it will find that this is the way in which its inquiry can be conducted meaningfully, if it so wishes.
The witnesses called before the Committee will be only too glad to help it in this very large field of the machine and its efficiency and—here I come to the questions which the hon. Member for Barkston Ash asked me—the efficiency of related matters so far as the Bank's rôle is concerned—not so far as the Bank's rôle is not concerned, because it
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is an inquiry about the Bank of England not of the world as a whole. So far as the functions of inquiring into the Bank and its efficiency are concerned, and how that efficiency is or is not enhanced by the surrounding circumstances and facts which have to be taken into account, the Committee will be free to inquire.
I am inviting the Committee to be good enough to see that I have at least half satisfied it that we do not approach this matter with lack of trust of hon. Members functioning as a Committee. I invite it to see that, for the first time in 12 or 13 years, we are asking the Committee to extend its responsibility very considerably. I am inviting the Committee to accept that we are asking it to inquire not into policy, not into those acts which are inextricably involved in policy, which is a difficult and delicate area for the Bank, but to inquire into the efficiency, the working of the machine, and the efficiency of related matters in the Bank's rôle.
I am saying that the Committee can invite to appear before it the Chancellor of the Exchequer, who has said that he will be glad to give evidence on the relationship between the Bank and the Treasury—and I remind the Committee that it is the Chancellor who answers to this House on questions of policy on which the Bank advises him.
I think that I have indicated a number of ways in which the Committee can carry out a useful function. Of course, the Governor of the Bank of England will be called before the Committee and will explain these matters to it.
It will be a very useful function. I hope it will do this, because there is a lot of misunderstanding which ought to be cleared up, and that is one of the functions of a Select Committee. I am inviting the House to say that one knows from long experience that this House makes progress in slow but sure steps. To some this may appear a slowish step, but to me it appears a very sure step, and I invite the House to accept the extension of the responsibilities as I have honestly described them, meaning to say to the House that if it turns out differently from what I have said hon. Members will have a perfect right to come back and complain and ask for the matter to be put right. In those circumstances, I am

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broadly answering the hon. Member for South Fylde. I do not want to stick to the words because I have not got them in front of me, but I am answering with the simple reply: "yes."
Colonel Lancaster: Would the right hon. Gentleman be prepared to say that we are entitled to find and to inquire into the powers of the Bank of England in relation to joint stock banks; what its relationships are with the merchant banks, what its relationships are with I.M.F.? These are essential matters.
Mr. Diamond: As to the relationship of the Bank with the Treasury, I have already said "yes". As to the relationship of the Bank and the joint stock banks, "yes." That means what the relationship is and not what the Bank says to Mr. X on a particular day about a particular matter. That is a different issue. As to the relationship with the I.M.F., "no," because there is no such relationship—[Interruption.] Let me remove the ignorance from hon. Members' minds. The relationship is through the Government and not direct from the Bank. I hear the former Chancellor, my right hon. Friend the Home Secretary, confirming what I am saying, and he has had years of it.
Mr. Crouch: I return to the right hon. Gentleman's explanation of the meaning of the words. He was making what I thought to be a considerable concession, but I must ask him to help me over this confusion. He spoke about letting the Select Committee look into the efficiency and working of the Bank of England. Yet we are told in the Motion that we cannot look into the activities in the formulation and execution of monetary and financial policy. What is the difference?
Mr. Diamond: I know the hon. Gentleman has anxieties because of the words on the Order Paper—[Laughter.] It is reasonable. The whole debate has been conducted on that basis of what the words meant and what will happen in practice. On the basis of what I am saying will be allowed to happen if the Select Committee wishes to undertake its examination on that basis. I hope that the House will be good enough to give it a chance. Progress is made
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in slow, steady and sure steps; and this step is a very sure one. I hope that the House will not feel it necessary to divide.
There are certain elements of confidentiality in the Amendment which we could not possibly accept, and I am sure that it was not intended that they should be accepted. For example, paragraph (iii) deals with:
"activities as a banker to other banks and private customers."
That confidentiality, which must exist, is excluded by the Amendment. Paragraph (ii) mentions:
"activities, as agents of the Treasury …".
This would merely be duplicating the work done by the Public Accounts Committee, and, therefore, it must be excluded from the Amendment—
Mr. Boyd-Carpenter Mr. Boyd-Carpenter rose—
Mr. Diamond: I have given way many times; let me finish.
Mr. Speaker: Order. Unless the Minister gives way, the right hon. Gentleman must sit down.
Mr. Diamond: I will gladly give way if I may finish the sentence. That is all I am saying, but there is so much noise going on. It is getting very late, and I hope that this will be the last intervention. I am saying that these are some of the reasons why, if it were thought fit to pursue the Amendment, we could not possibly accept it. I hope that the House will be good enough to say that there is a case for an extension of the powers which should work reasonably well and give it a chance.
Mr. Boyd-Carpenter: The right hon. Gentleman said that the objection to bringing in the Exchange Equalisation Account was the possibility of duplication of the work of the Public Accounts Committee. Is he aware that there is a very substantial overlap over the whole area of the nationalised industries between the two Committees, and that this gives rise to no difficulty whatever, thanks to ordinary commonsense liaison between the hon. Member for Poplar (Mr. Mikardo) and myself?
Mr. Diamond: The fact that there is an overlap is no justification for adding to the overlap.
Question put, That the Amendment be made:—
Main Question put and agreed to.
Resolved,
That a Select Committee be appointed to examine the Reports and Accounts of the Nationalised Industries established by Statute whose controlling Boards are appointed by Ministers of the Crown and whose annual receipts are not wholly or mainly derived from moneys provided by Parliament or advanced from the Exchequer; and of the Post Office, the Independent Television Authority and
The House divided: Ayes 61, Noes 101.
Cable and Wireless Ltd.; and to examine such activities of the Bank of England as are not—

(i) activities in the formulation and execution of monetary and financial policy, including responsibilities for the management of the gilt-edged, money and foreign exchange markets;

(ii) activities, as agents of the Treasury, in managing the Exchange Equalisation Account and administering Exchange Control; or

(iii) activities as a banker to other banks and private customers.

Division No. 63.]

AYES

[10.57 p.m.

Ashton, Joe (Bassetlaw)

Galpern, Sir Myer

Page, John (Harrow, W.)

Atkinson, Norman (Tottenham)

Gregory, Arnold

Pardoe, John

Biffen, John

Grimond, Rt. Hn. J.

Park, Trevor

Blackburn, F.

Heffer, Eric S.

Parker, John (Dagenham)

Blenkinsop, Arthur

Henig, Stanley

Parkyn, Brian (Bedford)

Boardman, Tom (Leicester, S. W.)

Hooley, Frank

Perry, George H. (Nottingham, S.)

Booth, Albert

Hooson, Emlyn

Price, Thomas (Westhoughton)

Boyd-Carpenter, Rt. Hn. John

Hughes, Emrys (Ayrshire, S.)

Ridley, Hn. Nicholas

Brooks, Edwin

Kelley, Richard

Rowlands, E.

Bruce-Gardyne, J.

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

Russell, Sir Ronald

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

Kirk, Peter

Sharples, Richard

Clegg, Walter

Lancaster, Col. C. G.

Steel, David (Roxburgh)

Conlan, Bernard

Lee, John (Reading)

Tinn, James

Crouch, David

Lewis, Ron (Carlisle)

Wainwright, Richard (Colne Valley)

Cullen, Mrs. Alice

Luard, Evan

Watkins, David (Consett)

Davidson, James (Aberdeenshire, W.)

Lubbock, Eric

Whitaker, Ben

Dickens, James

McGuire, Michael

Younger, Hn. George

Driberg, Tom

Mackenzie, Alasdair (Rote&Crom'ty)

Evans, Fred (Caerphilly)

Mapp, Charles

TELLERS FOR THE AYES:

Evans, Gwynfor (C'marthen)

Mikardo, Ian

Mr. Russell Kerr and

Faulds, Andrew

Molloy, William

Sir H. d'Avigdor-Goldsmid.

Foot, Michael (Ebbw Vale)

Orme, Stanley

NOES

Archer, Peter

Howarth, Robert (Bolton, E.)

Oswald, Thomas

Bishop, E. S.

Howie, W.

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

Bray, Dr. Jeremy

Hoy, James

Peart, Rt. Hn. Fred

Buchan, Norman

Huckfield, Leslie

Pentland, Norman

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

Hughes, Roy (Newport)

Perry, Ernest G, (Battersea, S.)

Callaghan, Rt. Hn. James

Hunter, Adam

Price, William (Rugby)

Cant, R. B.

Hynd, John

Probert, Arthur

Carmichael, Nell

Jenkins, Rt. Hn. Roy (Stechford)

Rees, Merlyn

Chapman, Donald

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

Reynolds, Rt. Hn. G. W.

Coleman, Donald

Jones, Dan (Burnley)

Rhodes, Geoffrey

Crossman, Rt. Hn. Richard

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

Robertson, John (Paisley)

Dalyell, Tam

Lawson, George

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

Davidson, Arthur (Accrington)

Lever, Harold (Cheetham)

Rodgers, William (Stockton)

Davies, G. Elfed (Rhondda, E.)

Lomas, Kenneth

Ross, Rt. Hn. William

Davies, Harold (Leek)

Loughlin, Charles

Silkin, Rt. Hn. John (Deptford)

Davies, Ifor (Cower)

Lyons, Edward (Bradford, E.)

Silverman, Julius

Dempsey, James

McBride, Neil

Small, William

Diamond, Rt. Hn. John

McCann, John

Spriggs, Leslie

Dunnett, Jack

MacDermot, Niall

Steele, Thomas (Dunbartonshire, W.)

Eadie, Alex

Macdonald, A. H.

Summerskill, Hn. Dr. Shirley

Edwards, William (Merloneth)

McKay, Mrs. Margaret

Taverne, Dick

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

Mahon, Peter (Preston, S.)

Thornton, Ernest

Finch, Harold

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

Varley, Eric G.

Foley, Maurice

Manuel, Archie

Watkins, Tudor (Brecon & Radnor)

Ford, Ben

Marks, Kenneth

Weitzman, David

Forrester, John

Miller, Dr. M. S.

Wells, William (Walsall, N.)

Fowler, Gerry

Milne, Edward (Blyth)

Whitlock, William

Freeson, Reginald

Morgan, Elystan (Cardiganshire)

Wilkins, W. A.

Gray, Dr. Hugh (Yarmouth)

Morris, Alfred (Wythenshawe)

Williams, Clifford (Abertillery)

Greenwood, Rt. Hn. Anthony

Morris, Charles R. (Openshaw)

Wilson, William (Coventry, S.)

Grey, Charles (Durham)

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

Woodburn, Rt. Hn. A.

Hamling, William

Oakes, Gordon

Hannan, William

Ogden, Eric

TELLERS FOR THE NOES:

Harper, Joseph

O'Malley, Brian

Mr. J. D. Concannon and

Herbison, Rt. Hn. Margaret

Mr. Alan Fitch.

Select Committee to consist of Eighteen Members:
Mr. Michael Alison, Mr. David Crouch, Sir Henry d'Avigdor Goldsmid, Mr. John Forrester, Mr. Norman Haseldine, Mr. John Horner, Mr. Roy Hughes, Sir Donald Kaberry, Mr. Richard Kelley, Mr. Russell Kerr, Colonel Lancaster, Mr. Ron Lewis, Mr. Michael McGuire, Mr. Ian Mikardo, Mr. J. T. Price, Mr. Nicholas Ridley, and Mr. David Watkins:
Power to send for persons, papers and records, to adjourn from place to place, and to report from time to time:
Power to report from time to time the Minutes of Evidence taken before them:
Power to appoint persons with specialist knowledge for the purpose of particular inquiries either to supply information which is not readily available or to elucidate matters of complexity within the Committee's order of reference:
Five to be the Quorum:
Power to appoint Sub-Committees and to refer to such Sub-Committees any of the matters referred to the Committee:
Every such Sub-Committee to have power to send for persons, papers and records; to report to the Committee from time to time; and to adjourn from place to place:
Three to be the Quorum of every such Sub-Committee:
Committee to have power to record from time to time any Minutes of Evidence taken before such Sub-Committees.—[Mr. Peart.]

HOUSING (SCOTLAND) BILL
Order for Second Reading read.
Bill referred to the Scottish Grand Committee.—[Mr. Concannon.]

CITY OF LONDON POLICE (MESSRS. HUGMAN)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Concannon.]
11.9 p.m.
Mr. William Hamling: First, I thank my hon. Friend the Under-Secretary of State for coming here tonight to answer this debate and for the courtesy that I am sure he will show me in answering some of the questions that will arise.
The matter I am raising on the Adjournment concerns three brothers named Hugman and Inspector Warwicker of the Special Branch. They were all involved in an inquiry undertaken by Mr. Bowler, Assistant Chief Constable of the Sheffield and Rotherham Constabulary, concerning a case in which the Hugman brothers were directly involved and in which Inspector Warwicker was indirectly involved.
It might help the House if I set out briefly some of the main facts. In March last year four men were seen by two civilians and two constables of the City of London force stealing television sets from a shop in Cheapside and loading them into a van. The men saw that they were being observed and ran away. The police gave chase and one of the civilian witnesses, Mr. Browning, tried to follow them in his van. The men got away.
Subsequently, one of the two officers concerned in the chase saw John Hugman in Walworth and thought that he was one of the men who had been seen taking away the television sets. Later the other two brothers were involved. They were taken to the police station and ultimately charged.
When they came up for committal at the Mansion House, a very striking feature in the case came to light. This is where Inspector Warwicker became involved.
I should say that Benjamin Hugman, one of the three brothers concerned, lives in my constituency. Inspector Warwicker is a neighbour of his and knows him very well. The inspector heard that Ben Hugman was involved in the case and was astounded. So, on
1276
his own initiative, he approached the City of London Police and offered to give evidence in favour of Ben Hugman, particularly regarding his character, pointing out that a man like Ben Hugman, a solid businessman working in a family business which has been in Billingsgate Market for a hundred years, could not possibly be involved in a case of this sort.
As I say, Inspector Warwicker offered to give evidence and he went to the committal proceedings. It was there that the civilian witness who claimed to recognise one of the brothers then claimed to recognise Inspector Warwicker as the fourth man in the case. As a result of the involvement of Inspector Warwicker doubts began to creep in whether the police were right, but because of his involvement, Inspector Warwicker was suspended from duty.
Subsequently, after the papers had been sent to the Director of Public Prosecutions, it was decided that Inspector Warwicker had no case to answer and he was never charged. When the three brothers were later brought up at the Old Bailey on committal, no evidence was offered against them.
Following a complaint made to me by Ben Hugman, I approached the Secretary of State for the Home Department, as a result of which this inquiry was set in train. A report was presented to the Home Secretary who, on 6th June, wrote me a letter offering his conclusions about the report and dealing with the specific complaints made by the Hugman brothers.
The first general complaint they make, and certainly the first complaint that I make to the House, is that no attempt was made to seek any evidence other than identification. When I wrote to the Home Secretary I said that in my view the evidence of identification was very thin. My right hon. Friend's reply was that there was positive identification, and I should like to spend a couple of minutes dealing with this.
The positive identification came particularly from the civilian witness. He claimed to recognise Inspector Warwicker at the Mansion House Police Court. How on earth anyone could ever connect an officer with Inspector Warwicker's impeccable service record with a trumpery

1277
case of this sort defeats one's imagination. I have no doubt whatever that it was this involvement of Inspector Warwicker which led to the case being dropped. It was completely out of character, completely against any record that there was of Inspector Warwicker's service life.
It has been said that this civilian witness was a good witness. May I offer some evidence to show that he was far from being a good witness. One matter which came out in the investigation was that when, after the robbery, this civilian witness went in his van to look for the man who had run away, he saw one of the police witnesses in Bread Street talking to two men by a Rover 2000 car. His conclusion was that the policeman had caught two of the men, and when he went back he said to the policeman, "So you have got two of them." The police witness said, "No. They were not them. They had nothing to do with it." There was no doubt in the civilian's mind that these were two of the men involved, and when he claimed to identify Inspector Warwicker at the police court later he said, "That man was the fourth man. He was one of the two men I saw talking to a policeman in Bread Street". Here is a clear case of conflict of evidence of identification, and how, in those circumstances, one can go on to talk about positive identification defeats me.
The Under-Secretary of State for the Home Department (Mr. Elystan Morgan): I am sure my hon. Friend appreciates that the civilian witness of whom he is speaking, Browning, made it clear after making his identification of Inspector Warwicker at Mansion House Police Court, that he had not mentioned the incident of the Rover car because he did not want to involve the police officer concerned. He never made any statement that was in conflict; it was merely a case of having omitted that material fact from the statement he made.
Mr. Hamling: How could he have said that he did not want to involve a policeman? Is my hon. Friend suggesting that this witness knew, when he saw this man standing by a car in Bread Street, that he was a police officer?
Mr. Elystan Morgan: Browning did not retract; it was Breeze.
Mr. Deputy Speaker (Mr. Sydney Irving): Order.
Mr. Hamling: He knew that because Breeze had said that these men had nothing to do with the case. Knowing Inspector Warwicker, and knowing his service record, he could not have been involved in this. So much for the identification. But what disturbs me, and what disturbs other people who have seen the facts of this case, is that the police sought no evidence other than evidence of identification. This is profoundly unsatisfactory.
I now propose to spend one or two minutes dealing with one or two of the other complaints. This refers particularly to the report by Mr. Bowler, and it leads me to the conclusion that I am not satisfied that justice is appearing to be done by this sort of inquiry.
The three Hugman brothers made specific complaints about the way they were questioned, the sneering way in which they were spoken to. For example, when one was told to empty his pockets and put his money on the table, somebody said, "So you have been doing a couple of gas meters lately", or words to that effect. That is not the sort of way in which innocent people expect to be spoken to by police, and one is presumed innocent until proved guilty.
These complaints were dismissed by Mr. Bowler. They are considered to be without substance. By whom are they so considered? Certainly not by the Hugman brothers, and, I should hope, not by anyone else.
Then there were complaints by Edward Hugman of bad language. This was regarded by Mr. Bowler as a frivolous complaint. I do not know why anyone should regard swearing by a policeman against a member of the general public as frivolous. In certain quarters, it may be thought the normal thing for police to swear at members of the general public. When I was a boy in Liverpool, which is a rather rough old place, this may have been accepted in certain quarters, but not by the people we are discussing. I hope that it is not going out from this House, and certainly

1279
not from the Home Office, that to complain about being sworn at by a policeman is regarded as frivolous. The police have a great reputation which should be guarded. It is most important that the House should maintain the integrity of our policemen. In London, where I live, and an area of which I represent, we think very highly of our police. We like them. They protect us and do a good job, at times in very dangerous conditions, and it is our job to protect them.
It is therefore all the more important that complaints against them should be thoroughly investigated so that these standards shall be maintained. I particularly want to say something about Inspector Warwicker in this connection. He did something wrong, perhaps, in getting himself involved in this. But if he had not there is no doubt in my mind that these three brothers would have gone for trial and could have been convicted and sent to prison. There is no doubt in my mind that they owe their freedom to Inspector Warwicker, who, as a senior police officer, went out on a limb for them. I am sure that if he had put it to his superior officers that he was contemplating this they would have advised him against pursuing that course.
It is a most serious matter that as a result of trying to see that justice is done senior officers might find themselves involved in difficulties as regards their personal position in the force. I should like to see a change in these investigations, and in this case an inquiry by my right hon. Friend, in which these things can be gone into and these complaints can be dealt with more satisfactorily, and, I should like to see new rules and regulations about identification parades.
11.24 p.m.
Mr. David Weitzman: I am glad to have the opportunity of supporting the plea of my hon. Friend the Member for Woolwich, West (Mr. Hamling), which he has made with his usual competence. I followed this case closely and felt that a real injustice had been done. Through my hon. Friend's courtesy, I have read the correspondence between him and my right hon. Friend the Home Secretary.
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Of late years, there have been far too many cases depending on identifications which have proved to be mistaken. We must remember the terrible consequences that attend the victim of mistaken identification—arrest, detention until bail is granted, the finger of scorn, the allegation that there is no smoke without fire, and, above all, the misery and anxiety suffered before trial, quite apart from the expense and losses incurred. Something should be done to see that, in circumstances like these, prosecutions are not brought solely on the flimsy evidence of one identification and that the greatest possible care is taken to ensure that any identification is made in circumstances to which no possible objection can be taken.
The inquiry in this case was held by another police official. This is not satisfactory in a case of this kind. Power exists, under Section 32 of the Police Act, 1964, for an inquiry to be held by a person appointed by the Home Secretary, in public or in private. How often has that power been exercised, if at all? I have many times written to the Commissioner of Police during my years in the House asking him to inquire into allegations against the police, sometimes very serious ones. Invariably, I have been told, "There is no question of any misconduct or blameworthiness on the part of the police." By whom are these inquiries made? By the police themselves. And those who complain, of course, say "What else can you expect from the police inquiring into allegations against one of their own body?"
Everyone admits that our police are splendid but that does not mean that there cannot be some who are guilty from time to time of misconduct. It is not satisfactory that the issue in all these cases should be dealt with by another police official. Greater use should be made in serious cases of the power under Section 32. This should have been done in the present case, and it should be done now.
11.27 p.m.
The Under-Secretary of State for the Home Department (Mr. Elystan Morgan): The train of events in this case is not straightforward, and it may help the House if I deal with the points which have been raised under three headings: first, the events leading up to the

1281
arrests, second, the criminal proceedings and third, the subsequent inquiries.
The events leading up to the arrests are in many ways the easiest to describe. There is no fundamental dispute between my hon. Friend and myself here. Early in the morning of Saturday, 16th March, a civilian parked his car in Cheapside and saw a white van parked outside a television shop on the opposite side of the road. Men were passing television sets through a broken window and he went over to see what was going on. As he reached the centre of the road, there was a shout of, "Coppers!" and four men ran from the shop as two policemen of the City of London Police ran towards their van. The four men ran off and the two constables gave up the chase, having followed them for some time. The civilian toured the area in his van and one of the police officers did so on foot, and shortly afterwards he was assisted in this search by other police officers.
Inquiries about the white van showed that it had been stolen from Penrose Road, in South-East London. I should explain here, only because of its relevance to the decision by the police to make the arrests, that this is only a very short distance from the home of John and Edward Hugman. While making the inquiries, one of the two police officers saw a man who turned out to be John Hugman in a street and recognised him as one of the men who had been taking part in the shopbreaking. The officer called out to other officers, who joined him. John Hugman saw them, turned and began first to walk and then to run away. He boarded a bus where he was arrested by two police officers and taken to his home.
The same officer who had identified John Hugman saw Benjamin and Edward Hugman there and he identified them as having been involved in the shopbreaking. This led to their arrest. Identification parades followed on 18th March; Edward Hugman was identified by the other officer who had been at the scene of the shopbreaking, and Benjamin Hugman was identified by the civilian who had also been there.
The case which the police had at this stage against the three brothers was this: John Hugman had been identified on the
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street by a police officer who had been an eye-witness of the crime and this officer later identified Benjamin Hugman and Edward Hugman as well. A second eye-witness, also a police officer, also identified Benjamin Hugman. The senior officer of another force, who later investigated the whole case, found that on the facts available the City of London Police were justified in making the arrests, a view which I fully accept.
I will deal with two criticisms made about the conduct of the police in connection with the arrests. It has been said by Benjamin and by Edward Hugman that they were not given any information about the offences for which they were arrested. The inquiries made have shown that the constable who detained them gave brief details of the offences of which they were suspected. Each brother was also asked by an inspector at the police station to which they had been taken if he knew why he had been arrested. Neither made any comment and at no time did either man ask for more specific details. The charge which was made against each man shortly after the identification parades was also in specific terms.
I think it is a criticism which can be made in retrospect that interrogation by the police of the three suspects at the time of the arrests was inadequate. The officers engaged on the case formed the opinion that it was unnecessary to question the Hugman brothers as they attached greater importance to the identification parades. In this they were mistaken in their assessment of the situation and the Commissioner of Police for the City of London accepts that in this aspect there was a deficiency in the inquiries into the offence.
Secondly, the conduct of the identification parades has been criticised. I say at once that the investigation into this aspect of the case has shown that the general arrangements for the parades were scrupulously fair and supervised closely by a senior officer. A solicitor was also present at the parades arranged for Mr. Benjamin and Mr. Edward Hugman. She has criticised the fact that a police sergeant guarding the doors at the entrance to the hall where the identification parades were being held left the hall to fetch each witness. The sergeant however had no conversation with the

1283
witnesses and the parades were not prejudiced by what he did.
The solicitor representing the Hug-mans has made a statement in which she says that she thinks that the parades were as fair as they could be although it would have been preferable to have a mechanical means of calling witnesses. There was nothing sinister in the confrontation between Mr. Edward Hugman and the witnesses, which is another point of criticism, as this took place after the parades were over. The Home Secretary has recently issued advice to chief officers of police on the conduct of identification parades which was prepared in consultation with the Lord Chief Justice. It is of a general nature and does not go into the means of summoning witnesses. It is obvious that the conduct of a parade would be prejudiced if there were any communication of intelligence to the witnesses by an officer coming from the room where the parade is taking place. But it is clear that there is no infringement of this by the mere calling of names by an officer. There was no irregularity here. There was no unfairness and the solicitor made no claim that there was.
On the question of criminal proceedings, it is from this point onwards that the case became increasingly complicated. All three brothers were charged with shopbreaking and remanded on bail to appear at the Mansion House Justices' Court on 1st April. Two detective officers were in the police gallery and Detective Inspector Warwicker of the Metropolitan Police was also sitting there with his wife and Mrs. Benjamin Hug-man. The civilian eye-witness of the crime went into the gallery after he had given evidence and he immediately recognised Inspector Warwicker as one of the men engaged in the shopbreaking. He went over to the two detective officers who, at that time, did not know who Mr. Warwicker was.
At an identification parade held on 5th April Mr. Warwicker was picked out by one of the City officers. This led to Mr. Warwicker being suspended from duty in the Metropolitan Police until 3rd May. There was nothing wrong in this. Inspector Warwicker had been identified by two eye-witnesses as being one of those committing the offence. It
1284
was clearly right for an officer suspected of involvement in a serious crime to be suspended from police duty in his own, and in the general, interest while inquiries were going on, and this is normal practice in the police service.
It should also be understood that Mr. Warwicker had not helped to allay the suspicions which had been aroused by his personal intervention in the investigation of a criminal offence by another force. It appears that at 5 p.m. on the day of the shopbreaking he got in touch with Wood Street Police Station, of the City of London Police, and spoke to a detective sergeant there to vouch for the character of Benjamin Hugman, as we have heard. At 7.30 p.m. on the following Monday he called at the station and spoke to a junior detective and sought to ascertain certain details about the offence and asserted that the Hugmans were innocent.
It has been said that Mr. Warwicker had been penalised for going to the aid of a friend and neighbour and for seeking to help fellow police officers from making a mistake. While this may be commendable, there are right and wrong ways of going about such a mission. Mr. Warwicker did it on his own responsibility. Without informing his superior officers or seeking their permission, he left his place of duty and went to the City using his rank to gain access to more junior officers.
He did not subsequently disclose in his official diary that he had made these visits or that he had an interest in the case. Such intervention, without reference to either his own superiors or to senior officers of the City of London Police, was improper and could have constituted a disciplinary offence. But that was not the reason for his suspension. It was, as I have said, that he was suspected of having been involved in a criminal offence.
In the meantime, difficulties began to occur for the City of London Police. A few days after the arrests, one of the police officers who had been at the scene of the crime began to have doubts about the identification he had made of Edward Hugman. He reported these doubts to a senior officer, who told him that if he had any doubt at all, he should say so at the committal proceedings on 1st April. The officer did this, and retracted

1285
his identification of Mr. Edward Hug-man as being one of the persons he had seen at the scene of the crime. That, I suggest, is the main reason why the case against the Hugman brothers was dropped, and not because a police officer had been identified as being one of the four persons.
Mr. Weitzman Mr. Weitzman rose—
Mr. Morgan: Time does not permit me to give way.
It was at this stage that the advice of the Director of Public Prosecutions was sought. It was plain that the evidence of the police officer concerned in this case was unreliable. A report of an investigation by the Metropolitan Police into the part played by Inspector War-wicker was also before the Director. After carefully considering all the information, the Director decided to take over the case, to withdraw the proceedings against the Hugmans and not to institute proceedings against Inspector Warwicker. No evidence was accordingly offered on behalf of the prosecution when the Hug-mans appeared on 12th June for trial at the Central Criminal Court. The Court ordered their costs to be met out of public funds.
On the question of the subsequent investigation, as soon as complaints by the Hugmans about the case were received from my hon. Friend, they were referred to the Commissioner of Police for the City of London. He decided to make use of his power under Section 49 of the Police Act, 1964, to ask the chief constable of another police area to provide
1286
an officer to carry out an investigation. I am sure that this was right, as, in the event, Mr. Bowler, Assistant Chief Constable of Sheffield and Rotherham, undertook the investigation.
I wish to pay tribute to the thoroughness and efficiency with which Mr. Bowler carried out his investigation, which is a testimony to the effectiveness of the procedures under the Police Act, 1964, for investigating complaints against police officers, if properly pursued. It extended to seeing and taking statements from all persons who could give any information, including the Hugmans, Inspector Warwicker and the City of London police officers concerned.
It led to the submission of a lengthy report by October dealing in detail with every aspect of the complaints. The report showed that Mr. Bowler had drawn fully on his police experience to test the evidence, check on procedures followed by police officers, and assess the different situations which had arisen as the case had proceeded. Much of what I have said tonight has been based on this report, in which Mr. Bowler both acknowledged certain defects in the action taken by the police—
The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at twenty-one minutes to Twelve o'clock.