Commons Sitting of 28 April 1971

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

  GREATER LONDON COUNCIL (MONEY) BILL (By Order)
  Order for Second Reading read.
  Bill to be read a Second time upon Tuesday next.

ORAL ANSWERS TO QUESTIONS
  ENVIRONMENT

    Haringey (Slum Clearance)
    Mr. Geoffrey Finsbergasked the Secretary of State for the Environment how many properties in the London Borough of Haringey still remain in its slum clearance programme.
    The Under-Secretary of State for the Environment (Mr. Paul Channon): I have no detailed information about this, but the current programme, for the years 1970–73, comprises 1,823 houses. When this programme is completed, only isolated cases of need for clearance will remain to be dealt with.
    Mr. Finsberg: Is my hon. Friend aware that his answer contrasts very favourably with the wild and exaggerated figure put forward by hon. Members opposite; namely, a figure of 5,000? Is he further aware that in four years of Labour rule in the Borough of Haringey 565 houses were built, whereas in the two-and-a-half years of Conservative rule 1,219 have been built?
    Mr. Channon: It is undoubtedly true that in recent years the slum clearance
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    programme has been considerably stepped up. I wish to congratulate the borough, especially since at the end of this period only isolated cases of need will remain to be dealt with.

    Kensington and Chelsea (Slum Clearance)
    Sir B. Rhys Williamsasked the Secretary of State for the Environment what is now the situation with regard to slum clearance in Kensington and Chelsea.
    Mr. Channon: A programme to clear 259 unfit houses is in hand, and on completion of this at the end of 1973, only isolated pockets of slum dwellings should remain in the borough.
    Sir B. Rhys Williams: Does my hon. Friend appreciate that the slum clearance problem in the borough of Kensington and Chelsea will be complete in five years time? Does he also appreciate that this year the borough will have to bear a rate equalisation burden of £890,000? Does he not regard this as excessive?
    Mr. Channon: Kensington and Chelsea have many serious housing conditions, although they have done extremely well with the slum clearance problem. I am looking forward to visiting Kensington and Chelsea tomorrow morning when I shall have the opportunity of discussing these and other matters with them.
    Mr. Freeson: Would the hon. Gentleman take another look at this matter, in regard to not only Kensington but also Haringey. He must know that sample surveys were undertaken in the Department showing that there were some 5,000 slums in Haringey and similar figures for Kensington, and that these figures have been accepted for a long time. He must know that it is misleading to the people who live in bad housing conditions to suggest that after the clearance of about 1,000 to 1,200 dwellings in the next three years there will be only isolated matters to be dealt with. The situation is very serious, and it does not behove the hon. Gentleman to be smug and complacent about it.
    Mr. Channon: On the contrary, it was the hon. Gentleman himself in his recent utterly misleading and reprehensible

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    article who gave a totally false impression of the problem.

    Ealing (Slum Clearance)
    Mr. Batsfordasked the Secretary of State for the Environment how many properties are listed for slum clearance in the London Borough of Ealing.
    Mr. Channon: The current programme provides for 344 houses to be dealt with by the end of 1973.
    Mr. Batsford: I thank my hon. Friend for that reply. Would he agree that in this case also many misleading statements have been made by the Labour Party about slum clearance in Ealing?
    Mr. Channon: I am glad to say that by the end of 1973 only isolated cases of slum property will remain to be dealt with.
    Mr. Spearing: Would the hon. Gentleman agree that, whatever the facts may be about the programme of slum clearance, the London Borough of Ealing started only 22 council dwellings in the whole of 1970?
    Mr. Channon: I am glad that the hon. Gentleman, unlike his hon. Friend, does not challenge the figure of slum clearance. I am glad to say that I understand the council proposes to put 2,000 dwellings to tender by the end of 1972, apart from the substantial assistance which it is giving to housing associations.
    Mr. Freeson: Is the Minister aware that his own Department, as well as County Hall, has estimates of 150,000 slum or near-slum properties in Greater London, mostly in Central London, apart from about 250,000 seriously sub-standard properties? If this figure is correct even within a margin, how can he try to assure the public, the local authorities and this House that only isolated pockets of slum clearance will remain in these boroughs and in central London? Ealing, it is believed in the Department, has several thousand slum properties, and the hon. Gentleman should not mislead the House.
    Mr. Channon: The hon. Gentleman was utterly misleading in his article. In our reform of housing finance we shall
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    be giving help to those areas in worse need, which the Labour Government signally failed to do.
    Mr. Molloy: Is the Minister aware that in the London Borough of Ealing there are 5,000 people in need of homes? I know that he will acknowledge that there is a world of difference between accommodation and homes, and this is why people are on housing registers. He will also know that local authorities have sold land which they took over from their predecessors—land on which they could have built council houses which, in turn, could have made a massive contribution to the slum clearance problem in Ealing. Would he bear these matters in mind and try to make a reasonable contribution to give homes to people who are sorely in need of them?
    Mr. Channon: The hon. Member's tendentious remarks are not borne out by the figures. The local authority proposes to put 2,000 dwellings to tender by the end of 1972.

    Hyde Park (Pop Concerts)
    Mr. Sorefasked the Secretary of State for the Environment whether he intends to permit the holding of further pop concerts in Hyde Park this year.
    The Secretary of State for the Environment (Mr. Peter Walker): In view of the general popularity of pop concerts in Hyde Park in past years, I have given permission for two to be held this summer.
    Mr. Soref: I thank my right hon. Friend for that answer. Would he not agree that the same supervision should be afforded as was provided for in the Private Bill of my hon. Friend the Member for Isle of Wight (Mr. Woodnutt) on this subject, especially in view of the increasing hazards to health which were—
    Mr. Leslie Huckfield: Rubbish.
    Mr. Soref: —revealed last week at the conference of the Royal Society of Health, and the increasing identity and coexistence of pop with pot?
    Mr. Walker: There have been no such problems with past concerts, which have given a great deal of enjoyment to many young people.
    Mr. Lipton: Is it not better that pop addicts should "do their thing", whatever that may be, in the open air rather than in dingy dens and dubious discotheques?
    Mr. Walker: I agree with the hon. Gentleman.

    Channel Tunnel (White Paper)
    Mr. Sheldonasked the Secretary of State for the Environment if he will publish a White Paper on the proposed Channel Tunnel.
    The Under-Secretary of State for the Environment (Mr. Eldon Griffiths): I would refer the hon. Member to the answers given to him on 10th and 31st March.—[Vol. 813, c. 400–1; Vol. 814, c. 1472–4.]
    Mr. Sheldon: Is the Minister aware that what is causing concern is that this private group is already committed to a real project? As a result, it may well be that a roadway, through a tunnel or some other link, will not be examined, as it has not been examined over the past nine years, during which time there has been considerable progress towards the study of these problems. Is the Minister further aware that this particular study group will have its costs completely reimbursed if it does not go ahead with the scheme? What sort of risk taking is this?
    Mr. Griffiths: The hon. Gentleman will be aware of the communiqué which my right hon. Friend and the French Minister of Transport Industries issued after their meeting in London. I think that that speaks for itself.
    Hon. Members: Answer the question.

    London Boroughs (New Town Links)
    Mr. William Sheltonasked the Secretary of State for the Environment which London boroughs have been active in promoting links with new towns.
    Mr. Peter Walker: I understand that discussions with a number of London borough councils are in progress; and I hope that the recent "Peterborough Week" in Lambeth, to publicise opportunities in new towns, will be followed by others.
    Mr. Shelton: I thank my right hon. Friend for that answer. Have these developments gathered pace in the last few years, especially since 1968, for instance?
    Mr. Walker: There are tremendous opportunities for Londoners being rehoused in new towns and overspill developments. I am anxious that there should be the maximum publicity of the opportunities.
    Mr. John Fraser: Was not one thing that came out of the "Peterborough Week" in Lambeth the fact that the growth of unemployment under the present Government is making the operation of the industrial selection scheme much more difficult?
    Mr. Walker: That is a very unfair comment, especially as that week was highly successful. I am sad that the hon. Gentleman should make that remark.

    Second Dartford Tunnel
    Mr. Trewasked the Secretary of State for the Environment when he will authorise the start of construction of the second Dartford Tunnel.
    The Minister for Local Government and Development (Mr. Graham Page): Yesterday the Dartford Tunnel Joint Committee was informed of my right hon. Friend's agreement to its building a second tunnel. It hopes to start building the tunnel next year with a view to its completion by the end of 1976.
    Mr. Trew: I am grateful for my hon. Friend's announcement, which will be warmly welcomed. In view of the speed with which traffic is building up in the existing tunnel, will my hon. Friend say what can be done to shorten the estimated construction period? Second, will he encourage the tunnel committee to raise the finance for this project on the open market?
    Mr. Page: It is for the tunnel committee to decide how it raises the finance. On the other matters, one has to consider the improvements to the approaches on both sides of the river, and it is no doubt a matter which will take at least up until 1976.
    Mr. McCrindle: Would my hon. Friend note that from the Essex side we

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    give a warm welcome to the announcement. But, in view of the growing pressure of traffic on that side of the existing tunnel, would he bear in mind the possibility of improving existing approach roads from the Essex side of the tunnel, thereby eliminating the mistakes committed in the first instance?
    Mr. Page: This matter is under full consideration by the two county councils concerned and by the joint committee.

    House Improvements
    Mr. Brayasked the Secretary of State for the Environment how many local authorities are granting loans to the owner's share of a house improvement scheme.
    Mr. McCrindleasked the Secretary of State for the Environment how many local authorities operate loan schemes to assist householders to meet their 50 per cent. share of house improvements; and if he will issue a circular further to encourage this practice.
    The Minister for Housing and Construction (Mr. Julian Amery): The number of local authorities offering such loans is not known.
    Authorities are, however, already being given, and will continue to be given, every encouragement to help in this way. The total amount of loans to private owners for conversion, alteration, repair or improvement of their dwellings rose from £3,849,000 in 1969 to £4,386,000 in 1970.
    Mr. Bray: I thank my right hon. Friend for that reply. I regret that he cannot give the precise increase in numbers over the past year. Would he give every possible encouragement, particularly to local authorities in intermediate areas, to provide loans for housing improvement purposes? Would he also request them to publish in their local newspapers, or in other media, the fact that these loans are readily available?
    Mr. Amery: Yes, Sir. My hon. Friend will see that this is already happening. In January and February of this year local authorities increased their improvement grants by 78 per cent., as against January and February of last year, for local authority buildings, and by 22 per
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    cent. for private buildings, making an overall total of an increase of 35 per cent. in improvement grants.
    Mr. McCrindle: Will my hon. Friend impress upon local authorities that this is money very well spent in that it helps to maintain and improve our existing stock of houses?
    Mr. Amery: Yes, Sir. The great bulk of local authorities, certainly under present management, are very well aware of this.
    Mr. Blenkinsop: Would the Minister continue to do his best to encourage local authorities—as he has already done in my constituency—to use their powers where the owners concerned are unwilling to take action?
    Mr. Amery: Indeed, Sir, and this is already being done. I would certainly press on with this good cause.
    Mr. James Hill: I appreciate what has been said about the improvements. Would my right hon. Friend not agree that this scheme requires greater simplification, especially when dealing with the older owner-tenant?
    Mr. Amery: Yes, Sir, we are trying to refine and improve the scheme and to publicise it at every possible stage.
    Mr. Emeryasked the Secretary of State for the Environment what further publicity he is undertaking in the next few months for improvement grants under the Housing Act, 1969.
    Mr. Amery: As my hon. Friend may have seen, we have just begun a new national Press advertising campaign planned to run through the spring and early summer, and there will be further national advertising in the autumn.
    We are now drawing towards the close of a successful first round of local house improvement months, and I have written to the lord mayor or mayor as the case may be of a further 50 cities and towns inviting them to co-operate in local campaigns.
    I am also proposing, in agreement with the Greater London Council and the London Boroughs Associations, to seek the co-operation of all London authorities in a major improvement campaign for the whole of London in the spring of 1972
    Mr. Emery: While I am delighted to see that my Question has stimulated this activity, might I ask my right hon. Friend to consider in this publicity the problem of certain boroughs which attempt to have all the exact plans for an improvement before they will even give an in-principle decision on whether a grant might be allowed? This is obviously a financial drawback to people applying for grants and should be discouraged, because in-principle decisions do not require such exact information.
    Mr. Amery: The great majority of boroughs have agreed to go forward on the basis recognised today. If my hon. Friend has knowledge of any authorities which are in particular difficulties, perhaps we can discuss them together.
    Mr. Bowden: Has my right hon. Friend considered the possibility of supplying leaflets which could be delivered in appropriate areas by local authorities to give even further publicity to the scheme?
    Mr. Amery: A number of local authorities distribute their own leaflets, but I will consider my hon. Friend's suggestion about whether we might help in the process.

    New Towns (Home Ownership)
    Mr. Allasonasked the Secretary of State for the Environment what further steps he is taking to encourage home ownership in new towns.
    Mr. Peter Walker: I am discussing with development corporations and the Commission for the New Towns measures designed to give private house builders greater freedom in new towns. This should enable them to make the maximum contribution to new town development that market conditions permit. I am delighted that many existing tenants of new towns are contemplating purchasing their homes.
    Mr. Allason: Is my right hon. Friend aware that there is a very long delay in obtaining valuations, as much as three or four months in some cases, and that this is a severe disincentive? Would it not be more useful to employ more valuers to expedite valuations?
    Mr. Walker: Yes, Sir. There is no need for such delays, and if my hon.
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    Friend would give me details, I will look into them immediately.
    Mr. Simon Mahon: Is the right hon. Gentleman aware that many of us feel that there is incompatibility between publicly and privately developed houses? Is it not important that the standards in both sectors should be improved and maintained?
    Mr. Walker: Yes, Sir. That is why I am delighted that the National House Builders' Registration Council has agreed upon standards.
    Mr. Tebbit: Is my right hon. Friend aware of how much satisfaction it will give all of us in new towns to know that there will be more privately built houses directly for sale to owner occupiers? Could he make this more possible in Harlow by announcing whether we are to have expansion in Harlow now that we know where the new airport will be situated?
    Mr. Walker: That is a separate question, and perhaps my hon. Friend would put down another Question.
    Mr. Denis Howell: In view of the fact that the New Towns Commission conducted a survey and did not find that many existing tenants wanted to buy homes, what evidence has the Secretary of State that large numbers of people are contemplating doing so?
    Mr. Walker: The evidence in new towns of hundreds applying to do so.

    Housing Aid Centres
    Mr. James Hillasked the Secretary of State for the Environment how many housing aid centres have been set up.
    Mr. Amery: To my knowledge, 10 such centres have already been established by local authorities, and a number of other authorities are considering doing so.
    There are also a number of housing aid centres run by voluntary organisations.
    Mr. Hill: This is only the tip of the iceberg. My right hon. Friend should direct local authorities to set up aid centres. Is it possible for Southampton to be one such centre?
    Mr. Amery: I understand that as a result of representations I recently made a further 14 authorities have already decided to set up such centres, and many more have the matter under consideration.

    New Towns (House Prices)
    Mr. Tebbitasked the Secretary of State for the Environment whether he will inquire into the increases in the price of new town houses since he announced his plan for 20 per cent. discount sales.
    Mr. Peter Walker: My hon. Friend the Under-Secretary of State, the Member for Southend, West (Mr. Channon), has written to my hon. Friend giving him the result of inquiries into this.
    Mr. Tebbit: I thank my right hon. Friend for making the inquiries. Is he aware that in July, 1970, Harlow Development Corporation offered my constituent, Mr. Smalley, the opportunity of buying the house in which he lives for £5,800 and that after the 20 per cent. discount was announced the Corporation increased the price by 19 per cent. before reducing it by 20 per cent.? Is my right hon. Friend further aware that, to add insult to insult, his colleagues in the Treasury charged the stamp duty on the price of £6,900 and not on the discounted price? Has any other new town behaved in this manner?
    Mr. Walker: I am sorry to hear the details of this case. I hope that Harlow New Town will consider giving many more tenants the opportunity of buying their own house. One factor which has increased the price is the shortage of supply.

    Havering (Owner-Occupied Housing)
    Mr. Loveridgeasked the Secretary of State for the Environment in view of the large proportion of local authority dwellings in Havering, what steps he proposes to take to help the borough to increase owner occupation in order to provide a better balance in the area.
    Mr. Channon: Private enterprise building in Havering has increased considerably during the last 12 months, and the Government's measures to stimulate growth and control inflation, together
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    with the relaxation of restrictions on local authority mortgage lending, the abolition of the betterment levy, the easing of bank credit, and the halving of S.E.T. should all further help to increase owner-occupation both in the borough and elsewhere.
    Mr. Loveridge: In view of the great success that Havering has had in bringing in people from other areas, will my hon. Friend give every encouragement to ensure that what little building land remains there is used for home ownership?
    Mr. Channon: As my right hon. Friend has made clear on many occasions in the House and elsewhere, we believe that every possible agency in London, both public and private, should be used in the conditions of London housing.
    Mr. Wellbeloved: Is the Under Secretary yet able to tell the House by how much he expects builders will be reducing the price of houses as a result of the reduction in S.E.T.?
    Mr. Channon: I have already seen a number of reports of people who are doing this. If the hon. Gentleman has a specific question, I shall be glad to answer it.

    Rent Increases
    Mr. Juddasked the Secretary of State for the Environment whether he will publish in the OFFICIAL REPORT details of all those local authorities which have increased their rents since January, 1971, giving in each instance the percentage by which they were increased.
    Mr. Channon: I have not this information since under the Rent (Control of Increases) Act, 1969, a local authority needs my right hon. Friend's agreement only if it wishes to increase rents by more than an average of 37½p a week or a maximum of 50p a week in any 52-week period.
    Mr. Judd: Do not increases of up to 15 per cent., as imposed in the City of Portsmouth, cause real hardship for families on smaller incomes, particularly those who are just above the rent rebate income level? How does the Under-Secretary expect families to meet such increased expenditure when his Government say that pay increases of 15 per

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    cent. are totally out of the question? Are not increases of 15 per cent. in rents directly inflationary because people cannot avoid the expenditure and will obviously push for increased pay? How does the Under-Secretary reconcile this with the Government's attitude to inflation?
    Mr. Channon: The present powers under which rents are raised require increases to be considered by the Government only if rents are raised by the amounts which I have already stated. We intend to move gradually to a system of fair rents and, what will be extremely important, a national rent rebate scheme for all those in need.
    Mr. Evelyn King: Does my hon. Friend accept that rents should reach their economic level as soon as possible, and that if there are cases of hardship, it is the function of the welfare authorities to deal with them, and that his Department will offer no indiscriminate subsidies to rich and poor, whether on behalf of private landlords or of local authorities?
    Mr. Channon: It is the Government's policy to proceed gradually to a system of fair rents all over the country, with help given to those in need. Indeed, the Government's policy is to direct subsidies to those people and those areas most in need.
    Mr. Crosland: Does that statement mean that the Rent (Control of Increases) Act, 1969, is not to be renewed when it expires and that the Government will exercise no control over rents in the public sector?
    Mr. Channon: On the contrary, as I have said repeatedly in answer to Questions, my right hon. Friend has already made it clear that we intend to proceed with a system of fair rents all over the country, with a national rent rebate scheme.
    Mr. Crosland: That does not answer the question. Economic rents were mentioned by the Minister. As we know from the Report of the National Board for Prices and Incomes, those are not the same as fair rents. If a council were to raise rents to a level above fair rents as defined by the Government, would the Government have no control over those increases?
    Mr. Channon: In that unlikely event, especially as local authorities are bound by their statutory obligations to charge reasonable rents—
    Mr. Freeson: No.
    Mr. Channon: They most certainly are. The hon. Gentleman seems to have forgotten what little he learned at the Ministry of Housing. In that unlikely event, if any rents were charged which were above the fair rent level they would have to come down.
    Mr. Denis Howell: Can we look forward to the Minister's answering some questions in the House in a less neurotic state than he appears to be in? [Interruption.] I am able to recognise a neurosis when I see one in front of me. Will the Minister kindly answer the question which has been put to him. Is it intended that the Government should have no legislative power to limit an increase in rent in any one year? If not, is not that absolutely inflationary?
    Mr. Channon: We all know that football referees are getting into a lot of trouble at the moment, and the hon. Gentleman is no exception to the rule. We have already made it perfectly clear—that the hon. Gentleman has not been listening—that we intend to introduce legislation that will require all local authorities to charge fair rents and that there will be a national rent rebate scheme.

    Council Dwellings, Greater London (Modernisation)
    Mr. Parkinsonasked the Secretary of State for the Environment what was the number of Greater London Council dwellings modernised in 1966; and how this compares with the number modernised in 1970.
    Mr. Peter Walker: I presume my hon. Friend is referring to dwellings it itself owns. The Greater London Council modernised 576 of its dwellings in 1966 and 1,435 in 1970.
    Mr. Parkinson: That encouraging reply will give much pleasure in the London area. May I urge my right hon. Friend and his colleagues to continue to press forward with this programme, which can do a great deal to

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    bring about an improvement in London's housing conditions?
    Mr. Walker: There is currently a mammoth increase in the number of private houses that are being modernised.

    Cohen Committee (Report)
    Mr. Rostasked the Secretary of State for the Environment when his Department expects to produce the report on the evidence received by the Cohen Committee; and if he will make a statement.
    Mr. Peter Walker: The report, based on the evidence gathered by the Cohen Committee, was submitted to the Central Housing Advisory Committee this week. I hope that the report, which will be published shortly, will prove a basis for discussion about housing associations.
    Mr. Rost: Now that we have a Government who are reversing the trend of the past six years of declining house building and who are, moreover, committed to more home ownership, can I have an assurance from my right hon. Friend that when the report of the Cohen Committee on help for housing associations is debated the Government will give it more than favourable consideration so that housing associations can be enabled to make a major contribution to home ownership in the future?
    Mr. Walker: My right hon. Friend the Minister for Housing and Construction has already been in close consultation with a number of leading figures in the housing association movement and his Department to ensure that the movement expands.
    Mr. Marks: In how many of the last six years did house building decline, and how did the figure for total building in the last six years compare with the previous six years?
    Mr. Walker: I cannot give figures, but what I know is that on 18th June last year I inherited one of the fastest-declining housing programmes ever.

    Private and Public House Building Programmes
    Mr. Frank Allaunasked the Secretary of State for the Environment if he will now make a statement on the future
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    of the private and council house building programmes; and what steps he will take to increase them.
    Mr. Amery: The Government have announced a number of measures which will assist house building in both the private and the public sectors. I am confident that the policies we are pursuing provide a sound basis for a vigorous and successful housing programme.
    Mr. Allaun: Is the Minister aware that last year housing starts fell to 319,000? Does he agree that this year they will be below 300,000, and that this fall will be accelerated if he reduces housing subsidies by £150 million a year and refuses to allow building firms in the private sector to obtain bank loans?
    Mr. Amery: The facts had better speak for themselves. Starts in January and February were 2½ per cent. up on last year in the public sector and in the private sector they were 27½ per cent. up, making a total for public and private sector of 15½ per cent. up. We do not yet have the March figures, because of the postal strike, but if the N.H.B.R.C. figures are to be believed, there is an increase in starts in the first quarter of this year of 48 per cent. over last year.
    Sir R. Thompson: If my right hon. Friend requires any further help or advice in what he is doing, will he consider consulting the Croydon Borough Council, which over the past 10 years has out-built, in both the public and private sectors, any other London borough?
    Mr. Amery: I am always grateful for advice, and shall be very glad to receive any representations the borough may like to make to me, direct or through my hon. Friend.
    Mr. Freeson: I am not sure about advice at this stage, but is the right hon. Gentleman aware that since the Conservatives took control of most of the town halls throughout the country three years ago there has been a major reduction, amounting to 40 per cent., from 178,000 housing starts in 1967 to 105,000 in 1970, and that according to tender figures which his Department has in its possession, I am informed, it is estimated in the Department that the figure of local authority housing starts in 1971 will come down below 100,000? Will he

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    stop misleading the public and the House on this matter, as his hon. Friend the Under-Secretary of State has been doing?
    Mr. Amery: The hon. Gentleman is trying to play with figures. The facts are quite clear, that in January and February this year the public sector is up by 2½ per cent. on the same period last year and the private sector is up by 27½ per cent., and that the overall increase in starts between 1970 and 1971 is up by 15½ per cent. Should anyone think that we have been favouring the private as against the public sector, it is worth saying that in the public sector improvement grants have increased by 78 per cent. in January and February this year compared with last year.

    Save-As-You-Rent Schemes
    Dr. Vaughanasked the Secretary of State for the Environment how many local authorities are currently operating save-as-you-rent schemes with the aim of getting tenants to save for a down payment deposit on a house; and what steps his Department now has in mind for encouraging such schemes.
    Mr. Amery: The information does not have to be reported to me, but I know that the London Borough of Newham is operating a scheme and that some other authorities are thinking of doing so.
    They already have complete freedom to do so.
    Dr. Vaughan: Lewisham is operating such a scheme, and Greenwich has also started a scheme. Does my right hon. Friend agree that having the opportunity to buy their own house is of such great importance to the happiness of families, particularly young families, that it is something he might like to look into to see whether the scheme can be extended and improved?
    Mr. Amery: I am not at all surprised to hear that Lewisham, which is one of the most progressive boroughs, has been following this path, and I am glad to hear that others are following. I shall do everything I can to support them.
    Mr. Kaufman: Will the Minister intervene to stop the Manchester City Council from going ahead with its disgraceful,
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    gimmicky scheme of council house sales, which it has just announced? As there are in my constituency thousands of people who, as a result of Tory control of Manchester over the past four years, are living in the most abysmal, squalid and filthy slum conditions, will he stop this and enourage Manchester City Council to build far more houses in my division for the people who need them?
    Mr. Amery: No, Sir.

    Rate Rebates (War Pensions)
    Mr. Boyd-Carpenterasked the Secretary of State for the Environment when he expects to complete his consideration of the necessary legislative provisions for disregarding war pensons in the computation of incomes for the purpose of assessing entitlement to rate rebate.
    Mr. Graham Page: I must ask my right hon. Friend to await the Green Paper on local government finance, which I hope will be published before long.
    Mr. Boyd-Carpenter: Whilst I await that document with my habitual patience, may I ask my hon. Friend whether he accepts that our party is completely committed to disregard war pensions, and that it would be dishonourable not to do so?
    Mr. Page: I can give my right hon. Friend a categorical assurance that if we decide to retain income-related rate relief we shall give the point of the war disability pensioners full consideration.
    Mr. Merlyn Rees: May I first declare an interest as a war pensioner? Will the Minister bear in mind that, apart from promises made at party conferences, and given the reason for which pensions are awarded, they should not be considered as income in the normal sense of the term?
    Mr. Page: The legislation provides that the income for rate rebate purposes is gross income, without any disregards. I do not think that there is any halfway house between a simple scheme with no disregards and a comprehensive scheme making due allowance for special circumstances, and there are many other special circumstances that we shall have to take into account in the rate review.

    Motor Vehicles (Pollution Control)
    Mr. Raphael Tuckasked the Secretary of State for the Environment if he will seek powers to make compulsory the fitting into all motor vehicles of a catalytic converter or other pollution control apparatus for cleaning exhaust fumes and the use therewith of lead-free petrol.
    Mr. Peter Walker: I have already made regulations to control pollution from the engine crankcase. I am considering whether further regulations are necessary. I am also asking for up-to-date figures as far as bad pollution is concerned and will give these full consideration when they are available.
    Mr. Tuck: I am grateful for that reply. Will the Secretary of State take into account the success which the system has had in the United States and get down to preventing this kind of pollution with all possible speed?
    Mr. Walker: There has not yet been success in the United States. The Americans are talking of action in the future. What I have done is to contact the United States and various European countries to exchange medical information on this topic, and also to try to see how quickly we can improve the whole position.
    Mr. Maddan: Will my right hon. Friend bear in mind that it is an established fact that fumes from exhausts are a contributory cause of cancer, and will he treat the matter as urgent?
    Mr. Walker: There is controversy in the medical world about the effect of fumes and pollution. One thing of which I am certain is that none of them does anybody any good.

    Sport (Governing Bodies)
    Mr. Charles Morrisonasked the Secretary of State for the Environment if he will name the governing bodies of sport that have been received by the Minister with special responsibility for sport since 18th June last.
    Mr. Eldon Griffiths: Since 18th June last I have met some 60 different sporting organisations, including 19 governing bodies.
    Mr. Morrison: I congratulate my hon. Friend on his activity since last June. In the light of his meetings with the various governing bodies, has he been able to draw any conclusions about their views on the future of the sports council? Can he say when he will be able to make an announcement about the future status and powers of the Sports Council?
    Mr. Griffiths: I shall take carefully into account in making recommendations to my right hon. Friend about the future of the Sports Council all the views of all sporting bodies with which I can make contact. I hope very much that we shall be able to make an announcement about the future of the Sports Council before very long.
    Mr. Ashton: Did the hon. Gentleman give any advice to the Football Association before it played its match against Greece last Wednesday? Is he aware that it was daft enough to play it on the fourth anniversary of the take-over by the Greek colonels, that it was conned into playing the match on that anniversary for political purposes in Greece? Does he not think that he should take more interest in the political connections of sport overseas?
    Mr. Griffiths: I believe that the great majority of sporting organisations in this country are adult and responsible bodies perfectly capable of making their own decisions. I would not welcome Government intervention on this ground. I attended the Greek match myself and also the East German match. I encouraged our players to go to China. I am glad that we have wide sporting exchanges with countries of all kinds.

    Chester (Ring Road)
    Mr. Templeasked the Secretary of State for the Environment whether he has received a firm programme report relating to the construction of the southern section of the Chester Ring Road; and when he expects a start to be made on this work.
    The Under-Secretary of State for the Environment (Mr. Michael Heseltine): Yes, Sir. The report is being studied, and if it is approved I hope that work may start in 1973.
    Mr. Temple: I thank my hon. Friend for that reply but I find it a trifle disappointing. Is he aware that this ring road was started in the 1930s? The line was defined some years ago, orders have been made but no firm date has been given for the start of construction. When does he hope to start the construction of the road?
    Mr. Heseltine: If we are able to take a programming decision, which we hope to do in two months' time, work may start in 1973.

    St. James's Park (Floodlighting)
    Mr. Moateasked the Secretary of State for the Environment whether in view of the results of the floodlighting of Duck Island in St. James's Park, he has considered extending the lighting further.
    Mr. Channon: My right hon. Friend intends to follow up the successful floodlighting of Duck Island last summer by floodlighting in addition this year the footbridge over the lake and the island at the Buckingham Palace end of the lake.
    Mr. Moate: Apart from the residents of Duck Island, who must be somewhat bewildered by this disturbance of their nocturnal habits, there is widespread approval of the enlightened programme of floodlighting which has been introduced in recent years. Will my right hon. Friend give further encouragement to new schemes wherever suitable, perhaps in other central Royal parks?
    Mr. Channon: I am glad to have my hon. Friend's support for this suggestion. I will send him the summer programme of floodlighting in London which the Minister has approved.

    Embassies (Display of Products)
    Miss Joan Hallasked the Secretary of State for the Environment if he will provide space in British embassies abroad for the display of British products.
    Mr. Channon: Yes, Sir; whenever suitable requests are made.
    Miss Hall: I thank my right hon. Friend for that reply. From my observations of our embassies and high commissions overseas, I believe we have wonderful sites, completely unused now, for the sale of British textiles which are
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    attractive and a great boost to our textile industry. When some of my manufacturers write to him, will my hon. Friend consider their requests favourably?
    Mr. Channon: I will certainly consider any specific proposal for the use of that kind of space.

    Halton R.A.F. Hospital
    Mr. Knoxasked the Secretary of State for the Environment when the present old accommodation at the Halton Royal Air Force Hospital will be brought up to modern standards.
    Mr. Channon: Work on modernising this hospital, at a cost of £1·1 million started last month and is due to be completed in the summer of 1973.
    Mr. Knox: I thank my hon. Friend for that reply. What arrangements are being made in respect of the R.A.F. hospital at Uxbridge?
    Mr. Channon: The work at Halton Hospital is being phased to enable Uxbridge patients to be accommodated there by the end of 1971, when R.A.F. Uxbridge will close.

    H.M.S. "Dolphin", Gosport (Living Accommodation)
    Dame Joan Vickersasked the Secretary of State for the Environment when he expects to provide new living accommodation for sailors and the Women's Royal Naval Service at H.M.S. "Dolphin", Gosport, so that they may vacate the present old and substandard blocks.
    Mr. Channon: Construction of new sleeping, dining and recreational facilities is expected to start this autumn and to be completed by the early summer of 1974, at a cost of just over £1 million.
    Dame Joan Vickers: I thank my hon. Friend for that reply. What is being done in Portsmouth and other areas to provide good accommodation for the Navy ashore?
    Mr. Channon: There are substantial redevelopment schemes going ahead, including H.M.S. "Colingwood" at Fareham; H.M.S. "Sultan", Gosport; H.M.S. "Dryad", Southwick; H.M.S.

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    "Mercury", Leydene; and Royal Navy Barracks, Portsmouth. We are in the early stages of planning the rebuilding or modernisation of other naval establishments in the area, notably H.M.S. "Excellent" on Whale Island.

    Housing Associations, Greater London (Improvements and Conversions)
    Mr. Selwyn Gummerasked the Secretary of State for the Environment what assistance he has offered to housing associations in Greater London undertaking house improvement and conversion towards the improvement of their organisation and operations.
    Mr. Amery: My Standing Working Party on London Housing is considering ways and means of helping housing associations in Greater London to operate more effectively.
    Last month I sent to London housing authorities and associations a report by the working party suggesting, in particular, a system of zoning in order to avoid overlapping of operations.
    Mr. Gummer: I thank my right hon. Friend. Would he not agree that housing associations are already making a considerable contribution to the rehousing of people, particularly in boroughs, like Lewisham, which were quick off the mark to use them? Some have so far shown a rather inefficient central organisation, however, and anything he can do in this way would help considerably.
    Mr. Amery: I agree that they are making a vital contribution. I regard them as a third force in building, along with the public and private sectors. We shall do what we can to help them.
    Mr. Molloy: Would not the right hon. Gentleman agree that, while housing associations might make a contribution, the main contribution to the housing of those desperately in need must come from the local authorities? When will Mr. Plummer of the G.L.C. be giving instructions to the London boroughs to make their applications to him to visit them with his cheque book to buy land to help solve the housing problems in their areas?
    Mr. Amery: The record of the G.L.C. in this matter is outstanding. It has done a remarkable job of rehousing
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    people from the Inner London boroughs, and it deserves the congratulations of this House.
    Mr. Freeson: Will the right hon. Gentleman also congratulate the Conservative G.L.C. on cutting the house-building programme from 9,000 a year—
    Mr. Speaker: Order. The Question on the Order Paper relates to assistance to housing associations. I have already allowed the supplementary questions to go wide enough.
    Mr. Freeson: Following the Minister's reply, and arising from it, will he also congratulate the G.L.C. on its outstanding record in cutting the housing starts programme from 9,000 in 1967—
    Mr. Speaker: Order. I allowed a supplementary question from the hon. Member for Ealing, North (Mr. Molloy) which went rather beyond the Question on the Order Paper, and I allowed the Minister to answer him. I am not prepared to allow the supplementary question being put by the hon. Member for Willesden, East (Mr. Freeson) or an answer to it by the Minister.
    Mr. Freeson: On a point of order, Mr. Speaker. My supplementary question—
    Mr. Jopling: Cheating.
    Mr. Freeson: I am addressing my remarks to Mr. Speaker. With respect, Mr. Speaker, my supplementary question arose from the Minister's own reply. Will you reconsider your observation that my supplementary question was out of order whereas the Minister's reply which gave rise to it was in order?
    Mr. Speaker: I think the fault was mine. I allowed the hon. Member for Ealing, North to put a supplementary question which was really out of order, and I allowed the Minister to answer it. That must conclude the matter. Mr. Lane—Question No. 34.
    Mr. Molloy: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. Would it be possible for the hon. Gentleman to raise his point of order at the end of Question Time?
    Mr. Molloy: I will be very brief, Mr. Speaker. The Question on the Order

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    Paper relates to housing associations and local authorities. The House of Commons was informed that the Leader of the G.L.C. was prepared to take his cheque book to any London borough to buy land either for housing associations or for local authorities. I simply wanted to know whether the Minister could enlighten us further and say when that would take place.
    Mr. Speaker: I have now called Mr. Lane for Question No. 34.

    Householders (Compensation Rights)
    Mr. Laneasked the Secretary of State for the Environment whether he will make a further statement about his plans to improve householders' rights to compensation; and when he hopes to introduce amending legislation.
    Mr. Peter Walker: As I told my hon. Friend the Member for Lancaster (Mrs. Kellett) on 10th March, good progress is being made on our review but it is too soon to make a statement about our proposals.—[Vol. 813, c. 400.]
    Mr. Lane: Would my right hon. Friend continue to give a high priority to this programme? Would he agree that until the law is changed more and more individuals will suffer injustice as the scale of public development increases?
    Mr. Walker: Yes, I recognise this problem. It is a complicated one affecting lighting, airports, motorways and further types of development. Alas, I must ask the House to be patient. We are proceeding as fast as possible.
    Mr. Selwyn Gummer: Would my right hon. Friend not agree that it is not only questions of compensation where public bodies are concerned but that this also affects private bodies when, for example, half of a semi-detached house is pulled down by the owner and the owner of the other half is unable to claim any compensation under the present law because the London Building Act does not yet apply to the whole nation?
    Mr. Walker: Yes. We are examining the whole question of compensation and all its aspects.

    Pollution Offences (Statutory Penalties)
    Mrs. Kellettasked the Secretary of State for the Environment when he
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    expects to announce the results of his review of the statutory penalties for pollution offences.
    Mr. Peter Walker: I hope to do so during this Session.
    Mrs. Kellett: May I tell my right hon. Friend how urgently people regard this matter? Is he aware that we are most grateful to him for the tremendous interest he takes in this issue?
    Mr. Walker: This is a considerably detailed review, and I agree with my hon. Friend about the urgency.

    Green Belt (Review)
    Mr. Idris Owenasked the Secretary of State for the Environment when he expects to complete his review of the green belt; and if he will make a statement.
    Mr. Graham Page: The review of the progress that can be made in the approval of proposed green belts is proceeding but my right hon. Friend is not ready to make a statement yet. Meanwhile, the green belts already approved will be safeguarded.
    Mr. Owen: Is my hon. Friend aware that that reply is rather disappointing because of the slow progress being made? Is he aware that for years and years green belts have merely appeared on town planning maps and proposed green belts have attracted many appeals against planning decisions? Does he realise that the sooner he positively determines green belt proposals the sooner he will reduce the amount of appeals on planning decisions?
    Mr. Page: This has to be considered in the context of the regional planning studies. We hope to make a fairly early announcement on the green belts in the South-East, and we have the matter under consideration particularly in connection with the North-West planning study, in which I am sure my hon. Friend is interested.
    Mr. Marks: Will the hon. Gentleman take note that the proposed green belt in south-east Lancashire and north-east Cheshire is quite inadequate? Will he protect it from the depredations of speculative builders?
    Mr. Page: This is the idea of regional planning, which will take into account the planning of land values and the growth of a region and, in particular, the green belts. Without committing myself, I would agree with what the hon. Gentleman has said about the extent of green belt in the area.

    Rents, and Conversion and Improvements Schemes
    Mr. Arthur Jonesasked the Secretary of State for the Environment if he considers that, in areas of high property values, rent levels following conversion are adequate to encourage schemes of conversion and improvement.
    Mr. Amery: Conversion and improvement of rented property would be encouraged if the procedures were simpler and the phasing of rent increases less prolonged; I am considering changes in the legislation to bring this about.
    Mr. Jones: While I recognise that there are varying levels in different parts of the country, is it possible to prepare a schedule showing similar types of accommodation with the differing rent levels in various parts of the country?
    Mr. Amery: We have to await the progression towards fair rents which will be a part of the housing finance reform which we shall introduce in the autumn.
    Mr. Blenkinsop: Will the Minister ensure that in conversion schemes existing tenants are not simply forced out of their accommodation by new rents which are too high?
    Mr. Amery: Existing tenants will always be able to fall back on the rent allowances in the private sector and the rebates in the public sector which are an integral part of our scheme.

    Housing Subsidies and Rents
    Mr. Meacherasked the Secretary of State for the Environment by what approximate percentage he expects council rents to rise on average for a three-bedroom house as a result of his refashioning of housing subsidies.
    Mr. Amery: I would refer the hon. Member to the reply to the hon. Member for Acton (Mr. Spearing) on 17th February.—[Vol. 811, c. 1819–20.]
    Mr. Meacher: Do not the latest statistics show council house rents averaging about once gross value while fair rents for modern and well maintained properties like council houses are unlikely to be less than two and a half times gross value? Will the Minister confirm that the Government are budgeting for utterly unprecedented and unjust rises in council rents, and will he state what comparable changes in subsidy he has in mind the owner-occupiers, whose subsidy, ridiculously, rises the better off they are?
    Mr. Amery: The hon. Member's Question related to the percentage increase expected for certain types of council house rents. I can only say at this stage that the increase will depend upon the nature of the house. Our policy is to help individuals and families rather than bricks and mortar. We shall give support to human beings where there is need instead of giving support to bricks and mortar where there may or may not be need.
    Mr. Crosland: The Question relates to the level of unrebated rents. Does the Minister not know, first of all, the present average level of rents for a three-bedroom house, and, secondly, does he not know what he means by fair rents when he proposes them to local authorities? He must know these things. Why can he not tell the House what is the likely difference between these two figures? Is he simply leaving his answer until after 13th May?
    Mr. Amery: I would not want the right hon. Gentleman to overstrain himself. If he thinks that there is an average level of rents for a three-bedroom house —[HON. MEMBERS: "There is."]—irrespective of whether it was built before the First World War, since the Second World War or between the wars, then he ought to go back for a refresher course.
    Mr. Crosland: Is the Minister seriously saying that he is making these new proposals on fair rents to local authorities—and he will eventually present them to the House no doubt—without any idea what average increase in rents this will mean?
    Mr. Amery: It cannot possibly be a question of an average. Certain houses will not require very much to come up

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    to the fair rents bracket; others will require more.

    Gravel Workings
    Mr. David Stoddartasked the Secretary of State for the Environment what new steps he intends to take to prevent the further despoiling of the countryside by gravel workings.
    Mr. Graham Page: Suitably stringent conditions attached to planning permissions for new workings can reduce environmental effects and secure suitable after-treatment. I have asked the local authority associations to furnish me with any evidence of difficulties over such conditions.
    Mr. Stoddart: Is the Minister aware that that answer is completely unsatisfactory? Is he also aware that many areas, including the Thames Valley and parts of Wiltshire, in which my constituency lies, have become vast stagnant lakes despoiling the country? Will he give further advice to local authorities telling them that they should not be "conned" by gravel-working contractors into allowing "water parks" to go on in perpetuity and that they should insist that these workings are in-filled when the gravel has been extracted?
    Mr. Page: It is within the power of the local authorities to impose restoration conditions of this sort on planning permissions for gravel workings. We have recently received the three reports of the local authority working party studying the problem of sand and gravel production in parts of south-east England, and other working parties are being set up to study this. If the local authority associations can produce to me evidence that there are occasions of difficulty in enforcing the conditions I will try to assist.
    Mr. John Hall: Is my hon. Friend aware that that lovely part of the Thames Valley that runs through my constituency is being increasingly pockmarked by gravel workings? Is he further aware that it will be many years, certainly beyond the lifetime of many residents, before these gravel workings are restored? Would he not agree that the present known sources of gravel are likely to run out by 1980? Should we not now be looking at alternatives?
    Mr. Page: This is exactly what we are looking at in the working parties set up to cover almost the whole of the South-East. We have a departmental official working party looking into the question of the use of waste material—instead of gravel and good material—for road filling, for example.
    Mr. J. T. Price: Does the hon. Gentleman appreciate that I and other hon. Members share the apprehensions of my hon. Friend who tabled this Question about uncontrollable despoliation of the countryside? Is he aware that some of the finest scenery in England is being destroyed by unregulated and illogical developments of this kind? Is he further aware that, in the opinion of myself and other hon. Members who have taken the trouble to study this question, the delegation of planning power to rural authorities, without any control by the county authorities, which have proper expertise to form a judgment on these matters, is a very bad thing which ought to be reconsidered by the central Government?
    Mr. Page: I assure the hon. Gentleman that we share his anxiety about gravel pit workings as they are at present. We believe that the local authorities have power to enforce conditions which will restore the workings to an environmentally good condition, and we are willing to help where it is necessary. But legal powers exist.
    Mr. Charles Morrison: Will my hon. Friend pay particular attention to the use of slag heaps as an alternative source of hard core instead of gravel? Will he also remember that gravel pits can be usefully developed for the general good as recreational facilities? Will he give every encouragement to local authorities to further the use of gravel pits in that way?
    Mr. Page: We are permitting the use of the product of slag heaps for certain road fill. There are two very good examples of gravel pits being used for recreational purposes: at the Cotswolds Water Park and at Wraysbury.
    Mr. Leonard: Will the hon. Gentleman reconsider his recent decision to include gravel workings in the partial derating of mineral hereditaments?
    Mr. Page: No, Sir.
    Mr. Emery: Will my hon. Friend consider the problems involved when local

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    authorities do not take into consideration the long-term factors of gravel workings and will not give approval for long-term usage? It is only if planning permission is given for long-term use that the necessary natural barriers can be created and landscaping can be carried out by firms to stop the type of despoliation to which we all object?
    Mr. Page: Yes, Sir. I should like to see local authorities impose conditions for restoration in the course of workings and not wait until the end of the workings.

QUESTIONS TO MINISTERS
Mr. Clinton Davis: On a point of order. I seek your guidance, Mr. Speaker, on a matter relating to Question Time and, in particular, to Question No. 45. As a new Member, I seek your guidance, Mr. Speaker, on whether it is the normal custom and courtesy of the House that a Member raising a Question about another Member's constituency should at least write to him initially before doing so—
Mr. Speaker: Order. It is out of order for the hon. Member to seek my guidance. If he will come to see me I will try to give guidance privately, but there is no duty in the Chair to give guidance publicly.
Mr. John Hall: On a point of order. I waited until the end of Question Time to raise this matter in order to seek your guidance, Mr. Speaker—
Mr. Speaker: Order. The hon. Gentleman has disqualified himself in view of what I have just said.
Mr. Hall: My choice of word was unfortunate, Mr. Speaker; I should seek your Ruling. It has been the custom for some considerable time that Members
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should impose upon themselves a self-denying ordinance not to raise points of order during Question Time so that time is not wasted and more Questions can be asked. This admirable custom may well have been lost sight of. Do you consider, Mr. Speaker, that it would be advantageous if you were to draw it to the notice of the House again?
Mr. Speaker: I think most right hon. and hon. Members are aware of that fact. A point of order was raised during Question Time today. It may well be that I was partially to blame. I will see what was said by way of question and answer, and if an apology is required from me I will give it. However, I agree with the hon. Gentleman that it is unwise and a waste of time to raise points of order during Question Time.

BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY, 14TH MAY
Members successful in the Ballot were:

Mr. Bruce Douglas-Mann.

Mrs. Lena Jeger.

Mr. Tom Boardman.

BILL PRESENTED
  LAW REFORM (JURISDICTION IN DELICT) (SCOTLAND)
  Mr. Secretary Campbell, supported by the Lord Advocate and Mr. Alick Buchanan-Smith, presented a Bill to extend the jurisdiction of the Court of Session and the sheriff court in Scotland in proceedings founded on delict; and the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 162.]

PASSENGER FARES (LONDON)
3.35 p.m.
Mr. William Molloy: I beg to move,
That leave be given to bring in a Bill to restore the powers of the Transport Tribunal relating to the control of passenger fares in London.
The London Transport Fares Tribunal had its origins in the Transport Act, 1947, and had power, under the general procedure outlined in that Act, to regulate fares. However, its identity and definition emerge via the Transport Act, 1962. The Tribunal was set up by Section 45 of the 1962 Act in the following terms:
"The Transport Tribunal shall, subject to and in accordance with the provisions of this Part of this Act, have power to make orders as respects the following charges of the London Board and the Railways Board, that is to say—

(a) charges for the carriage of passengers by railway on journeys wholly within the London Passenger Transport Area, and

(b) charges for the carriage of passengers by road on routes wholly or partly within the London special area…"

The authority of the Tribunal was removed by Section 27 of the Transport (London) Act, 1969. The general argument advanced then was that as London Transport's responsibilities were to be handed over to the Greater London Council the councillors of the G.L.C. would be much nearer to the people than the executive members of the former London Transport Executive and therefore there would be no need for the London Transport Fares Tribunal. But it has not worked out in that way. This is no criticism of the members of the G.L.C., who have very heavy responsibilities. The probability is that this is another of those things which afflicts us in local government when people give of their best to serve on authorities like the G.L.C. and at the same time must earn a living and then find that they cannot devote all the time that they would like to devote to their responsibilities, particularly concerning London Transport.
However, that does not deter from the fact that the argument advanced by the then Minister that there would be no need for the Tribunal because people would be able to contact their G.L.C. councillors and be able to submit their
428
views about London Transport and fares in general has not materialised. Therefore, the Londoner feels deprived of his right to have a say about the functioning of London Transport and particularly about decisions concerning the making and increasing of fares. Incidentally, outside the Greater London Council area bus fares are still subject to the Traffic Commissioners, but that does not apply within the G.L.C. area.
The constitution of the Tribunal is based on the Railways Act, 1962, and is incorporated in the Transport Act, 1947. The following quotation will help the House to understand the constitution of the Tribunal:
"There shall be established a court styled the Railway Rates Tribunal…consisting of three permanent members, with power to add to their number as hereinafter provided… Of the permanent members of the rates tribunal one shall be a person of experience in commercial affairs, one a person of experience in railway business, and one, who shall be the president, shall be an experienced lawyer."
The men who have served on the Tribunal have been responsible men with knowledge of commerce and industry and of what is involved in running a great public concern like London Transport. They have always given the greatest consideration to any submission put before them by the travelling public. I have on occasions submitted an appeal to the Tribunal on behalf of certain trade union organisations in Greater London.
The London Transport Tribunal did not always respond to the pleas of those who appealed. It took, as it had a right to do, grave cognisance of the responsibilities of the then London Transport Executive and was in no way been biased one way or the other. When London Transport Executive suggested an increase in fares the Tribunal, having listened to the appeals against these increases, sometimes reduced them. This in turn compelled London Transport to look at other measures to increase its revenue, and the Tribunal has, therefore, caused London Transport in a degree to be more efficient.
The organisations that submitted appeals included trade union organisations, employers' organisations, commercial interests, neighbourhood associations and organisations of ordinary people representing the travelling public of

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London. Since the authority of the Tribunal has been removed, people in all walks of life have been deprived of the opportunity to submit their views on proposals to increase fares.
e I am asking for the leave of the House to introduce a short Bill to put back the Tribunal and to allow the travelling public of London to have their say in deciding whether a fare increase is completely justified or whether there should be an examination before that fare increase is finalised.
Question put and agreed to.
Bill ordered to be brought in by Mr. Molloy, Mr. Bidwell, Mr. Thomas Cox, Mr. Weitzman, Mr. Wellbeloved, Mr. Ernest G. Perry, Mr. Carol Johnson, Mr. Hamling, and Mrs. Joyce Butler.

PASSENGER FARES (LONDON)
Bill to restore the powers of the Transport Tribunal relating to the control of passenger fares in London; presented accordingly, and read the First time; to be read a Second time upon Friday, 7th May and to be printed. [Bill 160.]

VEHICLE AND GENERAL INSURANCE COMPANY (TRIBUNAL OF INQUIRY)
Motion made, and Question proposed,
That it is expedient that a Tribunal be established for inquiring into a definite matter of urgent public importance, that is to say, the following issues in relation to the circumstances leading up to the cessation of trading by the Vehicle and General Insurance Company Limited—

(a) whether, and if so by whom, the contents of certain documents or other information in the possession of the Department of Trade and Industry relating to the affairs of the company or any of its subsidiaries were improperly disclosed or obtained between 4th and 18th November, 1970, and whether, should this be shown to be the case, any use was made of such information for the purpose of private advantage;

(b) whether there was negligence or misconduct by persons in the service of the Crown directly or indirectly responsible for the discharge, in relation to those companies, of functions under the Insurance Companies Acts, 1958–67;

(c) whether there is any evidence that the interests of policy holders or shareholders of those companies were adversely affected as a result of any impropriety, negligence or misconduct found to have occurred.—[The Prime Minister.]

3.44 p.m.
Sir Derek Walker-Smith: I shall not detain the House for more than a moment or two, and not at all on the generality of the matter, but on one specific point of public interest and of particular importance to the newspapers and people who are engaged in broadcasting, television and the like. For the avoidance of doubt, I warmly welcome the setting up of the Tribunal, and respectfully endorse the advice given to the House yesterday by the right hon. Gentleman the Leader of the Opposition that it is best to avoid any general debate at this stage. I shall certainly be within the spirit of that, because I propose to make no observations relating to the merits of the matter or to any factual issues. I am concerned solely with the ancillary but important matter of the position of commentators in regard to the application of the law of contempt to proceedings of a tribunal.
I sought to make reference to this matter at Question Time yesterday, and referred to the Report of the Committee on the Law of Contempt as it affects

431
Tribunals of Inquiry, and my Question was correctly reported in The Times of this morning. Unfortunately, and quite naturally in the context, my right hon. Friend the Prime Minister misunderstood my reference and thought I was referring to the earlier and much more widely ranging Royal Commission on Tribunals. I make no criticism of the misunderstanding because, in the nature of things, he was not and could not be on notice of my Question. As a result, some impression may have appeared that I was in some way seeking to criticise the conduct of the Aberfan Inquiry and, in particular, possibly of the right hon. and learned Member for West Ham, South (Sir Elwyn Jones), the former Attorney-General. That I certainly was not doing. I hold him in very high professional and personal regard. Equally, I should have great confidence in any approach which my right hon. and learned Friend the present Attorney-General decides to adopt in the course of the coming proceedings.
The reference which I made yesterday to doubts and difficulties which had arisen was solely in the context of the controversy which the House may recall arose at the time of the Aberfan Inquiry about the application of the law of contempt to these proceedings, and to the questions that arose about the proper interpretation of Section 1(2)(c) of the Act of 1921 which, on the face of it, applies to these proceedings the full rigours of the law of contempt as applied to the normal processes of law in the courts of the land.
The position at that time was acknowledged to be unclear and unsatisfactory, and was the subject of extensive criticism. As a result, the inter-departmental committee to which I have referred was set up on 25th July, 1968, two years after the report of the main Royal Commission, and it was charged with inquiring into the law of contempt as it affects comments or statements about matters referred to a tribunal of inquiry. Amongst its members were the right hon. Member for Sowerby (Mr. Houghton), who is, I am glad to see, in his place, and myself.
The Committee reported on 12th May, 1969, and our conclusions included a recommendation that the law of con-
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tempt in its application to tribunals of inquiry should not prohibit or curtail any comments about the subject matter of the inquiry. The reasons for that are set out in extenso in paragraph 26 of the Report. A distinction is there drawn between the possible prejudice which can arise from comment in a jury case or criminal case and what the report regarded as the remote risk of the tribunal being improperly influenced by such comment. The Committee said:
"We have no doubt but that the solid advantages of freedom to comment greatly outweigh the remote risk of the tribunal being improperly influenced by such comment."
In consequence the report proposed an amendment of Section 1(2) of the 1921 Act to establish this position. In fact we did more. We set out the suggested terms in a draft so as to facilitate the work of government in giving effect to the recommendation.
Alas, in accordance with a practice which of recent years has become increasingly frequent the report so far has suffered the all-too-familiar fate that its recommendations have not been acted upon. This has resulted in a position which is unsatisfactory, particularly from the point of view of the communications media. It is true that what is said in this report will help them in the clarification of their position, but I need not remind the House that no report of any Committee or Royal Commission has the force of law. Nothing which has not statutory effect can have such force.
I conclude by expressing some disappointment that we are now, after nearly two years, about to embark on another tribunal of inquiry without having had the advantage of the desirable clarification, and in some respects the liberalisation, of the law which was recommended in that report.
3.52 p.m.
Mr. Arthur Lewis: I should like to make a few comments on this Motion. Although it is true that my right hon. Friend the Leader of the Opposition and the Government gave notice yesterday that a Motion of some sort was to be put on the Order Paper, the first opportunity given to back benchers to consider this matter was this morning when they received the Order Paper. I believe it to be the usual

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custom when hon. Members are in this situation for the Chair to consider accepting manuscript Amendments.
I am not against the Motion as such, in fact am in favour of it, but I feel that it does not go far enough. I should like to see the Motion amended, and I shall give my reasons for wishing to do so. I think the Prime Minister has some knowledge of some of these reasons, which I am about to adduce.
I should like to see the Motion apply not only to Vehicle and General but also to a large number of other companies, the full details of which are in the possession of the Department of Trade and Industry. I know for a fact—and the Prime Minister can find out that this is a fact—that for years the Department has had in its possession details of similar cases where the Department has deliberately evaded its responsibilities under the Companies Acts when it could—and should—have taken action.
I will quote some of the examples of where this has happened. There was the case of the Real Estate Company; there was the Pinnock fiasco in which many constituents lost their savings; and there was the Dollar Land Holdings case. Also—dare I mention it—there was Rolls Razor, where for four years the Department was asked to take action and then reluctantly, after most of the evidence had been swept under the mat, it was forced to take somewhat belated action. This is not good enough.
It may be necessary for the Tribunal to inquire into this one particular case, but surely what should be examined is whether the Department has carried out its legal obligations in these other cases. I can assure the Prime Minister that Mr. Martin Moir, who has given evidence about the Vehicle and General case to my hon. Friend the Member for Birmingham, Northfield (Mr. Carter), has a pile of cases which he has submitted to the Department of Trade and Industry in which chartered accountants have requested investigation. However, the Department has deliberately refused to carry out its statutory obligations.
Some of these companies have not published their company reports for three or four years, which is illegal. When a body of shareholders, chartered
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accountants and ex-directors of the company go to the Department of Trade and Industry under the provisions of the Companies Acts and say, "Here are a whole string of illegalities and irregularities where the Department has not carried out its statutory responsibility, will you take action?", we know that in no single case has the Department taken any action whatever. What happens is that the Department waits and, having allowed all the evidence to be got rid of and to be swept under the carpet, it says, "Now we will have an investigation".
Mr. Speaker: Order. I have allowed the hon. Member to make his point and to go quite a long way, but what he is now saying is beyond the scope of this Motion. This Motion relates to a Tribunal that is to be set up to look into a specific matter. The idea that the Tribunal should inquire into all these other matters is a quite different issue.
Mr. Lewis: I am sorry, Mr. Speaker, but I must point out that the first time that I and many other back benchers saw the terms of this Motion was this morning. I am suggesting that I cannot support the Motion because it is not drawn widely enough. I am suggesting that had I know this earlier I would have proposed an amendment in line 4 to add at the end some six or seven other companies whose names should be added. I would have suggested substituting the word "companies" for the word "company" and I would have put forward a number of amendments. However, I have not had the opportunity to do so.
I am suggesting that I am now in order in explaining why I have doubts in agreeing to this Motion because it singles out one company. It is surely in order for me to give my reasons for thinking that six or seven other companies should be included in the Motion. Should I not also be able to give evidence on which to persuade the House that this matter has not happened overnight and to give evidence of some instances where these irrgularities have taken place?
I was going on to say that the Motion would have my support if the Prime Minister gave the assurance that he will take firm action now that he has knowledge of the situation. He has told us that he did not know what was going on about Vehicle and General, and that

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he was told only a couple of days ago. He has now been told, because I have written to him, and I tell him again in the hearing of all those right hon. and hon. Members who are present, that there are certainly half a dozen similar cases where the Department of Trade has consistently and persistently refused to carry out its legal obligations under the Companies Act.
It is difficult to understand why a tribunal is necessary. In my view, instead, the Minister and the Department concerned with these companies should demand to know why they have not published reports for three or four years in accordance with the Companies Act, why companies have not had directors, why companies have not had secretaries, and why they have not had the legal enfranchisement laid down in the Companies Act. The House should also be told why it is that when an hon. Member takes these matters up with the Department in question nothing is done, why it is that when he puts down Questions nothing is done, and why it is that when he discusses such matters with the Minister concerned nothing is done.
I do not know whether the Secretary of State or his civil servants are responsible. Whoever is responsible should be kicked in the pants by the Prime Minister and told to get cracking with their inquiries into these six or seven other companies which perhaps in the next few weeks or months will be in the same situation as Vehicle and General.
4.2 p.m.
The Prime Minister (Mr. Edward Heath): As there has not been a general debate, perhaps I might reply to the specific points which have been raised by my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) and the hon. Member for West Ham, North (Mr. Arthur Lewis).
First, on the procedure for putting the Motion on the Order Paper, we have followed precedent in these matters, except in the case of the Aberfan Tribunal, which was of a rather different nature from those normally set up under the 1921 Act.
I read out the terms of reference yesterday in my statement to the House, which
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was a breach with precedent, because it has not been the normal practice to give the terms of reference straight away.
As for the point about widening this inquiry, as I explained yesterday, it was a firm recommendation of the Salmon Commission that such an inquiry should not be wide-ranging but should concentrate on specific matters. That is so with the terms of reference that we have put on the Order Paper.
The hon. Member for West Ham, North wrote to me at the beginning of this week citing a number of cases, such as those that he has mentioned today. He also has a Question to me on the Order Paper about these matters. He will receive an answer to his Question and, should he be present when it is given, no doubt he will be entitled to ask a supplementary. I shall answer the point that he has raised in his letter. One of the cases occurred seven years ago. At the time I was President of the Board of Trade. I instituted immediate inquiries, and a prosecution followed. I shall deal with the other cases in replying to the hon. Gentleman's letter.
I am sorry that there was a misunderstanding yesterday on the point that my right hon. and learned Friend put to me. I hope that it has not led to other misunderstandings as a result of reports in the Press today.
The position is exactly as my right hon. and learned Friend has stated it. The recommendation of the other inquiry presided over by Lord Justice Salmon was as my right hon. and learned Friend has stated, and, since the report was issued in 1969, no amendment of the law has followed. I do not think that my right hon. and learned Friend will hold the present Administration entirely responsible for that. But the situation remains the same as it was at the time of the Aberfan Tribunal.
The Inter-Departmental Committee on the law of contempt, as it affects tribunals of inquiry, concluded that the law of contempt now applies and should continue to apply to tribunals of inquiry. The Committee recommended that, as under the present law, the law of contempt should apply from the date that the tribunal is appointed. That, therefore, is the position. My right hon. Friend the Home Secretary intends to announce the

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members of the Tribunal tomorrow and, from that date, the law will apply.
As for the proposed amendment, as I have stated, that has not been put to the House. I agree with what my right hon. and learned Friend said in quoting the Report, that it may well be that further evidence will come to light as a result of the publicity given to the establishment of the Tribunal.
Whether any action is taken about a possible offence of contempt depends on the chairman of the Tribunal. Any chairman of this kind, who is himself a judge, will obviously take all the circumstances into account in deciding whether it is a matter of contempt which deserves to be referred to the High Court. At the same time, I think that one can have confidence in the president of the Tribunal and in his judgment about whether any comment which might be made is one which is of a nature which should be referred to the High Court because it will imperil the work of the Tribunal.
Question put and agreed to.
Resolved,
That it is expedient that a Tribunal be established for inquiring into a definite matter of urgent public importance, that is to say, the following issues in relation to the circumstances leading up to the cessation of trading by the Vehicle and General Insurance Company Limited—

(a) whether, and if so by whom, the contents of certain documents or other information in the possession of the Department of Trade and Industry relating to the affairs of the company or any of its subsidiaries were improperly disclosed or obtained between 4th and 18th November, 1970, and whether, should this be shown to be the case, any use was made of such information for the purpose of private advantage;

(b) whether there was negligence or misconduct by persons in the service of the Crown directly or indirectly responsible for the discharge, in relation to those companies, of functions under the Insurance Companies Acts, 1958–67;

(c) whether there is any evidence that the interests of policy holders or shareholders of those companies were adversely affected as a result of any impropriety, negligence or misconduct found to have occurred.

ORDERS OF THE DAY

  FINANCE BILL
  Order for Second Reading read.
  4.6 p.m.
  The Chancellor of the Exchequer (Mr. Anthony Barber): I beg to move, That the Bill be now read a Second time.
  When the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) moved the Second Reading of the 1968 Finance Bill, his opening words were:
  "I do not propose to go through the Bill Clause by Clause, describing every nuance in relentless detail. The subsequent proceedings will provide opportunity for detailed discussion of this kind."—[OFFICIAL REPORT, 24th April, 1968; Vol. 763, c. 250.]
  Having myself taken part in four Finance Bills as Economic Secretary and then as Financial Secretary to the Treasury, I respectfully agree with the right hon. Gentleman, and I propose to follow his example.
  The Bill, together with the short Act which we passed last autumn, provides for reductions in taxation amounting to some £1,000 million a year. The Bill is also the first legislative step in a programme of radical reform of the taxation system. In the course of what I have to say, I want to deal with both these aspects. The House will also expect me to say something about the economy, to which many of the provisions of the Bill are directed.
  If we are realistic, any consideration of our present situation must start with an acceptance of the fact that, for many years, our national economic performance compared with that of our principal competitors has been, to put it mildly, an inadequate one. In the years which followed the war, there was perhaps some credible excuse. We had won the war, but the cost to our country was great. As a nation, we sacrificed much in the cause of freedom, and we were proud to do so.
  In more recent years, we can look to no convincing reason beyond ourselves and our performance. But that very fact should give us heart and confidence, because it follows that it lies within our own power to put matters right.

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  There is still much in Britain today of which we are all rightly proud. But I believe that what Britain has been starved of in recent years is achievement and success. It is my belief that it is as important to encourage achievement as it is to help those who do not succeed. It is as important to create wealth as it is to seek to divide it. I certainly have no wish, any more than most right hon. and hon. Members, to create a brash materialistic society. But we need to create a nation which combines in full measure both fairness and success.
  Mr. Jeremy Thorpe: With full employment.
  Mr. Barber: Of course, taxation is only one factor in our social structure. But these are the underlying reasons why I felt it right, at the beginning of a new Parliament, not just to tinker with the system that we inherited, but to set one's sights high and try to design a tax structure best suited for Britain in the last part of this century.
  So these were my aims in the Budget, now to be given effect in the Bill. First, to reduce the burden of taxation so as to increase incentive and initiative; secondly, to simplify the system so as to reduce its unnecessary enervating effects on individuals and on companies; thirdly, to encourage a widespread increase in personal savings so as to promote the accumulation of wealth for our nation; fourthly, to create a steady expansion in economic activity—neither boom nor slump, but sustainable growth, and, fifthly, to ameliorate the inflation which causes so much social injustice.
  Although on 30th March I described in some detail the circumstances in which I had to reach my Budget judgment and the reasons which led me to frame the proposals which I then put before the House, many of which are now embodied in the Bill, it might be helpful if I recapitulated them in broad outline to relate them to developments which have taken place in the past month between the Budget and this Second Reading debate.
  The situation with which I was confronted almost a month ago, at the time of the Budget, was dominated by two main features—inflation and unemployment—combined in intensity and scale as never before in our recent history.
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  The inflationary problem had been with us since the second half of 1969 when the present surge of large wage claims began. That is common ground. From the outset of our term of office the Government recognised that this was the most important economic and social problem facing the country. For this reason—I shall not go into the details today—we have given the highest priority to our policy of achieving a reduction in the level of pay settlements. The second, and related, problem is that of unemployment, which the House is to debate tomorrow.
  In these circumstances, a number of courses were open to me, and I chose a series of measures—many of which are reflected in the Bill—designed to make an addition to demand such that output would grow roughly in line with production potential.
  I realise that there are those who, since the Budget debate, during this past month have urged that the stimulus to demand should be greater. It is right that I should leave the House in no doubt about my own view, which is that to attempt by expansionary fiscal measures to bring about a substantial reduction in unemployment in present circumstances, would do irreparable harm to our longer-term prospects. While our costs and prices are rising so fast—at a rate well in excess of that of many of our competitors—any further boost in demand would be likely both to lead to a disproportionate increase in the demand for imports and to undermine our efforts to introduce some moderation in to wage settlements.
  My assessment today, a month after the Budget, has not changed. The conclusion which I reached was that I should give a modest simulus to demand, and to do so in a way which would stimulate investment and assist the fight against inflation.
  The Bill contains the main taxation provisions for the further cut in corporation tax, for the reductions in income tax and for the halving of S.E.T. These measures in the Bill, together with the other proposals in the Budget Statement, are designed to have the effect of raising the growth in output to about 3 per cent. in the year ahead and, therefore, of allowing the economy to grow in line with its underlying potential.

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  Moreover, the particular taxation measures which I selected, which we are to debate in the coming weeks, should make a contribution both to the job of restoring business confidence and raising investment and to the attack on cost inflation. Business confidence should be helped both by the addition to aggregate demand and by the further cut in corporation tax which will improve the post-tax return on investments and strengthen company liquidity.
  Clause 52 makes provision for the 50 per cent. reduction in the rates of S.E.T. This is the first step in implementing our commitment to abolish the tax altogether. Not all hon. Gentlemen opposite will need convincing of the demerits of S.E.T. Indeed, I recall that the hon. Member for Willesden, West (Mr. Pavitt), who, alas, is not with us this afternoon, supported by some colleagues, even went so far as to vote against their own Government on this particular issue. I am sure that my hon. Friends are looking forward as much as I am to having their support when we come to Clause 52.
  It is interesting to pose the question: Why is it that a tax, S.E.T., to which only employers are directly liable, should have achieved such wide and, indeed, universal unpopularity? I believe that one reason is the artificial distinction between manufacturing and services. This distinction fails to take account of the basic point that the marketing of goods is no less vital a part of getting them to the ultimate user or consumer than is their production. The emphasis on manufacturing ignores the fact that in recent years it has been a feature of all advanced economies, not just our own, that the proportion of the working population engaged in the services and commerce has increased.
  Again, the assertion that S.E.T. has improved the fiscal balance of the tax system, which is said by some hon. Gentlemen opposite, betrays, as Professor Reddaway pointed out, some confusion of thought, because what matters is the sum total of tax on a commodity. There is no inherent virtue in imposing tax at each stage of the distribution process without reference to the level of other indirect taxes.
  I think that one should look at the practical results of the tax as it has operated over the years since it was first
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  introduced. The building and construction industry ranks as services, and those who contribute to our invisible exports through international finance and commerce are liable to the tax.
  Mr. Eric S. Heffer: The right hon. Gentleman will be aware that I oppose S.E.T. being applied to the building industry. I felt that it should never have applied because I did not agree that it was a service industry. Will he indicate whether the Government are prepared to go further in their proposals and actually abolish S.E.T. for the building industry as a whole in July?
  Mr. Barber: I give the hon. Gentleman due credit. He has throughout been entirely consistent about the building industry. I considered, as a result of representations made to me on behalf of the building industry and wholesalers and other categories of people or companies liable to S.E.T., whether it might be worthwhile and sensible to abolish the tax altogether for particular categories of taxpayers liable to S.E.T. But I came to the conclusion that, in all the circumstances, because of the obvious problems which would arise, it would be better to make a substantial cut in S.E.T. right across the board. I assure the hon. Gentleman that I particularly considered industries such as the construction industry because of the effect of S.E.T. upon them.
  With a tax designed to discriminate in favour of manufacturing industry, as S.E.T. is, one might expect to find that it has some supporters among indusirialists. But, as one goes round the country and reads what they say, one finds that industrialists have no more affection for S.E.T. than anybody else. The C.B.I. has repeatedly called for its abolition.
  When one considers the reasoning, it is obvious—because the tax has also added significantly to the costs of United Kingdom manufacturing industry, both through the "forced loan" effect arising from the inevitable delay in repayment, and because those who provide services for industry are liable to be taxed. What sense does it make to discriminate against the builder of a factory, or the firm whose trade is the maintenance of industrial machinery? Yet these people are liable to S.E.T.

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  Again, all manufacturers must have some clerical and sales staff. Because of the establishment basis of S.E.T., the liability of such staff to S.E.T. will often depend on where they happen to be situated. One knows from one's own experience of companies having had to incur considerable expenditure to try to alter the establishment basis in a way which is not sensible from a business point of view, simply to deal with the problem of S.E.T. The cheapest way of running a business may no longer be the most efficient.
  The reduction in S.E.T. will help the company sector as well as having a direct influence on prices. I am sure that today the Opposition Front Bench will wish to join me in congratulating those companies which since the Budget have either made, or have announced, price reductions in anticipation of the cut in S.E.T., even though for administrative reasons it will not be possible until July for the cuts to become operative. I have no doubt that when the full effect of the tax is felt, price reductions will follow.
  I turn now to the reform of the personal income tax system, which is dealt with in Clauses 16, 22 to 29, and Schedules 5 and 6.
  Mr. Thorpe: In a significant passage in the earlier part of the right hon. Gentleman's speech he talked about the level of unemployment. What the right hon. Gentleman says today will be of great relevance to the debate tomorrow. He said that in his present economic thinking he did not feel that a further measure of reflation to cure unemployment would be possible or desirable. Can the right hon. Gentleman tell the House a little more about his thinking? Does he think that the level of unemployment will persist at the present level for the foreseeable future? That is a significant question to which many people would like an answer.
  Mr. Barber: I have dealt at a little longer length than is normal on the Second Reading of the Finance Bill with the general economic situation. There is to be a debate tomorrow on unemployment, but I thought that it was right, as almost a month had passed since we had a four-day debate on the Budget, to give my views on the Budget judgment in the light of all that has happened during the past four weeks.
  Mr. Thorpe: I am grateful to the right hon. Gentleman, but, because of the level of unemployment and the fact that it is higher now than at any time during the last 40 years, it is not surprising that the House is interested in this subject and would like to hear more about it. I hope that the right hon. Gentleman will not feel unduly flattered that the Opposition are asking for more information about his thinking.
  Mr. Barber: That is why I thought it was a right, proper and sensible move on the part of the Opposition to choose tomorrow as a day to debate unemployment, a subject which merits a day's debate of its own.
  Mr. Roy Jenkins: The right hon. Gentleman is not participating in tomorrow's debate, and that is understandable, but he is the principal economics Minister, and therefore his views are of special importance. A certain impression was gained from the right hon. Gentleman's speech last Friday night. He was rather more restrictive then in his attitude to what he might do in the future than he was in his Budget speech, when he said specifically that he was taking measures to restrain the growth in unemployment. Since then the April figures, showing unemployment at a record level, have been published. The right hon. Gentleman also said in his Budget speech that if the measures then proposed did not prove sufficient he could go further in the autumn to deal with the problem. On Friday the right hon. Gentleman said something more restrictive, and he has struck broadly the same note this afternoon. Has the right hon. Gentleman's attitude to this vital issue changed during the last month?
  Mr. Barber: I stand by the words that I have used, both last Friday and this afternoon. If the right hon. Gentleman has any points to make on this question of unemployment, no doubt he will seek to take part in tomorrow's debate, but I understand that he has decided not to do so. I thought it right to state quite clearly where I stood on these matters, because more than a month has passed since the debate on the Budget, and I do not propose to add anything to what I have said this afternoon.
  Mr. Norman Pentland Mr. Norman Pentland (Chester-le-Street) rose—
  Mr. Barber: No. I have a lot to say about the Bill.
  I turn to the reform of the personal income tax system.
  Mr. Pentland Mr. Pentland rose—
  Mr. Barber: No, I must get on. I have quite a lot more to say, and there are many right hon. and hon. Members who wish to take part in the debate. I have already given way a good deal.
  The reform of the personal income tax system and the provisions in the Bill were the subject of an explanatory White Paper published last week simultaneously with the Bill, and I am sure, from what has been said on both sides of the House, that hon. Members have found the White Paper useful. I should like, therefore, to concentrate this afternoon on a number of major points which are concerned with this issue.
  Mr. Pentland Mr. Pentland rose—
  Mr. Barber: No.
  I think that the whole House will agree that these far-reaching reforms of our tax structure were long over-due, and certainly during the Budget debates they were welcomed genuinely on both sides of the House.
  Coming to the details of the reforms, the first and most important change is that the tax system will be based on the rate applicable to a broad first band of earned income—the rate which the vast majority of taxpayers pay. In this way we leave no room for the real doubt that now exists about the tax paid on extra earnings.
  For all but a small minority of taxpayers the tax on extra earnings from overtime or extra effort will be, and will be known to be, the basic rate of tax—provisionally fixed at 30 per cent. This is higher than I would wish, but it is certainly much less than the level of tax which many people think they pay. In recent years we have been used to a standard rate of 8s. 3d. in the £, and certainly many people have rounded this up in a rough and ready way to a belief that taxation took almost half their extra earnings. All that will become a myth of the past.
  After this first broad band, the rate for which is provisionally fixed at 30 per
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  cent. by Clause 29, there will be higher rates charged on successive slices of income. Although these rates will not be fixed until 1973, it is the intention, as I have already stated, to ensure that the top rate on earnings will be 75 per cent., reached at about £20,000. The intermediate steps will be fixed so as to ensure that the graduation between the basic rate and the top rate is smoother and more regular than at present.
  The second major point of the new tax system is this. Modest amounts of investment income will be treated on the same basis as earned income, because the surcharge that is proposed will apply only to investment income exceeding a certain level. I think it is fair to say that since the Budget Statement informed commentators almost everywhere have welcomed this change; and many share the conviction of my hon. Friends and myself that this will lead to a revival of savings.
  I would, of course, very much have liked to have been able to say now what the surcharge will be and how much investment income will be exempt from it. I must explain why I did not feel able to do that. It seemed to me that clearly it would be wrong to make such a commitment now concerning the rates of tax to apply in two years' time. That was the sole and, I believe, the compelling reason why I reached that conclusion.
  The third point which I want to make about those changes in personal taxation is this. It is clearly absurd that we should have in effect two income taxes—one assessed in local tax offices, and the other on the same income but assessed by the surtax office. This is to a large extent a duplication of effort, and by getting rid of this duplication, we shall in due course be able to close down the Surtax Office.
  Mr. John Hall: I can understand that my right hon. Friend cannot refer to the rate which may be applicable in two years' time, but would it not be possible for him to suggest the slice of unearned income above which the rate will apply?
  Mr. Barber: I gave considerable thought to this. In the proposals which I put forward for dealing with personal direct taxation, it is true that, apart from this one aspect about the first slice of

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  investment income, nothing which I have done or said involves a commitment for the Chancellor of the day in two years, who I believe should have complete freedom of action to do whatever he thinks appropriate in the circumstances of the time. The only exception to this is that I have made the commitment for myself and my successor in two years—it is firmly on the record—that there shall be the same treatment for the investment income as for earned income, for the first slice. But I did not feel that I could go further than that. It was after considerable thought that I reached that conclusion, and I hope that my hon. Friend will, on reflection, agree.
  I was saying that the present system involves a considerable duplication of effort. The normal practice in future will be that surtax-payers will have to deal with only one tax office responsible for their tax affairs as a whole, and not with at least two, as at present. Another feature of the new scheme which I think is generally welcomed as a benefit to taxpayers is that pay-as-you-earn deductions will be able to cover the full span of tax rates and not merely the standard rate of tax.
  I recognise that this may cause difficulties to some of those affected in the first year of operation of the new system, because in that year they will also have to pay their surtax for 1972–73, and no doubt this matter will be considered when we reach Clause 16. That Clause makes provision for a measure of spreading of some of the surtax on earnings in certain circumstances.
  The one aspect of this reform about which I have seen some criticism is that it has been said by some that it does not go far enough and that further changes should have been made at the same time. For example, it has been suggested that the whole basis of giving relief for savings in the form of assurance premiums or for interest paid to building societies should have been altered.
  I should therefore say that, when we set out to change from the present dual tax structure to a single structure, we deliberately decided to make as few changes as possible in the way in which particular items were treated for tax purposes. I gather that this was the right course. After all, preparing the
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  way for the new system and getting it into operation will be yet another very large task for the Inland Revenue. It would only have made the immediate task more difficult or even impossible if, in addition to the changes that are being made, there had been other major alterations in the personal tax system.
  Consequently, I am sure that it is equally important that taxpayers and their advisers should not have to digest too much at once. It is for this reason also, incidentally, that we have taken no steps for the time being to introduce self-assessment into the new system. This will be considered at the same time as the proposal for a non-cumulative system of pay-as-you-earn.
  Another major reform is the change in the taxation treatment of the earnings of married couples. I have always thought it strange that while a special income tax allowance—the wife's earned income allowance—is given to married couples where the wife is at work, the tax system so operates that in some circumstances the working couple are penalised. The result is that at some levels of income there is a positive incentive for a wife to go out to work and at other levels the tax system raises a barrier. I can see no sense at all in this. We were pledged to do away with this absurdity and this is what we are doing.
  So in Clause 16 and Schedule 3 we are making a fresh start. If the wife is earning—or if she is retired and receives a pension by virtue of her former job—husband and wife can choose jointly that the wife should be taxed on her earnings as if she were in all respects a separate individual. This change will operate from next year, 1972–73.
  I am somewhat disappointed that it could not have been made operative in this year and become operative immediately, but on top of everything else which the Revenue have to cope with as a result of these major changes, I was completely satisfied that it was right that it should wait a year. If such an election is made, the husband will be entitled only to the single man's allowance and not to the married man's allowance. This is fair enough, because, in practice, the couple will be treated on their earnings as if they were not married.
  Some hon. Members opposite, in our four-day debate on the Budget, seemed

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  to disapprove of this proposal. I cannot think that all hon. Members opposite will disapprove of what is, after all, only a matter of elementary justice; and certainly not those, for example, who are in receipt of fairly substantial income from writing, and whose wives are also successful writers—or even poets.
  There is no conceivable reason why a couple who are both earning should be worse off than if they were not married. Moreover, the present situation, as hon. Members on both sides of the House will know from their correspondence, has discouraged many married women with the skills the country needs from using those skills in the service of the community—like teachers, physiotherapists, doctors and many others. I know a good deal about this, so far as the medical profession goes, from my experience as Minister of Health, when I was told this a number of times.
  I come next to the reduction to 40 per cent. in the rate of corporation tax for the financial year 1970. This is provided for in Clause 8 of the Bill. There are two contexts in which this reduction is significant.
  First, it will provide a relatively quick acting support to companies' liquidity. In this way it will help companies to maintain, and I hope increase, their productive investment; and this will in turn provide the basis for future employment and for economic growth. Taken together, the two reductions in corporation tax which I have now made, and the substitution of capital allowances for the old system of investment grants will provide companies with an additional stimulus of some £135 million in this financial year. On top of this there is the help resulting from the cut in S.E.T., to which I have already referred.
  The second significance of the reduction in the rate of corporation tax to 40 per cent. is that it represents a necessary and important first step on the way to the structural reform of corporation tax for which we hope to legislate next year. The reductions which have been made, together with the reform of personal taxation and the new basic rate of income tax which flows from it, will ease the introduction of a reformed corporation tax.
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  Taken together, the reduction in the rate of corporation tax and the reform in the structure of the tax will form part of a consistent and integrated policy to reduce the total weight of taxation on profits and to redistribute its burden so as to fall more equitably between companies, and in a manner more conductive to healthy economic growth. They will also enable the reform of company taxation to go forward consistently in substance and in timing with the reform of personal taxation, which is the main subject of this year's Finance Bill.
  I think that it is fair to claim that there has been a general welcome for the decision to publish a Green Paper on the Reform of Corporation Tax and to invite those affected by the tax changes to discuss their implications with us. I am sure that this is the right way to set about tax changes of this complexity and importance whenever we can, and that the discussions which will be taking place this summer will be helpful not only to industry and those who must pay the tax but to the Inland Revenue.
  It would be wrong for me to anticipate at this stage the outcome of these consultations. However, if no unexpected difficulty arises, I hope that by the end of the year I shall be in a position to take the firm decisions which will be needed to complete the detailed preparations for the 1972 Finance Bill.
  There are a number of provisions in the Bill which will be of real help to the small businessman and the small capitalist. One such provision is in Clause 49 which provides for the abolition of the capital gains tax charge at death. The original concept of the tax was to tax the man who built up capital gains which he could turn into cash at will. But there is simply no scope for selling off part of the great majority of family businesses when a man dies and wishes to hand on the business to his family. In these circumstances the capital gains tax can often become a penal charge on the productive assets of the business and a major threat to future investment plans.
  I have no doubt that, with the experience which we now have of capital gains tax, this is the right thing to do. I am not suggesting that those who introduced the tax in 1965 should necessarily have foreseen this, but now, with

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  the benefit of experience, this is the right move and I hope that when we come to consider this on reflection, we will have the support of hon. Gentlemen opposite.
  There are also the helpful changes in estate duty. These will, as I said in my Budget Statement, take out of tax a quarter of all estates and will give relief worth- £625 to all estates above the new starting-point of £12,500. We are also giving reasonable time to pay for virtually all assets which are hard to sell quickly, and this, too, will be a great benefit to family businesses.
  There are many other reliefs and changes which will no doubt be considered in Committee. In particular, a considerable welcome has been given to the proposals in Clause 17, which deal with the shortfall provisions. I referred to this in some detail in my Budget Statement, so I need not go over it again this afternoon.
  In our manifesto we promised to simplify the tax system and reduce the burden of taxation. It will be agreed on both sides of the House that the reaction throughout the country has been one of approval that these two aims are being achieved.
  Mr. Heffer Mr. Heffer rose—
  Mr. Barber: The purpose of the Bill is to start the process of simplifying our tax system by cutting away the undergrowth of 100 years of tax proliferation. It is an earnest of our resolve that the British people will no longer continue to be borne down by an apparently ever-increasing weight and complexity of taxation. I therefore commend the Bill to the House.
  4.43 p.m.
  Mr. Harold Lever: I must begin by apologising for my presence, or rather, for the absence of my hon. and learned Friend the Member for Lincoln (Mr. Taverne), who was due to speak following the Chancellor of the Exchequer. Because of his total loss of voice, he has asked to be excused from performing this duty.
  It is rare that one need apologise in this place for the loss of voice of a colleague. Generally it is the reverse. I do not know whether my hon. and learned
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  Friend has become speechless through indignation, having had to give considerable attention to this Measure.
  I only know that, in my case, I was hoping to enjoy the satisfaction of winding up the debate for the Opposition, thereby having the relatively easy task of shooting folly as it flies, rather than having to require more indulgence than is usually the case in opening the debate for the Opposition in reply to the Chancellor.
  I wish early on in my remarks to join in the general congratulations that have been offered to the right hon. Gentleman, and I do not want to seem mean-spirited about this, particularly as later it will be necessary, in the interests of candour, to subject his policy and proposals to rather close criticism.
  I hope the Chancellor will believe me when I say that I was sympathetic to the difficulties inherent in the economic situation, to the tragic circumstances in which he had to take office and, not least, to the fact that he was following my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), who was one of the most gifted minds ever to have been at the Treasury, not to mention the fact that the right hon. Gentleman was to be subjected to the criticism of that same mind from the Opposition benches. I therefore welcome the success which the Chancellor achieved. Whether, on mature consideration, it will be held to have been entirely deserved, we will see.
  When we consider the tax reforms which the right hon. Gentleman has outlined—the disaggregation of the wife's income, the single-tier corporation tax, some adjustments in capital gains tax, surtax reliefs on earned income, the merger of income tax and surtax and so on—we must agree that none of these is new. I am sure that both the Chancellor and his colleagues have been furnished with an adequate record of my pronouncements on these subjects. I only wish to add that in the right context I would have supported uncritically every one of these reforms, and I have made that plain in previous statements.
  A great many people have claimed to be the first to press these reforms on the Chancellor. Nevertheless, the right hon. Gentleman has done it, and he must have the credit for doing it. I can say

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  about this what I have said in another connection—I am sure the House will forgive the repetition—that when a man steals one's clothes, one may question his virtue but one is unwise to challenge his sartorial taste. In the light of my recorded comments on these tax reforms, I shall confine my remarks briefly to admiring the right hon. Gentleman's sartorial taste.
  Having said that, I would not have the Chancellor mislead the House or the country about this being more than a tidying-up operation, a marginal tinkering with mechanics rather than a substantive reform of the essential basis of our taxation system.
  The real things that are wrong with our taxation system are not mechanical, marginal questions. They result from a basic failure to fulfil the purposes of the system in a modern mixed economy by giving effect to the accepted ideas of social justice and what is required by social justice, with the movement forward of these necessary purposes to provide economic progress in a mixed economy.
  All these things have not been dealt with in any of the changes proposed by the right hon. Gentleman. [Interruption.] I gather that at least one hon. Gentleman opposite is puzzled by what I say. I mean that we have a tax system which purports to do what it does not do. It is true that there are some spectacular rates, but by them some rich people are taxed while others have easy rides.
  What impresses the generality of people when they look at our tax system, without going into its inwardness, is that it is a system which gives effect in an egalitarian way to what is required in a mixed economy, but they gain this impression to far too great an extent, and some fundamental reforms in this sphere, at the centre, would impress the country a great deal more than the right hon. Gentleman's proposed reforms at the margin.
  Even the reforms which the Chancellor has proposed are by no means comprehensive and will not remove all the anomalies. I will not weary the House at this stage by detailing the anomalies that will remain—hon. Members may be pleased to learn that I shall probably not
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  be allowed to take part in the Committee proceedings—and I could list at least five times as many extraordinary anomalies in our tax system that will remain after the right hon. Gentleman's proposals have been implemented.
  I hope that I shall not be thought mean-sipirited in making these criticisms of the Chancellor. As I said, he is entitled to the credit for doing what he has done, and I am not withholding any of that credit from him. However, it is a reflection on the state of our fiscal machinery that these simple reforms—which, as I have explained, are not new, and which have been advocated from both sides for a considerable time—should have produced a hallelujah chorus of praise from the newspapers, radio and television, with the right hon. Gentleman being called the greatest Chancellor since Gladstone in his reforming zeal. [HON. MEMBERS: "Hear, hear."] It may reflect immense credit on him, and I welcome any credit that is due to him, but it reflects extraordinary discredit on our way of handling our fiscal affairs.
  For this reason a Select Committee of the House should be set up to assist Chancellors in doing the preparatory work. Such a body, comprised of both parties, could, because of the spirit which prevails in our Select Committees, be of great assistance in doing this preparatory work. We should not have had to wait until now for these reforms if such a Committee had been in existence.
  The objection raised by the hon. Gentleman the Chief Secretary to this procedure was that it involves political controversy, which is best left to take place across the Floor of the House. These matters might get a very much more thorough and impartial consideration in a Select Committee than they do on the Floor of the House. It is precisely because we debate them in the House that marginal matters, secondary and puny issues of differential on dividends and the like, masquerade as matters of high ideological principle, because the only time they are ever considered is in heated debates across the Floor of the House. We could sit round a table, holding our different party political views, and make a lot of progress in improving the tax system by general agreement, saving some of the bogus excitements

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  that take place in the Finance Bill debates, when we dutifully, in the end, traipse into our respective lobbies on matters which purport to be of deep philosophic difference but which are merely matters of practical economic advantage which should rightly be resolved in a proper discussion.
  In his mini-Budget and in the Budget, the right hon. Gentleman is very proud of the fact that he has reduced tax by £1,000 million, but in his speech this afternoon he evaded any discussion—although I am grateful that he said that he would not go into relentless detail; but this is not detail—that out of this huge sum very little has gone to the poorer people of our society. There has been a redistribution of this £1,000 million of a significant kind. It has not been from the very poorest to the rich but at the expense of those immediately above the poorest, who have in many cases been made actually worse off in real income terms, taking the mini-Budget and the Budget together, through higher charges on Government services, the higher social contributions and the entry into tax of many people, wholly or mainly, not because of a rise in their real income but because of a rise in their money income. The Chancellor has done nothing for this last class except for the child allowance concession. He has done nothing for the man who will not get increased child allowances and who has had his real income stationary but his monetary income rising to match inflation. That man now pays tax or more tax than he would otherwise have done.
  The Financial Secretary to the Treasury (Mr. Patrick Jenkin): The right hon. Gentleman has obviously left out of account the cut in the standard rate.
  Mr. Lever: That is of little benefit to the man who has been brought into the tax system for the first time, not because of a rise in real earnings but because of a rise in monetary wages, which merely leaves his real earnings largely as they were but now brings him into the tax system. It is no good the Financial Secretary shaking his head. He ought to have read what the C.B.I. has said. The C.B.I. is not a notorius fount of original and revolutionary notions. Even the C.B.I. believes that the Chancellor ought to have done something for
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  this class of people, and it regards that as of high priority. But nothing has been done for them if they do not possess children qualifying for allowance.
  On the question of surtax reduction on earned income, I hope that no one will believe that I am expressing the unanimous view of the Labour Party, although I speak from the Front Bench, when I say that, given the right context, I could see a very strong case for a readjustment of the burdens of surtax on high earnings, provided that that readjustment was not made at the expense of reliefs which belong to the worse off people in our society, provided that that relief had been financed by people as well off as, or better off than, the people who were the subject of these very high rates of surtax. What makes it impossible for me—
  Mr. Barber: Would the right hon. Gentleman repeat that? I think we all misunderstood it.
  Mr. Lever: I should have welcomed a reduction of surtax on high rates of income, in the interests of fairness between one well-to-do man and another not so heavily taxed because his income or capital situation may make him less afflicted by the tax system. On those grounds, and on the grounds of economic incentive and the like, had the cost of providing this concession of £35 million in a full year been provided by an appropriate source—namely, people better off or, at least as well off—I should have welcomed this. There are such people. There are high earners who are paying 90 per cent. rates of surtax and other people who, for one reason or another, deriving from the ownership of assets, property and businesses, enjoy a higher effective income, after tax—
  Mr. Heffer Mr. Heffer rose—
  Mr. Lever:—and are far better off and pay a lower rate on their effective earnings. If the Chancellor is so unfamiliar in this area, I give him a simple example. If a man owns a business which is making £200,000 a year and is an advancing business, he may receive, after tax, an income of over £100,000 a year, most of which is ploughed back into the company, so his assets increase at £100,000 a year. That increase in assets is his disposable income at some later time when he realises it, on pain

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  of a capital gains tax. It is never subjected to this progressive tax of 90 per cent.
  On the other hand, for surgeons, company directors and the like, who own no property and whose income is subjected to a marginal rate of 90 per cent., if one seeks to relieve, as one ought, some of those high earners from the 90 per cent. rate, one owes an obligation not to finance that relief by denying reliefs to people much worse off who have a far higher prior claim for that money.
  If the Chancellor does not understand that, I can help him no more. I am in no muddle about it, and there is not much excuse for anyone else being in a muddle.
  Mr. Peter Emery: Is not the right hon. Gentleman saying that to provide the money that he wishes to assist the surtax payer, this has to be taken from some other greater wealth and that the only way to do that is by a capital levy?
  Mr. Lever: I can save the hon. Gentleman from straining his ingenuity to exhaustion by reminding him that we have an estate duty system but no gifts tax system. In his Budget speech the Chancellor looked as though he was about to adjust the estate duty rules so as to bring in a gifts tax, which would make the system coherent and comprehensive.
  A multi-millionaire who dies possessed of his estates pays at a high rate of estate duty. A multi-millionaire wisely or unwisely—but perfectly legitimately; I am not preaching humbug about this matter—having been given the option by our tax system to assign the multi-millions to his heirs more than seven years before his death pays no estate duty at all. A modest gifts tax would have more than financed the surtax reliefs which the right hon. Gentleman has introduced. That is the kind of source which the right hon. Gentleman has to look to if he wants to finance it.
  It is no good coming to this side of the House and pleading the cause of the marginal disincentive to a man earning £20,000 a year who ought to have some reduction. It is socially neutral if it is properly financed. Nor must the Labour Party be indifferent to the intelligent apportionment of tax, even among
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  the very rich. What we want is one which has the merits of fair play and economic advantage but which properly apportions the burden.
  It is no good the Chancellor expecting me or anybody else on this side to applaud surtax reductions on the ground that they increase incentives while there are people earning £23 a week who, because of the operation of the tax system and because of the operation of our system of financing social welfare, are often paying a 90 per cent. marginal rate, even though they have families, at income levels of £20 to £25 a week and certainly paying marginal rates of 30 per cent. to 50 per cent. at £17 and £18 a week. It is no good the Chancellor saying that these are social contributions and not tax. If the Chancellor is trying to foster some receptiveness on this side of the House for the concept of incentives, let him not be so selective and feel compassion exclusively in those areas where there is least urgency; namely, in the higher areas of surtax.
  Mr. Heffer: I entirely endorse my right hon. Friend's last comments, but will he indicate clearly that some of his earlier interesting statements were very much a personal opinion and were not the collective wisdom or unwisdom of the Labour Party? Some of us on this side would be bitterly opposed, and are bitterly opposed, to giving any surtax relief. We are of the opinion that we should go further and introduce a wealth tax.
  Mr. Lever: I allowed my hon. Friend to interrupt but not for the purpose of making his own speech. I made it quite clear that I was expressing a personal view, though it happens to be a view along the lines of a view expressed by my right hon. Friend the former Chancellor—my right hon. Friend the Member for Stechford.
  Mr. Heffer: My right hon. Friend was wrong on it as well.
  Mr. Lever: At any rate, I have carried my hon. Friend with me in not supporting the Chancellor's selective compassion and selective desire for incentives. The Chancellor has a very peculiar selective vision on this question. He can see the rich man who is over-taxed. He does not see the rich man who is under-taxed. He

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  can see the disincentive of a high rate of marginal tax on someone earning £20,000 a year, but he does not appear to have seen the greater disincentive on people earning £16 and £17 a week who are subjected de facto to a high rate of marginal tax: the Chancellor has done nothing about that.
  The Chancellor, with his selective vision, is rather like the Character in Dickens of whom the author said that he had got one eye and the popular prejudice ran in favour of two. The Chancellor has one eye—one eye for the rich, high earner. I am not unsympathetic to him having fair play. [Laughter.] Not at all. I vigorously object to the selective vision which centres on incentives for those on £20,000 a year and does nothing for those on high marginal rates of tax at the lower end of the scale.
  Apart from the increase in the child allowance, the only concession in this £1,000 million which has been made to the lower income groups is supposed to accrue through the reduction in S.E.T. What the Chancellor has not said about S.E.T. is how much of the reduction will accrue to those at the lower end of the scale. The right hon. Gentleman asked us to join in a chorus of congratulations to those companies which would relieve the consumer of the amount of S.E.T. of which they themselves were to be relieved. What the Chancellor has not committed himself to telling the House at any point is how much of the £290 million relief will come to the consumer and how much he expects will remain in increased profits.
  What effect the reduction in S.E.T. will have on employment depends vitally on the amount given back. The extent to which this will play its part in the reflationary movement will depend on the consumption effect that ensues from the S.E.T. reduction.
  I ask the Financial Secretary to tell the House how much of the £290 million concession he estimates will have its effect in terms of consumption. In any event, in a Budget of £540 million it was wrong to have given £290 million in relief on selective employment tax, uncertain in its consumption effect and uncertain in its advantage for the generality of citizens. The Chancellor should have used his £290 million to make a
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  contribution to the incomes of those victimised by inflation.
  I turn to the general propositions lying behind the Budget and to the general problems which they are supposed to contribute to solving; namely, inflation and unemployment. The successful tackling of inflation means that the Government must encourage the self-discipline and sense of community obligation of the work people, and the Budget must not be divisive. Out of £1,000 million, to have done so little for ordinary working people immediately disqualifies the Budget from claiming to play anything like the part in reducing inflation that a massive tax reduction opportunity such as this offered the Chancellor.
  The Budget should have contributed to the lowering of prices. The net effect of the mini-Budget and the Budget, taken together, is to increase prices, not to reduce them. The Budget should protect the victims of inflation who have been brought into the tax system because of inflation and for no other reason. The Chancellor has not done that, with the exception of those who enjoy enough progeny—I think that the word is "off-spring" in other connections—in the relieving category to offset the inflationary increase in their tax not brought about by an increase in real earnings.
  The Budget should have contributed effectively to dealing with the unemployment problem. This has a relationship to inflation, as the Chancellor recognises, but I see it somewhat differently from the Chancellor. The kind of self-discipline and co-operation that are required in our inflationary situation can be obtained only if there is a message in the Budget for the massive number of present unemployed rather different from the message the Chancellor has given. It is all right the Chancellor saying that he cannot improve the unemployment situation until the inflation cools off. He will get little or no co-operation from working people as long as he openly and avowedly sends them the message, as he does in the Budget, that the 800,000 unemployed must expect to remain unemployed throughout the whole of the year.
  That is what is planned at best, because the Chancellor showed a marked reluctance to answer those of my hon. Friends, including my right hon. Friend

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  the former Chancellor, who asked him how he stood on the question of the unemployed, what he predicted the unemployment situation would be in the light of his Budget, and what he was hoping to achieve. If the Chancellor is to win the assent of the workers to any sensible policies on inflation he must give a very different message to the unemployed from that which he gives in the Budget; namely, that they must stay out of work in at least their present numbers, and possibly in higher numbers, over the course of the next 12 months.
  The Chancellor is either confused or is seeking to bring confusion to this crucial point. Even when he discusses monetary policy the Chancellor seems to face two ways at the same time. My right hon. Friend the former Chancellor asked the right hon. Gentleman in plain terms to tell us whether he still stands by his Budget position that he wanted to arrest the increase in unemployment by his Budget and that that was the objective of the Budget. Does the Chancellor stand by that; and, if so, does he stand by the other statements he has made in relation to monetary policy, which seemed to be of a different nature?
  The Chancellor said, on the one hand, "I will arrest the rise in unemployment. I will not bring the level of unemployment down, but I will not allow it to go higher, because I shall expand the economy to the full extent of its productive potential—that is, 3 per cent." That is what the Budget is supposed to achieve. These things cannot be calculated with any exactness, especially in an inflationary situation like the present. He said "If for any reason unemployment continues to rise or I am not achieving my 3 per cent. target, I will not hesitate to add further reflation".
  But the Chancellor seems to have moved since then, because, although he kept insisting at first that he would get his 3 per cent., he added when talking of monetary supply, "I am not going to pursue a passive monetary policy and finance the inflation if inflation continues at a certain point". He even denied that the 3 per cent. increase in the money supply for the quarter could be assumed to be something that would continue throughout the whole year. That is as if to say that if inflation remains at its present rate throughout the year he will
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  not be prepared to finance it. But he told us what his intentions are. Does he stick by his proposition that he will reflate if he finds that we are off course on the 3 per cent. growth, or will he say that, if necessary, he will enforce a monetary and fiscal policy which will not even allow us the 3 per cent. growth?
  I am not claiming for my party unique anxiety and concern about the monstrous unemployment figures. I know that every hon. Member on both sides would like to see the figures come down. But the Chancellor's Budget Statement art best projects as the policy the present level of unemployment or something slightly higher. At least we should be assured by him that it will not be worse than that. If he is not to stand ready to reflate to achieve the 3 per cent. growth on which his Budget is based, then we shall get unemployment during the year of well over 1 million in number.
  What will the right hon. Gentleman tell us about that? He started off in not a particularly progressive position, but one that was not as bad as the one to which he is now being pushed, by saying, "I will arrest unemployment and get a 3 per cent. growth. That is, I will use the full productive potential increase without reducing unemployment in this year." Now he is pushed off that to a rather tougher policy, as we see when we read his latest statements, when he says that he will not finance inflation and the like. It becomes obvious that his priority target is not the 3 per cent. growth necessary merely to maintain the present level of unemployment, or something slightly above it, but a monetary target which will allow an increase in unemployment. Since the Chancellor refused to answer my right hon. Friend the former Chancellor on this matter, I hope that the Financial Secretary will tell the House and the people something about what the Government's real policy is.
  The Chancellor started off not unpromisingly, though not very excitingly, about maintaining the present huge level of unemployment, practically guaranteeing that he would not allow it to go higher. Since then he has moved to a tougher position. I know that the right hon. Gentleman is a man of compassion who understands modern conditions and who would resist the pressure from

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  powerful quarters to take this tougher line. If he moves to it, as he has been indicating in his recent speeches, he will end up saying, in the words of the old popular song,
  "I try to be good, but the boys won't let me."
  There are very heavy pressures on him to move from the at least tolerable line that he would use the existing potential of the economy without reducing unemployment.
  Mr. David Mitchell: The right hon. Gentleman said just now that my right hon. Friend the Chancellor, by controlling the liquidity rate, was having an effect on the growth rate. He went on to suggest that a 3 per cent. a quarter—12 per cent. a year—increase in the money supply would barely keep pace with a 3 per cent. growth in the economy. Will he explain exactly how he correlates those figures?
  Mr. Lever: It is fairly easy, but I beg the hon. Gentleman to attend in private seminar if he is curious, rather than force me to inflict on the great audience here a lecture on monetary policy, what it means and how it works. It is the principle of how it works out that I was stating. It does not matter about the details. [Interruption.] I am happy to detain the House with a lecture on the subject if hon. Members wish. All they need to know for their purpose is that if, whether by monetary or fiscal policy, or a combination of the two, the Chancellor sticks to his 3 per cent. growth rate, it is probable that we shall have slightly more but certainly not fewer unemployed than we have now. However, if we do not achieve a 3 per cent. growth rate, because of either the fiscal policy or the monetary policy, unemployment will rise and continue to rise so long as that is the position. I do not think that we need enter into the intricacies of the 3 per cent. a quarter in order to get a simple answer to the question.
  What I want to hear from the Financial Secretary is whether there is to be a priority for the 3 per cent. growth projection given in the Budget Statement, followed by further reflation if necessary to achieve it, which will at any rate maintain unemployment at its present repulsively high level and not increase it,
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  or is he going to take the risk of an even further increase in unemployment?
  There has been a great deal of talk in recent times about the horrors and injustices of inflation. I do not like inflation. There are, indeed, injustices and great dangers in it, but we must not talk as if when there is a trade-off between inflation and unemployment we are trading-off between the horrors, inequities and injustices of inflation on the one hand and the complete, scrupulous fairness and impartiality and pain-free character of unemployment on the other. If there are injustices in inflation, in my lifetime I have never seen any as horrifying, as repulsive and as damaging to the fabric of our society as I have seen in unemployment. There is something peculiarly repulsive to me in the kind of doctrine that we should take for granted that any inflation trade-off with unemployment must be a justifiable policy.
  The Chancellor is moving desperately near that position, even on his Budget projections, and he has moved in a reactionary way since then. He has announced that in the fight against inflation the shock troops are to be our 800,000 unemployed. [Interruption.] Yes, he has. I am not saying that he wills it, but the bankruptcy of Government policy which leads to the Chancellor saying in terms "I cannot reduce unemployment until the inflationary problem has improved" is tantamount to saying that there will be 800,000 unemployed until someone, somehow, solves the problem of inflation. I will go into more detail on who is to solve it in a moment. The Chancellor is showing a most alarming propensity to think that there is a healthy trade-off in the battle of inflation, and he starts by using 800,000 as the shock troops to bear the miseries of unemployment and all that follows from it in human terms for them and their families, and not merely in terms of reduction in the standard of life. But we are warned now that there may be other reserves of our fellow citizens to be thrown into the battle against inflation.
  Banker-Leninists are always lecturing us that societies collapse because of inflation. Which societies collapse because of inflation is not usually specified, and when a society is specified it always proves to be in no relation to the facts. Weimar is a popular example of this.

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  Unhappily for the people who use that argument, Hitler came in not because of inflation but because of the deflation with a currency that was steadily buying more. The German people survived the horrors of the massive inflation following the First World War and moved into a democratic republic. What democracy cannot survive, however, is the massive consequences in terms of unemployment, misery and contempt for the system that brings it about that results when there is high unemployment. I warn the Chancellor not to follow those gentlemen who, whether they are thinking of ancient Rome or other earlier societies, tell us that society goes to pieces because of inflation.
  I do not like inflation. It commits injustices. But what ruins a society is when people accept it as just as moral and as feasible to allow a million of their fellow citizens to be out of work because that is the only way they know to avoid the inconveniences or disruptive effects of inflation. I warn the Chancellor that what that is saying is that the system is bankrupt, if it has no other means of preserving itself from raging inflation than committing such mayhem and misery upon so many of our fellow citizens.
  Before the war, the challenge to private enterprise was, "How do you create the demand which will fully employ our society?" The challenge today is, "How do you control and manage the demand without having the heavy unemployment that used to occur before we learnt how to create the demand?" The answer from the Government is, apparently, "We do not know how, except on the basis of massive unemployment." I found that level of unemployment horrifying 40 years ago, and it is a level which people 40 years later will not stomach.
  It is, I must say, a rather gloomy outlook. What is particularly open to criticism is that members of the Government, when challenged, say "We have played out part, and any unemployment now results because of wild claims by workers on the one hand and by profligate employers paying out claims on the other. It is not the fault of the Chancellor or the Prime Minister—they are only the Government. It is all the fault of the workers or employers, who have
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  brought about this massive unemployment, and if it gets worse it will not be the Government's fault either."
  I hope that some of my hon. Friends will not resent it or be upset if I make a little defence of the Government and their attitude towards their responsibilities as a Government. The Government say, "We cannot help it; we have played our part." I want to take a few minutes, if my hon. Friends do not find it too tedious, to try to get the House to see things as the Government see them so that, whatever the Government's objective misdeeds, we might have sympathy for their subjective condition. I do not think that some of my hon. Friends realise the state of mind of the Government.
  The Government say, "After all, we have cut S.E.T. in half, yet people are still demanding more wages. We have enacted that no surtax payer should pay more than 75 per cent, of his income in tax, yet people still ask for higher wages. It is astounding! We have made working class children pay for their milk and more for their school meals, yet workers are still asking for higher wages. It is incredible! What else have we done? We have reduced corporation tax and merged income tax and surtax, yet still there are workers who have the effrontery to carry on asking for more wages. Who would have thought it? Who could have conceived that inflation would not immediately have abated?"
  One measure after another of this kind has been carried into effect. The right hon. Gentleman and his right hon. and hon. Friends have been living in a daydream during their six wasted years in Opposition. They have been a coterie of meritocrats isolated from the real world and honestly believing that they have performed in nine months a radical transformation of our society. They believe that all these economic and social aspects of our society have been changed from top to bottom and that the entire country should be accepting it and should be responding, only we are suffering from a malign propensity by employers and workers to be delinquent. The Prime Minister and the Chancellor are astounded because they have done everything in their power, everything they pledged thmselves to do. They were

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  going to transform society, and if it is not transformed, that is not their fault. It is only that they happen to be cursed by working people and employers who, in particularly malign conjunction, are defeating the best efforts that the Government were able to produce in their six years of radical thinking. The Government are genuinely astounded that after their radical transformation of society, inflation has not gone down but up and that unemployment has not gone down but up.
  Now, of course, the Government say, "We have done everything we could. It is up to the employers and the workers." It is as if King Canute had said, "I have done everything I could; I ordered the waves back." We have not one Canute but a whole Front Bench of Canutes, who believe that they have done everything for the best and that it is all the fault and folly of the rest of society that the thing does not work.
  The Government appear to be living in a nebulous daze about their responsibilities in modern society. They have been dealing all the time in meaningless aggregates like "workers and employers," They are out of touch with life as it is—which is a dynamic complex of individuals with competing interests. The people of this country cannot be supposed to have engendered in them, by the mere presence of the Chancellor of the Exchequer, a telepathic reflex which will co-ordinate workers and employers in one happy, harmonious arrangement which will stop raging inflation. Even if people wanted to do that, they could not do it. My secretary has not come to me, having read the Chancellor's speeches with some avidity—and even with some conviction, to my surprise—and said, "Please cut my salary so as to make a contribution to creating a job for someone else." Life really is not like that.
  The fact is that the only centre of co-ordination is the Government. Unfortunately, the Government abdicate their responsibilities for co-ordination and leave the whole thing somehow or other to the employers, who are supposed to bankrupt themselves or be regarded as out of line with sensible employers, while working people are supposed to sit back and have no wage claims because the Chancellor has pointed out the
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  aggregate effects of these claims on the aggregate class of workers and the aggregate class of employers.
  There has been an abdication of responsibility by the Government. They are not merely revealed as impotent. Latterly, when their impotence could no longer be concealed, they have taken to boasting about it. One can only assume that they wish in due course to be able to deny the paternity of the policies they are now breeding. The Government are in a state of confusion on the question of how far they stand by their 3 per cent. growth target. Perhaps the Financial Secretary will give the lie to this by coming out loud and clear about which has the priority—the growth target or the inflation level. Perhaps we can get at least that confusion out of our minds.
  This is not the only area of economic confusion in the Government. They are also confused about the nationalised industries. They keep talking about sound business principles, but they operate a selective labour policy on the nationalised industries which is calculated to deny to them a normal flow of high quality labour. They are doing so by making an impact upon the wage structures of those industries which is far more effective and far more severe than they are able to achieve anywhere else. That is not following sound business principles. They arbitrarily forbid price increases without saying where investment funds are to come from in the steel industry and elsewhere. That is not following sound business principles. If the Government had done to private industry what they have done to the steel industry, no one would have any serious expectation that it could prosper.
  I see no kind of coherence in the policy of the Government. We are told that we must adopt sound business principles and not help lame ducks—so we get the Mersey Docks scandal. The Government say in that case, "There is not sufficient public interest to warrant the handing-out of public money, and this lame duck must stand on its own feet"—if "lame duck" is the appropriate term for a stationary dock. But when the dock is about to go bust and when the essential services that it provides would have to be, immediately suspended, what do this Government of sound business principles

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  do? They retrospectively confiscate the legal rights of the creditors and debenture holders. They endanger confidence not only in the Government—which does not matter particularly—but in all public bodies which have to raise funds in the market. I do not want to rub salt in an open wound by referring to the Rolls-Royce fiasco.
  I am afraid that I am not persuaded that all this constitutes sound business management on sound business principles.
  The Chancellor got a rapturous welcome for his Budget. I have said that he deserved some of it. By and large, what he has done has been irrelevant or even adverse to the prospects of tackling the central problems which he had to face in his Budget, of inflation and unemployment. As time goes on people will see that this is so. It is not only the unemployed. All this talk about business confidence being restored is so much "my eye" as long as the Chancellor pursues his unemployment policy.
  It must be understood that in a modern world there can be no business confidence at a time when we have 800,000 unemployed, and rising. People must realise that this is 1971. These are consumers as well as employees who are being laid off. The Chancellor gets more and more pleased with his Budget as time goes on, but I believe that people will move in the reverse direction and become less and less pleased.
  Before the Chancellor gets too complacent about it, too pleased, I warn him that he might find himself in the position to which Bernard Shaw referred with relation to his unsuccessful attempts at love-making. He said:
  "I was never able to carry the lady in question into the state of ecstacy in which I found myself."
  I warn the right hon. Gentleman. He had better start taking a more critical and realistic view about the effects of his Budget not only on ordinary people but on the business community, otherwise he will share a rather similar experience with the late Bernard Shaw.
  What ought to be done? The first thing when we are dealing with an intractable problem such as inflation is to remember, here if anywhere, the Talmudic injunction "Teach thy tongue to say 'I do not know'." I do not claim that
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  I have the perfect solution to inflation. I do not claim that anyone in any country has found the perfect solution, and I would be very compassionate with the Chancellor if it were not for the fact that although we do not know the total answer, we do know what not to do. We do know that to try to solve the problem of inflation through underemployment of resources, through unemployment on a large scale of our people, is the wrong way. I do not believe in strength through self-mutilation, as the Chancellor and his advisers appear to. I believe that if we are to tackle inflation we have to use all the resources in our society, not only in human terms but in resource terms.
  No one is urging the Chancellor to go into a wild frenzy of reflation. All I am saying is: let him commit himself, if he will, to 3 per cent. growth. Secondly he ought to have gone further, if he hopes to win assent in society for dealing with inflation, and started on a policy which was intended, however, cautiously—and I would have supported him in caution—to bring down the rate of unemployment. At least he would be sending a message of hope to our unfortunate fellow citizens out of work. He would be saying "I do not intend that you should stay out of work, unhelped, over the next 12 months". This policy of unemployment as a means of dealing with inflation manages to combine immorality with economic and social folly.
  I would put in its place a coherent and hopeful policy for which over many months now many of us on this side have been arguing. The Chancellor ought to start to get the economy moving. He ought to start to reduce unemployment, however cautiously, so that a least there is a constructive message of hope coming from the House and the Government to those out of work. Then he will start to create business confidence because he will be committing himself to growth. At the moment even the growth he has pledged himself to in the Budget he has begun to hedge around with all kinds of qualifications. Until he commits himself to growth—[Interruption.] I did not hear the hon. Gentleman.
  Mr. Kenneth Baker: I was remarking that we have now got down to the positive proposals of the

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  right hon. Gentleman. I would remind him that in the six years for which he and his party were responsible for the affairs of this country they never achieved the rates of growth about which he is speaking and they never achieved the sustained improvement in the standard of living of our people.
  Mr. Lever: I do not intend to extend this debate by making a defence, nor would I want to make a defence, in every detail, of the success of the previous Government's policies.
  Hon. Members: Hear, hear.
  Mr. Lever: They may not have achieved the growth required but they were never put in the position of the right hon. Gentleman, with a large overseas surplus and a situation in which, unless he gets 3 per cent. growth, unemployment will rise above 800,000. Whether that is to our credit or not is beside the point; all I am saying is that in that concrete situation—I am not trying to score false points—in which the Chancellor finds himself, unless he gets the 3 per cent. growth, unemployment will rise substantially above 800,000.
  At least the Chancellor should pledge himself to this. My advice to him is to pledge himself to something more hopeful and to pledge himself to bring down that level of unemployment. Only if this is done will he get increased investment, increased productivity and lower unit costs. Only if he does so and offers an improved standard of life for our people will he get co-operation in dealing with problems of production, international competitiveness and inflation.
  What the Chancellor has tried has been tried for two years in the United States. Even Mr. Nixon has abandoned it; Mr. Nixon has seen the folly of an attempt to solve the problem of inflation by massive unemployment. He had far more massive unemployment than even the right hon. Gentleman would dare tolerate in this country without curing inflation but he has seen the folly of it and has started to try to reflate the economy and bring down unemployment. He is seeking to get the economy going again, and I hope he is successful.
  The right hon. Gentleman has a balance of payments surplus but he may not have
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  it for too long. If he does not use it, and the breathing space he has, to get our affairs into some proper order while we are surplus, we may find ourselves with high inflation, high unemployment and no balance of payments surplus. It is urgent that the right hon. Gentleman should at least clear his own mind and then tell us what his mind is about the rate of growth and the rate of unemployment that he foresees.
  I do not say that this is the intention of the right hon. Gentleman or of any of his supporters—I do not believe it to be the case—but the fact is that the division between the parties is that the Tory Government have deluded themselves with the belief that the modern problem of inflation, combined with high unemployment, is soluble by going backwards.
  Mr. Kenneth Baker: No.
  Mr. Lever: Yes. I am not saying that hon. and right hon. Gentlemen have no feelings, but the fact is that they have taken a tougher line on school meals and intend to take a tougher line with rent relief and things of that kind, involving a sense of community obligation. Their solution is to turn backwards. They say, "The Labour Government moved too far too fast; they were well intentioned but they softened up society. What our society needs now is a little bit of toughening at these points." I am not saying that these are hard-hearted or callous gentlemen. This is their policy and its central delusion is—"We need to turn the clock back"—not terribly and not without some compassion. I agree that they have helped some of the poorest people in an understanding way, but basically their solution lies in trying to turn the clock back on all the concepts of social advance and justice in which we believe.
  The remedy for the ills and evils in our society is not to move backwards but to move forward, widening our social vision, widening our sense of community obligation. Try to get any reasonably progressive youngster to listen to the proposition that it is possible to solve the problem of inflation through the misery of a million of our fellow citizens and their families and see how much support that proposition receives.
  I am not accustomed to imputing evil motives to people merely because they

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  have a difference of political opinion with myself. I do not believe that anybody on the Government benches is any less anxious and concerned than I am about the grievous misfortune which has overcome our country in that it has this present level of unemployment and is threatened with an even greater and disastrous level. But as long as the Chancellor of the Exchequer says that he is not prepared to take measures to reduce the number of unemployed, and is not even prepared to guarantee that the number will not increase until the inflation problem is solved, then we on this side of the House are driven to fight him every inch of the way. He may see the solution in going back, but we never will. We and the people of this country and of our movement will oppose him bitterly as long as he pursues these disastrous and reactionary policies in relation to the weakest members of our society.
  5.41 p.m.
  Mr. John Boyd-Carpenter: For those of us who have a touch of sadism in our make-up one of the pleasures of this place is to listen to a brilliant Parliamentarian brilliantly arguing the unarguable. We have had this pleasure today for a very considerable time. The right hon. Member for Manchester, Cheetham (Mr. Harold Lever) explained that he was asked at the last moment to step into the gap caused by the unfortunate indisposition of his hon. and learned Friend the Member for Lincoln (Mr. Taverne). At the right hon. Gentleman quoted Bernard Shaw, perhaps I can quote Bernard Shaw back to him. Bernard Shaw once said, "I had not time to prepare a short speech, so I will give you a long one".
  Mr. Harold Lever: May I take the opportunity of saying that, with the interventions and the lack of preparation, I was carried away in my speech and regret that I detained the House for so long, with other hon. Members wishing to speak. I must say touché to the right hon. Gentleman.
  Mr. Boyd-Carpenter: That was said with the right hon. Gentleman's habitual graciousness. I was trying to express sympathy with him.
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  I sympathise with the right hon. Gentleman on an even more substantial point. Having been a responsible Minister in the last Administration for six years, mostly on the economic side, it must be extraordinarily difficult to stand at the Opposition Dispatch Box and purport to tell my right hon. Friend the Chancellor and the country what should be done about the economy. As a distinguished and undoubtedly one of the ablest members of the last Administration, the right hon. Gentleman knows that the Labour Government bequeathed to my hon. Friend and his colleagues—
  Mr. William Hamling: A massive balance of payments surplus.
  Mr. Boyd-Carpenter: Yes, and heavy international debts to offset it—stagnation and, for the first time in our history, rising prices and inflation coupled with rising unemployment. For a right hon. Member so placed to lecture us on how the economy should be conducted is a remarkable feat of most agreeable effrontery. It is as if a doctor, most of whose patients have been treated magnificently but who unhappily have died, was lecturing a number of medical students on the values of his methods of curative medicine.
  The difficulty of the right hon. Member for Cheetham was illustrated by the extraordinary way in which he tied himself up—and he has a gift for tying himself up, as well as everybody else, which is unequalled in the House—on the question of the provisions in the Bill for reductions in surtax. As I understand it, he says—and he must say it because his right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) said it two years ago—that it is important to reduce the top rates of taxation on high earnings, but that he would contemplate it only if it were—and here I use his own word "financed" by some undisclosed method of other taxation on rich people.
  The fallacy of that argument is that the right hon. Member for Cheetham seems to assume that the totality of taxation is fixed and, therefore, if we reduce the taxation on one section of society we must increase it on others. No doubt that was so under the Labour Government. Indeed, at that time the country

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  could only wish that the totality of taxation was fixed. Under the Labour Government it rose on practically every possible occasion. The right hon. Gentleman overlooks the fact that my right hon. Friend the Chancellor, by his statement in October and in this Bill and Budget, has reduced the total of taxation by £1,000 million a year.
  Is the right hon. Gentleman saying that when there is a case, not only on grounds, as he said, of fairness but on grounds of incentive, for a reduction in the very high rates of tax, unequalled, I think, at the margin anywhere else in the world, on high earnings and my right hon. Friend the Chancellor is in a position to reduce taxation by £1,000 million, he may not reduce it by a penny unless he imposes additional offsetting taxation? Is that the doctrine?
  Mr. Lever: I did not say that. I said that in the context in which the Chancellor of the Exchequer operated he should have financed it by taxation on people as well off or better off and in the context of his lack of assistance to people who had a much greater prior claim; if he had not the money to help these people he had to find the money elsewhere.
  Mr. Boyd-Carpenter: The right hon. Gentleman is saying that when my right hon. Friend the Chancellor has £1,000 million in revenue to forgo he should not forgo any of it for what he accepts to be a good reason unless he evolves some new and additional tax on wealthy people.
  Mr. Lever indicated dissent.
  Mr. Boyd-Carpenter: If the right hon. Gentleman did not mean that, his references to some other tax were utterly meaningless.
  Mr. Lever: I said that if the Chancellor felt that he could give no relief to other victims of inflation I could not welcome, as I should have liked to do, the surtax reduction unless he financed it from other wealthy people. If the great bulk of the £1,000 million had gone to the poorer sections of the community and the victims of inflation and a handful of millions went to relieve surtax payers—for example, to reduce the rate to 75 per cent. at a cost of £5 million—I would have had no objection.
  Mr. Boyd-Carpenter: As I suspected, the right hon. Gentleman is on a false
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  hypothesis; namely, that my right hon. Friend the Chancellor was not also giving very considerable relief to a wide variety of people throughout the scale. For example, there is the child allowance. However, one can look at this matter fairly only in the context of the variety of social improvements and changes made at or about the same time, for the obvious reason that no one can help people who are below the tax level by making taxation changes. Surely that is elementary. Therefore, in order to look at the whole complex we must take into account the special reliefs for the poorest sections of the community which were made at the same time and out of public funds.
  I rarely resent anything that the right hon. Member for Cheetham says because he says it so nicely, but when he accused my right hon. Friends of lack of compassion I found myself feeling rather differently towards him. Does he realise that the present Government—not the one of which he was a member—have made special provision for the disabled with the disability pension and an attendance allowance?
  Mr. Lever: I said that.
  Mr. Boyd-Carpenter: Does the right hon. Gentleman recall that the Government have made special provision for the over-eighties? Does he recall that they have made special provision, unprecedented in our social history, for the poorer families? Is he aware that a Bill is going through the House to make the biggest increases ever in National Insurance benefits?
  Mr. Hamling: Who is paying for them?
  Mr. Boyd-Carpenter: If the right hon. Gentleman is aware of those things, he must regret charging us with lack of compassion. The amount of compassion, if it can be measured by the sordid measure of cash, is probably the greatest that any Government has shown, and it is helped by the fact that it is being applied, through the wisdom of my right hon. Friend the Secretary of State for Social Services, with a greater precision in the direction of human needs than was the case with any social changes in our history. Whatever the right hon. Gentleman may charge us with, whatever comparison he may wish to make between

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  the present Government and the Labour Government, compassion is not a basis on which I would advise him to challenge comparisons.
  The right hon. Gentleman treated the dangers of inflation very lightly. His ingenious attempt to suggest that inflation as a matter of history had nothing to do with the rise of Hitler throws little credit on his historical knowledge. Of course when Hitler came into power there was deflation, but why was there deflation? It was the inevitable consequence of the enormous inflation which had destroyed the German middle-class and its savings and eroded the whole fabric of German society. That is why the German has a horror of inflation which is equalled only by the horror, which I share with the right hon. Gentleman, that the Englishman has of unemployment. In both cases this is the result of historical memories and past experience. I have seen unemployment before the war, and I have seen it in areas I know. I like it as little as the right hon. Gentleman does. It is a waste of human effort, and has social consequences which, despite all our social security measures, are severe. Nobody wishes to see it.
  It is equally true—and the right hon. Gentleman must face this—that nothing my right hon. Friend or the Government can do will prevent some measure of unemployment at a time when demands are being made and met for increases in earnings quite out of line with increases in production. If labour in certain directions prices itself out of the market—and this is what has been happening in certain parts of our economy—there is nothing which my right hon. Friend can do except to exercise his good sense and influence in seeking to bring that situation to an end. I hope the right hon. Gentleman will not adopt an attitude of moral superiority over us on the question of unemployment. We wish to see it tackled, and my right hon. Friend is going the right way about it. To urge him to push us back into further inflation would be dangerous.
  Here I pick up one thing which the right hon. Gentleman said which was significant. He said that my right hon. Friend has a good balance of payments
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  position, and he went on to say that he may not have it for long. Out of the right hon. Gentleman's mouth that is an indication that an excessive reflation could endanger one of the achievements of the Government of which he was a member. As he knows, because he has said so, a good balance of payments position is not to be taken for granted; it has to be earned and worked for. It is irresponsible to suggest that because my right hon. Friend has a good balance of payments position at the moment he must be prepared to endanger it.
  I come now to the Bill. My right hon. Friend in the last few months has received many congratulations on his achievements, and they are deserved. I want to add another word of congratulation to him on the Bill itself. It is fashionable in the House to refer to legislation as badly drafted, and I must admit that some is, but this Finance Bill with great concision includes in 56 Clauses enormous changes and improvements in our system of taxation with the minimum of verbiage. In addition, I warmly congatulate those who have assisted my right hon. Friend in drafting the Bill.
  It is also unusual to find a Finance Bill implementing so many of the pledges of the party that brings it forward. My right hon. Friend has put forward a great many of the things that were promised, and, while I thank him for it, I do so in accordance with the classical definition of gratitude, with
  "A lively anticipation of favours to come."
  I now want to make one or two critical observations on particular points, but I stress that I am in general a great enthusiast for the Bill. It is the best of the 25 Finance Bills I have seen in the House, and I become critical now merely because it may be more helpful for me to confine myself to a couple of points of criticism than to waste the time of the House in saying that I agree with my right hon. Friend on the other points.
  Estate duty is a bad tax in many ways, certainly when it goes to high levels. It catches people at the moment of misfortune. It reminds me of the verse:
  "And first of all we fall upon the weak Largely because they do not squeak So loudly as they die."
  It is a tax which can cause real and severe hardship. Like all taxes, whether

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  on capital or on income, in an inflationary era it rises in intensity and effect every year unless drastic action is taken to curtail it. It is as if my right hon. Friend were on a moving staircase. Unless he moves to reduce these taxes every year, they rise, as money incomes rise in an inflationary situation.
  I am sorry that my right hon. Friend has not gone further on estate duty than he has. The increase of exemption to £12,500 is welcome, but it does not go far enough. I would like to have seen the matrimonial home excluded when the home is left to the widow. I do not want to repeat what I said in the Budget debate, because my right hon. Friend replied very sympathetically, but I hope he will do something more to help widows in this situation. Some countries have a lower rate of tax when money is left to a widow or child. Others defer the payment of duty until the death of the widow. Whichever method is used, I hope my right hon. Friend will realise that there is illogicality in the Inland Revenue treating a man and wife as one during their lifetime and then when one of them dies charging estate duty at the full rate on the passage of the goods of one to the other.
  A widow sometimes has to leave the home in which she has lived all her life with her husband and sell her treasures. This is not a great revenue-raising tax, and I hope that my right hon. Friend, who has shown himself so sympathetic and flexible in many directions, will be able to move on the question of widows.
  I welcome enormously the unification of personal taxation, both the unification of earned and investment income and the unification of income tax and surtax. As the right hon. Member for Cheetham said, this has been under consideration for some time. But it is my right hon. Friend who has actually brought it forward.
  Mr. Lever: I said that, too.
  Mr. Boyd-Carpenter: I hope my right hon. Friend will fix the surcharge on investment income fairly high up the scale. The present distinction between earned and unearned income is wholly unrealistic. To give an example, a man who works for an employer and is in the employer's pension scheme has his pen-
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  lion treated by the Inland Revenue when he retires as earned. Another man who builds up a small business and on retirement sells it and lives on the capital and the interest on the capital for the rest of his life has that treated as unearned income. Both those men have made provision as a result of a life's work for their old age, and the differential tax treatments seems very harsh. If my right hon. Friend were to put the point of entry to surcharge too low, he would diminish the value of his reform.
  When it comes to the merging of income tax and surtax my right hon. Friend himself referred to a point where he will be in considerable difficulty. It is a difficulty which my right hon. Friend the Home Secretary and I when we were at the Treasury saw and foresaw when we looked at this issue. My right hon. Friend will be in a very difficult situation in the year 1974. The difficulty arises from the fact that the tax experts and the Inland Revenue look at surtax in a totally different way from the way in which it is looked at by the taxpayer.
  To the Inland Revenue and also to my right hon. Friend, who himself is a distinguished tax expert, surtax for the year 1972–73 is tax for that year. To the taxpayer it is a tax that he must find in the year beginning 1st January, 1974. The layman's view is supported by the fact that if one looks at the Bill now before us we are in the financial year 1971–72 fixing the surtax rate for 1970–71. This supports the view that in reality surtax is a tax paid in the year after 1st January following the financial year to which it relates. When we get to 1973–74, my right hon. Friend has said that he will be collecting his replacement of surtax—his higher rate of income tax—through P.A.Y.E., but at the same time, as the Bill stands, the Inland Revenue will come down on 1st January, 1974, with surtax demands in respect of the tax year 1972–73.
  To take my right hon. Friend's specimen figures, 30 per cent. standard rate of tax plus up to 45 per cent. more on the top rates of earnings, a taxpayer theoretically for that year might be faced with a total of 30, plus 45, plus 45 per cent., or 120 per cent. on the higher tranches of his earnings. This makes the idea of the negative tax put forward

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  by my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) very small beer in comparison. In view of what has been said from both Front Benches about incentives and the need to cut these high rates of tax, there will be a difficult situation created in relation to 1974.
  I appreciate that the Bill contains Clause 16, which is my right hon. Friend's own attempt to mitigate this situation, but, with respect, that provision does not effectively deal with this matter. First of all, it applies to only half the tax due. Secondly, it applies only to earned income, not unearned income. Thirdly, where the taxpayer takes advantage of Clause 16 he will be liable to interest on the tax payment of which he defers. In 1974 my right hon. Friend will get through P.A.Y.E., depending on the rate at which he fixes the tax, the surtax or equivalent revenue for that year. I wonder why it is necessary for him in that same year also to collect surtax which, theoretically from the Revenue point of view, is related to 1972–73, but from the point of view of the taxpayer is tax which falls for payment on 1st January, 1974.
  I do not think that the modest mitigations of the total tax in one year are sufficient to prevent difficulty being caused, and caused for one year only. That would be a year in which high earners would be well advised to earn as little as they can because, since the tax on the top levels will be theoretically over 100 per cent., that is something of a disincentive. This was the difficulty which we foresaw years ago when we looked at this matter. I hope that my right hon. Friend and his advisers will find a solution that is less oppressive than it otherwise might have been.
  Mr. Lever: Perhaps the right hon. Gentleman would also examine the problems that will arise from having two different levels of surtax rate for investment income and earned income. The right hon. Gentleman will recall that when the present Speaker was Chancellor of the Exchequer—I think the right hon. Gentleman was there at the time—the £5,000 limit was raised for earned income and £2,000 was the differential level for unearned income. The result was that the man with unearned income
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  of £2,000 a year had to pay surtax on the first pound of his earnings. Would the right hon. Gentleman elaborate on the difficulties which arise with differential rates?
  Mr. Boyd-Carpenter: I roughly recall the situation, but so far as the Treasury is concerned I had an alibi since I never served at the Treasury with the present Speaker. Indeed, I was engaged in the more compassionate duties of the Ministry of Pensions and National Insurance and, therefore, I would forbear to accept the right hon. Gentleman's invitation.
  I want to concentrate the attention of my right hon. Friend on the new situation which is created by his welcome decision to merge these two taxes. I would ask him to give further thought to better provision to get over the transitional difficulty which in a particular year might be serious.
  In view of the time, I shall not press my right hon. Friend on the evils of long-term capital gains tax in an era of inflation and would merely invite his attention to what I said on this matter in the Budget debate. As the years go by from 1965 these evils become greater I hope that he will find some method of mitigating the effect of that tax after a number of years either by grading down, as the Americans do, or by a time limit. It is not a situation which he can afford to leave unreformed.
  I conclude by congratulating my right hon. Friend on a massive achievement. It is a privilege to have taken part in a Second Reading debate on what will become one of the great historic Finance Bills on this century.
  6.7 p.m.
  Mr. William Hamling: I hope the House will forgive me if I do not intrude on this private war between two former Financial Secretaries to the Treasury. One of them later became Chief Secretary, and I will not comment on the battle which has taken place between them. I would merely observe that at times the Conservative Party does not have the courage of its convictions.
  I would remind the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) that he held office in the days of what is sometimes called Butskellism and one of the boasts of the Government

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  is that they have now left those days behind them and that the situation is quite different. I would remind the House that in opening this debate today the Chancellor of the Exchequer said that his proposals involved a radical change of policy, and I will come to that statement in greater detail later in my speech.
  This Finance Bill, which is the product of the Government's second Budget, takes place against the background of both Budgets being Tory Budgets. The significance of the word "Tory" must not be lost on the House or the country. In our view, the first Budget, the mini-Budget, took us back to the 1930s, to the means test, because it involved a proliferation of new means tests being brought in. The second Budget, however, has taken us back even further, namely back to the situation before 1906, back to the days of Samuel Smiles, back to the days of self-help and to the days of rewarding achievement. The Chancellor used the word "achievement" in his opening speech today. We are now changing the policy of Government in this country. The Chancellor then drew a false analogy between regarding achievement and the creation and redistribution of wealth.
  The new philosophy presented by this Government is based on the view that it is impossible to create wealth and at the same time redistribute wealth. Certainly it has always been the view of my party both in and out of office that one of the pre-requisites of a just society is that wealth should be more fairly distributed and that it is only in that condition that it is possible to unlock the creative capacity not just of one very small and wealthy section of the community but of the whole community. That is the philosophy of this side of the House.
  In the two Budgets that we have had and in this Finance Bill, which the right hon. Member for Kingston-upon-Thames characterises as the finest that he has seen in 25 years, we see a new philosophy. The Government have turned their backs on the policy that the right hon. Gentleman accepted when he was in office. They have gone right back to the idea that we must stop the process of redistributing wealth and, instead, go in for massive rewards to the very wealthy. That is the new philosophy of
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  this Government, and in my view they will live to regret it.
  How do they intend to halt the move towards redistribution? How do they intend to turn back the clock? In the mini-Budget and in this Budget, only a corner of the curtain has been lifted. As yet, we know only a little of the Government's real policies. The House will remember the euphoria with which the Conservative Party welcomed this new Toryism, which is only the old Toryism writ large. The consensus on Welfare State policies was over. That is what the cheers of right hon. and hon. Gentlemen opposite signalled when the Chancellor of the Exchequer sat down after his Budget speech. The old days of the Welfare State were over. They were to be replaced by the opportunity State. That was the reason for the euphoria of the party opposite. However, that euphoria has taken on a sour look in recent weeks as we have seen the results of that policy coming home in the increasing figures of unemployment, which, apparently the present Government seem happy to accept.
  We hear constant complaints from the Government about inflation. They have no right to complain. They have brought about massive tax reductions for the wealthy. They cannot complain that less well off people say "If it is all right for the very wealthy to have incentives, what about us?" Surely there is justice in that.
  Mr. Hugh Dykes: Does not the hon. Gentleman agree that it is virtually impossible, technically and mechanistically, to redistribute wealth in any massive sense beyond the redistributive effects of the income from that wealth or the gains of people's newly-created wealth? Even a wealth tax at a rate which has commonly been discussed would not achieve the desired effect. Therefore, it is right for any Government obsession to be with the creation of new wealth irrespective of the taxes to be levied on that wealth.
  Mr. Hamling: The philosophy of my party is that the massive creation of new wealth can be achieved only if there is a fair distribution of existing wealth. As for limitations on the redistribution of wealth, the hon. Gentleman has only to look at the position some 50 years ago

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  and compare it with the position four years ago in the Inland Revenue's statistics to discover that there have been massive changes in the last 50 years.
  I was talking about the Government's attacks on trade unionists in an attempt to reduce inflation. The Government must accept a large share of the blame for inflation, by their massive tax reductions for the wealthy and their acceptance of the view that the wealthy will work only if they are given incentives. At the same time, the Government have set out as a deliberate act of policy to increase prices, which are the basis of a great many of the wage claims about which they complain. Quite deliberately, they have set out to increase prices in order to make people understand the real cost of the commodities that they buy. That is an act of deliberate policy, and they cannot complain when poorer people say, "If prices are going up and the wealthy are to get massive tax reductions, why should not we be in on the act?"
  There is a free-for-all in wages, and it is the Government's fault. They preached a free-for-all in wages when they were in opposition. They said that there was no need for wage restraint and for a wages policy and that the market should be allowed to decide. They said that the trade unions should be allowed to get the wages that they could by bargaining. They cannot complain now when the trade unions take them at their word.
  We have heard a lot about reducing taxation. But whose taxation has been reduced? The reduction has not been pro rata right across the board. The greatest reductions in tax have been at the top level. What we have seen is a shift in the incidence of taxation. I said just now that the curtain had been lifted only slightly. No doubt over the next two years—I cannot see right hon. and hon. Gentlemen opposite lasting longer than the limit of their present term of office—we shall see an even greater swing in shifting the incidence of taxation.
  I want to draw attention to the changes which have taken place outside the Budget. Over the years, Conservatives have said that, when they were in power between 1951 and 1964, successive Governments reduced taxation. What they never talk about is the massive changes in taxation and welfare policies
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  outside the Budget. Even in the last 10 months we have seen some very significant changes, with increased charges for welfare foods and for this and that. It may not strike right hon. and hon. Members opposite as taxation, but lower-paid people who have to pay these increased charges certainly regard them as forms of tax. I have heard it suggested that the lower-paid do not pay them. I do not know who right hon. and hon. Gentlemen opposite think lower-paid people are. A family with three children on £23 a week is not highly-paid, whatever may be thought. Certainly such families are lower-paid than anyone in this House.
  We have had other changes in the welfare service. What is the future of social services under this Government? In Opposition and in Government right hon. and hon. Gentlemen opposite have talked about massive reductions in public expenditure. Where are these massive changes to come?
  I said earlier that only a corner of the curtain had been lifted on their policies. We have not yet been told about their policy, for example, on local Government finance—grants from the Government to local authorities over a long period. We have not yet been told about their real long term policy for public investment, education, and so on. They are still living on the credit of the Civil Estimates which they inherited from us when we were in power. They have not yet unfolded their real plans.
  Where are the massive reductions in public expenditure to come, if they are not to come from massive reductions in expenditure on the social services? The full story of Government policy has yet to be told.
  Talking about taxation outside the Budget, the Chancellor of the Exchequer boasted about what the Government have done regarding pensions. Who will pay for them? About £500 million more will come in contributions from employers and workers. The Government talk about reducing taxation. What are these contributions if they are not a tax? The pretence has at last been dropped. I am glad for this, anyway. The contributions which people pay for social security are a tax. I have always maintained that they are a tax. I have said so in this House in every Budget debate since

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  I became a Member. I am glad that that pretence has been dropped. But let not the Government also say that they are reducing taxation by £1,000 million when at the same time they are increasing taxation on the middle income ranges to the tune of £500 million. The two things do not add up.
  These contributions are not intended to provide pensions for those paying the contributions. They are not insurance contributions at all; they are a social security tax. This is a taxation outside the Budget.
  The grave danger is that this tax is very regressive. When my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) was talking about marginal rates of taxation for working people in the middle income ranges of £25, £26 and £27 a week, he entirely overlooked and omitted to add into his calculation these significant increased contributions.
  I said that we had had only a glimpse of Tory taxation policy so far. That glimpse indicates that the Government have moved a great distance away from their former position.
  I now turn to prices and incomes policy. I said earlier that the Government are their own victim; that the troubles about which they complain are of their own creation. I distinctly remember—I am sure that the Financial Secretary will remember, too—the attacks on the National Board for Prices and Incomes by the party opposite when in Opposition. I am sure that the hon. Gentleman will remember the speeches made by leading Conservative spokesmen about the trade unions' free bargaining position being restored only when the Labour Government's prices and incomes policies were overthrown and a Conservative Government were elected.
  I wonder what the power workers, the postmen and the other groups of workers who have been attacked and abused by right hon. and hon. Gentlemen opposite would say about that today? Their election propaganda was. "Vote Conservative and we will free the trade unions to use their bargaining power to get what they want." Right hon. and hon. Gentlemen opposite said that the market would be the arbiter—but not for
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  the workers. The market is the arbiter for industry.
  We know what has happened in practice. There has been fundamental interference with the rights of trade unions to bargain for their members. We are constantly told by the Government that the workers must have regard for the national interest. Did they have regard for the national interest when they gave massive tax concessions to the wealthy and abolished school milk? Is that their idea of having regard to the national interest? But trade unionists must have regard to the national interest.
  The interference so far has been almost entirely in the public service sphere. Everyone recognises that this is totally unfair. The Government cannot interfere with the public services and yet allow the kind of wage settlements which go on in private industry. They cannot lay down the law for postmen, giving them 8½ per cent., whilst at the same time the Ford workers get 17 per cent. That is an unfairness which nobody will accept. How long will the Government persist in the illusion that they can evade their responsibilities for an incomes policy?
  The Government have allowed a free-for-all for everyone but the workers. The £17 a week man must restrain himself, but not apparently the £35 or £40 a week man. That is the message which is coming from the Government. Their incomes policy is in ruins. They cannot control the inflationary settlements which go on in private industry. All that they are storing up for themselves in the public services is resentment and contempt.
  The Government must at some stage accept the need for an incomes policy which will have some consideration for the lowly paid, for those who are not prepared to use their strong right arms to get what they can in the gutter. They must at some stage produce an incomes policy which will have some regard for the selfish wage claims which will undoubtedly go on. They must produce an incomes policy which will have some regard for people on fixed incomes. They must produce an incomes policy which does not penalise public service employees. They must at some stage produce a prices and incomes policy which has some respect for the consumer who

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  cannot compete in the same way as many industrial workers. They must at some stage produce a policy for the control of prices. I find very little sight of that at the moment. Certainly the Bill and the Budgets which have been presented by the Government do not indicate that any kind of incomes policy which they are ever likely to produce will carry conviction or will have behind it very much public support.
  The colours which the Government have nailed to the mast are those of self-reliance. Their colours are rewarding the strong, and perhaps a little hand out for the weak. That is not an economic philosophy which will be any guarantee that they will ever have a credible or creditable incomes policy.
  The Clerk at the Table informed the House of the unavoidable absence of Mr. SPEAKER.
  Whereupon Sir ROBERT GRANT-FERRIS, The CHAIRMAN OF WAYS AND MEANS, took the Chair as DEPUTY-SPEAKER, pursuant to the Standing Order.
  6.30 p.m.
  Mr. Kenneth Baker: There was a striking difference between the two speeches from the other side, not only in their manner, which one would expect, but also in their content. The hon. Member for Woolwich, West (Mr. Hamling) at least had the integrity and consistency to advocate what he advocated during the last Parliament, when he supported his Government, and indeed was, I think, a member of it. I am referring to his attitude to a prices and incomes policy. On the other hand, the right hon. Member for Manchester, Cheetham (Mr. Harold Lever), critical as he was of the Government's policy, did not at any time during his speech advocate an alternative policy at all. I welcome the right hon. Gentleman's return to finance and economic debates. I welcome the return of the prodigal. There was rejoicing in the land, once in a while, but there was not rejoicing on all the benches behind the right hon. Gentleman.
  As a Minister in the Treasury in the last Government, the right hon. Member for Cheetham was one of the few Members of the Government who earned the respect of the Opposition as having a real understanding of the tax system and of
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  some of our problems. I do not believe that anyone would accuse the right hon. Gentleman of being mean spirited in his welcome of the tax reforms being put through by the Government, but he was a member of the Treasury team for, I think, three years, and certainly for two and a half years. These reforms could have been put through then, and it does not become the right hon. Gentleman very well to say, "These are not original ideas. Look at the memorandum which I put to the Treasury when I was a Treasury Minister". The fact is that the right hon. Gentleman was a Treasury Minister, that the reforms did not happen, and that they are happening now.
  I think that the right hon. Gentleman was a little unfair when he said that some of the reforms that we are introducing are at the margin. That is by no means the case. This is the most thorough-going programme of reform for many years. In fact, one has to go back probably to Lloyd-George's Budget to find a Budget which marks such a substantial parting of the ways.
  Before turning to the reform proposals, I should like to touch on something which both Opposition speakers mentioned. They referred to it as a rich man's Budget and said that it was designed to satisfy constituents such as those who live in my constituency. If I were to dwell upon certain parts of the Finance Bill it may be that I should make a constituency speech, but that is by no means the case.
  There is a great deal of social fairness in the Budget and in the social security package that goes with it. I remind hon. Gentlemen opposite that the Budget reduces tax for about seven million families with children.
  Mr. Hamling: By how much?
  Mr. Baker: I shall tell the hon. Gentleman in a moment. He talked about the low paid worker. The man earning £15 a week—less than the £23 a week man to whom the hon. Gentleman referred—is better off as a result of the Budget and all the other measures, such as social security charges and national insurance contributions. The figures were given at column 90 of HANSARD on 6th April in a Written Answer to the hon. Member for Exeter (Mr. John Hannam). A married man earning £15 a week, with one child, is better off by £89 a year.

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  That is allowing for everything. A man with two children is better off by £104 a year. For a married man with three children the figure is £130, and for a man with four children it is £156. The family with a low paid wage earner benefits considerably from the total package that we have presented so far.
  Mr. Hamling: Will the hon. Gentleman take into account all the increased prices, and also the increased amount which will have to be paid by a man on his insurance stamp, which is not for his pension?
  Mr. Baker: With respect, I gave a specific reference because that was specifically included in the figures that I gave.
  Mr. Patrick Jenkin: In order to clear up any misconception, the hon. Gentleman ought to realise that a man earning £15 a week is not being asked to pay any increased contribution at all.
  Mr. Peter Emery: That applies to anyone earning up to £18 a week.
  Mr. Baker: May I be allowed to continue my speech?
  The net result, taking our two Budgets together, is that a married man, with two children, earning an average wage of £28 a week is 34p a week better off. The same man, as a result of six years of Socialist rule, was 62p a week worse off. These figures are to be found in HANSARD. [Interruption.] Hon. Gentlemen opposite are a little resentful of these figures because Labour Budgets varied from giving a little to a few to giving nothing to anyone and taking a lot from everybody. Indeed, it is three years ago almost to the day that a Labour Budget was introduced, in 1968, to increase taxtion by £929 million. Three years ago seems like another world. There was a sterling crisis, there was an emergency Budget, and there were two extra Bank holidays. That was only three years ago. But of course it is not another world, it is just another Government in charge.
  The hon. Member for Woolwich, West and his right hon. Friend the Member for Cheetham criticised the Government for, they said, being complacent about rising unemployment. The Budget which my right hon. Friend introduced a month ago is one of the most reflationary
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  Budgets that this country has ever had. There is an injection into total purchasing power—although I accept that it is not all going to affect consumer demand—of about £1,000 million this year, taking the two Budgets together. There is a monetary policy which many of my hon. Friends think is too generous—an increase of 2½ per cent. to 3 per cent. per quarter. That is very reflationary, indeed, and I hope that when the hon. Member for Heywood and Royton (Mr. Barnett) sums up the debate for the Opposition he will be more specific about the Labour Party's proposals in this respect. How would hon. Gentlemen opposite combat inflation and unemployment?
  Mr. Joel Barnett: The Chancellor did not say that he was going to increase the money supply by 3 per cent. per quarter. He said 3 per cent. for one quarter, but he went further today than in his speech the other day, and said that he might not be prepared to go that far at all.
  Mr. Baker: I accept the correction, but if there is not a substantial reduction in the money supplied it is likely to go up by between 2½ per cent. and 3 per cent. under the present policy. That is my interpretation of it.
  I now turn to the reforming elements of the Bill and the Budget. I welcome the scale, scope and method of the reforms. To those who take an interest in tax reforms, writing about them has become something of a growth industry over the last two years. I have made two maiden speeches in the House, both on tax reforms, with an interval of two and a half years between them. The proposals in my second speech were similar to those in my first, because nothing had been done in the interval. Writing about tax reforms has become the outdoor relief of ex-Ministers. As soon as they leave the Treasury they start to become the most passionate advocates of tax reform, and all the arguments put up by them when they were Ministers about it not being possible for there to be simplicity because of the equity involved, and about not being able to do various other things, are all forgotten.
  When hon. Gentlemen on the Opposition Front Bench advocate tax reforms, they are in the position of arriving at

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  the station to find the train steaming out, when they could have steamed out with the train. They had plenty of opportunities to carry out reforms, and I was staggered when the previous Labour Government did not take the advice of the hon. Member for Heywood and Royton, and the hon. Member for Ashton-under-Lyne (Mr. Sheldon), and introduce many of them. It is to the credit of the Chancellor and the Treasury Ministers that they have got on with it.
  I also greatly welcome the method. The consultation before changes is novel. The Financial Secretary made a speech about 18 months ago which I have carefully preserved, in which he described exactly this procedure. I thought that I would have to quote it back to him line by line, but I have put it away in my files because he has stuck to what he said. It is because there is this willingness to consult that we may be able to avoid some of the mistakes of the last few years.
  I believe that there have been 61 changes in capital gains tax since it was introduced in 1965. I am not saying that they could all have been avoided if there had been some consultation on the form of the tax, but probably 30 or 40 could have been anticipated if various interested and professional bodies had been consulted.
  Mr. Barber: My hon. Friend will appreciate that, in the light of that speech by the Financial Secretary, I had no alternative but to proceed in this particular way.
  Mr. Baker: I am glad that there is such harmony among the Treasury team.
  I also welcome their willingness to consult on corporation tax and the Select Committee. I hope that the Select Committee will be set up soon and will meet before we rise in July. I should have liked to see a little more consultation on V.A.T. The Government have produced on that about the whitest Green Paper I have ever seen. It is a very definite statement of the Government's intention. I hope that the Financial Secretary will this evening press the various interested bodies and trade associations to make representations as a matter of urgency. This aspect has not had sufficient publicity.
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  The running together of surtax and income tax has been an obvious one for some time over Schedule E. Since we are going for a basic rate of 30 per cent., there will inevitably be quite a large jump at the bottom, and of course jumps at the top. I hope that, having established the principle of a 30 per cent. rate, in future Budgets we may smooth out some of these bumps.
  A married man earning £20 a week pays no tax at the moment. From £1,000 to £2,000, the average rate of tax goes up from nothing to 16 per cent., and from £2,000 to £4,000, it goes up from 16 per cent. to 23 per cent. Above £4,000 it rises very steeply. If we can iron out some of these bumps over the next few years, so much the better.
  I have some regret that a greater opportunity was not made of simplifying some of the allowances even more. I should have thought that one standard child allowance instead of different allowances for children of different ages and things like this would have been sensible small improvements.
  But I look on this as a beginning on tax reform of income tax and surtax. I hope that some time—it will obviously be the tax reform of the 'eighties rather than the 'seventies—the social security and tax systems will come together in a much more integrated system than at present. As a result of pressurising the Treasury team, in this Parliament and the last, we are on the path of tax reform, but what we are getting is a slightly simpler tax system at the price of an infinitely more complicated social security system. I have often argued that we should bring them more closely together and simplify the cash transaction between the citizen and the State.
  Turning to the investment changes in the Bill, I greatly welcome the abandonment of investment grants. I have believed for some time that they were wasteful. Their supporters have never been able to explain why, when they were operating, investment in service industries, which did not get grants, rose consistently and investment in manufacturing industry, which did get grants, fell. Until they could resolve that basic dilemma, it was clear that the system was suspect.
  Although I welcome this change, I should have preferred to go further. I

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  would have allowed free depreciation. But this may be one of the shots in the Chancellor's locker if he feels that a further reflation or boost to investment is needed. Certain countries, like Sweden, have free depreciation, and it has stimulated business investment considerably.
  But investment ultimately depends upon the confidence of business men, their confidence that if they put down new plant this year or buy a new factory or go ahead with their programmes, there will be bigger sales and better profits next year. Without that, there will be no investment. I would remind the hon. Member for Heywood and Royton that there are signs that investment is beginning to pick up and that business confidence is returning. The first and, I believe, the only survey published in the Financial Times since the Budget optimistically—I hope that the hon. Gentleman will welcome it—showed some renewal of confidence. Being a business man, he knows as well as anyone that without that renewal of confidence we will not get the growth we need.
  There are other indications. The building industry has estimated that starts in the private sector in the first three months of the year have increased by 48 per cent. over the first three months of last year. This is the sort of encouragement which our country and our economy need.
  The Budget judgment of stimulating the growth of the gross national product from 2 per cent. to 3 per cent. I completely support, as does every hon. Member. It is unfair of hon. Members opposite to say that the Government are using unemployment as an instrument of economic policy. Of course they are not doing that. They have introduced a Budget which is expansionist and are trying to meet the demands which we must have of economic growth.
  Without this growth from 2 per cent. to 3 per cent., hon. Members know that the plans for the nationalised industries and for the improvement of the basic infrastructure of the social services will have to be reduced and to some extent cut or abandoned. I therefore congratulate my right hon. Friend upon this historic Budget. It will be remembered not only fiscally, but economically, because I believe that it will bring about
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  the improvement in the rate of growth which we want.
  6.47 p.m.
  Mr. Denzil Davies: Hon. Members opposite have been very enthusiastic about the Budget and the Finance Bill, and their enthusiasm is well founded because it is quite clear that they will give substantial benefits to the wealthy among their own supporters. Before I deal with the measures which are designed to swell the fortunes of the rich and to assist many of the constituents of the hon. Member for St. Marylebone (Mr. Kenneth Baker) I want to say how disappointing it is that the Chancellor has largely failed to make good in the Bill his bold promises of a major reform in direct personal taxation.
  When I left the Chamber on Budget day, in common with other hon. Members, I could not but feel a certain admiration for the Chancellor and for these proposals for reform. After all, here was a Chancellor who had taken his high office in very tragic circumstances. He had been Chancellor for only about six months and now, in his own words, he was embarking upon a major reform of direct personal taxation.
  He told us that, hitherto, this reform had been considered well-nigh impossible, but now, he said, a Chancellor had appeared on the scene who would finish the job which Sir Winston Churchill, apparently, had started but failed to finish. The hon. Member for St. Marylebone went back even further and compared the right hon. Gentleman, in some strange way, to my illustrious countryman, Mr. Lloyd George.
  When I received my slim copy of the Finance Bill my admiration for the Chancellor of the Exchequer knew no bounds. It seemed that the whole programme—this massive programme of reform—was to be carried out in a matter of nine Clauses and a couple of, as Finance Bill Schedules go, uncomplicated Schedules.
  Here, I thought, was a Chancellor who would not only effect a root and branch reform, but would do it with a brevity and elegance of language unusual in our taxation legislation. But alas, all good things must come to an end, and when I sat down to study the Bill in greater detail it was clear that a major reform

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  was not to be and that the essential structure of the system was to remain the same.
  Surtax would be abolished in name only to be replaced by an excess rates tax and an investment surcharge. The surtax office would be done away with amid a fanfare of trumpets only to be replaced by an excess rates tax and investment surcharge department. Nothing much in the world of taxation had changed apart from the name.
  My fears were confirmed when I read the White Paper, because the true story came out in paragraph 9, which said:
  "The abolition of surtax and the creation of a unified tax structure requires a large number of mainly technical amendments. In general, the changes made are of form rather than of substance. Where, in the past, particular items have been treated differently under the income tax and surtax rules, the practical effect of these differences, with a few exceptions, have been preserved inside the new tax structure."
  What was announced a month ago as a major reform in direct personal taxation apparently deteriorated a month later into a mere change of form. Obviously the White Paper was written by a different civil servant
  from the one who wrote the Budget Statement. Or was it the same civil servant writing to a completely different brief?
  The bold statements made in the Budget are now seen to be what they really are—a clever public relations exercise designed to engineer for the Chancellor a much-needed parliamentary success, not to mention some of the massive hand-outs to the rich which the Bill contains.
  The Measure of course contains major changes. Nobody denies this. However, they are changes which can hardly be graced with the name "reforms" because their primary purpose is to enable the rich to add to their wealth. I will mention, without becoming too technical, a few of these changes and leave it to my hon. Friends to develop some of the others.
  The short-term gains tax has been abolished. This will, no doubt, be welcomed with delight in the constituency of the hon. Member for St. Marylebone and in many other parts of the land because large speculative profits can now be made on the Stock Exchange and be taxed at the rate of only 30 per cent., re-
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  gardless of the fact that they may be large amounts and may not be capital profits. Indeed, most of them will be trading profits. Despite this, they will be taxed at 30 per cent.
  Mr. John Nott: If they are trading profits they will not be taxed as capital gains.
  Mr. Davies: The hon. Gentleman will know that the Inland Revenue has been extremely reluctant to try to pursue the taxation of profits made on stocks and shares which are sold over a short period of time. In reality, these are trading profits, but the Revenue has not in the past, and will not in future, tax them as such. As I said, these large gains will be taxed at only 30 per cent.
  This step has been welcomed by stockbrokers because it will increase the turnover on the Stock Exchange, thereby increasing their commission. Whatever else may be said for the Budget, unemployment among stockbrokers this winter will be very low.
  Without announcing it—at any rate, having given it very scant attention in his Budget Statement—the Chancellor has proposed a change in the definition of "earned income". It is now proposed to include profits made by financial partnerships—the sale of shares and other investments by merchant banks and stockbrokers—among the exemptions from the investment surcharge, a change which is being proposed, no doubt, as a result of some high powered lobbying on the part of the merchant banks.
  Not only does the City benefit. The public schools are not left out. Any income paid ostensibly for the benefit of a grandchild under a settlement made by his grandfather will not now be aggregated with the income of the child's father. Whatever hon. Gentlemen opposite say when they are in opposition about equality of opportunity, when they are in office and have a chance to legislate they are anxious to preserve the existing inequalities of opportunity.
  The most substantial and, in my view, extraordinary concession made to the very rich arises in consequence of the provisions of Clause 21, as a result of which it seems that the accumulated and undistributed income of trustees will be

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  taxed as earned income, at the lowest possible rate of 30 per cent., and such income may be as high as £100,000 a year. On my reading of this legislation, such income will be taxed at 30 per cent. even if it is investment income.
  It will not be subjected to the excess rates tax and investment surcharge. Not for those with this favoured income the burden of the excess rates tax or the impost of the investment surcharge. Whatever its size and source, it will be taxed at the lowest possible rate.
  Will the Financial Secretary tell me I am wrong? If I am not wrong, will he explain why such a massive hand-out is being given to the rich at a time when other sections of the community are being asked to exercise restraint in their wage demands?
  The Minister of State, Treasury (Mr. Terence Higgins): Would the hon. Gentleman explain to which Clause he is referring?
  Mr. Davies: I apologise. I referred to Clause 21 when I meant Clause 22. In any case, the Financial Secretary will no doubt wish to clear up this difficulty when he replies to the debate.
  If he confirms what I have said, I trust that he will not shelter behind any specious arguments about the administrative inconvenience of taxing the cumulative income of trustees at more than 30 per cent. After all, he is a member of a supposedly reforming Treasury team. One reason why surtax is being abolished and a uniform rate of tax established is, we are told, to iron out these anomalies and allow all income to be taxed under one taxation system.
  My hon. Friends are deeply suspicious and cynical of this Government's motives in relation to the cumulative income of trustees. This is income which they do not distribute but retain, sometimes for more than 21 years. Even if he were minded, and we doubt very much that he would be, so to do, we believe that the Chancellor could not possibly tax the cumulative income of trustees in the same manner and at the same rates as the incomes of everybody else because, by seeking so to do, he would be acting in direct and violent conflict with the paymasters of his party. After all, prior to
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  the election those who invested £2 million in the party opposite did so to secure a good rate of return on their investment. They would hardly sit idly by now while that investment was being jeopardised and their rate of return was being depreciated by a proposal to tax at anything but the lowest possible rates the cumulative wealth of their family fortunes.
  Other measures in the Bill are designed to assist the wealthy supporters of the Conservative Party. I shall not go into those measures now as we shall, perhaps, have an opportunity later. The Tory party never tires of asserting—driven, perhaps, by a feeling of guilt—that it is a party of one nation, that it is not a sectarian party and that it serves all the people all the time. The contents of the Finance Bill once again amply and eloquently demonstrate the hollowness and the dishonesty of that assertion.
  7.1 p.m.
  Mr. Robert Redmond: I take it that the hon. Member for Llanelly (Mr. Denzil Davies) has said three things in effect. First, he said that the Chancellor has failed in his reform of taxation. Second, he said that the Chancellor has given massive hand-outs for the rich. He kept on saying that. Apparently the hon. Gentleman cannot stand anyone showing a profit without having the whole lot snaffled from him. Hon. Members opposite should realise that the merchant banks perform a great service for the country.
  The hon. Member for Woolwich, West (Mr. Hamling) wants an incomes policy, price restraint, and so on. We had that from the Chancellor in the post-war Socialist Government. Sir Stafford Cripps, and from the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), and they seemed to work on the basis that the more often they did the wrong thing the more likely it would be to come right in the end. I have never been able to follow that kind of argument.
  It seems that when we have a Conservative Government the Opposition always pay them a very warm tribute in Budget and Finance Bill debates. It is the great tribute of recognising that a Conservative Chancellor has the ability to reduce taxes, whereas a Socialist Chancellor never seems to have much option but to increase them like mad. That point was taken by

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  the right hon. Member for Manchester, Cheetham (Mr. Harold Lever). He was backed by the hon. Member for Liverpool, Walton (Mr. Heller), who interrupted the Chancellor to ask if we could not have the abolition of S.E.T. on the building sites; in other words, saying that this was another tax which should have been reduced. This is the sort of tribute which we have at Conservative Budget time. From the debate so far, it seems a pity that the right hon. Member for Cheetham and the hon. Member for Walton are not in the same party.
  The main complaint throughout the debate, which I have no doubt will continue until the closure, is that to reduce taxation is to make great largesse for the rich. I am not rich. I do not pay surtax. But I welcome the proposals in the Bill. I was cheered by the reference of the right hon. Member for Cheetham to the record of the previous Conservative Government. But I always have the impression that the Opposition is more or less united in a conviction that I and my hon. and right hon. Friends represent big business. I do not represent big business I represent the people of Bolton, West in this Chamber and I come from the ranks of small business—small in size, but not in activity.
  Throughout my time in industry, which is not inconsiderable. I have been connected with small firms and it is those that provide the majority of jobs in this country. For several years I have been connected with the firm of Ashley Associates Ltd., which is a firm of management consultants, whose clients tend to be the smaller-sized companies spread across the country.
  I was glad that my right hon. Friend the Chancellor had a word to say about small firms. I can speak with some experience and authority of the effect of six years of increasing taxation on the affairs of small and private companies which employ the majority of the British people. I welcome the changes in capital gains tax, estate duty and so on, because of the effect they have on small business.
  Mr. Barnett: The hon. Gentleman says that he welcomes the changes. Has he noticed that under the new system of corporation tax the majority of close companies will pay considerably more tax?
  Mr. Redmond: I shall come later to corporation tax. I do not want to waste the time of the House.
  I was about to ask whether hon. and right hon. Members opposite understand—and whether we cannot make them understand—the effects of company taxation on the prosperity of those employed in the smaller companies.
  Mr. Nott: Does my hon. Friend agree that that was rather a silly interjection from the Opposition Front Bench, as the hon. Gentleman opposite has been asking for years that we should publish a Green Paper on corporation tax so that everybody could have an opportunity of discussing an issue before it becomes law?
  Mr. Redmond: I was saying that we should not waste the time of the House. I give two examples of my own experience of the effects of socialist taxation levels. A company in Lancashire—not a hundred miles from the constituency of the hon. Member for Heywood and Royton (Mr. Barnett)—has a remarkable new product. It put it on the market about six years ago and immediately found demand for it in Europe, the United States and the Far East. With those markets the expansion which the firm found was very rapid. It became so rapid that capital for expansion became the main problem.
  The managing director put his view of the problem like this. He said that every time he doubled his turnover, which he did each year for several years running, he doubled his book debts, doubled the value of stocks and the value of work in progress. He also increased the company's profit substantially, but because of the rate of expansion the profits never appeared as cash in the bank and were never represented by cash in the balance sheet, but that his overdraft was rising. The assets were fixed assets or assets in stocks and work in progress. They were not money in the bank. [Interruption.] Perhaps the hon. Member for Sheffield, Attercliffe (Mr. Duffy) might like to have a chartered accountant to explain this to him if it is a little difficult. The right hon. Member for Cheetham would have understood it, but it is a bit above the heads of some hon. Members opposite.
  The crunch came on 1st January every year. Although the company had profits on one side of the balance sheet, represented by goods and debts, the money was

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  not in the bank. But the tax man wanted 45 per cent. of those profits in cash on 1st January, on the nail, with no argument.
  Mr. Robert Sheldon: He still wants it.
  Mr. Redmond: Of course he does. He is going to want 40 per cent. That is the point I am making too.
  What was this chap to do? He found a very happy and ingenious solution. He had to avoid an increase in turnover. It is terribly difficult for hon. Members opposite to understand this typical businessman's problem. He had to find a way out of this and he had to restrict his turnover. In other words, if he did not do that he would run first into over trading and then into bankruptcy. Over trading is the way into bankruptcy for the small company short of capital. The hon. Member for Attercliffe again may like a chartered accountant to explain it to him.
  The company made an arrangement with a German firm to manufacture this product in Germany under licence in return for which the company would get a royalty on the Product made. This gave the company cash in the bank at the end of the year and enabled it to avoid a rapid increase in turnover. That was an arrangement caused entirely by Socialist tax levels, especially corporation tax at 45 per cent. But it also meant that work was being done in Germany which should have been done in Lancashire by men and women of Lancashire.
  Another client of mine could be described as an entrepreneur. He is the type of person whom I regard as rather vital to the economy. [Laughter.] Hon. Members opposite seem to think that "entrepreneur" is a rather comic term. However, an entrepreneur is the tyre of person I want to encourage, not to penalise. He is the person who provides jobs and prosperity. I am not under any illusions. He does not regard himself as running a one-man social service. He is in business for the rewards of the business—and good luck to him.
  This entrepreneur began business about 20 years ago in a shed in a back garden. When I saw him about 12 months ago he had a factory in an area of above-average unemployment in a development
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  area and was providing good, well-paid jobs for about 500 people.
  In the course of my business discussions with this man he showed me the plans he had laid for further expansion. They made good sense. I could see that he was right, if he could put the plans into operation, in getting a growth in his business over the next few years to the point where he would be employing instead of 500 probably 750 to 800. The man said to me, "With corporation tax at 45 per cent., the high levels of personal tax, not only on me but on those I have to employ, and the rates of increases in salaries to keep differentials and provide some reward to the men to whom I pay these salaries, I cannot afford to have the expansion". This was yet another case where the Labour Government's fiscal policies were holding down the number of jobs and preventing the expansion of industry.
  My right hon. Friend the Chancellor referred to the number of people who thought that they were paying tax at 8s. 3d. in the pound but who were not doing so. Another businessman whom I met not long ago said to me, "Can you appreciate what happens to the top end of the profits in my company?" He was not a client of mine. He was speaking to me privately. He said, "On every pound of profits my company earns 45 per cent., or 9s. in the pound, goes in corporation tax. On top of that I have to pay 8s. 3d. in the pound income tax on all the dividends that I distribute. I must distribute 60 per cent. of my profits, anyway. Most of the profits that are distributed come either to me or to my wife because we own the business and we think that we should own it as we built it up and started it. I am paying surtax at 10s. in the pound. Add it up. What happens to the profits of my company—9s. corporation tax, 8s. 3d. income tax on dividends, and 10s. surtax. That is £1 7s. 3d. in every pound at the top end of the profits of my company".
  We were with his auditor and tax adviser at the time. Together we were unable to convince the man that he was not paying taxes at those rates. I doubt if even hon. Members opposite would be able to convince him. That was the impression the man had about tax.

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  I wish that it were possible to convince hon. Members opposite that at least one of the contributory factors in the unemployment figures has been the tax policies pursued during the last few years. I want to reduce the level of unemployment, but I want to do it through the expansion of industry.
  When I heard the Chancellor's Budget proposals, I took an Easter Recess opportunity of ringing up the two clients about whom I have spoken to get their reactions to the Budget. I asked them how they felt about their expansion plans now. The answers were just as I thought. They agreed with me that a reduction of 5 per cent. in corporation tax was a help but did not go as far as they wanted it to go. They said that the encouraging thing was that we now had a Government set on reversing the trend of high and complicated taxation. Although the first firm could not undo the overseas licensing agreement, it would not enter into another one. The other firm, the firm which employs 500 but which could expand to 750 to 800, had started on that expansion in the belief that by the time the plans were beginning to bear fruit it would be able to get the finance required.
  This is indicative of the healthy fresh breeze which is blowing through the country as a result of the Chancellor's proposals. Decisions which are made in board rooms today do not put order on the order books of industry tonight, but they get industry on the move. It is not just a case of welcoming the Bill. It is a case of getting it on the Statute Book as soon as possible and getting the cobwebs blown away.
  7.15 p.m.
  Mr. Robert Sheldon: The hon. Member for Bolton, West (Mr. Redmond) is dealing with some very peculiar companies. I have no objection to entrepreneurs if they are successful and understand their business. However, it would seem from the short account given by the hon. Gentleman that they do not fully understand their business and certainly do not understand that a reduction in corporation tax from 45 per cent. to 40 per cent. does not make that much difference to their problems.
  Mr. Redmond: It does not, but it is an indication of a movement in the right
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  direction. That was the theme on which I finished my speech. It has given fresh hope whereas before they had no hope.
  Mr. Sheldon: I do not know what further help was required for a company which was doubling its turnover and profits every year and which had to send its work to Germany because it was so successful. That is the type of company, which, unhappily, I do not meet all that often. I seem to meet companies which are rather better advised than the companies the hon. Gentleman has spoken of.
  I agree with the hon. Member for St. Marylebone (Mr. Kenneth Baker), who raised the question of a Select Committee on Economic Affairs, that the ways in which we have our discussions on taxation are not the best that can be devised. This problem will arise in Committee: we shall not be able to discuss the advantages of taxing in this way rather than in that. All that we shall be able to do is to table Amendments designed to reduce taxation at all levels. That is not the right way to proceed.
  As a result of our method of proceeding, the Inland Revenue, at least on this aspect, has a rather easier time than it should have. There needs to be a closer questioning of the Inland Revenue and of the Treasury judgment. The only way in which we could have such closer questioning would be by vigorous questioning until the Treasury justification became clear to those who were on a Select Committee and to those who read the reports of such inquiries.
  In our method of proceeding we are not able to question the people who made the judgments as to how they arrived at the judgments, what alternatives were available, whether certain alternatives were considered rather than the one chosen, what would the difference have been, and so on.
  In Standing Committee there will be a large number of hon. Members opposite sitting silently, waiting for us to finish our speeches, which to them will always appear to be too long and which, so that we can sometimes gain a concession, will sometimes be rather longer than even we ourselves might wish. This is hardly the best way to conduct an examination of the country's economic affairs and taxation system.

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  I welcome the rather tentative steps which the Lord President of the Council has announced, and I think that these will be accepted by the House as the harbinger of further benefits to come.
  The big aspect of the Bill is the background to it, namely, the levels of inflation and unemployment. It is difficult for anybody to speak on the Bill without mentioning these matters which, although they are not directly mentioned in the Bill, obviously form the background to it and have dictated its shape almost Clause by Clause.
  One of the things which need to be taken into account is the way in which attempts are being made to present to the country as a whole the unjustifiable and unwarranted myth that the level of wage demands is the direct cause of unemployment. This is a point which it is very difficult to put and which it is very difficult to refute except in debate and in the columns of periodicals interested in these matters.
  It is scandalous that the Conservative Party can get away with this point, which I accept is not taken by all hon. Members opposite but which is being put assiduously by economics Ministers. They cannot believe this 19th-century pre-Keynesian nonsense that the cause of unemployment is the high level of wage demands. There are many other factors, factors that were fully taken into account in the forming of the postwar economic strategy, which we thought had been finally settled and would not need to be reopened.
  What is required is an understanding of what is the real industrial potential of the country. We know that it is growing at the rate of perhaps 3 per cent. a year. It is felt that there will be an increase of unemployment arising from this increased industrial potential as productivity increases year by year, and that we should adopt a passive attitude to increasing it. That means that if we let industrial productivity go ahead by itself, as unemployment increases as machines take over the jobs of men so we expand the economy to mop up that unemployment. That is the policy under which the country is run by the present Government and was run by the previous Government.
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  I think that the policy is highly questionable. Certainly an economy can be run in this way, but it need not be run in this way alone. We can actively intervene to push up the rates of growth higher than the potential. We can use an active policy in the matter, and not wait for the unemployment to arise from increased productivity and then mop it up by increases in demand. We can actively stimulate demand to have its own effect on productivity, and thereby promote in industry a policy of expansion without having to wait for that unemployment.
  The point of this is that it has considerable repercussions. Instead of manufacturers having the option to invest or take on labour freely available from a large unemployed pool, they would be faced with a shortage of labour and a greater desire to invest. They could then make that investment earlier. Even though this may be small in its extent, its cumulative effect can be considerable. This is what has happened for only a very brief period since the war. It is what has happened in Germany and one or two other countries, notably Japan. We have been in the position of having to start this. The best example was the boom started by the present Home Secretary in 1964, which I believe might have succeeded if he had not had the constraint of the balance of payments. The difficulty has been that when any Chancellor has had this grand approach to break out of the constraints, he has always had the balance of payments problem to contend with.
  The advantage of the present situation was that for the first time in 30 or 40 years that constraint was not there. The Government had the opportunity to succeed where the present Home Secretary failed. They had this supreme opportunity, and they did not use it. The only justification there ever was for creating that balance of payments surplus, which was bought—I was going to say by the blood and tears of the people, but we need not get so emotional—by the massive efforts and under-consumption of the people, was to make use of it. Instead we see it being frittered slowly while we argue and quarrel among ourselves. This is an appalling approach to what should have been a supreme advantage, which I certainly

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  hope the late Iain Macleod had it in mind to take. That is why I was by no means critical of him in my speech when we spoke on these matters last July. Whether he would have taken it is another matter.
  The sad thing is that this year's Finance Bill is being praised when it missed the whole point. We find ourselves dealing with tax matters which could have been dealt with in any year. What needed to be done this year, and could only have been done this year, was to break out of the spiral I have described. This was the time, and in these matters, as in so many others, timing is of the essence. In this we lost our way.
  The Government are working on the basis of de-escalating wages, and are using unemployment as a means of doing so. I do not think that it is unfair to say that. I agree with my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) that Conservative hon. Members are not callous. But I do not think they have their priorities right. In a situation like the present, the legacy of human misery can be much greater than any temporary advantage, even if they were successful.
  I do not think that the men of the 1950s admired by many Tories—Macmillan, Lord Butler and so on—could have brought themselves readily to accept a level of unemployment such as we have today in order to carry out an economic policy of, at best, doubtful value. Faced with the uncertainty of its economic implications, they would not have accepted the certainty of human misery. That is the kind of trade-off which would not have been possible for a number of such men, who represented the Tory Party and felt themselves in some way guilty of the Tory past in the 1930s, who really believed in the idea of one nation and did not mouth it when they acted in ways having the result of dividing the nation.
  Sir Harmar Nicholls: The hon. Gentleman is perpetuating a myth.
  Mr. Sheldon: There was no myth in this. The deeply embittered generation that experienced the troubles of the 1920s and 1930s was not a myth but a reality.
  Sir Harmar Nicholls: The myth the hon. Gentleman is perpetuating is the
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  unemployment under the Tories in the 1930s. The facts are that the Labour Party took over a million unemployed in 1929 and left three million when they left office in 1932. The Tories had brought it down to a million. again in 1939.
  Mr. Sheldon: If it was a myth, it was a myth accepted by a number of very honourable Tories, and it created the policies that were possible for an incoming Government in 1951. But I do not want to be distracted. I was just giving that as background, and did not want to deal with it at great length.
  I turn to the policy of de-escalation. This was a part of the original package last November, when it was first formulated, when there were fears of the increase in inflation. Following this, there was the Trades Union Congress attempt to get a working dialogue with the Government on these matters. We saw what many of us deeply regretted—the rejection of the T.U.C.'s initiative. I will quote what The Times said, and there were many similar reactions. On 12th February, The Times leader said:
  "When the T.U.C. come forward with suggestions for moderating wage inflation, it is quite irresponsible for the Chancellor first to misrepresent them and then dismiss them out of hand. This is no way to conduct economic policy, and certainly no way to conduct a difficult and precarious policy with success."
  That comment put it admirably. Here was an opportunity to form some sort of accord. That accord might have been limited and might not have produced the final answer. But it would have opened up relationships between the Government and the trade union movement. The Conservative Governments of the 1950s welcomed that relationship with open arms. In 1951 the Conservative Government regarded it as their duty in uniting the country to reach this kind of understanding with the trade unions—not to defer to them or to give way to them but to come to some accommodation with them. It is a pity that that lesson of the post-war Tory Government has not been learnt by the present Tory Government.
  The Government are assiduously peddling their claim of a relationship between the escalation of wage demands and unemployment. That claim is without foundation. In the 1930s there was no

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  inflation but unemployment was monstrously high. Latin America has the highest inflation anywhere in the world but unemployment can be extremely low there. All the work of the Keynesians and others makes it clear that there is no connection. Yet the Government are attempting to defraud the people into believing that responsibility for unemployment does not rest with the Government. But all who understand these matters—including hon. Members opposite—know full well that it does. Having claimed that inflation is the cause of unemployment, the Government have now tried to convince themselves that the deescalation of wage demands is working.
  On 16th March the Prime Minister said:
  "The escalation of wage demands has been brought to a halt. But that is only the beginning of the battle: having halted the escalation, we now have to reverse it."
  That was before the Ford and British Leyland settlements, before some of the biggest increases—which not all of us welcome unless they can be related to productivity—yet the Chancellor, in the knowledge of some of those increases, also said in his Budget Statement that the policy of de-escalation was succeeding.
  But if the Government are right in claiming that high levels of wage demands lead to unemployment, and they have stopped those high levels, then they should have stopped unemployment from rising. But unemployment is still rising. If the Government are right in their view, then at least the rise in unemployment should have been brought to a halt.
  What we are seeing is a policy of wish-fulfilment. Many Governments fall for that. When they find themselves in an impossible situation in which their policies are obviously not working and cannot be seen to be working by any uncommitted or even only partly uncommitted person, they fall into an attitude of wish-fulfilment. The Government are guilty of that when they should at least be making some move towards trying to reach an accommodation with the trade unions or looking to some alternative, possibly through increasing demand. If the Government are to take a risk at any time in this Parliament, one would think that they should take the risk at the present time.
  There is a hopeless decline in investment. It is expected that in the first half
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  of next year, up to June, 1972, the increase in investment will be only ½ per cent. That is deplorable. It is useless for the Government to shrug it off and say that it is a question of time lag, a two-year time lag after coming into office. If we get time lags like that, we shall have to change the way in which we have elections every five years, because it means that any election boom can only be achieved in the lifetime of any succeeding Government. These things do take longer than we sometimes think but not that long.
  There is the question of long-term confidence. It is very difficult to convince manufacturers that they should put in plant that will come into operation probably in a year's time. It is not easy to persuade them to produce the extra goods, because they do not feel confident in the future. That is the problem of the Government. Manufacturers have not shown confidence. I wish they had, because we need that confidence. It is the sort of change towards confidence in the future that the National Plan hoped to make. Jokes are made about the National Plan of 1965 but the great merit of it—and it was a noble aim—was that it sought to lift people's expectations. The disaster of the present time is that people's expectations are being depressed lower than reality. We tried to lift people's sights above reality in order to get the cycle of confidence going.
  In order to create the kind of demand required, the Chancellor might have done something about purchase tax, which at present is at a ridiculously high level on a number of goods which cannot be classed as luxuries, such as diamonds and mink. Instead, he was determined to go for selective employment tax, and it was an enormous pity. Thus, the level of demand next year is likely to be very much higher than many hon. Members opposite may like to see, whereas at present the level is too low. The S.E.T. measures will take a long time to come into effect. The consequential effects will be very much delayed. Thus, the Chancellor does not want to inject more demand now into the economy because he is already worried that there may be too much demand next year. He has gone for a further time lag by dealing with S.E.T. instead of going for purchase tax

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  or for some other measure which could have had a quicker impact.
  The Finance Bill comes at a time when we have the highest level of unemployment since the war, which is seen as almost a permanent feature of the current scene. It is impossible to accept any policy based on maintaining that level without any assurances that the economic success which the Government keep predicting is likely to come about. Once this is fully understood, the people will reject the Bill as they will reject the other policies of the Government.
  7.40 p.m.
  Mr. Peter Emery: It is always a pleasure to follow the hon. Member for Ashton-under-Lyne (Mr. Sheldon). No one on the other side of the House pays more attention to financial matters, certainly from the back benches, than he does. He always presents the House with a thoughtful speech, if not always one with which we can all agree. May I begin by agreeing with the remarks he made about setting up a Select Committee on economic affairs. I know that this is not accepted by some people with great experience, but in my view the sooner it is established the better. It is something the House needs and wants.
  May I deal with two points in the hon. Members speech. He talked about breaking out of the spiral and being able to use this Budget as an opportunity. £1,000 million in tax reduction!—what is this but the type of break-out many of us want to see? With a monetary policy many think is too slack, providing fairly easy cash borrowing for investment, this is hardly the credit squeeze factor hon. Member seems to suggest.
  The hon. Member says that the Government are using unemployment as a cure to inflation. That is completely untrue. The concept that by increasing unemployment we will cure inflation does not stand up to economic examination. It is not a factor which Keynes would accept. Therefore, why should the Government want to do it when it is not an acceptable cure for inflation? Unemployment and inflation are related only in that greater tax reductions to assist in curing unemployment might increase inflation.
  If that argument is being used that the Government have not done enough to
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  cure inflation in this way, it is an argument I could accept. But when the Government have taken the decision to reduce taxation by £1,000 million I do not believe that that accusation holds water.
  Mr. William Molloy: Is the hon. Gentleman really telling the House that it is some sort of comfort to the unemployed to know that there are very wealthy people who are obtaining tax reductions? These are the facts in people's minds today.
  Mr. Emery: I thought I made a mistake in giving way to the hon. Gentleman. That is entirely irrelevant to my argument. The hon. Gentleman knows, and I know, that the effect on surtax is £35 million, and that is all. Let us not say that this is a level which is so scandalously high that everyone in the country is up in arms. This is a section of the community which received no major benefit when the Socialists were in power. One of the effects of this Budget is that it deals with some of the massive wrongs that Socialist taxation policy allowed. This is why I congratulate the Chancellor upon the Budget and the Finance Bill.
  The reform of taxation legislation embodied here is much greater than anyone might have expected the Chancellor to introduce in his first Budget in the first year of the Government. This is often forgotten. In the short time that my right hon. Friend has been in office he has been willing to draw opinions together and go forward with this massive and revolutionary Finance Bill.
  Certain sections of the community have suffered because of the previous Government's taxation policy. This Government have set out to assist these people. The raising of allowances for the family man, the assistance given to the retired, who usually live on fixed incomes, are both things which ought to have been done a long time ago. I welcome the acceptance that taxation on much earned income is taxation on the savings of those who have worked all their lives. There ought not to be a double structure of taxation which the people we are attempting to encourage to save should have to bear as against the rest of the community. The concept that savings income should be at a different level of taxation so that we actually discourage savings is something which even the wild men of the Socialist Party should not want.

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  The real judgment of the Budget can be seen in a parliamentary reply dealing with the effect of the changes in taxation introduced in the ten months since June, 1970. The Government have reduced total taxation by about 6 per cent. or nearly 2 per cent. of the gross national product at factor costs. By contrast, the effect of the changes in 1965–66 was to increase taxation by 6 per cent. or about an extra 1 per cent. of the gross national product. These facts make it clear that the Conservative Party does set out to decrease taxation while the Labour Party, whether or not it wishes to, usually achieves the exact opposite effect.
  Mr. Robert Maclennan: The hon. Member has criticised my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) for his views of the purpose of the Finance Bill, but he has not dealt with the problems of inflation or employment. If he is making the simple point that a certain amount of taxation has been relieved, it hardly needs to be laboured at such length. At least, in fairness, he ought to point out the adverse effects on investment and the industrial climate of the withdrawal of investment grants, which tends to dry up investment in employment-offering activities.
  Mr. Emery: I do not intend to deal with that comment now, not because I cannot but because it has already been dealt with by my hon. Friend the Member for St. Marylebone (Mr. Baker). I want to deal mainly with employment and inflation.
  One point about which the Chancellor must be a little careful has to do with the increased cash flow that the decrease in corporation tax will bring about for business corporations. He must realise that the point he made in the statement he made to the House does not apply until the tax payment becomes due next year. Therefore, although there is an extra 2½ per cent. in this Budget, its effect on cash flow will not occur until the payment at 1st January next year.
  I am massively concerned about the increase of inflationary pressure. Will the Budget cure this problem? Do we see any major increase in expansion of industry? Are we not faced with a
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  worrying increase in export prices which, if it continues, will create a financial balance of payments problem? The situation presents a considerable enigma to anyone who attempts to study it. Sterling is strong, standing at 2·41·31/32 to the dollar. It cannot get much stronger. The balance of payments is favourable enough and much of the short-term borrowing which the Socialist Government made is being repaid—and I do not make that as a party point. Taxes are being reduced. Yet we have an unemployment level of 814,000 and prices have gone up by nearly 9 per cent. in the last year.
  The Government's view about inflation has been that price increases could not be reduced if wage settlements—one of the major factors in production costs—continued at the fantastic and unrealistic levels triggered off by the Government of the right hon. Member for Huyton (Mr. Harold Wilson). Blame for this situation must be squarely placed on the Socialist Administration because when their prices and incomes policy finished at the end of December, 1969—and I had been saying this for years beforehand—the wage demand built up by the ban on ordinary negotiated wage settlements was let loose. The then Prime Minister was quite willing to let wages rip. The effect economically was to put more money in men's pockets but the inflationary effect was not to be felt until after the time of the election. What was not considered was that this "letting loose" of the wage demands created a climate which could not be easily corrected and which still has not been corrected.
  Conservative policy has been clear. Physical and legal controls as the basis of an income policy completely failed under the Socialists. I am committed to support free and open bargaining in wage agreements, but we have urged everyone to ensure that wage bargains were reduced to reasonable levels. The Government have taken a lead in this matter, and some parts of private industry have followed suit. There are, however, notable exceptions. Fords, British Leyland and Vauxhalls have all granted wage awards of approximately 16 per cent.—much higher than the percentage advised by the Government.
  Two further problems arise from these settlements. First, certain agreements

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  have built in a 16 per cent. wage award for the next year and therefore have built in a 16 per cent. inflationary pressure for 12 months' time. The wage claims which are exceptions to the policy pursued by the
  Government receive much more publicity than those which are settled within the scope of the policy. This creates a climate of high wage demands which is a major reversal of what the Government wish.
  It seems evident to me—and it is not often accepted—that the Socialists' incomes policy was undermined by the very strong trade unions—the T.G.W.U., the E.T.U. and the A.E.U. These giants were able to negotiate settlements above the norm or contrary to the N.B.P.I. advice, often under the guise of productivity or other deals. The Socialist Government had neither the strength nor the inclination to bring these "friends and supporters" to heel.
  The Conservative Government cannot allow certain very large employers or manufacturers to undermine the present economic policy of the nation. All of our efforts will be useless if inflation continues and the value of money continues to be eroded. Increases in pensions and cuts in income tax or selective employment tax are meaningless if the benefits continue to be eaten up by inflation.
  I therefore urge the Chancellor of the Exchequer to be ready to act to ensure the working of the Government's policy, even if it means ensuring compliance from the big industries or the major corporations. If a voluntary request will not work, then stronger action is necessary. What action is possible if I reject physical controls? I believe that other steps are possible, and I shall deal briefly with only four of them.
  What is required first is an exact indication by the Government of what level of wage award should be the maximum for any one year. If industry or trade unions agree to settle above these limits certain restraints should come into operation. These restraints affecting industries could be the removal of tariff barriers which are protecting certain aspects of industry. The cold blast of competition in certain fields would not necessarily do any harm; it would probably do some remarkable good. Another restraint could be the removal of special Govern-
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  ment support, whether it be investment allowances or anything else, which could be claimed by industries which make wage settlements above the projected norm. There should be the freezing of further borrowing powers of nationalised industries, because it is the borrowing powers which, on the whole, finance the wage increases. In local government there should be a cutting of rate support grants so that increased costs had to be met, and were seen to be met, entirely by the ratepayers.
  Also there are financial levies which could and should be considered. The economists's favourite—and I reject it, but I believe that since I am trying to present a case it must be mentioned—is a charge as an extra payment on the employees' contribution to the National Insurance stamp of all moneys above the norm so that no benefit would accrue to the employee. I do not believe that that is a possibility, but it needs to be mentioned.
  Alternatively, an excess wages tax could be introduced. This would levy an increase of corporation tax on the company making an excess wage award. Suppose that we set the norm for this year at 9 per cent. If the increase in corporation tax were decided by the House at 2½ per cent. for each 1 per cent. above the norm, with its 16 per cent. award, Fords would have to pay an increased corporation tax of 57½ per cent. instead of the projected 40 per cent. It would even be possible to scale it up after 2 per cent. above the norm to 5 per cent. on corporation tax.
  Such a scheme is pretty rough justice. There would be major objections from the C.B.I. and from many industries. But such a system would apply only to those firms and industries whose actions were against the interest of the general public and who undermined the Government's economic policy. I have said many times that no section of the community has the right to hold the rest of the country to ransom. Anyone, whether trade unions or industrialists, who attempts to do so should be held to account.
  I believe that the taxes I have suggested would prove to be such a disincentive that they would probably never have to be levied. The whole climate of wage negotiations would alter appreciably, which would be to everybody's interest,

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  and inflation would be brought down to comply with the Conservative Government's objective. The scheme would continue to allow freely negotiated wage bargaining. Anyone who felt able to meet high awards above the norm would be able to do so, but I do not believe they would.
  Such a tax would be difficult to administer, because it is new. There would have to be a structure within the Board of Inland Revenue to assess whether productivity or expansion had been required which necessitated a larger number of employees. However, where people are breaking the Government's intended policy I should be quite happy for rough justice to be applied. A settlement could be made by the taxing authority with a right of appeal. The proof that an assessment was unfair should, however, be left to the industry. It should not be left to the Treasury to prove that it was fair. I can well understand that the taxing authorities might not like such a system but, if inflation continues as it has done during the next six months, the Government cannot continue to stand by and do nothing. If the Government's pleading with industry and their policy of attempting to give the lead by restraint in the public sector do not succeed, so that there are more settlements of the same nature as the Ford and Vauxhall settlements, the Government will have to take action. I cannot accept that the Government should go back to the physical controls and to the incomes policy of the Socialists. We must therefore look at other means, and Treasury Ministers should consider the type of action I have outlined.
  There is not much time. The worst possible action for the Government would be to wait until we are in crisis. We must act before crisis arises and not be forced by events into doing something. For these reasons I hope that the Treasury Bench will be willing to consider fully what I hope may be helpful suggestions for dealing with the inflationary pressure.
  8.4 p.m.
  Mr. A. E. P. Duffy: That the hon. Member for Honiton (Mr. Emery) should make the speech which he has just delivered suggests to me that the euphoric reception accorded
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  to the Budget only three weeks ago has already been dissipated. That the hon. Member for Honiton—and other Members of the Conservative Party—should have argued so persuasively for an incomes policy and that he should have foreshadowed a possible crisis calls into question the underlying strategy of the Budget. I hope the hon. Member for Honiton realises that the 9 per cent. norm he was prepared to consider, given our experience of incomes policy making in the 1960s, would mean in practice increases in the region of 12 to 14 per cent. I was interested to hear him say that he thought his right hon. Friend should nevertheless be congratulated on the extent of the reform that he has undertaken in his first Budget. That was the only complimentary thing he had to say about the strategy of the Budget.
  I agree with what the hon. Member for Honiton said about the tax reform content of the Budget, and I was glad to hear the hon. Member for St. Marylebone (Mr. Kenneth Baker) acknowledge the indebtedness of the House to my hon. Friends the Members for Ashton-under-Lyne (Mr. Sheldon) and Heywood and Royton (Mr. Barnett), who year after year argued the case for such far-reaching reforms. They recognised years ago that our tax system was archaic and called for a root and branch reform. In so far as I welcomed this feature in the debate on the Budget Statement three weeks ago, I owe it to their persuasiveness. I was glad that this was a major theme of the Chancellor's Budget speech.
  I am most interested in the Finance Bill and the White Paper on the Reform of Personal Direct Taxation, which lay down this new structure of personal taxation, although in one sense they are disappointing. They leave us in the air on the rates which will apply to different incomes of the two classes, investment and earned, after 1972–73. I was interested to hear the Chancellor say a word about their relationship. We know what the new basic rate will be against the present effective rate after earned income relief. We know what the top rate will be, and the effect on earned incomes of about £20,000 and above. But we have had no detail about the rates below that level, the income bands to which they will apply, the surcharge which will apply to investment incomes and the floor of

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  investment income above which it will operate. I understand the objections to giving this information; yet, given the call from both sides of the House for a Select Committee on Taxation, how can such a Committee work unless it has more information, if only by way of illustration, if only of a provisional nature, to assist the hon. Members who would staff that Committee? The White Paper is none the less welcome because of the way in which it deals with the technical aspects of the change-over to the new system.
  The Chancellor's general intention seems to be to preserve the total personal tax rate through the change-over period. Will the Financial Secretary tell us whether the opportunity will be taken in 1973–74 to shift some of the personal tax burden on to the new indirect V.A.T. foreshadowed in the Budget Statement? No doubt he and his colleagues are well aware of the many problems that will arise at that time, not least because of the difficulties of the transition and the timing. I will raise no more questions about that matter now since there will be opportunities to do so later in Committee.
  I have already expressed concern in the debate on the Budget Statement that the present incidence of personal taxation should not be altered too much during the period and process of tax reform. I am anxious that the two should be kept apart so far as possible and that one should be seen as a thoroughly deserving administrative exercise but the other as an important political exercise. I feel that one should not be prejudicial to the other. I can quite see how easily the second could suffer on account of the first.
  I also acknowledge that the Chancellor has produced a radical and complex Budget. It is radical because it proposes to simplify an archaic tax structure, but complex because it tries to achieve a variety of ends and also provide something for everybody. This in part explains its reception in the country, which, on the whole, has been favourable. Despite the apparent enthusiasm of industry and the City, there is a growing disposition on the part of many people to question its underlying strategy and to ask how far the Budget will help in overcoming the major problems that confront us.
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  The central problem remains that of inflation. On this matter there is no differentiation between one side of the House and the other, or between different categories of people outside the House, or indeed between one country and another. This is a one-world phenomenon so far as the Western world is concerned. It affects the board room and the bedroom; it affects the kitchen and the executive suite. It is a cancerous disease to which this country has never been so virulently exposed as it is today.
  We have the right to ask, and to go on asking, the Chancellor of the Exchequer what cure or easement this Finance Bill seeks to prescribe. At this stage it is difficult to point with certainty to any part of the Finance Bill which offers any such cure. The private sector seemingly does as it likes. It goes ahead in the free market because that is the only way in which industrialists, including the Ford management, can stay in business. At the same time, those who are in the public sector—including those who are too young, or too old, or disabled—face increasing prices for their everyday requirements. Nothing that has happened since the Chancellor presented his Budget Statement to the House has made us doubt his policies quite so sharply as has the Ford settlement, which came shortly afterwards. The Chancellor must be grateful for the existence of a considerable public sector, for its restraint and for its strong sense of social obligation.
  We all recognise that a Budget not only seeks to raise necessary revenue but, through the skilful employment of fiscal and monetary polices, tries to provide an appropriate equilibrium for the economy on a rising curve of growth and a high degree of social justice for society.
  It may fairly be asked what this Bill will do to ease rising prices at a time when savings and incomes are being eroded on a weekly basis. What prospect does it offer for future economic growth given that the Chancellor of the Exchequer's growth target, as he stressed again and again in his speech today, is in line with productive capacity? What he might have said is that the growth target is indeed well within productive capacity. I would ask whether reduction in corporation tax, the halving of S.E.T. and the reduction in the Bank Rate will be sufficient to stimulate investment.

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  This does not mean that I do not welcome what is being done in respect of investment. I very much hope that some of us on this side of the House will be confounded in our gloomy prophecies about the future level of investment. I would even be prepared to risk being at odds with my hon. Friends on this matter, for perhaps I am slightly less pessimistic than they are. It is on this sort of psychological basis that investment decisions are made, and this is the kind of thinking that goes on in board rooms, as will be recognised by hon. Members opposite.
  I want to see a rising level of confidence in board rooms, and whatever can be done to encourage confidence is to be welcomed on both sides of the House. I am even prepared to grant that there may be more ample grounds for this confidence than some of my hon. Friends believe. This does not mean that we should not watch the productive capacity of our economy and ask ourselves whether there is not too great a waste potential. We might see how far we can take this up since we know the costs we are paying month by month in respect of the gap between the Chancellor's growth target and what the economy can do.
  This leads me to raise questions about the right kind of reflation. Is consumer spending high enough? I hope I shall be forgiven for chiding the hon. Members for Honiton and St. Marylebone for the extravagant use of the concept of a £1,000 million injection. They will appreciate that that is a global sum and that consumer injection is considerably less. [Interruption.] If I misunderstood the hon. Member for Honiton, I am sorry. I am prepared to err a little on the side of optimism in regard to investment, but I go the other way in regard to consumer injection. I believe that this injection is much less than we have been led to believe, and that the situation will need to be watched.
  Who will lead this consumer boom? Are they only the poor, the low-paid and the sick—perhaps they ought to be—or are the people who are really being encouraged those who ride the waves, like the Prime Minister? Will this assist directly the unfortunate and growing imbalance in the import-export relationship? These and similar questions also arise.
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  I do not deny that the Finance Bill provides some investment for industry in the ways I have already mentioned. I am hopeful that it will help to restore confidence. But I am wondering how this confidence can be consolidated and translated into rising investment, with the spectre of 1 million unemployed haunting the nation? Some tax concessions may help here, because they are incorporated in the Finance Bill, but, on the best evidence available, they are unlikely to have much effect on either the economy or the beneficiaries. For that reason, I wonder how far those who have been especially encouraged by the Budget and who will be encouraged by the Finance Bill will be further encouraged to the point of helping investment, or whether they will not merely interpret this as a reward for their voting Tory.
  I do not deny that savings are on the increase, but I wonder how far the increase represents a growing propensity to save for the best motives or whether it reflects a growing insecurity amongst wage earners or perhaps the lack of creative investment outlets amongst the better off. There is a significant number of savings schemes and devices on the market indicating a growing urge to find a haven for savings outside the United Kingdom.
  The reduction of selective employment tax projected in Clause introduces a new factor in the retailing of consumer goods in the more competitive and responsible areas of the market and in the service industries. However, too much store should not be set on its consequential impact on prices. I recall the Chancellor of the Exchequer saying today that he thought that those stores which had already begun to mark down their prices because of the announcement about S.E.T. should be congratulated. But how far are those congratulations deserved? Might not it be the other way round, and that the people who are now marking down prices are those who marked them up, contrary to the wishes of this House, when S.E.T. was introduced, and in the face of the widespread resentment of the consumer public? Surely the firms which should be congratulated are those which will not make any adjustment to their prices because they did not make them when S.E.T. was introduced. They acted in the best spirit of that Act and absorbed

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  it through increased productivity and a slimming down of their labour forces.
  When I knew that today's debate was to take place, I asked an accountant friend of mine what he thought now that S.E.T. was on its way out. He has considerable experience in handling tax problems and S.E.T., and it seemed to me that here was someone whose judgment I respected and who was well placed to offer his views on it. I did not doubt that there were arguments against it, and I thought that we ought to consider another view before S.E.T. passed into history.
  The view of my accountant friend is that,
  "S.E.T. is by far the best way of collecting revenue ever invented. Its failings are the huge exemptions given to all manufacturing industries, involving refunds and the consequent clerical staff required. This could be easily overcome by cancelling all refunds so that everyone paid S.E.T. Thus a huge revenue would be collected by way of a stamp on the National Insurance card at a negligible cost to the public Exchequer. The cost of S.E.T. to manufacturing industry could be offset by a further reduction in corporation tax. S.E.T., apart from the obvious advantages of cheap collection, also ensures that an employer will not carry unnecessary labour. He will also endeavour to keep his labour to a minimum by investment in modern plant and equipment. This may not be politically desirable from a labour point of view, but it is certainly an economic desirability from the country's standpoint."
  That is a view which is not unknown in this House. It has often been expressed by hon. Members of my own party. It is a view which needs to be set alongside the opinion expressed by the Chancellor today about S.E.T. One of the benefits of S.E.T. has been the large amounts of cash in hand that the Revenue has been able to hold. One wonders how far they will finance refunds of the large sums held in July and subsequently.
  Finally, the Finance Bill details the Government's capital allowances system in Clauses 30 to 44. These repeat the proposals made in last October's White Paper on Investment Incentives. Higher rates of allowances now apply to plant and machinery acquired after 26th October of last year. Even so, they only partially compensate for the abolition of the investment grant system. This will undoubtedly deal a body blow to the regions. It knocks the sense out of not only regional development but develop-
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  ment and planning by forward-looking concerns in both the private and the public sectors. As a result, unemployment must continue to rise everywhere and remain chronic in certain locations.
  It is difficult, therefore, to avoid the conclusion that the Chancellor of the Exchequer, on the basis of his public statements, is using unemployment as a major weapon to combat inflation. In this connection, I want to refer to an article in The Times last Monday by its Economics Editor, Mr. Peter Jay, in which he says:
  "A high level and a rising trend of unemployment and, it is emerging, an integral part of the Government's short-term economic plan rather than just a regretted side effect of past output trends."
  He goes on to develop his argument in a way which suggests that it is the well-thought-out view of The Times. No doubt it will be put forward by my right hon. and hon. Friends in tomorrow's debate on unemployment, and they will expect a reply from the Government.
  Now that the first flush of enthusiasm for the Budget has died down, it is clear that some of the problems which beset us before its introduction are still very much with us and seem to be as dangerous as ever. Thus, the Chancellor of the Exchequer has failed to restore confidence at every level of the community. Deep concern remains the overriding factor of life in Britain today. There is concern about the value of money and the value of savings. There is concern about the value of endeavour. One day soon, perhaps, there will be concern about the right hon. Gentleman's Budget strategy and its relevance to these problems.
  We know from the speech of the hon. Member for Honiton that an assortment of further remedies is being canvassed on all sides, among them a fresh tightening of the money supply, a price squeeze, a wage freeze, a special tax on companies yielding to inflationary claims, and so on. The Chancellor of the Exchequer has weapons to hand in the regulators. Can he be confident that it will not be necessary by the autumn to buttress the regulators with the kind of incomes policy for which his hon. Friend the Member for Honiton called, with some other kind of incomes policy or, in its absence, with an autumn Budget?
  8.28 p.m.
  Mr. David Madel: I hope that the hon. Member for Sheffield, Attercliffe (Mr. Duffy) will forgive me if I do not follow him too closely in his remarks. I have only a few points to make and other hon. Members wish to speak.
  Since the Budget was announced many commentators have drawn attention to that part of the Budget Statement where my right hon Friend the Chancellor of the Exchequer said:
  "If, after the measures I am about to announce have been allowed a reasonable time to have their effect, a further stimulus is needed, the usual instruments are always available. Here I should mention that I propose to extend for a further year the power to vary revenue duties and purchase tax by means of the regulator."—[OFFICIAL REPORT, 30th March 1971; Vol. 814, c. 1370.]
  Since that statement we have had more information on unemployment and more pleas for further stimulus for the economy. That is not to say that people have not welcomed the tax changes and the simplification of the tax system.
  I endorse the point made by my hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker) when he urged industry to use the time between now and the autumn, when I think the White Paper on value-added tax is to be published, to go into consultations in depth with the Government on what effects this new tax will have on particular industries.
  I make a plea to the Chancellor to consider using the regulator very soon. So much of the Budget strategy depends on some voluntary agreement with employers in the manufacturing industries not granting what the Government believe are excessive wage increases. But, before we rush to condemn employers who have recently given relatively large wage increases, we should remember the economic background in which they have been working for a number of years.
  It has been estimated that the motor industry is working at 20 per cent. below capacity. That being the case, it is inevitable that prices rise, and we have certainly seen this in the past six months. This is bound to affect the competitiveness of British motor cars abroad—not only the finished products, but the engines and spare parts, of which we are large suppliers and from which the motor com-
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  panies in this country derive considerable revenue.
  That is one reason that Mr. Henry Ford is not best pleased with his company's performance in this country. Certainly he finds fault with our industrial relations system. But I suggest that what also causes him great concern is that he sees home demand in this country depressed by tax measures to a level below that of, say, Germany and France. With the depressed demand, employers are bound to look round hard and to reduce their labour forces as much as they can, not because they feel that the current rate of unemployment being pushed higher is going to be some brake on the increase in labour costs, but because they are not facing a domestic market showing enough signs of expansion.
  We should remember that the unemployment and under-utilisation of labour is at present making no contribution to getting labour costs under control, and is having other specific social and economic disadvantages.
  There can be quite a devastating effect on a family when a man returns home to say that he and many others in the factory where he works have lost their jobs. We must not assume that unemployment benefits can do all the short-term cushioning from hardship which is required. For those who remain at work a great edginess appears and improved industrial relations, which may have been built up in a factory, will start to slide backwards. It has taken years, and will take longer in many industries, to work out fully acceptable job apportionment and the consequent pay rates, but if unemployment goes on the progress which has been made will be undone and we shall get a return to the restrictive practices, particularly in manufacturing industries, which we have spent so long trying to remove.
  The Chancellor is basing much of his Budget strategy on increase in investment, and the tax changes will certainly help; but tax changes can do only part of the job. If there is continued under-utilisation of resources, investment will not rise quickly enough. No one will really go in for labour saving investment with the current rate of unemployment. Equally, under-utilised economy provides no incentive to risk taking investment, as those who may take the risk will not

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  take it if they do not see a faster growth economy.
  I am certain, too, that the Budget was framed with some kind of incomes policy in mind. But we have surely learned since the war that a voluntary incomes policy can only be begun—I emphasise the word "beguns"—with a background of falling taxes and much greater utilisation of the economy.
  Obviously the Government will want to have talks in depth with the T.U.C. on this matter. That is why I return to my earlier plea to the Chancellor to use the regulator soon and thereby strengthen his policy as laid down in the Bill. It will surely help the Government greatly if they can say to the T.U.C.: "In addition to the tax changes in the Budget, we have reduced purchase tax on a number of household essentials and cars, we have reduced the tax on oil to cushion the effects of higher prices being demanded by our suppliers, and by these measures we know that the economy will expand."
  It is with this background that pay norms can be discussed, because the moderates in the T.U.C. will then have considerable economic ammunition to use in the necessary internal discussions in the trade union movement.
  I beg the Chancellor to use the regulator as soon as possible because unless we can get extra spending power in the country we shall not get faster growth.
  8.34 p.m.
  Mr. Michael Meacher: I want to return to a thread that ran through an earlier part of the debate by saying that it is one of the curiosities of this Finance Bill that while so much attention has been lavished on correcting long-standing alleged anomalies and inequities in the taxation of personal income, the taxation of capital that will be left by the Bill will be more fortuitous, more unsystematic and more unjust than it has ever been. With the abolition proposed under Clause 49 of the charge to capital gains tax on death, and with the ending of the associated capital gains tax levy on the increase in the value of assets held by discretionary trusts, the havens of tax avoidance have been deliberately thrown open, and we are left
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  with the traditionally chaotic structure of wealth taxes.
  The least discussed of these taxes, though the oldest, the stamp duty on legal documents, is also being reduced under Clause 53 by the abolition of this duty on bonds and mortgages.. However, as the summary of stamp duties contained in the 106th Report of the Commissioners of Inland Revenue ran to eight pages and covered 87 major headings of types of legal documents, many such duties are obviously going to survive, to all of which a different rate applies. Not only do the rates appear arbitrary, but as each tax payment has to receive separate calculation and accounting, the cost of collection must be enormous. Moreover, the system is particularly inequitable for the relatively poor in the acquisition of property, because there is no element of progression in the tax.
  Second, death duties are even more inherently arbitrary than stamp duty, with no tax on the transfer of wealth by gifts inter vivos more than seven years before death. For the majority of wealthy taxpayers, this tax on the ignorant and prematurely dead is an option which they decline to accept. As one authority recently said,
  "estate duty is now paid only by the misanthropic, the patriotic, the absent-minded or the downright unlucky."
  But even for those people, the maximum level of 80 per cent. on huge estates over ·1¼ million is far from being as crippling as has been made out, for example by the Chancellor in his Budget speech, to justify the abolition of the charge to capital gains tax on death. For given the rule-of-thumb secular rate of appreciation in equity values at about 100 per cent. per decade, the residual £200,000, given reasonable port folio advice to even a passive shareholder, would return to its original value within a mere twenty-five years.
  The impost the 80 per cent. rate is a comparatively rare occurrence, chiefly because of the use of gifts and the manipulation of discretionary trusts, 95 per cent, of which are now taken out sheerly for the purposes of tax avoidance according to Professor Wheatcroft who, as the Financial Secretary knows, is a tax authority much esteemed and consulted by the Conservative Party.

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  One pointer to the massive transfer of wealth through gifts inter vivos is provided by the known fact that the age group in which the ownership of wealth is the most unequal is that of the youngest adults aged 20 to 24. Another pointer is provided by the wide and increasing discrepancy between gifts charged to estate duty during the 'sixties, and gifts valued for stamp duty during the same period. Indeed, it is because of this widespread avoidance that death duties are probably an extremely regressive tax in that the rate of tax paid often diminishes with the size of the estate.
  The third form of wealth tax, long-term capital gains tax, which is a step in the right direction, has been handicapped by being introduced at the same time as corporation tax. For the substantial amount of wealth held in close companies with high retentions the shift to corporation tax provides tax savings which will largely offset the capital gains tax.
  A more general weakness of the capital gains tax system is that it is a tax on realised capital gains. The rich can normally postpone realisation of their capital appreciation for a long time. Inevitably, therefore, the retention within families of such capital over long periods must reduce the real burden of the tax. Unless the rate of capital gains tax is closely geared to the length of the holding period, this inequity and inefficiency in the use of scarce capital resources can be avoided only by a tax on the capital itself.
  In view of the arbitrary and capricious incidence of existing capital taxation, one returns to the fundamental question of what the Government regard as a proper system for the taxation of wealth. Yet all this Bill shows is a withdrawal of Government and an abrogation of responsibility in this sphere. One might have thought that even this Government, for all their feather-bedding of the rich, would have thought that a concentration of ownership in the hands of the richest 1 per cent.—almost twice as great in this country as in the United States—would have been worth some attention.
  Even the Economist, which is not known for being particularly soft on Socialist causes, estimated in 1966, from
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  a capitalisation of investment income statistics, that the wealthiest 21,000 people had fortunes averaging £334,000 each, while 88 per cent. of taxpayers had precisely £107 on average each. According to those calculations—they were using probably the most precise and accurate techniques available—1 per cent. of the population owned 40 per cent. of total wealth, which represents a considerably greater inequality than even that displayed by the official Inland Revenue data, and 7 per cent. owned a fantastic 84 per cent. of total wealth.
  Mr. Harold Lever: I have often been puzzled about this. I know the argument, and it is a valid one, that the estate duty figures are unrepresentative of the way in which wealth is distributed. I know the argument, and I think it is a valid one, that the incomes attributable to individuals by reasons of trusts, close companies and so on, are also unrepresentative. But what I cannot understand is why, on the basis of these figures which are unrepresentative, one should draw conclusions about the distribution of wealth which one would think to be unjustified on the argument that the figures from which these are derived are not representative of the ownership of income or capital. In short, can one, on the one hand, say that estate duty is utterly unrepresentative of the wealth of individuals, and that direct personal investment income is equally unrepresentative and, on the other, quote figures of the percentage distribution of wealth which are based wholly or mainly on precisely those unrepresentative estate duty and income figures?
  Mr. Meacher: If I understand my right hon. Friend's argument, I would certainly take the view that one can adopt figures for the distribution of wealth provided by the Inland Revenue data which will provide a minimum floor for the degree of inequality. One can improve on this by using the capitalisation of investment income technique, which shows an even greater degree of inequality. While, for well-known reasons, regarding these as inadequate indicators of the inequality in the ownership of wealth, one can suggest that the taxes through which we achieve these figures are not achieving a proper purpose. There seems to be no logical inconsistency in this as a method.

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  But whatever the exact figures—one can argue about this—there is clearly a staggering degree of inequality in the ownership of wealth in this country—even more than in the United States, which is saying something.
  One must therefore ask whether the Government seriously believe that their policy, as represented by the Bill—one of masterly inactivity, one, indeed, of retreat—is the correct one. Do they really believe that a proper balance is achieved by the Bill as between taxation of income and taxation of capital? No party which was not so umbilically tied to the owners of property and wealth could possibly adopt such an utterly unreasonable policy. What is needed instead, if we are to retain the outmoded estate duty, is at least a supplementary gifts tax, but far better than that would be an outright substitution of an inheritance tax for estate duty.
  Better still, this would open the way to a completely new approach to the taxation of capital gains, by which inheritances, gifts, realised capital gains, and accretions to spending power which at present fall outside the income tax net—I am thinking particularly of what are euphemistically called "fringe benefits"—could be brought within a single comprehensive system of capital taxation which would match the Chancellor's very proper intentions for the taxation of personal income.
  The tax could then be levied by recording every gift and bequest on a register, and the rate of levy—which would be subect to, say, a minimum floor of £5,000, and to a disregard of capital receipts of, say, £200 a year—could be on a progressive scale, recording the total of gifts and bequests against his name during the whole of his lifetime.
  In the absence of a unified structure of capital taxes of this kind, this Bill can only be described as an extremely unbalanced package. It is a deliberate and uncompensated reversal of the redistribution of wealth, displaying arbitrary indulgence to an unrepresentative minority; namely, those who happen to be born in the right bed.
  8.46 p.m.
  Mr. Peter Rost: I hope that the hon. Member for Oldham, West (Mr. Meacher) will forgive me if I resist the temptation to pursue
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  his interesting, if thoroughly misguided, argument, mainly because what this nation really needs is not the further taxation of wealth but the opportunity to allow more people to create more wealth, and this is the theme on which I shall concentrate.
  We must achieve more incentives for personal saving. Today's savings are the seed corn of investment, about which much has been said in this debate. More than that, they provide the only means of gathering tomorrow's harvest of controlling inflation, reducing unemployment, allowing growth and prosperity and, above all, producing once again rising living standards in this country.
  The Chancellor has introduced a number of important measures which will provide incentives to save. In recent months the level of personal savings has improved somewhat after several years of decline. However, the percentage of the gross national product saved in Britain in personal savings is still well below that of our competitor countries, and particularly Germany, America and Japan, where the bulk of savings is channelled directly back into industry.
  The only way to provide incentives for personal savings, not just in the form of national savings, save-as-you-earn schemes, deposits in building societies and in other schemes of direct interest, is to encourage savings directly into equities—investment in industry—and unless this is done, we shall not provide the capital that is required for expansion and investment.
  I do not wish to be difficult, and I accept that the Budget has been tremendously exciting and has provided a stimulus to the nation. However, I must express disappointment at my right hon. Friend not moving towards a save-as-you-earn scheme that is tied to equity investment, along the lines promoted for some years by organisations such as the Wider Share Ownership Council and proposed by the present occupants of the Treasury Bench when they were in opposition. I should like to have seen more incentive provision for contractual savings into equity investment.
  We have at present a system whereby contractual savings in other forms of savings are given tax allowances. For example, if one saves through insurance contractually one has a tax advantage, as

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  with pension schemes. Also, one has tax-free allowances if one saves through National Savings, through the Post Office or through building societies. But there is no contractual savings scheme allowing similar tax advantages and, therefore, similar incentives, which ties contractual savings to equity investment.
  A particular sphere in which I would have hoped that we could have achieved a little more in the way of incentives through the smaller saver is that which has been growing rapidly in the last few years in this country as it has elsewhere in the world. It is the do-it-yourself or amateur unit trust movement; namely, the investment club movement. I must declare an interest, because I have spent many years helping to form investment clubs and talking to groups of factory savers, and have launched investment clubs myself. The House should appreciate that the growth of investment clubs mostly amongst people who have never saved or invested previously, and certainly have no capital, has reached the stage where it has stagnated. Between 1960 and 1965 the number of clubs in this country increased from about 500 to about 2,500. It has very much stagnated since then. We all know and appreciate that the reason for this stagnation was the 1965 Finance Act, which did nothing less than clobber investment clubs.
  Ministers of the present Government, during the proceedings on the 1965 Finance Bill, attempted to remedy the serious situation by moving Amendments to the Bill. I have the details here, but I do not want to read out the names of those financial Ministers involved in the Amendments because it may embarrass them. But the Amendments would have allowed the investment club and savings movement of a lot of small people to have continued unrestricted. Unfortunately, those Amendments were not made, and the result is that the capital gains tax of the 1965 Finance Act has made life extremely difficult for these small savings groups.
  Before returning to that point, I wish to contrast this situation with what has been happening abroad. In our competitor countries, where the level of personal savings has been rising rapidly recently, the investment club movement has been gaining momentum, especially
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  in France. Two years ago the French Government introduced legislation to stimulate and encourage the clubs, which are growing rapidly. The investment club movement in America is very widespread, and every factory floor has its own investment group. The movement is making rapid headway in other countries, such as Belgium, West Germany, Australia and New Zealand. It is not only a pity that it is stagnating here, but a serious reflection and a danger to the personal savings movement, which could be encouraged and could, therefore, provide more capital for investment.
  The average investment club has between 20 and 25 members. Most clubs are run on the factory floor and in offices. The average investment in the club is £4 to £5 a month. The average club invests about £100 per month. It spreads its portfolio over a wide range of shares and, therefore, avoids the sort of situation which happens when employees in Rolls-Royce, for example, invest all their savings in their own company, because investment club members get a spread of a portfolio over a period of months.
  The main attraction of the investment club movement is that it allows the educational advantages of personal savings and investment to be brought forward. In addition to that and to its social advantages, it allows savers to spread their risks safely and to combine savings with investment. It allows them to become shareholders even though they do not have the capital which is generally required of capitalists.
  The result of the Finance Act, 1965, was that all investment clubs had to declare the dividends received on behalf of all their investments, tot those up monthly gross and net, and then apportion each individual dividend to each member according to the number of units held by the member. That alone was a formidable task, as the average dividend for a club was only about £5 or about 20p per member, because the total dividend income for the average club is only about £200 a year. For an average club with, say, 20 members it entailed 250 calculations a year.
  Apart from this being a formidable task, it is a senseless and useless task, because in any case all the dividends are ploughed back and they are already taxed

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  when clubs receive them. Therefore, why is a schedule necessary? What is al] the work in aid of?
  However, it is not the calculations and the preparation of the schedule of dividends to be returned to the tax inspector which is the main problem. The main problem since the 1965 Act has been the apportionment of capital gains. Hon. Members may be surprised to hear that this year's Budget and Bill, far from making life simpler for investment clubs, make it more complicated than ever. The amount of work involved now is even heavier. Correspondence I have received from a number of clubs has confirmed this.
  Up to the present a club has had to split its short-term gains and its long-term gains between its members each time it has made a gain according to the holdings of each member. This has normally meant only one calculation per member for each loss or gain. It would appear that under the provisions of the Bill unless the minimum holding in a club is greatly above the level applying in the average club, a club will have to split each disposal and calculate as between the members not only the amount of the disposal to see whether the annual figure is below £500 but also the gain or loss.
  I have evidence of another club with 100 members. We have calculated that it will require 3,600 calculations each year to comply with the present tax regulations. This is ridiculous, because investment clubs are amateur organisations and do not employ professional accountants.
  The time has come for us to consider giving some concessional relief to the small saver through the contractual means of investment clubs. In our opposition to the 1965 Measure we said that we would do this, but since then nothing has been done. We should give relief to bona fide clubs. First, they should be exempted from having to make returns of dividends, since these are taxed before they receive them anyway, and it serves no useful purpose. They should also be exempted from capital gains tax provided that they comply with certain regulations on size—for example, that the average investment per member is not more than £10 a month; that they have a contractual method of
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  saving; and that the total net gains do not exceed an average of £50 per member over the year.
  Those are modest enough concessions which would embrace the average type of investment club. Control could be simply organised by an annual registration scheme for clubs to register with their annual report, a schedule of the total dividends received during the year, total members' subscriptions during the year, purchases and sales, and the names and addresses of the members. That should satisfy the Inland Revenue without the necessity for further complicated calculations to comply with the 1965 Finance Act, which has not been amended in regard to investment clubs.
  To summarise, I have quoted one area in the small personal savings field where we should do more to provide sensible incentive. No doubt there are others, but it is an area of which I have particular knowledge. In the more general context, it is vital for us to promote more personal savings at the shop floor level, from where it needs to come if we are to make any impact on providing the capital needed urgently to expand our capital investment and modernisation, and to return to prosperity. Above all, unless we channel the small savings by providing greater incentives, we shall not achieve what I believe is a desirable aim for this country, a capital-owning democracy which can be seen to be working in practice.
  9.02 p.m.
  Mr. Tam Dalyell: First, I have a short question to the Treasury Ministers. Is it wise to cut back, with a view to bringing to an end, what is easily in modern times the cheapest tax to collect, namely, S.E.T., or is it pandering to a doctrine or popular clamour? Certainly in the light of the Budget a great deal of discussion is going on as to whether it is wise to make this change.
  I say no more about that, because I want to address myself briefly to the Financial Secretary. He came to Scotland and made a number of very interesting speeches in which he praised the agreement reached there in that most difficult of all British industries, the motor industry. I say to him, in the spirit in which I hope he will take it, that some of us worked extremely hard with shop stewards and management to get

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  what was almost a model agreement—the Leyland agreement at Bathgate—which the Financial Secretary himself praised. We feel that there is no hope of getting such an agreement again in the motor industry, and especially a rational relationship, if we are to have a Budget that from the point of view of shop stewards and others goes in the wrong direction. The introduction of a Budget of the kind we have had this year will make it extremely difficult to get that kind of agreement. I hope that the Financial Secretary understands this.
  9.5 p.m.
  Mr. Ralph Howell: While I recognise the Bill to be a great reforming Measure, I think that it is a pity that the reform of P.A.Y.E. has been left out. We have been promised that at a later date—after several years—it will be reformed, but grave damage will be done by the fact that we are still perpetuating the grave injustices which occur under the present P.A.Y.E. system. We are confronted by rising unemployment and rising inflation, and some people think that this is a phenomenon. But we fail to recognise that a wide range of wage earners are actually better off unemployed than at work. Therefore, it is obvious that increasing unemployment is in itself inflationary and we reach a situation where more unemployment breeds unemployment.
  In a reply to a Written Question of mine on 22nd April, it was shown clearly that the new measures and new allowances have aggravated the situation which existed. Before the Budget there was an area around the £20 a week mark where a family consisting of a man, wife and two children could be as much as £2 a week better off out of work than at work. Since the Budget that area has been extended to cover the range between £22 and £32 a week. It covers the national average wage. This situation is discouraging people from working and encouraging people to take paid holidays on the State and to extend their period of unemployment. Gravest of all, it is discouraging regular workers, who see people who have been working in similar circumstances suddenly having more spending power than they themselves.
  I give one or two examples. Let us take the case of a man earning £25 a
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  week. His take-home pay is £22·47p. If he becomes unemployed and is in receipt of earnings-related benefit, and while he is receiving tax refunds, he has a take-home pay of £24·85p. This does not make much sense, especially when one considers that perhaps the fellow who is in work has certain expenses to meet. In my part of the country many people are spending £3 a week to get to work. So the pay difference between a person who is at work and a person who is not at work can be as much as £5. Add to that the fact that the person unemployed is also eligible for free school meals for his children and anyone can recognise how absurd the present system it.
  I have been in correspondence with the Treasury for some time trying to tell it how this situation could be rectified, but it does not seem to take any notice. Either it cannot hear or it does not want to hear—I have not decided which. I am sure that it could be easily rectified. It could be done by eliminating two tax forms we have been using for a long time, and possibly with less expenditure than is used to collect tax. The P.9 tax deduction card could now be used as a leaving certificate and all benefits and payments made by the State should rank as income. If this were done a continuous payment would be recorded on the tax deduction card and this in itself would eliminate the necessity for a leaving certificate.
  Despite my suggestions, the Treasury insist that this would be impossible. They say it would be too costly, that it would cost over £15 million according to their estimates to alter the system. They admit that by doing so there would be a saving of £150 million in tax repayments. Apparently the odd £135 million does not matter. They also say that it would mean 11,000 more civil servants. I am convinced that if the Treasury really accepted the necessity for this it could be done with no increased expenditure and with no further recruitment of civil servants. The benefits to the country would be enormous. Most important the will to work would be restored when we had removed these appalling anomalies.
  9.11 p.m.
  Mr. Joel Barnett: Today's debate was opened by the Chancellor when he said that there was in effect no change since last month's

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  Budget. It is true that the economic background is the same. We still have high inflation, low economic growth, low industrial investment and rapidly rising unemployment. The only good economic indicator is the balance of payments, and I thought the Chancellor was a little churlish in not showing a greater appreciation to my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) for the only decent statistic he has.
  As was said by my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever), even that is already in grave danger of being frittered away, unfortunately, not through the Government going for a higher level of economic growth but through an achievement which hardly seems possible—the achievement of low growth, low investment, high inflation, high unemployment and, on the Chancellor's own forecasts, a declining balance of payments situation. By the time the Chancellor is ready to stimulate the economy it seems all too likely that the balance of payments situation will have forced him almost to a complete stop.
  There are a variety of ways in which the problem could have been tackled. I hoped that the fine words delivered by hon. and right hon. Gentlemen opposite before the General Election about economic growth were honestly meant. As my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) said earlier, given a balance of payments situation which no Chancellor has ever inherited, the Chancellor still decided to put growth second and deal with the problem of inflation first.
  I do not dispute that the problem of inflation is very serious. No one should under-estimate, and I do not, the seriousness of the inflationary problem facing this and many other countries. If this is the Chancellor's first priority it is only fair that he should be judged, in this Bill and through the other economic and financial measures that have been taken, by the way in which those measures deal with what he has described as his first priority. It is true that inflation is an insidious disease. It feeds itself, and in those circumstances it is not surprising that trade union leaders, seeing prices rising at the rate of 10 per cent. a year, should want wage settlements of 10 per cent. plus perhaps another 3 per
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  cent. or 4 per cent. to give them the benefits of growing economic productivity. What they need and what they claim is something like 20 per cent. Taking off 30 per cent. income tax on the increase, it would just about give them the sort of increase for which they are asking and leave them in real terms better off to the extent of the increase in productivity. Firms, or at least those able to spot inflation quickly enough, increase their prices so that they do not lose out on the inflation with which the country is gripped.
  We are, therefore, in a vicious circle. The Prime Minister was right when he said that one way of breaking out of it was to act directly on prices. The trouble about breaking out of the vicious circle of inflation is that in some ways it is more difficult than to break out of the magic circle about which the late Iain Macleod used to speak. Words are not enough to break out of this vicious circle. What is needed is action. Little has been done by the Government, although they said that they would break into the vicious circle in the way which we all know. Little has been done except to prevent some price increases taking place in the nationalised industries, and we have yet to see the true cost of that. But any small reduction which may have been made in the increase in prices of the nationalised industries has been more than balanced by increases elsewhere caused, not by wage inflation, but, as my hon. Friend the Member for Woolwich, West (Mr. Hamling) said, by deliberate Government action.
  So the Government, having made their first priority tackling the problem of inflation, have failed in their original purpose of breaking into the vicious circle of inflation by acting directly on prices. They have decided that wage inflation is the real cause of the trouble and that their policy should be to act on wage inflation, despite all the evidence marshalled in an admirable speech by my hon. Friend the Member for Ashton-under-Lyne, which has not been refuted, and all the evidence from abroad and our own history to the effect that it is not the problem.
  Incidentally, I do not recall right hon. and hon. Members opposite, in their speeches before 18th June, arguing that the way to deal with the problem of

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  inflation was to break into the vicious circle by acting directly on wages.
  Mr. F. A. Burden: If high wage increases are not inflationary, why did the Labour Government fix wage increases at 3 per cent.?
  Mr. Barnett: The hon. Gentleman must not misquote me. I did not say that wage increases were not inflationary. I therefore hope he will forgive me if I do not reply to his point.
  The Prime Minister said that the battle against wage inflation has been won. He said in the House last week that escalating wage demands had been halted.
  Mr. Hamling: Nonsense.
  Mr. Barnett: My hon. Friend may well be right, but that is what the Prime Minister said last week. If escalating wage demands have been halted, one is bound to ask why the Chancellor of the Exchequer went further today than he did in his Budget speech. In his Budget speech and in other statements which he made before the last week or so, he gave the impression that if his Budget did not have the desired effect of reducing unemployment and achieving 3 per cent. growth he would be ready to take further action. What he said today was very different, and it will have caused concern in the country. He said in explicit terms that he was not prepared to take any further action. I should be delighted if that were not so, but I see from the right hon. Gentleman's silence that it is so. The Chancellor has failed to take the opportunity to remove from millions of people a fear which most of us never dreamt would return, a fear of unemployment, not just amongst ordinary workers but amongst executives, young, middle-aged and old. Those people can have received little hope from the Chancellor's speech today.
  The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and others showed themselves to be compassionate people who were extremely concerned about the level of unemployment. They thought that it was unfair of my right hon. Friend the Member for Cheetham to accuse the Chancellor of deliberately allowing unemployment to rise, but what else can one deduce? The
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  Chancellor knows what he is doing, if hon. and right hon. Gentlemen opposite do not. He knows that if he is not prepared to take action unemployment will rise, but he is not prepared to tell us that he will take action, so what else can one say? In spite of the compassion which right hon. and hon. Gentlemen feel, the Chancellor's policies, which they support, will bring about increasing unemployment, and the only conclusion we can reach is that if hon. Gentlemen are not deliberately doing this, the Chancellor is. I am surprised that, since the Chancellor said in his Budget speech, that he has the power to reduce the level of unemployment, he is still not prepared to say that he will act before unemployment reaches the tragic level of 1 million. If the Government are not disturbed by that, the people in the country will be.
  If the Prime Minister is satisfied that the Government are halting the escalation of wage demands, as he said, will he give us an assurance that he will not be considering a statutory incomes policy, in view of the reports of disagreement in the Cabinet on the possible need for an incomes policy? Will he be prepared to give us that assurance? We must assume that the eloquent silence speaks for success in the halting of the escalation of wage demands. If so, he and his colleagues are the only people in the country who are satisfied. No serious commentators are satisfied with what is happening.
  Another way was opened to the Chancellor by the T.U.C. In the face of intense provocation the T.U.C. has shown itself to be much more statesmanlike than the Government. The T.U.C. is more than ready to recognise that there is a problem here, and it has said that, given a Government prepared to go for economic growth, the T.U.C. in turn is prepared to consider what is in effect a voluntary prices and incomes policy. The Chancellor dismissed that out of hand.
  The Bill and all the measures behind it have to be taken together. Hon. and right hon. Gentlemen opposite are fond of talking about the tax remissions in the Budget and ignoring all the other financial measures that have been taken since last June. Taking these matters together, the chance of co-operation with the T.U.C. has been made extremely difficult.

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  As my hon. Friend the Member for West Lothian (Mr. Dalyell) said in a very brief intervention, what has happened in his area of the motor industry has shown all too clearly the difficulties of getting the co-operation of the trade union movement.
  How can trade union leaders, who want to stay in office probably at least as much as do Ministers opposite, be expected to accept wage settlements when, because of Government policy, those settlements would leave their members worse off. One commentator recently said that the Ford settlement of 16 per cent. a year over two years was not enough.
  Mr. Burden: Who was the commentator?
  Mr. Barnett: The hon. Gentleman must read his own newspapers, but if he really wants to know, the article was in the Financial Times. If the 16 per cent. is to be taken as the figure and 30 per cent. tax is taken off it, that would bring the increase down to 11 per cent. If price inflation remains at its present level of about 10 per cent., then all that the Ford workers in due course will be getting is something less than the increase in the rate of industrial productivity. Consequently the Ford workers' settlement—which at one point the Government said was highly inflationary and at another point exceptional—would not be sufficient to meet the rate of past inflation.
  How can one expect trade union leaders to accept restraint when the Finance Bill presents to the House and to the country a new corporation tax system which positively encourages a massive increase in dividends, no matter how much the Chancellor might be able to argue some economic advantage? It will be difficult to explain to the trade union leaders and to their members that on the one hand the Government are introducing a corporation tax system which will positively increase and encourage greater dividend distribution.
  The inflationary spiral is disastrous. We have experienced nothing like it for a very long time. Against all the evidence which is available to the Government, they are still trying to beat the problem by allowing unemployment to
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  rise. This could be insulting to their industrialist friends. It assumes that they have been ready to keep on additional workers at, say, £30 a week but are not prepared to do so at £33 a week. There is some truth in this. Some surplus labour would have been kept by some incompetent managements. Other managements would have kept surplus labour because they expected demand to rise and thought that the Government would keep their promise to increase demand and to go for a higher level of economic growth. The fault of management is that it believed the Conservative Party which before the election spoke of going for economic growth. Management, not unnaturally, assumed that this would mean an increase in demand which, in turn, would mean that extra skilled labour would be needed which previously was not readily available.
  The Finance Bill and the other Government Measures have hardly helped the situation. We have seen that dismissals instead of being reversed are snowballing. Whatever hon. Members may feel about what the Chancellor is doing about the matter now, industrialists are satisfied that the Chancellor's actions are not in the end likely to result in increased demand and opportunities for them to sell their goods. Consequently, we see the rising level of unemployment. Why else would managements dispose of skilled labour which over the years they have found it extremely difficult to obtain?
  If hon. Members are not prepared to believe what the Chancellor of the Exchequer has said in black and white that it will rise by only half of one per cent. within two years of this Government coming to office. It is interesting to note in that connection that one of our major machine tool companies, Alfred Herberts, said immediately after the Budget that it had received inquiries, not even firm orders, amounting to an increase of half of one per cent. So much for the argument that it will take some time for the right hon. Gentleman's policies to be turned into firm sales of machine tools.
  The main worry is that if the serious commentators are right about the level of unemployment it will not be easy to reverse the trend. That is why the policies of this Government are so

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  disastrous. They do nothing, and this Budget does nothing, about the really serious economic problems facing us.
  The remaining great claim of the right hon. Gentleman is that he has made tremendous reforms and simplifications, in addition to creating incentives for the go-ahead, the young and the ambitious. That grandiose claim is utterly false in my view. Reform is not of itself simplification. The income tax and surtax amalgamation is a simplification which I have advocated for some time. However, the right hon. Gentleman should not overdo it, as he did in his White Paper, unless he is proposing a massive reduction in investment income relief. He said today that he is proposing only a modest relief. He might have been a little more forthcoming and told us whether he is proposing to relieve £50 or £5,000, or £100 or £2,000. He might have taken us into his confidence a little more about what is in his mind about the first slice.
  If only a modest amount of investment income is to be exempt from the surcharge, the Inland Revenue will face a tremendous problem in dealing with it administratively before 5th July each year. Almost certainly it will mean that any saving that there is in the Surtax offices will be more than eaten up in the Inland' Revenue offices. Income tax assessments are not issued every year to every taxpayer before 5th July now. There will be a large number of taxpayers who will have to have their assessments in that time.
  While the new proposal is worth having and is very good, the right hon. Gentleman should not overstate the simplification involved. Certainly when it comes to the system as a whole, he should not assume that the pay-as-you earn taxpayer is simple. He is not. It is my experience that the average factory worker able to do a complicated pools computation every week is more than able to understand, even under the new simple system, that his net wage at the end of the first week will be exactly the same as it was under the old system. The right hon. Gentleman should not overdo the advantages of the new proposals.
  As for the other two measures of reform, if any hon. Member believes, for example, that a value-added tax is a
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  simplification of any tax system, he is very much mistaken. We have yet to decide whether we are to have it. But no one should imagine that it is a simplification. Equally, the new corporation tax proposals, whichever of the two is eventually chosen, are certainly not simpler than the present system. Therefore, I hope that we shall have less of the simplification myth. In any case, simplification is not the best test of the fairness or effectiveness of a tax system.
  The Conservative Party has long claimed, and the Chancellor has made it the centrepiece of his Finance Bill, that its policy is to reduce direct taxation as an incentive in such a way that it will almost transform our economic situation. If that is true, it is certainly worthy of consideration.
  We all know that there are some people who say that they will not work and that they will not, and do not, want to earn more. Obviously, we have all met that kind of person amongst workers and management and, from time to time, especially amongst entrepreneurs. But there are nothing like so many cases as we are frequently led to believe. All the research which has been done in this sphere does not prove it. At best, that research is inconclusive.
  The evidence from other countries where there are varying rates of direct taxation compared with our own, apart from the very highest level, to which I shall refer later, is quite clear. Where they have higher rates of direct taxation or equivalent rates to our own, there is no evidence that there is either a higher or a lower rate of economic growth. So it certainly cannot be proved by any evidence from abroad that reducing taxation will prove to be the transforming factor which the Chancellor would have us believe.
  It is not surprising that research has not been able to prove this, because the Chancellor, in common with others, has always talked in generalisations in this sphere. It is very different when one looks at the detail. For up to £4,005 a year earned income, a reduction from 32 to 30 per cent. is not likely to prove a massive new incentive to workers to work enormously harder, and this applies to a large number of workers in this country.

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  As to the higher income groups, we are told that the ambitious, go-ahead young executive, who the Chancellor is so fond of telling us is his key worker will work enormously harder from cuts in direct taxation.
  Immediately following the Budget The Times Business Diary did a little survey of its own. On 1st April it said:
  "A view expressed yesterday that the changes to surtax and earned income regulations would help to cure the lack of ambition and the unwillingness to move, which recent surveys had noticed among younger executives and which was so damaging to Britain's economic efficiency, was challenged when we rang two of the companies which devote their energies to meeting businessmen."
  It then quoted Geoffrey Duffield—he should know something about these matters as he is director of personnel services for Personnel Administration, the management consultants—who said:
  "it would not be our experience, and we do not know of any such recent surveys … I have detected no lessening in ambition among able executives."
  Eric Platt, the London manager for Management Selection, another well-known firm in the industry, said:
  "as far as I am concerned, I have noted no reluctance whatsoever on the part of young executives to move to better jobs, and they are as ambitious as ever."
  This is the answer to the Chancellor's often quoted case.
  Sir Brandon Rhys Williams: Perhaps I should declare an interest before asking the hon. Gentleman a question. I have for a number of years been employed by Management Selection Ltd. The selected quotation referred to young executives. Would it not be fairer to refer to the whole sphere of executive management selection?
  Mr. Barnett: I am coming to other executives. I was at that moment dealing with younger executives. I do not imagine that I have quoted them in any way incorrectly. So there is no evidence that a reduction of direct taxation would be a major incentive to young executives. As for older executives, I have met many who give taxation as the reason why they do not want to work harder and take on more responsibility. But this is very much a rationalisation. There are many other reasons. In many cases, they have
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  not been offered such jobs but only say that they have.
  Some young entrepreneurs have said that they are not prepared to go on because of the tax levels; but that also is overstated. It is still open to the ambitious young man in industry today to make his million. Industrial companies plough back their profits and can float their companies or sell and make that miraculous million. The reason why so many stop below that figure is very complex and has frequently nothing to do with the taxation level, although people who do not reach that general level rationalise the reason as being due to tax.
  What it really is is a modest failure. It is no terrible thing to make slightly less than a million. They do not have the luck or the ability or frequently the desire to make the necessary sacrifices of leaving their wives and families. They rationalise it as due to the wicked tax levels, but all the evidence shows that this is not so.
  Mr. Redmond: I feel on safer ground with the hon. Member, because he is a chartered accountant. Would he agree that it is possible for a firm, through shortage of liquidity, to run into over-trading and, therefore, into financial difficulty?
  Mr. Barnett: Yes, I heard the hon. Members remarkable speech this afternoon, when he said, with a blinding glimpse of the obvious, that an expanding company frequently finds itself illiquid and has large stocks, large debtors and a bank overdraft. I do not see how the Government's proposals will affect such a company, except that their corporation tax proposals would positively harm it by increasing from 40 per cent. to 50 per cent. the tax level of close companies.
  So there is no evidence that reducing the level of direct taxation will achieve the Chancellor's purpose. There is no evidence, as the recent Prices and Incomes Board Report on levels of overtime showed, that people in this country are working shorter hours than people in Europe. Indeed, manual workers are working longer hours.
  Even if the case for a massive switch from direct to indirect taxation had been made out, which it certainly has not, there are other factors. There is the

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  price which would have to be paid for such a policy, and the price would be moving to a much less fair system. It is not readily appreciated that, in this Bill and in his other financial measures, the Chancellor is being very selective. He is not helping all his friends, only those at the very top, and the main losers are the middle income groups. This is inevitable by the way he has reduced the direct taxation at the top of the income scale. Equally, he has been helping those at the lower end of the scale.
  Even if the Chancellor is not prepared to accept the excellent speeches made in this debate and in the Budget debates by my hon. Friends, showing that the middle income groups lose out, it is self-evident that if the rate of economic growth is not much more than 2 per cent. and one disproportionately helps the higher end and the lower end, those in the middle must lose out. This is precisely what has happened with the Chancellor's measures.
  Those in the main tax group, between £1,000 and £5,000 a year, have lost out. In due course they will find that there is nothing in the right hon. Gentleman's measures for them. Why on earth hon. Gentlemen opposite should have cheered this Budget, which will help a few of their constituents but will make most of them worse off, and why they should have cheered its proposals to tax everything, is beyond me.
  Consider the value-added tax. We have had no assurances whatever from the Chancellor that he does not intend to tax, for example, food, newspapers and housing [Interruption.] The Chief Secretary would not give us that assurance. We want to be told clearly not that there will be an exemption rate under V.A.T. but that there will be a zero rate which will really exempt food, housing and newspapers. Are we not being given that assurance simply because the Chancellor intends that these items shall be taxed? If we are not told, we are bound to draw that conclusion.
  The Bill, combined with the rest of the Government's economic policies, is not only of no help to the middle income groups but is positively harmful to the prospects of even the Chancellor's first priority of dealing with wage inflation,
  552
  let alone his pre-election priorities of going for higher growth, for industrial investment and for dealing with unemployment. For these reasons we condemn his Bill, his Budget and his other financial measures. I ask my hon. Friends to vote against the Bill.
  9.47 p.m.
  The Financial Secretary to the Treasury (Mr. Patrick Jenkin): This has been a strange debate. Time and again I have had to pinch myself to remind me that it is the Second Reading of the Finance Bill.
  Almost without exception—the hon. Member for Heywood and Royton (Mr. Barnett) being the exception—hon. Gentlemen opposite have scarcely spoken about the Bill. It is perhaps significant that my hon. Friends have had a great deal more to say about it, and I will therefore deal with some of the points they have raised.
  I must, first, say how much we welcome back to our finance debates the right hon. Member for Manchester, Cheetham (Mr. Harold Lever), who has been his usual engaging self—never more so than when giving his celebrated, if somewhat unconvincing, imitation of a champion of the common man.
  My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) sought clarification of the astonishing doctrine which the right hon. Gentleman propounded—namely, that surtax cuts are O.K. if paid for by tax increases on people no less well off. The argument was somewhat convoluted and, I am bound to say, obscure. It was sad to recall those gay, care-free days when the right hon. Gentleman sat on this side of the House on the then Government back benches, expressing views in forthright language, as, for example, he did in June, 1966, when he said:
  "If the hon. Member for Horsham (Mr. Hordern) seeks to convince me that tax on unearned income is excessively high in this country, he has a willing ear."—[OFFICIAL REPORT, 20th June, 1966; Vol. 730, c. 203.]
  Mr. Harold Lever: I proved it by what I said today.
  Mr. Jenkin: I was going on to say that it contrasted very markedly with the speech we have just heard from the

  553
  hon. Member for Heywood and Royton, who seemed to be trying to convince himself that high taxation was in no sense a disincentive. He may succeed in convincing himself, but he does not convince my hon. Friends.
  Perhaps the most remarkable part of the right hon. Gentleman's speech was when he announced that he would tell us what ought to be done, and the House waited with keen expectation because we know that the right hon. Gentleman is a man of considerable originality of thought. I again quote from my notes: "What ought to be done? One—I do not know." It seemed to have all the ingredients of the perfect parliamentary answer—brief, accurate and adding nothing to the available information. So when he lectured us about compassion, sound business principles and turning the clock back, perhaps I may be forgiven for having felt a little impatience. Right hon. Gentlemen opposite bequeathed to the Government a uniquely difficult combination of rising unemployment and soaring prices. They hardly carry conviction when they lecture us on how we ought to deal with it.
  Mr. Arthur Lewis: And a balance of payments of £800 million.
  Mr. Jenkin: That was last time.
  My hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker) referred to the change in the Finance Bill, to the restoring of capital allowances. I shall deal with this briefly because, rather surprisingly, the extent of the reforms of the structure of capital allowances, as they stand in the Bill, have not been appreciated either inside or outside the House. I do not need to go into all the reasons why we prefer a system of tax allowances to one of grants. Suffice it to say that in our view tax allowances, being profit related, are inherently more likely to lead to profitable investment than grants paid irrespective of profits. It simply does not make sense to subsidise out of the proceeds of excessive taxation the generality of industrial investment. It is far more rational to encourage investment by giving incentives through the tax system. In that way the benefit goes to firms which operate profitably and not to those which do not.
  554
  But we did not merely stop there. We did not just revert to the system which we had before. We aimed to use the change to effect a radical simplification of the tax allowance system, and I believe we can claim to have achieved this. Part III of the Bill represents a more ambitious step than has ever been attempted before.
  Last October my right hon. Friend announced, basically, the three main tax incentives: a 100 per cent. first year write-off for industrial plant and machinery in development areas; a 60 per cent. first year write-off for all other plant and machinery; and a single 25 per cent. rate of annual writing-down allowance. This accelerated depreciation—that is what it is—plus the single standard rate of write-off was the first step.
  In the Bill we go a good deal further than that. Once we have all the plant being written off after the first year at a single rate, there is nothing to prevent the firm putting all its qualifying assets into a single pool and writing them down in a single calculation. Of itself this would be a considerable improvement over the previous system, which involved several different rates. But by itself it is not enough. We lose most of the advantage of the single rate if when an asset is disposed of we have to go through the motions of calculating the balancing charge or balancing allowance. So we have carried the pooling concept to its logical conclusion and have introduced an entirely new system.
  Clause 34 provides that for capital expenditure incurred since last October, all the taxpayer's plant and machinery will go into a single pool. It will be written down in one annual sum, and so long as the trade continues, balancing charges will become very much the exception. This will save a great deal of computation for companies and their accountants. I hope that the hon. Member for Heywood and Royton will not suffer the result in reduced fees. If an asset is sold, the proceeds are subtracted from the pool, and the next annual writing down applies to the balance remaining in the pool. When a new asset is bought the first-year allowance is given and the written-down value goes into the pool. In other words, we are abandoning for the great preponderance of business assets used by firms and acquired since last

  555
  October the asset-by-asset writing down which the previous system required.
  Some people have asked why we cannot do this for all assets—pre-October as well as post-October assets. The short answer is that this would be extremely expensive, a great deal more so than my right hon. Friend was prepared to contemplate. We envisage that eventually all relevant capital expenditure should come into the pool and be dealt with in the way I have described.
  The Bill, when we deal with it in Committee, will be seen also to have a marked simplification for dealing with leased assets and a greatly simplified system for dealing with assets bought on hire purchase, and all in all will represent a notable additional simplification of the tax system which will be of great benefit to companies and their advisers. I hope firms will regard this as useful.
  The right hon. Member for Cheetham, the hon. Member for Ashton-under-Lyme (Mr. Sheldon) and my hon. Friend the Member for St. Marylebone raised the question of a Select Committee on taxation to look at our reforms. In the Budget debate my right hon. Friend the Chief Secretary said:
  "…we are prepared to consider the possibility of a Select Committee to study the Green Paper on corporation tax…"—[OFFICIAL REPORT, 5th April, 1971; Vol. 815, c. 52.]
  Consultations are proceeding in the normal way with a view to setting up a Select Committee for this purpose. I regret that I cannot give any further details at this point in time.
  My right hon. Friend the Member for Kingston-upon-Thames—I thank him for it—congratulated the draftsmen of the Bill upon the draftsmanship and also noted the brevity of the Bill compared with the amount of substance it undoubtedly contains. These points are well taken. What my hon. Friends will have noticed, rather like the dog that barked in the night, is what has not been put into the Bill this year but what was in so many recent Finance Bills. There are none of those complex anti-avoidance provisions which have been such a feature of recent Finance Bills and which have taken us so often into the early hours.
  556
  This year we have concentrated our main effort on the reform of the tax system and on reducing taxes. I would not be so foolish as to suggest that merely by lowering taxes and simplifying the system we shall eliminate avoidance. However, this year we have thought it wrong to load a Bill which is already full of new and far-reaching proposals with legislation which, if past experience is a guide, would inevitably be lengthy and complex. I am sure that most hon. Members will welcome this division.
  I have taken careful note of a point my right hon. Friend the Member for Kingston-upon-Thames raised about estate duty. I assure the House that the process of tax reform and review is continuing. This is not just a single shot; this is not a once-for-all exercise. My right hon. Friend the Chancellor and the rest of us in the Treasury are fully aware of the shortcomings of estate duty and particularly of its impact on widows. This is very much in our minds.
  My right hon. Friend the Member for Kingston-upon-Thames also mentioned the problem of overlapping surtax. May I make two points about this? The Bill gives a significant relief to high earners and reduces their total tax burden, and, therefore, it reduces the penalty which the overlap will represent. Second, we are giving two-and-a-half years' notice of the time at which the particular payment of surtax becomes due. I do not think that it is unreasonable that people might be expected to make some provision to meet that payment. Nevertheless, I take note of the points made, and we shall consider them.
  My hon. Friend the Member for Derbyshire, South-East (Mr. Rost) spoke about savings clubs and the impact of capital gains tax. I think he will agree that it was a somewhat complex point. We shall study in HANSARD what he said, as we shall the point raised by the hon. Member for Llanelly (Mr. Denzil Davies) on the argument about the unified tax.
  My hon. Friend the Member for Norfolk, North (Mr. Ralph Howell) raised a point about the P.A.Y.E. system. We do not accept all his strictures, but I can assure him that the whole range of P.A.Y.E. tax problems continues to be under review.
  Many of the speeches, including those of the hon. Members for Woolwich, West

  557
  (Mr. Hamling) Oldham, West (Mr. Meacher) and West Lothian (Mr. Dalyell), tried to reassert the case that the Bill and the Budget confer benefits on no one but the rich. That is absolute nonsense, and the hon. Member knows it.
  I gave some of the facts and figures in the Budget debate. The standard rate cut benefits every taxpayer. A total of 6¾ million taxpayers with children benefit from the increase in child allowances.
  Mr. Arthur Lewis Mr. Arthur Lewis rose—
  Mr. Jenkin: The hon. Gentleman has not been here throughout the whole debate.
  More than four-fifths of the total tax cuts in the Budget are accounted for by child tax allowances and the halving of S.E.T. Getting on for 500,000 taxpayers benefit from the increase from one-ninth to 15 per cent. in the earned income relief. Employment and investment will be helped by the cut in corporation tax. It is transparent nonsense to describe it as a rich man's budget.
  On the contrary, because it is broadly aimed at restoring confidence, it will help the whole nation. Take the cut in selective employment tax. Almost every day we read in the Press of price cuts because S.E.T. is coming down. Moreover, they are cuts now, not next July. Two days after the Budget the Daily Mail announced:
  "Two more chain food stores announced S.E.T. cuts yesterday. So did a big dry cleaning company and a chain of chemists."
  Hon. Members: Oh!
  Mr. Jenkin: I do not know why hon. Members opposite should jeer. The Sketchley dry cleaning company has 550 branches, and the paper says that it has made reductions of up to 30 per cent. The Daily Mirror announced:
  "Four big supermarket firms plan to cut some food prices now that Selective Employment Tax is to be halved…
  "Sainsbury's, Tesco…Pricerite and Fine Fare are all hoping to pass on some of the money they may save to customers."—
  Hon. Members: Oh!
  Mr. Jenkin: If Labour hon. Members do not want the price cuts, let them say so.
  558
  On 5th April it was reported that beer price increases scheduled for later this year had been shelved because of the Government's decision to cut S.E.T. One of the directors of Bass said:
  "The importance of the S.E.T. change is that it will enable us to hold beer prices as they now are."—
  Hon. Members: Oh!
  Mr. Jenkin: Wait for it—
  "and this will be the first year in three that they have not gone up."
  British Home Stores is cutting prices. Four of the stronger Courage bottled beers have been reduced by the equivalent of 1½p per pint.
  On 15th April The Guardian announced:
  "The savings that Marks and Spencer will make following the reduction in S.E.T. from July 5 are to be passed on to the public in advance. From today the group will make price cuts on a selected, but important group of St. Michael clothes and foods."
  Mr. Austen Albu Mr. Austen Albu (Edmonton) rose—
  Mr. Jenkin: I shall not give way. On 16th April it was reported that Boots had decided to give most of the benefit to the housewife. A Daily Mail report two days ago showed that the second round had started. It reported:
  "The Tesco supermarket chain is cutting prices on 50 more lines following previous cuts at the beginning of the month…"
  Mr. Albu: Can the hon. Gentleman say what proportion of the cost of food in the retail shops is represented by S.E.T.?
  Mr. Jenkin: A great deal more than purchase tax, which is what the Labour Party would rather have had cut. There is no sense in arguing for a cut in purchase tax when it would not have affected the price of food at all. The list I have quoted shows that food store after food store after food store has been bringing down prices as a result of the cut in S.E.T. The T.U.C. has told the Government that rising taxes were one of the causes of inflation. The T.U.C. is right in that, and we have answered it. Taxes are coming down and so are prices. This Bill cuts taxation not just for the rich but for the whole nation. By voting against it, the Opposition are demonstrating more clearly even than in Government that they are irredeemably the party of high taxation.

  559
  The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) told the House on 15th April, 1969, that an increase in one of the earned income allowances was a high priority for a later Budget. I was mug enough to think that he meant it. Yet today he is intending meekly to trot through the Lobby to vote against a Bill which does just that. Many of the Co-operative Members opposite spoke, and some of them honourably voted against S.E.T. year after year. They are going to go into the Lobby tonight to vote against a Bill which cuts it in half. The hon. Member for Oldham, West bewailed the low tax threshold for families with children. The Opposition will he voting against a Bill which raises it substantially.
  Virtually all right hon. and hon. Members opposite have called for measures to increase investment. The cut in corporation tax has been widely welcomed by industry as an incentive to do just that. Yet the Opposition will be voting against that too. Above all, the right hon. Member for Stechford longed to go down in history as a great reforming Chancellor, but having shrunk from introducing the very reform that constitutes the heart of this Bill—the unification of income tax and surtax—he is now advising his party to vote against it.
  This is not Opposition. These are the politics of sour grapes and will do the Labour Party no good. The Bill has been widely welcomed, not only because it cuts taxation, not only because with it we are embarking on a long overdue programme of tax reform, but mainly because for the first time for years, it sounds a new message of hope and a new message of confidence. I commend it to the House.
  10.10 p.m.
  Mr. John Nott: I want to make a brief point that will take only two minutes, and it may be a matter with which hon. Members opposite will agree. As this will be the only opportunity which back benchers will have in this House of raising the question of the Resolution which comes after the Second Reading, I would like to say a few words about the contents—
  Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. The hon. Member
  560
  must not address his remarks to the Resolution now.
  Mr. Nott: I will keep to the Bill and say that it used to be the practice for the Finance Bill to be debated in full upon the Floor of the House. I wish to make no comment as to whether it should be taken upstairs or divided in two. I understand that only one person may speak against a Resolution connected with the Finance Bill suggesting that it be divided in the way proposed. If this is not the case I would appreciate the guidance of the Leader of the House because I understand that there is no opportunity under the Standing Orders for back benchers to debate the manner in which this Bill is being divided.
  The opportunity should arise for back benchers to say whether they wish particular Clauses to be debated upon the Floor of the House or whether they wish those Clauses to be taken upstairs in Committee. It is wrong that there should be no debate upon the Resolution following the Second Reading.
  Mr. Deputy Speaker: The Question is—
  Dame Irene Ward: No, no. I would like guidance on the Resolution that follows this because I also—
  Mr. Deputy Speaker: Order. I cannot give the hon. Lady guidance on the Resolution until we reach it. All I can do is to try to keep her in order on the Second Reading.
  Dame Irene Ward: Arising out of the Bill, having listened to what has been said by my hon. Friend the Member for St. Ives (Mr. Nott), it seems reasonable that I should make some comments. If you cannot give me any guidance I will get on with what I want to say and if, when the Resolution is moved after the Second Reading of the Bill has been carried, there is no opportunity for discussion, I shall have made my protest, perhaps a little less vigorously than I made it once before, with the support of my party, although it voted against me, quite rightly, in support of Mr. Speaker's Ruling.
  Without commenting on the Bill, I want to know why, without any previous declaration, the Government have decided

  561
  to send part of the Bill upstairs. I thoroughly disapprove of this and wish to say so. There are a lot of things in the Bill—
  Mr. Deputy Speaker: I am afraid the hon. Lady is out of order in raising the question of whether parts of the Bill should be sent upstairs on Second Reading.
  Dame Irene Ward: Arising out of the Bill, I still want to make my protest, and

  Division No. 352.]

  AYES

  [10.13 p.m.

  Adley, Robert

  du Cann, Rt. Hn. Edward

  James, David

  Alison, Michael (Barkston Ash)

  Dykes, Hugh

  Jenkin, Patrick (Woodford)

  Allason, James (Hemel Hempstead)

  Edwards, Nicholas (Pembroke)

  Jennings, J. C. (Burton)

  Archer, Jeffrey (Louth)

  Elliot, Capt. Walter (Carshalton)

  Jessel, Toby

  Astor, John

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

  Johnson Smith, G. (E. Grinstead)

  Atkins, Humphrey

  Farr, John

  Jones, Arthur (Northants, S.)

  Awdry, Daniel

  Fell, Anthony

  Jopling, Michael

  Baker, Kenneth (St. Marylebone)

  Fenner, Mrs. Peggy

  Joseph, Rt. Hn, Sir Keith

  Barber, Rt. Hn. Anthony

  Fidler, Michael

  Kaberry, Sir Donald

  Batsford, Brian

  Fisher, Nigel (Surbiton)

  Kellett, Mrs. Elaine

  Beamish, Col. Sir Tufton

  Fookes, Miss Janet

  Kershaw, Anthony

  Bell, Ronald

  Fortescue, Tim

  Kilfedder, James

  Bennett, Dr. Reginald (Gosport)

  Foster, Sir John

  King, Evelyn (Dorset, S.)

  Benyon, W.

  Fowler, Norman

  King, Tom (Bridgwater)

  Berry, Hn. Anthony

  Fox, Marcus

  Kinsey, J. R.

  Biffen, John

  Fraser, Rt. Hn. Hugh(St'fford & Stone)

  Kirk, Peter

  Blaker, Peter

  Fry, Peter

  Kitson, Timothy

  Boardman, Tom (Leicester, S.W.)

  Galbraith, Hn. T. G.

  Knight, Mrs. Jill

  Body, Richard

  Gardner, Edward

  Knox, David

  Boscawen, Robert

  Gibson-Watt, David

  Lambton, Antony

  Bossom, Sir Clive

  Gilmour, Ian (Norfolk, C.)

  Lane, David

  Bowden, Andrew

  Gilmour, Sir John (Fife, E.)

  Langford-Holt, Sir John

  Boyd-Carpenter, Rt. Hn. John

  Glyn, Dr. Alan

  Legge-Bourke, Sir Harry

  Bray, Ronald

  Godber, Rt. Hn. J, B.

  Brewis, John

  Goodhew, Victor

  Le Marchant, Spencer

  Brinton, Sir Tatton

  Gorst, John

  Lewis, Kenneth (Rutland)

  Brown, Sir Edward (Bath)

  Gower, Raymond

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

  Bruce-Gardyne, J.

  Grant, Anthony (Harrow, C.)

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

  Bryan, Paul

  Gray, Hamish

  Longden, Gilbert

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

  Green, Alan

  Loveridge, John

  Buck, Anthony

  Grieve, Percy

  Luce, R. N.

  Bullus, Sir Eric

  Griffiths, Eldon (Bury St. Edmunds)

  McAdden, Sir Stephen

  Burden, F. A.

  Grylls, Michael

  MacArthur, Ian

  Butler, Adam (Bosworth)

  Gummer, Selwyn

  McCrindle, R. A.

  Campbell, Rt.Hn.G.(Moray&Nairn)

  Gurden, Harold

  Maclean, Sir Fitzroy

  Carr, Rt. Hn. Robert

  Hall, Miss Joan (Keighley)

  McMaster, Stanley

  Channon, Paul

  Hall, John (Wycombe)

  Macmillan, Maurice (Farnham)

  Chapman, Sydney

  Hall-Davis, A. G. F.

  McNair-Wilson, Michael

  Chataway, Rt. Hn. Christopher

  Hamilton, Michael (Salisbury)

  McNair-Wilson, Patrick (New Forest)

  Chichester-Clark, R.

  Hannam, John (Exeter)

  Maddan, Martin

  Churchill, W. S.

  Harrison, Col. Sir Harwood (Eye)

  Madel, David

  Clark, William (Surrey, E.)

  Haselhurst, Alan

  Maginnis, John E.

  Clarke, Kenneth (Rushcliffe)

  Hastings, Stephen

  Marples, Rt. Hn, Ernest

  Clegg, Walter

  Havers, Michael

  Marten, Neil

  Cockeram, Eric

  Hawkins, Paul

  Maude, Angus

  Cooke, Robert

  Hay, John

  Maudling, Rt. Hn. Reginald

  Coombs, Derek

  Hayhoe, Barney

  Mawby, Ray

  Cooper, A. E.

  Heseltine, Michael

  Maxwell-Hyslop, R. J.

  Corfield, Rt. Hn. Frederick

  Hicks, Robert

  Meyer, Sir Anthony

  Cormack, Patrick

  Higgins, Terence L.

  Mills, Peter (Torrington)

  Costain, A. P.

  Hiley, Joseph

  Mills, stratton (Belfast, N.)

  Critchley, Julian

  Hill, John E. B. (Norfolk, S.)

  Miscampbell, Norman

  Crouch, David

  Hill, James (Southampton, Test)

  Mitchell, Lt.-Col. C. (Aberdeenshire, W.)

  Crowder, F. P.

  Holland, Philip

  Mitchell, David (Basingstoke)

  Curran, Charles

  Holt, Miss Mary

  Moate, Roger

  Davies, Rt. Hn. John (Knutsford)

  Hordern, Peter

  Molyneaux, James

  d'Avigdor-Goldsmid, Sir Henry

  Hornby, Richard

  Money, Ernie

  d'Avigdor-Goldsmid, Maj.-Gen. James

  Hornsby-Smith, Rt. Hn. Dame Patricia

  Monks, Mrs. Connie

  Dean, Paul

  Howe, Hn. Sir Geoffrey (Reigate)

  Monro, Hector

  Digby, Simon Wingfield

  Howell, David (Guildford)

  Montgomery, Fergus

  Dixon, Piers

  Howell, Ralph (Norfolk, N.)

  Morgan, Geraint (Denbigh)

  Dodds-Parker, Douglas

  Hutchison, Michael Clark

  Morrison, Charles (Devizes)

  Drayson, G. B.

  Iremonger, T. L.

  Mudd, David

  if I cannot make it in any other way I shall just keep on saying, "Arising out of the Bill I want to make my protest."
  Mr. Deputy Speaker: The hon. Lady might consider, and I feel the House will surely consider, that she has made her protest.
  Question put:—
  The House divided: Ayes 286, Noes 250.

  Murton, Oscar

  Ridley, Hn. Nicholas

  Tebbit, Norman

  Nabarro, Sir Gerald

  Ridsdale, Julian

  Temple, John M.

  Neave, Airey

  Rippon, Rt. Hn. Geoffrey

  Thatcher, Rt. Hn. Mrs. Margaret

  Nicholls, Sir Harmar

  Roberts, Michael (Cardiff, N.)

  Thomas, John Stradling (Monmouth)

  Normanton, Tom

  Roberts, Wyn (Conway)

  Thomas, Rt. Hn. Peter (Hendon, S.)

  Nott, John

  Rossi, Hugh (Hornsey)

  Thompson, Sir Richard (Croydon, S.)

  Onslow, Cranley

  Rost, Peter

  Tilney, John

  Oppenheim, Mrs. Sally

  Russell, Sir Ronald

  Trafford, Dr. Anthony

  Orr, Capt. L. P. S.

  St. John-Stevas, Norman

  Trew, Peter

  Owen, Idris (Stockport, N.)

  Sandys, Rt. Hn. D.

  Tugendhat, Christopher

  Page, Graham (Crosby)

  Scott, Nicholas

  Turton, Rt. Hn. R. H.

  Page, John (Harrow, W.)

  Scott-Hopkins, James

  van Straubenzee, W. R.

  Parkinson, Cecil (Enfield, W.)

  Sharples, Richard

  Vaughan, Dr. Gerard

  Peel, John

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

  Waddington, David

  Percival, Ian

  Shelton, William (Clapham)

  Walker, Rt. Hn. Peter (Worcester)

  Peyton, Rt. Hn. John

  Simeons, Charles

  Walker-Smith, Rt. Hn. Sir Derek

  Pike, Miss Mervyn

  Sinclair, Sir George

  Walters, Dennis

  Pink, R. Bonner

  Skeet, T. H. H.

  Ward, Dame Irene

  Pounder, Rafton

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

  Warren, Kenneth

  Powell, Rt. Hn. J. Enoch

  Soref, Harold

  Weatherill, Bernard

  Price, David (Eastleigh)

  Speed, Keith

  Wells, John (Maidstone)

  Prior, Rt. Hn. J. M. L.

  Spence, John

  White, Roger (Gravesend)

  Proudfoot, Wilfred

  Sproat, Iain

  Whitelaw, Rt. Hn. William

  Pym, Rt. Hn. Francis

  Stainton, Keith

  Wiggin, Jerry

  Quennell, Miss J. M.

  Stanbrook, Ivor

  Wilkinson, John

  Raison, Timothy

  Stewart-Smith, D. G. (Belper)

  Wolrige-Gordon, Patrick

  Ramsden, Rt. Hn. James

  Stodart, Anthony (Edinburgh, W.)

  Woodhouse, Hn. Christopher

  Rawlinson, Rt. Hn. Sir Peter

  Stoddart-Scott, Col. Sir M.

  Woodnutt, Mark

  Redmond, Robert

  Stokes, John

  Worsley, Marcus

  Reed, Laurance (Bolton, E.)

  Stuttaford, Dr. Tom

  Wylie, Rt. Hn. N. R.

  Rees, Peter (Dover)

  Sutcliffe, John

  Rees-Davies, W. R.

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

  TELLERS FOR THE AYES:

  Renton, Rt. Hn. Sir David

  Taylor, Frank (Moss Side)

  Mr. Reginald Eyre and

  Rhys Williams, Sir Brandon

  Taylor, Robert (Croydon, N.W.)

  Mr. Jasper More.

  NOES

  Abse, Leo

  Davidson, Arthur

  Hardy, Peter

  Albu, Austen

  Davies, Denzil (Llanelly)

  Harper, Joseph

  Allaun, Frank (Salford, E.)

  Davies, G. Elfed (Rhondda, E.)

  Harrison, Walter (Wakefield)

  Allen, Scholefield

  Davies, Ifor (Gower)

  Hart, Rt. Hn. Judith

  Archer, Peter (Rowley Regis)

  Davies, S. O. (Merthyr Tydvil)

  Hooson, Emlyn

  Armstrong, Ernest

  Deakins, Eric

  Horam, John

  Ashley, Jack

  Delargy, H. J.

  Houghton, Rt. Hn. Douglas

  Ashton, Joe

  Dempsey, James

  Howell, Denis (Small Heath)

  Atkinson, Norman

  Doig, Peter

  Huckfieid, Leslie

  Bagier, Gordon A. T.

  Dormand, J. D.

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Barnes, Michael

  Douglas, Dick (Stirlingshire, E.)

  Hughes, Mark (Durham)

  Barnett, Joel

  Douglas-Mann, Bruce

  Hughes, Robert (Aberdeen, N.)

  Beaney, Alan

  Driberg, Tom

  Hughes, Roy (Newport)

  Benn, Rt. Hn. Anthony Wedgwood

  Duffy, A. E. P.

  Hunter, Adam

  Bennett, James (Glasgow, Bridgeton)

  Dunnett, Jack

  Irvine, Rt. Hn. SirArthur (Edge Hill)

  Bidwell, Sydney

  Eadie, Alex

  Janner, Greville

  Bishop, E. S.

  Edelman, Maurice

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

  Blenkinsop, Arthur

  Edwards, Robert (Bilston)

  Jenkins, Hugh (Putney)

  Booth, Albert

  Edwards, William (Merioneth)

  Jenkins, Rt. Hn. Roy (Stechford)

  Boyden, James (Bishop Auckland)

  Ellis, Tom

  John, Brynmor

  Bradley, Tom

  English, Michael

  Johnson, Carol (Lewisham, S.)

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

  Evans, Fred

  Johnson, Walter (Derby, S.)

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

  Faulds, Andrew

  Jones, Barry (Flint, E.)

  Brown, Ronald (Shoreditch & F'bury)

  Fernyhough, Rt. Hn. E.

  Jones, Dan (Burnley)

  Buchan, Norman

  Fisher, Mrs. Doris (B'ham, Ladywood)

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

  Butler, Mrs, Joyce (Wood Green)

  Fletcher, Raymond (Ilkeston)

  Jones, Gwynoro (Carmarthen)

  Callaghan, Rt. Hn. James

  Fletcher, Ted (Darlington)

  Jones, T. Alec (Rhondda, W.)

  Campbell, I. (Dunbartonshire, W.)

  Foley, Maurice

  Judd, Frank

  Cant, R. B.

  Foot, Michael

  Kaufman, Gerald

  Carmichael, Neil

  Forrester, John

  Kelley, Richard

  Carter, Ray (Birmingh'm, Northfield)

  Fraser, John (Norwood)

  Kerr, Russell

  Carter-Jones, Lewis (Eccles)

  Freeson, Reginald

  Kinnock, Neil

  Clark, David (Colne Valley)

  Galpern, Sir Myer

  Lambie, David

  Cocks, Michael (Bristol, S.)

  Garrett, W. E.

  Lamond, James

  Cohen, Stanley

  Gilbert, Dr. John

  Latham, Arthur

  Coleman, Donald

  Golding, John

  Lawson, George

  Coneannen, J. D.

  Gordon Walker, Rt. Hn. P. C.

  Leadbitter, Ted

  Conlan, Bernard

  Gourlay, Harry

  Lee, Rt. Hn. Frederick

  Corbet, Mrs. Freda

  Grant, George (Morpeth)

  Leonard, Dick

  Cox, Thomas (Wandsworth, C.)

  Grant, John D. (Islington, E.)

  Lever, Rt. Hn. Harold

  Crawshaw, Richard

  Griffiths, Eddie (Brightside)

  Lewis, Arthur (W. Ham, N.)

  Cronin, John

  Griffiths, Will (Exchange)

  Lewis, Ron (Carlisle)

  Crosland, Rt. Hn. Anthony

  Gunter, Rt. Hn. R. J.

  Lipton, Marcus

  Cunningham, G. (Islington, S.W.)

  Hamilton, James (Bothwell)

  Lomas, Kenneth

  Dalyell, Tam

  Hamilton, William (Fife, W.)

  Loughlin, Charles

  Darling, Rt. Hn. George

  Hamling, William

  Lyon, Alexander W. (York)

  564

  565

  Lyons, Edward (Bradford, E.)

  Orbach, Maurice

  Smith, John (Lanarkshire, N.)

  Mabon, Dr. J. Dickson

  Orme, Stanley

  Spearing, Nigel

  McBride, Neil

  Oswald, Thomas

  Spriggs, Leslie

  McCartney, Hugh

  Owen, Dr. David (Plymouth, Sutton)

  Stallard, A. W.

  McElhone, Frank

  Palmer, Arthur

  Stoddart, David (Swindon)

  McGuire, Michael

  Pannell, Rt. Hn. Charles

  Stonehouse, Rt. Hn. John

  Mackenzie, Gregor

  Pardoe, John

  Strang, Gavin

  Mackie, John

  Parker, John (Dagenham)

  Strauss, Rt. Hn. G. R.

  Mackintosh, John P.

  Parry, Robert (Liverpool, Exchange)

  Summerskill, Hn. Dr. Shirley

  Maclennan, Robert

  Pendry, Tom

  Taverne, Dick

  McMillan, Tom (Glasgow, C.)

  Pentland, Norman

  Thomas, Rt. Hn. George (Cardiff,W.)

  McNamara, J. Kevin

  Perry, Ernest G.

  Thomas, Jeffrey (Abertillery)

  MacPherson, Malcolm

  Prentice, Rt. Hn. Reg.

  Thorpe, Rt. Hn. Jeremy

  Mahon, Simon (Bootle)

  Prescott, John

  Tinn, James

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

  Price, J. T. (Westhoughton)

  Tomney, Frank

  Marks, Kenneth

  Price, William (Rugby)

  Torney, Tom

  Marquand, David

  Probert, Arthur

  Tuck, Raphael

  Marsden, F.

  Rankin, John

  Urwin, T. W.

  Marsh, Rt. Hn. Richard

  Reed, D. (Sedgefield)

  Varley, Eric G.

  Mayhew, Christopher

  Rees, Merlyn (Leeds, S.)

  Wainwright, Edwin

  Meacher, Michael

  Rhodes, Geoffrey

  Walden, Brian (B'm'ham, All Saints)

  Mellish, Rt. Hn. Robert

  Richard, Ivor

  Walker, Harold (Doncaster)

  Mendelson, John

  Roberts, Albert (Normanton)

  Wallace, George

  Mikardo, Ian

  Roberts, Rt. Hn. Goronwy (Caernarvon)

  Watkins, David

  Millan, Bruce

  Robertson, John (Paisley)

  Weitzman, David

  Miller, Dr. M. S.

  Roderick, Caerwyn E. (Br'c'n&R'dnor)

  Wellbeloved, James

  Milne, Edward (Blyth)

  Roper, John

  Wells, William (Walsall, N.)

  Molloy, William

  Rose, Paul B.

  Whitehead, Phillip

  Morgan, Elystan (Cardiganshire)

  Ross, Rt. Hn. William (Kilmarnock)

  Whitlock, William

  Morris, Alfred (Wythenshawe)

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

  Willey, Rt. Hn. Frederick

  Morris, Charles R. (Openshaw)

  Sheldon, Robert (Ashton-under-Lyne)

  Williams, Alan (Swansea, W.)

  Morris, Rt. Hn. John (Aberavon)

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

  Williams, W. T. (Warrington)

  Moyle, Roland

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

  Wilson, Alexander (Hamilton)

  Mulley, Rt. Hn. Frederick

  Silkin, Hn. S. C. (Dulwich)

  Wilson, William (Coventry, S.)

  Murray, Ronald King

  Sillars, James

  Woof, Robert

  Ogden, Eric

  Silverman, Julius

  O'Halloran, Michael

  Skinner, Dennis

  TELLERS FOR THE NOES:

  O'Malley, Brian

  Small, William

  Mr. Alan Fitch and

  Oram, Bert

  Mr. William Hamling.

  Bill accordingly read a Second time.
  Motion made, and Question proposed,
  That Clauses 6, 7, 8, 10, 22, 30 and 49 and any new Clause relating to purchase tax be committed to a Committee of the whole House:
  That the remainder of the Bill be committed to a Standing Committee:
  That, when the provisions of the Bill considered, respectively, by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill be proceeded with as if the Bill had been reported as a whole to the House from the Standing Committee.—[Mr. Maurice Macmillan.]
  Sir B. Rhys Williams Sir B. Rhys Williams rose—
  Mr. Deputy Speaker (Sir R. Grant-Ferris): Does the hon. Member for Kensington, South (Sir B. Rhys Williams) wish to oppose the Motion?
  Sir B. Rhys Williams: I do, Mr. Deputy Speaker.
  Mr. James Ramsden: On a point of order, Mr. Deputy Speaker. Before my hon. Friend begins, am I right in thinking that the operation of the Standing Order as it affects the future of this important piece of legislation in Committee is susceptible of only one
  566
  speech for and one speech against the Motion? If this is so, it will not be possible for the feeling in all parts of the House to be adequately expressed on the future of this most important piece of legislation.
  Mr. Deputy Speaker: The hon. Gentleman is right in his surmise that only one speech is allowed to propose the Motion—and the right hon. Gentleman the Chief Secretary has chosen not to make a speech—and one speech is allowed in opposition to the Motion, which must be short.
  Mr. J. Bruce-Gardyne: Further to that point of order. It would appear that we are in a slight difficulty over this matter. Surely it must be possible, apart from being able to oppose the Motion as it is before the House at the moment, for there to be alternative suggestions as to an alternative selection of the Clauses to be taken upstairs and those to be taken on the Floor of the House.
  Mr. Deputy Speaker: That may or may not be true, but that is not a matter for me now. I have to act in accordance with the Standing Order which governs

  567
  a Motion such as that which is now before the House. I have called the hon. Member for Kensington, South but if he wishes to give way to his right hon. Friend the Leader of the House he would be allowed to do so.
  The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): Further to that point of order, Mr. Deputy Speaker. It is clear that the Standing Order on which we are operating is absolutely correct and it is not for me to question it or the Ruling you have given. The Standing Order is quite correct as applying to the normal Bill, but it may be that in regard to the procedure which we now adopt in regard to Finance Bills the Standing Order may not be as complete as it is for other Bills. There may well be a desire for discussion as to which part of a Finance Bill is to go upstairs and which is to be heard on the Floor of the House. I feel that this is something that should be considered and, in view of my hon. Friend's points of order, I would undertake in the future to look at the probability of whether some procedure can be devised in regard to the Finance Bill to cover this matter.
  Mr. Nott: Further to that point of order, Mr. Deputy Speaker. We are grateful to the Leader of the House for that statement. I believe that it is possible for the Leader of the House to table an Amendment to this Motion. This would enable us on some future occasion, perhaps next week, to debate this important Motion. Perhaps you could give a Ruling on that point.
  Mr. Deputy Speaker: I have to operate the Standing Order upon which we are now working. There is no possibility under that Standing Order to move an Amendment at this stage.
  Mr. Kenneth Lewis: Further to that point of order. Are we to take it that, my hon. Friend the Chief Secretary having moved the Motion formally, he is not precluded from speaking? If he cannot explain the situation, the House is put in some difficulty.
  Mr. Whitelaw: Further to that point of order, perhaps I can help my hon. Friend. On this occasion, we have followed the precedent adopted in pre-
  568
  vious years. However, in respect of the future Finance Bills, I am prepared to look at this procedure. On this occasion, I hope that the procedure which we have followed, in accordance with precedent, will be acceptable.
  Mr. John Mendelson: Further to that point of order. It is important, because some of my colleagues have raised this matter in various discussions. It should be on record that some hon. Members on this side of the House support the general requests which have come from the back benches opposite. In view of that, it is to be hoped that the Leader of the House will provide an opportunity, even this year, by means of an Amendment, for example, whereby the matter can be considered, and that he will make quite certain that there will be such an opportunity next year.
  Mr. Deputy Speaker: I think that we should now leave points of order on this matter. The Leader of the House has kindly explained what he hopes to do. I have called the hon. Member for Kensington, South. I think he should now be allowed to make his speech.
  Dame Irene Ward: Further to that point of order. I am sorry to go against your Ruling, Mr. Deputy Speaker. Will it help my right hon. Friend to suggest that he moves a manuscript Amendment removing everything in the Motion, in which event we can debate the various Clauses?
  Mr. Deputy Speaker: I am afraid that that is impossible at this juncture.
  Mr. Jeremy Thorpe: Further to that point of order. While no one would wish you, Mr. Deputy Speaker, to misconstrue the provisions of Standing Order No. 40, the matter which is relevant at the moment is paragraph 3; namely, that if there is opposition to matters on the Order Paper, one speech in opposition may be allowed. I think that the House will accept that that is the position. It is one which arises only when, after a Bill has been read a Second time, it is committed to a Standing Committee. That process normally follows immediately after the Second Reading of a Bill. If that process were deferred and, for example, took place next week, the Leader of the House

  569
  would have an opportunity to canvass opinions in all parts of the House where, clearly, there are valuable views which he might wish to take into account.
  Mr. Deputy Speaker: I have taken advice from the learned Clerk. It would not be possible to do what the right hon. Gentleman wants to do even next week. It would still be subject to the same rules which apply to this Standing Order. Until the House in its wisdom decides to alter the Standing Order we are bound to apply it. Therefore, I hope that the House will now allow the procedure to continue.
  Mr. Thorpe: With respect, Mr. Deputy Speaker, no one suggests that the rules be changed at this stage, and no one suggests that it is possible to do so this year. All I urge upon you is that the process of permitting only one speech in opposition would be more agreeable to the House if a little time had elapsed so that the views, albeit informally, from different parts of the House could be transmitted to the right hon. Gentleman.
  Mr. Deputy Speaker: That is not a point of order for me at all. Sir Brandon Rhys Williams.
  Sir B. Rhys Williams: In view of the exchanges which have just taken place it is possible for me to be very brief.
  I should like to thank my right hon. Friend the Leader of the House for the assurances which he has given to the House.
  I sought to catch your eye, Mr. Deputy Speaker, more in sorrow that in anger, because it seemed to me objectionable that this important Resolution should be brought before the House under this Standing Order, which permits no serious discussion.
  I learned only by accident late last night that this Resolution was to appear on today's Order Paper. By courtesy of the Clerk in the Public Bill Office, I was informed which Clauses were to be taken on the Floor of the House and which Clauses were to be taken in Committee upstairs.
  My feeling was, and still is, that it is making rather a mockery of the Second Reading that the pattern of the Committee stage should be decided, albeit by due consultation through the usual channels, before right hon. and hon. Members
  570
  have had any opportunity at all of expressing their views on the Second Reading of the Finance Bill. Indeed, I think it would be more proper to allow the tabling of some Amendments before the final decision is taken about the shape of the Committee stage.
  These were the particular points I wished to raise.
  I should add that the Finance Bill is perhaps the most important Bill in the year. I know that hon. Members on both sides are particularly sensitive about the new procedure for taking part of the Bill in Committee. Concerning the precedents for this particular procedure for dividing the Clauses, it is right to say that on 6th May, 1969, which was the first occasion on which it was brought before the House, there was so much controversy that a Division was forced upon it. In 1970, when it was again attempted, it was afterwards rescinded.
  I hope, therefore, that the protest which has been brought to your notice, Mr. Deputy Speaker, from all parts of the House will result on a future occasion in some other procedure being adopted.
  I recommend that due consideration should be given to the expression of views on Second Reading and that proper time should be allowed for right hon. and hon. Members, if they so wish, to table Amendments to the Finance Bill; and that only then should the usual channels come together to make their selections. Even then, when their decision is brought before the House, I suggest that it should be settled by a procedure which allows a reasonable degree of debate.
  Question put, pursuant to Standing Order No. 40 (Committal of Bills) and agreed to.
  Ordered,
  After Second Reading of the Finance Bill, to move, That Clauses 6, 7, 8, 10, 22, 30 and 49 and any new Clause relating to purchase tax be committed to a Committee of the whole House:
  That the remainder of the Bill be committed to a Standing Committee:
  That, when the provisions of the Bill considered, respectively, by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill be proceeded with as if the Bill had been reported as a whole to the House from the Standing Committee.
  Committee Tomorrow.

  POTATO MARKETING SCHEME (AMENDMENTS)
  10.39 p.m.
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Anthony Stodart): I beg to move,
  That the Amendments of the Potato Marketing Scheme 1955, as amended, a draft of which was laid before this House on 6th April, be approved.
  In 1933 a Potato Marketing Scheme covering Great Britain came into operation under the Agricultural Marketing Act of 1931. During the war, it was suspended, and most of the functions of the Potato Marketing Board were taken over by the Ministry of Food.
  Until 1954 the Government provided a guaranteed market for all ware potatoes. In that year the Government announced that they were prepared to implement the guarantee to potato growers, provided under the Agriculture Act of 1947, through a substitutional Potato Marketing Board with suitable powers, and in 1955 the present Scheme came into force. Parliament approved Amendments to it in 1962, and I now recommend the House to approve some further Amendments.
  I should like to refer first to my own sorrow at the death of one who would certainly have been in the Gallery tonight disagreeing with everything I am about to say. I refer, of course, to Mr. Jack Merricks. I knew him very well and argued with him with animation but never with anger. Hon. Gentlemen on both sides and many people in the farming world will agree that the farming world is much the poorer for the passing of so colourful a character.
  There are at least three reasons why potatoes merit the support which is given to them. They are a useful and popular food. We eat about 4½ million tons of them every year, or close on 200 lbs. per head. For obvious reasons, I would suspect that both my right hon. Friend and I do not eat that amount.
  Potatoes are bulky and so their transport costs are high. To import large quantities would do no good to our balance of payments. Secondly, they grow very well in this country and they
  572
  are good for our system of farming. But—and this is my third point—such is the variation in the way they yield that without support there could be no stability so far as production is concerned.
  The Board co-operates with the Government in their policy for maincrop potatoes in two main ways—in operating its acreage quota powers and in support buying. The Board determines a basic acreage for each registered producer. This normally depends on what he has planted over the preceding three years. Additional basic acreage can be allocated to any individual producer who satisfies the Board that this should be done.
  The Government, after consulting the Board and the farmers' unions, decides each year what acreage of potatoes is needed in Great Britain. In the light of this the Board decides the proportion of his basic acreage which each grower may plant without incurring a financial penalty. The proportion is the same for all growers.
  So long as a grower keeps within his annual quota, he is liable to pay to the Board only the ordinary contribution, which is at present £3 an acre, with a reduction for potatoes which are lifted early. But if he plants a larger acreage he is charged, on what is excess over his basic figure, both the ordinary contribution and an excess one of £25 an acre. This rate is not high enough to prevent excess planting altogether; contributions on these were paid in respect of some 16,000 acres last year.
  Market support is the main way of giving a guarantee to potato growers. Demand is fairly stable, but yields vary a lot. So surpluses can arise if the acreage is the same as the target, or even a bit below it. If these surpluses were not taken off the market, prices would fall disproportionately and growers would suffer. Also—what some hon. Members may think at least as important a consideration—growers who had lost heavily in one year would be strongly inclined to reduce their acreage the following one, with the result that shortage would follow glut, and prices to the consumer would soar.
  Market support works like this. When there is a surplus, the Board makes contracts for all potatoes of suitable quality

  573
  which it is offered. It sells as much as it can of these for animal feed. If the ordinary shopping market runs short, the Board releases some of what it has contracted for. It pays compensation for any potatoes contracted to it which are left on the farm.
  The guarantee arrangements bind the Government to make a deficiency payment to the Board if the average market price to growers of potatoes sold for human consumption in the United Kingdom falls below the guaranteed price. Under a financial agreement between Ministers and the Board, the Government contribute towards the cost of joint market support. The agreement is soon to be changed so as to increase the Government's normal share of the cost of market support, which is two-thirds now, to two-thirds of the cost of the first 200,000 tons put under contract by the Board and three-quarters of the remaining cost.
  The Government share is reduced a bit if in a support year the average market price rises significantly above the guaranteed price. The details of the new sharing arrangement have still to be worked out with the Board.
  The 1970 yield was a record, and the Board expects to spend about £3·5 million on market support after allowing for the Government's share.
  The ordinary contribution is the Board's main source of revenue. The existing Scheme limits it to £3 per acre unless a poll of registered producers is taken, in accordance with the Scheme, and a two-thirds majority of those voting, in terms of number and productive capacity, are in favour of the increase. Productive capacity, for this purpose, means acreage under potatoes in the year when the poll is held. This limit was fixed in 1962, and the costs of support have increased since then.
  It is important to consumers, as well as producers and the Government, that the Board should be able to meet its financial commitments. If it is to do so, the £3 limit must be raised. In May, 1970, the Board submitted to the predecessors of my right hon. Friends Amendments to the Scheme, including provision to raise the maximum rate of ordinary contribution.
  574
  A chance for objecting was provided, and my right hon. Friends appointed Mr. J. R. Pickering, barrister-at-law, to conduct a public inquiry. Mr. Pickering reported to my right hon. Friends in February this year. In the light of the objections and the report, my right hon. Friends have modified the Board's Amendments.
  The result is to be found in the draft Amendments now before the House, and I will deal with them in order of importance. The draft Amendments numbered 3 and 4 concern the ordinary contribution. If they were approved by the House, they would first of all substitute for the limit of £3 per acre one of £4·03 for 1971. The Board has, in fact, announced that, if the Amendments are approved, the rate for this year will be not more than £4 per acre. For later years the rate would be restricted in two ways. In the first place, the maximum rate would change in proportion to movements in the guaranteed price and the three-year average yield. The reason is that these two factors—the guaranteed price and the yield—are what really determine the cost to the Board of market support.
  Secondly, the Amendment would provide that, even if the guaranteed price and the average yield had changed in such a way as to allow the Board to fix for any year a rate more than 6 per cent. above that fixed for the previous one, the Board could impose such an increase only if the producers were consulted and agreed to the increase, either by not requesting that it be put to a vote of producers; or, alternatively, if a vote were taken, by voting in favour by a two-thirds majority. It it did not get this majority, the rate could not be raised by more than 6 per cent. above that for the previous year.
  In any one year, the amount by which the ordinary contribution could rise would be limited either by the formula or by the 6 per cent. rule, whichever was the lower. Thus, if the formula allowed the rate to rise
  by only 4 per cent. compared with the rate actually fixed for the previous year, this would be the maximum increase which the Board could impose for that year, and the 6 per cent. limit would not operate.
  Amendments Nos. 5 and 6 meet a point which has been raised in the House.

  575
  Under the present Scheme the Board can relieve a grower of liability to pay the excess acreage contribution if flooding prevents him from growing or harvesting his potatoes—but it has no power to give relief from his ordinary contribution. The Amendments proposed would give the Board this power, but they would require it to determine in advance, and announce, the conditions subject to which the concession would be made.
  The draft Amendments Nos. 1 and 2 would fix lower and more convenient maximum charges for supply by the Board of certain documents—for example, extracts from the register of producers or copies of the Board's balance sheets.
  The Government have considered all the objections which were made to these Amendments, and the report of the Commissioner who conducted the public inquiry. We are fully satisfied that the Board should have power to increase the ordinary contribution to the extent permitted by the Amendments now before the House. We believe that the market support operations of the Board are of advantage to producers generally, and also to consumers, because, by levelling out the returns which farmers get, they tend to maintain production at a level consistent with a fair profit to producers and also reasonable consumer prices.
  My right hon. Friends have given full weight to the argument, advanced by objectors and supported to some extent by the Commissioner, that the ability to increase the rate of ordinary contribution above £4·03 per acre would reduce the Board's incentive to efficiency and economy in its operations generally; but the Board is accountable to producers at all times for what it does, and we are satisfied that, if the Amendments are approved, it will make responsible use of its greater latitude in this matter.
  By rejecting the Board's proposals as to further changes in the method of fixing the ordinary contribution, my right hon. Friends have ensured that the full and impartial procedure laid down in the Agricultural Marketing Act would apply to any change in the limits on the ordinary contribution which I now commend to the House. The Government believe that these and also the remaining Amend-
  576
  ments will make for more effective working of the Scheme.
  I am very willing to admit that the Amendments are couched in somewhat forbidding terms, although I assure hon. Gentlemen that they become less so on further acquaintance with them. I have tried to explain them in homelier language, and hope that hon. Members will have a tolerably clear idea of what they will mean to potato growers.
  Their apparent complexity arises from the fact that they have had to translate a mathematical formula into words: but I assure the House that the actual rate of contribution which the Amendments authorise will be a simple rate per acre which the Board will notify to producers, and which they will have no difficulty in understanding.
  I therefore recommend the House to approve these draft Amendments.
  10.45 p.m.
  Mr. Michael Barnes: Although I did not know Mr. Merricks, I endorse from this side of the House what the Parliamentary Secretary said about him.
  The Amendments before the House follow, as the hon. Gentleman indicated, from a consideration of the report of the inquiry into objections that were made to the Amendments. There are one or two points in that report of which we ought to remind ourselves. We on this side believe that many of the criticisms in the objections were very wild. Among other things, the Board was accused of being a puppet of Ministers and of being run by the "old brigade" who did not understand the problems of early growers. It was said that too much was being spent on administration, on research and development, and on publicity.
  The Commissioner very properly rejected these criticisms and pointed out that a board such as the Potato Marketing Board needs to spend a considerable amount on administration if it is to be efficient, that more research is obviously in growers' interests, and that the amount the Board spends on publicity is very small compared with the amounts spent by many similar organisations. The Commissioner emphasised, as we on this side strongly emphasise, that it is the Board's job to balance the competing interests of consumers and growers. To do this, the Board must have adequate resources.

  577
  Therefore, we support the Amendment which increases the ordinary contribution from £3 to £4·03 an acre. We think it is puzzling that there was so much opposition from growers to an increase, because the Board has done a great deal to benefit growers and growers have received a great deal of money from the Board and from the Government as a result. It is surprising that some growers should jib at an increase as they did do.
  The Commissioner rejected the original Amendment that there should be an automatic formula for increasing the ordinary rate of contribution, on the ground that this was unfair to growers. I am sure that there the objections from growers were much more soundly based. We agree with, and welcome as a sensible compromise, the modified Amendment which the Government have introduced which will require the Board to consult every registered producer before fixing a rate of ordinary contribution for any year after 1971–72 which exceeds the actual rate for the preceding year by more than 6 per cent. There is a poll procedure built into this Amendment.
  The most important question which the Amendments raise and which the inquiry raised is that of surpluses. Today's Financial Times reports—
  "Stocks of potatoes held by farmers and merchants at the end of March were a huge 1·45 million tons.… This is a record end-March stocks figure and reflects the massive surplus of supplies produced this season as a result of a peak yield per acre…it is still likely that some 0·5 million tons of surplus supplies will be left at the end of the seasonֵ
  A month or two ago there were estimates that there might even have been 1 million tons of surplus supplies.
  The Commissioner's report says this:
  "I am far from being persuaded that the Board cannot get closer to the 'minimum desirable acreage'."
  Earlier in his report the Commissioner says this:
  "It is, therefore, for consideration whether with gradually increasing yields…the min-mum desirable…acreage is being set too high, bearing in mind that the national average annual consumption of potatoes remains more or less constant."
  What does the Parliamentary Secretary think of the Commissioner's comment that
  "the minimum desirable…acreage is being set too high"?
  What are the likely future demands of potato processors? I believe that the
  578
  demand for tinned potatoes is on the increase and that the potato crisp market, which has expanded fantastically in recent years, is still expanding at a fair rate. Therefore, in dealing with the question of whether the minimum desirable acreage is being set too high, will the hon. Gentleman also say something about the likely future demands of the processors?
  If we could arrive at a situation in which there are smaller surpluses, less money would be paid out of the market support fund, the Board's finances would improve, and it would presumably be possible to keep contributions at the same level for growers for a longer period. As Mr. Pickering said in his report, all those objectives are very desirable.
  Apart from those questions, we on this side support the Amendments.
  11.1 p.m.
  Mr. Peter Mills: I support the Amendments. Most of what my hon. Friend the Minister has said stems from the Agricultural Marketing Act, 1958. I support orderly marketing, and that is why I support the Amendments. Some people are bitterly opposed to orderly marketing, but I believe that in the years ahead it will be important for all of us who are concerned with agriculture to look at the whole question very carefully.
  It is terribly easy to criticise any board, and I have done so. There are faults, but a complete free-for-all would bring problems not only for the producer but for the consumer. Therefore, we must look at the matter with an unbiased view, realising the time we live in and the difficulties. I hope it will be realised that orderly marketing can be a tremendous benefit to both the producer and the consumer.
  No one likes paying a levy. We remember the tremendous arguments here in the House about the levy for the training boards. But the levy here helps the producer. In spite of his natural reluctance to pay out, it brings a benefit and it is not a very large sum.
  Mr. Kenneth Lewis: I am sure my hon. Friend must agree that when a levy is to be imposed, whether by Governments or by boards, and particularly by organisations that are somewhat bureaucratic, it

  579
  is a good thing if there is a resistance, because that is the only way to keep the increase to reasonable proportions.
  Mr. Mills: I could not agree more. I was coming to that. When a levy is imposed upon a producer it is very important that the House and the producers should look at the levying organisation very carefully. We need to see whether we are getting value for money. It is important that all boards should come under the scrutiny of the House and of producers to ensure that we get value for money. It would be a very foolish board if it did not try to keep down administrative costs.
  Good housekeeping demands a small surplus. We must not be frightened by surpluses. There was a tremendous surplus of butter in the E.E.C. It has disappeared overnight. In one year, with a combination of factors in potato growing, it is possible to get a very large surplus of potatoes if all the conditions are right. Good housekeeping demands that the Government should ensure that there is just enough or a little more, and the Board must do the same.
  I hope that the Board will, with some of the money from the levies, look carefully into the question of new varieties and research. Mention has been made of the tremendous demand for tinned potatoes and chips. A weakness of producers is that they tend to produce what they want to produce and not what the consumer wants. I hope the Board will pay attention to this question of new varieties and what the consumer wants
  The surpluses this year and the amount of potatoes sold for stock feeding have been of tremendous benefit to us hard working and poor farmers in the South-West of England. We are grateful to the wealthy farmers in Norfolk, Suffolk and the better areas who have provided the surplus. It has been of tremendous benefit to those of us who feed stock and go in for the production of milk. Perhaps I shall be allowed to thank them for the excellent potatoes that we have been able to feed to our cattle in the South-West this year. The situation would have been serious if we had not been able to feed surplus potatoes to our cattle. In view of the shortage of hay and cereals, the surplus has been a godsend.
  580
  I am concerned about the language and type of message produced by the Ministry. I found the Amendments extremely difficult to understand, even though I read them more than once. The more I read them, the more confused I became. I hope a simplified instruction or message will be given to growers and producers so that they may understand what is proposed and the reasons for it. I do not say that the ordinary working farmer is not intelligent, but I am sure the Amendments are extremely difficult for him to understand. I cannot think why they could not have been produced in a more simple form. I ask the Minister to try to find a way of putting them into simple language. However, I hope that the House will accept them.
  11.10 p.m.
  Mr. John Mackie: As a potato grower, I welcome the Scheme. The Potato Marketing Board has been of great help and done a good job of work. I join in the tribute paid to the late Frank Merricks. I knew him well and he drove me round the bend and must have driven many other colleagues round the bend, but we shall all miss him.
  The plant breeders—I might say the nationalised plant breeders—have done a good job of work. They produced new breeds called Printon Green and Printon Dale which contributed to the surpluses which helped the hon. Member for Torrington (Mr. Peter Mills) so much. They are enormous croppers and good keepers.
  I do not agree that we should grudge these levies. If we want the Board we have to give it the finance to enable it to operate. I am puzzled that farmers have twice refused, in a poll, to give the Board what it wants to carry out its task. It is a pity that an inquiry had to be held so that the Minister could come here and give the Board the wherewithal to carry on.
  11.12 p.m.
  Sir Harry Legge-Bourke: My constituency, I think, grows more potatoes than any county other than Yorkshire. Naturally, the Scheme will be of great concern to my constituents, I have had no protests in advance of this debate about the terms of the Scheme but I am not quite certain whether this necessarily means that all my constituents who grow potatoes are fully conversant with the

  581
  terms of the Scheme. I am doubtful whether any of them fully comprehend what the Scheme really means, and I am not certain whether this debate will enlighten them.
  Of all the Amendments which the Scheme brings about, the one which I welcome most is that contained in paragraph (6)(a) which says:
  "…the Board may, if they think fit, prescribe different classes of exceptional circumstances in relation to ordinary contribution or excess acreage contributions respectively."
  What has worried me most about all the systems of guarantees that we have for agriculture has been the blanket nature of the benefit, such as it may be, that any guarantee gives. As we move forward, particularly in the light of the arrival of what for some extraordinary reason are called "convenience foods", we should become a little more sophisticated in the application of such guarantees that we operate. We have already seen the "culinary apple" and we are now seeing convenience foods moving in on the potato market with a vengeance. As a result of the marketing of potatoes is varying considerably. If the Amendment in paragraph (6)(a) means what I think it means I welcome it because it implies a recognition of the fact that we have now got to appreciate that some areas will be more heavily disadvantaged than others as the years go by. I hope that my hon. Friend will be able to confirm that.
  In one of the central fen areas in the Isle of Ely the average rainfall is 1½ inches for the month of March. March is a very important month for potato growers. In 1966–67 the rainfall was about 1¼ inches; in 1967–68 it was 2½ inches; in 1968–69 it was 3½ inches, and in 1969–70 it was 6¼ inches. That means 650 tons of water falling on the ground in a potato-growing area. One can imagine what happens when that occurs. I hope that the Board will now be able to take into account such factors in a way that it has not been able to in the past.
  One factor arising from the Amendment is likely to disturb those who are not fully acquainted with what the Order means, namely, the variation in the polling system involved. Under Orders which have been in being for some time.
  582
  where there teas been a variation in the acreage quota there has been a poll to get acceptance for any increase. Now, under paragraphs (d) and (e), on page 5 of the Scheme, a poll will arise only if the actual rate of ordinary contribution for any calendar year exceeds by more than 6 per cent. the rate for the preceding calendar year. That is a considerable restriction on the right to poll.
  I should like an assurance that in introducing this important Amendment, for which I am sure there are good reasons, my hon. Friend has fully consulted the National Farmers' Union, and especially the potato committee of that union, on which several of my constituents have given distinguished service. I should also like his assurance that there is general agreement that this is a wise change.
  I hope that my hon. Friend will recognise that, despite what my hon. Friend the Member for Torrington (Mr. Peter Mills) has said, one thing that always worries the Fenland potato grower is that areas less suited to grow potatoes all too readily take the opportunity to grow them if they think that there is a good market. The trouble is that when that happens it often undermines the market for those areas which can normally be relied upon to provide the main quantity of potatoes.
  My hon. Friend was unnecessarily modest about the importance of the potato crop. As a staple food it is second to bread. During the last war and afterwards our experience was that any inroad in the supply of potatoes was a very serious matter. I remember the late John Strachey having to introduce potato rationing for the first time, and what a disturbance it caused. We must not under-estimate the importance to the nation of the potato crop.
  I must not argue this in detail tonight, but ever since I have known about its operation I have regarded the Potato Marketing Board's title as a misnomer. It is not a marketing board; it has no control over the distribution of imports. To make sense of marketing, imports must be taken into account. At present 165,000 tons of raw potatoes are coming into the country from Egypt which are classified as "new potatoes". This sort of thing has undermined the confidence of the industry.

  583
  If my hon. Friend wants to make the Potato Marketing Board a marketing board in the true sense, he should allow it to have a say in the control and distribution of imports on the home market. He should at least try to find a better name for the board, since all it can do at the moment is to decide what acreage of potatoes shall be grown, particularly second earlies and main crop potatoes, and the rate at which that crop should be distributed in the country once it has been grown.
  11.21 p.m.
  Mr. Ian Percival: I hope that the farmers and those with farming interests will not take offence at a lawyer seeking to intervene in this discussion. I do so for a number of reasons. The first is that I feel attention should be drawn to the fact that the Minister has made severe modifications to the Amendments which were first proposed.
  I couple with this point my own personal and warm tribute to the late Jack Merricks. He was my wife's cousin and a close personal friend of mine for about 20 years. I am glad to have the opportunity in this House of paying a tribute to him as a person, and to recall that it was he who initiated the opposition which has resulted in these severe modifications—and to those by whom after his death the fight was continued—and I pay tribute to my right hon. Friends the Ministers for insisting on these modifications. The two most important Amendments which were proposed relate to the calculation of the ordinary contributions. At the moment the provisions provide for a figure of £3 but there could be an increase from that figure if the registered producers so decided on a poll by a majority of two-thirds. It was proposed to substitute for that an automatic increase or decrease by the application of a formula. The control of that increase by means of a poll was to be removed altogether.
  The Commissioner appointed by the Minister to hold the inquiry was very severe in his comments. Not only did he say that this was a powerful disincentive to efficiency, but he also said that it removed from producers a right which they had hitherto possessed, namely the legal procedure which had
  584
  to be observed before the board could increase contribution. I very much doubt that Parliament ever intended a statutory body to have self-perpetuating powers to exact money from a sitting target without the persons providing the money having effective means of expressing their approval or displeasure. That is the situation which the original amendment would have brought about. As I read the Amendments there cannot now be an increase of more than 6 per cent. without a poll. I do not think it is correct to say that the producers have to demand a poll.
  I read the amendment to mean that there can be an increase only if there is a poll. Although this is an improvement on the open-ended formula that the Board would have introduced, there could still be a 6 per cent. increase this year, a 6 per cent. increase next year and a 6 per cent. increase the year after, without the producers having any say.
  Sir H. Legge-Bourke: I hope that what I said did not lead my hon. and learned Friend to suppose that I was not fully supporting the argument he is making.
  Mr. Percival: The only advantage of what the Ministers are doing is that the increase cannot be more than 6 per cent. without it being approved by two-thirds of the producers on a poll but this is quite a severe modification.
  The second most serious Amendment gave the Board power to alter the basis of calculating the ordinary contribution, without coming to the House, on a two-thirds majority on a poll of the producers. I congratulate my hon. Friend and his right hon. Friends on taking notice of the objections made and requiring that Amendment to be deleted. It is wrong to introduce provisions under which so fundamental a change could be made without going through the Amendment procedure.
  These Amendments might have gone through had it not been for the vigilance of Mr. Jack Merricks and those who supported him. Those who opposed what he was doing often sought to beat him by ridicule. What a pity it is that he is not here to see the opposition which he started so amply justified and heeded.

  585
  Secondly, as a lawyer Member, one of those who often get the blame for the appalling legislation churned out by the House, I wish to take this opportunity of disclaiming all responsibility for the new paragraph 84. I agree with every comment that has been made about it. One might be justified in thinking that it was in code. With no disrespect to the potato growers, it is laughable to think of them trying to understand it. The original paragraph 84 consisted of 30 lines and any farmer could have read and understood it. It referred to £1 ordinary contribution and £10 excess. It was perfectly clear. In 1962, these amounts were put up to £3 and £25 respectively, and the new paragraph was three times as long as the old one. Even so, the provisions for the increase were tolerably certain and most farmers could understand them, because it was laid down that the maximum was £3 and that any increase over that must have a majority of two-thirds in a poll. Now we have taken out sub-paragraph (3) of paragraph 84, which occupied 16 lines and was intelligible, and are inserting a new sub-paragraph (3) which runs to 68 lines—and those lines are enough to defeat most people.
  I have been daily concerned with this sort of thing, but I have no shame in admitting that it took me a long time to read the new sub-paragraph (3), and I am far from sure that I have it right. But if I have it right, then my hon. Friend has one section of it wrong. It is ludicrous that we should allow ourselves to get into this kind of situation.
  Thirdly, I want to draw attention to the fact that it now seems apparent that the Government are actively encouraging the Board to use its power under this scheme to limit production in order to limit its own financial responsibility. I think that is wrong. I base my starting proposition here on the fact that paragraph 7(a) of the 1969 agreement between the Ministers and the Board, which recently became public through this inquiry, seems to me clearly to place a contractual obligation upon the Board to restrict production.
  Since 1955, when I was not a Member of this House but was engaged professionally in the inquiry into the Potato Marketing Board Substitution
  586
  Scheme, and also since I came to this House, I have been advancing the argument that the Agricultural Marketing Act only empowers schemes for marketing, and marketing starts where production stops. Production and marketing are two quite different things. Section 1 of the Act refers to
  "A scheme regulating the marketing of an agricultural product by the producers thereof…may be submitted…"
  and so on. The point was taken at the inquiry into the substitutional scheme. I think I am right in saying—I have given my hon. Friend notice of this point, so he can correct me if I am wrong—that objection was taken; indeed, I know it was, because I took it. No report was published giving the Commissioner's findings on that point. We were waiting for the report to come out to see if the Commissioner reported unfavourably because there would be a chance to go to court for a declaration.
  My recollection is that the next thing we knew was that an order had been laid, and we had to apply immediately to Mr. Justice Upjohn, as he then was, for a mandatory order ordering someone to take something off some table. I had the privilege of arguing the case before him. It was ex parte on the first day, so a decision was not given then.
  Mr. Justice Upjohn made it clear, however, that he thought there was an argument which called for an answer. I remember his asking the then Solicitor-General, Sir Harry Hylton-Foster, what would be the procedure if he—Mr. Justice Upjohn—thought that the Order should be withdrawn. The Solicitor-General replied that if he had to earn a living by his knowledge of the procedure of the House, it would be a poor living but he would try to ascertain during the lunch interval. I thought that was rather amusing later when he was occupying the Chair of the House and very soon became an absolute expert in the procedure of the House.
  What happened was that the Government gave an undertaking that the Order would not be brought before the House until the following Wednesday, so that there could be a hearing on the Tuesday with the case argued on both sides. The then Attorney-General, however, took a technical point that one could not have a declaration on an interlocutory motion

  587
  and he would not have the interlocutory motion treated as the trial of the action. We therefore had one of those arid arguments which continued for some hours and resulted in nothing happening at the end of the day.
  Next day, the House of Commons approved the Order. Parliament is very clever sometimes. In the Agricultural Marketing Act it included what we lawyers call a whitewashing clause which says that once this House has passed an Order, never mind that it was wholly outside the purpose of the Act and ultra vires, once the House has passed the Order, that is that. So there was nothing that could be done about it.
  The point was raised again, I think, in 1962. It was raised again at the recent inquiry and now, for the first time of which I know, there is a clear statement of opinion by another lawyer on the point. It is not the sort of point on which many lawyers have to spend much time, but the point having been raised at the inquiry with the Commissioner—who is the independent lawyer chosen by my right hon. and hon. Friends on the Front Bench—he had occasion to consider it in detail and he expressed the view in no uncertain terms that
  "The Potato Marketing Scheme of 1955 was 'ultra vires' in that the enabling Act contained no power for the Scheme to regulate production which in fact it does."
  He added:
  "Before coming to the above conclusions I spent a considerable time in closely reading the relevant legislation and also had the advantage of obtaining the views of the Legal Department of the Ministry on the 'ultra vires' point. Those views, I need hardly add, were at variance with mine."
  He expressed that view. He was not a person professionally engaged for one party, although I know, as every other lawyer here knows, that lawyers who are professionally engaged express independent opinions. He was, however, the Ministers' choice, and that was what he said.
  I know that the first scheme was "whitewashed", but Mr. Pickering went on to say that because the original scheme had been legitimated, amendments to it could not be regarded as ultra vires. I am not sure whether he was right about that, but I do not want to get into a legal argument tonight.
  588
  I want to put this general proposition to my right hon. Friends, and particularly to my hon. Friend the Parliamentary Secretary. For goodness sake, if the Government desire to limit the financial liability on the guarantee by restricting production, or if it is desired to give the Board power to restrict production, let them say so in terms. Let the Government take express power to limit production if that is what they want to do. If they want the Board to have the power to do that, let them produce another Act, which is not confined to marketing but which says expressly that this House can give the Board power to control production. Do not let us continue doing this under very doubtful powers, relying on legitimating provisions like the "whitewashing" ones to which I have referred.
  I know that my right hon. and hon. Friends place as much importance as anyone can on open and honest government, and I support them fully in that. Like them, I want to see more open and honest government and legislation. I beg them not to leave this point indeterminate. Do not go on sheltering behind "whitewashing" provisions, or even behind doubts. I hope that they will either get the point resolved, which they can by not laying their Order for a day or so, and simply applying for a declaration, or saying frankly that they want the power to control production themselves or to empower the Board to do it and, if they wish either to happen, to come forward with legislation which can be fairly and openly discussed in the House.
  11.41 p.m.
  Mr. Stodart: I must thank the hon. Member for Brentford and Chiswick (Mr. Barnes) and other hon. Members on both sides of the House for their remarks about the usefulness of the job that the Potato Marketing Board does in balancing the interests of consumers and producers. I was glad to hear the hon. Gentleman welcome the new poll procedure tied up with the 6 per cent. limitation.
  The hon. Gentleman referred specifically to surpluses, as did my hon. Friend the Member for Torrington (Mr. Peter Mills). Yields per acre are tending to rise as a result of new varieties. Fortunately, consumption is rising as well, and I am in no doubt that the processed

  589
  potato market is likely to show a considerable increase in demand in the next few years, just as I am sure that the Board will take note of what my hon. Friend said about the need for research in this subject.
  Accepting the complete uncertainty about the likely yields, the Board has done an extremely good job in managing to have output turn out somewhere in the vicinity of our requirements. Over the last nine years, it has taken off an average of 230,000 tons a year as surplus. That may sound a lot. It is in fact 5 per cent. of what is required for consumption.
  When one looks at the various years in which there have been surpluses, it is unarguable that they are due to high yields rather than to too many acres being grown. Therefore, it is quite uncontrollable. The highest surpluses have all been in years of high yields. In 1965, there was an average crop of 10·2 tons per acre. In 1967, it was 10·1. In 1970, there was a record crop of all time of 11½ tons an acre over the country.
  It is interesting to note that consumption requirements, averaged over the last nine years, turn out at 4·6 million tons. There is a seed requirement of 0½6 million tons, and wastage of 0½5 million tons. That gives a total of 5·7 million tons. In two years out of the nine the crop has been a shade under. In only four has it been fairly substantially over, and that has been due to years in which there have been very high yields.
  The expectation of the total crop this year is 6·6 million tons. Human consumption will require 4·8 million tons, seed requirements 0·6 million tons, stock feed 0·5 million tons, waste in the form of what we in Scotland call brock, thirds, chats, and all kinds of things, 0·4 million tons, and taken off by the Board for compensation 0·3 million tons, together adding up to 6·6 million tons. These are our latest estimates.
  My hon. Friend the Member for Torrington said the usual wise words, which we always expect of him, about the need for orderly marketing and the keeping down of the administrative costs of the Board. His account of the difficulties and the anguish of having to farm in the South-West wrung my heart strings. I must urge him to buy a farm in Scotland and learn what it is all about.
  590
  My hon. and gallant Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) gave a particular welcome for exceptional circumstances allowing ordinary contributions to be waived. He rightly said that the change in the system of polling is a considerable departure. I agree. I assure him that the N.F.U. was fully consulted and approved the change.
  I think that all who take part in agricultural debates must have welcomed the contribution of my hon. and learned Friend the Member for Southport (Mr. Percival). I felt that he was listened to with both interest and respect. I absolutely agree that wise action was taken by my right hon. Friends on the amendment which was proposed but not accepted. This would have allowed the basis of determining the ordinary contribution to be changed if a poll of registered producers were taken and two-thirds of those voting were in favour of the change. Registered producers opposed to the change could have voted against it, but other interested people would have had no opportunity of making representations, nor would Ministers or Parliament have been consulted. My right hon. Friends rejected the proposal because they considered that such an important change in the scheme should be made only if the full procedure laid down by the Agricultural Marketing Act was followed.
  My hon. and learned Friend is entirely right in what he said about the possibility of an increase in the levy of up to 6 per cent. without a poll being held. I can tell him that the interested bodies were fully consulted and that they agreed with the change. I think that there was a considerable weakness in the scheme before, particularly at a time when we all know that costs are rising, because when there had been a single poll there could not be another. If the Board applied for, say, £4 an acre, and got it, and two years later it wanted £5, without coming to the House for a new scheme and going through all the elaborate procedure laid down, there was no chance of it so doing. I believe that this is a fair compromise and a workable solution to the difficulty.
  My hon. and learned Friend criticised the restriction of production. Government policy remains to produce a small

  591
  surplus in years of normal yield, restriction of production only to a level required to produce such a surplus, and restriction of acreage because of expansion of yield. We cannot get away from this.
  It would be absurd for a layman to try to follow my hon. and learned Friend. I would not dream of disputing with anyone as eminent in his profession as he is. I have read the opinions of the Commisioner on the vires of the 1955 Scheme, and his observations on what he described as the subsequent "cure". But more than this I am not prepared to say, because members of the legal profession are to be found who take a different view from my hon. and learned Friend, which is what keeps him in his very robust state of health.
  Mr. Percival: It is not that: it is wording like that of this Instrument which keeps my learned Friends and myself in business.
  Mr. Stodart: I was going to say that we have noted the Commissioner's remarks about introducing the word "production" into future legislation. There has been criticism about the wording of the main Amendment, but it was as well that very little of it came from hon. Members opposite. If it had, I should have had to say that, although this looks complicated, it is nothing like as complicated as a Bill we once engaged on to do with farm almagamations. I do not think that it is as bad as it looks. If it were, I would not be able to understand it, and I think I do.
  It is not a question of being able to say that a firm figure will be able to operate on a certain date. We are trying to avoid recourse to Parliament and public inquiries, while still having a formula operating on the present levy, married to the guaranteed price and the yield. This is workable. If hon. Gentlemen would like to see examples of the actual calculations had this formula been in existence over the last few years, I could let them see them or write to them about the matter.
  I am obliged for the general welcome which the scheme has received. I have noted the criticisms and I hope that, if I introduce a similar scheme in future, I
  592
  shall have learned something from the constructive speeches made tonight.
  Question put and agreed to.
  Resolved,
  That the Amendments of the Potato Marketing Scheme 1955, as amended, a draft of which was laid before this House on 6th April, be approved.

  ARCHWAY ROAD, ISLINGTON
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hawkins.]
  11.55 p.m.
  Mr. Michael O'Halloran: I am grateful for the opportunity of having a second Adjournment debate in the course of a few weeks, and I am raising a matter which is of major concern to the people of North Islington; namely, the Archway Road rewidening scheme.
  For 30 or 40 years the people living adjacent to the A.1 have had hanging over their heads a scheme to turn this road into a dual three-lane carriageway. The northern part of the road is the responsibility of the Secretary of State for the Environment, and the southern part, below Winchester Road, is the responsibility of the Greater London Council.
  Compulsory purchase orders have been made with respect to a small section of the road, and while the Government Inspector considered that the scheme should go ahead, the Secretary of State for the Environment ruled on 23rd February last that the widening of the A.1 trunk road to dual three-way carriageway standard through Hampstead Garden Suburb should not proceed at present. His statement was in the nature of a Press release from his Department on that date. He also stated that he was not satisfied in that respect and had accordingly decided that it would be wrong to proceed at present with the improvement as planned.
  The right hon. Gentleman's decision to halt any work at the Hampstead Garden Suburb end should also apply to the Archway Road and Holloway Road end. At present, the whole area, of 7,000 people, has been left without any shopping centre. Thirty-three shops and 121 other properties are disappearing with a view to the rewidening of this road. No

  593
  provision has been made for a new shopping centre to accommodate the people of this area. Many people now have to go long distances to do their weekly shopping and for the old and infirm to get to a shop in this area is very difficult. No consideration whatever has been given to this, and to get across the Archway Road from one side to the other, even for those of us who are agile, is a nightmare.
  Having pulled down all the shops at the Archway Road end, the site is now being boarded up, and rumour has it that, having blitzed this part of Islington by taking away the shopping centre, the rewidening of this part of Holloway Road may never take place. And should any further rewidening of the Holloway Road take place, it is almost a certainty that Islington would be split in two and that all major shops would disappear from the Holloway Road for a distance of about two miles.
  Close to the Archway Road, people are also suffering from long-delayed housing development schemes which, it was hoped, would start this year to alleviate the housing shortage. But even in these developments little or no provision has been made for shopping centres.
  Yesterday I received a letter from a resident living at 21 Archway Road saying:
  "In view of the widening of Archway Road, how are people going to cross from one side to the other? I have a business and sub-Post Office and am very worried about how pensioners and also my paper boys are going to get to the other side, for three-quarters of my business comes from the other side of the road. For many years now we have been very badly treated, what with the empty places, and then the demolition, bringing dirt, smoke, dust etc."
  This is one of many letters I have received on this subject, apart from numerous verbal complaints.
  To show how ridiculous the situation is regarding the rewidening of the Archway Road, Mr. Neil Thorne, Chairman of the G.L.C. Area Board, which is responsible for the borough's major roads, said that the widening of the Holloway Road was unlikely because of the proposed ringway system. He made that statement to the Islington Gazette on 26th September 1969.
  594
  However, on 17th March, 1971, Mr. J. D. S. Spillane, of the Department of the Environment, in a letter to Mr. C. J. A. Stern, of the Shepherds Hill Association, N.6, said that the widening of the Archway Road between Pauntley Street, Islington, and Winchester Road, Haringey, was expected to start later this year. This is how confusing the situation is.
  My view of the whole matter is that there is no need for this major re-widening scheme whatever. I agree that there may be one or two minor improvements needed but not to the extent of spending many millions of pounds on a road which nobody wants in Islington.
  I hope that the Minister, having already halted the scheme at the Hampstead Garden Suburb end of the A.1 road for further inquiries to be made, will go one better tonight by bringing to a halt any further rewidening of this A.1 road. He must take into consideration amenities, traffic needs and public transport. Nobody in Islington wants another Cublington by having the entire borough split in two just for the sake of having a motorway through it. This would result only in thousands of Islingtonians having to find homes outside Islington, and with the present housing shortage as it is this would be an impossibility.
  12.1 a.m.
  The Under-Secretary of State for the Environment (Mr. Michael Heseltine): I at once say to the House, and in reply to the hon. Member for Islington, North (Mr. O'Halloran), that everybody is deeply sympathetic about the disruption that attends upon any major, and particularly urban, highway creations. Faced with the existing hardships, traffic congestion, fumes and pollution wherever we have existing heavy loads of traffic and, much worse, the projected far heavier loads of traffic, it seems beyond dispute that there have to be these major improvements if we are not prepared to see our cities brought to a standstill in the decades ahead.
  I in no way wish to diminish the seriousness of what the hon. Gentleman has said about the problems of the elderly, who are used to familiar shopping centres and find that they have to go slightly further. There are shops in the neighbourhood, and the principal

  595
  shopping centre now, in the particular part of the hon. Gentleman's constituency, would be the Junction Road shopping centre. I would not wish to say that the shops are in the same place as they were before. They are not. But there are shops and they provide an alternative service to the ones which have had to be destroyed to make possible the road widening scheme.
  Perhaps I can clarify the points which are important, and particularly the timetables which exist for the two broad divisions of the A.1 as they run in this area of London, first, the division that lies to the south of the road we are discussing, that between the Archway intersection and Winchester Road, and that section which lies further north, from Winchester Road to Wellington Junction. This represents two schemes. The first, the southern scheme, between Winchester Road and the Archway intersection, is to start later this year. It has completed its statutory processes. There was a public inquiry and this matter was dealt with in 1969. Later this year the road will be under way.
  The hon. Gentleman will be aware that in his constituency a considerable amount of demolition has taken place already. The scheme is a joint scheme between my Department, which is responsible for that section of this scheme between Hornsey Lane and Winchester Road, and the G.L.C., which is responsible for the road from Hornsey Lane south to the Archway intersection.
  It would be quite unthinkable, having gone through all the statutory processes and, in terms of house clearance, started work, for there to be any possibility of the Secretary of State intervening, as the hon. Gentleman has suggested. That would not be possible. It is in no way comparable with the Secretary of State's decision, embodied in the press release for 23rd February, to have another look at that part of the A.1 to the north of the road we are discussing, the Falloden Way section. But there is another section, and that is the trunk road section between Winchester Road and Wellington Junction. The situation here is that it has been the subject of detailed investigation by consulting engineers, who recommended, as the hon. Gentleman will know, that there should be a dual carriageway.
  596
  I take this opportunity of paying tribute to my hon. Friend the Member for Hornsey (Mr. Rossi), who I am delighted to see in the House tonight. He has been to see me in the Department and has energetically kept up a continual pressure to bring to the Department's notice the serious anxiety felt in the area about existing congestion, alternative congestion that may develop when the road construction is under way, and the whole traffic pattern which could develop. My hon. Friend is representing his constituents faithfully in this way, and I am sure that the hon. Member for Islington, North is doing the same.
  We are aware of the pressure that has developed from the various amenity bodies in the area which understandably and commendably have taken an active interest in representing the anxieties of local communities. These anxieties are not untypical of the anxieties which are felt, but they are no less real for that.
  It is also encouraging to know that the consulting engineers have taken into account the views of the local amenity bodies in the study they have made of the trunk road section between Wellington Junction and Winchester Road.
  It is suggested, and perhaps it follows from what the hon. Gentleman said, that we should not only hold up the Falloden Way northern section of the improvement but that we should also hold up the other two sections whilst the whole matter is reinvestigated. As I have already explained, we are under way with southern section between Winchester Road and Archway intersection and I should not like the argument to go unanswered that, because we have decided to proceed with the southern section, we are in some way prejudicing the route to be finally selected and pursued for the section of trunk road between Winchester Road and Wellington Junction.
  The fact is that to the north of the southern section, at approximately the Hornsey Lane area, there are a number of features on the ground which limit the choice of route at that point. There are the reservoir and the bridge. Therefore, there is no option as to where the northern end of the southern section goes and it is from that point that a number of choices would be open to the consultants in their investigation.

  597
  Whenever the Secretary of State feels for environmental reasons that a proposal which perhaps has been all the way through the statutory procedures is for some reason defective, the House has taken the view that he is to be commended when he has the courage to announce that he will look again at the proposal. I am sure that this is the view that will he taken in general about the Minister's decision taken on 23rd February to have another look at the Falloden Way proposal. Although it had already gone through a public inquiry and there had been an inspector's report, the Secretary of State thought that there were other matters which needed further investigation because he was unhappy about the general environmental effects on the area, such as the proximity to housing, if the original proposals had gone ahead. Therefore, my right hon. Friend has decided not to proceed.
  However, nobody would pretend that these three schemes should be linked entirely in any one section. It is the Department's view, and I believe that it will be in the greatest interests of those living around the area, that we should proceed with the sections which have now been decided upon. There is always great hardship once a section of a roadway has
  598
  been decided on. Planning blight and other forms of hardship occur if there is delay. All the statutory procedures must be gone through. The decisions having been taken, speed is important in the interests of everyone concerned.
  We are going ahead later this year with the southern section. We have schemes under consideration for the middle section between Wellington Junction and Winchester Road. It would be possible, if the statutory procedures go well and if the line is acceptable, for the earliest start in that section to be made in about 1974–75. There will be the possibility of a public inquiry, depending upon the representations which are made to us and our reaction to them. It would be wrong to pretend that a final decision has been taken on that section.
  Mr. O'Halloran: Are there any plans for the Holloway Road end?
  Mr. Heseltine: This is a matter for the Greater London Council. It is its road and its responsibility. The hon. Gentleman would be wise to direct his inquiries to the G.L.C.
  Question put and agreed to.
  Adjourned accordingly at ten minutes past Twelve o'clock.

  Second Reading Committee
  Wednesday, 28th April, 1971
  [MR. GEORGE WALLACE in the Chair]
  The Committee consisted of the following Members:
  Mr. George Wallace (Chairman)

  Armstrong, Mr. Ernest (Durham, North-West)

  Blenkinsop, Mr Arthur (South Shields)

  Clarke, Mr. David (Colne Valley)

  Cooke, Mr. Robert (Bristol, West)

  Eyre, Mr. Reginald (Birmingham, Hall Green)

  Farr, Mr. John (Harborough)

  Finsberg, Mr. Geoffrey (Hampstead)

  Hall, Miss Joan (Keighley)

  Hardy, Mr Peter (Rother Valley)

  John, Mr. Brynmor (Pontypridd)

  WILD CREATURES AND FOREST LAWS BILL [Lords]

  10.30 a.m.
  Motion made, and Question proposed,
  That if the proceedings on the Wild Creatures and Forest Laws Bill [Lords] are not completed at this day's sitting the Committee do meet on Wednesday next at half-past Ten o'clock.—[The Solicitor-General.]
  Mr. John Mackie: Before we deal with that Question I should like to raise a point of order on the Bill. This Bill, apart from the two items referring to the Crown, does away with 63 Statutes. It sweeps them away—if I may coin an expression—at a stroke.
  No Opposition worth its salt could allow this to happen without taking a good look at it. In order to take a good look at it, many documents have to be read. I understand that it is the duty of the Minister in charge of a Bill such as this to see that these documents are provided. Up to two years ago he had to see that these documents were in the

  Jones, Mr. Gwynoro (Carmarthen)

  Lomas, Mr. Kenneth (Huddersfield, West)

  Mackie, Mr. John (Enfield, East)

  Mather, Mr. Carol (Esher)

  Mills, Mr. Peter (Torrington)

  Morrison, Mr. Charles (Devizes)

  Page, Mr. John (Harrow, West)

  Parker, Mr. John (Dagenham)

  Rost, Mr. Peter (Derbyshire, South-East)

  Solicitor-General, The (Sir Geoffrey Howe)

  Miss J. Beston, Committee Clerk.

  Vote Office. However, it was found that in the case of some Bills this was rather overloading the Vote Office, so the Minister was asked by Mr. Speaker to see that a list of the documents was put in the Library, so that the Library could have the documents available for hon. Members who wished to do their duty and look into this Bill which, as I say, sweeps away 63 Acts of Parliament in one fell swoop.
  I and several other hon. Members have been to the Library to try to get these documents and have a look at the list, but no list has been sent there from the Solicitor-General's office, and we have had to try to find the documents that might be relevant. This is not an easy job. This is a lawyer's job. The Bill arises from the Law Commission's Report No. 28—Cmnd. 4433. I thought that that document might convey something, but the Bill is simply a reprint of

  601
  the Report. There is very little more in the Report.
  I agree with the Lord Chancellor that much of this—as he so picturesquely put it—is legal lumber cluttering up the statute garret. But although the Lord Chancellor is a delightful gentleman with whom to have a drink and chat in the Smoking Room of the House of Commons, we cannot take it for granted that all this is legal lumber, I have an interest in Epping Forest, and when I looked up some of the legal lumber in the Schedule I discovered four Acts concerning Epping Forest.
  The first Act in 1871, appointed a commission to look into the running of the Forest. I take it that the Act was passed by an inefficient Government, rather like the present Government, because they had to amend it within a year to provide more powers. They must also have been a little dilatory—like this Government—because they had to have two Acts to give them more time to carry out the business of the commission before they finished it in 1875. I agree that the Solicitor-General probably would not need that Bill.
  Then I thought that I had better have a look at another Act in which I had some interest when I was at the Ministry of Agriculture, concerning the New Forest. I find that an Act in 1902—fairly recent, parliamentary-wise—gave the public a right to have land in the New Forest "for necessary public purposes", chiefly to provide areas for sewage works for the towns round the New Forest. The hon. Member for New Forest (Mr. Patrick McNair-Wilson) is not here today. I am sure that he would take a dim view of sweeping away that right.
  I do not know whether there was a later Act which provided that the people round the New Forest could get a piece of land for public purposes. We are not told. I hoped that the debate in the House of Lords would give me some guidance, but so far as I can see all they were concerned about was to protect the Queen's fry on a Saturday night and leave her with her sturgeons, and something to do with swans. Another curious thing was how many oxen it took to shift
  602
  a dead whale off the beaches. So I got no change there.
  If we are to do our job prope ly we cannot go on without a little more information from the Vote Office and/or the Library. I suggest that it is pointless for the Committee to continue.
  Mr. Carol Mather: Further to that point of order. The last Measure of this kind which came before the House was the Statute Law Revision Bill, which covered statutes right back to 1297 and revised such Measures as Magna Carta. In Committee on that Bill it was suggested that so complicated a Measure had not come up in this form before and that if revision of statute law was to be made it ought to be done in a much smaller chunk. I do not consider that this is a small chunk. Here we are dealing with a total of 63 Acts, of which 44 are repealed in toto.
  On the last occasion when a Measure of this sort came before the House it was dealt with by the Joint Committee on the Consolidation of Bills. That Committee had six sittings, and made 23 Amendments. Apparently we have no opportunity to go into this Bill in any detail, although it raises wide-ranging and fundamental constitutional questions. We are not dealing with the Bill in the right way.
  Mr. Peter Hardy: I confirm the point made by my hon. Friend the Member for Enfield, East (Mr. Mackie) about hon. Members on this side not having access to some of the documents. Yesterday I went to the Library and asked to see the copies of Acts relating to Epping Forest. Despite a very diligent search the Library staff, to whom I pay tribute, were unable to find them. I also went to the Vote Office, and they were not available there. It may be that the Epping Forest Acts are quite innocuous. It may be that they are obsolete, and should be removed from the Statute Book. But hon. Members of this Committee have a right to examine the documents which they are supposed to be considering.
  Furthermore, if we are to pass an Act to vest no longer
  "the office of constable of the castle of St. Briavel's in the First Commissioner of His Majesty's Woods Forests, Land Revenues, Works and Buildings".

  603
  we ought to be able to ascertain who will have those powers when the First Commissioner no longer possesses them. Are we to revert to a constable of St. Briavel's castle? I was unable to discover this yesterday. We ought to have an opportunity to obtain this sort of information.
  Mr. David Clarke: I support my hon. Friends in this submission. It seems to me that in certain quarters there has been unseemly haste in trying to put the Bill on the Statute Book. I have the feeling that due consideration has not been given to certain aspects of the Bill—especially that part dealing with Epping Forest. The Epping Forest Act, 1878, which is not repealed by the Bill, did exacty what the Bill does in toto, in the sense that that Act called for the opening of the forest land the the abrogation of the Royal Prerogative, throwing the forest open to the general public.
  I wanted to confirm the point but I found that the Acts which constituted it and which were repealed—the 1871 Act, and following Acts—were not available in, the Library. I submit that we cannot do our job properly, because we have not been able to obtain the relevant documents.
  The Solicitor-General (Sir Geoffrey Howe): Perhaps I may comment on the important points that have been raised by hon. Members.
  The hon. Member for Enfield, East (Mr. Mackie), my hon. Friend the Member for Esher (Mr. Mather), and other hon. Members are right in saying that the repealing of Statutes is a matter of importance, and not something which the House, any more than the other place, ought to be required to undertake without having an opportunity for detailed consideration. Hon. Members on both sides of both Houses—and, indeed, many other people—have long been concerned about the extent to which the Statute Book is laden with a multiplicity of ancient Statutes. The fact that they are ancient does not mean that they are therefore automatically ripe for repeal; many of them are still important.
  At the same time, hon. Members will know from their own experience how difficult it can be to find one's way around, because of the clutter of largely
  604
  obsolete legislation. The Law Commission was appointed—under legislation passed by the last Parliament but one, I believe—with the object of helping us and the public at large to remove some of the statutory lumber of this kind. I hope that the Committee will agree that in our anxiety to see that we do everything with proper care and scrutiny we should not unduly obstruct that necessary process.
  Hon. Members have said that certain of the Acts in question are not available at the Vote Office. They will appreciate that if the Vote Office were to have available on demand copies of every statute of that kind it would need to outstrip the Palace of Westminster in size.
  I am talking in general terms. There is such an accumulation of legislation of the kind, that it would be very difficult—and, incidentally, very expensive—to have available copies of every Act that might be relevant.
  Mr. Mackie: I agree that that point was raised about four years ago. I was a victim myself. Mr. Speaker then ruled that it was the duty of a Minister to put in the Library a list of documents that were likely to be required when a Bill was under consideration, so that hon. Members could look at it. A list of documents that might be required to help hon. Members to decide about this Bill has not been put in the Library.
  The Solicitor-General: I take the hon. Gentleman's point. I am dealing with the question in general terms at the moment. The list of documents required is contained in the Schedule to the Bill. I do not think that any Measures outside those listed in the Schedule will be required. It is equally important that there should be reasonably readily available, somewhere, copies of these Acts for hon. Members to study. I undertake to do my best to see that what copies can be found are made available in the Library and in the House. The Law Commission has a copy of each of them.
  One difficulty is that many of them are local Acts of some antiquity. They are not to be found—I have checked—in the Statutes Revised. They are in the Statutes at Large, which go back over many years. Not all local Acts of this

  605
  kind have been reprinted. Hon. Members will know that to photocopy and reproduce statutes in the rather longwinded language of long ago would itself be a very expensive exercise.
  Having said that, if I bear any responsibility for the non-availability of any of these documents I apologise to the Committee. Hon. Members on the Standing Committee will certainly want to look at them. I shall do my best to see that sufficient copies are suitably available and to meet inquiries or requests made by hon. Members in respect of them at that time. I cannot undertake to produce every one of the Acts here and now. I hope that this Second Reading Committee will be prepared to approach this Bill bearing in mind that in Standing Committee hon. Members will have an opportunity to study each Act as we come to it.
  My hon. Friend the Member for Esher said that it was important that the Bill should receive detailed consideration, and he was supported by the hon. Member for Rother Valley (Mr. Hardy), with his understandable concern about the discharge of the functions of the constable of St. Briavel's. There are answers to that interesting and important question. I hope that I shall not be pressed to produce answers to every such question in the course of our proceedings today, because so many questions could be posed. Certainly the hon. Member's point is one that the citizens of St. Briavel's will need to have closely examined when the Bill is considered in Committee.
  The point raised by the hon. Member for Enfield, East (Mr. Mackie) about the New Forest Act, 1902, was considered in the other place, though not, I think, on Second Reading. One noble Lord gave notice of his intention to raise the point in the Second Reading debate. An Amendment was moved in Committee in another place to deal with the point, and it was discussed there. The question was raised by the noble Lord, Lord Montagu of Beaulieu—understandably, since it concerns the New Forest. In Standing Committee I am prepared to explain the rather curious reason why the 1902 Act can be considered for this kind of disposition.
  I hope that the Committee will feel disposed to proceed with the discussion of
  606
  the principles involved in the Bill. There are two central questions of principle—first, whether the forest law, as such, needs to survive, and, secondly, the extent to which the Royal Prerogative in respect of royal creatures can properly be varied. I suspect that hon. Members will find that those questions will occupy their time considerably. In Standing Committee I shall do my very best to see that hon. Member's requirements in respect of these Acts, private as well as public, are met so far as it lies within my power to do so.
  Mr. Kenneth Lomas: On a point of order. I am sure that the hon. and learned Member does not wish to treat the Committee in a discourteous way, but it seems to me that to say we must wait some time before we get the Statutes about which we are to talk is quite wrong. The best course of action would be for the Committee to be adjourned until these are available. How can we discuss the main principles of the Bill without knowing what it is all about? We should consider adjourning the Committee until these Statutes are available to hon. Members, as promised by the hon. and learned Gentleman.
  Mr. Mather: It must be fundamentally wrong that we in Parliament do not have access to these documents and yet the Law Commission does have access. If we are to do our job properly at all, we must obviously see the documents which we are asked to repeal.
  I have spent some considerable time searching for these documents, and I have managed to obtain most of them. Perhaps that is why some hon. Members opposite have not been able to get them. But I have not been able to obtain all of them, and I have not been able to give them the time that Statutes of this date obviously deserve because of the language in which they are termed.
  In a way, I hope that we continue with the debate because I have several important things to say about the Bill. But we should very seriously consider whether we give it a Second Reading. Even the Title is fairly meaningless, because the whole of the wild creatures part of the Bill has been removed in another place. All that is left is forest laws. A very important Amendment

  607
  was made in another place in Clause 1(1)(a) whore we have the words "…except royal fish…". So, royal fish are out. Swans are already out, so that deals with the wild creatures.
  The creatures of venery, of the forest, are not wild creatures as such. These are creatures of warren and of chase, and they come under the forest law. So all we are actually considering is the forest law—
  The Chairman: Order. If the hon. Gentleman will keep to the point of order, we can discus any extreme details later on, if the Committee proceeds. We only want to deal with the point of order which he has raised.
  Mr. Mackie: The hon. Member for Esher (Mr. Mather) would like it both ways, which intrigues me. He would like to continue the discussion, but he would not like the Bill to have the Second Reading. Even with the ingenuity of the Solicitor-General here, I do not think we could carry that one out.
  We are concerned with the question of not being given the time to look at the documents properly—and judging by the pile of documents which the hon. Member for Esher has there is no doubt about where some of them went. As hon. Members know, Manwood on Forests is quoted very liberally by the Lord Chancellor in the Law Commission Reports. I only got my copy from the Library half an hour ago because the staff had to go to another place for it.
  Hon. Members received notice of their appointment to this Committee last Wednesday, I think. I received the card on Friday morning that the Second Reading Committee was meeting today. I was busy all Monday, and left yesterday open to prime myself on today's business, and, of course, could not get the various documents I wanted. I think we should vote whether to carry on until we have had a chance to go through the documents. I shall be guided by the vote of the Committee.
  I am not a lawyer, but whenever animals or forests are mentioned I am put in charge for the Labour Party. I feel that everybody should have had a better chance than we have had so far to look at these documents.
  Mr. Hardy: I do not wish to be obstructive. I am not for a moment suggesting that each member of the Committee should be given copies of Acts of 1405 or 1406, but I was particularly concerned that Acts of relatively recent dates have not been made available in the Library. It is reasonable to expect that an Act of Parliament of 1870 or 1906 is available to hon. Members. I appreciate the point made by the Solicitor-General that it would be inordinately expensive if the Vote Office had to stock copies of all the ancient Acts, which we probably would not be able to read or understand anyway. But when we come to Acts of the nineteenth and twentieth centuries we are entitled to expect to have a sight of them before the Committee meets. I support the point made by my hon. Friend the Member for Huddersfield, West (Mr. Lomas).
  Mr. Robert Cooke: Whilst I have reservations, and support much of what has been said, I hope that hon. Members realise that the Statutes Revised are available in the Library, and in many other parts of this Building, and although some of the Statutes which we are asked to repeal, particularly those of Edward I and Edward III, appear to be written in a language which I take to be Norman French, there is an English translation on the right hand side. Although we have not had time to study these, they are available for study, though, of course, the Private Acts, as hon. Members have already said, are rather more difficult to get hold of, and I have considerable sympathy with my hon. Friends and hon. Members opposite who have had difficulty in discovering where they are to be found.
  Mr. Geoffrey Finsberg: I am not a lawyer, but it seems to me to be a very simple proposition. We are asked today to recommend giving the Bill a Second Reading, and, if that is agreed, the Bill will then go to Standing Committee. I should not have thought that on the principle there was any need to suggest that we ought to adjourn while these documents are found and made available. The right time to deal with that matter is when we are in Standing Committee, because recommending a Second Reading today does not, as I understand it, inhibit us from deciding, when we are looking at the Bill with even more careful

  609
  scrutiny in Standing Committee, that instead of repealing in whole or in part some 63 Statutes, repealing only 61. That, surely, is the time for detailed consideration—for the lawyers' and the agriculturists' paradise. I suggest that we proceed with the Second Reading debate, but accepting my right hon. and learned Friend's assurance that the documents we require will be available in sufficient numbers for the Standing Committee stage.
  Several Hon. Members Several Hon. Members rose—
  The Chairman: Order. We must proceed. We have had sufficient discussion on the points of order.
  The Solicitor-General: Hon. Members have appreciated that we are dealing with two different kinds of Statute. There are those which are public Acts but of such antiquity that they are not now printed in sufficient quantities, and there are the Private Acts, of which the Epping Forest Act is a very good example. The hon. Member for Enfield, East (Mr. Mackie) said he had looked at those Acts and found they were legitimately proposed to be repealed because they were all spent. One can therefore understand why few, if any, copies of such Acts, which nobody has had any need to look at for almost 100 years, are readily available.
  I hope that the Committee will not feel that I am lacking in sympathy with the feelings that have been expressed. I shall certainly do my best to help any hon. Member; to see that any particular Statute is made available in some way or another. The fact that the Statutes are so little available is in itself, to some extent, a commentary on their lack of utility to modern Britain; and on why it would be right for the Committee to proceed.
  Mr. Cooke: Perhaps my hon. and learned Friend can tell the Committee how many copies of Magna Carta are available in this building, because the availability of a Statute is not necessarily a mark of its importance.
  Mr. Mackie: I beg to move,
  That the Committee do now adjourn till Wednesday next.
  The Chairman: The Chair is in some difficulty here. There is a point of sub-
  610
  stance about certain documents not being available. On the other hand, in another place there was detailed Second Reading discussion and copies of the OFFICIAL REPORT are available. I had hoped that the Committee would proceed, but I am in the Committee's hands. I think the best thing is that the Question now before the Committee should first be accepted or rejected. Then I am quite prepared to accept a Motion to suspend on the grounds mentioned, namely, that certain documents are not available.
  The Solicitor-General: I understand that the hon. Member's Motion for suspending the sitting is not acceptable to you at the moment, Mr. Wallace?
  The Chairman: Not until the Question before us is resolved.
  The Solicitor-General: Then as I understand that we are considering the sitting's Motion, I should like to say one word in support of it.
  I fully appreciate the anxiety of hon. Members that we should not lightly remove statutory provisions from the Statute Book. In fact, the main thing is to do something towards simplification of our Statute Book and our Statute law. These proposals have already been considered in another place. They certainly deserve careful consideration here, and I suggest, therefore, that we ought to proceed with the timetable which I have moved. Thereafter, an infinity of time can be made available to meet the detailed points which must properly be considered.
  Mr. Mather: Some of us are in considerable difficulty. We have not the documents, but I hope that the debate will go ahead. It will be up to hon. Members to decide how they vote at the end of the debate, and I might say to the hon. Gentlemen opposite that, even when documents are available it takes a considerable time to digest them, whatever happens. Whether people will have the time to do this job is uncertain, and it might be better to go ahead with the debate now to see where we get, and to have an opinion on the Bill at this stage. We are all gathered here together, and I think that we should proceed.
  The Chairman: Order. I shall put the proceedings Motion first and then I am open to accept a Motion for suspension if this is the wish of members of the Committee.
  Question put, That if the proceedings on the Wild Creatures and Forest Laws

  Division No. 1.]

  AYES

  Cooke, Robert

  Halt, Miss Joan (Keighley)

  Rost, Peter

  Eyre, Reginald

  Mather, Carol

  Mr. Solicitor-General

  Farr, John

  Mills, Peter (Torrington)

  Finsberg, Geoffrey (Hampstead)

  Page, John (Harrow, W.)

  NOES

  Armstrong, Ernest

  Clark, David (Colne Valley)

  Lomas, Kenneth

  Blenkinsop, Arthur

  Hardy, Peter

  Mackie, John

  The Chairman: In view of that vote I do not propose to accept a Motion of the hon. Member for Enfield, East (Mr. Mackie).
  11.5 a.m.
  The Solicitor-General: I beg to move,
  That the Chairman do now report to the House that the Committee recommend that the Wild Creatures and Forest Laws Bill [Lords] ought to be read a Second time.
  The Committee has already introduced itself—if that is the right word—to the provisions of this Bill and appreciates that it is designed as a law reform Bill with two particular objectives; namely, to abolish certain of the rights of Her Majesty to wild creatures, and some related rights and franchises, and to abrogate the forest law as set out in the Long Title.
  The Committee will appreciate that the Bill affects the Prerogative and interests of Her Majesty the Queen and His Royal Highness the Prince of Wales, but I understand that it is not appropriate to signify at this stage the consent of Her Majesty and His Royal Highness in respect of the Prerogatives; that takes place on the Floor of the House.
  As my hon. Friend the Member for Esher (Mr. Mather) has pointed out, the Bill is different in one substantial respect from the Bill which was originally introduced in another place, because of the change that has been made in the provisions of Clause 1(1) in relation to royal fish. My hon. Friend will observe that the Long Title refers to the abolition of certain rights of Her Majesty rather than the abolition of all rights of Her Majesty. It may well be that the rubric to Clause 1,
  Bill [Lords] are not completed at this day's sitting the Committee do meet on Wednesday next at half-past Ten o'clock:—
  The Committee divided: Ayes 10, Noes 6.
  which refers to abolition of Prerogatives of the Crown, implies too wide-ranging an interpretation in the light of the changes made in the other place.
  I begin by explaining the use of the word "creatures". Other Committees of the House have been considering several times recently the provisions of the Animals Bill. The word "creatures" is designed to be rather wider than the word "animals" because, as the Committee will see, we are concerned with fish and swans and, as part of those, with whales being one of the creatures in respect of which a Royal Prerogative exists. Rather than embarking upon a consideration as to whether a whale is an animal or a fish, because of its mammal nature, we have used the word "creature" in the sense in which it was used in the Book of Genesis, Ch. 1 v. 21,
  "…and God created the great whale and every living and moving creature".
  "Creatures" is an all-embracing term.
  Mr. Cooke: My hon. and learned Friend will be aware that in one of the canticles in the Prayer Book there is a verse which talks about:
  "O ye whales and ye creatures that move in the waters…"
  There seems to be a differentiation between whales and creatures.
  The Solicitor-General: That is a good point, and I would not claim total response to it. "Creatures" is certainly used in a wider sense than it might be used in the sense of:
  "All creatures that on earth do dwell."
  We are concerned with creatures that on earth and in heaven and in the waters

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  dwell. Certainly, leaving aside the observations of the Psalmist, I should be prepared to argue that the terms of v. 21 of Genesis Ch. I make it plain that whales must be regarded as ejusdem generis with creatures; that creatures embraced whales.
  I shall endeavour not to follow the pattern sometimes set in these matters of embarking on too much mediaeval Latin, because we shall be in trouble enough with Norman French, without having mediaeval Latin as well. The word "creatures" is used in that way.
  It is perfectly right, as hon. Members have already pointed out, that the Bill goes further than a traditional statute law revision Bill which is merely repealing spent and obsolete enactments. A statute law revision Bill would go to a Joint Committee for consideration within the narrow terms of the relevant provisions. It does go as far as to abolish the forest law and make changes in the Prerogative rights in respect of wild creatures, and that is why it comes before a Second Reading Committee before going on, if the Committee accepts it, for consideration in detail by a Standing Committee.
  The main object, I underline, is to remove as far as possible those Statutes which the Standing Committee finally decides can positively be regarded as obsolete and of no further value. I once again commend to the Committee the general object of trying to remove those provisions which are of no practical value at all, either locally or nationally. I have no desire to get rid of something which survives merely as a tradition, and thereby get rid of the Statute, if the Statute is its foundation. It is only in those areas where the Statute provides no useful foundation for anything that now goes on that one can properly remove it.
  Mr. Mather: Will my hon. and learned Friend also concede that these Statutes, particularly the earlier Statutes, and particularly the Charter of the Forest, which runs in parallel with the Magna Carta, are the foundation of our Statute Law; and that if one is removing the foundation of Statute Law the whole of the Statute Law is thereby weakened? It is not so much what these laws actually do but the principles they establish which we will be destroying, and have destroyed already in regard to Magna Carta, in a
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  large Measure of this kind. The Forest Charter is a twin with Magna Carta: they have the same date and they establish the basis for English liberty.
  The Solicitor-General: I take my hon. Friend's point about not wishing to remove the practical foundation upon which anything stands, but against that one must examine the provisions now contained in this Measure. I suggest that the Committee, in respect of many of these Measures set out in the Schedule, will be able to conclude that the actual provisions contained in them cannot be regarded as fundamental to anything subsequently built upon them.
  Not all hon. Members may be familiar with the nature of forest law, which is the second and more compact part of the law we are proposing to amend. As my hon. Friend the Member for Esher (Mr. Mather) says, a forest law is, in the sense in which I understand it, a kind of feudal survival, which now serves no practical purpose. It is certainly an extensive body of laws, as the list in the Schedule makes clear.
  Its origins spring from the fact that the Crown enjoyed the right to set aside hunting rights and other rights within the designated forests. Even though the piece of land did not belong to the Crown, the Crown was nevertheless able to establish rights in respect of it; to designate over pieces of land which entitled the Sovereign to preserve the hunting rights over that land. The forest law grew up as a response to that, because of the extent to which the Crown was claiming very wide rights to set aside new forests in land which belonged to citizens.
  The forest laws were therefore developed in part to curtail the extent of the Royal Prerogative to secure land for the Sovereign and to secure hunting rights over the land. They were also developed in order to deal with particular offences and abuses and grievances that could arise in forests. Rather as the road traffic Acts developed in modern times to deal with the hazards which arise from improper use of the roads, so some of the Statutes dealing with forests provide the same sort of remedies in respect of abuses of that kind. For example, Chapter 6 of the Charter of the Forest provides for what is known as the lawing of dogs, that is to say, the cutting of several claws from the paws of the dogs in order to

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  prevent them from running at deer—something that had to be done once every three years.
  Mr. Hardy: That applied only to certain breeds of dog.
  The Solicitor-General: That is right. One of the difficulties that we have in dealing with mediaeval Statute in identification of the animals they are referring to is that it is necessary to translate the sense of the reference to the particular animal. That is the kind of matter that was dealt with.
  A more recent Statute—hardly, I would say, one of breathtaking modernity—was an Act in connection with the abuses in the forests of Wales, passed in 1535, at the same time as the monasteries were forcibly being dissolved. That Act abolished certain long-standing and unreasonable customs and exactions as a result of which the foresters in certain forests in Wales imposed tolls and fines on people going through the forest. In default of paying those fines, a person straying from the highway was liable to lose the joint from one of his hands. The Act in question declares that all subjects might pass through the forest without the exaction of tolls supported by that kind of penalty. The proposed repeal of that Act, which is not now regarded as necessary, does not revive the right of people in the forests of Wales to impose tolls and fines and support their sanctions in that way.
  The truth is that in practical terms, and I do not want to overlook the importance of what has been said by my hon. Friend the Member for Esher about the more fundamental nature of these things, the forest law was largely obsolete by the time of Elizabeth I, with the exception of the forest law dealing with the appointment and functions of verderers referred to in Clause 1(2). It is therefore proposed to abrogate the forest law, together with some 63 Statutes which are connected with it. many of them dating back into the Middle Ages.
  Perhaps I may now explain quite shortly what the provisions following on from Clause 1(2) do about the forest laws.
  Clause 1(3) provides that the rights of common which arise from forest law shall
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  hereafter be free of restriction by reason of the close seasons. Rights of common were restricted during close seasons, which is what is meant by the phrases the "fence month" or the "winter heyning". Under the law in certain places, as it at one time stood, one could not exercise the right of common during those periods which represented the close seasons.
  The "fence month" is something which one is advised not to try to define in general terms because it is a different period in different parts of the country, in so far as it survives by tradition at all. I believe that in general terms it is a period of fifteen days on either side of Midsummer's Day, but Midsummer's Day is not fixed at the same date in different parts of the country, because under these traditions not every part of the country adopted the new-fangled Gregorian calendar. So the fence month begins or ends eleven days later or earlier in some parts of the country. The winter heyning is the corresponding winter close season. That provision is to be removed.
  Subsection (4) deals with the Schedule.
  Subsection (5) says that no existing right of common which originates in the forest law shall be affected, and, similarly, no existing right of pannage—which hon. Members will know is the right to feed one's swine on acorns, as a particular aspect of common law—shall be affected.
  Subsection (6) provides for the continued election of verderers in the Forest of Dean as at the passing of the Bill. The election of verderers in the New Forest is, I understand, dealt with by Statutes that are more modern and that are not affected by this Bill.
  Subsection (7) preserves any existing power of purchasers of forestal in the Duchy of Lancaster to depute or appoint gamekeepers. It is not entirely clear whether any such people still exist. No doubt hon. Members more closely acquainted with the activities of the Duchy of Lancaster will be able to enlighten the Committee about that.
  The last Clause deals with the extent of the Bill in respect of Scotland and Ireland. The Bill operates in Northern Ireland because we are legislating outside the power of Stormont. There is only one statutory provision for Scotland, and there is no need any longer to analyse

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  the difference between the Scottish law and the English law in respect of royal fish, although it is perhaps interesting to know that the royal right in respect of fish in Scotland does not extend to small fish like porpoises. It extends only to whales of a size larger than can be carried away on a wain drawn by six oxen. That curious position will remain in Scotland, unaffectd by the introduction of the Marina edition of British Leyland. The measurements will still have to be undertaken by reference to oxen rather than horsepower.
  I should now like to deal to some extent, but not. I hope, at great length, with the provisions affecting royal creatures. These are the important provisions contained in Clause 1(1). As the Committee now appreciates, the original Clause as moved in another place proposed to abolish the Prerogative right of Her Majesty in respect of all wild creatures except swans, but even now the Prerogative right of Her Majesty to wild creatures is drawn widely.
  Hon. Members may wonder what wild creatures there are which fall within the Prerogative, apart from fish and swans, but there are certain propositions in the ancient law books which suggest that certain Prerogative rights still may exist, although one cannot think of their ever being exercised, in respect of a wider range of animals, at least in a very limited extent. Certain passages in the text books dealing with forest law—
  Mr. Mather: Will my hon. Friend mention any of these animals?
  The Solicitor-General: Blackstone refers to a long list of animals as having some Prerogative rights exercised over them; buck, doe, fox, marten, roe and all beasts of the forest. This is why the net has to be drawn rather wide td abolish these Prerogative rights which nobody can actually identify as having been exercised. There is a passage from Bracton, which says that the king had certain proper privileges by the common law of this realm but that he could only have those things which by the law of nature ought to be the finder's; such a treasure trove, wrecks of the sea, great fishes, sturgeons and whales, which are said to be the goods of no other man. The king, by his Prerogative, should
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  have them. He also by the common law should have in his own possession all such things as by the law of nature ought to be common, as wild beasts and fowls that were not tame, and which by the law of nature ought to be common. He might profit by the possession and taking of them.
  It is the wide-ranging nature of this kind of proposition, suggesting that there may be some residual law rights in respect of some animals which one would hesitate to list and identify, that makes it necessary to start by saying that the Prerogative right to wild creatures is hereby abolished, and then excepting it in respect of those now excepted, namely royal fish and swans, so that at least we shall know hereafter, when the Bill becomes an Act the extent of the Royal Prerogative, namely that it extends to royal fish and swans.
  Swans are to remain the subject of the Royal Prerogative. This is something which has been part of our law for many centuries. Swans are still regarded as valuable birds, to be given by Her Majesty as gifts to the heads of foreign States, and visiting dignitaries of that kind. They have not now the particular delicacy quality that they had in terms of price in the thirteenth century: the controlled price for the sale of a swan in 1274 was 3s. 0d., as compared with 5d. for a goose and 4d. for a pheasant. But the swan in that way remains a valuable part of the Royal Prerogative.
  In addition, the Royal Prerogative in respect of swans is in fact the authority under which the two City Livery Companies, the Dyers Company and the Vintners Company, organise conservation of swans on the River Thames, and it is thus the foundation of the swan upping ceremony that takes place in that connection. Those two companies enjoy one-third interest apiece with Her Majesty in the swans on the Thames, granted by royal charter. It is for that set of practical reasons that the Royal Prerogative in respect of swans is proposed to be retained.
  It was thought when the Bill was moved in another place that the Prerogative in respect of royal fish now served no practical importance. The Prerogative, in practical terms, extends to sturgeon, which are not often caught and become subject to Royal Prerogative; more extensively,

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  to whales and porpoises, and, more practically perhaps, when fish of those kinds are washed ashore on the shores of these islands. The generic description for them, I think, is cetaceae.
  There was a long and interesting article about these creatures in The Times on 23rd January this year by Dr. F. C. Fraser, in which he explained to some extent the practical value of the Royal Prerogative in respect of royal fish. That was the argument that prevailed in another place, so that the Royal Prerogative in respect of fish now survives.
  It is not entirely clear whether the argument is well-founded, but it was accepted in another place that when a porpoise or a whale is found on the shores of this country the coastguard service, as a matter of routine—established since 1912—notifies the museums. The British Museum and the Natural History Museum have a special interest in the pattern of distribution of fish of this kind, and in conducting scientific research in respect of them. By virtue of the Royal Prerogative they are given the right of first refusal of stranded aquatic creatures of this kind.
  If hon. Members read the article by Dr. Fraser they will find that between 1913 and 1966, no fewer than 1,547 aquatic creatures of this kind were the subject of this treatment, extending from 631 common porpoises to one white whale, and including attractive creatures like the lesser rorqual and the euphrosyne dolphin—21 species in all.
  It is important that the Bill should make it clear that the Royal Prerogative is being retained in respect of fish. In the Press last week there was a report about fishermen who caught and landed a sturgeon in this country and regarded themselves as free to sell it. It was being sold as "Sturgeon Royale" in a West End restaurant last week, in the belief that the Royal Prerogative in respect of sturgeon had been abolished. The newspaper reporting it pointed out that the Prerogative had not yet been abolished, but was shortly to be abolished. That was based upon a reading of the Bill as introduced in another place. In the Bill as it left the other place, and as it now stands, the Royal Prerogative in respect of sturgeon will not be abolished.
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  I hope that that will be regarded by the Committee as sufficient introduction to the general object of this exercise and that hon. Members will be disposed to accept the Motion I have moved, so that the Bill may proceed to detailed scrutiny by a Standing Committee in due course.
  11.30 a.m.
  Mr. Mackie: It is right to say—particularly to the hon. Member for Esher (Mr. Mather)—that once a Bill has been given a Second Reading it is very difficult to stop it going the whole way. Although much can and should be done in Committee, I think that we were right to question the Solicitor-General and argue about the whole question of the complexity of the documents, if nothing else.
  I am not sure of my interest here, but I must declare that I am a commoner of Epping Forest and, as such, have a vote in the appointment of verderers. My house stands on the site of King Harold's hunting lodge, which he built about 1050, and in which he lived when he was the Earl of Wessex. I am not sure whether he left me any rights when he became king, but I have a certain interest and would not wish to see any rights that I may have pushed aside without their being fully examined.
  I have referred to the New Forest Act, 1902, and I noted that in the debates in another place—both in Committee and on Second Reading—the Lord Chancellor did not give a satisfactory answer to that point. He did not satisfy Lord Montagu. That shows the danger that exists. The Lord Chancellor took care to point out that it was a Labour Government that brought in the 1945 Act which gave the Forestry Commission this right over the New Forest. Ultimately the Ministry of Agriculture took over the right from the Forestry Commission. As far as the Lord Chancellor can discover, the right of the people of the New Forest to obtain land there has not been passed on. Although the 1902 Act may be out of use, the right has not been passed on. That is the danger that faces us. We ought not to repeal Acts without being absolutely certain that something is put in their place.
  I do not want to say a lot in general. We probably all agree that once we have been able to see the documents in the

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  time that we have before the Committee stage we shall have a lot more to say. The Solicitor-General has given a very good and amusing resumé of the legal side of the question. As I explained earlier, I am not a lawyer. Another reason for postponing the Second Reading is that the two lawyers who are on this Committee are busy on another Bill. That is why there was such a poor vote from this side of the Committee earlier in our proceedings.
  Their Lordships were a little stupid in dealing with the question of the royal fish. Their argument that the coastguards would not be able to notify people as promptly seemed slightly ridiculous However, that is also a point that we can deal with in Committee.
  I am not sure whether the Royal Prerogative protects swans. From the agricultural point of view they are becoming too prolific, and are doing a lot of damage. I hope that the Bill will not give them protection if they become very numerous. Over the last 20 years their numbers have been increasing rapidly. I should not like to think that they are protected altogther by the Bill, although I have no wish to remove from Her Majesty the right over swans.
  I always thought that the main royal animal was the deer. Am I right in saying that the Solicitor-General gets a haunch of venison from the royal deer every year?
  The Solicitor-General: He has to pay for it.
  Mr. Mackie: If the Bill goes through I do not know whether that haunch of venison will be produced.
  We are all agreed about taking away the Prerogative over our forests, particularly in the light of the tremendous pressures from increasing population, the demands of leisure, and so on. That is only right. I do not want to say more, since we all agree that the Committee stage Bill is the proper time to deal with detailed points, of which I am sure there will be many.
  11.37 a.m.
  Mr. Clarke: I go along with my hon. Friend the Member for Enfield, East (Mr. Mackie), who welcomed the Bill
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  in the sense that it is another move towards tidying up our legal jungle. This is a much-needed move, but there are certain points about which I find it difficult to argue with assurance, because of the difficulty of obtaining documents. I should like to put those points to the Solicitor-General in a general way. They can then be dealt with in detail in Standing Committee.
  I accept the general premise that we should abrogate the Royal Prerogative when it serves no practicable purpose; that is a sensible approach. But there are certain aspects of the Royal Prerogative about which I am not sure. My hon. Friend spoke about the Royal Prerogative for swans. I am not sure about it, but I understand that it applies only to wild swans. Does that mean only Bewick and whooper swans? Does it include mute swans? I also understand that it applies only to swans on open water. Perhaps we could be told definitively what is open water.
  The practical argument for not doing away with the Royal Prerogative is said to be that we want to defend the swan upping of the two City companies, and also want to maintain Her Majesty's right to give swans to foreign dignitaries. I am not sure that in the 1970s that is a practical argument. I also venture to repeat the point made by my hon. Friend concerning the worry of some agriculturists about the increasing population of swans—because they are undoubtedly increasing at a considerable rate.
  On the other hand, I disagree with my hon. Friend to some extent; the point made in another place about royal fish is a valid one. No harm is done by including that Clause; on the contrary, I think it is a great improvement. It shows how an ancient right can be modified and used for a modern, scientific purpose.
  To take this a stage further, I should like one or two answers on Clause 1(3), which deals with the fence month and the right of winter heyning. As the Solicitor-General rightly said, this restricted the rights of commoners to use the forests. I thought that the fence month was the period of the fawning of the deer, when the deer needed protection,

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  and the heyning was the time around midwinter, when food is usually rather scarce, and that, just as we restrict the catching of fish around our shores, this was an attempt to preserve animals through the most dangerous periods of their existence. I am not sure that by abolishing this provision outright we may not be creating difficulties.
  In Law Commission Report No. 28 there is a reference to an enactment of the Royal King's Prerogative, Chapter 13, so far unrepealed, which was deleted in another place. It was deleted in five lines in c. 501 of the House of Lords HANSARD of 16th February. I should like to know why it was thought necessary to remove that part of the Schedule.
  The Bill also abolishes certain offices that have existed under the forest laws. I welcome this as a step forward but I am not sure whether it goes far enough. On checking through the Acts I find that the Epping Forest Act, 1878, is not repealed. That retains Epping Forest in the ownership of the Corporation of London, with public access to all our citizens. Under the Bill Her Majesty has a right to appoint rangers to the forest, who would perform functions and have the powers and duties conferred on them by the Bill.
  That may not be a very sensible or practical job—to use the Solicitor-General's yardstick again. When we are abolishing these multifarious titles is there not a case for abolishing just a few more, to tidy up the Statute Book completely?
  We must recognise that when we are talking about forests in this connection we are not talking about timber but about the use of land as open space. The Bill is a recognition that the open spaces are needed. We need more recreation facilities. In that respect I give a limited welcome to the Bill.
  11.42 a.m.
  Mr. Arthur Blenkinsop: I want to raise only two points. First, I am surprised that the Law Commission should have given priority to this subject as against the many others that it has on its plate. That question was raised in another place. We should seize this opportunity to ask whether something cannot be done to hurry forward some of the other proposals that are under consideration—for example, the law relating to burials,
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  which creates difficulties in respect of possible developments throughout the country, and other matters that a previous Chancellor raised in another place when this matter was debated on Second Reading. I accept that we cannot take that point very far, but I shall be grateful for any comment that the Solicitor-General can make.
  Secondly, I cannot go along with my hon. Friend the Member for Colne Valley (Mr. David Clarke), although I am entranced by his interesting comments upon the Bill and the necessity for it. I find it difficult to see the justification for the alteration made in another place; indeed, I go along with the present Lord Chancellor, who said that the whole thing was a nonsense. I do not automatically follow him in his more colourful comments from time to time but in this sense there is some truth in his comment.
  The process of notifying museums is in no way legally dependent upon Royal Prerogative. Indeed, the point was made that on some parts of our coast line the Royal Prerogative does not run anyhow, and yet royal fish would presumably be washed up there as much as anywhere alse. The Cinque Ports have been referred to, and other areas of that sort.
  This seems to be a stupid anomaly. I should have preferred to establish a clearer situation, rather than try to pretend that the Royal Prerogative signifies a power that any examination of the position suggests it does not really do.
  Mr. Clarke: The argument is that people in Scotland believe that whales are royal fish, and sometimes inform the coastguards who, in turn, inform the museums. If an alternative mechanism were provided by the Bill I should be happy to see the Royal Prerogative go, but until then I am worried about this point.
  Mr. Blenkinsop: I take my hon. Friend's point. I should have much preferred to see some alternative procedure spelled out, rather than that the matter should be left under this cloud of romantic nonsense. No doubt we shall be able to discuss these matters in more detail in Standing Committee. To gladden the heart of the present Lord Chancellor we

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  may try to restore the situation. None of us would shed any tears over the whole question, but for simplicity's sake we should like a clear and understandable provision, rather than leave matters as they have been left by the other place.
  11.48 a.m.
  Mr. Finsberg: I apologise if the point that I wish to raise was dealt with while I was called away urgently. It relates to Clause 1(1)(a), which concerns the question of the Royal Prerogative. As I read it, the Prerogative is retained for royal fish and swans, but the right to set aside land or water for their breeding or support is taken away. I do not quite follow that. Can my hon. and learned Friend enlighten me on the question whether royal fish, for example, are expected to live neither in water nor on land? As I read it, nothing is to be set aside for them. I hope that he can reassure me about that. Otherwise, in Standing Committee I may feel it necessary to table suitable Amendments.
  11.48 a.m.
  Mr. Cooke: On the general issue, I hope that my hon. and learned Friend will take careful note of what has been said by so many hon. Members about our reluctance to repeal Statutes, ordinances, and charters just because they are old. In the modern world our country will depend more and more upon its history for its livelihood. Tourism is by no means the small thing that it used to be, and for visitors from other countries to come here and read, at the entrance to a forest, that an ordinance of the 33rd Chapter of Edward I commands them to be careful as they go will add considerable attraction to their visit.
  That applies to Acts of Parliament in general and not just to those set out in the Schedule. I shall not weary the Committee by extolling the virtues of the 25th Chapter of Edward I that I have in front of me; that will be for Standing Committee, if I am fortunate enough to be appointed as a Member. The point is that the activities of the Law Commission, as shown in the Schedule, will make for a dull uniformity. It will eventually sweep away most of the ancient Acts, ordinancies and charters.
  If we act according to the wishes of the Law Commission we shall become a
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  kind of computerised Parliament. Despite the attractions of that situation to some people, in terms of speed of execution of business, and so forth, I do not think that that is our real function as Members of Parliament. We are human beings, elected by human beings, with all our frailties and prejudices, and we are here to express the point of view of those who sent us here. I am not sure that it would be the unanimous wish, or even the wish of the majority, that we should wipe out all this history.
  I end on a personal note in support of these ancient ordinances by saying that I have at home a copy of a grant made by King Henry VII to the builder of my house, regularising something that had already happened in the previous reign. It is a kind of retrospective planning consent, because it says that the fortifications are in order. It goes on to say that anything that is built in the future shall be in the same style. I find that a great comfort, because if I have any difficulty with Fine Arts Commissions, planning committees, or similar organisations, I can point to the grant of King Henry VII which decreed that the building shall go on as it was started. I intend to follow it.
  The happy bit about enclosing so many hundred acres has gone by the board, but that is another matter. I have given a little personal example, but many other examples could be quoted to these ancient ordinances and statutes having a significant modern use. We should be slow to wipe them all out.
  11.52 a.m.
  Mr. Mather: My hon. Friend the Member for Bristol, West (Mr. Robert Cooke) has made some valid points that we have not heard before about the caution which we need to have in examining these matters before we sweep them away, even though they may not appear to have any practical value.
  My hon. Friend the Member for South Shields (Mr. Blenkinsop) appears slightly to have misinterpreted what went on in the other place. My reading of the situation there was that the Lord Chancellor had a severe mauling, and found it extremely difficult to make a case for taking royal swans out of the Bill but leaving whales in. In the end he had to accept the Amendment put forward. As we see from the Bill that now appears before

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  us, royal fish are out. The Bill does not deal with the subject of royal fish at all.
  Speaking in the other place, one of the trustees of the Natural History Museum made a valid case for retaining the present arrangements, under the Royal Prerogative, for recovering sturgeon, porpoises, and whales. He pointed out that if this were done away with there would be no alternative law to put in its place. He made the point that those mammals are extremely valuable today, particularly on account of the degree of pollution of the sea.
  We are now discussing only forest law, and not the part dealing with wild creatures but, as my hon. Friend said, there is an anomaly, in that although swans are out they are apparently prevented from having any land or water set aside for them to breed. That situation needs to be looked at if the Bill goes on to Standing Committee.
  It looks an extremely innocent Bill, but I believe that it is deceptive, for it raises fundamental issues. It is straining the ability of any Commission—however learned—to undertake a job of this kind, with 63 Acts amended in some way or other and 44 actually repealed.
  To my mind the whole exercise is a great waste of public time and money. There are many other things the Law Commission ought to look at first. They were mentioned by the former Lord Chancellor in a debate in the other place—burials, deserted wives, and other matters of that sort. I cannot understand how it has come about that this body of learned men, employed at considerable expense, have spent all this time and wasted all this money in dealing with a matter of this sort, which has no immediate practical effect on the law.
  Procedurally, there is no precedent for revising and amending laws on this vast scale. On the last occasion when it was done—and there has only been one previous occasion—it was done by a Joint Committee on Consolidated Bills.
  The constitutional aspect raises a large question mark. My interest stems from the fact that there is some doubt to whether or not a royal chase exists in my constituency.
  The story goes that when King Henry VIII came to Hampton Court he used to go hunting in Windsor Forest. In his
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  younger days he could get up there quite easily, but when he became elderly and more corpulent he found it difficult to hack to the meet. He then formed various game reserves around Hampton Court and made some walled enclosures for coursing and shooting small game, but his main sport was stag-hunting. He could not get up to Windsor Forest, so he decided to create a hunting preserve on the other side of the river in the area that my constituency now occupies. It was called Hampton Court Chase. Interestingly enough, it follows almost exactly the present boundaries of my constituency.
  In 1539 an Act was brought in, which I have before me, creating an "honour", which was a group of manors under one lordship in the area for the purposes of this chase. The interesting thing is that this Act is not on the Statute Book; it is in the Statutes at Large. It is therefore not covered.
  In order to enclose the area, a fence or pale was then built with a ditch four feet deep and a high fence so that the deer could not escape. We also have all the details of the woods where the timber came from—some from a considerable distance. We have the details of what the men were paid for the timber, what the carters were paid, what the ditch-diggers were paid, what the men who put the fence together were paid. We still have details of all this. The fence was built so that the deer could not jump out, but there were three or four places on higher ground where they could jump in.
  This was in the later days of King Henry VIII and, as can be imagined, it caused much distress in the neighbourhood because the deer ate the crops. The people benefited to a certain extent because they paid one-third less in taxes, but the forest law at that time was fairly arduous. The people made a complaint in 1545, and there was no redress.
  Then King Henry VIII died, and when the boy king, King Edward VI, came to the throne, a further petition was made. This was examined by the Privy Council at Oatlands Palace, the petition was agreed to and it was agreed that the area should be dechased. It was discreetly added, however, that this would in no way prejudice the King's rights to make

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  it a chase again if he so wished. It has actually been dechased but it is still technically a royal chase.
  I should like to ask my hon. and learned Friend what the exact position is here. We are not complaining about the fact that it may still be under forest law, even though the Law Commissioners believe that they have abolished forest law. There are certain entertaining rights which we shall have who live under forest law:
  "Every freeman shall have within his own woods areas of hawks, sparrow hawks, falcons, eagles and herons and shall have also the honey that is found in the woods."
  We find this very agreeable on the whole. That is the story of how I came into it. If the Law Commissioners believe that forest law is being abrogated, as they say it is, they are incorrect; they have failed to do this. If they believe that they have abrogated Statute forest law, they have succeeded. But what is the point of abrogating Statute forest law if forest law itself still continues to exist?
  As I have already said, on the point of being a great waste of public money and time, the Law Commission's time could have been much better spent, I believe, quite apart from the specific points I have mentioned about deserted wives and the other things, in looking at our present legislation. This is surely a job which they ought to be doing.
  I draw the attention of the Committee to the speech which Sir John Hobson made during the Second Reading of the Law Commission Bill on 8th February, 1965, when the Law Commission was being set up. He called the Bill:
  "…an elaborate piece of expensive machinery designed to perform functions for which there already"—
  exists:
  "full Ministerial responsibility."—[OFFICIAL REPORT, 8th February, 1965; Vol. 706, c. 60.]
  He added that we do not want any major or important Measures to go through the back door in this way just because five lawyers, however eminent, may say so. Hon. Members may not consider that this is a major piece of legislation, but I suggest that it raises major issues.
  Sir John Hobson went on to say that there already exist instruments to do this job. We have the Lord Chancellor's
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  Law Reform Committee, which still exists, we have the Home Office Criminal Law Committee, which still exists, and we have the office of the Parliamentary Counsel. These three bodies are responsible for law reform. I believe that the Measures which we have before us are part of our living history, and that they do no harm to anyone.
  I have mentioned before this question of procedure and I should like to ask my hon. and learned Friend why in this case we did not have the Joint Committee on Consolidation of Public Bills, because it is an exactly similar Measure to that which was considered by this body before? Even if that body considered that its task was too great, although it did make some very important Amendments. It replaced several parts of Magna Carta which had been taken out by the Law Commission.
  By what constitutional authority does a body such as the Law Commission sit above Parliament and dictate law revision to Parliament and the abrogation of our Statute law, even going so far as to draft Bills? In the Law Commission Report No. 28 there is a draft Bill, and in Law Commission Report No. 22 there is a similar draft Bill.
  On the Second Reading of the Law Commission Bill, my hon. and learned Friend drew attention to this, and said:
  "It is my impression that the scope of the Commission to initiate proposals about the reform of Law of its own motion is restricted by Clause 3(1)(c)"—[OFFICIAL REPORT, 8th February, 1965; Vol. 706, c. 139.]
  Clause 3(1)(a) of the Bill, which they were then discussing enabled the Law Commission to recommend proposals, but not to go ahead and make a draft without the approval of Parliament. Hon. Members then present will recall this, but this is exactly what the Law Commission has done. It has gone ahead and prepared draft Bills, which is really the job of Ministers, and it is attempting to ram these Bills down the throat of Parliament. This is not right. The Law Commission is not an infallible body, and of this there are several notorious examples in its short term of life.
  The first was in the previous Measure, the Statute Law Bill. On this occasion it issued a Press notice that they had drafted the Bill and proposed to abolish

  631
  freehold. To anyone who knows anything about the laws of freehold—and I cannot claim any particular knowledge myself but I quote as my authority my hon. and learned Friend the Member for Southport (Mr. Percival)—this was an absolutely revolutionary proposal, and it had to be withdrawn.
  Again it proposed to repeal—again I have no special knowledge and again I quote my hon. and learned Friend the Member for Southport—Amendments which have Latin titles, which I will attempt to pronounce, the Quia Europtores and the De Davis Conditionalibus. These two Acts have a great practical significance in the law of property, and these two abrogations had to be taken out of the Bill.
  The Commission also proposed to repeal, and it was in their draft Bill on the last occasion, the First Article of the Magna Carta, the great charter of the liberties of England. The passage which the Commission attempted to repeal ran as follows:
  "We have granted and also given to all…"
  The Chairman: Order. Will the hon. Gentleman kindly come a little closer to the subject of the Bill we are discussing? We are going a little wide of the topic under discussion.
  Mr. Mather: I was attempting, Mr. Wallace, to bring out this extremely important point of principle, which I think is absolutely fundamental to the Bill. However, I will not continue to quote from that, but anyone can look it up in the Statute Book. It is the foundation of our English liberties, and that is what the Law Commission was attempting to do.
  The Charter for Forests and the Magna Carta are the twin foundations of English liberties. The Magna Carta has been very seriously amended, largely by the Law Commission. If one abolishes the forest law at the same time it destroys the whole basis of our English liberties and makes the whole of the Statute law look extremely silly. The Law Commission has run amok in our Statute law and has already created untold damage.
  We have no written Constitution. Our only written Constitution is in our procedures in this House, which safeguards our liberties, and the Statute law. This
  632
  is part of our living law. It is not dead, because these are the principles on which the law is based. One has only to look at the law of Edward I, No. 34—An Ordinance of the Forest to read one of the finest pieces of English prose.
  The forest law—and I have spent a considerable time looking through these Measures—is not there only to establish the Sovereign's rights. It is there at the same time to establish the people's liberties. It will be found that all Measures listed in the Schedule are about liberties and not about oppressive provisions. I believe that the Bill concerns not legal lumber; it concerns English liberties, it concerns constitutional liberties, and it concerns our Parliamentary liberties. I suggest, Mr. Wallace, that the Committee should give extremely serious thought before giving the Bill a Second Reading.
  12.12 p.m.
  Mr. Hardy: The hon. Member for Esher (Mr. Mather) seems to be critical of the Bill. He was suggesting that Parliament was being used merely as a vehicle for the implementation of the desires of the Law Commission. If Parliament is properly vigilant, it will not act merely as a recipient of dictation from the Law Commission. If, therefore, we are vigilant, and perhaps make improvements or changes and Amendments, it could well be that this might be a more important Measure than we might now suppose.
  My hon. Friend the Member for South Shields (Mr. Blenkinsop) referred to an Amendment made in another place. I think he rather admires the Amendment. I am not sure that I do, but I certainly support the reason for it.
  Mr. Blenkinsop: It is quite the opposite. I do not admire that Amendment. I regretted it.
  Mr. Hardy: I must confess that I am not particularly concerned or anxious about that Amendment, but I can support the reason for its being agreed. It seemed to me that it was agreed as a rap upon the Government's knuckles for their failure to consult the Natural History Museum over the question of royal fish. I wish that the Government had consulted the conservationists, and natural history bodies and other organisations before bringing in the Bill. We

  633
  might have had a far more useful and better Measure had they done so
  We obviously have to rid the Statute Book of some of the ridiculous obsolescence with which the Bill deals and with which the Solicitor-General dealt in his most interesting speech. We cannot keep on the Statute Book some of these Acts. The hon. and learned Gentleman referred to an Act concerning dogs. As a person who has bred and exhibited dogs over a considerable time, I should hate to retain on the Statute Book a law which said that dogs' feet had to be disfigured.
  But we ought not merely to repeal the Acts; we should seek to improve the law. There is a reference in Clause 1(7) to gamekeepers. Today there are many gamekeepers and landowners who are aware of the need to preserve and build up a balance in nature, but it is quite obvious that there are even today gamekeepers, and perhaps some landowners, who still believe that predators ought to be destroyed as soon as seen.
  The gamekeeper's job is to rear pheasants and, perhaps, shoot everything else that moves. I am not referring to all of them; there may only be a minority. But we ought to be very careful, indeed, to make sure that gamekeepers are sufficiently knowledgeable about Nature to realise that very often the predator performs a useful rôle. The badger is generally a beneficial animal. The kestrel is most useful, yet today kestrels will hang on gamekeepers' gibbets. The otter is generally frowned upon, yet recent evidence suggests that it is a very useful creature.
  It is possible that had it not been for the First and Second World Wars the slaughter of predators that was being carried on in Britain through the 19th and into the 20th century was such as would have seen the complete extinction of a number of very attractive species of British wild creatures, such as those which the hon. Member for Bristol, West (Mr. Robert Cooke) had in mind when he was talking about the need to attract the tourist.
  A lot of people like to see the golden eagle, or perhaps even the wild cat when they visit Scotland. But if the modern conception of natural balance did not apply, we would probably by now not
  634
  have any golden eagles or wild cats in Scotland—and certainly not if we had not had the First and Second World Wars. We probably would not have had any of the harriers, or peregrines, or buzzards, or kites which are still seen in Britain today if the primitive views of the old-fashioned gamekeeper and landowner had applied. One of the few things for which we can be grateful for the First and Second World Wars is that they took away the gamekeepers and gave the predators a breathing space.
  I hope that when we have finished with the Bill we will at least be able to underline the fact that the gamekeeper and the landowner—all, not merely the majority—are to be concerned with the need for the preservation of balance in that part of nature and our environment for which they have some responsibility. The hon. Member for Bristol, West made a point with which I was concerned. We obviously cannot afford the luxury of unnecessary obsolescence, but we spend a considerable amount of money in maintaining contact with our history through the establishment of museums and so on. This is expensive. It is, perhaps, even more expensive to maintain contact with our military heritage by spending vast sums of money in preserving the techniques of military movement and drill of the 18th and 19th centuries.
  I submit that if we spend vast sums of money on museums and military pagentry—I am not disagreeing with it; people like it—we ought to spend a little time and trouble in examining the ancient Statutes to see which we can properly and usefully keep and which we ought to amend. We should obviously seek to remove unnecessary obsolescence from the Statute Book, but we ought also to see which Statutes we can maintain and amend, in order that that which was relevant once can be made relevant today.
  Obviously the forest laws were relevant to the feudal period, but today people are interested in forests and woodlands as never before; they are also interested in wild creatures. It would be a mistake to remove that which was irrelevant without taking any action to see whether we can put something relevant in its place.
  12.19 p.m.
  Mr. Peter Mills: I appreciate what my hon. and learned Friend is trying to do, but I am afraid that I am one of those who have a natural reaction against anyone who seeks to do away with our ancient rights and laws. I agree that much probably needs to be removed from the Statute Book, but I am always a little hesitant about taking such drastic measures as are contemplated in the Bill. In the most ancient law book of all there is a small phrase to the effect that "some would remove the landmarks". There are always some people who wish to remove the landmarks of our countryside and our country.
  I have not gone into this matter very deeply, but looking at it on the surface it would seem that many of these ancient rights and laws ought to remain. They do no harm. I have a strong natural reaction against this sort of thing, but I am quite prepared—knowing my hon. and learned Friend so well—to concede that in his wisdom what he is proposing to do is probably right.
  It would be of great benefit to me, as a small landowner, if the Queen started to hunt over my own land, I should have thought that the local tradesmen would benefit tremendously from the hunting carried out in my area.
  Mr. Hardy: I do not wish to become involved in an argument about blood sports, but has the hon. Member realised that in view of the popularity of the Monarchy today and the growth of the population since the Middle Ages, the increased mobility of our people would be such that if the Queen chose to hunt upon his land the procession of followers that would inevitably result, the hundreds of tons of litter that would be deposited, and the damage done to his gates, hedges and fences, would be such that the hon. Member would almost certainly become a confirmed supporter of the abolition of blood sports forthwith.
  Mr. Mills: That is a most interesting discourse. The hon. Member has obviously not looked at my Bill—the Dangerous Litter Bill—which seeks to deal with that very point. I shall be out of order if I continue in that vein. The hon. Member must look at the very important Private Members' Bills that are
  636
  coming before the House. I have exaggerated, but it is important not always to seek to destroy our ancient laws and heritage. It is important that some of the ancient landmarks should remain, as the good book says.
  12.22 p.m.
  Mr. John Page: I am very disturbed by the Bill. It seems absolutely pointless. The Lord Chancellor, in another place, said:
  "There is obviously a great deal of learning behind this Bill, and I should like to express my gratitude to the Law Commission for the pains that they have taken in unearthing this extraordinary piece of almost archæological law. We ought to get rid of it, however picturesque it may be; and this Bill gets rid of much of it."—[OFFICIAL REPORT, House of Lords, 25th January, 1971; Vol. 314, c. 717.]
  I ask the Solicitor-General whether the existence of these statutes has been a nuisance to anybody. It seems to me that the Members of the Law Commission who, I presume, are paid for their pains—[Interruption.] I should like to be informed about this. It seems extraordinary that they should have to spend their time unearthing something of archæological importance and then destroying it, rather like the archæologist going to a barrow, spending hours in digging out the fossils, and then making them into a road. I do not see the point of it.
  Can the Solicitor-General tell us whether young lawyers would find it necessary to become up to date on this kind of Statute law before they qualify? If he says that they would have to spend some time learning about these things, perhaps there is some reason for having them put aside, but if they are just sitting there I should have thought they were doing no harm, and that it was an awful waste of the time of these eminent lawyers—and the time of the House—to bring forward a Bill of this kind.
  The retention of these Statutes would seem to do no harm whatever. I am willing, rather regretfully, to give a Second Reading to the Bill, but I most strongly reserve my position as to a Third Reading. When we know more about what is being destroyed I shall wish to make up my own mind whether or not it should be destroyed.
  12.26 p.m.
  Mr. Mackie: I have nothing to add, except to point out to the Solicitor-General that I do not think that this has been quite such a simple Bill as one of his hon. Friends told me when we entered the Committee Room. There is a lot of meat in the Bill. Many hon. Members have misgivings about it—the hon. Member for Esher (Mr. Mather) in particular. Others are worried about the traditions that it is killing, and many think it is a waste of money.
  There seems to be some doubt whether the members of the Law Commission are paid. I do not know. But I should like to ask the Solicitor-General what is the actual physical procedure. Are those weighty tomes taken and the Bills extracted, and the whole thing reprinted? Is there any reason for destroying them? Shall we have a bonfire? The hon. Member for Bristol, West (Mr. Robert Cooke) said that some of the language was worthy of preservation. I presume that that will not be destroyed; he can look it up elsewhere.
  The Solicitor-General will appreciate that the Bill will have to be examined very carefully in Standing Committee, and we look forward to having his reply to the numerous and pertinent points that have been put not only by hon. Members on this side of the Committee but also by his hon. Friends.
  12.27 p.m.
  The Solicitor-General: With the leave of the Committee, I shall reply shortly to some of the points that have been raised. Many detailed questions have been put to me by hon. Members on both sides, and I do not propose to answer them all. Some of them can be dealt with in Standing Committee.
  The hon. Member for Enfield, East (Mr. Mackie) and the hon. Member for Colne Valley (Mr. David Clarke) both made the general point about the nature of the conservationist position in respect of swans. The swans that are the concern of the Royal Prerogative are white wild swans on open and common rivers. I cannot answer for the detailed analysis of the sub-species of the bird, and the Prerogative extends thus far.
  The preservation of the Prerogative is important, not only to preserve swanupping—although its touristic attractions
  638
  of the kind that appeared to my hon. Friend the Member for Bristol, West (Mr. Robert Cooke) should not be disregarded—but also as the foundation for conservation on the River Thames. The point made by the hon. Member for Enfield, East about the possibility of conservation going too far must be looked at in the context of modern legislation dealing with animals and conservation generally.
  There is no need, as my hon. Friend the Member for Hampstead (Mr. Finsberg) implied, to preserve the Prerogative right to set aside areas, land or water, for the breeding of these wild creatures. The wild creatures in question either have their habitats already in open or common rivers or in the open sea, and those are really the matters we are now dealing with.
  The right to set aside land or water for breeding for sport or taking wild creatures harks back to the right exercised by Henry II at some inconvenience to demand the right to hawks and falcons on certain defended rivers. Her Majesty has her own land on which to feed her own animals. Animals in respect of which the Prerogative exists have their own roaming ground, and what one is removing is a very shadowy power, which the Crown might yet possess, to take my hon. Friend's back garden at the stroke of a pen, as a place in which to keep wild animals.
  Mr. Finsberg: If for example, these fish and/or swans happen to be in their natural habitat—let us say, at Foulness—and that natural habitat disappears whilst neither he nor I have water in our back gardens, what would happen? Where can the breeding or support continue when the natural habitat goes?
  The Solicitor-General: That very important question can be considered by my right hon. Friend the Secretary of State for the Environment. The whole Committee will accept that it would not be appropriate for it to be resolved by a regal diktat, however, much respect one may have for Her Majesty, which might or might not decree that the creatures thus displaced should be accommodated in any of our more humble back gardens, if there were room to accommodate them there.

  639
  I may say one thing more about the question of royal fish. There is obviously room for a difference of opinion as to whether the existing pattern of the coastguard service does or does not depend on the Royal Prerogative, and whether it is sufficient protection to the Natural History Museum, and so on. It is important, while the Press are here, that the country should at least now be informed of the present state of play about the Royal Prerogative in respect of royal fish. The hon. Member for Colne Valley said that one of the values of the Royal Prerogative right in fish is that people believe that whales belong to the Crown. Whether that is right or wrong, it is important that they should know what the present state of law is.
  There was a report in the Daily Express on Saturday, 24th April, which set out the account of this sturgeon that was caught and sold in Scott's Restaurant as "Sturgeon Royale". The report was headlined "The One that Got Away from the Queen's Platter", in the belief, as I explained to the Committee, that the Royal Prerogative in respect of sturgeon had already been abolished.
  We do not yet know what is to happen to the Royal Prerogative in respect of royal fish. The Bill as introduced in the other place said that it was to be abolished; the other place said that it was not to be abolished. The question of what is to happen to the Royal Prerogative in respect of royal fish is still on Parliament's platter before this Committee, and will be before the Standing Committee hereafter.
  Mr. Mather: Is it intended by the Government to revert the Bill to its former phraseology, and table an Amendment to bring back royal fish into the Bill and thereby abolish them?
  Mr. Mackie: Before the Solicitor-General replies, will he also answer this point? The B.B.C. also got it wrong; it had a programme this morning on the subject, which I heard on the way in in the car.
  The Solicitor-General: I am grateful to the hon. Member for Enfield, East. The point, I hope, is now at least clear, that we do not yet know whether Parliament will abolish the Royal Prerogative in respect of royal fish. The Bill as
  640
  introduced in the other place said "yes", and the House of Lords said "No". It now comes here as amended by the House of Lords. There is no present intention to re-amend the Bill to its original form. This is the kind of matter on which Parliament is entitled to express its view in this way. This Committee may yet form its own mind about it in some different sense.
  The last point that I wish to make relates to the more general arguments that hon. Members have addressed to the Committee about the entire process of Statute law revision and the activities of the Law Commission. One of the most difficult questions for a lawyer, and a layman, to face is trying to assess what is the proper rôle and place of law reform and, in particular, of Statute law reform of this kind.
  The Law Commission was certainly established with one of its functions the bringing up to date of the Statute Book. It was established by Act of Parliament. Its members are paid, one of them as one of Her Majesty's judges and the other four as Law Commissioners.
  Surely this Committee will not gainsay the importance of trying to produce for our lawyers and laymen a more compact, coherent and intelligible Statute Book. If one goes to any other country in the Common Law jurisdiction—and it has disadvantages as well—one can go along to the Stationery Office and buy the revised Statutes of the Province of Ontario or New Zealand in one more or less compact set of books, so that someone can actually see the Statute law by which he is intended to be governed.
  One of the matters which has beset those of us who try and work with the law, and laymen such as many of my hon. Friends who have been raising their understandable criticisms this morning, is that when we try to discover where the law is and what it is, we find ourselves tearing our hair at the accumulation of books of the type exhibited by hon. Members this morning.
  One of the tasks on which the Law Commission will shortly be giving assistance is the preparation of a modern compact edition of Statutes Revised. When we achieve this object, the question will be whether we are to re-enact in that book of the contemporary Statutes of the

  641
  United Kingdom, Statutes about the right to law dogs' feet and the right not to chop off joints of people's hands in Wales.
  In general, people would support the idea of trying to diminish the number of Statutes when they have passed their utility. On the other hand, there is a charm and attraction in some of the Statutes that we have. The language is beautiful, the notices that display them are impressive, and the fact that we are governed by such things is in itself attractive and one would dislike the idea of casting them away.
  It is that difficult balance which must be undertaken. I am not myself sure, looking at it in the strategic sense, and I have sympathy with what my hon. Friends say about this, that we have yet the right strategic mix for answering these questions. I rather shrink from the possibility of dividing the Statutes into two kinds; those that actually matter and are reprinted for contemporary use, and those that are kept in a kind of archaeological stream. Yet one can see the sense that prompts people to move in that direction.
  I hope that hon. Members will agree that the broad approach of trying to modernise the law in this kind of way is acceptable. I certainly take the point that there is much more for the Law Commission to be getting on with. The resources of legal skill are not infinite. The points put by the former Lord Chancellor to my noble and learned Friend the Lord Chancellor in the other place, illustrate things that the hon. Member for South Shields mentioned—burial grounds.
  A great deal of this kind of work is going on. I am myself much attracted by the importance of studying the possibility of simplifying the entire pattern and structure of the laws which we are passing on so many topics raised by several hon. Members this morning. We have, however, had a Law Commission for only six years. Law reform, despite what my hon. Friend the Member for Esher (Mr. Mather) says about the Law Reform Committee and the Criminal Law Revision Committee, has for too long been nobody's business. The Law Commission and many other bodies are producing Bills for consideration through our constitutional machinery—
  Mr. Mather: On their own initiative?
  The Solicitor-General: No. The Law Commission cannot produce legislation or take things into its programme save with the consent of the Lord Chancellor and in accordance with statutory procedure. It is very valuable, as I am sure hon. Members will agree, for the Law Commission to produce its proposals in the form of a draft Bill, with the very useful innovation that it has developed of putting its annotations on the Bill in facing pages so that we can understand them.
  Mr. Mather: Is it really true that the Lord Chancellor gave precedence to this kind of Bill in preference to all the other urgent matters that hon. Gentlemen opposite have mentioned, which should have been dealt with first? Quite apart from our modern law, which is in urgent need of revision, I cannot believe that the Lord Chancellor actually gave his approval for this operation to be carried out.
  The Solicitor-General: There is one point about priorities, and this is why I made a sympathetic response to the difficulty of deciding whether one can distinguish certain kinds of Statute which ought not to be the business of Statute law revision. I would find it very difficult to do. One of the priorities which Parliament gave to the Law Commission, which the Lord Chancellor gave to the Law Commission and which, I should have thought, the country gave to the Law Commission, is that it should enable us to have in one compact place, readily accessible, all our Statutes drawn together intelligibly—the whole business of Statute law revision. This Bill is part of it. This particular exercise is going on the whole time.
  There is this difficulty about dealing with the archaeology of Statute law. It is a genuine balancing argument. But I hope that my hon. Friend does not set on one side the importance of getting in one place, modernised, the Statutes under which we have to live. This is part of an ongoing systematic process undertaken by the Law Commission in accordance with its duties.
  I hope very much—and I am sure that it will be the case—that the Law Commissioners themselves will read the proceedings of this Second Reading debate,

  643
  because it indicates some of the anxieties of which they ought to be aware in continuing their important work. I hope that hon. Members will consider once again the extent to which it may be right for this kind of Bill, which is part consolidation, part Statute law revision and part law reform, to be considered by a Joint Committee of both Houses, rather like the Consolidation Committee. It may be more appropriate for that kind of deliberative consideration.
  I have always felt that the informality of such consideration is more appropriate for this sort of undertaking than the formality of the conventional Second Reading Committee and the conventional Standing Committee. I am sure that that idea deserves to be looked at as well.
  I hope that, if I acknowledge the strength of what hon. Members on both sides have said in favour of maintaining aspects of our law which are attractive, they will acknowledge, equally, the case which I seek to make, which is supported by many hon. Members, in favour of modernising those parts of the Statute Book with which we have to work and trying, however difficult it may be, to balance the lust of my hon. Friend the Member for Torrington (Mr. Peter Mills) for antique spectacles upon his land—or, at least, at a convenient and respectable distance from his land—with the lust of others of us who have to work with the law for something a little slimmer and more manageable than that with which we now have to live.
  The Chairman: Some hon. Members seem to have the impression that they are giving an automatic Second Reading to the Bill. I should point out to the

  THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:

  Wallace, Mr. (Chairman)

  John, Mr.

  Armstrong, Mr.

  Lomas, Mr.

  Blenkinsop, Mr.

  Mackie, Mr.

  Clarke, Mr. David

  Mather, Mr.

  Cooke, Mr. Robert

  Mills, Mr. Peter

  Eyre, Mr.

  Morrison, Mr. Charles

  Farr, Mr.

  Page, Mr. John

  Finsberg, Mr.

  Rost, Mr.

  Hall, Miss Joan

  Solicitor-General, The

  Hardy, Mr.

  Committee that we are recommending the Second Reading to the House.
  The Question is,
  That the Chairman do now report to the House that the Committee recommend that the Wild Creatures and Forest Laws Bill [Lords] ought to be read a Second time.
  Those in favour say "Aye"; those to the contrary say "No"—
  Mr. Mather: No.
  The Chairman: The "Ayes" have it.
  Mr. Page: On a point of order. If an hon. Member opposes, ought there not to be a Division?
  The Chairman: I was exercising the prerogative of the Chairman to collect the voices. However, if it is the wish of the Committee that there be a Division, I am quite prepared to allow it.
  Mr. Page: I should have thought that it is up to my hon. Friend the Member for Esher (Mr. Mather).
  Mr. Mather: If it is in order—
  The Chairman: I have put the Question.
  Mr. Mather: If it could be recorded that I dissent—
  The Chairman: That is in order. The hon. Gentleman can be recorded as dissenting.
  Ordered,
  That the Chairman do now report to the House that the Committee recommend that the Wild Creatures and Forest Laws Bill [Lords] ought to be read a Second time.
  Committee rose at fifteen minutes to One o'clock.

  Second Reading Committee
  Wednesday, 28th April, 1971
  [MR. HAROLD GURDEN in the Chair]
  The Committee consisted of the following Members:

  Mr. Harold Gurden (in the Chair)

  Archer, Mr. Jeffrey (Louth)

  Mardsen, Mr, Frank (Liverpool, Scotland)

  Benyon, Mr. W. (Buckingham)

  Mudd, Mr. David (Falmouth and Comborne)

  Booth, Mr. Albert (Barrow-in-Furness)

  Boscawen, Mr. Robert (Wells)

  Ogden, Mr. Eric (Liverpool, West Derby)

  Brown, Sir Edward (Bath)

  Pounder, Mr. Rafton (Belfast, South)

  Clegg, Mr. Walter (North Fylde)

  Prescott, Mr. John (Kingston upon Hull, East)

  d'Avigdor-Goldsmid, Maj. Gen. James (Lichfield and Tamworth)

  Prescott, Mr. John (Kingston upon Hull, East)

  Ellis, Mr. Tom (Wrexham)

  Ridley, Mr. Nicholas (Under-Secretary of State for Trade and Industry)

  Grant, Mr. George (Morpeth)

  Hamling, Mr. William (Woolwich, West)

  Stokes, Mr. John (Oldbury and Halesowen)

  Hicks, Mr. Robert (Bodmin)

  McNamara, Mr. Kevin (Kingston upon Hull, North)

  Watkins, Mr. David (Consett)

  MINERAL WORKINGS (OFFSHORE INSTALLATIONS) BILL [Lords]
  10.30 a.m.
  Resolved,
  That if the proceedings on the Mineral Workings (Offshore Installations) Bill [Lords] are not completed at this day's sitting, the Committee do meet on Wednesdays at half-past Ten o'clock.—[Mr. Ridley.]
  The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley): I beg to move,
  That the Chairman do report to the House that the Committee recommend that the Mineral Workings (Offshore Installations) Bill [Lords] ought to be read a Second time.
  This is an enabling Bill to ensure the greater safety of those engaged in drilling for and producing oil and gas in our coastal waters. There are now nearly 20 fixed platforms producing gas—we hope that in due time oil will be produced—together with a large number of mobile platforms which come and go from one
  part of our waters to another, or from far away to this country's shores.
  The Committee will have in mind the tragic accident to the "Sea Gem" in 1965, when 13 lives were lost. Since then, ten more people have died while engaged in this type of work, and many have been injured. The Committee will also remember the two gas blow-outs which took place in 1968, causing considerable havoc and danger.
  Arising out of the "Sea Gem" accident, a report was prepared in which suggestions were made for legislation for the greater security of those engaged in this hazardous operation. I feel that the Committee would like to pay tribute to the bravery and enterprise of those who work on oil rigs. The extremely hazardous nature of the operation and the unfortunate accident record which I have mentioned will, I think, make us all admire

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  the important and dangerous work which these people do.
  I have visited a rig in the North Sea, as, I gather, did the hon. Members for Kingston upon Hull, North (Mr. McNamara) and Kingston upon Hull, East (Mr. Prescott) yesterday. I think that everyone will agree that anything that we in this House can do to increase the safety of rigs will be well worth doing.
  It is fitting that the Bill should be debated first in a Second Reading Committee in view of the possibly less contentious atmosphere in a Committee of this sort. The two sides of the House can combine to welcome the Bill, which, I think, is largely agreed and which will allow us to make a joint contribution to ensuring greater safety in future. The Labour Government intended to bring in the Bill, as they announced in the Queen's Speech in 1969. We have given it as high a priority as we could in order that it should reach the Statute Book as soon as possible. Nearly six years have elapsed since the "Sea Gem" accident and the sooner that delay is ended, the better pleased hon. Gentlemen will be.
  The Bill is necessary because existing powers to control safety on drilling rigs are inadequate. They derive from the Petroleum Production Regulations and they are inadequate because they are contractual rather than mandatory. They depend upon the granting of licences to those who wish to operate rigs, but, once the licence is granted, there is weak control over the method of operation, which depends upon the good will of the company operating the rig, enforcement being very difficult for the inspectors of my Department who lack statutory powers. This is not to say that those who operate drilling rigs have not complied with and co-operated in all efforts to increase safety, but I feel sure that the Committee will think it better to put this matter upon a statutory basis, so that everybody will know what are his duties and responsibilities.
  The Bill provides for a statutory code with clear requirements for all those engaged in this work. It also gives penalties graded according to the seriousness of the offence, so that an appropriate sanction may be held out for those who needlessly or heedlessly take risks or dis-
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  obey normal safety requirements. The industry has been consulted about the Bill and will continue to be consulted about its implementation and, as far as I know, there is no opposition. Indeed, the industry is co-operating actively.
  The Bill covers the geographical area within which this country is entitled to grant petroleum exploration licences. It does not extend beyond the limits of the areas where we have the right to the Continental Shelf and the minerals which lie there. It cannot apply to British rigs operating beyond our waters, but it applies to foreigners operating a rig under licence within our waters. It is deliberately flexible, in the sense that the main control will be by regulations made under the Bill.
  I know that Parliament sometimes likes to feel that it has specified exactly what the regulations should be at the time of the legislation and fights shy of making regulations by Order, but I believe that the Committee will accept that it is right on this occasion that the regulations should be made by Order, because, with this rapidly changing industry, and its advancing techniques and technology, it will be necessary to bring in new regulations and to change them frequently in response to development. This can only be done by Order rather than by enshrining the regulations in the Bill. The House will have control over the regulations through the exercise of Prayers against the Orders, which can be annulled by negative Resolutions.
  The Bill covers all types of installation: production platforms and exploration rigs, fixed rigs with fixed legs, floating rigs, and it is necessary to register all rigs which might be used. It could also cover installations which as yet have not been designed or made which would explore for other minerals on the sea bed, and it is intended to be a vehicle to control safety within the whole of this growing and interesting new industry of ocean exploration. Some rigs are classified as ships because of the nature of their construction, and I confirm that they will still be subject to merchant shipping legislation if they are registered as ships. They will also be subject to the Bill if they come within its scope.
  The feature of the Bill to which I particularly draw the Committee's attention

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  is the duty to appoint a master to be in control of the rig. He will be the person on board who is fully responsible for all the safety arrangements, and he will be in many ways in a similar position to that of the captain of a ship, with complete responsibility for complying with safety regulations. It is possible, as I believe is the practice on some rigs, that it will be one man who is the master when the rig is drilling or producing, and another man who is master when the rig is being towed or moved from place to place, a navigational master on the one hand and a production master on the other. But at all times it must be clear who is the master in charge of the operation. The analogy with safety in mines and safety in ships at sea makes it clear that it is absolutely right that there should be one person solely responsible and with the duty of ensuring safety throughout the operation.
  There are minor provisions dealing in detail with the keeping of adequate records of safety precautions, the need for a public address system and for lights and foghorns. As the regulations are made, there will be full consultation with the industry and others expert in these matters. We hope to start to draft the regulations as soon as the Bill has had its Third Reading, and we shall make sure that the regulations are accepted by all those who will have to work them.
  This is a field in which technology is changing rapidly, and we must make sure that the requirements under the Bill develop and change with experience. The whole House is excited by the prospects of the developing industries in oceanology, and we must therefore be ready to allow all these new developments to take place, but to keep alive what has been a typically British tradition—that we are ahead with our safety regulations, not in any sense to cramp enterprise and initiative, but in order to ensure that those who take these initiatives are adequately protected in so far as Parliament can protect them by safety legislation. This tradition goes right back to the 19th century, and the House should be justly jealous to keep it up to date. I commend the Bill to the Committee and hope that hon. Members will give it a speedy passage.
  10.45 a.m.
  Mr. Eric Ogden: The Opposition wish to join the Under-Secretary in his tribute to all those who work and operate the type of installation covered by the Bill. There are hon. Members with better knowledge than I of the conditions in the North Sea, the English Channel, or the Irish Sea, of those who actually operate these rigs. It is only right for the Under-Secretary to have paid this tribute at the beginning of the Committee and for us to follow that by allowing the Bill a fairly speedy passage through this Committee, wishing it good progress to the Statute Book. The Opposition will no doubt wish to put forward Amendments later, but that will be for other Members in another Committee. Generally this morning we are to welcome the Bill, perhaps giving only a critical welcome to certain parts. We do not want this to become another Committee stage. The temptation is there, but no doubt you, Mr. Gurden, will help us to resist it.
  The Bill should have been on the Statute Book long ago. It is a long time from the disaster that provoked the Bill. This is no criticism of the present Government. There were circumstances with the last Government which made it difficult to find Parliamentary time; it is a criticism of the Parliamentary procedure rather than of the party in power.
  I am reminded of how quickly time moves on by pamphlets showing that exploration of the North Sea began in 1962 and drilling in 1965. One can pick up booklets thought to be up to date which say that by July, 1967, and perhaps even before, the first North Sea gas will be coming through the pipeline. Yet that was five years ago.
  The Under-Secretary was right to say that the "Sea Gem" was not the only incident. The number of accidents in this industry have been out of proportion to what could reasonably have been expected. Even with all the difficulties, the number of accidents has been too high. We are dealing with a large and strange piece of machinery called a "drilling rig", or a "floating barge", which seems to be neither a factory nor a merchant ship, and which somehow or other, like its twin, the hovercraft, falls between every piece of previous legislation. "Sea Gem" was the first rig to

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  discover oil in the North Sea for British operators. The accident occurred when it was moving from one drilling place to another. It was followed by enormous pieces of machinery such as the "Sea Quest" built, I believe, on the other side of the water. One hon. Member has special knowledge of these enormous rigs. Photographs, or even flying over them, give little idea of their huge size. If "Sea Quest" were to be superimposed on Wembley Stadium, there would not be much room for spectators.
  These installations cost £3½ million and "skill" is the operative word. Skilled operators are needed to work in the most hazardous and dangerous conditions to be found anywhere. It is bad enough to have to ride out a storm in the North Sea, the English Channel, or the Irish Sea, but having to work there in a fixed position and carry on drilling is the most difficult of all.
  The disaster to "Sea Gem" was followed by one of the most effective and efficient inquiries to have taken place. Not every disaster in the North Sea has been followed by an inquiry. The hearing by the Tribunal to which Command 3409 refers, occupied 29 sitting days. Nobody who thought he had a contribution to make was denied audience.
  The Tribunal was without statutory authority, had no power to compel the attendance of witnesses, and nor was it empowered to administer oaths. However, so generous was the contribution of all concerned that there can hardly have been an investigation better served by those offering evidence. Everybody involved in any way came forward voluntarily, without any compulsion at all, to give evidence. The Tribunal summed it up logically and lucidly, and the Bill flows from the recommendations.
  The fact that the Bill is now before the House, may be some thanks to those who gave evidence and to those who served on the Committee and produced the Report. The Bill takes up almost all the recommendations made by the Committee of Inquiry, particularly those about construction and operating techniques, facilities and codes of construction, which vary enormously from one type to another, discipline and the chain of command.
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  We may be in some difficulties when we talk about a "master". "Master" is a word with a particular meaning. We are trying to tag on a new meaning which may cause some difficulty, although perhaps not within the oil drilling industry itself, for the word may have one meaning inside and another outside the industry. There may be some difficulties about "master", but it is a simple term and has much to commend it.
  One of the matters raised in another place and elsewhere is the question of the qualifications of the master, whether he should be a certificated master and have special responsibilities. The aim is to make sure that whoever is in charge of a rig has the necessary prestige and authority. If he is to be responsible for the safety of everyone on the rig, his word of command has to be accepted in any difficult situation. The Committee of Inquiry recommended:
  "It would not be necessary for the 'master' to be an expert in the engineering and mechanical aspects of his charge. It would only be necessary for him to be a mature and responsible person trained to have a wholesome respect for the sea and knowing what to look for in carrying out his task of keeping everybody up to scratch."
  That will be a most difficult appointment for anyone. There is tremendous responsibility not only in terms of the capital value of the installation, but the number of men involved.
  The object of the Opposition is to ensure that whoever is appointed has the authority necessary to carry out these duties and that in any difficult situation when he has to impose that authority there will be no challenge to it. It should be an overriding consideration for the safety of drilling that the instructions of the master should be carried out. Unless that is so, there will be no point in the Bill.
  Other accidents in other conditions and other circumstances have been mentioned, but I should like to raise some other matters. So far, oil rigging and exploration has taken place mainly in the North Sea, with some in the Irish Sea. The Bill refers to the extent of our territorial waters and those parts of the Continental Shelf which are under our control because of the Continental Shelf Act, 1964. There are now reports that concessions are to be made in the English Channel. Apart

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  from the obvious difficulties of navigation, if ships cannot keep out of the way of other ships, having fixed structures operating there will cause tremendous difficulties.
  There was opposition to a recent suggestion that there should be an agreement among the countries bordering the Channel, the United Kingdom, France, Belgium, Holland, and perhaps even Germany, and that, to be able to obtain effective control of shipping in the Channel, we should extend our territorial limits, or extend the Continental Shelf Act. We had hoped that there would be a reasonable agreement for the control and passage of shipping. Perhaps the Minister will let us have some information about his thoughts and those of his Department about the effect of proposals to license operations in the English Channel. Simply allowing for the extension of territorial waters in the English Channel would not bring rigs operating in the English Channel within the terms of the Bill, and we might have to have changes to allow for that. We are legislating not for three or five years, but for the next 20, 30, or 40 years, and we must look at problems which might arise.
  The other point to which I should like to refer may be a criticism of Parliamentary procedure. Most of us have seen a ship and most of us have seen an oil rig from a distance. Between these proceedings and the beginning of the Committee stage those appointed to the Standing Committee should be asked to visit an oil rig. Although each of us serving on a Committee like this has some special knowledge and interest, we were not consulted about the Bill. We are told that it is a Bill agreed among every interested party. But as the Bill has been coming since 1961, there may have been changes since the consultation procedure.
  It is a enabling Bill. Would the Minister let us know later whether the regulations made under it will be subject to the affirmative or negative procedure? Inevitably, it may have to be the negative procedure. How will he report the results of conversations and the regulations to Parliament?
  This is a Bill that is overdue. It is a Bill welcomed by the Opposition. We hope that it will get its Second Reading
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  this morning. Those Labour Members appointed to the Standing Committee will doubtless have critical Amendments to make, not to weaken the Bill or to alter its purpose, but to make it stronger and more effective and, above all, to ensure that whoever is responsible for the safety of installations will have the necessary authority and capacity to carry out his duties.
  The Chairman: I am obliged to the hon. Member for Liverpool, West Derby (Mr. Ogden) for reminding us that this is essentially a Second Reading debate, not a Committee stage, and that general principles rather than Committee points are involved. That is not to say that Committee points will necessarily be out of order, but I remind the Committee that this is a Second Reading debate.
  Mr. David Mudd: As has been said, this is not the time to criticise details of the Bill. I do not wish to detract from a very important piece of legislation, but at this stage I should like briefly to draw attention to several factors that could usefully be incorporated in the Bill.
  First, there is the question of the lack of certification of the rig master. In the Merchant Navy, although individual companies have different operating practices and procedures, the master of a ship is bound to have his Board of Trade certificate of competency. I do not believe it to be beyond the power of the Department of Trade and Industry to institute a certificate of competency for rig masters, which would include such things as knowledge of currents, weather, hull stress, and, even more important, the handling and launching of lifeboats from a static rig in an emergency.
  My second point deals with the safety proposals. The safety proposals outlined in Clause 6 assume a great deal, but are not very specific. I am horrified to find that there is no statutory requirement implied in Clause 6 that the rig should have radio communication. It is assumed, but it is not stated. I am even more amazed to find that it is not required that a rig should have radar. The sea lanes of Britain have become even more congested and more dangerous because many ships using British waters do not have radar in an operating condition. I think

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  that rigs should have radar on which they can note the approach of other ships.
  I am delighted that the Under-Secretary has told us that the rigs would have lights and fog horns; to this, we should extend the warning rockets system that would apply to a lightship if an oncoming vessel is standing into danger with relevance to its position to the rig.
  The final point concerning the safety proposals is that the Department of Trade and Industry should give serious thought to the development and testing of a non-inflammable lifeboat. Evacuation in an emergency from one of these rigs could mean lowering a pinnace or lifeboat into a sea which is already aflame with burning oil or fuel.
  I hope that we shall have an assurance from the Under-Secretary that those points will be seriously borne in mind.
  11.0 a.m.
  Mr. Kevin McNamara: I, too, welcome the Bill. It is one of a series of Bills, with generally non-contentious Clauses in them, which originated while we were in Government, which both sides of the House wished to co-operate to bring through.
  We in Hull have had experience of tragedies at sea. We have a melancholy history, with times of great heroism and great disaster, and families suddenly bereft of fathers. It is not an experience which we should wish on any other community. To this grim catalogue was added another item with the landing of the survivors of the "Sea Gem" from the "Baltrover". Before coming to the Committee, I refreshed my mind on those events by reading the simple accounts of the survivors as they came ashore. These accounts, in back numbers of my local paper, the Hull Daily Mail, were simple, clear and stark, bringing home the reality of the cruelty of the sea, and the dangers which prevail there, far better than the report of any Tribunal no matter how painstaking its work, no matter how thorough and sound its recommendations may be—and, of course, the Report of the Tribunal on the "Sea Gem" had both of those qualities.
  Tribute has been paid to the men who work on these rigs, brave, courageous and skilful men. But I could not let an opportunity like this go without pay-
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  ing tribute also to the people who were engaged in the rescue—a tribute not only to the men on the "Baltrover" and the other ships which were operating in difficult waters, in a very difficult situation, with the broken rig and with wreckage around, not knowing what might happen, but also, and in particular, to the men of R.A.F. Leconfield who snatched three men from a watery death into their Whirlwind helicopters, again in very difficult circumstances. I pay tribute also to the men of the Humber lifeboat who, on that occasion, were at sea for nearly 43 hours, which must be something of a record in lifeboat work, and something of which we are very proud.
  The people of Hull are used to the work of R.A.F. Leconsfield and the work of the Humber lifeboat. The hon. Member for Louth (Mr. Jeffrey Archer) is well aware of it, too.
  It is fair and right that we should draw attention to the work of others who are interested in this problem, who risk their lives in trying to save others, and who can be very much influenced by the results of this piece of legislation.
  Although much of the Bill stems from the recommendations of the "Sea Gem" Tribunal, it must not be thought that that was the only incident involving rigs in the North Sea. There were many more. Reference has been made already to blow-outs. In December, 1965, the "Sea Gem" was lost 43 miles east of the Humber. In April, 1967, the "Conoco I" sank off Grimsby. In March, 1968, the "Ocean Prince" was lost off Flamborough Head. In November, 1969, the "Constellation" was lost off Flamborough Head. It was reported that two rigs, "Mr. Cap" and "Glamar IV", were moved to Nigeria because they could not risk the pounding of the North Sea and the cruelties of the weather there.
  It is important to see that we are not dealing with just an isolated incident. This is important because of a desire, in some parts of the industry, not to be tied down. It is a changing technology, and some people fear that legislation might in some way hamper them. But we have a duty to the men who work on the rigs, and a duty, also, to others who use the seaways to ensure that these hazards will, as far as is possible, be removed.
  The Under-Secretary referred to the visit which my hon. Friend the Member

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  for Kingston upon Hull, East (Mr. Prescott) and I paid yesterday to the production platforms off the mouth of the Humber belonging to B.P., and I shall give some impression of what I saw there. I must at once say that I was very impressed by the provision of safety devices—rafts, netting, ropes, ladders, lifebuoys, warning lights and notices. In reply to the hon. Member for Falmouth and Camborne (Mr. Mudd), I can tell the Committee that on these rigs and generally throughout that company what is known as the Brucker capsule, a life-saving device, has been introduced. It is a form of craft, a sort of metal sphere which can hold a great number of men, more than the crew of a rig. It is powered by a motor, and, because of various scientific devices and equipment on it, it can exist in a blazing sea of oil and take the crew to safety. With elaborate provision for a cooling capsule on the outside, it can save people from a hot death, as well as from what might have been a cold one in the water.
  I understand that there are one or two little troubles still with this capsule, but it is a very important step forward. One hopes to hear something from the Under-Secretary what is his thinking and the thinking of the Department with regard to this device. Because of the shortage of the notice—I only got to know about it myself yesterday—perhaps he might tell us about that when we come to the Standing Committee stage. It is an expensive device, but it is something which needs to be developed and used.
  I was very impressed, also, by the provision for wireless on the rigs—ship-to-shore on all rigs, and on the ones with the larger crews there is a permanent radio operator. However, I agree with the hon. Member for Falmouth and Camborne about the need for radar and other safety provisions which did not seem to be there, and also for mandatory wireless communication. When a rig is at sea, under the I.M.C.O. agreements it must carry a radio operator. But it is when rigs are stationary that the real problem arises.
  Having said all that about the provisions which B.P. is making, and very good and sound provisions they are, I come now to the point at which Parliament must intervene. There seem to be five major loopholes in the legislation
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  as it exists, most of which are covered by the Bill.
  First—this astonished us all when the "Sea Gem" went down—the Minister has lacked power to enforce an inquiry into the loss of a rig. This has been a serious defect. For a shore installation or factory, there would have been power under the Factories Act to order an inquiry. For a vessel as defined by the Merchant Shipping Act, there would have been power under the Merchant Shipping Act. As it was neither fish nor fowl, there could be no order for an inquiry for the "Sea Gem". The Report of the Tribunal rightly pays tribute to the way different people in the industry came forward to give evidence entirely voluntarily. Although that is a pleasant situation and reflects great credit on all concerned, it is essential that the Minister should have mandatory powers.
  Second, there has been the lack of sanctions which the Minister has with regard to the operation of a concession, once it has been granted. His only sanction is the right to revoke the licence. Although one can envisage cases where that might be necessary, in the majority of cases it would be far too large a sanction ever to be invoked. Although this does not apply to the oil companies which are operating around our coasts, nevertheless there is always the temptation, and there is the need for proper sanctions against both firms and individuals, though not necessarily as they stand at present in the Bill, as I shall explain later.
  Third, there has been the difficulty in defining a rig. There are many different designs, and I think that there are about 250 rigs operational now around the world. I congratulate the draftsmen of the Board of Trade for the wonderful way they have defined an offshore installation, which tells us nothing and covers everything. It is very good.
  Following up this question of definition, one comes to the problem of the changes which are taking place in the technology of the industry. I appreciate the point made by the Under-Secretary, that for this reason one wants regulations rather than specific legislation, and I would agree with that, but I feel that there are parts of the Bill which should be subject not to the negative procedure

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  but to the positive procedure. With the pressure on Parliamentary time, matters can go through on the negative procedure without any discussion at all, and there are certain aspects of the Bill which should come up on affirmative Resolution and have the positive approval of the House.
  Fifth, a major defect has been the difficulty of establishing uniform safety procedures, and the lack of detail required. This was eminently displayed by the Tribunal's comments on the code of safety practice drawn up by the Petroleum Institute. The Report showed the difficulties. All that Governments have done, my own Government included, has been to incorporate those provisions straight into the concession and say, "Provided you act like that, you are all right". This is just being wise with hindsight. On the other hand, we were entering a new and changing technology in which it would have been difficult to draw up rules.
  The Bill seeks to remedy these deficiencies and to implement the recommendations of the "Sea Gem" inquiry. Where it does that, it is to be welcomed, but there are a number of points which will need careful examination in Committee. At this stage, I draw attention to two major points of principle, and one of safety, which need to be looked at.
  Because I was concerned about radio safety, I wrote to the Radio and Electronics Officers Union, and I received a very kind reply from the general secretary, Mr. K. A. Murphy, in which he said:
  "The existing fixed oil exploration installations do have Radio Officers and quite complex radio installations but these are only for rig-to-shore communication and any other watches they might keep, i.e. safety watch on 500 or 2182 kHz. would be voluntary and not compulsory. Perhaps it would be possible to ensure that all such installations do in fact maintain a loud speaker radio watch on the two main distress frequencies and are adequately manned to ensure its integrity."
  This is very important; it backs up the point made by my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) that, if there are problems in certain respects, it is essential that the safety regulations, despite all the problems which people might raise about new
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  technologies and so on, should be rigorous and set very high standards. Both human life and our environment are at stake if any of these rigs are run into by vessels in bad weather—or, as seems to have happened, in good weather. This is something we need to look at very carefully indeed.
  I wish to add one further point on this which Mr. Murphy does not mention. A large number of rigs are now going further and further out to sea. I hope that the regulations, will ensure that, beyond a certain limit, which, presumably, would be negotiated by the experts, not only ship-to-shore telecommunications exist but wireless exists as well, because, particularly, in the North Sea, one can have freak atmospheric conditions and blind spots—people can be beyond the line, and so on—and just ship-to-shore telephone communication can fail badly.
  11.15 a.m.
  Another point of principle raised by the Under-Secretary is the question of the qualifications of the masters of these rigs. In the House of Lords, after being pressed by noble Lords on the Opposition side of the House, the Government introduced Amendments to Clause 5(2) to give the Secretary of State power to introduce certification. But it is almost as vague as what had existed before—he may do it if he thinks fit.
  There are two important problems here; first, the question of qualifications and, second, the hierarchy of command. As I understood it, talking with people engaged in the industry, the idea of a hierarchy of command, in a sense, does not exist. There is a team which does a job.
  On the question of qualifications, I asked two rig masters yesterday what their qualifications were. They were very experienced and responsible men. One had spent all his life in the industry, and the other had come into the industry after serving as an engineer officer of submarines in the war. Nevertheless, they had no common qualification other than the length of their experience. It seems to me, as the hon. Member for Falmouth and Camborne said, that it should be easy for the Board of Trade to lay down regulations in this matter. After all, the

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  Department demands to know from concessionaires what will be the qualifications of the masters of their rigs. It will have in mind its own criteria for what they should be, and these should, I think, be readily accessible and easily understood by people at large. Certainly, in view of the comments made in the Report of the Tribunal, there is need for public misgivings to be allayed on this point.
  The Under-Secretary, as I understood him, said that, because of the difficulties in the oil industry, there were two separate jobs; there was the drilling master and there was the navigation master. But the whole problem is that there comes a time when a decision has to be taken whether to continue one function or not, and the question is: Whose responsibility will it be to take that decision if there are two equally competent men qualified in their own spheres? This is the crux of the problem.
  In conversation yesterday, one had the impression that they were reasonable men, they knew what they were about, and this was not a problem they had ever come across. On the other hand, one is not always dealing with reasonable men; people can be under strain and in difficulties, and there must be a proper procedure, even if the oil industry and those engaged in it are not quite happy about it.
  Now, the question of discipline. Hon. Members concerned with the Merchant Shipping Bill and similar matters which have come before the House will recall my attitude towards penal clauses in normal working conditions for breaches of discipline not connected with the safety or seaworthiness of a vessel or the safety of its crew. The Bill contains the worst elements incorporated in the Merchant Shipping Act. Section 7(2) provides:
  "Subject to subsection (3) below, regulations under this Act—

  (a) may provide for the creation of offences and for their punishment on summary conviction or on conviction on indictment, and

  (b) may afford, in respect of any description of offence created by the regulations, such defence, if any, as may be specified in the regulations."

  Subsection (3) provides:
  "The punishment for an offence created by regulations under this Act shall be—
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  (a) on summary conviction a fine not exceeding £400,

  (b) on conviction on indictment imprisonment for a term not exceeding two years, or a fine, or both;

  but without prejudice to any further restriction on the punishments which can be awarded contained in the regulations, and without prejudice to the exclusion of proceedings on indictment by the regulations."
  That is, potentially, a very wide Clause. It can cover a whole multitude of possible disciplinary matters, although the Bill contains the limitation that prosecutions have to be by the approval of the Secretary of State, under Clause 10.
  Nevertheless, this sort of provision in legislation at this time, in this type of industry in particular, where there is no history of any need for it, is a reactionary and backward step in industrial relations. It arises for a number of reasons. First, it arose from the Report of the Tribunal, which tried to draw a parallel between a sinking rig and a sinking ship. It spoke in terms of discipline and of a master, and then wanted to translate from one sphere of activity to another rules and regulations which were not appropriate at all. Second, it arose because of a fear of conditions on rigs, because men are away from home and so forth. So far as I could gather, this fear is not felt in the industry. What impressed me most was that, when I asked one of the sailing masters what disciplinary problems he had, he said he had none. When I asked why not, he pointed to the helicopter. The helicopter can take a man ashore most immediately. The power under Clause 5(7) to put a man ashore immediately, or as soon as may be reasonable, is the real power of discipline under this legislation.
  It is wrong that men should be punished for offences at sea which are not offences ashore. It is wrong that we should go back to this 18th-century attitude. I hope that, when we come to look at the Bill in Committee, while we shall seek to improve, as the hon. Member for Falmouth and Cambome suggested, every possible safety device, we shall think at the same time in terms of modern disciplines, in modern industries of high technology, where none of these penal provisions is needed.
  Mr. David Watkins: Like my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) and all other hon. Members who have spoken so

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  far, I welcome the Bill. My hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) referred to the Inquiry into the "Sea Gem" disaster. As he said, it was one of the most effective and powerful inquiries which had ever taken place, and, since the Bill is the carrying into legislation of its principal recommendations, there are powerful reasons for welcoming it.
  The Minister drew attention to the fact that there have been 23 lives lost and many injuries sustained in the course of the operations to which the Bill applies. It is a great pity, although, perhaps, it is in the nature of things, that we always have to wait, as in the case of the Aberfan disaster and of countless other accidents arising from industrial and commercial activity, until there has been a tragic loss of life before legislating in an attempt to avoid such loss of life.
  In the past, for all sorts of sorrowful and other reasons, that has been the experience. Now, however, we are well advanced in the technique known as damage control, the distinguished pioneer of which, Mr. Frank Bird, I had the pleasure of welcoming to this Palace when he was in this country last week. It is a technique whereby it is possible for experts to examine thoroughly any place where people are subject to any possible form of hazard arising from their work and, by reporting fully, enable steps to be taken to eliminate many of the causes of accident.
  Notwithstanding the fact that those employed in maritime occupations are in a vastly different situation from those working on land, the British Shipping Federation, for instance, is currently giving considerable attention to the technique of damage control. When the Minister comes to consider the regulations, he may well think it worth writing in something to the effect that this type of technique should be applied before a rig even takes to sea, in order that a number of potential dangers may be eliminated.
  One of the features of the Bill which I welcome is that it applies both to individuals and to corporate bodies of owners, even if they are not British, who are operating in the waters over which this country has jurisdiction. That might seem self-evident in any case, but one
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  can think of previous occasions, and the possibility of future occasions when foreign owners of rigs operating in British waters might well need a salutary reminder in advance that British law will apply to them in this matter.
  There has already been some discussion on those parts of the Bill which relate to the appointment of qualified masters and which define the responsibilities of the master, namely, Clauses 4 and 5. I am not qualified to comment on either the qualifications or the duties of masters, but hon. Members on both sides, I feel, are concerned to know whether the terms of these Clauses are sufficiently definitive to cover all situations and, as my hon. Friend the Member for Kingston upon Hull, North said, whether the powers they give to masters over the crews of rigs cover matters not entirely related to safety conditions in general. These two Clauses will be among those which will require detailed examination in Committee.
  The Bill introduces industrial safety legislation into a completely new field. Inevitably, therefore, to some extent it has to be experimental. Because of technological development, there is uncertainty about what will happen when this legislation is applied in future developing situations. Rapid developments are taking place in the design of rigs. Soon, they are likely to be used much farther out to sea. I accept that it is necessary, therefore, to leave a great deal to regulations. As the Minister said, it is really an enabling Bill which leaves the Secretary of State with considerable powers of regulation.
  I notice that, in Clause 2(2)(g) and Clause 3(2)(d), the Secretary of State is empowered to make regulations for "any other incidental matters". To some of us who have memories, that seems reminiscent of "conduct prejudicial to the maintenance of good order and military discipline", and it could give the Secretary of State wide powers to cover virtually any situation.
  In saying that, I am not criticising the enabling nature of the Bill. I should be one of the last Members to do so, since I was fortunate to get a Private Member's Bill through the House, which became the Employers' Liability (Compulsory Insurance) Act, 1969, under

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  which, because it covered a completely new field, a great deal had to be left to regulation. Perhaps I should just remind the Minister that the regulations have still not been laid under that Bill. If he can use any influence with his right hon. Friend the Secretary of State, it would be welcome.
  11.30 a.m.
  The Minister has already given an assurance that the fullest possible consultation will take place—the Bill states that it must take place—with organisations representative of people concerned in these operations. In view of the importance of the regulations and the way in which they cover the matters raised by my hon. Friend the Member for Kingston upon Hull, North, it is essential that there be the most careful consultations.
  I join hon. Members on both sides in stressing the urgency of this matter and the necessity to facilitate progress of the Bill, though not to facilitate it in a totally uncritical manner, because we should be failing in our duty if we did that. It would be a tragedy if further lives were lost in the interim because of non-observance of the provisions which the Bill will in due course lay down.
  In the final analysis, it is the credibility and the enforceability of legislation that matters—the reaction to it, and the action of people on the spot where accidents occur. If the Bill can do anything to prevent further disasters, or even minor occurrences, involving injury or loss of life, it will be very greatly welcomed. I hope that its passage will be facilitated.
  Mr. John Prescott: As a new Member, I have just learned another Parliamentary lesson, that when one is invited to sum up at the end of a debate, one finds that everything one has prepared has already been said by others.
  Mr. Jeffrey Archer: Hear, hear. A good speech.
  Mr. Prescott: That is my second lesson, I suppose. Perhaps I could emphasise some of the points that have been made, without detaining the Committee too long.
  We are here discussing a special piece of legislation to deal with special circumstances. It originates from the tragedies
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  which have occurred in this industry and the inquiries which followed them, in particular, the "Sea Gem" Inquiry. It is very welcome, as every piece of safety legislation is welcome, and we hope that it will meet some of the problems encountered in the dangerous work which rig operators have to undertake.
  It is special legislation because the rig itself is special, in the sense that, when it is moving it is considered to be a vessel to all intents and purposes, when it is being repaired in a shipyard it is a factory for Factories Act purposes, and when it is doing the job it was designed to do, fixed over a set place and drilling for oil or gas, it does not fit into either of those two categories.
  Another special characteristic is added —my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) and I saw this yesterday when we noted the impressive display of safety provisions on B.P. rigs in the North Sea—by the environment in which rigs operate, that is, the sea itself, and particularly the North Sea. I was a seaman for a number of years and sailed across the North Sea from Hull to Rotterdam. I have experienced the varied and sudden changes in climate that one can find in this part of the world. The percentage of waves over six feet, over a measured period of time, in the Gulf is only 5 per cent., off the coast of Nigeria it is 12 per cent., but in the North Sea it is 29 per cent. It is a particularly harsh environment in which these rigs must operate. Therefore, the problems are far greater than those experienced by operators in more favourable climatic conditions.
  There has been a great increase in the number of rigs. In 1949, there was only one mobile drilling rig, which drilled to a depth of little over 20 feet. In 1969, there were over 200 of these rigs, now drilling to a depth of over 1,000 feet. Around the United Kingdom coast, there are over 20 rigs, as the Minister pointed out. Ten of them are the fixed-platform type, mainly under contract to drill for gas, but we are now beginning to see developments for drilling for oil, particularly off the coast of Aberdeen.
  So we have a growing problem. There are more rigs, and more men employed. Therefore, it is absolutely necessary that we should pass legislation to make important provisions for safety of this kind.

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  The Bill is concerned not only with safety but with the health and welfare of the men on these rigs. I hope that, on this aspect of the matter, we shall concern ourselves with the ready availability of doctors and medical support facilities. Although the oil rig companies make these provisions, we should recognise that in this Bill we are setting down standards which will be statutorily enforced. Let us make them the best, as good as or better than the standards which the best companies are operating. One of the impressions I came away with yesterday was that these operations are so expensive that one cannot do things on the cheap. We cannot have cheap -jack operators, who are usually the main threat to safety, operating in the North Sea. It is likely that the acceptable standards of safety in these areas are much nearer to what we are proposing in the Bill than are the standards in other areas of industry where recommended practices are not always fully followed.
  A rig is now to be regarded as approximating to a vessel. I shall bring up a point later on which I am in strong disagreement about the maritime implications, but, broadly, what we have here is recognition of its role as a maritime vessel. To some extent the Court of Inquiry recognised this when it stated that in an emergency a drilling rig became a vessel and that people with maritime experience were needed in such situations.
  Health and welfare standards for accommodation on British ships are laid down. Perhaps we should consider laying down statutory leave for men operating rigs, so that people do not become too tired and so that the desire to obtain an ever-increasing amount of money does not override their sense of awareness, or nullify the safety provisions necessary for this type of operation.
  However, I do not advocate the introduction of Board of Trade diets. Having only yesterday enjoyed a T-bone steak with the hon. Member for Kingston upon Hull, North in the middle of the North Sea and having compared that with provisions on British ships—two ounces of margarine, four ounces of butter and so on—we do not advocate that the Board of Trade should impose those rations upon rigs. Indeed, the rations on rigs are largely influenced by the nature of
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  the labour, for the labour force is international and includes large numbers of Americans. They would not accept the standards which the Marine Department of the Board of Trade might think sufficient for British seafarers.
  In view of the sanctions which we are considering, it may be necessary to give a man a statutory right to leave a rig. If there are to be mandatory sanctions upon a man's operations upon a rig, as he might not be able to get on with the man in charge, for instance, he should have the right to leave the rig if he thinks that there may be a conflict between him and the man in charge, to whom we are proposing to give powers.
  The navigation considerations are of the greatest importance to safety. We saw the fog signals and navigational equipment designed for rigs under regulations made under the Continental Shelf Act. As my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) pointed out, if we license operations of this nature in the Channel, the best seamanship in the world will be of small avail—here I must aim my usual blow at the Liberian vessels which ignore warning lights and other regulations—unless these warnings are observed. To institute fixed rigs in that waterway will make it infinitely more dangerous, and I hope that careful consideration will be given to applications.
  Radar is important not only for the identification of other vessels, but so that a rig may give a special signal, identifying itself as a stationary vehicle, which may be picked up in fog, for instance. I hope that we may consider the design of rigs, particularly as the Inquiry made some important comments about the quality and design of rigs. I hope that the Minister will tell us of the progress in the design and classification of rigs mentioned in the Inquiry. Is there a criterion for the design of these rigs?
  The lifeboat facilities are essential. When the "Sea Gem" went down, many men died from exposure in the water. Even if the normal number of lifeboats is provided on rigs, if there is a collision or the rig collapses, as did the "Sea Gem", one side may be at an angle, making the use of gravity-launched lifeboats extremely difficult. It is important that the Brucker system, which uses a

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  dome which is completely sealed off and which can go into oily waters and fire and which gives quick access, should be introduced. The Brucker capsules are considered to be expensive at £20,000, but it is a trifling sum when the rig itself is worth about £2 million and against the vast sums involved in the drilling process. A number of companies are already using them and it is essential that they should be put on all oil rigs.
  My hon. Friend the Member for Kingston upon Hull, North asked whether the Board of Trade had approved this system. We know that the Ministry of Technology considers it to be of value, but we do not know whether the Board of Trade has given it a certificate of recognition as a life-saving facility possibly to be used in preference to the open lifeboat. Survival suits to protect men against exposure should also be considered. There should be training procedures for the men because of the nature of their work. We could also consider giving them safety books, as is now done in the British shipping industry, recommending the best safety practices.
  It is essential that all accidents are reported. In the shipping industry, only deaths are reported, but it should be compulsory for rig companies to report all accidents so that an analysis of types of accident may be made and a remedy sought. Matters should not be left as they are in the shipping industry which is allowed to get away with reporting only deaths.
  Much is said about those who work on the rigs, but what about the men who are constantly diving from them? Would the Minister consider having special safety provisions for divers operating from oil rigs?
  The fundamental issue, with which I was identified before becoming a Member of Parliament, is the penal sanctions of the Bill and the philosophy that greater discipline means greater safety. That has not been proved, although the sterile thinking of the Marine Section of the Board of Trade seems to have seeped into the Power Department.
  This belief is connected with calling a man a captain. I appreciate that the Committee of Inquiry said that one man
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  should be responsible, and we do not disagree. But when one man has been responsible he has been referred to as being in charge of the rig. He may be what is called the "tool pusher", a man who has ten years' experience of drilling, years of experience on the rigs themselves, and perhaps with an engineering degree. A variety of qualifications is plainly required for the jobs involved in this sort of operation.
  The system in the past has been that when a gale reaches Force 8, maritime skill is needed, and there is a written instruction that responsibility is passed to a man with the maritime experience to handle the rig. That is not entirely satisfactory. Somebody should be directly responsible and should inherit the responsibility for implementing regulations made under the Bill. If we lay down regulations, it is important that somebody is made directly responsible.
  Our only concern is that professionals —captains by maritime certification—would probably say that that name should not be used so loosely or be given at the will of a company to those whom it makes in charge of rigs, and we do not know what conditions may be required of a man before he is given the job.
  11.45 a.m.
  The more important point about the word "captain", however, is its connotations. It suggests hierarchical control. It suggests that one man has absolute authority and that his orders will be obeyed.
  The Bill will make it an offence, punishable by a fine, for a man to disobey the lawful command of the captain. It was said in another place that there was no intention to introduce hierarchical control, but it is inevitable, because, if a master tells his deputy to give an order and it is disobeyed, a lawful command has been disobeyed.
  The command does not necessarily have to relate to an action which threatens the safety of the vessel. A lawful command in the Merchant Navy may mean anything. It once meant that a steward who brought a steak well-done when an officer ordered it to be medium was "logged" and fined £2 for bringing a steak which was not as ordered. It

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  sounds crazy and I am not suggesting it will happen on oil rigs, but it happens on ships, and it is an example of disobeying a lawful command. Bringing the power of sanctions into this sort of situation will create grave industrial relations problems, particularly with workers who have not been associated with this sort of discipline which has for so long created problems for merchant seamen.
  The case for bringing in sanctions like this is not proved. The philosophy that greater discipline means greater safety is not proved. Indeed, the figures show that accidents and deaths in the British merchant service are over 14 times higher than in many dangerous occupations ashore. One may say that shipping is different from shore work, but our accidents and deaths are far higher than they are for other maritime industries. Nobody has greater discipline than we have in the British merchant service, yet we have the highest rate of accidents and deaths. So it is certainly not proved that greater discipline necessarily means greater safety. We think that that sort of philosophy is absolutely wrong, and we shall challenge it in the present Bill.
  We note that the captain is to have power of arrest, to detain a man and put him away. One can think of all sorts of things that are likely to happen in this situation. They already happen in the British merchant service. This is not "pie in the sky"; it happens already. It is proposed to apply this power to men who are highly skilled in their operation, not labourers who do an ordinary functional job but people with specialised skills. The situation may be made worse by using the title "captain". The temptation will be to take a Merchant Navy captain from a ship and put him on the rig, making him the "captain", with all the connotations.
  We shall have a lot to say in Committee about the penal provisions. I hope that the Minister will take a weather note of the sort of storm we intend to create about the penal clauses and the proposed extension of them into this field. An oil rig is absolutely different from a British merchant ship. I should argue about penal clauses even in those situations, but the case is unanswerable in relation to oil rigs. As
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  my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) said, we were told yesterday that, if a man disobeys or commits an act which the company does not agree with—which, on an oil rig, includes not wearing a safety helmet or the boots which are provided—he will be flown off the rig. That is the ultimate sanction, being taken off and being denied access to the attractive earnings possible on these rigs. One does not need these penal sanctions. There is this ready contact all the time, back and forth between management and crew, and it is not necessary to maintain that sort of discipline.
  We want to ensure that some of the regulations are subject to the affirmative procedure, which requires some form of debate in Parliament before they can be implemented. Also, I trust that discussion about the regulations will take place with the Trade Union Movement and, in particular, with those trade unions which claim to have some interest in this field. I hope that "representative" means that any trade union making a claim and showing an interest in these matters will have a right to be able to make its point.
  This is a valuable piece of legislation. It is necessary for the industry, and especially so for those working off the Humber coast.
  One thing which impressed me yesterday, in all the highly developed safety provisions which we saw, was the practice of having a vessel standing by. There is a stand-by vessel from the Humber, with medical attendance and facilities for accommodating 70 men. It is constantly standing by the rig in case of accident. That vessel is owned by a trawler owner, who has had to condition his ships to the high standard of medical facilities required by the oil companies. But if that same ship employs fishermen, in far more dangerous operations in other waters, it does not have to have those standards. So then, I presume, they change it back to the old conditions, because fishermen, apparently, are not regarded as entitled to the high safety standards demanded by the oil companies.
  Mr. Ridley: By leave of the Committee, I should like to reply to the interesting debate we have had.

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  I congratulate the hon. Member for Kingston upon Hull, East (Mr. Prescott) on his maiden speech from the Front Bench, so soon after his election to the House. I thought that he made a very good job of it, though, perhaps, when he waxed wroth about the evils of discipline, I could see a glint in the eye of the hon. Member for Woolwich, West (Mr. Ham-ling). I counsel him, if he wishes to make progress through the hierarchy of his party not to be too strong in his condemnation of discipline.
  Clearly, we shall take up that point again when we reach the Committee stage, but as the hon. Member for Kingston upon Hull, North (Mr. McNamara) also raised it, I should point out now that the discipline provisions in the Bill are solely in the context of safety and there is no possibility of their being used in relation to the quality of a steak or any matters not to do with the operation of plant. They are purely in relation to safety. There is a £50 fine at most. The really serious penalties in Clause 7, which were criticised by the hon. Member for Kingston upon Hull, North, relate to offences by the owners, the masters or the companies running the drilling organisation. If it is right that there should be severe safeguards directed against those responsible for providing the necessary safety precautions, it is not unreasonable to say that those on board who do not observe instructions in relation to safety should themselves be subject to some sanctions and some discipline.
  I know we shall debate this again, so I leave it there. I think it probably necessary to have sanctions underlying what should be done, as the hon. Member so rightly says, by good relations, good communications and, eventually, by the power to fly men off who are persistently undisciplined. There must underneath be the power to have one's orders accepted when not only the life of the individual is at stake but he can put the lives of his colleagues on the rig at risk.
  I confirm that Orders made under the Bill will be subject to the negative Resolution procedure. If any of them are contentious or not agreed, hon. Gentlemen will be able to pray against them, to debate them, and, if necessary, vote against them in the House. I do not think it would be practical, nor is it within the usual tradition, to make such Orders subject to affirmative Resolution.
  Mr. McNamara: There is precedent for it under the Merchant Shipping Act.
  12 noon.
  Mr. Ridley: I apologise if I have misled the Committee, but I think that the negative Resolution procedure is the right procedure in this case, because we expect that the greater bulk of these regulations will be entirely agreed, and it would seem unnecessary to trouble the House with a special debate on Orders in respect of which there is no need to criticise. The negative Resolution procedure will give hon. Gentlemen opposite a chance to complain about any aspects of the regulations which they do not like.
  Next, I come to the point raised by the hon. Member for Consett (Mr. David Watkins) about the wide nature of the powers implied, in particular, by the phrase,
  "for any other incidental matters".
  I assure him that this is contained by the rules of construction, which limit the words to matters of the same nature as those set out in the preceding paragraphs. Technically, the meaning is not as wide as he fears.
  The hon. Gentleman asked also about employers' liability. In the Schedule to the Bill, there is provision for applying by regulation the provisions of the 1969 Act, of which he was the sponsor, to this work at sea. This is really the responsibility of my right hon. Friend the Secretary of State for Employment, who is pressing on with the necessary consultations with the insurance world to be in a position to make regulations as soon as possible. No unavoidable delay is taking place.
  Mr. Watkins: I am grateful to the hon. Member. I can confirm from my own knowledge that what he said about the formulation of the regulations is correct.
  The Chairman: Order. The hon. Member will need the leave of the Committee to speak again.
  Mr. Watkins: I beg your pardon, Mr. Gurden. With your leave, and the leave of the Committee to speak again, may I say that I confirm what the Minister has said about the work being in an advanced stage on the preparation of the regulations. In the course of a conversation which I had last week—I think this is

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  almost classic and worth putting on record—I was told that the regulations would be ready "in days rather than months".
  Mr. Ridley: We have heard that phrase before. We shall wait and see.
  I come now to some of the points raised by the hon. Member for Kingston upon Hull, East. Medical treatment is covered by paragraph 8(2) of the Schedule. A standard will be decided in consultation with the industry before the regulations are made. Accommodation is covered by paragraph 8(3) of the Schedule. I can confirm that there is no intention of making minimum regulations in relation to diet. That would be a dangerous precedent, although I heard my hon. Friend the Member for Louth (Mr. Jeffrey Archer) suggest that it might be applicable here in the House. But that is a matter which I should be wrong to pursue at this stage, Mr. Gurden.
  Hours of work and leisure could be covered, if it was thought fit, by making regulations under the Schedule. The hon. Gentleman asked also about divers. There are powers under Clause 6 to make regulations regarding divers. There are regulations in relation to divers in inshore waters, but they could be extended to particular problems under Clause 6.
  Finally, in relation to the design of installations, we are working at present on minimum design and construction requirements, which will be specified under Clause 3. We shall discuss these requirequirements with the classification societies, for example, Lloyd's Register of Shipping, and with the operators. It is intended to bring these into existence when the Bill reaches the Statute Book.
  The major matters which concerned hon. Gentlemen were the qualifications of masters, the dangers from ships, and the question of fireproof lifeboats. As the hon. Member for Kingston upon Hull, North, said, in another place the Government accepted an Amendment which widened the power to make regulations and gave the Department discretion to make regulations dealing with the qualifications of masters. I think that is as far as it is possible to go, not because of any disagreement in principle with the arguments which were put forward but because experience of what should be
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  the necessary qualifications is so limited that it would, possibly, do more harm than good to make regulations at this stage.
  Masters of oil rigs have evolved so far, and they have evolved as very responsible and excellent people. Nobody is criticising them. But they do not in any sense seem to have a common background of experience or knowledge which it would be possible to enshrine in regulations at this stage. I believe that it is right, for the short period ahead, to leave it to the operators and owners of rigs to choose the most suitable people from their knowledge of those who have experience in this field. If, in due course, it becomes clear what the relevant qualifications are, we have powers under the Bill to make qualification regulations. It might well have the effect of making regulations which rule out admirable people, or which allow in people who, perhaps, do not have the requisite qualifications, if we were to attempt to do so at the present imprecise stage of knowledge.
  My hon. Friend the Member for Falmouth and Camborne (Mr. Mudd) and others felt that there was danger from passing ships colliding with rigs. First, I should say that as yet no decision has been taken on whether to grant licences in the English Channel. The hon. Member for Liverpool, West Derby (Mr. Ogden) suggested that this might take place, but that is mere supposition.
  Mr. Ogden: A good deal of supposition and leak coming from the hon. Gentleman's Department over the past few months has proved remarkably accurate. I say this in all fairness. It did give cause for concern. It is reasonable that the Department should be considering it, and we were taking the first opportunity of pointing out some of the difficulties.
  Mr. Ridley: I was merely making the point that it was not a certainty, and a decision had not yet been taken. We have been giving much thought to the problems which might arise, and I can give some reassuring answers to the Committee. First, there will be power in the regulations to forbid the approach to rigs of ships which have no business to call there. There will be a 500-metre safety zone round the rigs. The latitude and longitude of each rig will always be made public, and all ships sailing those seas should

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  have knowledge of the exact location of the rigs.
  Secondly, as regards ships which have cause to call at the rigs, the position is much the same as for a harbour master. There will be power to make regulations as to the manner of coming up to the rig, approaching it, tying up, and so on. There will be full power under the regulations to control that operation.
  Third, there is the question of warning signals. Of course, fog horns, lights, radar, radio and rockets are vital. They are not mentioned in the Bill because they will come in the regulations when they are finally agreed. We are discussing the precise requirements with the operators, and we hope to include the most up-to-date and reasonable requirements in relation to all these warning devices.
  I must sound one note of warning: it will be the ship that runs into the rig more often than the rig that runs into the ship. Therefore, perhaps, it is more for the ship to watch where it is going than it is for the rig to watch out who will run into it. One might say that an island or a rocky peninsula should be required to have safety regulations applied to it to stop ships running into it.
  Mr. McNamara: What about fog?
  Mr. Ridley: That does apply to some extent, but still, principally, the onus is on the ship not to run into it, not the other way round. One has to bear that in mind when considering these problems.
  Last, the question of the fireproof lifeboats. I am pleased to be able to say that the Brucker capsules have been approved by the Department of Trade and Industry and we are in consultation with the industry on the circumstances in which they should form part of the safety equipment at rigs. This is not the only truly fire-proof device. There is also a suitable lifeboat in existence. Therefore, one has to consider the alternatives before specifying which should be used, or how they should be employed on rigs. I think that I have said enough on that point to reassure the Committee that we are fully aware of the importance of these inventions and the great contribution which they can make in the safety of those who work on rigs.
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  I am glad of the general welcome for the Bill which has been expressed by hon. Gentlemen. I give the hon. Member for Kingston upon Hull, North the assurance he requires that they will be rigorous regulations. As high a standard will be called for as is reasonable and right in relation to the twin needs of protecting everybody on board without causing waste or extravagance for no good reason. I am sure that the general welcome which has been given to the Bill will encourage those who work in the North Sea. I thank hon. Gentlemen for the many points which have been raised. They will be carefully taken into account in drafting the regulations.
  I, personally, look forward to a Committee stage at which I shall see the same familiar faces as I see this morning, Mr. Gurden, even though they are refreshed by a few more visits to the North Sea, as was suggested by the hon. Member for West Derby. I am afraid that the Department cannot fix those visits, but hon. Gentlemen who have sufficient initiative can fix them for themselves, no doubt. I look forward to the Committee stage and to considering sympathetically any points which hon. Gentlemen wish to raise by way of Amendments.
  The Chairman: I apologise to the hon. Member for Consett (Mr. David Watkins). I thought that he might have been launching into a speech. In fact, it was an intervention, and I should not have reminded him of the need to ask leave to speak again.
  Question put and agreed to.
  Ordered,
  That the Chairman do now report to the House that the Committee recommend that the Mineral Workings (Offshore Installations) Bill [Lords] ought to be read a Second time.
  Mr. Ridley: I thank you for taking the Chair this morning, Mr. Gurden. I hope that it has not been too arduous. It has not been too long, due to the co-operation of all hon. Members. I express our thanks to you for the sympathetic and helpful way in which you have handled our proceedings.
  Mr. Ogden: I join in that expression of thanks for your guidance, Mr. Gurden. I hope that you feel that your task was eased by our restraint on this side and, perhaps, by the encouragement which we

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  seemed to get from the hon. Members for Falmouth and Camborne (Mr. Mudd) and for Louth (Mr. Jeffrey Archer), as well as the interest, I am sure, of even the hon. Member for Bath (Sir E. Brown). The Bill refers to inland waters, and, for all we know, there might be trouble in the Pump Room at Bath.
  I believe that, if you serve on the Standing Committee, Mr. Gurden, you will find it not over-contentious. The silent majority may be joining us, it is

  THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:

  Gurden, Mr. Harold (Chairman)

  Hicks, Mr.

  Archer, Mr. Jeffrey

  McNamara, Mr.

  Benyon, Mr.

  Marsden, Mr.

  Booth, Mr.

  Mudd, Mr.

  Boscawen, Mr.

  Ogden, Mr.

  Brown, Sir E.

  Pounder, Mr.

  Clegg, Mr.

  Prescott, Mr.

  d'Avigdor-Goldsmid, Maj.-Gen. James

  Ridley, Mr.

  Grant, Mr. George

  Stokes, Mr.

  Hamling, Mr.

  Watkins, Mr. David

  true, but it should be an interesting Committee stage. We hope that we shall have the benefit of your guidance on that occasion, just as we have had it today.
  The Chairman: I am very grateful to the hon. Gentlemen who have just spoken, to whose who spoke earlier, and, equally, to those who have shown more restraint.
  Committee rose at twelve minutes past Twelve o'clock.