Commons Sitting of 20 January 1970

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

  CALDERDALE WATER BILL [LORDS]
  The Order of the day being read, for the Second Reading of the Calderdale Water Bill [Lords]
  Ordered, That the Bill be read a Second time upon Thursday, 29th January, at Seven o'clock.

ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    Selective Employment Tax
    Mr. Blakerasked the Chancellor of the Exchequer if he has now received the initial findings of Professor Reddaway about the selective employment tax; and if he will make a statement.
    The Chief Secretary to the Treasury (Mr. John Diamond): Yes, Sir. My right hon. Friend received Professor Reddaway's initial report, which deals with the distributive trades, on 12th January. The report will be published as soon as possible. The Chancellor will review the tax and its working carefully in the light of the findings. My right hon. Friend and I should like to take this opportunity of thanking Professor Reddaway and his staff for the immense amount of work which has gone into the preparation of the report.
    Mr. Blaker: Is the right hon. Gentleman aware that his gratitude to Professor Reddaway is echoed on this side of the House? Can he give an assurance that the initial findings will be published before the Budget?
    Mr. Diamond: I am grateful for the hon. Gentleman's remarks. I assure him
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    that there will be a sufficient number of copies placed in the Library so that all hon. Members may have access to the document.
    Mr. Crawshaw: Will my right hon. Friend bear in mind that this tax is affecting some areas of the country adversely and that particularly on Merseyside the unemployment figures are still well above the national average? Will the Government be prepared to adjust the tax in some areas until the unemployment figures are brought down to the national average?
    Mr. Diamond: Whether my hon. Friend's analysis is completely persuasive is a matter for consideration, but certainly he will not expect me to give any indication of what my right hon. Friend may care to do in his Budget.
    Mr. Spriggsasked the Chancellor of the Exchequer if he will list the employers and trade unions which have made representations to him for the abolition of selective employment tax, the nature of the representations, and the nature of his replies.
    Mr. Diamond: With permission, I will circulate in the OFFICIAL REPORT a list of employers' organisations and trade unions which have made representations to us since the last Budget asking for the abolition of the tax. Most of them were concerned about the position of small businesses. In our replies we emphasised the disadvantages of the practical alternatives to S.E.T.
    Mr. Spriggs: If my right hon. Friend is given evidence that the S.E.T. has a bad affect upon wages in the distributive industry, will he consider it in relation to that industry?
    Mr. Diamond: I am prepared to con sider anything my hon. Friend cares to put before me.
    Following is the list:

    Bath Chamber of Commerce

    Battle & District Chamber of Commerce.

    Birkenhead Chamber of Commerce.

    Blackpool Chamber of Trade.

    Bowness on Windermere Chamber of Trade.

    Broadmead & District Trades Association, Bristol.

    Bromley (Kent) Chamber of Commerce.

    Chesterfield & District Chamber of Trade.

    Cleethorpes & District Chamber of Trade Coventry Chamber of Commerce.

    Fordingbridge & District Chamber of Trade.

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    Hayes & Harlington Chamber of Trade.

    Hereford & District Chamber of Commerce.

    Horbury Chamber of Trade, Wakefield.

    Glasgow Junior Chamber of Commerce.

    Grimsby & District Chamber of Trade.

    Hemel Hempstead & District Chamber of Trade.

    Horticultural Trades Association.

    Hythe Chamber of Commerce.

    Incorporated Guild of Hairdressers, Wigmakers & Perfumers.

    Institution of Business Agents.

    Jarrow & Hebburn Chamber of Trade.

    Lyme Regis & District Hotels & Restaurants Association.

    Macclesfield Chamber of Trade.

    Medway Chamber of Commerce.

    National Hairdressers' Federation.

    National Union of Small Shopkeepers.

    Newcastle-Under-Lyme Chamber of Trade.

    Newham Chamber of Commerce.

    Newton Abbot & District Trades Council.

    Northwood & Pinner Chamber of Trade.

    Penzance Chamber of Commerce.

    Potters Bar Chamber of Commerce.

    Purley & District Chamber of Commerce.

    Retail Confectioners Association (Bournemouth).

    Retail Fruit Trade Federation Limited.

    Rochdale & District Chamber of Trade.

    Romford & District Chamber of Commerce.

    Royal Borough of Kingston Upon Thames Chamber of Commerce

    Rye Chamber of Trade.

    South Lakeland Licensed Victuallers Association.

    South Norwood & District Chamber of Commerce & Trade.

    Thurrock Chamber of Trade.

    Union of Shop, Distributive & Allied Workers.

    Uxbridge Chamber of Trade & Commerce.

    Waltham Abbey Chamber of Commerce.

    Washington Chamber of Trade, Co. Durham.

    Wickford & District Chamber of Trade & Industry.

    Overseas Visitors (Duty-free Export Scheme)
    Mr. Blakerasked the Chancellor of the Exchequer if he will now announce the result of the Government's review of the new over-the-counter duty-free export scheme for overseas visitors; and if he will estimate the value of goods sold under the new scheme since its introduction compared with those sold under the alternative scheme.
    The Financial Secretary to the Treasury (Mr. Dick Taverne): The review is not yet complete. The value of goods sold under the new scheme from its introduction on 1st July, 1969, until the end of December was over £¾ million, compared with rather less than £2 million under the alternative scheme during the same period.
    Mr. Blaker: Do not those figures suggest that the new scheme has not been very popular and do not they confirm some of the many criticisms that were made of the scheme? May we have an assurance that any modified scheme will be brought into effect as a result of the review in time for the forthcoming tourist season?
    Mr. Taverne: Many of the criticisms made of the scheme were based on misconceptions; and the evidence is that increasing use is being made of the scheme.

    French Finance Minister (Discussions)
    Mr. Kenneth Bakerasked the Chancellor of the Exchequer whether he will make a statement on the discussions held in London on 4th and 5th December with the French Finance Minister.
    The Chancellor of the Exchequer (Mr. Roy Jenkins): M. Giscard d'Estaing visited London at my invitation on 4th December. We had most useful discussions on a wide range of topics within our respective responsibilities.
    Mr. Baker: May I press the right hon. Gentleman to say a little more about what was actually discussed? For example, did the discussions include the subjects of the value-added tax, of agricultural support for the Common Market or of a European currency? Were the discussions a preliminary skirmish to the negotiations that will occur later this year?
    Mr. Jenkins: No. The discussions were confidential, and the hon. Gentleman and the House will, on reflection, agree that it is desirable that they should have been confidential. That does not mean that they were highly secret or that matters of great sensitivity were dealt with. We ranged over a wide field of subjects, mainly of international monetary matters of mutual concern. We were certainly not concerned with negotiations or even with preliminaries to negotiations.

    Gross National Product
    Mr. David Howellasked the Chancellor of the Exchequer what is now his estimate of the rate of growth of gross

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    national product for the current financial year.
    Mr. Roy Jenkins: I see no reason to depart from the broad judgment that I made at the time of my last Budget about the likely course of the economy up to the middle of 1970.
    Mr. Howell: Are we not now moving into the new year with a rate of growth of output which looks as though it may be less than 2 per cent.? Is not this a pitifully low figure by international standards? How can it be reconciled with the constant claim of Ministers, and particularly of the Prime Minister, that we would be combining rapid growth with a balance of payments surplus?
    Mr. Jenkins: There are a number of ways, none of them wholly satisfactory, by which one can measure growth. There is the Index of Industrial Production, which is subject to a good deal of revision as time goes on, the National Income Statistics and other methods. I think that the rate of growth is not likely to be markedly different from the prediction I made in April of last year.
    Mr. Dickens: May I press my right hon. Friend to go further on this point? Is it not a fact that the rate of economic growth of this country last year and this year was well below the average obtained by every other comparable advanced industrial nation? Will he bear in mind that we are now in the fourth successive winter with 600,000 people out of work? Is it not about time that my right hon. Friend got his priorities rather differently arranged?
    Mr. Jenkins: It is a fact, and there is no point in disputing it, that the rate of growth of this country over a period from 10 to 15 years past has been slower than that of most other advanced economies. However, the rate of growth in 1968 was one of the best during this period, and in 1969 it will have been a little less good, but the two combined rates will, on the whole, represent one of the better, rather than one of the worse, two-year periods.
    Mr. Tom Boardmanasked the Chancellor of the Exchequer which of the following countries, from information available to him from international sources, namely Canada, the United States of America, Japan, Austria, Belgium,
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    Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Netherlands, Norway, Portugal, Switzerland, Sweden and Turkey have shown a faster rise in gross national product than the United Kingdom since 1964 and which have shown a smaller increase.
    Mr. Diamond: From 1964 to 1967, the latest year for which figures are available from O.E.C.D., all of the countries listed by the hon. Member showed a faster rise than the United Kingdom in gross national product at constant market prices. The same was true for the period 1958–64.
    Mr. Boardman: As the United Kingdom appears at the bottom of the list, 19th out of 19, what importance does the Chancellor of the Exchequer attach to the rise in the gross national product as a measure of good economic management?
    Mr. Diamond: My right hon. Friend attaches a great deal of importance to that and also to the level of income enjoyed in the various countries. The hon. Gentleman will be interested to know that the income per head of population in that year in the United Kingdom was greater than that in Japan, Austria, Greece, Ireland, Italy, the Netherlands, Portugal and Turkey, was broadly similar to that in Germany and Belgium, and was slightly below that in France.
    Mr. Paget: Is my right hon. Friend aware, in spite of that, that if record unemployment, record interest rates and record bankruptcies, coupled with minimum expansion, are the symptoms of a healthy economy, some of us look back to a sick economy with some nostalgia?
    Mr. Diamond: The list which my hon. and learned Friend has given to me is an interesting one. Were I able to ask a question—I am entitled only to answer questions—I would ask him to what he was referring.

    Revenue Surplus
    Mr. David Howellasked the Chancellor of the Exchequer what is now his estimate of the surplus of all revenues accruing to the public sector over total public spending for the current financial year.
    Mr. Diamond: I would refer the hon. Member to Table 1·2 in "Public

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    Expenditure, 1968–69 to 1973–74" (Cmnd. 4234) which shows the latest estimate of the total balance for 1969–70, a surplus of £542 million.
    Mr. Howell: I have seen that table. Is not part of the surplus arising from the practice of certain public bodies of borrowing abroad and not calling on the National Loans Fund? Is this a policy which the Treasury and the Minister condone and continue to approve?
    Mr. Diamond: I would be misleading the House if I did not draw attention to the fact that the main reason for the addition to the surplus arises from the extra import deposits, which indeed account for more than £200 million of the increase to which I have referred.
    Mr. Higgins: Is it the case that the effects of these borrowings abroad by nationalised industries appear easily in the accounts, particularly in Table 15 of the Financial Statement?
    Mr. Diamond: Yes, they do appear in Table 15.

    Exchange Controls (Evasion)
    Mr. Bruce-Gardyneasked the Chancellor of the Exchequer if he will make a further statement on the outcome of his discussions with the Swiss banks regarding evasion of United Kingdom exchange controls.
    Mr. Taverne: I assume that the hon. Member is referring to the discussions between the Governor of the Bank of England and the President of the Swiss National Bank, after which Dr. Stopper subsequently wrote to the Swiss banks on this matter. I hope this will prevent any recurrence of recent difficulties.
    Mr. Bruce-Gardyne: Was there not something a little unedifying about sending the Governor of the Bank of England to drum up support among the Swiss banks to enable the Chancellor to persevere with controls on capital movements intact which he and his predecessors promised the I.M.F. they would relax?
    Mr. Taverne: There was nothing about this as far as undertakings to the I.M.F. are concerned. What was concerned here was certain activities of the Swiss banks, about which Dr. Stopper had been approached, and he proved extremely helpful.

    Domestic Credit Expansion
    Mr. Bruce-Gardyneasked the Chancellor of the Exchequer what adjustment he has now made to the forecast of domestic credit expansion during the current financial year contained in his Letter of Intent to the International Monetary Fund.
    Mr. Sheldonasked the Chancellor of the Exchequer what estimate he has now made of the level of domestic credit expansion in the current financial year.
    Mr. Frank Allaunasked the Chancellor of the Exchequer what amendment he has made of his earlier forecast of domestic credit expansion this year.
    Mr. Roy Jenkins: I expect the expansion of domestic credit during the financial year to be well inside the £400 million ceiling mentioned in the Letter of Intent.
    Mr. Bruce-Gardyne: In that case is it not time that the Chancellor should remove the renewal of the import deposits scheme which he was not expecting to renew when he wrote the Letter of Intent?
    Mr. Jenkins: No, I do not think so. The £400 million was a ceiling. I have always told the House that I thought it right to do at least as much as we told the I.M.F. we would do, perhaps more. While we are somewhat below the ceiling, the balance of payments out-turn looks like being a great deal more satisfactory than anyone anticipated.
    Mr. Sheldon: Since events of the last few months seem to show that the relationship between domestic credit expansion and inflation is nothing like as certain as that which the I.M.F. predicted, is it not clear that the original Treasury view had something to commend it?
    Mr. Jenkins: I am sure that the original Treasury view had a great deal to commend it.
    Mr. Frank Allaun: In view of the country's greatly improved financial position, will the Chancellor now give priority to ending the credit squeeze in the house-building industry, which is crippling the small and medium-sized

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    builder, and help to halt the critical decline, the highly serious decline, in the house-building industry in this way?
    Mr. Speaker: Order. The hon. Member should not anticipate his own later Question.
    Mr. Jenkins: On the first part of the question, the part which I understood to be in order, it is not the case that because a policy has worked effectively it is right to abandon it. On the latter point, I will bear in mind, as I bear in mind other considerations, the particular problem mentioned by my hon. Friend.
    Mr. Peyton: Before the right hon. Gentleman allows the glow of self-satisfaction to overcome him, will he reflect that although there has been a very welcome improvement in the balance of payments—and we are, of course, all delighted about that—[HON. MEMBERS: "Oh!"]—nevertheless he and the Treasury have to answer for very high figures of unemployment, very steeply rising prices and grotesque taxes?
    Mr. Jenkins: I think the hon. Member is endeavouring to take the question even wider than did my hon. Friend the Member for Salford, East (Mr. Frank Allaun).

    Monetary Restrictions
    Mr. Biffenasked the Chancellor of the Exchequer what is the latest assessment he has made of corporate liquidity; and what proposals he now has to ease current monetary restrictions.
    Mr. Roy Jenkins: On the whole, liquidity is significantly lower than in earlier years. I am keeping this and other aspects of the monetary situation under close review but I have no proposals to make at present.
    Mr. Biffen: Is the right hon. Gentleman aware that liquidity is not only considerably lower, to quote his own words, but for many sectors of business and commerce a matter of the most acute concern? Can he not take this afternoon as an opportunity, for example, to announce relaxation in hire-purchase restrictions?
    Mr. Jenkins: No, Sir.

    Companies (Gross Trading Profits)
    Mr. Biffenasked the Chancellor of the Exchequer what is the level of gross
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    trading profits of companies expressed as a percentage of capital employed for the period so far available for 1969–70; and how this corresponds with the corresponding period for the preceding year.
    Mr. Diamond: In terms of the net capital stock of physical assets at current replacement cost plus the book value of stocks and work in progress held by the company sector at the end of the preceding calendar year, the figures are 12½ per cent. for the first half of 1969–70 and 12¾ per cent. for the corresponding period of the preceding financial year.
    Mr. Biffen: Is the right hon. Gentleman aware that those two figures show that industry for some time now has been operating on dangerously low levels of profitability which cannot but affect future levels of investment? Will he communicate to his right hon. Friend in the Department of Employment and Productivity that she should use certain discretion and economic judgment in dealing with price increases?
    Mr. Diamond: I would not necessarily accept the first part of what the hon. Member has said, but I will be only too glad to convey to any of my hon. Friends any message from any hon. Member.
    Mr. John Hall: Does the right hon. Gentleman agree that some major industries are operating a return on capital which is less than the amount they have to pay for new money and this is rather disastrous? Will he reconsider his answer to my hon. Friend?
    Mr. Diamond: I have already indicated the average level of the return on capital employed in the definition I have given. This, of course, is a very crude method of attempting to give the answer, but it is the best information one has.
    Mr. Patrick Jenkin: Is not the failure of the Government's intentions to get higher investment particularly in manufacturing industry attributable to the difficulties the Chief Secretary has mentioned this afternoon rather than the millions of pounds they have been pumping into the industrial investment scheme?
    Mr. Diamond: There is no such failure.
    Mr. Barnett: Do not the figures perhaps give some indication of the level of management ability in this country?
    Mr. Diamond: I take account of what my hon. Friend has said.

    Value-Added Tax
    Mr. Kenneth Bakerasked the Chancellor of the Exchequer whether he will now make a study of the effects of introducing a value-added tax in the United Kingdom in view of the pending negotiations with the Common Market.
    Mr. Diamond: I have nothing to add to what I told the hon. Gentleman on 25th November.—[Vol. 792, c. 45.]
    Mr. Baker: Does the Chief Secretary recall that his colleague the Chancellor last year made certain speeches in favour of the Common Market and on different days certain speeches attacking a value-added tax? These views are inconsistent. and if the Chancellor is to be consistent in 1970 is he to come out against the Common Market or in favour of a value-added tax?
    Mr. Diamond: All Treasury Ministers are wholly consistent. There is no inconsistency in what my right hon. Friend said and no inconsistency in the supplementary answer I now give, which is to refer the hon. Member to the very full statement made on this point by my right hon. Friends the Prime Minister and the Foreign Secretary.
    Mr. Gardner: Does my right hon. Friend accept that whatever the other effects of a value-added tax may be, it is likely to lead to very substantial increases in prices to the consumer?
    Mr. Diamond: I am bound to give my hon. Friend a serious answer and to draw his attention to the fact that questions relating to the effect of a tax depend on the rate and coverage of the tax.

    Taxation Revenue
    Mr. Edward M. Taylorasked the Chancellor of the Exchequer what estimate he has made of the revenue from taxation in the calendar year 1969; and what was the comparable figure in 1964.
    Mr. Diamond: The revenue from taxation in the calendar year 1964 was £7,110
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    million. The comparable figure for 1969 at constant prices is estimated at £10,590 million; and at current prices at £12,551 million. If account is also taken of the rise in average earnings the comparison shows an increase of 28·7 per cent. over the five years, or 5·2 per cent. per annum compound.
    Mr. Taylor: Is the Chief Secretary aware that the increase in tax rates alone has resulted in the average family in Britain having to pay about £3 10s. a week extra in tax? When do the Government hope to redeem their promise not to impose any general increase in taxation?
    Mr. Diamond: I am aware that the general economic policy followed by my right hon. Friend has resulted in an increase in the standard of living of the very people to whom the hon. Gentleman referred.
    Mr. Woodburn: Do the Government impose taxes to punish people, or to provide services?
    Mr. Diamond: The Government have to collect taxes partly as a method of demand management and partly, as my right hon. Friend says, to provide the services which on all sides we are continually asked to provide and increase.
    Mr. Iain Macleod: Will the right hon. Gentleman confirm that, leaving aside questions of price changes, and so on, the increase in tax rates between 1964 and 1969 is more than £3,000 million?
    Mr. Diamond: I want to be as helpful as I can. I did not follow the right hon. Gentleman's question. He specifically referred to tax rates alone—rates, as opposed to the amounts on which the rates are imposed?
    Mr. Iain Macleod: Yes.
    Mr. Diamond: In that case, I will have to ask the right hon. Gentleman to be good enough to allow me to obtain the information and give it to him.
    Mr. Rankin: Is my right hon. Friend saving up to give us a little reduction in due course?
    Sir W. Bromley-Davenport: How do these figures, showing this vast increase in taxation, compare with the Socialist Party's promise at the last election that

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    its whole programme could be carried out without any increase in taxation? Laugh that one off!
    Mr. Diamond: The short answer to the hon. and gallant Gentleman is that no such statement was made at the last General Election—certainly not by myself, nor by any of my colleagues that I am aware of.

    Rhodesia
    Mr. Edward M. Taylorasked the Chancellor of the Exchequer what estimate he has made of the cost to Great Britain of maintaining sanctions against Rhodesia in 1969 and in 1970.
    Mr. Taverne: The cost to the Exchequer was a little under £4 million in 1969, and, if the Rhodesian situation remains unchanged, is expected to continue at about this level in 1970. The cost to the United Kingdom balance of payments cannot be precisely estimated. In 1969 it was probably slightly less than the estimated cost of some £40 million in each of the preceding three years, and a further fall in the cost is expected in 1970.
    Mr. Taylor: Is the Minister aware that after four years of sanctions and blockading Beira, petrol in Salisbury is 1s. a gallon cheaper than it is in London and that the shops are full of goods from countries all over the world, including Eastern European countries? Precisely what is the purpose of sanctions now? How long must this nonsense continue?
    Mr. Taverne: If the hon. Gentleman is suggesting, as he clearly seems to be, that sanctions should be discontinued, first he is flouting the United Nations resolution and, secondly, we could not disregard possible other economic effects which would follow if we discontinued the policy.
    Mr. Ronald Atkins: Does my hon. and learned Friend agree that the vast majority of the inhabitants of Rhodesia cannot afford petrol or need it?
    Mr. Biggs-Davison: In view of the remarkable growth of the Rhodesian economy, which the Chancellor might well envy, and the lowering of both surtax and income tax in the last Rhodesian budget, may we be told when the sanctions will begin to bite?
    Mr. Taverne: The hon. Gentleman would do well not to take at face value everything that comes out of Rhodesia by way of official statements.

    Low Earnings (Income Tax Allowances)
    Sir B. Rhys Williamsasked the Chancellor of the Exchequer what study he has given to the use of the income tax system to make positive allowances to people living on low earnings; and if he will make a statement.
    Mr. Diamond: Schemes of this kind are kept under review by the Departments concerned.
    Sir B. Rhys Williams: Is there not a need for an efficient system to provide a minimum income guarantee? Does the right hon. Gentleman agree that the income tax system could readily be adapted to provide this? Will he institute a serious departmental inquiry into the matter and publish its findings?
    Mr. Diamond: Of course we want an efficient system, and schemes of this kind are kept under review. I will consider, if the hon. Baronet thinks it would be helpful, whether some kind of report could be made.

    Negative Income Tax Allowances (Abolition)
    Sir B. RhysWilliams asked the Chancellor of the Exchequer what estimate he has made of the savings to be made by employers in the administration of Pay-As-You-Earn through the abolition of negative income-tax allowances.
    Mr. Diamond: Information on which to base an estimate is not available; it would depend, among other things, on what alternative arrangements were made to replace tax allowances.
    Sir B. Rhys Williams: Does the right hon. Gentleman agree with my estimate that the cost of running the Pay-As-You-Earn system to employers on behalf of the Inland Revenue is currently between £30 million and £50 million a year?
    Mr. Diamond: No, I cannot agree. I have heard figures quoted. One figure I have heard quoted—I think by the hon. Gentleman himself—was between £25 million and £50 million. It seems to have risen since the last occasion.

    Manufacturing Industry (Investment)
    Mr. Sheldonasked the Chancellor of the Exchequer what measures he now proposes to stimulate investment in plant and machinery.
    Mr. Ridsdaleasked the Chancellor of the Exchequer what steps he is now taking to promote investment in manufacturing and the construction industries.
    Mr. Roy Jenkins: Investment in manufacturing industry has risen steadily since devaluation, and is expected to increase by about 10 per cent. between 1969–1970. I am keeping a careful watch on the indicators for the future in all sectors. On the whole the recent evidence has been encouraging.
    Mr. Sheldon: As my right hon. Friend is, quite rightly, turning his attention towards the improvement of manufacturing investment, will he say what consideration he has given to further shortening the period of repayment of the investment grants?
    Mr. Jenkins: I have considered this with all other matters, though, as my hon. Friend will be aware, there has been no element in public expenditure which has increased more rapidly recently and which has gone more above estimate than investment grants, for which a Supplementary Estimates has already been laid, and for which another spring one will have to be laid.
    Mr. Ridsdale: Is it not a fact that, although our investment has increased by 10 per cent. recently, it is still only one-fifth above what it was 10 years ago and compares very badly with other similar industrialised countries?
    Mr. Jenkins: I have always made it clear that I would like to see a higher rate of fixed investment in manufacturing industry. I do not believe that we could have achieved this in one go in 1969. I hope that we can achieve a steady rate of progress. As to comparison with the early 1960s, there was one good year which stood out, but it was one good year amongst a number of bad years.
    Mr. Iain Macleod: The right hon. Gentleman will be aware that the White Paper Cmnd. 4234, which we are to discuss tomorrow, says that the Government are making a cost-benefit analysis
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    of the value of investment grants. Will the result of that study be published in due course?
    Mr. Jenkins: That is primarily but not exclusively a matter for my right bon. Friend the Minister of Technology. The study is proceeding. I will certainly consider with my right hon. Friend whether it would be suitable for publication when complete.

    Immigration (Economic Effects)
    Mr. John Hallasked the Chancellor of the Exchequer if he will now publish the Report of the National Institute of Economic and Social Research on the Economic Effects of Immigration.
    Mr. Taverne: Publication of the report is the responsibility of the National Institute. I am informed that it has been with the printers for some weeks and will be published as soon as possible.
    Mr. Hall: Is the Minister aware that it is more than two years since the National Institute was first asked to undertake the survey and that reports have been published from time to time over that period? Is it not time that this report was published, in view of the great importance of this subject?
    Mr. Taverne: I wholly agree that the report is of very great importance. It was therefore obviously desirable that it should be extremely thorough and wide-ranging and should make full use of the information available from the 1966 sample census.

    Inland Revenue (Estimates Committee's Report)
    Mr. William Hamiltonasked the Chancellor of the Exchequer when he expects to reply to the Estimates Committee's Report on the Inland Revenue.
    Mr. Roy Jenkins: I have not yet completed my consideration of the Estimates Committee's Report, but I shall present a White Paper as soon as possible.
    Mr. Hamilton: Can my right hon. Friend say whether the reply of the Treasury will be available before the Budget, so that we might have a debate on the report before the Budget? But meanwhile will he in any case give an assurance that he will not be inhibited by the terms of the report from initiating

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    such tax changes as he thinks necessary in the presentation of his Budget?
    Mr. Jenkins: I certainly hope to be able to present the White Paper as soon as possible, and I hope that that might be before the Budget. In any tax changes which I might wish to propose, I am bound to take account of the administrative consequences. I am a little bewildered that my hon. Friend, having presided over the Committee, appears for the moment to be asking me to take no notice of its recommendations.
    Sir G. Nabarro: Will not the Chancellor also take into account the fact that since the report was published the militant behaviour of Inland Revenue staff demonstrates their fear that any action he takes in the Budget in regard to taxation will cause additional complications in the Inland Revenue and additional tardiness in dealing with thousands of taxpayers' individual assessments?
    Mr. Jenkins: I take all these matters into account, even without the hon. Gentleman's assistance.
    Mr. Barnett: Have not preliminary investigations indicated that the Estimates Committee was somewhat naïve in its simple acceptance of the Inland Revenue's staff federation's submissions?
    Mr. Jenkins: I would never wish to accuse the Estimates Committee while under my hon. Friend of being naïve.

    Inland Revenue Centre, Kilbride
    Mr. Dalyellasked the Chancellor of the Exchequer what measures he has taken to improve the speed of service to taxpayers given by Centre 1, East Kilbride.
    Mr. Gordon Campbellasked the Chancellor of the Exchequer what action he is taking to eliminate the delays now being experienced by taxpayers in Scotland as a result of the reorganisation involving Centre 1 at East Kilbride.
    Mr. Taverne: Internal procedures at the centre have been under constant review and a number of improvements have been made; the staff has also been increased with the growth in the number of taxpayers whose affairs are handled there.
    Mr. Dalyell: Whilst M.P.s who have raised individual cases have had total co-operation—and we thank the staff for that—does my hon. and learned Friend see an end to these teething troubles? What has been learnt from them?
    Mr. Taverne: Inevitably we have learnt something about a change-over which must necessarily be somewhat complex. The centre will be fully set up by May of this year, and the teething troubles should then be at an end.
    Mr. Gordon Campbell: While the computer at Centre 1, which I was glad to visit recently, will in due course be helpful to the Inland Revenue, is the Minister aware that during the period of transition serious and exasperating delays are occurring in the cases of many Scottish taxpayers?
    Mr. Taverne: I am aware of that, and greatly regret them.
    Mr. Eadie: Is my hon. and learned Friend aware that there has been rapidly building up in Scotland a great deal of disenchantment with the East Kilbride computer? To restore complete confidence, will he consider conducting an inter-departmental inquiry into the whole matter, and let the taxpayers of Scotland see that something is being done to deal with their complaints, many of which I have received?
    Mr. Taverne: A great deal has been done, and some of this will appear in later Answers. It is inevitable that there should be difficulties when it takes two weeks to convert from the manual records to the computer and when a manual and A.D.P. system must be operated side by side.
    Mrs. Ewing: Will the Minister give us more precise information so that we can pass it on to our disgruntled constituents? Can he say what is the backlog, the waiting period, and when he hopes that it will be finally over?
    Mr. Taverne: That is a separate question which I will answer separately if I am asked it. I can assure the hon. Lady that when the centre is finally in operation in May the difficulties should disappear to a very large extent, and, one hopes, almost entirely.

    Taxation (Centralisation Programme)
    Mr. Dalyellasked the Chancellor of the Exchequer whether he is satisfied that his policy of centralisation of taxation affairs does sufficient to retain personal methods of contact between his officials and taxpayers; and if he will make a statement.
    Mr. Taverne: My right hon. Friend is aware that there have been delays in particular cases at Centre 1, East Kilbride, in the period while work is being transferred from local offices, but we are confident that the centralisation programme when completed will give taxpayers a quicker and more efficient service than is possible at present.
    Mr. Dalyell: Since personal interview is often not only more convenient for our constituents but saves a great deal of paperwork for the Inland Revenue, and therefore valuable time, is not there a case for making clear in each printed leaflet where an individual can go for personal advice, rather than dealing with the computer centre?
    Mr. Taverne: I entirely take my hon. Friend's point. Such a leaflet has been issued.
    Mr. Edward M. Taylor: Will the Minister at least give us an assurance that he will not add to the burdens of the centre when the overworked staff are quite unable to cope with the burden they already have? Will he reconsider the proposition put by the hon. Member for Midlothian (Mr. Eadie) that there is every justification for a full-scale inquiry into the operation of the centre?
    Mr. Taverne: I do not think that this is a case for an inquiry. We have looked fully into these difficulties, and I think that they will decrease as the number of staff at the centre is increased.

    Companies (Private Medical Insurance Payments)
    Mr. Barnettasked the Chancellor of the Exchequer on what grounds payments by companies for private medical insurance on behalf of employees is allowable as a deduction for tax purposes; and if he will make a statement.
    Mr. Taverne: Because the expenditure is normally incurred wholly and exclusively for the purposes of the employer's business.
    Mr. Barnett: Are not there many items of expenditure, some "wholly and exclusively" incurred for business purposes, which are not so allowed? One could, for example, allow holidays for all members of the staff. Will my hon. and learned Friend at least reconsider the whole question of what is taxable and what is not in the way of benefits in kind?
    Mr. Taverne: In general one wants to stick to the position whereby it is for a company to decide how it is to make its profits. Expenditure incurred in making the profits is something which should be allowed.
    Sir G. Nabarro: If a company is allowed the charge as a deduction, why should not a self-employed individual—as the Chancellor as a member of the Society of Authors before he took office was self-employed—charge his B.U.P.A. subscription against his personal taxation?
    Mr. Taverne: The hon. Gentleman will realise that different tax rules apply to different categories.
    Sir G. Nabarro: On a point of order, Mr. Speaker. In view of that wholly unsatisfactory reply, I beg leave to give notice that I will seek to raise the matter on the Adjournment.

    Motor Industry (Home Sales and Exports)
    Mr. Christopher Priceasked the Chancellor of the Exchequer what studies his Department has made about the relation between home sales and export performance in the motor manufacturing industry; and if he will publish such studies.
    Mr. Roy Jenkins: A confidential study was carried out by Government officials and representatives of the industry in 1966–67. The recent Report of the Motor Manufacturing E.D.C., which also considers this question, will be published shortly.
    Mr. Price: Is my right hon. Friend aware that many of us on this side of

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    the House do not accept the proposition that one helps exports by squeezing the home market? Is he aware that much of the motor manufacturing industry in the West Midlands still works below capacity and could export even more if some stimulation were now given to a home market that has greatly declined?
    Mr. Jenkins: I am aware of the whole balance of considerations here. As my hon. Friend will be aware, I have just as close a constituency interest in the matter as he does, if not closer. I very much doubt whether we should have achieved the substantial increase in motor exports achieved in 1968 and 1969 had we allowed the home market to run absolutely free during that time.
    Mr. Edelman: Will my right hon. Friend bear in mind that the decline in domestic output is leading to a decline in the earnings of workers, and that that is contributing to industrial unrest in the motor industry? Will he consult his right hon. Friend the Secretary of State for Employment and Productivity before coming to a conclusion about whether he should ease restrictions on the output of motor cars for the domestic market?
    Mr. Jenkins: I will bear all these factors in mind.

    National Superannuation (Employees' Contributions)
    Mr. Boyd-Carpenterasked the Chancellor of the Exchequer whether he will introduce legislation to permit employees' contributions to the Government's scheme of National Superannuation to be allowed in full against assessments for income tax.
    Mr. Taverne: No, Sir.
    Mr. Boyd-Carpenter: Does not the hon. and learned Gentleman appreciate that the administrative problems of doing this would be resolved by the proposed system of collecting National Insurance contributions through the Inland Revenue? Is it not very unfair that people should pay tax on earnings they do not receive?
    Mr. Taverne: The answer to the first part of the right hon. Gentleman's question is "No, Sir". There would be P.A.Y.E. difficulties not dissimilar to those which existed in 1959 when he him-
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    self disallowed the graduated contribution for tax purposes. Second, any such concession would have to be paid for, and would be paid for at the expense of the lower-paid for the benefit of the higher-paid. In any event, there is the Exchequer contribution, which is a broad equivalent.

    Occupational Pension Schemes
    Mr. Boyd-Carpenterasked the Chancellor of the Exchequer whether he will now make a statement about the charges which he proposes to make in the taxation treatment of occupational pension schemes consequential upon the introduction of National Superannuation.
    Mr. Taverne: My right hon. Friend will make a statement as soon as he is in a position to do so.
    Mr. Boyd-Carpenter: Can the hon. and learned Gentleman at least tell us whether it is the Government's policy to make the taxation position of these schemes better or worse?
    Mr. Taverne: The right hon. Gentleman should await the statement.

    Investment
    Mr. J. H. Osbornasked the Chancellor of the Exchequer what was the level of British investment overseas and investment by overseas companies and investors in Great Britain, respectively, in 1969.
    Mr. Diamond: Estimates for 1969 of British investment overseas and investment in the United Kingdom from overseas are not yet available. Provisional estimates for the first three quarters of the year were published in Economic Trends for December, 1969.
    Mr. Osborn: What steps will the Chancellor take to reverse the trend of overseas liabilities, particularly of the private sector, which are increasing faster than overseas assets, as revealed in the quarterly bulletin of the Bank of England?
    Mr. Diamond: I do not know whether the hon. Gentleman is fully aware of what has been happening with overseas investment. It has been considerably higher not only in money terms but in real terms over the past four years than over the preceding four years.

    Balance of Payments
    Mr. J. H. Osbornasked the Chancellor of the Exchequer what has been the change in the balance of payments figures in 1969.
    Mr. Roy Jenkins: In 1969 there is likely to have been an improvement in the current account of the order of £600 million on the previous year. Full figures for the year, including the capital account, will be published in March.
    Mr. Osborn: Is the Chancellor aware that, contrary to the Prime Minister's indication at Swansea, I welcome this trend and the strong platform which the Prime Minister has for his visit to the United States? What steps will the Chancellor take to reduce taxation on invisibles, which have accounted for this trend? What will be the effect of wage inflation?
    Mr. Jenkins: I was not aware that my right hon. Friend mentioned the hon. Gentleman at Swansea but perhaps I did not read the speech fully. As for taxation proposals on invisibles or anything else, the hon. Gentleman will not be surprised to be told that at this time of the year I have no statement to make on that matter. As far as the question of what he calls "wage inflation" is concerned, this is a matter which we must watch very carefully indeed.

    50p Coin
    Mr. Dudley Smithasked the Chancellor of the Exchequer how many representations he has received from industrial organisations, professional organisations and individual traders about the inconvenience of the new 50p coin; and if he will make a statement.
    Mr. Taverne: We have received a total of 14 complaints from traders, most of them from retailers and written in the first four or five weeks after the coin was introduced.
    No complaints have come to us from professional or industrial organisations.
    Mr. Smith: Is the hon. Gentleman aware that, far from becoming accustomed to the new coin, most people still heartily detest it? Is there not a good case for putting public choice first and at least improving the size of the
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    coin or, better still, reintroducing a paper note?
    Mr. Taverne: Everyone who complained about the coin did so on different grounds. My impression is that the public are growing used to it and that it is much more acceptable than it was at first.

    Building Industry (North-East)
    Mr. Boydenasked the Chancellor of the Exchequer if, in view of the need for a sustained and enlarged output of local authority and private housing in the north-east he will take steps to authorise the banks to increase credit facilities to their builder customers in the northern planning region.
    Mr. Diamond: The banks have been asked, in carrying out the authorities' requests on lending, to have regard to the Government's policies on regional development.
    Mr. Boyden: Is my right hon. Friend aware that the placing of local authority housing contracts in the first nine months of last year was only half what it was in 1968 and that this is having a serious effect on housing policy generally and also on small builders? Something needs to be done to help small builders, otherwise the tap cannot be turned on again quickly.
    Mr. Diamond: I am aware of the situation but it does not necessarily follow that credit was the main cause or one of the main causes of what my hon. Friend has described.
    Mr. Boydenasked the Chancellor of the Exchequer if, in view of the unemployment in the building industry in the north-east, he will take steps to allow the regional employment premium to operate in the building industry in the northern planning region.
    Mr. Diamond: I recognise the seriousness of the problem, but I consider that the cost of my hon. Friend's proposal would be out of all proportion to the benefit in terms of reduced unemployment in the region.
    Mr. Boyden: This is another one of the reasons which relate to Question No. 31. Would my right hon. Friend at least consider, and ask the Chancellor to consider when making Budget proposals,

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    some easement on the building industry in the northern region so that it can achieve its task in that area?
    Mr. Diamond: I will convey to my right hon. Friend what my hon. Friend said.

  HOUSE OF COMMONS

    David Lloyd George (Statue)
    Mr. C. Pannellasked the Prime Minister whether he will give consideration to the commissioning of another statue in the Members' Lobby of the late David Lloyd George which would symbolise historically his proper comparison with the late Winston Churchill.
    The Prime Minister (Mr. Harold Wilson): I would prefer to wait until we have some clearer indication of the range and depth of feeling on this matter both in the House and elsewhere before reaching a conclusion.
    Mr. Pannell: Is my right hon. Friend aware that I did not put down this Question until several hon. Members on both sides of the House had spoken to me on the subject, so that he need not misunderstand the feeling? Is my right hon. Friend aware—in fact, I know that he is —that the last speech made in this House by Sir Winston Churchill was on the proposal to put up a statue to Lloyd George? Sir Winston said—
    Mr. Speaker: Order. It is not in order to quote on a supplementary question.
    Mr. Pannell: I am aware of that, Mr. Speaker, but as I am only referring to a sentence I hope that you will be indulgent.
    Mr. Speaker: Order. Even if the quotation is small, it is out of order.
    Mr. Pannell:
    "As a man of action, resource and creative energy, he stood, when at his zenith, without rival".
    Those were the words of Sir Winston Churchill. Does my right hon. Friend accept that what has emerged now is a caricature? Indeed, the scene is like that of a man and boy in the Lobby. Will my right hon. Friend take the view of Lloyd George's—
    Mr. Speaker: Order. Supplementary questions must be reasonably brief.
    Mr. Pannell: I am aware of that, Mr. Speaker, but this is a curious Question. I ask for the indulgence that you have extended to hon. Members less experienced than I. Will my right hon. Friend bear in mind that there is considerable feeling here that the thing represents a caricature and historically is not a complete symbol of the respective places of these two great men in history?
    The Prime Minister: All those right hon. and hon. Members present will recall that speech made by Sir Winston Churchill to which my right hon. Friend referred tangentially. I have heard a number of different views expressed about the feelings in the House, and I think that that is the general experience of right hon. and hon. Members. I think that a little more time is needed. Right hon. and hon. Members are not usually over-slow in becoming articulate on any matter on which they feel strongly regarding the House itself and its surroundings.
    When there has been an opportunity for right hon. and hon. Members to consider this matter and discuss it, no doubt my right hon. Friend the Leader of the House will be prepared to find time for a short debate so that the views of right hon. and hon. Members can be expressed.
    Mr. Thorpe: Is the Prime Minister aware that the House will be grateful to him for saying that he will give sympathetic consideration to the views which will be expressed on this matter? Is he further aware that certainly every surviving member of the Lloyd George family, particularly his one surviving child, believes that this statue is neither worthy of him nor worthy of the House of Commons? There would be widespread support for a statue which was a worthy companion to the very fine statue of Sir Winston Churchill, so that we could suitably commemorate both the war leaders of this century.
    The Prime Minister: The right hon. Gentleman has put an individual point of view, and others will be expressed on the matter when it is considered further. My impression was that there was concern in the Lloyd George family about an original proposal to move the Lloyd George statue as part of the rearrangement, and when that did not occur I

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    thought there was rather more acceptance of the position. If the right hon. Gentleman has more up-to-date information, no doubt he will express that at the appropriate time. Others may express different views.
    Mr. Shinwell: Is my right hon. Friend aware that no one regards the Lloyd George statue as satisfactory and that there is no need for a debate at all? Surely he could collect the voices and decide whether it is worth proceeding with the suggestion? At the same time, would he consider removing some of those abominable marble statues in the Members Lobby that should never have been placed there?
    The Prime Minister: The House knows how much my right hon. Friend has contributed in this matter as Chairman of the Committee which was responsible for producing—and I do not think anyone has contested this—a remarkable and memorable statue of Sir Winston Churchill. That is not at issue today. It is right that whatever views my right hon. Friend has, other hon. Members may have different views. We must leave time for these views to become articulate. Whether we collect voices, however that may be done, or have a debate must be a matter for the House and the strength of feeling of hon. Members.
    Sir R. Cary: May I ask the Prime Minister to resist the suggestion contained in the Question? I remember the late David Lloyd George in this House in the 1930's. The statue in the Lobby is an adequate representation of his splendid being. With regard to Sir Winston Churchill, the statue is familiar to all hon. Members in the aggressive significance of the head and shoulders. I invite the Prime Minister to leave well alone.
    The Prime Minister: That is another view, and in view of the hon. Member's seniority in this House I think we must treat it with deep respect. All hon. Members should have the opportunity to express a view if there is strong feeling about it. Let us consider whether action is needed. In any case there ought to be no consideration of action before the House has had a chance to express itself as a whole.

    EUROPEAN ECONOMIC COMMUNITY
    Mr. Martenasked the Prime Minister whether he will now invite the Dutch and French Prime Ministers to visit him to discuss matters of mutual interest.
    Mr. Winnickasked the Prime Minister what further talks he is having with the heads of the European Economic Community Governments regarding Great Britain's application to join the Community.
    Sir G. de Freitasasked the Prime Minister when he now expects to discuss European affairs with the Prime Minister of France.
    The Prime Minister: It was announced from 10 Downing Street on 2nd January that the Federal German Chancellor would he visiting this country on 3rd and 4th March.
    There are no firm plans at present for meetings with other Heads of Government of the Six.
    Mr. Marten: In the meantime and in view of the remarks of the Dutch and the French Foreign Ministers on the question of supranationality, can the Prime Minister reaffirm to Parliament what he said in this House on 6th February, that we do not support any federal or supranational structure in our relations with Europe? Would he clarify this point once and for all?
    The Prime Minister: I do not think that it needs clarification. On the question of federation, which is not contained within the Treaty of Rome and about which there is no obligation so far as the Treaty is concerned, I had something to say about this in a broadcast last week, a copy of which is in the Library. I hope that I was quite clear about that and reaffirmed what I have said in the past.
    Mr. Winnick: Is my right hon. Friend confident that negotiations will actually start by July on our application to join the Community? Can he now give any indication to the House when the estimate of costs of joining, and perhaps not joining, will be laid before the House?
    The Prime Minister: I have no reason at all to doubt the decision of the Common Market Ministers at their meeting in Brussels, following the meeting at the Hague, which laid down the timetable; namely, the first half of this year. I have heard nothing to suggest that their thinking is in any way at variance there. With regard to the White Paper, I hope that this will be available to the House pretty early in February. As I have explained to the House, there has been one problem on top of all the others, and that is that certain decisions were taken in Brussels, and we have had to take account of those decisions in making calculations. I can also tell my hon. Friend, who referred to the calculations on the cost of not joining, that they will not be in the White Paper. That is even more difficult to quantify.
    Sir G. de Freitas: When there are discussions with the French Prime Minister, will my right hon. Friend encourage more Anglo-French technological collaboration and do so expressly as a foundation for wider industrial collaboration between the Six and the four applicant countries?
    The Prime Minister: My right hon. Friend will be aware that the French Foreign Minister is visiting London this week and that my right hon. Friend the Foreign and Commonwealth Secretary and I will be having talks with him. We have made it clear to the French that we are only too anxious, as I know they are, to strengthen and improve Anglo-French relations, which have been at a pretty low ebb for a period of years, following particularly the two vetoes in 1963 and 1967. We are certainly anxious, as I made known to General de Gaulle on all occasions that I met him, to cooperate in technological projects, particularly those between our business firms, from which I think both sides would gain a great deal of mutual advantage.
    Mrs. Ewing: Would the Prime Minister be very frank in his discussion with the Federal Chancellor and tell him of the opposition of the Scottish Nationalist Party—[HON. MEMBERS: "Oh."]—which is the largest party in Scotland, to the application in its present form in which Scotland will have no voice, no votes, no seat at the table and no one specifically bargaining for Scotland?
    The Prime Minister: I think that the French Foreign Minister will be as well aware of the history of the old alliance as the hon. Lady, and will know that it finally passed out in the sixteenth centtury. He will also, unlike the hon. Lady, be aware of the advantages to Scotland, as well as to the rest of the United Kingdom—
    Mrs. Ewing: What are they?
    The Prime Minister: —and all of Europe, including France, of the trade and employment facilities which will result from a larger grouping in Europe.
    Mr. Shinwell: Is my right hon. Friend aware that ever since the E.E.C. was initiated, the members have been doing nothing more than squabbling among themselves, on agriculture and financial policy and the like? Have we not got enough trouble on our plate without associating with these quarrelsome people?
    The Prime Minister: I am sure that right hon and hon. Members in all parts of the House will have a full contribution to make in any further squabbling that may be necessary. That is the essence of parliamentary institutions and intergovernmental organisations. If the squabbles lead to the right answer, there is a lot to be said for them. It is far better than any dictatorship methods. My right hon. Friend will also be aware that during this period in which there has been very intense argument within E.E.C., which is still continuing, there has also been a very big increase in production, internal trade within E.E.C. and the standard of living within the Community. We have to learn the lessons from that.
    Sir D. Walker-Smith: In his original reply to my hon. Friend the Prime Minister referred to his broadcast, a copy of which was in the Library of the House. Is he aware that Foreign Office Ministers are refusing to place in the Library of the House transcripts of the speeches made by them in foreign capitals, thereby increasing the widely held suspicion that the Government are speaking with two voices on the matter of federation—one for home consumption and one for foreign consumption?
    The Prime Minister: I am sure that all of my right hon. Friends are very

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    happy, as I am, to place in the Library of the House any statements that have been made in public and on the record. It the right hon. and learned Gentleman has any such cases in mind where they have not been made available when they have been on the record and in public, would be happy to go into them myself. He would not, however, expect from this Government, any more than from the Government of which he was a member, that they should place in the Library or put on record things which are said confidentially in intergovernmental organisations, whatever accounts may have appeared in the Press, correct or incorrect, of such confidential statements.

    BALANCE OF PAYMENTS
    Mr. Arthur Davidsonasked the Prime Minister what recent consultations he has had with the National Economic Development Council with regard to improving exports; and if he will make a statement.
    The Prime Minister: The National Economic Development Council gave particular attention to the balance of payments in its review of the outcome of the recent consultations with industry at its meeting on 16th December. Discussions in the council are continuing.
    Mr. Davidson: In view of the continuing excellent export figures and the part that they have played in helping us to achieve in 1969 the highest balance of payments surplus for the past 12 years, which I am sure the whole House would wish to acknowledge, could my right hon. Friend say whether he discussed with the N.E.D.C. ways of easing restrictions on certain key industries to stimulate home sales?
    The Prime Minister: The N.E.D.C. shares the general gratification at the improvement in our balance of payments. What we have been concerned with at recent meetings, some of which I have chaired and some of which the Chancellor has chaired, has been to see what can be done to improve further on these exports, and that is why we have been going into this question industry by industry.
    Of course we have had in respect of a number of industries views about the
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    home market, and these have been considered by the Government. I cannot go beyond that. My own impression from these discussions is that industry is extremely confident not only of maintaining the present level of exports but of improving substantially on that level, particularly since export orders in the last two years, many of them in long lead items, take time to manufacture and have not yet shown in the trade returns.
    Mr. Peyton: Would the Prime Minister try to look a little beyond these ritualistic congratulations and say whether he thinks that high interest rates and a very sluggish, miserable growth are pretty poor foundations on which to build future success?
    The Prime Minister: The hon. Gentleman is looking to broad horizons. If he were to look a little wider than this country, he would find that interest rates are high all over the world and that this has been the determinant factor on our own interest rates. I will not speculate about the future of interest rates, but since the hon. Gentleman is concerned about gratification, perhaps he will recall that the Government of which he was a member, in their last year of office, achieved, after 13 years, a current balance of minus £381 million, on which no doubt he congratulated himself. Against that minus £381 million, the figure last year was about plus £350 million, on which no doubt he will congratulate us.
    Mr. Maudling: The Prime Minister was asked whether he was consulting "Neddy" about improving exports. We were glad to hear his answer. Has he consulted "Neddy" about rising prices and high unemployment?
    The Prime Minister: We rely on the right hon. Gentleman always to find for each new year the issues to compare with issues in the previous year about which he had been so pessimistic and has now been proved wrong. We have had many discussions with "Neddy" on incomes, prices, investment and unemployment, and it is only too well aware of the disastrous consequences when the right hon. Gentleman was in charge of its policy.
    Mr. Heath: In view of the discussions which the Prime Minister said he has had with "Neddy" in the light of the present balance of payments situation, will he

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    tell the House when the Government will turn to a policy of full employment?
    The Prime Minister: The right hon. Gentleman knows, as I have made clear many times, that during the period when we had to clear up the mess of the export situation which the Opposition left, we have had to hold down internal demand in order to get goods going for export. The answer to his question is that as progressively the restructuring of industry, which we did and he neglected, takes effect, we can have both full employment and a high surplus balance of payments. In 1962, after the Tories had been in office for 12 years, there was one of the highest unemployment figures on record, and in 1964 they left behind a deficit of over £800 million.

    BALANCE OF PAYMENTS
      BILL PRESENTED
        EXPORT GUARANTEES AND PAYMENTS BILL
        Mr. Roy Mason, supported by Mr. Anthony Wedgwood Benn, Mr. Dick Taverne, and Mrs. Gwyneth Dunwoody, presented a Bill to amend the Export Guarantees Act 1968, and to confer on the Board of Trade power to make grants for the purpose of reducing costs incurred or to be incurred, under export contracts or contracts related to export contracts by persons carrying on business or other activities abroad: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 79.]

EDUCATION (LOCAL AUTHORITY FEES) (SCOTLAND)
3.33 p.m.
Mr. Ian MacArthur: I beg to move,
That leave be given to bring in a Bill to restore the right to local authorities in Scotland to charge fees for education.
The need for my proposed Bill springs from the Education (Scotland) Act, 1969. which, in August this year, will extinguish the right of local authorities in Scotland to charge fees in certain of their schools. I should emphasise that it is local authority schools which are affected. There are 12 of these schools, representing 18 primary and secondary departments, with between 11,000 and 12,000 pupils. All these schools are in Edinburgh and Glasgow and, among many famous schools, they include the Glasgow High School and the Royal High School in Edinburgh.
The elected representatives of those two great cities wish to retain their right to charge fees. My Bill would restore that right to them. These local authority fee-paying schools have a unique rôle in the Scottish educational structure and, indeed, in that of the United Kingdom as a whole. They are not comparable with the local authority fee-paying schools which used to exist in England, because in these two cities they alone provide a middle sector of education.
In England, the direct grant schools are required to provide a number of places free. No such obligation rests on the grant-aided schools in Scotland. It is the local authority fee-paying schools in Edinburgh and Glasgow which provide this middle sector, partly by charging fees, which are small, and, to a lesser extent, by providing places free. The highest fees are charged in Glasgow, where they have amounted to a little over £40 a year—the price of about three packets of cigarettes a week.
But the Government's assault on these schools is not inspired only by a dislike of the fees which they charge even on this modest scale. Their main objection is that the schools are selective. At both the primary and secondary stages children are selected by educational merit. The result has been that these schools rightly

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enjoy a distinguished reputation for academic excellence, but, because the Government believe that selectivity in education is a sin, they propose to suppress the very qualities which have produced this excellence.
First, fee paying, even on this very modest scale, is to be abolished; and, secondly, it is clear that the local authorities will be forced to turn these schools into territorial comprehensive schools, a rôle for which they are totally unsuitable. Some of the finest schools in Scotland are to be destroyed. I know that my hon. Friends will join me in supporting the local authorities which have refused to bend meekly to the Government's will.
My proposed Bill defends two principles which are now under attack in Scotland and which will soon be assaulted in England, also. The first principle is the belief that freedom of choice in education must be preserved. These schools contribute to that freedom by making a middle sector of education available to children of merit. What the so-called egalitarians on the benches opposite are doing is removing choice, not from the rich who can afford to look elsewhere but from poorer parents who cannot afford the scale of fees charged in the grant-aided and independent schools. Theirs will be Hobson's choice if the Government have their way.
The second principle is the right which elected local authorities should have to shape the pattern of education in their own areas. The Government have a shabby record in this regard in Scotland. First, they pretended to consult the local authorities. When they found that Edinburgh and Glasgow would not bow to their will, the masquerade was changed. Instead, these two cities were faced with the reality of compulsion. The 1969 Act gave the Government statutory power to override and crush the wishes of these democratically elected local authorities.
Those two principles will be protected if my proposed Bill is successful. If it fails, the next Government, a Conservative Government, will restore to the Scottish local authorities the right to charge fees if they wish to do so. What is certain is that in one way or the other my hon. Friends and I are determined to save these fine schools and protect the
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great contribution which they have made to the variety and distinction of education in Scotland.
3.40 p.m.
Mr. Donald Dewar: It is only a few months since this House concluded an exhaustive and at times exhausting discussion of the principle of fee-paying in education authority schools in Scotland. I hope that the hon. Member for Perth and East Perthshire (Mr. MacArthur) will not think me ungracious if I say that nothing in his speech has tempted me to think that the House should reconsider the decision then taken.
We are being invited today to perpetuate what I believe to be a startling educational anomaly, to preserve a privileged enclave within the public sector, to allow a small group of schools to retain entry based upon selection which is rigorous but not necessarily efficient and to charge fees the only justification for which must be the buttressing of social status.
What I find frightening is the certainty with which hon. Members opposite assume that these schools have a unique claim to be preserved as they presently operate, the idea that in an absolute sense these schools are the best, the widespread feeling that their pupil is a superior product, which is the basis on which I fear that many people support the belief that there are two nations in the educational world of Scotland and that those who do not manage to gain entry to the selected few schools carry the stigma of failure.
I believe that these schools are, and must be by definition, divisive, not just because of the values and attitudes which, on occasion, they display, but because their method of selection is bound to favour those who come from an intellectually aware and educationally ambitious background. Although it is very fine to talk about a system of choice, in the circumstances we face it becomes merely an empty slogan. Many people looking at the barriers, which through no fault of their own remain in their path must look at it as a laughably inaccurate abstraction or at best a piece of naive optimism. Even if the social basis of these schools were broadened and they were turned into an efficient meritocracy, I would be opposed to the Bill.

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It is not possible to reconcile with comprehensive reorganisation the principle of selection on which these schools work. They set out to cream off the pupil, or at least the willing pupil. They give an opportunity for parents to opt out of the State sector, parents whose dedicated energies and enthusiasms could do much to raise standards. They destroy, almost by definition, the social and educational mix which should be the hallmark of a comprehensive school. We are being asked to encourage the survival of an elite within the State system, and all the honest enthusiasm—and I accept that it is honest—for established tradition does not disguise that fact.
Whatever may or may not be permissible in the private sector, it is quite wrong for the public purpose to support and supply privilege for the few. It seems to me that the principles of these schools stand against everything which our State system is striving to achieve.

Division No. 45.]

AYES

[3.45 p.m.

Allason, James (Hemel Hempstead)

Fry, Peter

Morgan-Giles, Rear-Adm.

Amery, Rt. Hn. Julian

Galbraith, Hn. T. G.

Munro-Lucas-Tooth, Sir Hugh

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

Glover, Sir Douglas

Nabarro, Sir Gerald

Baker, Kenneth (Acton)

Godber, Rt. Hn. J. B.

Neave, Airey

Baker, W. H. K. (Banff)

Goodhew, Victor

Nicholls, Sir Harmar

Batsford, Brian

Gower, Raymond

Page, Graham (Crosby)

Beamish, Col, Sir Tufton

Grant, Anthony

Page, John (Harrow, W.)

Bennett, Dr. Reginald (Gos. & Fhm)

Grant-Ferris, Sir Robert

Pearson, Sir Frank (Clitheroe)

Berry, Hn. Anthony

Gresham Cooke, R.

Peel, John

Biggs-Davison, John

Griffiths, Eldon (Bury St. Edmunds)

Peyton, John

Boardman, Tom (Leicester, S.W.)

Gurden, Harold

Prior, J. M. L.

Bossom, Sir Clive

Hamilton, Michael (Salisbury)

Pym, Francis

Boyd-Carpenter, Rt. Hn. John

Harvey, Sir Arthur Vere

Rhys Williams, Sir Brandon

Boyle, Rt. Hn. Sir Edward

Harvie Anderson, Miss

Ridley, Hn. Nicholas

Brewis, John

Heald, Rt. Hn. Sir Llonel

Ridsdale, Julian

Brinton, Sir Tatton

Hiley, Joseph

Royle, Anthony

Bromley-Davenport, Lt. Col. Sir Walter

Hill, J. E. B.

Russell, Sir Ronald

Bruce-Gardyne, J.

Hogg, Rt. Hn. Quintin

Scott-Hopkins, James

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

Holland, Philip

Sharpies, Richard

Bullus, Sir Eric

Hornby, Richard

Speed, Keith

Campbell, B. (Oldham, W.)

Hutchison, Michael Clark

Stoddart-Scott, Col. Sir M.

Campbell, Cordon (Moray & Nairn)

Jenkin, Patrick (Woodford)

Tapsell, Peter

Cary, Sir Robert

Jennings, J. C. (Burton)

Taylor, Sir Charles (Eastbourne)

Chichester-Clark, R.

Jopling, Michael

Temple, John M.

Clegg, Walter

Joseph, Rt. Hn. Sir Keith

Tilney, John

Cooke, Robert

Turton, Rt. Hn. R. H.

Corfield, F. V.

Kirk, Peter

Waddington, David

Costain, A. P.

Kitson, Timothy

Walker-Smith, Rt. Hn. Sir Derek

Craddock, Sir Beresford (Spelthorne)

Lane, David

Ward, Dame Irene

Currie, G. B. H.

Legge-Bourke, Sir Harry

Weatherill, Bernard

Dance, James

Longden, Gilbert

Wells, John (Maidstone)

Digby, Simon Wingfield

McAdden, Sir Stephen

Whitelaw, Rt. Hn. William

Dodds-Parker, Douglas

McMaster, Stanley

Wiggin, A. W.

Doughty, Charles

McNair-Wilson, Michael

Williams, Donald (Dudley)

Douglas-Home, Rt. Hn. Sir Alec

Maginnis, John E.

Wilson, Geoffrey (Truro)

Drayson, G. B.

Marten, Neil

Wolridge-Gordon, Patrick

Elliot, Capt. Walter (Carshalton)

Mawby, Ray

Wood, Rt. Hn. Richard

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

Maxwell-Hyslop, R. J.

Wright, Esmond

Emery, Peter

Mills, Peter (Torrington)

Wylie, N. R.

Errington, Sir Eric

Mills, Stratton (Belfast, N.)

Younger, Hn. George

Eyre, Reginald

Miscampbell, Norman

Alison, Michael (Barkston Ash)

Monro, Hector

TELLERS FOR THE AYES:

Farr, John

Montgomery, Fergus

Mr. MacArthur and

Fortescue, Tim

More, Jasper

Mr. Edward M. Taylor.

It is the duty of the House to look to the interests of the majority who have no opportunity to enjoy the advantages which it is now sought to save for a small group of children. I believe that the fee-paying principle and all it stands for bolsters and buttresses and does not destroy social divisions. I believe that it endangers and obstructs educational progress. For all these reasons I think that the Government were right to abolish fee-paying in the 1969 Act, and that it is right to oppose the Bill, not on a basis of pique or jealousy, but because it is necessary in the cause of Scottish education.
I hope that the hon. Member will not he granted by the House the leave which he now seeks.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—
The House divided: Ayes 127, Noes 205.

NOES

Abse, Leo

Gregory, Arnold

Molloy, William

Albu, Austen

Grey, Charles (Durham)

Morgan, Elystan (Cardiganshire)

Allaun, Frank (Salford, E.)

Griffiths, Eddie (Brightside)

Morris, Alfred (Wythenshawe)

Alldritt, Walter

Hamilton, James (Bothwell)

Morris, Charles R. (Openshaw)

Allen, Scholefield

Hamilton, William (Fife, W.)

Murray, Albert

Archer, Peter (R'wley Regis & Tipt'n)

Hamling, William

Neal, Harold

Armstrong, Ernest

Hannan, William

Newens, Stan

Ashley, Jack

Harper, Joseph

Ogden, Eric

Atkins, Ronald (Preston, N.)

Harrison, Walter (Wakefield)

O'Halloran, Michael

Atkinson, Norman (Tottenham)

Haseldine, Norman

O'Malley, Brian

Barnes, Michael

Hazell, Bert

Oram, Albert E.

Barnett, Joel

Heffer, Eric S.

Orme, Stanley

Benn, Rt. Kn. Anthony Wedgwood

Herbison, Rt. Hn. Margaret

Oswald, Thomas

Bessell, Peter

Hobden, Dennis

Paget, R. T.

Binns, John

Hooley, Frank

Pannell, Rt. Hn. Charles

Blackburn, F.

Hooson, Emlyn

Pardoe, John

Blenkinsop, Arthur

Horner, John

Park, Trevor

Booth, Albert

Houghton, Rt. Hn. Douglas

Parker, John (Dagenham)

Boston, Terence

Howarth, Robert (Bolton, E.)

Parkyn, Brian (Bedford)

Bray, Dr. Jeremy

Howell, Denis (Small Heath)

Pearson, Arthur (Pontypridd)

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

Hoy, Rt. Hn. James

Peart, Rt. Hn. Fred

Buchan, Norman

Hughes, Rt. Hn. Cledwyn (Anglesey)

Perry, Ernest G. (Battersea, S.)

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

Hughes, Hector (Aberdeen, N.)

Perry, George H. (Nottingham, S.)

Butler, Herbert (Hackney, C.)

Hughes, Roy (Newport)

Prentice, Rt. Hn. Reg

Carmichael, Neil

Hunter, Adam

Price, Christopher (Perry Barr)

Chapman, Donald

Hynd, John

Price, Thomas (Westhoughson)

Coe, Denis

Janner, Sir Barnett

Probert, Arthur

Coleman, Donald

Jenkins, Hugh (Putney)

Rankin, John

Concannon, J. D,

Jenkins, Rt. Hn. Roy (Stechford)

Rhodes, Geoffrey

Conlan, Bernard

Johnson, Carol (Lewisham, S.)

Roberts, Albert (Normanton)

Crawshaw, Richard

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

Robertson, John (Paisley)

Grossman, Rt. Hn. Richard

Jones, Dan (Burnley)

Robinson, Rt. Hn. Kennethv. St. P'c'as)

Dalycll, Tarn

Jones, J. Idwal (Wrexham)

Ross, Rt. Hn. William

Davidson, Arthur (Accrington)

Jones, T. Alec (Rhondda, West)

Rowlands, E.

Davies, Dr. Ernest (Stretford)

Kelley, Richard

Shaw, Arnold (Ilford, S.)

Davies, Rt. Hn. Harold (Leek)

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

Sheldon, Robert

de Freitas, Rt. Hn. Sir Geoffrey

Kerr, Russell (Feltham)

Shinwell, Rt. Hn. E.

Delargy, H. J.

Latham, Arthur

Shore, Rt. Hn. Peter (Stepney)

Dempsey, James

Lawler, Wallace

Silverman, Julius

Dewar, Donald

Lawson, George

Snow, Julian

Dickens, James

Ledger, Ron

Spriggs, Leslle

Dobson, Ray

Lee, Rt. Hn. Frederick (Newton)

Steele, Thomas (Dunbartonshire, W.)

Doig, Peter

Lewis, Ron (Carlisle)

Strauss, Rt. Hn. G. R.

Dunn, James A.

Lipton, Marcus

Symonds, J. B.

Dunwoody, Mrs. Gwyneth (Exeter)

Lomas, Kenneth

Taverne, Dick

Eadie, Alex

Loughlin, Charles

Thornton, Ernest

Edwards, Robert (Bilston)

Lubbock, Eric

Thorpe, Rt. Hn. Jeremy

Ellis, John

Lyon, Alexander W. (York)

Tinn, James

English, Michael

McBride, Neil

Tomney. Frank

Ennals, David

McCann, John

Tuck, Raphael

Ensor, David

MacColl, James

Varley, Erie G.

Evans, Fred (Caerphilly)

Macdonald, A. H.

Wainwright, Edwin (Dearne Valley)

Evans, Gwynfor (C'marthen)

McGuire, Michael

Wainwright, Richard (Colne Valley)

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

Wallace, George

Ewing, Mrs. Winifred

McKay, Mrs. Margaret

Watkins, Tudor (Brecon & Radnor)

Faulds, Andrew

MacMillan, Malcolm (Western Isles)

Weitzman, David

Finch, Harold

McMillan, Tom (Glasgow, C.)

Whitlock, William

Fitch, Alan (Wigan)

McNamara, J. Kevin

Williams, Alan Lee (Hornchurch)

Fletcher, Raymond (Ilkeston)

Mahon, Peter (Preston, S.)

Williams, Clifford (Abertillery)

Fletcher, Ted (Darlington)

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

Williams, Mrs. Shirley (Hitchin)

Foot, Michael (Ebbw Vale)

Manuel, Archie

Willis, Rt. Hn. George

Ford, Ben

Mapp, Charles

Wilson, William (Coventry, S.)

Forrester, John

Marks, Kenneth

Winnick, David

Fowler, Gerry

Mellish, Rt. Hn. Robert

Winstanley, Dr. M. P.

Freeson, Reginald

Mendelson, John

Woodburn, Rt. Hn. A.

Galpern, Sir Myer

Mikardo, Ian

Woof, Robert

Gardner, Tony

Millan, Bruce

Garrett, W. E.

Miller, Dr. M. S.

TELLERS FOR THE NOES:

Ginsburg, David

Milne, Edward (Blyth)

Mr. Robert Maclennan and

Gray, Dr. Hugh (Yarmouth)

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

Mr. William Small.

INDUSTRIAL DEVELOPMENT (SHIPS) BILL
As Amended (in the Standing Committee), considered.
3.50 p.m.
Mr. Speaker: I have posted the selections I have made of Amendments to the various Bills which we are discussing today. On this Bill the first Amendment selected is new Clause 3, with which I suggest we debate new Clause 2, Publication of Text.

INDUSTRIAL DEVELOPMENT (SHIPS) BILL
  New Clause 3

    TEST FOR ASSESSMENT OF APPLICATIONS
    The Treasury shall from time to time publish in the London and Edinburgh Gazette the details of the complete test whereby they assess whether an application, if granted, would operate to the detriment of the balance of payments.—[Mr. Ridley.]
    Brought up, and read the First time.
    Mr. Nicholas Ridley: I beg to move, That the Clause be read a Second time.
    Perhaps I should start by saying that new Clauses 2 and 3 are similar but differ in one respect in that they refer respectively to the Treasury and to the Ministry of Technology. The House will be aware that the Bill was considerably improved in Committee, as a result of which the Treasury was removed and the Ministry of Technology inserted. In case the House should decide to reverse that decision, I thought it prudent to have two new Clauses on the Notice Paper dealing with this subject. Therefore, the House may select whichever new Clause it thinks appropriate.
    This Clause requires the publication by the Government of the full details of the balance of payments test which will be applied to applications for investment grants for new ships. I hope that with this Clause we will be pushing at an open door, because the Financial Secretary to the Treasury, during Committee Stage, said:
    "I assure the hon. Gentleman that we shall publish changes. We published the circular in the first place so that there should be as much comment upon this as possible."—[OFFICIAL REPORT, Standing Committee E, 4th December, 1969; c. 25.]
    We are at least at one about the desirability of publishing the rules of the test.
    264
    The test is very important in connection with the Bill. The publication which has so far been made does not appear to be entirely specific. It will be a great help to all concerned if the test is entirely specific. I hope that the publications which will follow in due course if the Clause is accepted will be more specific. It does not, so far as I can make out, say whether the cost of buying a new ship in a foreign shipyard shall be taken into account in assessing the outflow on the balance of payments or whether it will be merely the cost of the investment grant, namely, the 20 per cent. itself. I cite that as an example. One can read the balance of payments test as already published, but I believe that it is impossible to get a true answer as to what is meant in those two respects.
    I hope that the Financial Secretary will clear up this point straight away since it is most material and of the greatest importance. An expert with whom I was discussing this test was under the certain conviction that it was only the outgoing investment grant which was to be considered in relation to the test and not the outgoing for the total cost of the ship if ordered abroad. It would completely upset the administration of the test if one or other of those two propositions turned out to be the true one.
    Indeed, if it is the total outgoings on the ship which are to be considered it seems odd that this is treated separately from any other form of overseas investment, because that is all it would become. It is surprising that the same rules are not applied to overseas investment in assets as are applied to overseas investments in ships, with which the Bill deals.
    The second point which does not appear to be specific in the present test is that profits from other activities carried on by the shipowners have in the past been used to depreciate the value of ships. This has been quite legal and legitimate, but, clearly, it would upset the calculation if profits from other sources of activity were allowed to be applied to the depreciation of ships covered by the Bill. I hope that the Financial Secretary will clear up these two areas of doubt which I have cited as being instances in which the present test is not specific.

    265
    It is very important that these tests should be specific. It would help enormously if the Government published a specimen calculation, taking an imaginary ship worth £5 million, putting in imaginary figures for profits, crew and maintenance and all the rest, and showing how the calculation is to be worked out. If this were done, any shipowner who was contemplating ordering a ship could, without difficulty, do his own calculations to make sure that he had exactly the right method. He would then know whether to go ahead with his application and whether it was likely to fail. So far as possible, it is important that there should be certainty in these matters.
    I do not like the phrase in the present test
    "provided that sufficient details of such loans are given, Her Majesty's Treasury will make the necessary calculation."
    We do not want any discretion to be left to Treasury Ministers. We want it to be all above board and perfectly clear, so that the rules are known to everyone. I am sure that the Government will take it in good part when I say that it is possible for the powers in the Bill to be abused and for pressure to be put on shipowners and applicants to do what may not be strictly in their interests in return for permission to order a ship abroad.
    It is that aspect of the matter which worries the Opposition slightly. It is not quite open enough, and we think that the best way of dealing with the situation will be to have complete and regular publication of the test in the fullest detail together with some system of appeal, to which we will come in a later Amendment.
    I hope that the Government will respond to this Clause. It is moved in an attempt to improve the Bill, make it fool-proof and narrow the area of discretion left to the Government. Beyond that, it is always desirable that the exact rules of an operation should be made public. I know that the Government accept the principle behind the Clause, and I see no reason why they should not accept the Clause itself.
    4.0 p.m.
    The Financial Secretary to the Treasury (Mr. Dick Taverne): I understand
    266
    and share the hon. Gentleman's desire that the fullest details of the test to be applied should be known and that they should be specific.
    To answer his questions about the test, it was made clear that all transactions associated with the purchase and the financing of the purchase of a ship will be considered as part of the sum of gains and losses in considering whether there is a balance of payments gain. That must include the cost of purchasing a ship abroad. It is plain that the investment grant in itself is a loss so far as it goes to someone who may send profits abroad. One looks at the capital transaction as one of the factors to be taken into account in determining whether a profit or loss arises.
    We will no doubt be discussing other activities on a further Amendment, but it will be the transactions concerned with a particular ship which are in question and not, for example, profits from activities in connection with running an oil refinery. It is that ship and that ship's transactions which are in question.
    As for the hon. Gentleman's point about publication, I can assure the House that no one affected will be or has been kept in the dark. There is no question of any change being made without notice to those who are affected. Anyone who wishes to discuss it can do so. There have been regular contacts with the Chamber of Shipping and, if a company fails the test, there is no question of the Treasury or the Ministry of Technology keeping the figures to itself. A company will be free to discuss the calculations with the Government to see how they are arrived at, and everything will be open and above board.
    In discussing this Amendment, the real question to be faced is how the details of the test can be best made known. What is suggested is that we should publish the test regularly in the London and Edinburgh Gazettes. However, I suggest that that is not the best way of publication. As a result of discussions with the Chamber of Shipping, a number of amendments to the test have already been made. They concern such matters as equipment manufactured in Britain being incorporated in a ship abroad, which is a material factor to be considered in working out the calculations. That was a useful

    267
    suggestion, and it has been incorporated in the test.
    Another suggestion which has been accepted was concerned with making an allowance for withholding tax. In addition, the question of where repairs should be carried out is a matter which will be taken into account in doing the sums.
    However, from time to time proposals will be put to us by individual companies and discussed with the Chamber of Shipping about how the test should be altered. Many of these will be trivial, fiddling little changes, and I suggest it is unnecessarily cumbersome to publish the test in the Gazette on each occasion that a very minor change is made when there is no question of anyone affected being kept in the dark. Everyone will know what is happening. The Chamber of Shipping will be kept fully informed.
    There is nothing between the two sides of the House on our intentions and what we would like to achieve, nor about what will be achieved. But I suggest that regular publication of the kind suggested is not the desirable way of doing it, because, in practice, everyone will know.
    Dame Irene Ward: To me, this debate appears to be quite involved. In what he has just said, was the Minister speaking with the authority and at the request of or after discussion with the Chamber of Shipping? If this has not all come forward suddenly, why were these details not settled before? I do not know the angle of the Chamber of Shipping on this, but I know that shipbuilders support the Bill, and I would have thought that all the details would have been settled before the Bill reached Report and Third Reading—or are we to understand from what the Financial Secretary has said that the new Clause is not acceptable?
    I am all in favour of having as much light as possible thrown on these matters. Taking into account what shipping and shipbuilding mean in terms of invisible exports and our balance of trade problems, there are few hon. Members who are au fait with all these matters. The shipping interests have been tossed about from one Government Department to
    268
    another, and I for one cannot remember which Minister is responsible for what. As there are so few hon. Members who are conversant with these matters, I am anxious that the Executive should not be able to impose a departmental view unless that view is acceptable to those who have the responsibility for the interests concerned.
    I hope that the hon. and learned Gentleman will go into the matter in a little more detail in order to satisfy an ordinary individual like me, because I want to be sure that we get it right.
    Mr. John Rankin: I have a very narrow interest in this matter, but I hope that it is not in any way a bigoted one. The phraseology of the Bill is new to me in that it seeks to give the Government power to refrain from providing funds to help any shipbuilder to build a ship abroad. I take it that that is the basic purpose of the Bill.
    My interest is confined largely to the interests of the shipbuilding area which I have the privilege to represent. In Govan the Government, fortunately for us, have not refrained from investing money. They have—
    Mr. Speaker: Order. The hon. Gentleman must come to the new Clause, which asks the Treasury to publish the details of the test on which it refuses an application for grant.
    Mr. Rankin: I am sorry. I assume that in a little while we may come to this part which I have reached ahead of the rest. Therefore, like a good sailor, I shall await the arrival of my ship at the proper port.
    Mr. Ridley: With the leave of the House, I will briefly reply to the Financial Secretary's speech which aroused in me the feeling that he wanted a cosy little party with the Chamber of Shipping. I thought that his dodging of the issue, that these details should be regularly published, was rather a pity.
    The representative of the Ministry of Technology, giving evidence to the Estimates Committee on the run-away figures for investment grants, dealing with this very point, at page 30, said:
    "However, a company will have its case judged on published criteria—its transactions,

    269
    where its profits go, the source of the ship, the crewing of the ship and other factors with a balance of payments implication."
    I draw attention particularly to the phrase "published criteria". It is not good enough for the Minister to say that he does not want to publish every alteration, because it would be too much trouble, when he is telling us that the criteria will be changed from time to time. They must be made public. I do not stick to the London and Edinburgh Gazettes, but it is important that this should not be a private matter between the Treasury and the Chamber of Shipping. They should be made public for all to see. After all, some shipowners may not be members of the Chamber of Shipping and there may be other interests, apart from the direct interests of the shippers.
    I hope that the Financial Secretary will find some way to give an undertaking that these details will be made public at all stages and that there will not be changes made—although changes may not seem important to him, they may be very important to other people—which are not in some way brought to the notice of all concerned. Unless the hon. Gentleman can be more forthcoming in meeting the point made from this side, I feel it would be right to ask my hon. Friends to insist upon the Clause being inserted in the Bill.
    Mr. Taverne: With the leave of the House, I should like briefly to deal with some of the points which have been raised.
    First, the point raised by the hon. Member for Tynemouth (Dame Irene Ward). I am not aware of any dissatisfaction by the Chamber of Shipping about its being kept in the dark. Indeed, the circular was published specifically so that comments could be made on it and it could be improved. We are aware that in an operation of this kind there should be the most rapid consultation so that people are put to the minimum inconvenience.
    We are aware that all the time there will be improvements of one kind or another which, in the light of experience, we will incorporate. This will be decided by the Executive. The form in which
    270
    it is published will not detract from or add to the power of the Executive.
    Dame Irene Ward: Does this also apply to the shipbuilders?
    Mr. Taverne: Indirectly it affects shipbuilders, but it is directly the concern of the shipowners. It is an investment grant which goes to owners, not to builders. There are special grants which go to builders.
    4.15 p.m.
    Dame Irene Ward: I fully understand that, but there is a great alliance between shipbuilders and shipowners. As far as I know, the shipbuilders endorse the Bill. But when the Minister makes observations about the shipowners and the Chamber of Shipping I want to know more, because, at any rate in the Common Market, there is a difference between shipbuilders and shipping interests. I want everybody in on this. That is why I support the case put forward by my hon. Friend.
    Mr. Taverne: I appreciate the hon. Lady's concern with the shipbuilders, and I am aware that they strongly support the Bill. However, I do not think there will be any difficulty about the shipbuilders being aware of the test, the details of which are not of immediate concern to them. The details about the balance of payments profit and loss calculations are of immediate concern to the person applying for the grant. It is important that he should know
    I realise that Members of Parliament will be interested to see how the test is applied. As the original circular was published and issued, so from time to time, incorporating the changes which may be made, there will be a memorandum showing what the test is. It is desirable that this memorandum should, amongst other places, be available in the Library of the House so that hon. Members may satisfy themselves how the test is being worked.
    I think that that will meet the point made by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). Therefore. I hope that he will not press the new Clause to a Division.
    Question put and negatived.

  Clause 1

    POWER OF MINISTER OF TECHNOLOGY TO REFRAIN FROM MAKING GRANTS IN CERTAIN CASES
    The Joint Parliamentary Secretary to the Ministry of Technology (Dr. Ernest A. Davies): I beg to move Amendment No. 1, in page 1, line 9, leave out 'Minister of Technology is' and insert 'Treasury are'.
    Mr. Speaker: With this Amendment I have suggested that we take Amendments Nos. 3, 4, 9, 10, 11, 12, 13 and 15.
    Dr. Davies: The Amendment seeks to insert in the Bill that power be given to the Treasury to examine, according to the balance of payments test which we have just been discussing, an application for grant to see whether a prospective shipowner will make the best use of his ship to bring a benefit to the balance of payments for the United Kingdom. This is in response to requests for assurances that, where public money is expended in investment grants, it shall be to the benefit of the United Kingdom's economy.
    There have been suggestions of abuses of investment grants by people purchasing ships. We have already given assurances that these abuses are checked, amongst other things, by exchange controls. But the Clause goes on to require that the shipowner, when applying for grant, shall show that there will be no detriment to the balance of payments of the United Kingdom when he gets his ship into operation.
    The point at issue is whether the power shall be given to the Treasury to apply the balance of payments test. The Government's view is that, since the Treasury is responsible for the financial policies relating to our balance of payments, it is right and proper that the exercise of this function should, therefore, lie with the Treasury rather than the Minister of Technology.
    The Treasury is already examining applications for investment grants and applying exchange controls. It is, therefore, right and proper that the Treasury should apply the balance of payments test and have this power to give a direction to the Minister of Technology to
    272
    withhold the grant when it is clear that it would be detrimental to the United Kingdom's balance of payments to award it in respect of a certain ship.
    The expertise is there in the Treasury. The control which has been asked for by the House is already being exercised in part by the Treasury, and it is, therefore, the Government's view that the power to give a direction in respect of withholding a grant should lie with the Treasury and not with the Minister of Technology.
    Mr. Simon Wingfield Digby: We are dealing with the procedure to restrict the grant. The Opposition feel even more strongly than the Government do that any leaks in the payment of this grant should be restricted, and it is a question of the form in which this should be done.
    The Government are asking us to reverse a decision which was taken in Committee upstairs. From the constitutional point of view, the wording which the Government are trying to reinsert in the Bill is rather strange. This point was made at some length on Second Reading by my hon. Friends the Members for Guildford (Mr. David Howell), and Henley (Mr. Hay). We are accustomed to words like "Treasury consent". What struck us as surprising, and still does, is that the Treasury should take power to direct a senior Minister to refrain from making certain grants.
    Mr. Taverne: I wonder whether the hon. Gentleman will explain one thing which puzzles me. What is the difference between the Treasury giving directions, which is objected to, and the Treasury having power to refuse its consent, which is a negative direction?
    Mr. Wingfield Digby: I think that we have become accustomed to the old forms, and we have had no explanation from the Government why they wish to set a precedent in this matter.
    If the Financial Secretary looks at the 1966 Industrial Development Act, which first authorised investment grants as opposed to investment allowances, he will see that power is given to the Board of Trade to make this grant without any restriction. In Clause 5, which deals specifically with ships, the same wording is used. It says that the Board of Trade

    273
    shall have power, and there is no mention at all of the Treasury.
    This restriction on the Minister of Technology is something new. This was debated in Committee upstairs, as it was on Second Reading, and many hon. Members were puzzled at the constitutional implications of it. Perhaps that is why the Committee decided to revert to a different form of wording. Or it may be that there was a lack of enthusiasm amongst Government supporters for a Bill which would save the taxpayer money.
    I am surprised that the Joint Parliamentary Secretary did not mention that since we debated this matter in Committee a certain amount of new evidence has come to hand about the extent of the leak in the giving of this grant, and the granting of this money in ways which are not helpful to the balance of payments. We have just received the First Report of the Estimates Committee on the Winter Supplementary Estimates.
    The Committee has quite a lot to say about this. It says, in paragraph 23:
    "Your Committee have commented on the under-estimating on this Vote in each of their last three Reports on the Supplementary Estimates. Nevertheless the rise in requirements this year is so alarming both in total amount and as a percentage of the provision in the Main Estimates that Your Committee felt bound once again to take written and oral evidence from the Department concerned (now the Ministry of Technology)."
    I think that both sides of the House must be slightly alarmed at the extent to which the money paid out in investment grants for ships and in other ways has exceeded expectations.
    This Report goes on to deal with the matter in some detail, and says in paragraph 24 that on the evidence of the Ministry itself no complete figures for any one year have been available to it in making its calculations. The Committee says in paragraph 27, with regard to ships in particular, that there was a 57 per cent. rise in the Supplementary Estimates, and that when the representative of the Ministry of Technology was asked to explain this he said that there was a fall-off in orders expected, which seems to be a strange comment on the policy of the Ministry of Technology which has been trying to support ordering for the shipbuilding industry.
    Mr. Speaker: Order. I hope that the hon. Member will link what he has to say to whether it is the Minister of Technology or the Treasury who will decide the matter.
    Mr. Wingfield Digby: In view of this evidence, the Treasury's attitude to the ability of the Ministry of Technology to stop these large sums from flowing out is very much to be understood. It has been estimated that no less than £5 million a year may be saved to the taxpayer by the passing of the Bill. This goes some way to explain why the Treasury is anxious to retain this power to direct the Minister of Technology, but I should have thought that it was up to the Ministry itself to put its house in order, and not to have to subject itself to this special control by the Treasury.
    Only the Treasury watchdog is able to make this change, and the power with which the old Board of Trade could be entrusted cannot be entrusted to this new and very much enlarged Ministry of Technology. Unless we receive very much better reasons than we have had so far—these were not the reasons advanced for making the change—I think that we should stick to the decision taken in Committee after due thought, and accordingly vote against these Amendments.
    Mr. John Hay: The intervention by the Financial Secretary a few moments ago, when my hon. Friend the Member for Dorset, West (Mr. Wingfield Digby) was speaking, is typical of the way in which the Government have sought to fudge the important constitutional point at issue here. I drew attention to this during my Second Reading speech. Unfortunately, I was not a member of the Standing Committee which considered the Bill, and I therefore could not participate in the debate which led to the change in the wording which we are now being asked to remove.
    The point which the Government must answer is that the Bill as originally drafted, and in the form in which it would be if the Amendment were carried, would enable one Government Department, the Treasury, to give a Minister of the Crown, namely, the Minister of Technology, a direction. This has nothing to do with a Minister being able to act with or without the consent of the Treasury. I hope that it is clear to the

    275
    Financial Secretary that what we are concerned with here is the statutory power being given, as far as I know for the first time, to one Government Department—to one Minister if one likes—to give a statutory direction to another.
    What we are concerned is really part of the machinery of government. In the normal course of events, a Minister will not act in a matter which affects the affairs of another Department without consultation. As everyone knows, if there is a disagreement, this can lead to a meeting of the Cabinet committee, and even a decision by the Cabinet itself, and one side or the other may be overruled.
    4.30 p.m.
    This is traditional in our constitution. I know of no case in our statute law where one Department, even a Department so powerful—almost omnipotent—as the Treasury, has the power to give a direction to another. If the Parliamentary Secretary or the Financial Secretary can quote me an example of this being in our law heretofore, then the argument is weakened thereby. But that is my point, and it is the point on which my hon. Friends in Committee sought to amend the Bill, and succeeded.
    I understand the argument put by the Parliamentary Secretary in Committee and again this afternoon is that it is basically for the Treasury to consider balance of payments reasons, that it is not really for the Minister of Technology to take them into account, and that, therefore, the Bill should be amended because the onus of acting is not in the right place, is not with the right Minister.
    But in the light of the machinery of government in this country, with individual Ministers and Departments consulting at all levels, it should not be necessary for balance of payment reasons to be neglected by the Minister of Technology if the Bill remains in its present form. When he is deciding whether to give a grant or withhold it, this is one of the factors which he should take into account, and the normal process of consultation should give him the advice and view of the Treasury in any particular case. Under the main Act the Minister of Technology has complete discretion. It is not as though we are bringing in something completely new. He is not obliged to make grants. It would be
    276
    perfectly normal for the Minister to use his discretionary power only with the advice or consent of the Treasury in cases with which the Bill is intended to deal.
    What I dislike, what I think my right hon. and hon. Friends dislike, and what the House as a whole should dislike, is the power being given to one Department to give a statutory direction to another. That is the key to the whole matter and it is to that that the two Ministers on the Treasury Bench must direct their attention. I hope that the House will insist on a proper answer.
    Dame Irene Ward: I find this debate tremendously fascinating. I can think of nothing more exciting on some occasions than to be able to probe the Treasury when one should really be addressing remarks to a Departmental Minister. I can see all sorts of delightful operations for myself developing from this small controversy.
    Would not it have been a bit more open with the House if the Joint Parliamentary Secretary had really gone into why we were discussing the Amendment? I did not serve on the Standing Committee. Many hon. Members are interested in Report stages of Bills because they provide the only opportunity that all back benchers have of probing certain aspects of matters with which the Bills deal.
    As some constitutional problems seem to arise from this matter. I do not think that the Treasury Bench was sufficiently open with the House or sufficiently knowledgeable about what the House might thing about it. I had no idea that there had been all this discussion. I trust neither the Treasury nor the Ministry of Technology, so I am delighted to find this problem cropping up.
    I am very interested in both shipping and shipbuilding. It is very difficult with my little knowledge to raise points that I am particularly interested in. If I want to put Questions, to which Department shall I address them? If I put down a Question to the Treasury, would it send me a polite little notice through the Table Office saying that the Question had been transferred to the Minister of Technology? If I put it down to the Minister of Technology, would I get back an equally polite little note from him

    277
    through the Table Office saying that my Question must be addressed to the Treasury?
    We have two Ministers here to move and speak to the Amendments, which may be good, bad or indifferent. I do not know, though I follow my own side, because I think that it knows a good deal more about the subject than the Government. It is ridiculous to have two Ministers from different Departments sitting on the Treasury Bench without taking the House into their confidence. This I dislike very much. So if there is a vote I shall enjoy voting against both the Treasury and the Ministry of Technology. That would be absolutely marvellous.
    But I want to know specifically to whom I should address my Questions, so that the answer is in HANSARD and not lost in the enormous Ministry of Technology, which I do not think has time to deal with some of the very difficult matters affecting shipping interests that arise. If shipowners and shipbuilders in my part of the country want answers, they may ask me to put down a Question. It is very important for them—not for me —that we should all know who will take the responsibility. I should be acting in their interest mainly, though perhaps in my own interests sometimes.
    This fascinating discussion about Ministers reminds one of the situation on teachers' and nurses' salaries, with Ministers puting up the National Whitley Council, giving instructions to the council, and then telling us that they support various things, when one knows perfectly well that behind the scenes they have done something quite different, which the House knows nothing about.
    This is a House of Commons matter and I hope that the two Ministers on the Treasury Bench will tell us a great deal more, so that at any rate I shall know where I am.
    Mr. Rankin: I do not know that I regard the proposal as making any revolutionary change. I do not see any greater menace in the Ministry of Technology than I do in the Treasury.
    What is troubling me is whether this is an end of the business or just the beginning. Are we sanctioning an Amendment which will radically change the relationship between the Treasury and every other Ministry? That is the
    278
    fundamental issue before us, and it cannot be lightly decided.
    It may be said that we are voting money which, if used properly, will be spent abroad, and that we must be careful because of the balance of payments position with all money used in that way. But the Board of Trade, a sister Department to the Ministry of Technology, will also receive grants for works that are sanctioned. Is there any Ministry whose intromissions do not affect the balance of payments, even though its money is not necessarily spent abroad? If extra money is granted to the Board of Trade for a justifiable cause, the situation may arise, as it arises now, of our wanting the Treasury to take a careful look at how the money is to be expended, because of the risk of prejudice to the balance of payments.
    We are dealing with one matter at the moment, but it seems to me that we are dealing also with an unfolding matter, and that is an issue which we cannot set aside in our deliberations. It is an issue to which I have been giving some thought. If that be the case—and I fail to see how it can be otherwise—in the development and application of parliamentary sustenance and its natural and inevitable expansion, I hope that the Front Bench will give us firm and reliable guidance on those aspects of the proposed grant which are troubling me, at least.
    Mr. Stanley R. McMaster: I, too, oppose the Amendment. This subject was considered carefully by the Committee, and, after it had considered the question of the responsibility, it decided that the Minister of Technology was the appropriate Minister to be responsible.
    We now have an Amendment substituting the Treasury. I note that it is the Treasury, not even the Chancellor of the Exchequer who is to be responsible and who is to give directions. The Minister might have explained what he meant by "Treasury". Does "Treasury" include a junior Treasury Minister or, indeed, a Treasury official, or does it simply mean the Chancellor of the Exchequer?
    I support my hon. Friend the Member for Tynemouth (Dame Irene Ward) when she says that the Amendment confuses

    279
    the issue in the eyes of the ordinary Member of Parliament. The Bill is designed to block a loophole and to stop the country's money being used to benefit people abroad. The intricate questions which arise fall much more within the province of the Minister of Technology, in deciding matters dealing with both shipping and shipbuilding, than within the province of a Treasury Minister.
    If one of the purposes of the Bill, as I believe it to be, is to support our own shipbuilding industry, the apropriate Minister to take a decision, with, perhaps, the advice of the Chancellor of the Exchequer, should be the Minister of Technology, who is responsible for the success of our industry and yards.
    If matters are to be considered on the basis of what profit is to be earned by a shipping company which places an order for a ship abroad, which is, presumably, the case with which we are particularly concerned here, we must consider some detailed matters. They include whether the company will make any profit or loss on the ship; where it is to operate; whether the profit or loss will be taxed in this country; what crew will be employed; what will happen to the ship if it is sold; and, if some money is due to be paid back to the Treasury, what remedy the Treasury will have and how it will recover the money.
    Those are questions which, in the final analysis, should be left with the Minister of Technology as the Minister responsible for the two industries affected by the Bill—the shipping industry, as a whole, and the shipbuilding industry.
    To accept the Amendment would only confuse the issue, pass the buck and make it more difficult to achieve the purposes of the Bill. It would be better to leave the Bill as it was left in Committee, leaving the responsibility where it is left in every other instance, as my hon. Friend the Member for Henley (Mr. Hay) said, with the responsible Minister, in this case the Minister of Technology.
    4.45 p.m.
    Dr. Ernest A. Davies: I should like to help the hon. Lady the Member for Tynemouth (Dame Irene Ward), because she said that the shipbuilding interests with whom she is closely concerned welcomed the Bill. If that is the case,
    280
    I am very glad that it has been so warmly welcomed and the hon. Lady's recommendation is greatly welcomed as well.
    It is true that both in the Second Reading debate, and in Committee, hon. Members opposite questioned this admittedly unusual provision in the Bill as originally drafted, since the original draft gave the Treasury power to give a direction to the Ministry of Technology not to make an investment grant on the cost of providing or converting a ship if it failed the balance of payments test. The power to make the grant is, basically, provided in the relevant Act and lies with the Ministry of Technology. But the power originally written into the first draft of the Bill, which was before the House on Second Reading, gave the additional power to the Treasury, to give a direction to the Minister of Technology that he should not pay the investment grant if it could be shown that the purchase of a ship and its subsequent use would be detrimental to the United Kingdom's balance of payments.
    In its wisdom, the Committee chose to amend that to remove the power of the Treasury to give a direction to the Ministry of Technology on the grounds which I have just mentioned. The Committee left the power entirely with the Minister of Technology and did not even require that he should consult the Treasury, or even say, "may with the consent of the Treasury".
    The phrase, "may with the consent of the Treasury" is one which we frequently come across in our legislation. One could, therefore, reflect on the point and consider what would happen if any Minister of the Crown who was required in the exercise of his powers to rely upon the consent of the Treasury were to say, "What will happen if the Treasury decide not to give their consent?" If the Treasury withholds consent, the Minister may not proceed.
    In effect, what we are saying in the Amendment is that that is what actually happens. The consent is withheld, the Minister cannot exercise the power, and we are saying that in that case the Treasury may direct. This is really pointing up, so to speak, "may with consent", to turn it into the reality which it would be in practice.
    Mr. Hay: With respect, the hon. Gentleman is again missing the point. If he

    281
    believes that the right course is that the Minister should retain the power but exercise it only with the consent of the Treasury, why did he not put down an Amendment not going back to the original text of the Bill, which is what he wants to do now, but simply importing those words, that the Minister of Technology may, with the consent of the Treasury, refuse a grant? Why does he insist upon a direction from the Treasury, not just Treasury consent, which is quite usual?
    Dr. Davies: The point of putting in this form of words is to make absolutely plain that the balance of payments test is to be worked out, calculated, discussed, and so on, by the Treasury with the relevant applicant, and that the power to apply the balance of payments test shall lie with the Treasury. It is the prerogative of the Treasury to carry responsibility for balance of payments policy.
    It seems right to the Government, therefore, that this power should lie with the Treasury. In the case of, for example, brass-plate companies, the Treasury itself is already exercising some measure of control. It seems right to the Government to give this power to the Treasury, which has the necessary expertise, so that it is plain exactly where it lies.
    Mr. Wingfield Digby: The hon. Gentleman has still not explained how the position has changed between 1966 and today as regards the Treasury's responsibility for the balance of payments. He is now arguing that the Treasury is more responsible for the balance of payments than it was in 1966, when absolute discretion was given to the Board of Trade.
    Dr. Davies: The purpose of the Bill is to make sure that, in any question of investment grant in respect of the purchase and subsequent operation of a ship, it shall be clear that there will be benefit, or, in the terms of the Bill, no detriment, to the United Kingdom balance of payments. We are, therefore, changing the situation by introducing the Bill. It is the Government's view that this power ought properly to lie with the Treasury so that the, Treasury is responsible for carrying out the balance of payments test and all that that implies.
    282
    I agree that the Committee, in its wisdom, discussed this question at length and changed the wording, but, in view of certain absences which occurred and which have been remarked on, I am not entirely sure that the collective wisdom of the Committee is quite what I hope will prove to be the collective wisdom of the House.
    Mr. Ridley: The Parliamentary Secretary has given an inadequate reply. Several important points have been made by my hon. Friends, and I shall take them in order so as to show how wrong the Government are here.
    The point just pressed by my hon. Friend the Member for Dorset, West (Mr. Wingfield Digby) was first raised by the hon. Member for Glasgow, Govan (Mr. Rankin). Why should the Treasury suddenly subsume this new responsibility for balance of payments considerations in industrial matters? Are the Government proposing that the import-saving programme should be taken over by the Treasury? If one is considering whether to build aluminium smelters, or to establish new industries to save imports, is power now to be given to the Treasury to decide whether a project is or is not in the interest of our balance of payments? If we are going that far, why not put all exporting under the Treasury, too? This is an entirely new development, and one which somewhat alarms my hon. Friends.
    The second question was raised with considerable force by my hon. Friend the Member for Tynemouth (Dame Irene Ward): which Minister is to be responsible for answering Questions about the administration of the investment grant scheme in relation to ships? The Minister of Technology is responsiblie for investment grants, and the Treasury is now to be responsible for the balance of payments aspects in relation to ships. I encourage my hon. Friends to put down some trial Questions to see which side of the fence they bounce to; it will be an interesting test, and difficult for the Government to determine whose responsibility begins and ends where. My hon. Friend had no answer to her point about Questions, and the Government owe the House a firm and clear statement about whose responsibility it will be.

    283
    The next point was raised by my hon. Friends the Members for Henley (Mr. Hay) and for Belfast, East (Mr. McMaster), and it is the most important of the lot. It is now proposed to give power to the Treasury—which, presumably, means civil servants as opposed to the Chancellor—to direct senior Ministers in what they are to do. With respect to the Parliamentary Secretary, this is a totally different question from obtaining the consent of the Treasury. When expenditure is incurred, Ministers have to obtain the Treasury's consent. But this is not that case. An administrative decision is to be taken as to which grant shall be paid to which person, and which shall not. So it is a matter of the saving of money.
    Under the Industrial Act, 1966, the Treasury has power to refuse the Minister of Technology consent to make an investment grant at all. The power is there in the 1966 Act for the Treasury to refuse grants through the Ministry of Technology. So what we are here talking about is not the ultimate control of the nation's resources, which was the implication of the Minister's argument, but the administration of a particular scheme which will apply differently in different circumstances to different persons.

    Division No. 46.]

    AYES

    [5.0 p.m.

    Abse, Leo

    Davies, E. Hudson (Conway)

    Fowler, Gerry

    Albu, Austen

    Davies, Dr. Ernest (Stretford)

    Freeson, Reginald

    Alldritt, Walter

    Davies, Rt. Hn. Harold (Leek)

    Gardner, Tony

    Allen, Scholefield

    Davies, Ifor (Gower)

    Garrett, W. E.

    Anderson, Donald

    Davies, S. O. (Merthyr)

    Ginsburg, David

    Archer, Peter (R'wley Regis & Tipt'n)

    Delargy, H. J.

    Golding, John

    Ashley, Jack

    Dempsey, James

    Gray, Dr. Hugh (Yarmouth)

    Ashton, Joe (Bassetlaw)

    Dewar, Donald

    Gregory, Arnold

    Atkins, Ronald (Preston, N.)

    Dickens, James

    Grey, Charles (Durham)

    Atkinson, Norman (Tottenham)

    Dobson, Ray

    Griffiths, Eddie (Brightside)

    Bacon, Rt. Hn. Alice

    Doig, Peter

    Hamilton, William (Fife, W.)

    Bagier, Gordon A. T.

    Driberg, Tom

    Hannan, William

    Barnes, Michael

    Dunn, James A.

    Harper, Joseph

    Barnett, Joel

    Dunnett, Jack

    Harrison, Walter (Wakefield)

    Benn, Rt. Hn. Anthony Wedgwood

    Dunwoody, Mrs. Gwyneth (Exeter)

    Haseldine, Norman

    Blackburn, F.

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

    Hazell, Bert

    Booth, Albert

    Eadie, Alex

    Henig, Stanley

    Boston, Terence

    Ellis, John

    Herbison, Rt. Hn. Margaret

    Bradley, Tom

    English, Michael

    Hobden, Dennis

    Bray, Dr. Jeremy

    Ennals, David

    Hooley, Frank

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

    Ensor, David

    Houghton, Rt. Hn. Douglas

    Buchan, Norman

    Evans, Fred (Caerphilly)

    Howarth, Robert (Bolton, E.)

    Butler, Herbert (Hackney, C.)

    Evans, Gwynfor (C'marthen)

    Howell, Denis (Small Heath)

    Butler, Mrs. Joyce (Wood Green)

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

    Hoy, Rt. Hn. James

    Carmichael, Neil

    Faulds, Andrew

    Huckfield, Leslie

    Chapman, Donald

    Fernyhough, E.

    Hughes, Rt. Hn. Cledwyn (Anglesey)

    Coe, Denis

    Finch, Harold

    Hughes, Hector (Aberdeen, N.)

    Concannon, J. D.

    Fitch, Alan (Wigan)

    Hughes, Roy (Newport)

    Conlan, Bernard

    Fletcher, Raymond (Ilkeston)

    Hunter, Adam

    Crawshaw, Richard

    Fletcher, Ted (Darlington)

    Hynd, John

    Cronin, John

    Foot, Michael (Ebbw Vale)

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

    Crossman, Rt. Hn. Richard

    Ford, Ben

    Janner, Sir Barnett

    Dalyell, Tam

    Forrester, John

    Jeger, George (Goole)

    For the first time, therefore, the Treasury proposes to take power to give instructions to senior Ministers on a specific matter within their normal ambit dealing with administration and not with the expenditure of money. So far as it may wish to use it, power resides with the Treasury under the 1966 Act to keep its finger on expenditure as a whole, and there is no need to provide again for that.
    The Government are insisting on reversing the decision of a wise and co-operative Standing Committee, which devoted a great deal of thought and effort to improving the Bill, out of nothing more than Treasury pique. There is nothing behind this other than the desire of the Treasury not to have taken from it a little extra accretion of power. It was preposterous in the first place that the Treasury should have power to boss senior Ministers about. Now that it has been caught out in that attempt, it would be quite wrong to try to reverse the Committee's decision, and I hope, therefore, that my hon. Friends will insist that the Bill stays as it is by voting against the Amendment.
    Question put, That the Amendment be made:—
    The House divided: Ayes 210, Noes 170.

    Jenkins, Hugh (Putney)

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

    Sheldon, Robert

    Johnson, Carol (Lewisham, S.)

    Molloy, William

    Shinwell, Rt. Hn. E.

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

    Morgan, Elystan (Cardiganshire)

    Shore, Rt. Hn. Peter (Stepney)

    Jones, Dan (Burnley)

    Morris, Alfred (Wythenshawe)

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

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

    Morris, Charles R. (Openshaw)

    Silverman, Julius

    Jones, J. Idwal (Wrexham)

    Morris, John (Aberavon)

    Skeffington, Arthur

    Jones, T. Alec (Rhondda, West)

    Murray, Albert

    Slater, Joseph

    Judd, Frank

    Neal, Harold

    Small, William

    Lawson, George

    Newens, Stan

    Spriggs, Leslie

    Steele, Thomas (Dunbartonshire, W.)

    Leadbitter, Ted

    Norwood, Christopher

    Swain, Thomas

    Lee, Rt. Hn. Frederick (Newton)

    0'Halloran, Michael

    Symonds, J. B.

    Lewis, Ron (Carlisle)

    O'Malley, Brian

    Taverne, Dick

    Lipton, Marcus

    Orme, Stanley

    Thornton, Ernest

    Lomas, Kenneth

    Oswald, Thomas

    Tinn, James

    Loughlin, Charles

    Padley, Walter

    Tomney, Frank

    Lyon, Alexander W. (York)

    Paget, R. T.

    Tuck, Raphael

    McBride, Neil

    Pannell, Rt. Hn. Charles

    Urwin, T. W.

    McCann, John

    Park, Trevor

    Varley, Eric G.

    MacColl, James

    Parker, John (Dagenham)

    Walker, Harold (Doncaster)

    Macdonald, A. H.

    Parkyn, Brian (Bedford)

    Wallace, George

    McGuire, Michael

    Pavitt, Laurence

    Watkins, David (Consett)

    McKay, Mrs. Margaret

    Pearson, Arthur (Pontypridd)

    Watkins, Tudor (Brecon & Radnor)

    Mackintosh, John P.

    Peart, Rt. Hn. Fred

    Weitzman, David

    MacMillan, Malcolm (Western Isles)

    Pentland, Norman

    Whitlock, William

    McMillan, Tom (Glasgow, C.)

    Perry, Ernest G. (Battersea, S.)

    Wilkins, W. A.

    McNamara, J. Kevin

    Perry, George H. (Nottingham, S.)

    Willey, Rt. Hn. Frederick

    MacPherson, Malcolm

    Price, Thomas (Westhoughton)

    Williams, Alan Lee (Hornchurch)

    Mahon, Peter (Preston, S.)

    Price, William (Rugby)

    Williams, Clifford (Abertillery)

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

    Probert, Arthur

    Williams, Mrs. Shirley (Hitchin)

    Manuel, Archie

    Randall, Harry

    Wilson, Rt. Hn. Harold (Huyton)

    Mapp, Charles

    Rankin, John

    Wilson, William (Coventry, S.)

    Marks, Kenneth

    Roberts, Albert (Normanton)

    Winnick, David

    Mayhew, Christopher

    Roberts, Gwilym (Bedfordshire, S.)

    Woodburn, Rt. Hn. A.

    Mellish, Rt. Hn. Robert

    Robertson, John (Paisley)

    Woof, Robert

    Mikardo, Ian

    Rose, Paul

    Millan, Bruce

    Ross, Rt. Hn. William

    TELLERS FOR THE AYES:

    Miller, Dr. M. S.

    Rowlands, E.

    Mr. Ernest Armstrong and

    Milne, Edward (Blyth)

    Shaw, Arnold (Ilford, S.)

    Mr. James Hamilton.

    NOES

    Allason, James (Hemel Hempstead)

    Drayson, G. B.

    Knight, Mrs. Jill

    Archer, Jeffrey (Louth)

    Eden, Sir John

    Lambton, Viscount

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

    Elliot, Capt. Walter (Carshalton)

    Lane, David

    Baker, Kenneth (Acton)

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

    Langford-Holt, Sir John

    Baker, W. H. K. (Banff)

    Emery, Peter

    Lawler, Wallace

    Batsford, Brian

    Errington, Sir Eric

    Legge-Bourke, Sir Harry

    Beamish, Col. Sir Tufton

    Eyre, Reginald

    Lewis, Kenneth (Rutland)

    Bennett, Dr. Reginald (Gos. & Fhm)

    Farr, John

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Berry, Hn. Anthony

    Fortescue, Tim

    Longden, Gilbert

    Biffen, John

    Fry, Peter

    Lubbock, Eric

    Biggs-Davison, John

    Galbraith, Hn. T. G.

    McAdden, Sir Stephen

    Birch, Rt. Hn. Nigel

    Gibson-Watt, David

    MacArthur, Ian

    Boardman, Tom (Leicester, S. W.)

    Glover, Sir Douglas

    Maclean, Sir Fitzroy

    Bossom, Sir Clive

    Godber, Rt. Hn. J. B.

    McMaster, Stanley

    Boyd-Carpenter, Rt. Hn. John

    Goodhew, Victor

    McNair-Wilson, Michael

    Boyle, Rt. Hn. Sir Edward

    Gower, Raymond

    McNair-Wilson, Patrick (NewForest)

    Brewis, John

    Grant-Ferris, Sir Robert

    Maddan, Martin

    Brinton, Sir Tatton

    Gresham Cooke, R.

    Maginnis, John E.

    Bruce-Gardyne, J.

    Grieve, Percy

    Marten, Neil

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

    Griffiths, Eldon (Bury St. Edmunds)

    Maude, Angus

    Bullus, Sir Eric

    Hamilton, Michael (Salisbury)

    Mawby, Ray

    Burden, F. A.

    Harvey, Sir Arthur Vere

    Maxwell-Hyslop, R. J.

    Campbell, B. (Oldham, W.)

    Harvie Anderson, Miss

    Mills, Peter (Torrington)

    Campbell, Gordon (Moray & Nairn)

    Hawkins, Paul

    Monro, Hector

    Cary, Sir Robert

    Hay, John

    Montgomery, Fergus

    Channon, H. P. C.

    Heald, Rt. Hn. Sir Lionel

    More, Jasper

    Chichester-Clark, R.

    Heath, Rt. Hn. Edward

    Morgan-Giles, Rear-Adm.

    Clark, Henry

    Hiley, Joseph

    Mott-Radclyffe, Sir Charles

    Clegg, Walter

    Hogg, Rt. Hn. Quintin

    Munro-Lucas-Tooth, Sir Hugh

    Cooke, Robert

    Holland, Philip

    Nabarro, Sir Gerald

    Cooper-Key, Sir Neill

    Hooson, Emlyn

    Neave, Airey

    Cordle, John

    Hornby, Richard

    Nicholls, Sir Harmar

    Corfield, F. V.

    Howell, David (Guildford)

    Noble, Rt. Hn. Michael

    Costain, A. P.

    Hutchison, Michael Clark

    Orr, Capt. L. P. S.

    Craddock, Sir Beresford (Spelthorne)

    Iremonger, T. L.

    Orr-Ewing, Sir Ian

    Crouch, David

    Irvine, Bryant Godman (Rye)

    Osborn, John (Hallam)

    Currie, G. B. H.

    Jenkin, Patrick (Woodford)

    Page, Graham (Crosby)

    Dance, James

    Jennings, J. C. (Burton)

    Page, John (Harrow, W.)

    Dean, Paul

    Jopling, Michael

    Pearson, Sir Frank (Clitheroe)

    Digby, Simon Wingfield

    Joseph, Rt. Hn. Sir Keith

    Peyton, John

    Dodds-Parker, Douglas

    Kaberry, Sir Donald

    Pike, Miss Mervyn

    Doughty, Charles

    Kitson, Timothy

    Powell, Rt. Hn. J. Enoch

    286

    287

    Prior, J. M. L.

    Tapsell, Peter

    Whitelaw, Rt. Hn. William

    Pym, Francis

    Taylor, Sir Charles (Eastbourne)

    Wiggin, A. W.

    Renton, Rt. Hn. Sir David

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

    Williams, Donald (Dudley)

    Rhys Williams, Sir Brandon

    Taylor, Frank (Moss Side)

    Wilson, Geoffrey (Truro)

    Ridley, Hn. Nicholas

    Temple, John M.

    Winstanley, Dr. M. P.

    Ridsdale, Julian

    Thorpe, Rt. Hn. Jeremy

    Wolridge-Gordon, Patrick

    Rippon, Rt. Hn. Geoffrey

    Turton, Rt. Hn. R. H.

    Wood, Rt. Hn. Richard

    Rossi, Hugh (Hornsey)

    Vickers, Dame Joan

    Woodnutt, Mark

    Russell, Sir Ronald

    Waddington, David

    Worsley, Marcus

    Scott-Hopkins, James

    Wainwright, Richard (Colne Valley)

    Wright, Esmond

    Sharples, Richard

    Walker-Smith, Rt Hn. Sir Derek

    Wylie, N. R.

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

    Wall, Patrick

    Younger, Hn. George

    Speed, Keith

    Ward, Christopher (Swindon)

    Stainton, Keith

    Ward, Dame Irene

    TELLERS FOR THE NOES:

    Stoddart-Scott, Col. Sir M.

    Weatherill, Bernard

    Mr. Anthony Grant and

    Summers, Sir Spencer

    Wells, John (Maidstone)

    Mr. Anthony Royle.

    Mr. Ridley: I beg to move Amendment No. 2, in page 1, line 9, leave out 'granting it by him' and insert:
    'activities of the applicant as a whole'.
    This proposal is designed to alter the basis of the balance of payments test so that it is not a question whether or not the ordering of one ship is in the interests of the balance of payments but is a question whether or not the activities of the applicant are, as a whole, beneficial to the balance of payments.
    The Amendment is largely probing because we want the Financial Secretary to justify the Bill in this context. We may agree with the proposal if he makes a good justification, but the present premise on which this part of the Bill is based should not go unchallenged. The new test—new indeed in this whole sphere—is that operations will not receive investment grants unless they are in the interests of the balance of payments. The Bill goes on to particularise and say that it must be the operations not of a particular shipping company but of a particular ship.
    The Financial Secretary made it clear in Committee that the grant would not be forthcoming for one ship which was not operating in the interests of the balance of payments, despite the fact that a company's fleet was, as a whole, earning money for the balance of payments. My hon. Friends and I fear that the Government are creating an anomalous position. A company which makes industrial investments is, and will be, entitled to claim the 20 per cent. grant, whether or not the activities in question are in the interests of the balance of payments, while that will not apply to persons engaged in shipping in respect of the activities of a particular ship the activities of which are not in the interests of the balance of payments.
    288
    On the surface, the effects of this appear to have rather harsh results. No one is keener than I on stopping up loopholes in the giving of investment grants. This, clearly, is one and we are united in wishing to stop it up, but we must be careful not to do something which is unfair and harsh. A major oil company has brought in during the last two or three years £93 million in foreign exchange earnings against profits and dividends going out of £37 million. That has been achieved by its fleet yet the operations of its individual ships would probably mean that it would be disqualified from receiving investment grant.
    That same company has built many ships in Great Britain—I believe 18, of which seven were major tankers. We have had considerable benefit from this company. If investment grants are no longer forthcoming, that company will no longer feel obliged to build in British yards and may place orders wherever prices are lowest. That may damage the balance of payments because we would lose orders for ships which otherwise might be placed in Britain.
    It is a curious concept that we should take these decisions on the earning capacity of a single ship when the earning capacity of the company as a whole might be enormous and benefit us greatly. If we are to have these new rules about what is and what is not in the interests of balance of payments, the Government have to do a considerable amount more thinking It is clear that many grants will he refused for activities which are in the interests of the balance of payments and some may be stopped by the operations of the Bill while others are paid for activities which are not in balance of payments interests.
    I move the Amendment to ask the Financial Secretary to justify the Government's decision that grant should be paid

    289
    only where a single ship is profitable to balance of payments even though the company as a whole might be bringing great balance of payments benefits to this country and paying taxes and benefiting, by means of employment and investment and otherwise, the economy of the country.
    I think that the hon. and learned Gentleman will find it difficult to find a fair justification for what is proposed here. I do not take the matter further, but we all know that a number of companies will be affected. Some have been better employers and the benefits to the economy have been greater than in the case of others. Before taking a decision the House should be given a justification of the Government's assumption that the grant should be paid only in respect of a single ship and not for the activities of a company as a whole.
    Mr. Albert Booth: It would assist the House if the hon. Member would make clear that the argument he has advanced applies only to vessels built outside the E.F.T.A. area since the Bill as amended excludes such ships.
    Mr. Ridley: I agree with the hon. Member's interpretation of the purpose of the Amendment.
    5.15 p.m.
    Mr. Taverne: The concern here is about a company which over the whole field of its operations is benefiting balance of payments. There is no question of discrimination between companies as to the balance of payments test. The test is designed straightforwardly for the purpose that its name indicates. It is an impartial test. If the facts indicate that a particular transaction is unfavourable to the balance of payments, it is because the facts are what they are, stemming from the whole circumstances of the company's ownership, the proposed operation of the ship, and so on. We will consider the operations of an individual ship in the context of the whole fleet, but it is still at the individual ship that one must look.
    I understand that this is a probing Amendment. It asks us to look more widely at other activities. If one looks at activities of an American-owned oil
    290
    company one may find that the company has interests which freely enjoy investment grants where these apply on assets provided for other operations because in this field there would be gain to the British economy. It is the British economy with which we are concerned, but it would be wholly illogical to say that within an entirely different branch of operations the company is benefiting the balance of payments and therefore we must regard ourselves as under an obligation to pay out taxpayers' money in respect of another activity where by definition there is no benefit to the balance of payments.
    The Amendment by its very wording postulates a situation in which we are asked that taxpayers' money should be given for the benefit produced by a ship which will redound to our loss and lose us money on the balance of payments. If the money were not given there would be no loss. It would be totally unjustifiable to say that this operation, which can be distinctly separated, should be given money whatever the effect on balance of payments.
    I do not follow the argument about how this would discourage companies building in British yards because, if they build in our yards, they get the grant. While I recognise that it is a probing Amendment, we must look at the effect of what is proposed. It is quite unjustifiable when the Opposition were earlier very much concerned about the handing out of grants of British money to people who build ships for benefits elsewhere.
    Mr. Wingfield Digby: In view of what the hon. and learned Gentleman said about looking at the case of an individual ship in a whole fleet, there is perhaps a case for revising the pro forma circulated to applicants, particularly paragraph 6 which refers to the way in which the ship shall operate without relating to the operation of the fleet.
    Mr. Taverne: I shall certainly look at the question of revising the format, but one should look at the operation of that ship in the fleet. It may be that looked at allied with the building of other ships it would seem to bring in a benefit which would not be brought in without the other ships.
    Amendment negatived.
    Amendment proposed: No. 3, in page 1, line 9, leave out 'him' and insert 'the Minister of Technology'.—[Mr. Taverne.]

    Division No. 47.]

    AYES

    [5.19 p.m.

    Abse, Leo

    Griffiths, Eddie (Brightside)

    Newens, Stan

    Albu, Austen

    Hamilton, James (Bothwell)

    Norwood, Christopher

    Alldritt, Walter

    Hamilton, William (Fife, W.)

    O'Halloran, Michael

    Allen, Scholefield

    Hannan, William

    O'Malley, Brian

    Anderson, Donald

    Harper, Joseph

    Oram, Albert E.

    Archer, Peter (R'wley Regis & Tipt'n)

    Harrison, Walter (Wakefield)

    Orme, Stanley

    Ashton, Joe (Bassetlaw)

    Haseldine, Norman

    Oswald, Thomas

    Atkins, Ronald (Preston, N.)

    Hazell, Bert

    Padley, Walter

    Atkinson, Norman (Tottenham)

    Heffer, Eric S.

    Paget, R. T.

    Bacon, Rt. Hn. Alice

    Henig, Stanley

    Pannell, Rt. Hn. Charles

    Bagier, Gordon A. T.

    Herbison, Rt. Hn. Margaret

    Park, Trevor

    Barnes, Michael

    Hobden, Dennis

    Parker, John (Dagenham)

    Barnett, Joel

    Hooley, Frank

    Parkyn, Brian (Bedford)

    Benn, Rt. Hn. Anthony Wedgwood

    Houghton, Rt. Hn. Douglas

    Pavitt, Laurence

    Blackburn, F.

    Howarth, Robert (Bolton, E.)

    Pearson, Arthur (Pontypridd)

    Blenkinsop, Arthur

    Howell, Denis (Small Heath)

    Peart, Rt. Hn. Fred

    Booth, Albert

    Hoy, Rt. Hn. James

    Pentland, Norman

    Boston, Terence

    Huckfield, Leslie

    Perry, Ernest G. (Battersea, S.)

    Bradley, Tom

    Hughes, Hector (Aberdeen, N.)

    Perry, George H. (Nottingham, S.)

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

    Hughes, Roy (Newport)

    Price, Thomas (Westhoughton)

    Buchan, Norman

    Hunter, Adam

    Price, William (Rugby)

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

    Hynd, John

    Probert, Arthur

    Butler, Herbert (Hackney, C.)

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

    Randall, Harry

    Butler, Mrs. Joyce (Wood Green)

    Janner, Sir Barnett

    Rankin, John

    Carmichael, Neil

    Jeger, George (Goole)

    Rhodes, Geoffrey

    Chapman, Donald

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

    Roberts, Albert (Normanton)

    Coe, Denis

    Jenkins, Hugh (Putney)

    Roberts, Gwilym (Bedfordshire, S.)

    Coleman, Donald

    Johnson, Carol (Lewisham, S.)

    Robertson, John (Paisley)

    Concannon, J. D.

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

    Rose, Paul

    Conlan, Bernard

    Jones, Dan (Burnley)

    Ross, Rt. Hn. William

    Crawshaw, Richard

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

    Rowlands, E.

    Cronin, Jonn

    Jones, J. Idwal (Wrexham)

    Shaw, Arnold (Ilford, S.)

    Crossman, Rt. Hn. Richard

    Jones, T. Alec (Rhondda, West)

    Sheldon, Robert

    Dalyell, Tam

    Judd, Frank

    Shinwell, Rt. Hn. E.

    Davies, E. Hudson (Conway)

    Kelley, Richard

    Shore, Rt. Hn. Peter (Stepney)

    Davies, Dr. Ernest (Stretford)

    Lawler, Wallace

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

    Davies, Rt. Hn. Harold (Leek)

    Lawson, George

    Silverman, Julius

    Davies, Ifor (Gower)

    Leadbitter, Ted

    Skeffington, Arthur

    Davies, S. O. (Merthyr)

    Slater, Joseph

    Delargy, H. J.

    Lee, Rt. Hn. Frederick (Newton)

    Small, William

    Dempsey, James

    Lestor, Miss Joan

    Spriggs, Leslie

    Dewar, Donald

    Lewis, Ron (Carlisle)

    Steele, Thomas (Dunbartonshire, W.)

    Dickens, James

    Lipton, Marcus

    Swain, Thomas

    Doig, Peter

    Lomas, Kenneth

    Symonds, J. B.

    Driberg, Tom

    Loughlin, Charles

    Taverne, Dick

    Dunn, James A.

    Lubbock, Eric

    Thornton, Ernest

    Dunnett, Jack

    McBride, Neil

    Thorpe, Rt. Hn. Jeremy

    Dunwoody, Mrs. Gwyneth (Exeter)

    McCann, John

    Tinn, James

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

    MacColl, James

    Tuck, Raphael

    Eadie, Alex

    Macdonatd, A. H.

    Urwin, T. W.

    Edwards, Robert (Bilston)

    McGuire, Michael

    Varley, Eric G.

    Ellis, John

    McKay, Mrs. Margaret

    Wainwright, Richard (Colne Valley)

    English, Michael

    Mackintosh, John P.

    Walden, Brian (All Saints)

    Ennals, David

    Maclennan, Robert

    Walker, Harold (Doncaster)

    Ensor, David

    MacMillan, Malcolm (Western Isles)

    Wallace, George

    Evans, Fred (Caerphilly)

    McMillan, Tom (Glasgow, C.)

    Watkins, David (Consett)

    Evans, Gwynfor (C'marthen)

    McNamara, J. Kevin

    Watkins, Tudor (Brecon & Radnor)

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

    MacPherson, Malcolm

    Weitzman, David

    Faulds, Andrew

    Mahon, Peter (Preston, S.)

    Whitlock, William

    Fernyhough, E.

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

    Wilkins, W. A.

    Finch, Harold

    Manuel. Archie

    Willey, Rt. Hn. Frederick

    Fitch, Alan (Wigan)

    Mapp, Charles

    Williams, Alan Lee (Hornchurch)

    Fletcher, Raymond (Ilkeston)

    Marks, Kenneth

    Williams, Clifford (Abertillery)

    Fletcher, Ted (Darlington)

    Mellish, Rt. Hn. Robert

    Williams, Mrs. Shirley (Hitchin)

    Foot, Michael (Ebbw Vale)

    Mikardo, Ian

    Willis, Rt. Hn. George

    Ford, Ben

    Millan, Bruce

    Wilson, Rt. Hn. Harold (Huyton)

    Forrester, John

    Miller, Dr. M. S.

    Wilson, William (Coventry, S.)

    Fowler, Gerry

    Milne, Edward (Blyth)

    Winnick, David

    Freeson, Reginald

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

    Winstanley, Dr. M. P.

    Gardner, Tony

    Molloy, William

    Woodburn, Rt. Hn. A.

    Garrett, W. E.

    Morgan, Elystan (Cardiganshire)

    Woof, Robert

    Ginsburg, David

    Morris, Charles R. (Openshaw)

    Golding, John

    Morris, John (Aberavon)

    TELLERS FOR THE AYES:

    Gray, Dr. Hugh (Yarmouth)

    Murray, Albert

    Mr. Ernest Armstrong and

    Gregory, Arnold

    Neat, Harold

    Mr. R. F. H. Dobson.

    Grey, Charles (Durham)

    Question put, That the Amendment be made:—
    The House divided: Ayes 221, Noes 160.

    NOES

    Allason, James (Hemel Hempstead)

    Glover, Sir Douglas

    Noble, Rt. Hn. Michael

    Amery, Rt. Hn. Julian

    Godber, Rt. Hn. J. B.

    Orr, Capt. L. P. S.

    Archer, Jeffrey (Louth)

    Gower, Raymond

    Orr-Ewing, Sir Ian

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

    Gresham Cooke, R.

    Osborn, John (Hallam)

    Baker, Kenneth (Acton)

    Grieve, Percy

    Page, Graham (Crosby)

    Baker, W. H. K. (Banff)

    Griffiths, Eldon (Bury St. Edmunds)

    Page, John (Harrow, W.)

    Batsford, Brian

    Gurden, Harold

    Pearson, Sir Frank (Clitheroe)

    Beamish, Col. Sir Tufton

    Hamilton, Michael (Salisbury)

    Peel, John

    Bennett, Dr. Reginald (Gos. & Fhm)

    Harvey, Sir Arthur Vere

    Peyton, John

    Berry, Hn. Anthony

    Harvie Anderson, Miss

    Pike, Miss Mervyn

    Biffen, John

    Hawkins, Paul

    Powell, Rt. Hn. J. Enoch

    Biggs-Davison, John

    Hay, John

    Pym, Francis

    Birch, Rt. Hn. Nigel

    Heald, Rt. Hn. Sir Lionel

    Renton, Rt. Hn. Sir David

    Boardman, Tom (Leicester, S. W.)

    Heath, Rt. Hn. Edward

    Rhys Williams, Sir Brandon

    Bossom, Sir Clive

    Hiley, Joseph

    Ridley, Hn. Nicholas

    Boyd-Carpenter, Rt. Hn. John

    Holland, Philip

    Ridsdale, Julian

    Boyle, Rt. Hn. Sir Edward

    Hornby, Richard

    Rossi, Hugh (Hornsey)

    Brewis, John

    Howell, David (Guildford)

    Russell, Sir Ronald

    Brinton, Sir Tatton

    Hutchison, Michael Clark

    Scott-Hopkins, James

    Bruce-Gardyne, J.

    Iremonger, T. L.

    Sharples, Richard

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

    Irvine, Bryant Godman (Rye)

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

    Bullus, Sir Eric

    Jenkin, Patrick (Woodford)

    Speed, Keith

    Burden, F. A.

    Jennings, J. C. (Burton)

    Stainton, Keith

    Campbell, B. (Oldham, W.)

    Jopling, Michael

    Stoddart-Scott, Col. Sir M.

    Campbell, Gordon (Moray & Nairn)

    Joseph, Rt. Hn. Sir Keith

    Summers, Sir Spencer

    Cary, Sir Robert

    Kirk, Peter

    Tapsell, Peter

    Channon, H. P. G.

    Kitson, Timothy

    Taylor, Sir Charles (Eastbourne)

    Chichester-Clark, R.

    Knight, Mrs. Jill

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

    Clark, Henry

    Lambton, Viscount

    Taylor, Frank (Moss Side)

    Clegg, Walter

    Lane, David

    Temple, John M,

    Cooke, Robert

    Langford-Holt, Sir John

    Turton, Rt. Hn. R. H.

    Cooper-Key, Sir Neill

    Legge-Bourke, Sir Harry

    Vickers, Dame Joan

    Cordle, John

    Lewis, Kenneth (Rutland)

    Waddington, David

    Corfield, F. V.

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Walker-Smith, Rt. Hn. Sir Derek

    Costain, A. P.

    Longden, Gilbert

    Wall, Patrick

    Craddock, Sir Beresford (Spelthorne)

    MacArthur, Ian

    Ward, Christopher (Swindon)

    Crouch, David

    Maclean, Sir Fitzroy

    Ward, Dame Irene

    Currie, G. B. H.

    McMaster, Stanley

    Weatherill, Bernard

    Dance, James

    McNair-Wilson, Michael

    Wells, John (Maidstone)

    Dean, Paul

    McNair-Wilson, Patrick (NewForest)

    Whitelaw, Rt. Hn. William

    Digby, Simon Wingfield

    Maddan, Martin

    Wiggin, A. W.

    Dodds-Parker, Douglas

    Maginnis, John E.

    Williams, Donald (Dudley)

    Doughty, Charles

    Marten, Neil

    Wilson, Geoffrey (Truro)

    Drayson, G. B.

    Maude, Angus

    Wolridge-Gordon, Patrick

    Eden, Sir John

    Mawby, Ray

    Wood, Rt. Hn. Richard

    Elliot, Capt. Walter (Carshalton)

    Maxwell-Hyslop, R. J.

    Woodnutt, Mark

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

    Mills, Peter (Torrington)

    Worsley, Marcus

    Emery, Peter

    Monro, Hector

    Wright, Esmond

    Errington, Sir Eric

    Montgomery, Fergus

    Wylie, N. R.

    Eyre, Reginald

    More, Jasper

    Younger, Hn. George

    Farr, John

    Morgan-Giles, Rear-Adm.

    Fortescue, Tim

    Mott-Radclyffe, Sir Charles

    TELLERS FOR THE NOES:

    Fry, Peter

    Munro-Lucas-Tooth, Sir Hugh

    Mr. Anthony Grant and

    Galbraith, Hn. T. G.

    Nabarro, Sir Gerald

    Mr. Anthony Royle.

    Gibson-Watt, David

    Neave, Airey

    Further Amendment made: No. 4, in page 1, line 11, leave out 'he may' and insert—'they may direct him to'.—[Mr. Taverne.]
    Mr. Booth: I beg to move Amendment No. 6, in page 1, line 21, leave out from first 'the' to 'or' in line 24 and insert 'United Kingdom'.
    The purpose of the Amendment is to prevent British taxpayers' money from being used to pay for ships to be built in yards outside the United Kingdom where to do so would be detrimental to our balance of payments. I therefore hold that the Amendment is completely in accord with the purpose of the Bill.
    294
    If my hon. and learned Friend the Financial Secretary is in any doubt about this, I refer him to these words used by his predecessor, the current Paymaster-General, on Second Reading:
    "The purpose of this short and, I hope, not violently exciting Bill is to ensure that investment grant is not given on ships where to do so would be detrimental to the United Kingdom balance of payments."—[OFFICIAL REPORT, 24th November, 1969; Vol. 792, c. 117.]
    5.30 p.m.
    The Bill does not apply the test of balance of payments detriment to all shipbuilding grants, but only to ships built in yards outside the E.F.T.A. countries. The least which I owe my

    295
    shipbuilding constituents and shipbuilding trade unionists, whose interests I have so much at heart, is this Amendment. It would not have been unreasonable to ask for something more—namely, that no investment grants would he paid on ships built outside the United Kingdom, but the Amendment will at least ensure that, if any grant is considered for payment by British taxpayers for the building of a ship outside the United Kingdom, it will be withheld if the balance of payments requires it.
    This, of course, represents a growing problem. A total of £91 million has already been committed to grants to shipping companies controlled by people who are not residents of the United Kingdom. Of this, £61 million is committed for building ships outside the United Kingdom. So there is no doubt that this is a problem of serious proportions. Therefore, a Bill which does not deal with this problem but leaves an enormous loophole for this practice to continue in respect of E.F.T.A. yards is utterly indefensible.
    When we talk of E.F.T.A. yards in this context, what we mean is competition with Sweden, our major and growing competitor. In 1952, Swedish tonnage launched was less than half a million tons, while United Kingdom tonnage was about 1·3 mllion tons. By 1959, Swedish tonnage was up to 800,000 tons launched and ours had fallen to about 1¼ million. By 1964, Swedish tonnage was on a par with ours—it had risen further and ours had fallen. By 1966, Sweden was launching a higher tonnage than we are.
    It is reasonable to contend, therefore, that, as Swedish yards have increased their output, it has been to the detriment of, or in direct competition with, British yards, so we cannot say that the Bill deals with the problem of British taxpayers' money being paid out in investment grants for building in foreign yards unless we examine the conditions of shipbuilding competition in E.F.T.A.
    Not only is there the general problem of the increase in Swedish shipbuilding investment: there is the particular problem of competition in tanker shipbuilding tonnage. Of the £61 million which has been paid or is committed to be paid for building abroad, £54 million is being paid for tankers. Therefore, it is in tanker competition that the Amendment is vital.
    296
    I turn now to the evidence submitted by the Electrical Trades Union to the Shipbuilding Inquiry Committee in 1965. It is not my union, so I can claim that this view is not biased by my own union's stand. It said in paragraph 113:
    "In our view, the reliance of the shipbuilding industry to the extent of 80 per cent. or more of its orders on the United Kingdom fleet has meant that the industry has likewise been influenced by the policy in United Kingdom ship operating referred to previously.
    The Japanese and Swedish shipbuilders in meeting the demand for larger tankers and bulk carriers, have based their production on development trends in world ship operating, whereas the United Kingdom shipbuilding industry has primarily based itself on home market demands."
    This was true then and it is true today. Therefore, the danger of allowing the Bill to go through unamended is that Swedish yards will take a higher percentage of world shipbuilding tonnage of bulk carriers and oil tankers than do British yards.
    I am not so confident of any British Government's ability to control the machinations of capitalists generally, and shipowners in particular, as to imagine that we could frame legislation to guarantee—even if that were desirable—that all money paid in investment grants went to British shipowners for building in British yards. But I think that we can frame legislation to ensure that grants are paid only in respect of ships built in United Kingdom yards. This, I think, is a prima facie guarantee of at least some initial benefit to our balance of payments.
    Mr. Anthony Royle: In his reference to grants to British yards, the hon. Member would, of course, include British yards overseas, which are also included in the Bill, in view of the Committee's decision.
    Mr. Booth: There is also a Government Amendment to deal with the question of British Colonies. My Amendment deals strictly with the United Kingdom. It does not apply to any yards outside this country. I have particularly in mind, of course, British shipyard workers and our balance of payments problems.
    As I was saying, I think that we can frame legislation to guarantee that grants are paid only in respect of ships built in particular yards, and we can nominate United Kingdom yards for this purpose. While any berths or slipways are vacant

    297
    in any shipyard in the United Kingdom, while any shipyard workers are unemployed, it is totally indefensible to have legislation to allow grants to be paid to foreign-owned shipping interests for building ships abroad.
    In fact, in certain shipbuilding areas, there are still unacceptably high levels of unemployment. In the North-East, where about half the United Kingdom tonnage is built, there are areas with probably the highest rate of male unemployment in the whole of England. On Wearside, for example, there is a terrible level of unemployment.
    But even if we could reduce that unemployment to more reasonable levels, there would still be a case for the Amendment. It must rest on the premise that, if British taxpayers are to pay for the building of ships, their money should be primarily directed to ships built in United Kingdom yards to provide employment, to provide for the expansion of the industry and to ensure that we do not use British taxpayers' money to subsidise a country which is a highly successful competitor.
    Mr. Wingfield Digby: Although I fully appreciate the motives of the hon. Member in moving this Amendment, I must make it clear that the Opposition loyally support our E.F.T.A. agreements. There are times when we feel that we support them more loyally than the Government do. We would not want any breach of those agreements. However, we were surprised to find in the Bill a provision for total exemption from the new test of ships ordered in E.F.T.A. countries or the Irish Republic, and, even more surprising, of ships on which 50 per cent. or more of the work is done in those countries. In the Report of the Estimates Committee there was a relevant question to the representative of the Ministry of Technology. In Question No. 211 he was asked if he had any figure for the saving. He replied that he thought that the saving on the Bill would be £5 million a year but added:
    "But there is nothing to stop a ship-owner transferring his order somewhere else, or to an E.F.T.A. yard."
    So there is a slight danger that we shall see an increase in the transfer of orders to E.F.T.A. yards in order to escape the new test.
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    On Second Reading, the Paymaster-General estimated that £12 million worth of this work was going to E.F.T.A. countries already. But on both sides we are a little concerned lest this £12 million be increased. The right hon. Gentleman spoke of our treaty obligations but did not enlarge on that point. He stated categorically that it would be contrary to our treaty obligations under the Stockholm Agreement and under the Irish Treaty not to make these exclusions. But we should ask whether the Minister does not now see a danger that those who wish to avoid going through this rather more arduous test may take the easy course of transferring their orders to E.F.T.A. countries, thereby escaping the new net we are trying to make in order to prevent any unnecessary leakage which would be contrary to the interests of our balance of payments.
    Mr. Rankin: I followed the speech of my hon. Friend the Member for Barrow-in-Furness (Mr. Booth) very closely and I do not think he even breathed the thought ascribed to him by the hon. Member for Dorset, West (Mr. Wingfield Digby), of an intention on his part to break or even try to break the E.F.T.A. agreement. I accept my hon. Friend's view and in doing so give him my warmest support on the Amendment, because so much is it a part of my parliamentary life in Govan that I actually started by jumping off at the point which my hon. Friend has now reached along with the House.
    We have no hurtful thoughts with regard to any shipbuilders in any part of the world, and, while I am not speaking now for my hon. Friend, I feel that he will not disagree with anything that I may say. I have no harmful thoughts towards any ship producers in the world because we recognise that we must sell ships and encourage other people to sell ships too. That means they have to produce ships because ships that sell are ships that almost inevitably have to be repaired at some time. It cannot be avoided because those vessels cross the Pacific and other oceans which some of us have seen—waters which are so torrential in their nature at times that they provide, if not Britain herself, then some of her dependencies such as Hong Kong with steady work in ship repairing. Sometimes, of course, these ships may

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    ultimately come to us for repair and so provide work for our own people.
    5.45 p.m.
    There is interdependence in the shipbuilding industry but there is also concentration and such concentration I have seen in my constituency where, for five years, we have had a fight for survival. I want to say here, without being unkind—I am sorry to say it—that had the Opposition been in power when hard times struck, as in Govan, then Govan shipbuilding yard would not be operating now. I detected this attitude in the Opposition at the time when the first proposal for help came up. There was almost a movement of objection to the provision of £1 million urgently needed to keep Govan breathing. That movement from the Opposition was indicative of their attitude then.
    I do not mind the Opposition being critical because I agree that, when money is being expended by the Government, even for good purposes, it must be subject to close examination by this House. I think we have been good stewards because we have used that money well despite tremendous difficulties.
    I hope there is nothing contentious in what I am saying. The Amendment seeks to provide aid for shipbuilding here. So far, we have been talking about overseas in this debate; now we are going to talk about the situation at home and those parts of shipbuilding in our own country where aid has been needed, and where it still may be needed. It is our business to speak of the places we know and to assure the House that the aid we have got in Glasgow and to which we admit, and which now amounts to nearly £20 million, has kept 4,000 men in my constituency at work. Better that, than that they should not be working. It has kept us producing ships and selling ships, filling a market that was needed. That is a good job to do. It is a good purpose to which to apply our money. I hope that the Amendment will receive the support of the House. It may get some criticism but I trust it will receive the support of the House and become the policy of the Government.
    Mr. McMaster: I also express sympathy with the hon. Member for Barrow-in-Furness (Mr. Booth) in the purpose
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    of the Amendment. Perhaps we can be told what the express provisions of the E.F.T.A. agreement are and whether, if the Amendment were accepted, we would be in breach of the Agreement.
    Under the Industrial Development Act, we made provisions intended to benefit industry in this country, particularly our shipbuilding industry, which has gone through a very tough time. It has faced unfair competition from abroad. In certain cases, there has been direct open subsidy to shipbuilding in such countries as France and Italy, while indirect subsidies are suspected in other competing countries like Japan—for example, through the low price of steel. When we attempt to meet this type of competition by assisting our own industry so that it will at least be on an equal, competitive basis, are we obliged to extend that help to assist shipyards in Sweden or any of the other E.F.T.A. countries, including the Republic of Ireland?
    There is a valid case for assisting the British shipbuilding industry. This assistance, the British taxpayers' money, should only be spent within the country. There has been a loophole here and the purpose of the Bill is to close it. There have been some comment and concern recently about this continuing gap which has in the past led to a lot of taxpayers' money being spent on the building of vessels abroad, and it might have increased in coming years. This Amendment deserves the support of all hon. Members. If it is at all possible, within the agreements into which this country has entered, to restrict in some way the provision of money through the Industrial Development Act to ships being built in this country only, then some such Amendment should be incorporated in the Bill.
    Speaking as a Member for a Northern Ireland constituency, where we have a large shipbuilding yard, Harland and Wolff, I am well aware that our shipyards are proud of the fact that, generally speaking, and with the exceptions I have mentioned, they are fully competitive. Many of our orders come from abroad. I would be a little concerned if we were too chauvinistic. It might lead other E.F.T.A. countries, particularly Norway, which has placed many orders with British yards, some in my own constituency, to take their orders away or to place them in E.F.T.A. countries.

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    If that were the case we might be cutting off our nose to spite our face. I should like the Minister to pay particular attention to this point. He should tell the House what we stand to lose and to gain by the Amendment. What research has been done into this? Can he tell us the value of foreign orders placed in British yards and how these are likely to be affected as against the value of British orders which, with the Bill as it stands, we are likely to lose? The sum of £12 million has been mentioned. I should like him to estimate what amount of money will be made available to companies in this country.
    How far will it be possible for overseas shipping companies to establish an office in this country simply to obtain a grant and then to place an order in an overseas yard and have a ship built which might operate in the Far East, between Japan and Australia or in the United States? If the Treasury is satisfield that there is some tax advantage, will this be permitted? If this is the case we are neglecting the interests of our shipyards, and these interests should play a part. This is not written into the Bill but it is a relevant and important matter.
    Dr. Ernest A. Davies: I very much appreciate the reason why my hon. Friend the Member for Barrow-in-Furness (Mr. Booth) has moved this Amendment. When we discussed the Bill in Committee on 4th December, he spoke about the recent history of the shipbuilding industry and argued that the Government should not take any measures which would reduce the amount of work coming to British yards. As I know of his constituency interests I am very much alive to the reason why he has put forward this Amendment. I also note that my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) and hon. Members opposite have argued strongly along similar lines stressing the position of the shipbuilding industry.
    Investment grants provided for ship owners, give some benefits to the shipbuilding industry. It is fair to remind the House that the intention of this investment grant is primarily, although it may be in the interests of the shipbuilding industry, to assist in maintaining the British merchant fleet. It
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    is therefore aiming at the shipowner and operator rather than the ship builder. I would ask my hon. Friend and the House to look at this against the background of the general activity of the Government in support of the shipbuilding industry and to see the primary reason why this investment grant is made.
    Because of this interest my hon. Friend wishes to limit the special exemption under Clause 1(2)(a) to ships entirely or mainly built or converted in United Kingdom shipyards instead of extending it to those built or converted in E.F.T.A., this includes the United Kingdom, and the Irish Republic. I can assure my hon. Friend that, while the investment scheme is intended for the general benefit and encouragement of the British merchant fleet, the Government regard it as most important that investment grants are made available only when there is an effective benefit to the balance of payments. That has been repeated in the course of the debates. This is the primary reason for introducing the Bill. It follows that for this reason we want as few exceptions to these provisions as possible.
    This was made quite clear on Second Reading. When we look at this question of our relations with E.F.T.A.—and I welcome the comments made by the hon. Member for Dorset, West (Mr. Wingfield Digby) on this, although I would not entirely agree with his assessment of the relative warmth with which the two sides of the House view the E.F.T.A. agreement—we have to remember that we are subject to the terms of agreements into which we have entered. It is a consequence of having entered into the agreement to form E.F.T.A. that we are subject to that convention. We are subject, for similar reasons, to the provisions of the treaty setting up the Irish Republic Free Trade Area—
    Mr. Wingfield Digby: Would the Parliamentary Secretary go a little further and tell us which particular Article of the Stockholm agreement and of the Irish agreement brings this into force?
    Dr. Davies: I will try to be helpful. I assure the House that in legislating to apply the balance of payments test we have no alternative but to include the special exemption in favour of ships built in E.F.T.A. and Irish Republic shipyards.
    Mr. Royle: Would the hon. Gentleman answer the question and say which article applies to his argument?
    6.0 p.m.
    Dr. Davies: I gave way to the hon. Gentleman just as I was about to quote a portion of the convention which is relevant to the question. It is Article 13 of the E.F.T.A. Convention. No doubt hon. Members opposite will take the opportunity to study it. I shall not weary the House by quoting it.
    Sir Douglas Glover: Why not? Put it on the record.
    Dr. Davies: I am sure that the hon. Gentleman is well able to study the E.F.T.A. agreement if he wishes. Now that I have identified the article, he will be able to study it at his leisure.
    Mr. Hay: The hon. Gentleman cannot get away with it as easily as that. The balance of his argument depends on the fact that we have signed a convention and the Government's hands are therefore tied. Surely we are entitled, without waiting until the debate is over and going to the Library, to be told he provisions in the convention which bind and force the Government in this respect.
    Dr. Davies: I am not sure that I can allow the hon. Gentleman to get away with the notion that the Government have been forced. If a Government enter freely into an agreement with other countries, they should abide by the agreement.
    I am, however, delighted to help the hon. Member for Dorset, West, by giving him some further information. He has, I hope, already noted that it is Article 13. This exemption is required by Article 13 of the Stockholm Convention entitled "Government Aids". This part of the convention prohibits aid
    "the main purpose or effect of which is to frustrate the benefits expected from the removal or absence of duties and quantitative restrictions on trade between member states".
    No doubt hon. Members opposite will want to digest that. There is no doubt that under the convention it is necessary to include in the Bill the exemption which it includes and which my hon. Friend the Member for Barrow-in-Furness seeks to persuade the House should properly be removed.
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    The question of the so-called "E.F.T.A. leak" has been mentioned by the hon. Members for Belfast, East (Mr. McMaster) and Dorset, West. If the investment grant is used legitimately and there is no suggestion of malpractice, this is not a leak it is the proper use of the investment grant. However, the hon. Member for Belfast, East raised the question of what has come to be known as the "brass plate" company. My hon. and learned Friend the Financial Secretary addressed himself to this problem at column 156 of the Second Reading debate. A "brass plate" company will require exchange control consent if it is to exploit the possible opportunity to acquire United Kingdom investment grant on ships built in E.F.T.A. shipyards. There is no doubt that the "brass plate" company will be denied that consent. Arrangements have been made for the Bank of England to refer to the Treasury any exchange control application from any shipping company set up in the United Kingdom under foreign control since the date of the introduction of the Bill.
    Mr. McMaster: I still do not follow the detailed point about the "brass plate" company building in an E.F.T.A. yard. Surely under the provisions of the Act and the Bill, if the ship is to be built in an E.F.T.A. yard, approval is not required; or, to put it in a negative form, as the Bill does, the Treasury is not empowered to refrain from making the grant. Surely that is outside the provisions. Therefore, I do not see why the hon. Gentleman says that the "brass plate" company will be caught by the Bill.
    Dr. Davies: I made it plain that the "brass plate" company is dealt with by the Treasury under exchange control consent. But the fact that we have this Bill does not remove that power from the Treasury. The Bill adds to, rather than detracts from, the powers in this respect. I hope that the hon. Gentleman will feel reassured on that matter.
    Mr. Booth: I understand my hon. Friend to say that the brass plate company will be tackled by exchange control whereas other companies placing orders outside E.F.T.A. yards will have to run the gauntlet of the balance of payments test. Has the exchange control activity

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    of the Treasury changed since the figures were last produced? If so, how will this ensure that the leak is stopped or that a further £60 million will not flow out, as it has done in the past?
    Dr. Davies: The "brass plate" company was held to be a particular abuse of investment grants. The Government's original proposal prior to the introduction of the Bill was to stop this undesirable activity by using the exchange control mechanism of the Treasury. The Bill does not remove those powers from the Treasury. In the event of any "brass plate" company activity, the Treasury will exert its control, as it has done for the last two years. If anything, the provisions in the Bill are additional to the Treasury's powers. I cannot make it plainer than that.
    I hope my hon. Friend the Member for Barrow-in-Furness will understand why the Government are not able to accept his Amendment.
    Mr. Hay: I may be wrong—I hope I am—but I believe that the Minister has not done his homework on the point about E.F.T.A. He did not know the article of the convention under which the Clause in the Bill is drawn. I listened very carefully to the extract from Article 13 which he read, and it seemed to me that it had nothing whatever to do with the Bill. As I understood, it dealt only with duties and quantitative restrictions. We are not talking about them. We are talking about grants or subsidies. I must ask the Minister to give us a little more information.
    The Government in effect are saying that they want to restrict the use of these investment grants by people who are neither in the United Kingdom nor in E.F.T.A. If there are provisions in the E.F.T.A. Convention which oblige the Government to do this, the House should be told in detail exactly what they are. It is not good enough for a Minister to say that we have an obligation under E.F.T.A. and if we want to know what the obligation is we must go to the Library and look it up. The House of Commons deserves more than that. I am sorry if I embarrass the Joint Parliamentary Secretary, but I must ask him to tell the House, with leave, a little more about the article in the E.F.T.A. Convention
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    under which the provision in the Bill is framed.
    Mr. Ridley: I should like to reinforce what my hon. Friend the Member for Henley (Mr. Hay) has said. We are disposed to help the Government on this Amendment, but the reason why it is necessary to extend this privilege to E.F.T.A. has not been clearly explained. The Parliamentary Secretary seemed to suggest that Article 13 contained a prohibition of devices which would be a substitute for tariff protection and would not be common to all the E.F.T.A. countries. If that is so, presumably we could pay investment grants on all investments made in the E.F.T.A. countries. If it is not so, then he has quoted the wrong article. The next Amendment to be dealt with concerns G.A.T.T. There is little difference, if any, between what the Parliamentary Secretary quoted from the E.F.T.A. article and the relevant provisions relating to G.A.T.T., so presumably the whole world could be exempted from the operation of the Bill.
    I think that the reason why the Parliamentary Secretary is so coy about E.F.T.A. is that the Government have done so much damage during their term of office to E.F.T.A. that they cannot risk another row. We all remember when the Norwegian Minister for Trade and Shipping, Mr. Willoch, came over and made a tremendous fuss about investment grants for the aluminium smelters, and we all remember the import duties which were imposed in the first few weeks of the Government's life. They think that perhaps this is enough, and they cannot risk another row. The Government must have a better excuse. It is no use the Parliamentary Secretary quoting part of an article which does not apply. Although we would not like to associate ourselves with giving E.F.T.A. a third kick in the teeth in seven years, we want to know more from the Parliamentary Secretary to justify his stand.
    We are not considering here the granting of a subsidy, the imposition of a quota or the erection of a tariff, but whether or not the Treasury shall have power to direct the Minister of Technology not to pay an investment grant to a foreign shipowner who might build in a foreign yard. This has nothing to do with trade and nothing to do with the

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    matters dealt with in either the G.A.T.T. or E.F.T.A. Treaties.
    While we are benevolent towards E.F.T.A. and towards the Government in their unfortunate plight, we still think that they should sing for their supper and quote at greater length the relevant articles in the E.F.T.A. Treaty which they are quoting in aid.
    6.15 p.m.
    Dame Irene Ward: May I add a comment on this new controversy? At the beginning of the Minister's speech on the Amendment I understood him to say that this provision was designed primarily to help the British merchant fleet, and that was why he wished to retain the present arrangements which the Amendment seeks to remove from the Bill, and I do not think that this has anything to do with E.F.T.A. Surely, the more British merchant shipping which we can get on the high seas the better it will be for our invisible exports. Curiously enough, the Minister has not said a word about invisible exports.
    May I ask what the British shipbuilding industry thinks about this? My recollection is that it does not like the arrangement which is in operation. On occasions there is conflict between the shipbuilding industry and the shipping industry, and this makes the part played by the House of Commons very difficult. The two industries really run together, although there are occasional conflicts.
    I can see that papers are being handed round on the Treasury Bench, and I am always interested in pieces of paper. I do not want to press the Minister too hard, but this is a detailed matter which affects the private sector in which I am tremendously interested, although I know that the Government are not as interested in it as I am.
    The Bill is designed primarily to help the British merchant fleet, which I would not damage for all the tea in China. Will the Minister give an explanation for that phrase which fell from his lips, and will he say what is the view of the British shipbuilding industry? In parts of the British shipbuilding industry there is not full employment—for instance, in Sunderland—although I am aware that there must be a balance between the
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    technical and the labouring sections of the industry.
    The Minister has given us no reason, but has havered from one point to another, and I would like him to read to us what is written on those fluttering pieces of paper.
    Dr. Ernest A. Davies: May I address my reply to the hon. Member for Tyne-mouth (Dame Irene Ward)? I told my hon. Friend the Member for Barrow-in-Furness (Mr. Booth) that I understood why he was arguing so strongly in favour of the British shipbuilding industry, and the hon. Lady has put forward a similar argument for the shipbuilder. I suggested to my hon. Friend, and I offer this to the hon. Lady, that under the terms of the Bill we are considering the purchaser of the ship rather than the shipbuilder. I ask the hon. Lady to set that against all the activities of the Government in building up the shipbuilding industry in this country.
    It is not within the terms of the Bill to discuss and describe all the ways in which the Government have supported and helped to improve the prosperity of the shipbuilding industry. I suggested that one might look at the Bill against that background, bearing in mind that the primary objective of the Bill is to apply a balance of payments test when investment grant is to be awarded to the ship purchaser and operator.
    To return to the matter of E.F.T.A., the hon. Member for Henley (Mr. Hay) pointed out that I quoted only a portion of the convention. That is quite natural since it is a very lengthy document. On a matter of this kind when one is considering the international implications of the Agreement, the proper course for the Government to adopt is to consult the Law Officers. The Law Officers were duly consulted and gave it as their opinion that under the terms of the convention the Government of the day had undertaken these agreements.
    Mr. Ridley: Where are the Law Officers?
    Dr. Davies: It follows therefrom that they were obliged by agreements freely entered into to put this exemption in the Bill. For my part I am quite content, indeed happy, to accept the opinion of the Law Officers on this matter.
    Mr. Hay: With the leave of the House—
    Mr. Speaker: The hon. Gentleman has not addressed the House on this particular Amendment?
    Mr. Hay: I am sorry, but I do not think I can accept that what the Minister says—
    Mr. Speaker: Order. I now understand that the hon. Gentleman has addressed the House on this Amendment.
    Mr. Hay: Yes, Sir. I asked for the leave of the House.
    Mr. Speaker: It is not usual to grant leave. We are on Report.
    Mr. Hay: With all respect, Mr. Speaker, if I am refused permission on this, point, I should like to point out that it is within my recollection that if an hon. Member rises and asks for the leave of the House and nobody objects, in other words, where the House indicates that it does not object, it is customary for an hon. Member to address the House again.
    Mr. Speaker: It is customary for the Chair to dissuade hon. Gentlemen from seeking leave to speak again at Report stage unless they can satisfy the Chair that there are special reasons that they should speak again. This does not apply to the mover of an Amendment and the Member in charge of the Bill. However, I do not want to be hard on the hon. Gentleman.
    Mr. Hay: I was hoping to adduce reasons for seeking the leave of the House to speak again. I can only do that by coming to the argument that I want to advance. I still ask the Parliamentary Secretary to tell us under which precise provision of Article 13 the Government base their case. It is not enough to say "We were advised by the Law Officers that this had to be done under the provisions of E.F.T.A." Surely the House is entitled to be told exactly which is the provision and the appropriate words should be read out. That is my sole point.
    Amendment negatived.
    Dr. Ernest A. Davies: I beg to move Amendment No. 7, in page 1, line 23, leave out
    'and any British Crown Colony'.
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    This Amendment was put into the Bill by the collective wisdom of the Committee. There is some reason for supposing that the collective wisdom of the Committee as then expressed was not quite what we on the Government benches had expected.
    We have just discussed the problem of how we are obliged by our treaty arrangements to allow certain exemptions under this Bill. I have already remarked that it is the desire of the Government to keep down the number of exemptions. One would wish to apply the balance of payments test in as many cases as possible. The whole intention of the Bill is to make sure that where an investment grant is made it shall be for the benefit of the balance of payments of the United Kingdom. Therefore, exemptions under the Bill should be at a minimum. It is undesirable to widen the range of exemptions in this way. I ask the House to take out these words and to restore the Bill to its original form.
    I am also advised, although I would not press this matter too strongly, that the form of words could be used but would not be a very suitable way in which to express the intention described when the Amendment was discussed in Committee.
    Mr. A. Royle: First, I wish to declare a marginal interest in that for 20 years I have worked with a firm of insurance brokers, I have been a member of Lloyds and have had a close connection with the shipping industry. Having said that, I must confess my surprise at the way in which the Joint Parliamentary Secretary has moved this Government Amendment.
    My hon. Friends and I made it plain in Committee, as a result of which the Committee by a majority agreed to include British Crown Colonies in the Bill, that the balance of payments side of the matter was extremely preferential to the United Kingdom in regard to Hong Kong. In the proceedings in Committee, on 4th December, in column 31 I pointed to the massive contribution made to the British balance of payments by two particular British shipowners operating in the Far East. My point was taken up by the Joint Parliamentary Secretary who admitted that a large contribution was made to our balance of payments by British Crown Colonies and by Hong Kong in particular.

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    For the hon. Gentleman this evening to produce that as the reason for reversing the decision taken by the Committee seems extraordinary. Indeed the main case made by the Minister in Committee against including British Crown Colonies along with the E.F.T.A. countries from filling in the various forms which are necessary to apply for these grants was the General Agreement on Tariffs and Trade. Yet the Minister has not mentioned G.A.T.T. this evening. He made no mention of it at all. I understood during the Committee stage that this was the sole reason why the Minister was unhappy at including British Crown Colonies and Hong Kong in the Bill.
    I find it quite extraordinary that the hon. Gentleman should come to the House today and make the most specious pleadings in the course of about 30 seconds or very little longer than that period of time. Hon. Members on both sides will be astonished to think that the Government will use their massive majority of 63 to bulldoze through this Amendment which will remove from the British Crown Colonies benefits which will accrue to foreign countries, such as those in E.F.T.A. It will be quite deplorable if they adopt such a course.
    6.30 p.m.
    Hong Kong and the other British Crown Colonies cannot negotiate on their own behalf. The United Kingdom carries out that task for British dependent territories overseas, and, as I am sure the hon. Gentleman will admit, the British Government have a great responsibility to see that our overseas territories are not put at a disadvantage as a result of their inability to negotiate for themselves.
    The inclusion of Hong Kong and other British Crown Colonies in the Clause will cause no extra financial burden to Her Majesty's Government. That makes it all the more extraordinary that the Government should now decide to remove this benefit to British Crown Colonies. Several of my hon. Friends and I outlined the position in detail in Committee. The Government are now deliberately proposing to put United Kingdom owners who are building or converting ships in Hong Kong and other British Crown Colonies in a worse position than those who are building in E.F.T.A. countries. Why
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    should British shipowners who build in a British territory be put in a worse position than an owner who builds in Sweden or Portugal? To many people, this seems to be blatant discrimination against our overseas territories.
    Hong Kong is our largest dependent territory, with a population of over four million. It relies entirely on the United Kingdom Government to negotiate its overseas agreements. As the hon. Gentleman admitted in Committee, it has made a great contribution to the British balance of payments, and continues to do so. During the political troubles in Hong Kong in 1967, Her Majesty's Government gave stalwart support to the Colony. In my view, that is the key argument in favour of the Government withdrawing their Amendment, and it is a political one. Hong Kong wants to see that she has support from the United Kingdom. That support was given before by Her Majesty's Government, and we share the admiration for their support of the Hong Kong Government and the people of Hong Kong in standing up to the difficulties they faced at that time. Since then, the British Government have given support to that Colony in terms of defence and have decided to increase the garrison after our withdrawal from South-East Asia in 1971. In Hong Kong, continuing confidence is vital. It is booming and thriving today, but to keep it going it is important that the people of Hong Kong see that the British Government continue to have confidence in them.
    The Minister realises that the recent decision about the textile agreement, which affected Portugal and the other E.F.T.A. countries, was received in Hong Kong with great disappointment. It was felt that once again the United Kingdom Government were benefiting E.F.T.A. countries at the expense—
    Mr. Speaker: Order. I know the hon. Gentleman's knowledge and interest in the matter, but he must not widen the debate too far.
    Mr. Royle: Mr. Speaker, this is all tied up with the reason why Hong Kong should have the same advantages as the E.F.T.A. countries. The textile agreement benefited E.F.T.A. countries and damaged Hong Kong. There is a precise parallel. The textile decision was dis-

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    appointing to Hong Kong, and it is now to be followed by the regrettable decision to reverse in this House, with the aid of the Government's majority, a decision taken in Committee. We are not given adequate reasons for restoring the position to what it was prior to the debate in Committee, and it is a proposal which must be greeted with deep regret. I deplore the Minister's attitude, and I hope that he will reconsider it. If he does not, I hope that my right hon. and hon. Friends will divide the House to ensure that British Crown Colonies are treated with the same fairness and given the same facilities as those accorded to E.F.T.A. countries.
    Mr. Dan Jones: It would be wrong to assume that concern for British Crown Colonies exists only on one side of the House. However, before resuming my seat, I wish to put two brief questions to my hon. Friend.
    First, will he be good enough to tell us the precise reason why British Crown Colonies are discriminated against? With special reference to Hong Kong, there can be no doubt that the Colony has been a remarkable trading outpost for the United Kingdom. I take the view, having been there, that the potential is by no means fully exploited and that, in consequence, it is worth while reserving the good will of the people of Hong Kong.
    My second question is this. If it is a fact that we are discriminating against our Colonies in deference to the E.F.T.A. countries because of our trading agreements, can my hon. Friend assure us that this matter has been discussed with the E.F.T.A. countries with a view to discovering whether bringing our Colonies into the fold would meet with their opposition?
    Those are my two questions, and I feel that we need answers to both of them.
    Mr. Hay: Again I am sorry, but I must return to the charge against the Parliamentary Secretary. As my hon. Friend the Member for Richmond, Surrey (Mr. A Royle) said, the hon. Gentleman's explanation of the Amendment was perfunctory, to say the least. I have read what he said in Committee about the words which the Amendment seeks to exclude from the Bill. As I understand
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    it, his argument was based upon three points.
    The first one was that ships built, converted, or repaired in Hong Kong would have to go through the balance of payments test, anyway, and there was no reason for words in the Bill diving exemption to a British Crown Colony.
    The second was that there were only two firms which had been involved in the business in recent years, and that there were not likely to be a larger number in future.
    The third and most important argument was that to import the words now sought to be excluded from the Bill was in some way a breach of G.A.T.T.
    The Treasury has power to give directions to the Ministry of Technology, so perhaps either the hon. Gentleman or the Financial Secretary would be good enough to tell us what is the provision in G.A.T.T. preventing us from exempting a British Crown Colony, especially when it has the adverse consequences pointed out by my hon. Friend. We deserve a better explanation for this Amendment than we have had so far. Will the Minister quote exactly the terms of the most-favoured-nation Clause in G.A.T.T. which he says make it vital that the Amendment be made and that British Crown colonies be excluded from the provisions of the Clause?
    Mr. Rankin: I am sorry that I missed my hon. Friend's remarks.
    Dame Irene Ward: The hon. Gentleman never said anything!
    Mr. Rankin: I do not know what the joke is. Nevertheless, I participate in it for what that is worth.
    I should be sorry to hear of anything done by this Government which would be prejudicial in any way to the welfare of Hong Kong, because for a longer time than any hon. Member in this House today, I have been closely associated with that British Colony. As almost everyone there knows, I have taken a close interest in all its affairs, not only on the Floor of the House but in other places, too.
    I am astonished to discover that today Hong Kong is suffering any disadvantage concerning shipbuilding. I have made a

    315
    prolonged visit to the Hong Kong shipbuilding yard. I have met all the board. I have been through every part of the yard and met all those working in the yard at floor level and so on. At no level in the yard did I find complaints of the nature that have been put forward today. Nevertheless, I pay attention to them, because I do not suppose that they are advanced recklessly. But I should point out that I have never heard charges made against the British Government, that any action on their part has been directed towards the hurt of the shipbuilding industry in Hong Kong. I hope that in due course my hon. Friend will assure us that what I am saying has substance. My experience of events and happenings on the shipbuilding side confirm me in what I have said.
    The Hong Kong yard, during the period that I have known it, has always had plenty of work. As I said earlier, using it as an example, it is fortunately situated. It is the first yard that ships crossing the Pacific—one of our stormiest oceans—come into contact with. Therefore, repair work is a continuing source of employment. I hope that my hon. Friend will deal particularly with that point.
    Mr. Edward M. Taylor: The Parliamentary Secretary will have noticed that not one voice has been raised in support of the Amendment which was so ably spoken against by my hon. Friend the Member for Richmond, Surrey (Mr. A. Royle).
    It is significant that the hon. Member for Glasgow, Govan (Mr. Rankin), with his experience of shipbuilding and of Hong Kong, has pointed out that it would be utterly intolerable if we, as a nation, were to give more preferential terms to foreign countries than to our Crown Colonies which do not have a voice in this House to speak for them. In these circumstances, I hope that the Minister will change his decision.
    6.45 p.m.
    There is another point which I hope the Minister will bear in mind when arriving at a final decision. Although Hong Kong has been the area talked about today, we have other Colonies which, although they do not carry out merchant work at present, may be forced to carry out merchant work in
    316
    future. I am thinking of Gibraltar, which was referred to in Committee. The Gibraltar dockyard concentrates on naval work. But, bearing in mind the Government's defence policy—the reduction of our commitments—what will be the future of this important dockyard? If it was to carry out merchant work, both new and repair, it would also be discriminated against. Certainly it would not be the feeling of the House or of the country, at a time when Gibraltar is undertaking what is partly a siege economy—being harassed in every possible way by the Spaniards, and looking to this country alone for assistance—that we should take action now which in future could discriminate against Gibraltar and its gallant people who are fighting for their survival.
    The Minister has a clear obligation to explain the position on G.A.T.T. He will recall that in Committee he did not refer to this loosely or obliquely. He said:
    '… I am assured in the most categorical terms that if any special provision were made in regard for Hong Kong we should be in breach of the G.A.T.T. rules."—[OFFICIAL REPORT, Standing Committee E, 4th December, 1969; c. 39.]
    Nothing could be clearer or more precise. We must have a clear indication about what the Minister means by this.
    The Minister must not only think about Hong Kong, which is so important; he should realise that many people in Gibraltar are engaged in shipbuilding and repair work in major conversions. Although they can be engaged on naval work at present, this may not be the position in future. If the Government today were to do something which could damage Gibraltar, they would have every reason to be ashamed.
    Mr. McMaster: This must be a most unusual day in the history of the House. We have a short Bill—barely a page in length—and we have at least a dozen Government Amendments seeking to change its provisions as left in Committee.
    Three-quarters of the new Clauses and Amendments we are considering seem to be promoted by the Government more in a fit of pique than anything else. Instead of thinking generously that the Bill has been well treated and well amended in Committee, the Government have immediately set out blindly to reverse everything done in Committee. They

    317
    appear to be intent on producing a short Bill, but a much worse Bill than had they left it alone. A few minutes ago they refused to plug a loophole which will lose this country millions of pounds—
    Mr. Speaker: Order. After the exordium the hon. Gentleman must come to the specific Amendment.
    Mr. McMaster: I apologise. I simply wanted to reinforce the point that it seems almost slap in the face for the Crown Colonies—both Hong Kong and Gibraltar have been mentioned—that E.F.T.A. countries should benefit from the Bill and they should be excluded.
    Who can benefit by the exclusion of Hong Kong? Boats which are to be reconstructed or repaired in Hong Kong will not, if they do not obtain a grant under the provisions of the Industrial Development Act, be brought back to Britain for repair or reconstruction. They will most likely be sent to Japan. This seems a complete nonsense.
    If we are to benefit E.F.T.A. countries and the Irish Republic, I feel that there is a strong argument that Hong Kong, as a British Colony, should be included in the provisions of the Bill.
    The Minister dealt with the House in a cavalier fashion when he introduced the Amendment. He uttered only two or three sentences. He advanced no arguments for the distinction in the treatment of British Colonies and foreign countries which are to benefit very substantially from the Bill. I feel that those who drafted the E.F.T.A. Treaty and the G.A.T.T. cannot have thought that millions of £s of British taxpayers' money would be used to benefit shipyards in E.F.T.A. countries, and that at the same time British Colonies would be excluded from those benefits.
    How can the Minister argue that something which was not in the minds of the officials and the Ministers who drafted those agreements should now be used in this way, and that we should be obliged to use the provisions in those agreements to benefit European shipyards while excluding repair yards and shipbuilding yards in Colonies which have stood behind Britain for many years, Colonies which each year contribute substantially to our balance of payments position?
    318
    I think that the Bill has become a complete nonsense. The Minister should take it away, approach it again with a fresh mind, and consider whether the Bill as we amended it in Committee is not a far better one than that which he is seeking to get accepted by the House.
    Dame Irene Ward: This afternoon has been one of the most extraordinary experiences that I have ever had in this House. It is most extraordinary and mysterious. We are discussing the elimination of the words "British Crown Colonies". It is not often that one suggests that perhaps a Minister might repeat his speech, but I did not follow what the hon. Gentleman said, and I do not think that anybody else did, either, because he said nothing. He just came to a full stop, and that was all there was.
    In Committee the Minister said on more than one occasion, "I am advised". I always understood that the Minister concerned accepted responsibility for the Measure being discussed, and that it was not the usual constitutional practice to say that he had been advised by anybody. I am now wondering whether whoever advised the Minister in Committee has found that the advice tendered is not correct, and that perhaps the Minister is now doing what is often done. It is a sort of constitutional thing. He is trying to protect the advisers because they tendered the wrong advice.—[Interruption.]—My hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) is giving voice to some exciting little snippets in undertones, but I do not think that I should repeat them.
    Mr. Speaker: Order. Fortunately, the Chair did not hear them.
    Dame Irene Ward: I was wondering whether I ought to repeat them, because then, Mr. Speaker, you would hear them. However, I think that I shall refrain from doing so.
    The Minister's speech did not give any body to the Amendment. One of the good things that has come out of this extraordinary afternoon is that the whole House, except the Treasury Bench—and I am glad that the Minister now has one of his colleagues sitting beside him, because he looked a very lonely little figure a few moments ago—is united in its desire to ensure that rights which are given to foreign countries are given to British

    319
    Crown Colonies, too. I think that at last Parliament is asserting its desire to protect—as I think we ought to do—British interests in British Crown Colonies.
    The Minister has been asked to deal with a number of matters "when he replies". I am not sure that the Minister has made a speech, but he may be going to make another one. If he does, I hope that it will be a better speech than his earlier one, which, as I said, had no body. It had no arguments, no soul, and no spirit. In fact, it had nothing at all.
    It is rather funny occasionally to offer advice to Ministers, even though they never take it. However, as hon. Members on both sides have on this occasion spoken up for the British Crown Colonies, I do not think that it would be fair to ask those hon. Members who support the Government to troop into the Lobby in support of an insupportable Amendment and commit themselves to repudiating the British Crown Colonies. I think that hon. Members would be very angry if they were forced to go into the Lobby in support of the Minister without having heard what he had to say—not that it mattered very much. I do not know whether it is possible for the Minister to say that he knows nothing about the Bill and that when it gets to the other place somebody else will make a better speech in support of the Government's proposals.
    I hope that we shall divide the House on this Amendment, and that everybody will support us. I do not think that it would be fair of the Minister to embarrass his hon. Friends by asking them to support the Government's action against the Crown Colonies which, quite rightly, are regarded with affection by people in this country, whose representatives we are.
    Mr. Booth: Before the House divides, if it does, I shall seek, not to advise the Minister, but to get some information from him.
    If the Amendment is accepted, and a non-resident shipping company which is incorporated in Great Britain applies for a grant for construction or modification of a ship in a Hong Kong yard, and the grant is refused because it fails to pass the balance of payments test, and the com-
    320
    pany then places an order for the work to be done in a Swedish yard, will the grant then be paid, or will it be refused on exchange control grounds? If the grant was refused on those grounds, would not that be a breach of the E.F.T.A. agreement?
    7.0 p.m.
    Mr. Ridley: I thought that the Minister was going to make a second intervention. I assure the hon. Gentleman that we are looking forward to hearing from him again, but if he wishes me to speak before he does, I am happy to do so.
    The House will not accept the Minister's defence of the Amendment. The first point which I want to stress is the one made by many of my hon. Friends, and particularly by my hon. Friend the Member for Richmond, Surrey (Mr. A. Royle) in his excellent speech. The Government apparently relied upon the G.A.T.T. for rejecting our Amendment in Committee. The Minister has now failed to follow up that suggestion. We can only assume that, if he no longer believes that G.A.T.T. is an obstacle—he would have said so if he thought it was—the Government are dropping this defence. They are right to do so. We are not talking about a tariff or a subsidy or a non-tariff barrier. This is simply the Treasury's right to refuse an investment grant if they believe that it is against the balance of payments interests. That seems to me to be totally beyond the concept of the G.A.T.T. treaty. This idea was not in existence as the G.A.T.T. Treaty was negotiated, and, search as I may through G.A.T.T., I can find no reference to any such goings on.
    Of course the Government have discretion to refuse an investment grant already, either by means of the Minister of Technology's discretion or by means of the control of foreign exchange. So no changes is proposed. The present position remains exactly the same if the Amendment is made. At present, the Government have certain powers to affect investment grants spent in Hong Kong. If the Bill goes through as it is, those powers will not be altered. So there will be no change in the position if the Bill is not amended.
    But we are entitled to assume from the Parliamentary Secretary's dropping the use of the argument about G.A.T.T. that he has again consulted the Law Officers,

    321
    juit as he did over the E.F.T.A. Treaty. They, of course, have taken great care not to be present on this occasion, and we do not blame them. But they have advised him that his argument in Committee was wrong and that G.A.T.T. is not applicable in this case. In any case, it is impossible to say that the Stockholm Treaty forbids this in relation to E.F.T.A. and that G.A.T.T. makes it essential that Hong Kong be excluded in relation to the British Crown Colonies. The Government cannot have it both ways, because they are both very similar in this respect.
    The hon. Gentleman relied on the fact that it was undesirable to rely on the exemptions in the Bill. He made a passing reference to the drafting of the Amendment, which is inadequate, but I am sure that the Law Officers would not rest their case on that. There is plenty of opportunity to correct it in another place.
    The sole reason, therefore, which they have put forward for resisting the extension of the Bill to cover the British Crown Colonies is that they think it is undesirable to widen the exemption. But in all the cases concerned—in Gibraltar, where there is practically no civil building at all, and Hong Kong, where all the civil building and repairing is likely to be exempt because it passes the balance of payments test—those concerned have been into the matter and have told me that they are happy that they will pass the balance of payments test as they understand it.
    So there is no money involved and the Amendment would make no difference in money terms. So the Government are sticking out against the will of the House without any reason in insisting that they deliver a deliberate insult to the British Crown Colonies. This is quite unnecessary. It is very stubborn, and my hon. Friends, including hon. Members opposite, have been quite right to point out that this will cause a great blow to the morale of Hong Kong. The people there have no way of expressing their views on these matters other than supplicating this House. We negotiate for them in these matters. There are 4½ million people in Hong Kong for whom we are responsible in this respect. Although it will cost nothing, the Government are determined to put the E.F.T.A. countries before those people,
    322
    when it would be perfectly possible to put both on the same footing.
    Therefore, even at this late moment, I would ask the Government to think again about this. They have fallen foul of the opinion of the House, on both sides, they were defeated in Committee on it, they have failed to justify the Amendment with any argument at all, let alone an argument of substance, and it would be better if they accepted the will of the House and agreed to withdraw the Amendment.
    Dr. Ernest A. Davies: I ask the House once again to direct its attention to the main purpose—indeed, the sole purpose—of introducing the Bill, which is to ensure that, wherever possible, an investment grant shall be paid only in circumstances where there is no detriment to the United Kingdom balance of payments. That is the whole point of the Bill, and that is why it is so short. Everyone is agreed on this. I have heard no dissenting voice. I have already said that, if possible, one would prefer to have no exemptions and that the exemptions are provided because we are obliged to do so under international agreements freely entered into.
    I have already put this argument in Committee and if I put it briefly when we began discussing the Amendment, it is because it can be put briefly in those terms. The hon. Member for Richmond, Surrey (Mr. A. Royle) raised the specific issue of Hong Kong. The Amendment talks of "any British Crown Colony". He brought before the House some of the arguments which he put to the Committee. Among these was the question of discrimination. We argued this in Committee, and I managed, I think, to make the point to him that there was no discrimination against Hong Kong.
    We had a look at the prosperity and otherwise of the shipbuilding industry in Hong Kong, and the hon. Member agreed with me on that point. We now have the evidence of my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) that the Hong Kong shipbuilding industry is very prosperous. We made the point, and it was agreed in Committee, that the prosperity of that industry did not depend on the investment grants payable under this Bill. It seems to me that it is quite inadmissible to argue that the provisions of the Bill, as it

    323
    originally stood before it was amended in Committee, in any sense injured Hong Kong.
    The hon. Member for Richmond, Surrey gave us some evidence about the operation of fleets of ships which may use the Hong Kong shipyards. He agreed with me again that, if the evidence which he gave to the Committee of the effectiveness of these fleets in support of the balance of payments was what he said it was, there would be no difficulty at all if a ship of that kind or a further ship were to be purchased, passing the balance of payments test. Therefore, on the evidence which he himself presented, it was clear that Hong Kong was in no way likely to suffer any disadvantage from being excluded, as it was under the original draft presented to the Committee. So I do not see how he can argue that the Amendment would damage Hong Kong.
    Mr. A. Royle: We heard all these comments in Committee, and I accepted the point which the hon. Gentleman made. He has again accepted tonight that no damage will be done to Hong Kong by its being excluded on the detailed points. It was the overall point which I made today and in Committee regarding the discrimination against Hong Kong as opposed to E.F.T.A. countries which was accepted by the Committee. The fact that the Amendment was passed in Committee and the fact that the Government were defeated by 7 votes to 6 shows that the Committee agreed with me and not with the hon. Gentleman.
    Dr. Davies: This tends to put us in a rather contradictory position, because on the question of Hong Kong and whether or not there was any serious damage, or damage of any kind, to shipbuilding there, we were in agreement that there was none. So, if the hon. Gentleman raises this as a general point, he is asking for a gesture to be made, whereas the Bill deals with what I thought all hon. Members agreed was a very serious problem. That is the possible misuse in some cases of investment grants for ships or certainly the application of investment grants for ships in a situation where there would be no benefit, and indeed a detriment, to our balance of payments. So I cannot see that it is
    324
    proper, when we are dealing with a matter of serious business, to make what, on the hon. Gentleman's own argument, is really a gesture.
    My hon. Friend the Member for Burnley (Mr. Dan Jones) raised the question of discrimination against Crown Colonies and asked whether we had discussed the matter with the E.F.T.A. countries to see what their reaction was specifically in relation to the Crown Colonies.
    As I have tried to show, this Bill is not aimed in any sense at discriminating against the Crown Colonies. The essence of the Bill is to ensure that there is a balance of payments test before investment grants are provided for the purchase and operation of ships, and in the Bill we attempt to limit the exemptions to the absolute minimum that our international obligations permit. There is no question of discrimination against the Crown Colonies in favour of E.F.T.A. It is a question of reducing the exemptions in the Bill to the absolute minimum, and this we have done. If my hon. Friend asks whether we consulted the E.F.T.A. countries on whether this issue of Crown Colonies should be raised, the answer is that we did not. That is a matter for this House and not one which we should need to discuss. The E.F.T.A. countries are involved in this issue only in so far as we are a member of the E.F.T.A. and, therefore, subject to the terms of the convention that set it up and governs it.
    Mr. Dan Jones: My hon. Friend now tells us that, because of the prosperity of these yards, there is no need to make a dispensation. That could be very foolish reasoning, because the prosperity of the yards is built on a high degree of efficiency. My second point—
    Mr. Speaker: Order. The hon. Gentleman is making an intervention, not a second speech.
    Mr. Jones: Is not the Minister prepared to deal with my second point, that the balance of payments does not relate only to shipbuilding and ship repairing but, there is a more general application than that? We could lose out on balance by what is, after all, a discrimination.
    Dr. Davies: I endeavoured to satisfy my hon. Friend by pointing out that this is a balance of payments test. It is not

    325
    an exclusion from investment grant in respect of a ship being built or reconstructed in those yards. So it is a question of the balance of payments test.
    Mr. Jones: I accept that.
    Dr. Davies: On the evidence given by the two hon. Members who are well acquainted with the position in Hong Kong from first-hand experience, it is clear that the prosperity of those yards does not depend on the investment grant. But if on the evidence offered to us, both in the House and in Committee, the situation is as described in respect of the operation of ships that might use those yards, there would be no difficulty about passing the balance of payments test. So requiring the test to be passed is not, in itself, either a discrimination or a hardship.

    Division No. 48.]

    AYES

    [7.17 p.m.

    Allaun, Frank (Salford, E.)

    Eadie, Alex

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

    Alldritt, Walter

    Edwards, Robert (Bilston)

    Janner, Sir Barnett

    Allen, Scholefield

    Ellis, John

    Jay, Rt. Hn. Douglas

    Archer, Poter (R'wley Regis & Tipt'n)

    English, Michael

    Jeger, George (Goole)

    Armstrong, Ernest

    Ennals, David

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

    Ashton, Joe (Bassetlaw)

    Evans, Fred (Caerphilly)

    Jenkins, Hugh (Putney)

    Atkins, Ronald (Preston, N.)

    Evans, Gwynfor (C'marthen)

    Johnson, Carol (Lewisham, S.)

    Atkinson, Norman (Tottenham)

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

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

    Bacon, Rt. Hn. Alice

    Faulds, Andrew

    Jones, Dan (Burnley)

    Bagier, Gordon A. T.

    Fernyhough, E.

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

    Barnes, Michael

    Finch, Harold

    Jones, J. Idwal (Wrexham)

    Barnett, Joel

    Fitch, Alan (Wigan)

    Jones, T. Alec (Rhondda, West)

    Benn, Rt. Hn. Anthony Wedgwood

    Fletcher, Raymond (Ilkeston)

    Judd, Frank

    Bennett, James (G'gow, Bridgeton)

    Fletcher, Ted (Darlington)

    Kelley, Richard

    Bessell, Peter

    Ford, Ben

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

    Binns, John

    Forrester, John

    Kerr, Russell (Feltham)

    Blackburn, F.

    Fowler, Gerry

    Lawler, Wallace

    Blenkinsop, Arthur

    Freeson, Reginald

    Lawson, George

    Booth, Albert

    Galpern, Sir Myer

    Leadbitter, Ted

    Bradley, Tom

    Gardner, Tony

    Lee, Rt. Hn. Frederick (Newton)

    Bray, Dr. Jeremy

    Garrett, W. E.

    Lewis, Ron (Carlisle)

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

    Ginsburg, David

    Lomas, Kenneth

    Buchan, Norman

    Golding, John

    Loughlin, Charles

    Buchanan Richard (G'gow, Sp'burn)

    Gray, Dr. Hugh (Yarmouth)

    Lubbock, Eric

    Butler, Herbert (Hackney, C.)

    Greenwood, Rt. Hn. Anthony

    Lyon, Alexander W. (York)

    Butler, Mrs. Joyce (Wood Green)

    Gregory, Arnold

    McCann, John

    Carmichael, Neil

    Grey, Charles (Durham)

    MacColl, James

    Chapman, Donald

    Griffiths, Eddie (Brightside)

    MacDermot, Niall

    Coleman, Donald

    Hamilton, James (Bothwell)

    Macdonald, A. H.

    Concannon, J. D.

    Hamilton, William (Fife, W.)

    McGuire, Michael

    Conlan, Bernard

    Hannan, William

    McKay, Mrs. Margaret

    Crawshaw Richard

    Harper, Joseph

    Mackintosh, John P.

    Cronin, John

    Harrison, Walter (Wakefield)

    Maclennan, Robert

    Crossman, Rt. Hn. Richard

    Haseldine, Norman

    MacMillan, Malcolm (Western Isles)

    Dalyell, Tam

    Hazell, Bert

    McMillan, Tom (Glasgow, C.)

    Davies, E. Hudson (Conway)

    Heffer, Eric S.

    McNamara, J. Kevin

    Davies, Dr. Ernest (Stretford)

    Herbison, Rt. Hn. Margaret

    MacPherson, Malcolm

    Davies, Rt. Hn. Harold (Leek)

    Hobden, Dennis

    Mahon, Peter (Preston, S.)

    Davies, Ifor (Gower)

    Hooson, Emlyn

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

    Davies, S. O. (Merthyr)

    Horner, John

    Manuel, Archie

    Dempsey, James

    Houghton, Rt. Hn. Douglas

    Mapp, Charles

    Dewar, Donald

    Howarth, Robert (Bolton, E.)

    Marks, Kenneth

    Dickens, James

    Howell, Denis (Small Heath)

    Maxwell, Robert

    Doig, Peter

    Huckfield, Leslie

    Mellish, Rt. Hn. Robert

    Dunnett, Jack

    Hughes, Roy (Newport)

    Mendelson, John

    Dunwoody, Mrs. Gwyneth (Exeter)

    Hunter, Adam

    Mikardo, Ian

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

    Hynd, John

    Millan, Bruce

    I was surprised at the comment made by the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor), because if we are to widen, as he seems to wish, the range of the exemptions offered under the Bill, we shall be open to further criticism by hon. Members with shipbuilding constituencies. I am sure that the hon. Gentleman would wish to agree that the extent of the exemptions ought to be limited as much as possible. That is the basis on which the Government are moving this Amendment.
    Mr. Edward M. Taylor: Surely the Parliamentary Secretary will say something about Gibraltar?
    Question put, That the Amendment be made:—
    The House divided: Ayes 208, Noes 135.

    Perry, George H. (Nottingham, S.)

    Miller, Dr. M. S.

    Price, Thomas (Westhoughton)

    Thornton, Ernest

    Milne, Edward (Blyth)

    Price, William (Rugby)

    Tinn, James

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

    Probert, Arthur

    Urwin, T. W.

    Molloy, William

    Randall, Harry

    Varley, Eric G.

    Morgan, Elystan (Cardiganshire)

    Rhodes, Geoffrey

    Wainwright, Edwin (Dearne Valley)

    Morris, Alfred (Wythenshawe)

    Roberts, Albert (Normanton)

    Walden, Brian (All Saints)

    Morris, Charles R. (Openshaw)

    Roberts, Gwilym (Bedfordshire, S.)

    Walker, Harold (Doncaster)

    Murray, Albert

    Rose, Paul

    Wallace, George

    Neal, Harold

    Ryan, John

    Watkins, David (Consett)

    Newens, Stan

    Shaw, Arnold (Ilford, S.)

    White, Mrs. Eirene

    Norwood, Christopher

    Sheldon, Robert

    Wilkins, W. A.

    Ogden, Eric

    Shinwell, Rt. Hn. E.

    Willey, Rt. Hn. Frederick

    O'Halloran, Michael

    Shore, Rt. Hn. Peter (Stepney)

    Williams, Alan Lee (Hornchurch)

    O'Malley, Brian

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

    Williams, Clifford (Abertillery)

    Oram, Albert E.

    Silverman, Julius

    Willis, Rt. Hn. George

    Orme, Stanley

    Skeffington, Arthur

    Wilson, William (Coventry, S.)

    Oswald, Thomas

    Slater, Joseph

    Winnick, David

    Padley, Walter

    Spriggs, Leslie

    Winstanley, Dr. M. P.

    Pannell, Rt. Hn. Charles

    Steele, Thomas (Dunbartonshire, W.)

    Woodburn, Rt. Hn. A.

    Parkyn, Brian (Bedford)

    Summerskill, Hn. Dr. Shirley

    Pavitt, Laurence

    Swain, Thomas

    TELLERS FOR THE AYES:

    Pearson, Arthur (Pontypridd)

    Symonds, J. B.

    Mr. R. F. H. Dobson and

    Peart, Rt. Hn. Fred

    Taverne, Dick

    Mr. Neil McBride.

    Pentland, Norman

    NOES

    Alison, Michael (Barkston Ash)

    Grant, Anthony

    Noble, Rt. Hn. Michael

    Allason, James (Hemel Hempstead)

    Grieve, Percy

    Orr-Ewing, Sir Ian

    Amery, Rt. Hn. Julian

    Griffiths, Eldon (Bury St. Edmunds)

    Osborn, John (Hallam)

    Archer, Jeffrey (Louth)

    Gurden, Harold

    Page, Graham (Crosby)

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

    Hamilton, Michael (Salisbury)

    Pearson, Sir Frank (Clitheroe)

    Baker, Kenneth (Acton)

    Harris, Reader (Heston)

    Peel, John

    Baker, W. H. K. (Banff)

    Harvie Anderson, Miss

    Peyton, John

    Batsford, Brian

    Hawkins, Paul

    Pike, Miss Mervyn

    Bennett, Dr. Reginald (Gos. & Fhm)

    Hay, John

    Powell, Rt. Hn. J. Enoch

    Biffen, John

    Heald, Rt. Hn. Sir Lionel

    Pym, Francis

    Biggs-Davison, John

    Hiley, Joseph

    Renton, Rt. Hn. Sir David

    Birch, Rt. Hn. Nigel

    Holland, Philip

    Rhys Williams, Sir Brandon

    Boardman, Tom (Leicester, S.W.)

    Hornby, Richard

    Ridley, Hn. Nicholas

    Boyd-Carpenter, Rt. Hn. John

    Howell, David (Guildford)

    Ridsdale, Julian

    Boyle, Rt. Hn. Sir Edward

    Hutchison, Michael Clark

    Rossi, Hugh (Hornsey)

    Brewis, John

    Iremonger, T. L.

    Royle, Anthony

    Brinton, Sir Tatton

    Irvine, Bryant Godman (Rye)

    Russell, Sir Ronald

    Bullus, Sir Eric

    Jenkin, Patrick (Woodford)

    Scott-Hopkins, James

    Burden, F. A.

    Jopling, Michael

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

    Campbell, B. (Oldham, W.)

    Kaberry, Sir Donald

    Speed, Keith

    Campbell, Gordon (Moray & Nairn)

    Kirk, Peter

    Stainton, Keith

    Carlisle, Mark

    Kitson, Timothy

    Stoddart-Scott, Col. Sir M.

    Chichester-Clark, R.

    Knight, Mrs. Jill

    Summers, Sir Spencer

    Clark, Henry

    Lambton, Viscount

    Taylor, Sir Charles (Eastbourne)

    Cooke, Robert

    Lane, David

    Taylor, Frank (Moss Side)

    Cooper-Key, Sir Neill

    Langford-Holt, Sir John

    Temple, John M.

    Cordle, John

    Legge-Bourke, Sir Harry

    Turton, Rt. Hn. R. H.

    Corfield, F. V.

    Lewis, Kenneth (Rutland)

    Vickers, Dame Joan

    Costain, A. P.

    McAdden, Sir Stephen

    Waddington, David

    Mac Arthur, Ian

    Walker-Smith, Rt. Hn. Sir Derek

    Craddock, Sir Beresford (Spelthorne)

    Maclean, Sir Fitzroy

    Wall, Patrick

    Dance, James

    McMaster, Stanley

    Ward, Christopher (Swindon)

    Digby, Simon Wingfield

    McNair-Wilson, Patrick (NewForest)

    Ward, Dame Irene

    Dodds-Parker, Douglas

    Wells, John (Maidstone)

    Drayson, G. B.

    Maddan, Martin

    Whitelaw, Rt. Hn. William

    Elliot, Capt. Walter (Carshalton)

    Maginnis, John E.

    Wiggin, A. W

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

    Marten, Neil

    Williams, Donald (Dudley)

    Emery, Peter

    Mawby, Ray

    Wilson, Geoffrey (Truro)

    Errington, Sir Eric

    Maxwell-Hyslop, R. J.

    Wolridge-Gordon, Patrick

    Eyre, Reginald

    Mills, Peter (Torrington)

    Wood, Rt. Hn. Richard

    Farr, John

    Monro, Hector

    Woodnutt, Mark

    Fortescue, Tim

    Montgomery, Fergus

    Wright, Esmond

    Fry, Peter

    More, Jasper

    Younger, Hn. George

    Galbraith, Hn, T. G.

    Morgan-Giles, Rear-Adm.

    Gibson-Watt, David

    Nabarro, Sir Gerald

    TELLERS FOR THE NOES:

    Glover, Sir Douglas

    Neave, Airey

    Mr. Bernard Weatherill and

    Gower, Raymond

    Nicholls, Sir Harmar

    Mr. Walter Clegg.

    Title
    Amendments made: No. 9, in line 1, leave out 'enable' and insert 'Restrict the power of'.
    No. 10, in line 1, leave out 'refrain from making' and insert 'make'.
    No. 11, in line 3, leave out 'in certain cases'.
    No. 12, in line 4, leave out 'empower' and insert:
    'restrict, by reference to certain matters, the power of'.
    No. 13, in line 5, leave out from 'refrain from making' and insert 'make'.
    No. 14, in line 6, leave out 'Development' and insert 'Investment'.
    No. 15, in line 7, leave out in similar cases'. —[Dr. Ernest A. Davies.]
    7.25 p m.
    Dr. Ernest A. Davies: I beg to move, That the Bill be now read the Third time.
    We have had a good deal of discussion on various aspects of the Bill; it has been thoroughly considered both in Committee and in the House. The important Point now, I think, can be put shortly: whatever disagreement there may be on detail, the House is entirely in agreement with the central purpose of the Bill. I hope that it will, therefore, accept it.
    7.26 p.m.
    Mr. Ridley: The passage of the Bill has been expedited by the Opposition, and it has been improved—or, at least, it; was improved in Committee. We had only one sitting in Committee, and, as the Parliamentary Secretary has suggested, we are keen that the Bill should become law. We disagree on some of the detail. The Bill puts a patch on a very shabby pair of trousers, but we are keen to have the trousers patched as quickly as we can.
    The whole investment grant system is under heavy strain. Publication yesterday of the need for another £30 million, largely due to shipping, added to the £100 million Supplementary' Estimate before Christmas, means that the investment grants this year have cost £130 million more than the original Estimate. The Bill is an unhappy measure in that
    330
    it relies on the administrative decision of the Government, and the test is nothing like as specific as we should like it to be. There is no appeal mechansim. In addition, the Bill adds to the ranks of the bureaucracy and the amount of intervention in industry. For all these reasons, we have been chary of it, and we have tried to amend and improve it, though, I repeat, we remain in support of the principle.
    The Government's treatment of E.F.T.A. and of Crown Colonies is incomprehensible. Either they should both have been excluded or neither excluded; to exclude one and not the other is unjustifiable and has not been justified by the Government. The Parliamentary Secretary has nothing to be proud of in his handling of the last two points. The loopholes which remain through E.F.T.A. will cause concern, whereas the exclusion of Hong Kong will cause an upsurge of antagonism which would have been entirely avoided if the Government had not been so arrogant on the last Amendment which we discussed.
    In criticising the Bill and the investment grant system, we have no wish to criticise the British shipping industry. British shipping has had a remarkable recovery. It has shown great enterprise. It has taken advantage of favourable conditions in the world to increase its share of the market, to increase its profits and to enhance its enterprise and skill. We have been among the first to take advantage of the move to bulk carriers and container ships and the boom in passenger liners and cruises.
    Nobody wants to criticise the way in which the shipping industry has taken advantage of the help that has been made available to it. In criticising the Bill, we are complaining about the way in which the Government have administered investment grants and about the way in which this extraordinary leak has been allowed to go on unchecked for so long.
    We should not forget that the Bill is long overdue and that it has cost perhaps £60 million, which has been spent on subsidising foreign shipowners to build in foreign yards. This is a poor reflection on the administrative ability of the Government, who have allowed this state of affairs to go on unchecked despite having the matter drawn to their attention frequently. It is, I fear, an example of the

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    administrative sloppiness which we are anxious to see stopped.
    Thus, in congratulating the shipping industry, we cannot give congratulations on what was a Board of Trade responsibility which is now in the hands of the Ministry of Technology. It is right that we should record our distaste for what has occurred and for what has made this Measure necessary.
    7.31 p.m.
    Mr. Booth: If I were to accept the analogy of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) —that the Bill is only a patch on a pair of trousers—I would have to question whether the patch was covering the hole.
    Whether or not some of my hon. Friends and I can commend the Bill to those who live in constituencies such as mine and to any unemployed worker in Barrow who would have had a job at Vickers' shipyard if additional orders had been placed there, will not depend so much on the terms of the Bill but on the way in which it is implemented, in conjunction with the exchange control facilities which are designed to prevent any more of the British taxpayers' money from being used to build ships in foreign yards.
    7.33 p.m.
    Mr. McMaster: I, too, feel that the Bill will do little to block the leak which it was originally designed to stop up. I refer to the £60 million of orders which, we have been told, were placed outside the United Kingdom in the past year. When one considers that that sum must be deducted from the total of about £91 million worth of orders, one is bound to be alarmed.
    332
    We have not been told where those orders were placed and how many of them were placed in E.F.T.A. countries. It seems that, despite the efforts of the Government through this Bill and in other ways, there will still be a large leak in the bucket, a leak through which a lot more of the British taxpayers' money may flood out of the country before we finally get some sensible and adequate legislation.
    I am surprised that the Treasury, having first amended the Bill to take responsibility, have left it to the representatives of the Ministry of Technology to handle this debate. The Treasury should have begun as it intended to finish. If that Department is to accept responsibility for the control of expenditure of this public money, it should have been prepared to have one of its spokesmen here to answer our questions.
    The reason why E.F.T.A. countries have been left free from the provisions of the Bill are of the weakest possible nature. It appears that it was not contemplated by the Government, when they entered into the original undertaking, that that should be so. It therefore remains an important requisite that the relevant agreements should, if necessary, in the light of the Bill and in view of the considerable loss of public money, be considered and, where necessary, altered so that our shipyards, in which a great deal of public money has been invested, do not suffer.
    Question put and agreed to.
    Bill accordingly read the Third time and passed.

LOCAL EMPLOYMENT BILL
Not amended (in the Standing Committee), considered.
Mr. Speaker: I have posted up my selection of Amendments. I wish to inform the House that, after consideration during the day, I have added to my selection Amendment No. 8, in the Schedule, page 9, line 22, at end insert 'and under this Act'.

LOCAL EMPLOYMENT BILL
  New Clause 1

    AMENDMENT OF SECTION 15(3) OF ACT OF 1966, c. 34
    Section 15(3) of the Industrial Development Act 1966 is hereby amended by the addition, after the words 'population changes', of the words 'level of earnings'.—[Mr. Wallace.]
    Brought up, and read the First time.
    7.35 p.m.
    Mr. George Wallace: I beg to move, That the Clause be read a Second time.
    The objective of the new Clause is simple and straightforward. Up to now low average earnings have not been taken into account in the determination of whether an area shall receive assist-mice under the Industrial Development 1966. In Committee the Minister of State said:
    "The Industrial Development Act, 1966, requires the Minister of Technology, in designating development areas, to have regard to all the circumstances, actual and expected, including the state of employment and unemployment, population changes, migration and the objectives of regional policies. In this context, the objectives of regional policies can in appropriate cases include raising the level of earnings."—[OFFICIAL, REPORT, Standing Committee A, 20th November, 1969; c. 63.]
    That statement provided my hon. Friends and me with at least a ray of hope in the continuous efforts which we have made to stress the needs of East Anglia, where average earnings have been among the lowest in the country for far too long.
    The First Report of the East Anglia Economic Planning Council stated that the average weekly earnings of men in East Anglia were about 9 per cent. less than in the rest of the country as a whole. In fact, if the hours worked were no longer than the hours worked in the rest of the country, the difference would be
    334
    10 per cent. Further statistics indicate that the difference in money incomes also reflects a lower level of real consumption. In other words, the standard of life is lower.
    Fundamentally, the problem is one for solution by management and trade unions and a diversity of industry to provide competition for labour. Efforts on a self-help basis have been made by local authorities and other bodies to attract industries into the area, and although the offer of a free flow of I.D.C.s, which we welcome, has been made, the fact remains that the competition from areas receiving Government assistance and those designated is too great, with the result that the problem remains unsolved.
    What incentive is there if a man's take-home pay is no more nor less than he would receive if he were unemployed or on sick pay but for the wage stop? All we ask, for the sake of social justice, is that average low earnings should at least he taken into consideration, and, in my view, such a case is unanswerable.
    If Britain enters the Common Market, East Anglia, with its close proximity to the Continent, will become a key area, and then the Government of the day will have to render assistance, particularly in terms of road, rail and dock facilities. But why wait? It seems incredible that an area working the longest average hours in the country should also average the lowest pay.
    The people of Norfolk in particular are proud and independent. They are beholden to nobody. They deserve every effort we can make to see that they get at least a degree of consideration under this Measure, and that is all we ask. I trust that the Government will make this token concession.
    Sir Harry Legge-Bourke: All East Anglian Members will be grateful to the hon. Member for Norwich, North (Mr. Wallace) for his speech. Those of us who have the honour of representing East Anglian constituencies have to recognise that the Industrial Revolution started in East Anglia very much later than in other part of the country.
    A great deal of attention has inevitably been given by various bodies to this problem. We find ourselves in the position in which all the Government-sponsored planning bodies seem to assume

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    that there can be no question of treating this area as a special area. The Hunt Committee Report came as a great disappointment. The East Anglian Economic Planning Council's Report disclosed very disturbing factors, Right at the beginning, in the summary of the problems, we have these facts in paragraph 18e:
    "East Anglia will have a limited industrial base for many years.…There are very few large firms and a restricted range of skills and training facilities. Employment in agriculture is proportionately five times as high as the national average but is running down rapidly."
    The most potent sentence of all is:
    "It is difficult to see how, without major changes in government policy, sufficient employment will be generated within the region to provide jobs for the projected increase in population; earned incomes from employment are lower in East Anglia than in any other English region, lower than Wales and only fractionally above Scotland. They are about 8 per cent. below the average for Great Britain, and there are even more marked differentials of up to 12 per cent. between certain counties of the region and the national average."
    Those are startling facts by any criteria.
    The Government must be now aware that after the decision of the Hunt Committee not to treat East Anglia, and particularly North Norfolk and parts of my constituency, as an area which requires special treatment, we have had the regional planning council rejecting this and now we have the Royal Commission on Local Government, which has very important relevance to all this also seeming in sympathy with the idea of setting up city regions of Norwich, Ipswich, Cambridge and Peterborough and letting the rest go hang.
    Everyone who has the Eastern Counties at heart is aware that unless something more is done than so far has been propounded by any Government-sponsored body we shall finish with a sort of hinterland between the city centres where there will be no prospect of anyone doing anything other than agriculture. We know that as soon as those in agriculture get a rise all those in other industries put in demands, as a result of which the old agricultural worker is back in his former position relative to the rest. This is producing an economic debility and having an effect in the minds of men. I do not blame them for having concern about this.
    336
    In the Conservative Party we made a study of the East of England which we published at the end of 1968. Without having before us the East Anglian Planning Council's Report for which we were waiting anxiously, but having only the South-East Study, and without the Hunt Committee's Report, we reached conclusions which, although mentioned as possibilities in some of these reports, have been rejected. Those of us on this side of the House who have concerned ourselves with the Eastern Counties recognise that we have to make sure that if we extend a town such as Peterborough or Ipswich and do not at the same time take proper account of the rural areas we shall be grossly unfair to agricultural workers and all who live by the land. This calls for some consideration of the Industrial Development Act, 1966.
    7.45 p.m.
    The Government could ride out of the obligation in Section 15(3) of that Act by saying that it obliges the board to take account of all the factors, and obviously "all factors" could include what the hon. Member for Norwich, North has put in his new Clause. What makes us suspicious is that the Section lists particular things which must be taken into account within the overall bracket of the word "all". They are the state of employment, unemployment, population changes, migration and objectives of regional policies. The Government could say that the objectives of regional policies are to include what the hon. Member has put in the new Clause; but why not specify them? If the other arguments are specified we should equally say that these are embraced in all circumstances actual and expected. This is of great importance to the rural areas which are becoming more and more depopulated to such an extent that farmers are desperately short of labour despite mechanisation. They have almost reached a limit where no saving of labour is to be made if they are to carry on farming.
    I stress that it is no good being "bitty" in this policy. It must be regarded as a complete exercise and integrated in the true meaning of wholeness. It has to be a wholesale exercise, not a bitty one. The Government need to have a very good reason for rejecting the new Clause. It would be an earnest of their real intention if they were able to show that in the

    337
    re-gearing of this region—even if we disagree fundamentally, as I do, with the general basis of the policy—so long as tile policy is as it is and the machinery is what it is we do not leave out what should be brought in.
    I quite from a statement by the group which I had the honour to chair and which reported to my right hon. Friend the Leader of the Opposition:
    "In two sample areas in East Anglia, male earnings from employment have been the lowest of all the Regions in England and Wales, .8 per cent. or £90 per annum below the average for Great Britain and £190 below the average for the South-East. Norfolk, in particular, showed a figure of 15 per cent. below the average for Great Britain in 1965–66 but the East Anglian Economic Council points out that this is not solely due to agricultural factors. Industrial male earnings were £1 18s. a week less for over half an hour's more working time. Many of these figures cover much wider areas than that of this present survey. But they indicate clearly the typical increasing trends away from primary industries towards manufacturing and service industries especially in the area south of the Wash. Moreover, the trends greatly intensified in the last three years of the seven-year period 1955–62."
    The grisly thing is that, despite this increase towards manufacturing industries, the earnings from this industry are a long way below the average earnings in the country. This the Government have to recognise. In their regional planning boards they have to make sure that this matter is not overlooked. If they want to make a gesture of real good faith they ought to accept the new Clause.
    Mr. Bert Hazell: I support the case made by my hon. Friend the Member for Norwich, North (Mr. Wallace) and the hon. Member for Isle of Ely (Sir H. Legge-Bourke). All of us horn East Anglia were profoundly disappointed by the Hunt Committee's Report. Perhaps we had expected too much from it. However, the Committee's offer to East Anglia was nil. We had hoped for more encouragement. After all, Sir Joseph and his Committee visited Norfolk and other parts of East Anglia and learned about the problems from the witnesses and from the large volume of written evidence.
    Unfortunately, the Government have largely accepted the recommendations, which left East Anglia out in the cold. The placing of the emphasis on growth
    338
    areas in districts like Norwich, Ipswich, and even King's Lynn, has little impact an the wide rural areas of East Anglia. Such are the means of communication that, even if more work was available in the proposed centres, many of the rural people who are displaced for one reason or another, mainly because of the increase in mechanisation on the land, are unable to reach the more populous centres to take employment there. As the hon. Member for Isle of Ely and I know only too well, the problems of Isle of Ely and North Norfolk were highlighted. I hope that the Government will accept the Clause, which, although it may not mean much in toto will at least be an encouraging indication to the districts concerned that they are not left out of the planning for industry in these rural areas.
    Agriculture will continue to lose a considerably greater volume of labour in the purely rural areas. In some districts —for instance, on the edges of large cities and industrial centres—agricultural labour is very scarce. However, it is in the purely rural areas where agriculture is the main source of employment, and where there are possibilities of still further automation taking place on top of the already intensive mechanisation which has occurred, that labour will come on to the market. Unless steps are taken now, the problems which are only too well known to us will persist.
    Earnings in these rural parts of East Anglia are lower than in any other part of the region. I thank my hon. Friends for their assistance in not preventing I.D.Cs. from being granted in parts of Norfolk and East Anglia, but these certificates are insufficient in themselves to provide the necessary employment and to have a marked effect on raising earnings in this important part of Britain.
    Mr. Paul Hawkins: If the Government do not accept this Clause, I shall be glad to vote against them later. However, I do not think the words which it is sought to add to Section 15(3) would achieve much, because that Section says that
    "the Board shall have regard to all the circumstances actual and expected".
    The Report of the Hunt Committee was disappointing. I did not have much faith in that Committee, anyway. I had even less faith that the Government

    339
    would do anything about it even if the Committee had recommended any action. My expectations have been borne out by the fact that the Government have done nothing. It is the Government's fault, because even though the Hunt Committee made no recommendation, the Government could have taken soundings and taken action.
    The tabling of this Clause is an extraordinary action by hon. Members opposite, but I am glad that they have done it. It is their Government who have let the basic industry of agriculture down. As the hon. Member for Norfolk, North (Mr. Hazell) has so eloquently said, it is rural areas which are dependent entirely on agriculture that are hit so hard, because the basic agricultural wage is so low. East Anglia, and Norfolk in particular, has a much lower level of earnings than any other area.
    The Government promised great things for agriculture. However, after the "Little Neddy" Report, which said that agriculture was to be expanded, the Government have done nothing to expand it and raise its profitability, which would enable it to pay better wages. For a long time I have pointed out that agricultural wages are on the bottom rung of the wages of all manual workers and are £5 a week less for five hours' work a week more than the hours worked by any other section of manual workers. Yet other trade unions always want to keep agriculture at the bottom of the wages table. As soon as agricultural workers get an increase, the other unions want an increase. This is a basic cause of the low earnings in East Anglia in general and in the rural areas of Norfolk in particular.
    Another factor depressing earnings in Norfolk has been the extraordinary attitude over I.D.Cs. The hon. Members for Norwich, North (Mr. Wallace) and Norfolk, North have said that the Government have been free in issuing I.D.Cs. That may be true now, but up to 12 months ago it was a very different matter. I had to fight before a small firm of oculists, which was to employ about seven men and five women, could come to the town in which I live. For nine months it tried but was told to go to Ulster, to Scotland or to the North-East. It wanted to be on the main line from Downham Market, where I live, to
    340
    London where its head office was, but it was being prevented from going there. I took the matter up with the Board of Trade, which in the end had to give way, with very bad grace.
    Another example is the fact that Norfolk-based industries have not been allowed to expand. In East Dereham there is a large national industry, a part of which is also in the constituency of the hon. Member for Norfolk, North. This firm, which wanted to expand its business operations by making a new type of vehicle, was told that it could not have an I.D.C., although the urban district council had an industrial site adjoining its works. At that time East Dereham probably had the highest unemployment level in Norfolk. Yet for month after month the firm was told that the shop would have to go anywhere else but in Norfolk. Yet that was an industry which had started in Norfolk and expanded there. It was told to go elsewhere. The only way in which the firm and I were able to bring pressure to bear on the Board of Trade was to say that the whole firm would close down in Norfolk and move elsewhere.
    The Board of Trade has been most unto-operative and unhelpful in allowing I.D.Cs. to firms which the county wants and which are prepared to come to Norfolk, despite the attractions of all the other areas where they are given grants. The pressure of the Board of Trade is on them to go to a development area, even though they are suitable firms which want to come to Norfolk and are ready to put up with the lower financial incentives.
    So I am prepared to support the Amendment in the Lobby if the Government will not support it or allow it to go through. But I emphasise again that it is the basic industry of agriculture which sets the wage rates and earnings in the county of Norfolk, and that until we have a proper policy for agriculture we shall not see those earnings rise to the proper level.
    8.0 p.m.
    Mr. John Golding: I support the new Clause, but I want to make it clear that I was pleased with the Government's attitude on the question in Committee. They then indicated that they would take the level of

    341
    earnings into account when deciding their development policy. I think that the Government will do that whether or not the Clause is passed. But many of us would like these words included as a declaration of intent, as a public gesture that they will take the problem very seriously.
    No trade union wants to keep the pay of agricultural workers down. The problem is not confined to agriculture or to East Anglia, although the tenor of the contributions so far would lead one to believe that that was so. The problem is shared by many areas.
    Unfortunately, we cannot say which is the worst area. We can say something about regions, but we cannot say anything about areas, because we have no statistics on the level of earnings and wage rates in particular localities. I recently asked the Department a Employment and Productivity whether it intended to give us the statistics, and the reply was that there NN as no such intention. That is a great pity, because it blurs the issue and blurs the picture to talk simply in terms of regions.
    I represent a constituency in a region that is considered very prosperous—the West Midlands. Yet there are pockets —and North Staffordshire is such a pocket—where the average earnings are very much below those enjoyed by workers in other parts of the region. So one of our requirements is to know very much more clearly than we do what the earnings situation is in particular localities.
    The argument in favour of taking low earnings into account is that the problem of low pay can be solved ultimately only in that way. The Government have dismissed in the White Paper on incomes policy the practicability of a national minimum wage, a policy which many of us have advocated as a way to get rid of low pay in this country. It seems that it is not practicable in the years to come. For some of us, productivity bargaining is one way to get rid of low pay, but if the trade unions are to co-operate with employers in improving efficiency they must have Government help, and that help can best be given in the way of grants and encouraging modern firms to go into particular localities.
    342
    In North Staffordshire the level of unemployment is not high, but although it is about 2·2 per cent.—below the national average—the level of earnings appears very low. It is distressing to us to see that the locality is based on two, or perhaps three, traditional industries. Agriculture is one, but the predominant industries are pottery and mining. It is distressing to see the area based on industries which, certainly in the case of coal mining and possibly in the case of pottery, lack the very great prospects that modern technical industries can give. It is distressing to us to see workers engaged in the computer industry being declared redundant in an area like North Staffordshire and told that they must work in the South-East if they are to continue to be employed in that industry.
    The Government should follow the policy of encouraging industries to go into such areas to provide some mix, to provide a balance of employment prospects. Therefore, I urge them to accept the Amendment as giving an indication to the public of the seriousness with which they treat the whole question of low pay.
    Mr. Kenneth Lewis: I, too, congratulate the hon. Members opposite who have moved and spoken in support of the new Clause, and hope that the Government will accept it. Although I recognise that what it would do may not be very considerable it would at least be a small token by the Government that they are serious about the low paid worker.
    The Secretary of State for Employment and Productivity is constantly telling us that the Government are concerned about the low-paid worker. Nevertheless, we find that it is the already high-paid worker who is receiving the largest increase in incomes, through the pressure and power of the trade union behind him. Indeed, we are coming to a situation where the differential between the high-paid worker in industry and the low-paid worker in the countryside is even greater than that between the well-paid middle class and the high-paid worker. The worker in the motor car industry is now nudging up to, and sometimes going beyond, what the professional man is earning. The Ford workers say that they want equality of pay with those in the same industry in the Midlands. What would happen if the Government found overnight that there

    343
    was an insurrection in the countryside against the acceptance of the right of the industrial worker to ante up all the time; if the workers in the countryside said that they too wanted equality of income with people working in manufacturing industry?
    The situation is becoming serious. It used to be said that if one lived in the countryside one could live more cheaply. This is no longer so. Most of the costs in the countryside are now just as high as those in the towns. The basic living costs are virtually the same. The costs of some council houses are as high as in some of the smaller industrial towns, if not in the big cities. The difficulties and the costs of transport in the countryside are even greater than they are in the towns. Thus, the advantages of lower costs no longer accrue to those living in the countryside.
    The result is that people are leaving. Those who have been educated are not looking to the countryside for their jobs but to the towns. If we go on like this, we shall soon have large conurbation areas whose people are prosperous with a kind of desert surrounding them. I agree that this does not only apply to East Anglia. My constituency bridges East Anglia and the East Midlands area in Rutland. I have the same problems in Rutland as in Lincolnshire.
    There might be something to be said for the Government looking at some of our country areas and laying down there some of our larger industries. At the moment, if one goes to the Board of Trade for an I.D.C. for a very small industry, the chances are that one will get it. But small industries go to the countryside because they know that they can pay low wages. They do not have to compete in wages with large manufacturing concerns in the towns because there is no wage competition in the countryside and no general lifting up.
    Here again, we have seen in the last few weeks the reactions of the farmers to the last Price Review. Inadequate attention is given by the Government in the annual Price Review—
    Mr. Deputy Speaker (Mr. Harry Gourlay): Order. The Second Reading debate on a new Clause certainly goes
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    wide but not as wide as the annual Price Review.
    Mr. Lewis: I appreciate that, Mr. Deputy Speaker, and I shall come back to the case of the low-paid workers. But when the Government are examining what they are going to pay to farmers in the Price Review, they should take account of the pay of the workers in the industry. The farmer does not want to be well off at the expense of his workers. He wants to run a prosperous industry with the ability to pay his workers well, and unless the Government, particularly the Treasury, are prepared to concede that the Price Review should grant more because of the low-paid workers, we will not get an uplift of pay standards in the countryside. In addition, where there is low pay, the chances are that there are worse conditions.
    I am certain that any Government for the future must consider how we can redress the balance on this question because there is no doubt that, in the last few years, the countryside has fallen way behind the town in incomes, and in ability to earn. People employed in manufacturing industry are buying the products of the countryside. Why should they not have to pay more? The people in the countryside when they buy the products of industry have to pay a high price in order to pay those who are employed in those industries the high incomes they have secured and which apparently they are going to increase in the next 12 months.
    It may be that the Government think that they get a large part of their support from the industrial workers in the towns. In the run up to an election, perhaps they are thinking, "We will pay the industrial worker more money, although he has enough already, because thereby we will get his vote". I say to the Government that the backlash on this from the countryside is not far off and that therefore they should accept the new Clause.
    8.15 p.m.
    Mr. James Tinn: I had not intended to intervene but I feel compelled to express a contrary view to those I have so far heard on this new Clause. We all recognise and sympathise with the problems of low income areas but I submit that the priority must still go to areas of high unemployment, where so many men have no work at all.

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    This, I believe, must be so as long as unemployment in the existing development areas remains at a high level. For example, the Northern Region has well over twice the national average. In particular areas of the region, the level is as high as 10 per cent. This situation persists due very largely to the run-down in the mining industry. That run-down has been largely contained but not entirely by the Government's remedial measures. But so long as unemployment remains such a heavy burden and massive problem for the existing development areas, we must bear in mind that the purpose of this legislation is to stimulate employment in those areas rather than to seek to disperse it even more to areas which are not experiencing high rates of unemployment and whose people are, by and large, in work, even if it be low paid. I sympathise with the point of view expressed by my hon. Friends on the new Clause, but it is more important to provide the men unemployed in the existing development areas with work before we divert resources to other areas.
    Mr. Hazell: Does not my hon. Friend agree that, while one has sympathy with the development areas in their situation of high unemployment, nevertheless unemployment and other social benefits often are higher than the earnings of people such as those I am privileged to represent and which operate throughout many rural areas? There is merit in the new Clause because the earnings of these people are lower than the unemployment and associated benefits in development areas.
    Mr. Tinn: It is not often I disagree with try hon. Friend the Member for Norfolk, North (Mr. Hazell) but the problem of the lower-paid has to be tackled first at the social security level. There is no reason why such a system should not take care initially of the points he has raised. Secondly, it should be dealt with by trade union action. Only after legislation such as this has solved the major problem for which it has been devised—high unemployment—can much greater attention be paid to other areas than hitherto.
    Mr. Eldon Griffiths: I find myself in some difficulty over the new Clause because I dislike the prospect of the whole country being turned into a patchwork quilt of
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    areas, some intermediate, some derelict land clearance areas, others development areas and the rest. I do not like that conception. We would do far better to improve the infrastructure. Nevertheless, we have the policy, at least for the time being, and we must make the best of it.
    In my part of the country the application of this policy is working, if anything, against the interests of the people I represent. Because the development areas are sucking away most of the footloose industry in Greater London, that industry is not going to the overspill towns of East Anglia. Consequently, we have a Government policy which, on the one hand, decants population into the country areas but on the other hand prevents the industry which is needed to sustain that population from going to those areas.
    Because I face this difficulty, I pondered before deciding to support the new Clause. But I decided to support it for several reasons. The first was stated well by my hon. Friend the Member for Norfolk, South-West (Mr. Hawkins) when he said what a bitter disappointment to us in East Anglia the Hunt Committee's Report had been. In my area the local Labour Party led us to believe that Hunt was the deus ex machina. Leave it to Hunt they said, and all our problems of inadequate support for overspill, inadequate income for farm workers would be dealt with. Lord Hunt would come up with a solution and a nice fatherly Government would accept it. What happened? The local Labour parties all rushed after Lord Hunt and gave evidence. They got into the headlines and told us that what they had said would be accepted. Lord Hunt considered the evidence and produced his Report.
    Mr. Hazell: May I remind the hon. Member that it was not Lord Hunt but Sir Joseph Hunt. He seems to have mixed the two individuals. They are quite different.
    Mr. Griffiths: I apologise both to Lord Hunt, who is so excellently representing our country in Nigeria and who has done such sterling work in Northern Ireland, and to Sir Joseph Hunt, who produced this report and perhaps did not receive his peerage because the Government were

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    not prepared to accept his recommendations.
    I need not draw the attention of the hon. Member for Norfolk, North (Mr. Hazell) to this, but it is stated in the Hunt Report that:
    "In North Norfolk … unemployment averages about 2 per cent. above the regional average and is aggravated by seasonal variations due to the high proportion employed in agriculture and the holiday trades."
    In January and June of 1968, the year with which the Hunt Committee was dealing unemployment stood at 4·8 per cent. and 3·2 per cent. respectively. An analysis of the arge of those registered as unemployed in this region showed that the proportion of unemployed males aged 60 and over was twice the national average. What this means, and I am sure that the hon. Member will confirm it, is that the elderly male worker very often the retired agricultural worker whose fingers are no longer supple, whose limbs are very often arthritic, because those who have worked on the land knows that this happens to the elderly, is more likely to be unemployed than anyone else. This was a point borne in upon the Hunt Committee.
    I am sorry to say that the primary reason for it is S.E.T. In our part of the world many elderly retired farm workers have been taken on and have been kept on by other families in part-time jobs that were perhaps not very demanding but were the sort of things that gave a man a bit of self-respect and enabled him to continue earning a few bob which helped him and his family. Many of those elderly men have now been put out of work by S.E.T. and as a result have very low incomes indeed.
    The Hunt Committee was absolutely right to draw attention to this sector of the Norfolk and Suffolk population and to ask that the Government should do something about it. Hunt, as I said, was a disappointment but the Government's action was not only a disappointment, it was a disaster. They accepted the Hunt Committee's recommendations if they thought that it would do them a bit of good. I notice that its recommendations for Merseyside were accepted at once, but other parts of the country, East Anglia in particular, were ignored.
    I come to my second reason for supporting this new Clause. Here I am
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    thinking particularly of the low earnings of many of the industrial workers in the overspill towns of my constituency. I have four industrial towns, Haverhill which has had some difficulties, Bury St. Edmunds, which on the whole has managed its overspill programme very well, and the very small towns of Mildenhall and Brandon. Because of the downturn of demand in the economy and the many other difficulties which have arisen due to this Government's mismanagement of the nation's affairs, we now have a situation where overtime is very hard to come by in the overspill towns. Consequently net income—I am not talking of the wages rates although they are not very high—and actual income of many of our industrial workers is extremely low.
    In Haverhill there are many families who have come from London, young people with the highest expectations who have bought new furniture on the instalment system and moved into a brand new house at a higher rent—and who now are finding that with the escalating cost of living and the fact that their incomes have fallen because of the loss of overtime and the increased stoppages from their wage packets as a result of the Government's activities, that they are in a severe personal squeeze. They are finding it very difficult to make ends meet. This new Clause deserves to be supported if only on the grounds that there are many people, particularly in East Anglia, who are finding it difficult each week to make their incomes stretch to meet the very high cost of living and bring up their families.
    My third reason for support is that in some of our towns in East Anglia we are at a peculiar disadvantage because the Government's policy, inherent in this Bill, of pushing industry towards the development areas. This is placing us in East Anglia at a disadvantage. Let us consider two firms, one of which goes to East Anglia and the other to the North-East. The firm which goes to the North-East will get the regional employment premium. The East Anglian firm will not. The North-East firm will get accelerated amortisation of its plant but it will not get it if it goes to Bury St. Edmunds. If it goes to the North-East it will get a complete rebate on S.E.T.: it will almost certainly, depending on the

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    type of industry, get preferential treatment for credit by the commercial banks. It will get none of these if it goes to the West Suffolk area, to any of the towns in East Anglia.
    Our overspill programme and the great possibilities for expansion that there are in East Anglia are actually being held back by this absurd policy of pushing industry into certain areas but denying that industry the oportunity to go to others.
    Mr. Tinn: I am a little puzzled. The hon. Gentleman seems to be so tremendously impressed by the effectiveness of the Government's policy of inducing industry to go to the development areas that I wonder why he usually supports the Opposition and attacks that policy for its ineffectiveness.
    Mr. Griffiths: I said nothing of the policy's effectiveness. I referred only to the amounts of money and advantages which industrialists can obtain from going to particular areas. I was not suggesting that it was an effective or an intelligent use of public money. It would be far better to provide the infrastructure which would lead industry to go to those areas of its own volition—indeed speaking as an East Anglian, I see no advantage in our handing out as a nation about £20,001 for every industrial job created in particular development areas. Nor do I relish a policy which is being implemented to the disadvantage and detriment of my constituents.
    8.30 p.m.
    My last point concerns agriculture. As report after report to the House has demonstrated, the agricultural industry is shabbily dealt with. The agricultural worker is at the bottom of the wages scale. My hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) drew lo my attention some figures on this subject in the East Anglian study. My hon. Friend pays much greater attention to these intricate reports than most people. In paragraph 415, under the heading "Regional Incomes", it is stated:
    "East Anglia has the lowest average earned income from employment of all the English regions, lower than Wales, only slightly above that of Scotland but some way above that of Northern Ireland. Income from self-employment is also low".
    I should put the figures on record. In Schedule D, which is earned income from self-employment, East Anglia ranks seventh out of the 11 regions, the tenth and eleventh being Scotland and Northern Ireland. In Schedule E, which is earned income from employement—in other words, wages—East Anglia is ninth. With the exception of Northern Ireland and Scotland, East Anglians earn less than people in any other region of the country; they earn the least in England. That is not good enough.
    Those facts, by themselves, justify every East Anglian Member, whatever his party political outlook, in supporting the new Clause. I hope that the Government will have the good sense to accept it. They will not win any seats in East Anglia by doing so. They will almost certainly lose those which they hold anyway. I am sorry to say that to hon. Members opposite, but those are the facts of life; no doubt they will be able to make some other arrangements. In fact the Government owe it to their East Anglian colleagues, who have fought for higher incomes in the area, to ensure that there are higher earnings in the area, for they themselves are going to need them in less than a year's time.
    The Minister of State (Mr. T. W. Urwin): The debate has been so wide-ranging as to be reminiscent of a Second Reading debate. My hon. Friend the Member for Norfolk, North (Mr. Hazell) properly drew attention to the low-wage economy which has obtained for so long in North Norfolk and in East Anglia generally.
    I wish first to take up one or two points made by the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths), who has excelled in making an election speech during the debate on the new Clause.
    Mr. James Dempsey: On a point of order. May I ask for your assistance, Mr. Deputy Speaker? Am I to take it that the debate is being wound up?
    Mr. Deputy Speaker: The hon. Gentleman has been a Member sufficiently long to realise that the Minister is intervening.
    Mr. Urwin: The hon. Member for Bury St. Edmunds was at great pains to point out that, because of the introduction

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    of the additional policy of classifying intermediate areas and the Bill before us to implement that policy, he concedes that we have a policy, even though, to use his words, it looks like a patchwork quilt. I remind him of the many years of inactivity of his party when in office concerning the adoption of a regional policy. Had he and his hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) appreciated the difficulties which were arising in industry long before the Conservatives left office in 1964 and taken the necessary steps to improve the situation and to initiate a regional policy, it may be that we would not have had to consider the more serious question of the extension of development areas.
    The Bill seeks to anticipate the serious problems which will occur in some intermediate areas which have been classified or are about to be classified in the Bill in advance of those problems developing. I suggest that the hon. Gentleman when he leaves the Chamber might read the Hunt Report. He apparently has not done so, since he said that the Government, whilst rejecting the recommendation for the de-scheduling of Merseyside, had also rejected a recommendation about East Anglia. The Hunt Report did not recommend intermediate status for East Anglia.
    Mr. Eldon Griffiths: I did not say that.
    Mr. Urwin: The inference could be drawn from what the hon. Gentleman said.
    Mr. Keith Stainton: It is fair to point out that the Hunt Committee proceeded on the assumption that the expansion of Ipswich will go forward. This has not been the case.
    Mr. Urwin: I do not think the point is a valid one. Other factors are more relevant than Ipswich, and I cannot recall in the Hunt Report any reference to the importance of the development of Ipswich. The Hunt Committee did not recommend East Anglia for designation as an intermediate area, but there were references to Ipswich and its development as there were to overspill towns in other regions.
    May I remind the House of the difficult problem with which the Government
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    were faced, on receipt of the Hunt Report, in determining how slender resources could be allocated to produce the best possible results. It was decided that there should be three criteria as the basis of need; first, the nature and level of unemployment; secondly, migration; and, thirdly, the potential of the area for industrial development. Whilst some of my hon. Friends have expressed disappointment at the omission of East Anglia, I think that they appreciate that those three criteria are not applicable to East Anglia.
    References have been made to the application of the I.D.C. policy. My hon. Friend the Member for Norfolk, North (Mr. Hazell) appreciates that a liberal I.D.C. policy is in operation in his constituency. The Minister of Technology, who is responsible for the location of industry, has to vet applications for an I.D.C. If a firm can be regarded as suitable for establishment in a development area, the policy is to encourage it to go there.
    This is somewhat different from the criticisms made by the hon. Member for Norfolk, South-West (Mr. Hawkins) of I.D.C. policy. As I have said, there are three criteria, one of which relates to the nature and level of unemployment. The hon. Gentleman placed great stress on unemployment in the area. I might not have referred to this matter had it not been for my hon. Friend the Member for Cleveland (Mr. Tinn), who drew attention to the difficulties which arose in development areas when this policy was extended. There is no comparison between the levels of unemployment in development areas and those which obtain in East Anglia.
    Mr. Eldon Griffiths: It is 4·8 per cent.
    Mr. Urwin: I am speaking of the region as a whole, in which the unemployment rates are substantially lower than even the national average, which is not the case in the development areas. I realise that North Norfolk—and I have taken the trouble to visit the area—perhaps has a worse problem than any other part of East Anglia, but certain events have taken place which are appreciated by my hon. Friend the Member for Norfolk, North and which might produce a distinct improvement in the relatively near future.

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    Perhaps because of the extensive departures from the precise wording of the new Clause, I will be excused for wandering a little widely from the Clause itself, but I felt that I should recount to the House the criteria adopted by the Government in considering the intermediate areas. They are similar to the Industrial Development Act of 1966 which requires the Ministry of Technology, in designating development areas, to
    "have regard to all the circumstances actual and expected, including the state of employment and unemployment, population changes, migration and aims of regional policies".
    In this context the objectives of regional policies can in appropriate cases include raising the level of earnings. The Governmen- will have regard to the same indicators in designating intermediate areas, although, as Clause 1(1) provides, intermediate areas will be designated when it is the opinion of the Government that special measures are necessary but that the economic problems are not as severe as in the development areas.
    Mr. Wallace: Do I take it from what my hon. Friend says that Government consideration of East Anglia could include the matter of the lower level of wages? Are they prepared to say that they would give consideration to this matter if the necessity arose?
    Mr. Urwin: I said that the Government continuously keep under review all aspects of regional policy. In these circumstances if decisions were to be taken as to extension of designated areas this would be one of the factors to be taken into consideration.
    My hon. Friends have referred to the statement made by my hon. Friend the Minister of State in the Ministry of Technology during the Committee stage of the Bill when he assured the Committee that the Bill as drafted would enable the Government to take into account the level and rate of growth of earnings in designating intermediate areas. What I cm suing is a repetition of what the Minister of State said in Committee.
    Other factors relevant to the selection of development and intermediate areas—low female activity rates, for example, or heavy reliance on declining industries —are not specified in the legislation, but this does not prevent the Government from taking such factors into account,
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    just as they can take into account the level of earnings. However, I believe it is right that the legislation should stress the need for the relief of unemployment, which is the most obvious waste of economic resources and which gives rise to such acute social problems, both for the community and the individual.
    8.45 p.m.
    I do not wish to underrate the significance of low earnings levels. However, it is worth pointing out that, while the statistics of earnings are being improved and extended, they are still not entirely satisfactory for the purposes which my hon. Friends have in mind. Few up-to-date and reliable earnings statistics are available below sub-regional or county level. To concentrate the funds available and the limited supply of mobile industry on the areas of greatest need, the Government have frequently had to base the boundaries of the development areas and the proposed intermediate areas on rather smaller units.
    However, I assure the House that the Government already have power to take the level of earnings into account in designating development areas and intermediate areas and that, to the extent that we judge appropriate, we already pay regard to earnings levels.
    The hon. Member for Isle of Ely (Sir H. Legge-Bourke) referred to tables of statistics culled from, amongst other places, the report of a Conservative Party study group. He used them to supplement his argument about the low rate of earnings in East Anglia. He could have quoted from Appendix E of the Hunt Report, which shows the increase in earnings per tax unit between 1949–50 and 1964–65. The rate of increase in Norfolk and Suffolk was at about the national average, and well above it in the rest of East Anglia. The counties in which the lowest rates of increase are to be found are wholly or partly within the development areas and the proposed intermediate areas.
    Sir H. Legge-Bourke: The only reason why we did not quote the Hunt Report was that it had not been published by the time that we came to publish our report.
    Mr. Urwin: It is more modern than the Conservative Party's report, apparently. Perhaps one of the reasons

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    is that it is so long since the Conservative Party looked at regional policy, and probably its figures are out of date, anyway.
    I conclude by repeating the assurance which I have given to my hon. Friend the Member for Norfolk, South—[Interruplion.]
    Mr. Wallace: On a point of order Mr. Deputy Speaker. There has been a great deal of confusion. There is only one hon. Member for Norwich, North, and it happens to be me.
    Mr. Urwin: I apologise to my hon. Friend. I repeat my assurance to him that low earnings is one of the matters which can be taken into account in any future considerations with a view to designating new areas. In the light of what I have said and the explanation that I have given, I trust that my hon. Friends will be willing to withdraw their Clause.
    Sir Keith Joseph: It is because of the sudden illness of my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) that I am intruding on the work of what has been a diligent and interested Committee. I am glad to have had the chance to listen to this well-informed debate. There is obviously a strong case behind the new Clause. I have listened to the trenchant arguments of hon. Members on both sides and been much impressed by the marshalling of evidence.
    The speech of my hon. Friend the Member for Isle of Ely (Sir H. Legge-Bourke) represents a great accumulation of knowledge culled from his long representation of the area and his work in preparing, with a number of colleagues, the report of the Conservative Party's study group on East Anglia, to which I thought the Minister referred a little churlishly just now.
    The Government do not seek to deny that East Anglia suffers from low earnings. Even where labour has moved from agriculture to industry, the industrial earnings are still low. My hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis) put his finger on the reason when he pointed out that labour in East Anglia does not have the blessing of competition for its ser-
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    vices. There is not enough demand for labour, even though unemployment may be marginally lower than in the development areas. As a result, we have these very low earning figures.
    The Minister of State may say that the Government are now adopting a liberal I.D.C. policy in this area. But "liberal" is a relative term in this context. He cannot shrug off the cogent arguments of my hon. Friends and of hon. Gentlemen opposite, the figures given by my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) and the picture painted by my hon. Friend the Member for Norfolk, South-West (Mr. Hawkins). Even with a liberal I.D.C. policy, the fact is that relatively few firms apply to move industry into East Anglia. Why? Because the infrastructure is not yet good enough.
    It is no good the Government saying that they have not got the money to improve the infrastructure in East Anglia to attract industry, because they are sitting on a huge pile of wasted resources that they could move into improving the infrastructure in East Anglia and in other parts of the country.
    It is the view not only of Her Majesty's Opposition but of growing numbers of the Government's supporters that the development area investment grants are going in far too great quantity to capital intensive projects that would go to the development areas anyway even if there were not any differential investment grants for them. Scores of millions of pounds are going to waste—not increasing employment in the development areas—that could be spent on improving infrastructure. If infrastructure were improved there might be more applications for I.D.Cs. and some competition for labour in East Anglia and in other low earning areas.
    But behind all this lies the larger phenomenon that, under this Government, industrial growth has been so wretchedly low. There is an absolute lack of footloose industry, and, combined with poor infrastructure in areas like East Anglia, the result is the situation which we are all deploring today.
    The Minister of State gave a pedantic answer to the new Clause. He said that the Government already have power to consider the level of earnings. Why, in

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    that case, do they have specified power to consider by name other particular evils? Why are some evils specified by name and others, like low earnings, not referred to? If they already have power to consider low earnings, what harm is there in accepting the new Clause? The Minister of State has not begun to answer the reality of the debate.
    I do not want to give any hypocritical impression. I cannot advise my hon. Friends positively to support the new Clause, because it would give the impression that we wanted to increase the patchwork quilt to which my hon. Friend the Member for Bury St. Edmunds referred. We do not want to multiply the number of different types of area because at each boundary there is a new set of distortions.
    We see no harm in accepting the new Claues, because it does no more than recognise legally what the Minister of State has already said that the Government have power to take into account. We ask the Government to recognise that infrastructure, which could be increased by moving into relevant expenditure some of the wasted expenditure to which I have referred, and growth lie behind this evil of low earnings and that, until there is competition for labour in the low earnings areas, earnings will not be raised. The Government had a chance to show whether they were really concerned about low earnings, or whether this was all ministerial cant, and the Minister's speech did not give very good testimony.
    Mr. Dempsey: I, too, have listened to the debate, and I think that we should get back to the Clause. The speech of the right hon. Member for Leeds, North-East (Sir K. Joseph) was a typical hysterical outburst against Government policy, and it detracted from the value of the argument adduced by my hon. Friend.
    What I wanted to say, Mr. Gourlay,—
    Mr. Deputy Speaker: Order. Perhaps I should remind hon. Members that we are meeting as a House, and not as a Committee.
    Mr. Dempsey: The protocol might be different, but the formula is similar. We have been doing our utmost to induce industrialists to go into those areas
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    where there is unemployment. In spite of the inducements offered by the Local Employment Act, we have found difficulty in doing this. East Anglia has been discussed, but it has been generally admitted that low earnings are common in other areas of England and Wales, and therefore the policy set out here could become general.
    My view is that we should have regard to the situation in other parts of the country. In Scotland, for example, we have twice the United Kingdom average of unemployment. In North Lanarkshire, where my constituency is situated, the unemployment figure is three times the United Kingdom average. In one part of the County of Lanark unemployment is almost as much as 15 per cent. It seems to me that if we include areas such as East Anglia, where there is nothing like that kind of unemployment, merely on the ground of low average earnings, we shall reduce the global sum which is available to try to induce industrialists to move to those parts of the United Kingdom which genuinely require new industry and new jobs, and where unemployment amongst school leavers is very vexing indeed.
    I cannot support a Clause, from whichever side of the House it comes, if it results in reducing the global sum available to help areas where there is existing unemployment, and where we are endeavouring to solve the problem. It appears to me that if you have to choose between contemplated and existing employment, you have to decide to spend the money where the unemployment problem exists. If you have to choose between low earnings and existing unemployment, you have to spend the money on those areas where there are no earnings at all because of unemployment.
    Mr. Deputy Speaker: Order. Perhaps I should remind the hon. Gentleman that the Chair is not making any choice at all.
    Mr. Dempsey: I think that it would be difficult for the Chair to make a choice. I should not suggest that the Chair should make a choice, but I am sure that if the occupant were out of the Chair he would make one all right. For my sins as a Member of Parliament I happen to be blessed with the fact that I am not in the Chair, and I can make a choice, and my view is that if we have any money to

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    spend we should spend it in those areas—
    Hon. Members: In Scotland.
    Mr. Dempsey: Yes. I am willing to concede that hon. Gentlemen opposite have been kind enough this evening to admit that Scotland has an unemployment problem. Most hon. Gentlemen opposite have said that there is a low wage earning problem there. Prior to the Christmas Recess figures were given from the Dispatch Box which showed that as a result of the Local Employment Act and trade union organisation the gap between average earnings in Scotland and in other parts of the United Kingdom had been reduced from 7·3 to 2·4. This itself shows how local employment principles and financial inducements are now beginning to operate. Therefore, as long as unemployment stays at the rate that it is in the North-East and in Bonnie Scotland, surely we should not think of reducing that global sum by spending it in areas with nothing like these unemployment figures.
    I agree with the Minister that we must get our priorities right and should spend whatever resources are available in the right areas and for the right purpose, that of inducing industrialists to come to those parts of the country, particularly Scotland, which have an unemployment problem. Hon. Gentlemen have said how difficult it was to attract an industry to East Anglia; but it still went there. It financial inducements are to be provided for areas like this, more industries will go there and fewer will come north. This will be the inevitable consequence of inducing them to go where they are not so necessary. I hope that we get our priorities right and satisfy ourselves that the global sum for attracting industry is spent in the areas where the need is most urgent.
    9.0 p.m.
    Dr. Hugh Gray: The sweeping and superficial generalisations by the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) should be corrected. He carefully forgot that the Hunt Report drew attention to the increased prosperity of East Anglia. If there is a General Election this year, I have no doubt that the inhabitants of
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    Norfolk will remember this. One has only to point to the increased number of motorcars parked in the streets of Great Yarmouth.
    This is not to say that many of the criticisms are not justifiable. The right hon. Member for Leeds, North-East (Sir K. Joseph) spoke of the necessity for a new infrastructure in Norfolk. Certainly the communications network must be opened up to both the North and the Midlands if Norfolk is to benefit, particularly from going into the Common Market. But I could not agree with him that the Government's policy is a patchwork, particularly when one remembers that the policy which the Opposition propose to put in its place, apart from promising to provide the infrastructure, is that they also intend to engage in promoting growth points.
    In the recent foreclosures in Great Yarmouth resulting from mergers, only one firm concerned is moving to a development area. Another is moving to the increased and very prosperous city of Norwich. I suggest that a policy of growth points will not help the county as a whole, as the right hon. Gentleman's study group seems to have suggested.
    Sir K. Joseph: When I spelled out the Opposition's regional policy in Brighton in October I do not recall using the phrase "growth points", or referring to them at all.
    Dr. Gray: If that is so, I must apologise to the right hon. Gentleman. In that case, it seems that his policy does not even have the benefit which I supposed that it had. What does he suggest? Does he suggest that the Government should go on from the dichotomy of development and non-development areas to something more sophisticated? No, he suggests nothing of the sort. At least hon. Members on this side with constituencies in East Anglia have suggested that this should be done; they support a policy of grey areas. Our difference with the Government is on the criterion chosen; namely, that of unemployment alone.
    Low average wages also should receive consideration, particularly in view of the redistribution of wealth which has taken place between areas as a part of the Government's policy. This seems to me to have been a success, within the limited

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    framework set, but I hope the Government will go further and look at the special problems of such areas as Norfolk. Sometimes it seems to me that the Government are, perhaps, misled by the basis on which the statistics are collected. It is often not narrow enough to apply to Norfolk as a county, let alone to regions within that area.
    There is mounting discontent on low average wages, and also on the question of the social consequences of mergers such as the four which I have mentioned. These will also swell the figures of unemployment. It is true that skilled men are assimilated much more quickly than unskilled men. Nevertheless, the employment figures, on the basis of what the Minister said, will need to be looked at closely by the Government. It seems to me also that the Minister has made a promise that low average wages will not be forgotten.
    The policy as it stands—-of development and non-development areas and the new grey areas—is not set for ever. We live in a changing world and a changing economy, and one expects the Government to take account of new factors as they arise. Perhaps hon. Members on both sides erred in the evidence which they gave to the Hunt Committee in that their evidence was not sufficiently convincing. The Hunt Committee was set up by the Government, and we should have been able to convince it that there was a case to be considered for East Anglia to be made a grey area and to receive the aid which it richly deserves, particularly in the rural areas.
    One hon. Member opposite drew attention to the low wages which prevail in rural areas and which are not cured by a drift to the towns, where the wages are slightly higher. I sometimes think that some of my hon. Friends forget how low these average wages are. I find it exceptional for a man in Yarmouth to earn £15. Many are taking home £11 and £12. The talk about average wages for the whole of East Anglia, including the South-East fringe of London, being £20 is completely illusory.
    Also in Yarmouth there is the problem of more available employment for women. We know that that may be solved by the Government's policy of equal ply for equal work, and I hope it will he introduced—
    Mr. Deputy Speaker: Order. The hon. Gentleman is departing somewhat from the new Clause before the House.
    Mr. Kenneth Lewis: On the question of equal pay—
    Mr. Deputy Speaker: Order. The hon. Gentleman is out of order to mention it.
    Mr. Kenneth Lewis: Putting it another way, does the hon. Gentleman realise that there are some women who earn more in the town by typing than men do in my area and in his area?
    Mr. Deputy Speaker: Order. The hon. Gentleman must not pursue a question which is out of order.
    Dr. Gray: I regret that I cannot reply to that assertion, though it is true that for some occupations such as typing, women are sometimes paid more than skilled workmen. We should regret that. It is a state of affairs which will be cured only by a more sophisticated policy than the Government have had in the past.
    I accept my hon. Friend's assurance that the Government will keep the question of low-level earnings in mind, and I hope that he can move on from that assurance to something stronger, even before this debate finishes, so that my hon. Friend the Member for Norwich, North (Mr. Wallace) will not have to press his Clause to a Division.
    Mr. Wallace: For my hon. Friends and myself, our purpose in raising this debate was to bring out into the open and confirm what was said by the Minister of State, Technology in Committee. My hon. Friend in replying to the debate today clearly reiterated what was said, and I accept it in good faith. [An HON. MEMBER: "Naïve."] It is not naive. Some of the positive actions taken by my hon. Friend as Minister, seeing for himself what was needed in the area and assisting hon. Members who have asked for his aid, are sufficient for me to know that his integrity is beyond doubt, and I accept what he says in good faith.
    I am not playing politics on this issue, in spite of the attempts made by some hon. Members opposite whose contributions to the debate have been very poor. In the circumstances, I beg to ask leave to withdraw the Motion and Clause.
    Hon. Members: No.
    Question put, That the Clause be read a Second time:—
    The House proceeded to a Division: Mr. Ernest Armstrong and Mr. James Hamilton were appointed Tellers for the Noes, but no Member being willing to act as Tellers for the Ayes, Mr. DEPUTY SPEAKER declared that the Noes had it.

  New Clause 3

    REVIEW OF DEVELOPMENT AREA POLICIES
    The Minister shall, with the Minister of Housing and Local Government and the Secretary of State, cause to be carried out a comprehensive review of development area policies to determine the effectiveness of existing measures and their consistency both with other Government policies and with policies for other areas and shall lay the report on this review before Parliament within twelve months of the passing of this Act.—[Mr. Ridley.]
    Brought up, and read the First time.
    Mr. Nicholas Ridley: I beg to move, That the Clause be read a Second time.
    The Clause calls for a review of development area policies. It follows a recommendation of the Hunt Committee that there should be such a review to test the effectiveness of the policies being pursued by the Government. In paragraph 493 of its Report, the Hunt Committee said:
    "It is important in the meantime, therefore, to prepare the way for a transition from financial policies primarily based on incentives to policies of strengthening the infrastructure and improving the environment. The opportunity should be taken now to assess the impact of current policies and to evolve more closely integrated and balanced regional policies. We recommend that the Government set a review in hand without delay."
    Those are fairly strong words. They are a positive recommendation from an official Committee set up by the Government that the Government's own policies need overhaul and reappraisal. Moreover, there is no doubt that that view is shared by a large number of people both inside and outside the House.
    To put the point in its context, I remind the House that the Government's regional policies as a whole are costing nearly £300 million per annum. We want to know what results we are getting for this expenditure.
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    9.15 p.m.
    The figures for the number of jobs provided are not all that encouraging. I have with me the statistics covering the change in employment in the various development areas between June, 1964, and March, 1969, a period of nearly five years. There are now 272,000 fewer employees in employment in the five principal development areas. The level of unemployment in those regions has gone up by 103,000, a startling figure, but it means that 169,000 people have migrated and have left those regions for good.
    One can hardly claim, therefore, that the results of this large expenditure has dramatically transformed the employment pattern in the regions. It is extraordinary that unemployment has gone up by 103,000 while migration has gone up by 169,000, despite this enormous expenditure.
    Mr. Edwin Wainwright: Over what period has that migration taken place? Does the hon. Gentleman know what occurred prior to 1964?
    Mr. Ridley: The figures I quoted were for the change between June, 1964, and March, 1969. Thus, during the period which, broadly speaking, has been under the stewardship of the Socialists, there has been an increase in unemployment in the development areas of 103,000 and, in addition, a net migration of 169,000.
    I appreciate that there are reasons why the task has been particularly difficult, such as the run-down of the coal industry. I am not saying that the problem has not been difficult. However, the results have not been as good as we would have liked.
    Mr. Wainwright: The hon. Gentleman has not answered my question. What were the figures prior to 1964? I will, of course, understand if the hon. Gentleman does not have that information.
    Mr. Ridley: I do not have the figures with me. There has always been migration from the development areas, but it has not been as high as that. As I say, in addition there has been a large increase in unemployment. I am not trying to compare records but am pointing out that we should not be entirely satisfied with the results.
    The Government have resisted pressure for their development area policies to be

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    reviewed. They have contented themselves with a few limited studies of the effectiveness of those policies within Departments, and from time to time we are told that those studies are proceeding. When will the results of those studies be published? I hope that the Minister will tell us more about them.
    I do not know if a study is going on into the effectiveness of the regional employment premium. This benefit costs about £100 million a year, although it will be less when the selective employment premium comes to an end in April. What has been the result, in terms of an improvement in the unemployment position or in economic activity, of that benefit in the various regions?
    The guarantee does not run out until 1974, which is not all that far away. The time is coming when we will have to reassess the position. It is our intention to phase out this benefit when we become the Government. In the meantime, we want to know the Government's views on the subject. Will we have their support when we perform that operation and when they are in opposition? We shall need to know what they think about its effectiveness.
    Yesterday at Question Time the Government admitted that the 40 per cent. investment grant was not particularly designed to improve employment. I quote from the OFFICIAL REPORT for yesterday:
    "… the facts are that the investment grant was not primarily intended to increase labour in particular areas. There are other methods of doing that."—[OFFICIAL REPORT, 19th January, 1970; Vol. 794, c. 15.]
    What is it intended to do? It is costing the best part of £100 million and it has been very severely criticised, not least by hon. Members opposite. The hon. Member for Middlesbrough, West (Dr. Bray) made a devastating speech when he talked about costs up to £20,000 per job in refineries and chemical works on Tees-side. We know that there is now a rush of capital intensive industries to development areas which provides some jobs, but by definition capital intensive industry is the least suitable because it provides the least number of jobs.
    Professor Brown in his note of dissent in the Hunt Committee's Report underlines this argument strongly. He seriously questions whether it is right to put so
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    much reliance on capital intensive subsidies of this sort. We hear stories of cost up to £70,000 per job in certain chemical complexes which are contemplated. The stories of possible levels of cost per job are becoming more and more extraordinary. Many industrialists say that they would probably have moved to whatever region they decided to settle in anyway even if the capital incentive had not been provided.
    Without seeking to prejudge the issue, here is another field in which there is ample room for study of the cost- effectiveness of these policies. The Government have undertaken some sort of study of effectiveness of investment grants. Perhaps the Minister of State will say whether this is confined to investment grants as a whole, or to regional parts of those grants, or whether it may concern other aspects. We should like to know what is being studied and what are the Government's intentions as to the future of the 40 per cent. grant rate as they see it at present.
    There is ample ground for making a study of what is actually happening in the regions. I am always surprised at the very large migration which takes place even when there is no change in the total population of a region. Every year about 40,000 workers move in and out of the Northern Region quite apart from any net migration. Who are these people and why are they moving and to what degree is the population mobile? How can we increase the mobility of the population? Who are those who cannot move and are not being helped by present methods?
    We have approached this matter too much from the point of view of industry and infrastructure and not made enough studies of the effect of regional policies on certain classes and groups of individuals. We do not know whom we are helping and whom we are failing to help. We know there are serious problems of shortage of skill and ageing populations in some districts because the young are leaving and certain benefits are of help to certain classes, but we do not know enough about this. I should have thought the time had come when the study of the individual side of development area policy was long overdue. I have said enough to show that there are a whole

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    number of areas which would repay further study.
    The time has come for there to be a full-scale committee or Royal Commission which can take evidence in public and consider these matters closely. The trouble about an interdepartmental or entirely internal inquiry is that people cannot give evidence before it and that it does not take place sufficiently in the public eye for it to be clear what is going on.
    I therefore urge the Government to undertake such a review. This is an ideal moment at which to do so. The Bill will be passed tonight. That will end the problem of what to do immediately for the grey areas, right or wrong. It is wholly appropriate for the Government now to announce that it will initiate a proper study of the effectiveness of all the different aspects of regional policy so that the House can be better informed on whether it is getting value for money.
    Mr. Charles Mapp: I take a somewhat different view about the Clause from that taken by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). There is a germ in the Clause which commends itself to me. For that reason, although I do not think that the Clause as a whole can be accepted, I ask the Government seriously to consider whether there should not be a complete and exhaustive review of one aspect of this matter.
    I am convinced—philosophically, economically, and politically—that the Government's policy on development areas is right, but I have difficulty in coming to terms with their selective treatment of intermediate areas. I come from Lancashire which, with its sister county of Yorkshire, is one county where the words "grey area" have an application. It is because of the discriminations in Lancashire that I want a review to be held.
    The House has had no opportunity of discussing the Minister's decision as to the choice of intermediate areas. The Bill precludes us from discussing the question now, but the Clause, if it were accepted, would enable us in 12 months' time to consider whether the Minister's
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    decisions today about the intermediate areas in particular were correct.
    I have made some study of the selective treatment which has taken place in Lancashire. I have taken into account the criteria, from which I do not differ, stipulated by the Minister. However, it is no good enunciating principles unless the details are filled in. The Department has been wholly unconvincing in the matter of producing facts to satisfy a fair-minded person like myself of the correctness of the selective treatment which has occurred across Lancashire and, to a lesser extent, across Yorkshire.
    One of the defects about the Report of the Hunt Committee, defects for which the Committee was not responsible, and one of the defects about the Bill, is that the problems of the grey areas are not exclusively problems of employment. They are problems of environmental decay—industrially, socially, and in terms of civic furniture.
    I should appreciate an assurance that in 12 months' time there will be an independent appraisal of whether the choice of the intermediate areas was right. Such an independent body should consider questions such as these. Were the areas chosen correctly? I have indicated reservations. Were the criteria for selection correct? Are the forthcoming economic benefits worth the cost? This general question must command serious attention on both sides, because there is a good deal of money involved.
    9.30 p.m.
    There is the question whether, in the context of such a Report, the problems of housing and environmental difficulties should run parallel. This is perhaps the key to the new Clause. Anyone who travels in Lancashire, and doubtless in Yorkshire, will see not so much a lack of jobs, though the counties have more than their share of this problem, as the depressing effect on businesses and households that too often cause our people to leave.
    The unemployment figures are deceptive in my town, which is losing 900 people a year. It is no wonder the unemployment figures are what they are in my part of the county and other parts. I think not only of my town, because I have been too long associated with the

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    county. Every hon. Member will have a vivid picture of the old industrial background of the vast industrial area running across central Lancashire, including the North-East and right around Manchester. In many ways its furniture is worn out. Most of its industries, including an engineering industry that was appropriate 30 or 40 years ago and coal and cotton, are disappearing fast, coal overcome by other sources of power and cotton in the heat of modernisation. I want a speedy appraisal to be made of what the Bill might effect in 12 months' time. I took part in the debates in 1960 and 1956 on the two major Acts that preceded the Bill. The major argument in 196E was on getting rid of narrow development areas and having blanket treatment for vast areas and even countries—Wales, Scotland and a great deal of the South-West. The suggestion was that the narrow, selective treatment was inadequate to the region or countries concerned, and it was accepted. If that reasoning was good in 1966, what has changed it now?
    Even Hunt, with all its imperfections, made blanket recommendations. Some of them should doubtless have been rejected by the Government, but the substance was a blanket recommendation for the two major industrial counties outside the Midlands. But the Government, for reasons peculiar to themselves, decided to go in for selective treatment.
    I have spent some time researching on the facts of the differing treatment across the county of Lancashire. May I say as kindly as I can to my Government that the case for Merseyside was doubtful. Merseyside includes the south side of the river. There is a case as powerful as is to be found anywhere for development status for Liverpool and its immediate background, but can anyone say fairly that that applies to the growth area of oil installation plants all around Ellesmere Port, about which we have had an important announcement in the past few days?
    I knew the area intimately, and I cannot be persuaded that it should be a development area—not when I look across Lancashire at the dereliction all around me. I ask hon. Members to think of the great trunk motorway running north and south through the county, containing
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    a vast population of nearly 6 million people, and ask where are the new growth zones? The Preston new town, the biggest new town to be, is nearly on the motorway. It is close to North-East Lancashire. Below it is Skelmersdale, another new town. Below that is Warrington, a new town to be. Then there is another new town, Runcorn.
    Has it not struck the Minister that all the growth is emerging around and west of the motorway and that the area lying east of the motorway, where this old, vast industrial area had its cradle, has been more or less overlooked? I urge him to look at this pattern and to ask himself whether the choice the Government have made may not have been inadequate. Rather than say it was the wrong choice, I merely say that for the south side of the Mersey there is not even a case for intermediate status. But there is a case for the great background of Liverpool.
    The status for North-East Lancashire is the correct one, but if that judgment is still shown to be right in 12 months' time, then the case for the vast area including Oldham, Bury, Rochdale and Bolton and down to Stockport is just as great. The case for North-East Lancashire was stronger three or four years ago than it is today.
    As I have mentioned, we have 5 per cent. outward migration from a town like Oldham. Manchester and Salford, two cities which cannot be distinguished from each other, also have a heavy net migration outwards. It may surprise hon. Members when I tell them that, in a Written Answer to me on 6th June, I was told that the net emigration figure from Manchester and Salford between 1961 and 1966 was 9 per cent. Such figures do not emerge quickly. It is obvious, however, that there is a vast movement away from that great conurbation.
    There are other equally dramatic figures. In common with other hon. Members, I belong to the North-West Industrial Development Association, a non-political industrial body. I have mentioned the growth points. A recent news letter issued by the association listed practically every new industrial venture in the area in the last few months and also the closures.

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    Along the motorway and west of it lie about one-third of the population of Lancashire. Two-thirds of the population live east of the motorway. There have been 81 new ventures west of the motorway during the period covered by the news letter. On the more populated east side of the motorway, the new ventures total 79. Five new ventures closed to the west of the motorway; nine closed to the east of the motorway.
    In the last week it has been learnt that another 300 jobs in Oldham are likely to go in the next few months, because of the closure of a mill. The firm says that it cannot stand up to the giants. I have a branch of Ferranti's in my constituency and 600 to 700 jobs will be in jeopardy after next July. My latest information does not give me room for optimism. Those jobs are going from Oldham to Blackburn in the new intermediate area. This is a highly technical firm doing advanced work in a huge factory.
    I am not saying this with any satisfaction but am merely trying to express the feelings throughout Lancashire—in the North-East and in Liverpool—that if blanket arguments were good in the past, what will happen now that we have this selective treatment? Hunt has proved that despite what was said in an earlier debate, development areas suck more from the adjacent industrial areas than they did from Birmingham or London. We in Lancashire and Yorkshire know this. We are so near to the North-East and Scotland. We do not complain too much, but we notice the haemorrhage. If we are to add to this another selective area in the north-east of Lancashire, what is left of industrial Lancashire will be bleeding even more.
    Whatever review takes place, in 12 months or so, will show the Government the reaction in adjacent vast industrial areas. Although their choice of selective areas or intermediate areas is not mine, I do not find basic fault with it except inadequacy. My colleagues from Yorkshire know their constituencies as well as I know mine and they know that there is still time, before the Orders are laid, to reconsider the figures for the old industrial towns, excluding the seaside. There is still time for my right hon. Friend to change his mind, and not by political persuasion from me—in 15 months I
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    shall not be interested—but through persuasion based on economic facts and a social and economic infrastructure of those parts of Lancashire which must be revived and given hope and the kind of incentive which these old areas found in the challenge which they met 100 years ago and can meet again.
    This incentive should be spread evenly across the county. The words of the Clause are quite inappropriate for an Act of Parliament, but I should like the Government to accept the implication. Although we in the central Lancashire belt may feel that we have missed the boat for the time being, the time will come when this kind of new Clause will prove that the Government's judgment, although inadequate, can be remedied in the near future.
    Several Hon. Members Several Hon. Members rose—
    Mr. Speaker: Order. I would remind the House that we are beginning the second of five debates on five New Clauses, after which we shall take a number of Amendments to the Bill, after which we will take two more Bills. The night is wonderful and beautiful, but not infinite. Brief speeches will help.
    Mr. A. P. Costain: I will take your broad hint, Mr. Speaker, and keep my speech very short.
    The hon. Member for Oldham, East (Mr. Mapp) made a very good appeal to the Government, but I did not see his Front Bench moved by his remarks. I want to make a plea for the South-East. The Clause is good because I believe that the policy in development areas is taken much too literally. Over the past two or three years we have seen in my constituency a most regrettable and dramatic rise in unemployment because factories have been shut down—as they have in Oldham—and this has been worsened by the Government's defence policy which has removed many troops from an area which to some extent depended on the camps there.
    The effect of S.E.T. has produced great difficulties for the hotel industry. Why should the Government not face up to the situation? This new Clause asks for the matter to be reviewed in 12 months' time. Why should it not be so reviewed? What are they ashamed of, that their policies will not stand up to this? If

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    they are not ashamed of this they should accept it. If they will not accept it they should say why quickly.
    9.45 p.m.
    Mr. Frederick Willey: I congratulate the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) on raising this important issue. I am sure that he is using it as a peg to put before the House an argument which he recognises is not appropriate to this legislation. We know that the Government constantly keep under review development area policy. We have had a succession of Distribution of Industry and Local Employment Acts, so that we can rest assured on that point.
    We get the annual statements made under the Local Employment Act, and the Economic Planning Councils issue a good deal of information. What I am concerned about is who should take part in the review. Here there is a case for the hon. Gentleman's argument.
    Mr. Ridley: The right hon. Gentleman will be aware that under the Local Employment Act, 1960, the Government have to lay a report before Parliament every year whereas under neither the 1966 Act nor this Measure is there any such provision There is statutory precedent here.
    Mr. Willey: I accept that. We have today what is comparatively new, the reports from the regions through the planning councils. My lack of sympathy with the hon. Gentleman and the provisions he is asking the House to accept lies in the fact that he is asking the Government to hold this review. I have some sympathy with him in that I feel that there ought to be a review and I have a suggestion to make. The Select Committee on Nationalised Industries, in its report on the N.C.B., made several comments about pit closures which are relevant to the problems of the development areas. There is a good deal to be said for the comment in the report that it would have been more economical to have kept some pits open.
    We have set up one or two new style Select Committees dealing with specific matters or departments. There is something to be said, particularly as the Estimates Committee has produced one or two valuable reports on the development areas, for the Government using these new style Committees to hold a review of
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    this kind. As the Minister of State knows I am critical of some aspects of development area policy and a little apprehensive of hon. Gentlemen opposite because I know that they wish to economise at the expense of development areas, which could be fatal to them. The Government ought to consider this approach. These new committees have done some very good work and there is something to be said, knowing that the Government keep this matter under review, for the House playing a more important part and being given the opportunity collectively to look at the evidence, which is more voluminous than it was, and to recommend what changes, if any, should be made.
    Mr. Michael Shaw: I, too, will try to assist the progress of the House by keeping my remarks to the minimum. I congratulate my hon. Friend on moving the new Clause. It is significant that, he having covered the ground so expertly, every subsequent speaker has supported the new Clause. I hope that this agreement will continue to the end of the debate.
    I was particularly interested in the speech of the hon. Member for Oldham, East (Mr. Mapp), and I regret that he will not be enjoying the luxury of another contest. I know with what seriousness he has tackled all the problems both in Committee and outside during his period in the House. I welcome his speech because its theme followed closely a theme which I raised on Second Reading. He emphasised the problem raised by the blanket type of assistance. This problem will be accentuated by the Bill, and so make the need for review more necessary. It is along the edges of the region which is being helped that the effect is most starkly felt. If there is imposed on the other side of that area, to the south in this case, an intermediate area of special help, the area in between has an attraction to the north and an attraction to the south, and this will exacerbate its difficulties. The effect of this should be carefully studied.
    May I now deal in detail with the new Clause and particularly with investment grants. The cost of investment grants is rising, and is estimated this year to be running at the rate of £560 million—
    Mr. Ridley: The figure is £590 million—
    Mr. Shaw: I am corrected by my hon. Friend—£590 million. In spite of this, manufacturing investment remains at a low level. Regarded as a proportion of the gross domestic product, the level has been lower only once in the last 15 years. In 1963 it dropped to 3·5 per cent. of the gross domestic product, whereas now it is 3·6 per cent.
    The Hunt Report recommends—and the new Clause follows closely upon the Hunt Report—that there should be a comprehensive review of development area policies. The Government are already beginning to probe the effectiveness of the aid given to industry. The aid given by the Government to industry in the development areas amounts to about £300 million a year, £200 million of which is being spent in three ways, R.E.P., S.E.P.—until it finishes in April —and the investment grant differential. This is a large sum and, if we continue to spend at this rate, we need to know much more about the effectiveness of that expenditure in curing the problems at which it is aimed.
    What attracts new industries to development areas and to intermediate areas? Are there sufficient attractions to induce industries to come to the areas? What deters firms from going into development areas? Is there a shortage of skills in the areas and a need for retraining? Is there a shortage of universities? Are there inadequate roads and a lack of industrial and social amenities? All these factors must be considered to ensure that the money is spent in the best possible way.
    There are two factors above all to bear in mind. First, the sums spent in these areas are substantial; secondly, the problems facing these areas are still considerable. We must ensure that those substantial sums are spent in such a way that they will have the maximum effect in helping to solve those considerable problems. For this reason I believe it essential that there should be some review as recommended in the Clause.
    Mr. John McCann: I, too, will be brief, although it is a considerable time since I had the opportunity to address the House, and to do so now feels rather like making a second maiden speech.
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    I wish to support the idea of a review. Many of us support the Government's policy on development areas, and so does the Hunt Report which suggests that the Government for some years yet must continue the development area policy which they are carrying out.
    The Minister of State made the case for a review during the Second Reading debate when he said:
    "I turn to the need to assist the intermediate areas. Any system of discrimination between one part of the country and another in respect of assistance for industrial development leads to criticism from those areas which just fail to qualify—and the greater the differential between the development areas and the rest of the country, the greater the criticism tends to be."—[OFFICIAL REPORT, 5th November, 1969; Vol. 790, c. 1028.]
    Although many of us broadly support the Government, we were worried about the areas which did not qualify. This led to the agitation for some help for grey or intermediate areas.
    We welcome the setting up of the Hunt Committee. The matter was examined thoroughly and recommendations were made, but our joy was tinged with sadness when it was learned that the Minister of State had taken out large areas. In his remarks today the Minister of State mentioned the three criteria which were applied. One wonders how the criteria were in fact applied when even in the intermediate areas in Lancashire some towns which are better off than others have become grey areas under the Hunt proposals.
    I wish to make a plea for my own constituency. Rochdale is a very progressive town, but finds it rather difficult to attract industry because of the attractions of the nearby development areas. We have a very fine technical college, thanks to the initiative of successive Governments, and a very lively student body, but the danger we see is that these youths eventually will have to move out of the town to find jobs suitable to their talents and training. At the moment the town is being cut in half by a magnificent motorway concept, the M62, but it will be tragedy if this motorway ultimately is used only to take jobs and workpeople to neighbouring towns.
    We accept that the economic position demanded that some of these towns be taken out, but a difficult situation has been made worse. I should like to quote

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    a personal example of what happened in Rochdale. A well known international firm with a very good export record wanted to expand. It had the land, it had the orders, and it approached the Board of Trade for advice. Instead of offering the firm a grant or loan, the Board of Trade said that if it moved to the North-East it could have an advance factory and regional premium. In other words, if we want to expand we risk losing the jobs that we have.
    We in the North-West have the finest craftsman in the country. All we ask is the chance to compete on equal terms with our neighbours. I ask the Government to think again about the question of a review.
    Amendment No. 1, which was in the name of my hon. Friend the Member for Oldham, East (Mr. Mapp) and myself, but which was not selected, asked the Minister to take advice from an appropriate body. I think that this House would be "an appropriate body" to decide this matter. The Hunt Committee considered all aspects of the problem and made certain recommendations. On these recommendations some areas which are not even intermediate areas, on the grounds of migration or prospective migration, dependence on older industries, and industrial dereliction should be included along with some of the better parts of the present development areas. The review—
    It being Ten o'clock, the debate stood adjourned
    Ordered,
    That the Proceedings on Government Business may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Varley.]
    Question again proposed, That the Clause be read a Second time.
    Mr. McCann: A review could do nothing but good because justice would not only be done but would be seen to be done. I am confident that if the recommendations of an impartial body were accepted justice would be done.
    Mr. John H. Osborn: I, too, will be as brief as possible. I come from an area that is critical not only of the policy being
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    pursued but of the decisions taken by the Government. In fact, any Government which take decisions in these matters are bound to gain more critics than supporters. It would be a little out of place if I extended sympathy to the Government in the difficult problems which face them largely emanating from the unsatisfactory economic climate in which the country is operating at present.
    The Hunt Report in paragraph 493 suggests that the Government should set in hand a review without delay. This is the purpose of this Amendment. Earlier in that paragraph the Committee states:
    "We think it important, however, to use this time for a thorough evaluation of current development area measures and their relationship with the measures we are advocating for the areas which seem to us to give cause for concern."
    These are what are now designated as intermediate areas.
    I welcome this Amendment because there should be a specific review when this Bill becomes law. I welcome this since it will be a milestone if we review progress after the passing of this Bill, although it is equally essential that there should be regular reviews of policy and that this and future Governments should be fed back with information about employment, migration and the effectiveness of measures.
    The most important aspect of the new Clause is,
    "The Minister shall, with the Minister of Housing and Local Government and the Secretary of State, cause to be carried out a comprehensive review …"
    As I see it, this involves more than one Minister because it involves town and country planning and other aspects of development.
    I cite as an example the problems created by the designation of the South Yorkshire coalfield area and its impact on Sheffield. To what extent is it desirable, from a planning point of view, that development should be carried out in cities that already have the infrastructure for industry, whether this be housing, cultural facilities, including education, or the normal facilities, such as drainage? To what extent should this be encouraged outside in possibly intermediate areas?

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    Sheffield has facilities as a city. Many other cities wish to embrace larger areas of industry. Sheffield is one of many cities in a period of transition. Therefore, it makes absolute nonsense to have an intermediate area on its boundaries.
    It would be wrong to pursue the extent of this nonsense, as the time to press this issue would no doubt be when orders are placed before the House. But the Government will make decisions by placing orders before the House.
    The hon. Member for Oldham, East (Mr. Mapp) pointed out that a development area will suck industries away from the immediate proximity, not from the South of England. So could an intermediate area. Therefore, I hope that within one year of the passage of the Bill, the Minister of Housing and Local Government will see how his overall plan for industrial and housing development in each region is progressing—and the Sheffield area would include Yorkshire and Humberside, the East Midlands, the West Riding and other counties—to find out whether the intentions of the planners, in terms of the right area for housing and industrial development—I have asked many Questions on these matters—are being implemented or are being distorted by the new Act. I support my hon. Friend who so ably outlined the reasons for the new Clause. I urge the Minister to agree to the new Clause.
    Mr. John Mendelson: I have been trying to follow the debate since the new Clause was moved to find out whether hon. Gentlemen opposite are arguing that there should be a built-in stipulation of review within 12 months on institutional grounds and general grounds or merely because they are not satisfied with the kind of detailed decision that the Government have made on this occasion.
    Mr. Osborn: My immediate reaction would be to say both. There is a good case on both grounds for a quick review after the passage of the Bill to see how it is working. All Governments are fallible, and it is important to see that this Measure operates effectively.
    Mr. Mendelson: Surely the hon. Gentleman knows how long it takes to get new industry into an intermediate area. Will not 12 months be too short a time to see the fruits of this new legislation, of which many of us have great hopes?
    Mr. Osborn: There is some point in the hon. Gentleman's observation. But I suggest that this is a suitable time limit. Whether the 12 months in the new Clause is the right time scale is another issue. But there should be some method of assessing the effectiveness of the Bill when it becomes law, bearing in mind that there has been criticism and we do not know how it will operate. I support the new Clause.
    Mr. Bert Oram: There is a considerable case for the proposed review, but I cannot believe that the addition of the new Clause is the way to bring it about, partly for the reason that my hon. Friend the Member for Penistone (Mr. John Mendelson) pointed out in terms of time scale.
    My right hon. Friend the Member for Sunderland, North (Mr. Willey) put forward an important suggestion in this connection: that Members of this House might have the opportunity of reviewing not only the effects of the Bill, but other related industrial Measures.
    I believe that it is necessary for somebody to have under constant review the situation not just in the development and intermediate areas, hut in areas which have been affected by the movement of industry and population to those areas. It is particularly necessary to have a close look at pockets of difficulty in terms of industrial development and employment within more affluent regions.
    The Borough of Newham, part of which I represent, has been affected in this way. That is why I intervene. In view of the time, I will not do more than give the headlines of the many difficulties that face that borough, which is getting the rough end of the stick in many different ways.
    To begin with, our industrial fortunes have been affected by the moving of factories into new towns and related areas, and the borough council is most disturbed by this development. In addition, there has for a longer period been a decline in employment opportunities in the gas industry consequent upon the use of North Sea gas, and this has added considerably to our difficulties.
    The Bill deals with derelict and unused land. This again is a problem facing Newham. For many years there has been

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    sterile land in the area. It was hoped that this land might be used for dock extensicns, but these plans now look doubtful of fruition, and development which might have taken place has been held up for years.
    There are other problems which I shall no: detail in view of your strictures, Mr. Speaker, but when one adds up the problems in each area one sees that we have a situation which is as serious, not in terms of geographical extent but in intensity, as the problems facing the development and intermediate areas.
    The fact that we are part of a larger region which is generally affluent is no comfort to those who have the responsibility of overcoming the difficulties facing their areas. It is for this reason that some kind of review is necessary. I believe that it will be necessary to have a new kind of partnership between the national Government and local authorities in areas such as mine. It is no use suggesting that local authorities can be left to deal with these problems. There must be this new partnership. I shall not this evening suggest what the nature of the new partnership should be, but this is one of the things which might come out of the activities of a Select Committee such as that suggested by my right hon. Friend the Member for Sunderland, North.
    Mr. Ted Leadbitter: When reference is made to a review, the question that we have to ask ourselves is: Why? The question has already been put, and in, I thought, some considerable haste in answering my hon. Friend he Conservatives committed the unforgivable sin of wanting to back both horses and appear to win. When a review of this kind is asked for, there has to be an underlying imputation, or genuine expression, of concern, and this falls into two areas. Either the policy has failed, or it has been successful. If it has been successful, we can seek to redeploy some of our aid in other areas where it is necessary. If, on the other hand, the policy has failed, we should seek either to redeploy the financial aid within the development areas as they exist, or supply some additional financial succour.
    That, in brief, is an analysis of the question which has been asked. Un-
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    fortunately, the Conservatives cannot come anywhere near answering it, because already, without a review, they have said—and the right hon. Member for Leeds, North-East (Sir K. Joseph) said so specifically—that millions of £s are wasted in the development areas. The corollary of that is that the Conservative Party intends to cut considerably the amount of financial aid given to the development areas. If that is a reasonable conclusion to come to, then we, the country, and, more specifically, the development areas, have a right to ask: what is the extent of the cut, and by what test will it be made?
    10.15 p.m.
    We should consider a familiar situation to project our thinking about the efficacy of the present Government policies. The Hunt Committee, a very responsible body, made it clear that those policies should go on for some years. Let us turn from that authoritative opinion to a situation which will bring out the sense of Hunt. My constituency is a specific example. I have spoken of this before and I will not go into it at length. In 1963–64, the unemployment level in my constituency was 12½ per cent.—the highest in the United Kingdom. Today, it is approaching 5 per cent. and more than 3,000 new jobs have been found in the constituency. If the policy had not been successful, we should not have had that result.
    On the other hand, if the Conservative policy had been in operation instead of the Labour one, there would have been 4,000 people out of work, and 3,000 new jobs would have been lost. That would have been a dreadful situation. If nothing else, the Labour Party has averted a tragedy in the development areas.
    We must consider two other factors. In the Northern Region in 1963–64, the Conservative Government's aid was about £13 million. At the moment, under this Government, it is £105 million—
    Mr. Speaker: I know the hon. Member's enthusiasm for his own constituency —a similar emotion is felt by all hon. Members—but we are discussing whether there should be, according to the new Clause, a comprehensive review from time to time.
    Mr. Leadbitter: When addressing ourselves to the question of a review, we may ask what, between these two poles of aid, is the maximum advantage. There are many imponderables and unpredictable elements and some complexities in aid because of the complexity of industrial society, but the chances of getting a specific answer which would help us must be carefully examined. We must not convince ourselves that an illusion is reality or try to kid the country that, because we talk about what appears to be common sense, we are helping its best interests.
    I should be greatly surprised—in fact, I would be a disappointed Member of Parliament—if I thought that, with the immensity of this problem of aid to development areas, there was not a con-
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    tinuing review. There is such a review, and the regional economic planning councils give us, for the first time, a channel whereby reviews can be rolled on at the request of the Minister, of the House, or of any hon. Member. If the Minister could not answer questions about my area, I should be coming back on him very hard. Finally, whatever else might be said about the new Clause, it is not appropriate for it to be put into a Bill of this kind. The Bill deals specifically with intermediate areas, and to that extent the new Clause has really been put in to provide the House with an opportunity for a debate on the side. I am quite satisfied that the objectives which have been mentioned have long since been put under way by the Government.
    Mr. Edwin Wainwright: I have some sympathy with the new Clause, but I doubt the motives behind Lt. We ought to examine it carefully and, if possible, look at what is in the minds of hon. Members opposite in presenting the Clause. We should look at the Bill and consider how the new Clause would affect it. I am surprised that the Clause has been put down; the Bill has not yet become an Act, and there is nothing to review. If it were intended to review the whole situation throughout the country, one could understand the purpose behind the Clause, but I am afraid that the motive is to prevent the Government from spending even the money allocated for the intermediate areas.
    I thought that my hon. Friend the Member for Oldham, East (Mr. Mapp) did not come out with a stentorian voice on an issue of this kind. He ought to have asked for an additional amount of money to look after the area which is his concern—
    Mr. Speaker: Order. T he hon. Gentleman would have been out of order if he had.
    Mr. Wainwright: I appreciate that, Mr. Speaker, but what was in my hon. Friend's mind was the motive in the mind of hon. Members opposite in putting the Clause down. The Clause could do great harm to my constituency. The kind of review suggested could affect the planning taking place in my constituency as a result of this Bill. It is the motive behind the Clause which makes me speak about my constituency.
    There are nearly 6 per cent. unemployed in Mexborough. Mexborough wants help, but hon. Members opposite want to stop help coming to Mexborough by their new Clause. There is a lot of migration taking place. I thought that the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) made a selfish speech in support of the Clause. He talked about people travelling to Sheffield to work and about the accommodation available for them. He gave the impression that there is no housing waiting list in Sheffield. If there is not, the people of Sheffield are very lucky. That kind of approach creates the impression among people outside Sheffield that a very selfish
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    attitude is operating from Sheffield, and I should not like to think that that was so.
    Mr. J. H. Osborn: The hon. Gentleman attributes to me and to Sheffield motives which we in no way entertain. I stressed the value of bringing in the Ministry of Housing and Local Government, and what concerned me was that rural and country areas should not become urban but should remain rural and countrified, not being interspersed with haphazard industrial development. I wanted that matter to be subject to review within 12 months.
    Mr. Wainwright: I am sure that, if I tried to answer the points which the hon. Gentleman has just raised, I should be out of order, though I should like to have a chat about them over a cup of tea or in some other place.
    Mr. Osborn: Come and join me now.
    Mr. Wainwright: There is something else behind this new Clause. The West Riding now has a land reclamation scheme under way. If the new Clause were accepted, it could stop that scheme half-way through. There are 130 acres involved, and the outcome of the scheme could be of tremendous help. Thirty acres will be cleared by 1971. The new Clause might stop that, and I do not want any such thing to happen. At the end of the scheme, there will be 80 or 90 acres available for industrial purposes, the rest going for playing fields and so on. The dirt stacks are to be removed and the land is to be reclaimed. But hon. Members opposite want to stop that sort of thing happening. I hope that the Government will urge the House to vote against their new Clause, which is both premature and unnecessary.
    If I said all that I could on this subject now, I should be ruled out of order again, so I end on this note. The amount of money which has been allocated for the grey areas is not really sufficient. If my hon. Friend the Member for Oldham, East, would care to press for that amount to be doubled, so that his area might be included, I should give him wholehearted support.
    Mr. Robert Howarth: On Second Reading, I urged upon the Government that they should review at some future date the areas which they

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    proposed to include under the Bill. I did that because people in my constituency, half of the County Borough of Bolton, were very disappointed at not being included within an intermediate area, and I felt then, as I still do, that we must be able to look forward to a time when we can gain from these provisions.
    Several hon. Members from textile towns, of which Bolton is one, have made various points in support of their inclusion under the Bill. Although Bolton has been successful in absorbing the tens of thousands of textile workers who have lost their jobs through the contraction of the cotton textile industry in the last two or three decades, the alternative employment has arisen from both new industries and expanding older industries, principally engineering, which have, in the main, established themselves in ex-cotton mills. This only contributes to our environment problems in the North-West. When one goes to the more fortunate and newer areas of Britain, seeing there the new factories and developments which are common place and taken for granted, one realises how lucky they are. Also the size of the problem which faces the old industrial towns of Lancashire is realised. Because these buildings were cheap to these new industries we have attracted a large number of mail order firms, precisely because the industrial buildings were so cheap. If eventually, as, obviously, we hope they will, they wish to replace those premises, then they will be faced with a very large bill indeed.
    10.30 p.m.
    The difficulties which we see are still in the future, I would agree, but there is no doubt that the proposal to establish just north of my constituency an intermediate area—the southern boundary of the east Lancashire intermediate area—will possibly add to the difficulties of my constituency in overcoming the problems of the continuing contraction of the cotton textile industry.
    Mr. Speaker: Order. The hon. Member will link what he is saying to the question whether we have a comprehensive review, as is proposed in the new Clause which he is talking about?
    Mr. Howarth: Yes, of course, Mr. Speaker. I was just going on to say, as I had already remarked, that although these problems of renewal are very much in the future, unless we can look forward to eventual inclusion in the intermediate area they will be very serious problems indeed to the future of my constituency.
    Another reason why I support the idea of a review, though not necessarily in the way in which it is expressed in the new Clause, is that we also have the problem of industries which do not offer to our young and well trained young people coining from the colleges and universities the sort of employment which induces them to stay in the area of Bolton.
    Therefore, I hope that we can at least extract from the Minister this evening a clear indication that after a reasonable time—the time proposed in the new Clause is unreasonable for the reasons which have already been given—after a reasonable time, say, two years, a review will take place and further extensions of the intermediate areas will be made.
    In conclusion, as I said in the Second Reading debate, so much has been done by the Labour Government in the last five years to help the old industrial—I am thinking of Lancashire, of course—with the massive advances in education, with new schools at every turn, new housing, the great expansion of the roads policy, and, now, with the derelict land grant, that it would be a pity if all this were to be held back in the years ahead by the reluctance of the Government, whose difficulties I appreciate, to include the old textile towns in the intermediate areas. Therefore, I am confident that my hon. Friend in his reply will be able to offer us some hope that the future of industrial development in my constituency, and the other textile towns of south Lancashire which have industrial problems, will be assisted by Government policy as outlined in this Bill.
    Mr. Eric Ogden: This new Clause opens the door to a very wide debate, and while Mr. Speaker, a few moments ago, before you took the Chair, Mr. Deputy Speaker, dropped a gentle hint that there was no welcome on the mat for those going too far through that door, I feel that when hon. Members have debated South Wales, North Wales, Scotland, Vietnam, east of

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    Suez and points yet farther away at all times of day or night, so there are times when it is desirable, when hon. Members from the regions of this country get an opportunity to do so, to talk about the things which we think important. Though I have not spoken in the House since the beginning of this Session—so I cannot be blamed for any nonsense to which you may have had to listen since last October Mr. Deputy Speaker—I shall be brief.
    I suspect that hon. Gentlemen opposite worded the new Clause in its present form, not so much out of conviction but in an attempt to gain the widest possible support in the House. That is reasonable from their point of view, but when, earlier, one of them said that all hon. Members who had spoken had welcomed the new Clause, I could only conclude that he was either over-optimistic or hard of hearing. There may have been some quiet support earlier in the debate, but the proposal has received loud and strong opposition.
    When hon. Gentlemen opposite raise the matter of our development area and regional policies I always bear in mind their claim that they will, should they take office, "cut Government expenditure". Since they have been looking hard at the development areas in the last 12 months, I fear that these areas as well as the intermediate areas would suffer most.
    I am sure that the Minister will tell the House that the Government's various regional policies have been and are under review and will remain under review. That can be proven because in the last four or five years these policies and the methods of implementing them have undergone change.
    It should not be forgotten that a regional policy cannot be changed overnight. It cannot be chopped about every other minute as the tides ebb and flow. Regional policy must have time to work through so as to provide a degree of certainty for employers and employees, who can be certain of continuity of aid. If chat is not done we will lose all hope of developing the regions.
    If hon. Gentlemen opposite really want an inquiry, why not say what sort of inquiry it should be? The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said that he did not want an interdepartmental committee to conduct
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    such an inquiry. But he did not say if he would prefer a Royal Commission or a Select Committee of Parliament to do the job. Either insufficient thought has been given to the whole question, or they do not want to tell the house what they would really prefer.
    The hon. Member for Cirencester and Tewkesbury wants the effectiveness of the existing machinery to be determined. Hon. Members generally will agree that, while the methods used have proved effective, a degree of rough justice, they have been expensive in the development and intermediate areas. For example, about £60 million worth of Government aid has gone to Merseyside in the last five years. This money has certainly been needed. In three or four years' time we hope Merseyside will be in a position to say with pride, "Thank you for the help you have given us. We can now stand on our own feet and we do not need further help".
    Unfortunately that cannot be said for some time, for as aid comes in, along with new industries which are being attracted to the area, we are losing a considerable amount of employment from older industries and factories. As a mill, factory or depot closes we lose employment overnight. This is happening, with 500 people here and 1,000 people there finding themselves unemployed. Those jobs cannot be replaced overnight.
    We have a large Shell development in the North and this will provide a welcome addition to the employment prosperity of the area. However, it is an expensive addition, costing £225 million worth of capital, part of it in the development area and part in the general area. I estimate that it will cost between £35 million and £40 million of Government aid to provide about 1,000 jobs inside the region in connection with this development—£35,000 per job. I remind the Minister that there are other, less expensive, ways of providing employment.
    The hon. Member for Cirencester and Tewkesbury was right to point to certain other ways, such as the provision of housing, to encourage new firms to the development and intermediate areas. For example, a company wants to provide 1,500 jobs in North-East Lancashire, but to do so the firm must bring in certain key workers from outside because

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    this skilled labour is not available in the area. Houses are needed for these workers from outside. Yet, only one local authority of the half-dozen authorities concerned has offered to create a special housing scheme for key workers from outside. About 70 new homes will be provided by this authority for this purpose in the next few years. It would be disastrous if we were to lose these 1,500 jobs because of a lack of housing, so that the employment went away from the North-West.
    Hon. Gentlemen opposite have suggested that a committee of inquiry—they have not specified the type—should be established to look into this whole matter and report within 12 months. By all means appoint a body to do this work and say "You must act urgently," but it would be completely wrong to place a time limit on its activities. The committee might be comprised of full-time members, but the time they take over their deliberations must not be limited. They must decide how they operate and when they report.
    Above, all, for practical political reasons it will be apparent to every hon. Member on this side of the House that January, 1971, would not be a good time to report back. I do not think that any major changes in regional development policies will come in the next two years. We want time for this Bill and other measures to work before we come back to this subject. I look forward to 1972 when a Labour Government will bring forward its proposals for the second tier of regional development. Let us have no nonsense from hon. Members opposite in the meantime.
    Mr. Michael McGuire: I want to spend a few moments on the general principles outlined in this new Clause about the need for review of Government policies and in particular the question of development of the intermediate areas.
    I am in the rather curious position of representing a constituency in South-West Lancashire referred to in the Hunt Report as an area not of outstanding beauty but of outstanding dereliction. In two of the seven towns I represent there is the highest land acreage of dereliction—old pit heaps and the like—of any part of Lancashire and one of the
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    highest in Great Britain. Industrial dereliction brings in its wake social dereliction, poor housing and poor schools; but we also have a new town which is a development area. Skelmersdale and Up Holland urban districts have been amalgamated to form the Skelmersdale and Holland U.D.C. which covers almost the new town development area and in that area, though we have not enough skilled employment, we have new schools and a more prosperous environment.
    This forms a magnet by which the prosperous new town draws possible employment from the derelict areas. We need some kind of selective review. The policies of any Government are subject to review from time to time, but this should not be done in a piecemeal way. We have to see how these policies work and 12 months is not sufficient time for that. We need an assurance that there will be some kind of review body to study the effect of preferential treatment of what we used to call grey areas.
    Most hon. Members who have spoken from this side of the House have referred to the North-West Region and we have also had the voice of Yorkshire. In the Hunt Report there is reference to industrial dereliction of the North-West, the cradle of the Industrial Revolution. We have to see what effect the action in the Merseyside and North-West intermediate areas will have on the country in between. There is already too much industrial dereliction and the social dereliction that arises therefrom. It is a deprived area.
    If the situation is to be aggravated by a new policy—which we welcome—there must be a review. It is no good saying that we do not welcome it because our area has been omitted. We must say that the policy is necessary for the areas which are included and we want our areas to be included. We hope that a sensible review will persuade the Government to spread the net a little wider to save the areas from becoming more derelict, thus obviating the need for more drastic action.
    I hope that the Government, although not committting themselves to the proposed time scale, will assure us that they have the matter under review and are as concerned as we are to ensure that the

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    effects of the new policy will not aggravate the situation in areas which benefit from neither one policy nor the other.
    10.45 p.m.
    The Minister of State, Ministry of Technology (Mr. Eric Varley): This has been a long debate. Many detailed points have been raised. I shall seek to answer some of them, although I realise that the House is anxious to make progress, because it has much more work to do tonight.
    I can well understand the motives which led the Hunt Committee to recommend, in words which the Clause reflects, that
    "there should be a comprehensive review of development area policies".
    This proposal, and in particular the suggestion that a review should be carried out and a report published within a set time limit of twelve months, is rather less simple than hon. Gentlemen appear to realise.
    I invite the House to consider two basic points. First, new regional development policies can only make their full impact over a period of years. It takes time for new incentives to be reflected in the investment plans of firms, for these plans to mature, and for new projects to be fully manned up. The wider development areas and investment grants were introduced only in 1966. The regional employment premium and the special development areas followed towards the end of 1967. We now have the intermediate areas. It is still too soon to make a clear and specific assessment of the impact of the more recent incentives.
    There are also a number of technical and conceptual difficulties to be overcome before the effectiveness of regional measures can be fully assessed, partly because many of these measures are relatively new. For example, we have area statistics of employment and unemployment, but we cannot be certain precisely how far changes in the figures reflect regionally-differentiated policies and how far they reflect other developments such as the rate of growth in the national economy. A very important article in the Economic Journal by Professor Brown, who was a member of the Hunt Committee, considered some of these matters.
    However, the Government are anxious to develop a reliable assessment of the costs and benefits of development area
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    policy and are trying to make progress in this field. The Report of the Hunt Committee was itself a most valuable study of the parts of the country outside the development areas. As the House knows, a review of the investment grants scheme is already in hand.
    The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) talked about the loss of jobs and unemployment in development areas. I believe that the hon. Gentleman does under-estimate the nature of changes occurring in the employment structure of the country. There has been a major rundown in employment in coal mining, heavy engineering, shipbuilding, railways, agriculture and so on, and without the Government measures we should have faced massive unemployment in large areas. On Second Reading I quoted figures for the relationship between the development areas and the country as a whole.
    The hon. Gentleman also raised the question of migration and the importance of making a study of it. Here I think that he was on an important point. We agree that much more needs to be known about migration movements. It is a very complex matter, and studies need to be made of migration problems.
    The question of investment grants generally was also raised by the hon. Gentleman. This is becoming a bit of a hobby horse with the Opposition. We have seen a developing interest in it over the past few months, but there is no evidence to suggest that investment grants are any more costly than investment allowances would have been had that system still been in operation.
    The point is that with investment grants one can estimate, and as time passes one can see, the full cost. This was very difficult with investment allowances. The hon. Gentleman knows this very well.
    Mr. Ridley: How can the Minister say that when he was £130 million out this year? It is quite a lot of money to be out by.
    Mr. Varley: This was readily acknowledged in 1966, when the matter was before the House. The hon. Gentleman took part in the debates then, and knows that the Government made no firm predictions. The real point is that the

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    cost can be truly seen now, whereas with the investment allowance it could never be seen.
    There is no evidence to suggest that investment grants are more costly than investment allowances would have been. Where the investment grant scheme scores over the old investment allowance system is that individual grants are predictable and more readily understood and assessed by industry.
    It is true that a review of the investment grant scheme is already in hand. The higher rate of grant helps in development areas and helps the creation of jobs. This is not a prime objective, I accept, but where a capital intensive project has established itself in the development areas, if there is to be any expansion it will obviously expand there. It assists indirectly in helping employment and the creation of jobs. There is the additional factor that it is absolutely essential that capital intensive industries should he well established in development areas and should base their expansion there.
    My hon. Friends the Members for Oldham, East (Mr. Mapp), Rochdale (Mr. McCann) and Bolton, East (Mr. Robert Howarth) supported the idea of a review, although they did not completely support the Opposition Amendment that it should be done in 12 months' time. I say to my hon. Friends from these very difficult areas that this is a continuing review; we shall watch their areas very carefully.
    My hon. Friend the Member for Oldham, East raised a specific point about Ferrantis. I know that he is in correspondence with my hon. Friend the Minister of Defence for Equipment, and that he will pursue that matter with him.
    The hon. Member for Folkestone and Hythe (Mr. Costain) asked why we could not have more information, and my right hon. Friend the Member for Sunderland, North (Mr. Willey) properly referred him to the wealth of information that already exists. There are the Local Employment Act reports, the Economic Planning Councils, the regional studies, and the Report of the Select Committee on Nationalised Industries. All have made comments about development area policies.
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    The hon. Member for Cirencester and Tewkesbury was wrong when he interrupted my right hon. Friend about the annual reports. It is not true that they are not published. The annual report covers activities under Part II of the Industrial Development Act, and the annual report under the Local Employment Acts will also be covered under the Bill.
    I understand the reasons for my hon. Friend the Member for East Ham, South (Mr. Oram) intervening on what was primarily a grey area, development area problem. I know something about his problem. It is true that, in his constituency, there is the impending closure of the North Thames gas plant and that this will create difficulties. Our assessment is that the situation should not remain as difficult as currently it may seem because jobs for unskilled workers are available for those willing to travel to work and the more skilled workers should be able to adapt to new skills. Generally, we do not consider that the situation in East Ham gives cause for concern, particularly in comparison with the problems of the development areas as a whole and some of the proposed intermediate areas. But I assure him that we will keep an eye on the situation. I can well understand the concern he has expressed.
    My hon. Friend the Member for Dearne Valley (Mr. Edwin Wainwright) put his finger on the point. He perhaps made the most effective argument so far against the new Clause. He said that wanting a review already or in twelve months' time is nonsense, since not a penny has yet been spent in the intermediate areas, that the orders have not yet been made and that we are anxious to get this Bill on the Statute Book as quickly as possible and get the scheme into being. He also mentioned, quite properly, the serious unemployment problem in Mexborough, which forms part of his constituency.
    My hon. Friend the Member for Ince (Mr. McGuire) talked about dereliction. Ince will be included in a dereliction area, where the new rate will be 75 per cent. I know that the local authorities in his constituency will be taking advantage of this but I understand his concern.
    My second point is that, if it were known that a general and major review was to take place over the next twelve

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    months, this could well have the effect of delaying investment decisions. If a firm knew that consideration was being given to possible major changes in the lists of development or intermediate areas in the financial incentives and the operation of the I.D.C. control, it might be reluctant to embark on new projects until it was in a position to know the full implications of the changes and the effect they would have on its plans. It is true that we keep careful watch on progress in the development areas and are prepared to make changes from time to time if we judge them necessary. It is one thing for firms to be aware, as they are already, that changes in development area policy or in the coverage of development areas may take place at some indefinite future date, but it is another matter for them to know that a major review is going to take place, and that a report is to be published in a specified time.
    The Government have always accepted that the development area policy should be kept under regular review. The policy was examined most recently when the Report of the Hunt Committee became available. I believe that it would not be sensible to commit ourselves to a full-scale cost-benefit study of the development area policies within a fixed, limited time, and I hope that, in the light of my arguments, the new Clause will be withdrawn.
    Mr. Ridley: Perhaps I may speak briefly again by leave of the House. We have I ad a good debate, and if this new Clause has facilitated opportunities for many hon. Members to make constituency points, the time has been well spent because it is one of the virtues of this type of debate that all sorts of local problems can be raised. There has been a general feeling, although not with unanimity or wholeheartedness, that there is something to be said for a general review of this policy and of the boundaries of the various areas. I was a little disappointed that the Minister of State did not go a little further than acknowledging that this was the will of the House.
    The idea of a Select Committee, put forward by the right hon. Member for Sunderland, North (Mr. Willey), is appealing, but it is not for the House to state
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    which Select Committee should set out to study the matter. It would be for some Select Committee to take notice of these suggestions. We cannot compel a Select Committee to do anything under the Bill. Indeed, it is a little disappointing that the Government have not proposed some open inquiry. The mood of the House and of the country—and I was surprised to note how many hon. Members shared that view—is that the time has come to take general stock of the position, to measure cost effectiveness and to see what is the best way to go from here.
    We must, therefore, return to the subject from time to time and keep the Government under pressure to consider such a review. In view of the short time before we are on the other side of the House, perhaps it will be better if the Conservative Party institutes that review.
    With that comforting thought in mind, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave withdrawn.

  New Clause 4

    GRANTS FOR HOTELS IN INTERMEDIATE AREAS
    In section 11(2) of the Development of Tourism Act 1969, after the words 'development area', there shall be inserted the words 'or an intermediate area'.—(Mr. Waddington.)
    Brought up, and read the First time.
    11.0 p.m.
    Mr. David Waddington: I beg to move, That the Clause be read a Second time.
    The object of the new Clause is to make available in the intermediate areas the larger grants towards the cost of building new hotels and improving and extending existing hotels which are available in the development areas as a result of the Development of Tourism Act. It is a great mistake to imagine that building grants in themselves will solve the problems faced by areas such as North-East Lancashire, because the main problem there is not so much unemployment as population drift and the fact that year by year people, and young people and skilled people in particular, are leaving the area.
    It is an error to think that building grants in themselves will bring about industrial modernisation and equally an

    399
    error to think that if we have industrial modernisation, the existing population will stay. We cannot expect new industry to move into the area when the necessary labour is not there. The crucial need, acknowledged on both sides of the House, is to improve the environment—a point made on an earlier Clause by the hon. Member for Oldham, East (Mr. Mapp). A crucial need is to improve the amenities and recreational facilities in such areas and generally to do a great deal to make them attractive places in which to live and work. The acceptance of the Clause would be some recognition of that need.
    I hope that I shall not be misunderstood: I do not feel that it is the destiny of North-East Lancashire to become a tourist area, and still less do I feel that it is its destiny to become a dormitory town for the new Chorley-Leyland-Preston new town. But the Clause is intended to make it a little more likely that in the years to come more people will go to live and work in the area and that fewer of the younger people will drift away.
    I have a fair idea of what the Minister of State will say in reply to this short debate. He will no doubt say that many of the areas which benefit from the higher scale of grants under the Development of Tourism Act are almost wholly dependent on the holiday and tourist trade whereas clearly North-East Lancashire does not come within that category. But if we accept, as we must, that the provision of good, modern hotels can in itself make a contribution to industrial growth, and that industrial growth is one of the Government's prime aims, there must be a case for hotel incentives at the development area rate outside the tourist areas.
    Such grants are available because there are many parts of existing development areas which cannot, by the wildest stretch of the imagination, be considered as tourist areas. Secondly, the Government will no doubt say that it remains a matter of policy that the development areas should retain their advantage over the rest of the country; as they have this advantage in manufacturing industry it is only logical that they should have it with hotels. To that I can only say that the correctness of the policy remains
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    unproved. The Hunt Committee found it unproved and called for a general review, which we have been debating. In addition there is little logic in the proposition that if the differential is right with manufacturing industry it must ipso facto be right for services.
    I hope that the Minister of State does not start animadverting on the wickedness of the Tories in calling for cuts in Government expenditure at one moment and at the next calling for more expenditure in their individual areas. We could save millions of pounds by changes in regional policy, but we have to work within the system as it is, however daft it is. As long as the present system exists I shall continue to call for some financial help for my part of the world to mitigate the distortion resulting from the Government's development area policy.
    Dame Joan Vickers: I support the new Clause. Paragraph 291 of the Hunt Report states:
    "The South-West Economic Planning Council were concerned about the undue dependence on agriculture and tourism and advocated the encouragement of self-sustaining growth in the rural areas."
    We are grateful that Plymouth is now an intermediate area, but there is a need in Plymouth and other areas, for more hotel accommodation. Tourism is one of our major industries and we feel that tourism could become as useful as a factory in some areas. It would employ just as many people as factories do nowadays, with the advent of automation. One of the things that it is not easy to automate is an hotel. There have to be personnel. Why cannot hotels be considered in the same light as any other industry, particularly as they bring in great numbers of people to spend considerable sums of money and are one of our major external currency earners? One of the difficulties is providing first-class hotels.
    As I understand it, it is the aim of the Government to encourage people to visit Britain and to encourage our own people to take their holidays here. S.E.T. has prevented many hotels from expanding or improving their premises. With the abolition of the travel allowance it is essential that they are allowed to do so. If we want to keep our own people here we must have first-class hotels. Otherwise, the attractions of warmer climates

    401
    in European countries and better hotel accommodation, will take visitors from us. Let us face up to the fact that in the past this country has not been noted for good hotel accommodation.
    The Minister of State may have seen Early Day Motion No. 59 which is concerned with S.E.T. He, like myself and many other hon. Members in this House, has probably received a considerable number of letters recently from hotel managers about the difficulties they are having because of it.
    This is a special year in the SouthWest—Mayflower, 1970. We have sent a deputation, consisting of the lord mayor and the town clerk, overseas to attract tourists to the South-West. This is not just for Plymouth, which is an intermediate area, but it would help Plymouth to improve its hotel situation if the suggestion in the new Clause was accepted.
    The Hunt Report has acknowledged that Plymouth is a growth area. If we can attract more people to holiday in the Plymouth area it will benefit not only the intermediate area, but the whole neighbourhood.
    Furthermore, it is essential for businessmen and women to have decent accommodation when visiting their factories. This has been a difficulty in the South-West. A number of factories have had to provide flats for their visitors and managing directors when they come to visit them. That is not very satisfactory. The great thing is for them to be in hotels where they can mix freely with other business people and so help their industry.
    I sincerely hope that the Minister of State will consider the new Clause reasonable. Why should not hotels be considered on the same lines as factories, as real industries? They produce a good income for this country and, in their own way, they are a type of factory. I think that the new Clause should be accepted. It will not interfere with Government policy and it will be of great benefit to the country as a whole.
    Mr. Robert Cooke: I should like to support my hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) knowing, as she does, a certain amount about the South-West.
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    I had the experience of trying to spend a pleasant day and night in a Plymouth hotel with my wife, but finding it impossible to find anywhere to stay there. Frankly, what we saw was not as attractive as it might have been, because people have not been able to improve their hotel accommodation. The experience of trying to take a holiday anywhere in the West Country is not entirely a happy one, because accommodation of the type which will attract visitors from abroad is not available.
    I share with my hon. Friend the thought and understanding that the South-West is largely dependent upon tourism and agriculture. The suggestion that light industry can solve our problems does not attract me. It will solve the problems only temporarily. Industry invariably drags people away from the hotel and holiday industry with the result that the problem is worse than before.
    Dorset has a similar experience with local festivals. The Mayflower Festival in Plymouth is an international affair. But the year before last we had the Thomas Hardy Festival in Dorset, and it was difficult to accommodate all the people—even from as far away as Japan—who wanted to stay in the county. They had to stay in Hampshire instead.
    I hope that the Government will seriously consider helping the hotel industry. My hon. Friend said that tourists could not enjoy a holiday in an area of great natural beauty or historic interest without somewhere to stay. She is quite right. I hope that the Government will bear in mind, too, that if the facilities for enjoyment in an area of natural beauty or historic interest are such that they destroy the area, they are self-defeating. The unattractive looking hotel, the sleazy café and the parking problems that develop from improper provisions for visitors destroy the very amenities that people go to enjoy. Therefore, it is shortsighted not to help the tourist industry by helping the hotels.
    I echo what was said by my hon. Friend the Member for Nelson and Colne (Mr. Waddington) about the whole system of discrimination in one area and another and the necessity for less tax and less interference. But that is a broader matter. I hope that the Government will take the matter seriously and

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    realise that tourism is a growing and significant industry which can have a tremendous effect on the foreign exchange which we need. They have set up a new and improved British Tourist Authority to replace the British Travel Association or to enhance its functions. I hope that they will look at the matter seriously and help the hotel trade as well.
    11.15 p.m.
    Mr. Urwin: I assure the hon. Member for Bristol, West (Mr. Robert Cooke) and his hon. Friends that when the Local Employment Bill was being prepared the Government gave careful consideration to the possibility of extending to intermediate areas the rates of grant payable in development areas, but concluded that 20 per cent. was the appropriate rate of grant to hotels.
    On listening to this rather brief debate, one would think that something was being denied to the intermediate areas, and that the Government were completely unaware of the necessity of assisting the tourist industry. It does not appear to be recognised that it is not just the intermediate areas which benefit from a 20 per cent, grant. This grant for the development of new hotels is available over the whole country outside the development areas, and this is something for which the intermediate areas themselves are grateful.
    The hon. Member for Nelson and Colne (Mr. Waddington) recognised the reason for the inclusion of such areas as the Highlands of Scotland, North Wales, North Devon, and Cornwall, where there is very little manufacturing industry, and where they are heavily dependent upon the holiday trade. Clearly these areas can derive little benefit from the extensive assistance available for investment in manufacturing industry in the development areas. Generally speaking, manufacturing industry is in areas where there is no substantial tourist trade.
    I recognise that the provision of good modern hotels is as important to the business man as to the holiday maker, but I believe that the new industrial investment and the additional prosperity which we expect in the intermediate areas as a result of the Local Employment Bill should provide a substantial amount of extra business for local hoteliers. The Government think it right to provide new
    404
    incentives for investment in the intermediate areas, but it remains our policy that the development areas should continue to retain a large preference over the rest of the country.
    A good deal was said about that during the debates on the two earlier Clauses, and about the desirability, as many of my hon. Friends see it, of continuing the preference to which I have referred, and which is represented by the Government's policies. If the 25 per cent. grant was available in the intermediate areas, as hon. Gentlemen opposite have proposed, hotels in those areas would be on a par with hotels in the development areas.
    Mr. Waddington: I take the point that many places in the development areas are completely dependent upon the tourist trade, but is it not right that under the present law there are many places in the development areas which have no tourist trade, but which get a grant? What is the justification for that expenditure?
    Mr. Urwin: One assumes that the rate of development there would not be as great as in the areas where tourism is a decided attraction. That is the only reason that I can suggest. It does not put the area to which the hon. Gentleman is referring at any serious disadvantage.
    As regards the incentives for manufacturing industry, there remains a substantial difference between the development and intermediate areas. If we were to accept the Clause, where would we stop? Would hon. Gentlemen opposite then ask for the 40 per cent. development area rate of investment grant for which the intermediate areas do not qualify under the Local Employment Bill? When they go on to ask for the application of the regional employment premium to the areas designated as intermediate areas, to achieve parity with the development areas, it is said that on this side—and it is right—we wish to maintain the 5 per cent. differential from the national rate for the development areas. I therefore ask my hon. Friends to reject this new Clause.
    Mr. Michael Shaw: I congratulate my hon. Friend the Member for Nelson and Colne (Mr. Waddington) on emphasising, by bringing forward this new Clause, that while considering the new manufacturing capacity of the intermediate areas, we

    405
    must also consider the services which go with them. My experience is that one finds that many of these intermediate areas have been suffering from a slow decline over many years, and with the gradual decline in industries has gone a decline in the amenities of the neighbourhood, among them amenities connected with the hotel industry.
    On the other hand, one has to recognise that there is a limit and a danger of fragmentation and of the patchwork quilt philosophy which has been mentioned in earlier debates. None the less, it is important to remember, if we are to get true recovery in the intermediate areas, particularly the areas my hon. Friend knows so well, that we must encourage the modernisation of the hotel industry, to bring up to date the amenities not only for the people living in the area, but also, as my hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) so rightly said, the amenities for visitors and business men and women visiting the neighbourhood. It makes a great difference if one can ring up a potential customer and invite him to see one's works or products and take him to a comfortable hotel for a meal or to be put up for a night, so that he can be sent away satisfied not only with the goods he has seen, but with his reception and with the hotel services.
    My hon. Friend has done a great service in emphasising the need for improvement of services in the intermediate areas, and particularly of hotel services.
    Question put and negatived.

  New Clause 5

    INVESTMENT GRANTS AT DEVELOPMENT AREA RATES FOR TEXTILE MACHINERY TO BE: USED IN INTERMEDIATE AREAS
    After sub-paragraph (b) of paragraph 1 of the First Schedule to the Industrial Development Act 1966 there shall be inserted:—
    '(c) expenditure on the provision of textile machinery or plant for use in an intermediate area'.—[Mr. Waddington.]
    Brought up, and read the First time.
    Mr. Waddington: I beg to move, That the Clause be read a Second time.
    The object of this important new Clause is to make available 40 per cent. investment grants in intermediate areas in the case of textile machinery or plant.
    406
    I appreciate that Section 7 of the Industrial Development Act, 1966, gives the Minister power to vary the rates at which the grant is payable in the case of a particular class of machinery, but this is an opportunity to debate an important matter and I hope that the Government will not shelter behind a technicality, and that they will deal with the important arguments on their merits. If the Government accept the Clause, they will be implementing a very important recommendation of the Report of the Textile Council in May last year. In paragraph 619, that Council said:
    "One of the main themes of this report…is the need for effective vertical integration at every stage of the production process and for a marked rise in total investment. We believe that the national interests are not being best served by encouraging the building of new unintegrated plants outside the existing textile areas, and we believe that further encouragement should be given to new investment in the traditional districts. We strongly urge, therefore, that the Government establish a temporary 40 per cent. investment grant for that section of the textile industry covered by this Report and situated outside the Development Areas."
    I am sure that the House accepts that that recommendation was not lightly made. It followed the most critical analysis of the industry's problems, and incidentally, a forecast of a 50 per cent. reduction of the labour force in the industry by 1975.
    The Government would be taking a very serious step if they cast aside this recommendation and, while continuing to spend considerable sums in the development areas, ignored what is considered by the experts a most important step towards the modernisation of an industry which has certainly had more than its fair share of troubles in recent years and is now trying to put its house in order. I am sure that the Government are aware of the concern felt in North-East Lancashire at the fact that, in recent years, Courtaulds has, because of the development area incentives, chosen to extend outside the traditional textile areas. It is difficult to see what benefit the community receives from its so doing. I hope that the Government agree that this trend should be discouraged rather than encouraged.
    Therefore, I hope that they will accept the Amendment. If not, I hope that they will at least state plainly whether they accept or reject the logic of the

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    Council's recommendation. As I said, I hope that they will not shelter behind a welter of words and technicalities but will try to give their considered view of the merits or demerits of this suggestion.
    Mr. Mapp: I am amazed that the members of the Textile Council, some of whom are knowledgeable folk, but not all of whom have the breadth of knowledge wanted in an industry of this kind, should, by this proposal, imply a split of the industry into two areas. There would be a positive premium for that part of the industry in the intermediate areas, but nothing for the three-fourths outside those areas. This discrimination is quite unjustified in a territorial industry. I accept the implications of going to Carlisle: that is a discrimination through the nature of events, and has nothing to do with the present Government's policy.
    This proposal has dangerous implications. I speak with some knowledge of the industry and of many of the textile leaders on the Council—
    Mr. Waddington: In fairness to the Textile Council, might I remind the hon. Gentleman that it is not a recommendation of the Council that the 40 per cent. grant should be available only in the intermediate areas? It was that the grant should be available in what it describes as the traditional textile areas, which I would always have imagined would include Oldham and Rochdale.
    Mr. Mapp: But the hon. Gentleman must look at the implications. I could, with some reservation, see the point made by the Textile Council if there had been a blanket recommendation accepted by the Government, but, once there is not a blanket recommendation and there is discrimination, for good reasons, in its judgment, for a particular part of the county, we cannot follow the logic of the argument in making a further discrimination between competitive parts of the industry in the one geographical area. The thing is complete nonsense, and I could tell the Textile Council, for which I have some regard, what I think of the misapplication of its thinking in this instance.
    Mr. Varley: The effect of the new Clause would be to make investment
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    grants payable at the development area rate on textile machinery for use in intermediate areas, and it would have precisely the result pointed out by my hon. Friend the Member for Oldham, East (Mr. Mapp).
    In considering the Clause, the House may find it helpful to keep in mind the distinction between investment incentives given for the purposes of regional development and incentives given to stimulate investment in one or more specific industries. The hon. Gentleman the Member for Nelson and Colne (Mr. Waddington) and his hon. Friends seem to be primarily concerned with the need to stimulate investment in the textile industry. If that be so, there is no particular merit in limiting the higher rate of investment grant to textile machinery for use in intermediate areas, although in the context of a Bill concerned with regional development they may have thought it more reasonable to present their proposals in this way.
    It is true that a substantial part of the cotton textile industry, mainly in the weaving section, is to be found in the proposed North-East Lancashire intermediate area. However, although there are significant numbers of wool textile manufacturers in the northern part of the Yorkshire coalfield intermediate area, the greater part of the wool textile industry is to be found in that part of the West Riding which is not within the intermediate area. I think that these inconsistencies result probably from some confusion in the mind of the hon. Gentleman as to whether the aim of the new Clause is to promote regional development or to assist the textile industry.
    We on this side are fully conscious of the problems of the textile industry, particularly in the North-West. From time to time, my hon. Friend the Member for Oldham, East and others of my hon. Friends press most effectively the case of the textile industry in their areas. My right hon. Friend the former President of the Board of Trade told the House on 22nd July that the Government had decided to replace the present quota system by a tariff on imports of cotton textiles from the Commonwealth as from 1st January 1972, as the Textile Council had recommended. The Council said, and the Government agreed, that this would give the industry the confidence it

    409
    required to undertake the investment needed to make it more competitive.
    I know that the Textile Council recommended also that firms in the traditional textile areas should be eligible for investment grants no less favourable than those available in the development areas, but its reason for putting forward this proposal was not that the investment would not otherwise take place but that it would not be in the national interest to encourage the building of new unintegrated plants outside the existing textile areas when the need was for effective vertical integration at every stage of the production process.
    The Government considered these arguments very carefully. They recognise that the industry had made out a good case, by its own lights, but, as my right hon. Friend said, they were unable to accept the proposal both on general grounds of regional policy and because in present circumstances, including, in particular, the position on public expenditure, they would not be justified in singling out the textile industry for financial assistance on such a scale. The Hunt Committee did not suggest that assistance to specific industries was appropriate to regional problems.
    I realise that the hon. Member for Nelson and Colne will not regard that reply an entirely satisfactory, but, for those reasons, I must ask the House to reject the new Clause.
    Mr. Ridley: My hon. Friend the Member for Nelson and Colne (Mr. Waddington) has done the House a service by bringing forward this new Clause. First, it is a good thing for the recommendations of industry councils to receive occasional attention in the House, and if the Textile Council has made this recommendation, it is only right and proper and fair to the Council that it should receive some attention by Parliament. I am sure that it will be glad that the matter has been debated, even if only briefly and at this somewhat late hour.
    Secondly, my hon. Friend has underlined what will clearly be a problem which will develop more and more. It is that the effect of the heavy subsidies available in development areas will often be to draw industry away from areas where the economic strength and the employment position are not all that
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    strong and are getting weaker. This is certainly true of textiles. Although my knowledge of the industry is limited, I know that a large amount of the new investment is going into development districts—Carlisle has been mentioned and Spennymoor in Durham is another place where big expansion is going on—because the investment is subsidised as to 40 per cent. and regional employment premiums are payable. This bears out what was said in an earlier debate when it was said that the effect of the development areas policy could be to take industry from parts of the country which could little afford to lose it.
    But the objections which the Minister of State has made to the Clause are strong in that we do not want to single out specific industries for specific treatment if we can help it. There would probably be large problems of definition about where the textile industry began and finished. These problems would make the whole thing more complicated.
    The moral to be drawn from this short but interesting debate must be that there will be all sorts of side effects from present development area policies and that is why we have to keep this subject of a review very much before us. It would be wrong to press the new Clause but I congratulate my hon. Friend on bringing it forward, for this has been a useful and interesting interchange.
    Mr. Waddington: I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

  New Clause 8

    DECISION ON APPLICATION UNDER TOWN AND COUNTRY PLANNING ACT, 1962
    When under section 38 of the Town and Country Planning Act 1962 any application is made for an industrial development certificate, the Minister shall give his decision on the application within three months of receiving it.—[Mr. Ridley.]
    Brought up, and read the First time.
    Mr. Ridley: I beg to move, That the Clause be read a Second time.
    The Clause puts a limit on the time which the Minister shall take to reach his decision on an application for industrial development certificates. There is a genuine grievance in this connection.

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    There has been a series of delays in the administration of regional policy, both industrial development certificate grantings and grants of all sorts for aiding regional development.
    There was a damaging report in the Financial Times of 27th November dealing with a firm which wished to move to Cornwall and which was baulked by the excessive amount of time taken by the Board of Trade and the Ministry of Technology. I quote:
    "It kept asking for further information from us. Ten days ago it became clear this could go on no further."
    As a result of the prevarication and the endless questioning of the Ministry, 800 jobs have been lost to Cornwall.
    Doubtless there are two sides to cases such as that, but the six months over which the haggling apparently went on was far too long a period. Business is in no position to be able to wait while officials get round to making up their minds on these matters. If officials are overworked, that in a way is a healthy sign, because it means that there are plenty of applications for I.D.C.s and grants. Parliament should have the right to require that the administration of regional policy has some sort of time limit. This would greatly help the distribution of industry, because as much as the fear of being refused an I.D.C. businessmen fear the delay before they know what the answer will be.
    All the surveys and investigations which have been made into this subject show that there is very marked reluctance on the part of businessmen to apply for industrial development certificates, and though the causes are manifold one of them certainly is the delay and frustration involved in these applications, because they very much fear it. So I hope that we can hear something from the Minister of State as to the speeding up of giving grants and of telling firms what their grants will be. Also I hope that he will accept that there should be some speeding up in the granting of industrial development certificates.
    It may be that the period I have suggested, three months, is not entirely appropriate, but it seemed to me to be plenty long enough for the Ministry of Technology to make up its mind whether an application should be allowed or not. Of course there are facts to be found out
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    and investigations to be made, but, nevertheless, it would be a help to the whole of this policy, and certainly it would be a very great help to business, if the administration of the scheme could be greatly speeded up. The reports we have from business all point in this direction.
    I hope that the new Clause will prove acceptable to the Government, because I think it would improve our procedures if the Ministry were to have the discipline of a time limit on its own deliberations. I hope the Government will respond favourably to this Clause and to the suggestion that the grants be speeded up.
    Mr. Varley: Perhaps I may refer immediately to the Press report which the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) mentioned concerning a firm in Cornwall. I think I can identify the firm because I was involved, in part, in that case. For normal commercial reasons and our practice, I cannot go into the details, but I can tell him that in that case it was not a question of an industrial development certificate; it was a question of assistance under the Local Employment Acts.
    The Ministry of Technology recognises, as formerly did the Board of Trade, the need to give quick decisions on applications for industrial development certificates. In development areas, the proposed intermediate areas and elsewhere where the control is operated liberally, applications are normally decided within a week or two. Even in congested areas where control is rigorously applied—and the House understands the reason for this rigorous application—and all the applications are looked at critically, the great majority of cases are determined well within three months of the date of application. In a few cases where large and complex applications are involved decisions may not be given within three months. This may happen, for example, where detailed discussions with the applicant company are needed, perhaps about a number of related projects, or where, as a result of discussions, the company agrees to submit revised proposals. I would emphasise, however, that the number of applications which are not settled within three months is very small indeed.
    I have the greatest sympathy with the view that delays in determining industrial

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    development certificate applications must be minimised, and the Department will do all it can to achieve this, but I do not believe that the time limit as proposed would make a useful contribution to this objective. It would always be possible to refuse within a three-month period all those applications which did not appear to be consistent with the proper distribution of industry, but this proposal in the new clause would be completely rigid, and I believe that the imposition of a time limit leads to that kind of rigidity. I am sure that rigidity would occur if the new Clause were accepted.
    11.45 p.m.
    While it is important to have a quick decision, it is also important to have the right decision—right for the country as a whole, for the area in question, for the other firms which will be affected by an increased demand for labour and for the applicant firm.
    We can often operate more positively by opening discussions with companies in some of these more difficult cases to explore whether an alternative expansion scheme, more in accordance with the Government's regional policies, can be found. For example, we are often able to allow some further expansion of existing premises in a congested area, where a company agrees to provide new employment in a development area by locating part of its activities there. Any disadvantages involved in this delay must be weighed against the benefit of such negotiations securing a better distribution of industry, and in particular locating projects in development and intermediate areas, where employment is much needed.
    This is the principal aim of the Government's regional policies and I hope that, in the light of this explanation, hon. Gentlemen opposite will not press the new Clause.
    Question put and negatived.

  Clause 1

    INTERMEDIATE AREAS, AND FUNCTIONS EXERCISABLE IN RELATION THERETO
    Mr. Varley: I beg to move Amendment No. 5, in page 2, line 19, leave out subsection (3) and insert:
    (3) No grant shall be made, by virtue of this section, under section 3 of the Local Employment Act 1960 (building grants), towards the
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    expenditure incurred in providing a building or extension in an intermediate area, in a case where any work on providing that building or extension, being work undertaken by or on behalf of the applicant, was done on the site before 25th June 1969; nor, where any work on providing a building or extension intended for occupation by an undertaking was so done, shall a grant be so made under that section in respect of a purchase of that building or extension for occupation by that undertaking.
    In tabling this Amendment the Government had two aims in mind. First, the Amendment will provide a somewhat clearer and simpler version of a provision which some hon. Members, for reasons with which I sympathise, have found difficult to understand.
    Secondly, it is designed to close a loophole in the Bill of which the Ministry of Technology has only recently become aware. Under the Bill as drafted, we believe that it might be possible for a firm which had started building a factory for its own use before 25th June to secure a building grant by selling the factory to a developer and buying it back, after the intermediate areas had been designated, as a new building not previously occupied.
    It would not be desirable for this loophole to remain open. Grant should not be payable on a factory on which work had started before 25th June, 1969—the date on which the proposed intermediate areas were announced by my right hon. Friend the Minister without Portfolio—with the intention that it should be occupied by a particular undertaking.
    Amendment agreed to.

  Schedule

    MINOR AND CONSEQUENTIAL AMENDMENTS OF ENACTMENTS
    Mr. Ridley: I beg to move Amendment No. 7, in page 9, line 2, at end insert—
    Section 38(2) of the Town and Country Planning Act 1962 (Industrial Development Certificate).
    At the end of subsection (2) of section 38 shall be added the words 'and intermediate areas'.
    This Amendment would have the effect of granting to intermediate areas the same considerations in I.D.C. policy as apply to development districts. I imagine that this will, in any case, be the policy of the Government. The relevant phrase

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    in the Town and Country Planning Act, from which the I.D.C. power derives, reads:
    "…shall have particular regard to the need for providing appropriate employment in development districts".
    The Amendment would add "and intermediate areas" after the words "development districts". Thus, from the point of view of granting I.D.C.s, intermediate areas and development districts would be on the same footing.
    I cannot conceive that there would be circumstances in which an I.D.C. would be refused in an intermediate area. I hope very much that there is no question of that, because the problem by definition is one of employment and if I.D.C.s are refused for intermediate areas those areas will have something to complain seriously about. There is something to be said for amending the original Act in this sense so that the powers are exactly the same. The Hunt Committee was in general agreement with this. Its policy on I.D.C.s was a great deal more flexible than is that of the Government. It was prepared to advocate I.D.C.s in more areas than the Government were prepared to look at. The Committee recommended that I.D.C.s should be made available to firms to establish themselves in Yorkshire and Humberside. We should like to go further and put them on the same basis as development areas.
    I hope there will not be any dispute about this from the Government. The I.D.C. is a very arbitrary and abrupt weapon. Although we agree that it has to remain, the effect can do serious damage to businesses which have a right to extend their area of operation. Although we want to continue the use of I.D.C.s, we should use this weapon as little as possible consistent with policy, but I hope that there is no question of refusing I.D.C.s in intermediate areas.
    Mr. Varley: As the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said, there was a long discussion about I.D.C. policy in Committee and it attracted a great deal of interest.
    As far as industrial development certificate control is concerned the Ministry of Technology is required under present legislation to determine whether applications are consistent with the proper dis-
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    tribution of industry and in so doing to have particular regard to the need for providing employment in development areas. In practice this has meant that I.D.C. applications for development area locations are almost always approved and projects for locations in congested areas are approved only if they would not add unreasonably to the congestion in those areas and if it is demonstrated that they could not reasonably be undertaken in a development area.
    But while we must have "particular regard" to the needs of providing appropriate employment in development areas, this does not mean that the needs of other areas are neglected in operating I.D.C. control. The I.D.C. policy is of course a flexible one and full account is always taken of the local employment situation in considering any application. In those areas which the Government intend to designate as intermediate areas, the I.D.C. control has for some time been operating liberally in recognition of their employment problems. In accordance with the Secretary of State's announcement on 25th June, 1969, I.D.C.s are now available in the intermediate areas on the same basis as in the development areas. This means that most applications will be approved, but there may be occasions, both in development areas and intermediate areas, when refusal of an application would be justified; where, for example, a project was proposed for an area where the labour resources were inadequate.
    I can assure the House that so long as the intermediate areas have their present needs the policy announced by the Secretary of State will continue. I hope that the movers of the Amendment will accept this assurance and will not press it.
    Mr. Ridley: Having accepted entirely the substance of what I said, the hon. Gentleman has not given any reason why he cannot accept the Amendment. Can he say what is wrong with the Amendment since he seems to meet me on the substance of what we are trying to achieve?
    Mr. Varley: I.D.C. policy is flexible. In this regard we could not stop at intermediate areas, but would be pressed to include overspill towns and assisted areas which are not in intermediate areas or

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    development areas. To do that would be adding to the complexities of the matter.
    Mr. Ridley: The Bill deals only with intermediate areas, so it would be possible under it to extend the power only to intermediate areas. As the Minister of State said that he accepts that I.D.C.s should be granted on the same basis and for the same reasons as in development areas, it is odd that he was not prepared to accept the Amendment and write it into the Bill. What is the point of having Acts if they are not to contain what we mean? As we are all agreed about the substance of the matter, it is peculiar that the hon. Gentleman was not prepared o accept the Amendment. The hon. Gentleman's assurance is welcome and satisfactory, so I see no point in pressing the Amendment. I merely state in passing that it is a pity, if the hon. Gentleman is prepared to accept the substance, that he is not prepared to accept the form. I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. Waddington: I beg to move Amendment No. 8, in page 9, line 22, at end insert 'and under this Act'.
    I am not sure that strictly speaking the Amendment is necessary, but it is not entirely clear from the Bill whether it is intended that in future the annual report by the Minister under the Local Employment Acts should include a report on assistance in the intermediate areas. The Amendment, if accepted, would make it absolutely plain that such a report bad to be furnished. I am sure that all hon. Members would like this information to be available annually.
    Mr. Varley: There can be a concession here. We originally took the view that it was not necessary to add a reference to the Local Employment Act, because no new functions would be exercised. However, we have considered the matter and, in view of what the hon. Member for Nelson and Colne (Mr. Waddington) has said, we accept the Amendment.
    Mr. Ridley: After much hard pounding to a late hour, it is to be welcomed that at last we have made an impact upon the Bill. After three weeks in Committee and five hours on Report, we have at last achieved an improvement of substance. The credit for this fittingly goes to my hon. Friend the Member for Nelson and Colne (Mr. Waddington), who has been doing a great deal of the hard pounding. I am only sorry that we have not succeeded in persuading the Government to accept many more of our Amendments. However, much of the substance of what we have argued has been accepted, and that is some consolation to us. The Bill has been thoroughly and properly debated. With the acceptance of the Amendment we can leave the Bill with the knowledge that we have produced something which will be of great assistance to the grey areas. All hon. Members will wish those areas prosperity for the future.
    Amendment agreed to.
    Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.
    Bill accordingly read the Third time and passed.

GENERAL RATE BILL
Not amended (in the Standing Committee), considered.
GENERAL RATE BILL
  Clause 1

    ASCERTAINMENT OF GROSS VALUE OF DWELLING-HOUSE
    12 m.
    Mr. John M. Temple: I beg to move Amendment No. 1, in page 1, line 9, after 'dwelling-house', insert '(other than a caravan)'.
    Mr. Deputy Speaker (Mr. Harry Gourlay): I think that it will be for the convenience of the House to discuss with it Amendment No. 3, in page 1, line 12, after 'dwelling-houses', insert '(other than caravans)'.
    Mr. Temple: As we are starting to discuss the Bill at precisely 12 o'clock I think that I am entitled to make a modest protest at the very late hour at which business is being begun on a matter which affects no fewer than 20 million householders throughout England and Wales. It is a very serious matter and will naturally have to have a reasonably thorough discussion, even though the hour is late.
    I am glad to see present the Minister of State, Ministry of Housing and Local Government, because we are almost old colleagues in discussing these matters.
    The Amendment, which was discussed in Committee, is relatively simple. It seeks to leave out the word "caravan" in respect of the types of dwelling which will be assessed at the same time. In other words, if it were accepted all other dwellings throughout the country would be on a comparable basis for rating purposes, but caravans, which I shall seek to show are in a different class, would be excluded and dealt with exclusively by themselves as a separate category.
    Very strangely, on Second Reading on 10th November, when the Joint Parliamentary Secretary was in charge for the Government, he said in reply to an intervention by my hon. Friend the Member for Harwich (Mr. Ridsdale) that caravans were included with other hereditaments. This came as a slight surprise to me, as in my opening speech for the Opposition I had not thought that they were so included within the general category of
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    dwellings. Therefore I moved a somewhat similar Amendment in Committee on 25th November. I was not then very certain of the drafting, so I withdrew it.
    There is a history to the rating of caravans, and it is comparatively new. On the last revaluation in 1963 caravans were regarded not as rateable but as chattels and, therefore, not rateable. But under the decision in a case before the courts in 1966—Field Place Caravan Park Ltd. v. Harding—residential caravans became rateable. From then on they have been individually assessed to a modest extent.
    Neither the industry nor we on this side of the House dispute that individual caravans of a semi-permanent nature can well be assessed. But in only 80 rating areas out of 1,600 throughout the country are caravans independently assessed. I have a letter from the Minister confirming this. As there is so little of this individual assessing going on it would not seem reasonable to bring them into the generality of dwellings. They are totally different.
    A hereditament such as a mixed hereditament—a hereditament partly a dwelling and partly a shop—is in a category by itself. If there is a case for that being in a separate category, caravans should be in a separate category as well.
    I will now state the reasons why I think caravans are so essentially different. First, unlike a house, caravans are built of relatively light materials and are of a depreciating nature. Everyone who has bought a house in recent years has thought of it as a more or less permanent investment, and as an appreciating investment. But caravans, in the nature of their construction, are of a depreciating character.
    Again, caravans change hands relatively frequently because even a parmanent caravan is, to an extent, mobile. It is the practice of those who own caravans frequently to change them for possibly superior models. One cannot do that with a house. Once one has bought a house, one has to go to another. It is permanently affixed to the ground. A caravan is essentially in a different position from that of a normal dwelling.
    A relatively minor but still significant point is that a caravan, by reason of size,

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    has entirely built-in furniture or furniture which is bought with it. To that extent, I do not think that there is any comparable dwelling, and it is difficult for a valuer to subtract the amount of the value of the movable furniture from the value of the caravan and thereby arrive at an assessment of the caravan for rating purposes. This may be one of the reasons why so few caravans are individually rated at present.
    Another reason which makes a caravan entirely different is that its rating assessment is arrived at having regard to the caravan and the pitch on which it stands. This is not comparable to the rating of a house and the land upon which it stands because the pitch on which the caravan stands is rated from an amenity point of view as part of the caravan park. In other words, one can have two identical caravans on caravan parks which are relatively close together but which are differently assessed because of the difference it the site amenities.
    I have been in touch with the National Caravan Council today in order to give the House some up-to-date observations about amenities. Some parks are run to a very high standard of amenity. I have been to parks where there have been club facilities. Sometimes there are paved roads and street lamps; sometimes there is piped television; sometimes main drainage is available and sometimes not.
    A caravan therefore on a particular park cannot be judged just as a caravan but in conjunction with the amenities of the site. Taking one caravan and comparing it with another, one may get a wrong view of the actual value for rating purposes of both of them.
    Another point leads me to suppose that the rating of individual caravans will not become very general. It is surprising that, although caravans have been in the position of being able to be rated individually for some time, few rating authorities have sought to bring them within the purview of rating. This is because it is more convenient, very often, for the local authority to rate the whole of the site and collect the collective rate from the site operator rather than collect rates from each individual owner of the caravans. I believe that this will always be the case and that rating authorities are not ill-advised to operate that procedure and
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    allow the site operator to pay rates under one assessment.
    I have no intention of over-playing my hand on the Amendment because I hope that it will succeed. It is a reasonable Amendment and I trust that, with my explanation, the Government will accept it.
    The Minister of State, Ministry of Housing and Local Government (Mr. Denis Howell): I am obliged to the hon. Member for the City of Chester (Mr. Temple) for putting his case briefly. I share his concern that these proceedings are taking place at so late an hour, but that is the fate of such Bills which are placed low in the Order Paper—I believe after proper consultation through the usual channels.
    The hon. Gentleman will not be surprised to hear me say that the Amendment is not acceptable to the Government. Its effect, as he rightly said, is to exclude from the new procedures outlined in the Bill the rating of caravans and to make a distinction between them and houses. One point on which he rested his case was that caravans, in fact, were different from houses and ought not to have the same principles applied to them. But we are talking about caravans on permanent sites—and the courts decide what is a permanent sit. We are not talking about the type of caravan which a holiday maker hitches to the back of his car and tows around the country. If we are talking about caravans on permanent sites, it would be grossly unfair to householders if their houses were rated when people living in caravans on permanent sites were not rated.
    Mr. Temple: We are not talking about that.
    Mr. Howell: Indeed we are. The hon. Member disagrees. What are we talking about?
    Mr. Temple: I said that neither the industry nor the Opposition claims that individual caravans should not be rated. I said that they should not be comparable with houses and should not be aggregated within the houses category. That is a different matter.
    Mr. Howell: If caravans are to be rated, we must apply the principles laid

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    down in the Bill. If we try to apply some other criteria to them, we are drawing a distinction between the rating of houses and the rating of caravans.
    It is also extremely important that the valuation officer should have the best evidence available. Temporary bungalows may form the only alternative source of information on which to base a judgment. That is a very good parallel, because it is almost on all fours with the case which the hon. Member made about a caravan being a wasting asset. That is exactly the situation with the temporary prefabricated bungalows which were put up in many parts of the country. They were not expected to be permanent. It was intended to clear them away. As we know, our expectations were not fully met, but that illustrates the anomaly which the acceptance of the Amendment would create.
    Where this type of caravan is to be found infrequently, as is the case in some parts of the country, the valuation officer needs to go outside his valuation area to get the best possible information on which to base his judgment. Almost identical considerations apply to caravans as to houses. I do not believe that the hon. Member has come anywhere near to making a case for the acceptance of the Amendment, and I ask the House to reject it.
    12.15 a.m.
    Mr. Martin Maddan: The Minister gave the game away in his opening words. His brief undoubtedly told him to reject the Amendment but his first words made it clear that he did not understand, not only the intentions of the Amendment, but what the Amendment says. I hope that he will give further consideration to this, because he will realise that other points made earlier have had some substance. Indeed if they had not, a lot of Government Amendments would not be on the Order Paper. He may learn from that that my hon. Friend's case holds a good deal of water.
    As I understand the Bill, the ratepayer living in an ordinary house may have to argue about the effect on his valuation of the valuation of a caravan. Whether or not it is next door does not matter. He does not know the considerations. He has probably never lived in a caravan
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    and his position is very difficult. To put millions of ordinary householders in this position seems improper. The Minister seemed to imply that all that will happen under the Bill is that semi-permanent caravans will be compared with semi-permanent caravans. I do not understand that from the Bill, and from what I have heard about it. It is that caravans are to be compared with houses and vice versa. If it were just caravans being compared with caravans then no one on this side would try to say that caravans should be exempt.
    We are saying that they should not be put in the same mixing bowl when comparisons are made. It will be difficult for millions of ordinary householders in conventional households to refute evidence because of a lack of experience of caravan life, amenities, costs and so on. It will enable the valuation officer to bring in an extra definition with which the householder is completely unfamiliar. This is what the Amendment is about.
    Mr. Denis Howell: We are not trying to exempt caravans from rating. What the Amendment tries to do is to exempt caravans from the same processes as apply under the Bill to housing. I say that would be unfair.
    Mr. Maddan: Our Amendment deals with separating caravans from houses when making comparisons for rating purposes. If later the hon. Gentleman makes a consequential Amendment comparing caravans with caravans, there will be no objections from this side.
    The Minister of State implied earlier that my hon. Friend's purpose was to exempt caravans from rating. I was alluding to that. If he did not mean that, I withdraw entirely what I said about it, and only reiterate that it is understood that in one way or another those who live in semi-permanent caravans must contribute to the rates.
    Mr. James Allason: I remind the Minister of State that the purpose of the Bill is to allow houses to be valued under a new system; namely, to compare the rents at which other houses are being let or the relationship between rents and gross value not only of comparable houses but in similar categories. We are seeking to exclude caravans from this form of rating. The

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    Minister says that this would be unfair. Unfair to whom? It will not be unfair to the occupiers of houses—
    Mr. Howell: It might be.
    Mr. Allason: —that they shall not be entitled to be compared with caravans, but it will be unfair to the occupants of caravans if they are to be compared with houses. My hon. Friend the Member for the City of Chester (Mr. Temple) made this clear.
    I know that the Minister of State is running away from it now, but he told us that if the Amendment was accepted it would mean that caravans would not be rated. He has withdrawn that now. Of course caravans can be rated. They ate being rated for value now just as are cinemas, hotels and shops. It is not unfair on hotels and shops that they will be rated in the same manner as houses. I wish that the Minister would accept that caravans are in a different category of rating from houses. Therefore, I think that he should accept the Amendment.
    Mr. Graham Page: I want to add my protest to that of my hon. Friend the Member for the City of Chester (Mr. Temple) about the Bill coming on at this hour of night and dealing with an Amendment of such importance. The Minister of State cannot pass it over by saying that it is just one of those things that happen. I know that it is not his fault. He is pushed here to deal with the Bill at this hour in the same way as we are. It is the fault of those on his side who manage the affairs of the Government that the Bill is brought on at this time.
    I want to protest, too, about the grounds on which the Minister said that the Amendment was unacceptable. He said that it was unacceptable because caravan s should be rated. When he was pulled up over that, he said that it was unacceptable because caravans should be rated on the same principle as other dwellings. They are already rated on the same principle as other dwellings if they are permanent caravans. We can already use as comparable one caravan with another in discussing the rateable value of the first or the second. This is the law. But the Bill introduces a new type of comparable: that a caravan can be compared with a house and
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    a house can be compared with a caravan to arrive at the gross value of either of them.
    In considering the Amendment we should bear in mind that one arrives at the rateable value of a dwelling by finding what the rental value is and making the appropriate adjustments to that rental value.
    The purpose of the Bill is to make certain short cuts in going from a rental value to a rateable value. Its purpose is to permit the valuation officer to say, "That particular hereditament is let at £X per year, so this one will be let at £X plus Y or £X multiplied by Y." I am not sure which way the valuation officer intends to use that in future.
    If the hereditaments are of the same kind, if one is comparing a three-bedroom house with a three-bedroom house in the same street, that factor Y, an addition or a multiplication, will be insignificant. The houses are almost the same, and they are what we know in rating law as "comparables". But if one is comparing a house with, say, a flat, then the valuation officer has a formula for that Y, a formula which may vary from district to district. If the hereditament is a caravan, and we are comparing it with a house, perhaps a town house, or a mews house, what formula can be used reliably to discover that factor Y, that difference which one will apply, that multiplier, that addition to the caravan or to the house to compare like with like?
    As my hon. Friend the Member for the City of Chester said, caravans are so totally different from all other types of dwellings that to take the rental values of caravans and compare them with other types of homes is ridiculous. It will only result in great anomalies in the preparation of the valuation list, and I say that even though we are talking about what are known as permanent caravans, because, even though they are permanent, many of them have short lives. They depreciate rapidly because they are flimsy structures. There is undoubtedly a fluctuating market for them. They are in the nature of temporary dwellings, although one calls them permanent caravans.
    They can be mobile, even though permanent, because it is not an excuse to derate a dwelling because it has wheels.

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    Some years ago one used to get away with things if one put wheels on a prefabricated bungalow, but that is not the law now. Caravans are different in structure inside because of the built-in furniture and equipment, and they are different from ordinary dwellings in that the pitch is included in the rating. I do not think that one can say that that is so with buildings on the ground.
    One purpose of the Bill is to permit the valuation officer to compare caravans with dwelling houses of other types. The other purpose of the Bill, as appears from later Amendments, is to permit the valuation officer to point to the current valuation list in preparation for that which will come into operation in April, 1973, and say, "On that list as it is now the gross values are so much. Rentals in this area have gone up by so much in these last years, and therefore I shall add a certain amount to the values shown in the existing valuation list"—again a certain multiplier or additional figure. I hope that I have expressed that properly as the intention of the Bill.
    When one applies that to caravans and other dwelling houses, will valuation officers really point to valuations of caravans in the current list and compare those with houses which he is going to assess in the 1973 list? If he does that, he will perpetuate anomalies and errors in the existing list, and indeed multiply them. If he takes the present rent of, say, a dwelling-house, and by some X to Y ratio he gets the present gross value—if that sort of formula is to be applied as between caravans and other dwellings, it creates a ridiculous situation.
    12.30 a.m.
    So from the point of view of both purposes of the Bill—comparing present rents and present rateable values and gross values and pointing back to the previous valuation list in the use of caravans as comparable with other dwellings—this will make a complete farce of the list.
    I do not say that this is likely to happen many times. I cannot see any intelligent valuation officer carrying out an exercise of this sort except in some peculiar districts where he has nothing else to compare them with, but in places like some areas of North Wales where there are masses of caravans and one brick-built
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    house, he will compare them and come to an extraordinary decision. Whether it happens on one occasion or thousands, it will create injustice, and that is permitted by this Bill.
    Caravans ought not to be brought into any rule of thumb or any formula which a valuation officer could apply and will be permitted by this Bill to apply. It would be far better if the Government accepted this Amendment and excluded caravans from consideration under the new procedure in the Bill.
    Mr. Denis Howell: If I may, with the leave of the House, reply briefly, I hope I have cleared up the misunderstanding which appeared to occur earlier. I am sorry if it was my form of words, but I proceeded from the assumption that all hon. Members in the Chamber were friends of the Bill and I used the words that we would talk not about the exclusion of caravans but about how they were to be assessed and about the criteria to be applied.
    I am still unconvinced that the powers given to valuation officers in this Bill are not necessary. I listened with great care to what the hon. Member for Crosby (Mr. Graham Page) has just said. The important thing, which he said and I emphasise, is that if any valuation officer can use caravans for the purposes of his comparison, he will do so. Evidence about their rentable and rateable value is the best evidence on which any valuation officer can proceed and we are talking only about cases where such evidence does not exist.
    The Opposition are saying that they would take from valuation officers powers to compare with temporary bungalows and other similar types of accommodation and the power to use them as a criteria. They have not told us, and certainly the hon. Member for Crosby has not told us, how they would assist the valuation officer in this difficult task. When I intimated to the hon. Member for Hove (Mr. Maddan) earlier that this could be a hardship on caravan owners, I think I was right, because the further advice I have is to the effect that caravan owners themselves not infrequently seek to argue their case on the basis of the valuation or rents of temporary bungalows and other similar types of accommodation which is not exactly on all fours.

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    Therefore, this applies both ways. It will help the caravan owners to judge whether their valuation is fair, as it will help the valuation officers to reach a reasonable conclusion in all the circumstances of any particular case. I repeat, if no evidence of similar caravans exists in the valuation officer's area, he must go further afield to get the best evidence he can of temporary bungalows, which is usually the comparable type of accommodation which he takes into account.
    For all these reasons, I cannot accept the Amendment.
    Mr. Temple: I do not know when I have felt more disappointed—and possibly with myself, for not having taken sufficient time to explain my Amendment. I tried to cut corners, which is always wrong with anything to do with rating, because it is an extremely complicated matter. Possibly, therefore, I should blame myself for the fact that the Minister misunderstood the object of the Amendment at first. Even in his second speech, however, he did not get really the point. That is why I will make the point very clearly again to see whether he will not change his mind.
    We were never challenging how the caravans individually could be assessed. The challenge was on quite a different basis. As I explained, until this new revaluation, caravans were not rateable at all and there were various dwellings categories for rating purposes. These were houses, bungalows, purpose-built flats, converted flats, maisonettes, town houses, mews houses, semi-houses and flatlet houses. These were all separate categories. What the Government have sought to do—we do not challenge this—is to make all those dwellings into one category, but they are all permanent dwellings. They have said that caravans are to be compared with all those permanent dwellings. My submission, which was perhaps not clear at the start, is that we do not wish caravans, which are essentially different, to be made comparable with these other dwellings. I hope that I have made the position completely clear.
    I am afraid that the Government are already proposing a system of amalgamating these dwellings for assessment purposes, which will be extremely confusing in the valuation court. It will be
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    confusing if we bring in for comparability purposes caravans or mobile dwellings, albeit on a permanent site. The Minister would keep referring to "permanent caravans". Caravans can be moved from the site. It is only the pitch which has any permanence.
    The Bill will cause many difficulties in the valuation courts, and if there are to be other categories of dwelling—I referred to the mixed hereditament—I can see no reason why caravans should not be in a separate category. As the Minister said, the valuation officer will go around the valuation courts of adjacent areas and there will be comparability—but caravans should be in a separate category, and then the situation will be much clearer.
    I hope that we have made our point. I certainly have no intention of withdrawing the Amendment.
    Amendment negatived.
    Mr. Denis Howell: I beg to move Amendment No. 2, in page 1, line 10, leave out from 'a' to 'and' in line 20 and insert:
    'new valuation list coming into force on or after 1st April 1973, then, subject to subsections (3) and (3A) of section 83 of this Act, any evidence taken into acount or adduced—

    (a) as to the rents at which other dwelling-houses have been let; or

    (b) as to the relationship between those rents and the gross values of the hereditaments consisting of those other dwelling-houses as shown in the valuation lists ceasing to be in force on the date of the coming into force of the new valuation list in question,

    shall be regarded as relevant and admissible for the purpose of that ascertainment, whether those other dwelling-houses are of the same or a different description, if, at the beginning of the period of three years ending with the date of the coming into force of the new valuation list in question, the site of each respectively of those other dwelling-houses was situated within the area of a local valuation panel constituted in accordance with section 88(2) of this Act which was either the same such area as, or such an area contiguous at some point with, that in which the site of the dwelling-house in question was situated;'.
    This Amendment is intended to honour an undertaking which I gave to the Standing Committee. I am sorry that the hon. Member for Hove (Mr. Maddan), with, perhaps, a little less than his customary charity, suggested a few minutes ago that we were being reluctantly forced into making the change. In fact, I am trying genuinely to meet the wishes of a number of hon. Members on both sides.

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    Real concern was expressed in Committee that the Bill as originally drafted would give valuation officers considerable additional powers which would, on the whole, be to the disadvantage of occupiers. It was argued that a valuation officer would be able to go far afield for his comparisons when drawing up a new valuation list, and the occupier, particularly if he were not professionally represented would be at a grave disadvantage. After considerable debate, I undertook to see whether it would be reasonable and practicable to produce a form of words which gave the valuation officer the power which we thought he needed in certain cases to go further afield than his own area, but not so far afield as to result in the realisation of the fears which hon. Members had expressed. We have, accordingly, alighted upon the formula of the contiguous valuation panel area.
    We examined several alternatives and tried to arrive at what we thought was the best solution. We toyed with the idea of writing into the Bill a reference to "reasonable distance", but we decided that a form of words of that kind would invite litigation on a large scale about what was or was not reasonable. We looked at the idea of single or contiguous rating areas, and we decided that that, in practice, would become too restrictive. Next, we considered the possibility of putting in a reference to some set distance from the dwelling house within which comparable evidence might be found, but we decided that, in terms of distance as between rural area and urban area, that also was not practical.
    We concluded finally that the only possible approach to meet the wishes of the Committee was to determine the matter on the basis of the contiguous valuation panel area. The House will know that there are 95 of these in England and Wales. That gives some idea of the limitation which we are here putting upon the opportunities open to valuation officers and occupiers. It is a reasonable solution. It strikes a fair balance as between the valuation officer and the domestic ratepayer. I think that it meets the real fear which hon. Members expressed, and I hope that the House will accept the Amendment.
    Mr. Temple: We welcome the Amendment. As the Minister of State said, the question was discussed at length in Committee. Right from the start, the Government were pressed to narrow the area of comparison. This is a major victory for the Opposition. From the outset, we maintained that it would be unfair if the net of comparability were spread over the whole area of England and Wales. The Government have reached a happy compromise by settling on this valuation court area and the adjacent valuation court areas, because together those will give a fairly wide area around the hereditament under discussion. We can accept that and think that we have done a good deal to help ratepayers when they appear in the valuation court.
    12.45 a.m.
    You may have noticed, Mr. Speaker, that my hon. Friends and I have tabled a modest Amendment to the Government Amendment. It is after the first 'rents', insert 'and assessments'.
    Mr. Speaker: The hon. Member may not speak about an Amendment which I have not selected and which in any case is out of order.
    Mr. Temple: I consulted the Public Bill Office about this. The Amendment is not numbered, but it goes with Amendment No. 2. I thought that there was no question of selection because it was not numbered.
    Mr. Speaker: There are two Amendments to Amendment No. 2 which are not numbered. They are out of order and they are not selected.
    Mr. Temple: I accept your Ruling, of course, Mr. Speaker.
    I conclude by saying that we are grateful to the Government for the Amendment, which goes a long way to meeting the case which we put in Standing Committee.
    Mr. Ted Leadbitter: I am pleased that the Government have decided to make this considerable shift from the original wording. Hon. Members opposite may claim some credit for the change, but it was urged by both sides both in Committee and on Second Reading when I strongly protested against the then wording.

    433
    However, as I said on Second Reading, even with a compromise of this sort, when areas with comparable rateable values are considered, even when they are contiguous, the ratepayer is left with a considerable problem when applying to the local valuation court for a revision of his rates or objecting to an assessment. The difficulty occurs especially in the large conurbations and in urban areas contiguous to rural areas.
    Although the ratepayer applying to the valuation court may have some knowledge of his immediate locality and may be able to confront the Inland Revenue with argument and evidence based on that knowledge, it is often difficult for him to contest evidence about the circumstances of areas only three or four miles away. I welcome this change, but I urge the Minister to consider that problem.
    Normally a ratepayer is unable to afford professional advice. I have had considerable experience as a member of a local valuation court and I know that the ordinary ratepayer is often so awestricken by the professionalism which he meets in the court that he is unable to find the words with which best to argue his case.
    The Government have done a remarkably good job here in producing a compromise and moving away from the greater difficulties for a ratepayer of allowing assessors to bring in evidence rateable values in areas completely different from that in which the plaintiff is assessed and is making his case.
    I would have thought that the corollary of what the Government, in their wisdom, have now done in accepting the appeal made from both sides of the House is that the plaintiff should have made available to him all the evidence which the assessor,, the Inland Revenue, will bring to bear against him. A very good principle in Government and local government is this, that where a man is making an appeal there should be available to him all the relevant information so that he can prepare his case, or seek advice, before he enters the local valuation court to present his case. Therefore I ask the Minister, can some real thought be given to how best to make available to the ratepayer all relevant information which will be brought to bear against him at the hearing when he objects to the assessment
    434
    made upon him, or when he makes application for a reduction in his rateable value, for whatever reason? If the Minister will take that appeal which I make to him, on the ground that it is very important to the individual, I shall be very grateful to him.
    Mr. Allason: I think we are very sorry that the hon. Member for the Hartlepools (Mr. Leadbitter) was not a Member of the Standing Committee, because had he been there, with his well-known persuasiveness, he might have helped us to get a bit further along the road even than we have reached at last tonight.
    The Minister gave the impression this evening that he had given undertakings in Committee and that he had been thoroughly sympathetic. I would remind him that his words in Committee were very different indeed. He said that
    "it is the Government's belief that the only feasible thing to do is to go further afield than 'adjacent' when, by necessity, it has to be done, in order to get the best possible evidence. Obviously we cannot accept the limitation proposed…On purely practical grounds, therefore, we could not accept the Amendments…[OFFICIAL REPORT, Standing Committee E, 20th November, 1969; c. 43–4.]
    He gave us no hint whatever that his mind was in any way receptive to the arguments we were putting to him. Finally, I asked leave to withdraw the Amendment then under discussion, and I did so on the basis that we should bring forward a better Amendment on Report, because the Minister was not then prepared to budge.
    However, do not let us be churlish about this, because now he has brought forward this Amendment, and it is a very important one. It amends the 1967 Act to the extent of adding 15 lines to it; 10 lines are taken out and replaced by those of the Amendment.
    I welcome it very much, firstly on the grounds of clarity. In the debates in Committee the Minister was constantly getting muddled between the alternative types of evidence. We constantly reminded the Minister of the alternatives, and considering this proposal and the new sub-paragraphs (a) and (b), it is clear that if the matter was muddled to the Minister, it would have been even more muddled to those affected by it.

    435
    A principal matter has concerned the restriction on the scope of the area about which the valuation officer might seek evidence. We have based our arguments on grounds of equity and convenience, and we are delighted that the Government have accepted our views. We were told that "adjacent" was ill-defined, and instead we now have "contiguous". The Amendment is to be welcomed because it will improve the Bill.
    Several Hon. Members Several Hon. Members rose—
    Mr. Speaker: I remind the House, as I mentioned about two hours ago, that we still have a lot of work ahead and that the night is not eternal. Mr. Maddan.
    Mr. Maddan: I sympathise with your observation, Mr. Speaker, and I promise to be brief. Indeed, I wish to clarify only one point.
    On Second Reading and subsequently I tried to obtain an explanation of the phrase
    "…for the time being in force…".
    I feared that those words would mean that since the new list had already come into force, it would not be permissible for a ratepayer to make comparisons between his current valuation and his old one and similar differences between those applying to his neighbours' houses. Will subparagraph (b) of the Amendment solve that problem?
    Mr. Denis Howell Mr. Denis Howell indicated assent.
    Mr. Maddan: I am grateful for that assurance. The Minister will agree that often things are not always what they seem at first sight, certainly to a layman like myself in these matters.
    Mr. Graham Page: The hon. Member for the Hartlepools (Mr. Leadbitter) raised an important point in connection with the Amendment when he asked how best we could protect the ratepayer who was often awe-stricken in valuation proceedings because he must frequently appear in person since there was no legal aid for him in those courts.
    For the ratepayer this presents a considerable problem, even though the area with which he may have to deal has been greatly reduced by the Amendment. As the hon. Member for the Hartlepools
    436
    pointed out, he may have precise knowledge of his immediate locality, but he will be in difficulty in rebutting evidence which may be brought even from areas contiguous to his own.
    I do not want to be uncharitable when the Minister has made a concession of this sort. However, it should be put on record that here we have a one-Clause Bill—that is, apart from Clause 2, which is concerned with the
    "Citation, extent and commencement"
    of the Measure—of 25 lines the guts of which are in lines 10 to 20. It probably has not happened in the history of Parliament that those lines, those guts, have been removed, that the Bill has been de-gutted and a transplant gut inserted, this operation resulting from an examination and critical diagnosis by the Opposition.
    1.0 a.m.
    Even so, the position, although gratifying, is rather alarming. My hon. Friends the Members for the City of Chester (Mr. Temple) and Hemel Hempstead (Mr. Allason) were the specialists, as it were, called in to make the diagnosis. It is rather alarming to think what would have happened to the patient if they had not been consulted in Committee. To switch the metaphor somewhat, the patient is the ratepayer who will suffer under this new procedure. The Government could not possibly sustain such a grossly unfair provision, and they ought never to have tried to defend it. The Minister of State tried to do so in Committee, but it was an untenable position. Now under the Amendment we have the provision that evidence will be brought only from the area of the property concerned or the area of the local valuation panel contiguous to that of the area in which the property is situated.
    The Minister of State told us that there are 95 local valuation panel areas. That means that every one of them is substantially large. It may still be that the ratepayer has to face evidence brought from l0 or 20 miles away—from an area with which he is not acquainted. He will still be in difficulty with the Amendment as it stands. He will be in difficulty because of the size of the area concerned and he may have to face evidence which he cannot verify or confirm. He has not the power of the valuation officer 10 discover rents different from his own.

    437
    The valuation officer may point at the dead list to produce a live valuation list. The ratepayer has to face the possibility of comparison of his property with different kinds of property.
    Although the geographical area has been reduced from the whole country to a matter of two or three local valuation panel areas, the ratepayer will still be in difficulty. A great burden is placed on a ratepayer when the valuation officer has all this information at his disposal which the ratepayer cannot possibly gather. Even with the very best advice the scales will be more heavily weighted against him in the valuation court than at present. This is too great a price to pay for administrative convenience in a situation of staff shortage. That is the only reason for this Bill, that there are not enough valuation officers to go round and a short cut to valuations is wanted. This is too great a price to pay in the suffering and burden it will put on the ratepayer who wishes to dispute his assessment.
    Amendment agreed to.
    Mr. Graham Page: I beg to move Amendment No. 4, in page 1, line 25, at end, add:
    Provided nevertheless that the said evidence shall not be regarded as admissible in valuation proceedings unless the party seeking to adduce the same has, not less than 28 days before the commencement of the hearing of those proceedings, supplied to the other party or parties thereto written particulars relating thereto, stating—

    (i) the reasons for endeavouring to ascertain the gross value of the hereditament, which is the subject of the said proceedings, by reference to dwellinghouses of a different description or in an area contiguous as aforesaid to that of the said hereditament;

    (ii) the address, the accommodation, the description (for example, house, bungalow, purpose-built flat, converted flat, maisonette, town house, mews house, semi-house, flatlets house), the rent (including the amount and whether it is inclusive or exclusive of rates, controlled, regulated or of otherwise) and the assessment of any dwellinghouse being one of those referred to in the foregoing part of this subsection as 'other dwellinghouses';

    (iii) the nature of the said relationship between rents and the gross values shown in the valuation lists ceasing to be in force as aforesaid, stating it in figures as a ratio, percentage, fraction or multiplier if it is capable of such definition, and

    (iv) the calculations made and the multiplier or other formula used in arriving at the dross value of the said hereditament from the rent or assessment of the other
    438
    dwellinghouse' or 'other dwellinghouses' aforesaid or from the relationship aforesaid.

    This proviso deals with the information which should be given to the ratepayer by the valuation officer if the officer intends to adduce certain evidence which the Bill now says is admissible evidence in valuation proceedings. It also obliges the ratepayer, if he intends to adduce that kind of evidence, to notify the valuation officer. It is a case of mutual disclosure of evidence before the parties reach the court.
    In our discussions on the last Amendment we saw examples of the kind of evidence with which the ratepayer may be faced. In a straightforward case the evidence will be about houses of the same size in the same street as that the subject of the dispute. Under the Bill the ratepayer may be faced on the day of the hearing of his case with a great deal of evidence selected from facts to which he has no access. I recognise that to give that evidence the valuation officer will have to give notice stating the property to which he intends to refer. If the ratepayer has read the right sections of the General Rate Act, 1967, which he probably will not have done, unless he has professional advice, for which he can obtain no legal aid, he will know that he can demand that the valuation officer should produce the returns relating to that property for his inspection. He may receive that notice from the valuation office 14 days before the hearing and then must busy himself going to the valuation officer's premises and looking at these returns to see what information they give him about the sort of evidence which the officer intends to adduce at the proceedings.
    All that those returns will include is, according to Section 82(1)—
    "such particulars as may be reasonably required for the purpose of enabling him"—
    that is, the valuation officer—
    "to compile the list."
    They are returns which the officer has required the householder to sign at the time the last list was being prepared, which, as we have not kept to quinquennial periods, may be ten years out of date, or they may be
    "such particulars as may be reasonably required for the purpose of enabling him to decide whether or not to make or, as the case may be, to object to the proposal."

    439
    The valuation officer may have got returns fairly recently in connection perhaps with that case or some other case before him. The returns may be up-to-date. They may be many years old. They could be supplemented by evidence from the valuation officer or any witnesses he cares to call, evidence which will not appear on the returns and which will not be known to the ratepayer before he hears it in court, evidence such as the present rents, which may or may not be given in the returns which he has inspected, and the kind of dwelling-house. What the returns will not show is the multiplier which the valuation officer will use by reference to some previous valuation list. The returns will show only a fraction of the valuation officer's case which the ratepayer has to meet when he gets to court.
    What we seek in the Amendment is to oblige any party adducing any kind of evidence which he will be able to adduce when the Bill becomes law to inform the other party of that evidence. If he intends to bring evidence from another area, he should say why it is necessary to do so, why there is no comparable evidence within a short distance of the property the subject of the dispute. If he is to use secondary evidence of that sort from a distance there must be a reason which he will have to put before the valuation panel. He should inform the ratepayer of that reason, so that the ratepayer can be prepared to argue the point if necessary during the valuation proceedings.
    The valuation officer should state clearly the category into which his alleged comparable dwellings falls. I have set out in paragraph (ii) of the Amendment different kinds of dwelling-houses as I believe they are categorised by valuation officers. If the valuation officer or the ratepayer wishes to compare a bungalow with a maisonette or town house he should state clearly in what category the comparable dwelling-house falls.
    He should also make it quite clear, if he is to compare rents, what type of rent applies to the house which he intends to compare with that one at issue. The forms now being sent out by valuation officers to householders, which are the returns about which I shall speak, the
    440
    returns which the valuation officers are collecting in order to prepare the 1973 list, ask the householder to say what rent he pays if he is a tenant. It does not ask him to say whether that is a controlled rent, regulated rent or entirely free rent. If that rent is to be the basis of fixing the rateable value on some other property, at some distance away, what on earth is the use of knowing that the rent is just a certain figure? One must know whether it is a controlled rent based on 1939 values, a regulated rent, which disregards scarcity values, or a free rent, which is probably the right rental value for the property.
    So if the ratepayer examines the returns he will not get real information about the rent. He will be given a figure for rent, but will not know what kind of rent that is or how he should compare it in valuing that property, and from that property valuing his own. The additional information which would be given before the hearing is that concerning the formula which is to be applied in order to compare like with like—not only the formula but the basic facts from which that formula is derived.
    1.15 a.m.
    The ratepayer may be faced with an argument from the valuation officer that on the current valuation list there are properties which are rated at EX and that since the valuation list was compiled rents in the areas have gone up to £Y. The valuation officer may say to him, "I have not valued your house but I have applied that ratio which I have found to be existing in this area. I have not taken your house on separate valuation but have applied a certain formula."
    If the ratepayer is going to be presented with that sort of thing at the hearing without warning of the figures beforehand or of the basis on which that formula or the multiplier has been concocted, and without any idea of what the formula is or the multiplier is, how can he argue his case? He may ask for an adjournment in order to get professional advice, but I cannot see the ordinary, awe-stricken householder at valuation proceedings, unrepresented, trying to argue his case in person reacting in that way. Faced with the statement, "I have applied the multiplier based on the last valuation list for the area. I have taken twenty houses where the annual value is

    441
    so-muck, and rents are so-much, and have applied that formula to your house", he would be so shocked that he would not know whether he should ask for an adjournment. Indeed, if he said, "Can I go away and think about it?" what would be the good? He is not given the real information and he would need great professional advice to know it.
    Having argued that the valuation officer should inform the ratepayer throughout these examples, I say that what is sauce for the goose is sauce for the gander. If the ratepayer intends to adduce that kind of evidence himself, he should give the valuation officer notice of it beforehand in the same way as he would require the valuation officer to give notice to him. The Minister of State should give serious thought to this.
    I can imagine the difficulties in which a valuation officer might be placed when fighting the owner of many properties, for example, some of the flat-owning companies in London, who would be able to adduce a mass of evidence of this sort. Would the valuation officer be pleased to meet that sort of evidence without warning in the valuation court? It is only fair to both sides that, now that we have altered the procedure on which formula or multiplier evidence can be produced, and are allowing evidence to be produced of property from a distance, as it were, we should say that, at least 28 days before the valuation proceedings start, the parties should disclose their cases to one another.
    In any civil action, the plaintiff delivers hi; statement of claim, the defendant delivers his defence, and the parties know what each other's case is. If they do not "buy" these two documents, they ask each other for further and better particulars, and one has the reply to the defence, counterclaims and so on before one goes into court. The chance of surprise is reduced to the minimum. One knows the case one has to face.
    But in valuation proceedings, under this procedure the ratepayer certainly will be faced with surprise when he gets into the court. I ask the Minister to remember that the very great proportion of ratepayers appearing in valuation proceedings, because there is no legal aid for them, will be appearing in person without professional advice. We should not put them to the disadvantage
    442
    of having to meet a very complicated case on the spur of the moment.
    Mr. Maddan: I warmly support the Amendment, particularly for a reason which my hon. Friend the Member for Crosby (Mr. Graham Page) did not give.
    The point is that the matter would be likely to go to the valuation court only if there had been personal negotiations between the property owner involved and the valuation officer in an attempt to resolve the difficulties privately. If those negotiations are to be likely to lead to a private settlement, so that the matter is kept out of the court as far as possible, it is better for the valuation officer to know that he will not be able to spring on the property owner a case in the valuation court which will take him by surprise.
    For that additional reason the Amendment will be very valuable. In one sense it may require more work of a valuation officer before a case goes to court but, human nature being what it is, it will help to keep cases out of court. The endeavour must be to try to reach a settlement wherever possible and to use the court only as the last resort. My hon. Friend has listed all the germane considerations which could arise in the court. This is a most useful Amendment and I trust that the Minister will accept it.
    Mr. Allason: Parliament has a duty to ensure that equity follows our actions. I and other hon. Members have misgivings about the effect of the Bill, first because of comparisons with different types of dwelling. My hon. Friend the Member for the City of Chester (Mr. Temple) has listed them. If the ratepayer finds that his type of house will be compared with an entirely different type we must go out of our way to ensure that he is fully protected. We are also worried about comparisons at a distance. A ratepayer may have to go 20 or 30 miles to view a house with which his house is being compared. Are we satisfied that there are adequate safeguards?
    What about the effect of the general multiplier, referred to technically as the relationship between rent and gross value? We know that it is a general multiplier which will be given on tablets of stone to the valuers who are to apply it. It is a little suspicious that they are to use a

    443
    computer for the purpose. We must ensure that there is equity in our actions. Are we satisfied that the Bill will ensure equity to ratepayers and others if the Amendment is not accepted?
    We have to consider the point about fairness to the ratepayer. He will be in considerable difficulty unless he receives the information listed here. If the Minister can tell us that every one of these items will automatically happen I will be fascinated. I suspect that he cannot lay his hand on his heart and say this is so.
    There is also the question of fairness to the valuation officer. My hon. Friend the Member for the City of Chester has explained what could happen if he comes up against a really hot surveyor who blinds him with science and produces all sorts of cases of which the valuation officer has not heard. I would put the other case, which is that the valuation officer wants to be fair to the ratepayer. He will find it difficult unless this information has been given in advance.
    Then there is the valuation panel, which is deeply concerned to ensure that justice is done to the ratepayer, particularly the unrepresented ratepayer, who is rather at a loss as to how he goes about this. He is up against experts. The panel will wish to ensure that his case is presented in the best possible way and his difficulties understood fully. Unless the items contained in the Amendment are within the knowledge of the ratepayer, valuation officer and the valuation panel, justice will not be done. It is essential that this Amendment be included in the Bill.
    Mr. Denis Howell: It is, naturally, disappointing to find that every time I try to be accommodating and meet the wishes of hon. Gentlemen opposite, they either describe it as a victory for the Opposition, or, as with the hon. Member for Hemel Hempstead (Mr. Allason), I am accused of producing something to which I never referred in Committee. If the hon. Gentleman looks at column 50 of the Committee proceedings he will find that I gave the undertaking to go away and think again about that. I returned and produced—
    Mr. Speaker: Order. Let us get back to this debate.
    Mr. Howell: I am trying to. I have tried to honour a commitment I gave in Committee by producing Amendment No. 5. We have tried to meet the commitment, as far as we could, to ensure that the basic facts should be known to every occupier. We have done that in the only practicable form.
    I think that the House will reach the conclusion that the form of words in this Amendment is not practicable or desirable. I am advised that this Amendment would be a completely new departure in that it not only seeks to give the occupier a right to know the facts, but it goes further and seeks to give him advance knowledge of the arguments which would be adduced from the facts. The question about the arguments is one for the valuation court.
    1.30 a.m.
    The hon. Member for Crosby (Mr. Graham Page) fairly stated that they were trying to do something which applied both ways: that the obligation would be not only on the valuation officer, but also upon the occupier. This is one reason for turning down the Amendment. In a sense it would take away the rights of many occupiers. It would drown many people in red tape, because it would become obligatory in every case to go into the excess of detail for which the Amendment calls. The appellant in many cases would find himself drowned in an ocean of unnecessary detail and red tape, because most of the information which the hon. Gentleman suggests should be made available obligatorily can be and normally is obtained in the friendly and informal discussions which go on between householders and valuation officers. Therefore, I do not think that it is necessary to write into the Bill all this mass of detail which is normally available.
    If the valuation officers had to provide all this detailed information in every case it would cause intolerable delays in dealing with cases and would create a considerable increase in public expense. It is not my case that we should not increase public expense if it produces a greater degree of equity in these matters. My case is that it will not necessarily produce a greater degree of equity, because all the information is normally available in the transactions between the

    445
    occupier and the valuation officer. Therefore, to say that the valuation officer has to go into this detail in writing in every case seems an unwise move.
    The Government's view is that if there had to be this exchange of information in every conceivable case that was to be argued before the valuation court, it would destroy the informality of the proceednigs in that court, which, time and again, has been recognised and acknowledged to be one of the most valuable parts of those proceedings. If hon. Gentlemen look at the proceedings of the Land Tribunal, they will see that on many occasions it pays tribute to the value of the informality of the valuation court proceedings.
    For these reasons, we very much hope that the House will prefer Government Amendment No. 5, which comes next, rather than the more detailed procedure proposed in this Amendment.
    Mr. Temple: I am disappointed by the Minister of State's reply. I make no comment on Government Amendment No. 5, because that will come under discussion later.
    My hon. Friend the Member for Crosby (Mr. Graham Page) did a magnificent job in explaining the Amendment, and I think it must be clear to the House.
    The Minister of State has just said that the Amendment is a new departure. That is true. But there are at least three new departures contained within the Bill, all of which will be helped by acceptance of the Amendment.
    The first new departure is this amazing amalgamation of all types of different hereditaments, now including caravans, That is one reason why we believe that a case could be stated, or adduced, to use the words of the Amendment, by either party in the valuation court, and I believe that it would be helpful for that reason. Another reason why we think the Amendment is necessary is that the areas are extended to quite an extent. At the moment there is a limited area for comparability purposes of various hereditaments.
    But there is a third and overriding reason, and this was admitted by the Minister of State when he said:
    "But the use of the multiplier must be available to the valuation officer…"—
    446
    [OFFICIAL REPORT, Standing Committee E, 20th November, 1969; c. 31.]
    An entirely new dimension has been imported into the valuation of properties, and it will be observed that the Amendment is directed to the calculations made and the multiplier or other formula.
    During the Second Reading debate I referred to the fact that we did not want a form and formula job, and about the use of the multiplier I said:
    "If the idea is to enable the Inland Revenue to use a multiplier in an office remote from the site, the Bill will be a disaster."—[OFFICIAL REPORT, 10th November, 1969; Vol. 791, c. 46.]
    That is exactly what will happen, because we had a startling admission from the Minister. It electrified the Committee when it was made, and I congratulate the right hon. Gentleman on coming clean on this matter, but this new dimension has been imported.
    I believe that the Amendment is very important because, whereas the normal ratepayer may be able to judge the value of properties in adjacent areas of which he has knowledge, only the Inland Revenue will know what particular multiplier it has used. I must explain this use of the multiplier, because it is germane to the Amendment. It has been said that flats are over-valued, and that houses are under-valued relative to flats. If the multiplier was a factor of two—in other words, that rentals had gone up to approximately double in the 10 years between 1963 and 1973—the multiplier for houses would be taken as a factor of two. But if it is judged—and it always has been—that flats are over-assessed at the moment, one might say that the multiplier for flats should be 1·8.
    Within all these categories there are an enormous number of different types of hereditament. These are now being brought together. There will, of course, be an enormous number of different factor multipliers, but only the Inland Revenue will have the advantage of knowing the exact multiplier which it has used in respect of each class of hereditament. For that reason, and for that reason alone, it is imperative, if we are to have fairness and a reasonably relaxed atmosphere without a degree of professionalism, which I know is not wanted by the hon. Member for the Hartlepools (Mr. Leadbitter), in these valuation courts, that the ratepayer

    447
    should have the advantage of knowing the multiplier used in the class in question.
    I cannot see that the Inland Revenue would have any reason for not disclosing this matter, but unless it is disclosed in advance the whole procedure before a valuation court will be more or less vitiated from the ratepayer's point of view if, at the last moment, he is suddenly confronted with this use of a formula. He will have no idea how to compare his dwelling-house with other dwellings in respect of which a different multiplier, or a different formula basis, has been used. Again I do not see any reason why the appellant in a valuation court should not have the address and description of the other accommodation with which his hereditament is being compared. It seems only reasonable, and something which one would have thought the Inland Revenue would have been glad to list in advance, to give a chance to the ratepayer.
    We on this side feel that we have made an impact, but we also feel, as do certain hon. Members on the Government side, that the ratepayer wants more than a fair chance against all the professionals who will be facing him on these occasions. Domestic ratepayers are, for the most part, small people and do not want

    Division No. 49.]

    AYES

    [1.43 a.m.

    Nil

    TELLERS FOR THE AYES:

    Mr. James Allason and Mr. Martin Maddan

    NOES

    Ashton, Joe (Bassetlaw)

    Harper, Joseph

    Morris, Charles R. (Openshaw)

    Buchan, Norman

    Harrison, Walter (Wakefield)

    Murray, Albert

    Concannon, J. D.

    Howarth, Robert (Bolton, E.)

    Norwood, Christopher

    Davies, Dr. Ernest (Stretford)

    Howell, Denis (Small Heath)

    O'Halloran, Michael

    Dobson, Ray

    Johnson, Carol (Lewisham, S.)

    Peart, Rt. Hn. Fred

    Dunnett Jack

    Jones, T. Alec (Rhondda, west)

    Perry, George H. (Nottingham, S.)

    Ellis, John

    Judd, Frank

    Skeffington, Arthur

    English, Michael

    Latham, Arthur

    Urwin, T. W.

    Fernyhough, E.

    Leadbitter, Ted

    Wainwright, Edwin (Dearne Valley)

    Ford, Ben

    McBride, Neil

    Walker, Harold (Doncaster)

    Freeson, Reginald

    McGuire, Michael

    White, Mrs. Eirene

    Golding, John

    McNamara, J. Kevin

    Williams, Alan (Swansea, W.)

    Griffiths, Eddie (Brightside)

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

    Hamilton, James (Bothwell)

    Mapp, Charles

    TELLERS FOR THE NOES:

    Hamling, William

    Mellish, Rt. Hn. Robert

    Mr. Ernest Armstrong and

    Hannan, William

    Millan, Bruce

    Mr. Ioan L. Evans.

    Mr. Denis Howell: I beg to move Amendment No. 5, in page 1, line 25, at end insert:
    (2) In section 83 of the said Act of 1967, after subsection (3) (which restricts the use
    to go to the expense of employing rating surveyors. It seems only reasonable that rather more evidence should be available to them if they request it some 28 days before the hearing.
    I do not see why the cards cannot be put face up on the table. That is what the Amendment is about. We do not want mysteries or Departments browbeating the poor ratepayer. This system would be much better, and I should have thought that the Inland Revenue would welcome it. I do not see how it would add an enormous amount to the expense. Anyone preparing a case must know what evidence he will adduce, on either side, so why not have the cards face up on the table?
    We have an important extra safeguard here for ratepayers. It should be welcomed by the Government, and I cannot for the life of me understand why they are not accepting it.
    This is our case. We have done well up to date but we would like to record a third success in our attempt to help the ratepayer in what I know are his difficulties. I hope the Amendment will prove acceptable.
    Question put, That the Amendment be made:—
    The House divided: Ayes 0, Noes 44.
    of certain returns as evidence by or on behalf of the valuation officer) there shall be inserted the following subsection:—
    '(3A) Subsection (3) of this section shall apply to any gross values taken into account

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    by the valuation officer by virtue of section 19(2A)(b) of this Act as it applies to returns to which this section applies, and—

    (a) the reference in paragraph (b) of the said subsection (3) to the returns there men. Toned shall be construed—

    (i) in the application of that paragraph to a return relating to a hereditament in a rating area other than that for which the valuation officer was appointed, as a reference to a copy of that return certified by a valuation officer to be a true copy;

    (ii) in the application of that paragraph to any of the gross values taken into account as aforesaid, as a reference to such a copy of the relevant part of the relevant valuation list as is referred to in section 84 of this Act;

    (b) subsection (2) of this section shall apply to such a copy of a return as is referred to in paragraph (a)(i) of this subsection as it would apply to the return itself'.

    (3) In section 84 of the said Act of 1967 (which relates to the proof of the contents of a valuation list as for the time being in force) the words 'as for the time being in force' are hereby repealed.
    The Division on the last Amendment was the first occasion in my experience when I have played extra time in order to produce such a result.
    The present Amendment is further evidence of the Government's wish to be helpful and accommodating and to honour the commitments which I made in Committee. The basis of the commitment in this case, given in response to the suggestion made by two of my hon. Friends, in particular, was that we should make it possible for a ratepayer to have the facts which would be put in evidence and from which he could conclude what arguments were likely to be adduced.
    I was asked that the facts should be made available to the ratepayer, if requested. In fact, the Amendment goes further. The facts will be made available not just upon request but as an obligation upon the valuation officer. Where a valuation officer proposes to use rental evidence or the relationship between rents and assessments, he will be required to disclose the facts, the rent return and the assessment. I hope that the House will regard that as a very fair means of meeting the undertaking.
    Under this procedure, the occupier will have 14 days' notice, which seems to us to be a reasonable time, and for his part
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    the ratepayer can have inspection of the form by giving 24 hours' notice.
    Mr. Graham Page: Although this is a concession, after pressure in Committee, it is not so great a concession as the Minister of State suggests. He said that it is to let the ratepayer know the facts. He is only bringing this into line with Scottish practice, anyway. There is some warning to the ratepayer when he is told by the valuation officer what properties are to be adduced in evidence, but he is not given a statement about those properties. He is merely told, "Come and look at the returns". He is not even given the returns or copies of them.
    The return will tell the ratepayer nothing but who happened to be tenant of the property, perhaps ten years ago. It may be up to date; it may not. It will tell him the figure for rent but not the kind of rent. He will have only a fraction of the valuation officer's case from looking at the returns.
    Then there is the time factor. The valuation officer can give this notice 14 days before the hearing of the valuation proceedings. It may be a notice about a property in a contiguous valuation panel area perhaps 10 or 20 miles away. The ratepayer has to go and see the property, or send a professional man to see it. Having regard to the shortage of professional valuers—and the purpose of the Bill is to obviate that shortage—he is unlikely to get a professional man to go and see the property at that short notice.
    He looks at the property in the neighbourhood of the property about which he has been given notice and he has then to decide whether he ought to ask the valuation officer to produce returns of any other properties down the street or in any other neighbourhood. He can ask the valuation officer to do that only after he has received a notice of this sort from the valuation officer himself.
    If the ratepayer wishes to adduce evidence by producing returns about the property, he cannot do so unless the valuation officer has given notice that he himself intends to produce returns about some other property. This is an anomaly, and that is why I say that the Amendment is insufficient and that with the new procedure which we are producing Section 83 should have been much more amended.

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    A ratepayer may not often be put at this disadvantage, but when it happens there may be a grave injustice to him. Section 83 of the General Rate Act, 1967, is not sufficient to cope with the new procedure which will be the law when the Bill is passed. The new rating practice which will evolve, the new rating law and the new kinds of valuation, valuation by multiplier, by reference to old valuation lists and multiplying by this new procedure, warrant a complete revision of Section 83, a section which obliges the valuation officer to produce information, and I am disappointed that that section has not been better amended by the Amendment.
    Mr. Michael English: Would the hon. Gentleman care to explain why he did not put down an Amendment to the Amendment?
    Mr. Page: The hon. Gentleman cannot have been in the Chamber during our discussion of the last Amendment, which was my alternative to this.
    Amendment agreed to.
    Bill read the Third time and passed.

LOCAL AUTHORITIES (GOODS AND SERVICES) BILL
As amended (in the Standing Committee), considered.
LOCAL AUTHORITIES (GOODS AND SERVICES) BILL
  New Clause 1

    ANNUAL REPORT
    The Ministers designated in section 1(5) of this Act shall keep under review the operation by local authorities and public bodies of the powers given to them under this Act and shall lay before Parliament annually a general report upon such operation, its involvement of municipal trading and work by direct labour and its employment of persons with skill and expertise therein.—[Mr. Graham Page.]
    Brought up, and read the First time.
    Mr. Graham Page: I beg to move, That the Clause be read a Second time.
    Again I protest at a Bill of this importance coming on in the early hours of the morning. The last Bill was said to
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    affect at least 20 million people and we were called upon to debate it between midnight and two in the morning. This Bill affects every local authority in the land and through them every ratepayer. This is not the right time to debate a Bill of this importance.
    2.0 a.m.
    However, I move the new Clause to require the Minister—and who the Minister is, is designated in the Bill—to put an annual report before Parliament of the working of the Bill when it becomes an Act, and of the operation of the powers given to local authorities under the Bill.
    As the Joint Parliamentary Secretary said in the Second Reading debate the Government and the local authorities accepted the recommendation of the Burton Committee that there should be early legislation enabling local authorities to co-operate in bulk purchasing. As a result, the Bill is now before the House. But the implementation of that recommendation raised problems and doubts which the Joint Parliamentary Secretary mentioned in his Second Reading speech and which we have since debated very thoroughly in Committee. The hon. Gentleman said:
    "To allay any other fears, I should add that this is not a greater charter for the extension of municipal trading. I should not mind making the case for that again on an appropriate Measure, but all that the present Bill does is to enable services which local authorities are now empowered to provide to be shared among the categories of recipient which I have mentioned."—[OFFICIAL REPORT, 24th November, 1969; Vol. 792, c. 48.]
    There he dealt with one of the doubts which he admitted had been raised in the minds of hon. and right hon. Members and the public, namely, the question of an extension of municipal trading.
    A little before, the Parliamentary Secretary dealt with another doubt. He said:
    "It will not be possible for a local authority building department, or, to take the example in its worst form, the form which might alarm some people, a direct labour department, to start building new housing or for a hospital board, or something of that kind. I dare say that some of my hon. Friends will regret that that is so, but what we are doing at this stage in this minor Measure is what the local authorities wanted, what was recommended, and what the study group thought would be wise."—[OFFICIAL REPORT, 24th November, 1969; Vol. 792, c. 48.]

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    In that he dispelled the fear that the Bill was intended to extend direct labour work by local authorities.
    Also the hon. Gentleman referred to the other concern by hon. Members, namely, whether there would be sufficient expertise to carry out the difficult job of bulk purchase by local authorities and the distribution of the goods, and he said:
    "As the review body report points out, savings can be achieved not only by purchasing in bulk but as a result of purchasing by those who are specialists. That is almost equally imrortant."—[OFFICIAL. REPORT, 24th November, 1969; Vol. 792, c. 43.]
    He came back to it again in his winding up speech, because a number of hon. Members mentioned it. He said that
    "bulk purchase will yield its dividends only if it is in the hands of an expert organisation, or expert personnel… I hope that as a result of this Measure…departments and experts will be able to provide their expertise over a wider field."—[OFFICIAL REPORT, 24th November, 1969; Vol. 792, c. 110.]
    Those three points are basic to this Bill. It is not intended as a Bill to extend municipal trading. It is not intended as a Bill to extend direct labour. It is intended that the work should be carried out by experts, so that the ratepayers have some confidence in the operations being carried out by the local authorities which desire to take powers under this Bill.
    My hon. Friend the Member for Worcester (Mr. Peter Walker) referred to two of these points when he said:
    "The Parliamentary Secretary has endeavoured to make clear two of the non-objects of the Bill. First, it is not to extend municipal trading. Secondly, it is not to allow an extension of activities by direct works departments in new building. We welcome that assurance, and we shall move Amendments in Committee to give what we regard as necessary greater certainty on that point."—[OFFICIAL REPORT, 24th November, 1969; Vol. 792, c. 49.]
    We moved Amendments in Committee in an endeavour to write these matters into the Bill. I am not unsympathetic with the argument of the Parliamentary Secretary against such a course of writing these items into the Measure as, in some way, statutory obligations on local authorities.
    The hon. Gentleman said that we should not be too grandmotherly to local authorities or try to give them too precise statutory directives on the management of their affairs. However, we are here giving substantial new powers to local authorities, and Parliament will, through the appropriate Minister, wish to be kept
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    informed on the operation of those powers.
    To try to keep track of this sort of operation by letters to the Minister, by way of Parliamentary Questions or even by Adjournment debates is too piecemeal. We do not get the full picture by those means. We may ask Questions about the effect of these operations in our constituencies and so on, but if the Minister had to make a formal report each year—I would not mind if it was bi-annually, if that were thought more appropriate or if less work would be involved—hon. Members could decide, from reading that report, if the operations were going well or badly and if amendments to the powers should be made.
    The new Clause would, therefore, make this not a statutory obligation on local authorities—I said that I was sympathetic to the Parliamentary Secretary's argument—but a statutory obligation on the Minister, who would be obliged to give Parliament this information. Mainly it would be, as the new Clause suggests
    "a general report upon such operation…"
    but in particular it would be a report directed to the three points that have caused hon. Members considerable concern during the passage of the Bill; that is, the questions of municipal trading, of direct labour and of skilled personnel.
    I particularly stress the last one. We must keep under review the whole question of the supply of expert and skilled personnel to deal with these operations. The success of the whole project will depend on the people who operate it. There may not be a sufficient number of trained people for this task, and the Government will have to see that there is training to enable people to run this operation.
    Our qualified support for the Bill is based on the assurances that have been given by the Government over these three points, but we want those assurances to be statutory by there being an obligation on the Minister.
    Mr. Carol Johnson: I take the opportunity of discussion of this new Clause to raise a matter of some importance to local government employees likely to be affected by the Bill.
    The mover of this Motion made clear that the new Clause deals by implication

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    with the work of staffs of local authorities in carrying out the provisions of the Bill and new powers conferred on local authorities. It is rather strange that no reference appears to have been made during the passage of the Bill to its likely effect on staffs. I therefore ask my hon. Friend the Minister of State, Wales, to give some indication of what she estimates will be the effect of the Bill on staffs. The Explanatory Memorandum of the Bill when first introduced stated that it was not expected to produce any increase in local authority staffs and in the long run it should produce a reduction. If so it is rather surprising that the usual compensation Clauses to deal with redundant staff have not been included in the Bill. I believe that a new Clause was tabled in Committee but it was ruled out of order.
    In view of all these circumstances and as I am informed that there is some anxiety among local authority staffs about the effect of the Bill, it is important that my hon. Friend should take the opportunity—the last one—to make clear whether or not there is any possibility of a significant reduction in staffs as a result of the Bill. If there is, she should give some assurance—
    Mr. Deputy Speaker (Mr. Harry Gourlay): Order. The hon. Member is going rather wide of the new Clause. I hope that he will confine his remarks to it; otherwise the Minister will not be able to reply to his remarks.
    Mr. Johnson: The Clause asks that an annual report should be submitted
    "by local authorities and public bodies of the powers given to them under this Act and shall lay before Parliament annually a general report upon such operation, its involvement of municipal trading and work by direct labour and its employment of persons with skill and expertise therein."
    This applies to the people about whom I am speaking. I hope that my hon. Friend will be able to give an assurance that if this should lead to redundancy she would regard it as her responsibility to see that their position is adequately protected.
    Mr. Peter Emery: We regret that the hon. Member for Bethnal Green (Mr. Hilton) is not able to be with us tonight. Because of illness he is not able to be present. I know how much
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    he has had to do with this Bill in its earlier stages. Credit should be paid to him for all the work he has done. We are sorry that he is not able to participate in this final stage on something on which he has worked for many years.
    I am not so worried about an annual report as I am about municipal trading and direct labour. I hope that the Bill will not lead to any major or specific increases in this field. I do not see any reason why it should. It is not intended for that purpose although some hon. Friends may be over-nervous about that aspect. However, I believe there is something to be said for asking the Minister whether he can review progress made under the Bill in achieving economies.
    There will be some resentment among some ordinary plain Conservative councils which do not want to change and do not see the benefits which the Minister will urge in circulars suggesting that they should combine and use more advanced methods for procurement and supplies. If in the first few years the Minister is able to review the working of the Bill when enacted and some of the benefits secured under it, it will persuade more local authorities to accept the Act. It has been reported to me that the A.M.C. already thinks that perhaps it went too far in the support it gave to the Bill. This is a shame. I urge the Minister to consider this matter and use whatever influence she can to ensure that there is no retrenchment.
    2.15 a.m.
    An annual report by the Minister to Parliament would enable the public to see how Government service supplies departments were saving money and what they were achieving for the taxpayer. It would not be a major task. It would not involve many man-hours. I urge the Minister in a non-partisan manner that an annual report would be helpful. She may say that more thought must be devoted to the matter and that something might be done in another place. If that is her attitude, I shall be happy, but I believe that there is something to be said for the view that an annual report would help in securing greater acceptance of the Bill when enacted and in encouraging a greater number of local authorities to use these powers, thereby ensuring greater efficiency in local government procurement.
    The Minister of State, Welsh Office (Mrs. Eirene White): I thank the hon. Member for Honiton (Mr. Emery) for his reference to my hon. Friend the Member for Bethnal Green (Mr. Hilton), whose absence from the closing stages of our debates on a Measure which he, in effect, initiated we all regret.
    The hon. Member for Crosby (Mr. Graham Page) made what I rather hope might be his Third Reading speech in advance.
    Mr. Graham Page: There can be no Third Reading debate.
    Mrs. White: I do not suppose the hon. Member will be surprised when I say that we are not particularly enthusiastic about the Clause. As the hon. Gentleman explained with great clarity, the Bill is in a sense a minor one. It does not extend the existing powers or functions of local authorities. It merely enables them with greater freedom to co-operate will one another in the interests, as we hope and believe, of economy and efficiency.
    If we took the Clause fully and literally in all its aspects, the fears of my hon. Friend the Member for Lewisham, South (Mr. Carol Johnson) about redundancy would be groundless—quite the contrary. Even if an annual report to Parliament was not so detailed as to give particulars of what little jobs of maintenance were performed by direct labour or what purchases of tea or milk were made for the sale of refreshments to the public, it is clear that a considerable number of people would have to be employed. The information would have to be sorted and collated if a proper review based on statistical evidence were to be presented. Without that basis, I do not see how one could responsibly report to the House, particularly in this matter.
    I do not feel that a Measure of this kind really calls for a report of the nature suggested in the new Clause. I do not want to be misunderstood about this. I agree that it may well be of value for the Departments concerned to keep an eye on how this works out in practice, and particularly, as the hon. Member for Honiton (Mr. Emery) emphasised, how far the special objects of the Bill are being achieved; namely in showing that we obtain the benefits of more modern methods of procurement, bulk purchase,
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    and using specialists to obtain various supplies.
    We would be very sympathetic to a general obligation to keep an eye on it. That is very different from a statutory obligation to make an annual report. We would certainly try to meet the desires of the House to keep the working of the Measure under a general review, and, in particular, if an occasion arose perhaps an Adjournment debate would be a very suitable opportunity after a year or two's working of the Act to ventilate such a matter. We would certainly keep that in mind.
    My hon. Friend raised the matter of the reference to staff in the original Explanatory Memorandum. I am sure that he will not misunderstand me if I say that the general obligation now that when legislation is introduced one must make a manpower estimate as well as a financial estimate sometimes perhaps strays into the realm of pious hope. It seems to me that this is a fairly cautious suggestion that in the long run we should achieve some reduction in local authority staffs, but I am assured that many local authorities, far from being likely to have redundant staff, will have the difficulty of recruiting suitable, adequate, experienced and well-trained staff for the purposes suggested in the Bill.
    Whereas it is probable that in the long run local authorities, and perhaps the smaller authorities in particular, may require fewer people to deal with these matters, any such reduction is unlikely to be immediate or to cause apprehension. We think that it can be met in any case by normal wastage, and we do not believe that any situation is likely to arise in which the sort of arrangements suggested by my hon. Friend would be necessary. I hope that he and those whose interests he very properly draws to the attention of the House will feel that there is really no cause for alarm. We certainly do not think that there will be any need to be concerned about this.
    For the reasons I have given, while we have a certain sympathy with the suggestions made, we cannot recommend that the House should accept the new Clause.
    Dr. M. P. Winstanley: Can the Minister go a little further into the difficulties she outlined in preparing a report of this kind? I am sure that the House appreciates her arguments about

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    a detailed report. But much of the information is already available. What is wanted is to have it in tabulated form, aggregated between all the authorities. Would she be prepared to bring together all the information now collected by individual authorities and add it all up for Members, so that we do not have to do it for ourselves?
    Mrs. White: The hon. Gentleman must realise that it is not just a case of general information about direct labour, for example, or municipal trading as affected by the Bill. It would mean that separate sets of statistics would have to be prepared by every local authority which undertook any of the activities permitted by the Bill. That would be a pointless exercise unless the statistics were studied, collated and the rest. One can collect statistics for the sake of collecting them. They are no use unless they are analysed and explained. Since the Bill does not extend the functions of the local authorities, I repeat that the Government do not think that the game is worth the candle.
    Question put and negatived.
    Mr. Deputy Speaker: In announcing Mr. Speaker's final selection of Amendments, it would help the House if I described the way in which I understand the Government, with the Opposition's agreement, would wish their own Amendments to be grouped. The selection is as follows: Government Amendments Nos. 1, 2, 3 and 9, with which may be discussed the Amendment to Amendment No. 9; Government Amendment No. 12, with which may discussed Amendments Nos. 4, 5 and 10: Government Amendments Nos. 7 and 8, followed by Government Amendment No. 11, with which may be discussed the four Amendments offered to it.

  Clause 1

    SUPPLY OF GOODS AND SERVICES BY LOCAL AUTHORITIES
    The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington): I beg to move Amendment No. 1 in page 1, line 5, at beginning insert:
    "Subject to the provisions of this section,'.
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    It would, Mr. Deputy Speaker, be convenient to take Government Amendment No. 2, in page 1, line 6, at end insert:
    'all or any of the following purposes, that is to say—'.
    No. 3, in page 1, line 16, leave out 'and'. and No. 9, in page 2, line 38, at end add:
    (6) An order under the preceding subsection may contain such provisions as the person making it considers appropriate—

    (a) for restricting the agreements which may by virtue of the order be entered into by a public body;

    (b) without prejudice to the preceding paragraph, for securing the inclusion in any agreement made by virtue of the order of terms imposing restrictions.

    and the Opposition Amendment to No. 9, in line 6, at end add—
    'such an order shall contain provisions for securing the inclusion in any agreement made by virtue of the order of terms prohibiting the retailing to the public of the goods, materials and services to be supplied under the agreement'.
    Amendments Nos. 1, 2 and 3 are all drafting Amendments. Amendment No. 1 makes it clear that the power in subsection (1) of the Clause to enter into agreements is subject to the provisions of the rest of Clause 1 and, in particular, paves the way for the new subsection (6) proposed to be added by Amendment No. 9.
    Amendments Nos. 2 and 3 make it crystal clear, if it was not already clear, that when an order is proposed by the Minister, it does not have to cater for every one of the four purposes referred to in subsection (1)(a) to (d). It is a matter entirely for the parties concerned. They can take these paragraphs separately or together.
    Amendment No. 9 is more important. As the Clause stands, subsection (5) will enable Ministers to prescribe by Order public bodies other than those specifically mentioned in subsection (4) as bodies entitled to enter into agreements with local authorities. If Parliament approves this Order these public bodies will then be able to receive any or all of the goods or services set out in subsection (1)(a) to (d) without restriction.
    Some anxiety was expressed on Second Reading and in Committee about whether this was an extension of municipal trading or of direct sales to the public, although I had given a categorical assurance that it was not. We considered

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    this point because we do not want to breach our undertaking. An example quoted in Committee was that of the National Coal Board, which has a considerable builders' merchants retail organisation which sells direct to the public. It was suggested that there might be cases where a local authority supplied services or material to the board which would reach the public through the board's retail organisation. In order securely to prevent that sort of situation, Amendment No. 9 was tabled. However, in fact it is unlikely that the building organisation can be considered part of the N.C.B.
    But let us assume for a moment that that were so. Amendment No. 9 enables the Minister in an appropriate case to limit the activities to certain functions. While it might be highly desirable in other respects to prevent resale to the public, it would be absurd if a training establishment of the National Coal Board were not allowed to obtain text books from a local education authority. The Amendment enables the Minister, at his discretion, first, to limit the powers and, secondly, to insist on some limitation in the agreement between the partners.
    If it were known that a public body were supplying direct to the public, the Minister could ensure that there was a covenant in the agreement against these goods and services being supplied to the public body for the particular function of that public body. That goes a long way to meet objections raised by some hon. Members opposite. The covenant expressly prohibiting sales to the public would go a good deal further than the proposal by the hon. Member for Crosby, and I hope that our method will be accepted.
    2.30 a.m.
    Mr. Graham Page: The power in Clause 1(5) to designate almost any kind or body as a public body and, therefore, to authorise a local authority to sell almost anything to that body or to do any work or service for which it was obviously much too wide, and when it was criticised on Second Reading the Joint Parliamentary Secretary generously admitted that there might be ground for criticism. Wisely, in Amendment No. 9 the Minister seeks authority to limit the purchasing power of that public body and, therefore, the supplying power of
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    the local authority. It is a most ingenious way of meeting the anxieties—either by prohibiting an agreement as a whole or by insisting on certain restrictions being put in the agreement.
    Amendment No. 9 is permissive to the Minister. He may forbid an agreement or restrict it or he may put conditions in the agreement. But he is not obliged to do so. I submit that in one respect the action should be mandatory on the Minister—and that appears in the Amendment to Amendment No. 9 in the names of my hon. Friend the Member for Worcester (Mr. Peter Walker) and others and myself. In that respect we should like an obligation to be placed on the Minister to prohibit the retailing of the goods or services which the local authority supplies to a public body. I do not want to see a local authority supplying goods and services for re-sale. The Joint Parliamentary Secretary told us that it is not the Government's intention that the local authority should supply goods to public bodies for re-sale.
    The purpose of the Bill is mutual trading rather than municipal or public trading. It may be gilding the lily to ask for the Amendment to Amendment 9 but I feel that it should be set out in the Bill. The idea of the Bill can be set out in this way: let us say that Blankshire County Council says:
    "We buy a lot of tape machines for our typists, and you, Puddlecombe Development Corporation, use tape machines for your typists. If we buy ten times as many tape machines as we really want we shall get them at 25 per cent. less and we can supply you."
    I understand that to be the sort of purpose of the Bill and not that the Puddlecombe Development Corporation should set up in business selling tape machines. This is what we ought to say definitely in the Bill. For that reason we placed the Amendment to Amendment 9 on the Order Paper. With that Amendment, Amendment 9 would he extremely satisfactory and meet the anxiety which has been expressed.
    Mr. Emery: The method of operation in Amendment 9 is a clever way the Minister's officials have found to ensure that he can take certain action which he gave us an assurance in Committee he wanted to take, but about which we were not really clear. If he would look at column 67 in the Committee proceedings he will see that he confirmed that it was

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    not his intention, with the Clause requiring public authorities to be designated for purchasing, to allow a nationalised industry to be designated to become a chief buyer for other public bodies.
    I would like the Minister to repeat that assurance now. We were concerned in Committee about the possible situation whereby an authority which, by the powers given by the Chancellor, was able to avoid S.E.T., and certain matters within its jurisdiction, should be designated an authority to purchase for other bodies which did not get this exclusion. I have gone through the Committee proceedings and am not really clear of the answer. This was a bit of a "stumer" and we fully understand that the Minister was in some doubt. He said that he did not wish to allow tax evasion. It seems that the powers he is taking here would allow him to ensure that tax concessions applying to one organisation should not apply to a second body which might be designated the purchasing authority unless the receiving body already received these concessions.
    Because of their limiting factor, these powers would ensure that the Minister was able to deal with that matter. Will he, even at this pleasantly early hour in these salubrious surroundings, help the House on that point, because it is important? It might save it having to be raised in another place if the Minister can give the kind of assurances which I think he can, because these proposals are fairly reasonable.
    I turn now to the Amendment to Amendment No. 9. I understand and go along with the points in the Amendment. In most instances I cannot see why the Government should not accept it. There is nothing in it which is objectionable, other than the dispersal and sale of redundant stock. Whatever situation arises —and it is likely to arise with decimal coinage or something like that—there will be some redundant stock. In many cases the easiest way to dispose of it is to sell it to somebody else who will be able to use it. This could be described as retailing.
    I do not believe that it is my hon. Friend's view that there ought to be a limitation on any local authority getting the best possible price for any redundant
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    stock or material which it might have. I am not suggesting that there should be over-purchasing in order to obtain stock redundancy, which some suspicious people might suggest. I do not believe that this would happen. If the Amendment was accepted it might preclude genuinely redundant or old stock having to be sold to another public body when it might be sold to other consumers at a better price and be termed as retailing.
    I hope that the Minister will feel inclined to accept the Amendment to the Amendment—this is not a political matter—because the point about redundant stock is of material importance.
    Mr. Skeffington: The hon. Member for Crosby (Mr. Graham Page) would like to make the power mandatory in connection with direct sales to the public. I resisted this proposal before, and I resist it now on two grounds.
    First, there may be an enormous number of variations of agreements. An organisation which is already by definition not capable of being a "public body" has to be prescribed in an Order which must come before the House, and the House can decline to approve the Order if it thinks it ought to contain some restrictions on the agreements which should be made with that body. We believe that this matter must be left flexible and not made mandatory because of the variety of bodies involved.
    2.45 a.m.
    There is, however, a second point. If the hon. Gentleman's proposal was rigidly applied, we might inflict considerable harm on bodies which might benefit from these arrangements. It would be unfortunate if hospital management committees or hospital organisations which provide some kind of service to the public or to relatives who visit patients for payment were precluded from making arrangements for bulk purchase, or for the supply of services, which is what would happen if the hon. Gentleman's Amendment were accepted. One can think of innumerable cases of this kind. One example is a workshop for the blind, run by a public statutory body. It would be unfortunate if, because such a body tried to sell some of the products of these unfortunate people to pay for their welfare, it was precluded from enjoying

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    the economic advantages of the arrangements set out in the Bill. The same considerations apply to proposed arrangements for spastics, mentally handicapped people and so on.
    I hope that the hon. Gentleman will not press his Amendment, but we shall have to resist it if he does. There is the assurance that the matter will have to come before the House. The terms of the arrangements will be known. The Minister can be pressed to add to the Order if that is thought necessary. By leaving the Bill flexible we shall not harm a large number of public bodies who will be able to take advantage of the provisions cf the Bill.
    My answer to the first point raised by the hon. Member for Honiton (Mr. Emery) is that I thought I had given a firm assurance that the operation was not reversible. The supply comes from the bodies listed in the first part of the Bill, and the junior partners cannot act in a reverse way.
    On the question of S.E.T., I am not sure whether this could be the subject of a covenant or agreement, but I shall consider this and ensure that a suitable announcement is made. This is an extremely small factor of cost, but in the normal way some public bodies do not pay S.E.T., but I shall investigate this. One has to be careful when dealing with tax matters, and I should not like to say that these bodies will be covered. I should like to be assured about that.
    Mr. Emery: What we need from the Minister is an assurance that when a body comes before him to be designated a public body it shall not be so designated unless the tax benefits it receives are equal to the benefits already enjoyed when it does any purchasing. In other words, they must be treated in the same way, and those who are so designated must not get extra tax concessions. I am sure that that is right in principle, and I hope that we may have that assurance.
    Mr. Skeffington: I am sure that that is right in principle. My understanding is that any public body performing public functions under the Bill will be exempted, and, therefore, the point is covered. I shall, however, consider this again, because I should not want to mislead the House.
    Amendment agreed to.
    Further Amendments made: No. 2, in page I, line 6, at end insert:
    "all or any of the following purposes, that is to say—"
    No. 3, line 16, leave out 'and'—[Mr. Skeffington.
    Mrs. White: I beg to move Amendment No. 12, in page 2, line 1, leave out from 'in' to end of line 4 and insert:
    paragraphs (a) to (c) of the preceding subsection authorises a local authority—

    (a) to construct any buildings or works; or

    (b) to be supplied with any property or provided with any service except for the purposes of functions conferred on the authority otherwise than by this Act '.

    Mr. Deputy Speaker: With this we can discuss Amendments No. 4, in page 1, line 17, leave out paragraph (d).
    No. 5, in page 2, leave out lines 1 to 4 and insert:
    (2) Nothing in subsection (1) of this section shall authorize—

    (a) any local authority to carry out any building operations or works of civil engineering construction on behalf of a public body, or

    (b) a public body, which has been supplied by a local authority with any of the goods, materials, services, vehicles, plant, apparatus or persons employed in connection therewith to use any of the aforesaid goods, materials, services, vehicles, plant, apparatus or persons for the purpose of carrying out building operations or works of civil engineering construction on its own behalf and involving the use of persons directly employed by the public body whether or not such persons are normally employed by the public body wholly, mainly or partly for building or civil engineering work.

    No. 10, in line 39, at end insert:

    (a) authorising any local authority to supply goods, materials or services of a kind which would not be required in the exercise of the statutory functions of that local authority apart from that section;

    (b) authorising any local authority or any public body to acquire, goods, materials or services which are not required for the purpose of the statutory functions of that local authority or public body (as the case may be) apart from that section; or

    (c).

    Mrs. White: Our Amendment is in two parts. The first,
    "to construct any buildings or works",
    we have put down to meet a difficulty which arose in Committee and was of particular concern to the hon. Member for Poole (Mr. Murton).I gave an

    467
    undertaking at that time that, while we could not accept the Amendment the hon. Member moved, we would try to meet his point because it was not the intention that civil engineering should be included in the Bill any more than ordinary building.
    I pointed out then that there are various difficulties of definition, and we are advised that by far the simplest way of meeting this genuine point is to use the words in our Amendment. I am assured that they are in common currency and are understood and accepted by all concerned, and that, if anything, they go a little wider than the Amendment suggested by the hon. Member for Poole. I believe they cover the Amendment of the hon. Member for Maidstone (Mr. John Wells) about major landscaping and works of that kind. It is certainly intended to meet the point on which we gave the assurance.
    The second part of the Amendment deals with a different matter which also caused some concern, and which is referred to in Amendment 10. We believe that our Amendment is a full and adequate safeguard against any sort of abuse or extension of powers which have apparently caused some apprehension to hon. Members of the Opposition.
    I was much surprised to see on the Order Paper Amendment No. 10 in the name of the hon. Member for Crosby (Mr. Graham Page) and others, because when one looks at what the hon. Member said in Committee, he conceded the point that
    "it is desirous"
    —I think that should be "desirable"—
    "that the supplying party should be able to supply without any restriction on its powers "
    whereas Amendment No. 10 tries to impose some restriction.
    In any case, we want to make it abundantly clear by our Amendment that it is not the intention of the Bill to enable authorities to do anything they do not already have the power to do. We feel that this meets the situation perfectly adequately. The local authority is in any case bound, and, if it went beyond its proper powers, would find itself in trouble over its audit.
    Amendment No. 9 should cover any possible difficulty which might otherwise
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    have existed for a designated body which is not a local authority, and which is, therefore, not hound by Statute as to what it can do. It gives the Minister powers if it appears that any objectionable use might be made of the possibilities in this Bill. It does not appear to us that anything further is needed than this Amendment.
    The points touched on in the other Amendments are dealt with quite satisfactorily in subsection (2) of Clause 1 as it would be amended, and nothing further is required.
    Mr. Graham Page: As originally drafted, the Bill excluded what were termed "building operations ", and we had some discussion in Committee as to what this meant. It obviously did not exclude civil engineering works or—a subject which we discussed at some length —landscaping works. It did not exclude the provision of building materials and labour by one local authority for another so that that local authority might do the building in place of the first.
    The Amendment partially meets those cases. I hope that civil engineering works are excluded by the word "works". The Oxford Dictionary contains enormous numbers of definitions of this word, including "needlework" and "knittingwork". I hope that the Government have been doing their knitting. The word is frequently used to mean construction works, including building but including something far more. So that word has met our anxiety about exclusions.
    Second. Amendment No. 12 excludes supply of materials and labour for purposes ultra vires of the receiving local authority. That is so that the Bill does not give the receiving authority powers which it does not already have. That also is satisfactory as far as it goes. When I suggested in Committee that some such provision was necessary, I was thought to be a bit of an ass, but evidently advice has been received since then and I am no longer such an ass. Even so, the Amendment leaves gaps.
    First, it applies to a receiving local authority but not to a receiving public authority. If it was necessary to provide that the former should act within its statutory powers, I should have thought that the same provision was necessary for

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    a receiving public authority. The very mention of the one case throws doubt on the position in the other.
    Mrs. White: If an authority has statutory powers, it cannot be beyond them, and that is made quite clear. It arises only in the case of bodies which are not regulated by Statute.
    Mr. Page: But the local authority has only statutory powers, yet the Minister has been advised, rightly I think, to include paragraph (b) in the Amendment. This could have been made as certain in the case of receiving public authorities with statutory powers, which are in no different position from that of a local authority which cannot act otherwise than within statutory powers. I would have filled this gap with Amendment No. 10, paragraph (b) of which deals with that very point.
    3.0 a.m.
    The other gap is that Amendment No. 12 deals with a receiving authority but not with a supplying authority. Again, I do not understand why it is necessary to mention here the case of the receiving authority but not the supplying authority. Whatever I may have said in Committee —I do not recall the context in which I used the words which the Minister quoted —it seems to me now that it is just as import ant to mention the supplying authority acting intra vires as to say that the receiving authority should act infra vires. Perhaps it is even more important to ensure that the supplying authority does not act outside its powers in collecting goods and services and passing them on to other authorities.
    One can think of occasions when a supplying authority acquires goods which it would not acquire in the ordinary way far its own purposes and then supplies those goods to another local authority or public body. I think that that is not the intention of the Bill. The intention is that where one large local authority is purchasing goods for its own purpose, if it purchases them in greater quantity it may then provide them at an economic figure to other local authorities or public bodies. I am sure that it is not the intention of the Bill that a local authority should deliberately go into the business of acquiring goods which it does not need for itself at all but which it wishes to pass on.
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    In Committee, we had what almost became the classic instance, the county council supplying dust carts. I greatly sympathise with the Parliamentary Secretary. When one starts on an example like that, on one's feet, one is only too likely to run into confusion over it. We even got down eventually to the parts of the dust cart, not the whole dust cart. But no county council has a duty to collect rubbish. We do not expect a county council to buy a lot of dust carts in order to sell them to urban district councils which have the job of collecting refuse.
    That is why I say that we should mention, as I do in Amendment No. 10, that the supplying authority should act infra vires its existing powers, apart from the Bill, and we should, therefore, mention all three. Not only should the receiving authority not act ultra vires but the public body and the supplying authority must act within their existing powers.
    Mr. Emery: May I mention one matter on which I said that I would try to obtain information for the Committee or the House? It concerns the purchasing of, perhaps, unusual items. The example of the dust cart has been brought up again. I have been informed that where local authorities are purchasing motor vehicles, and have powers so to do, they would find no difficulty in increased costings in being able to apply their specialist dealings in the procurement of motor vehicles to the obtaining of a specialised vehicle for another authority, in much the same way as they would be able to obtain extra types of ambulance or some other normally procured item. I have had this matter looked into. I gather that it would not be ultra vires in a number of instances where powers have been given under present local authority or county Acts under which central purchasing establishments have been provided for. While local authorities should not engage in purchases about which they know nothing and when they know nothing about surrounding circumstances, a local authority which has special knowledge should be able to supply another local authority when to do so makes for more efficient buying than would result from one authority making a one-off purchase.
    Mrs. White: I am grateful to the hon. Member for Honiton (Mr. Emery), who

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    has put his finger exactly on the point of the distinction between a supplying and a receiving authority. I was somewhat surprised by the hon. Member for Crosby (Mr. Graham Page) who appeared to appreciate the difference in Committee, but now seems to have forgotten that he did so. The receiving authority tries to obtain the expertise and knowledge of the conditions of buying which the supplying authority possesses. That is the object of the whole exercise.
    Although it will often be infra vices for the supplying authority, if it is not covered by existing private Acts it should not be precluded from assisting what will probably he a minor authority or organisation. That is why we could not advise the House to accept the hon. Gentleman's suggestion. I do not want to elaborate, but I think that on reflection the hon. Gentleman will appreciate the distinction between the supplying and the receiving authority.
    Amendment agreed to.
    Mr. Skeffington: I beg to move Amendment No. 7, in page 2, leave out lines 18 and 19.
    Mr. Deputy Speaker: With this it will be convenient to discuss Amendment No. 8.
    Mr. Skeffington: Both are drafting Amendments. We thought that the words "works of maintenance" were a better form of drafting than "maintenance".
    Mr. Emery: These drafting Amendments are probably necessary only because in Committee the Government accepted my understanding of the term "minor", for which I am grateful to them. However, in Committee the hon. Gentleman said that he would consider whether the word "minor "could be better defined. This might be a good opportunity for him to tell the House of the outcome of his researches.

    5

    (2) The accounts of a local authority by whom agreements in pursuance of the said section 1 are entered into under which the authority are to provide any such property or service or do such work as is mentioned in subsection (1) of that section shall include a separate account in respect of the agreements; and subsections (4), (6) and (7) of section 283 of the Local Government Act 1933 and sections 199 and 200 of the Local

    10

    Government (Scotland) Act 1947 (which relate to the inspection and taking of copies of the abstract of accounts of authorities) shall have effect as if any reference to an abstract of the accounts of an authority included a reference to such a separate account as aforesaid and, in relation to such a separate account, as if the words from' which shall' to 'may prescribe' in subsection (1) of the said section 200 were omitted.

    Mr. SkeffingtonWe investigated whether we could define "minor" further, but it is impossible. To impose financial limits would be absurd, and it cannot be done by size. We have to leave it to ordinary, reasonable common sense.
    Amendment agreed to.
    Further Amendments made: No. 8, in page 2, line 24, at end insert:
    '; and "works of maintenance"include minor renewals, minor improvements and minor extensions '.
    No. 9, in page 2, line 38, at end add:
    (6) An order under the preceding subsection may contain such provisions as the person making it considers appropriate—

    (a) for restricting the agreements which may by virtue of the order be entered into by a private body;

    (b) Without prejudice to the preceding paragraph, for securing the inclusion in any agreement made by virtue of the order of terms imposing restrictions.—[Mr. Skeffington]

  Clause 2

    SUPPLEMENTAL
    Mr. Deputy-Speaker: The next Amendment is No. 11, with which we can discuss the four Amendments there to. In line 2, after 'provide ', insert 'or to receive'.
    In line 3, after ' do ' insert:
    'or have done for them'.
    In line 4, leave out `the agreements' and insert:
    'each class of agreement as classified by paragraphs (a) to (d) of section 1(1) of this Act;'.
    In line 4, after ' agreements ', insert
    ' and there shall be noted upon each such account the estimated liability to selective employment tax which the local authority would have incurred as a result of the activities shown in that account had the local authority not been entitled to relief from that tax '.
    Mr. Skeffington: I beg to move, Amendment No. 11, in page 2, line 41, at end insert:

    473
    This covers an important point which in Committee I undertook to bring before the House on Report, largely as a result of some very interesting and constructive proposals by the hon. Member for Honiton (Mr. Emery). What he and other Members of the Committee were seeking at that stage to do were three things: first, to ensure that there should be a proper system of accounting so that local authorities would not operate at a loss; second, to ensure that proper accounts are kept; and, third, to ensure that the public should know what is going on.
    For a number of reasons which were fairly obvious, we did not accept the hon. Members solution but undertook to see whether, as under the Local Government (Financial Provisions) Act, 1963, whereby special accounts have to be kept of activities of what is sometimes called the "free penny", we could meet the points raised. The special accounts have to be kept for the benefit of the in-habitants of the area, and that is what we have done by this Amendment. It is in fairly broad terms, but for the reason; I have given one cannot in a Bill of this kind tie up the keeping of accounts in too tight a fashion technically, even if it were desirable to do so. On the whole we do not do that in regard to the activities of local authorities, although we do provide in various ways that there should be available proper checks on what they are doing, and largely operative at the instance of the ratepayers.
    We therefore have sought to secure, and I think we have satisfactorily secured, the virtue of what we wanted —proper accounting and greater availability to the public of the accounting.
    I am bound to warn the House, though, tint, even so, those whom we have consulted, particularly the Institute of Municipal Treasurers and Accountants, were not at all happy with this proposal. They said it would be bound to add to their work. In view of the principle of the public interest, we have been able to persuade them that it is vital to have something of this kind in the Bill, and they are now not raising any objections, but, in connection with Amendments proposed to the Amendment, I am bound to warn that if we go much further we shall be in great difficulty with them,
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    apart from technical difficulties involved in precise accounting definitions in a Statute.
    There is the other point which also has to be guarded against. The hon. Member for Honiton referred to this earlier. It would be quite wrong in the Act to tie local authorities too much so that in disposing of stock which they may wish to sell off they could not sell below the original purchase price. I saw an instance last week—old school furniture being disposed of at less than was paid for it; but it was useless material for modern educational purposes.
    In relation to guidance to local authorities about accounting, we propose to take advice from all the technical bodies, and I hope that in a circular we shall be able to give guidance about keeping these accounts.
    I hope we have provided an Amendment which will meet the wishes of all hon. Members.
    3.15 a.m.
    Mr. Emery: I thank the Minister for meeting an obligation which he undertook in Committee, and I congratulate him on having overcome one of the most conservative bodies, the Institute of Municipal Treasurers. I was warned early on in the proceedings that we did not stand a chance of getting such a provision, and I therefore congratulate the Minister on having been able to go as far as he has gone in this matter.
    The Amendment will be beneficial in that it will ensure that where a supply department is set up and structured, a proper accounting procedure will, by Statute, be part of the ordinary structure. However, while the Parliamentary Secretary claims that his Amendment meets our wishes, I remind him that the Amendment which I moved in Committee read:
    "…and where a public body enters into an agreement the authority shall ensure that all appropriate costs and overheads arising from the purchase, storage, distribution, or supply of the goods, materials or services shall be properly allocated and accounted, and the accounts shall be made public at least once a year".
    That would have been easily understood. The Government Amendment, however, leaves one completely in the dark about the objects because of its references to earlier Measures. Nevertheless, I accept that this form of words is necessary. It

    475
    is a pity that simple English cannot more frequently be used.
    I urge the Parliamentary Secretary to consider the proposed Amendments to lines 2 and 3 of the Amendment, which are designed to ensure that the accounting will be done at both ends; in other words, at both the supply and receiving ends. I see no reason why the receiving authorities should not also keep accounts of what they receive or of what has been done on their behalf. In different circumstances I would urge my hon. Friends to vote on this issue, when we might have the support of some hon. Gentlemen opposite. The Committee and this House have been much too reasonable over the Bill to wish to go to such lengths. There is every advantage in attempting to see that the object of the first two Amendments to the proposed Amendment is carried out. I hope that the Minister will agree that that makes sense.
    I am absolutely convinced that it is right that where supplies, purchasing or procurement departments are set up the inhabitants of the area should be informed how efficient the department is, what the costs are, how the costings have been distributed and be certain that the thing has been done properly. It should be open to inspection. I am delighted that the Minister will ensure this.
    Mr. Graham Page: I join my hon. Friend the Member for Honiton (Mr. Emery) in expressing delight that Amendment No. 11 is on the Notice Paper. It is there in response to an Amendment put forward by the Opposition in Committee. I appreciate the difficulty the Parliamentary Secretary has had in persuading those who will have to do the work that this should be carried out.
    Nevertheless, the Amendment falls short of what I would have hoped to see, in three respects, one of which has been mentioned by my hon. Friend. That is dealt with in the first two Amendments to the proposed Amendment. We would like the Amendment to be corrected so that the receiving authority would keep separate accounts as well as the supplying authority. The second gap is referred to in the Amendment to line 4, that the accounts of all sorts of contracts can be lumped together. The third point is in
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    regard to S.E.T. This appears in the last Amendment to the proposed Amendment. The advantage over other traders by relief from S.E.T. should be shown in the accounts.
    I recognise that it is important that the supplying authority should be seen to be operating these contracts so that they are not making a loss for the ratepayers and the authority is acting efficiently as a middle man between manufacturers and the ultimate consuming authority. The public should see what the purchase costs of the goods have been, the overheads, the storage costs, distribution costs and so on. It is just as important that the receiving authority, which is the spending authority, should show its accounts to the public. It should show that it is not paying more for the goods and services it gets from another local authority than if it went to the open market. Of course we hope there will be these economies, but it is right if the supplying authority has to bring its accounts that the receiving authority should do the same.
    In moving Amendments Nos. 2 and 3, the Parliamentary Secretary pointed out that a local authority need not take all the four powers set out in paragraphs (a), (b), (c) and (d) of subsection (1) of Clause 1. It could take one, two, three or four powers. This shows the distinction between the several powers. I do not think that the accounts will be very enlightening to the public if all the contracts are lumped together. For example, it may be that a contract to provide services subsidises a contract to provide goods, or vice versa. That can be seen only if separate accounts are maintained. I do not think this will cause any further trouble. The figures must be obtained for the consolidated account, and it is no great labour to set the figures out in separate accounts.
    The third point is that the accounts would not be true trading accounts without showing tax benefits. That is brought out in the last sub-Amendment, which would require a mention of S.E.T. benefits in the accounts. They will probably have to be shown, because for local authorities S.E.T. is a payment and then a recovery of that money; so it must appear in the accounts as a payment and as a receipt. I therefore presume that it will be traceable in the accounts in

    477
    some form. These are sub-Amendments which would not give the municipal treasurers any great trouble.[HON. MEMBERS: "oh"] They have the figures already. It is a mere matter of a different form of setting them out. I hope that we shall at least have an assurance that the sub-Amendments will tie dealt with in some way so that the public has clear accounts set before it.
    If on this Amendment, as on others, I and my colleagues have been a little verbose, I hope that it is recognised that some benefit derives from that, in that we have avoided the necessity for a debate on Third Reading. The absence of a debate on Third Reading deprives us of the usual opportunity at the end of the proceedings on a Bill of this sort—I shall take the opportunity now quickly, before you call me to order, Mr. Deputy Speaker—to say how gratified we on this side are for the co-operation we have had in the proposals we have put forward and for the fact that they have been carefully studied by the Minister of State and the Parliamentary Secretary.
    We have reached this happy conclusion on the Bill with a great number of compromises. We have not got all we wanted, but we never do. The Parliamentary Secretary and the Minister of State on the Government side and myself on this side have had to act a little diplomatically throughout the debates on these Amendments, because we have both had back-seat drivers. I am sure that it will be a tonic to the hon. Member for Bethnal Green (Mr. Hilton) to hear that the Bill has gone through its final stage, as I know it is a tonic to my hon. Friend the Member for Honiton.
    3.30 a.m.
    Mr. Skeffington: My hon. Friend the Minister of State and I greatly appreciate what the hon. Member for Crosby (Mr. Graham Page) has just said. We welcome the help which has been given to us. Nearly all the proposals have been constructive. The Bill is a better Bill as a result. I thank hon. Members opposite for all the work they have done and for the manner in which they have done it. I am sure that the hon. Member for Honiton (Mr. Emery) and my hon. Friend the Member for Bethnal Green (Mr. Hilton) will heave sighs of relief in a very few minutes.
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    I am glad that on the whole the Amendment has been well received. We have tried to do what was required of us. We have secured general agreement on it. It goes a very long way to providing the kind of check and information that every hon. Member wanted.
    I must make it absolutely clear that the Institute of Municipal Treasurers and Accountants did not object to Amendment 11 because it wants to conceal anything. It is very anxious to have the fullest public accounts. I have had personal assurances about that.
    There are two general points about the Amendments I must make again. First. we cannot in the main body of the Bill —even if it were desirable, and for certain reasons I do not think that it is—attempt to include all the accounting requirements that some hon. Gentlemen may desire.
    Second, we must bear in mind all the time that we are dealing with local authorities which on the whole are very responsible. We cannot tie up the accounting Clause so tightly that people will either not want to use the provisions of the Bill or will be put under very heavy work loads as a result of using them.
    We are not unsympathetic to the point of view that the receiving authorities should keep accounts in the same way, but cannot see any purpose. The local authorities supplying them will be merely alternative sources of supply, and they would list the prices which they paid. One might have to decide all sorts of ways in which this could best be done. Having looked very carefully at the matter, we could see no advantage. We realise that there would be considerable resistance by those upon whom the work load would fall, and for that reason the first two Opposition Amendments to the Amendment do not appeal to us. Very often the accounting might be quite complex in the case of a receiving authority in a way I need not go into now.
    We have looked at the third Opposition Amendment very carefully, but most treasurers and accountants would be pretty horrified by the proposal that accounts be kept in relation to the four types of activities mentioned. For example, the hiring out of computer equipment would presumably have to be shown under paragraph (c), but if this

    479
    required someone to work from the computer which would be a normal sensible thing to do, that would presumably have to be shown under paragraph (b). Maintenance is one of the activities involved. The paint would be shown under paragraph (a) and the staff under the appropriate other paragraph. Bearing in mind that one does not want to tie the Measure up in such a way that authorities will not bother to use it, we have come to the conclusion that in many cases this would be impracticable.
    The fourth Amendment concerns S.E.T. The hon. Gentleman probably does not realise the full picture. What we would have to do would be to work out the hypothetical estimate of S.E.T. in relation to that proportion of staff involved in this work. I have been advised by accountants that one could get almost any result one wanted if one applied that formula hypothetically in that way. If we adopted the Amendment I do not think that we would necessarily have a clear answer as a result.
    The other point which makes the hon. Gentleman's Amendment less significant is that the amount of the S.E.T. as a factor in total cost is very small. The operations of the G.L.C. are running at about £34 million a year and the S.E.T. payments are estimated at about
    480
    £140,000 a year, or about ½ per cent. of the total. That is not a very significant figure. For the other reasons I have given, we should only get an imprecise answer dependent on the way in which the accountants wanted to present it and the information would not be of great value. I hope that the Amendment will not be pressed.
    Amendment agreed to.
    Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.
    Bill accordingly read the Third time and passed.

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

ADJOURNMENT
Resolved, That this House do now adjourn.—[Mr. Hamling.]
Adjourned accordingly at twenty-four minutes to Four o'clock a.m.