Commons Sitting of 14 April 1970

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS

  BOLTON CORPORATION BILL
  SOUTHAMPTON CORPORATION BILL
  SWANSEA CORPORATION BILL
  STOKE-ON-TRENT CORPORATION BILL
  TOR BAY HARBOUR BILL
  [Queen's Consent, on behalf of the Crown, and Prince of Wales's Consent, on behalf of the Duchy of Cornwall, signified]
  Read the Third time and passed.

  WHITEHAVEN HARBOUR BILL
  As amended, considered.
  To be read the Third time.

  BARCLAYS BANK D.C.O. BILL [Lords]
  HAMBROS BANK BILL [Lords]
  MERSEY DOCKS AND HARBOUR BOARD BILL [Lords]
  NORTH RIDING COUNTY COUNCIL BILL [Lords]
  NORTHAMPTON CORPORATION BILL [Lords]
  NORWICH CORPORATION BILL [Lords]
  Read a Second time and committed.

ORAL ANSWERS TO QUESTIONS
  PUBLIC BUILDING AND WORKS

    Small Building Firms (Finance)
    Mr. Christopher Wardasked the Minister of Public Building and Works if he will take further action to minimise the financial burdens currently placed on small building firms; and whether he will make a statement.
    The Minister of Public Building and Works (Mr. John Silkin): I have nothing to add to my reply to the hon. Member on 10th February.—[Vol. 795, col. 299.]
    Mr. Ward: But is the right hon. Gentleman aware that there are 125,000 building workers unemployed and enough bricks for 70,000 houses lying idle? When will the Government lift the credit restriction on builders so that houses can be built?
    Mr. Silkin: The hon. Gentleman is well aware of the steps which have been taken by the Government in connection with house building. Those steps will progressively have their effect during the months ahead.

    Construction Industry (Discussions)
    Mr. Christopher Wardasked the Minister of Public Building and Works when he next proposes to meet leaders of the construction industry to discuss the present state of trade.
    Mr. John Silkin: I have regular discussions both formal and informal with the industry.
    Mr. Ward: The Minister must be aware that the R.I.B.A. has reported a 16 per cent. drop in commissions, that building merchants foresee a 14 per cent. decline in trade, and that the N.F.B.T.E. sees a fall in starts and completions this year. When will he do something about this terrible state of affairs?
    Mr. Silkin: The hon. Gentleman's enthusiasm is not matched by his memory. I answered that question a moment ago.

    Selective Employment Tax
    Mr. Costainasked the Minister of Public Building and Works how much he

    1187
    estimates that the direct labour Departments of local authorities engaged in new construction will have to pay in selective employment tax during the financial year 1970–71 on the basis of the present rates of the tax; and what is the equivalent figure for private contractors.
    The Parliamentary Secretary to the Ministry of Public Building and Works (Mr. Charles Loughlin): The construction industry will pay about £150 million, of which about £5 million will come from local authority direct labour Departments.
    Mr. Costain: But does not the Parliamentary Secretary appreciate that £18 million more would have come from local authorities if S.E.T. was charged on maintenance? May we assume that S.E.T. will be abolished for this reason?
    Mr. Loughlin: I doubt whether I can anticipate the statement of my right hon. Friend the Chancellor of the Exchequer today.

    Construction Industry (Output)
    Mr. Rossiasked the Minister of Public Building and Works by what percentage output in the construction industry fell in 1969 compared with 1968; and to what factors he attributes the decline.
    Mr. Kirkasked the Minister of Public Building and Works what rise in output he expects from the construction industry in 1970 compared with 1969.
    Mr. John Silkin: In real terms, out-put of new work in 1969 was about 3 per cent. lower than in 1968. There was an increase in non-housing work, but this was offset by the fall in housing. In 1970, I expect output of new work to be not less than it was in 1969. I am confident that the measures recently announced by the Government will help house building in the private sector.
    Mr. Rossi: Will the Minister now admit that the decline in output in the public housing sector last year was 10 per cent. more than the decline in the private sector? What will he do to help this very hard-pressed industry?
    Mr. Silkin: A number of measures on private house building, of which I think the hon. Gentleman is aware, have recently been announced. I have every
    1188
    reason to believe that the raising of the ceiling on local authority mortgages to £155 million, together with the further resources now available to the housing corporations and the Save-As-You-Earn Scheme, will increase the number of houses built, though I must add that the number is very much higher than it was when the Opposition were in office.
    Mr. Allason: Has not the small builder lost his proper share of the house-building programme? Cannot the Minister do something to help the small builder in this?
    Mr. Silkin: It is the small builder who has suffered more than the medium and large builders, but the measures to which I referred a moment ago will be of direct help to him.

    British Standard Time
    Mr. Rossiasked the Minister of Public Building and Works whether he will make a statement on the effects of British Standard Time on the output of the construction industry during the winter 1969–70.
    Mr. Speedasked the Minister of Public Building and Works whether he will now make a statement on the Report of his National Consultative Council on the subject of the effect of British Standard Time on the construction industry.
    Mr. Bruce-Gardyneasked the Minister of Public Building and Works what further discussions he has had with representatives of the building industry in Scotland regarding the effect on the industry of British Standard Time.
    Mr. John Silkin: My National Consultative Council, on which Scottish interests are represented, considered at its last meeting the reports of a survey, undertaken on its behalf by my Department, of the effects of British Standard Time on the construction industry over the past winter. I am placing a copy in the Library of the House.
    Mr. Rossi: Would the Minister agree that the evidence shows that B.S.T. cost the building industry £30 million this winter? Is not this a clear indication that this absurd experiment should come to an end?
    Mr. Silkin: It is true that this was the estimate thrown up by the survey, but British Standard Time is a matter for my right hon. Friend the Home Secretary, who will, no doubt, be taking this into account, together with any other balancing factors on the other side.
    Mr. Speed: Yes, but will the right hon. Gentleman urge his right hon. Friend to do something about this? Is it not also true that B.S.T. has added £90 to the cost of an average three-bed-roomed house?
    Mr. Silkin: That second question would depend on the assumption that winter continued for 12 months of the year—[Interruption.] I am much more hopeful than the hon. Gentleman. The actual figure would be nearer £30.
    Mr. Bruce-Gardyne: If there has been an addition of 3 per cent. to building costs over the United Kingdom as a whole, is it not obvious that the addition in Scotland must have been substantially greater? Can the right hon. Gentleman now assure us, in the light of the reports in the Press recently, that the Government have decided to abandon this ridiculous experiment? Will he do so here and now?
    Mr. Silkin: I would hesitate ever to answer for Scotland. As for the experiment, it is an experiment, and my right hon. Friend is perfectly capable of balancing all the factors necessary to reach a decision.
    Mr. Heffer: Would my right hon. Friend bear in mind that some hon. Gentlemen on this side, from the very commencement of this proposal, felt that it was an absurdity and could have very serious consequences for the construction industry? Would he, therefore, make it perfectly plain to his right hon. Friend that the time has come to abolish this nonsense altogether?
    Mr. Silkin: The survey, of course, concerned the construction industry as a whole and the industry has been fairly united in its views on this. As I have said a number of times, my right hon. Friend must balance a number of considerations and a number of industries.
    Mr. Godber: In the light of these questions and answers, would the right hon. Gentleman bear in mind my Private
    1190
    Member's Bill to abolish British Standard Time, and would he consider supporting it when it comes before the House?
    Mr. Silkin: I always bear in mind everything that the right hon. Gentleman says, but I do not necessarily undertake to support it.

    Bolton Committee (Publication of Evidence)
    Mr. Speedasked the Minister of Public Building and Works when he proposes to publish his Department's evidence to the Bolton Committee on Small Firms.
    Mr. Loughlin: If the Committee wishes this evidence to be published I will readily consider it.
    Mr. Speed: I thank the hon. Gentleman for that reply. In the evidence by his Department was reference made to the crippling burden of interest rates on small builders, who comprise about 80 per cent. of the building industry?
    Mr. Loughlin: The evidence which we submitted to the Bolton Committee is now the property of the Committee. If the Committee wishes it to be published, we will publish it.

    St. James's Park (Illumination)
    Mr. Straussasked the Minister of Public Building and Works whether he has now completed his examination into the illumination of appropriate areas of St. James's Park.
    Mr. John Silkin: Yes, Sir. I intend this summer to start work on illumination in the park, and a scheme is now being prepared.
    Mr. Strauss: Approximately what area will be illuminated? Will my right hon. Friend be certain to employ illumination experts, since if this is done badly it will be poor, and if it is done well it might be beautiful?
    Mr. Silkin: The effort being put into it is designed to produce a really worth-while scheme. The effect will almost certainly be concentrated on the lake.
    Sir D. Renton: Can the right hon. Gentleman give an undertaking that the illuminations will not disturb the remarkable bird life in the park?
    Mr. Silkin: I share with the right hon. and learned Gentleman the feeling that it would be unwise for birds to get lit up in St. James's Park at any time—and particularly during the breeding season.

    North-East Region
    Mr. Ted Fletcherasked the Minister of Public Building and Works what is the current level of expenditure on new building work for which his Department is responsible in his North-East Region; by how much this has increased since 1964; and what is the value of projects planned to start in the next three years.
    Mr. Loughlin: Including agency services, £9·6 million. This is about 90 per cent. above the comparable figure for 1963–64. We expect to start about £38 million worth of new work in the next three years.
    Mr. Fletcher: Is it not obvious from that answer that this represents a considerable increase in the construction industry in the North-East? Would my hon. Friend agree that much of the unemployment in the North-East in the construction industry is caused by the cutback in the housing programme of Tory-controlled local authorities?
    Mr. Loughlin: The cutback by Tory-controlled authorities has had an effect not merely in the North-East but else-where. I thank my hon. Friend for his first remarks.
    Dame Irene Ward: Is the hon. Gentleman aware that the construction industry is not as pleased as the Government are with what has gone on in the North-East, having regard to S.E.T. and other things? Would he kindly ask the Prime Minister whether, when he visits the North on Friday of this week, he will find out what the people of the North-East, particularly those in the construction industry, really feel about the Minister of State and what he has been able to do?
    Mr. Loughlin: No doubt my right hon. Friend will note what the hon. Lady has said about his proposed visit to the North-East. All I can tell her is that the figures at least show that we have put plenty of work into the North-East Region.

    Construction Industry (Computers)
    Mr. Ellisasked the Minister of Public Building and Works what contribution his Department has made in extending the use of computers in the construction industry.
    Mr. Loughlin: A committee drawn from all sections of the construction industry and its associated professions exists to secure the wider application of knowledge and the promotion of further advances in computer applications. A number of sub-committees have been appointed to study particular fields: major conferences have been held and 14 reports have been published. The Ministry is developing a most promising system for structural engineers called "Genesys" which it is hoped to make available publicly early next year.
    Mr. Ellis: What is this "Genesys" system, and why was this curious name picked? Surely my hon. Friend does not expect to reconstruct the building industry in seven days? Is it a biblical precedent?
    Mr. Loughlin: I would not want to get into a technical explanation of "Genesys", but in practice it is a computer library of programmes which can be used in almost any form of computer. On the structural engineering side, the first side we are doing, this will be a tremendous advantage. Incidentally, a number of countries are interested in "Genesys".
    Mr. Boyd-Carpenter: Is the hon. Gentleman aware that what the people of this country want from this Government is not "Genesys" but Exodus? [Interruption.]
    Mr. Speaker: Order. Back to Numbers.

    Construction Industry (Bad Weather)
    Mr. Ellisasked the Minister of Public Building and Works what steps have been taken by his Department in the past three years to overcome the disruptive effects of bad weather on the construction industry.
    Mr. John Silkin: Investment grants may now be obtained for lighting systems. Recommendations on technical procedures and site amenities have been

    1193
    issued. Improved protective clothing has been produced; health problems are being studied, and cheap lightweight shelters and better lighting systems are being examined.
    Mr. Ellis: Would my hon. and learned Friend agree to give an estimate of how many days are lost through bad weather? Following statements by the Meteorological Office that it is to provide a much better service in advising on weather conditions, which can save many millions of pounds, has my hon. and learned Friend had any approaches from the Office?
    Mr. Silkin: In reply to the first part of the question, I estimate that as much as 60 million man hours, that is, 3 per cent. of the total, in outside working building is lost through bad weather. In reply to the second part of the question, the meteorological services, I think, are producing very suitable information. There are monthly forecasts, there are forecasts on site to within 24 hours and an assessment of the whole value of the existing meteorological data is at present being considered as part of a research project at Sheffield University, sponsored by C.I.R.I.A.
    Mr. Chichester-Clark: In view of the Minister's efforts against the weather, will he confirm that the appallingly large brick stocks of 1,000 million or more and the 150,000 unemployed in the industry are direct fruits of policy rather than of bad weather?
    Mr. Silkin: The question of brick stocks arises later. I cannot anticipate a later Question on the Order Paper. With reference to the extent of unemployment, I think that hon. Member may see a down-turn in the number in view of the measures already announced by my right hon. Friend on 18th March.

    Steel Reinforcing Rods (Supply)
    Mr. Kirkasked the Minister of Public Building and Works what delays are being experienced on Government building contracts as a result of the shortage of steel reinforcing rods; and what action he has taken in this regard.
    Mr. John Silkin: The majority of contracts are proceeding without any serious delay although some are being held up. For projects under construction consultations
    1194
    between architect and contractor ensure that the delay in final completion is reduced to a minimum. For jobs not yet started, arrangements are being made for earlier ordering of steel reinforcing rods.
    Mr. Kirk: In view of the fact that the average delay now seems to be of the order of four months, does not the Minister think he is being a little complacent about this hold up?
    Mr. Silkin: I have checked fairly carefully into this because I thought the Question was of considerable importance. I find that the maximum delay in my Department is three months, and that is by no means typical. I have checked with other Departments and their conclusions are the same.
    Mr. Costain: Has the right hon. Gentleman checked the fact that contractors working overseas are now badly held up for steel reinforcement and the Board of Trade is giving instructions to take from home demand? Is not this shocking?
    Mr. Silkin: It is not, I fear, a problem isolated in this country, as the hon. Member is probably aware, but is occurring in many parts of the world. Delivery dates and cost are very much in favour of the United Kingdom in comparison with those of other countries.

    Building Fitments, Components and Materials (Exports)
    Mr. Dan Jonesasked the Minister of Public Building and Works what was the total value of exports of building fitments, components and materials in 1968 and in 1969.
    Mr. Loughlin: Figures are given in tables 64 and 65 of my Ministry's Monthly Bulletin of Construction Statistics. These show a rise from £141 million in 1968 to £170 million in 1969.
    Mr. Jones: I congratulate my hon. Friend on the statistics, but could he indicate which individual commodities show an increase expressed in terms of value?
    Mr. Loughlin: I think the rise in exports in 1968 and 1969 were pretty much across the board. Float glass, for example, was 61 per cent. up, prefabricated structural

    1195
    steel work 43 per cent. up, and prefabricated buildings 33 per cent. up. This is an indication of what is going on.
    Mr. Christopher Ward: Will the hon. Gentleman say whether home demand was deliberately restrained to achieve these export figures?
    Mr. Loughlin: I think that sometimes the hon. Member confuses perspiration with inspiration.

    New Airfields (Offshore Locations)
    Mr. Dan Jonesasked the Minister of Public Building and Works if, in the light of the objectives of Conservation Year, his Department has examined the possibility of preserving local amenities by building new airfields in offshore locations.
    Mr. Loughlin: The practical problems of offshore building have been studied by my Ministry and a report was issued in February. Although the basic technical and economic principles of construction have been largely established the provision of adequate access to city centres could be a major complication.
    Mr. Jones: Has the Minister drawn on the expertise of other nations where experience in these matters has been acquired?
    Mr. Loughlin: Yes, we have had our experts looking at the offshore sites in Chicago and Los Angeles, as well as those which exist in Hong Kong.

    Ancient Monuments Exhibition
    Mr. Goldingasked the Minister of Public Building and Works in what major cities in the United Kingdom and abroad his Ancient Monuments Exhibition has so far been sited; and what are his plans for its future location.
    Mr. John Silkin: The exhibition has been shown 11 times since May, 1968, attracting widespread interest abroad as well as at home. Among the major cities already visited are London, Edinburgh, Cardiff, Sheffield, Copenhagen and Gothenburg. Proposals for future showings include Glasgow, North Wales and Frankfurt.
    Mr. Golding: What numbers have visited the exhibiton? Will my right
    1196
    hon. Friend consider taking the exhibition to the royal and ancient borough of Newcastle-under-Lyme?
    Mr. Silkin: We estimate that about 100,000 people have already seen the exhibition. I shall certainly favourably consider a visit to Newcastle-under-Lyme whenever it may be possible and I will write to my hon. Friend accordingly.

    Directly Employed Labour Force (Management Training)
    Mr. Brooksasked the Minister of Public Building and Works whether he is satisfied with the training at present available to the managers and supervisors of his directly employed labour force; and if he will make a statement.
    Mr. Loughlin: We are giving training in management to both non-industrial and industrial supervisors of the directly employed labour force. Depôt superintendents receive a one-week course, and supporting technical staff, foremen and charge-hands a two-week course. The field is large, and training has started comparatively recently, but I shall not be satisfied until everybody in it has received this basic training as well as other, specialised forms of training which will also be provided.
    Mr. Brooks: Would my hon. Friend not agree that this is a most welcome development? Can he now indicate how long it will be before there is completion of training?
    Mr. Loughlin: I hope that all depôt superintendents and other staff will receive training by August, 1971. Bearing in mind the number we have and the facilities that have been available, that is quite a good completion of the programme.

    Airfield Construction
    Mr. Brooksasked the Minister of Public Building and Works what expertise in airfield construction his Department has made available to other Government Departments generally and developing countries overseas in particular.
    Mr. Loughlin: A specialist branch within my Directorate of Civil Engineering is the Government professional consultant for all aerodrome construction

    1197
    problems which advises and guides all Departments who have aerodrome responsibilities. In the past year visits have been made to 10 developing countries overseas and feasibility studies have been completed for a potential 15 aerodrome sites.
    Mr. Brooks: Would not my hon. Friend agree that in many developing countries, which have very inadequate surface transport facilities, the development of an adequate airfield system is absolutely vital for economic growth? Will he indicate to what extent his Department was actually involved in construction of these overseas airfields?
    Mr. Loughlin: We have given a lot of information and expert advice to a whole series of countries. At the moment, we are building a civil aerodrome at Mahé in the Seychelles and at Bahrain in the Persian Gulf.

    Gibraltar (Minister's Visit)
    Mr. Gwilym Robertsasked the Minister of Public Building and Works if he will make a statement about his recent official visit to Gibraltar.
    Mr. John Silkin: I visited Gibraltar to attend the opening of Gibraltar Building Week, which marked the launching of a new training scheme instituted by my Department in conjunction with the Government of Gibraltar. The main feature off the week was a building exhibition, largely organised by my Department but with considerable local support, to encourage recruitment for construction. During my visit I also had discussions at my Department's Western Mediterranean Region headquarters and saw the new Construction Industry Training Centre in operation.
    Mr. Roberts: What will standards of tuition and general training at the training centre be like? Can my right hon. Friend assure us that the standards will be high enough?
    Mr. Silkin: I can certainly assure my hon. Friend that the training course is of a very high standard indeed. There are in fact a number of courses. They are all based on those run by the Construction Industry Training Board at Bircham Newton, so the standard at Gibraltar will be no lower than that in the United Kingdom.
    Sir H. Legge-Bourke: In the course of his visit, did the right hon. Gentleman have any discussions about the possibility of improving the accommodation of British troops, especially those stationed in the old R.A.F. barracks at the northern end of the Rock?
    Mr. Silkin: No. My visit on this occasion was purely to do with the question of the Building Week.

    Selective Employment Tax
    Mr. Chichester-Clarkasked the Minister of Public Building and Works how much he anticipates that the construction industry will have to pay in selective employment tax during the financial year 1970–71, on the basis of the present rates of the tax.
    Mr. John Silkin: On the basis of the previous financial year's rates I would estimate that there will be no change.
    Mr. Chichester-Clark: As this industry is already paying a quarter of the total yield from the tax, or £150 million, in view of the number of unemployed in the industry and in view of the collapse of the Government's housing policy, may we have an assurance that on this day of all days there will be no increase, at least in this tax?
    Mr. Silkin: I have a feeling that the hon. Gentleman is trying to draw me on a matter that is not strictly within my province.

    Tower of London
    Mr. Gwilym Robertsasked the Minister of Public Building and Works if he will consider providing a permanent exhibition at the Tower of London of costumes and furnishings relating to suitable periods of the Tower's history.
    Mr. John Silkin: Very little is known about the original furnishings in the Tower and how they were arranged. Reproductions would have to be made and we might end up with something inaccurate.
    Mr. Roberts: Would my right hon. Friend not agree that, while the House appreciates his considerable difficulties here, a touch of variety and spice would add to the exhibitions in the Tower?
    Mr. Silkin: I would certainly accept what my hon. Friend says, provided that

    1199
    such variety and spice do not cause too much disruption. The difficulty is that we should be forced to store a number of important objects at present in the Tower. I will look into this.
    Mr. Marten: On the question of costume, would the right hon. Gentleman take advice from his hon. Friend the Member for Pontypool (Mr. Abse)?

    Palace of Westminster
    Mr. Laneasked the Minister of Public Building and Works what is his latest estimate of the cost of cleaning the exterior of the Palace of Westminster.
    Mr. Loughlin: About £225,000.
    Mr. Lane: Does the hon. Gentleman agree that as soon as it could be afforded, this would do more than any other cleaning operation to improve the beauty and attractiveness of this part of Central London?
    Mr. Loughlin: As long as the hon. Gentleman prefaces his question with "As soon as it can be afforded" I will accept what he says.
    Mr. Hector Hughes: Does my hon. Friend realise that this expense should not be undertaken, because the Palace of Westminster is much more picturesque with its present antique appearance than it would be if it were whitewashed?
    Mr. Loughlin: I am afraid that I could not accept that remark.

    Building Firms (Closures)
    Mr. Frank Allaunasked the Minister of Public Building and Works if he will state the number of building firms which closed down in the last 12 months; and what were the main causes for such closures.
    Mr. Kenneth Lewisasked the Minister of Public Building and Works how many small building firms he estimates have gone out of business in the years 1969 and 1970.
    Mr. John Silkin: A total of 6,750 firms in the construction industry ceased trading during 1969 but my Ministry has no record of causes. Included in the total were about 6,400 firms with less than 25 persons of which about 2,900 were one-man businesses. Similar information for 1970 is not yet available.
    Mr. Allaun: If later today there is no relaxation of the credit squeeze on house-building firms will my right hon. Friend "do a Devlin" and sit all night outside No. 11 Downing Street? Could there be anything more anomalous than having firms and building workers unemployed on the one hand and several millions of families desperately needing houses on the other?
    Mr. Silkin: I am aware of my hon. Friend's concern, but I am not altogether sure that we can deduce all the inferences that he makes from these figures. The assumption of my hon. Friend is that the closing of these businesses resulted from a lack of liquidity. This is not necessarily true. [Interruption.] There are many thousands of new firms starting, and at the same time a number of businesses closing down or amalgamating, because the proprietor does not wish to continue.
    Mr. Speaker: Order. It is difficult for hon. Gentlemen to put their questions and to receive answers against a background of conversation.
    Mr. Lewis: Is it not time that the Government started to help the poor businessman instead of caning him all the while? Does the Minister realise that many of these small firms have built some of the best houses in the country and that the more we kill off the fewer houses we get and the worse it is for those on the waiting list for houses?
    Mr. Silkin: As to building in general the hon. Gentleman may have heard me say earlier that output, apart from housing, went up in 1969. As for housing I would once again draw the hon. Gentleman's attention to the measures announced by my right hon. Friend the Minister of Housing on 18th March. 1970.
    Mr. Heffer: Would my right hon. Friend ask hon. Gentlemen to get this question of the small firms into proper perspective? Is he aware that there has always been a proliferation of small firms in the building industry and that their rate of failure has always been tremendously high? Does the hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) realise that, on this issue, it is very important that he should not attack the Government for something for which they are not basically responsible?
    Mr. Silkin: Once again I would say that it is significant—and my hon. Friend has pointed the way—that, although there has been a number of closures, and many of these may have been through amalgamations, there have also been many thousands of new firms starting up in 1969.
    Mr. Chichester-Clark: Is the right hon. Gentleman aware that a new factor is that large and reputable building firms have closed down this year, for the first time in any great quantity, and that this is due in large measure to S.E.T.? Is he not aware that despite the new measures, many of the small house-building firms, who build anything up to 40 per cent. of the private houses in this country are suffering? Is it not time for some new measures?
    Mr. Silkin: I do not think that the hon. Gentleman can have taken in my first answer which was that out of 6,750 firms in the construction industry, 6,400 were firms of less than 25 persons, so that the attempt that he makes to say that this is a matter affecting the whole building industry is simply not true.

    Parliament Square (Churchill Statue)
    Mr. Kenneth Lewisasked the Minister of Public Building and Works whether in considering the site for the proposed Sir Winston Churchill statue in Parliament Square, he will also arrange to build an underpass into the Square itself so that people can see the statue.
    Mr. John Silkin: The hon. Member's proposal is not one that can be considered in isolation from the general traffic proposals.
    Mr. Lewis: Is the right hon. Gentleman aware that if the Chancellor of the Exchequer tried to get to the House today via Parliament Square he would probably be late because in the first place he would have difficulty in getting on, and secondly he would have difficulty in getting off? Is he aware that this square is the most isolated in London and that no one can get there? It is supposed to be used for the general public, yet it is hardly possible to get on or off. Would he give this serious consideration?
    Mr. Silkin: I have some sympathy with the hon. Gentleman's point. It is a very crowded square and it is clogged
    1202
    with traffic. The whole question of the road pattern is one, and this question is already under review in connection with the new parliamentary buildings and the proposed redevelopment of Whitehall.
    Mr. Arnold Shaw: In view of the constant demands from the Opposition to cut public expenditure, may I ask my right hon. Friend to use any available money for projects which are more essential than this?
    Mr. Silkin: This is a question of taste. There are those who believe that the whole traffic problem in the parliamentary precinct is one of fundamental importance. As for the Opposition complaining about the spending of money, that is not really a matter for me.

    Green Park (Fleet Line Site)
    Mr. Worsleyasked the Minister of Public Building and Works (1) when the work for the Fleet Line, for which he has retained part of Green Park and excluded the public there-from, will begin;
    (2) at what date he now anticipates returning to public use that part of Green Park which he is retaining for work on the Fleet Line.
    Mr. Loughlin: As my right hon. Friend the Minister of Transport stated in the House on 24th March, no formal proposals for the Fleet Line have yet been received from the Greater London Council. In these circumstances I cannot now add to the answer as regards the Green Park site which I gave to the hon. Member on 10th March.—[Vol. 798, c. 1180 and Vol. 797, c. 1099.]
    Mr. Worsley: Will the hon. Gentleman confirm that he intends to keep this part of the park out of public use for a project which may not happen?
    Mr. Loughlin: No, that is not true. As I told the hon. Member on the previous occasion, I do not want to spend £12,000 clearing this site only to spend another £12,000 on putting the Fleet Line there if it is needed. I propose to make inquiries of the G.L.C., or through my right hon. Friend the Minister of Transport, to see if we can get a date for the commencement of the Fleet Line and, in the light of that, we shall consider our policy on this amenity site.

    Labour-Only Sub-Contracting
    Mr. Henigasked the Minister of Public Building and Works when he now expects to introduce legislation to end the practice of lump labour.
    Mr. John Silkin: I hope, by the end of this week, to introduce a Bill to deal with the whole question of labour-only sub-contracting in the construction industry.
    Mr. Henig: Is my right hon. Friend aware that this news will be warmly welcomed both inside the House and amongst many millions of working men throughout the country? May I ask him whether, in advance of the Bill becoming law, which I believe it most certainly will, he will use his powers of moral suasion to make sure that on work at the Heysham power station, affecting trade unionists in my constituency, under no circumstances will any lump labour be employed, either before or after the Bill becomes law?
    Mr. Silkin: I am grateful to my hon. Friend for the first part of his supplementary question. In reply to the second part, it is not a good thing for Ministers to intervene in industrial disputes.
    Sir Frederic Bennett: Would the Minister care to estimate, if and when his Bill becomes law, whether the effects will be to increase or reduce the price of houses?
    Mr. Silkin: The implication of the hon. Gentleman's question is that he wishes an abuse which causes the British taxpayer considerable losses to continue. If one takes a balance of what the taxpayer will save and what it may cost in construction, the undoubted advantage is to the community.

    House Building Programme
    Mr. Arthur Lewisasked the Minister of Public Building and Works what recent action he has taken to assist the building industry to increase the house building programme; and whether he will make a statement.
    Mr. John Silkin: Housing is for my right hon. Friend the Minister of Housing and Local Government. I have of course discussed the industrial problems with my right hon. Friend and I would refer my
    1204
    hon. Friend to his statement made on 18th March.—[Vol. 798, c. 405]
    Mr. Lewis: Is the Minister aware that that is not a very satisfactory reply? We are all interested, on both sides of the House, in seeing this Government get back next time. Is the Minister aware that the most certain method of ensuring the return of this Government is for them to take whatever action may be necessary to produce an increase in house building in general and rented houses in particular?
    Mr. Silkin: The fact remains that during the years of this Government more houses have been built than ever before. If an election were to come within the near future, or whenever it may come, I have no doubt that the country as a whole will be perfectly willing to judge our record against the miserable record of our predecessors.
    Sir G. Nabarro: Does the right hon. Gentleman ever read the headlines in the Daily Mail? [Interruption.] Does not he realise that this morning the Daily Mail reported authoritatively a surplus of 1,090 million bricks, equivalent to the requirement for 90,000 conventional houses—[Interruption.] The Prime Minister should stop laughing. Does not the right hon. Gentleman think that it would be a good idea to put the bricks into new houses and use the unemployed labour for that purpose?
    Mr. Silkin: That is rather a long supplementary question. I do read the headlines of the Daily Mail from time to time, but I do not need the Daily Mail to tell me about the number of bricks. The brick manufacturers hope to carry a total of 500 million bricks at any one time, so the hon. Gentleman will have to deduct that figure and do the sums all over again.

  INDUSTRIAL RELATIONS
  Mr. Laneasked the Prime Minister if he will now assume direct responsibility for improving industrial relations.
  The Prime Minister (Mr. Harold Wilson): I would refer the hon. Member to my reply to a Question by my hon. Friend the Member for Bolton, East (Mr. Robert Howarth) on 18th March.—[Vol. 798, c. 146–7.]
  Mr. Lane: How can the Prime Minister disclaim responsibility, in view of the deterioration during recent months, and with the number of strikes in January and February nearly 50 per cent. greater than in January and February, 1969? Is not it clear that in this as in other matters the Government are increasingly impotent?
  The Prime Minister: I accept collective responsibility. That does not mean that I take over any particular Government Department. Our record, statistical or in any other way, in industrial relations bears favourable comparison with that of the last five years of Conservative Government.
  Mr. Ashley: While the T.U.C. has been making progress in improving industrial relations, its efforts have been largely frustrated by the attitude of the C.B.I. Will my right hon. Friend remind the C.B.I. that the employers have just as great a responsibility as trade unionists for industrial relations and it is time they accepted it?
  The Prime Minister: That conclusion was stated in Donovan, and of course it was in our White Paper. I notice, however, that the C.B.I. is extremely cynical about the industrial relations electioneering of right hon. Gentlemen opposite.
  Mr. R. Carr: Will the Prime Minister correct his totally incorrect statement of a few moments ago? Surely he must be aware that, as the Government's own statistics show, apart from coal mining—and this was the criterion taken both by the Donovan Commission and the White Paper "In Place of Strife"—the number of strikes in the last 5½ years of Labour Government has been greater than during the whole 13 years of Conservative Government? Is not he aware, quite apart from that, that there has been an undeniable deterioration in the period since June? Will not he, therefore, publish a report analysing the reasons for the deterioration since last June and saying what action will be taken about it?
  The Prime Minister: I notice that right hon. Gentlemen include or exclude coal mining as it suits them. The figures given in their speeches in the latter part of last year took credit, as they would regard it, for 1 million days lost in Yorkshire coal mining and elsewhere last
  1206
  October. I will give the right hon. Gentleman the figures. In the five years from October, 1964, to October, 1969, there were 11,634 stoppages, compared with 12,443 in the five years to October, 1964. There were 5,657,000 workers involved, against 7,464,000 in the last five years of the Tories. I will grant that the figure of man days lost was 17·2 million as against 15·9 million—hardly enough to justify the right hon. Gentleman's hyperbole of expression. They were longer strikes, yes, but the proposals put forward by the right hon. Gentleman would seem to be a prescription not only for more strikes but longer strikes.

  EUROPEAN ECONOMIC COMMUNITY
  Mrs. Renée Shortasked the Prime Minister what discussions he has now had with the Trades Union Congress about Great Britain's application to enter the Common Market; and if he will make a statement.
  Mr. Edward M. Taylorasked the Prime Minister what arrangements he has made to consult the Trade Union Congress on the negotiations on Great Britain's proposed entry to the Common Market.
  The Prime Minister: There was a very full discussion of Britain and the Common Market at the meeting of the National Economic Development Council on 16th March and I shall also be discussing this with members of the Economic Committee of the T.U.C. on 28th April.
  Mrs. Renée Short: As the economy of the country is growing stronger every month, for which the Government deserve great credit, is it not clear that the trade unions will do everything they can to oppose anything which will jeopardise the situation? As the gross hourly industrial wage in this country is better than that in almost all the other countries of the Common Market, according to the latest figures available, and the cost of living is lower than in all of them, will my right hon. Friend give a categorical undertaking to the House that he will not agree to any decision to take us into the Common Market which is likely to put increased economic burdens on the

  1207
  shoulders of the working people of this country?
  The Prime Minister: The fact that, to use my hon. Friend's phrase, the economy of the country is growing stronger every month did not stop the right hon. Gentleman opposite selling Britain short again to the Foreign Press Association yesterday, with his usual selection of figures. I hope that he will read today what he said after last year's Budget about balance of payments prospects—if he would like to be reminded of those words.
  On the latter part of my hon. Friend's question, the Trades Union Congress representatives have made clear in their discussions, for example, in the N.E.D.C. that they were in favour of negotiations being started and pursued with determination. But, like most hon. Members in this House, they will want to be aware of all the facts resulting from the negotiations before reaching their own decision and they have undertaken to call a meeting of affiliated unions to decide their attitude when the terms of entry are known.
  Mr. Edward M. Taylor: Does the Prime Minister agree that there is considerable anxiety in Scotland over the fact that entry into the E.E.C. would virtually outlaw the policy of industrial development certificates which, under Governments of both parties, has brought new growth industries to Scotland? Would he promise to discuss this important question with the Scottish T.U.C. when he comes to Scotland?
  The Prime Minister: I do not accept the hon. Gentleman's premise. When we debated the regional aspects of possible entry at the time of Britain's application a number of us produced some arguments against what the hon. Gentleman has in mind. On the question of i.d.c's, I I thought it was increasingly the policy of those supported by the hon. Gentleman to get rid of those constraints on the freedom of private enterprise and to abolish other forms of help. The first part is the policy of the C.B.I. and the latter part is, I understand, the policy of right hon. Gentlemen in relation to investment grants and to their criticism of the aluminium smelter and other schemes.
  Mr. Hooley: Has my right hon. Friend observed the fantastic tangle that the
  1208
  Common Market countries are getting themselves into over wine surpluses, agricultural policies and the value-added tax? Would it not be as well to let them sort out these problems for themselves before continuing our hot-foot desire to get into this tangle ourselves?
  The Prime Minister: I think there is no doubt that they will sort out these problems which still await settlement before negotiations get very far. I do not think it will be an argument for our deferring our application while some of these matters are settled.
  Mrs. Ewing: Is the Prime Minister aware that the trade union movement in the Common Market in its dealings with employers is organised on undemocratic and monolithic lines? Is he further aware that the Scottish National Party is the only party to have pointed this out, or does the Prime Minister of Great Britain prefer to turn a blind eye to all the undesirable and undemocratic features of the Common Market?
  The Prime Minister: I never turn a blind eye to the hon. Lady. If she tells me that these matters are undemocratically worked out in the Common Market, both on the employers' side and on the trade union side, I would be glad if she would send me a memorandum on this matter, following her prolonged investigation on her recent visit to the Continent. I would be glad to study it. I know that the trade union movements in the Six are extremely anxious to see the Common Market strengthened and their own efforts strengthened by the adhesion of Britain, with our own strong trade union movement, and other countries.

  COMMONWEALTH IMMIGRANTS
  Mr. Iremongerasked the Prime Minister if he will call a conference of Prime Ministers of the Commonwealth countries concerned to discuss arrangements for the permanent settlement in Australia, Canada, India, New Zealand, Pakistan and the United Kingdom of British passport holders who wish to emigrate from the African Common-wealth nations of which they are unwilling or unable to become citizens and the stopping of all other immigration into

  1209
  the United Kingdom forthwith and finally.
  Mr. Juddasked the Prime Minister whether he will make a statement on his communications with Prime Ministers and Presidents of Commonwealth countries concerning the position of unemployed British citizens and passport holders in Commonwealth countries.
  The Prime Minister: There are no plans for a special conference and there have been no such communications but there is continuing contact with other Commonwealth Governments on immigration matters.
  Mr. Iremonger: Why should we shut out thousands of people who have an absolute right to come here while we are letting in hundreds of thousands of people who have no particular right at all?
  The Prime Minister: The House took the decision on this extremely difficult matter. It raised difficulties for many hon. and right hon. Gentlemen in all parts of the House. This was a decision of the House. There will be general agreement that my right hon. Friend has administered that decision with considerable humanity and fairness on the basis that he did not wish to allow queue-jumping. In answer to the hon. Gentleman's question, I need not go into all the arguments on Second Reading, in Committee, on Report and during the Third Reading.
  Mr. Judd: Would my right hon. Friend not agree that whatever our criticisms of racialism wherever it occurs, and even our reservations about the motives of some of those who have sought British citizenship in the past, citizenship is such a fundamental human and civil right that the Government at all times have its protection in mind? Could he assure the House, in view of the predicament of some British citizens abroad, that any administrative actions or policy pronouncements are the considered collective view of the Cabinet as a whole?
  The Prime Minister: Yes, sir. My right hon. Friend in administering this matter is acting within general Government policy. I know my hon. Friend will have the fullest regard for and will support his fairness in administering it.
  1210
  Difficult individual questions are involved. Sometimes if one is lenient in one particular case it means being unfair to other people who might have a stronger case. Whatever the legal position, it is a fact that more than half of those who have registered for entry into this country were not born in this country or in Kenya, but were born in India. We have extremely friendly and constructive discussions continuing on this matter all the time. I do not think I should add to what I have said.
  Mr. Thorpe: Has the Prime Minister read the recent report of the British Council of Churches showing the destitution in which many Kenya Asians of British descent are living today, and can he say whether there is any precedent in our history for a British passport holder being detained without trial in a British prison for the offence of trying to enter Britain?
  The Prime Minister: I cannot comment on any questions affecting trials or matters of law. As for the question of destitution and hardship, naturally the Government have studied this report and are concerned about what is said in it. I am advised by my right hon. Friend that we have no details of any case where the delay in issuing a special quota voucher has caused great hardship to the applicant. I read a very moving Press report this morning. Inquiries are always made at our High Commission in Nairobi about any special hardship cases. Those who would try to evade the immigration controls and the laws made by us by attempting to jump the queue lead to their experiencing some degree of hardship, and it is also unfair to others in the queue who may have a stronger case.
  Dr. Gray: Will my right hon. Friend agree that it would be shameful if British passport holders became homeless refugees, and that, in the last resort, they must be allowed to come to this country?
  The Prime Minister: I have nothing to add to what my right hon. Friend said in answer to a similar question. He has exercised control with great humanity. But the House should realise what the situation would be if it were to relax all controls or, as my hon. Friend seems to be suggesting, there were some question of repealing the Act.

BILL PRESENTED
  SALE OF TICKETS (OFFENCES) (No. 2)
  Mr. William Price, supported by Mr. Alfred Morris, Mr. Roland Moyle, Mr. John Farr, Mr. Eric Lubbock, Mrs. Braddock, Mr. Alex Eadie, Mr. Albert Booth, Mr. Laurence Pavitt, Mr. Eric S. Heffer, and Mr. Richard Body, presented a Bill to prohibit in certain circumstances the sale or resale of any ticket for entry or admission to any sporting event or entertainment; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday and to be printed. [Bill 142.]

WELSH AFFAIRS
Ordered,
That the matter of the White Paper on Local Government Reorganisation in Glamorgan and Monmouthshire (Command Paper No. 4310), being a matter relating exclusively to Wales and Monmouthshire, be referred to the Welsh Grand Committee for their consideration.—[Mr. Peart.]

ORDERS OF THE DAY
  WAYS AND MEANS

    BUDGET STATEMENT
    Mr. Speaker: Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them of the procedure to be followed at the end of the Chancellor's speech.
    As in the last two years, copies of the Budget Resolutions will not be handed round in the Chamber, but will be available to hon. Members in the Vote Office.
    The first Resolution will be one to apply the provisions of the Provisional Collection of Taxes Act, 1968, to certain of the proposals to be contained in the subsequent Resolutions. Under Standing Order No. 90(1), I am required to put the Question on this Resolution forth-with.
    When the first Resolution has been disposed of, I shall propose the Question on the second Resolution, which I understand will be a general Resolution entitled, "Amendment of the Law". On this Resolution, the Budget debate will take place today and also on the remaining days allotted to it.
    Finally, when that Resolution has been agreed to next Monday evening it will be my duty, under Standing Order No. 90(2), to put successively the Questions on each of the remaining Budget Resolutions without amendment or debate, but with the possibility of a Division in each case.

    BUDGET STATEMENT

      INTRODUCTION
      3.33 p.m.
      The Chancellor of the Exchequer (Mr. Roy Jenkins): The circumstances in which I open this Budget are, I am glad to say, more agreeable than those in which I made my last two Budget statements; and I propose to celebrate, and even to enable the House to participate in the celebration, if in no other way, by being a little shorter than on these two previous occasions.
      In 1968, we were in the trough of crisis. By this time last year we had made progress; but we were still encompassed

      1213
      by danger and full recovery was still a hope and an aim. Today, we have solid achievement behind us.
      Over the past two years I have had to give priority to a massive switch of resources into the balance of payments. Other aims of economic policy had to be subordinated to this. This major objective has now been achieved and the time has come when we can adopt a more normal balance of priorities. The main task now is less burdensome, but in some ways more complex: it is to maintain the strength of the position we have won, and, at the same time, to guide the economy into steadily increasing growth.
      There is no virtue in endeavouring to obtain a larger and larger surplus; at the same time, a strong balance of payments is still vitally necessary. The change lies in the fact that other objectives of policy can now be brought into the front line alongside the balance of payments; and we can perhaps cease to treat the foreign balance as a perennial national obsession.
      Our success on the external front is recent, but firm—provided that we do not take positive action to dissipate it. This is a good moment for reviewing our progress. The House will not, therefore, be surprised if I begin this Budget statement with some account of the economic history of the past two years, and especially the past year. This will form the basis for my judgment of the outlook now and of the prospect for building securely upon the success we have achieved.

      REVIEW OF RECENT DEVELOPMENTS
      The record since devaluation
      Two and a half years ago, our main economic task was to convert a large balance of payments deficit into a substantial surplus and then to maintain that surplus over a period of years until our short and medium-term debt had been repaid. Devaluation, by making our exports more competitive and more profit-able, was a necessary pre-condition of achieving these aims. But it could not be sufficient on its own. It was essential to devote a large part of the increase in our national output to additional exports and import replacement, and to
      1214
      manufacturing investment on which the longer-term health of our balance of payments depends.
      To make sufficient resources available for these purposes it was necessary to restrain other elements of demand severely, and, in particular, personal consumption and public expenditure. This meant higher taxes, a strict pruning of public sector expenditure programmes, and a firm monetary policy.
      Our policies on taxation and public expenditure have transformed the accounts of the public sector as a whole. A borrowing requirement of £1,956 million in the financial year 1967–68 was reduced to one of £450 million in 1968–69 and then replaced by a surplus of about £600 million in the financial year just ended. There has thus been a turn-round in the public sector accounts of about £2,550 million in these two years.
      At the same time, our tight monetary policies—which are, in part, a reflection of the fiscal turn-round—have created conditions that have reinforced the restraint of home demand. Domestic credit contracted moderately in 1969, in contrast to large increases in 1967 and 1968.
      Thus the turn-round has been massive in both the fiscal and the monetary fields. But it has not been excessive, considering the magnitude of the task which faced us just over two years ago. It has produced a decisive switch of resources in the direction that was needed, and with a growth performance that compares well with previous periods of balance of payments improvement—even though the improvement was on those occasions much more limited.
      I shall give a few illustrative figures. These compare the middle two quarters of 1967—I choose this period to avoid the distorting effects of the dock strikes later in that year—with the last two quarters of 1969—the latest six-month period for which figures of national income and expenditure are available.
      During this period of just over two years, the national product as a whole grew by about 6¼ per cent., roughly in line with the growth of productive potential. But exports of goods and services grew, in volume terms, by 24 per cent. This is twice the rate of growth of manufacturing production, which rose by 11 per cent.; nearly two and a half times

      1215
      the growth of imports of goods and services, which rose in real terms by about 10 per cent.; nearly four times the growth of the national product as a whole. Over the same period, manufacturing investment rose by about 13 per cent.
      The large increase in exports was greatly helped by an abnormally rapid growth of world trade. But we should have been unable to take full advantage of this, and effect such a large switch of resources into the balance of payments and manufacturing investment, if the other elements of demand had not been effectively contained.
      Personal consumption went up in real terms by less than 4 per cent. Public sector expenditure on goods and services—which includes investment by the nationalised industries, but, is of course, different from public expenditure as a whole which also includes certain other items, particularly transfer payments—fell by 2· per cent., and the two together rose by 2 per cent., only one-third as fast as the national product.
      Thus, about a half of the increase in our national output during the last two years or so has been devoted to improving the balance of payments and raising the level of manufacturing investment.
      The improvement in the balance of payments has been dramatic. For many years the British balance of payments was weak. Today, it is one of the strongest in the world. Last spring, I set a target for a surplus of £300 million on the basic balance—current and long-term capital—for the financial year 1969–70. The final outturn for the financial year will not be known until June, but in the first three quarters, up to December, our surplus, seasonally adjusted, was £451 million. For 1969–70 as a whole it is unlikely that the surplus was less than £550 million, and it may have been considerably larger.
      During the early days after devaluation I set another target—a surplus at the rate of £500 million a year in the course of 1969. A year ago that target had come to be regarded by nearly everyone—perhaps including myself—as rash and unattainable. In fact that, too, was surpassed. In the last two quarters of 1969 our surplus was at an annual rate of £550 million on current account and £740 million on current and long-term capital account combined.
      The March trade figures were published today, showing a moderate surplus. This gives us a surplus on visible trade for the first quarter of £36 million, better even than the two strong quarters which preceded it. It brings the visible surplus for the past nine months to £87 million. This is not only a transformation from the large deficits of a couple of years ago, but quite different from the traditional pattern of our trade, for visible surpluses have been earned in only two years since 1822.
      Invisible earnings have also risen strongly. Net invisibles in 1969 were £524 million—more than double the figure for 1967. There were also favourable developments on the long-term capital account, though some of these were of an exceptional nature.
      As a result, our current account was in surplus in 1969 by £366 million. Our basic surplus, despite a first quarter deficit, was £387 million, or £457 million after adjustment for Eurodollar borrowing for overseas investment. These are the largest positive figures ever recorded either for current account alone or for current and long-term capital account combined.
      It is also appropriate to note the performance of the balance of payments for the past five years as a whole compared with that for the previous five years. For 1965 to 1969 inclusive, the aggregate basic deficit was £817 million. For 1960 to 1964, it was £1,161 million. The aggregate current account deficit in the last five years was £306 million; and, for the previous five years £436 million. There is, of course, the additional difference that the five years to 1964 ended in record deficit. The past five years have ended with a record surplus.
      Debt repayment
      I turn to the question of our short and medium-term debts. These reached their peak at the end of December, 1968. The total was then 8,071 million dollars, or £3,363 million. It was a formidable sum, but it bore no relationship to the wildly exaggerated figures which were bandied about in some quarters. As late as June of last year the right hon. Gentleman the Member for Stafford and Stone (Mr. Hugh Fraser), for example, was claiming that figures of this order were "infinitely lower" than the total we owed

      1217
      abroad by means of central bank and similar arrangements. He was infinitely wrong.
      The true figure, indeed, could always be fairly closely calculated, after a short time-lag, by anyone who applied himself carefully and objectively to the published sources. At the time of the Budget last year we published figures of the balance of payments deficit and outflow which pointed to a broad measure of total debt of about £3,100 million. This, indeed, could have been inferred from the regular published series. Of course, there was concealment of short-run changes. At a time when pressure upon sterling was very severe, this was necessary in the national interest.
      That time, I am glad to say, is now well past. I shall describe the position in full detail today, and thereafter publication will be resumed quarterly in arrears. The information about the use of central bank facilities will be published in the Bank of England Quarterly Bulletin, as it was up to March, 1966.
      By short and medium-term debt I mean the assistance which we took from the I.M.F., central banks, and certain other institutions such as the Bank for International Settlements. I do not include longer-term obligations, details of which are always published and almost all of which were incurred before 1964. Since then, there have, in this category been two German offset loans and borrowing from the Ex-Im Bank to finance the purchase of U.S. military aircraft. The total of these loans since 1964 now outstanding is about £300 million. They have been exceeded during this period in a ratio of 8 to 1 by our private long-term investment abroad.
      Nor, of course, do I include what are commonly called the sterling balances. These are liabilities, but of a very different character from our other debts, and they have been with us for a very long time. They are part of the working balances and reserves of the sterling area countries, and the working balances, too, to some limited extent, of those outside the sterling area who trade with us and with the sterling area. They are an important part of world liquidity, which, if not held in sterling, would have to be held in some other currency.
      I thought that I detected on the part of the right hon. Member for Bexley (Mr. Heath) last autumn a tendency to suggest that repayment of genuine debt out of an increase in these balances ought not really to count. That would be a very perverse argument, for, in fact, a considerable part—just under one-third—of the debts we incurred since 1964 were because of a run-down of the sterling balances. It would certainly be totally inconsistent to count an increase in debt because of a run-down here, and not to count a reduction of debt because of a build-up.
      In any event, the sterling balances of overseas countries at present are still significantly below—approximately £500 million below—their level at the end of the third quarter of 1964. These liabilities need to be reckoned alongside our much more substantial assets abroad, and our net overseas assets position is better than was the case 5½ years ago.
      Having dealt with those two possible areas of confusion, I return to the central question of short and medium-term debt as always understood both here and abroad. At the end of 1968, as I have said, this amounted to £3,363 million. Our reserves then stood at £1,009 million. Our net adverse short and medium-term foreign exchange position was, therefore, £2,354 million.
      In the first quarter of 1969, we repaid debt to the extent of £252 million. In the second quarter, we repaid another £93 million. This quarter included the intense bout of deutschemark speculation in May, but we nevertheless finished quite well up. The third quarter began well and I was able to announce in the middle of July that we had repaid almost 1 billion dollars—equivalent to over £400 million—of debt since the beginning of the year. By the end of the month, that is, July, 1969, we had exceeded that mark.
      August and September were difficult months. French devaluation disturbed August. September was dominated by a new bout of deutschemark speculation, but we were able to ride it reasonably well, owing to the manifest turn in our own balance of payments. As a result, our net borrowing in the quarter amounted to only £43 million—a setback, but not a severe one.
      In the last days of September and the early part of October the question of the parity of the deutschemark, which had overhung the world monetary scene for the previous 18 months, was satisfactorily settled—a tribute to the courage of the new German Government and the Bundesbank. This, together with the clear improvement in our own position, meant that the real turning point had arrived. In the fourth quarter we repaid £397 million of debt. The outturn for the year 1969 was a debt reduction of £699 million, accompanied by an increase in the reserves of £44 million.
      Progress so far in 1970 has been even better. In addition to the currency inflow, we also received in January our allocation of £171 million of Special Drawing Rights. Using all these resources, we were able, by the end of March, to reduce debt by a further £1,010 million while adding another £76 million to the reserves.
      In sum, therefore, we have improved our position by £1,829 million over the past 15 months. This means that our net adverse position has been reduced by over three-quarters from £2,354 million to £525 million. Our outstanding short and medium-term debt, expressed in dollars, as it usually is for purposes of foreign exchange dealing and selling, has come down from over 8 billion dollars, to under 4 billion dollars. Of the remaining debt, 2,400 million dollars is to the I.M.F., the first repayment of which is due to be made in June, 1971.
      Assistance under short-term facilities of the swap variety is down from over 4 billion dollars to 800 million dollars—less than one-fifth of that outstanding at the end of 1968. The Fed. swap, which at 2,000 million dollars is our main line of central bank credit, is now completely clean and unused. I think that it can therefore be claimed that the statement I made in last year's Budget, that there was nothing insuperable about our debts, has been proved wholly true.
      This improvement of over £1,800 million has occurred during a 15-month period when our balance of payments surplus, substantial though this is, has been of the order of only £500 million. Some hon. Members who used frequently, but not recently, to ask me questions about how many years' surplus would be necessary to redeem the debt may now
      1220
      understand why I always answered that I could attach little meaning to any direct arithmetical connection. This does, how-ever, raise the question, which may be in some hon. Members' minds, of "hot money".
      I do not believe that much of the inflow has been of the kind that occurs purely to take temporary advantage of favourable interest rate comparisons. We discouraged movement of this kind by our own Bank Rate adjustment in early March which was followed by rather larger moves, in the opposite direction, by the Germans and Italians.
      The major explanation of the currency inflow we have had so far, apart from the balance of payments surplus itself, has been an unwinding of leads and lags, the unfavourable flows against sterling that had built up over previous years. Indeed, these flows may by now have moved in our favour. The liquidity pressures at home have no doubt pulled in money from abroad, particularly where companies here have been able to adjust the cash-flow from subsidiary or related companies abroad in order to ease the cash difficulty of the heavy tax-paying season. There has also been some re-building of sterling balances to what the holders may well regard as more convenient and normal levels now that confidence in sterling has been restored.
      My considered judgment is that for the most part the currency flows going beyond what we have earned by our surplus have been attributable to these factors, and that it would not be accurate to called this "hot money". To some extent there is a seasonal pattern, for example, of sterling balances, which are usually favourable in the first quarter of the year. There may also have been some further seasonal effect through the liquidity pressures of our revenue quarter.
      For these reasons, we must expect that during the rest of the year the inflow of currency will be more closely related to what we actually earn by our surplus than in recent months. From time to time, because of the seasonal pattern, there may even be a temporary reversal of the flow. Such movements would not reflect any underlying change either in our own position or in confidence and need not disturb us, for we have proved our ability to repay debt at a very fast rate.
      What is left is clearly manageable. We can afford to be slightly more relaxed on this front, but we shall continue to need a strong balance of payments, because our capacity to repay debt will henceforth be more directly related to that surplus; and because we shall continue to need, over the years ahead, to build up our reserves, which are still low by comparison with other major industrial countries.
      Monetary policy in 1969–70
      Monetary policy has played an important part in the transformation I have described. A year ago I stressed that fiscal and monetary policy would both be more effective if each was working in harmony with the other. The last 12 months have demonstrated that this is so.
      The change from a very large Government borrowing requirement to a sizeable surplus on Government account is, of course, the result of decisions in the fields of public expenditure and of taxation, and is in that sense an element of fiscal policy. But the fact that the public sector has been in net financial surplus with the other sectors of the economy, and, therefore, a net repayer of debt, has had important implications for the liquidity of the system, and has also enhanced the effectiveness of Government debt management and the control of bank credit.
      The past year has seen a powerful strengthening of the gilt-edged market. In the calendar year 1968, the authorities bought about £200 million of gilt-edged securities from the non-bank public. In the weeks following last year's Budget, rates were allowed to move up to levels which took the redemption yield on some stocks to nearly 10 per cent. Then, with the improvement in the trade figures, the gilt-edged market turned. Apart from a short-lived reversal after the devaluation of the French franc, the market continued firm and at times very strong.
      The results, in terms of stock bought from or sold to the non-bank public, are these: in the first half of 1969, net purchases by the authorities from the public of somewhat over £80 million; in the second half of 1969, net sales to the non-bank public from the authorities of nearly £500 million. Figures for the first quarter of 1970 are not yet available, but over much of the quarter
      1222
      the demand for stock continued firm, if not at the exceptionally high levels of the last quarter of 1969.
      The other main ingredient in monetary policy has been the control of bank lending. Towards the end of 1968 I asked the London clearing banks and the Scottish banks to reduce their lending in the categories covered by the ceiling to a level 2 percentage points lower than at the time of devaluation in November, 1967. These banks found the task difficult, though other banks were able to achieve the comparable target set for them—probably because the pressure on them was less severe.
      At times during the past year it seemed that a rise in restricted bank credit was threatening to undermine the effectiveness of monetary policy. But by September the strength of the gilt-edged market, against the background of the continuing Government surplus, allowed us to take a less rigid view of the requirements for control of bank lending. By the end of the year, provided that the clearing banks themselves did not relax their efforts to restrain credit, it was no longer necessary to judge their achievement simply by success or failure in reaching the 98 per cent. ceiling. In fact, over the calendar year 1969, restricted lending by the banking system as a whole fell by about £40 million.
      Our policies have, moreover, brought about a very marked and satisfactory change in the pattern of lending within the ceiling in favour of the categories to which we have given priority in the interests of the balance of payments. There was, alongside this, a substantial rise in the unrestricted categories of lending in 1969, notably in fixed rate guaranteed credit for exports and shipbuilding, and the total increase in bank lending to the private sector was about £600 million.
      To sum up, then, monetary policy in 1969 was very tight by any standard. In a year in which the external transactions of the public sector were adding to the money supply, this increased by about £400 million, or under 3 per cent., compared with a rise of £987 million, or about 6½ per cent., in 1968, when the external transactions of the public sector were tending to reduce the money supply.
      The figures for domestic credit expansion, which are not directly affected by the external transactions of the public

      1223
      sector, illustrate the tightness of monetary policy even more dramatically: domestic credit contracted by about £200 million in 1969, compared with an expansion of about £1,900 million in 1968. In the financial year 1969–70, for which the full data are not yet available, the contraction of domestic credit will have been greater than in the calendar year 1969. The expectation, expressed in my Letter of Intent to the I.M.F. last May, that domestic credit expansion in 1969–70 would be within a figure of £400 million, has thus been more than fulfilled.

      AIMS OF ECONOMIC POLICY
      With the achievements of the past two years behind us, I believe that we now have an opportunity, such as has not occurred for a good many years past, to set the economy on a path of sustained and accelerating growth. It is in this perspective that I have made my Budget judgment. If we are to achieve this aim, there are, in my view, three essential requirements of economic policy.
      The first is that the growth of total demand must be kept in line with the increase in our productive potential. It is sometimes argued that because we now have a big balance of payments surplus we can afford to inflate home demand and achieve an eruption of short-term growth. This would be a piece of familiar folly, bringing its own inevitable retribution. Very soon we should be back in deficit and crisis. My aim is a much greater prize—a real improvement in the long-term growth of the economy; and this can only be achieved if we steer well clear of the dangers of balance of payments weakness which have cramped and inhibited us so often and for so long.
      This does not mean that domestic demand cannot grow at a good rate. During the last couple of years, both private consumption and public expenditure had to be held below any reasonable long-term rate of growth so that we could transfer resources into the balance of payments. But there is now no reason why they should not go forward from here roughly in line with the national product as a whole. If we can keep this balance, the growth of productive potential itself may
      1224
      accelerate. There is certainly no eternal law that limits our growth rate to levels achieved in the past.
      The second requirement is an improved and sustained growth of industrial investment. Both the level of our industrial investment and the quantity and quality of the capital stock in British industry have been inadequate for many years. We cannot put this right overnight, but it must be an essential aim of economic policy to increase manufacturing investment over a period of years at a rate substantially faster than the national product.
      The most important contribution which the Government can make towards achieving it is to increase confidence in the prospect of steady and sustained growth in the economy as a whole. It is also most important that the capacity of the engineering industries which supply goods for investment should be built up so that they will not be overloaded by a greater demand for plant and machinery. I was encouraged to see that the latest C.B.I. industrial trends survey showed investment intentions considerably stronger in the capital goods sector than in industry generally.
      The third requirement is that we preserve our competitive position. So far, since devaluation we have done reasonably well in this respect. No industrial country has for long been able to combine a high level of employment and a healthy rate of growth with absolute stability of prices, and certainly none is doing so today. But there are dangers for this country in the present situation to which I must draw attention.
      There is a danger that, under the pressure of steeply rising incomes, unit costs will go up more rapidly and we may move on to a much steeper trend of inflation than we have known in the past. If others achieve greater stability, this will obviously affect our competitive position, and, therefore, the balance of payments, adversely; but there is perhaps even more cause for concern from the domestic social point of view.
      If serious inflation gets a grip it will be very difficult to shake it off; and in all sorts of ways it will be the weaker members of society who will suffer. The illustion that money incomes can be pushed up by the kind of figures which

      1225
      have become common in industrial bargaining recently without producing harmful effects of this kind, is a dangerous one. Everyone concerned with wage settlements should understand that if we are to achieve the reasonable stability of prices which is necessary for a sound economy and a healthy social framework, incomes cannot for long continue to rise at their recent rate.

      PROSPECTS FOR 1970–71
      I come now to the prospects for the year ahead and I begin with the world background against which we have to frame our policies.
      World Trade and International Monetary Affairs
      World trade seems likely to grow less this year than in the past two years. But its growth in the past two years has been exceptionally fast, especially in manufactures, which were up about 17 per cent. in both 1968 and 1969 compared with an average of 9½ per cent. a year over the previous decade. This year, the growth of the United States economy has been temporarily checked. But demand in Europe and Japan is still strong, the developing countries have higher reserves than in the past, and further progress in Kennedy Round tariff cuts should mean more trade in relation to output. World trade could grow much less than recently and still grow as fast as in the preceding 10 years.
      Meanwhile, the outlook on the international monetary scene is considerably better than for some years. There is no speculation about the parities of any of the main currencies. The inauguration of the Special Drawing Rights scheme, with the distribution on 1st January, 1970, of the first allocations, was a highly satisfactory development. In addition, agreement has been reached on quota increases in the International Monetary Fund.
      Balance of Payments
      During 1968 and 1969 our exports rose much more rapidly than imports. This year, the growth of exports is likely to moderate, with the slow-down in world trade. Even so, they have probably not yet exhausted the full gains
      1226
      resulting from devaluation, and I expect a rise in the value of exports during the next year or so at a rate faster than the long-term trend.
      Increased growth in the volume of imports is likely from now on, associated with a higher level of activity at home; but import prices may be expected to rise less fast than last year, so that the size of the import bill should be acceptable. Taking account, also, of invisible earnings, which have shown great strength during recent years, this means that we should have a strong balance on current account during at least the next 12 to 18 months, even though the surplus may fluctuate from quarter to quarter.
      There were some exceptional elements in the long-term capital account in 1969. Private capital flows, mainly because of sales of overseas securities, were unusually favourable and there were also substantial foreign currency borrowings by public bodies. So it would be wise to allow for some deterioration this year and next, but this should be moderated by confidence in sterling and continued monetary stringency.
      We can thus look forward to a satisfactory basic balance of payments surplus, taking the current and long-term capital accounts together. I make no precise forecast because of the margin of error inevitably involved in assessing, for example, the course of the United States economy and of world commodity prices. But on any reasonable "central" estimate, we can look forward to the maintenance of a surplus fully adequate to our continuing need to repay debt and build up our reserves.
      Balance of Payments Measures
      I deal here with certain policies and measures which bear directly on the balance of payments.
      At the beginning of January I abolished the restrictions on travel expenditure outside the sterling area. A start has been made towards phasing out the import deposit scheme. Last December, Parliament enacted powers to continue the scheme for a further 12 months, but at a reduced rate of 40 per cent. I believe that the scheme has played a modest, but useful, part in moderating the increase in the import bill. But this effect has perhaps been less important than the contribution of

      1227
      the scheme to reinforcing our controls on domestic liquidity, and in helping to provide some short-term assistance to the reserves.
      As I have previously stated, there are clear advantages in phasing out the scheme gradually, as the balance of payments situation permits. A further move is now justified and I have, therefore, decided to reduce the rate of deposit from 40 per cent. to 30 per cent. as from 1st May.
      I have also considered overseas investment policy. This has been a subject of renewed discussion in recent months, and arguments have been put to me by the C.B.I. and others about the value of overseas investment and the effects of the restrictive measures which are and have been in operation.
      The present restrictions are designed less to prevent direct investment overseas than to shift its financing. In fact, direct investment overseas assisted by borrowings on overseas capital markets has shown a continuing, substantial and healthy increase during the past four or five years; and we can warmly welcome the future earnings which this should bring.
      As our position improves, it will be right to keep the possibility of relaxations under review. This is a direction in which we shall need to move in preparation for entry into the E.E.C. But for the present no important relaxation on this front would be sensible. I wish, first, to see our balance of payments maintaining its strength while the economy moves forward strongly at home. I have, therefore, decided both to maintain our exchange control arrangements affecting overseas investment and to ask again for the continuation of the voluntary programme.
      The decision about the voluntary programme has been conveyed to the Governments of the four countries of the sterling area which are involved. A considerable degree of understanding has been expressed of the reasons which have led me to this decision. I realise the irksomeness of this restraint to United Kingdom investing companies and institutions who under growing pressure have continued to give loyal co-operation. I hope that they, too, will understand and accept this decision.
      The domestic prospect and the Budget judgment
      I turn now to the outlook for the domestic economy in 1970–71. In my Budget speech a year ago I gave some tentative projections, which were printed in the Budget Report, covering the period up to mid-1970. The Budget Report issued today gives provisional estimates of how the various elements of demand have changed up to the end of 1969 in comparison with these projections. I have always stressed the hazards of economic forecasting, although since 1968 I have published, and propose to continue to publish, far more forecasting detail than was hitherto the case.
      A year ago I suggested that the outcome of such forecasts could not, except by accident, be wholly accurate. In 1969, however, we nearly had an accident. The correspondence between the projections and the provisional estimates of what has actually happened to the economy as a whole—although not in all cases to the components—is pretty close.
      There was, however, one error which I am sure the House will welcome. Exports rose substantially more than in the "central" forecast and more, too, than in the alternative, higher, forecast given in the Budget Report. Manufacturing investment, which also rose strongly, was broadly in line with the forecast. In these vital sectors, our performance has been very satisfactory.
      Other elements of demand have as a whole been restrained broadly as I had intended. Personal consumption has been a little higher than forecast, rising by 1 per cent. during 1969 instead of remaining flat, but this has been roughly offset by public expenditure on goods and services being lower—there was a fall of 1½ per cent. instead of a rise of ¾ per cent.—mainly as a result of the determined efforts made by the Government throughout the year to keep it under very strict control.
      Finally, stockbuilding in the second half of last year was probably a little lower than forecast. But this was entirely because it was depressed in the third quarter. In the fourth quarter of 1969—contrary to a widely held impression—stockbuilding was at a very high level and yet the balance of trade in that quarter was strong.
      I now come to the outlook for 1970–71. The economy will not have the same stimulus from an improving trade balance—for we do not need a continued improvement here—as during the past two years. However, I expect to see another substantial rise in manufacturing investment, though perhaps not so fast as the rate of over 10 per cent. per annum which took place last year—a rate of increase that could hardly be sustained for long without placing undue pressure on the engineering industries.
      I know that there are different views about the prospects for industrial investment this year, and I shall watch the situation carefully. But my present view, based partly on the results of the latest official investment intentions survey, is that there should be a good increase.
      There are three other elements of demand that are likely to grow faster than during 1969. First, stockbuilding is likely to increase at some stage, although the exact timing is hard to predict. Second, public expenditure on goods and services which has been severely restricted over the past two years—and has, indeed, fallen—will now begin to grow at a moderate rate. This is in line with our decisions on public expenditure as a whole announced in the White Paper of last December, which gives us a frame-work for charting and controlling its growth.
      Third, and most important, there will be a faster increase in private consumption. A renewed growth of consumer spending is something which would be likely in any event at this stage; but the rate at which incomes have been rising recently makes a fairly strong rise in consumer expenditure a virtual certainty this year.
      This factor necessarily imposes caution on me in my Budget judgment. It is wholly desirable, as I have already made clear, that consumer spending should grow somewhat faster than over the past two years; but in making my Budget judgment I have had to take into account the considerable boost which it will get from rising incomes, despite the fact that these will be to some extent offset by higher prices and proportionately higher tax payments with existing rates of tax.
      Taking account of all the elements of demand, the central forecast is that, on the basis of existing pre-Budget policies and levels of taxation, output would grow by about 3 per cent. over the year ahead, that is, between the first half of 1970 and the first half of 1971. I describe this estimate as "central" because there is necessarily a substantial margin of error in forecasts of this kind, and this must be taken into account in formulating policy. Among the factors that are particularly difficult to forecast on this occasion are not only the impact of American developments on the world economy, but also the effects of monetary and financial conditions on investment, stockbuilding and prices.
      But whatever the uncertainties, both in the world scene and in domestic forecasting, I have to make a Budget judgment. It will be obvious from what I have said already that this must be designed to set the economy upon a path of sustainable and gradually accelerating growth. I must avoid, on the one hand, the traditional temptations of a consumption surge which, because it would involve great risks for the balance of payments, would be likely to lead to an early, drastic, and only too familiar slamming on of the brakes.
      On the other hand, I must avoid a situation in which demand is sluggish, investment is discouraged, unemployment rises, and there is a revolt against sensible balance of payments objectives. I wish to see neither "go-stop" nor "stop-go". Both are equally inimical to the aims I believe we can now achieve.
      At the same time, I must bear in mind the competing claims of fiscal and monetary relaxation. Just as the one had to buttress the other a year ago, so they now compote for the limited resources we can this year afford to release. An exclusive concentration on fiscal relaxation would no doubt make more immediate popular impact, but a combination of modest fiscal and monetary relaxation may well be more conducive to the healthy growth of economic activity.
      I therefore conclude that it is right to give a moderate stimulus to the economy, but to spread this between monetary and fiscal measures. On both, I intend to proceed fairly cautiously. If I

      1231
      find that my judgment is too cautious, it is much easier to correct this later in the year than if I go too far in the other direction. [Interruption.] Not, I am bound to say, a degree of caution which has unduly influenced right hon. Gentlemen opposite in the past.
      I therefore propose to announce certain measures of limited monetary relaxation, accompanied by fiscal changes which will cost the Revenue rather more than £200 million in a full year. The prospect for the economy, after these changes, is a rate of growth on the basis of the "central" forecast of about 3½ per cent. between the first halves of 1970 and 1971. The rate of growth might be somewhat higher if the growth of export demand proves to be stronger than I now expect, or if consumption should grow faster. But a faster growth of consumption would be likely to involve some cost to the balance of payments.

      GOVERNMENT FINANCE— OUT-TURN AND PROSPECTS
      As last year I shall deal quite briefly with the Government's financial accounts, the full details of which are available to hon. Members in the Budget Report. Perhaps the most interesting feature of the out-turn for 1969–70 is the figure for the central Government's surplus. In my Budget statement last year I estimated that the central Government would have a surplus of £807 million. In fact, we achieved one of £1,130 million.
      The improvement mainly reflects the extension of the import deposit scheme last December, but even without this we would have been able to extinguish liabilities last year on a scale never before realised in a single financial year. Further-more, the public sector as a whole achieved a net surplus of about £600 million last year compared with a deficit of £450 million in the previous year.
      In 1970–71, I would expect the central Government surplus on the basis of existing tax rates to be about £800 million. This is almost exactly the same as the estimate I made last year for 1969–70; but, largely because it allows for the running down of the import deposit scheme, it is £330 million less than the out-turn for last year. On the same basis, the surplus for the public sector as
      1232
      a whole in 1970–71 would be £420 million. This would be £180 million larger than the estimate I made in my last Budget for 1969–70, but £175 million less than the out-turn for that year. Leaving aside the effects of the import deposit scheme, however, the public sector surplus would be about £400 million better than last year's out-turn.

      MONETARY POLICY IN 1970–71
      I shall now deal with monetary policy in the year ahead. We shall continue in 1970–71 to need a reasonably tight monetary policy; but I have also to guard against the danger that the cumulative effects of the policies followed so far might produce a greater degree of monetary stringency than is intended or necessary. On the basis of policies which will be in operation from today, my expectation is that there will be some expansion of domestic credit in 1970–71, in contrast to the contraction in 1969–70. My intention is that this expansion should be within a figure of £900 million.
      I would, however, expect this to be accompanied by a different relationship, in this financial year, as against last, between D.C.E. and the money supply. This is despite the good balance of payments prospect. The relationship between domestic credit expansion and changes in money supply turns not just on the balance of payments, but on the size and nature of all external flows and on banking sector transactions. For example, some part of the additional bank lending included in the D.C.E. forecast for 1970–71 could well be matched by increases in banking liabilities to non-residents which are not included in money supply. As a result of this and other factors money supply could well rise by less than D.C.E. this year.
      Given the prospect for the public sector as a whole which I have just described, this D.C.E. forecast gives a broad indication of the prospect and requirements in the fields of bank lending and government debt operations.
      I approach the control of bank lending with two considerations principally in mind—the need for adequate finance for industry, and the method of control to be employed. Easy liquidity does not of itself guarantee a satisfactory investment performance either in quantity or

      1233
      quality. The policies which create excessive liquidity may themselves help to undermine business confidence. And if companies are so liquid as to feel themselves insulated from monetary pressures and disciplines, the quality of investment may suffer. Although company liquidity is, clearly, a good deal lower today in relation to turnover than it was in the recent past, I am sceptical about the view that it is at the moment excessively low.
      I regard the results of the latest investment intentions survey as on the whole encouraging. But I must bear in mind both the need to maintain a good investment performance and the continuing pressures of the public sector surplus foreseen for 1970–71. An excessive stringency of restraint must, therefore, be avoided.
      The second consideration relates to the method of control of bank lending. The main deposit banks have been living under a continuous régime of ceilings for nearly two and a half years and the other banks for a good deal longer. Though such a control is probably the most direct and effective method of achieving tight short-term restraint, the rigidities and distortions which come from it intensify with the passage of time.
      I believe that it will be consistent with our main economic objectives for lending which has hitherto been subject to the ceiling restrictions to show a gradual and moderate increase over the coming year: of the order of, say, 5 per cent. over the period between now and March, 1971. It will, however, be important that the increase should be directed towards the finance of exports, and of productive investment, not only in manufacturing industry but also in agriculture, which can be expected to contribute to the balance of payments over the coming years. The construction industry can, of course, expect to benefit from such an increase in investment.
      I must emphasise that this is not a general relaxation. The banks and finance houses are being asked to concentrate the increase in their lending on these purposes, and in no way to relax their restrictions upon the availability of credit for imports and import deposits, or for personal spending, other than bridging finance for house purchase. We shall continue to keep a careful watch on the
      1234
      way lending develops, both in total and in detail; and we shall take further restraining action if that becomes necessary. No Government can pursue an effective monetary policy without a substantial degree of control and guidance of bank lending.
      But there are different methods of control. Subject to the continuance of close consultation between the authorities and the London clearing and Scottish banks, I believe that we no longer need to maintain the existing ceiling restrictions for these banks. As a result of the large Government surplus and the substantial sales of Government debt to the public over the last year, the liquidity of these banks has already come under pressure.
      In these circumstances, the use of the special deposit mechanism will allow us to exert a continuing influence over the liquidity and lending capacity of the banks. Special deposits will, therefore, in future be used as freely as is required by the liquidity and actual or prospective lending of these banks. A call for special deposits should in no way be regarded as a "crisis" measure, nor, indeed, should a repayment be regarded as a signal of major relaxation.
      It is against this background that I have considered the requirements of the present situation. The lending position of these groups of banks in the middle of March—the latest date for which figures are available—was reasonably satisfactory, despite a marked rise over the preceding month, which probably owed a good deal to the pressures of the taxpaying season. But it would clearly be inconsistent with the general objective I have stated if their restricted lending were to continue to rise at that rate over the coming months. At the same date most of the clearing banks were in a reasonably comfortable liquidity position for the time of year.
      Given this liquidity situation, a further modest call for special deposits will underline the need for continuing restraint in bank lending. The Bank of England is accordingly calling upon the London clearing banks to place with it by 6th May special deposits equivalent to ½ per cent. of their total deposits. For the Scottish banks the call will, as on former occasions, be one half of that for the London clearing banks: on this occasion ¼ per cent. of total deposits.
      With the change in the system of control, it is no longer appropriate to continue the reduction in the rate of interest on special deposits which was imposed last May. From tomorrow, therefore, all special deposits will once again carry interest closely related to the going average Treasury bill rate.
      For the other banks which have hitherto been subject to ceilings we propose to rely on the cash deposit scheme which was worked out in 1967, but has never yet been brought into operation. In its present form this differs from the special deposit scheme for the clearing banks mainly in that it is more a means of making the guidance for lending effective than a ratio control. Clear guidance will be given from time to time to these banks, and a call for cash deposits would be the result of this guidance not being followed.
      For the finance houses I see no immediate alternative to maintaining a ceiling control. We now ask them to keep their restricted lending within a ceiling of 105 per cent. of its level at 31st March, 1970. The report of the Crowther Committee on Consumer Credit, which we can expect to receive within a few months, will provide an opportunity for reconsidering the techniques of control over credit-giving by these and other non-bank financial institutions.
      So far as the gilt-edged market is concerned, too, official strategy will be based on the general policy requirement which I have already defined. There will be substantial maturities to refinance; but I believe that there is every prospect of good sales of stock, even if not quite on the scale of the last six months, to set against the maturities.
      I have been considering interest rates in relation to the general monetary policy and prospect which I have described. Given the prospects for the world and domestic economy, I do not believe that we can look for a dramatic reduction in long-term rates. But that does not preclude some flexibility in short-term rates. Our balance of payments position is strong, and United States and Eurodollar short-term rates—the international interest rates of most significance in this context—have been easing slightly down-wards in recent weeks. International
      1236
      developments have thus given us a little room for manoeuvre; and the requirements of domestic monetary policy do not oblige us to hold the Bank Rate at 7½ per cent.
      With my approval, therefore, the Bank of England is reducing Bank Rate to 7 per cent. with effect from tomorrow.
      Hon. Members: Hear, hear.
      Mr. Jenkins: The House is always very kind in giving me a short rest from time to time, which I much appreciate.

      National Savings
      I have just a few words to say about national savings at this point. The results of the first six months of the save as you earn scheme which I announced in my last Budget are satisfactory. On contracts entered into during the first six months of the scheme with the Department for National Savings and the Trustee Savings Banks, subscriptions already received total nearly £6 million, and commitments to subscribe amount to a total of over £110 million over the next five years. Some 30 per cent. of these contracts are for saving through deductions from pay.
      S.A.Y.E. has made a good start, although I have always thought that it should be judged less by its immediate effect than as a long-term contribution to the means of personal savings. How-ever, its yield so far has only to a small extent offset a decline in the amount invested in other forms of national savings, notably in ordinary accounts in the National Savings Bank and the ordinary departments of the Trustee Savings Banks. The savings banks are failing to attract and hold funds as they have done in the past, despite their obvious advantages notably of liquidity and accessibility.
      In the circumstances of today it no longer makes sense to think of an immutable savings bank rate of 2½ per cent. I therefore propose to take powers in the Finance Bill to vary, by Order, the rates of interest payable on deposits in the ordinary accounts of the National Savings Bank, in the ordinary departments of the Trustee Savings Banks, and in the No. 2 Department of the Birmingham Municipal Bank.
      A change in the rate would be a major administrative exercise. The earliest

      1237
      point at which it could now become operative would be in respect of interest credited for the year 1971. At this stage, therefore, I propose to do no more than take powers to vary the rates: a decision on whether to change the rates for 1971 will be taken nearer the time.
      There is one other change in the national savings field to which I want to refer. Sir Miles Thomas, the President and Chairman of the National Savings Committee, has decided that the time has come for him to retire as Chairman. Since he succeeded Lord Mackintosh in 1965, he has led the National Savings Movement in England and Wales with devotion, vigour and distinction. I record my gratitude to him for his outstanding services. I am glad to say that he has agreed to continue for a time as President of the National Savings Movement.
      I have been fortunate enough to secure as his successor Sir Robert Bellinger. He will take over from Sir Miles Thomas as Chairman at the National Savings Assembly at the end of May. He brings most valuable qualities to his new appointment, and I believe that he will carry with him the good wishes of every Member of the House, and our confidence that the national savings movement, under his leadership, will rise to the challenges of the 1970s as it has risen to so many other challenges over its life of more than 50 years.

      MINOR TAX CHANGES
      Before I come to my major taxation proposals, I have a number of lesser ones to put forward.
      Building sub-contractors
      My right hon. Friend the Minister of Public Building and Works has already announced measures to control sub-contracting in the building and civil engineering industry by means of a register of sub-contractors. As the House will be aware, the uncontrolled spread of sub-contracting has led to evasion of income tax, and a widespread resentment at the unfairness involved. I therefore propose to make use of the register which my right hon. Friend is establishing to require contractors who make payments under sub-contracts with unregistered sub-contractors to deduct on account of in-
      1238
      come tax a sum approximately equal to the standard rate of income tax less earned income relief and pay it over to the collector of taxes.
      At present rates of tax, the sum would be 32 per cent. At the end of the year, when the sub-contractor produces his accounts and his tax liability is worked out, he will be able to set the deduction he has suffered in this way against his liability, and any excess will be repaid to him. If he fails to produce accounts, or if he disappears, he will, nevertheless, have borne tax on his income. Those who register will be traceable through the register, and those who do not will, under this proposal, be unable any longer to evade payment of tax on their earnings.
      The income tax deduction scheme cannot be brought into operation until the register has been established, and I therefore propose that it should be effective from 6th April, 1971; thereafter, the estimated yield for a full year is about £8 million.
      Tax treatment of superannuation arrangements
      The Finance Bill will include provisions to simplify and rationalise the tax treatment of superannuation arrangements for employees and to take account in this connection of the earnings-related State pension which will become payable under the National Superannuation and Social Insurance Bill, now before the House. The main lines of the proposals have been set out in a document which the Inland Revenue issued with my authority on 26th February last and I will not, therefore, go into them in detail.
      In general, the changes are intended to take effect from the introduction of the new earnings-related pension scheme, the target date for which is 6th April, 1972, but legislative provision is being made this year so that the trustees of pension funds and those engaged in working them can know the new rules as soon as possible, and be able to take them into account when deciding what adaptations are needed to take account of the new State scheme. Those who wish to adopt new arrangements before 1972 will be able to do so.
      For technical reasons it is also necessary for the Finance Bill to prescribe the tax treatment of contributions to, and benefits from, the new State scheme. This

      1239
      will broadly follow their existing treatment.
      Estate duty
      I propose to increase the rate of interest on unpaid estate duty, which has stood at 2 per cent. since 1943. In present-day conditions, I think that an increase is appropriate, but it has never been intended that this interest should be a penal charge—bearing in mind that many estates include substantial elements of property which earn little or no income—and I propose only a modest increase to 3 per cent. This change will apply to interest accruing after the passing of the Finance Act. It is estimated to yield £1¾ million for the full year and about £1 million this year. But the yield of estate duty in the current year is estimated to increase by £5 million as a result of earlier payment.
      Decimalisation
      On the introduction of decimal currency, next February, exact conversion of some rates of Customs and Excise duties, drawbacks and allowances would introduce inconvenient fractions. I therefore propose to take power to reduce by Order certain rates to the nearest lesser amounts which will be suitable and convenient. I also propose that motor vehicle licensing authorities should be authorised from 15th February, 1971, to round the payment and refund of vehicle excise duty down to the nearest new penny.
      Stamp duties
      In the field of stamp duties, a number of changes will have to be made to take account of the change to decimal currency. My general approach to this question was indicated by my hon. and learned Friend the Financial Secretary in reply to a Question last summer. He then explained that I had no intention of making decimalisation an excuse for increasing the overall yield of the stamp duties; and, secondly, that I aimed to make the necessary changes in such a way that all charges to stamp duty should in future be in multiples of 5 new pence. I reserved the question of the 2d. duties on cheques and receipts for further consideration.
      The point that has weighed with me in regard to the cheque duty is that, while
      1240
      it produces the useful revenue of £11 million to keep it would inevitably mean increasing the duty to 1 new penny, an increase of 20 per cent. A similar increase would also be necessary in the receipt duty. I am anxious to avoid any increase in these duties purely as a consequence of decimalisation; but in any case I regard both as somewhat anachronistic.
      There are at present probably at least 10 million persons who hold bank accounts on which cheques can be drawn. The duty is thus an irritant which affects a great many people and it is, moreover, a form of discrimination against this particular method of making payments. I have, therefore, decided to propose the abolition of both the duty on cheques and the receipt duty as from Decimalisation Day, 15th February, 1971.
      I propose also to abolish the 6d. fixed duty on agreements and the 6d. duty on accident and other non-life insurance policies; to exempt policies of life assurance up to £50; and to reduce the duty on mortgage deeds from 2s. 6d. per £100 to 2s. per £100. These changes will take effect from 1st August, 1970.
      The cost of all these changes in the present financial year is estimated at £1 million and, for a full year, £13½ million. This sum, of course, includes the cost of the remission on cheques and receipts. I shall thus have more than carried out my undertaking not to seek an increased revenue from stamp duties in connection with decimalisation.
      The remaining stamp duty changes are of a minor nature, with no substantial consequence in terms of revenue, and are introduced in order to produce a reasonable result on the change of currency. The details will appear in the Finance Bill.
      Betting and gaming
      I have certain adjustments to propose to the duties on betting and gaming. The bookmakers have represented to me that they regard a tax on turnover as more equitable than one based on the rateable value of premises. They have made proposals which would result in a substantial reduction in the total yield from the betting duties, and I cannot see my way to agree to that. But I propose to meet them as regards the system of taxation by

      1241
      repealing the betting premises licence duty and increasing the rate of general betting duty to 6 per cent., except for on-course betting, where it will remain at 5 per cent.
      I also propose to relieve on-course hedging bets from duty altogether. These changes will take effect from 27th April; the appropriate proportion of the licence duty for the current licence year will be remitted or repaid. These changes taken together should, on balance, leave the total yield from betting unchanged.
      I explained last year that a general review of casino taxation must await the full operation of the Gaming Act, 1968. The remaining provisions of that Act will be brought into effect on 1st July, and it is, therefore, appropriate to make changes in the structure of the duty this year so as to relate it more closely to the level of gaming in clubs.
      The existing duty is related only to the rateable value of the premises used for gaming. I propose to replace it by a charge in two parts, consisting of a basic element related to the rateable value and an additional progressive charge increasing with the number of tables provided for gaming. In its new form the duty will apply to clubs licensed under Part II of the Gaming Act for general gaming.
      I also propose that the duty should in future be paid twice yearly on six-monthly licences, instead of in one annual lump sum. The licence duty payable each six months will range from £750 for a small club to £32,000, plus £5,000 for each additional table over five, in the case of the largest clubs. The details are set out in the Budget Report. The new rates will apply to licences expiring after 30th September, 1970, and I estimate that they will yield about £1 million a year extra revenue.
      I do not propose to make any changes this year in the rates of duty on gaming machines, but, to take account of decimalisation of the currency, I propose that the scope of the holiday season gaming machine licence should be extended to cover machines which may be played by the insertion of a single new half-penny or of a single new penny.
      Regulator
      It will not surprise the House to know that I propose to extend for a further
      1242
      year the power given to the Treasury to vary the Customs and Excise revenue duties and the purchase tax, either up or down, if the national economy should require it, by means of the regulator.

      MAJOR TAX CHANGES
      I come now to the more important changes in taxation. I had, first, to consider whether such concessions as I can make should be concentrated on the direct or the indirect side. Clearly, remissions in either field would in themselves be desirable. But I believe that direct taxation should this year have priority. This is bound to a large extent to be a matter of judgment, although I can give at least one powerful empirical reason for the choice.
      The continuing rise in incomes and prices means a more than proportionate increase in the yield of income tax—so that the real burden of the tax rises—without anything like a corresponding increase in the yield of the specific indirect taxes such as those on alcohol, tobacco, petrol or vehicles. The result is to bring more and more people into tax and to increase the real burden on small as well as large incomes, while, at the same time, the real weight of specific taxation on goods and services declines with changes in the value of money.
      If there were no tax changes in this Budget the proportion of total tax receipts from direct taxation would rise from 56½7 per cent. last year to 58·7 per cent. in 1970–71; and the proportion contributed by specific duties and taxes would fall from 32·2 to 30·4 per cent. If earnings rose only at the same rate as last year about 1 million additional people would be brought within the tax field, and the effective rate of tax on a married man with two young children and average industrial earnings would rise by about 11 per cent. I see neither justice nor logic in allowing this development to continue unchecked.
      Indeed, a major issue confronting me has been whether I should merely give priority to direct taxation reliefs, within a limited framework, or whether I should endeavour to raise substantial new sums in indirect taxation in order to make larger direct taxation reductions. I have decided firmly against this latter course.

      1243
      With the more traditional forms of indirect taxation it is difficult to avoid regression, and impossible to achieve a worthwhile switch without a significant effect on the retail price index. I believe that in the present climate this would be both economically and psychologically wrong. I wish neither to give any excuses for still further wage increases nor to give any stimulus to an inflationary mentality.
      I therefore propose to introduce a Budget which will in no way, either directly or indirectly, do anything to raise prices. Apart from the minor changes I have already described, I have, as a result, no proposals to put before the House in regard to the rates of Customs and Excise duties—including purchase tax—or vehicle excise duties. I cannot reduce them, if I am to give priority to direct taxation relief. But I do not think it right to increase them.
      Somewhat different considerations apply to the selective employment tax. It does not share the regressive qualities of many traditional indirect taxes, and its effect on the retail price index is very much smaller. We now have Professor Reddaway's extremely valuable report on the distributive trade. [Laughter.] Hon. Members opposite were keen enough to press for it before they did not like what they read in it. This report shows many of the criticisms of the tax to be unfounded. It shows that in both the retailing and wholesaling sectors of the trade S.E.T., possibly associated with the progressive ending of resale price maintenance, has led to an appreciable increase in productivity in addition to that which would have occurred in any case. Thus, one of the main objectives of the tax, to make more labour available for manufacturing industry, has been realised.
      We can go further than this; since Professor Reddaway reported, the provisional figures for employment in June, 1969, have become available. They show for the first time a substantial increase in numbers employed in manufacturing industry combined with a continued fall in the number employed in the main industries which bear the tax. The architects of the tax can, therefore, feel with some justification that the structure they designed, and upon which I have built, has a basis whose soundness has
      1244
      been tested and substantiated by objective and empirical inquiry.
      Nevertheless, I have to bear in mind both the problems of the construction industry and the fact that the tax has borne two successive and heavy increases in the past two years. I have, therefore, decided that here, too, it is right to leave rates unchanged.
      Professor Reddaway has also made some criticisms of the way the tax works in certain areas. He drew attention to two principal anomalies. The first arises from the liability of wholesalers to the tax while manufacturers' wholesaling activities are exempt. The second anomaly arises from the exemption of the self-employed from the tax. To take action to deal with these two anomalies—the one reducing, and the other extending, the scope of S.E.T.—would amount to a major refashioning of the tax.
      I have come to the conclusion that I should not embark on such a task this year. Professor Reddaway indicates that he will have more to say about the self-employed in later reports, and I think that it would be wise to wait for this before taking a decision on so important a matter. Since I am not proposing to increase the rates of S.E.T., or to bring in the self-employed, this means that I can make no concession to the wholesalers.
      The cost of exempting the wholesalers would be about £50 million a year, and I cannot afford to forgo this revenue if I am to meet claims upon me in other fields for which, as I see it, a still stronger case can be made out.
      Professor Reddaway did, however, make one important suggestion the acceptance of which I am glad to be able to announce. He considered that it would be preferable for the tax to be related to earnings rather than be expressed as so much per head. With the introduction of the earnings-related national insurance scheme it will be possible to move over from a flat rate to a graduated system, under which the Inland Revenue will be able to collect the tax as a percentage of the total payroll.
      At the same time, we shall be able to collect the tax on a genuinely voluntary—[Laughter]—genuinely selective basis and dismantle the cumbrous, although not expensive, machinery of collecting

      1245
      the tax from all employers and then refunding more than half of it. These reforms, when implemented with the earnings related pensions scheme, will reduce somewhat the burden of the tax on those industries where earnings are below average and will relieve manufacturers from the obligation to provide an involuntary loan to the Government.
      There is one concession, outside the scope of Professor Reddaway's first report, which I feel I should make. The House will recall that last year we effectively exempted film production from the scope of S.E.T., and I was urged by a number of hon. Members to treat the live theatre in the same way as the cinema. These representations have been reinforced by the recent report published by the Arts Council on the state of the commercial theatre.
      Accordingly, I now propose to exempt the production and staging of plays, but not the managing of theatres, and thereby to reduce the disparity of treatment between the commercial and the subsidised theatre. The cost will be about £500,000 in a full year. I shall be consulting representatives of the theatre interests about the exact form of the Order which will give effect to this.
      Having dealt with the indirect taxes whose rates I propose to leave as they are, I can now address myself to the question of direct taxation.
      Industrial Buildings
      I begin with a change which will benefit industry. I have spoken earlier of the need for a good level of manufacturing investment, and of my own belief that the prospects are reasonably encouraging. However, investment in industrial buildings shows signs of increasing less rapidly in the immediate future, and there is some unused capacity in the construction industry, particularly in the less prosperous parts of the country.
      I therefore propose a short-term stimulus to investment in industrial buildings. The rate of initial allowance for tax purposes will be increased from the present 15 per cent. This will apply to expenditure incurred on the construction of an
      1246
      industrial building after 5th April, 1970, and before 6th April, 1972. The new rate will be 30 per cent. in the country generally, but 40 per cent. in both development and intermediate areas. The 40 per cent. rate will also apply to Northern Ireland.
      The reason for the two-year limit is, first, that this very heavy rate of tax alowance would not be justified in different circumstances, and, second, that I wish industrialists to move quickly to take advantage of the temporary opportunity to write off much larger amounts of the cost of new construction in the first year. The annual allowance, which governs the amounts which can be written off against tax in subsequent years, remains unchanged. The cost to the Exchequer in the present financial year is nil, but I would expect companies' future tax liabilities as a result of work undertaken this year to be reduced by about £30 million. I would, therefore, expect to see some significant stimulus both to investment and to activity in the construction industry.
      Age Exemption
      I now turn to taxation on persons. I begin here with a modest, but, I believe, worthwhile concession to the old. I propose to make a substantial increase in the income limits up to which people of 65 or over qualify for age exemption. Last year's Finance Act raised these income limits from £415 to £425 for single people and from £665 to £680 for married couples. These increases took account of the increases in national insurance retirement pensions which were payable in 1969–70. The increases I now propose for 1970–71 will go considerably further than the £15 for single people and £25 for married couples which would be broadly necessary to reflect a full year's increases in national insurance retirement pensions. I propose an increase of £50 to £475 for single persons and one of £60 to £740 for married couples.
      For persons with incomes somewhat above the exemption limit there is a marginal relief under which the tax bill is not to exceed 45 per cent. of the income in excess of the limit. This figure will now become 50 per cent. for the marginal relief might otherwise in some cases run

      1247
      up well into the surtax scale. Even with the 50 per cent., there will in most cases be some benefit up to an income of £577 for the single elderly, and £994 for the married. One hundred thousand will be entirely freed from tax, and another 300,000 will have their liability reduced. The cost to the revenue will be nearly £8 million for a full year.
      Additional Personal Allowance
      I propose to correct what I think is an injustice in the tax system affecting certain women who have single-handed responsibility for young children. At present, a single man—that is, a man who is entitled only to the single personal allowance—can claim an additional personal allowance of £100 if he is entitled to child allowance for a young child resident with him; so too can a widow. But in the case of a woman who is divorced or separated from her husband, or unmarried, there is a further condition for the allowance. She must either be totally incapacitated or engaged full-time in earning her living throughout the income tax year.
      I think that this extra condition is difficult to justify, particularly where the mother cannot take a full-time job because of her responsibilities for the child. I propose to abolish the condition of full-time work or total incapacity for those single women who have sole responsibility for a young child. I see no reason in equity why these women should be treated differently from widows or from men in a comparable situation. The change will also be a small simplification of the tax system. I estimate that the number of women benefiting will be about 100,000 and that the cost of this concession will be about £3½ million for a full year.
      Dependent relative allowance income limit
      I should also mention that, as I announced in reply to a Question on 29th October last year, I propose to increase the dependent relative allowance income limit. This allowance is given in full where the income of the dependent person does not exceed a certain limit. This limit will be increased from £245 to £260. P.A.Y.E. codings for 1970–71 have already been worked out on this basis.
      Surtax
      I now turn to a surtax point. There is an increasing and heavy administrative cost in collecting surtax from the steadily rising number of small payers at the lower end of the scale. Over the past seven or eight years the total number of surtax payers has almost doubled, and if nothing was done there would be nearly 600,000 surtax payers for 1970–71 compared with 286,000 for 1961–62. As things stand, it would cost £850,000 to collect £4 million of surtax from those with surtaxable incomes between £2,000 and £2,500, a collection cost of no less than 21 per cent. This compares with an average collection cost of 1·5 per cent. for Inland Revenue receipts as a whole.
      Apart from other considerations, I cannot justify this degree of administrative cost for such a small amount of revenue. In the longer term, we must find more radical solutions, and study is being made of possible alternatives, but as an immediate remedy I propose to exempt from surtax persons with surtaxable incomes not exceeding £2,500. I cannot, however, afford to give relief all the way up the surtax scale.
      I am, therefore, reviving the sort of arrangement which applied in the early days of the tax. Surtax will be charged only when surtaxable income exceeds £2,500, but when it does it will be imposed, at the same rates as at present, on the excess over £2,000; thus, only the smaller surtaxable incomes will benefit from the new exemption limit. To avoid anomalies where individuals have a surtaxable income somewhat above £2,500 there will be a tapering relief under which the surtax charge will not exceed 40 per cent. of the income over £2,500. Thus, someone with a surtaxable income of £2,600 will pay £40 surtax instead of his present liability of £62 10s. At £2,682 of surtaxable income—and I must stress this—the marginal relief will run out and the normal basis of computation will take over. The figures I have given are for surtaxable income, that is after allowing for any deductions due for earned income or personal allowances.
      I estimate that this new arrangement will free from surtax about 185,000 people, something like one-third of those who would otherwise be liable for 1969–70. Most of these will have mixed

      1249
      incomes, partly earned and partly from investments. Of those with wholly investment incomes many will be retired or widowed. There can be few who are capable of working but choose to live solely on investment incomes at the range affected.
      The cost, including the cost of the marginal relief, will be about £5 million for a full year. The change will mean a staff saving of about 325 in the Surtax Office over the course of this year and about 360 next year; and there will also be a useful saving of work in income tax offices.
      As one of the reasons for the new arrangements is the administrative saving, they will apply for 1969–70 surtax, that is, the surtax payable on 1st January, 1971, on the basis of 1969–70 income. Thus, the staff saving will be realised as soon as possible. This is a form of retrospection to which I think there will be little objection.
      Income Tax Allowances
      I come, finally, to the one major scheme of tax remission which I am able to propose. I said earlier that I would be proposing fiscal changes to take effect now which would involve a full year cost to the revenue of rather more than £200 million. The immediate measures I have just outlined will lead to a net loss of revenue of about £45 million a year. Therefore, though I have not felt myself rigidly pinned down to a precise amount, I have found it necessary to think in terms of a scheme whose annual cost would be of the order of £170 million.
      This would be enough to allow a cut of about 4½d. in the standard rate. A cut of 6d. in the standard rate without any corresponding reduction in the reduced rate would cost about £225 million in 1970–71. I do not, however, believe that this would in any case be the right way to proceed. It would take no one out of tax, and it would give no benefit to those not already paying at the standard rate. On the other hand, it would, of course, give very great benefits to those with large incomes. It is the most dramatic, but also the most regressive, of all income tax changes.
      Another approach is a straightforward increase in income tax allowances. The difficulty here is that the increase in allowances either has to be so small as
      1250
      to make little impact or becomes prohibitively expensive. An increase of £50 each in the single and married allowances, for example, would cost £465 million. Such an arrangement would also involve some but not all of the effects of a standard rate cut. It would enable some people to be taken out of tax, but it would allow no further concentration of the benefit at the lower end of the tax-paying scale, and it would give benefits up the whole length of the income scale.
      This, is of course, inherent in many schemes of direct tax remission, and I certainly do not take such an enthusiastic view of the virtue of taxpaying as to regard this as bad in itself. But this year I feel that I should concentrate a large part of the limited remissions, which alone are prudent, upon those at the lower end of the scale. These are the people most affected by price increases, and some of them are likely to be left behind in the present rapid round of wage increases.
      I therefore conclude that it is best to proceed by a substantial extension of the methods which I used last year, that is, operating on both the personal allowances and the reduced rate. I propose large increases in both the single and married allowances. The single allowance will go up by £70 to £325; the married allowance by £90 to £465. I have deliberately decided upon the differentiation in favour of the married. This will help to redress the balance between the two allowances, which has gone rather against the married man in recent years; and it will give greater benefit where, on the whole, responsibilities are greater.
      To keep the cost within acceptable limits and produce the effect I intend, this will, however, involve the elimination of the reduced rate band—a step further along the road I took last year. I certainly do not regard this as in itself desirable. It means that, in future, when people start to pay tax on earned income they will do so at just over 32 per cent.—the standard rate less the earned income allowance. But I regard it as a worth-while price to pay for raising the threshold a substantial distance, and securing a significant benefit for a large number of people as well.
      I mention, in passing, that the disappearance of the reduced rate involves

      1251
      a change from 50 per cent. to 55 per cent. in the figure which governs the marginal relief associated with what is known as the small income relief. This is the relief which gives the equivalent of earned income relief on the investment income of a taxpayer under 65 whose total income does not exceed £450.
      I will now endeavour to describe the effects on earned incomes of the scheme I propose. For single people and earning wives—for the maximum wife's earned income allowance will be increased with the single allowance—the tax threshold will be raised from £328 a year to £418 a year. At this point, the relief will amount to £21 a year. It will then fall to almost exactly nil at about £660 of earned income a year. I say "almost exactly nil", because for single standard rate payers there will be a nominal loss of 7s. 6d. a year, which at 1¾d. a week, is so small that, because of the tolerances in the P.A.Y.E. system, in many cases it will not, in practice, be collected.
      Married people, as I have said, do considerably and intentionally better. For a man with two young children the threshold for earned income will be raised from the present £724 a year to £840. At this point, the benefit will be £27 a year. It will then fall to £7 17s. 6d., at about £1,060 a year, and will then continue at that figure indefinitely. For married men liable to surtax, there will be an additional benefit, rising to £10 at the maximum, resulting from the widening of the diffential between single and married allowances.
      For a married man with one child or without children the maximum benefit will occur somewhat lower in the income scale, as will the fall to £7 17s. 6d., but the continuance of the benefit at this figure will apply equally. With more than two children it will correspondingly occur higher up the income scale, and the same continuance will, of course, also apply.
      Under this scheme, almost 2 million people who would otherwise have paid tax in 1970–71 will be freed entirely. Of these, more than 700,000 will be single; about 800,000 working wives; and over 400,000 married men. In addition, about 11 million will get the continuing benefit of £7 17s. 6d. and 4 million taxpayers will get more than that. I estimate the full
      1252
      year cost at £175 million and the cost in the current year at £139 million.
      The introduction of the scheme means a lot of recoding work for tax offices. New tax tables will also have to be produced. As a result, the new arrangements cannot take effect until the first pay day after 5th July; but P.A.Y.E. deductions after that date will take account of any income tax overpaid in the first three months of the year.
      Rates of income tax, surtax and corporation tax
      It will be apparent from what I have already said that the Resolutions to be put before the House will provide that the standard rate of income tax should be renewed at 41·25 per cent. and that the same surtax rates should apply for 1969–70 as for 1968–69; but, like the standard rate of income tax, the surtax rates will now be expressed as percentages. The Resolutions will also provide for the renewal of corporation tax at its present rate of 45 per cent.

      CONCLUSION
      That brings me to the end of my proposals. In total, the full year cost to the revenue of the measures I have announced as coming into effect at once may be reckoned at about £220 million; and after taking account of these measures, the central Government should this year have a surplus of £619 million. The public sector as a whole should have a surplus of about £250 million. Thus, the improvement in the balance of public sector transactions which we have brought about in the past two years is being consolidated and sustained.
      The Budget endeavours to give limited help where it is most socially necessary, and where, within the existing tax frame-work, it is most reasonable to proceed. No prices should be put up as a result of what I have announced. No one should be effectively worse off. But over 2 million people will be taken out of income tax altogether. And there will be benefit, in varying degrees, for a further 16½ million people who pay income tax and surtax.
      The result is a significant lightening of the burden for a very large number of people. But I have deliberately proceeded with caution. We cannot allow

      1253
      the hard-won national gains of the past two years to slip away. I have paid at least as much regard to the needs of industry for credit as to the needs of individuals for tax remission.
      This is a Budget for growth, but for suitable growth. It is a Budget for the strength and balance of the economy, on which depends the whole future prospect of the standard of living of our people. It is a Budget not just for today, but a Budget geared to the needs of the whole year ahead, and to the period beyond that, too.

      PROVISIONAL COLLECTION OF TAXES
      Motion made, and Question,
      That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following Motions—

      (a) Alteration of general betting duty and repeal of betting premises licence duty (motion No. 2);

      (b) Income tax (charge and rates for 1970–71) (motion No. 9);

      (c) Income tax (surtax rates for 1969–70) (motion No. 10);

      (d) Income tax (alterations of personal reliefs) (motion No. 11).—[Mr. Roy Jenkins.]

      put forthwith, pursuant to Standing Order No. 90 (Ways and Means Motions), and agreed to.

      AMENDMENT OF THE LAW
      Motion made, and Question proposed,
      That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making—

      (1) amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description, or for all goods to which any of the several rates of tax at present applies;

      (2) amendments of the enactments relating to selective employment tax so as to give relief from tax—

      (a) by way of exemption from, or a reduction in the rate of, tax except in respect of all persons of the same descriptions relevant for determining the rate of the employer's flat-rate contribution with which the tax is combined, whether that contribution is under the National Insurance Acts or under the corresponding enactments in Northern Ireland; or

      (b) by way of providing for payments to employers of an amount equal to the whole or a specified part of the tax paid if the proposed provision—
      1254

      (i) is in respect of employers in, or at establishments in, part only of Great Britain; or

      (ii) extends to employers in, or at establishments in, Northern Ireland; or

      (iii) is in respect of all persons in any particular description of employment in all parts of Great Britain, and relief in respect of the whole of the tax paid could be given in respect of that description of employment by an order under section 9(1)(a) of the Selective Employment Payments Act 1966 adding that description of employment to the employments to which section 1 or 2 of that Act applies; or

      (c) by adding or removing any employer to or from the employers to whom section 3 of that Act applies, or

      (d) by amending the provisions of Schedule 1 or Schedule 2 to that Act;

      (3) amendments of the provisions of the Customs (Import Deposits) Act 1968 so as to give relief from the import deposits required by those provisions to be paid. other than amendments making the same provision for all goods on which such deposits are so required to be paid;

      (4) provisions relating to betterment levy.

      —[Mr. Roy Jenkins.]
      5.35 p.m.
      Mr. Edward Heath: I gladly begin, as is the privilege of the Leader of the Opposition, by warmly congratulating the Chancellor of the Exchequer on the presentation of his third Budget. After all, it is a matter of intense pleasure for the House when a test of endurance such as we have on these occasions, albeit briefer than is customary, is delivered with such lucidity and fluency and in such a well-constructed speech as the Chancellor has given us this afternoon. As I said last year, it was again characteristic of the man, not only in its presentation but also in its content. And certainly in the way in which he has comes before the House today, I should like most sincerely and warmly to congratulate him.
      Hon. Members: Hear, hear.
      Mr. Heath: He began his speech on the state of the economy, and I thought, quite rightly, took the precaution of getting the cheers at the beginning of his speech, probably estimating that they would be comparatively fewer by the time he sat down. Despite the vociferous efforts of the P.P.S.s behind him, who are to be congratulated on their still loyal attitude, he sat down to comparative quiet.
      Hon. Members: Oh.
      Mr. Heath: I wish to deal only briefly with the first part of the Chancellor's speech. [Interruption.] I will give the Prime Minister the reason. The reason is that the Chancellor himself so frankly pointed out that his task had been to deal with the major deficit incurred by his predecessor. [Interruption.] The Prime Minister has got out of the habit of reading speeches these days—even his own before he delivers them. He really ought to read the Chancellor's speech carefully when it appears in HANSARD tomorrow, because twice his right hon. Friend emphasised that he had to cope with the enormous deficits of 1967–68. In fact, the current deficit in 1968 was the largest this country has ever had, £796 million. That was the current deficit, including payments for American aircraft, with which the Chancellor has had to contend. I gladly give him credit for contending with it.
      The second thing he said so frankly was that he had to contend with the enormous indebtedness which reached its peak in 1968. For this reason, because of the enormous level of the current deficit, we are grateful to him for explaining this so frankly to the House and to the country. It finally demolishes the Prime Minister's claim that what he is dealing with is an earlier period of Conservative rule. Today was worth it just for that.
      The Chancellor gave the figures of total indebtedness, which he will agree are higher by several hundred million than those I have ever publicly put forward. We welcome the repayment which has taken place, even those it is not as much as we ourselves had calculated. Nevertheless, it is encouraging that he has been able to reduce it, as he says, to four billion dollars, which is still a heavy amount of indebtedness.
      As for the question of how it has been done, in addition to the surplus on balance of payments, I am not sure I agree with him about the aspects of hot money. After all, the money pouring into gilts to get high interest rates in the expectation that he would announce a reduction in the Bank Rate to take the profit is hot money and is liable to be moved at any moment. But he has acknowledged that position frankly, and now we have a clearer statement about his indebtedness.
      1256
      Then we come to the lesser measures that he has introduced, and then the one major point. I say very little about the lesser measures. We shall have an opportunity to discuss them in the debate and when we come to the Finance Bill. We welcome the reduction of import deposits. Whether the overseas trading companies will welcome it so much when it is put fairly and squarely on the grounds that the Chancellor did, that it is required for our monetary control internally, I beg leave to doubt. Such measures are not supposed to be used for that purpose, but the Chancellor has stated it, and we welcome the reduction.
      The other feature about the lesser points was that he has given us notice that we shall have to take a decision on the Savings Bank rate in 1971. We appreciate that. He has warned us that he has given away already £12½ million of the next Budget through decimalisation changes, and that we shall have to find £30 million for the 1971 Budget for the construction industry. We welcome these measures and accept the responsibility for having to meet them in the 1971 Budget.
      Coming to the next point, the announcement of the Bank Rate change, even with this Government's record of announcing a Bank Rate change on a famous Monday in November, 1964, I am sure that the Chancellor will agree that to announce a Bank Rate change in a Budget Statement on a Tuesday in April 1970 is unusual——
      An Hon. Member: It is very good.
      Mr. Heath: It is very good, and we welcome it. I am sure that the hon Gentleman welcomed it particularly. What we welcome especially is that the Chancellor of the Exchequer has announced that today, at last, the Labour Government are able to bring the Bank Rate down to the crisis level of 7 per cent., and that after 5½ years of Labour rule.
      Then I come to his major effort, his changes in taxation. Before that, I want to deal with what he gave as the three objectives of his policy. First, he wanted the growth of total demand to keep in line with potential capacity. It has been this which has fixed the limits of what he has decided. Secondly, he wanted a sustained growth in industrial investment

      1257
      He has done precious little to encourage that, apart from some industrial building construction. Thirdly, he wanted to preserve our competitive position, and he stressed the dangers of increasing unit costs.
      The House cannot but have noticed the extraordinary speed with which he delivered his next sentence, skated over the page and hastily turned to other matters. He said, "Incomes cannot for long continue to rise at their present rate." What does he intend doing about that? Does he accept responsibility for it? After all, it was the Chancellor of the Exchequer who, in his last Budget, announced that he was abandoning all incomes policy in exchange for the reform of industrial relations. He chose to make the announcement in his Budget Statement because it was a prime part of his economic policy. Of course, we know that it was the Prime Minister who was pushed over. He abandoned it. But why did the Chancellor of the Exchequer stand for his policy being pushed over like this by the Prime Minister? It has removed the major item of his economic policy, which was to deal with incomes as well as industrial unrest.
      In the past year, the Chancellor of the Exchequer has seen the main plank on which he was building removed by the Prime Minister. The consequences are clear for all to see: a wage increase now averaging 10 per cent. a year. All that the Chancellor of the Exchequer can do on this occasion is say "Incomes cannot for long continue to rise at their present rate." He does nothing whatever about it.
      Just as the abdication of industrial relations reform is his responsibility as much as the Prime Minister's, so his failure to deal with wages in the present situation is his responsibility just as much as that of the Government as a whole——
      Mr. Roy Roebuck: I thought that the right hon. Gentleman believed in high wages.
      Mr. Heath: Yes, high wages for productivity and production. That is what our policies are designed to secure.
      Let me be fair to the Chancellor of the Exchequer. Today, we have witnessed not quite a unique event, but a very rare one. It is a Socialist Chancellor who has announced a reduction in taxation. The last occasion on which
      1258
      it occurred was in 1949. There are only 17 hon. Members left on this side who last had the pleasure of hearing a Socialist Chancellor announce a reduction in taxation. On the benches opposite, there are some 60 hon. Members who were present on both occasions. Twice in a lifetime they have heard the good news of a Socialist Chancellor of the Exchequer making a cut in taxation. Just to give the flavour of that Socialist Government, a day or two before the Budget——
      An Hon. Member: The right hon. Gentleman is electioneering.
      Mr. Heath: I will come to the election in a moment. A day or two before the 1949 Budget, the then wonder boy President of the Board of Trade, now Prime Minister, announced that he had granted three applications for the export of onions. It was his finest hour.
      We have all been waiting on the abyss to know what decision the Chancellor of the Exchequer would take on his Budget judgment and about the taxes with which he would deal. Would he go for what might be called an Election Budget, or would he appear responsible and avoid the accusation of an Election Budget? Would he bail out the Prime Minister by producing a Budget which appeared to be responsible but which in fact was a vote catcher and irresponsible? Would he look after his own future in the history books, or would he support the Prime Minister? We have all waited with bated breath to hear.
      Was it to be an Election Budget? No, he said, certainly not. He had come to the conclusion that he should be cautious because it was too soon to have an Election Budget. He gave us fair warning. He said, "It is too soon for me to produce anything which will really attract the electorate." When one then comes to his main change, I rather agree with him. When one analyses the changes in direct taxation that he has made, they will not produce the startling transformation which the Leader of the House and a number of his hon. Friends want, which is a change of attitude towards the present Government at the next election.
      We welcome the reductions in direct taxation. We have urged them constantly, year in and year out. But what has the

      1259
      Chancellor done? He has increased the allowances. However, in the case of a single man, by the time he reaches £13 a week, he gets no benefit. That has to be seen against average industrial earnings of £24 16s. 6d. a week. So, after £13 a week, he gets no benefit from the Chancellor's Budget.
      When we come to a married couple, at £20 a week they gain 2s. 3d. a week benefit from the Chancellor's Budget. Against that, they will start paying tax at a rate of 32 per cent. If that is not a disincentive to extra effort on the margin or to overtime, I ask what is? To talk about giving incentives for steady stable growth and to say when people first came into the direct taxation bracket that it will hit them with 32 per cent. must surely be a mistaken way to handle it. This is no incentive; this is a disincentive at the margin to extra effort, particularly extra overtime, when it is required.
      The Chancellor says that he has taken two million people out of paying direct taxation. Last year he told us that he was taking 1,100,000 out, and he did so. Are they still out? Of course not. By the time he produced his Budget today those 1,100,000 were back paying direct taxation. What is more, an additional 1 million are in paying direct taxation.
      Mr. Roy Roebuck: Why?
      Mr. Heath: Because of a roaring wage inflation. That is why.
      The Chancellor has taken two million people out of paying direct taxation. How long will that last? Precious little time, as he knows.
      Let us look at the real impact of this Budget. We all know that what matters this afternoon is not so much what the Chancellor has said in the House, but what is going on outside in the country. In the six months to February 1970, prices had increased by 3½ per cent. This means that purchasing power was cut by £1,000 million. In a month from today the increases in prices will remove exactly £200 million of purchasing power. The Chancellor today has given back, or, as he likes to say, has conceded, to the taxpayers of this country £200 million. That will cope with exactly one
      1260
      month's increases in prices in this country today. One month's increases in prices will wipe out entirely the £200 million which the Chancellor has conceded. This is a one-month Budget as far as the ordinary citizen is concerned. After a month, any advantages that the Chancellor has given him will be wiped out.
      This is the balance sheet at the end of five and a half years of Labour Government. Three and a half years of disaster which led to devaluation——
      Mr. Andrew Faulds: Let somebody else do it—[Interruption.] You are cocking it up.
      Mr. Deputy Speaker (Mr. Harry Gourlay): Order. The hon. Gentleman must restrain himself.
      Mr. Heath: Three and a half years which led to devaluation, two years of hard slog which the Chancellor promised us, and at the end benefits which will be wiped out in one month.
      Mr. Roebuck Mr. Roebuck rose——
      Mr. Heath: The hon. Gentleman cannot stand it. He at least is certain of losing his seat in the next election—[Interruption.]
      Mr. Roebuck Mr. Roebuck rose—
      Mr. Deputy Speaker: Order. Perhaps we can have silence.
      Mr. Roebuck: I am grateful to the right hon. Gentleman for giving way. Concerning electoral prospects, I ask him to turn his attention to his own area in that regard. I earnestly beseech him, in view of the awful mess that he is making, to sit down and allow his right hon. Friend the Member for Kinross and West Perthshire (Sir Alec Douglas-Home) to get to the Box—[Interruption.]—to spell out precisely what the right hon. Gentleman is trying to say with his matchsticks.
      Mr. Heath: I was right to give way to the hon. Gentleman, because he will never have another chance to speak in a Budget debate—[Interruption.]
      Mr. Faulds: The right hon. Gentleman has had his last chance of opposing a Budget as Leader.
      Mr. Heath: The present state of this Government is such, and so demoralised

      1261
      are their supporters on their back benches, that this morning—
      Mr. Roebuck: Where is Enoch?
      Mr. Heath: —the Chief Whip could not even mobilise enough support for the Government to carry the operative Clause of their Education Bill—[Interruption]
      Mr. Faulds: They are telling you to go, Ted. They have had enough.
      Mr. Heath: The Government are ailing and weak, and their supporters are demoralised.
      A year ago the Prime Minister said to the T.U.C. that if the Government stood by and did nothing it could lead to economic and political destruction. The right hon. Gentleman was absolutely right. The Government did nothing about the other major matter outside this House—industrial relations. They are now being destroyed economically, and they will be destroyed politically. This is a one-month Budget. If the Prime Minister had any honour or integrity, in a month he would go.
      5.56 p.m.
      Mr. A. H. Macdonald: I really think that we shall have to change our procedures in this House. I regard it as absolutely ridiculous, after a serious Budget speech, to have to listen to the kind of knockabout slapstick that we had from the Leader of the Opposition, who had to dig back to 1949 to find some feeble joke about onions. It is not proper to say things like that in the middle of what should be a serious examination of the national economy. Our procedures place this difficulty on the right hon. Gentleman. Not having the ready wit to come forward with a serious speech, he has to dig around beforehand to find a few feeble jokes to fling across the Floor of the House. We must think about different procedures in future, because that kind of performance is a disgrace to the status of this House.
      It might be worth noting one or two points in the right hon. Gentleman's speech, not that I want to spend very long on it. I understood that he had some experience of banking. Yet, in the first part of his speech, the right hon. Gentleman referred to our liabilities of £4,000 billion as though they were of necessity bad. A liability in itself is neither good
      1262
      nor bad. It depends entirely upon the use that is made of it. Consideration must be given to the condition of the borrower, the use he has made of it and his ability to repay. These matters are just as relevant to a national liability as to the private liabilities of individuals or firms. However, this fact does not seem to have penetrated.
      The right hon. Gentleman said that this was the first Budget since 1949 in which a Socialist Chancellor had reduced taxation. This is certainly something on which I should like to comment. But to propose that a reduction in taxation is necessarily good seems totally to disregard one of the purposes for which a Government—at any rate, a Socialist Government—is brought in.
      In the Budget debate last year my right hon. Friend the Chief Secretary, in what I thought was a brilliant speech, referred to the contrast between private affluence and public squalor and suggested that one of the purposes of a Socialist Government was to transfer resources from private affluence to the public sector to assist in the development of schools and hospitals, old-age pensions and overseas aid. I want to spend money on these things, and I see no need to apologise.
      I appreciate that, in the conditions of a Budget when we are considering the way in which we raise money, it is easy and popular to call for tax reductions and sneer when reductions are not so great or so frequent as one thinks they should be. But a Budget, of all times, is when we should refer to the purposes for which the money is raised. I want to spend more on education, pensions, hospitals, overseas aid and facilities for the old. I could easily produce a lengthy list. It is no more than humbug to jump around as though the sole object of any Budget debate is to discuss tax reductions, as though they alone were good and the purposes for which taxation is' raised should not even be considered.
      How disgraceful it is for the Leader of the Opposition in that sort of knockabout performance, which I greatly deplore and find thoroughly distasteful, to make a speech bearing little relationship to the Budget Statement—obviously, he must have prepared most of it before-hand—and, knowing very well how much

      1263
      more we need to spend on our social services, to sneer that only twice has a Socialist Chancellor reduced taxation. It is with pride that I think of the amount of public expenditure which Government supporters have carried through, and I do not support the concept which has just been advanced that the single object of a Budget should be to effect some reduction in taxation.
      Therefore, I mainly support what my right hon. Friend has done. In the newspapers beforehand, there was widespread comment that Labour Members expected massive reductions in taxation. That was true of me, but the implication that Labour Members wanted massive reductions was not true of me. I thought that a modest reduction was the most which could reasonably and safely be allowed, and this is what we have seen. I entirely support it, and I also support the method which my right hon. Friend has adopted to put it into effect. But I have one or two criticisms.
      First, when considering whether to effect reductions in direct or indirect taxation, my right hon. Friend was quite unambiguous, that direct taxation was where reductions should be made. I am not altogether sure that this is entirely consistent with the Socialist thinking which this party is supposed to embody. I should have thought that there was much to be said for the concept, "From each according to his means and to each according to his needs". This is the concept expressed better by direct than by indirect taxation, and I am a little sorry that the reductions which have been effected have been exclusively in direct taxation. I should have thought that there might haxe been some room for lesser reductions there—I agree with the amount of the reductions—and for some reduction in indirect taxation, most notably in the most odious of taxes, purchase tax.
      I thought that the present Government were wrong in previous Budgets to widen the band of purchase tax. Governments have no business discriminating and deciding what is and what is not a luxury. Further, one of the causes for the feeling expressed against the Government in certain quarters is the constant rise in prices. This is the thing constantly thrust upon us when we are canvassing.
      1264
      I should have thought that there was scope for some modest reductions in purchase tax, which would have done something to keep price increases within bounds.
      I was again a little surprised at my right hon. Friend's analysis when he said that there should be some relaxation in fiscal policy parallel with some relaxation in monetary policy. I do not think that the relaxation in monetary policy was all that great. He referred to a possible increase to 105 per cent. in bank lending. That is not a great increase and in itself will not do much to encourage further investment in industry, which my right hon. Friend said—I entirely agree—is so desirable. Indeed, there is a case for saying that the prosperity of this country during the 1970s will not depend at all on the Budgets of the 1970s but rather on the amount of the investment which we could put through in the 1960s. In the same way, our prosperity in the 1980s depends on the amount of investment which we can encourage now.
      Therefore, a modest little increase in credit to 105 per cent. of present levels is not as much as I would have hoped for. I should have preferred a greater monetary relaxation, even if it had been necessary to accompany that with slightly less fiscal relaxation. Therefore, while I think that my right hon. Friend's judgment in the round was broadly correct, and I entirely applaud him for not throwing away more than he did, none the less, the relaxations which he made might have been better placed.
      Subject to that, my right hon. Friend is to be congratulated on pursuing a wise and moderate policy. He must have been considerably tempted to embark on a reckless Budget to attract popularity, but he has adopted a wise course and one which will gain popularity for him in the long run, because courage is generally to be applauded and will, I hope, succeed. I therefore wish my right hon. Friend well in the Budget debates, and I applaud his decision.
      6.7 p.m.
      Mr. Michael Noble: Like everyone else, I listened with attention and pleasure to the way in which the Chancellor developed his long Budget speech. I suppose, like many other hon. Members, I was also not unaware of waiting for something which would help my

      1265
      particular area or constituency. As I go around Scotland, particularly my own constituency in Argyll, I find that there are two things which are outstandingly important to the people who live there and have businesses there. They are without doubt the enormous rise in the cost of living and the equally staggering rise in industrial costs.
      In his peroration, the Chancellor made it clear that nothing he had done in this Budget made it necessary for anyone to put up prices. But those of us who have watched what has been happening over the last few months—particularly in wages, but not only there—know only too well that there is a vast increase in industrial costs which must come through to the unfortunate consumer over the next few months. The Chancellor has done nothing in this field that I can see to bring costs down. This is just as important as the reverse.
      I know that if one happens to live and work in the outlying parts of the country the single factor which is most critical is the cost of transport. Therefore, I had some hopes that this year, when there was clearly some scope for reduced taxation, the Chancellor might take this as one area where some reduction was possible and fully justified, and one which would have a major effect over a wide number of areas, often the most difficult areas in England, Wales and Scotland. A justifiable case could be made out for this, because if one looks at the figures of taxation on transport—fuel tax, licences and purchase tax on vehicles—for 1964, the total level of taxation was £777 million, whereas for 1970—which must of course be an estimated figure and might be wrong by 1 or 2 per cent. it is £1,800 million. This is an increase of nearly three times. In the four to five years before 1964 when we were in government the increase in taxation on the motorist in the round was 20 per cent. In the four to five years since the Socialist Government took over, the increase has been 125 per cent. So at least there is some real justification for this section of the community—and I am not just thinking of the private motorist but of the commercial firms in transport—getting some relief.
      The hon. Member for Chislehurst (Mr. Macdonald) took considerable pride from the fact that the Government were
      1266
      spending money in many areas. But I do not know if he is very proud of this one. If one looks at the expenditure on roads—and we all know that the day has long past when the money collected from the motoring community goes back to the roads—we find that in 1964 some 40 per cent. to 45 per cent. of the money collected went on the road programme. At the moment under 30 per cent. of the money collected is going back on the roads, so in this field a great deal more has been taken out than has been put back.
      I have heard some figures from one of my friends in Scotland of his own business in road haulage where the costs have increased over the last two years by 67½ per cent. I checked with a firm over which I have some control and asked what its recent increases of costs had been, and I was told that since 1st January last costs have increased by 27½ per cent. These are startling increases, so when the Chancellor says that he has done nothing in this Budget to make anybody put prices up, it must be remembered that these sort of increases must come through in one form or another and he has done nothing to reduce them.
      Mr. Macdonald: The right hon. Member referred to me and I should like to say that I am proud of the amount we are spending on the roads. Looking at Cmnd. 4234, I see that expenditure in that field is increasing at a rate of 7·5 per cent., and this is faster than under almost any other heading.
      Mr. Noble: This is the way that so often these arguments go, and they are slightly fatuous. If one takes an extra 125 per cent. in taxation in four or five years, there is not much good in claiming the credit of having spent an extra 7 per cent., because the motorist justly feels that he is being soaked. This is just the sort of sterile arguments which has been put forward.
      I turn to the general industrial field in Scotland today. Over the last few weeks, we have had three very considerable shocks there. First, A. M. Carmichaels, perhaps the best known of the big Scottish construction busineses, failed. Second, last week this was followed by the failure of perhaps the best known of the new construction firms, William Logan, the

      1267
      firm that built many of the great bridges and roads which have been built in the last few years. Third, at the same time there are very serious rumours—and let us put it no higher than that—about the Upper Clyde Shipbuilders and, having seen the figures recently by Harland & Wolff across in Belfast, one can begin to understand the real problems that this section of industry is facing. I know that the hon. Member for Chislehurst will not quote these figures at me, but he could, if he wanted, in the same spirit as he has just quoted what the Government is spending on roads.
      The Government have spent in Scotland a great deal more in the last four or five years in actual cash than we spent during the last four or five years of our administration. But it is not unfair, if one accepts that, to look at the results. In the period 1960–64—for the latter period of which I happen to have had some responsibility—I was continually being abused by the present Government for not doing nearly enough. For that period, we created a net gain of 57,000 new jobs. In the last equivalent period up to the end of 1968, the Government have spent more than twice as much per new job created. But there has been a net loss of more than 35,000 jobs over the same period. So a great deal of money was spent but the result was extraordinarily depressing.
      Therefore I had hoped, in listening to the Chancellor, to try to find some indication in the Budget that he was aware of the position in Scotland—or indeed in the North-East of England or in the South-West, because I do not care which area it is. I had hoped to find some indication that he was aware of some real regional problems and that he was to take some measures to try to help these areas forward. I know that there is very little benefit in hon. Members shouting that they want something special for Scotland or the North-East, or the South-West, or Wales. But there is a real and good reason for hon. Members to demand that the Chancellor and the President of the Board of Trade face the fact that there are still a number of outlying areas in the country faring desperately worse than many others. The Budget is one occasion—I know that the Treasury does not like it—when positive action can be taken to help those areas. I see no sign of
      1268
      this in the Budget, and I see no sign of anything to reduce the rise in the cost of living and nothing whatever to reduce the rise in industrial costs.
      On that basis, like the hon. Member for Chislehurst, I do not think that an increase to 105 per cent. in the ceiling of credit will spur industry to any great effort, because it cannot. Industry's increase in costs will be far greater than that. It will absorb the whole of that in a week or so. The money will not be available there for people like myself, who are interested in industry as well as being here, who at the moment are trying to build up new industries to employ more people. The incentive is not there and to that extent I cannot support the Chancellor in his thinking.
      6.20 p.m.
      Mr. John Lee: I will be charitable and will not refer to the speech of the Leader of the Opposition beyond saying, for the benefit of my hon. Friend the Member for Chislehurst (Mr. Macdonald) that by the rules, procedures and traditions of the House the Leader of the Opposition is bound to say something after the Budget speech and that when he is in the position, because of the circumstances, of being able to say nothing of relevance, the only thing he can do is make the kind of knock-about turn that we heard from the right hon. Gentleman today.
      It is a criticism of our procedure that today's debate has been cut in two. Indeed, it has been reduced for back benchers to a matter of little more than an hour by the incursion of Private Business. I do not say that that Private Business is not important, because of course it is, but it has been traditional that the first day of a Budget debate should be the occasion when the non-experts are able to raise matters, as the right hon. Member for Argyle (Mr. Noble) did, quite legitimately, which are either of constituency interest or of perhaps somewhat limited reference, leaving the remaining days for those who are perhaps better qualified to go into the details of the Budget and economic policy in greater depth.
      I want to make a few references to the position as a whole and then to take my turn, for which I am grateful, to raise one or two specific matters which have been concerning me. I want to extend

      1269
      a qualified welcome to the Budget. We on this side have had to sit, flinching at times, through the measures introduced in the last two or three years, and it would be right to say, and the Opposition themselves can scarcely deny, that the period of two years' hard slog is now coming to an end.
      This is not to be measured by tax reductions. My hon. Friend the Member for Chislehurst is right in saying that it would be wholly wrong for the value of a Labour Budget to be assessed purely or predominantly in terms of tax reductions. They may play a part in it but it is far more important from our point of view to examine the measures in terms of their social usefulness.
      I think that the earned income allowance increases were predictable and are welcome compared with the situation before, but I think also that they are less satisfactory than some measure which would have meant the continuous exemption of persons of low income. There is some substance in the jibe of the Leader of the Opopsition that as incomes rise people come back within the scope of the tax system and this serves to increase again the administrative burden of the Inland Revenue, which is considerable and has grown during the last few years.
      The fact that incomes are rising is something which is surely a matter for unqualified welcome, certainly in relation to low incomes. The Leader of the Opposition did not see it that way, but we do. It would certainly help to make this process of reducing the tax burden on those of modest in comes more effective if it were geared to something like a specific income related to the overall national income—in other words, instead of a flat floor, a sloping, rising floor. Those who have studied the proposals of the Tribune group will know the kind of things I have in mind. That having been said, the change proposed by my right hon. Friend the Chancellor of the Exchequer is welcome.
      I suppose that one may say that the change in Bank Rate is the most important of the other measures in the Bill. I wish that we could get away from these across-the-board interest rates. I believe that it would have been more useful to do something to reduce certain specific interest rates, such as that for the Public
      1270
      Works Loans Board, and to make house purchase easier.
      The trouble with across-the-board reductions is that they benefit the useful and the useless alike. Although, of course, this is a reduction of Bank Rate from a fairly high level, the fact is that we have become used, over the last few years, to fairly high bank rates and that it is no use talking in terms of crisis level. The days of a two or three or even four per cent. Bank Rate have long since departed and this reduction must therefore, be measured against the more rigid and higher rates of the last few years.
      I think it reflects the Chancellor's caution that he should have reduced Bank Rate by only one half per cent. after giving us a most impressive display of the improvement in our over all balance of payments position. Whatever measures may have been adopted—and I have been sharply critical of some of them—over the last two years, the fact remains that the over all improvement is most impressive, and nothing that may be said by way of criticism can detract from the fact that we have moved into a situation in which the country's economic position in relation to the rest of the world is stronger than it has been for many years.
      Mr. Donald Williams: The hon. Gentleman is talking about the strength of the balance of payments. Has he not noticed that the Chancellor implied a very substantial increase in the gross national product? If that is so, would not the hon. Gentleman agree that the miserable sum which is now to be given away—about £200 million—will be more than recovered within the terms of taxation at present levelled on the increased gross national product?
      Mr. Lee: If the hon. Gentleman had been listening carefully, he would have heard me refer to my right hon. Friend's caution. The implication behind my reference was critical. I think that my right hon. Friend is in a position to give rather more than he has chosen to do. I do not regard that as an overwhelmingly serious criticism because he says that there will be time later in the year to make further reductions. But it is a criticism, and up to a point I agree with the hon. Member for Dudley (Mr. Donald Williams), although I strongly suspect that, in common with so many of his

      1271
      hon. Friends, he measures budgetary excellence in terms of reductions of taxation more than anything else.
      I ought to turn to something else, rather aside from the nature of the Budget proposals but relevant to financial policy generally. This is the application of the development grants. Much of the economic recovery of the country is said to depend upon the way in which we have disbursed money in the development areas. Indeed, a great deal has been done to diversify industry, to reduce unemployment and to replace obsolescent industries in development areas. The principal means, apart from industrial development certificates and closely related to these, has been the system of development grants in operation over the last few years. It is right to recall that the Conservative Government started that system but it has been developed on an enormously larger scale during the last few years.
      The assistance given to private industry in the United Kingdom in 1964–65, when, to some extent, we were still conditioned by the policies of the Conservative Government although the present Government had by then taken office, was about £45 million. In the financial year just ended the total was £844 million, which is an enormous sum of money. Over the last few months I have been endeavouring, without much success, to persuade the Board of Trade and the Ministry of Technology to say specifically which firms have been assisted to provide what industries and to give in detail what has been done with the taxpayers' money in this direction. My request has been resisted. I get the impression that there is a conspiracy of silence to which both the donor and the recipient are equally willing parties because they do not want this House and the taxpayers to know exactly how this money is spent.
      I say at once that I grudge not a penny spent in the development areas, provided that it is spent efficiently and for socially useful purposes. I have no doubt that in a majority of cases this is so. But it is straining one's credulity a little too much when sums of this magnitude can be spent and it is totally impossible to elicit from a Minister exactly how that money is to be spent. I am not sure that it is constitutionally proper
      1272
      that it should be so. This House has spent a great deal of parliamentary history over the last 300 years gaining control of financial expenditure, gaining a measure of financial accountability. But the operation of this development grant system over the last few years has bypassed that, because one is met with a flat refusal to disclose the identity of firms to which money is paid out.
      I would like to know in how many cases money is paid to firms having capital reserves from which they could well afford to carry out the development work that is prescribed for them and on which grants are made dependent. I would like to know the dividend policy of the particular firms. I even tried to get from the various Finance Ministers involved in this an undertaking that where a public company is provided with largesse of this kind its dividend policy should be specifically controlled. After all, in so far as dividends represent the degree of risk involved that is borne by the shareholder, when Government money is provided on this kind of scale that risk, if it ever existed in the first place, becomes negligible.
      It would be reasonable, therefore, that the Government should at least control the level and in some cases perhaps prescribe that no dividends should be payable for a specific period of time. I cannot even get that information. It is not a question of castigating the expenditure of money. I represent a non-development area which has been fortunate for many years in the matter of employment and it would certainly not lie in my mouth to begrudge money being spent in areas or constituencies less fortunate than my own. But I believe I have a right, as a back-bench Member of Parliament, to know how Government money is spent.
      It ought to be said that there is another factor here, too. One sometimes gets the impression that, in some instances at any rate, development money is spent on projects which are capital-intensive rather than labour-intensive. There is the rather striking example—one that I have been able to identify—which is well known to the House of the petrochemical complex in Invergordon, Scotland. There a very great deal of money has been spent on what is, no doubt, an admirable project but for the provision of

      1273
      comparatively few jobs. There may be justification for this one, but I suspect there will be instances where this is not the case. But we can only tell in very general terms when we know where and how money is spent.
      There is another aspect of this. It is a legitimate election point. I do not see why the Government do not want to parade their medals. I would have thought that in election years they ought to do so; and we know that an enormous amount of money has been spent for impressive results. My hon. Friend the Member for Fife, West (Mr. William Hamilton) was telling me the other day that as a result of development work encouraged or originated and largely financed by the Government, his constituency and the areas around it are now the biggest electronics concentration in the world outside California. I had no idea that this was the case. This is an example of the good work that is done with development grants, so why on earth are Ministers so coy of telling us to whom money is paid?
      I suspect the answer is that they realise that it was Labour policy not so very long ago that where money was to be paid out to non-Government organisations the least that we were to require was that we should take a pro rata shareholding. That was one of the proposals mentioned by my right hon. Friend the Member for Battersea, North (Mr. Jay) some years ago; and, after all, he is no Socialist extremist. He was Hugh Gaitskell's Clause Four kite flier 11 years ago and one cannot accuse him of an excessive addiction to ideology. But, in any case, that is ordinary good financial policy. If a large organisation invests money in some other firm the usual collateral is that it takes a holding in that firm. Why, therefore, when Government money is at stake on a very much larger scale than is involved in the ordinary merger or interlocking procedure should not at least the same procedure be adopted?
      I do not want to say very much more because several other hon. Members would like to take advantage of this unsatisfactorily rather short period of time allotted to us in this debate. I have a suspicion that the enormous surplus that we have built up about which my right hon. Friend the Chancellor of the
      1274
      Exchequer spun some impressive statistical web this afternoon is being held in reserve, at least in part, as part of the price we shall pay if this country is affiliated to the Common Market. We know the limits of variability of that price, but it is enormous. We know that at the top end of the scale the price is a staggering one. But even if the price is only half way between the two limits set out in the recent White Paper it will be a grievous cost to pay.
      It is certainly a price which I, for one, would never be a party to. I happen to dislike the Common Market in any event. I dislike its political aspect, its undemocratic bureaucracy, and most of all its lunatic agricultural policy. But I know that there are hon. Members on this side of the House and on the other side who for not ignoble reasons believe so passionately in what they call a "united Europe" that they are prepared to pay almost any price of which anyone can think.
      I hope that the Chancellor of the Exchequer, despite his own well known enthusiasm for this cause, is not going to be a party to squandering a surplus which has been garnered in with considerable difficulty over a period of time and over which we in this party have suffered great political adversity. It would certainly be a crying shame when there are so many other more immediate and more important matters on which these riches could be spent.
      6.28 p.m.
      Mr. Donald Williams: I hope that the hon. Gentleman the Member for Reading (Mr. John Lee) will accept that I am not going to follow him in many of his arguments though I agree with him on two points: first, in regretting that this is to be a truncated debate, and, second, on the question of the E.E.C., on which I believe the right hon. Gentleman the Chancellor of the Exchequer has made it quite clear that he would accept a deterioration of up to £1,000 million in our balance of payments if we were to go into the E.E.C. on acceptable terms. But apart, from that, even we on this side of the House can certainly congratulate the Chancellor on an extremely smooth Budget speech. That apart, it is interesting to note that last year he

      1275
      exploited the same tactics as he has exploited again this year in terms of personal allowances and a reduced rate of relief.
      I said last year, and I believe my voice was the first to be raised on this, that the million people who were to be taken out of taxation would before the end of the fiscal year, due to increased wages, all come back into this position again. It was also interesting to note that the maximum amount up to which the people who were taken out were relieved was five shillings a week. It seems that again this year the Chancellor of the Exchequer feels that he can help some of the more lowly paid by removing some two million of them out of P.A.Y.E. But again I will say—and my right hon. Friend the Leader of the Opposition has already made it quite clear—that with wage demands, which are perhaps the most explosive point in the economy today, these people in the main will be brought back into the taxation net in the very near future. Last year it was other measures which put up prices that led to demands for wage increases. This year it will be wages catching up with prices.
      We had hoped that this might have been an easier Budget in the sense that there would have been more pumped into the economy so that we could get greater expansion. Our hopes in this direction were mainly to reduce the number of people unemployed, which hon. Members will agree has remained at much too high a level for far too long. A mere £200 million pumped back in the form proposed will do little to relieve this factor.
      We appreciate, on the other hand, that the Chancellor had to appear not too munificent in his Budget. He could not endanger the economy in the long term. Further, many people thought that he might, for political ends, try to con the people, but, it should have been realised that he being a man of such stature, would not do that.
      The right hon. Gentleman has ignored an important factor which has been discussed on many occasions, and that is the great demand for a simplification of the tax system and, in the process, the need for increased incentives. I am told that the qualities of a tax should be such that it is equitable, easily understood, simple
      1276
      to administer, cheap to collect and places only a small disincentive on effort.
      None of these qualities is present in our existing taxation system. We are still to continue with this peculiar anomaly of having earned an unearned income. Even with a recognition that decimalisation is coming in early next year, we are still to be left with a standard rate of tax of 41·25 per cent., with a highest rate of tax and surtax of 91·25 per cent. In terms of decimals, we shall be left with the peculiar fraction of earned income relief of two-ninths.
      For the small amount of tax which would have been involved, a simple adjustment could have been made; for example, it could have been reduced from 41·25 per cent. to 40 per cent., or 0–4 in terms of decimalisation. Such a move would have been sensible and would not have cost the Exchequer more than about £100 million.
      I trust that the Chief Secretary has taken note of this, because he above all knows the many problems which arise from our taxation legislation due to the anti-avoidance measures which have been introduced in one Finance Act after another, not only by his Government but by former Conservative Administrations.
      The present "police rules", as they are called—the anti-avoidance measures designed to stop legal avoidance; I will not talk about evasion—are taking up a great deal of time and effort in the accountancy profession. Considering the tremendous burden that has been laid on them, we should be complimenting the staff of the Inland Revenue for the enormously good job that they are doing in the face of continuing new legislation in this sphere.
      In recent weeks I have been reading many articles about the economy and taxation. A brilliant article by Mr. Jack Clayton appeared in the Accountant of 9th April under the strange heading
      "Whom the Gods Would Destroy".
      He indicated, quoting Graham Hutton, that
      "The British disease: State-induced inflation of the currency, brought about through over-spending in the public sector".
      On a number of occasions over the last 18 months, the Chief Secretary has indicated that public spending was being contained, that everything was on course

      1277
      and that all would be well. He and the Chancellor have not indicated the tremendous increase in public spending over the last six years.
      According to my figures, in 1963 public spending amounted to £11,692 million, representing 41·9 per cent. of the g.n.p. In 1969, it is estimated, it was £20,350 million, representing more than 51 per cent. of the g.n.p. Most people agree that public sector spending has become too great as a proportion of the g.n.p., even if it is contained within the small percentage of about 3 per cent. increase per annum.
      It must be remembered that the increase in the g.n.p. has, on average over the last three years, been only about 2 per cent., a quite inadequate increase for the purposes we have in mind and inadequate to meet the increases in public sector spending. I hope that the Chancellor will prove to be correct and that we shall achieve a growth rate of 3½ per cent. However, if that is achieved, then the miserable amount which we shall be allowed to retain in our pockets—this sum of £200 million—will be more than collected back out of the £800 million increase in the g.n.p. At the end of the year, therefore, the tax product will be greater than it was in the previous year. It is almost unique in peacetime to see an increase in the National Debt, which has gone up by about 75 per cent. since the war.
      One of our greatest problems—it is a problem which the present and future Administrations must meet—is the rapid increase in retail prices. According to my information, these prices are going up by more than 5 per cent. per annum, whereas in the 10 years 1955 to 1965 they increased by less than 3 per cent. per annum.
      One of the causes of this has undoubtedly been over-spending in the public sector, with the truncation of personal incomes because of the Chancellor's taxation campaign in the last five years. We are heading for the difficult position of a new wage explosion, which I believe is primarily designed to catch up with price inflation.
      We are, therefore, back on the vicious circle. We have had price inflation caused, to a great extent, by Government policy, and in particular by their taxation
      1278
      policy. Now, with rising prices, wages are seeking, and rightly so, to get back to the position which they enjoyed. In the process we shall have wage inflation and wage increases which will work back through the economy to produce further price increases.
      All this came about during the time of the great National Plan, when it was deemed that we would have an increase in the economy of more than 4 per cent., so that the Government could spend a great deal more than they had earned; and they proceeded to do just that. We have had a total bankruptcy of the incomes policy, which finally gave out when the Prime Minister abdicated his position last June.
      Looking back at some of the historical factors which have led to the taxation policies of the Labour Administration, I am intrigued to see, in terms of S.E.T., that this tax was regarded as an effort by the previous Chancellor to exhume Lord North's infamous servants tax of 1777. It seems, therefore, that even this tax—a most indiscriminate selective tax—is very ancient and should have been abolished long ago.
      We also have had an incomes policy which appears to be a resurrection of the Statutes of Labourers, which I again believe were not successfully followed throughout 600 years of our history. I was very interested to note—I quote from the Encylopaedia Britannica—that:
      "A statute of 1495 proceeds to fix the wages of artificers and labourers with great minuteness. This Act contains a remarkable Clause against unlawful conspiracy by workmen engaged in building. It is not surprising that, even with so limited a knowledge of the principles, a short time sufficed to show how ineffectual minute legislation was to control wages."
      There was also the later Act of 1514, which, in a re-enactment of the law of 1495, said "The London workmen could not endure this restriction as to wages".
      The reason why it appears that incomes policies fail in terms of wages is that they never have a sufficiently broad discussion throughout the country and they do not have the leadership which they must have.
      We have often in this House tried to improve Finance Bills and, in terms of Budget debates, point out to the Chancellor of the Exchequer measures which would improve any Finance Bill which

      1279
      he hopes to bring in. One of these—and I hope this can be done—would be to repeal the betterment levy and also to eliminate short-term gains in terms of capital gains tax legislation. It would be interesting to the House and to the country if someone calculated the difference that would be made if these were taxed under the ordinary capital gains tax legislation. How much would be lost to the Treasury with these simplifications?
      I wonder whether the time has not come, as in America, to give to people in employment a standard deduction for expenses, thus stopping so much quibbling which goes on over the minutiae. There would be small amounts of expenses payable to people in employment. It has been found in America that a tremendous amount of the administrative burden can be lessened in this way.
      Could not something be done in terms of the £50 exemption for capital gains tax? This factor still means that there has to be calculation and working out. Is it not time it turned on the question of the size of the transaction that gave rise to a capital gain or a capital loss? Could it not be restricted to one item in the year of £1,000 or a series which came up to this figure? I hope something can be done along these lines.
      Finally, I have seen a definition of a Budget as "an expression of intention". So often—and again today—I feel we have had a discussion and a discourse on the receipts and payments of Government. I see very little which has shown us on this ide of the House this Government's true intention for the future. Perhaps the real idea here is that this Government will not be present in the future and that it will be this side of the House, the Conservative Party, which will have to bring in future Budgets.
      6.55 p.m.
      Mr. Laurence Pavitt: The hon. Member for Dudley (Mr. Donald Williams) ranged over a wide field. I would deal with one or two points. I agree very much with his comments about the Inland Revenue and support him in his encouragement to my hon. Friend to do more stopping of tax avoidance.
      I disagree with what the hon. Gentleman said about public expenditure. There
      1280
      has been £132 million more spent on the National Health Service, £100 million on hospitals. We want to pay more to the nurses and the teachers, and we want to pay the whole of the public service more. It is nonsense for hon. Gentlemen in these debates to ask for less public expenditure at the same time as they ask for the amenities that the community deserves.
      The hon. Gentleman, like his right hon. Friend the Leader of the Opposition, deplores the fact that working people are getting more pay. He does not like the idea that wages are increasing. I reject entirely the philosophy that the only thing that makes prices go up are the wages of the workers. Profits also play a part, but nobody ever mentions profits.
      I rejoice that more than two million people, even if only temporarily, are coming out of the income tax bracket. If they get more money by the end of the year I shall rejoice about that too.
      I have two points to make. First, on the question of direct and indirect taxation, I would ask my right hon. Friend not to be so quick to accept the fact that the tax one sees is bad and the tax one does not see is not. There is a good case for a more selective approach to the whole question of indirect taxation, even if we are moving away a little from the Socialist concept put forward by my hon. Friend the Member for Chislehurst (Mr. Macdonald).
      I sweated a good deal this afternoon. As the House knows, I am a Co-operative Member of Parliament. I have sat through three of these Budget debates. The Chancellor of the Exchequer, much to my surprise, on the third occasion introduced selective employment tax. When my right hon. Friend started this afternoon to praise the Reddaway Report, not only did I sweat a little but my heart beat at least twice as fast. I rejoice in the fact he is not going to increase that tax.
      I hope he will not accept too fully the fact that, although the Reddaway Report has shown that in the first instance when the tax was 25s. it did not have the effect some of us thought, the two subsequent increases going to 37s. 6d. and 40s have completely altered the picture. I hope he keeps this under consideration.

      1281
      This tax is still a tax on food. As far as the Co-operative Movement is concerned, 71 per cent. of its retail business is food This has a direct tax on it. I agreed with the hon. Gentleman opposite on the question of prices; we have to make a determined effort in respect of prices. We cannot bring prices down and put taxes on and see them increase. On this point I am at one with him.
      I hope that when the Reddaway Report is looked at again too much is not made of the argument introduced by my right hon. Friend this afternoon about the redeployment of labour. Anybody who knows anything about services knows that the pay in services is very much less than the pay in production and industry. We are dredging the school-leaving population in order to get people into the grocery trade and into retail distribution. To imagine that there is a great pool of labour to be transferred because of selective employment tax is the greatest bit of nonsense I have ever heard in this House.
      I would raise an omission at this stage. I hope that my right hon. Friend would take this opportunity to get rid of the most iniquitous tax the Government have had to introduce over the last two or three years: that is, the tax on the sick. The prescription charge is an onerous one on sick people. The chronic sick, which the Government have the good intention of exempting from this charge, have not been exempted. There are "season tickets" which at the moment raise 0·015 of the total amount of £179 million which the Government have to pay on drugs and medicines. There was a false figure involved. The net amount raised was £16½ million and not £25 million. One has to take into account that the hospitals have to employ extra clerical service. The cost of this goes not on the drugs bill but on the hospital account. The local London executive council pays out some thousands of £s for civil servants. It is able to get only £46 in connection with people claiming exemption from prescriptions.
      The weight of this tax is ridiculous in terms of the amount we have to spend in order to get it in; I would estimate that at the moment it is an amount of between £5 million and 7½ million.
      1282
      I know the House has to proceed with the next debate. Like most of us, I imagined that I was going to make a brilliant speech, congratulating my right hon. Friend on his strategy—which every newspaper would have in headlines tomorrow morning—but I cannot do that in four and a half minutes.
      I congratulate my right hon. Friend. He has done an extremely good job of work, not only for the House but for the country. He has taken a wise approach. The strategy of his Budget is correct on this occasion. He has had compassion for the poorest section of the community. The concessions he has given are not enormous, but he has been very fair. I wish him luck in the debate that ensues in the next two days.
      Debate adjourned—[Mr. loan L. Evans.]
      Debate to be resumed Tomorrow.

  PLYMOUTH AND SOUTH WEST DEVON WATER BILL (By Order)
  Order for Second Reading read.
  [Prince of Wales's Consent, on behalf of the Duchy of Cornwall, signified]
  Motion made, and Question proposed, That the Bill be now read a Second time.
  Mr. Speaker: May I inform the House that I have not selected the Amendment in the name of the hon. Member for Lewisham, South (Mr. Carol Johnson) and some of his hon. Friends:
  That the Bill be read a second time upon this day six months.
  This non-selection will not affect the course of the debate in any way. It will help me to secure a balanced debate if those who wish to take part will indicate to the Chair whether they are for or against the Second Reading.
  7.0 p.m.
  Dame Joan Vickers: In opening the debate, I hope to show the urgent need for further water for the south-west half of Devon to serve a population of about half a million and about 40 per cent. of all the population of Devon and Cornwall.

  1283
  It is an interesting fact that the South-West Devon Water Board has 34 members and represents 14 local authorities which unanimously support this Bill.
  As hon. Members will realise, Plymouth has recently been made an intermediate area. It is therefore expecting that further industry will be attracted to the area. The South-West Economic Council and the Hunt Report, in paragraph 280, stated that Plymouth should be considered a growth area for the South-West. The tourist industry is on the increase. This is leading to two new hotels being opened in Plymouth which will give a fillip to the industry and an enormous boost' to Mayflower, 1970, adding to the tourist trade in the area.
  With the many new housing estates in the area, particularly those built in Plymouth following the blitz, with modern equipment and gardens, the domestic consumption of water has gone up by 50 per cent. Last year Mr. R. le G. Hetherington, a senior member of the firm of Messrs. Binnie and Partners the promoters' engineering consultants, was appointed as a member of the Central Advisory Water Committee, by the Ministry of Housing and Local Government. He doubts whether any other water project has been so intensively and widely studied prior to promotion as this scheme. Considerable pains have been taken to examine every project in the area. The firm considered that the water supply position in the whole of the South-West peninsula lying to the west of Taunton before submitting, in March, 1969, a report in nine large volumes to the promoters.
  It is interesting to see that in this report account was taken of many factors, archaeology, botany, fishery, landscaping, land use and amenity, water quality, geology and finance. The investigations to find the most appropriate new source of supply were commenced during the summer of 1965, when the Plymouth City Council adopted a report from its then water engineer, but a most important factor in the search for the new supply was the entry of the Water Resources Board on to the scene in January, 1967.
  On 25th November last year, the Water Resources Board formally notified the promoters that it supports the scheme for which powers are sought in this Bill. In
  1284
  fact, the construction of a reservoir on the River Swincombe was the recommendation contained in the original report of the Water Resources Board published in August, 1968. The information which led to the publication of the board's report was for the most part compiled by a technical steering committee set up by the board in January, 1967. The scope of the technical steering committee was widened in October, 1967, to cover the future requirements of other water undertakings in the area of the Devon and Cornwall river authorities and to examine the possibility of any of those needs being met by a new scheme to supplement Plymouth's supplies.
  Representatives from the two river authorities and five water undertakings have attended meetings of that technical steering committee. In all, 80 different schemes involving the use of 30 or more different sites have been studied, borings were put down at six sites to ascertain geological conditions, and the cost has been at least £140,000. The most likely of these other possibilities are as follows: for Plymouth, Lee Mill, eight farms destroyed, 15 farms affected; Townleigh, seven farms destroyed, 20 farms affected: Lamelgate, seven farms destroyed, 17 farms affected; for only South-West Devon, Woodcourt, six farms destroyed, 18 farms affected; Curtis, three destroyed; Knowle, 18 farms affected. This compares with the Swincombe Joint Scheme for Plymouth and the South-West Devon Water Board in which there would be no farms destroyed and only two affected.
  The name of the area to be flooded is Fox Tor Mires which, as the name suggests, is mainly bog land. Two of the alternative sites are designated as areas of outstanding natural beauty. At Lee Mill, 19 dwellings would be inundated and two would be untenable. Four dwellings are scheduled as of architectural and historic importance, one having been lived in by Sir Walter Raleigh. There is already on the river Swincombe just below the site of the proposed dam, a small intake of the South-West Devon Board. The land for which and its catchment in the site of the proposed reservoir was sold by the Duchy of Cornwall to Paignton in 1930 for £22,000. In view of this the Duchy is hardly in a position to protest about this site.

  1285
  Already there are picturesque leats, built over 150 years ago, which carry water to Dartmoor Prison and to Plymouth. These will be widened to supply water to the proposed reservoir and faced as at present with the local granite, but certainly not with concrete as has been suggested. Nor will they be 20 ft. wide but of the sizes stated in paragraph 19 of the promoters' statement. They will not be fenced in the open moor.
  Mr. Peter M. Jackson: I have read carefully the statement by the promoters and I am aware of the dimensions they give, but they give no indication of what the depth of the leats will be.
  Dame Joan Vickers: I think it will be 2 ft. to 2½ft. Certainly there would be no danger to any animals. They will be on the same level as the present leats.
  There have been articles in the Sunday Observer and the Spectator. Both newspapers had articles about "The rape of the moor", but I can assure hon. Members that this will not be so. It will be left to Devon County Council to decide on the planning of amenities if considered necessary and public access at Swincombe, as shown in Clauses 46 and 47 of the Bill. Plymouth has no powers and does not want them.
  People who live in the area and so know it have very different views which they have put into print. The Vicar of Princetown stated that it was "a really ugly place". He lives three miles away. He added that it was,
  "none other than a horrible bog in which many Dartmoor animals have been swallowed up."
  Brigadier Davis refutes the allegation that it would completely destroy one of the last remaining wild areas of Dartmoor and has said:
  "It is one of the most gloomy and useless places imaginable."
  Keith Le Cheminant has written:
  "No one who has seen Burrator, Plymouth's reservoir"—
  which was built in 1893 before Dartmoor was designated a National Park—
  "or the reservoirs serving the Torbay area could think them ugly. They are beautifully landscaped and give the moor some inland water—which apart from its charming rivers it sadly lacks."
  1286
  That is a quotation from the article in the Observer.
  Mrs. Woolner, who is an F.S.A., states:
  "It is neither a remote beauty spot nor an unspoiled wilderness…it is a large wilderness surrounded by dismal remains of former exploitation (an old tin mine) and failure."
  Lady Fox, who also has similar qualifications, gave a detailed report on the antiquities in the area and stated that there was none of outstanding importance. Dr. A. S. Thomas, in regard to the botanical aspect, said:
  "Fox Tor Mires, in the centre basin, is a stretch of bog dominated by sphagnum moss and rushes. All the soils seem very acid, and that is the reason for the small variety of flowering plants."
  The residents in the vicinity have met at Princetown, and they support the scheme. Those in favour of the scheme include the Water Resources Board, the National Farmers Union—I think that it has circulated every hon. Member with its opinion—the Country Landowners' Association, the British Waterworks Association, and the Confederation of British Industry, western area.
  The Chairman of the C.B.I. Devon and Cornwall Water and Trade Effluent Committee gives as his view that there will be an increase in industrial demands for water owing to the intermediate status of the area.
  What are the main points put against the scheme? The first is that it is
  "hydrologically on a knife-edge."
  I assure hon. Members this is not so. Modifications have been made to the abstraction conditions following discussions with the river authority before the depositing of the Bill, which should allay any fears about this.
  The fishery experts of the Devon River Authority, the Dart Fisheries Protection Society and the promoters have issued an agreed report setting out abstraction and river flow conditions which the promoters have accepted. As a keen fisherman myself, I shall naturally be particularly at pains to see that the fishing is not interfered with. The reservoir will fill within about one year of being completed, and its large storage represents more than 200 days' supply for Plymouth and South-West Devon.
  Those not in agreement state that the water undertakers should not promote a

  1287
  scheme until the Devon River Authority has published its Section 14 survey. No date has yet been given for its publication, but even if it were available now, no scheme could be built before 1977, and Plymouth's demand in 1975 will be 25 million gallons, compared with existing available supplies of 19 million gallons.
  I hope that hon. Members, having kindly listened tonight, will agree that what I have said has given a full picture of what we are proposing to do. I quite understand, having listened to two other debates quite recently, that some hon. Members criticise what they call the piecemeal water schemes being presented to Parliament. This criticism cannot be applied to this Bill. We have had very long surveys over a number of years, and we have taken particular care to see that no agricultural land would be wasted.
  Finally, in putting forward this Bill. I hope that perhaps hon. Members will consider my personal credentials and that of Plymouth. At the Council of Europe, the hon. Member for Bilston (Mr. Robert Edwards) kindly proposed me as Chairman of the European Conservation Committee, and as such I attended the Strasbourg Conference, and was on the final drafting committee. I received a letter of thanks for my work from the Secretary of State for Local Government and Regional Planning. If that is not a fairly good credential to some hon. Members opposite, I shall have to try to find another.
  When the Foot family had to sell Plymbridge Woods, I formed a committee to buy the woods, which we managed to do in two months, and we handed the woods over to the National Trust. Incidentally, I sent a note to the hon. Member for Ebbw Vale (Mr. Michael Foot) and spoke to the right hon. and learned Member for Ipswich (Sir Dingle Foot), that I would refer to this.
  The City of Plymouth and the Cornwall County Council have recently bought the Mount Edgcumbe Estate, which I can assure the hon. Gentleman will not be despoiled. It has a splendid coastline. Both the Plymbridge Woods and Mount Edgcumbe Estate will provide enjoyment for the local people and tourists alike.
  In order to be thoroughly fair and democratic, the Devon County Council is
  1288
  speaking for the Dartmoor National Park Committee, which I understand would be unable to petition against the Bill unless the county council allowed itself to be used as a vehicle for the expression of the committee's views. This means that the county council petition, where opposition is expressed, is speaking not for itself but for its parks committee. It is also quite evident that the county council and its planning committee have never considered the broad planning issues involved.
  It is extremely difficult to judge any scheme without seeing the site, but the county council and the City Council of Plymouth have given the opportunity, by offering an official visit to those who have put their names down against the Bill so that they might come and see the site. None of them, I believe, has been able to accept. All hon. Members have been circulated also, by means of the Party Whip, with a notice concerning an address by the promoters' advisers in the House last week.
  Conservation is always a matter of balancing opposing considerations. Here we have a scheme which avoids taking agricultural land and also has the advantage of using water just before it would run to waste in the salt waters of the estuaries. I concur with the view of the Water Resources Board, after a personal examination of all the possibilities, that the Swincombe-Tay Scheme is the best to serve the needs of Plymouth and the South-West Devon Water Board. Therefore, I ask hon. Members to give the Bill a Second Reading so that it can be considered in detail by a Committee in a manner which is not possible for us now.
  Mr. Speaker: Order. I remind the House that I said at the beginning of the debate that it will help me to secure a balanced debate if those who have not already done so and who wish to speak against the Bill will let the Chair know.
  7.19 p.m.
  Mr. Carol Johnson: The House is indebted to the hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickers) for the very reasoned way in which she presented the case in support of the Bill. Although I may disagree with one or two of the assumptions she made and the factors to be taken into account, I recognise that

  1289
  she honestly and sincerely believes that the Bill should have a Second Reading. I equally sincerely believe that the House should reject it.
  The House should appreciate that, apart from the bodies to which the hon. Lady referred, every public and local body in the area is opposed to the Bill, including the Devon County Council and the Devon River Authority, both of which have a special interest and special responsibilities in regard to it. Then there is the Duchy of Cornwall, which owns Swincombe, not only opposing but petitioning against the Bill, which is a most unusual procedure. I cannot recall any occasion when the Duchy has felt so strongly about the matter that it has petitioned the House. We should have to go back a long time in our history to find that.
  On top of that, every national amenity and open air organisation is strongly opposed—the Council for the Preservation of Rural England, the Commons Footpath and Open Spaces Preservation Society, the Ramblers Association, the Youth Hostels Association, and many local associations, such as the Dartmoor Preservation Association, the Dartmoor Livestock Protection Society, and the Dart Fisheries Society, together with—as important as any of these—the Countryside Commission, which has special responsibilities. After many years' experience, I cannot think of such unanimity of opposition to a Private Bill of this character. Moreover, the national Press has also been critical in its comments. Therefore, the House must accept that there is very strong and deeply-rooted opposition to the Measure.
  I must add in fairness that, apart from the bodies to which the hon. Lady referred, the Bill has received some support. First, it has had support in the way of letters to the Press from a number of people who appear to be living in sites that are possible alternatives to Swincombe, and who may therefore be said to have a vested interest in Swincombe's being confirmed and their not being disturbed.
  Dame Joan Vickers: There is nobody actually living at Swincombe to protest.
  Mr. Johnson: I was putting the point that the people who wrote to the Press in support of the Bill gave their addresses,
  1290
  and I think that in every case they were living in places which have been suggested and considered as alternative sites to Swincombe. To that extent, therefore, they have a vested interest in securing the passage of the Bill. That is very understandable. I do not complain about it, but we might accordingly discount it a little.
  Then there are the farmers, to whom the hon. Lady referred. I have the greatest respect for the way in which the National Farmers Union conducts its public and parliamentary relations. All of us benefit from the very intelligent summaries and explanations of legislation coming before the House, which it gives us from time to time. But, with all its knowledge and experience, and claiming as it does a general sense of responsibility, I am surprised that it should circulate to hon. Members a four-page memorandum about the Bill in which not a single reference is made to the very material fact that the scheme is in a national park, and completely ignoring the provision, which we must all keep in mind in regard to national parks, in Section 11 of the Countryside Act, 1968, that
  "In the exercise of their functions relating to land under any enactment every Minister, government department and public body"—
  and that includes the promoters of the Bill—
  "shall have regard to the desirability of conserving the natural beauty and amenity of the countryside."
  There is one possible explanation of the farmers' attitude—that they feel so identified with the scheme that they look at it merely through the eyes of the promoters and present only one side of the picture. I wish that in making their representations to hon. Members they had shown themselves to be a little more objective. We as parliamentarians have rather broader responsibilities, and I hope that even those who support the Bill will not do so for the reasons put forward by the farmers. The only reason that seems to have motivated them was that expressed by the Country Landowners Association in its journal as far back as last August, when it said, referring to the Bill, that this proposal, which had the support of the Water Resources Board, was
  "as a result of the pressure which we have put on the Water Resources Board to avoid placing reservoirs on agricultural land."

  1291
  That clearly shows that at least the agricultural interests have not proved themselves to be objective about the proposal. Such a diktat may be appropriate for the Water Resources Board, but certainly not for the House of Commons.
  Sir Harry Legge-Bourke: May I declare my interest before I say any more? I am a member of the C.L.A. and the N.F.U. I think that the hon. Gentleman is being a little unfair to both those organisations, which have a duty to look after the interests of their members and not necessarily to uphold the Countryside Commission.
  Mr. Johnson: That is not in dispute. I am not disputing their right to express their views in their own interests. What I am objecting to is that the hon. Lady cited the attitude of the farming interests as a ground for approving the Bill. I showed by that quotation that they cannot be regarded as disinterested. That is all I sought to show.
  I should like now to spend a few minutes considering the planning aspects of the scheme. In recent years, and I think particularly during the current Session, it has become clear that the House as a whole is increasingly doubtful about the Private Bill procedure in cases such as the present one. I think that no one disputes that the works involved in this scheme would make a large impact on the area and are obviously of major planning significance. Yet the House is being asked to approve these proposals without any planning application having been submitted, and thus without any opportunity of the scheme's being considered on planning grounds. Indeed, the planning authority—the Devon County Council—as well as the amenity bodies and the largest landowner involved—the Duchy of Cornwall—are all opposed to the proposal.
  The hon. Lady argued that the issues I am raising should be fought out in Committee. But will a Select Committee be properly and fully advised on a matter of this major importance? I am vice-chairman of the Commons, Footpath, Open Spaces and Preservation Society and active in a number of other voluntary associations. The voluntary amenity movement cannot afford the cost of putting proper alternatives to a Select Committee. In this case the various amenity
  1292
  societies have collected £2,000, which is quite a lot of money for organisations largely run on a shoestring. But we have been advised that if we wish to submit a feasibility study on an alternative site by qualified water engineers and to produce expert evidence to a Select Committee the cost would be £10,000 upwards.
  It is not only amenity societies that are called upon to bear such costs. In opposing the Calderdale Water Bill in another place, the Hepton Rural District Council incurred bigger costs than it could meet, and has had to ask the Minister for special loan sanctions.
  What is the position if, because of the the cost, amenity societies and public bodies concerned do not appear? A Select Committee in another place when considering the Welland and Nene Water Bill complained that its work had been hampered by the absence of counsel opposing the Bill. A Bill such as that before us cannot be properly examined by a Select Committee unless full-scale opposition is mounted to it there and counsel are present, together with expert witnesses on the various alternatives.
  In my view, the present procedure is inappropriate for the problem with which the Bill seeks to deal, which is the problem of from where Plymouth shall get its additional water supplies. There are six or seven possible alternative sites, but how can these best be evaluated? I suggest that Parliament devised a good method when it provided, in the Town and Country Planning Act, 1968, for the Minister to refer certain applications to a planning inquiry commission. I suggest that the siting of this major reservoir would be a good matter to go to such a commission.
  Many people, both inside and outside the House, had hoped that, as a result of the 1968 Act, the question of new reservoirs in national parks would be made the subject of investigation by planning inquiry commissions, at which the views of all concerned could be expressed and at which all possible alternatives could be explored before the matter came before Parliament.
  Certain criteria are laid down in the 1968 Act before such a planning inquiry commission may be appointed, but I believe that these criteria are met in this

  1293
  case. Nobody will deny, for example, that the proposed scheme is of regional importance. Indeed, many would say that it is of national importance. There are certainly interesting technical innovations involved, and all of these considerations are referred to in Section 62 of that Act. However, because Plymouth Corporation has chosen to promote a Bill, the Minister has no power to refer the issue to a planning inquiry commission.
  I hope I have shown that it is doubtful whether a Select Committee would be able to examine adequately the alternatives; and surely the best course for this House is to refuse this Measure a Second Reading, so that then the promoters could apply for planning permission, which would enable the Minister to refer the whole issue to a planning inquiry commission which, with its research staff, could make a proper evaluation of the various alternatives.
  Mr. Bryant Godman Irvine: I appreciate the difficulties of cost that he is putting forward in relation to the presentation of a case to a Parliamentary Committee. Is he not placing himself in the same dilemma by suggesting that the matter should go to a planning inquiry commission, in the sense that costs would still have to be met?
  Mr. Johnson: I pointed out that such a commission would have the necessary staff to do the research investigation and to bring before the inspector all the relevant factors and assessments, in exactly the same way as is now being done with the third London airport. In other words, if the matter were transferred to a public inquiry of that character, the machinery would be possessed by that inquiry to see that those who are ultimately charged with deciding would have all the facts before them. With the matter being left to individual societies and bodies, these organisations literally do not have the money these days to afford the cost.
  Mr. Peter Emery: What does the hon. Gentleman envisage would be the delay involved in taking the steps he is advocating? Is he aware that we would still need to go through the sort of routine on which we are now embarking, after such a planning inquiry commission had reported? What time-scale does he envisage?
  Mr. Johnson: That is a matter for an expert witness. I would not claim to answer it. However, there is no evidence that a delay in the approval of this scheme would prejudice Plymouth's water interests for a few years. [HON. MEMBERS: "Rubbish."]
  The question of water supply brings me to my next important point. Under the Water Resources Act, 1967, river authorities are responsible for assessing the requirements of their areas, and it is then their duty to provide resources. As it happens, Plymouth is in the area of Devon County Council, yet the limits of its supply of water are almost wholly within the area of the Cornwall River Authority.
  In the case of the adjoining area of Devon, under the Devon River Board, which is also opposing, that authority has not yet completed its survey, so that the effect of endorsing the Bill at this stage would be to pre-empt the Devon River Authority and, indeed, to rob it of supplies of water within its catchment area. No wonder, in these circumstances, that the board should resent the action of Plymouth, as a water undertaker, "jumping the gun" because that is what it is doing. Before it should be allowed to proceed, the promoters should be called on to co-operate with the two river authorities in the surveys of the areas provided for by the original Act.
  There is another aspect of this matter which concerns the Devon River Authority. The scheme involves tapping the waters of the River Dart. Out of the blue, as it were, I received a letter this morning from the Chairman of the Devon River Authority. Other hon. Members may also have heard from him. His letter is extremely relevant in this context and he writes:
  "Dear Mr. Johnson,
  At last the South West Devon Water Board, one of the promoters of the Swincombe Bill, have disclosed the serious position of sewage in the River Dart.
  Facts

  1. The water for South Devon is abstracted directly from the River Dart at Totnes and goes into the water supply without filtration.

  2. The river is so badly polluted that the Medical Officer of Health will not permit bathing.

  3. Under the Swincombe scheme, Plymouth abstracts from the head waters of the Dart a further 30,000,000 gallons a day.

  1295
  This reduction in flow will make the sewage effluent even more dangerous and more concentrated.
  If the South West Devon Water Board themselves are worried, surely we must stop this scheme in its present form."
  It is signed by the Chairman of the Devon River Authority, Mr. G. E. J. Gawthorn, and his communication cannot be ignored.
  I suggest that the remarks of the hon. Lady the Member for Devonport were not only derogatory but gave a completely false picture of the area that would be affected. She referred several times to "the bog", but the boggy part of the moorland that would be affected is only 10 per cent. of the whole. A substantial body of opinion has a better assessment of the nature and character of this area than one might gather from the quotations she gave. Perhaps she will accept the views of the distinguished architect and landscape consultant, Sir F. Gibberd, who, I understand, is being retained by the authority for which she is speaking as its landscape consultant for the scheme.
  Mr. R. J. Maxwell-Hyslop: In using the word "retained", does the hon. Gentleman mean that he is being paid for the opinions which he is expressing or that he is volunteering his services pro bono publico?
  Mr. Johnson: The quotation which I shall give is embodied in a document entitled "Report on Future Water Resources, Volume 5", which is commonly called the Binnie Report. This report was made some time ago, but I am quoting from it in the form of a credible witness from the point of view of an assessment of the areas that would be affected. I am sure that the House will trust me to quote only in line with the document as a whole, which includes the following paragraphs:
  "The moorland sites are in a unique and irreplaceable area of wild landscape. The agricultural sites, which although very beautiful and of individual character, have counterparts elsewhere in Devon."
  He is there referring to a number of alternative sites which are under consideration.
  "Moreover, areas of wild landscape are becoming increasingly rare; the more so, as in Devon, where they are reasonably close to centres of population."
  1296
  "…the essential character of moorland is its simple and wild state."
  "When we come to consider the alternative sites in terms of the recreation facilities they offer, we find there are very great advantages in the use of an agricultural site.
  If a lake is formed on either of the agricultural sites, it could be used for active recreation, such as fishing and sailing, without conflicting with the scene. In fact, either site could be considered as possible regional recreation centres."
  He is referring here to two other sites which are mentioned earlier in the document, Lee Mill and Townleigh.
  "The choice is between humanised landscape with human activity as against a relatively remote and wild one with nature dominating man. If the reservoir is sited in the agricultural valleys, not only can active recreation be encouraged, but the wild landscape of the moors could remain unspoilt for those who seek solitude.
  Notwithstanding the value to agriculture of Lee Mill and Townleigh, and notwithstanding their beauty, we are firmly of the opinion that either are preferable to sites on the Dartmoor National Park.
  We believe, for the reasons we have tried to explain, that the preservation of wild landscape is of vital importance to the nation, and only if there are no reasonable alternatives should it be sacrificed."
  There is no doubt that there are reasonable alternatives in this case. Equally, the promoters of the Bill, by bypassing normal planning procedure, have prevented a thorough examination of those alternatives.
  Sir H. Legge-Bourke: Has the hon. Gentleman considered the immense amount of work done by the Water Resources Board which was set up for this purpose?
  Mr. Johnson: This is a relevant factor. The Water Resources Board in its statement says that it has examined a large number of schemes, and that £140,000 has been spent. But if one of the alternative schemes were adopted the money would not have been wasted. I am not suggesting for a moment that the public money which has been spent should be wasted. The Water Resources Board has considered a large number of schemes, it had this alternative information before it, and it cannot be said that the £140,000 was restricted solely to this site.
  As I said at the beginning, the Countryside Commission has made it clear that a reservoir at Swincombe would irreparably and substantially diminish the value of

  1297
  the Dartmoor National Park as a whole. The national park at Dartmoor has already suffered greatly from development. Reservoirs have already been established, and a large section of the moor is under the control of the Ministry of Defence. Commercial development—afforestation and extension of china clay workings—has taken a further large area. The open moorland left in Dartmoor today is less than 40 per cent. of the area as a whole, and it is in this 40 per cent. that this further intrusion is proposed.
  To accept the basis of the Bill would effectively destroy Dartmoor as a national park, and the purposes for which it was established. It is one of the few wild areas left in the south of England to which people can turn to find the solitude for which we in the cities yearn, and the communion with nature which is essential if we are to maintain our spiritual values. We should be losing a great deal if we sacrificed this, particularly if we sacrificed it without giving full consideration to alternatives whch will leave it untouched for the future. We have an obligation to the future. Before this century is out, I believe that the wild parts of this country will be our most precious heritage, and, as urbanisation goes on, we shall yearn for them and turn to them more and more. Our young people should have the opportunity of walking, as I walked so often in my youth, in these wild areas, and we shall be doing an injustice to the future if we allow the Bill to go forward.
  Mr. Speaker: I remind the House that many right hon. and hon. Gentleman wish to speak.
  7.45 p.m.
  Sir Lionel Heald: As it has been mentioned that the Attorney-General for the Duchy of Cornwall has petitioned against the Bill, I think that you, Mr. Speaker, and the House would wish there to be no misunderstanding of the position of the Duchy of Cornwall in this matter. It is, I expect, known to most people that virtually the whole of Dartmoor was granted to Edward the Black Prince, first Duke of Cornwall by the Royal Charter of 1337. Therefore, the Bill seeks powers to acquire compulsorily land which belonged to Edward the Third and now belongs to His Royal Highness the Prince of Wales.
  1298
  Constitutionally, the Prince of Wales, through his Attorney-General, would have a right to veto this Bill, as strong a veto as that in the Security Council. If anyone has any doubt about that, he need only look at the Order Paper, to see that the consent of the Crown is required, and those who were here at the beginning of to-day's proceedings will remember that it was given.
  Although the Duchy has much concern with regard to the Bill, and wishes to be able to deal with the detail of the matter before the Committee, if and when the Committee is appointed, His Royal Highness's advisers, with His approval, thought it would be right not to use this weapon of refusal of consent, but to submit the matter to Parliament.
  I believe that it is unprecedented for there to be a petition by the Duchy of Cornwall. They could simply have taken no notice of the Bill and refused the compulsory purchase order, because it could not be effective against the Crown. Therefore, when notice was served on the Duchy, as required by the Standing Orders of the House, it could have been said that it was entirely ineffective. There again, not surprisingly, His Royal Highness's advisers, with his approval, said that that was not a proper or dignified procedure, and they have said in their petition that the Duchy wishes to present its views to Parliament and accordingly waives its right under that Clause.
  The Petition says:
  "If, after hearing those views and those of the other petitioners, Parliament decides that it is in the public interest to authorise the construction of the Swincombe reservoir and associated works, the Duchy will accept that decision and negotiate with the water undertakers for the sale or lease to them of such land and interests in land as may be required for the reservoir and other works."
  In those circumstances, I think that you, Mr. Speaker, and the House will be glad to feel that the Duchy of Cornwall is acting in a thoroughly proper manner, recognising the necessity for such matters to be decided by Parliament and placing all its rights, dating from that ancient time, at the disposal of Parliament.
  7.50 p.m.
  Mr. Jeremy Thorpe: I should like, first, to congratulate the hon. Member for Plymouth, Devonport (Dame Joan Vickers) on the way in

  1299
  which she introduced the Bill, not least for the brevity with which she canvassed her argument. I shall be even more brief because I have less to say, but I say at the outset that I find this is a profoundly difficult decision to take.
  The promoters are completely within their rights to bring forward this Bill under the Private Bill procedure. The hon. Lady is quite within her rights, as an hon. Member for Plymouth, to be thirsting for water to assuage the thirst of the people of Plymouth from now until next century. But I have always taken the view that the Private Bill procedure is a totally inappropriate way to proceed in making provision for the supply of water.
  To me, it is somewhat obscene that one or two promoters can get together and decide to come to Parliament with a view to raiding somebody else's valley or part of their national park. [Interruption.] If the hon. Gentleman has a better adjective, I would be grateful for it. But I said "obscene" and I meant it. It is a cumbrous procedure, even though it is outwardly respectable. It has not the simplicity with which Ahab coveted Naboth's vineyard. I must not carry on with that allusion because Ahab, in this case Plymouth, was egged on by Jezebel and I would never cast the hon. Lady in that rôle.
  I have always believed that on the whole the supply of water should be a national matter. I suppose that in saying that water should be nationalised I must be one of the last Socialists left in this House. As a Liberal, it gives me such profound relief that I find myself in such a minority.
  I believe that a planning inquiry commission would have been the right way to proceed under the provisions of the Town and Country Planning Act. I feel that a Ministerial inquiry, possibly with assessors, is better than the Committee procedure, although, since my father had a considerable practice at the Parliamentary Bar, I am arguing against the former interests of my own family.
  The position is that the promoters tell us that they have gone into 70 different schemes, some £140,000 has been spent and they propose to spend £14 million on these works. The amenity societies, the Devon County Council, the Prince's
  1300
  Council, have pointed out that this is an instrusion into a national park. I hope that my record is reasonably good in that regard, having introduced a Motion about the national parks in this House some years ago.
  We are told that the dam is to be 135 feet high, will cover 745 acres and will stretch half a mile, and, indeed, questions are raised on the whole matter of siting. The Devon County Council sums it up reasonably well when it say that
  "an intrusion into a National Park could only be justified if there is an overwhelming need and that interest can be satisfied to the satisfaction of Parliament."
  Parliament is being asked whether it will give a Second Reading to this Bill, which will then go to either a Committee of this House or a Joint Committee of both Houses before subsequent decision. It is a very difficult decision. If we say "No, we will not give the Bill a Second Reading" we are saying that we will not allow this matter to go to a Committee; we will not allow petitioners from both sides to make known their views; we will not give the promoters a chance to put forward their own case and to have their own witnesses cross-examined and then to try to answer the objections raised. It means that we ourselves will prejudge the issue and accept the view of all the objectors, just like that, in a three-hour debate and that we will pass final judgment on this application this evening.
  I believe that this will be a profoundly wrong course to take. I should have preferred it if there had been an inquiry first. I should prefer it if in future we do not resort to the Private Bill procedure for the provision of water supplies. It is an old-fashioned and archaic procedure to use, and it is not the best guarantee that the national interest will prevail.
  Mr. Emlyn Hooson: My right hon. Friend will find that the reason why this procedure is used is that there is a deficiency in the Water Resources Act, 1963, which makes the Order procedure and further inquiry of dubious validity.
  Mr. Thorpe: My hon. and learned Friend has a good point. This is why I would go much further and nationalise water supplies. But on this particular issue we "Socialists" are in a minority in this House.

  1301
  Since we are in a quasi-judicial position tonight, this is what is so appallingly difficult. We are asked: "Will you express your view on amenity, on technical problems, on possible alternatives and on cost schemes?" We are asked to take all these technical decisions. It would be profoundly wrong of us simply to say "We have taken our decision and we will not let you have the Bill."
  Therefore, the Bill having come to the House, whatever objections or qualifications we may have, we should give it a Second Reading so that all the objections from amenity societies can be heard and subject to cross-examination. If we do that, we shall at least act in a quasi-judicial manner. For that reason I suppose it could be said that I support the Second Reading with faint damns, but for that reason I will vote somewhat reluctantly for the Second Reading of the Bill.
  Mr. Douglas Jay: Before the right hon. and learned Gentleman sits down, may I ask him this question? Does he challenge the statement of my hon. Friend that if the Bill were rejected tonight it would be possible for a planning application to be made and then for a planning inquiry commission to be set up by the Government?
  Mr. Thorpe: I thought I had sat down, but if I had not sat down I am delighted to get up. The answer to the right hon. Gentleman is that the hon. Gentleman is technically correct.
  Mr. Jay: Legally?
  Mr. Thorpe: Technically and legally correct. In the case of Meldon there was a delay of seven years. The answer is that, although he was correct, what would be faced would be a tremendous delay.
  Mr. Jay indicated dissent.
  Mr. Thorpe: It is no good the right hon. Gentleman shaking his head. It was a seven-year period, which is a great delay, even for a Socialist Administration. Therefore, the answer to his question is that what we must bear in mind is the tremendous delay that would ensue.
  7.57 p.m.
  Mr. Michael Heseltine: Although I have made it widely known in my constituency that I cannot
  1302
  support the Bill, it presents me with quite the hardest decision I have had to reach on a local issue since I have been a Member of this House. I say at once that Plymouth and the South-West Devon River Authority have behaved in an exemplary manner in the investigations which they have conducted into the case embodied in their Bill. They have consulted widely, they have tried to take account of the protest meetings and have made adjustments in the schemes. In fact, they could not have done more to try to reach agreement with all sides. It was probably inevitable from the beginning that it was not possible to reach agreement with all sides if they still wished to go ahead with their proposals to build a national reservoir within the national park.
  I find it impossible to agree with the conclusions which they have arrived at. Three reasons influence me at this stage. First, I agree with the right hon. Member for Devon, North (Mr. Thorpe) that the procedure whereby water undertakers are expected to introduce a Private Bill into the House to satisfy their needs is the wrong procedure because it takes account essentially of the local needs of the undertakers themselves. They are bound to be motivated and influenced by their specific water needs. Although I accept that there is a national interest involving the Water Resources Board, it is essentially a water-motivated exercise which brings about a Bill of this sort. Secondly, I do not believe that the House can have anything but the gravest anxieties about the fact that the surveys of both Devon and Cornwall under Section 14 of the Water Resources Act, 1967, are on the verge of being published but have not yet been published. This is a most important argument. Here one finds machinery whereby a regional approach to the provision of water is being taken but where we are asked, perhaps for the last time in this House, to take a decision in advance of the publication of those two surveys to encroach into the national park.
  That is my second reason for saying that we should be cautious about the Bill. The third argument is that the supporters of the Bill locally are bound to be influenced by the specific local issues as they see them and as they

  1303
  affect their interests. First, there is the interest of the water undertakings themselves. But there are two more. There is the argument of the agricultural land which is obviously put forward by the C.L.A. and N.F.U. No one can question that as being a valid and real argument. It is right that the N.F.U. should plead this case. We know how fast land is being used for other purposes. It is easy to say that a little more does not make any difference and, in the last resort, it does not. However, it is not just the little more. A very large amount of land is taken every year, and it continues. It is right that there should be a well informed lobby in favour of the preservation of agricultural land, and I respect those who advance the argument.
  Then there are the inhabitants of the two principal alternative sites in the area. I have that extraordinarily unenviable position of being the Member of Parliament for all the likely sites for the proposed reservoir. In view of that, I am bound to be subjected locally to all sorts of pressures. I have made it my business to consult those who live in the areas of the two alternatives which have been most canvassed.
  In the case of the smaller Lee Mill site, one has the arguments of the local inhabitants, the historic buildings and the agricultural land usage. I would be totally opposed to the use of Lee Mill, which I find objectionable on the ground that it would represent piecemeal and small-scale development, and I have told the inhabitants that I would oppose it.
  The other alternative is the Townleigh site. Again I have consulted the residents in that valley. As their Member of Parliament, I felt that it was my duty to explain that a wide variety of alternative benefits could flow from it. It is up to them to decide whether benefits will flow but, in terms of additional investment and the likely attraction to tourists, the possibility of a country park at Townleigh cannot be dismissed out of hand. It was my duty to tell my constituents that they should at least consider that, and I would be failing in my duty if I did not say that all those who live in and around the Townleigh site are against the concept of a country park and reservoir in the area.
  1304
  One can do nothing but sympathise with them. They live there, their homes are there, their agricultural land is there, and they regard the valley as a beautiful one. It is difficult for them to understand why the beautiful valley in which they live should be preferred to a valley in which no one lives but which is in the national park. There is no doubt that they are against the alternative attractions of a country park, even if that were possible within the water provision policy.
  In the end, this issue is a question of subjective attitudes to the environment of the national park. As the hon. Member most immediately involved in the national park issue, although my hon. Friends the Members for Torrington (Mr. Peter Mills) and Totnes (Mr. Mawby) share something of my experience, I am aware that one intrusion into a national park is not likely to change its character. I am not a fanatic in this matter. I have supported a number of schemes which proposed intrusions into the national park in one form or another.
  Over the years during which I have represented that part of Devon in this House, I have become increasingly aware of the pressures which have been building up, and they continue building up at a rate that we cannot ignore. The military authorities need training grounds. I support this because I do not believe that it does much harm in the long term, and certainly it brings money to the area concerned. The Forestry Commission proposes to develop the Moor. The N.F.U. wants to fence one area of it, and I am prepared to support that. Then there was the Meldon reservoir, a piecemeal development. There are telecommunications masts. The china clay spoil wastes are growing. There are no fewer than seven independent competing pressures on the national park. In each case there is the justification, "It does not matter. Put it on the moor". In each case it does not matter, and it can be on the moor. But my anxiety about the Bill——
  Mr. John Ellis: I am trying to make up my mind for or against the Bill. The hon. Gentleman is obviously knowledgeable about these matters, and perhaps he can help me. One of the points not so far refuted by the hon. Member for Plymouth, Devonport

  1305
  (Dame Joan Vickers) is that this is an area of bog, a bleak area where no one lives and where animals are liable to fall in and die. As someone who is impartial, can the hon. Gentleman say whether this is so? Has he visited the site?
  Mr. Heseltine: I have visited the site on two separate occasions. With respect to my hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers), I do not believe that that was the impression that she wanted to give. There is a bog in the Swincombe area. In the bottom of the valley through which the river Swincombe flows, there is an element of bog. In certain conditions, it might be dangerous to animals, but there is no suggestion that animals are lost in the bog or that people disappear never to be traced. I would not like the hon. Gentleman to think that that is the position. It is not.
  The fact is that this is an exceptional type of countryside. It is part of a broad sweep and panorama. It is unique and irreplaceable, and it is different. Anyone may say that it is a difference which he does not like. Anyone may say that he does not see this type of untamed, expansive open country as being of great natural beauty. That is entirely subjective. But, the more I look, the more I find that it is unique and irreplaceable. However, that is a personal opinion.
  My anxiety is that, little by little, a change in character is taking place in the national park. I feel that I have a responsibility, not only to my constituents, but a wider national responsibility to ask the country whether it is aware that these encroachments are taking place, and to say to the Government that it is their responsibility to say whether they are satisfied that these encroachments should continue in the national interest.
  I hope that the Minister will not simply state the arguments for and against the Bill. We all know them. I want to hear the Government's view about a major change in the environment of the national park, whether they have a policy and whether they are prepared to support the Bill. It is untenable for a Government who plead the environmental case whenever they get a chance not to
  1306
  have a view on a major change in the environment of the national park.
  I have come to the conclusion that this procedure of referring a matter like this to a Select Committee of the House is not the one which should be followed in this case. Not only is the Countryside Commission unable to appear before such a Select Committee. A Select Committee is not equipped to examine the multitude of complex and conflicting arguments in reaching a decision of this sort. I believe that there should be an inquiry set up, and that the Government should examine two matters: the provision of water on a national and regional scale and the encroachment they are prepared to allow into the territories of the national parks. The Government, having set up the inquiry, should make their views clear on both major issues and the House should be entitled to vote on that situation. I do not believe that the issue is well served by the provision of a Select Committee.
  I am not yet satisfied—it may be that I shall be persuaded—that this will be the last encroachment. However, I am not in a position to make a final commitment and I am, therefore, against the Bill.
  8.10 p.m.
  Mr. Eric Ogden: I believe that it was a good thing to adjourn the Budget debate at 7 o'clock to discuss another issue, yet I wish that the issue was clearer to most hon. Members than it appears to be.
  It might seem unusual for an hon. Member from the North-West to intervene in a dispute between the interests of hon. Members from the South-West. We have enough problems in the North-West. However, as I am asked to vote on the issue, it might be useful to put forward a point which I think is causing anxiety to many hon. Members.
  In the last few months, there have been four water debates concerning four different areas: two in Yorkshire, one in Rutland, one coming up for the Derbyshire valleys, and this one. This way of deciding such issues is about the worst possible way that Parliament could choose. First, the "advocate system" of contrasting interests of local authorities, local loyalties and local constituencies.

  1307
  While those who speak in the debate are interested, knowledgeable and deeply concerned, others who have to vote upon the issue may do so for a variety of reasons, very few of which have anything to do with the merits of the case. Chance attendance, personal loyalties, and constituency interests of hon. Members come into it. These are about the worst reasons for deciding the merits of the case.
  On the broader issue of the organisation of our natural water resources, in the last few years we have made tremendous changes. When I came to Parliament in 1964 small local authorities like Oldham, Heywood and Middleton were building enormous walls around their water resources and almost refusing to share. We now have the river water boards which are a tremendous improvement. Yet one danger is that while they are, in theory at least, responsible to some elected authority—they have representatives from local authorities who go back to give reports to elected councils—in practice they are almost autonomous bodies. The walls being built round the larger authorities are every bit as strong as earlier ones round smaller authorities.
  I come to the point made by the right hon. Member for Devon, North (Mr. Thorpe). No one has suggested yet that I am a revolutionary Socialist or an out-and-out nationaliser. Yet there is wide agreement on both sides of the House about the need for a British Water Resources Authority with national water boards responsible to it and able to coordinate, link together and work through and with other resources. We will have such schemes as the Dee, the Wash and the Morecambe Bay Barrage. There has been much legislation in recent years. I should have preferred legislation to create a national water resources authority.
  Mr. Hooson: The danger about the authority suggested by the hon. Gentleman is that it becomes too remote and centralised and rides roughshod over local interests. The difficulty is to find a compromise whereby we can have a national plan but still have a means of paying true regard to local interests.
  Mr. Ogden: Local interests are vital. This is the purpose of establishing such
  1308
  an authority. If we are to get sharing and planning for years ahead for water resources it must come in with the whole system who must be responsible to Parliament.
  I am not here by chance. I have listened to previous debates, and there is only one principle which can guide me: that the people who live in the area know best what their constituents should want and should have. Where there is a conflict between town and country it is often exaggerated. I have seen a reservoir established in the Peak District National Park which has enhanced it. Another in a different area is a disaster.
  While it may upset one or two of my hon. Friends that I vote this way or that, in the main I rely on those from the South-West, the majority of whom want the Bill to have a Second Reading, and I support it.
  8.15 p.m.
  Mr. Peter Mills: I should like to congratulate my hon. Friend the Member for Tavistock (Mr. Michael Heseltine) on his reasonable speech. Though I might disagree with him on some things, particularly about the Bill, he presented the case very well. As he is my Member of Parliament, perhaps I am allowed to congratulate him.
  This is not the kind of debate in which I enjoy speaking. I can think of other types of debate which I would enjoy more. When we talk about water and reservoirs, they become the great dividers.
  This is an emotional subject. Indeed, emotions run very high. One has only to attend some of the meetings in my constituency regarding Meldon and other reservoirs to know how emotions run. People become entrenched in their views and in many cases are not prepared to listen.
  I have been through all this before. I understand the problems of my hon. Friend the Member for Tavistock. I had six years of Meldon, and my predecessor experienced all the slings and arrows and difficulties.
  Looking at all the literature—I am surrounded by it—I can almost believe that the claims on both sides are justified. It is not easy to decide on the right course. After considering all the pros and cons,

  1309
  unless some fresh evidence is produced, I am prepared to support Second Reading of the Bill. I believe it is important that it should be given a Second Reading so that we can examine it more fully in Committee.
  I support the scheme. I do not like using Dartmoor for supplying water, but I believe that it is the right decision. It does not give me any pleasure to intrude upon this wild area of Dartmoor, but I sincerely believe that that is better than using agricultural land. My principle has always been, unless I can be convinced otherwise, that in the 20th century it is wrong to use land producing food for reservoirs when there is extremely poor land available on a moor or at other places.
  I am concerned about the use of good agricultural land not only for reservoirs, but also for roads, clay-mining, gravel-mining and for factories. We should take more care about the kind of land that we use in future, particularly in the South-West.
  Mr. Peter M. Jackson: Would the hon. Gentleman not concede that he is putting the dilemma in a mistaken way and that the alternative is not taking good agricultural land, or even marginal land or open moorland, but the solution is desalination, barrages and ground-water? These are surely the alternatives which we should be considering tonight and which no one has so far mentioned.
  Mr. Mills: I will come to that point. I am pleased that the Minister is here, because I want to quote from an excellent speech he made recently, which sums up the alternative methods very well, much better than I could. Can we afford this loss of land in food production terms? I do not think so. When we come to talk of conservation I want to quote what the Minister said in a recent speech in the North on 26th February. He said
  "I want to take this opportunity to say something about my policy on the development of water resources. When some people talk about 'a national policy' what they are really saying is: 'There ought not to be a reservoir in this or that place, in fact there should not be any reservoirs at all. Let there be desalination and barrages coupled with a massive national water grid. And while we are waiting for these to come along, we can afford to cut our safety margin to the bone and run the risk of shortages developing in dry areas, which are not all that frequent anyway.' I fully appreciate that the motives which lead people to argue in
  1310
  this way spring from sincere convictions about the conservation of our land and scenery, but in this European Conservation Year I must remind them that the term 'conservation' includes the prudent development of our other natural resources as well, and none of these is more important than water."
  The Minister is absolutely right. I agree with him.
  We must not forget that conservation includes the development of our natural resources and we certainly have not got very many of them. Water is the most important.
  It is true that Dartmoor must be safeguarded from unsightly development and I would be the first to oppose any further encroachment on the moor by T.V. masts, electricity pylons or even an extension of land for the Army. There could even be a reduction in the use of land for army purposes in future. Real attempts ought to be made to get rid of the spoil from the mines, the unsightly signs and all the other things which detract from the beauty of Dartmoor. I certainly believe that a dam and a reservoir is an entirely different matter. In many cases they enhance the beauty of the area as well as providing recreational facilities.
  I am not saying that in the case of Swincombe that there will be recreational facilities there, because it is probably too windy for sailing, but it could and would, enhance the beauty of the area. I hope that those who so bitterly oppose the scheme will put the same energy into seeing what can be done to deal with the problems I have mentioned, particularly in dealing with the waste from clay mines, which is really an eyesore.
  I hope too that those who oppose the Bill will not be unduly upset by what I am about to say, but I am slightly irritated when I hear some of them. They are probably in more prosperous areas. They have their homes with flush toilets and a bath. Even in the better farming areas of Norfolk and Suffolk and such places they have modern equipment with adequate water supplies. This is not so in many instances in the South-West and I am irritated by the way some urban people seek to prevent adequate water supplies going to those of us who live in rural areas like the South-West. I would say to them, "You have a flush toilet, you have a bath. Some of us do not. In your areas you have factories, industrial

  1311
  employment, but we in the South-West, particularly in Plymouth, are only just starting this". This is true also of North Devon. We desperately need water for the new industries. We are irritated when those who have facilities are not prepared to encourage us to get on with the provision of similar facilities.
  Mr. Ogden: I thought I made it clear at the end of my remarks that I was supporting the hon. Gentleman. If he is trying to turn this into a "town versus country" issue, may I remind him that if this Bill receives a Second Reading it will be because it gets the support of the urban Members of Parliament.
  Mr. Mills: The hon. Gentleman was not listening to what I said. I quoted instances of rural farming areas which have these facilities. It is not a question of countryside versus town. Plymouth needs water and will need more in future. The population of Plymouth is increasing. One of the most important factors of all, and I hope to carry the Liberal Members with me on this, is that we have an enormous increase in the population during the summer months as a result of holiday-makers. In the Plymouth area in the summer there are 160,000 such people. Over the whole of the South-West we double our population. This means that we must have a good water supply.
  Water consumption per head is growing as the living standard increases. Industrial usage is increasing. Are we to deny the people of Plymouth, Barnstaple, Bideford, North Devon and Meldon the chance of working in factories, the chance to do something other than farming, to work in hotels or service industries? I want to see the young people remain in the South-West or at least a large proportion of them. One of the ways we can do this is by providing technical employment for them. To do this we must have adequate water supplies for the new factories. The case for this is perfectly clear. There is an ever-increasing demand. Taking into account all the various arguments, I believe that it is right to give the Bill a Second Reading so that we can discuss all the other points in Committee.
  Finally, there is the question of those who have suggested that we should have a planning inquiry. I am told that the delay would be at least 24 to 27 months,
  1312
  and I wonder whether Plymouth can really afford this. I doubt it. I only remember what has happened to Meldon with not only enormous extra cost through delay but the delay in actually getting the water. I have here the timetable of the delay and it is almost a disgrace. April, 1962, was the start and it will finally be completed in June, 1972.
  Mr. Maxwell-Hyslop: April, 1962, was not the start. That was when they got the consultant's report. That was the end of the beginning.
  Mr. Mills: At any rate, 10 years is quite long enough, and I would not like to see the Plymouth Swincombe scheme take so long, because I believe that the water is needed.
  8.32 p.m.
  Mr. Douglas Jay: I intervene briefly because I happen to know every part of Dartmoor extremely well and believe that this is the most beautiful part of the British Isles. However, like the hon. Member for Tavistock (Mr. Michael Heseltine), I am not a fanatical preserver in all circumstances, even of Dartmoor. I think that the Forestry Commission has enhanced the beauty of Dartmoor in many places as well as improving its productive value. I also believe, like the hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickers), that probably the existing three reservoirs—not merely Burrator but Hexworthy and Ferrworthy reservoirs—although this is more arguable, have probably enhanced the beauty of these areas.
  On the other hand, I thought that the hon. Lady was going a little far when she sought—and here I may be misrepresenting her—to brush aside the aesthetic arguments on the ground that this was rather a bleak and lonely spot and, particularly, that it was largely a bog. My hon. Friend the Member for Bristol, North-West (Mr. Ellis) wanted to know whether it was bleak or beautiful. The factual answer to that is that it depends on the weather, as in a great many parts of Dartmoor, and on the time of year. Certainly many areas, including this one, can look bleak and in some sorts of weather can look exceedingly beautiful. This is admittedly a much less beautiful part of the moor than the Meldon Valley, which is pre-eminently beautiful but is now a closed issue.

  1313
  Therefore I do not think that we should write off the aesthetic argument nor think that because Fox Tor Mire, is a bog that it is not an area worth preserving. I think that the hon. Lady will agree that a very large part of Dartmoor is a bog, including many of the most beautiful, wildest and impressive parts of it. Frankly, I found on the issue as it is presented tonight that it is exceedingly difficult to make one's mind for or against. I say to the hon. Member for Torrington (Mr. Peter Mills) that none of us would be as foolish as to say that Plymouth or South-West Devon should not have an adequate water supply. But that is not the issue. The issue is whether this is the best way of finding that water supply in a reasonable period among all the possible alternatives.
  I am impressed by those who argued tonight that a Select Committee was not the best way of reaching a decision and that some of the important interests—as indeed happens in other cases—would be excluded either for administrative reasons or because they could not afford the costs of engaging the specialists who are necessary. It seems to me that my hon. Friend the Member for Lewisham, South (Mr. Carol Johnson) did make out a case for using a planning inquiry commission in circumstances of this kind. I do not think it is enough to say that in the case of Meldon seven years was occupied. In the first place, Meldon could not have planning permission because that was only introduced by the Act of 1968, which could hardly have been in force in 1962 which was the relevant date according to hon. Members opposite. An inquiry should not take as long as that. I should have thought two years would be enough. On the evidence of the memorandum from the Devon County Council, it does not seem to me that the case for extra urgency has as yet been made out.
  I should like to ask the Minister if, supposing this Bill were rejected tonight and the planning application were made whether it would be possible within the existing law for the Government to appoint a planning inquiry commission to go into the whole of this problem and the alternatives and to hear evidence from all the interested bodies and whether it could be done in a reasonable period of time not exceeding two years. We should know this from the Minister
  1314
  and if it were possible I think that some powerful arguments have been advanced for not giving the Bill a Second Reading this evening.
  8.35 p.m.
  Mr. Christopher Chataway: Other right hon. and hon. Members have set a good example in the brevity of their contributions and I will try to emulate them. I pay tribute to my hon. Friend the Member for Plymouth, Devon-port (Dame Joan Vickers) on the way in which she introduced the Bill and on the work she has done over the weeks in preparation for it. With my hon. Friend the Members for Tavistock (Mr. Heseltine), I believe that the Plymouth City Council could hardly have approached its task more thoroughly or with more courtesy to those involved. I have found its chairman and town clerk and all those involved for the promoters only too anxious to go to considerable trouble to put their case across. I think that one must also be impressed by the case advanced tonight by my hon. Friend the Member for Devonport.
  I am sure that few hon. Members are under any illusion that there is not a price to be paid if the House agrees to this reservoir in Dartmoor. One must be impressed by the case advanced by the Countryside Commission. This part of our countryside may not be to everybody's taste. I find that Dartmoor is not my favourite piece of countryside in Great Britain, but it is rare and valuable moorland. It is unique, and when the Dartmoor Preservation Association and the other amenity societies argue that any further encroachment on Dartmoor will have a serious effect on the national park, they must be listened to with very considerable respect.
  I hope that the Minister has noticed the near-unanimity with which this procedure has been criticised in the debate.
  Mr. Geoffrey Wilson: Such near-unanimity is an accident of the choice of hon. Members called to speak. I hold the view strongly that the Private Bill procedure is much more satisfactory than the other, and I have had personal professional experience of both.
  Mr. Chataway: I did say "near-unanimity". Perhaps I should have said that it was near-unanimity up to this point. Clearly, there is not unanimity in

  1315
  the House. I am sure that many hon. Members would have had their faith in the present procedure undermined had they attended the two meetings laid on earlier this week, one by the promoters and one by the opponents of the Bill. The opponents' meeting took place upstairs an hour before the meeting laid on by the promoters. About four or five hon. Members were able to attend both and they must have been struck by the enormous contrast between the two sets of information advanced to them. Indeed, the photographs produced could hardly have been more different. I believe that many hon. Members will seriously question whether this procedure is such as to give the maximum chance of arriving at a sensible, rational decision in such cases as this. I can see that this procedure does raise doubt among hon. Members.
  The feelings about the Bill centre around three considerations. The first is the case advanced by the Devon County Council and the Devon River Authority. The latter argues that it should be allowed to complete the Section 14 survey which it and the Cornwall River Authority assured us at our meeting would be ready by May this year. One must have sympathy with the river authorities concerned when they find that a major decision of this kind is being taken in advance of their being able to arrive at what they consider to be an over all scheme of their own.
  Mr. Charles Doughty: The Cornwall River Authority completely supports this Bill. It does not want any delay or anything of that kind.
  Mr. Chataway: I have here a letter from the Chairman of the Devon River Authority, which I could quote but I do not wish to detain the House, arguing passionately that it would be wrong for the House to pass this Bill before that authority has had an opportunity of completing its Section 14 survey, which it says it and Cornwall are just about to complete.
  The other matter of major concern which I know troubles a number of hon. Members is the change in the proposal that has apparently taken place since the Water Resources Board investigated the matter and recommended the scheme in
  1316
  question. Much was made of this by a number of the opponents of the Bill. The scheme that now comes before the House is approximately twice the size of that which was recommended by the Water Resources Board; and I hope that the Parliamentary Secretary or the Minister, in replying, will be able to shed light on this factor.
  Mr. Maxwell-Hyslop: If my hon. Friend will allow me, I can shed some light on it right away. On 25th November, 1969, the Water Resources Board wrote agreeing in principle to the revised scheme; so the allegation made in the Committee Room upstairs was entirely misleading. One would like to think it was based on ignorance, but I would not wish anybody else to go on in this belief.
  Mr. Carol Johnson: Will the hon. Gentleman not confirm, because he was present at the meeting to which he referred, that the point was made that though formal approval may have been given for the larger scheme, it never received the detailed examination that the original scheme received?
  Mr. Chataway: Upstairs we did not have the opportunity of going into this question in greater detail and my hon. Friend did have an opportunity of putting there the points that he has put to the House today. All that is apparent is that the Water Resources Board in its sixth annual report published within the last few days, says of the new scheme that it will result in a greater final yield and may influence the design of the scheme, including the possibility of a bigger reservoir; and the board refers to the scheme as now being one not envisaged in its report.
  I want to put two questions principally to the Parliamentary Secretary or the Minister this evening. The first relates to the suggestion that has been advanced from various parts of the House for a planning inquiry commission under Section 62 of the 1968 Act. I have had the opportunity of discussing this with the promoters of the Bill. They feel, understandably, a considerable anxiety about this proposal. They fear that it might set the Bill back by up to five years. In a situation, however, where a number of the major authorities in an area are opposed to a scheme of this kind, the commission procedure under that 1968

  1317
  Act would seem to have considerable attractions.
  The other question I would like to put to the Parliamentary Secretary relates to the Plymouth water shortage. I believe there would be very few in the House who would want to jeopardise the water supplies in Plymouth. There is no doubt that the promoters of the Bill, while accepting perhaps that the need for water in South-West Devon is not a matter of such urgency, do believe that in Plymouth, unless the House passes this Measure today, there is a serious danger of a major water shortage within the next three or four years.
  On the evidence and counter-evidence that is advanced it is extremely difficult for any hon. Member to come to any decision on this matter. I hope that the Government, with the advantage that they have of expert advice from the Ministry of Housing and Local Government, will be able to give the House their views on what, perhaps, is the crucial issue in coming to a decision on this matter. We have in recent months had a number of Measures of this kind. As the Minister has recognised, there is a danger of a number of further reservoir proposals in national parks. I readily agree with those who argue that in certain circumstances a reservoir can be an addition to the amenities of an area. With the pressure on recreational water, there is no doubt that many reservoirs will be welcomed, but it will not always be inappropriate to place them in national parks.
  It is accepted in all parts of the House—it has been accepted since the 1949 Act—that priority should be given in national parks to amenity and access. It will, therefore, be only in very exceptional circumstances, as the Water Resources Board has said in this instance, that one will want to recommend a reservoir proposal in a national park. I hope, therefore, that we may have, perhaps not in this debate but in the near future, further clarification of the Government's attitude to proposals such as this in national parks.
  Mr. Peter M. Jackson: Would not the hon. Gentleman agree that the recreational value of this proposal would be absolutely nil because of, for example, the height and situation of the reservoir? In other words, would he agree that there
  1318
  would be no recreational spin-off from this proposal?
  Mr. Chataway: I believe that that is accepted by the promoters—[Hon. MEMBERS: "No."] I can only say that at the meeting which we attended with the promoters of the Bill it was accepted that this reservoir would not be appropriate for sailing and that its recreational use would be virtually non-existent. I thought that it was accepted that nothing could be done about that aspect, though I am not suggesting that it should be decisive in this case.
  8.47 p.m.
  The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Reginald Freeson): I wish to say at the outset how much I have appreciated the quality of this debate; and this is one of the occasions when one can say that not just out of politeness but because every contribution has been worth listening to rather than just nodding to, as is sometimes the case in this House.
  I do not want to extend my congratulations too far because, although as a Government we have a view on the Bill, I do not want to get drawn into a position in which I am taking up a judgment which will, I trust, be made elsewhere, following these proceedings. Nevertheless, the quality of the debate has been really excellent.
  I will try to deal with some of the main queries which hon. Members have posed, including some of the questions asked by the hon. Member for Chichester (Mr. Chataway). I hope that I shall be treated in no greater fashion as a ping-pong ball than he was, and on this occasion I commiserate to a certain degree with the hon. Gentleman.
  It might help if, first, I made some general observations about the position in regard to projects of this kind. Generally, they come before my right hon. Friend under statutory arrangements laid down by various Acts. Although there has been validity in some of the criticisms that have been made of the procedure, some of them have been rather generalised.
  This is an unusual case, as hon. Members have indicated and as I shall show. Generally speaking, there are procedures under the various water Measures

  1319
  which result in these projects coming before my right hon. Friend, who holds an inquiry, weighs the matters for himself and comes to a decision. As was urged on me by the hon. Member for Tavistock (Mr. Michael Heseltine), I hope to indicate that the Floor of the House is not the place to come to actual planning decisions. In this place we deal with the procedure, and that is what is at issue tonight.
  Plymouth was debarred from adopting the general procedures for two reasons. The first was its proposal to use the reservoir for water regulation, a point which brought it up against a flaw in the Water Resources Act, 1963, to which reference has been made. This flaw in the Act casts doubt upon the adequacy of an order in the particular circumstances. The river authorities have been advised that an order cannot protect them against possible action by riparian owners downstream to prevent them discharging waters from a reservoir into the stream.
  I was questioned as to when the Government hoped to take action on this anomalous position in law. It is hoped and I believe it has been stated already in the House, to introduce legislation later this Session to deal with the anomaly.
  In addition to this, a reservoir at Swincombe requires the Bill because the land is owned by the Duchy of Cornwall and therefore, under common rights, could not be acquired compulsorily. The common rights affecting Dartmoor are so complex that it would not be possible to get the title and authority other than by compulsion. The promoters needed to seek approval for their proposals in a Bill in order to put the matter beyond doubt.
  What I hope to do tonight—without encroaching on matters proper to the Committee stage of the Bill—is to review the background to this proposal and the considerations which the Minister would have had in mind if the had had to take the decision himself under the more usual procedures.
  The case for developing new sources of water to meet the future needs of Plymouth and South-West Devon is not seriously challenged, if it is challenged at all by anyone.
  Plymouth provides water for its own needs and for some adjoining districts—
  1320
  in all for a population of 281,000. Consumption was 19·2 million gallons daily in 1967, 20·4 million gallons daily in 1968 and 20·8 million gallons daily in 1969. Present sources can yield only 19 million gallons daily under severe drought conditions, so already the ability to meet statutory obligations is at risk. It is estimated that the population will increase to between 300,000 and 332,000 by the end of the century, that consumption would be between 91·8 and 116·8 gallons per head daily, and that a deficiency of between 9·6 or 21 million gallons daily must be expected, according to the end of the range, within which the prospective figures show this as an actuality during this time. To this must be added the 5 million gallons daily for large and unexpected industrial demand.
  Bearing in mind particularly the point made by hon. Members earlier—that there is industrial development ahead and that this is now an intermediate area—one must expect and hope that the demand will grow. If the demand does not grow, this reflects a shortfall in industrial expansion which the Government are seeking in that part of the country. They decided that they must look for a new source of water which would yield 20 million gallons daily.
  The position in South-West Devon is somewhat different. As the House knows, Torbay and the surrounding area is a very popular holiday centre. The resident population in 1968 was 227,800, and consumption averaged 11·45 million gallons daily or 61 gallons per head daily during the winter. The large influx of summer visitors boosted consumption during the summer to 13·96 million gallons daily of 61 gallons per head daily of equivalent resident population and to 14·13 million gallons daily during the summer of 1969. The House will recognise that summer is the critical period.
  The board can rely upon 14·8 million gallons daily from its present sources. It, too, estimated a resident population of between 291,000 and 315,000 by the end of the century with an assumed consumption of between 73 and 95 gallons per head daily of equivalent resident population. It has calculated the smallest and largest expected deficiencies and has decided that it needs a new source to yield the mean figure of 10 million gallons per day. It is calculated that there will

  1321
  be, between the two areas, a deficiency of about 30 million gallons daily by the end of the century. It is important to bear these basic facts in mind, and it is desirable to get them on the record whatever detailed consideration is given in Committee, as I hope will be the case.
  The Water Resources Board reported in August, 1968, on the consideration given to estuarial barrages. These raised many problems apart from construction—influencing of coastal conditions, drainage of low-lying adjacent land, the loss of storage by siltation, as well as the effect of such a scheme on general amenities. A lengthy investigation would be needed, but Plymouth's water needs are immediate.
  The Water Resources Board is satisfied that the cheapest means for the desalting of sea water would not be an economic alternative to the Swincombe—Tavy scheme. It has advised that the total capital and running costs of desalting alternatives up to the end of the century would be about three times those of the Swincombe—Tavy proposal. It is important to bear this in mind because the board, and any authority considering these matters, would have to take it into account.
  The South-West is well furnished with alternative sites for a reservoir which have been investigated by the Water Resources Board, by the consultant engineers to the promoters, by the Countryside Commission and by landscape consultants, and by several of the petitioners. This is not a case where someone can claim that alternatives have not been examined.
  The Water Resources Board examined many sites and made its choice on the adequacy of a scheme to serve both Plymouth and south-west Devon on cost and on the relative effects of each scheme on amenity, agriculture and property. It also considered Huccaby, a site on the River Dart in the national park suggested by the South-West undertakings as being better than Swincombe. The cheapest and most convenient site to meet Plymouth's sole needs was Lee Mill, and this was used as a basis for comparison of the costs of other schemes.
  I should tell the House something about the sites which were examined by the board and by the promoters before being
  1322
  passed over in favour of Swincombe. I hope that the House will bear with me as I shall speak probably at some greater length than I usually wish to do so that I may set the scene accurately and dispassionately and so that a fair decision can be made on the Bill.
  First, I deal with Townleigh in the Thrushel Valley. This scheme has been referred to mostly previously and tonight as an alternative. It would serve Plymouth and South-West Devon and is favoured by many who are opposed to the Swincombe scheme. Up to 760 acres would be flooded, almost wholly good agricultural land, including three farmsteads and six cottages. Most of the tree would be lost, and extensive landscaping and tree-planting would be needed.
  The form of the valley would result in a lake 3¼ miles long, ½ mile wide and gradually narrowing with a much indented shore line. This reservoir could be an attractive one because of the continuation upwards of the valley sides to a height of some 250 feet and more above the water level so that the expanse of water would appear well contained by the surrounding hills. New planting of shrub vegetation would help to fit the dam, which would be a very short one, into the existing landscape.
  Moreover, the site offers plenty of scope for making it a regional recreational centre close to the A.30 although 30 miles from Plymouth on the coast, which is the nearest large centre of population. Plymouth feels that the need for water-based recreation in this area is small. The House will be aware that any proposal to build a reservoir at Townleigh would inevitably face strong opposition from agricultural interests and, I assure hon. Members, from local residents. Furthermore, apart from the additional cost factor—Swincombe would be 15 per cent. to 20 per cent. cheaper than the most favourable development of the Townleigh site—there would be operational difficulties arising from the very long pumping main which could make Townleigh less satisfactory than Swincombe for use in regulating the River Dart and giving the South-West Devon Board the supply it requires.
  Secondly, Huccaby, a site at the confluence of the West Dart and Swincombe Rivers, two miles east of the Swincombe

  1323
  site, is in the national park at one of the points where the wild moorland begins to meet the smaller scale landscape of the valleys that radiate from the edge of the moor. A reservoir on this site could serve Plymouth and South-West Devon and would drown one of the most attractive stretches of the River Dart.
  I now turn to two sites that could serve Plymouth alone. I ask the House to remember that the promotion by Plymouth of a scheme on either of these sites would later necessitate a reservoir elsewhere for South-West Devon.
  A reservoir at Lee Mill on the River Yealm would be the cheapest source of water for Plymouth. The site is in the valleys of the Rivers Yealm and Piall. The reservoir would take about 475 acres of land, about 400 acres being farmland. Nineteen houses would be destroyed, some of them attractive and two of them listed as buildings of architectural or historic interest. The dam would be conspicuous in this comparatively small-scale landscape, and the large sheet of water visible from the moor above it would not fit as satisfactorily into the scene as at Townleigh. The site is conveniently placed for recreational use.
  Finally, Tor Wood on the River Lynher which could serve Plymouth alone, is in an area of high landscape value. About 300 acres of woodland and about 250 acres of agricultural land would be flooded, and two ancient monuments, Newbridge and the old clapper bridge upstream of the dam site, would be drowned. Fishing in the River Lynher might be harmed. A scheme here would be considerably more expensive than one at Lee Mill, and the water quality is suspect.
  The remaining short-listed sites—Hill Bridge, Hawkes Tor, Milton Brook and Hallowell—were rejected by the Water Resources Board and the promoters, after examination.
  I now turn to the Swincombe scheme, which is the subject of the Bill. It has been described earlier in outline by hon. Members, so I will not go over that ground again. It is the location and size of this proposal which are contentious. The proposals would increase the reliable yield for Plymouth by 32 million gallons
  1324
  daily and for South-West Devon by 17 million gallons daily. This would yield increases which should secure supplies for approximately 50 years ahead. This part of Dartmoor National Park is notable for its landscape beauty and wild quality. Situated in a shallow bowl, the reservoir, which would inundate an area of no agricultural significance, would nevertheless dominate the view from the higher ground all round, and would be visible from several directions from distances of several miles.
  It might be asked whether the effect of a reservoir at Swincombe on the appearance of the area would to some extent be counter-balanced by the opportunities it would afford for the introduction of facilities for water-based recreations, such as were referred to shortly before I rose to speak. But the whole attraction of the area at present is its solitude and wild beauty, and the more attractive it becomes for other recreational purposes, however desirable they may be in themselves, the more its character and the basis of its appeal, in the past and currently, would be changed.
  If the House gives the Bill a Second Reading and sends it to Committee, my right hon. Friend the Minister will report to Parliament on the Bill; he has already received reports on it from the Water Resources Board and the Countryside Commission, and, in accordance with his usual practice, he will append those reports to his own for the assistance of Parliament. Whilst I do not want to encroach on a possible Committee stage, it may be helpful if I indicate to the House briefly the views of those bodies, which have been, in certain respects, dealt with by other Members.
  The Water Resources Board believes that the objections to this development in the Dartmoor National Park are out-weighed by the benefits of using the site for both the Plymouth and the South-West Devon undertakings. It is also satisfied that desalination is not an economic alternative to meet Plymouth's needs. It accordingly supports the promoters in their choice of the Swincombe-Tavy scheme.
  The Countryside Commission, on the other hand, has reported to my right hon. Friend that it is opposed to the Bill. Its main objection is that the project would

  1325
  introduce an artificial intrusion into one of the wildest parts of the moorland. This, it says, ought to be kept in its present state for present and future generations at part of the diminishing reserve of wild country still available for access by the public for recreation of an adventurous kind.
  It goes on to say that the drastic and conspicuous proposed enlargement of the leats—those are the stone-lined canals dug at various dates since the 16th century to supply water to Plymouth—would spoil the local scene and the sense of remoteness, besides interfering with access by walkers and riders and with the special enjoyment of those who resort to the wilds for inspiration, recreation and the study of nature. It drew attention to the unsuitable nature of the site for the development of other active leisure pursuits associated with water to which hon. Members have referred briefly.
  Mr. John Nott: The lack of recreational possibilities has now been mentioned three times. It is not only sailing that provides recreation. The reservoir could provide excellent trout fishing for a very large number of people travelling down to, and holidaying in, the West Country, and all sorts of other forms of water recreation, apart from sailing.
  Mr. Freeson: I note the point, but I was seeking to outline the views represented to the Minister, having stated the Water Resources Board's representations in outline. It has made the point quite strongly that it would not be appropriate to have this kind of recreational activity for this site.
  There have been other objectors to the Bill. There have been six petitions, at least one of which represents a joint effort by six amenity bodies. I do not want to go into their details and merits, because if the Bill is to go to a Committee it will be for the Committee to weigh the petitioners' case against that of the promoters. There are no fewer than six petitions, and they cover a wide variety of interests—the Duchy of Cornwall, as owners of the site, Devon County Council, the Devon River Authority, the Dart Fisheries Preservation Society, the Dartington Hall Trustees, and, last but by no means least, the joint petition to which
  1326
  I have referred on behalf of six bodies concerned with protecting amenity in the countryside.
  The most common view is that another site would have been better, and there is strong preference for the site at Town-leigh, especially by the amenity bodies. They also express views that a shorter-term solution should be found or that Plymouth's needs alone should be met at this time. This is suggested in the hope that non-conventional sources like desalination or estuarial barrages will in the meantime become a more practicable alternative. None of the petitions seriously questions the immediate need for water for Plymouth nor the early need for South-West Devon.
  I now turn to the point dealt with by hon. Members about the planning inquiry procedure. It has been suggested that a planning inquiry would be the right thing even at this stage, and that this brings into question the whole procedure before us. I do not intend to go into the question of procedure, because I have touched on it earlier, and we hope to deal with this by way of amending legislation later in the Session.
  An application for planning permission would be necessary to get started either on the planning inquiry commission procedure or a normal planning inquiry procedure. The statutory requirement for a planning inquiry commission is that a special inquiry is essential to a proper evaluation of considerations of national or regional importance, or an assessment of technical or scientific aspects of an unfamiliar character. Otherwise an ordinary local inquiry is the effective way. That a case is difficult or controversial is not a sufficient reason for a planning inquiry commission, which, with its separate stages for identification of issues and local inquiries, takes longer than the ordinary inquiry procedures.
  I was asked several times what we estimated the time taken to be. We believe that if a decision were taken on planning inquiry commission procedure immediately following a planning application it would take 27 months for that procedure to be gone through, even with everything smoothed out, tied up and neatly arranged. Beyond that, it is not possible for me to give an estimate, because whatever the decision arising from the public

  1327
  inquiry commission procedure it would still be necessary to have a Bill presented to Parliament. It would be open to Parliament to consider the matter again either shortly or, if it was referred to a Committee, to go through it in as much detail as it chose through the Select Committee procedure, which is where we come back full circle to tonight's business.
  Mr. Jay: Supposing the Bill were rejected on Second Reading, it would be possible under the law for this alternative procedure to be followed. Could my hon. Friend make the position clear?
  Mr. Freeson: I was going to touch on that matter as I worked my way through my remarks on the planning inquiry commission. My right hon. Friend is correct on that matter, but I will come back to it later. If I can proceed through the matter stage by stage, I was indicating that there will be this length of time, 27 months, for these procedures. There are no unfamiliar technical or scientific questions involved here, though there are certainly questions of regional importance which are already fully known and appreciated.
  One raises an important question as to whether within the terms of the 1968 Act the planning inquiry commission procedure would be the right one. But I am not tonight rejecting it. I am stating that there is a big question and that it should not be automatically assumed that it was the right alternative procedure. The alternatives in any case have been evaluated by a statutory body, namely the Water Resources Board, which is specifically charged with this task. It is difficult to see what more could be done in the way of research of evaluation by a commission than has already been done. I stress that, whatever may happen tonight, a Bill is in any case necessary.
  The short question is: would Parliament be satisfied to accept the work of a commission as a substitute for its own Select Committee stage inquiries? It could be summed up in those terms.
  Mr. Carol Johnson: This is a very important point. Surely the distinction would be that if the planning inquiry commission procedure were used, by the
  1328
  time the matter got back to the House we should all be fully informed about all the alternatives. As at present we have only one side of the story.
  Mr. Freeson: That is fair so far as it goes, but I am not aware that it would not be possible for evidence and representations to the Select Committee, if the House decides that to be the right procedure, to cover the very ground mentioned by my hon. Friend.
  Mr. Carol Johnson: I drew attention to that point, but I was pointing to the financial burden imposed on the opponents of the Bill, and particularly the amenity societies, which cannot afford to undertake these matters.
  Mr. Freeson: I take the point to a degree. It is more expensive to go through the Select Committee procedure, but nevertheless there is expense involved in submitting evidence through the planning inquiry commission procedure. What is more I repeat this—it would still require a Bill. It would still be open for the same procedures to be adopted and evidence to be sought. No doubt objectors of one kind or another would be involved in the same kind of expense. I am not saying what is right or wrong about the issues involved, but whether they come before a Select Committee or before a planning inquiry commission organisations would be involved in the same kind of expenditure, whichever way the House decides tonight.
  Sir H. Legge-Bourke: Having had considerable experience in the past of being chairman and member of this type of Select Committee, may I be allowed to disabuse the House of the suggestion that it is automatic that enormous expenditure is involved? I have myself presided over a Committee which has heard independent petitioners who have had no legal assistance at all and in the face of whose evidence the Committee has bent over backwards to give every possible opportunity.
  Mr. Freeson: The House will welcome that observation. There has been a tendency, which I regret, to treat the Select Committee procedure as if it is a kind of abuse of people's rights. I am not saying that those words have been used. It is a good procedure and we should be proud of it. We should not tend to criticise it

  1329
  because we have a particular problem that we are worried about.
  I hope that I have summarised the matter fairly. The House is deciding tonight whether it prefers a commission as a substitute for its own Committee stage inquiry. Both ways would require investigation and evidence, and in the end a Bill would still have to come before the House.
  It is true that a local inquiry, whether held by a commission or in the ordinary way by an inspector, would allow the views of objectors to be expressed and taken into consideration in a more informal and somewhat less expensive way than under the Private Bill procedure. But the promoters, in considering whether to test the Minister's view by making a planning application in a case like Swincombe, where a Bill would in any case be necessary, would have to take into account both the additional time, to which I have referred, which it would be necessary to allow for the procedures, and the extra expense to which they might be putting objectors, who may wish to petition against the Bill even though planning permission has been obtained.
  Discussions about the possibility of some kind of planning inquiry into alternative sites have taken place with promoters of the Bill on several occasions. On the most recent occasion, elected representatives of the authorities promoting the Bill discussed the matter with my right hon. Friend the Minister. Apart from any other considerations, the promoters took the view that it was extremely important for them to get a decision about at least this one site as soon as possible, and, of course, they would get such a decision, one way or the other, by proceeding with their Bill.
  The House may well ask—and this point has been put by my right hon. Friend the Member for Battersea, North (Mr. Jay)—what would be the position about holding an inquiry into alternative sites should the Bill not succeed in Parliament, whether in the House tonight or if it is referred to a Select Committee? If Parliament rejects the Bill, this would not necessarily exclude Swincombe from further consideration. Beyond that, the form of any inquiry into all alternatives would have to be decided in the light of specific proposals put forward.
  1330
  At the outset, I said that there were a number of public interests involved. I hope I have said enough to show that each of the main alternative solutions I have mentioned has its own share of them. The need for water conflicts with the desire to preserve existing amenity. In some cases the desire to preserve amenity would also come into conflict with wide recreational use of a reservoir. Elsewhere, it is farming land which must suffer, or people's houses, or listed buildings. Some sites are more expensive than others. Some can offer a solution for only one of the promoters.
  Swincombe is cheapest. It does not affect farm land but it does affect amenity. Huccaby has the same disadvantages, and it affects agriculture. Townleigh could make a good recreational centre; a reservoir there could probably enhance the amenity; but it would be more expensive in money terms. More important, the site is more expensive in terms of farm land and houses. Lee Mill gets good marks recreationally, is likely to be less offensive to amenity, but is again at the expense of farm land and houses, and this time some of the houses are listed buildings, architectural and historical.
  The Water Resources Board advised Swincombe and still supports it, and so, after much investigation do the promoters. My right hon. Friend's other advisers, the Countryside Commission, would prefer the choice to fall on Townleigh. But it is Plymouth which is now pressingly in need of new sources of water.
  Although I and other hon. Members have spent time this evening speaking about the alternative schemes to Swincombe, the object of the exercise is, as I hope I have stressed, not to choose the one which we prefer but to decide whether the Bill should go forward for examination in Committee. I think it should, and I believe that the promoters have formed a view about the most appropriate site for a reservoir in the light of many conflicting pulls and interests. I think they should have the chance to deploy their arguments in greater detail than they have been able to do this evening.
  Moreover, I think that we are dealing with a particularly difficult case. There

  1331
  is no doubt in my mind that the arguments on water grounds and those on agricultural grounds very strongly support the choice of the Swincombe site for the reservoir. If that were all we had to think about, there need be no hesitation in accepting Plymouth's proposals. But here there are very cogent amenity arguments to be weighed in the balance against the scheme. I would like to see all the evidence produced and tested before a Committee so that it can assess the situation and weigh the arguments. For these reasons, against the background which I have described, I hope not too wearisomely, I recommend that the Bill be sent to the Committee for examination.
  9.20 p.m.
  Mr. R. J. Maxwell-Hyslop: May I begin by saying that I have known Dartmoor all my life? I was born at Ivybridge, on the edge of it, and as a child I wandered, as many others have done, over Dartmoor and I am passionately fond of it. Secondly, I have visited the Swincombe site as recently as the Sunday before last. Dartmoor is not homogeneous. Dartmoor is not Exmoor. Exmoor can be accurately described as a wide open space, devoid of habitation except for farms at its edges.
  Traditionally, Dartmor has a very considerable industrial element. Those concerned with the industrial archæology of the West Country know that the Stanary towns, of which Lydford and Tavistock were certainly two, had their own laws. The private ownership of land was rigorously circumscribed by the Stanary rights of search and mining for tin. The waters which flow from Dartmoor were harnessed early on, and towns like Ashburton have been wool centres and centres of manufacturing for centuries.
  Although it is obvious to those who look at Dartmoor today that there are extractive industries at work in the form of clay work and quarrying, we should remember that much of the history of Dartmoor, which was only called a "forest" because the forest laws of pursuit of game applied to it, is the history of industrial activity, such as it was in those days. It has provided men throughout the centuries with their liveli-
  1332
  hood, not just by farming, but by works of one kind or another, by using the waters that flow from it for productive purposes.
  This distinguishes Dartmoor from Exmoor, from probably the Highlands and many other parts of England. This is as much a part of the tradition of the West Country as is seafaring which sprung not only from fishing but the carrying of tin to the Mediterranean and further afield.
  Mr. Geoffrey Wilson: I, too, have been on Dartmoor, since 1910. My hon. Friend is quite right about the industrial bit, but would he not agree that it also applies to a great many other West Country moors? There is, for example, Bodmin Moor.
  Mr. Maxwell-Hyslop: Yes, but we are not discussing putting a dam on Bodmin Moor. I would not dispute with my hon. Friend the number of years that we have each of us tramped Dartmoor. It is true that there are other moors with industrial connections, but it is probably fair to say that most hon. Members in this House have never visited Dartmoor. My mention of tin-mining is even more relevant, because when I visited this allegedly remote spot a couple of Sundays ago I drove all the way there by tarmac road. Upon arrival I found that there was a modern, derelict house with boarded broken windows, some derelict farm buildings, some worked out or unsuccessful tin mines. This cannot be called a spot remote from human habitation, left in pristine loveliness, which is typical of many parts of Dartmoor.
  Mr. Ellis: As a seeker after truth, and having listened to the debate since 7 o'clock, may I ask the hon. Gentleman to tell me whether this is a bog or whether it is an area of outstanding beauty? There is precious little time and I would like to know from somebody who has been there.
  Mr. Maxwell-Hyslop: I think that the hon. Gentleman is getting some conflicting advice from his right hon. Friend the Member for Battersea, North (Mr. Jay), but I will give him an accurate first-hand picture 10 days old. One arrives by travelling on a public tarmac road from Princetown, a remarkably unlovely venue. This road terminates in a cluster of four old cottages painted with tar varnish,

  1333
  two of which are inhabited as holiday houses. The remainder of them, together with the derelict farm buildings and derelict house I have described will be just above water level—alas, they will not be flooded by the reservoir.
  The area which is bog varies with both the time of year and the rainfall. It is accurately said that much of Dartmoor is boggy. But, having said that, much of boggy Dartmoor is heather-covered. This is not. It is a fairly shallow bowl without many of the distinguishing characteristics of Dartmoor which, in particular, are the granite out-crops known as tors. Those are not found on Exmoor, and certainly they are not a feature of Swincombe. The area is accessible. It is not untouched by man. It is abandoned by man, which is rather different. Like anywhere else, it is a variable part of national parkland.
  Emotionally, I would prefer to see no part of Dartmoor used for reservoirs. However, Burrator Reservoir is one of the most beautiful features of Dartmoor, with the surrounding tors reflected in it. The same considerations do not apply to Swincombe, because there are no tors to be reflected. I would not claim that, like Burrator, the formation of the reservoir would add to the natural beauty. Swincombe is remarkably undistinguished by natural beauty. It is a bit of abandoned land. Certainly it has a wild character, but so do many other parts of Dartmoor. It is not a loss which will cause me pain and, as I have said, I speak as a lover of Dartmoor. I was born on the edge of it, and I still love it.
  It is a happy circumstances that we have not a battle between town and country in this case. We have agreement between the two. It is necessary also to say that Plymouth has very severe problems. Recently, the Government have made it a "grey" area. Is it sensible to do that with a view to attracting additional industry and employment for its people, and then to deny it the water that it needs to sustain the industry which it is hoped to attract? That does not seem very sensible.
  Mr. Michael Heseltine: I am sure that my hon. Friend is aware——
  Mr. Speaker: Order. Interventions prolong speeches. Many hon. Members wish to speak yet.
  Mr. Maxwell-Hyslop: I shall take your hint, Mr. Speaker. I will not cover all the ground that I wanted to. Most of it has been covered. But I wanted to disabuse the minds of those hon. Members who do not know Swincombe, as opposed to just a general outline of Dartmoor, of any false impressions of its characteristics.
  Having started emotionally opposed to this project and having given the Parliamentary Agents acting for the promoters of the Bill a rough ride, I am satisfied that it is a necessary evil. It is the best of the alternative sites. I do not know anywhere in Dartmoor where a reservoir would do less violence to the environment. I do not know any area of Dartmoor which is less valued by people who know the moor. Obviously it has its devotees. Anywhere has. But, on balance, I think that this House should give the Bill a Second Reading and leave the Select Committee to examine the specific merits of its proposals.
  9.29 p.m.
  Mr. John Ellis: Having been approached or lobbied by various hon. Members who have interests, whether of their own constituents or otherwise, or being fearful that if the reservoir did not go to this place it would go to another which would affect their area, I determined to do my duty as a Member, and I have been here since six o'clock.
  I have no axe to grind in any way, shape or form. I came into the Chamber purely to listen to the arguments and to decide whether it would be right to give the Bill a Second Reading. The time having reached half-past nine, I believe that I am now in a fair position to make that judgment.
  I have heard demonstrated the fact that there is a need for water in Plymouth. That has not been argued against. I have also heard talk about other sites that have been looked at and considered in some detail.
  I had great trouble earlier in deciding whether this was an area of outstanding distinguishing feature and beauty. I ran into some trouble on that score. There was a dispute whether it was a bog or not, whether it was a beautiful bog, and whether this was a characteristic of the area. I have the view in mind now that

  1335
  it is not an area that can be described as of outstanding beauty and typical of the moor that it represents, but that if there is a need for water in Plymouth, that there must be a reservoir, and that it would be a fair place for it because it would not ruin the nature of the area altogether. If that is right, I think that the House should now be in a position to give the Bill a Second Reading with all that that entails.
  However, one serious point should be made. I noted in the course of the arguments that some hon. Gentlemen seemed to think that once an area had been designated as a national park not one scrap should ever thereafter be taken from it. I dispute that view. I believe that it is right that this House should decide the matter.
  From that point of view, whatever the procedures are, one matter we always discuss is whether people and pressure groups have an adequate channel for their discussions. I think that people in this area, whether they agree or not, will rest easier in their beds tonight knowing that that place has been discussed in this place. This is a fine institution, and I think that we have done justice by seeing that all those voices were represented here tonight. Hon. Gentlemen opposite have played a part. Therefore, I am not unhappy about the procedure that we have adopted in this case, not one iota. I hope that the Bill will get a Second Reading, because I believe that we have tried to satisfy the different points of view expressed tonight about the need for water in that area.
  If the reservoir is built, there will, I am sure, be a natural concern in making water supplies available; but I should like people to be able to get to it and see it. If possible, sailing and fishing should be allowed. I believe that it should be used for some kind of recreation.
  I come from North Yorkshire where there are moors. I do not accept that the building of a reservoir destroys the natural beauty of a place. Some of our most beautiful views are of reservoirs which have been tastefully built. A reservoir can enhance the appearance of a valley. But all too often in the past—I am talking about places serving Leeds, Bradford and other areas—because local
  1336
  authorities had greater powers, they sought to exclude the public. I do not share some people's ideas of having a national park in solitude, because no one goes to enjoy it. We must keep a balance. We should have regard to making it accessible to cars so that people can get out to enjoy it, because nowadays most people do not bother to walk very far. There are many places in which people can find solitude. I believe that we can do justice to the area and to the various conflicting interests.
  9.35 p.m.
  Mr. Peter Emery: I shall be as brief as possible because at least five more hon. Members wish to speak, and I hope that they will all be able to do so if we limit our speeches to about four minutes each.
  We appreciate the Minister's finally coming down in support of the Bill, but when we have only three hours for debate I deprecate a Minister's taking 20 per cent. of the time. It is rather encroaching on the good nature of the House, particularly when we are considering a local matter affecting so many people.
  I was in some difficulty about the decision I had to make. What is wrong about the way in which the decision has been made is that we have had to have a decision on Meldon and then a decision on Swincombe. The necessary water requirements of the South-West should have been decided initially and there should have been one scheme—perhaps even an enlarged scheme. The Water Resources Board should have done this with the South-West Regional Economic Planning Council. I only hope that other areas can learn from this example that we should not deal with such a problem piecemeal, because we then have the worst of all possible worlds.
  There is no doubt that Plymouth has gone to great trouble in the way in which it has presented the proposal. There is an essential need in the South-West.
  I am somewhat concerned about the way in which Devon County Council has been at sixes and sevens over the matter. Hon. Members have been kept in touch about what is going on, and it was only today that I was informed finally that the council was petitioning against the Bill absolutely. Technical reasons were given to us previously. I believe that the council has taken this view mainly

  1337
  because the Dartmoor National Park Committee is a committee of the council and it feels an obligation to go along with the views and feelings of one of its committees, whereas I still know that there is very strong opposition to the council's having had to take the view that it has in petitioning against the Bill.
  Mr. Peter M. Jackson: Will the hon. Gentleman allow me——
  Mr. Emery: Perhaps you might be allowed to make a speech of your own.
  Mr. Speaker: Order. Never in history.
  Mr. Emery: I hope that when the Bill reaches Committee, as I hope it will, extra thought will be given to the question of fishing on the Dart. There are some real problems about fishing on the Dart, but they can be overcome. When the Committee considers this, the views of the river authority should be borne in mind, together with those of the people who own fishing rights on the Dart. I believe that their rights can be properly safeguarded.
  I urge the House to give the Bill a Second Reading.
  9.38 p.m.
  Mr. Arthur Blenkinsop: I intervene very briefly because I have always had a very special interest in the development of our national parks and the problems inevitably associated with developments proposed within them.
  Some time ago, before I was a Member of this House, I prepared a report on the whole future and development of our national parks and visited them all, including Dartmoor. Therefore, I have a particular concern about the way in which the proposals put forward tonight might very well affect that national park.
  The House has a specific and very special responsibility for national parks. The priority that preservation must take in these limited areas has often been stressed. Most of us understand, particularly in European Conservation Year, the almost exceptional reason why we should give it special consideration. We in this country face pressures on all sides, and it is all too easy to give way, first for one reason and then for another, and in the process to lose certain facilities that we should protect, facilities which meet certain needs. It is the responsibility of the House to protect them.
  1338
  I agree with those who have said that one certainly should not assume that the development of an artificial sheet of water is necessarily a destruction of amenity values. It entirely depends upon where it is. There are many which we have welcomed in many parts of our countryside, and I am one who has welcomed some of those on certain occasions. There are others coming up affecting the area where I live, and again in all probability we shall regard them as a valuable contribution to the variety of the landscape and to the appearance of the area.
  But here I do not believe this can be said. Already considerable areas in Dartmoor have been lost, and this is one of the tragedies, both by military action and also by other reservoir developments which have already taken place. I agree entirely with the hon. Member for Tavistock (Mr. Michael Heseltine), who perfectly fairly put the case, that one cannot examine this proposal on its own. One has to examine its effect together with the effect of the other developments which have taken place on Dartmoor. It is for that reason that I think that we need to have a very special concern about what effect this will have. I am rather surprised that hon. Members should have cast doubt—and I am sure they know better than I do—on the attitude of the county council, because, after all, Devon County Council has submitted its views to us at the end of which it says very clearly:
  "the County Council therefore humbly submit that your honourable House should decline to give a Second Reading to this Bill."
  Nothing could be clearer than that.
  I share the anxieties of hon. Members about the whole of the procedure that we use. I do not agree with my hon. Friend the Member for Bristol, North-West (Mr. John Ellis). I do not think this is a satisfactory procedure for dealing with these matters. I should like to see a different procedure developed, but as the matter is before us I sincerely suggest that we cannot, as matters stand, give a Second Reading to the Bill.
  9.43 p.m.
  Mr. Charles Doughty: First, I should like to deal briefly with the question of the procedures which we adopt. What has been suggested by some

  1339
  hon. Members is that we should have a double procedure first, with a lengthy and expensive inquiry, and then, a procedure involving coming back before the House for some proposal of a Second Reading of the Bill and matters of that kind, followed by reference to a Select Committee. I think this is so, unless hon. Members are suggesting that we should delegate our decisions to an independent body, and I am certain that they are not doing that. Therefore, it is incumbent upon the House to decide whether to give the Bill a Second Reading or not.
  Many Members will be wondering why, since I represent a Surrey constituency, I am talking about this matter. I shall enlighten them. On the map provided by the promoters of the Bill, they will see the rivers of Walkham and Tavy which meet at what is appropriately called "double waters". Just south of there is a house with fishing on the Tavy, which is owned by my family. I go there frequently in the summer, if not the winter, and I know the district extremely well. I say at once that I also know that Plymouth is in need of water. It is just about now running level. Although this matter does not affect the Bill, I think that they are taking too much from Hopwell dam and should go further downstream. However, that is another story.
  I want to put on record for the Select Committee that it is high time that the electricity board which extracts a lot of water from the Tavy which otherwise would go for Plymouth's availability should not be doing so. I do not believe that it needs that water. It has a very small hydro-electric scheme there. It takes the water from the Tavy at Tavistock and has a generating station on the River Tamar into which the water is finally put. This is wrong. I am sure that if pressure were put on the Board to stop taking that water it would do so.
  The Plymouth authority and the South-West Devon Water Board would have to come before the House separately. I heard what the hon. Gentleman had to say about the Lea Valley, but that is not suitable for Plymouth and the South-West Devon authority as well. Two separate applications would have to be made. They would both concern agricultural
  1340
  land and would entail destroying farms and houses and so forth. I do not want unduly to run down the alternative site, but hon. Members who have received from some amenity societies a picture of a lovely top of a tor with hikers going around it should realise that it does not bear any relation to Swincombe.
  The best place for the reservoir is where proposed. It would provide the water required. It would take a few years to build but it would be an advantage to the amenities of the district. The Plymouth Water Board itself said that there is good fishing at the Burrator reservoir. Indeed, it is a great asset to the neighbourhood. I am certain when the new reservoir is constructed it will have the same amenity, although whether it is too windy for sailing I cannot tell. I shall not express any opinion as to what form of recreation could be provided on the reservoir. However, I am certain that amenities could be provided, for fishing, or sailing or water skiing, and that it would be an attraction even to those who merely visit in their cars and look at the scene while picnicking.
  I have a knowledge of the district and of its needs, and certainly of Plymouth's needs. I ask the House to give the Bill its Second Reading. I am not unmindful of the interests of the national park and of the need to preserve green belts and amenities. Every thing must be considered against the background of needs and common sense. I am certain that, when hon. Members have fully considered this matter, they will conclude that they should give the Bill a Second Reading and let the matter go to a Committee which can hear all the objectors and report back to the House, Perhaps I am anticipating the outcome, but I am sure that such a Committee would let the Plymouth and South-West Devon Water Boards build the reservoir where they wish.
  9.49 p.m.
  Mr. Ray Mawby: Like my hon. Friend the Member for Tavistock (Mr. Michael Heseltine), I have had to make almost an agonising decision about this plan. This is a joint exercise by Plymouth and the South-West Devon Water Board. In joining together to promote the Bill they are doing what Parliament has asked them to do, through

  1341
  the Water Resources Act. That Act was passed in order to avoid small authorities having to come with piecemeal proposals. The idea was to move to an entirely new system. In this case the South-West Devon Water Board is just as interested as Plymouth, and if its need is not perhaps as great as that of Plymouth, nevertheless it has a need.
  The hon. Member for South Shields (Mr. Blenkinsop) raised several important points. He dealt with the amenity questions. Obviously, this is one of the great considerations one has to take into account, because those who are Members for this area have to balance amenity considerations with the more human needs of our constituencies. Obviously, a balance will always have to be maintained between the two factors, and one can certainly not do other than consider that balance.
  It has been said that many surveys were made. As I understand it, this is the first water Bill to come before this House having received the blessing of the Water Resources Board. After all, that board was set up to do this kind of job, and this is the first Bill to have the benefit. The hon. Gentleman quite fairly referred, as did others, to the Section 14 survey being carried out by the Devon River Board and asked whether we could not wait until this had been completed.
  If we look at the needs of Plymouth we see that the average summer demand will exceed the reliable supply by 1971. If this Bill goes through its normal process before a Select Committee it means that when the works are completed the additional water supply will not be available until 1975; so even if we give the Bill a Second Reading tonight those concerned are four years adrift in all the projections they make.
  The question of the planning inquiry council, again, is extremely important, and we should consider what it would mean. First, it would mean that the kind of timetable mentioned by the Minister, 27 months, would result in the process over that period of time quite possibly blighting a number of properties. After all, all of us have seen examples of properties which remained blighted over a period of time when everyone knows that it may well be that at the end of the day the property will not be required.
  1342
  Nevertheless, over that period the owner of the blighted property cannot sell it if he wishes to do so. Thus, the citizen is considerably restricted for no apparent good reason. This is one question which we have seriously to consider.
  While the planning inquiry commission idea looks attractive at first sight, it has a number of drawbacks. The big drawback is that mentioned by the Minister, that even after the commission a Bill has still to be drafted. As he pointed out, through the flaw in the Water Resources Act and the peculiar circumstances of the powers which are required for these two authorities to carry out their works, those cannot be done by Order procedure and must be done by a Private Bill procedure.
  It may well be that this House in its wisdom at some future date will change the law with regard to these particular matters. Obviously, this is something on which we all have our own ideas although I would certainly refute the hon. Gentleman's suggestion that people cannot appear before a Select Committee objecting to a Private Bill without large funds. I support my hon. Friend's point. After all, he has had much more experience of Select Committees than I have. But I have known of many cases in which a Committee has leaned over backwards to make sure that someone with no funds at all has been able to put his case effectively before the Select Committee so that it could amend a Bill if that particular objector, even though he was not legally represented, put before it a good case for a change.
  Whatever we do in future, Plymouth and south west Devon cannot wait. This is the most important factor.
  Sir Frederic Bennett: Is my hon. Friend saying that if the Bill is not given a Second Reading tonight the people of South Devon will shortly be short of water?
  Mr. Mawby: Yes. My hon. Friend asks a question which raises a major problem. The Government have set up various boards and are trying to interest people in visiting the West Country. Not all the visitors want to tramp on Dartmoor, and even those who do want the luxury, after their walk, of a hot bath and food cooked in wholesome, fresh water.
  I have been worried by a letter which purports to come from the Chairman of

  1343
  the Devon River Board. The hon. Member for Lewisham, South (Mr. Carol Johnson) and others have quoted from it, but although the River Dart runs right through the middle of my constituency, I have not received a copy of of it. While I make no complaint about that, I obviously cannot comment on the letter, except the point in it about the so-called pollution of the River Dart.
  This matter is not referred to by the Devon River Board in its objection to the Bill. Indeed, the point has never been raised. The fishery authorities are, naturally, concerned about the Bill and about any possible change in the flow of the Dart because salmon still spawn in the higher reaches of the river. However accommodations have been reached between the promoters and these bodies, including the Devon River Board, with a view to altering the original flows to ensure that the objections are met.
  The South-West Devon Water Board abstracts water from the gravels just before the weir and estuarial flow of the River Dart. The water of the Dart will be more regulated over the year between the seasons; and if Plymouth were to prevent a good flow of water down the Dart it would be damaging its
  partner, the South-West Devon Water Board, which will continue to seek to abstract water from the gravels in the lower reaches of the Dart. Thus, water will be added to the Dart in low flow conditions, and this will mean a better regulated river than we have at present, with an abnormal flush compared with almost drought conditions.
  Having considered all the facts, it seems that, by and large, the operation of the Bill will be of benefit to, rather than to the detriment of, the River Dart. On that basis we should support the Bill. The Minister pointed out that we are not making a decision tonight as to the final appearance of the Bill. He made a valuable suggestion when he said, in effect, "Let the Bill go into Committee upstairs, where it can be thoroughly considered". On that basis, I urge the House to give it a Second Reading.
  Mr. Peter M. Jackson Mr. Peter M. Jackson rose—
  Mr. Emery Mr. Emery rose in his place and claimed to move, That the Question be now put.
  Question put, That the Question be now put:—
  The House divided: Ayes 120, Noes 23.

  Division No. 98.]

  AYES

  [10.0 p.m.

  Armstrong, Ernest

  Fletcher, Ted (Darlington)

  Lubbock, Eric

  Ashton, Joe (Bassetlaw)

  Ford, Ben

  MacArthur, Ian

  Astor, John

  Foster, Sir John

  McBride, Neil

  Bagier, Gordon A. T.

  Freeson, Reginald

  MacColl, James

  Barber, Rt. Hn. Anthony

  Galpern, Sir Myer

  Mackenzie, Alasdair (Ross & Crom'ty)

  Bennett, Sir Frederic (Torquay)

  Ginsburg, David

  Maclennan, Robert

  Bessell, Peter

  Gower, Raymond

  McMillan, Tom (Glasgow, C.)

  Binns, John

  Greenwood, Rt. Hn. Anthony

  McNamara, J. Kevin

  Bishop, E. S.

  Gunter, Rt. Hn. R. J.

  Marks, Kenneth

  Boardman, Tom (Leicester, S. W.)

  Hamilton, James (Bothwell)

  Maxwell-Hyslop, R. J.

  Braine, Bernard

  Hamilton, William (Fife, W.)

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

  Brewis, John

  Hamling, William

  Miller, Dr. M. S.

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

  Hannan, William

  Mills, Peter (Torrington)

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

  Harper, Joseph

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

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

  Harrison, Walter (Wakēfield)

  Monro, Hector

  Campbell, B. (Oldham, W.)

  Hart, Rt. Hn. Judith

  Morgan-Giles, Rear-Adm.

  Chataway, Christopher

  Hawkins, Paul

  Morris, Alfred (Wythenshawe)

  Concannon, J. D.

  Hay, John

  Morris, Charles R. (Openshaw)

  Cooper-Key, Sir Neill

  Heffer, Eric S.

  Nott, John

  Crawshaw, Richard

  Heseltine, Michael

  Ogden, Eric

  Crouch, David

  Hooson, Emlyn

  O'Halloran, Michael

  Davidson, James (Aberdeenshire, W.)

  Howie, W.

  Osborn, John (Hallam)

  Dodds-Parker, Douglas

  Hoy, Rt. Hn. James

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

  Doig, Peter

  Irvine, Bryant Godman (Rye)

  Pannell, Rt. Hn. Charles

  Doughty, Charles

  Jenkin, Patrick (Woodford)

  Peel, John

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

  Jones, Dan (Burnley)

  Pentland, Norman

  Ellis, John

  Jones, T. Alec (Rhondda, West)

  Perry, Ernest G. (Battersea, S.)

  Emery, Peter

  Kitson, Timothy

  Perry, George H. (Nottingham, S.)

  Errington, Sir Eric

  Leadbitter, Ted

  Powell, Rt. Hn. J. Enoch

  Eyre, Reginald

  Lee, Rt. Hn. Frederick (Newton)

  Probert, Arthur

  Faulds, Andrew

  Legge-Bourke, Sir Harry

  Rhys Williams, Sir Brandon

  Fernyhough, E.

  Lewis, Ron (Carlisle)

  Ridsdale, Julian

  Fisher, Nigel

  Lomas, Kenneth

  Roberts, Rt. Hn. (Normanton)

  Fitch, Alan (Wigan)

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

  Varley, Eric G.

  Williams, Donald (Dudley)

  Silvester, Frederick

  Vickers, Dame Joan

  Wilson, Geoffrey (Truro)

  Steel, David (Roxburgh)

  Wainwright, Edwin (Dearne Valley)

  Woodburn, Rt. Hn. A.

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

  Wainwright, Richard (Colne Valley)

  Woof, Robert

  Temple, John M.

  Wall, Patrick

  Thorpe, Rt. Hn. Jeremy

  Watkins, David (Consett)

  TELLERS FOR THE AYES:

  Turton, Rt. Hn. R. H.

  Weatherill, Bernard

  Mr. John Pardoe and

  Urwin, T. W.

  Wilkins, W. A.

  Mr. Ray Mawby.

  NOES

  Allaun, Frank (Salford, E.)

  Hornby, Richard

  Noel-Baker, Rt. Hn. Philip

  Bennett, Dr. Reginald (Gos. & Fhm)

  Houghton, Rt. Hn. Douglas

  Price, Thomas (Westhoughton)

  Bidwell, Sydney

  Jackson, Peter M. (High Peak)

  Roebuck, Roy

  Blenkinsop, Arthur

  Jay, Rt. Hn. Douglas

  St. John-Stevas, Norman

  Body, Richard

  Johnson, Carol (Lewisham, S.)

  Spriggs, Leslie

  Booth, Albert

  Kirk, Peter

  Brinton, Sir Tatton

  Lee, John (Reading)

  TELLERS FOR THE NOES:

  Davies, E. Hudson (Conway)

  McGuire, Michael

  Mr. Angus Maude and

  Davies, S. O. (Merthyr)

  Newens, Stan

  Mr. A. H. Macdonald.

  Question put accordingly and agreed to.
  Bill accordingly read a Second time and committed.

  PARISH COUNCILS AND BURIAL AUTHORITIES (MISCELLANEOUS PROVISIONS) [MONEY]
  Queen's Recommendations having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to amend the law relating to the administration and provision by parish councils of allotments and signs and of burial grounds by burial authorities, it is expedient to authorise the payment out of moneys provided by Parliament of any increase in the sums payable, by way of rate support grant under the enactments relating to local government in England and Wales, out of moneys so provided, being an increase attributable to the provisions of that Act empowering parish councils and councils of boroughs included in rural districts to provide or contribute towards the cost of providing traffic signs and warning objects or devices.—[Mr. Armstrong.]

LESOTHO
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Armstrong.]
10.9 p.m.
Mr. Patrick Wall: I wish to raise the question of suspension of aid to Lesotho. The question of suspension of aid is interlinked with the question of recognition. Therefore, I propose to pursue first the question of recognition and then come to the details of the aid programme being suspended.
The root of the constitutional crisis, the latest manifestation of which took place on 30th January this year when a state of emergency was declared and the constitution was unconstitutionally suspended, lies in the past. The basic causes are twofold.
The first is the differences between the Nationalist Party and the Basutoland Congress Party. The B.C.P. has always taken the pan-African line, it wanted Lesotho to be used as a base against South Africa, and has been assisted by Powers which wanted to see a black-white confrontation in Southern Africa. The National Party, under Chief Leabua Jonathan, was also utterly opposed to apartheid and the racial policies of its neighbour, but it took a realistic line in appreciating that Lesotho lay within the economic orbit of South Africa and, therefore, reciprocated in that good neighbour policy introduced by the present South African Prime Minister, Mr. Vorster.
I think I am right in saying it would be wholly agreed that in the

1347
present constitutional crisis South Africa has played a completely neutral part, has not interfered in any way at all and has acted thoroughly correctly.
The second root of the crisis is, I suggest, the position of the King, His Majesty Moshoeshoe II. I had the privilege of putting the case for the King, or Paramount Chief as he was then, from the Opposition Front Bench when we debated the Lesotho Independence Bill on 20th July 1966. I said to the House at that time that the King had seen what had happened in Swaziland and in Botswana and wanted to be more than a constitutional monarch, wanted more power.
If I may quote to the House, I said:
"He"—
that is the Paramount Chief—
"believes that in his capacity as Head of State he should succeed to the reserve executive and legal powers in external affairs and over internal security"
which today are exercised by the Secretary of State.
"He agreed that these powers should be transferred to the Prime Minister, but he thinks that the Head of State should have the right to step in and assume these powers if an emergency arises."
A little further on I said:
"I do not think that we should feel that this young man is being too unreasonable. But history is against him."
But I concluded:
"If we pass this Bill we introduce a constitution which makes the Paramount Chief a constitutional monarch. I wholly agree with the Secretary of State that in the circumstances, in spite of his"—
that is, the King's—
"misgivings, he should agree to accept this position."—[OFFICIAL REPORT, 26th July, 1966; Vol. 732, c. 1620–1.]
In other words, I maintain that this House has some direct responsibility for the present constitutional crisis, because it derives to some extent from the determination of the King to secure more than the constitutional power awarded him in the constitution passed by this House. In fact, in December, 1966, the King, supported by the Opposition, the Congress Party, clashed with the Government, riots ensued, and the King was put under house arrest, and, I understand, signed an instrument of abdication, to be used if he again interfered in politics.
1348
I think it is proven that the King did advise chiefs and others to vote against the Nationalist Party in the recent general election. We do not know exactly what happened in that general election. The best information is that the National Party and the Congress Party won 23 seats each. Then the constitution was suspended. Irregularities had occurred during the election, and it was discontinued.
It is clear that this was an unconstitutional act on the part of Chief Leabua Jonathan, the Prime Minister. Indeed, he has admitted that. Since then there has been some unrest in Lesotho, but the major area of unrest was in the diamond mines—and that really stems from quite a different cause altogether—the removal of certain tribes to allow the diamond workings to start.
To bring the constitutional history up to date, the King is now in Holland, as it were, on three months' leave of absence.
I am glad to be able to quote to the House two statements issued in Lesotho, the first one by Chief Jonathan on the 1st April:
"Although the constitution has been suspended and certain executive powers assumed by Tona-Kholo during the state of emergency, the monarchy continues to exist and the monarch remains the head of State for the purpose of international relations subject to the advice of Tona-Kholo."
In other words, the position of the King is protected and there is no question of forcing his abdication.
The second and perhaps politically more important statement was issued on 8th April. I quote the first paragraph:
"In view of the present situation in Lesotho, we the leaders of the above-mentioned political parties, in our capacity as representatives of the people of Lesotho, have agreed in principle to arrange between ourselves a round-table conference to discuss the prevailing situation and the future of Lesotho. We firmly believe that the present situation being a domestic matter can only be solved by us and not by any outsiders, through dialogue and not by violence."
That is signed by the leaders of the Basutoland National Party, the leader of the Basutoland Congress Party, who was arrested after the General Election, and the leader of the Marematlou Freedom Party and the leader of the United Democratic Party. I suggest that the

1349
sentiments contained in that communiqué should commend themselves to both sides of the House and should be encouraged.
What has been the British Government's action? We are the only country which has refused recognition to the new Government. No one has suspended recognition as we have. There has been no withdrawal of its representative or aid by any other State. In fact, the Ambassador from Lesotho to France has presented his credentials since the General Election.
The British Government's action is unique and strange. It can be argued that the action taken by the Prime Minister was wholly unconstitutional but in the background of Africa we have had coups d'etat of one kind or another in the following African States since the independence of Lesotho: Central African Republic, Upper Volta, Nigeria, Ghana, Burundi, Togo, Sierra Leone, Dahomey, Congo—Brazzaville, Mali, Sudan and Libya. As far as I know Her Majesty's Government have in each case recognised the new Government immediately, whether it came into power by coup d'etat or any other way.
I would like to quote from an excellent editorial in the Daily Telegraph of 27th February which said about aid to Lesotho:
"There was a similar situation in 1965 in Uganda, when the Prime Minister, Mr. Obote, moved against the Kabaka of Buganda, lawful President of Uganda. According to learned opinion, Uganda was in grosser breach of its own constitution than Rhodesia, when Mr. Obote made himself President, but Britain's official relations were transferred smoothly to him. So could they be in Lesotho, too, we suspect, had the coup come from the Left."
Anyone who studies the Libyan situation and the immediate recognition of the new Libyan Government would come to the same conclusion.
I began by discussing at some length the constitutional situation because I believe that, as the Government spokesmen have said, this is linked to the suspension of aid but it is the suspension of aid which is the responsibility of the right hon. Lady.
We are the only country which has suspended aid to Lesotho. United Nations aid continues, as does aid from other countries. What is this aid about
1350
which we are talking? The aid announced in Parliament last March for 1969–70 showed budgetary aid of £2·8 million and development grant of £1·2 million, totalling £4 million. The 31st March this year marked the end of the three-year period of agreed aid to Lesotho, and the new three-year aid programme, therefore, started on the first of this month.
The amount in the next three years was discussed by a technical mission which visited Lesotho in 1969. I understand that agreement was reached, for 1970–71, for budgetary aid of £1·2 million. This showed a reduction because of the Customs agreement with South Africa, which has been very much in Lesotho's favour and meant that the British budgetary contribution could be decreased. Development aid of £1·5 million was to be offered to Lesotho for the coming year, and all this was to be in grants. Incidentally, this underlines the foolishness of the dispute that has lasted over a year with Malta. The one country we give aid wholly by grants, and in the case of the other, Malta, there has been argument over whether 25 per cent. should be grant or loan which led to suspension of aid for over a year.
What is the effect of the suspension of aid? There has been a serious drought in Lesotho, and no maize crop has been produced this year because of it. Maize is a staple diet of the population, and unless ploughing starts straight away for the winter crops there may be widespread starvation. Yet the suspension of aid affects schemes which are designed to increase food production and which were agreed last year or this year with the British Government.
Immediately affected are the tractor hire scheme, the feed and fertiliser subsidy, credit by the Co-operative Union of Lesotho, the agricultural development fund, and certain research schemes which cannot be interrupted without great loss of previous work, particularly irrigation research, on which £40,000 was to be spent in the coming year. There are also pilot projects for fisheries development, counterpart funds for the £500,000 given by the United Nations and the soil and water conservation programme, on which £100,000 was to be spent will have to be abandoned if the Government continue to suspend aid to Lesotho. The whole

1351
future of the livestock industry is endangered, as about £500,000 is allocated for this.
All these matters concern the people of Lesotho; they affect the amount of food that can be produced to feed them. The Government's decision, if it is prolonged, could lead to serious starvation in the country.
Why are the Government doing this? Is it because they do not approve of an unconstitutional act? I can understand that, and that it might mean refusal to recognise the régime or a delay of recognition. What I cannot understand is why they also suspend aid. Why are we the only country in the world that has taken this action over Lesotho, which will affect not so much the government or régime but the people of Lesotho? Do the Government really want to ferment revolt and ensure civil unrest in Lesotho? I cannot see any justification for that.
The result of the Government's action will be to force Lesotho closer and closer to South Africa. That is the only alternative source from which it can obtain funds. Is that what the Government want? Their Rhodesia policy has forced Rhodesia closer and closer to South Africa. Do they want to repeat that in Lesotho, which is supposed to be an independent Commonwealth country?
What are the criteria for recognition? The other day the Joint Under-Secretary of State for Foreign and Commonwealth Affairs said in reply to Questions that the normal criteria were
"that the new Government enjoy, with a reasonable prospect of permanence, the obedience of the mass of the population, and have effective control of much the greater part of the territory of the State concerned."
A little later he said:
"I think that the question is, first, one of recognition, and as soon as there is recognition there are negotiations and discussions on aid."—[OFFICIAL REPORT, 6th April 1970; Vol. 799, c. 23–24.]
In other words, he said—and I cannot think why—that the whole question of recognition must come before the restoration of aid to Lesotho.
Who is to decide when those criteria have been implemented? Who will decide whether the Government are in control over a major part of the country, as I believe they are? The British Government have already refused to allow
1352
the British High Commissioner to have anything to do with the present régime in Lesotho, and have more or less put the Lesotho High Commission in this country into quarantine, so how will they judge when their criteria have been met?
I again emphasise the burden of my case. The suspension of aid to Lesotho is an unprecedented action not carried out by any other country in relation to Lesotho, and not carried out by this country in relation to African States where new governments have come into power by coups d'état or revolutions. The delay in the aid programme may cost the lives of innocent people, and I ask the Government how long they propose to continue this delay.
10.25 p.m.
Mr. Bernard Braine: I intervene briefly to express the deep concern we on this side of the House feel over this delicate and difficult situation. I am sure that my hon. and gallant Friend the Member for Haltemprice (Mr. Wall) is right in saying that there is no precedent in the history of Commonwealth relations for the extraordinary decision of Her Majesty's Government to suspend aid to a friendly country and to refuse recognition to its Government, so that, in effect, diplomatic channels are closed and it is not possible for any communication to take place. If there is one thing that we should have learnt it is that we cannot turn off the tap of aid without doing serious harm to a developing country's economy; taper it off, by all means, but not cut it off altogether.
The right hon. Lady will recall how the Government were criticised for cutting off aid to Tanzania for political reasons. I am glad, as I think the whole House is, that they have since reversed that decision, and rightly so.
As I understand it, the financial year in Lesotho has just come to an end. Discussions took place with Her Majesty's Government last December on the aid programme for the next three years, and now the country is cut off from any assurance of support at a time of acute difficulty. One is bound to ask, therefore, whether it is the purpose of Her Majesty's Government to precipitate economic crisis and collapse in Lesotho in order to attain certain political objectives? Such a suggestion is not fanciful. The Government must be aware that widespread drought

1353
has not only been sweeping Lesotho but is affecting the southern regions of Rhodesia, the whole of Botswana, parts of the Transvaal and the Orange Free State. No rains were experienced up to the end of December, and since then very little rain has fallen and the main maize crops have been very hard hit. Those farmers who planted early in October will harvest a little, but the majority of the African farmers planted later than this, many of the fields are a complete write-off. I understand, too, that maize stalk borer damage is also severe in the later planted plots. The situation is already causing very grave concern to the people in Lesotho, and it is almost certain that there will be widespread starvation among the people.
My hon. and gallant Friend has asked how long it will be before a decision is taken on resuming aid. It is surely wrong that this human consideration should be bound up with the question of recognition. At this moment the Government and the people of Lesotho have not the faintest idea what lies ahead for them. It seems clear that this policy if unchecked will have exactly the same result as the policy of Her Majesty's Government on Rhodesia of driving Lesotho into the arms of South Africa, which can hardly be in the interests of its people, of the Commonwealth or of this country. I shall await with interest to hear what the right hon. Lady has to say.
10.28 p.m.
Mr. John H. Osborn: I intervene only briefly to say that I have recently been on a delegation to Lesotho, where I had a foretaste of the drama which has that country in the two months. I visited the Senate, and I met the representatives of the various parties. It occurs to me that this constitutional crisis has occurred because the Paramount Chief who became King has a feudal and tribal background. I was interested to learn today that the King is in Holland and that representatives of all the major political parties will attend a round table conference.
When will the Government recognise the present position in Lesotho and when will they embark on an aid programme? At present there has been a fair amount of bloodshed. The Guardian last week calculated that between 100 and 150
1354
people have died as a result of insurrection.
The first question to be asked is when will the present Government be recognised. Secondly, I very much hope that not only the aid programme outlined by my hon. Friend but the help this country can give to that country to support itself against independence will be implemented.
Could the right hon. Lady say what is happening to the more ambitious programmes to enable Lesotho to get foreign currency, particularly schemes involving the supply of water to South Africa where it is so badly needed. It we leave Lesotho on its own and do nothing to help that country, we will, as my hon. Friend said, drive the country into the hands of South Africa. It will be left quite on its own, not getting the support from Britain which it could expect. This in Westminster terms may be a constitutional crisis, but it has a background which is very different from our own situation.
10.32 p.m.
The Minister of Overseas Development (Mrs. Judith Hart): The hon. Gentleman the Member for Haltemprice (Mr. Wall) has raised a question, which, of course, has already been the subject of Question and Answer in the House. I would have thought that the position had been made quite clear. But it is an important question and I am glad to amplify what has been said—by myself and by right hon. and hon. Friends who are Ministers at the Foreign and Commonwealth Office. It may indeed be helpful to have the opportunity to do so, and I am, therefore, grateful to the hon. Gentleman. He will allow me, I am sure, to state what I see as being the basic principles governing this issue and to summarise the developments in Lesotho as we have seen them since 27th January.
The criteria for the recognition of a State are, of course, primarily a matter for the Foreign and Commonwealth Secretary. I am sure the hon. Gentleman fully appreciates this, but he spent a considerable part of his remarks on this aspect of the matter, so I must deal for a moment with it.
Since recognition is a key and, indeed, a main factor in the provision of aid, it

1355
is clearly important to me in terms of the resumption or discontinuance of aid. The criteria are as follows. The hon. Gentleman has summarised them clearly, but perhaps it would be as well if I state them.
The first is that a Government must clearly be in effective control of a country. Second, it must clearly command the obedience of the mass of the community. Third, it must demonstrate a reasonable prospect of permanency.
If we look at the developments in Lesotho since 27th January, we can summarise the position as follows. Chief Jonathan appeared to have lost the General Election and, accordingly, heads a minority régime. There have been disturbing reports of unrest——
Mr. Wall Mr. Wall rose——
Mrs. Hart: I am sorry. I have little time left. I have been generous in the time I have allowed. There have been disturbing reports of unrest, notably in the mountainous North-East. We are bound therefore to have our doubts about whether our normal criteria can be satisfied in relation to the present position in Lesotho. I must confess I am a little surprised that the hon. Gentleman who has read the newspapers as well as I have can suggest that conditions in Lesotho would justify at present the recognition which would prompt the resumption of aid. He must have read the report in The Times from Cape Town on 9th April:
"Police reinforcements were flown to the rebellious areas in the mountainous north of Lesotho today amid reports that at least 100 and possibly 150 people have been killed in fierce fighting."
He must have read, as I did, the report from Johannesburg on 2nd April in The Times:
"The events of the past few days, culminating in the exiling of the King last night, suggest that the situation after the Prime Minister's nullification of the election at the end of January and the subsequent incarceration of the opposition leadship, who claimed to have won, is finally but slowly coming to the boil."
I express a slight but justifiable degree of surprise that, having read these reports, the hon. Gentleman can seriously suppose that in circumstances of this kind, the
1356
normal criteria of recognition can be held to be satisfied. Since he makes a point about other countries' recognition of the Government of Lesotho, perhaps I might say that the countries which have so far recognised the new Government of Lesotho are South Africa, France, the Netherlands and Taiwan. No other country has, so I express my surprise at this.
However, let me emphasise that there are encouraging developments. It was reported from Maseru on 8th April that the leaders of the four political parties are to arrange a round table conference to discuss the prevailing situation and the future. We are glad about this. We hope that the present unhappy situation in Lesotho can be speedily resolved. Nothing would please us more. We would like to be in a position where we could continue our aid programme and, as we have done before, assist in a development effort to help the people of Lesotho.
In the meantime, we must continue to regard the whole area of British-Lesotho relations as under review, including the aid programme. We are one of the two major donors—probably the major donor—to Lesotho. There are not many others. Apart from South Africa, the only two who are marginally concerned are Germany and Sweden. So it is a matter of vital concern both to Lesotho and to us.
Our present position on aid is that there has been no contact with the Lesotho authorities since the end of January. O.S.A.S. and technical assistance recruitment has been halted. Requests for training are in abeyance. Apart from one payment of £45,000 in February in settlement of a particular O.S.A.S. claim, no aid payments have been made. The claims presented for payment to us, but which we have returned to the Lesotho authorities, total just over £1 million.
The hon. Gentleman referred to the increase last December, and he will be interested to know that I am about to give for the first time publicly the figures which were involved. The aid programme which we offered for Lesotho covering the three-year period from 1st April of this year included budgetary aid up to £2·575 million and development aid of £4·5 million over the three years 1970–73,

1357
both in grant form. In addition, the full range of technical assistance, including O.S.A.S., the provision of experts and training, would be made available to Lesotho. The hon. Gentleman will be interested to know the firm details of this offer, since they are new to the House.
If the criteria for recognition are satisfied—and I have indicated that the signs are hopeful—and recognition is accordingly granted, I will, of course, consider the resumption of the aid programme in the light of these new circumstances. The basis on which our offer was made last December will now be looked at in the context of recent events. Before I could feel it right to resume budgetary and development aid, naturally I would want to be assured that Lesotho's capacity and ability to spend money usefully remained
1358
as it was when the offer was made, and that the level of budgetary aid remained justified. Naturally, these would be points on which I would need to be satisfied in the light of the events of the past few months. But I would certainly hope that the circumstances prevailing would prove to be such as to present no great difficulties on either.
I think that things are moving now in a more satisfactory direction and——
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 Eleven o'clock.