HC Deb 20 January 1970 vol 794 cc271-328
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 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 (Dorset, West)

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 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 (Henley)

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 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 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 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 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 (Belfast, East)

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 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, 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 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. 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.

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
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.

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 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 (Barrow-in-Furness)

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 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.

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 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.

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 (Richmond, Surrey)

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 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.

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 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 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.

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 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 (Ormskirk)

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.

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 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 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 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 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'. 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.

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 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- 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 (Burnley)

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 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 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 (Glasgow, Cathcart)

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 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 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?

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 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- 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, 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, 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 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 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 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.
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