Commons Sitting of 2 December 1971

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  HOME DEPARTMENT

    Northern Ireland
    Mr. Meacherasked the Secretary of State for the Home Department what consultations he has had with the Northern Ireland Government about the implications for security of the Payments for Debt (Emergency Provisions) Act (Northern Ireland), 1971; and if he will make a statement.
    The Secretary of State for the Home Department (Mr. Reginald Maudling): Security was one of the aspects of which I took account during discussions with the Northern Ireland Government about the Act and its operation.
    Mr. Meacher: Nevertheless, since civil disobedience through rent strikes is the only means left, short of violence, for both individuals and communities to protest against long-standing social injustices and discrimination, let alone internment, in Northern Ireland, will the Minister not acknowledge that the repression of this channel through the Payments for Debt Act can only drive people back hopelessly into violence; and will he, on social security grounds, make representations to the Northern Ireland Government for the drastic amendment or curtailment of these provisions?
    Mr. Maudling: I cannot accept that. It is not right that people should have the right to live rent and rate free at the expense of other ratepayers.
    Mr. Pounder: Is my right hon. Friend not aware that, even after the deduction of rental payments from security benefits, a married couple with two children are still nearly £5 a week better off than their counterparts in Southern Ireland?
    Mr. Maudling: Social services in Northern Ireland are particular good. But the purpose of this Measure is that people should not benefit at the expense of other ratepayers by not paying rent and rates.
    Mr. Callaghan: Is not the objections to this that the provisions are entirely arbitrary? Is the Home Secretary aware that the Act has been described by the Child Poverty Action Group as probably the worst piece of social legislation of the twentieth century? Will he look at it again?
    Mr. Maudling: I have seen that description. I disagree with it. The problem could be solved if people paid their rents.
    Mr. Moyleasked the Secretary of State for the Home Department whether he will make a statement on the protection of Royal Ulster Constabulary members and their families from attack, following his meeting with a deputation of Royal Ulster Constabulary members on 9th November, 1971.
    Mr. Maudling: I would refer the hon. Member to the reply I gave to the Questions by the hon. Member for Belfast, North (Mr. Stratton Mills) on 18th November. Certain other points put to me by the deputation are under urgent consideration.—[Vol. 826, c. 191–2.]
    Mr. Moyle: Can the right hon. Gentleman assure the House that any protection provided for members of the R.U.C. will be on the same scale and on the same conditions as would prevail among police forces on this side of the Irish Channel under similar conditions?
    Mr. Maudling: It is difficult to envisage similar conditions on this side of the Channel. The Government attach the highest importance to giving protection to members of the R.U.C., who have been subjected to the most dastardly attacks.
    Mr. McMaster: Is my right hon. Friend aware that his earlier answer to my hon. Friend the Member for Belfast, North

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    (Mr. Stratton Mills) is not satisfactory and that at least the same degree of protection should be given to police barracks as is given to Army barracks in Northern Ireland, because these men are in the front line and there have been more attacks on police barracks than on Army barracks during the emergency?
    Mr. Maudling: The trouble is that if the Army were to provide a permanent guard on every police station, it would be tying up forces that would be better used in another role. That is why I said in my reply that the Army will be extending its activities, but where that cannot be done, automatic weapons are being provided for the police, together with training.
    Mr. Callaghan: Is there any evidence of threats being made against the families of R.U.C. personnel recently, and, if so, has the Home Secretary been able to give them the protection they deserve against these very cowardly attacks when their husbands are carrying out their duty?
    Mr. Maudling: We have done everything possible, but I cannot say that we are doing everything we would like to do. These threats to the families are one of the most deplorable features of the whole situation and I know that anything we can do will receive the support of the whole House.
    Mr. Whiteheadasked the Secretary of State for the Home Department what plans he has for further meetings with the Chairmen of the British Broadcasting Corporation and the Independent Television Authority, relating to coverage by the broadcasting media of events in Northern Ireland.
    Mr. Maudling: None, at present, Sir.
    Mr. Whitehead: Will the Home Secretary accept that when he goes off, if he goes off, trundling again to see the two Directors-General or the Chairmen he should go perhaps as the emissary of the 1922 Committee but not of this House as a whole? Is he aware that there is grave concern in the country at the calls for the B.B.C. and I.T.V. to report things from the point of view only of the Unionists or security forces because while, of course, those points of view must be put
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    fully and fairly, if we are to have a situation in which there is either voluntary censorship, such as the I.T.A. is now practising, or governmental censorship, that would be the best propaganda weapon that could be placed in the hands of the I.R.A.?
    Mr. Maudling: There is no question of censorship. But the hon. Member lumped together the Unionists and the security forces, and that is a very dangerous thing to do. The B.B.C. must be impartial between Catholic and Protestant but it cannot be impartial between the murderer and the policeman.
    Mr. Redmond: Would my right hon. Friend not agree that the opinion on this side of the House is that we do not want censorship; what we want is a fair deal for the Forces, who are not skilled propagandists, as against the I.R.A., which is probably the most skilful propaganda organisation in the world?
    Mr. Maudling: I think that I sense the view of the House. The appearances of members of the Forces that I have seen on television have been enormously impressive.
    Mr. Croninasked the Secretary of State for the Home Department if he will make a statement indicating what progress he is making towards a political settlement, acceptable to the Catholic minority in Northern Ireland.
    Mr. Maudling: I would refer the hon. Member to what my right hon. Friend the Prime Minister and I said in the debate on 29th November.
    Mr. Cronin: Will the right hon. Gentleman say how soon and under what conditions the Government are prepared to enter into party talks to consider the constructive proposals of my right hon. Friend the Leader of the Opposition? Will he also say what is his attitude towards the early transfer of responsibility for security from Stormont to Westminster?
    Mr. Maudling: On the first point, the Leader of the Opposition got into touch with my right hon. Friend on his return from the United States. My answer to that is, the sooner the better. I dealt

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    with the second point in the course of the debate.
    Mr. St. John-Stevas: Does my right hon. Friend agree that, while the Catholic minority in Northern Ireland would certainly welcome a political settlement, they would be just as grateful for the defeat of the campaign of violence and intimidation, of which they are the co-victims?
    Mr. Maudling: Yes, I entirely agree, and the more often that is said the better.
    Mr. StallardDoes the Home Secretary accept that the two greatest obstacles to a political settlement so far as the minority are concerned are the continuance of the policy of internment and imprisonment without trial and the fact that no action has been taken against licensed guns? Will he institute a review of both those items so as to get political discussions on a real basis?
    Mr. Maudling: On the second point, I think the review is in progress. On the first point, internment was discussed thoroughly during our two-day debate, when I gained the impression that our point of view and that of the Opposition Front Bench were not so different.
    Mr. Peter Archerasked the Secretary of State for the Home Department how many people detained or interned in Northern Ireland under the Special Powers Act have been released in consequence of recommendations by the Advisory Committee.
    Mr. Maudling: Twelve internees, I understand.
    Mr. Archer: Will the Home Secretary accept that when a Government detain people without trial, for whatever reason, they bear a heavy responsibility for ensuring that they detain the right people? Do not these figures already indicate that the authorities in Northern Ireland fall short of this standard? While I accept what the right hon. Gentleman has said about the difficulty of confronting detainees with accusers, what are the difficulties in the way of legal representation before the Advisory Committee?
    Mr. Maudling: On the first point, the Appeal Committee is working as was
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    envisaged, and all its recommendations have been accepted by the Northern Ireland Government. The second point is one of those which I said we would consider.
    Mr. Callaghan: As the right hon. Gentleman has called us in aid, may I ask him whether he intends to make a statement on the quite substantial proposals I put forward last Monday in connection with the procedure to be followed in such cases, so that there shall be at least a substantial element of trial, if not a complete trial?
    Mr. Maudling: I have said that we are considering and discussing these proposals with the Northern Ireland Government, and if a statement will be useful to the House, I will make one.
    Mr. McMaster: Is my right hon. Friend aware that in certain cases, such as suspicion of handling arms, it may be that only three or four people are aware that the person detained has been handling them, and that to reveal the nature of the charge might give away the informant and endanger his life?
    Mr. Maudling: That was the point made more than once in the course of our debate.
    Mr. McManus: Does the right hon. Gentleman agree that the Brown Committee is farcical in many aspects, particularly with regard to the oath that internees are asked to take or to sign? For example, a constituent of mine has been recommended to the Minister of Home Affairs for release, but since my constituent has an objection to taking an oath, he cannot be released, though there are many internees still inside, such as teachers, who have already taken oaths because of their professions. We have the farcical situation that a man who will not take the oath will not be let out and men who have taken it are kept in.
    Mr. Maudling: This matter was in the terms of reference of the Committee. I do not agree that the Committee is a farce. It is a distinguished body of men going into all the cases very thoroughly. There are precedents for the oath, and I think that I am right in saying—I do not have the exact words before me—that it

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    really amounts to saying that the internees will not break the law in future.
    Mr. Edelmanasked the Secretary of State for the Home Department when the hon. Member for Coventry, North, may expect a reply to his letter of 7th October, in which he requested him to obtain from the Northern Ireland Government and secure the publication of the names of those at present held in custody in Northern Ireland without trial.
    Mr. Sharples: I wrote to the hon. Member yesterday.
    Mr. Edelman: I am glad that the hon. Gentleman was inspired by my Question to answer it in a letter. Does he not agree that this situation is contrary to natural justice, and does it not smack of Star Chamber methods that a man should be taken from the streets or from his home and his whereabouts thereafter not be disclosed? In the light of this situation, will he not remedy the procedure so that those detained in this way may at least be known to have been detained and may have their whereabouts disclosed to their families?
    Mr. Sharples: My understanding is that a notification is sent to relatives and that in that way relatives are informed. There is a difference between that and the publication of a list of names, which might not always be in the interest of the person interned.
    Mr. Meacherasked the Secretary of State for the Home Department what representations he has made to the Northern Ireland Government to ensure that the Payments for Debt (Emergency Provisions) Act (Northern Ireland), 1971 is carried out without a threat to security.
    Mr. Maudling: As I stated in reply to the hon. Member's earlier Question, security was one of the aspects of which I took account during discussions with the Northern Ireland Government about this legislation.
    Mr. Meacher: Will the Home Secretary not acknowledge that payment of debt under this Act breaks the Human Rights Convention by being retrospective, by flouting the normal rights of appeal, and by exacting repayment arbitrarily at penal rates, thus causing immense hardship? In view of the security risk in-
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    volved in harsh legislation of this kind, will the right hon. Gentleman give a less complacent answer than he gave to my first Question?
    Mr. Maudling: I do not accept any of those propositions. If people are not prepared to pay proper rent and rates, it means that other people have to pay them. Other ratepayers should be protected.

    Replica Firearms
    Mr. Michael McNair-Wilsonasked the Secretary of State for the Home Department what action has been taken by his Department to control the sale of replica firearms in view of the increasing use of all sorts of weapons in crimes of violence.
    The Minister of State, Home Office (Mr. Richard Sharples): A replica capable of firing would be subject to control under the Firearms Act, 1968. On the information before my right hon. Friend, he is not satisfied that it is necessary or practicable to control other replicas.
    Mr. McNair-Wilson: Is my hon. Friend aware that these pistols and machine guns, which are exact working models of the real thing, are freely available? I have been informed by one gunsmith that they are capable of firing up to 12 bullets before the barrel comes to pieces. At a time when crimes of violence are on the increase, should we allow these weapons to come into this country and be put on sale as freely as they are because no one, faced with such a weapon, will ask whether a Luger pistol is the real thing or a replica?
    Mr. Sharples: A replica which is capable of firing is subject to control under the Firearms Act, 1968. So far as other replicas are concerned, the difficulty lies in defining what is a replica—for example, whether a child's toy pistol is a replica. Surely the right course is to concentrate on the use to which the weapon or replica is put. The penalties for misuse are being considerably increased under the Criminal Justice Bill.
    Dr. Stuttaford: Is my right hon. Friend aware that, from the letters I have sent to him on the subject together with Press cuttings, the sale of these mock firearms has caused a lot of anxiety to sub-postmasters and others at risk?
    Mr. Sharples: Yes, and that is the reason why steps have been taken in the Criminal Justice Bill to increase the penalties considerably.

    Magistrates' Courts (Duty Solicitor Scheme)
    Mr. Clinton Davisasked the Secretary of State for the Home Department how many magistrates' courts operate a duty-solicitor scheme to enable unrepresented accused persons to be advised before and/or represented at the first hearing of their cases.
    The Under-Secretary of State for the Home Department (Mr. Mark Carlisle): No duty-solicitor scheme has so far been sponsored by the Home Office and I have no detailed information about any such scheme. But I understand that help is often given to unrepresented defendants by court staff or, on occasion, by solicitors attending for other purposes.
    Mr. Clinton Davis: Is not the hon. and learned Gentleman aware that a very great deal of concern is being expressed about the problems affecting unrepresented defendants? Would not this proposal be worthy of Home Office consideration, since it would enable the unrepresented defendant to be represented at the critical time, when first denied bail by the police, and at the even more critical stage when he makes his first appearance in court? It is no use relying on solicitors who might be present to intervene.
    Mr. Carlisle: I am aware that the proposal has been put forward by Justice. It will be considered. But the Home Secretary thinks it right to await reactions from the other organisations who have an interest in this matter before taking a decision.

    Remand Centre for Women
    Mrs. Knightasked the Secretary of State for the Home Department what criteria he will take into account when planning the new remand centre for women in the Midlands.
    Mr. Carlisle: The need to provide adequate facilities at a suitable place and at a reasonable price.
    Mrs. Knight: Will my hon. and learned Friend, having asked Birmingham City Council for its views on this matter, give a categoric assurance that he will act on them? Will he take into account the need for care in the preservation of attractive areas, the objections of nearby residents, the needs of land for housing or the rival claims for land from such bodies as medical practitioner groups anxious to put up medical centres in thickly populated areas?
    Mr. Carlisle: We have recently received a letter from Birmingham Corporation indicating its view that one of the sites suggested should be used instead for housing. I can assure my hon. Friend that the representation will be carefully considered and that we shall equally consider any other suggestion the Corporation may wish to propose.
    Mrs. Knight: In view of the unsatisfactory nature of that reply, I beg to give notice that I will seek to raise this matter on the Adjournment at the earliest opportunity.

    Unlawful Killings
    Mr. Chapmanasked the Secretary of State for the Home Department what was the number of unlawful killings in England and Wales in each of the years 1961 to 1970, inclusive.
    Mr. Maudling: I will, with permission, circulate in the OFFICIAL REPORT, a table giving figures for offences of murder, manslaughter, infanticide and child destruction known to the police in England and Wales.
    Mr. Chapman: While I am obviously unable to comment on the figures before I see them, may I ask my right hon. Friend to give the widest publicity to those statistics and the breakdown under the category of unlawful killings so that those arguing for or against more extreme punishment for these serious crimes may have a greater acceptance among the public?
    Mr. Maudling: I congratulate my hon. Friend on his reticence in supplementary questions. These are important matters. They are difficult figures to interpret sometimes, and I am anxious that they

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    should be fully understood by and available to the public.

    Murder (see note below)

    Manslaughter

    Infanticide

    Child Destruction

    1961

    …

    …

    …

    …

    147

    105

    13

    1

    1962

    …

    …

    …

    …

    159

    114

    26

    1

    1963

    …

    …

    …

    …

    153

    135

    19

    —

    1964

    …

    …

    …

    …

    170

    108

    18

    4

    1965

    …

    …

    …

    …

    171

    134

    20

    —

    1966

    …

    …

    …

    …

    169

    172

    23

    —

    1967

    …

    …

    …

    …

    200

    193

    19

    1

    1968

    …

    …

    …

    …

    203

    196

    26

    1

    1969

    …

    …

    …

    …

    182

    188

    22

    7

    1970

    …

    …

    …

    …

    186

    181

    26

    —

    Note: The figures for murder are not those normally announced as "latest corrected" figures; for consistency with the figures for the other offences in the Table, account has not been taken of reductions resulting from court proceedings that took place after the year in which the murder became known to the police. Nor do the figures exclude any cases resulting in acquittal.

    Holloway Prison
    Mrs. Renée Shortasked the Secretary of State for the Home Department what steps he is taking to recruit more nursing officers for Holloway Prison.
    Mr. Carlisle: With the assistance of agency staff, there is at present a full complement of nurses at Holloway Prison.
    Mrs. Short: Does the hon. and learned Gentleman not understand that the medical officer of Holloway is anxious to recruit his own staff, because agency staff are much more expensive? Will he give some thought and attention to this to see that the staff are provided for the parts of Holloway where they are needed?
    Mr. Carlisle: Like the hon. Lady, I have recently visited Holloway and I fully appreciate the need for adequate medical staff. She will appreciate that efforts are made from time to time to recruit nurses directly for Holloway, but it is a profession in which there is a substantial turnover. I do not think that the prison service is alone in suffering from this.
    Mr. O'Halloranasked the Secretary of State for the Home Department what consultations took place between his Department and the London Borough of Islington regarding the new staff headquarters at Holloway Prison, London, N.7; and if he will make a statement.
    Mr. Carlisle: There have been consultations with the Planning Department of Islington Borough Council at frequent intervals during the past 2½ years. I understand that the plans for the staff
    Following is the information:
    quarters are to be presented to the appropriate Committee on 9th December.
    Mr. O'Halloran: I am grateful for that reply. Will the hon. and learned Gentleman explain why building has started on the site before final approval has been received from Islington Borough Council and when the views of the local residents have not been taken into account?
    Mr. Carlisle: It is true that work has started, but it started a year after plans were deposited with the local authority. It is not up to the Home Office to decide when those plans are drawn to the attention of a particular committee of the local authority, if that is necessary.

    Probation Service
    Mr. R. C. Mitchellasked the Secretary of State for the Home Department how many probation officers left the probation service in the year ending 31st October, 1971.
    Mr. Carlisle: 247 established officers, according to returns so far received from probation authorities, including normal wastage on account of age and sickness, death, resignation for domestic reasons, and losses to other work in the probation field.
    Mr. Mitchell: Is not that an alarming feature? Is the hon. and learned Gentleman aware that, despite the recent pay increases, the salaries of probation officers compare very unfavourably with those for similar positions in the local authority social service area?
    Mr. Carlisle: I do not know what the hon. Member means by "alarming".

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    Obviously we do not welcome any wastage, but some is inevitable through natural causes. I would point out that the figure for the year 31st October, 1971, was 247, for the previous year it was 250 and for the year before that it was 224. I do not think that there is significance in that figure. As to his remarks about pay, he knows that an inquiry is about to start into the matter.
    Mr. Merlyn Rees: Is the hon. and learned Gentleman satisfied that there are sufficient probation officers to undertake the new duties which will fall on them by virtue of the new Criminal Justice Bill?
    Mr. Carlisle: As the hon. Gentleman knows, we have announced a plan to increase the size of the probation service from 3,500 to 4,700, partly to take up the additional tasks that may be required of them as a result of the successful working in later years of the provisions of the Criminal Justice Bill.

    Licensed Premises (Assault Cases)
    Mr. Raphael Tuckasked the Secretary of State for the Home Department how many representations he has received asking for an increase in the minimum penalty for persons who assault licensees of premises.
    Mr. Carlisle: None recently.
    Mr. Tuck: Is the hon. and learned Gentleman aware that I have received a number of letters from constituents asking for protection because they have been attacked? Is he aware that it appears that this kind of crime is on the increase? Will he consider raising the minimum penalties for such crimes in an attempt to reduce the number of assaults?
    Mr. Carlisle: I am aware of the general concern felt about all crimes of violence but as the statistics cannot show and never have shown the circumstances of the offence or the status of the victim, I cannot comment on the hon. Member's view that this particular type of assault is increasing. As to minimum penalties, we have no such penalties under other systems in the law.
    Mr. William Price: Allowing for the fact that figures are not available, as
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    was said in an answer to me yesterday, is the hon. and learned Gentleman aware that there is widespread feeling in the licensing trade that publicans are not getting protection, that many are being subjected to crimes of violence and that when those who commit these crimes eventually come to court the sentences are ludicrously lenient?
    Mr. Carlisle: The hon. Gentleman will appreciate that he cannot expect any Minister to comment on a sentence given in any particular case by a court. This must be a matter for the court, within the framework laid down by Parliament. As to the first part of this question, we will look at this.

    Parliamentary Candidates (Young Persons)
    Mr. Foxasked the Secretary of State for the Home Department whether, because a person who is over 18 and under 21 years of age may now vote at a local or parliamentary election but may not stand as a candidate at either, the Government intends to take steps to change this situation.
    Mr. Sharples: The analogy is not exact. My right hon. Friend remains to be persuaded of the justification for such a change.
    Mr. Fox: I thank my hon. Friend for that reply, but will he accept that in removing this anomaly he will not be distorting our system? To be nominated is not automatically to be elected to this House, as all hon. Members know. I ask him to act on this sooner rather than later.
    Mr. Sharples: There will be an opportunity, if the House wishes, on the Local Government Bill to discuss this matter in relation to local elections. Wider considerations come into operation when one considers parliamentary elections.
    Mr. Michael Cocks: The hon. Member for Shipley (Mr. Marcus Fox) could help himself by tabling an Amendment in the Committee which is now considering the Local Government Bill and so breaking the self-imposed vow of silence of some hon. Members on that Committee.
    Mr. Sharples: I am sure that my hon. Friend heard that suggestion.

    West Yorkshire Police (Representations)
    Mr. Albert Robertsasked the Secretary of State for the Home Department what considerations he has given to the representations made to him by the West Yorkshire Police Joint Branch Board of the Police Federation that the proposed further reorganisation will have a disruptive effect.
    Mr. Sharples: My right hon. Friend has considered them carefully, along with comments from local and police authorities concerned. The Joint Branch Board has been informed that he would not feel justified in proposing the combination of the West and South Yorkshire metropolitan counties for police purposes.
    Mr. Roberts: Will the hon. Gentleman bear in mind that there is much discontent in Yorkshire? I know he is in touch with my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris). But we in Yorkshire are concerned about the police force, so will the hon. Gentleman consider a unified police force within the geographical boundaries of Yorkshire?
    Mr. Sharples: The policy is that each new county should have its own force except when a new county is too small to secure its own efficient policing by modern standards. Each amalgamation scheme has been considered carefully by my right hon. Friend and myself. In certain cases we have reached conclusions but in others the conclusions still have to be announced.
    Mr. Alfred Morris: As the Minister of State and the Home Secretary know, from their conversations with me and from officers of the Police Federation, there is deep and widespread concern about the disruptive effects more generally on the police of local government reorganisation. May we be assured that the Home Secretary will now enter into full and meaningful consultation with the Police Federation nationally on this important matter?
    Mr. Sharples: My right hon. Friend has had a talk with Police Federation representatives. He has considered very carefully the views which were put forward and is anxious to reduce the disruption to a minimum. None the less, the principle must remain that police authority areas must be related to local authority areas.

    Domestic Accommodation (Fire Escapes)
    Mr. Tilneyasked the Secretary of State for the Home Department whether he will introduce legislation to require persons letting domestic accommodation to provide adequate fire escapes.
    Mr. Sharples: Where the occupants of domestic accommodation are at unusual risk in the event of fire, for example in high blocks of flats, legislation already exists to secure means of escape. My right hon. Friend sees no need for the legislation proposed.
    Mr. Tilney: How many people have lost their lives in the last two years from fires in rented accommodation? Would not many deaths have been prevented had a comparatively inexpensive collapsible ladder been attached to the wall below the upper window?
    Mr. Sharples: I cannot, without notice, give the figures for which my hon. Friend asks. He will know that, under the 1961 and 1969 Housing Acts, where houses are in multiple occupation the local authority can require such means of escape to be provided as it considers necessary. It would be very difficult to extend this provision to every private house.
    Mr. Lipton: Will the Minister of State look at the letter addressed to his right hon. Friend a few days ago complaining of the inadequate fire precautions at Arlington Lodge, a large block of flats on Brixton Hill, where the fire precaution arangements are unsatisfactory?
    Mr. Sharples: Yes, I will look carefully at that letter.
    Mr. Leadbitter: Will the Minister of State bear in mind that, although the legislation is there, the enforcement is not? A few months ago in my constituency a young couple lost their lives because the means of escape were inadequate. Will the Minister ensure the enforcement of this legislation by circularising local authorities and asking what steps they are taking?
    Mr. Sharples: The hon. Gentleman knows that the Fire Precautions Act has recently become law and will be brought into operation by stages.

    Bentley-Craig Case
    Mr. William Priceasked the Secretary of State for the Home Department how many letters he has received asking for an inquiry into the Bentley-Craig case.
    Mr. Maudling: Five, from two correspondents.
    Mr. Price: In view of that answer, I assure the Home Secretary that he will get another letter tomorrow morning. Has he read the recent book by David Yallop on the Bentley-Craig case, which appears to raise a number of points of vital interest? If he has read it, will he comment on it? If he has not, is he prepared to consider the matter if I send him a copy of the book?
    Mr. Maudling: As the Under-Secretary of State said recently, I have received a copy and it has been studied. Of the five letters, four were received before the book was published.
    Mr. Moyle: How is it that the Home Secretary is able to spend time and money on assessing the number of letters he has received on a certain subject?
    Mr. Maudling: Perhaps my letters fall into more natural categories.

    Police Recruitment
    Mr. Laneasked the Secretary of State for the Home Department whether he will make a statement on the latest trends in police recruitment.
    Mr. Maudling: Recruitment is improving and wastage is lower than in recent years. There has been a net gain in strength of 2,459 police officers in England and Wales in the first ten months of this year, compared with 1,986 for the whole of 1970.
    Mr. Lane: I congratulate my right hon. Friend on those encouraging figures. Will he keep in mind that there is still leeway to make up, and will he continue to regard a stronger police force as the top priority in the fight against crime?
    Mr. Maudling: Yes, Sir, I accept that entirely. We are making progress, but we should like to see a lot more.
    Mr. Ashton: How many of these recruits are school-leavers who cannot
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    find a job anywhere else because of high unemployment?
    Mr. Maudling: I cannot say without notice. Wastage is a much more serious problem than recruitment.

    Drug Abuse
    Mr. Pavittasked the Secretary of State for the Home Department how many times his Advisory Committee on Drug Abuse has met this year.
    Mr. Sharples: The non-statutory Advisory Committee on Drug Dependence was disbanded at the end of last year. The new statutory Advisory Council on the Misuse of Drugs will be established next month.
    Mr. Pavitt: Is the hon. Gentleman aware that a supply of so-called Chinese heroin is persistently available in a main London street? As no Advisory Committee is sitting at this time, will he take other action to stop this racket?
    Mr. Sharples: This is a matter which the police have very much in mind, and they have taken certain action.

    Vandalism
    Mr. Dormandasked the Secretary of State for the Home Department what plans he now has to reduce vandalism.
    Mr. Carlisle: A strong and effective police force is the best deterrent to vandalism. The measures my right hon. Friend is taking to strengthen the police are already showing results. The Criminal Damage Act, which became law on 14th October, provides a maximum penalty of 10 years' imprisonment for most offences of criminal damage, and a maximum of life imprisonment for certain grave offences.
    Mr. Dormand: I wish the Minister well in those proposals. Is he aware that there is a greater public concern about vandalism than ever and that the problem needs to be looked at from two points of view? First, there is the short-term aspect. There need to be greater penalties of the kind described by the Minister. Second, from a long-term point of view there needs to be a study in depth of the causes of vandalism, some of which do not seem to fit the theories that many of us hold.
    Mr. Carlisle: I agree with the hon. Gentleman. There is concern. It is often difficult to arrest individual offenders for this type of offence. As to a study in depth of the causes of vandalism, if we all knew more about the causes of crime generally we might be able to reduce the crime figures.
    Mr. John Page: Does my hon. and learned Friend agree that the public feel that one of the most annoying results of vandalism is the damage to telephone boxes? Will he have discussions with our right hon. Friend the Minister of Posts and Telecommunications to see whether a system of lights or bells can be used so that such vandalism is more likely to be stopped sooner and the culprits arrested?
    Mr. Carlisle: All types of vandalism are disquieting, but I will certainly take up with my right hon. Friend the suggestion my hon. Friend has made.

    Police Dogs
    Mr. Frank Allaunasked the Secretary of State for the Home Department if he will make a statement on his policy towards the use of police dogs in industrial disputes and also at political meetings.
    Mr. Maudling: It would be contrary to normal practice to use police dogs at industrial or political gatherings.
    Mr. Allaun: Does the Home Secretary realise that the sending of police dogs to trade union meetings is more likely to provoke than prevent trouble? Therefore, will he consider dropping a hint to chief constables about the question, particularly in the light of last month's incident at London Airport, where police dogs actually bit a man and helped to provoke an industrial stoppage?
    Mr. Maudling: I do not think that further guidance to chief constables is required. A circular was issued by the Home Office in 1963 stating that:
    "The Secretary of State wishes to draw attention to the special dangers of using dogs in the handling of even comparatively small crowds …".
    The incident at London Airport involved British Airports Authority police, not the ordinary police, and is therefore not my responsibility but that of my right hon. Friend the Secretary of State for Trade
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    and Industry. I understand that a full inquiry is going on.
    Mr. Heffer: Will the Home Secretary reconsider his previous reply and issue a definite, clear Government statement that under no circumstances should police dogs be used in industrial disputes, where their use is a provocation and exacerbates a situation that may already be difficult? Under such circumstances, the Government must give a clear lead.
    Mr. Maudling: I think that the instructions are quite clear. We believe that the circular issued by my predecessor in 1963 is absolutely right. The Commissioner has given general orders that dogs should not be used at demonstrations or political or industrial meetings.

    Licensing Law
    Mr. Farrasked the Secretary of State for the Home Department when he expects that the Committee of Inquiry into the Liquor Licensing Law in England and Wales will publish its report.
    Mr. Carlisle: I would refer my hon. Friend to my reply to a Question by the hon. Member for Rugby (Mr. William Price) on 24th November.—[Vol. 826, c. 406.]
    Mr. Farr: Is my hon. and learned Friend aware that there is nothing fundamentally wrong with the British pub, that it is the envy of the world, that it is part and parcel of our country scene and that it does not need altering in any fundamental manner?
    Mr. Carlisle: We all have our own views on the position of the British pub, but I should have thought that my hon. Friend would agree that the whole range of our licensing laws certainly requires looking into.

    Legal Aid
    Mr. David Stoddartasked the Secretary of State for the Home Department in what proportion of cases reasons are given when legal aid is refused to applicants.
    Mr. Carlisle: I regret that this information is not available. Courts are not required to give reasons for refusing legal aid in criminal proceedings.
    Mr. Stoddart: That is a most unsatisfactory answer. It is a great pity that

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    the hon. and learned Gentleman does not have some kind of information. I have been told that many people are refused legal aid on no apparent grounds, aid which is probably due to them. Will the hon. and learned Gentleman reconsider the position with a view to amending the Criminal Justice Bill to provide that applicants for legal aid are given the reasons for refusal?
    Mr. Carlisle: My original answer was factual, that the information was not available. It is true that Justice and a memorandum from the Law Society have made this recommendation recently. Such views will be considered, but it is important to realise that the take-up of legal aid in magistrates' courts has increased enormously in the past four years.

    Republic of Ireland (Extradition Agreement)
    Sir T. Beamishasked the Secretary of State for the Home Department if he will list the offences under the provisions of the reciprocal extradition agreement between the Irish Republic and the United Kingdom; whether he proposes to seek an extension of this agreement to include other offences; and if he will make a statement.
    Mr. Maudling: Our extradition arrangements with the Irish Republic are based on reciprocal legislation which covers indictable offences and summary offences punishable on summary conviction with six months' imprisonment. I see no need to seek to extend these arrangements to lesser offences.
    Sir T. Beamish: Is my right hon. Friend aware that, although this agreement on the face of it seems satisfactory, all too often its provisions can be frustrated in the Irish courts for what seem to be quite spurious reasons? Is he further aware that there is widespread and strong feeling about this matter and, although I do not ask him to comment in detail now, would he be kind enough to convey this view to the Irish Government?
    Mr. Maudling: My hon. and gallant Friend voices a view that is well known in this country. It would be bad enough if I were to comment on the action of the courts in this country, but it would
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    certainly be wrong and improper of me as Home Secretary to comment on the actions of courts in another country.
    Mr. Chichester-Clark: Whether or not my right hon. Friend comments on this matter, will he at least consider setting on foot a study to look into how the practice of extradition is in conformity with the Irish Republic's own law, and indeed with international law? If necessary, will he consider taking this matter to the International Court of Justice?
    Mr. Maudling: I would be prepared to consider any suggestion put to me that the arrangements are not satisfactory.

    Complaints against Police
    Mr. Fowlerasked the Secretary of State for the Home Department what action he intends to take on the report of the Home Office committee he has received dealing with complaints against the police.
    Mr. Maudling: I will, with permission, answer this at the end of Question time.

    Soliciting
    Mr. Hollandasked the Secretary of State for the Home Department when he expects to complete his departmental review of the law concerning soliciting by men and women, with particular reference to the decision by the Queen's Bench in Crook v. Edmondson in 1966 on this subject.
    Mr. Carlisle: The review is of a wide range of vagrancy and street offences, including the nuisance which my hon. Friend has in mind. I cannot yet forecast when it will be completed.
    Mr. Holland: Would my hon. and learned Friend not agree that the judgment in 1966 not only classified women as second-class citizens in this area of the law but also revealed a discrepancy in the Sexual Offences Act—a discrepancy which should be dealt with as soon as the opportunity arises?
    Mr. Carlisle: I would not accept that the judgment classified women as second-class citizens. I agree that it threw up a discrepancy in the working of the Sexual Offences Act. This is the reason for the review.

    Shoplifting
    Mr. Adleyasked the Secretary of State for the Home Department if he will now introduce legislation to control the trading habits of supermarkets in regard to their methods of apprehending people whom they suspect of shoplifting.
    Mr. Sharples: No, Sir.
    Mr. Adley: Is my hon. Friend aware that the police are concerned about the different attitude as between one company and another? Is he also aware that in one case the county police force is refusing to prosecute cases brought by certain companies? Would he look into the situation since this problem is worrying not only police but also many housewives?
    Mr. Sharples: Yes, Sir. As my hon. Friend knows, a working party is considering all these matters, together with the useful suggestions put forward by my hon. Friend.

    Acquitted Persons (Compensation)
    Mr. Clinton Davisasked the Secretary of State for the Home Department in how many cases in 1970 and 1971 compensation was allowed to persons acquitted by criminal courts after spending a long period in custody before trial.
    Mr. Carlisle: In this period ex gratia payments were made to three convicted persons subsequently acquitted by the Court of Appeal either on appeal or following a reference to that Court under Section 17 of the Criminal Appeal Act, 1968. There were no payments to persons acquited by the court of trial.
    Mr. Clinton Davis: Is this not an appalling situation and should not the Home Office give urgent attention to the situation which now prevails in France and Germany, where arrangements have been made to give generous compensation to people who have been detained for long periods and ultimately acquitted?
    Mr. Carlisle: I do not accept that it shows an appalling situation. The position has always been that ex gratia payments are made from public funds to those acquitted only where there has been some negligence or misconduct on the part of the police or some other public authority or official.

  MULTINATIONAL AND INTERNATIONAL COMPANIES
  Mr. David Stoddartasked the Prime Minister whether he will seek to convene a meeting of heads of Government to seek agreement in principle for intergovernmental action to supervise the activities of multinational and international companies.
  The Prime Minister (Mr. Edward Heath): I see no need for such a meeting of Heads of Government. Her Majesty's Government are, however, represented on a Working Party of the Organisation for Economic Co-operation and Development in which member countries exchange information on their policies towards multinational companies.
  Mr. Stoddart: Is the Prime Minister aware that that is a most unsatisfactory answer? Is he further aware that his complacency on this and on other matters frightens many of us—[HON. MEMBERS: "Reading!"] Well, the Prime Minister was reading, was he not? Does the Prime Minister not agree that these organisations, which recognise no rôle other than that of maximising profits, represent one of the greatest social evils of the present day and have already been responsible for factory closures and widespread unemployment—[HON. MEMBERS: "Too long."]—and that their activities in under-developed countries have viciously exploited the poor and unorganised people in those areas? Will he not reconsider—
  Mr. Speaker: Order. The Prime Minister.
  The Prime Minister: The hon. Gentleman made a series of unsubstantiated allegations which are completely unjustified. This is an important and, for some of us, an extremely interesting subject, but it is ridiculous for the hon. Gentleman to make the wide statement that these international companies know no laws. Many areas of this country, especially those which suffer from heavy unemployment, owe a great deal to foreign investment. They will not be encouraged by the hon. Gentleman's attitude. Similarly, the invisible exports of this country benefit very much from our own international companies based here. This has a tremendous effect on

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  our balance of payments, for which the hon. Gentleman should be grateful.
  Mr. Tapsell: While we on this side of the House would wish to dissociate ourselves from the irresponsible remarks of the hon. Member for Swindon (Mr. David Stoddart), will my right hon. Friend accept that there is a real problem here which is of crucial importance to international trade and the level of our prosperity and employment? Is my right hon. Friend aware that, particularly in the operations in the Eurodollar market, some of these great international companies have more influence than any decision made by central banks and that some degree of control by Governments over this market is overdue?
  The Prime Minister: I am prepared to examine any problem arising out of the existence of great international companies. This is the reason that the O.E.C.D. Working Party has been set up and for our being represented on it. The matter to which my hon. Friend refers is one aspect of the leads and lags in international trade. It is obvious that any company with great trading income and capital assets is able more than others to influence international movements of currency. But this is not a matter where Governments usually exercise control over companies of any kind. Every Government knows the problems of dealing with leads and lags. This is one aspect of that problem.
  Mr. Thorpe: Is the Prime Minister aware—
  An Hon. Member: Why is the right hon. Gentleman not in his usual place?
  Mr. Thorpe: Discounting any geographical positioning in which temporarily I may find myself, is the right hon. Gentleman aware that the complexities of international corporations are the sort of problem which we shall be able to tackle more effectively on a multinational basis when we are members of the enlarged European Community?
  The Prime Minister: I very much agree with the remarks of the apparently former Leader of the Liberal Party. It is also true that entry will immediately bring us into the area of European company law through which we shall be able to deal with European international companies.
  Later—
  Mr. Stoddart: On a point of order, Mr. Speaker. I wish to give notice that, in view of the unsatisfactory nature of the reply given to my Question No. I to the Prime Minister, I shall seek to raise the matter on the Adjournment—
  Mr. Speaker: Even had that intimation had any real significance, it is too late.

  STIRLING AND FALKIRK
  Mr. Ewingasked the Prime Minister what plans he has to pay an official visit to the constituency of Stirling and Falkirk.
  The Prime Minister: None at present, Sir.
  Mr. Ewing: Will the Prime Minister reconsider that decision so that he can see for himself the industrial anxiety to which his right hon. Friend the Secretary of State for Scotland referred at St. Andrews on Tuesday?
  Is he aware that we are continually being told that employment prospects in Scotland will improve when in fact they are deteriorattig and that unemployment in Scotland is a national scandal?
  The Prime Minister: I fully realise the difficulties. I should have thought that the hon. Gentleman could also proclaim aloud that B.P. has announced that its base for the development of offshore oil from Scotland will be in his constituency.

  PRIME MINISTER (CORRESPONDENCE)
  Mr. Carterasked the Prime Minister how many letters he has now received since taking office on matters for which he is responsible.
  The Prime Minister: About 128,000. Sir.
  Mr. Carter: May I ask the Prime Minister how many of those letters in recent days have urged him to add substance to Press speculation and to announce a massive reflationary programme?
  Is he aware that, without such a programme, unemployment this winter could

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  rise by as much as a third and that in those circumstances the only demand of the British people would be for a General Election?
  The Prime Minister: I have already explained the problem about the breakdown of letters on this scale.
  Mr. Atkinson: Returning to the question of unemployment, is the Prime Minister aware that his right hon. Friend the Chancellor of the Exchequer blames the present level of unemployment on the Labour Party? Does he recollect his own remarks, that unemployment is due to high wages? Which is the Prime Minister now backing? He cannot have both.
  The Prime Minister: Of course it follows that it was the Labour Government which released the enormous wage pressure.

  PENSIONS
  Mr. Lamondasked the Prime Minister if he is satisfied with the co-ordination between the various Departments responsible for retirement pensioners; and if he will make a statement.
  The Prime Minister: Yes, Sir. The Secretary of State for Social Services maintains close contact with other Ministers on all matters affecting retirement pensioners.
  Mr. Lamond: Nevertheless, did the Prime Minister notice the reply given by the Minister of Posts and Telecommunications the other day in which he said that he had received no fewer than 25 petitions calling for pensioners to receive free television licences? Although we are sympathetic to these petitions, does this not illustrate that pensioners are being browbeaten into accepting that they must now ask for charity? Will the Prime Minister take the proper course of returning to these pensioners their dignity by giving them an immediate increase which will enable them to live at the present high cost of living without having to come begging to the House of Commons?
  The Prime Minister: I recognise the view which the hon. Gentleman has expressed and which was put forward by petitioners. The plain fact is that the
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  real value of the pension this Christmas will be higher than its value at Christmas 1969, the last under the Labour Government, and higher than at any previous Christmas.
  Mr. Raphael Tuck: Is the Prime Minister aware that hundreds of thousands of pensioners are not receiving their advertised £1 increase because they are on supplementary benefit? Will he try to persuade his right hon. Friend the Secretary of State for Social Services to give these pensioners their £1 increase which was so widely advertised by the Government?
  The Prime Minister: The hon. Gentleman knows that under all Administrations when pensions are increased there is always an adjustment of supplementary benefit.

  UNEMPLOYMENT
  Mr. James Hamiltonasked the Prime Minister if he is satisfied with the co-ordination between all the Departments responsible for the unemployed; and if he will make a statement.
  The Prime Minister: I would refer the hon. Member to the answer I gave on 23rd November to a Question from the hon. Member for Bolsover (Mr. Skinner).—[Vol. 826, c. 338.]
  Mr. Hamilton: Does the Prime Minister agree that, without exception, all his Ministers concerned with unemployment, since they first introduced their mini-Budget after the General Election, have been making different statements about the unemployment situation? Will he now, as Prime Minister, assure us that the Chancellor of the Exchequer will make a statement and that all Ministers will be in accord and on the self-same wavelength? Will he also assure us that, as Prime Minister, he will tell the country that there will not be one million unemployed by February next year?
  The Prime Minister: We have recently debated all these matters in the House.
  Mr. Hamilton: Answer the question.
  Mr. Onslow: Will my right hon. Friend tell us whether, following his meeting with the T.U.C. yesterday, he found its attitude to unemployment rather more constructive than that of the Opposition?
  The Prime Minister: It was indeed. In a very valuable discussion lasting an hour and a half we considered a variety of proposals which the T.U.C. wished to put before us, and we undertook to examine all of them. We also had a very detailed analysis of the reasons for the present level of unemployment and how best it can be dealt with.
  Mr. Grimond: Now that there are, unfortunately, very large unemployed resources in the country, may I ask the Prime Minister whether he agrees that a great deal more could be done to improve the living conditions and environment of the communities in which the unemployed live? Will he consider setting up machinery by which there can be consultation between Government Departments and between Government Departments and local authorities with a view to getting this work done?
  The Prime Minister: That machinery already exists. What is more, under the Department of the Environment, a great deal of action has been taken—to a considerable extent because of the level of unemployment and therefore the available resources to deal with the problems mentioned by the right hon. Gentleman. I need only call his attention to increased road programmes in the regions which have high unemployment, the clearance of derelict areas, for which specially increased grants have been given, which is now going apace, and, what I find in my contacts in the country to be one of the most important, the increased improvement grants for housing over the next two years, of which great advantage has been taken.
  Mr. Dell: Is the Prime Minister aware that in Birkenhead unemployment is now virtually double what it was a year ago and that it is substantially higher than it has been at any time for which comparable records have been taken? Will he tell us why there cannot be a special development area on Merseyside?
  The Prime Minister: We have to concentrate the resources available into the areas which have the greatest problems. Every Government have dealt with the problem in this way. We have extended special development areas in other parts of the country to concentrate resources upon them.

  SECRETARY OF STATE FOR DEFENCE
  Mr. McManusasked the Prime Minister whether he will ask the Secretary of State for Defence to resign.
  The Prime Minister: No, Sir.
  Mr. McManus: While attempting to make allowances for that particularly arrogant answer, may I ask whether the Prime Minister is aware that on the national television network on 16th November the Secretary of State for Defence, referring to 14 men who had been interrogated in depth, said:
  "but you must remember that those who were being questioned are murderers."?
  He spoke those words against men who cannot even raise a voice in their own defence. Will the Prime Minister explain how a man who can make such an outrageous allegation against defenceless men can retain the degree of credibility or confidence which is necessary in a high-ranking Minister of State?
  Is he further aware that in my constituency the Army is at the moment performing the disgusting habit of going from house to house asking the religion of certain occupants? Will he give the House his assurance that this will cease forthwith?
  The Prime Minister: Those who are detained in Northern Ireland are detained because they are members of the I.R.A.—[HON. MEMBERS: "No."]—and they are, therefore, members of an organisation which uses violence and is pledged to violence—[HON. MEMBERS: "Not true."]—or they are detained because they are believed to be a danger to security. That is why they are detained, and we have set up a Committee to ensure that this matter is examined because they cannot be taken for trial. In the debate on Northern Ireland the right hon. Member for Dundee, East (Mr. George Thomson) used the expression "known gunmen". There is, therefore, no difference between us.
  Mr. Duffy: If members of the Government are permitted to make judgments of this kind about men who have not yet been tried, what is the point of the Prime Minister setting up the Brown Committee?
  The Prime Minister: The Brown Committee is able to examine whether they should be kept in detention. In all cases where the Brown Committee has recommended that they should be released, they have been released.
  Mr. Biggs-Davison: If resignation is indicated is not it rather indicated for hon. Gentlemen who find a conflict between their political ideologies and the oath that they have taken as Members of this House?
  Hon. Members: In Salisbury?
  Mr. Harold Wilson: The right hon. Gentleman will recall that some aspects of this matter were discussed in our two-day debate, and that I suggested that some of them should be the subject of all-party discussions here and in Northern Ireland. Is the Prime Minister aware that some of the anxieties here probably are due to the fact that the decision on internment was not taken by this House or a Government responsible to this House, but taken elsewhere, and that that is why we are anxious that charges should be notified to those who have been interned? If it is a fact that 14 detainees have been accused of being murderers, is not it open to them to take civil remedies against the Secretary of State for Defence by suing him for defamation?
  The Prime Minister: That is a matter for them and for those from whom they seek advice. I cannot give judgment on a legal matter of that kind.
  On the right hon. Gentleman's other question, when I wound up the debate on Monday night I undertook that the Prime Minister of Northern Ireland and my right hon. Friend the Home Secretary would look into the right hon. Gentleman's suggestions. They are already examining some of them to see whether they could be met in the context of internment.
  The reason why the action is taken by the Prime Minister of Northern Ireland is, as I have said before, that the powers lie in Northern Ireland under the Acts of 1920 and 1922. They do not rest with this Government.
  Mr. Farr: Has my right hon. Friend's attention been drawn to the murder of a constituent of mine, Private Benner, in the Republic yesterday? May I ask my right
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  hon. Friend what representations he has asked the Foreign and Commonwealth Secretary to make to the Irish Government about it?
  The Prime Minister: I have seen reports of this terrible incident. At the moment, it is being fully examined. I should not like to comment until we receive reports from Northern Ireland.
  Mr. Orme: Is the Prime Minister aware that Lord Carrington's remarks have created a great deal of difficulty in Northern Ireland, because he has prejudged cases which have not been tried and some people who have since been released? Will the Prime Minister agree that Lord Carrington's leadership in this matter, with its emphasis on defence instead of on political action by this Government, is leading to a deterioration of the situation in Northern Ireland?
  The Prime Minister: I know that that is the hon. Gentleman's thesis. He also knows that I cannot accept it. We pay tribute, quite rightly, to the work of our forces in Northern Ireland. It does not lie in the hon. Gentleman's mouth to criticise the Secretary of State for Defence.

COMPLAINTS AGAINST POLICE (INVESTIGATIONS)
The Secretary of State for the Home Department (Mr. Reginald Maudling): With your permission, Mr. Speaker, and that of the House, I will now answer Question No. 28.
My right hon. Friend the Secretary of State for Scotland and I have considered the report of a working party which examined the procedure for investigating complaints against the police.
We agree with those recommendations made by the working party which aim at bringing about substantial improvements within the existing framework. We propose to cover these points in a circular about which we are consulting the bodies represented on the police advisory boards. They include recommending police authorities to develop their supervisory rôle under the Police Acts; encouraging chief officers of police to borrow officers from other forces to conduct investigations of serious complaints; and advising

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them to take greater trouble in explaining to complainants what action has been taken on their complaints.
As police authority for the Metropolitan Police District, I have myself agreed with the Commissioner of Police that serious complaints against his officers will in future be investigated by officers from other forces; and I have approved organisational changes to enable the handling of complaints to be concentrated in a single unit directly responsible to the Deputy Commissioner.
My right hon. Friend and I are well aware of concern that, in addition, an independent element should be brought into the handling of complaints. It is already a statutory requirement that a complaint about any behaviour which may involve a criminal offence must be referred to the independent judgment of the Director of Public Prosecutions, or in Scotland the procurator-fiscal. I am making it clear to all concerned that, once a case has been referred to the Director, it is his responsibility to consider whether further inquiries should be made or additional statements taken, and that it is open to him to propose that further inquiries should be undertaken by an officer from another force. My right hon. Friend is satisfied that investigation of all such complaints in Scotland is entirely under the control of the procurator-fiscal. It is further being arranged that the Director or the procurator-fiscal will in future himself inform a complainant direct of his decision whether or not the police officer complained of should be prosecuted.
In the more serious cases, therefore, the crucial decision is reserved for the independent judgment of the Director or the procurator-fiscal. The working party considered whether an independent element might also be brought into the handling of less serious complaints which at most involved the possibility of some breach of discipline. Some members thought that it might be possible for the report of the police officer investigating a complaint to be referred to an independent solicitor for a confidential opinion on what disciplinary charges, if any, should be brought. An alternative suggestion was that the procedure in individual cases might be open to examination by an outside review body
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after proceedings on the case had been concluded.
But my right hon. Friend and I believe that the suggestions are open to considerable practical objections and that they would not command general confidence. Where no possibility of a criminal charge is involved, the chief officer of police, who is responsible for discipline, must be responsible for what is done about complaints, subject, of course, to the continuing supervision of the police authority.
Mr. Fowler: I congratulate my right hon. Friend on making that very important statement. Does he agree that the additional checks he has announced have important advantages for both the public and the police: for the public, to establish the complete impartiality of the police; for the police, to establish what many of us already believe, that the general standards of the British police are exceptionally high?
Mr. Maudling: I hope and believe that that will be so. I know that the police themselves are very anxious not only that justice should be done, but that it should be seen to be done in all cases.
Mr. Callaghan: Am I to conclude from the right hon. Gentleman's answer that the report of the working party was not unanimous? Does the right hon. Gentleman intend to publish the report of the working party, and will he do so?
While it seems, though I have never doubted it myself, that the procedure in criminal cases is satisfactory in terms of references to the Director of Public Prosecutions, is the right hon. Gentleman aware that his answer will not remove the disquiet which is felt about the police judging their own cases? I do not think that the procedure which the right hon. Gentleman is proposing will remove that. Is it possible for him to look once again at the possibility of introducing an independent element at some stage in the consideration, either of the procedure or at the time that charges are brought, to determine which charges shall be brought, while leaving unimpaired the chief constable's right, which must be a right in a disciplined force, to determine what is the ultimate answer? If the right hon. Gentleman is to give general confidence not only to the police but to the public,

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there will be greater satisfaction if at some stage in the procedure an independent element is introduced.
Mr. Maudling: It was always the understanding that the working party's report would not be published. It did its work on that basis. Therefore, I cannot disclose the contents of the report.
The right hon. Gentleman's second point is a very difficult matter. I am concerned both with assuring people that complaints against the police are investigated properly and with the morale of the police. It is too easy to complain about the police. Anyone can always make a complaint. If he scores with his complaint, he wins; if it is shown to be foolish, he loses nothing.
In a disciplined force the man responsible for discipline must take decisions about disciplining his own members. I call the right hon. Gentleman's attention to what I said in the last sentence of my original answer about the continuing supervision of the police authority. Supervision is necessary in these matters. The police authority is the right body to do that supervising.
Mr. Callaghan: While acknowledging what the right hon. Gentleman says in the last words of his original answer, may I ask whether he will take it from me that the disquiet will not die down as a result of his answer? Will he consider returning to the working party and seeking its permission to publish its report so that it can be seen what considerations were involved? It seems to me that the answer to my first question is that the working party was not unanimous.
Mr. Maudling: It is quite possible that it was not unanimous. People of independent judgment often have different views. However, I think that this is the right way in which to handle the matter. I believe that we should see how it works. I believe, further, that it will deal with the existing anxiety. If it does not, we shall have to think again about the practice.
Mr. Burden: I draw my right hon. Friend's attention to the irregularities that have recently taken place in the Leeds police force, particularly the fact that the Chief Constable of Leeds stated on television only a few nights ago that
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he would resist any investigation into the Leeds police force. Is it not right and proper that when there is anxiety about a particular police force the police authority or some other authority should have the right to go above the chief constable to institute investigations? The main point which was disquieting to anybody who saw that television broadcast was that the Chief Constable implied that the standards of police could be different when they were on duty and in uniform from when they were going about as private citizens. I ask my right hon. Friend to get a re-run of that interview.
Mr. Maudling: There is some doubt about what the Chief Constable said. I have asked the police authority to come and discuss this matter with me. After that discussion I shall take whatever action I think is necessary.
Mr. John Fraser: Will the Home Secretary look again at the question of the independent investigation? If the element of independence is to be with the Director of Public Prosecutions, it may be wholly unfair to a police officer who has already run the gamut of an investigation and then has to be further investigated by the Director; so in some circumstances it is unfair to a police officer.
At the same time, is the right hon. Gentleman aware that there is a crisis of confidence in the police, particularly among members of the coloured community, and that this will never be assuaged unless there is an element of independent investigation at the beginning? If that element is built in, it will make for better confidence on the part of both the police and the general public, because co-operation with and confidence in the police by the whole community, including the coloured community, is essential for the maintenance of law and order.
Mr. Maudling: As I said, it is the case now, and it will be even more so under the new arrangements, that where criminal offences or possible criminal offences are involved the Director of Public Prosecutions must deal with the matter. I do not accept the argument about a crisis of confidence in the police. I believe that, by and large, our police forces command enormous support and confidence from the people.
Mr. Braine: Is my right hon. Friend aware that the introduction of an element of independent inquiry will be welcomed by the police and by the public—by the police because of the triviality of many of the complaints reaching them, and by the public who want to be assured that the police are not judge and jury in their own case? Nevertheless, is my right hon. Friend aware also that his readiness this afternoon to see how this works out in the light of experience will be generally welcomed by the police themselves?
Mr. Maudling: As I said, I am sure that the police themselves are anxious that the right thing should be done and should be seen to be done. It is very much in their interests that it should be so.
Mr. Merlyn Rees: The matter raised about the Leeds police is an important matter in the area. Can we get it clear that the procedure that the right hon. Gentleman has announced today has nothing to do with any inquiry that the right hon. Gentleman could raise in the future, that that would come under Section 32, concerned with the administration of the police, that he has explained clearly his view on that, and that the hon. Member for Gillingham (Mr. Burden), who raised the question of the Leeds police today, raised it in the wrong context, because the police have already appeared in the courts? It is important that no one should think that anything that the right hon. Gentleman has said today could affect any inquiry that might be made into the Leeds police.
Mr. Maudling: That is quite correct. On the question of the Leeds police, there is a feeling that in general there is something that should be investigated. I intend to determine my own attitude on this and how to use my powers after consulting the police authority. I was speaking today about general cases.

QUESTIONS TO MINISTERS
Mr. Raphael Tuck: On a point of order, Mr. Speaker. On 22nd November I tabled a Question to the Home Secretary asking him if he would make illegal the pernicious practice known as pyramid selling. Since tabling that Question I
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have received numbers of tragic letters from people who have been conned out of their savings—
Mr. Speaker: Order. The hon. Member was kind enough to give me notice of a point of order. He must not go into the merits. This is purely a point of order.
Mr. Tuck: I will not go into the merits, Mr. Speaker. I want to bring to the Minister's attention the fact that these people have been conned out of their savings by the promoters of these schemes—
Mr. Speaker: Order. The hon. Gentleman cannot do that on a point of order.
Mr. Tuck: —and to ask him whether he will take action. Two days later the Home Office transferred the Question, as it was undoubtedly entitled to do, to the Secretary of State for Trade and Industry, but I received no word that the Question had been transferred. The Question is now No. 62 today and has no prospect of being reached, and I am placed in the embarrassing position that I can neither bring these matters to the attention of the Secretary of State for Trade and Industry nor ask him to take action. Where do I go from here?
The Secretary of State for the Home Department (Mr. Reginald Maudling): Further to that point of order, Mr. Speaker. I understood that the hon. Gentleman was informed. If the message did not reach him, I am sorry. Perhaps we could go somewhere else and examine why the message did not reach him.
Mr. R. C. Mitchell: On a point of order, Mr. Speaker. I want to raise with you a matter regarding Written Questions. The facts are these. On Wednesday, 24th November, I tabled a Written Question to the Secretary of State for the Environment for answer on Monday, 29th November. I received a little note on Monday, 29th November, telling me that the Question had not been overlooked. On Monday the 29th, the very day that my Question was due to be answered, an hon. Member opposite tabled an almost identical Question for Oral Answer today. I still have not received an answer to my Question. Could you, Mr. Speaker, make inquiries about this case, which looks very much like sharp practice?
Mr. Speaker: The question of transfers of Questions is not for the Chair, but I will certainly look into the hon. Member's complaint.

BUSINESS OF THE HOUSE
Mr. Harold Wilson: May I ask the Leader of the House to state the business for next week, and perhaps, if he is able to, give us an early intimation of the arrangements for the Christmas Recess?
The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): Yes, Sir. The business for next week will be as follows:—
MONDAY, 6TH DECEMBER—Second Reading of the Housing (Financial Provisions) (Scotland) Bill.
Motions on the Anti-Dumping Duty (No. 5) Order and the Iron and Steel Regulations.
TUESDAY, 7TH DECEMBER—Supply (5th Allotted Day): A debate on Development Areas in England.
Second Reading of the National Insurance Regulations (Validation) Bill.
WEDNESDAY, 8TH DECEMBER—A debate on a Motion to take note of the White Paper on Public Expenditure to 1975–76 (Command No. 4829).
Motion relating to the Import Duties (Developing Countries) Order.
THURSDAY, 9TH DECEMBER—Supply (6th Allotted Day): Conclusion of the debate on the Public Expenditure White Paper.
At 10 o'clock the Chairman will put the Question on the Civil Vote on Account and the Winter Supplementaries.
FRIDAY, 10TH DECEMBER—Private Members' Motions.
MONDAY, 13TH DECEMBER—Private Members' Motions will be considered until 7 o'clock.
Afterwards, Second Reading of the Employment Medical Advisory Service Bill.
Motions on the Rate Support Grant (Increase) Orders.
In response to the question asked by the Leader of the Opposition, it may be
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convenient for the House to know that it will be proposed that we should adjourn for Christmas on Wednesday, 22nd December, and resume on Monday, 17th January, 1972.
Mr. Harold Wilson: The right hon. Gentleman, recalling the exchanges that we had last winter—not about Christmas, but about the debate on public expenditure, which last year was a one-day debate—will understand that we welcome the fact that it is to be a two-day debate this year again, as it was in January, 1970.
As the right hon. Gentleman has announced it as a Supply Day, will he confirm that this is purely a matter of parliamentary convenience and that the Opposition are not giving up a Supply Day but will recover the day that we have given to the right hon. Gentleman in due course and following negotiations through the usual channels?
Mr. Whitelaw: I am grateful to the Leader of the Opposition. He is perfectly correct about the arrangements for the debate on public expenditure. Obviously, I confirm that both days for this debate, as was requested by the House, should be in Government time. There are procedural reasons why it is right and helpful to the House to have it as a Supply Day on this occasion. I am grateful to the right hon. Gentleman for agreeing to that. Of course I confirm that the Opposition will be owed a day at some future time, and that matter can be discussed in the future.
Mr. du Cann: Adverting to Wednesday's business, is my right hon. Friend aware that the Select Committee on Expenditure would very much like in future an opportunity to examine, and perhaps report to the House on, the White Paper on Expenditure before the debate takes place, if this proposal was thought to be for the convenience of the House as a whole? If, regrettably, but through nobody's fault, this is not possible this year, may I ask my right hon. Friend whether we could engage in discussions during 1972 to see whether such a process would be possible for that year.
Mr. Whitelaw: The procedure arranged was in response to the proposal, put forward originally by the Select Committee on Procedure, that there should

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be a two-day debate at a time divorced from the normal economic debates and the Budget, and suitably before Christmas. However, since then the Select Committee on Expenditure, of which my right hon. Friend is Chairman, has been formed, and, naturally, if that Committee wishes to take a different view than that previously thought to be for the convenience of the House I am prepared to have discussions with it on that basis.
Mr. Harold Wilson: We on our side feel that the right hon. Member for Taunton (Mr. Du Cann) has raised a valid point, and we are proposing that the debate from this side should be opened by our senior representative on the Committee. Perhaps the right hon. Gentleman will consider this before deciding on the Government speakers. Perhaps he will consider whether we should not follow the procedure we have followed in different kinds of debates on expenditure whereby a senior ranking member of the Expenditure Committee on the Government side will have a special place in the debate, at either the opening or the closing.
Mr. Whitelaw: I note what the right hon. Gentleman says. I am prepared to consider it. The only point I make from the Government's point of view now is that it is our White Paper and, therefore, Treasury Ministers may properly speak to it.
Sir F. Bennett: Last month the Minister of State for Foreign and Commonwealth Affairs reported that there was a confused situation on the borders of East Pakistan. Since then the confusion seems to have been clarified, albeit rather disastrously. It appears that the armed forces of one Commonwealth country are actively engaged on the territory of another. Can we hope for an early statement by my right hon. Friend the Secretary of State for Foreign and Commonwealth Relations as to what, if any, British initiative can be taken in the United Nations or elsewhere to try to prevent this conflict from spreading even further?
Mr. Whitelaw: As my hon. Friend appreciates, my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs has undertaken to keep the House fully informed of this tragic
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and difficult situation as it unfolds, and he will certainly do so. I will call his attention to my hon. Friend's remarks.
Mr. Frank Allaun: Could we have a statement next week from the Secretary of State for the Environment on whether he intends to meet deputations of tenants accompanied by their Members of Parliament on the question of the doubling of rents proposed in the Housing Finance Bill? I ask this question because a vital parliamentary principle is being flouted in that it is a long-standing tradition of the House that a Minister will meet deputations accompanied by their Members of Parliament. The Secretary of State for the Environment has refused two, including one from the representatives of 250,000 London tenants. Yesterday he refused to receive four ladies from the Wythenshawe Estate of Manchester, accompanied by their Member of Parliament. We take very strong exception to this conduct.
Mr. Whitelaw: I will look into the matter and discuss it with my right hon. Friend. I would not like to be committed to the various assertions about rights which the hon. Gentleman has made, but I will look into the matter.
Mr. Ford: Will the right hon. Gentleman find time for a statement by the Government arising from the matters considered by the Commission headed by Lord Boyle of Handsworth?
Mr. Whitelaw: Early next week.
Mr. James Johnson: Will the right hon. Gentleman do me the courtesy of looking at Question No. 83—down for Written Answer—on the Order Paper today, which stands in my name? It asks whether the Secretary of State for Foreign and Commonwealth Affairs will give the terms of the agreement reached about the island of Abu Musa in the Persian Gulf. Is the right hon. Gentleman aware that Iranian forces occupied the island before the Iranian Government reached that agreement? Is he further aware that the Iraqi Government have severed their relations with Britain and Iran? Why does not the Foreign and Commonwealth Secretary make a statement about this? Has he any intention of doing so? Will the right hon. Gentleman be kind enough to tell us what is happening?
Mr. Whitelaw: My right hon. Friend hopes to make a statement to the House early next week.
Mr. Richard: There have been rumours in the Press recently about the possible allocation of a fourth television channel. Will the right hon. Gentleman take note that we on this side would take strong exception to a decision being made on this very important matter before there was any public debate and before a debate in this House? Will he give an assurance on this point?
Mr. Whitelaw: I can give the hon. and learned Gentleman the assurance that no decision of any sort or kind has been taken on that matter. I will bear in mind what he has said.
Mr. Robert Taylor: Has my right hon. Friend had the opportunity to reconsider his decision not to allow the House to debate the Bolton Report? This exceptionally fine report affects very large sections of British industry, and many of us on this side would like to see all the recommendations implemented at the earliest possible opportunity—in particular, the recommendation relating to the Industrial Training Act, 1964.
Mr. Whitelaw: I appreciate the value and importance of the report, and I agree that it has many valuable provisions in it. I cannot offer Government time for a debate before Christmas, but there are other opportunities which might be used in the House for raising the subject.
Mr. James Hamilton: Will the right hon. Gentleman, in deference to Motion 89 standing in my name and the names of many of my hon. Friends, give an assurance that a statement will be made, either by the Prime Minister or by the Chancellor of the Exchequer, about the rumours which are circulating, because this is causing a great deal of controversy in the regions, particularly those where unemployment is so heavy?
[That this House regrets the failure of the Prime Minister to announce whether the Government has decided on further immediate measures to deal with the present appalling level of unemployment, a failure which is the more disturbing because of the uncertainty created by the widespread and apparently officially inspired rumours that the Government is contemplating such measures.]
Mr. Whitelaw: I note what the hon. Gentleman says. I think he must await events.
Mr. Luce: Does my right hon. Friend propose to find time in the near future for a debate on the Green Paper on local government finance?
Mr. Whitelaw: I am afraid I can give no Government time before Christmas for it but I appreciate its value and will see what can be done.
Mr. Arthur Davidson: In view of the concern felt, particularly in Lancashire, about the grave state of the textile industry, could the right hon. Gentleman find time for an early debate on this very important topic?
Mr. Whitelaw: I realise the importance of the subject but I am afraid I could not give a promise of an early debate. But, again, there are other opportunities open to the House for raising the matter.
Dame Irene Ward: My right hon. Friend the Prime Minister has stated that he is having examined all the proposals that have been put forward for trying to deal with unemployment on the North-East Coast. As a number of Government Departments must be involved, can my right hon. Friend say whether we are going to be able to get answers to the proposals which have been made so that we shall know before the House rises for the recess what we may look forward to in the light of these suggestions? That would be very helpful to the North-East, and we are grateful to my right hon. Friend the Prime Minister for having taken so much trouble.
Mr. Whitelaw: I thank my hon. Friend for what she has said. I will see that it is brought to the notice of my right hon. Friends concerned.
Mr. John Mendelson: In some parts of the country, including south Yorkshire, further redundancies are occurring in the steel industry and there is urgent need to bring forward its expansion schemes. Will the right hon. Gentleman, therefore, ask the Secretary of State for Trade and Industry to make a statement about future plans in the steel industry before we rise for the Christmas Recess? In various parts of the country this is a very urgent matter, and the House should

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not adjourn for Christmas before it is discussed.
Mr. Whitelaw: I cannot give the hon. Gentleman any definite commitment but I will, of course, inform my right hon. Friend the Secretary of State for Trade and Industry of what he has said. I certainly note the importance of the matter.
Mr. Hastings: Will my right hon. Friend reconsider his decision about the Bolton Report? Would he not agree that the contribution made by small businesses to the economy and the difficulties which they are currently suffering merit a full debate in the House, and that this Government in particular should provide time?
Mr. Whitelaw: I note what my hon. Friend has said. I must, regretfully, say that I do not have Government time available before Christmas for that, but I shall bear in mind what he has said.
Mr. Alfred Morris: I noted the right hon. Gentleman's reply to my hon. Friend the Member for Salford, East (Mr. Frank Allaun). Is he aware of the disgraceful way in which hon. Members are being treated by the Minister for Housing and Construction? Is the right hon. Gentleman aware that after I had waited 19 days for a reply to my personal and urgent request to that Minister to receive a deputation of Manchester people, to be accompanied by me, the right hon. Gentleman refused that request by means of a verbal message delivered within two days of the scheduled date of arrival of the deputation? That was a monstrous departure from the normal courtesies, decencies and conventions between colleagues in this House, of which the Leader of the House is so jealous. Will he make a statement next week, after making representations to his Ministerial colleague?
Mr. Whitelaw: I have already said that I shall investigate the matter put to me by the hon. Member for Salford, East (Mr. Frank Allaun), and the hon. Gentleman would not expect me, in advance of my investigations, necessarily to accept what he has said. I have undertaken to investigate the matter. I could not undertake necessarily to make a statement myself, but I think it is
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reasonable for the House to accept that I shall look into the matters which have been put to me.
Mr. John Smith: The right hon. Gentleman will be aware that earlier this year the Government published a White Paper dealing with the reform of local government in Scotland, and that before the Summer Recess the other place had an opportunity to debate the matter. Will he tell us when it will be possible for hon. Members from Scotland to discuss this important matter, as everybody appears to be being consulted except them?
Mr. Whitelaw: I note what the hon. Gentleman has said. I cannot see an opportunity of providing Government time in the immediate future.
Mr. Skinner: Is the right hon. Gentleman aware that the result of the miners' ballot has been declared today, showing that 58馷8 per cent. of the 280,000 miners who voted are in favour of a strike? Out of the total electorate, 84 per cent. have voted in a secret ballot, a higher figure than in any General Election since the war. On the basis of that, will the right hon. Gentleman make arrangements for a coal debate as quickly as possible so that we on this side of the House, or some of us at least, can expose the full extent of the Government's interference in the National Coal Board's offer of only 7 per cent. in reply to a justified wage claim, which represents a 5 per cent. cut in real living standards?
Mr. Speaker: Order. The hon. Member must not make the sort of speech that he would make if the debate were allowed.
Mr. Whitelaw: I note what the hon. Gentleman has said. In this delicate matter I do not think that it is for me to comment one way or the other, except to say that I cannot find time next week for a debate on the coal industry.
Mr. Latham: I want to raise with the Leader of the House what I hope he will recognise is a genuine House of Commons matter. When he alludes, as he does from time to time, and as he did today, to "the usual channels", is he referring to the use of the party machinery within the House? If he is,

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will he acknowledge that the Parliamentary Labour Party plays a very important part in that procedure, and presumably so also does the 1922 Committee to a lesser or equal extent?
Would the right hon. Gentleman, therefore, recognise that it is wrong in principle, if the usual channels are to function and decisions are to be taken in the name of back benchers, if those back benchers, by deliberate action of the Government, are deprived of the opportunity of attending meetings at which they may confirm or challenge recommendations made through the usual channels. [Laughter.] I imagine that the mirth is connected with my suggestion that there might be as much democracy in the 1922 Committee as there is in the Parliamentary Labour Party. That is for hon. Gentlemen opposite to decide.
Does not the right hon. Gentleman agree that it is bad practice for the Government, with their majorities in Committees, to insist upon Committees meeting at a time which prevents the proper machinery of the House from operating? Will he accept that I am not concerned with whether this is an old practice or a new one, and that what I am asking him to agree is that it is a bad practice?
Will the right hon. Gentleman also acknowledge—
Mr. Speaker: Order. I am sorry to interrupt the hon. Member, but that cannot arise on the business for next week. It is a matter for the usual channels which he has mentioned.
Mr. Raphael Tuck: We are not as tired now as we shall be, heaven help us, at Easter or Whitsun next—
Mr. Speaker: Order. How does that affect the business for next week?
Mr. Tuck: In those circumstances, I wonder whether the Leader of the House would consider taking a week off the Christmas Recess and giving it back to us at Easter or Whitsun next, when we shall be more tired than we are now? The right hon. Gentleman will remember that I made a similar suggestion last year. He took a week off at Christmas, but he did not add it on at Easter or Whitsun. In fact, he stole it.
Sir H. Legge-Bourke: Before my right hon. Friend answers the question asked by the hon. Member for Paddington, North (Mr. Latham), may I assure him that, unlike the position on the other side of the House, the relationship between the Chairman and back benchers of the 1922 Committee and the Chief Whip is excellent?
Mr. Whitelaw: I am not sure where I have reached, or where I am, but perhaps I may answer the hon. Member for Watford (Mr. Raphael Tuck). The Recess which I am proposing for Christmas is about normal, or perhaps rather shorter than usual. I am dealing with Christmas now, and I do not want to go very much further.
Mr. Latham: On a point of order, Mr. Speaker. Could you help me to understand your Ruling about the matter which I raised a few moments ago. I asked about the usual channels, and I was told to use them. Is the Leader of the House responsible, technically, or not, for the arrangement of the business of the House generally, including the Committees, or are Committees excluded from his province?
Mr. Speaker: Technically, the position is that the Leader of the House is dealing with business for next week, and any question which does not relate to business for next week is, strictly speaking, not in order. That is my Ruling, and that is why I restricted the hon. Member's question. Had the hon. Member been asking for a debate next week, or for a statement to be made next week, he would have been in order, but he was asking for the investigation of a problem. I think that that should take place through the usual channels, and so I rule.

GROUP OF TEN (ROME MEETING)
The Chancellor of the Exchequer (Mr. Anthony Barber): The meeting of the Group of Ten which has just concluded in Rome was in two important respects different in character from the recent meetings of the same group in London and Washington.

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In the first place, the United Kingdom for the first time was able fully to participate in the discussions of the finance ministers of the E.E.C., so as to ensure the fullest co-operation and to facilitate a common approach in the interests of Europe as a whole.
In the second place, the greater part of the Group of Ten discussion was in closed session confined to finance ministers and governors only. This made possible a much fuller and franker discussion of the conditions necessary for the realignment of currencies, the return to fixed parities, and the removal of the U.S. import surcharge and the discriminatory job-development tax credit.
As a result of this discussion lasting over several hours on Tuesday and yesterday, it was agreed that sufficient progress had been made to justify a resumption of the talks at an early date.
As the House will be aware, we have agreed to meet again in Washington on 17th and 18th December.
Mr. Roy Jenkins: I welcome the fact that some progress appears to have been made on a matter of the highest importance for the state of world trade, and also the fact that the next talks will not be long delayed.
Could the right hon. Gentleman tell us what is the main point outstanding for decision? As I understand it, both a change in the dollar-gold price and the matter of the United States surcharge are no longer insurmountable difficulties.
The basic question here is the health of the economies of the world. Could the right hon. Gentleman now, therefore, tell us whether, in view of the appalling and worsening unemployment here, we are to have further measures before Christmas, or whether the matter is to be left to deteriorate still further?
Mr. Barber: I am grateful to the right hon. Gentleman for his remarks about the progress achieved at this meeting. As for outstanding points, I think the right hon. Gentleman will understand when I say that it would be unwise for me to say anything about the details or even the principles which were discussed at the meeting—[Interruption.]—and I do not want to say anything which might prejudice a solution. Having said that,
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I hope the right hon. Gentleman will not press me further.
My answer to the other points which the right hon. Gentleman raised is that, as he knows, successive Chancellors of the Exchequer have always taken the view that speculative stories, however absurd, should be neither affirmed nor denied because to do so inevitably provokes further kite-flying and speculation. I am sure that this attitude is, in general, the right one.
The House will therefore understand why I took no notice of the speculative story which appeared in Monday's Daily Mail, but as the inference drawn from later stories in The Times and the Financial Times was that there was some disclosure of intentions in connection with, or in the course of, international meetings, the circumstances are different, and I therefore thought it right, at the first opportunity after my return this morning, that I should tell the House that such stories were wholly without foundation.
In particular, as the stories which were datelined "Rome" referred to cuts in purchase tax and the use of the regulator, I would only add that there was no discussion or, indeed, mention of these matters, either formally or informally, and, what is more, they are not being considered.
Mr. Roy Jenkins: I accept what the right hon. Gentleman says on this matter, and I am glad that he has cleared it up, though in a way which I believe the Prime Minister might have done a little earlier.
I am concerned not to pursue this point but about the substance of the matter. Is the right hon. Gentleman now telling us that, despite the deteriorating unemployment situation, the rumours are absurd and that he has no intention of putting any further measures before the House in the immediate future?
Mr. Barber: I thought I had made the position clear—[HON. MEMBERS: "No."]—Yes, I have—first in the debate on the Address and next only last week when we debated unemployment. I clearly said that whenever the changing circumstances and the forecasts warranted it, I would not hesitate to take appropriate action, and take it at any time during the financial year.
Mr. Hordern: Is my right hon. Friend aware that the firmness and clarity of his statement will be widely welcomed? [HON. MEMBER: "Oh."] Coming to the Rome discussions, does he agree that they were rather more successful than had been generally anticipated? Will he do his best to ensure that if at the forthcoming talks in Washington there is any question of fixing international exchange rates, they will be fixed with the widest possible margins?
Mr. Barber: One matter for consideration in the Group of Ten is the question of wider margins, and if there are to be wider margins, which, as I have said publicly in the past, I think there should be, then the extent of the widening of those margins.
I have just received authority to inform the House—and hon. Members will realise that I returned from Rome only at lunchtime today—that Mr. Sam Brittan has this morning sent a message to the Treasury saying that, in view of the suggestions that are being made, he wishes to make it clear that the stories that Mr. Peter Jay and he wrote about reflation were not based in any way on anything that had been said by any member of the United Kingdom delegation to the Group of Ten.
Mr. Grimond: Is not this almost unprecedented [HON. MEMBERS: "Hear, hear."] Who is running the Exchequer when the Chancellor is away? I have no doubt that Mr. Brittan and Mr. Jay are important people, and I am glad that they have cleared up this matter.
May I ask the right hon. Gentleman a little more about what he said about not taking further measures to deal with the unemployment situation? There is some real confusion about the Government's intentions in this matter. The Chancellor of the Exchequer has constantly reiterated the view that unemployment was due to inflation created by the Labour Government. Incidentally, a junior Minister said not long ago that it was due to the unprecedented squeeze imposed by the Labour Government. It seems that one can read it either way. The remedy suggested by the right hon. Gentleman so far is further reflation, but this is, clearly, not working—
Mr. Speaker: Order. Is the right hon. Gentleman making a speech or leading up to asking a question?
Mr. Grimond: I have finished my speech. I am now about to ask a question, Mr. Speaker.
Does the right hon. Gentleman intend to take no further measures to increase spending power in the economy? If not, what measures does he now propose to take to cure unemployment?
Mr. Barber: The right hon. Gentleman raises two points. First, he seems to be under a misunderstanding about the reason why I referred to The Times and the Financial Times. I did so simply because the matter was raised by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) on the information which he then had before him and which other hon. Members had before them. I had just returned: I was told that it was a matter of public interest, and I therefore wanted to clear it up.
On the second matter raised by the right hon. Gentleman, I have nothing further to add.
Mr. du Cann: While congratulating my right hon. Friend and his colleagues on the fact that progress is undoubtedly being made in these Group of Ten discussions, and while acknowledging that the unprecedented prosperity of the world since the war was due in large measure to the Bretton Woods Agreement on fixed parities, may I ask him to bear in mind that there is a large and growing volume of opinion which, after deep thought, is clearly of the view that, in general, flexible rates of exchange are better than fixed rates?
Mr. Barber: I said in my statement that the discussion which we had was concerned with the conditions necessary for a return to fixed parities. It is the view of all the members of the Group of Ten that this should be the ultimate aim. I will of course bear in mind what my right hon. Friend said about flexibility. If he is considering matters such as wider margins and so on, then that is another matter.
Mr. Sheldon: Is the Chancellor aware that the most charitable view that can be taken of what he has said is that he is failing to do anything about unemployment because of his desire to achieve some sort of international co-operation

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and not to vary the United Kingdom exchange rate unnecessarily without the co-operation of, in particular, the Italians and the French?
Is the right hon. Gentleman aware that it would be the greatest disaster if we were, in an attempt to show ourselves as good Europeans, to enter the Common Market with far too high an exchange rate, which would limit us severely in the chances we may have?
Mr. Barber: I have said in the past that our first priority in this country must be to ensure that the United Kingdom remains competitive, and that is our view.
Mr. Tugendhat: Does my right hon. Friend agree that one of the principal causes of the lack of sufficient industrial investment in this country and of unemployment is the continuing international crisis and that it is, therefore, the major priority of the Government to ensure that the surcharge and other American measures are lifted? Does he also agree that it is putting the cart before the horse to suggest new measures while the uncertainty persists, when the uncertainty is likely to be brought to an end within such a very short time?
Mr. Barber: I think that all the members of the Group of Ten would agree that the uncertainty which now prevails is an important factor in the deferment of decisions by businessmen.
Mr. Shore: Is the right hon. Gentleman aware that he made an almost complete non-statement, except in relation to what we were privileged to hear from Mr. Sam Brittan. Turning to the substance of the matter, which is the important question of international trade and currency relationships, has he taken the opportunity to urge on the Six that the common agricultural policy and this rather absurd proposal for an economic and monetary union should be among the matters to be discussed and negotiated with the United States in broader and longer-term efforts to establish a more sensible world trade and payments system, which I hope will arise out of the Washington conference?
Mr. Barber: I do not agree with the points which the right hon. Gentleman has made. We discussed a variety of matters, and I do not propose to go into details.
Mr. Kenneth Baker: Does my right hon. Friend appreciate that there will be a warm welcome in all parts of the House for the fact that the countries of Western Europe seem to be resolving their differences of opinion on monetary matters? Would he bear in mind at the meeting in Washington that the uncertainty in international trade is now a major factor in inhibiting the upturn in world business, particularly in the commodity markets and shipping? Since time is not on our side, may I express the hope that some real and effective progress will be made in a fortnight?
Mr. Barber: I agree with the latter part of that question. As for the first part, concerning my discussions with the Finance Ministers of the E.E.C., the position is that it is very important to do everything possible to reach an overall world settlement. As a result of a number of meetings which I had with the Finance Ministers, which, incidentally, for the most part were wholly limited to Ministers of Finance and governors without officials being present, there is no doubt that those discussions were extremely successful and made a real contribution to the progress which we made in the Group of Ten.
Mr. Leadbitter: The right hon. Gentleman has been quite precise on what he is not considering in regard to the deteriorating unemployment situation. He has been less than precise about what he is considering. May I ask him one question about a firm statement that he made? He said that he had nothing further to add. Is it his opinion that the deteriorating state of unemployment is such that he has decided that no new measures are required at all?
Mr. Barber: I said that I had nothing further to add to what I said in our whole day's debate on unemployment last week.
Mr. Bruce-Gardyne: Would my right hon. Friend not agree that there is another aspect to the question of the return

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to fixed parities, even with wider margins? Is it not a fact that one of the major terms of the Bretton Woods Agreement up to 15th August was that international traders would be prepared to accept the polite fiction that exchange rates were immutable? Surely it will be very difficult, whatever agreements are made, to re-establish that polite fiction now?
Mr. Barber: There is no doubt—my hon. Friend's views are well known—that if we can reach agreement in the Group of Ten on a return to fixed parities on a new pattern of parities, with the removal of the United States surcharge and the discriminatory job-development tax credit, this will make a significant difference to business prospects throughout the world.
Mr. Albu: In the Chancellor's reference to reports in the Press about Treasury matters, he laid most emphasis on the fact that these were not discussed in the meeting which he had with other Finance Ministers—which was never suggested in the Press. Do I understand him to confirm that he has no proposals under consideration for other immediately reflationary measures? I am referring to them having been discussed not with the other Finance Ministers but in the Cabinet here at home.
Mr. Barber: On the specific matters to which I referred, and also with regard to the more general matters which we discussed on Tuesday of last week in the unemployment debate, I have nothing further to add to either.
Mr. Roy Jenkins: As the Chancellor has nothing immediate to put forward at home, does this mean that he has returned to his July view—however mistaken that then proved to be—that unemployment would level out over the next two months and then begin to come down?
Mr. Barber: No. Sir. The fact is that, as the right hon. Gentleman knows only too well, I did, both a month or so ago in the debate on the Address and again only last week, set out the Government's position at considerable length. What I have said is that I have nothing to add
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to the explanation which I gave at that time.
Dame Irene Ward: While my right hon. Friend and the House are waiting for the next stage of the Group of Ten meetings, would it not perhaps be helpful if my right hon. Friend, when referring to what he said in the debate on unemployment, just set out the figures of money which has been made available through various Ministers into the economy to bring forward all sorts of good schemes which are needed in the constituencies? This would be helpful. Would he bear in mind that it is very difficult for the country to remember all that is said when they are worried about unemployment? It is helpful to know what is done. We should like him to let us know the amount of money. We hope that the local authorities are taking advantage of the opportunities which have been offered to them. We would be grateful if he would just repeat this.
Mr. Barber: I think that this is a very good idea. If my hon. Friend will put down a Question, I will answer it. If she wishes to have any assistance with the drafting of the Question, I am at her disposal.
Mr. Joel Barnett: Although the House will be glad if the right hon. Gentleman can achieve success at his next meeting, is he aware that he, as Chancellor, has created a unique situation? Instead of taking advantage of a unique opportunity for economic growth, he has created an economic shambles. The only effect of his statement can be to delay increasing consumption and increasing investment. His statement is disastrous. To tell us now that Samuel Brittan and Peter Jay say something or other instead of giving his own statement of new measures can only add to the worsening unemployment situation, and will do actual harm to investment and growth.
Mr. Barber: The view that I should not have cleared up what was written in the Press while I was away will not be shared by many other people.
Several Hon. Members rose—
Mr. Speaker: I am afraid that there must be a limit. Mr. Peter Walker.

WATER SERVICES (REORGANISATION)
The Secretary of State for the Environment (Mr. Peter Walker): With permission, Mr. Speaker, I would like to make a statement about water services reorganisation.
I have to tell the House that the long-term prospects for water supply in this country and for maintaining and improving the quality of our rivers give rise to serious concern. The massive increase in demand coupled with increases in the quantity and range of pollutants face us with a most exacting task. My right hon. Friends and I have reached the conclusion that the way in which responsibilities for managing water are distributed at present imposes a handicap which can no longer be accepted and that a comprehensive reshaping of the machinery is called for.
As the report of the Central Advisory Water Committee made plain, responsibility in this field is fragmented between more than 1,400 different bodies. For many years they have discharged their duties well, but too often their interests conflict and very many of them are far too small. The Government intend to create 10 regional water authorities, including one for Wales, which will be able to deal with water services as a whole, literally from the source to the tap.
The regional water authorities' functions will include the prevention and control of polluting discharges to rivers and estuaries; augmentation of river flows by schemes of storage; treatment of water for public use; and dealing with sewage. At the same time they will have a duty to ensure the full development for amenity and recreation of our rivers, canals and, wherever appropriate, reservoirs.
The new regional water authorities will replace the present joint water boards and joint sewerage boards. They will assume the responsibilities of those water undertakings still owned by local authorities together with the obligations of local authorities for sewage disposal.
Local authorities will continue to have local sewerage functions other than those that are necessary for the authorities' efficient discharge of their duties. In view of the local authorities' clear interest in
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water supply and pollution control, I have decided that a substantial proportion of the members of each regional water authority will be appointed by local government.
We are proposing to retain statutory water companies, which can continue to play a valuable part within the new system. I expect suitable arrangements to be made for them to supply water as agents of the regional water authorities.
The responsibility exercised by the present river authorities for water conservation, pollution control, navigation and recreation will be assumed by the regional water authorities. My right hon. Friend the Minister of Agriculture, Fisheries and Food will be undertaking consultations with the interested bodies on the future organisation of land drainage and fisheries, which lay outside the terms of reference of the Central Advisory Water Committee's Report. He has asked me to say, however, that the present proposals do not require a review of the responsibilities of internal drainage boards.
As suggested in the Committee's report, the responsibilities of the British Waterways Board for canals and certain rivers will be transferred to the regional water authorities. I am convinced that, in conjunction with local authorities, they can build upon the valuable work the board has done, in particular by adapting the present canal system to one more directly designed for amenity and recreation. Special arrangements will be made for the board's canals in Scotland.
The chairmen of the regional water authorities, together with a chairman and other members chosen by Ministers as having special knowledge of industrial, agricultural, amenity and other matters, will form a National Water Council. This Council, together with the regional water authorities, will continue and develop the valuable work done by the Water Resources Board.
Apart from cases where Exchequer grants may be justified for specific purposes, the revenue to enable the new authorities to discharge these functions should, in principle, come from charges for the services they provide.
I have placed in the Vote Office copies of a circular and a memorandum explaining these proposals which are being sent

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out today to all the bodies concerned. Accompanying this is a map showing the boundaries we are proposing for regional water authorities.
My right hon. Friend the Secretary of State for Wales is making a separate announcement about reorganisation in Wales, and about the special arrangements that will be made to safeguard both English and Welsh interests in the Anglo-Welsh rivers.
We now propose to hold consultations with the bodies concerned within these broad principles. Our aim will be to introduce legislation to enable the new system to come into operation in April, 1974, concurrently with the new local authorities. Staff interests will be safeguarded, and there will be full consultation on all the arrangements for the transfer and protection of staff.
The time has come when we must stop taking our water resources for granted. Water is too scarce; it costs too much to collect, transport and distribute any longer to be wasted, polluted or fenced off from recreational use. The Government's proposals are, therefore, radical and far-reaching. They are designed to create the conditions and to provide the necessary modern machinery for the cleaning up of our rivers, the improvement of our sewerage and sewage disposal arrangements, and the safeguarding of the nation's water supplies for the remainder of this century. As such, I hope that these proposals will contribute to the Government's general policy of safeguarding our national environment and improving the quality of life.
Mr. Denis Howell: We are obliged to the Minister for this long-delayed statement. I would like to make a comment or two and ask one or two questions on the three main aspects which the policy embraces.
First, the Minister is a most remarkable animal because, judging by this statement, he is capable of walking in opposite directions at the same time. We welcome what he has to say about water resources as being half a step in the right direction, but in respect of control and ownership of the canals we can only regard the proposals as a step in the wrong direction. We have considerable misgivings about the effective
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ness of what he proposes, judged against the national need to double the water supply of this country within 10 years, with all that that means in terms of surveying, parliamentary powers, ownership, construction and so on. The logic of the Minister's proposals is that of national ownership of the water resources and the waterways of this country. The Minister seems to have drawn back from the brink of that situation, no doubt because of the doctrinaire loyalty which his statement shows towards the privately owned water companies of the country, which is complete nonsense.
I turn now to the three areas on which I wish to ask questions. The first is the establishment of a National Water Council. What will be the powers of the Council? Will it own the national water resources of the country and have overall responsibility for the transportation of water to the 10 regional authorities? The only way that we can judge the effectiveness of the proposals is by getting an answer to that question.
Secondly, I refer to the proposal for the new regional water authorities. This seems to us at first glance to be an argument in favour of the Redcliffe-Maud proposals for democratic provincial or regional government. We are bound to ask, in the light of the Local Government Bill now going through the House, whether it is proposed to establish 10 regional authorities not democratic in content and not entirely responsible to the local authorities in the region? This seems to be a great argument for regional government. On the canal system—[Interruption]—it is no good the Minister turning up his nose—we feel that every proposal that he brings before us is for the establishment of regional arms of Whitehall, without democratic responsibility, and that this is a further step in that direction.
As to the canal system, the Minister proposes to dissolve or demolish the British Waterways Board. Who, therefore, will assume the national ownership and control of the canal system, and, in particular, who will provide the £3 million subvention which the British Waterways Board has at present? It seems that this is yet another proposal to transfer the responsibility of that £3 million from the taxpayer to the backs of the ratepayer albeit at regional level.
Mr. Walker: First of all, as far as a "doctrinaire" approach is concerned, I regard as surprising the suggestion that we should not take advantage of £250 million of private capital on fixed interest, under complete control with an agency arrangement with the new regional water authorities. In the view of the Labour Party the ratepayer should pay £250 million for doctrinaire reasons.
Secondly, the National Water Council will be of an advisory nature and have responsibility for research work. It will be clear, when the hon. Gentleman has given a little attention to this problem that there is on record a large number of members of his party who have advocated the solution that I suggest. I can assure the hon. Gentleman that the regional authorities that I have suggested will be strong enough to carry out their functions and have adequate provision to do so. As regards his suggestion that this should be the basis for provincial government, he should look at the map. The rivers do not conform to the regions appropriate for regional government. When dealing with water and sewage disposal, we are dealing with rivers and waterways, not with political boundaries. These boundaries are not appropriate for regional government but are appropriate for handling in an objective way the water resources of this country.
As regards canal ownership, my Department has had discussions with the British Waterways Board, and I am convinced from the way that this will be handled that the amenity aspects will be substantially improved as a result of the proposals.
Mr. Spearing: Will the Secretary of State understand that there will be deep forebodings among those who use the waterways at his announcement about the canals. Could he tell us whether, as far as finance is concerned, the proposed regional water authorities will depend entirely for rate precept on the areas which they cover, and if the majority are also nominated members of the authority, does not that suggest that they will be reluctant to spend sufficient money in keeping the rivers in good order? Will he tell the regional water authorities the standards of cleanliness and purity for which they are responsible?
Mr. Walker: My statement makes clear that in future the charges will be made direct on people who use water and the rivers; it will not be done on a rate precept basis. This will result in the authorities charging those who use the river system, the appropriate amounts. It will result in river authorities having a considerable vested interest in doing the maximum to clean up the rivers. This comes out clearly from the Advisory Committee's Report as being a positive approach to cleaning up our rivers.
Sir H. Legge-Bourke: Will my right hon. Friend appreciate that the statement that he has made today is one of enormous importance and that those of us who have studied matters concerning water, land drainage and pollution will wish to congratulate him on the imaginative way in which he has approached this vital problem? May I thank him for the consideration given to requests to ensure that land drainage can continue to be associated primarily with agriculture rather than with anything else.
Mr. Walker: I am grateful to my hon Friend.
Mr. Roderick: While I will not go into the merits or demerits of the statement, may I ask what form the separate Welsh statement will take? Is the right hon. Gentleman aware that some of us are suspicious that a Written Answer in reply to Question No. 86 on the Order Paper in the name of the hon. Member for Pembroke (Mr. Nicholas Edwards) will be used to make this statement? Does that mean that we have to ask that hon. Member for the loan of his correspondence? When shall we have an opportunity of questioning the Secretary of State for Wales?
Mr. Walker: That is a matter for the Secretary of State for Wales, but the information will, of course, be made available.
Mr. Ridsdale: While congratulating my right hon. Friend for once again showing himself to be a progressive and reforming Minister, may I tell him that in certain parts of the country where there have been very high increases in water rates this reform will be judged on whether it is able to bring about some equalisation of water rates in the country?
Mr. Walker: What we have endeavoured to do is to see that the nine major river systems of England form the basis of the new organisation. In the past the large number of authorities concerned meant that certain authorities had to meet high costs sometimes due to pollution created in the river further upstream.
Dr. David Owen: Is the right hon. Gentleman aware that in areas such as the South-West, where there is an acute water shortage, these proposals will be thought to be nowhere near radical enough? Can he tell the House how the legislation to provide for adequate water will be placed before the House? Is this to be the responsibility of the regional authority or the national Government? I think the right hon. Gentleman and the House will agree that what is needed is national leadership with the responsibility for legislation undertaken by the Government. Turning to waterways, will he take it from me that many who have given a great deal to the waterways, quite voluntarily over the years, will be very disheartened by this major change?
Mr. Walker: On the first point, the legislation will be introduced by the Government. The chairmen of the authorities will be appointed by the Secretary of State, and there will, therefore, be considerable Government impact upon the total problem. As to the point about the waterways, hon. Members who query this are doing so on the basis that they feel, quite rightly, that the existing Waterways Board has done important work in providing amenity on the canals. I agree, and I want to continue that work, to enhance and improve it. I would not have brought these proposals forward unless I was convinced that they would mean better amenity use of the canals.
Mr. Tom King: Can my right hon. Friend clarify exactly what the future position will be of river authorities? Did I understand that they will have delegated powers from the regional board?
Mr. Walker: There will be nine water authorities which will take over the functions of the existing sewerage boards and river authorities, so that in future there will be nine major water authorities in England covering the nine major river systems.
Dr. Marshall: What are the reasons why the reconstitution of internal drainage districts is not included in these proposals?
Mr. Walker: Because it was not considered necessary for the main strategy.
Mr. Arthur Jones: The circular refers in paragraph 42 to the proportion and appointment of elected members in local government after reorganisation. Is my right hon. Friend able to say whether members at area council level and district council level will be eligible?
Mr. Walker: I wish to discuss with the local authority associations ways in which local government can have the power to appoint substantial numbers of members to these authorities. I want them to appoint people who will make a real managerial contribution to the development of what is a considerable problem involving a massive investment programme—a £300 million capital investment a year programme in the coming years. Local government should prove as good as central Government in appointing people to do this task. I shall be discussing with all the local authority associations how best this can be obtained.
Mrs. Castle: Is the right hon. Gentleman aware that he really has not answered any of the questions put to him by my hon. Friend the Member for Plymouth, Sutton (Dr. David Owen), particularly in relation to the canals? If the National Water Council is to be purely advisory, who will own the waterways? Who will be financially responsible for keeping open the national network of cruise-ways which we created, to say nothing of a national commercial network, which, however reduced, we tried to sustain and expand? Will the right hon. Gentleman tell the House categorically whether he intends to maintain the Exchequer grant of £3 million which has been vital in providing recreational facilities and bringing happiness to millions of people?
Mr. Walker: I know the right hon. Lady's interest in this subject, and I can assure her that the total support to the whole of this system in various ways by various central Government agencies viii in my view be an increasing, not a

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diminishing, factor. As to the responsibility and ownership, the responsibility will be with the new water authorities but there will be a statutory obligation on them to keep open various navigation ways which cross the frontiers of these authorities and which are laid down at present.
Mrs. Castle: I am sorry but I asked the right hon. Gentleman to answer some of our questions. Will he tell us (a) who owns the canals and (b) whether he intends to maintain the Exchequer grant of £3 million for our amenity network?
Mr. Walker: I answered quite clearly. I said that the new regional authorities will own the canals. As to the Exchequer grant, an Exchequer grant can be paid through a number of agencies, such as the Countryside Commission or the Sports Council. It can be paid through the rate support grant in various ways. In total there will be increasing expenditure.
Rear-Admiral Morgan-Giles: Is my right hon. Friend aware that there is a total building blight across a very wide band of the Winchester constituency? Can he assure the House that the proposed regional water authorities will not be an excuse for the delaying of administrative decisions which are urgently needed? Can he tell the House what steps his Department has carried out to deal with the use of salt water for industrial and sewerage purposes, certainly in coastal areas?
Mr. Walker: There are a number of existing water authorities in which certainly by the end of this decade, unless a change is made along the lines proposed, there will be desperate shortages of water which will create planning blight. These proposals are designed to eliminate that position. As to the use of sea water, we agreed to go ahead with the one major desalination proposal put to us, and provided a substantial amount of public expenditure for that purpose. I can assure my hon. and gallant Friend that in looking at barrage schemes and the possibilities of desalination we are anxious to make progress and will give these schemes every possible encouragement.
Mr. Thorpe: Since the absence of adequate water supplies has enabled or
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prompted the local water board in my constituency to oppose all planning applications, thereby preventing improvement and causing very great hardship, is the right hon. Gentleman aware that anything which conserves and increases water supplies is to be welcomed? Is he further aware that, in common with many of my constituents served only by septic tank, I would welcome improvements in domestic sewerage arrangements? Speaking as one who thinks that the case for nationalisation is unanswerable, and accepting that this is a first step in that direction, what is to be the relationship between the continuing statutory bodies and the 10 authorities? Are the former to be strictly the agents of the latter? Secondly, who is to have general oversight of policies such as the siting of reservoirs, desalination and barrage schemes?
Mr. Walker: The new authorities will have all the main powers concerned with this, and the statutory companies will be on an agency agreement. All the controls which are operated at present over these statutory councils—which are considerable—will be exercised in future by the regional water authorities concerned. To talk about it as nationalisation or denationalisation or keeping free enterprise is gross exaggeration of the realities of the situation. The right hon. Gentleman knows that the charges and the payment of interest on shares are restricted by central Government. What we have is an injection of £250 million of private capital which will certainly be useful. We have a number of companies which achieve high standards of efficiency, and I decided that it was in the best interests of water supply to continue these on an agency basis under the new authorities.
As for the early remarks of the right hon. Gentleman, I am well aware of the problems in his constituency. Unless a major step of this type is taken, those problems will greatly increase in scale over the next decade.
Dame Joan Vickers: What powers will the river and water authorities have to review schemes such as the Swincombe scheme, which have been turned down?
Mr. Walker: I cannot comment on any individual scheme, but the regional water authorities will be responsible for seeing that water and sewage disposal are

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organised in the most efficient way in the areas concerned.
Mr. Blenkinsop: Will the right hon. Gentleman lay before the House a White Paper on the linking together of water and sewage disposal which has been pressed for for so long? I ask him not to rule out a link between his regional proposal and the new local government structure which is being created, and to bear in mind the considerable provincial developments and the possibility of a link with industrial development in the areas concerned.
Mr. Walker: On the first point, if the hon. Gentleman will obtain from the Vote Office a copy of the explanatory memorandum which I am providing, he will find that it will give him a great deal more detailed information. I am grateful to him for stressing the importance of at last combining responsibility for water and sewage disposal. It was a mistake not to have done so, and the new arrangements will make a considerable improvement to the total position.
I am well aware of the need for improving regional activity, but the hon. Gentleman will see from the memorandum to which I have referred and from the map that the river networks do not coincide with the political networks.
Sir R. Thompson: Will my right hon. Friend say more about desalinisation? Is it not clear that the demand for water has no limit and, if natural sources are relied upon to make up the deficiency, we shall soon have no worthwhile environment at all? This will put paid to the recreational aspects with which he is rightly concerned. Have not experiments shown that there is a solution, although it may be initially costly?
Mr. Walker: There are two types of scheme. One is the barrage scheme, and where major schemes have been brought forward I have readily provided additional expenditure, and those schemes are proceeding. One major desalinisation scheme was put to me, and once again I came forward with public money and supported it. Whether that scheme or any other experiment will be successful is uncertain. I assure my hon. Friend that no one would be more pleased than I if a delightful way of turning sea water into fresh water could be produced. I am giving all the help I can.
Mr. John: Will the Secretary of State explain the absence of a Welsh Minister to make an oral statement about the Welsh Water Authority? Does he not regard it as unsatisfactory that the Secretary of State for Wales is not to make a statement? There has been no indication when he will do so. The right hon. Gentleman has been courteous enough to come to the House and submit himself to questions. Will he not try to ensure that his right hon. and learned Friend does the same?
Mr. Walker: I am sure that there will be plenty of opportunity for the proposals of my right hon. and learned Friend on this topic to be debated in the Welsh Committee.
Mr. Maddan: Will the regional water authorities under the proposed scheme be self-sufficient in water, or will a national grid be necessary? Secondly, will the regional water authorities cover the coastal discharge of sewage?
Mr. Walker: On the latter point, the regional water authorities will be responsible for the sewage disposal arrangements throughout the whole of their area, including coastal areas. In reply to my hon. Friend's first point, in some cases it will be necessary to transfer water from one authority to another, and this will be organised through the National Water Council. In the main the new authorities will be self-sufficient.
Mr. Biffen: In view of the considerable importance of the exploitation of the amenity and recreational potential provided by our waterways, will my right hon. Friend as he is in a reforming mood, say whether or not the regional water authorities will be encouraged and enabled to take into partnership private risk capital?
Mr. Walker: Certainly in the exploitation of amenity factors private enterprise will have the freedom to do so. In our canal, reservoir and river systems there is considerable potentiality for the private enterprise sector and the public sector to provide far more amenity resources.
Mr. Jessel: Is my right hon. Friend aware that the quality of the water in the River Thames in the western London area has for some years been steadily improving, so much so that freshwater fish have been found as far downstream

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as Chelsea? This has been due to effective co-operation between existing authorities, the Thames Conservancy, the Greater London Council and the Port of London Authority. Are the new authorities so constituted as to have a built-in tendency to seek further improvement in the quality of the water in our rivers?
Mr. Walker: Yes, Sir, and the new authorities will bring into being in every part of the country the best methods of collaboration and co-operation between the sewerage authorities and river authorities that have existed in the past. They will also have a much greater ability to make the capital investments throughout the whole river system which are required.
Miss Quennell: Is my right hon. Friend aware that we shall never succeed in satisfying the demands for water unless we encourage people to conserve water and to economise in the use of it? Will the new authorities have power to encourage the economical use of water?
Mr. Walker: Yes, the new authorities will have power to do everything they consider right in terms of the conservation of the water resources of this country.
Mr. Deputy Speaker (Sir Robert Grant-Ferris): I propose to allow one more question from each side.
Mr. Simeons: I congratulate my right hon. Friend on hitting the nail on the head in terms of the greatest existing weaknesses. Those whom I see in the water cycle tell me that the proposal will help to conserve water and will, for the first time, advance the sewerage system without any political strings being attached, because there are no votes in sewerage. Secondly, they believe that technical resources will be concentrated. Instead of qualified people being scattered round the country in different authorities, some of which oppose each other, they will for the first time all be working for the same end. It will also remove the anomaly whereby the Upper Thame Sewerage Authority has to wear the hat of the authority concerned before action can be taken against anyone. Thirdly, the proposals also provide an extra career structure. There are no graduates in sewerage, and I hope that
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there will be. Lastly, the area structure will enable areas to work on different bases according to the needs of the rivers. I hope my right hon. Friend will bear in mind the water pollution research laboratories, which might be given the rôle of laying down the parameters of research so that there will be no overlapping as there is now.
Mr. Walker: I am grateful to my hon. Friend. I agree that the proposals mean that resources will be much better employed in future. One of the most important aspects of my proposal is that it will underline to a much greater extent the principle that he who causes the pollution will pay the cost.
Mr. Denis Howell: The right hon. Gentleman's answers to supplementary questions confirm all our worst fears in respect of the canal system. He is wilfully destroying the British Waterways Board and setting up nothing in its place that will keep the canal system as a national entity. None of the measures he suggested for financing our canals will work to give a national network of canals. As for the water industry and its great need to double the supply of water for the people in 10 years, we regard the proposals and the right hon. Gentleman's answers today as an irrelevance. The Opposition cannot accept the proposals as a right or permanent solution.
Mr. Walker: From a purely party political point of view, I am delighted, first, that the hon. Gentleman was put up to speak on this topic, and, second, that he spoke as he did, because he will be judged by those who know anything about the matter to have spoken in pure, rather low-grade, party political terms. As to the canal system, I am perfectly willing to be judged by those who use the canals for amenity purposes on the improvements that take place.
Mr. Howell rose—
Mr. Deputy Speaker: Order. We should leave this subject now.
Mr. Howell: I think I am entitled to ask the Secretary of State whether he is aware that the views I expressed on the subject of water are those of most people in the British Waterworks Association, of a non-political character. The right hon. Gentleman's reply is not only inaccurate but unworthy of him.

ORDERS OF THE DAY
  SUPPLY
  [4TH ALLOTTED DAY],—Considered.

  COMMITTEE OF PUBLIC ACCOUNTS (REPORTS)
  5.2 p.m.
  Mr. Harold Lever: I beg to move,
  That this House takes note of the First, Second and Third Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute on those Reports (Command Paper No. 4817).
  This is an annual occasion on which the House evidences, by some of its Members at any rate, the great public interest in the Reports of the Public Accounts Committee. I must assume that even those hon. Members who are not present and those present who do not choose to speak, have brooded over our reports and considered them in considerable detail.
  This is also an occasion on which I must express our gratitude to Sir Bruce Fraser, the former Comptroller and Auditor General, for the years of service he has given to the House and the Committee. He is a distinguished public servant, whose zeal, pertinacity and great personal interest in the work he did was a great source of support to the Committee and previous Committees which he served.
  I welcome Sir David Pitblado, who has taken over the job. He has the advantage of being well acquainted with my personal weaknesses and foibles, as I had the satisfaction of working with him at the Ministry of Technology for a number of months. It is an advantage that is for him not wholly of unmixed blessing, I should imagine. I have the undoubted advantage, unqualified, that I already know the wisdom, shrewdness and balance of Sir David in his capacity as Permanent Secretary, and I look forward to the service he will give to our Committee.
  I must also thank Mr. Ecclestone, the Clerk of the Committee, for his devoted service at all times.
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  I know that my colleagues would not wish me to speak for too long. That is why I shall be very brief in my commendation of my fellow members of the Committee. Were I to expatiate at length in the particularity to which they would normally be entitled, this speech would be of indefinite duration. I am deeply grateful to them all for the shrewdness and zeal they have contributed to our work, and for their maintaining the non-party spirit in which we do our work. That is not to say that we cease to have a party political personality. Certain of the evidence and questioning has on occasion aroused what might be described as party political chuckles, but these, happily, are not recorded on the very efficient transcript that is kept of our proceedings. I should like to express my personal gratitude to every member of the Committee for the assistance that has been given in conducting this work.
  I shall not range widely over the reports but shall pick on two items which I suggest are worth comment. First, I want to refer to that part—paragraphs 31 to 48—which relates to the giving of equality of information between the Government and contractors on defence in respect of non-competitive contracts. This is a very difficult area, and no one has the right to come up with facile solutions. I think that what we have done is broadly right. We have sought, under the previous Government and the present Government, to grapple pragmatically with the problem of contractors who cannot be subjected to competitive tendering in the nature of things, in the nature of the work they do.
  We have not achieved any final solution, but the last Chief Secretary to the Treasury, I think, introduced the scheme referred to in the report, which represents a considerable advance. The heart of that scheme is that the Government should be entitled to detailed information on costings and the like available to the firms doing the contracting. The Committee was very happy to note that that proposal has been widely accepted by the contractors, but, alas, four substantial subcontractors have found themselves for one reason or another unwilling to participate in the exchange of the information. I should say—and I am

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  sure that I carry the Committee with me—that we have made no assumption because of this of an abuse of monopoly power by the four subcontractors. There has been no disclosure of their names in the report, but it should be publicly stated that the Committee will not rest content until all contractors and subcontractors accept the system that has now been brought into being.
  It will be necessary at some point to examine what possible further steps we can take, unless, in the time we have given them more mature consideration, the four firms feel able to come into line with the rest of the firms concerned, as I hope they will. If the present situation persisted, we should have to consider calling them before us to explain their motives, which may be entirely justifiable, and ask them why they refuse to put the information upon the table. If we were not able to get adequate information, we should have to consider what alternative methods of securing the information could be open to us, either under the existing monopolies or patent legislation or by a suitable amendment. It is a very serious matter, when the Government are contracting with people who have patent rights or are in monopoly situations in relation to the material and objects necessary for defence, if they cannot have before them all the information which would enable them fairly to price the work they are seeking to have done.
  We must look at all those possibilities, and there may be some others. I am not anxious to raise party political issues, and what I am about to say may not be a party political issue. At the end of the day, whichever Government were in power, it may be that some would think that the right remedy was to take the firms into public ownership, if the alternative, on vital matters of defence, was that we were unable to ensure that the pricing was arranged on a basis fair to the public purse, by at least examining in daylight the full facts relating to what is being ordered.
  I said at the beginning that it is not an easy subject. It is an almost insoluble problem. Therefore, we must not seek perfectionist solutions. I do not know which of the possible answers would seem perfectionist to which of my colleagues, but we must make clear—and I hope
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  that note will be taken of my words—that the Committee is satisfied that what has been done is a great improvement in the system and offers opportunities for improving it further. We cannot allow four firms to stay outside the system and to refuse information simply on their say-so.
  I have every sympathy for all firms. I appreciate that, for example, the nationalised industries resent spending time in getting at facts and figures which have to be re-examined and probed in detail. However, I am afraid that it is a chore which has to be accepted in this sort of situation. I hope I carry the House with me in general sympathy with the proposition embodied in the report on this subject.
  The second matter which seems to me to be of immense public importance is the question of the Beagle contract. The paragraphs in our report referring to this matter and the inferences to be drawn are worth examining in great detail.
  The Beagle Company, although wholly Government-owned, was not a public intervention on traditional lines; that is to say, it was not a public intervention in which we set up a statutory corporation by Act of Parliament with all the capital and management arrangements that go with it. It was a public intervention—and none the worse for that—because, in the nature of things, when one is dealing, not with a great industry but with an individual firm, if the Government decide to intervene it is an extemporising intervention in which the Government hope that, after a reasonable period of time, their intervention can be withdrawn. These hopes are not always fulfilled as early as the more optimistic interventionists might hope. In the Beagle type case we were dealing with transitional aid rather than with permanent arangements. Because of this, there has been a good deal of neglect in arranging in systematic form what should be the Government's attitude in their financial relationship with this company and in respect of possible liability to criticism.
  The Treasury Minute has referred to our comment about the inadequacy of continuing information to the Government and continuing appraisal of the Government's position on Beagle. The Treasury Minute is written in words of

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  such opacity, and, indeed, almost taciturnity, on this interesting subject that, had I been in the Financial Secretary's place today, I could hardly have bettered the section in the Minute on this matter had it been my purpose—as I suspect it might have been in the case of this Minute—to withhold any kind of comment at present on the subject under discussion.
  Although I compliment the Financial Secretary on the Treasury Minute, which takes a substantial paragraph to add nothing to our information, and though I recognise that it would be unfair to expect the hon. Gentleman even today to elaborate on this matter at any great length, I feel that this subject necessarily must be causing a good deal of searching of minds in the Treasury and in other Government Departments. I am not complaining, but I hope that this Minute is the hon. Gentleman's first word on this matter rather than his last in the weeks and months ahead. I exempt him from an obligation to be too forthcoming to-day since I recognise his difficulties.
  I am not under the same restraint as the Financial Secretary and, therefore; I shall say a few words on this subject; and I hope I shall carry most hon. Members with me. In cases of Government intervention there have to be some firm principles, publicly known and clearly established, as to where the Government stand. It is not enough for the Government to say, as they do in the Minute, that nothing in the legal rights and duties of a shareholder changes because the shareholder happens to be the Government. That does not quite answer the problem. When the Government intervene as a shareholder, they are rarely wholly passive. They tend to appoint directors to the board, to exercise some degree of supervision and in some ways to become responsible for what the company does.
  When the Government have a major financial stake in a company, the first question to be asked is: what are their obligations to creditors? The Government cannot ride off by saying "We told the directors to act commercially and, therefore, any liability to creditors is a liability of the company and not of the Government." It is difficult for the Government to say this in respect of the
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  Beagle Aircraft Company. I am not criticising any one Government on this score since the Beagle matter occurred under the previous Government, whereas other matters of this nature happened during the period of office of other Governments. In respect of the Beagle company we had to meet the creditors. I do not want to go into the law on banicruptcy because it is rather vague and capable of different interpretation, but there is no doubt about the commercial morality on this subject. Whether one is a Government or an honourable private citizen, if one is financing a company and actively participating in its affairs with knowledge one has no right to spawn companies which can take on credit without any reasonable expectation of paying the debts one is incurring.
  A great deal follows from this from the Government's point of view. If they are to have some kind of participation or supervision in management, what is to occur when they know, or ought to have known, that the company is taking credit which it has no reasonable prospect—or only a gambling outside chance—of meeting? In these circumstances the Government must pay up if they have participated in other than a strictly banking or shareholding capacity.
  Past Governments—and I emphasise that this is not a party political matter—have tended to assume "We are putting up so much money, we are appointing reputable directors and we must assume that they will see that the law is obeyed and that they do not incur debts which they cannot meet". If the Government know or ought to know that a company's commercial prospects are not promising—in other words, if it is a socially sub-vented operation—the directors are acting in the confidence that they can meet the creditors because they are confident that the social purposes they are thought to be pursuing will result in the Government giving a continuing subsidy or a continuing non-commercially based loan or share subscription. Once the Government have embarked on this course, which I am afraid has been the case in the past, they must not be under any illusions that they can go on running the company in the knowledge that it has only a slight chance of commercial viability and then say "We shall only subvent it by £2 million a year", only to find that it will cost £5 million and then want to close it down. In those circumstances they are

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  already committed to the creditors because they have been running the company on the basis, which the directors and the Government must have known, that, even if the loss had been kept to £2 million, the creditors could have been paid only if the Government paid up.
  Governments must realise that there is no soft option for them. If they are running a company, knowing that it is running at a loss and there is little prospect of doing other than running at a loss and the loss suddenly becomes gigantic and they are tempted to withdraw, they cannot withdraw without satisfying the creditors who have already given credit to the company and never had the prospect of being paid except from Government funds.
  It follows that the Government must not put money into companies of this kind unless they also put themselves in a position to know the extent of their liabilities. It means that there must be a continuing appraisal and continuing information from the company. The Government cannot rest unless they have a flow of continuing information about the company's prospects, because its prospects are, in a sense, the measure of the Government's ultimate potential liability. Therefore, they have to see that that information and appraisal goes on the whole time they are engaged in such a situation.
  It is not good enough to appoint gentlemen of distinction to the board—an eminent accountant or general; talent of the kind that Governments are apt to find for these jobs—and then say, "We were not to know that the losses would be so great. We would have been ready to pay up for a smaller loss, but not for this gigantic loss, and we now wish to withdraw." In those circumstances, they cannot bow out without meeting the creditors. It follows that the appraisal and information must be continuous.
  Something else follows, too. Before Governments undertake these ventures they must obtain an expert and dispassionate commercial judgment about the prospects and they should found their decision on that. I hope that no one will misunderstand me. Any Government are entitled to have their view about the social costs of intervention. The Conservative Government—I do not want to stray into party politics—preach a great deal of hard-facedness on the
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  subject which, to many, is widely divorced from much of their practice. I do not resent that. It provides much material for criticism by their opponents, which they are unable to challenge, about what they preach on the subject. They are in the unhappy position of being in a minority. I have always said that the central bankers were one of the few groups whose practice was better than their preaching. I think that, even so, in the very narrow area of Conservative Government, their practice is far more intelligent and up-to-date than their preaching.
  Mr. Cranley Onslow: I am sure that the House admires the exquisite tact with which the right hon. Gentleman is addressing this homily to the absent figure of his former colleague the right hon. Member for Bristol, South-East (Mr. Benn), who should be benefiting from it, because it is his business methods which are being called in question. In this instance the Government obtained professional advice about the level of capital which the Beagle Company would need if it were to succeed, but they then instructed the company to succeed on the basis of having half that capitalisation. That was not a very good way of going about it.
  Mr. Lever: I was trying to draw some useful general principles in the belief that, by poring over the report, hon. Gentlemen will get what they need of the details without my elaborating on the report in my speech.
  Mr. John Nott: On the general principle, does the right hon. Gentleman agree that if the Government have a social obligation towards creditors the answer is not to incorporate such companies? I cannot see the object of a wholly-owned organisation of the Government operating as an incorporated entity with a paid-up capital if the philosophy which he is outlining is relevant. Would it not be better for the Government to run such companies in a partnership form?
  Mr. Lever: Is the hon. Gentleman challenging my proposition that where the Government are actively in control of a company, whether by total or partial shareholding or by financial control, they are not liable to the creditors when, to

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  the Government's knowledge, the company is incurring debts without a reasonable prospect of meeting them unless the Government fork out the money? Perhaps he is asking—if that doctrine be right why bother to form a limited company? There are two answers. First, a company is a convenient vehicle for carrying on trade rather than calling it the Department of Civil Aviation Manufacture at the Ministry of Technology, which is what I suppose the hon. Gentleman would have as an alternative; and, secondly, the position may be temporary. If the best hopes of Beagle had been fulfilled, it might have made a profit and been exceedingly solvent and continued to run as a company. If so, a Labour Government could have enjoyed the fruits thereof, or a Conservative Government could have wasted a great deal of parliamentary time seeking to hive it off. All this argues in favour of having a company which is a satisfactory vehicle for this purpose.
  Mr. R. T. Paget: I agree about a company as a vehicle. But does it have to be a limited company? Is there any point in it being a limited company in these circumstances? Would it not be tidier if a Government wholly-owned company had an unlimited liability?
  Mr. Lever: That is a point well worth considering. Where the Government were to take liability, that would be the case. But sometimes the Government may know facts about a company which they are not keen to advertise. If, in affect, they said that it was an unlimited liability company, they might be, as it were, hinting to the world at large that they were taking a pessimistic view about its immediate prospects of meeting its obligations.
  Mr. Nott: Surely we must stick to a principle. The creditors are either dealing with a limited liability organisation or with an unlimited liability organisation. I understand what the right hon. Gentleman is saying. However, why make a special distinction between a limited liability company which is owned by the Government and a limited liability company which is owned by the general body of public shareholders? I do not want to make a speech. I take the
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  right hon. Gentleman's point. But surely there is a principle. The Government must, in certain circumstances, as a limited liability organisation, be entitled to trade like other organisations in the private sector.
  Mr. Lever: The hon. Gentleman's first point is pedantic but misplaced, as I will explain. He asked: why trade under a limited liability company if the liability is not limited? The answer is that in all limited liability companies the liability is not limited whether the person concerned be the Government or a private citizen. If a private citizen engages in trade in the manner I have indicated, though he is but a shareholder, or not even a shareholder but has de facto control of the company, and the company incurs debts at his instigation and with his participation without reasonable expectation of meeting them, under our law, although it is a limited liability company, he can be made liable. I am not seeking to score off the hon. Gentleman. I understand why he raised this point. It seems a contradiction in terms.
  If I were to send a company abroad incurring debts with one chance in a hundred of meeting them, and I did this knowingly, albeit I was only a shareholder, and I promoted the directors to this activity and risk, I should be liable although it might be a limited liability company. I am not without some sympathy, in special cases, for my hon. and learned Friend's suggestion. However, in general there is nothing wrong in using a limited liability company if one realises that the expression "limited liability company" does not give blanket protection under the law as it stands. I am drawing no distinction between the position of the Government and that of any other person who runs a limited liability company, except that I hope that, on the fringe cases, the Government would set their moral standards no lower than the best standards of leading commercial companies.
  The Financial Secretary to the Treasury (Mr. Patrick Jenkin): I do not want to be drawn too far into this, for reasons which I shall make clear if I succeed in catching Mr. Deputy Speaker's eye. From what the right hon. Gentleman is saying, he seems to suggest that the extent of the Government's obligation in

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  these circumstances, according to his view, will turn on the state of knowledge of the Government at the time. But this, by itself, is not a great deal of help to the creditors.
  Mr. Lever: No. It is not the state of knowledge of the Government. It is the extent of the Government's participation in the company's affairs which is the crucial factor.
  If the Financial Secretary chooses to subscribe to a company and, without knowing its prospects, is content to let it go round trading and takes no further part in its activities, when it goes bankrupt, he is not liable, and the ordinary rules of limited liability will apply.
  I am discussing what happens in almost every Government intervention, which is that the Government tend to put themselves, in almost every case—and certainly in the Beagle case—into a position where they know or ought to know that the company is incurring credit which, with reasonable expectation, can be met only if the Government subsidise the company. Secondly, the Government intervene in the supervision of the affairs of the company in such a way as to make themselves responsible, in some senses almost being a de facto director of the company.
  I am aware that the Government have a technical legal defence to any action by which they can escape responsibility, but Governments are reluctant to make use of such defences. Where the Government are actively intervening in the affairs of a company and know or ought to know that the creditors' reasonable prospects of being paid will depend upon Government money, they must recognise that they will be liable for the debts of the company. I do not draw a distinction between the Government and commercial firms in this, though on borderline cases I should not expect the standard of morality of the Government to be less than that of any of the commercial concerns in our country in relation to their own subsidiaries.
  When I said that the Government must start the operation with a clear and dispassionate commercial judgment, that does not end the matter. It is the beginning. When they know what the commercial prospects are, they start to apply the political judgment, be they a Con
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  servative Government or a Labour Government. They start to ask themselves how much they are prepared to pay for the social interests of the situation, but they do it with their eyes open. They do not have a misty mix-up between commercial, semi-commercial, and semi-social feelings. First, they see what they think it will cost, including possible liability to creditors. They set up machinery to protect themselves from unnecessary liability to creditors. Then they make a decision about how much it is worth in social terms.
  I am not implying that, if a commercial judgment told me that in Cammell Laird I am unlikely to see a commercial profit from the Government's investments, that is the end of the matter. That is where I start. I do not end here. Then I ask myself what it is worth in social and human terms. Those cannot always be assessed in cash terms. Human suffering has a value from the Government's point of view, and one has to use one's best judgment in thinking about the social value. One must start the process on a realistic basis and continue it on a basis which does not involve one in unforeseen liability.
  Too often, the Treasury approves £2 million or £5 million for a project in the belief that that limits the total cost. Then it finds that because of other considerations, it does not, and that it has other liabilities brought on because of contractual liabilities to creditors, as in the case of Beagle.
  Again without raising too many controversial points, I should add that Beagle is not alone. There must be lessons and stimulating thoughts on the subject of the Rolls-Royce Company and the Upper Clyde company. If the Government had had a clearer view of their obligations and a clearer system for assessing them, the panic actions which resulted in the bankruptcy of the Rolls-Royce Company might never have occurred. I do not suggest on the part of the Government. I do not take the view of many of my colleagues and make pronouncements on the subject of lame ducks, and the like. I do not believe that these flights of oratory are a fair measure of the Government's record in this matter. But if the Government had put themselves in a better position to assess the Rolls-Royce situation, what were its

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  actual liabilities and what they might do to obtain a temporary easement of the company's cash position without putting themselves in the position of becoming liable to all the creditors, we might have been able to escape the bankrupting of one of the world's famous names which must have been a source of grief to every hon. Member.
  Mr. Robert Sheldon: Will my right hon. Friend take that further and realise that, given the way in which these matters are arranged at present and given the will, there could have been a renegotiated contract, as Sir Denning Pearson has already told the Trade and Industry Sub-Committee of the Expenditure Committee, which Lockheed would almost certainly have accepted, with the advantage of retaining the firm intact?
  Mr. Lever: My hon. Friend is evading what was the real Government difficulty here. The Government needed time for this re-negotiation to take place. For that time to be forthcoming, the Rolls-Royce Company needed cash. The only volunteer for this cash was the Government. I suspect that the Government were afraid that, if they put in the cash, they would come within the rules of liability that I have discussed and make themselves liable for the entire range of the Rolls-Royce Company's liability. It was not lack of good will on the part of the Government. There was no lack of willingness to put up the modest amount of cash required to give time to the Rolls-Royce Company to renegotiate the contract. It was that the Government had no idea how that cash might be put in without exposing themselves to liability to the whole of the company's creditors.
  I suspect that the truth about the Government's thinking was that, if they put themselves in a position in which they could have financed this time for renegotiation by having a suitable banking instrument at their disposal with which to do it, they would not have so hastily allowed the receiver to go into the company—and irretrievably, because once it is done, although it is possible to put Humpty-Dumpty together again, probably it can be done only at a greater cost than if he had never fallen off the
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  wall. The damage to Britain's reputation and credit is not retrievable. But, having no such instrument—
  Mr. Onslow: All of this is not only speculative; it is also irrelevant to the matter in hand. The Committee has heard no evidence on the subject. It is a mistake to draw conclusions on bases which are in dispute and to suggest inferences that the House is not in a position to draw—nor is the right hon. Gentleman.
  Mr. Lever: I am not asserting this as a certainty. If the hon. Gentleman cares to read my words tomorrow, he will see that I said that it may be that the reason why Rolls-Royce was made bankrupt was the lack of system and systematic rules for the intervention actions of Governments at the time of the collapse.
  Sir Henry d'Avigdor-Goldsmid: I am obliged to the right hon. Gentleman for giving way to me, particularly as I was not sufficiently fortunate to be a member of his Committee. On the Rolls-Royce issue, I am surprised that someone of considerable commercial experience should be talking with all the arrogance of a legal simpleton. The point about Rolls-Royce is that people just do not know what the position is. The information discovery machinery does not work. The figure for stocks and work in progress is not available for checking and is built up out of a variety of valuations taken at various times. I speak from personal experience of a company of rather smaller dimensions. When a company has got itself into a mess like this, it is not something which can be discovered by a quick look through the books. It probably takes a year to determine what the true position is.
  I do not altogether go along with Sir Denning Pearson's comment that, if he had had a little time for renegotiation, everything would have been all right. He had plenty of time and he got into a mess.
  Mr. Lever: I do not know why the hon. Baronet is criticising me. This is my point of view, too. I am not criticising one Government only on the question of Rolls-Royce or anything else. My point is that if, when we first intervened in the affairs of Rolls-Royce, we had recognised that such intervention must be accompanied by a very detailed knowledge of

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  the company's position and that this should be an on-going knowledge, things might have been different.
  I am not blaming either of the Governments. What happened arose because we did not evolve a system which recognised that one cannot go in with a cheque book and a few wise words of advice about what one feels should be done. I agree with every word that the hon. Baronet said. It takes a considerable time. One must begin at the beginning. Before the Government become heavily involved in one of these financial operations, even if they do not own shares, when they are necessarily because of the scale of the intervention wanting to exercise, and inevitably forced to exercise, some supervision from the outside, they must ensure that information is available. It takes a very considerable time.
  It is clear that neither the previous Government nor this Government ever had at their disposal the information which I regard as being reasonable when these major interventions are to be undertaken. I am not apportioning blame between the last Government and this Government on the Rolls-Royce issue. I am saying that, because of the system, this sort of panic decision had to be taken.
  As to Sir Denning's comment to the junior Committee which has been considering this matter, I must say, without any criticism of Sir Denning Pearson, that directors of Rolls-Royce have from time to time expressed hypothetical opinions which events have not always justified, so we must not take that comment as gospel.
  Mr. Tom Boardman: I am following the right hon. Gentleman's argument on the evidence that came out in Beagle and the general principles that he developed from that. But is it wise to go on and apply those general principles to matters and facts which were not in evidence before the Committee and which were not dealt with by the Committee? In this way he fails to do justice either to the report or to his own argument.
  Mr. Lever: I will not stray too far. If Beagle were the only case in point, it perhaps would not be worth being made the centre of my comments today. Hon. Members on both sides should be stimu
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  lated to realise that the legal issue raises matters of fundamental importance in many other cases, of which the more obvious ones like Rolls-Royce and U.C.S. come to mind. I assure the hon. Gentleman that I was not seeking to make party political points out of this, because neither party in government exercise the proper system or are yet exercising the systematic approach to these affairs which I believe has to be taken.
  The point which must be made, although it does not come strictly from the report, is that these problems do not arise only in relation to public intervention. They arise also in relation to private concerns generally. The problem from the resources point of view is that of ensuring that we direct our resources to the country's advantage, whether they are privately-owned resources or publicly-owned resources.
  Again on the question of systematising finance, I hope that if we learn lessons from Beagle as to the way these things should be financed, we shall not be tempted to seek finance elsewhere. I hope that I do not offend by concretising my comments. I could easily refer to other possible cases, but I prefer to name the company properly.
  If the Government had a proper system and proper rules for financing and intervening, I do not believe that the situation would arise as in Rolls-Royce in which the Government impose the somewhat invidious task on the Governor of the Bank of England of bringing pressure to bear upon private firms to finance, on terms which they would not voluntarily wish to undertake, a company in which the Government are interested.
  The lessons of Beagle are that the financing must be systematic, given according to sound rules, and taking into account profits—not the amounts of cash immediately advanced, but the total liabilities the Government are incurring when they negotiate in these matters; so that no Government will be driven to blur the issues by getting finance from other quarters than from the Government themselves. It places us in a rather absurd position and gives an idea of muddle if Governments proceed in that way.
  I again assure hon. Members that I can give plenty of examples under both Governments where the Government

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  went round persuading private firms to give finance on non-commercial terms. If it is a public purpose, the right source for it is the Government. If the Government think that it is worth doing, let them put their hands in their pockets and not go round putting all kinds of persuasive, oratorical or financial pressures on other people.
  I hope that I have said enough to show that I regard this as the biggest and most stimulating issue that we have considered this year. The Committee will undoubtedly want to return to this issue when the Government have had time to put their thoughts in order and let us know the kind of rules that they are to bring into being covering these interventions in the public interest and for the protection of the public purse.
  All of us on the Public Accounts Committee are anxious not to preserve intact the false Gladstonian image of the Committee as being concerned only with candle ends, still less concerned to preserve the image, which was perhaps intended by Gladstone when he set up the Committee, of the severity of our approach to anything that goes wrong.
  We do not want to become, and I do not think that any member of the Committee has become, expert in retrospective judgment and hindsight. Our function is to encourage foresight and care in officials, not to discourage flexibility because of the feeling, if something goes wrong, that they would have been wiser to stick to more staid, if less justifiable, rules.
  The Committee must go on with the development of its role, which has already taken place over the years, not to be a purely negative influence on the Civil Service. Members of the Committee will want the Civil Service to know that, in judging what has happened when things have gone wrong, we place ourselves emphatically in the minds of the officials themselves, not with a view to discouraging flexible initiatives, not with a view to encouraging the play-safe attitudes which can always ensure that someone does not come before the Committee. It is in this spirit that we should continue to do our work, which is still one of vital importance to the public interest.
  5.50 p.m.
  Mr. Kenneth Clarke: It is a pleasure to take part in a debate opened by the right hon. Member for Manchester, Cheetham (Mr. Harold Lever). It is true to say that a 50-minute speech from him does not seem as long as it does from other Front Bench speakers in most other debates. Sad to say, I do not intend to follow his subject matter because, as he himself said, each of the 630 Members of this House who, no doubt, give close attention to the report, singles out the particular part which attracts his interest. The part of the report which drew my attention was that on the social security system and the light it throws on and the information it gives about some of the practical difficulties and some of the failings which occur in our system of attempting to alleviate poverty.
  I realise the background to this part of the report and the circumstances in which the Departments of Health and Social Security and Employment are trying to wrestle with the difficulties of poverty. We are dealing with the front line of the battle against poverty. Sometimes it is rather a sordid front line, set in bleak offices throughout the country, despite the attempts to brighten and improve them. There are certain situations in which harassed staff are dealing with a large number of claims—and we all know the failings that can lead to. But many of us suspect that the system misses many of the poor and does not help them to the extent to which they are entitled, and at the same time helps, either by error or abuse, people not entitled to it. This is a difficult subject always for anyone to venture into in a speech and the report gives a valuable background to the delicate issue involved.
  The report deals in one section with the extent of fraud and abuse of the social security system. A lot of really civilised politicians on both sides rather tend to avoid this embarrassing aspect of our system. Unfortunately, it is sometimes taken up by would-be hatchet men, who use these allegations of fraud and abuse in the hope of attacking, discrediting and destroying the whole system. Partly because there is fear that this is what these people are doing, others tend to over-react and to regard any criticism of the system as reactionary and absurd.

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  Unfortunately, this does not get us very far. Least of all does it satisfy the public, who hold wide beliefs that the system is abused and would like an assurance that the Government are doing something about it.
  The allaying of public disquiet, which was widely expressed at the last General Election, is something to which every Government have a duty to pay attention. Belief that fraud is going undetected leads to a disrespect for the system of social security which sometimes affects the status and self-esteem of those people who have good and deserving reasons for trying to obtain benefits to which they are entitled. The Government pledged that they would try to cut down abuse of the system. That pledge is going to be difficult to carry out with humanity and without producing undesirable results, but it is nevertheless one which the Government have a serious duty to face.
  My right hon. Friend the Secretary of State for Social Services has appointed the Fisher Committee to inquire into the subject. I hope that its report will give guidance on the fundamental problems—first, how to make sure that any policing of the system does not lead to enormous expense in investigations, whereby we would be spending more money in investigating abuse than the amount saved in preventing it, and, secondly, how to avoid any exposure being embarrassing and humiliating to the vast majority of honest applicants, who need help because they are in trouble. As the civil servants who gave evidence to the Public Accounts Committee recognise, there can be no question of just waiting for the Fisher Committee to report before we do anything. There are areas where more action is called for now and which we could usefully consider now.
  The Public Accounts Committee's Report gives a useful indication of the scale of fraud and abuse in the system, and it gives the lie to those who so overreact from their liberal and humanitarian viewpoint that they pretend that the criticism is all got up by the Press or invented. Evidence shows that 25,000 cases of fraud were detected by the 300 or more investigators of the Department and that 15,000 of these were in the supplementary benefit sector. It is important to publicise to the general public these successes which the Department
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  achieves now in finding out so many of these cases and prosecuting where it is worth while. It is simply not true that all cases of deliberate dishonesty go undetected and unpunished. But there are certain categories of perhaps widespread abuse where comparatively little is being done.
  One of these is the category of the deserted wives who find themselves obliged to seek supplementary benefit. Some of the worst difficulties are experienced by the single woman left coping with children. She is often in the greatest need in our society and is normally deserving of great help. She is usually in that position through no fault of her own. It is, therefore, unfortunate that the estimate in the report shows that, of the benefits at present paid out to people who put themselves in this category, almost 7 per cent. are suspected to be fraudulent, in that genuine claims are not being made, because the wife has either not actually been deserted by the husband or is having her family maintained by someone else to whom she is not legally married. Seven per cent. is a high proportion—I estimate that it is one in 14—and is not insignificant.
  One comes across flagrant cases from time to time. I remember a case in the law courts when a wife, who had come before the court to obtain a matrimonial order on the instructions of social security officials, attended with her husband to discuss possible grounds and to arrange that the hearing should be held at a convenient date for the appropriate order to be made.
  There is much largely undetected deliberate fraud, and it is no good, in facing the problem of investigation, saying that it is distasteful to investigate the way in which women are living. It might be distasteful if the investigation were conducted in the worse sort of private detective way, but nevertheless there is fraud.
  Another category is the false claims made by men receiving sickness or unemployment benefit for wives who are in fact working. Again this is difficult to investigate without causing embarrassment to honest claimants. But over £1 million a year is being paid out to dishonest claimants in this category.
  Having indicated the scale of the problem, what is to be done about it at the moment? This aspect is dealt with

  711
  in Question 3089 and onwards in the report. I accept the difficulties here describbed—the problem of staffing because of the ceiling set on the Civil Service at the moment, the need for skilled and experienced staff for this work, and the problem of cost effectiveness in perhaps spending more money investigating than we save through investigation. The Department frankly acknowledges that it is under-staffed for this work and is not doing enough to cut down the area of abuse. But I do not think that this is only an argument that it might cost more than would be saved by employing more investigators. I think that we should look at the psychological effect in trying to cut down deliberate dishonesty and abuse.
  The Department should be allowed to spend more money on this aspect of investigation. It must be able to recruit the staff to carry it out because it is important to get across to the public that the scale of investigation is being increased, that abuse and fraud are being eliminated, so that the public can have confidence that the help which is being given at ever-increasing cost to the taxpayer is going to the right people.
  Mr. Harold Lever: Will the hon. Gentleman acquit me of discourtesy if I absent myself for a minute or two in order to ascertain whether I am sitting on the right bench?
  Mr. Clarke: I will not think it discourteous. I must say that at certain stages of the right hon. Gentleman's speech I myself wondered whether he should have been speaking from the Opposition Front Bench because I welcomed certain aspects of what he said on the Rolls-Royce, Beagle and other affairs.
  I now turn to deal briefly with what strikes me as even more serious than fraud and abuse, and that is the failure of the system due to sheer error and mistakes by the people who administer it. One thing that comes out of the report is that in 10 per cent. of the cases in which people receive supplementary benefit the staff get the amount of money to which they are entitled wrong. This is not only over-payment. It is about over-payment and under-payment equally. In one case out of ten, through no dis-
  712
  honesty,through no abuse, but simply because the staff get their calculations wrong, some people get more money than that to which they are entitled if they are strictly assessed. What is more serious, bearing in mind that those who apply for supplementary benefit are below the poverty line and want to be brought up to it, is that because someone makes a mistake many people receive less money than they ought to get, and to which they are entitled. It is estimated that up to £1 million is under-paid to applicants for social security benefit.
  The difficulty is that of the staff making errors, and when that leads to serious consequences I think that we have to look at the reasons for those errors and consider what can be done to put matters right. The main point is that the staff are inexpert because there is a tremendously high turnover of staff. That is hardly surprising, when they work in such unattractive conditions, and have such comparatively poor status and pay that they have to be dedicated people to do it.
  Whatever incomes policy is being applied, if it is found that the high turnover of staff is reaching such a point of inefficiency that one case in ten is being assessed wrongly, that, surely, is a good reason for improving the status and pay of the staff to try to get more of them to stay on and acquire the necessary knowledge and experience.
  What worries me is to learn that a mistake is made in one case out of ten, and that Members of Parliament and a few social workers are the only people who take up individual cases. Most people who receive money are probably blissfully unaware of receiving incorrect amounts and that they are entitled to more money, or, even more blissfully, are unaware that they are receiving more money than they ought to get.
  Another reason for the 10 per cent. of errors is that the system for dealing with poverty is so complicated. The calculation of supplementary benefit, and how much someone is entitled to, is extremely complicated. It not only baffles the applicant, who cannot understand how the figure he is paid is reached, but is a maze for politicians and social workers to follow when they are trying to check on any case.

  713
  A system which is too complicated, which is administered with such a poor standard of efficiency, and which produces such inaccurate results leads one to ask how the whole system can be changed to provide a more efficient and more simple method of alleviating poverty.
  This leads me to a matter which comes closer to the province of my hon. Friend the Financial Secretary than anything else that I have said so far. One of the things which the report leads me to wonder is not only whether we should not wait for Fisher before deciding how to deal with abuse and fraud, but whether we should speed up the consideration of negative income tax as an alternative method of trying to deal with poverty.
  There are many reasons for advocating a negative income tax in one form or another as an alternative to the present system. I hope that when the review is finished—and it ought to be finished more quickly than seems likely from recent pronouncements—one of the considerations which will be given to the possibility of negative income tax, is that such a system would provide less scope for fraud and abuse, and would also reduce the number of inaccuracies in the payment of benefits to those who are the most deserving in our society.
  The report deals in detail with figures, and gives statistics of fraud, abuse and inaccuracy in the payment of benefits. The people with whom we are dealing are among the poorest in our society. The honest ones, the overwhelming majority of those who receive benefits, are those whom all hon. Members would most wish to assist with public money. To those recipients of benefit the extent of fraud, abuse, error and inaccuracy on the scale that exists is a matter of grave concern, and must be a cause of some hardship and difficulty. I am grateful to the Committee for this part of its report, and I hope that the material contained in it will be of assistance when we go on to improve the effectiveness of our social security system.
  6.5 p.m.
  Mr. Dick Douglas: I have no great desire to deal with the part of the Report dealt with by the hon. Member for Rushcliffe (Mr. Kenneth Clarke). I do not wholly agree with the hon. Gentleman's severe strictures. Nevertheless, I welcome what
  714
  he said about the Committee having given tacit approval to the method being used—perhaps not as successfully as the hon. Gentleman might have wished—to overcome any fraud being perpetrated with regard to social security benefits.
  I want to follow a little along the lines indicated by my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) because they were valid in their contemporary context, particularly with regard to what is happening in one or two Scottish concerns.
  As a new member of the Committee, having been appointed to it some way through its deliberations during the last Session, to me one of the most interesting things about its investigations was to see my right hon. Friend in his capacity as Chairman of the Committee on one side, and the noble Lord, Lord Goodman, in his capacity as Chairman of the Arts Council on the other. I never quite knew which was the donor and which was the knife. At all events, I found it a most illuminating and edifying educational experience.
  My right hon. Friend touched on one or two issues of supreme importance, and he mentioned Upper Clyde Shipbuilders. The position at U.C.S. is not on all-fours with what happened to the Beagle Aircraft Company, because that was not a wholly-owned Governmental concern. It was a concern in which the Government owned about 48 per cent. of the equity. Nevertheless, there was a substantial Government subvention and shareholding in that operation.
  Although I put my name to a Bill introduced by my right hon. Friend the Member for Bristol, South-East (Mr. Benn), I took the view that U.C.S. was virtually a public company and therefore the Government had an obligation, in operating that type of company, to ensure that their representatives, albeit one stage removed, on the board of directors of the company gave them adequate and full information about what was happening.
  I know that the "Governmental director" on the board was, in effect, the representative of the Shipbuilding Industry Board, and one of the great mysteries surrounding U.C.S. was the relationship of that director to the Department of Trade and Industry. If the Government subvent industrial concerns

  715
  in this way in the future, the House must be given much more information about the terms of reference given by the Government to their representatives on the boards of such companies.
  I am unable to quote them, but I was astounded to receive the information that I did in reply to Questions which I put to the Department of Trade and Industry. The replies gave no indication that the representative of the Shipbuilding Industry Board at U.C.S. had any clear terms of reference.
  This is quite alien to anything I used to inculcate into my students in relation to getting clear-cut lines of communication and terms of reference. I was further astounded to find that the Department did not necessarily operate through the directors of U.C.S. but sometimes operated through the chairman of the company.
  I do not place too much weight on this, but if the Government are to have an equity interest in a concern and if, as my right hon. Friend the Member for Cheet-ham said, the liabilities may be difficult to ascertain in the medium and long-term then the lines of communication between the Government and the concern must be very clear indeed. Although the Committee of Public Accounts and Treasury Minute did not go into this in detail, it is obvious that if the Government are to subvent industry by taking an equity interest, this issue must be clarified.
  Commenting on investigations which the Committee of Public Accounts undertook into cases of the subvention of drilling rigs and subvention by the investment grant procedure, the report states in paragraph 30 on page xxiii:
  "Your Committee observe that, in the two classes of case described … involving transactions between associated companies, the Department exercised their discretion in favour of allowing costs which were enhanced by the intervention of the subsidiaries, mainly on the grounds that the intervention was a normal commercial practice and that the price involved in the transaction was on an arm's length commercial basis. Your Committee, however, are not satisfied that the arrangements made between the associated companies were not influenced by the prospect of obtaining higher grants".
  I am not necessarily putting a view unequivocably in favour of investment grants and in total opposition to tax-
  716
  based allowances, but one objection which hon. Gentlemen opposite have made to investment grants is that on occasions they have gone to concerns which were unprofitable and that, by this means, the Government were throwing good money after bad. Be that as it may, no matter what system of investment incentives is offered to industrial concerns, it is in the interests of those concerns to find ways round them and operate investment incentives in a manner most beneficial to them.
  I question the efficacy of the procedure which we adopt in this House and the meaningfulness of that procedure in contemporary circumstances. We have rightly moved away from the counting candle ends view which the Treasury used to apply and we now adopt the Plowden philosophy of trying to get value for money. But in contemporary circumstances, particularly when dealing with multi-national companies, we must remember that these concerns operate their affairs in such a way that they can often dodge the payment of tax on profits earned by any of their companies. In other words, they can operate their procedures so as to avoid payment of tax in that way. On the other hand, if investment grants can be obtained, they are able to obtain them.
  I am questioning whether the Committee of Public Accounts as at present constituted can get behind the ideas and the performance of particular companies to see their motivation. Perhaps this is too difficult to do or too idealistic. We questioned the accounting officers of the various Departments but we were rarely capable of being able to go behind the scenes, as it were, and to get the observations of the concerns which the Government are subventing.
  I welcome the initiative of the Select Committee on Expenditure in this regard. We in the Committee of Public Accounts may find that that is the direction in which we shall be required to go, and I hope that considerable attention will be paid to the reports of this excellent Select Committee on Expenditure.
  Perhaps I can show what I mean by saying that we need to go behind the ideas of these companies by referring to the examination of accounting officers for the Navy, and the investigation of unrecorded items and items in the hands

  717
  of contractors. I put a question about this to one accounting officer and I was told in reply:
  "we intend to introduce a new system to deal with this. As accounting officer, I now have several million pounds worth of Admiralty property which is not on my loan records."
  I recall that being said because I met the accounting officer in question informally on a subsequent occasion; it was at the opening of the covered berth at Yarrow shipyard. That disclosure to which I referred was made somewhat off the cuff.
  Is a great deal of this equipment still out on loan? Is any of this machinery now in the factory at Alexandria, which was formerly the Royal Naval torpedo factory, commonly known as the Argyll Works and now in the ownership of the Plessey Company?
  I ask this because last Friday I was in that factory with several of my hon. Friends. As I looked at the machinery I saw some which had a specific function; it was not the usual lathe or drilling or planing machinery. I saw five machines which I imagine were all Admiralty designed to wind armature cores for a specific class of motor.
  I am very sorry that I cannot bring the correct information to substantiate it in writing, but I understand from discussions that the Plessey Company is very anxious to get hold of this machinery, to remove it from Alexandria to its works in Ilford. This machinery is required to manufacture the Mark 24 torpedo. I am asking for some investigations to see whether that machinery is owned by the Plessey Company or is on loan.
  Behind this relationship, in terms of accountancy and Governmental practice with industry, I understand that the sale price for this huge concern at Alexandria was £650,000. I cannot estimate the break-up value of such property, but I would hazard a guess that valuation of that plan and machinery is well over £650,000.
  Perhaps, at our next meeting of the Public Accounts Committee, we could go behind the relationship between Government and industry, when the Government have to subvent private industry in this way. I formed the view from a long discussion with the people in this former Ministry of Defence establishment, that
  718
  the company moving in—Plessey is a multinational company—gave the impression that they were doing, the Government a favour by taking over this concern.
  I have read with interest the balance sheet of the company which says, on page 12:
  "Nowhere was the order fall-off more drastic than in our enlarged numerical control company, where a 50 per cent. decline in the United Kingdom business and a 30 per cent. overseas forced the closure of the recently acquired Argyll Works in Scotland. This was a harsh decision for us to have to take and, I recognise, a grievous blow to the Scottish people at a time when their hopes of other work are small".
  That is certainly a truism. What was harsh for the company is much more harsh for the men involved.
  I wonder whether, in drawing up this type of contract—I am not privy to the type of contract which was passed between the company and the Ministry of Defence—the Government are right to tell a company that it may close at will something which was built up by the nation. The only thing which has prevented this—and, I suggest, the only thing which has prevented the moving of some machinery which still belongs to the Ministry of Defence—is the action of some men on the shop floor. This is disastrous. It is not in keeping with the type of contract to which I would want to be a party that one should give the impression to a public company that it is doing one a favour by taking over assets whose break-up value would be much more than the £650,000 which it claims.
  I know that this is embarrassing for Plessey, because it is willing to sell or participate in a new form of organisation with other concerns, without raising the price which might be bid for the assets on that site. I question this whole procedure. We are dealing not with national companies but with companies which can switch their investment. They can so involve their investment decisions on an international basis that the people in a locality suffer great hardship: an investment decision is taken remote from them and in a manner which disturbs their future well-being.
  I want to describe some of the problems of investment decisions, which are examined in great detail in this book,

  719
  "The Structure and Growth of the Scottish Economy", by Professor Johnston and others. He says on Page 342—
  Mr. Onslow: Which Professor Johnston is this'?
  Mr. Douglas: I apologise. This is Professor Tom Johnston, Professor of Economics at the Herriot Wall University at Edinburgh. There are other Professor Johnstons and I have a suspicion which one the hon. Member has in mind—but he is more a monetary economist than the one I am quoting. Professor Johnston says on Page 342 of this book:
  "Regional measures have sought to stimulate capital formation, to affect both the quantity and quality of labour supply, and technological advance has been pursued through the efforts that have been made to promote the growth of such new industries as electronics. All the measures deployed with a view to influencing the regional supply of factors have demonstrated an interest in seeking to improve Scotland's resource position and her comparative advantage. We have identified and tried to quantify them in this study. Nevertheless, disquieting questions have kept recurring as we proceeded. Why has the tempo of change not been more rapid? Why is Scotland still out of step with the national average? "
  We have done a lot in terms of trying to assist companies by either giving them public assets, at what I consider to be a relatively low price, or assisting them with investment grants and in other ways.
  In looking at the rôle of the Public Accounts Committee, should we not develop a new technique, a new rôle in terms of the financial analyst approach to public expenditure? We cannot look at the operations of companies in which public money is used. We may have the accounting officer who can account strictly by his balance sheet, but we have very little or no opportunity to get behind all the public expenditure in terms of the investment decision. We have no opportunity to consider the effects of public expenditure, and investment decisions which flow from that, on the men in particular regions.
  I hope that I have not taken too long, but these are important points. I will try as a member of the Committee to find ways, with the assistance of other members, particularly my right hon. Friend the Member for Cheetham, the Chairman to see that some lessons are drawn by the Committee in the coming Session.
  6.28 p.m.
  Mr. Tom Boardman: The success of the Public Accounts Committee was due to two factors. The first, as the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) said, was the work of the Comptroller and Auditor-General and his staff. I would echo the right hon. Gentleman's praise of Sir Bruce Fraser. The second factor was the chairmanship of the right hon. Gentleman himself, who gave us both an entertaining and instructive, and, I hope, a useful, session.
  The right hon. Gentleman's main theme was the Beagle aircraft. If I develop from that point, I do so because, as the right hon. Gentleman said, there are many lessons to be learned from it. It was not the amount involved—£8½ million, which is a not insignificant sum, although it was relatively small in relation to many of the amounts discussed. Neither do I wish to raise it because of the party political issues which have been discussed in this House from time to time during the incidents which gave rise to the acquisition and subsequent downfall of Beagle. It illustrates the problems that arise from Government intervention. Whether we like it or not, there is Government intervention in industry, and on some future occasion there will be further Government intervention, by one party or the other. We should see what lessons can be learned from this.
  I shall not go, blow by blow, through the sorry incident of Beagle, but there are some facts which came out in the evidence and which were not referred to in the House but which should be mentioned as illustrating the sort of faults which arose in that case and which we should avoid in future.
  The episode began with the acquisition in July, 1966, of the Beagle Company in a way which needed, but did not secure, the approval of this House. There was an interval of two years between the time when the Government undertook to acquire the share capital, guaranteed the amount to be paid, and guaranteed that it would cover all losses in the intervening period, until parliamentary approval was given. They had taken on all the commitments and obligations that would have followed the acquisition of the share capital of the company. This could not

  721
  be acquired because parliamentary approval was lacking. I accept that there must be many occasions on which the Government have to take action and ask for approval afterwards. In this case there was a long delay of two years, in which the company appeared to have deteriorated, before the matter came to the attention of this House.
  The Government having made the acquisition—the right hon. Gentleman made an indirect reference to this—which we must assume was made on careful investigation of the facts and figures, and having got themselves into the saddle, there was no post-acquisition audit which would, by normal commercial standards, have been the appropriate course to take.
  Any large company having acquired another company would periodically, and normally as soon as possible after it was in the saddle, have had a post-acquisition audit to see whether the forecasts and assumptions on which the purchase had been made were supported by the facts of which it was then in full possession. That was not done in this case.
  Turning to the point which the hon. Gentleman the Member for East Sirlingshire (Mr. Douglas) has touched on, a Government nominee was appointed a director to "safeguard the interests of the Ministry". This was in the interval between July, 1966, and July, 1968, when the acquisition was completed. It begs the question, which the hon. Gentleman himself begged, of what is the responsibility, the role—what kind of animal a Government nominee is. We are accustomed to hearing that a certain person has been nominated to a board to represent some sectional interest, but there can be no such representation. A director is one of a board of directors with collective responsibility. It is dangerous particularly for a Government to claim that they are entitled to put someone on a board to represent their interests, interests which are presumably in conflict, or could be in conflict, with the interests of other shareholders in the case of partly owned companies or other duties which a director should discharge. A director has collective responsibility. He cannot say that he is responsible for only one section of the shareholders, or that he has a primary duty to one particular group not shared by his fellow directors.
  722
  There requires to be clear thinking on this point. Some of the problems which have arisen in subsequent cases have shown that reliance has been placed on the so-called Government nominee or representative director on the board. Criticism has been made because he has not run back to his sponsor and told him the facts. It begs the question whether any director who represents a sectional interest is entitled to go to that section and tell it facts not known to all the shareholders.
  Mr. Douglas: I am sorry to interrupt, but the point I questioned was the fact that Mr. MacKenzie, who was a member of the S.I.B., went scurrying to the Department of Trade and Industry on 14th October to tell it his view of the facts. That triggered off the crisis.
  Mr. Boardman: I wanted to avoid widening the discussion to deal with Upper Clyde and Rolls-Royce and to go on to develop the general principle on the facts of which we have evidence in the Beagle case. How this can be developed is a matter which the House can discuss.
  A director's responsibilities are laid down under the Companies Act. We should be cautious before we nominate someone as a director and expect him to have a special duty.
  There was a further feature in the Beagle case which caused me concern. The Government having acquired their control and appointed their directors, and having put in their financial management, there appears to have been a lack of prudent commercial appraisal and, despite the completion of monthly and quarterly forms and the holding of periodic meetings, the writing on the wall, which I would have thought was to be seen, was missed. It was not until the disaster struck that anyone responsible appeared to recognise the consequences of their financial policy, consequences which should have been apparent a long time before. That is a matter of management.
  A further factor which came to light and to which I would draw attention was the way in which the Government put in the money. It was initially said in Committee on the Industrial Expansion Bill in 1968 that further capital was required within the company and that

  723
  this would be put in by Government in the form of share capital. But when the Government found that further money was needed they did not subscribe further share capital; they made additional loans. When it was asked why this had been done, the Department said that the money would have been subscribed to shares if the Government had been satisfied that the company had a future and would trade successfully. The inference—in fact it was stated—was that the Government would subscribe in the form of share capital only if the company was solvent. If the company were to become insolvent, it wished to have the priority of loan capital above share capital. This is most relevant to the argument which the right hon. Gentleman put forward about safeguarding the position of the creditors. Having publicly stated, in so far as the minutes of the Standing Committee are public documents, that all further Government capital would be subscribed share capital, and then to put in several million pounds as loan capital, so that when the receiver was appointed that additional Government subscription ranked with the creditors instead of below them, was a course of conduct which, had it been carried out by gentlemen in the City, would I am sure have been described as some form of swindle. I suspect that the original statement as to how the Government would subscribe the additional funds would have been named as a fraudulent prospectus.
  When the company went bankrupt, was it not considered straightaway that this would make a difference? It was not said that the creditors would be paid in full and it was not said that the money the Government had put in by way of loan would be deferred. Hon. Members will recall that there was an interval of many months, about four, during which the Government of the day were unable to say whether the creditors would be paid in full. At one stage the Government said that they were considering the legal implications to decide whether it would be possible for the creditors to be paid. That is a course of conduct which it is quite improper for a Government Department to pursue.
  The creditors were paid in full but there was some doubt whether they would be, and that brings me to the Treasury
  724
  Minute upon which the right hon. Gentleman has commented. I share his views. It is skilfully drafted and avoids what I believe is the main issue which should be faced by Government. It must be said quite clearly, when Government becomes involved in investments of this nature, whether or not they accept liability beyond that which would be incurred by an ordinary shareholder. In this case, the public looked upon this as if the Government had taken the company over. In the minds of creditors, many of whom were my constituents, and many of whom approached me and told me of their attitudes, the company was in the same position as the Coal Board or the Steel Corporation. These people looked upon their money as being safe and secure. They were horrified, shocked, when they were told that it was a limited company and it depended on the proceeds of liquidation whether they would get their money and that in any case a large part of the money which the Government had put in was on loan and ranked equally to the company's obligations to them. At that time the Government took the line that they were unsure, in the light of legal advice, what the position would be. The Treasury Minute has certainly not clarified this for the future.
  Whenever Government make an investment, whether into a wholly-owned company or whether they are making a substantial investment into a company and are know to be, this knowledge of Government participation lulls creditors into a false feeling of security. This is something about which the Government should think more deeply. In future it should be made clear whether Government have accepted unlimited liability, or the extent of the Government commitment should be clearly set out.
  Mr. Harold Lever: I think the hon. Gentleman would welcome an intervention to allow me to qualify what he has said. He appears to have said that if the Government make any investment in a company they must issue notice that they are not taking liability for creditors, on pain of meeting these creditors. He surely would not say that people give credit to B.P. on the strength of the Government's shareholding, quite apart from its own strength. It never occurs to them that the Government would be behind it merely because of their shareholding.

  725
  A great deal depends on the activity of the Government in relation to the company.
  Mr. Boardman: I am obliged to the right hon. Gentleman. I think my statement was too sweeping. If we take the case of Beagle and the facts that we know about that, where it was known to those who were trading that this was a "Government company", then it is different. There are at the other end of the scale those companies in which the Government may have investments in one form or another, the extent of which may not be known to the creditors and those who trade with it, or, if known, may be irrelevant. There is an area between these two extremes, and I find it difficult to draw a dividing line. This requires further thought. Beagle provides the opportunity for some fresh thinking on a number of such factors.
  A general point which disturbed me in the evidence which came before the Committee, a point developed already by the right hon. Member, was the position of the sub-contractors who were in something of a monopoly position and yet were apparently able to resist demands for information and to continue to supply on prices which they fixed. The right hon. Gentleman has made the point, which has been carefully considered by the Treasury and the Minute refers to it.
  There is a further point involving the bacon industry, which was investigated. It received £42 million over four years, yet the Ministry did not require the firms which have been supplying statistics to produce any breakdown of their costs and profits attributable to this operation. This disturbs me considerably. There was no breakdown of operations into the parts appropriate to the subsidy and those parts inappropriate to it.
  It appeared in evidence that it was thought to be difficult to make this division which would be essential in assessing the level of subsidy. I would not have thought it unreasonable to tell a firm which expected such a subsidy that it must justify it by producing proper costings to show the figures upon which it based its claim. I hope that the discussions now in progress will enable that to be done.
  I recognise that the only matters which come into this report and which come before the Public Accounts Committee
  726
  are those where questions of doubt arise. The House will no doubt bear in mind the thousands of other matters which go on daily and reflect upon how small are the number with which we have been concerned.
  My first year's experience on the Committee is that it has a good disciplinary effect, and, while no doubt over the years the processes will be improved and developed, I have enjoyed my year, and I hope that the work which the Committee has done will be of use to the House.
  6.50 p.m.
  Mr. John Smith: I do not propose to follow the hon. Member for Leicester, South-West (Mr. Tom Boardman) in his interesting discussion about the way in which the Government are involved in the activities of private companies. I prefer to direct the attention of the House to the decision by the Government, which is noted in the report of the Committee, to discontinue the payment of investment grants on 27th October, 1970. This decision has had serious implications for the development of regional policy, and the Committee discuss in the report one or two problems which arise from the discontinuance of investment grants.
  The House will recall that under the previous Government there were two major arms of development area policy. One was investment grants, introduced in 1966, which made a 20 per cent. grant available to manufacturing firms undertaking capital expenditure in non-development areas, and a grant of 40 per cent. on capital expenditure on plant and equipment inside development areas.
  As is noted by the Committee, on 27th October last year the Government replaced this scheme by a system of differential tax allowances, whereby firms in non-development areas could write off 60 per cent. of their capital investment against corporation tax in the first year, while firms in the development areas enjoyed free depreciation and were able to write off 100 per cent. of their capital expenditure in their first year. This system was further amended in July, 1971, when the Chancellor of the Exchequer allowed firms in non-development areas to write off up to 80 per cent. of their capital expenditure on plant and equipment in a one or two-year period.

  727
  It would not be in order for me to discuss the basic argument whether the investment grants system was an intrinsically better system than the free depreciation system, on the grounds that it benefited companies not making immediate profits and was a much more direct inducement to invest than the system of tax reliefs. Many hon. Members on this side of the House believed that the change was made more from a desire to reduce public expenditure and an aversion to Government money being given to private enterprise than from a desire to revise regional policy.
  I draw to the attention of the House some recent developments which, directly or indirectly, are speedily eroding the value of such regional development incentives as presently exist. They are arising partly because of the form of these incentives. In the July measures announced by the Chancellor of the Exchequer the proposal to give 80 per cent. free depreciation to firms in non-development areas reduced the differential advantage for firms in development areas. In addition, the decision earlier to reduce the corporation tax from 45 per cent. to 40 per cent. diminished the value of regional development incentives in the form of tax allowances.
  The result has been picked up recently in research carried out by Dr. Rhodes in the Department of Applied Economics at Cambridge University, who noted that the differential value of the free depreciation system for a firm in a development area over a firm in a non-development area in which £100 invested was worth about £12 under the old system had been reduced to about £2 per £100 under the new system. This is dramatic evidence of a serious erosion in the value of the incentive, which has been caused basically by the decision to move from investment grants to free depreciation and by various other matters I have mentioned which followed as a result of the Government's development area policy. We should bear in mind that the whole key to the notion of development areas is that there should be a substantial differential between a development area and a non-development area, otherwise the policy of assisting the development areas is not likely to have a very important effect.
  728
  What is more, when one looks at the whole question of development area policy other things are taking place which make matters even more serious. One of these is the atmosphere in which decisions are taken in the knowledge that the regional employment premium is to be phased out in 1974. The knowledge that it will not be in existince in 1974 means that many businesses discount it completely in their future planning, because they tend to take their planning decisions over a longer period than from now until 1974. That is an unfortunate feature of this decision, and, in addition, there has been no announcement by the Government of any other form of labour subsidy to take its place after 1974.
  The regional employment premium is a fixed amount, £1·50 per employee, and it is becoming worth less each year in the light of inflation. It is, therefore, reducing in value as the amount of the wage bill which the firm has to meet is increasing. That has been a feature of the last year or two, so that the value of the R.E.P. is scaling down as inflation increases. There is now an urgent requirement for the Government to announce either that the R.E.P. will continue beyond 1974 or that another form of labour subsidy will be introduced at that time. This would be a great help in ensuring that we have an effective regional employment policy, and it would also have the advantage that the R.E.P. is one of the few regional development aids which is of benefit to existing industry as well as to incoming industry.
  There has recently been a good deal of complaint by companies in special development areas that they are not given the same assistance in their struggle to retain employment as incoming firms are given to bring in new employment. The R.E.P. is a form of assistance which benefits both equally. Although the cost may be fairly high, I counsel the Government to think seriously about announcing either that it will not go or that it will be replaced by something of equivalent value, in the meantime perhaps increasing it to take account of the influence of inflation upon its value, and to show that the Government are serious about wishing to assist industries struggling to keep their labour force.
  This problem is particularly common in Scotland, and an immediate objective

  729
  of Government policy should be to try to hold the line in Scotland to prevent the unemployment situation becoming even more serious.
  I know the Government will plead that there are other features of their regional development policy, such as the special development area provisions which cover, for example, areas like West Central Scotland, but these have not yet borne much fruit, and we may have to wait a considerable time before any advantage is gained from them. Certainly these policies would have been much more effective if they had been set in the context of an investment grant system rather than in the context of the system of tax allowances which the Government produced in its place.
  There has been an increase in public expenditure involved in the public works programmes recently announced by the Government. There is a certain irony in the Government in one year reducing investment grants paid to manufacturing industry so as to reduce public expenditure, and in the next year having to increase public expenditure in the form of public works programmes to deal with the economic difficulties which have to be faced.
  Mr. Patrick Jenkin: I do not want to choke off the hon. Gentleman's remarks, but they do not bear strictly on the report which we are considering. On the particular point he has made, it is fair to point out that the Government have all along related the abolition of the investment grants to the reintroduction of the tax allowances, and have consistently stated that the savings in public expenditure are net of any savings in investment grants.
  Mr. Smith: I do not follow the hon. Gentleman's last point. Will he repeat it?
  Mr. Jenkin: The hon. Gentleman is making the point that the Government cut public expenditure by cutting grants last year to private industry, and are now increasing public expenditure as part of the measures to promote employment. My point is that, according to all the figures and percentages, as the expenditure White Paper shows—and we shall be debating it next week—the reductions in public expenditure last year were all
  730
  net of the cuts in investment grants. The investment grants were not taken into account as part of the cuts in public expenditure.
  Mr. Smith: In the public expenditure White Paper we see that there will be considerable savings for the Government in the future arising from the decision to abolish investment grants. That decision was taken with the future in mind as much as the present. In the present situation the Government should either reinstate the investment grant system or make substantial amendments to their own proposals, which would perhaps involve increasing the regional employment premium now.
  There is the difficulty that changing regional development incentives has an unsettling effect upon investment decisions, because firms deciding to invest in development areas are never very sure how long a particular area development area policy will remain in operation. We see the argument that there should not be too much chopping and changing. That is why it was unfortunate that the Government departed, very shortly after coming into office, from a system which I thought was doing reasonably well in building up new industries in the development areas.
  My constituency is within the West Central Scotland development area. It is a constituency with a male unemployment rate in excess of 10 per cent. Those of us who come from development areas are bound to look on regional policy as just about the most important thing affecting the interests of our constituents. Scotland has a male unemployment rate of 8·6 per cent. The whole country is acutely conscious of the need for an effective policy of regional development, which is why we look with a great deal of foreboding at the present evidence that the value of regional development incentives has been greatly reduced, both by changes in Government policy and by events over the past year or so.
  I urge upon the Government, and upon the Committee in its future deliberations on investment grants, to pay particular attention to the way in which Government policy works out in practice. I have been trying to give some evidence of how the present policy is not working successfully. I hope that the Committee can

  731
  check the way in which Government policies work out and bring to the attention of Parliament those occasions when it is not working successfully.
  The reasons why the policy is not working under the present Government are clear enough. If the Government seriously wish to stimulate investment, to stimulate industrial activity in the development areas, the time has long since passed for a fundamental review of the policies upon which they are embarked. I understand that Lord Rothschild's group is considering a study of regional development policies. I hope that it proceeds quickly and that the Government do not feel restricted by any of their ideological notions when considering the future of regional development policy.
  It is perhaps a little unfortunate that it is this side of the House which by and large represents the development areas. As well as an economic division in the country between the better-off areas and the development areas, there is almost a political division. It would have been healthier for the development areas if more Conservative Members had to face the problems there. I hope that hon. Members opposite will not be blinkered in their view by the fact that most of the pressure for change comes from this side.
  It is unfortunate to see both an economic and a political division developing between areas which are better-off and those which are less well off. To avoid the division developing further, to have unfortunate social effects as well, I urge the Government to change their policies in the light of a complete review of the effect of regional development policy as presently constituted.
  7.4 p.m.
  Mr. Cranley Onslow: I am not sure what most of the speech of the hon. Member for Lanarkshire, North (Mr. John Smith) had to do with the report, but I will not prolong my speech by inquiring.
  I want to make just three brief points. First, I want to add my thanks to the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) as Chairman of our proceedings. I remember particularly his inventiveness. Students of parliamentary oddities may like to
  732
  read the interesting exchange of evidence on the "Electro-Magnetic Enemy-Killer", which the right hon. Gentleman invented as a hypothetical article but which he has obviously put to good use lately, since we still see him on the Front Bench where lie started the debate.
  My second point has already been made substantially by my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman), who analysed with great clarity and precision what we should be looking at in the Beagle affair and the lessons we can properly draw from it. I was startled to hear the right hon. Gentleman, in his opening speech, interpolate a piece of information which was new to me and the Committee, and which I believe is also new to the House, that it was the intention that governmental intervention in the affairs of Beagle should be only on a transitional basis. I was very interested to hear that, and perhaps at a convenient moment we can hear the right hon. Gentleman further on the subject.
  Mr. Harold Lever: What I said was that there were a number of situations which were of a transitional or extemporised character—that is, they were not regarded as central pillars of economic and political policy. I did not imply that it was thought that Beagle would be transitional, certainly not in the sense in which it became transitional. In fact, it could reasonably have been hoped—I do not know whether this was so—that it might get on its feet and then operate independently of Government support.
  Mr. Onslow: What a beautiful piece of extemporisation! But what the right hon. Gentleman actually said—the OFFICIAL REPORT will probably confirm that I got his words right—was that this was a situation such as might occur elsewhere, where intervention one day was to be withdrawn. If the right hon. Gentleman did not mean to say that, or did not say it, of course I will say that I am sorry. But this is a facet of the affair that I think is new to the House, and on a convenient occasion I shall be delighted to explore it with him.
  Mr. Edmund Dell: Perhaps my right hon. Friend intended to imply that the late Government's intervention in Beagle was to be as transitional

  733
  as the present Government's intervention in Rolls-Royce.
  Mr. Onslow: I should be delighted if that were to be so. We might find that the present Government will outrun the previous one by that standard.
  I return to the real point. It is wise that on this occasion we should stick to such conclusions as we know can safely be drawn from the Beagle affair and the evidence we have taken on it. The safest possible conclusions to be drawn, which I have advanced to the House before, summarises my view in a nutshell. It is that any private citizen in the City of London who behaved in like fashion would be in dead trouble with the law.
  My third point is that, fascinating though it is to join the right hon. Gentleman in speculating about the functions which the Committee might perform in future, and inclined though I am to join him, we are somewhat confounded by Standing Order No. 86, which sets us up. There we find that the Committee is appointed
  "for the examination of the accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure, and such other accounts laid before Parliament as the committee may think fit …"
  But by long-standing custom the nationalised industries are conceded to the proper concern of the Select Committee on Nationalised Industries. Whether we can without further instruction from the House institute ourselves as a Committee to advise the Government on how other activities which are nearly but not strictly nationalised industries should in future be accountable to Parliament, which votes their funds, I do not know. It would be interesting to do that. Perhaps we might first have to redraw the demarcation line between ourselves and the Select Committee on Nationalised Industries, or have it redrawn for us, or we might usefully consider whether we need two distinct committees.
  I am conscious, and the right hon. Gentleman may well be equally conscious, that Parliament probably has about enough committees and would not mind cutting down in number. The time to carry out their proceedings adequately, the ease of obtaining a quorum and,
  734
  indeed, the amount of manifest parliamentary enthusiasm for debating their affairs, are all rather less than in Glad-stone's day. That is not necessarily a bad thing. We move on. If it is correct to describe the P.A.C. as the most influential of the Select Committees, and its reports as the most authoritative, at the same time we must try to entitle ourselves to that lofty description by moving on with the times.
  So I ask that somebody should seriously consider whether there is a continuing need for this kind of Public Accounts Committee. In our grandfathers' day it was no doubt an enormous comfort to have a broadsword hanging over the ancestral fireplace, but now we are too puny to lift so large a weapon even if it retains its cutting edge. In a day and age when government is steadily becoming more professional administratively we amateurs must ask ourselves whether this Committee, Parliament's great old broadsword, is still as effectual as it used to be. I will say no more now—I have had only one Session as a member of the Committee and no doubt I have asked as many useless questions in that time as any other member of the Committee and probably more. I may be slightly wiser at the end of the next Session, but it is not too much to ask at this stage that we should consider the Committee and its function with a slightly critical gaze.
  Mr. Harold Lever: I do not know whether the hon. Gentleman thinks there is any dubiety about the Commiteee's right to investigate appropriations of money on any enterprise, whether it be Beagle, U.C.S. or Rolls-Royce, which do not fall within the purview of the nationalised industries, which by courtesy rather than by strict rule we allow them to investigate.
  Mr. Onslow: The right hon. Gentleman is leading me to prolong my speech, which I do not want to do. We exist to serve Parliament. If Parliament wants the task to be carried out, it would be as well that we should have a formal instruction to that effect rather than invent new tasks for ourselves. Meanwhile we might consider whether it would be most effective for us to undertake new tasks in the old way or whether some new machinery might more effectively be evolved.
  7.12 p.m.
  Mr. George Cunningham: This is the first debate on the Report of the Public Accounts Committee in which I have taken part. I find it a curious kind of debate, with each of us talking about his own particular obsession. With the exception of my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) and the Government's spokesman, each of us waits for the previous speaker to resume his seat so that we can get on with our own speech.
  The hon. Member for Woking (Mr. Onslow) gave a clue as to one direction in which the work of the House in overseeing expenditure should go. We should get into the habit of using such specialist committees as the House reluctantly provides itself with to perform the job of overseeing expenditure before the event—and in some ways after the event.
  The Public Accounts Committee has a very special function in that it looks at expenditure after the event, and such a rôle calls for a general committee rather than a specialist one. But if we are to have specialist committees on particular subjects, it surely is sensible—if the House of Commons could ever bring itself to do such a thing—for the Public Accounts Committee to pull in one or two representatives from one of the specialist committees to assist the Public Accounts Committee when discussing a Department's affairs.
  I illustrate this point by drawing attention to the Committee's comments on overseas aid. I am sorry to say that on the subject of budgetary aid I find myself in agreement with the hon. Member for Woking, but probably for very different reasons.
  The Committee and the Treasury in its reply endorse what in recent years has become the conventional wisdom of our aid machine, which is that budgetary aid should be brought to an end as quickly as possible. This surely is far too simple a view of the situation. There are only three or four independent countries in relation to which we provide budgetary assistance as against development assistance, but I think I am right in saying that in not one of those places do we provide only budgetary assistance. We always provide budgetary assistance along
  736
  with development assistance. If we intend to give to Botswana, say, £2 million development assistance each year, which is probably about the right figure, it makes sense for us to assist the Botswana Government to maintain the quality and size of administration which permits it to make sensible use of that development assistance.
  The Committee was concerned with the detailed control and investigation of the budgets of independent countries which, according to present practice, the provision of budgetary assistance entails. Perhaps some members of the Committee would not mind continuing to assist developing countries in meeting the difference between their expenditure and their revenue but would like to stop detailed investigation of the budgets of those countries. In other words, we would continue to provide budgetary assistance but would not demand the detailed control which, with rather rare exceptions, we have always demanded in the past. When we used to vote £6 million a year to Jordan we did not ask for the detailed budgetary control which we now normally ask for any country which is to receive such assistance. I suggest that there is no practical possibility of Britain providing budgetary assistance without asking for, and rigorously examining, the details of the budgets of the countries which we are assisting. I am surprised that the implication in the report of the Public Accounts Committee is that there should not be a degree of detailed control.
  If it is suggested that we simply want to get rid of budgetary assistance as quickly as possible and concentrate on development assistance, then we need to know whether this would mean that we shall move away from a system of aid allocations to countries like Botswana Malawi, Lesotho and, in the past, Swaziland—countries which have not been able to meet a reasonable level of expenditure on their own revenue.
  I hope that in future whenever the Public Accounts Committee looks at the budgetary assistance programme, it will look at it with rather more sympathy than it does in this report. We happen to be assisting with budgetary help a few countries which have strong historic ties with us and which cannot look to other aid donors for assistance. If we get out of the business of giving them budgetary

  737
  assistance until they can look after themselves, then nobody else will go in to fill the gap.
  Mr. Harold Lever: I hope my hon. Friend is aware that nobody on the Committee, so far as I know, wanted to reduce the assistance given to these countries. They wanted to bring to an end as soon as possible the budgetary aid system. Unless my hon. Friend thinks that that system is better than the other methods used in every other case, he has no complaint against the Committee. If, on the other hand, he thinks that the budgetary aid system should be perpetuated because it has special advantages over other kinds of aid, he should know that not a voice was raised to suggest that we should reduce total aid. Is he so attracted or infatuated by this method that he is advocating that we should extend it, not only to those four or five countries, but to other recipients of aid in replacement of some of the aid which they are now receiving?
  Mr. Cunningham: I do not want to quarrel with my delightful and respected Front Bench colleague, but what he has just said will illustrate the difficulty of a general committee which has never had any need or opportunity to go into the details of the aid programme or to make judgments on this matter. My right hon. Friend seems to think that budgetary aid is a device and that we can give assistance for purposes with similar ends by different devices. I am prepared to assert that that is not so. Budgetary assistance is to meet the difference between revenue and expenditure. That cannot be done in India because there is no gap between revenue and expenditure there. There is no need for there to be a gap. India is able to raise from its own revenue the expenditure which it has on what I may call its current account.
  However, whatever development assistance we give to Botswana cannot be diverted to making up the difference between revenue and expenditure. If we stop budgetary assistance to Botswana, it has to sack some civil servants. It is as simple as that. It has to reduce administrative expenses and have more development projects. That would be the effect of telling Botswana, "You will get the same next year as last year, but
  738
  next year it will be development assistance; none of it will be budgetary assistance." We would be telling Botswana to run more development projects, but it would have fewer civil servants to help it to do that. With a country in Botswana's situation it simply is not practical or sensible aid administration to do that.
  The second principal item of aid coverage in the report concerns expenditure at the end of one year on a hurried item to use up the Department's total allocation of funds because if the Department had not used the funds in March they would have been lost and could not be spent in April.
  I should like to take this opportunity, although understandably neither the Minister for Overseas Development nor the Treasury Minister concerned is present, to retract congratulations which I offered to them for the very sensible innovation introduced a few months ago by which, if the overseas development administration undershoots its target by up to £5 million in future, it will have up to £5 million added to its allocation the following year. Since that idea had been in the minds of officials in the Ministry of Overseas Development for some years and as it was brought into force this year, I thought it right to pay public tribute to the Ministers responsible. It was only when I read this report that I discovered that the Ministers were not responsible and that it was a recommendation from the Public Accounts Committee which achieved this very worthy end. So, having retracted my congratulations to the Ministers, I should like to transfer them to my right hon. Friend the Chairman of the Committee.
  I suggest that there is a better way of dealing with this matter. Although it is the ingrained view of the Treasury that finance can be authorised only in annual sections, other countries have more sensible ways of running their affairs. The Canadians, for example, on the specific matter of aid, have got round the enormous difficulty which the Treasury imagines exists by simply realising that there is no problem at all. When the Canadian Parliament, which is based on our constitutional basis, votes aid loans, the money can be expended in that year or in any later year. That encounters

  739
  no difficulty, technical, political or otherwise, in Canada. When money has been voted for aid grants, if there is anything left in the kitty and at the end of the year it goes into a suspense account, a special account, and is regarded as having been spent. It can be spent from that account in later years in addition to whatever is voted in those later years. I suggest that that would be a more straightforward and sensible way of providing for the necessarily long-term nature of aid funding than this very small device which we introduced this year of allowing up to a £5 million carry-over from one year to another.
  It was perhaps a little unfair, though necessary and right, that the overseas development administration was rebuked by the Committee for having gone out of its way to spend the money that Parliament had told it to spend. We now have a dual method of financial control. Although the two methods are drawing closer to each other, they are still very far apart. On top of the traditional estimates method, by which we approve detailed estimates which can be used only for the purposes stated, we have now superimposed the Public Expenditure Survey Committee system, with the approval of the Government, and the noting of the House of programme totals.
  What was the overseas development administration expected to do when, at the end of the year, it found itself with £7 million or £8 million free out of its total but without the detailed provision made in the estimates? If we care to rebuke Whitehall for doing what it thought right on that particular point, we are entitled, when the matter comes before the House, to say that the blame also lies with the House for not making more sensible arrangements for approving aid expenditure.
  One part of this difficulty arose because some of the approved expenditure which did not materialise in the year in question was expenditure which, under the Treasury's outdated rules, was not subject to virement. I suggest that when the main decision on aid is not the detailed decision to spend this and that bit on aid but is the approval of the total amount of aid to be spent in the year, there is no longer any justification for any item of aid expenditure not being subject to vire-
  740
  ment.This would get rid of some of the difficulties encountered here.
  Finally, I invite the Minister to do what few Ministers of any Government are ever prepared to do: to give his attention to the form of our Votes. There has been some rationalisation of the form of the Votes undertaken on the initiative of Whitehall in recent years, but I suggest that it has not gone nearly far enough concerning aid Votes.
  We have two major aid Votes, but both contain items which do not count for control of expenditure purposes as part of the aid programme. Other Votes, not called aid Votes, contain items which do count as part of the aid programme. Therefore, any humble hon. Member like me trying to reconcile the total approved expenditure for aid with the estimates finds it totally impossible to make the transition from one to the other. I beg to state that no one below the level of a Treasury higher executive officer could possibly make that journey from one figure to the other. It may always be difficult, but I suggest that it is possible to make it a great deal easier than it is at the moment. I suggest that we should have one aid Vote which contains all the items which count as part of the aid programme for domestic purposes. This translation from the P.E.S.C. figure to the Estimates figure would be much easier to make. If we did that, I think that we should facilitate a closer interest on the part of hon. Members in the voting of funds than exists at the moment.
  It seems curious that in this Legislature, perhaps uniquely in the world, we have an Expenditure Committee which does not look at the Estimates. I cannot see any purpose in having an Expenditure Committee and having it broken down into sub-committees looking at individual Departments if the Estimates are to come before this House in the end without having been referred to the Expenditure Committee. It means that the voting of hundreds of millions of pounds goes through the House on the nod with hardly anyone taking any interest, and in such a form that, if anyone did, it would be very difficult to follow the figures. We have a long way to go before we look at expenditure in this House in a remotely rational way. I suggest that some of these changes would make matters a great deal easier for hon. Members.
  7.30 p.m.
  Captain Walter Elliot: As the hon. Member for Islington, South-West (Mr. George Cunningham) said, we tend in this debate to concentrate on points which interest us. For that reason, I hope that the hon. Gentleman will not think that I am discourteous if I do not pursue his arguments.
  I am not a member of this distinguished Committee, and inevitably I cannot examine these matters as deeply as the skilful and experienced right hon. and hon. Members who are. However, this debate on the Floor of the House on what is an extremely valuable report gives some hon. Members who are not connected with the Committee an opportunity to look at its work more broadly and talk about our impressions.
  Traditionally, all Governments are considered to waste the taxpayers' money. This report strengthens my view that there is some force in that argument. But I suppose that most hon. Members are too busy to worry about water under the Bridge. One hopes that, as a result of the Committee's investigations, action will be taken to prevent similar waste occurring in the future.
  The reactions of some Departments to the reports of investigations seem to be remarkably flabby. I have looked at four of the items which the Committee examined in order to illustrate what I mean by that.
  I take first the launching aid for aircraft, and I turn to paragraph 60 which deals only with the Trident series, which must be a good many years old. Its estimated launching cost was £49 million, of which the Government contributed £24 million. The expected receipts from that were £5½ million. I do not wish to inquire too much into where the £19 million has gone. I suppose that it has gone somewhere. But we see that the original estimate of receipts of £5½ million is now reduced to £2 million, and that the receipts to date have been roughly £500,000.
  In paragraph 67, we see the Committee's comments:
  "in total the prospective recoveries of Government aid fall considerably short, not only of the aid given, but also of the amount expected to be recovered … But it is clear that, even so, the results have been less satisfactory to the taxpayer than the Government intended."
  742
  When such a big contribution was made by the Government in the first place, I think we ought to have got back something approaching the sum that we estimated, which was a very small proportion of the original amount.
  What does the Treasury say about it? On page 6 of its Minute, it says:
  "The Treasury and the Department of Trade and Industry note the comments of the Committee and welcome their endorsement of the Department's proposal to treat each future case on its merits, to seek better terms for the Government and to include in agreements provision for the review of margins."
  That is what I mean by a rather flabby response to what has been a considerable loss on the part of the Government.
  I turn next to that interesting area, the bacon curing industry. In paragraph 70 the Committee says:
  "It was the Government's intention that payments and levies, taking one year with another, should be broadly self-balancing, but between April, 1967, when the stabiliser arrangements were first introduced and 31st March, 1970, total payments to curers amounted to £21,587,000; and further sums of £20·5 million and £15·5 million are expected to be incurred in 1970–71 and 1971–72, respectively. Total levies to 31st March, 1970, amounted to only £56,684."
  Originally, these were supposed to be self-balancing.
  With considerable anticipation, I turned to the Committee's conclusion. It says in paragraphs 80 and 81:
  "Your Committee are disturbed to note that the Bacon Curing Industry Scheme, which was originally intended to be self-balancing, has turned out in the event to involve such heavy net expenditure year after year; it appears that during the first five years of the scheme, the payments, so far from being balanced by the levies, will have outweighed them by about a thousand to one … Your Committee cannot feel satisfied that the heavy expenditure has produced value for money either for the taxpayer or for the consumer."
  That is very much an under-statement.
  There again, one would hope that the Department concerned might be disturbed with what appears to be a great miscalculation. In paragraph 81 the Committee
  "… welcome the Ministry's assurance that, in future, costs will play a less important part in the determination of the scale of assistance to the industry, and that more attention will be given to the general policy of bacon production …".
  I do not know what is meant by that, but surely costs should have been considered in the first place.

  743
  The third area to which I want to look is that of the social services. I do not make too much of this, because I know the vast sums involved. Paragraph 98, dealing with supplementary benefits, is headed
  "Overpayments of Social Security Benefits."
  Overpaid, including sickness benefit and unemployment benefit, amounted to over £3 million. Underneath that there is a sentence which I do not like:
  "There was, however, evidence to suggest that overpayments not discovered and not therefore written off were likely to be much greater than the £3 million written off in 1969-70."
  Large sums are involved. What is meant by "evidence to suggest"? This matter should be examined more closely.
  Paragraph 100 estimates that errors—I appreciate that errors can be made by staff—would amount to a further £3 million. I have already identified £10 million. In the last few weeks there has been much argument about the cost of children's milk at school, which was £9 million.
  Another very interesting item is paragraph 111, concerned with deserted families. I did not realise that the sum involved was so great. The paragraph states:
  "In 1969 supplementary benefits totalling £78·5 million were paid to 211,500 deserted families, including separated and divorced wives and single women with illegitimate children".
  Of that sum only £7 million was recovered. Greater effort should have been made to recover some of that huge sum.
  Paragraph 117 contains this statement:
  "On 10th March, 1971, the Secretary of State announced the establishment of a committee under the chairmanship of Sir Henry Fisher to review departmental measures to prevent and detect abuse … It is not expected, however, that the committee will present an early report."
  Surely there should have been a greater display of urgency.
  My fourth and last point concerns naval stores. As I understand the system, the depots transferring stores to and from the four naval dockyards have a system whereby stores are issued and the value is checked. The stores are received at the other end and checked and the value is checked. At the end of each year or specified period the difference between
  744
  those issued by the issuing department and those received by the recipient is costed and the difference is labelled "stores in transit". In other words, stores on the way will not appear in the books at the recipient's end.
  Paragraph 167 says:
  "In 1965, a mechanised (computer) procedure was introduced at the four home dockyards for matching, three times a year, the receipts and issues of stores".
  It is very disturbing to read in paragraph 168 that
  "on 1st April, 1969, stores valued at over 11·3 million were recorded in these accounts as having been 'in transit' … for more than a year and that at 31st March, 1970, the comparable figure was over £22 million."
  It is pertinent to ask where the stores were. Inter-depot transfers amounted to only £16 million; so these are considerable figures for stores in transit.
  The Department's view was that the discrepancies were caused very largely by paper errors arising from computer miscodings or valuation discrepancies. That estimation strikes me as being vague. I do not know whether it can be accepted. The cure proposed is the introduction of a new computer complex in two years' time. That will involve more expense. It might have been wiser to have got the present computer system working properly before installing another.
  On page 10 of the White Paper the Department says this:
  "More effort will be devoted to investigating large discrepancies and less effort to the more numerous small ones."
  That is not very encouraging. It would have been better if greater effort were to be made abroad.
  I realise that large sums are involved in the various Estimates and that there are bound to be some errors, but I think that in some cases the errors are rather large. My impression from what the Departments say is that they are inclined to take the view that such errors are inevitable. What stands out is that the inevitable loss always seems to be underestimated. If this happened in private industry—some private companies are very large—the company concerned would be bankrupt. Therefore, it does not happen.
  I hope that the Treasury and the Ministers will carefully study this valuable report and not just let it disappear into

  745
  a cupboard. The Departments' reaction to these investigations in different areas is complacent and lacking in urgency. I have taken only four examples. For all we know, there may be many more leaks, and I suspect that there are. I hope that the Treasury will supply the driving power to implement what this very industrious and skilful Committee has submitted to the House today.
  7.48 p.m.
  Mr. Norman Buchan: I will not follow the hon. and gallant Member for Carshalton (Captain W. Elliot) in all the points that he made, but I must take up one or two of them, particularly his final point that if errors of the magnitude which have been brought out by the Committee occurred in private industry the company concerned would be bankrupt.
  It is only in public affairs that we get this open, public questioning, examination and analysis, and then discussion in the House. Private enterprise conceals and buries its errors. It is true that a company which becomes very inefficient goes bankrupt, but through the whole of private enterprise there is a tremendous weight of inefficiency, as events over the last 18 months have shown, but private enterprise is not subjected to this vigorous examination. We must not fall into the error of believing that because we subject public industry to public scrutiny and are prepared to discuss it openly there is more inefficiency in public industry than in private industry. There is not—far from it. If all private industry were run as efficiently as most of our public industries are, this country would be in a very much better state.
  There is a fair point to raise about over-payment, for example, of social security benefits, with the figure of £3 million in over-payment and the suggestion that a further sum is undetected. But, of course, this sort of thing happens with people who are largely in tragic circumstances anyway. It does not happen with people who are trying to get a nice, fat, greasy cut. It happens to poor people who are trying, for example, to push up £2 benefit to £2·50 to pay the gas bill. Secondly, this is a tolerable error in the sense that the expansion and overweighted structure that would be needed to prevent such errors would have
  746
  two effects: first, it would be too expensive and would probably cost more than the money saved, and, secondly, it would create a kind of inhumanity in the structure and the running of the scheme which would not be compatible with what we see as the kernel of the social services.
  This has relevance to the main point that I want to raise. It has already been referred to my hon. Friends the Members for East Stirlingshire (Mr. Douglas) and Lanarkshire, North (Mr. John Smith). It concerns investment grants and particularly the two curious paragraphs, Nos. 26 and 28, in the report. Those paragraphs are curious in that they describe two incidents which for some reason or other the hon. and gallant Gentleman did not take up, although he was worried about the lack of care and drive on the question of public expenditure. In paragraph 26 there is reference to one case of a subsidiary company in which the manufacturer received a grant, based upon the total list price, of £1,918,228, although the total cost to him was £979,755, almost £1 million difference. Investment grant was paid on the higher amount. If he is worried about 25p too much being paid to an individual on social security, one would have thought that this kind of costing would have attracted the hon. and gallant Gentleman's attention, at least to some extent.
  The Committee looked at this question, and I am glad that it has taken on board some of the points made. It seems a curious situation, as the Committee says, that
  "… grant … should have been based on costs higher than the capital expenditure incurred at first hand, which in Your Committee's view was the appropriate measure of investment by the group taken as a whole."
  This makes me wonder to what extent we have properly analysed the total effect and cost of investment grants. I am an unrepentant supporter of investment grants. We should have done a proper analysis of the situation instead of leaving it to The Guardian and one or two other newspapers which have examined the cost-benefits of investment grants as opposed to tax allowances.
  We are in a very difficult economic situation—and this is especially true of Scotland. The most alarming factor during the past year has been not only

  747
  the increasing unemployment but the disparity between the regions. After a decade of regional development by all Governments, both Conservative and Labour, we were beginning to see—if not the effects of a boom in the regions—at any rate the cushioning effect of direct policies. For example, unemployment in Scotland had been running over the last few years at one-and-a-half times the national average instead of double the national average, as had been the previous unhappy history. But over the last few months this one-and-a-half times has been creeping up again to double. In other words, the tendency has been worsening in Scotland in relation to the total economy.
  I do not believe, therefore, that the usual answer of the Government—that when the economy as a whole picks up the regions will automatically pick upholds water. That is not necessarily a corollary. A pick-up in the economy as a whole is necessary, but it is not sufficient. The sufficiency comes in with conscious policies designed to ensure that the pick-up goes to the regions. Investment grants were a useful cushion in that respect.
  I want to look at what the Committee said about two events in particular—the Plessey factory and U.C.S. From these two incidents certain lessons emerge. It would be interesting to know to what extent shipowners have not been over-keen to withdraw their ships on order from Upper Clyde but have been keen to co-operate because they had investment grants which they would lose if they were to have their ships retendered for and the orders placed elsewhere.
  The main lesson, however, is the reaction to these events. As my hon. Friend the Member for South Ayrshire (Mr. Sillars) said yesterday, the Government should give a vote of thanks to the shop stewards and workers of U.C.S. because without their action the Scottish unemployment figures would have been even worse. What the workers in U.C.S. and in Plessey asserted is something which we have often argued—the right to work. It is a principle easily stated but its fulfilment is difficult to achieve. The right to work is emerging through their action. It is emerging throughout Britain as a whole and is being seen no longer as an aspiration but as moving into being
  748
  of equal value with other human rights which we have established—the right to education, the right to good health, and the right to homes—and it is a factor which no Government in future, either Conservative or Labour, can ignore. They will do so at their peril. The right to work is being asserted in a way as universal as the concept of free education.
  This poses certain problems not unrelated to the Public Accounts Committee and the question of investment grants. What, in incidents like those of Plessey and U.C.S., is the responsibility of private industry? I agree with many of the criticisms made by my hon. Friend the Member for East Stirlingshire. Plesseys put out an investment of £650,000 for the Government factory when it went to Scotland. Within a few short months it was folding up and leaving. I believe that a great responsibility rests upon private firms.
  Speaking about closures, the chairman's report says:
  "This was a harsh decision for us to have to take and—I recognise—a grievous blow to Scottish people at a time when their hopes of other work are small. It is always difficult to reconcile commercial realism with human needs."
  That raises the issue of the social responsibility of private industry, and I am not sure that private industry can meet the problems raised by the demands of social responsibility. One simply cannot ask a firm to work at a loss.
  The consequence of that has been underlined by a fascinating inquiry carried out by the Scottish T.U.C. during the summer in which, for the first time in this country, and, perhaps, in any country, an attempt has been made to estimate the social costs of a closure, because far too lightly we in Parliament and people in industry have accepted the phrase that it is difficult to reconcile commercial realism with human needs.
  What the Scottish T.U.C. said was, "Let us look at the costs of a closure. Let us not merely say that a firm is running at a loss, or coming near to making a loss, or is not showing a sufficient profit. Let us consider what would happen in terms of social cost if there were a closure".
  Those concerned have been equating the amount of money needed to keep

  749
  U.C.S. going with the cost to the community in terms of redundancy payments, unemployment benefits, and so on, of closing it down. More important, they have been considering the cost to the community if the 5,000 workers were moved elsewhere, in terms of hospital beds, teachers in schools, and schools themselves, and the infrastructure necessary to cater for the needs of those workers. For the first time that kind of cash-cost assessment has been carried out, and there are good reasons for thinking that the acceptance of the imperative demands of commercial realism, and the closure of a factory, has been shortsighted, even in cash terms, let alone its monstrous effect in human terms. That is something else that we have learned from the assertion by the workers at U.C.S. of the right to work.
  More and more the social responsibility of the Government and of industry to provide work and employment for our people is being made known. I remember my favourite shop steward, Sammy Gilmore, at the Govan Shipyard, being asked on television, "Are you trying to say that the world owes you a living?" His reply was, "No. I am trying to say that the world owes me the right to earn my own living", and that is the right that is being asserted.
  How can we met the aspirations of working people? It is not enough for us to berate the management of Plessey, dearly as I should like to do it here, and as I have done elsewhere. The real question is how we can meet the needs of the regions in terms of providing work. What the Government have to do is to get rid of some of their dogma and adopt some of ours. We cannot have social costing and ask industries to accept a social responsibility if we do not at the same time have social control.
  Ultimately, whatever pressures we bring to bear on the Government—and many pressures could have been brought to bear on Plessey as 80 per cent. of its work is done for the Government, and plenty of arm-twisting could have been indulged in to get the firm to keep that factory going—in the long run, without social control, and, therefore, vastly increased public ownership, we cannot fulfil the basic demand of this second half of the twentieth century.
  750
  I want to link investment grants with regional policy. About £7,000 million a year is spent on public purchasing. Municipalities buy electric bulbs, and town councils buy scavenging lorries. Two points arise from that. First, if those purchases could be directed to the regions, that would be a revolutionary economic weapon for regional development. There should be a conscious direction of public purchasing towards the regions.
  In conjunction with that, the Government should shed their dogma, as they have in respect of Rolls-Royce—this need not raise the problem of nationalisation—and they, the nation, or the people, should move into the public sector to undertake manufactures. I see no reason why manufacturing for the public sector—the Government, municipalities and nationalised industries—cannot be done by a national, public, or, if one likes, people's manufacturing sector. Is it necessary to order scavenging lorries from a private firm? Cannot there be a consortium of municipalities, and, knowing what those authorities need, can we not meet their needs from the public sector? I see no reason why that should not be done.
  Third, throughout Britain we rightly subsidise various research and development institutions, such as the engineering laboratory at East Kilbride, and the Agricultural Engineering Research Institute at Bush in Edinburgh. A prototype is developed, and then begins the long process of finding a private manufacturer who will manufacture it under licence.
  When I was a Minister I found overnight that I had Ministerial responsibility for agriculture, and one of the things which I discovered I had under my umbrella was the Agricultural Engineering Research Institute. It had developed a plough which was particularly fascinating, but it took about five years to persuade a private manufacturer to undertake its manufacture. That was because the firm was selling its own plough and there was no need for it to rejig or retool its factories so that it could make the new type until it had reached the optimum of sales on its own make and had cleaned up the market. Agriculture is an industry by which we seek to grow two blades of grass where one grew before,

  751
  yet here there was a hold up of five years.
  Another factor is that although the development was the result of public expertise and money, the manufacture had to be carried out in a private sector. The prototypes developed in publicly financed research institutions should be manufactured in the public sector. That would make sense, because in the private sector things become obsolescent in a very short time so that in any case there has to be a retooling and rejigging of machines every five or six years. I stress that suggestion, because it does not raise the whole problem of nationalisation, although I am in favour of that. It merely raises the question of initiative and imagination in starting up new manufacturing developments in the public sector.
  Such a process could underpin a restoration of investment grants in the private sector because it would give a keel to the economy by having public manufacturing there, and that is very important. During the last week we have seen the thoroughly deserved panic of the Government because of the unemployment situation. They have scrambled everywhere to scratch up all the projects that can be pushed through to save 0·1 per cent. of unemployment over the next 12 months. They are spending £180 million on public investment to do this.
  They must do it because only in the public sector can there be an immediate response. If the Government treat the public sector not as a pariah but as something that should be treasured, it will prove the quickest, most satisfactory and cheapest way of triggering off properly based economic recovery, and we could start seeing this country returning to the kind of growth and prosperity with which this great aspiration—the right to work—can properly be fulfilled.
  8.8 p.m.
  Mr. Peter Hordern: I hope that the hon. Member for Renfrew, West (Mr. Buchan) will forgive me if I do not continue his wide discussion of investment grants. I wish to refer only to those sections of the report dealing with aircraft procurement and, in particular, with Beagle Aircraft.
  I think it is safe to assume that, whatever items may appear in future reports
  752
  of the Committee of Public Accounts, we are absolutely bound to find, as a recurring item, expenditure beyond the original estimates on aircraft procurement. It is at once the most rapidly growing part of Government support for industry and the one that is the most difficult to appraise and control.
  In inverse proportion as expenditure is growing on these projects by leaps and bounds, the worst reasons are given for this expenditure. Whereas Government expenditure used to be justified on the ground that certain aircraft were essential for our national defence, we are now told that a rescue operation must be mounted for Beagle Aircraft so that we can have a light aircraft industry.
  Why should we have a light aircraft industry owned by the Government, any more than we should have a Government-owned hairdressing or candyfloss industry? In any case, after the abandonment of the TSR2 we can never again claim to be able to mount a comprehensive and national series of aircraft for the Royal Air Force, and have not been able to make such a claim for a long time.
  The next claim for Government support is that we need a strong aircraft industry, partly because of the number of people employed in it and partly because of the advantages of technological know-how and spin-off. But we must recognise that the cost of a strong aircraft industry, and in terms of employment, is borne almost entirely by the taxpayer, and that cannot be a strong base on which any industry can rest.
  It is also claimed that we should never allow ourselves to become dependent on another country for the supply of aircraft since the technology of aircraft production is ever increasing and we cannot afford to be left out of it. But it is increasingly apparent that we cannot afford to go it alone in this technology, and, happily, this is becoming increasingly acknowledged.
  Finally, it is claimed that we need to undertake important aircraft projects, such as the Concorde, because of the importance of Anglo-French relations, because it is important to earn foreign exchange or even simply because of the honour of building the fastest supersonic aircraft in existence—all no doubt desirable claims, but at what a cost!

  753
  I remain unimpressed by all these criteria. Indeed, I think a country is to be judged not by the resources it devotes to technology but by its unwillingness to pursue irrational ends at ever-increasing expenditure provided by the taxpayer.
  This does not mean that there is no place for an aircraft industry, because of course there is. However, any aircraft industry—indeed, any industry—must rest for the greater part of its support on what the market will readily provide. But from all the evidence over many years it is clear that Government support for the aircraft industry has had to provide far in excess of all original estimates, and the sums involved are truly daunting and rarely justified.
  The estimates now are that Government support will amount to £139 million this year and £213 million next year, without taking into account support for civil aviation services. I take no notice of the official estimates for future years, since they are likely to be falsified by events. I say this not because I doubt the good faith of the experts employed by the Ministry but because the Plowden recommendation that only the more promising projects should be approved have not been followed in the past, and I doubt if they will be followed in the future.
  Up to 31st March of this year total launching costs stood at £152 million, of which the Government's contribution was £64 million. Total Government receipts were originally expected to be £36 million but were by March expected to be £26 million. Since then, of course, we have had the Rolls-Royce debâcle, and £183 million is being set aside during the next five years for the RB211.
  There is no easier rôle than that of Cassandra in forecasting dire disaster and huge costs in the development of higher technology. There will, it is certain, be worse to come. But at least we could have done without the gratuitous assistance of that walking disaster area the right hon. Member for Bristol, South-East (Mr. Benn). Whatever he touches—Concorde, the RB211, Beagle Aircraft, Upper Clyde; big or small, ancient or modern—bears the unmistakable imprint of the master bungler.
  Mr. Buchan: Did the hon. Gentleman warn my right hon. Friend that he would be dealing with him today?
  Mr. Hordern: I do not regard this as a personal attack.
  Mr. Buchan: "Walking disaster"?
  Mr. Hordern: I would have called that a mild expression to use about the right hon. Gentleman. Had I and a number of my hon. Friends given him warning of our remarks and of those that we are preparing to make about him, he would never cease to open his correspondence. I am making a gentle personal reference. I considered advising the right hon. Gentleman that I would be referring to him, but I could not expect him to give up his time to listen to me. I hope that the right hon. Gentleman—I have not finished with him by any means—will let me know if he finds anything in my remarks about him offensive.
  About Beagle, we were told by Sir Ronald Melville in evidence:
  "We had recognised that it was a gamble and everybody knew that it was a gamble, certainly".
  So it was pursued. Plowden might never have been written for all the notice that was taken of it by the right hon. Gentleman.
  There was once a Scottish financier named Law who was entrusted by Louis XV with the management of the French economy. His solutions were paper money for Government projects and a Government lottery. That was also the solution of the right hon. Gentleman as Minister of Technology. Both were utter disasters, but at least under Law's system somebody might have won the pools. The other difference was that Law had to leave the country. No matter. We leave the right hon. Member for Bristol, South-East pursuing his relevant way towards industrial democracy. Perhaps the slogan of the industrial democrats will be "We have nothing to fear but Benn."
  It is my belief that the work of the Committee of Public Accounts will continue to show that Government-aided technology is the new tyrant of the twentieth century. His demands become ever larger, always more extravagant, and his promises more and more incredible.

  755
  I do not think that any British Government will ever be able to keep his activities within bounds unless they ask this question: What is State-aided technology designed to achieve for the State, at what cost, and how could the money otherwise be used?
  If the work of the Committee of Public Accounts ever succeeds in getting those questions asked and answered outside the Department of Trade and Industry, it will have contributed a signal service.
  8.20 p.m.
  The Financial Secretary to the Treasury (Mr. Patrick Jenkin): This debate has inevitably covered a wide range of the subjects touched on in these reports. The right hon. Member for Manchester, Cheetham (Mr. Harold Lever) is no doubt justifiably celebrating his retention of a place on the Front Bench in an election which has seen some surprising upsets. No doubt when he returns to his place I shall have the opportunity of expressing my congratulations.
  I am sure that every hon. Member, particularly those who have had the privilege of serving under his chairmanship on the Public Accounts Committee, will join me in paying a very warm tribute to the skill, tact and humour which the right hon. Gentleman has shown in his chairmanship. Perhaps, as he has returned—
  Mr. Harold Lever: I apologise for my absence.
  Mr. Jenkin: No. I appreciate the right hon. Gentleman's position. I might reaffirm my congratulations on his retention of a position on the Front Bench. I was saying that we all join in expressing our warm appreciation of his chairmanship of the Committee and that those of us who have studied some of the evidence in which the right hon. Gentleman pursued points of great technicality with tenacity and percipience will recognise the great service which he has rendered, both to the House and to the country.
  Perhaps I might begin at the point where the right hon. Gentleman ended, with a few general remarks about the purpose of the Public Accounts Committee. In last year's debate, I said that the Select Committee on Procedure had recommended baldly and briefly that the
  756
  Public Accounts Committee should be retained and should continue to fulfil its present functions. Since then, we have seen the setting up of the new Select Committee on Expenditure, which has already begun to make its impact on the House, as next week's debate will no doubt bring out very clearly.
  But this must prompt the question which my hon. Friend the Member for Woking (Mr. Onslow) asked—was the Procedure Committee right to recommend the continuance of the P.A.C. in its present form? Does it have a part to play in the modern Select Committee structure? I echo what the right hon. Gentleman said when he aptly demonstrated that the Committee has a part to play, that it is thinking about its future, and that it confidently expects to go on playing a vital rôle in our system of public accountability. I am sure that that is absolutly right. The P.A.C. and the Estimates Committee survived together amicably for many years and there is still a need for two such committees in our system.
  The changes made when the Estimates Committee was restyled the Expenditure Committee extended its scope and enabled it to examine the projection of expenditure up to five years ahead. Perhaps more important, the new Committee can consider the policies behind the figures. If there are one or two points in the debate on which I do not comment, it may be because they ventured into the field of policy, and whatever else its functions, the P.A.C. does not examine policy—
  Mr. Harold Lever indicated assent.
  Mr. Jenkin: I am glad to have the right hon. Gentleman's agreement.
  Therefore, some of the speeches of hon. Members opposite about investment grants, regional policy and public enterprise are rather outside the scope of this debate.
  But none of this new work of the Select Committee on Expenditure encroaches in the least on the territory of the Public Accounts Committee, which is concerned to see that, once policy decisions are made, the House and the country get value for money in the implementation of those decisions. That is the main consideration underlying the reports.

  757
  It is of course a commonplace in these days to say that the P.A.C. is concerned more with value for money, efficiency in management than with the narrower questions of propriety and regularity. We are long past the days when a committee was necessary to ensure that money voted for defence was not spent on the King's mistresses. The Committee must still have the strictest of attitudes to any suggestion of misappropriation, but it is very rare indeed that there is cause for complaint about the honesty with which Departments handle the money entrusted to them.
  At the same time, it must be recognised that the meticulous checking of every item and the pursuit of perfect accuracy is a very expensive—indeed, an increasingly expensive—operation and needs itself to be examined for cost effectiveness. I very much welcome what has been said in the debate about this subject. Naturally, Government Departments, like any other bodies, have been examining the possibilities which have been opened up by the more sophisticated methods of control and scrutiny which can be devised by efficient and up-to-date internal auditing.
  Some impressive results have been achieved by replacing with much better methods of control much of the old routine checking which was very dull and boring for the staff engaged upon it and very costly for the Department concerned. But we still get the feeling that, in some quarters in the Government machine, there is a reluctance to press this new innovating function in the checking of accounts as far as it ought to go.
  Perhaps this is in part due to the fear of the unknown, but in part I suspect it may be due to a fear of unfavourable reaction from the Public Accounts Committee if it should be found that something had gone wrong under the new system. If this attitude exists, it is a mistaken attitude. I am sure—I was grateful to hear what the right hon. Gentleman said today—that it should not cover a Department's proposals or ideas about changing or modernising their accounting techniques.
  If an accounting officer has satisfied himself that a new system is well thought out, with adequate but not excessive safeguards against inaccuracy and abuse, and
  758
  that it will make for greater efficiency of management, he should not feel in the least inhibited by the possibility of criticism if, despite his best endeavours, mistakes occur. His defence would be that, in the long run, such mistakes can be expected to cost less than the machinery required to eliminate them.
  Perhaps I can take from these reports evidence in support of this immensely commonsense attitude by the Public Accounts Committee—namely, the Committee's report on the control of internal receipts of the General Naval Stores, the "T" stores episode. Although the Committee properly brought out that things had gone wrong, it was not unduly harsh on the Department, recognising that it was pursuing the laudable aim of saving manpower. The whole House, and certainly accounting officers, will have taken great encouragement and comfort from what the right hon. Gentleman said on this aspect of the Committee's affairs.
  My hon. and gallant Friend the Member for Carshalton (Capt. Elliot) made the general charge which he ilustrated with effect that in certain Departments—he also included in this, to some extent, the Public Accounts Committee, of which he is not a member—the reaction to the losses which were shown to have occurred was "flabby". I would assure him, with all the emphasis at my command that there is no complacency about this. Perhaps I can illustrate this best by referring briefly to four matters which he mentioned, all of which show that in the period the Committee was examining, substantial sums of money were expended which, perhaps, if all things had gone well, would not have been expended.
  His first example was launching aid for aircraft—and here I shall carry with me my hon. Friend the Member for Horsham (Mr. Hordern) who made a powerful plea for less support for the aircraft industry. The position here is that since 1960 it has been the policy of successive Administrations to support promising civil aircraft and engines which would otherwise fail for lack of finance. The aid is intended to be used for research and development—jigs and tools, and, of course, to help meet the high labour costs of initial production. The Government, in theory, like to recover their investment from a levy on sales.

  759
  It must be made clear that in the past, launching aid has had the particular objective of earning foreign exchange. It has had other objectives as well, and these were spelt out in a reply by Sir Ronald Melville on 5th May, at question 2,800 on page 333 of the report. He was asked about the circumstances in which launching aid was given. He said:
  "The VC 10 and the Trident I way back in 1960, were not supported only on commercial prospects but the support was part of the arrangements made between the Government and the aircraft firms which brought about the formation of the British Aircraft Corporation and Hawker Siddeley Aviation. In the case of other aircraft, the B.A.C. 1-11/500 and the Trident 3B were supported particularly in order to enable B.E.A. to fly British and the potential sales of those aircraft were not at that time expected to be very big."
  Given those objectives—this is a matter of policy which it is not appropriate for us to go into this evening—it is scarcely surprising that the recovery should have represented such a small proportion of the total launching aid originally given. There were other reasons for this. The levy recovery arrangements reflected the view held in earlier years that the manufacturers financial weakness justified his enjoying a rate of recovery more favourable than that of the Government. This contributed to the unsatisfactory return. To counter this and other arguments, the investment appraisal become increasingly rigorous and partly for this reason no launching aid, apart from the RB211, has been given since 1967. The Public Accounts Committee rightly welcomes the Department's intention to deal with future cases on their merits and to seek better terms for the Government. That is not complacent or "flabby". It goes a long way to meet the Committee's objectives.
  Secondly, my hon. and gallant Friend mentioned bacon stabilisation as did my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman). With great respect to both my hon. Friends, they did not take account of the changes which my right hon. Friend the Minister of Agriculture announced in an Adjournment debate on 20th April this year. My right hon. Friend then announced changes in the operation of the Bacon Stabilisation Scheme, designed to stimulate closer
  760
  attention to market conditions and to reduce the cost to public funds. These changes were to be put into effect immediately and have contributed to a substantial saving in stabilisation payments.
  The effect of this arrangement is reviewed quarterly, and on 3rd November last my right hon. Friend announced the continuation of these arrangements for a further three months. As a result, the industry is now being forced to pay more regard to market requirements and its reliance on Exchequer support has been substantially reduced. I will quote three figures dealing with stabilisation expenditure if operative for a full year. Before my right hon. Friend made his statement the figure was £23 million per annum; by 12th November, 1971, it was down to £1·22 million; and a fortnight later, on 26th November, the figure was £92 million. There has been a sharp cut-back on the rate at which the stabilisation payments are being made.
  Mr. Tom Boardman: My criticism related to the fact that over a period of three years beforehand this system had gone on whereby there was no requirement to provide what I considered to be essential information. It was not a criticism of the current practice.
  Mr. Jenkin: I am grateful to my hon. Friend for making that point. Under the new system announced by my right hon. Friend there is now a much more realistic system of demanding costs from bacon producers.
  Captain W. Elliot: I am delighted to hear what my hon. Friend said, but I was going on paragraph 70 of the report. I quoted the figure of the total payments which amounted to about £57 million and the statement that
  "… no further levies are expected in the period to 31st March, 1972"
  I understand from my hon. Friend that that is not the case and I am delighted to hear it.
  Mr. Jenkin: My hon. and gallant Friend will be interested to know that when I came to that paragraph in the report I did a swift arithmetical calculation and came out with the ratio of 0·1 per cent. as the return on the total amount paid out. When I got over the page I found that the Committee had done the same sum. It certainly has changed, and

  761
  my right hon. Friend was swift to make the necesary changes. It has been substantially dealt with—if not satisfactorily, then at least better than before.
  My hon. and gallant Friend mentioned the control of internal receipts of general naval stores which I have mentioned already. Here again I must challenge the suggestion that the Department was complacent or that the response has been "flabby". The system which the Department introduced a year or two ago has not proved a success. The level of discrepancies not resolved, although proportionately small, is nevertheless higher than it should be. In an area of business involving vast numbers of stores transactions, many of small value, it is rarely possible to account for them all with complete accuracy. There is no recognised yardstick of tolerance or acceptable level of discrepancy. The effort to resolve discrepancies becomes more difficult and laborious as the 100 per cent. rate is neared. It can be said that the nearer that rate, the lower the return on any extra effort to achieve it becomes.
  The report has three aims—to improve procedures and to reduce discrepancies, to identify stock-accounting discrepancies quickly so that they can be chased up before the trail is cold and to concentrate investigation on the more important discrepancies. The Department is now working along these lines and hopes to consider with the Treasury what sort of accounting procedures are reasonably acceptable for this area of business having regard, obviously, to staff considerations. Here, too, this is being followed up with vigour and determination.
  While on the subject of naval stores, the hon. Member for East Stirlingshire (Mr. Douglas) asked about certain stores in Alexandria which presumably belonged to the Plessey Company but which, because of the work-in, it never obtained. It has not been possible in the time since he asked the question to get an answer. Perhaps I may write to him when I have the details.
  My hon. and gallant Friend the Member for Carshalton mentioned the social security benefits, as did my hon. Friend the Member for Rushcliffe (Mr. Kenneth Clarke) in what I thought was a most thoughtful and helpful contribution to
  762
  this extremely difficult area. The report makes it clear that overpayments have arisen from two main causes; on the one hand, official mistakes and, on the other, mistake, fraud or abuse by claimants. The main factor in official error has been the great increase in the volume and complexity of the work in recent times. Staff have been working under considerable pressure. There has been much dilution of experience as additional staff have been taken on to deal with increased work loads and to meet the relatively high rate of turnover particularly amongst junior staff. I will certainly take note of what my hon. Friend the Member for Rushcliffe said about staff conditions.
  The Committee accepted that there are both moral and practical difficulties in countering fraud and abuse. Most claimants to benefit are honest, as several hon. Members have acknowledged, and procedures which treated them as potential wrongdoers would not be acceptable to the House or to the public. Such procedures would not be practicable because the amount of checking that would be needed would interfere with the prompt payment of urgently needed cash. Therefore, the Government have sought to retain a prompt and humane system for the payment of benefit, while, at the same time, strengthening the machinery for checking abuse.
  I agree with those who say that abuse is important, not only for the money that is lost but for the effect it has on honest claimants. I well remember a striking article in the New Statesman by the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) just after the election, when he recounted in colourful terms the reaction he had had from one of his constituents who was complaining about the "fat slob" down the road who sat on his bottom all week and drew large sums of money which he should not have had. The Government accept that this is important, and, accordingly, staffs have been strengthened. The Treasury has been closely concerned with recent decisions and keeps a watch on progress. As the House has recognised, the Fisher Committee is now sitting and hopes to report next year on the further measures which are necessary to strengthen the procedures.
  My hon. Friend the Member for Rushcliffe suggested that a change to

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  negative income tax might ease some of the administrative problems and reduce the opportunities for mistake and fraud. As the Government have made clear on a number of occasions, we still have negative income tax under study as part of our continuing review of the problem of family poverty, and we are not yet in a position to make a statement on it.
  I mention investment grants merely to say two sentences and then pass on. The investment grant scheme has now terminated, and there is a relatively short period for residual payments still to continue. The Committee's report, therefore, is really about the past. The hon. Member for East Stirlingshire suggested that some of the same problems might be apparent in the case of tax allowances. I assure him that problems of the same nature as those examined in the report in relation to grants are being most carefully watched.
  The hon. Member for Islington, South-West (Mr. George Cunningham) raised several interesting points about overseas aid. His first point did not so much criticise the Government, although I think they were perhaps included in his strictures, as criticise the Committee, again on a policy matter, namely, whether the Committee was right in taking the view it did in its 1968-69 report that budgetary aid should be brought to an early conclusion. This has been a consistent view of the Committee for at least three or four years. It has certainly been the Government's wish to fall in with the Committee's desire.
  It is not for me tonight to defend the matter of policy whether the Government should give budgetary aid. I will only say that the Committee has rightly regarded it as an essential concomitant of budgetary aid that the Department in this country should maintain as close a control over the budgetary affairs of the recipient Government as it would over a Department in this country receiving a Treasury subvention. That has always been considered to be inconsistent with the status of an independent country. For this reason it has been felt that to move increasingly the emphasis to development aid is a much more realistic way of helping. I have noted the hon. Gentleman's points and will see that they are drawn to the attention of my right hon. Friend
  764
  the Minister for Overseas Development and my hon. Friend the Minister of State, Treasury, who will no doubt take note of what the hon. Gentleman said.
  Mr. Harold Lever: I do not think that any members of the Committee thought that they were engaging in a policy decision in criticising budgetary aid. What they thought that they were doing—certainly what I thought that I was doing—was to accept the policy decision on aid but to seek a better system for giving it in relation to independent countries, for the reasons the Financial Secretary has given. We were not straying into policy, because we were not allowed to stray into policy. All that we were saying was that if the Government gave that money they must do so under a different system, unless they are prepared to exercise the rigorous detailed control which is appropriate if it is done in that way.
  Mr. Jenkin: I am grateful to the right hon. Gentleman for that clarification. In so far as I suggested that the Committee had a policy, that would be wrong, because it would not be for it to criticise such policy.
  The hon. Member for Islington, South-West also spoke about the spill-over of aid. While he was justified in piling his congratulations on the shoulders of the members of the Committee, I do not think that he was wholly justified in entirely withdrawing congratulations to my right hon. Friends who had acted so swiftly and effectively in accordance with the Committee's recommendations. I have noted the hon. Gentleman's suggested extension of the spill-over provisions along Canadian lines, and will see that it is drawn to the attention of the appropriate Ministers.
  The hon. Gentleman also spoke about the form of the Votes and the reconciliation with the P.E.S.C. figures. This matter is being intensively studied in the Treasury. The next stage must be to make sure that the estimate figures are readily reconcilable with the P.E.S.C. figures. There are many problems, not least of which is the price basis on which one lists the figures.
  Finally, there are the two matters of real substance. By saying that, I do not want in any way to criticise hon. Members who have made other points, but

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  the two major matters in this year's report are the non-competitive contract point which the right hon. Gentleman made and the whole Beagle argument. I shall begin with the non-competitive contracts, perhaps with a blinding glimpse of the obvious. It is the intention of the Government and industry that prices should be fair and reasonable and that they should be established at the earliest practicable stage consistent with the risks and uncertainties involved in particular cases. Firms can earn a reasonable profit and have an incentive to meet departmental needs sufficiently. Obvious though the aims may be, their achievement is often complicated. The problems involved are under continuous study.
  The Public Accounts Committee made a number of references to the Review Board for Government contracts. I wish to pay a warm tribute to the board for what it is doing to assist both sides in this difficult question. As mentioned in the Treasury Minute, in its most recent report—the so-called supplementary report—the board has carried forward its work on the accounting conventions used in pricing Government contracts to cover the allowances to be made in overheads for contractors' marketing and selling expenses.
  That the board made such a good start with its very difficult task was due in no small measure to the wisdom and the personal efforts of its first chairman, Sir William Lawson, whose untimely death earlier this year came as a shock to all who knew him. The Government and industry are fortunate in having secured such an able replacement in Sir William Slimmings, and we are deeply indebted to him for taking on the job. As the Committee was told, the work of the board is arduous and time-consuming, and I take this opportunity of thanking all its members for their valuable services.
  Agreement of individual contract prices must take place between the Department and the contractor. Hon. Members on both sides of the House rightly have emphasised that there must be complete frankness and openness in negotiations if these prices are to be fair and reasonable. On the whole the co-operation which has characterised the discussions between central bodies in
  766
  industry and Government on this subject has been reflected in the individual relationships between firms and Departments. This is important not least because contractors' accounting systems are often not geared to providing information in the form necessary to Departments for pricing purposes. This situation calls for flexibility by both parties to a contract; but there is a minimum amount of data on which Departments must reasonably insist, in the spirit of "equality of information", before they can be expected to agree a price. Timing is also extremely important and a great deal of attention is given to these matters.
  However, much turns on the reasonable co-operation of individual contractors, and the persistent refusal of such co-operation by a contractor or subcontractor is something which the Government would be bound to take very seriously. I must make it clear that in such a case the firm in question runs the risk of being ignored as a future supplier to the Government and, as we said in the Treasury Minute, the Government will consider all possible remedies. I noted most carefully the various suggestions made in the speech of the right hon. Member for Manchester, Cheetham.
  Defence contracts are now being handled by the recently formed Procurement Executive in the Ministry of Defence. One of the objectives of this new organisation will be to develop further this spirit of co-operation between purchaser and supplier.
  Finally, I turn to much the most thorny subject in this report, which has been hanging on the hook of the Beagle Aircraft Company. The Treasury Minute was called by various speakers opaque, taciturn and—by one hon. Member—even evasive.
  There are two aspects of this difficult question which must be considered. One is the problem of Crown liability for a company's obligations; the other is the question of information which the Government should have about a company's affairs. I realise that the first matter is a subject of great complexity. I should dearly have loved to be able to pursue the right hon. Gentleman and some of his hon. Friends in their fascinating exploration of the ramifications and complications of this difficult issue, but I am afraid that I am not able to add much to what was said in the Treasury Minute.

  767
  The Committee recommended that when the Government take a shareholding in a limited liability company and intend to accept no liability beyond that of any normal shareholder, this should be stated publicly so that creditors will not be misled. This recommendation raises immensely complex issues which are still under consideration.
  The second question concerns information. Perhaps I can be of more help in this regard. We agree, as the Treasury Minute points out, that where the Government are the sole shareholder in a commercial company, there must be arrangements to ensure that they are adequately informed about the company's affairs in general, its trading position, developments in its activities and prospects. The Government accept that principle entirely and the arrangements which exist—they must obviously vary from one individual case to another—are reviewed from time to time. It is not essential that the arrangements should be uniform in all cases. The main thing is to make sure that they work well in practice. The Government are reviewing the arrangements in individual cases to make sure of this.
  At the same time, this does not mean that Government Departments should seek to involve themselves in day-to-day affairs of wholly-owned companies. Again, as the Treasury Minute points out, the fact that such a company is wholly-owned by the Government does not in any way alter the fact that it has to operate under the Companies Acts, and clearly boards of directors must be given the proper degree of freedom to manage the affairs of the company commercially without prejudice to their rights and responsibilities under the law.
  The right hon. Member for Manchester. Cheetham mentioned companies in which the Government are part shareholders—[Interruption.]—or not even shareholders at all. I suppose that they may have loan finance. To some extent, the same considerations apply.
  Where the Government are not the sole shareholder but have a majority or substantial holding, the position is not quite the same. 'Where the Government appoint directors to the board of a company, it is clearly right that they should keep the Government adequately
  768
  informed, while at the same time paying due regard to their responsibilities as members of the board which is answerable to the shareholders as a whole. It is the Government's policy to ensure that this is done, but clearly the precise arrangements must vary from one case to another according to the circumstances.
  We are not pressed for time tonight. I have, therefore, replied to the debate at greater length than might otherwise be appropriate. I think that I have answered most, if not all, of the points which have been raised by right hon. and hon. Members on both sides of the House.
  It is for me a little sad that an important debate in the parliamentary calendar should year after year, he attended by so few right hon. and hon Members. This week we have had important debates on Ulster, on pensions and on Rhodesia, so it is not altogether surprising that on a Thursday evening many right hon. and hon. Members want to go back to their constituencies. However, we have had contributions from three or four hon. Members who are not members of the Public Accounts Committee. They added greatly to the value of the debate. I hope that the limited attendance which the annual debate on the Report of the Public Accounts Committee seems to attract will not in any way indicate a lessening of the importance of that Committee in the scheme of things. Indeed, in a sense, the fact that the debate does not attract large numbers may be taken as evidence that right hon. and hon. Members on both sides are pretty satisfied with the way that it works.
  I should again like to pay tribute to the right hon. Member for Manchester, Cheetham for his able chairmanship and to express my satisfaction that he will be chairing the Committee in the year ahead. I wish him and his colleagues every success.
  Question put and agreed to.
  Resolved,
  That this House takes note of the First, Second and Third Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute on those Reports (Command Paper No. 4817).

  COMMITTEE OF PUBLIC ACCOUNTS (REPORTS)
    ADJOURNMENT
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. John Stradling Thomas.]

  BRITISH RAILWAYS WORKSHOPS
  9.0 p.m.
  Mr. W. F. Deedes: I do not think I have to explain to my hon. Friend the Under-Secretary of State for the Environment my interest in British Railways workshops and why I raise the subject on the Adjournment tonight. I acknowledge my gratitude to my hon. Friend for being here on an evening when very few other hon. Members are.
  In Ashford, for a century or more, the railway workshops have been and remain today the guts of the town. Now we are in trouble. We are in trouble for reasons which I think it is now as well publicly to rehearse. As a result, the works face at worst a shutdown involving about 1,300 jobs by the middle of 1972 and at best some contraction, possibly severe.
  I have been in two minds about seeking this debate publicly. For some months I have thought it right to negotiate urgently but privately with Mr. Richard Marsh and the Ministers principally concerned. There are situations in which correspondence can be more effective than public debate. But in this instance I have acted privately for two main reasons. First, I have been anxious to avoid aggravating the talks which have been going on between British Railways management and the unions, especially the working party talks which were in progress until a day or two ago. Secondly, I have been anxious, though less anxious, to avoid raising hopes falsely among those principally concerned, the men in the workshops.
  However, events of the last 24 hours make it clear that we have now reached some kind of "crunch" and, therefore, those two considerations no longer arise. I know that my right hon. Friend has been seeing the unions today. I do not want to dwell on that aspect of the difficulties. I have no doubt that my hon. Friend will comment on it.
  I want first to say a word about the background, partly historical, and then to deal with Ashford's special position. Finally, I want to put some questions to my hon. Friend.
  The need for some contraction in British Railways workshops and their work force and the reason for it are not anywhere in dispute. One could spend a long time explaining it. I content
  770
  myself with dwelling on one or two salient facts which sum it up.
  Rationalisation and modernisation of the railways, once a labour-intensive industry, has been going on apace for a number of years. Rationalisation of the industry's activities has led to rapid changes in the workshops. My workshops at Ashford now make and repair wagons. In the days of steam they did a great deal more. Their main contraction took place about a decade ago. Now they are engaged on wagon repairs and the production of new wagons.
  It is worth considering this revolution through the eyes of the railway workshops. In 1953, for example, the railways owned 1 million wagons, with a ratio of repairs to replacements of about 10 to 1, or rather more. Today the figure is nearer 400,000. They are bigger, faster and more durable wagons. They include the express liner wagons which are made at Ashford, and the high capacity "merry-go-round" wagons which can carry about 150 tons a week. By 1975, it is said, we shall need only 200,000 wagons. That will represent a cut of about four-fifths in a quarter of a century. That is the nature of the revolution which has come about. In a sense, it is an historical process, and it cannot be attributed to political, social or other reasons.
  Some may wonder why, with this faster, streamlined railway freight service, we have this gigantic growth of heavy road haulage creating environmental problems and likely to become bigger, uglier and heavier as we grow closer to Europe. Freight by rail today is about 8 per cent. of the total. Yet our main roads and towns are swamped by heavy lorries polluting the atmosphere and creating new problems of their own on the motorways. I am not dwelling on this crazy paradox. I am simply concerned with the consequences.
  I wish that British Railways top management saw a bigger challenge on the freight side than it sometimes appears to do. It would be wrong to say that it sometimes gives the impression of a death wish. None the less, it seems to be reconciled to perpetual contraction. I cannot believe that in the general balance of things we should be satisfied to see railway freight, if anything, contracting while, on the other hand, road freight is manifestly expanding. However, that is

  771
  not what I want my hon. Friend to reply to.
  To these general factors must be added the fact that more and more wagons have become privately owned and are off British Railways' books altogether.
  All these factors put together have been greatly aggravated by the recession in recent months and the fall in, particularly, coal and steel freight. This is what led to the threat to the three principal workshops—Barassie, in which no doubt the right hon. Member for Kilmarnock (Mr. Ross) has a close interest, Swindon and Ashford.
  I come to the position of Ashford. In August I sent a fairly long paper to Richard Marsh, with a copy to my right hon. Friend, setting out the reasons why I believed that Ashford must be kept going. Nor was this simply special pleading of the order in which all good hon. Members should be proficient. If we have a Channel tunnel—the odds seem to be on that—the railway works at Ashford become indispensable.
  First, they are best placed to deal with repair and maintenance of tunnel vehicles. I understand that the French have no counterpart near the tunnel mouth to the Ashford railway works. Second, they would be required to build wagons for the tunnel which, because of their size, cannot so readily be built elsewhere. We seem to have reached the point of being able to propose vehicles for the tunnel. Those which have been agreed with S.N.C.F. will have fixed bodies with an overall height and overall width far above normal railway size. I understand that these are for carrying coaches or vehicles. Design and construction will be easier and costs will be less if this work can be done at Ashford. At Ashford the work would provide us with at least 31 years' work load.
  Thus it is imperative that British Railways, engaged in these current talks about the future levels in the workshops, should get from the Government as firm guidance as possible on whether the tunnel is thought by the Government to be a runner. I keep an eye on this because in another capacity I have certain constituents who may be afflicted by the tunnel, who may not benefit by it.
  I am baffled to find teams of men in certain places, which I will not specify,
  772
  and in Europe, beavering away on the clear assumption that the tunnel will go ahead. I recently talked to some engineers in Germany who have no direct interest, but they were absolutely assured. I talked to certain people in this country who were absolutely assured. Indeed, in my area a large area is frozen or blighted because nobody can do things there: they are told that it may interfere with the tunnel. Yet British Railways' top brass is apparently uncertain, or claims to be, about these prospects. This is crucial, because if it was certain of the tunnel it would be certain that it needed Ashford.
  I warned my right hon. Friend the Minister for Transport Industries about this, and I repeat my warning tonight. Even if nothing can be said publicly about whether we are to build the tunnel, it would be helpful to tell British Railways a little more explicitly what the Government's latest thinking may or may not be. It is conceivable that this would affect other things besides the Ashford works. I am told that Sir Eugene Melville, who is my right hon. Friend's principal adviser, has received the message and will do his best. I hope that he will pass it on to the Minister. Ashford has a distinctive rôle to play if we build the tunnel. There would be no prospect of closure. But building wagons, or even prototypes, cannot start for some time, and there is a gap with no immediate work to do, as far as I can see.
  What, therefore, do we do in the meantime? There are two possible answers. The first is the general answer, on which I have been pressing my right hon. Friend the Chancellor of the Exchequer—and this affects everyone concerned with railway works. I have asked him to take a hard look at the railway programme and see whether some construction work could not be phased forward. From time to time applications for capital are made to the Treasury, which, for some reason or other, decides that they cannot be allowed. They are perfectly good reasons, and I do not quarrel with them. If that situation obtains now in respect of rolling stock, I suggest that the Treasury should reconsider and that any work which can be phased forward should be. This can be done with a certain amount of carriage work, although I am not sure about the position in relation to freight work. I am not, from this side of the

  773
  House, asking the Treasury to sanction vehicles which we do not want. I am asking for capital allocations to be scrutinised, and quickly.
  More immediately, and in a sense more relevantly to Ashford, we have a prospective order from Yugoslavia for about £10 million worth of work. That would provide at least 15 months' work for 600 men, but the work requires an Export Credit Guarantee Department credit. As I have made clear, I am aware of the difficulties. Iron Curtain countries like a long line of credit, although they are good payers eventually. There clearly has to be a limit on the amount of E.C.G.D. loans which can go out where long periods of payment are involved. I accept this, and I know the difficulties. Yet surely it is not too much to ask that Ministers, when seeking ways and means of tiding over the recession and dealing with unemployment, should take a very hard look at terms like this, which very much affect jobs.
  My information is that what we offered to Yugoslavia was not the £10 million over eight years but £6·4 million over five years. Let us be clear about it. I understand that a decision in a matter of this kind lies technically with the E.C.G.D. but finally rests with the Department and perhaps the Treasury. In other words, Ministers can exert some pressure if they want to.
  On 22nd November my right hon. Friend the Minister for Transport Industries told me that matters were in the hands of the Yugoslavs. I hastened to disabuse him by letter. They have been offered certain terms which they do not wish to accept, and the order might drift away. Can my hon. Friend tell me the latest position? Where do we stand now? My right hon. Friend wrote to me today and indicated that eight years was now on, but I should like to be clear about the latest position now. If we do not get this right quickly, we shall have only ourselves to blame if the order drifts away, and it must be settled quickly. It is a matter of days, not weeks any more, and I am sure that my hon. Friend accepts that.
  There are other factors in all this. Most of them are being dealt with by the management of British Railways, the unions, working party talks, and so on. I am limiting myself to the points which
  774
  I have raised with the Minister; namely, the Yugoslav loan, which is important, the Channel tunnel—and I should be grateful if my hon. Friend could be a little less vague about this—and the broad policy involved.
  There are one or two hon. Members who want to intervene in the debate, and I shall begin to bring my remarks to a conclusion by saying that I have tried always to be reasonably conscientious about pleading special causes in this House for local reasons which may be contrary to sound policy. That is not what I am doing tonight. This is not a plea in defence of obsolescence. I am not saying that this is a railway works which has been there for a century and deserves to be preserved. Nor am I pleading against changes which must come. We know that certain changes must come, and they have been accepted.
  This is a first-class works. It is well managed, has high productivity, and good labour relations. It can compete, as can many British Railways workships, with anything that private enterprise can put up against it. We are not dealing in anything weak. It has a major rôle to play in a major project of the future which Ministers affect to take seriously. As far as I know the Channel tunnel is being taken seriously by them.
  The works has a force of skilled men which we shall need. If we make these men redundant, we shall disperse a labour force which we shall never get back. The notion—and I think that this floated around Euston Road at one time—that railway works like this can be put into mothballs and taken out again if a sudden need arises out of the Channel tunnel is pure cloud-cuckoo-land. It does not work. Once an organisation like this is put into mothballs and its labour force dispersed, with a great deal of agony on the way, the men can never be got back again, and I am sure that my hon. Friend accepts that.
  I have no doubt that those considerations will indicate to my hon. Friend why I am simply not ready to see a national asset of this kind squandered without a hard battle.
  9.18 p.m.
  Mr. Neil Carmichael: I am grateful to the right hon. Member for Ashford (Mr. Deedes) for

  775
  giving me the opportunity to put my point of view to the House during this Adjournment debate.
  The title of the right hon. Gentleman's debate is "British Railways workshops". That gives me the opportunity to raise some matters of which I know the Minister will not be aware, and I shall therefore be content if he will take note of what I say and perhaps reply to me later. I know how these things are done. The Minister has prepared for a specific and important debate on a topic chosen by his right hon. Friend, but this is too good an opportunity to miss to raise some of the points that were raised last Wednesday by unemployed people who gathered in the Lobby.
  A number of those who came to see me were members of the National Union of Railwaymen, of the Associated Society of Locomotive Engineers and Firemen, or of the Transport Salaried Staffs' Association. They are concerned about this problem in Scotland. As the Minister probably appreciates, I had one or two difficult furrows to plough when I held his office. The circumstances were slightly different. I had a difficult job over the Inverurie Works, which were being closed. I went to Inverurie with my hon. Friend the Member for Greenock (Dr. Dickson Mabon), who was then Minister of State at the Scottish Office. The people there were naturally not at all happy, but we spoke to them about the position.
  At that time the Inverurie Works were in an area in which the average level of unemployment was very much below the Scottish average, even in 1968. The travel-to-work employment area in which the Inverurie Works were situated had a good employment record.
  We are now reaching the point in the west of Scotland when something must be done because, as I say, the situation is very different from what it was then. Unemployment in the west of Scotland never was the same as in the Aberdeen area, but now all the unemployment figures have taken a big jump upwards and in the west of Scotland 101/2 per cent. of the male population is unemployed. In other words, 35 men are chasing every job.
  As the situation is now very different from what it was two or three years ago,
  776
  the Government have a responsibility because of the social problems that are involved, leaving aside the technical standards of the Barassie Works, at least to lean on the British Railways Board to wait until other forms of employment come into the area before closing the Barassie Works.
  The memorandum I was given by the T.S.S.A. is quite frightening when one examines the results of closures. The implementation of the two-tier management system in 1969-70 meant a loss of 389 clerical and supervising jobs. The closure of the Inverurie Works, the closure of the Perth Regional Workshops, where they do wagon repairs, the closure of the Kilmarnock Regional Workshops, where they also do wagon repairs, the proposed closure of the Leith Central Diesel Depot in May, 1972, the scheduled closure of the Corkerhill Diesel Depot in 1972-73, and the threatened closure of the Barassie Works, where wagon repairs are also undertaken, will mean the redundancy of 480 wages staff, 34 clerical staff and 45 supervision staff, bringing the grand total of redundancies for the Barassie Works to between 550 and 560. It is natural in an area of high unemployment that we should be extremely concerned about this state of affairs.
  I hope that the Minister will intercede with the British Railways Board over this. I am aware that the Board must act commercially, though I am not convinced that closing the Barassie Works would necessarily be of immense commercial value. But even if it were, I am pleading, unlike the right hon. Member for Ashford, for the defence of obsolescence in this case.
  I am not suggesting that the Barassie Works are obsolescent, but even if they were, they should be maintained in being, if only for a short time. Considering the economic circumstances of Scotland and particularly of the West of Scotland just now, the works should be kept open so that at least 550 people are kept in work until the boom which we have been promised comes next year.
  This is not the end of the story. The whole question of the railways in Scotland is at stake. The railways in Scotland are becoming the victim of over-centralisation in the South, and particularly in the Midlands-to-London triangle. There is talk, for instance, of large parts

  777
  of Buchanan House, the Scottish Region headquarters, being transferred south. There is the threatened transfer of the paybill section to Crewe which will apparently mean 150 clerical jobs, the threatened continuity of the whole computer section, involving 50 jobs, and the transfer of the claims section to Leeds, with 40 jobs. I gather that, if the McKinsey Report is fully implemented, there will be eight territorial reorganisations, with the possible loss of the train planning section to Crewe, with 50 jobs, and a transfer of the accountancy section to York, which involves between 40 and 100 jobs.
  Therefore, I am glad of this opportunity to put it to the Minister that, on top of the problems which we have in Scotland generally, something catastrophic will be added which the Government could, with a little persuasion, hold off for a time. Plans have not always gone smoothly and I am simply asking for the blueprint to be lost for a few months or a year.
  I make no apology for pleading this special case. I ask the Minister to consider in a quieter moment the whole question of staff centralisation. Having always been interested in efficiency, I have a small worry that, in the past two years, many people throughout the world have begun to realise that the reorganised organisation may also lose some of its efficiency in the process.
  This is not a party point. With modern techniques of computer control, all of us have got carried away with the idea that a big unit is more efficient. I doubt whether we get all the benefits that the management consultants promise us. Sometimes, these things never seem to get into complete working order. I sometimes feel that management consultants' first job is looking for their second job when it comes to reorganisation. That is probably facetious; they do a good job. They tend, however, to carry their clients—in this case the railways—a little too far in their enthusiasm for over-centralisation.
  There is no place for these people of whom I have been talking to go for jobs, particularly the men over 50 in the wages, clerical and supervisory sections. We are forcing them into premature retirement. I hope that in the meantime the Minister will have talks with the Railways Board,
  778
  with all the Government's authority, to do something for the regions of Scotland. Perhaps he can delay these plans, so that works like Barassie can continue and so that some of these alterations are postponed so that the jobs can stay in this region.
  9.30 p.m.
  Mr. William Ross: I congratulate the right hon. Member for Ashford (Mr. Deedes) on his timely intervention over railway workshops because it was today that eventually, after a change of heart, the Minister agreed to see the unions. We are certainly anxious about the outcome. "If it is bad news don't give it to us; just listen carefully tonight and change your mind." That is my advice to the Minister because the last thing I want to do is to get a Minister to say "No". It is better to keep him talking, discussing and giving a certain amount of hope than to have the final "No". There are many paradoxes. The right hon. Gentleman mentioned one about the use of roads. No one could fail to be struck by this when looking at the carnage which took place on the M1 the other day and contrasting that with the degree of safety in travelling by rail.
  I am reminded of the efforts made by some of my right hon. Friends and my hon. Friend the Member for Glasgow, Woodside (Mr. Carmichael) when they were at the Ministry of Transport to try to get some switch from road to rail and the outcry there was from right hon. and hon. Members opposite and the public—or certain interested sections of the public. Parliament saw the need but would not face up to measures which might prove temporarily unpopular. We may have to come to it and some day we may wonder why we lifted certain tracks and wish that we had been more sensible in conserving what is the best way of transporting goods and people.
  The right hon. Member talked of the Channel tunnel and the impact that it will have on patterns of transport. We can imagine what the South will be like when that happens. If we do not have a properly co-ordinated policy there will be a hopeless muddle. We are in danger of a certain amount of such unco-ordinated planning, although it may be less now that we have railways and other aspects of transport and planning under one Department. I cannot say that I

  779
  am all that thrilled about these mammoth Departments and it may be some time before we get proper planning. We used to have problems at the Scottish Office. I often felt that the Department responsible for the railways, a United Kingdom Department, was eager to close lines to ease the financial pressures on the railways, but that Department was not the same one which had responsibility for roads in Scotland. The poor old Scottish Office had to find additional money for roads. My first plea is for co-ordinated planning.
  I have been concerned with railways all my life and if I favour any industry it is the railway industry. I used to catch the 6.50 train from Newton-on-Ayr and I remember on occasions just catching that train, and the driver was howling at me telling me to hurry up. That was my father. The fireman was equally vociferous; that was my uncle. And that was nothing to what the guard was saying. That was my grandfather. I have a feeling for railways and a bias towards them but also a knowledge of railways and railwaymen. At one time the railways had the pick of the men in the country. Railwaymen have become councillors and mayors, mainly because the old railways gave them time off.
  The right hon. Gentleman spoke of the crazy paradox; but the paradox will be even crazier with all the developments that are taking place. Barassie is part of Troon, which is better known as a golfing centre, within four or five miles of Prestwick and on the border of the new town of Irvine. Within 10 to 15 miles is a development that even English members have heard of—Hunterston. Today there has been an announcement that the South Scotland Electricity Board has embarked on the building of a jetty at Wemyss Bay. The reputation of the Secretary of State for Scotland hinges upon the initiation and completion of the Hunterston project to use the deep water facilities available for a general cargo port. A study was set up, in which the Scottish Office participated, the chairman of which was the late Hugh Stenhouse, to consider what kind of industry would fit in here. This is not far away from the part of Ayrshire we are talking about.
  We must be optimistic about the future of Scotland, and many of our hopes are
  780
  fixed on this kind of development. We shall need good communications and railways, and if a general user port is developed we shall need wagons. Instead of looking at the past, we should be looking at the future.
  I can understand the point of view of British Railways, whose finances are being squeezed by the Government. On 27th October, 1970, the Chancellor of the Exchequer announced a saving of £1,500 million by the middle of this decade. A considerable part of that was to come from cutting back on the investment plans of this nationalised industry. This will affect the Hunterston project in more ways than one. It will affect the railways and the port development. So British Railways have been forced into facing up to what we hope will be a temporary recession and, unfortunately, making decisions that will be permanent in the form of closures of places like the Barassie workshops, which are old Glasgow and South Western Railway workshops. They are one of the few remanants of a considerable industry in that part of Scotland.
  We used to have Cowlairs in Glasgow. Now all we have is St. Rollox. We used to have the great locomotive works at Springburn, the biggest in Europe. We used to have the Caledonian works in Kilmarnock, and it was Jack Maclay who as Minister of Transport had the honour of closing that one down. Then we were left with some wagonworks, and it has been under the present Administration that it closed down. The remaining 41 men have gone quietly, but sadly, in the past few weeks. Inverurie went in 1968. It angered me then, because the unco-ordinated planners in British Railways had told us not very long before that it would continue.
  Today we are making decisions that may result in considerable hardship, in loss of jobs and closures of workshops, closures which may be justified by the present pessimism but which will not be justified and will be greatly regretted in the light of the developments that I am sure will be needed in five to 10 years if right policies are followed. So we make the same sort of plea for the Barassie workshops as the right hon. Member for Ashford did for the Ashford workshops.
  I was very disappointed to learn that there is still trouble with the Export

  781
  Credit Guarantee Department over the Yugoslavia order. Not long ago a junior Minister who is not present tonight was thrown in at the deep end on an Adjournment debate and was rather caught out on that. The Minister who was expected to deal with the matter, and who had a little more knowledge of it, did not appear that night. The next day we received information from the Department that the position had been clarified. Things were being held up because of doubts about the credit-worthiness of Yugoslavia.
  Since British Railways have gone so far, the Government should make the right decision on the matter. It may not directly affect us in Barassie, but it is of considerable importance for the position at Ashford and probably elsewhere.
  Mr. Deedes: I am sure that the right hon. Gentleman will not want to dish the Ashford—Yugoslavia deal now by referring to the credit-worthiness or otherwise of Yugoslavia. That is not the issue. The issue is the length of years.
  Mr. Ross: The right hon. Gentleman might have been here when we had the last debate, which was not all that long ago. [Interruption.] I wish that the right hon. Gentleman would contain his frustrated soul in patience. What was read out that night was a letter from the Department; that phrase was a quotation from a Government Department. I was as surprised as the right hon. Gentleman was, particularly as I think that just the day before President Tito had been in this country. I thought that the matter had been resolved. Therefore, I was surprised to learn tonight of the further holdup. The order will not be there all that long for us to take up and, facing the sort of employment situation we do, we should not hesitate in this way.
  My real point is that it is easier to save jobs than to make jobs. Some 480 to 500 jobs are at risk in a part of the country which is suffering from severe unemployment. My hon. Friend the Member for Woodside quoted the figure of male unemployment in Scotland, and we know that in the west of Scotland it is over 10 per cent. My hon. Friend knows what this means in human terms. Industrial employment in Troon is entirely dependent on what happens in Barassie, and this decision will create
  782
  a fantastic amount of male unemployment in Troon. I do not think anybody would suggest that all the unemployed should become caddies this winter, nor, indeed, would it offer satisfactory alternative employment for these men in the summer.
  I have already spoken about the quality of these men and the service they have given to British Railways. British Railways must accept a great measure of responsibility in saving these jobs. If it is said that the trouble flows from pressure of finance, then it is up to the Minister to examine this matter. Let there be co-ordination between him and the Ministers responsible for employment.
  There is no job available in this part of the country for these men. We have 141,000 unemployed, and we are just entering the winter. This is the highest unemployment figure for 30 or 40 years. During the whole period of Labour Government unemployment never rose to 100,000. The present figure is even higher than it was when the present Prime Minister was President of the Board of Trade and was in charge of employment in 1962–63. The figure reached by the Tories in 1963 was some 134,000. Now it has gone up to 141,000—and, as we say in Scotland, we are just at the mouth of the poke. If we add 20,000 to that figure we shall know what the figure will be in February. In this situation the Government, by deliberate decision, are failing to meet the financial needs of British Railways to enable them to live through this period of stress. A decision is to be taken which will mean the loss of some 500 jobs. It is not good enough.
  We are reminded of what was said by the Prime Minister when he came to Scotland in the run-up to the General Election. He then said on television "What do you want in Scotland—a soup kitchen economy in a soup kitchen country?" It is this Government which are bringing back the soup kitchen economy—it is they who have the soup kitchen mind, with means testing for school meals, denying the children their milk, and failing to provide the kind of attitude—[Interruption.] Oh, I have not started yet. Surely the Under-Secretary of State will not want any more than half an hour.
  The Under-Secretary of State for the Environment (Mr. Eldon Griffiths): I should like 40 minutes.
  Mr. Ross: The hon. Gentleman will have plenty of time. Parliamentary time is valuable, and over the years Scottish Members have learned how to use it. We remain here when other people go. The hon. Gentleman should be thankful for it. Only today the Leader of the House was saying that we had not time to do this and that we had not time to do that. The only way to make proper use of this House is by being here and creating and taking opportunities as they arise. I assure the hon. Gentleman that Scottish Members are past masters in this art.
  Our plea is that British Railways should think again. One of my hon. Friends spoke about a probability. It is more than a probability nowadays regarding Barassie. Until a final decision is made I shall refuse to accept it. Even when it is announced, I shall try to persuade British Railways to change their mind. What is proposed is wrong in terms of railway economics and the future of that part of the country, as Scottish Ministers are always telling us. This is the last thing that should be done.
  I sincerely hope that the hon. Gentleman will look again at the report of the efficiency experts. The only hope of getting efficiency in British Railways is to sack some of the efficiency experts. Judging by what they have done before, they do not save money when they close a line: they seem to lose more. We require a complete new look at the situation. It may cost money, but if we are to get the kind of reformed Scotland and Britain which we want, with the communications system we want, we should not begin by destroying the one we have we should be building it up.
  I am convinced that there is every justification for keeping Barassie open and using it properly and adequately. I sincerely hope that the Government will not readily accept any advice to the contrary which may be given to them by British Railways.
  9.53 p.m.
  Mr. Norman Buchan: I regret that I was unable to be here to hear the speech of the right hon. Member for Ashford (Mr. Deedes). I had hoped to be here, but I did not make it in time. However, I understand that he made a plea for the retention of the railway workshops. I should like to support his plea with other reasons than
  784
  those which he deployed. His argument was that there was time ahead for the development of communications in the South, the Channel tunnel, and so on. It was a good argument why this great sector of public industry should be kept open. In other words, it was the realisation that some of the things we have been seeing recently in the form of dogmas are unrelated to the needs of the people of this country.
  I should like to draw attention to the fact that right hon. and hon. Gentlemen opposite have changed a great deal in this respect. At one time it was easy to look at an industrial problem concerning potential closure and redundancies and to argue that commercial considerations made them necessary and that there was no point in keeping things which were not running at a sufficient profit, and so on. This was the basis of their attack over a year ago on the public sector of our economy. But dramatically over the last week there has been a necessary and sensible dropping of these dogmas. We have had £180 million worth of droppings. This was necessary and sensible, because the Government realise that if we are to restore the economy to its proper condition, that which gives the most rapid return is the public sector.
  There is an obvious reason. We know that the social cost of this huge unemployment figure which faces us today begins to outstrip the economic cost of bringing about the closure of an uneconomic enterprise. For example, the rate of unemployment that we are experiencing at present in Britain as a whole represents about 230 million working days' production lost per year. That is a gigantic loss, and it cannot be compensated for by looking at the balance sheet which causes any closure or redundancy.
  The right hon. Gentleman argued that there was economic sense in keeping the workshops open. There is a second reason. It is that in the past we have stripped lines only to discover a few years afterwards that we needed to restore them or to find alternative and more costly transport methods. We have denuded urban areas such as Glasgow of vast networks of railways. Today, we are crying out for their restoration. The railways cannot be allowed to run down any further. If we wanted to restore them in a few years' time, it could be done only at a massive cost.

  785
  The problem of the right hon. Gentleman at Ashford is repeated for us in the West of Scotland, with the threatened closure at Barassie. In the area as a whole, unemployment is running at just below 5 per cent. If the Barassie works closed, it is estimated that that would double to 10 per cent.
  The trouble with past Governments of both parties is that they have never looked at the social cost of this problem. They have never asked themselves what is the cost of unemployment in terms of unemployment benefits, redundancy payments, social security benefits, quite apart from all the other problems that it creates for a community in general to ancillary workers, shopkeepers and so on. No Government have measured that against the economic cost of keeping an establishment open. It has been left to the trade union movement to do it. The Scottish T.U.C. is currently trying to do a costing of this nature. When that is published in January or February, the Government will have a blueprint against which they can assess future ruthless action, if they desire to take it.
  Another reason is that it is easier to put a man out of work than it is to create a future job for him. If the 450 men whose jobs are threatened at Barassie and those whose jobs are threatened at Ashford were to have other employment created for them, the amount of money needed would be enormous.
  In Scotland, over the decade from 1957 to 1967, after enormous public investment, the creation of infrastructure, investment grants and enormous private capital, we built up the motor vehicle industry at Bathgate and Linwood. After 10 years' work and hundreds of millions of pounds of investment, we created 19,000 jobs. In the same decade, for natural reasons, including the run-down of only two traditional industries, mining and shipbuilding, we lost 76,000 jobs. That is a ratio of four to one. Despite the enormous investment in the motor vehicle industry, the result was the production of only a quarter of the number of jobs lost in two industries which have run down.
  In a period of high unemployment, there is a strong case for preserving jobs of this kind, even assuming that there are no other arguments for so doing. However, I believe that there are other
  786
  arguments. The last 12 months have shown that, despite the effort which has been put into trying to help the regions by means of investment grants and so on, they remain on a very shaky basis. Over the last few years' of intense effort to help the regions, which include areas such as Barassie, we managed to bring the ratio of unemployment in Scotland to that in the United Kingdom down to one-and-a-half to one. However, over the last year, as soon as we removed one major prop in the shape of investment grants, the ratio went up again to nearly double.
  The argument is not simply that a depressed economy means that the regions will suffer and a booming economy means that the regions will do well. It also depends on specific and sharp regional incentives whether we have a depressed economy or a booming one. When this is argued we see the flimsiness of the basis—
  It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hawkins.]
  Mr. Buchan: This cannot be done by private industry alone, because we cannot impose upon private industry a proper social responsibility. We can twist the arm of private industry and persuade it, but unless there is social control over industry it cannot discharge the social responsibility which is properly there. The one form of industry which can be made to discharge a social responsibility is public industry.
  Over the past week the Government have turned to public industry in an extremity. Panic-stricken because of protests throughout the country and the great demonstration of Scottish local authorities and trade unionists throughout Britain last week, suddenly the Government pump £180 million into the public sector. By so doing they recognise the rôle of public sector. This is the key in the regions. The economy requires a sector of industry which can discharge a social responsibility. Fundamentally this can be only the public sector.
  Then there is the question of direction of production towards the regions. We

  787
  cannot ask private firms to operate in any area at a loss. We try to do it by the carrot of investment grants and by the stick of I.D.C. Policies. Private industry will not operate if it cannot make a profit.
  There is a ready-made market for public industry. About £7,000 million a year is spent on purchasing in the public sector by municipalities and by the Government. Cannot this be served by the public sector? The British Railways workshops form an existing manufacturing sector in the public sector and we cannot tolerate that this should go. There is no reason why the necessary employment cannot be pumped into it to keep it going while alternative manufacturing is found for the rest of the manufacturing sector.
  A great deal of Government and public money goes on research and development, but it is used to fatten private industry. There is no reason why this money should not be used to enable a manufacturing industry in the public sector to develop for the benefit of the community. There is a prototype for this in the railway workshops which have existed for so long in the public sector.
  The right hon. Member for Ashford raised the question of time and of creditworthiness. On the question of Yugoslavia's potential order the Department of Trade and Industry wrote to my hon. Friend the Member for Durham (Mr. Mark Hughes) to this effect, as quoted in the Adjournment debate on the question of Barassie Railway Works:
  "This matter has been under review by the E.C.G.D. and other departments concerned for some time, but it has not yet been proved possible, due to current doubts about Yugoslavia's creditworthiness'—
  HON. MEMBERS: Shame!
  Mr. LAMBIE: —'to agree a form of cover which is satisfactory to British Rail Engineering. It is hoped that a final decision will be reached within the next fortnight, and I can assure you that the importance of this order for British Railway Workshops will be taken into account'."—[OFFICIAL REPORT, 9th November, 1971; Vol. 825, c. 969.]
  That debate was replied to by one of the other Under-Secretaries of State for the Environment—the hon. Member for Tavistock (Mr. Michael Heseltine)—standing in for the hon. Gentleman who will reply tonight, whom we welcome back after his accident.
  788
  What is the present position? What is the significance of saying that the British Railways workshops will be taken into account? Have they? Has the order been secured? Has a credit guarantee been given. Is the future of Ashford and Barassie secure? If not, there will be savage questions asked throughout Scotland.
  In my area, the foundry of Babcock and Wilcox is due to close next January. I am bringing pressure on a private firm to keep it open. We cannot continually keep on doing the job that every Scottish Member is doing—fighting closure after closure and redundancy after redundancy in the private sector if, willy-nilly, the Government allow the great nationalised industries, to run down in this way. There are one million unemployed in the country who expect action from the Government. The Government can start tonight by giving a positive answer on the retention of the railway workshops.
  10.6 p.m.
  The Under-Secretary of State for the Environment (Mr. Eldon Griffiths): This debate, generated by my right hon. Friend the Member for Ashford (Mr. Deedes), has been turned into a much wider ranging debate, including such larger issues as unemployment in Scotland and the immediate railway forebears of the right hon. Member for Kilmarnock (Mr. Ross). I am glad my right hon. Friend obtained this opportunity for a debate because I know his special interest in the Ashford workshops. Indeed, he has recently been in close contact with various members of the Government, including attendance at a meeting, together with representatives of his local authorities, with my hon. Friend the Under-Secretary of State for Trade and Industry, when the unemployment position at Ashford was discussed. I want to say in passing how much I admire the able, sensible, responsible and fully documented way in which he made his speech. All his speeches are that way but this one was in particular.
  We also had a speech from the hon. Member for Glasgow, Woodside (Mr. Carmichael), who, making no bones about it—I respect him for it—said that if it was necessary for him to plead a special case on behalf of the people of his area, he would do so. I do not complain about that. But I think it only fair to say in

  789
  passing that it is not easy to see how both Barassie and Ashford can be kept.
  We had as well an intervention by the hon. Member for Renfrew, West (Mr. Buchan), who is not in his place for the moment, although he may have gone out for a perfectly good reason. His essential case was that if there is to be reflation of the economy the best way is through the public sector. This is a matter which the House could debate at length on some other occasion, but I am entitled to draw to his attention, that over recent weeks and months the Government, far from squeezing the railways as the right hon. Gentleman suggested, have provided an additional £40 million or more in infrastructure grant to the railways and that my right hon. Friend the Minister for Transport Industries has recently brought forward work on some £5 million worth of new passenger rolling stock which will be built much earlier than had been planned.
  Hon. Members asked about help for Scotland. I am advised by my hon. Friend the Under-Secretary of State for Home Affairs and Agriculture, Scottish Office, who is sitting beside me, that the Government will be providing for the whole of Scotland, under the additional public works programme, not less than £60 million, and I understand that in the area adjacent to Barassie there have been, of course, the recent naval orders, worth £70 million, nearly three-quarters of which go to the Clyde. In addition, there has been the order of 100 Beagle Bulldog aircraft to Scottish Aviation at Prestwick. These orders, and the large public works programme which my right hon. Friend the Secretary of State for Scotland is pushing into Scotland, give the answer to the suggestion of the hon. Member for Renfrew, West that the Government are failing to provide adequate public works and stimulus in the nationalised sector.
  I think the House will understand that the gravamen of this debate is the narrow question of the railway workshops, and in particular it is my right hon. Friend's speech to which I must primarily reply.
  The background is the fact that British Railways are having to take some difficult decisions arising from surplus capacity in their workshops, and I want to say clearly,
  790
  right at the start, that taking those decisions is a management function. It is a function which must be exercised by the British Railways Board. It cannot be exercised by the Government, and I can say on behalf of the Minister for Transport Industries that he has no desire, and no intention, of intervening in the board's discharge of its proper statutory functions.
  Under the 1968 Transport Act, for which hon. Gentlemen opposite bear the responsibility, British Railways have a statutory duty to balance their accounts. That is their duty, laid upon them by this House, and hon. Gentlemen opposite voted for the Bill which made it so. Following that Act, the board no longer receives general deficit grants. There is no power for the Government simply to hand the board money and hypothecate it for use for one particular workshop, or for any other function.
  The board is bound by law to view all its activities in a commercial light. It is for that reason that the board has been carrying out a comprehensive review of its future requirements for workshop capacity, and it has been taking into account such factors as the decline in coal traffic, the decline in rail sundries traffic, and it has also had in mind this year's shortfall—which no one can dismiss—in the levels of a freight movement generally.
  At the same time the board is improving its working methods, and I am sure that we are all in favour of that. But as it improves its working methods, it is achieving in particular a very much higher utilisation of its existing wagon fleet. About 70,000 wagons have been withdrawn from service this year, and within four or five years the board expects to be carrying about the same amount of traffic as today in a wagon fleet half the present size.
  This improved wagon utilisation is one of the benefits which have come from the computerised wagon control system, which I understand the board has recently decided to develop, and from better management techniques. All of us who care for industry in this country, and in the public sector in particular, will want to congratulate British Railways on achieving this more efficient utilisation of their stock of wagons.

  791
  British Railways' review has already taken account of improvements in workshop techniques, which I accept can be seen not least at Ashford, and it has also achieved greater efficiency, because modern rolling stock can, and does, cover a higher mileage and requires less maintenance than the previous older types.
  My right hon. Friend mentioned the noticeable growth of privately-owned wagons. In some quarters this has been a matter of contention, but it is very welcome to the board that there should be this growth of privately-owned wagons because, for one thing, it saves the board's own capital investment, and for another it ties the traffic of those private industries to the railways.
  All these developments—better utilisation of wagons, the fact that they do not have to repair modern types as much as they used to—mean that British Railways need far fewer wagons to do the job. There is consequently a greatly diminished requirement both for the building of new wagons and for the repair of old ones.
  In these circumstances British Railways have reached the conclusion that the best road for them to take in the interests of the railways and, in their judgment, in the interests of the country, is to close down a number of those workshops which deal specifically with wagons, rather than to make general reductions of staff throughout the workshops organisation.
  British Railways have taken this view because closures save the heavy costs inherent in fixed overheads, particularly at smaller workshops. That saving, in their view, will be positively achieved by closures—in contrast with trying to make the economy by way of staff reductions spread across all the workshops but without complete closure. This would fail to achieve the savings in overheads which the board seeks to make.
  I assure the House that the board's conclusions in this review have taken fully into account the need for capacity to deal with any additional workload if this becomes necessary as the economy picks up and more freight movement is generated.
  Mr. Buchan: How can one take account of future developments if the
  792
  workshops have been closed? That is impossible.
  Mr. Griffiths: The hon. Gentleman could not have been listening to me carefully. In its review of these workshops the board has taken into account the prospective increase in traffic and, therefore, the prospective increase in the need for new wagons and for repairing old ones, and the board is satisfied that in all the circumstances it can meet that prospective demand.
  In considering how best to trim its surplus capacity, the board has to my knowledge shown the fullest awareness not only of economic and operational factors but of social factors as well. Unfortunately workshops at a distance from the main centres of railway activity, such as Ashford and Barassie, inevitably tend to be less economic because of the dead mileage, not to speak of the operational problems, involved in moving defective wagons there for repair.
  I acknowledge that Ashford builds as well as repairs wagons, but the fact that Ashford has been named as a workshop which may have to close, or at any rate be extensively run down, cannot to looked at in isolation from the problems of the British Railways workshops organisation as a whole.
  I understand from British Railways that they are likely to need in the longterm only one main workshop to build new wagons. The only workshop other than Ashford which builds wagons is at Shildon in County Durham, where four-fifths of the drop stampings for British Railways are produced. I understand that British Railways consider that there are sound technical reasons why Shildon should be retained.
  Shildon is in a special development area where the unemployment rate is much higher than the national average, whereas at Ashford it is lower. Thus, in addition to technical considerations, which British Railways find convincing, there are strong arguments on social grounds for retaining Shildon, if need be in preference to Ashford.
  A word about Barassie. The right hon. Member for Kilmarnock suggested that British Railways were somehow being peculiarly unfair to Scotland. There is

  793
  no evidence whatever to support that suggestion.
  During the reduction and modernisation of the railways' main workshops organisation under the plan begun in 1962 under a Conservative Government, continued through five years until 1967 under a Labour Government, the British Railways workshops staffs were reduced nationally from 66,000 to 40,000. But of the 16 workshops that were closed, only one during that programme was closed in Scotland, Cowlairs, one was closed in Wales and 14 were closed in England. Similarly, the rundown entailed a reduction of the workshop labour force in Scotland by 9 per cent., whereas in the country as a whole the reduction was 32 per cent.
  In British Railways' new investment in workshops, the expenditure per man employed as a whole was £487. In Scotland it was £675. So to suggest that British Railways are picking out Scotland to damage the economy is grossly unfair and quite inaccurate.
  Mr. Carmichael: I think that the hon. Gentleman will agree that the figures which he gave for the cost per man in England and Scotland were before the considerable modernisation in the works at St. Rollox in Glasgow. The figures seem to show that productivity in Scotland was a good deal less, whereas in fairness we should point out that the capitalisation in that period was also a good deal less.
  Mr. Griffiths: The hon. Gentleman will forgive me if I get on to Ashford. I was about to say that the only other workshop which was closed after that was Inverurie, which he quite fairly mentioned. It did not lie in the mouths of hon. Gentlemen opposite to use this strong language about Barassie when they closed Inverurie at a time when there were relatively few jobs in that area either.
  Mr. Ross: I mentioned Inverurie myself. Let the Minister look at the unemployment figures in that part of the world then and now. Let him consider the matter geographically: he will realise that things are quite different.
  Mr. Griffiths: I must now protect my right hon. Friend's Adjournment debate. He mentioned the problems of heavy
  794
  lorries and suggested that more freight should be sent by road. I do not disagree. He will know that the Minister for Transport Industries recently rejected proposals to increase the maximum lorry weights from 32 to 44 tons. But it is important to see this question of road haulage versus rail freight in perspective.
  Even if the railways were to increase their freight tonnage by a half, the total vehicle traffic on the roads would drop by a tiny amount—probably 1 per cent. This amount is made up in about four months' growth of the new vehicles on our roads.
  My right hon. Friend also suggested that, if the Channel tunnel went ahead, Ashford works would be well placed to construct and maintain these specialised rolling stock. He asked for an early decision. I wish I could give him that decision tonight, but I must be content with telling him how things now stand.
  The British and French Governments had a meeting in London in March and chose a private international group as the instrument for the further pursuit of this project. We also agreed on the final studies, technical and financial, which would need to be made. These studies, with which the two Governments are closely associated, are going well. My right hon. Friend is anxious that the decision on this great Anglo-French project should be taken as early as possible. But, given the amount of work which still remains to be done and the complex issues involved, the Government do not expect to be able to take a decision and to bring it to Parliament, as my right hon. Friend has undertaken, before 1973.
  I recognise that the delay with the decision has an important bearing on the future of the Ashford workshops but, with the best will in the world, no one at this stage can guarantee that work on the special tunnel rolling stock will automatically go to Ashford. The placing of contracts for rolling stock and, indeed, the placing of all the contracts in connection with Channel tunnel construction will be a matter for the bodies which eventually build and operate the tunnel. If we assumed that the rolling stock contracts were to be obtained by British Railways it would then be for the British Railways Board to decide where the work should be undertaken. It

  795
  might well be sent to Ashford but this cannot at this stage be a foregone conclusion. It is in any event a matter of management and not a matter for me.
  I can nevertheless, assure my right hon. Friend that my Department and the board are in close touch on all the relevant aspects of tunnel planning and the board is a member of the private group conducting the studies. The board has all the information it needs when considering the relationship of the tunnel and the future need for Ashford workshops.
  My right hon. Friend also raised the question of rail wagons for Yugoslavia. British Railways have been taking this possibility fully into account in their plans. It is because of that that they have deferred a definite decision on Ashford's future pending the outcome of the negotiations. This, of course, is a commercial matter, but the Government are providing all possible assistance to enable British Railways to win this useful order. Earlier this week the E.C.G.D. informed B.R.E. Metro that credit cover for a period of eight years would be available, and this will cover up to 85 per cent. of the cost of the proportion of the contract to be built in this country. There is no suggestion known to E.C.G.D. from the B.R.E. Metro organisation that the terms of the cover now offered are anything other than satisfactory.
  Yugoslavia cannot of itself save Ashford. The order, if it is obtained by the board, would be sufficient only to keep part of the Ashford works in operation and the work force would still have to be run down, some provision being made for the possibility of the Channel tunnel requirements. The Government hope that by the time the Yugoslav order, if won, is completed, the
  796
  position regarding the Channel tunnel requirements will be clearer.
  This afternoon my right hon. Friend explained all this more fully to representatives of the union side of the Railway Shopmen's National Joint Council and the Transport Salaried Staffs Association. The unions were listened to carefully and courteously but no new factors have been brought to light to change my right hon. Friend's view that these proposals are essentially a matter of railway management for the board.
  My right hon. Friend the Member for Ashford considers that special circumstances warrant special measures. The Government have taken special measures to help nationalised industries but there is a limit to what can be done. The measures so far taken will, I believe, help British Railways, but beyond what I have said about the Yugoslav order I cannot promise that they will keep Ashford open.

  MOTORWAY ACCIDENTS
  10.28 p.m.
  Mr. J. R. Kinsey: Time has beaten me completely this evening, and I would just ask the Minister to note the point that I intended to bring up about motorway safety which I shall have to leave to another occasion when I may have the opportunity of a debate on the subject. I am certain that my hon. Friend and his right hon. Friend have the point well in mind, and I look forward to debating it with them on another occasion.
  Question put and agreed to.
  Adjourned accordingly at twenty-nine minutes past Ten o'clock.