Commons Sitting of 8 February 1971

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

    Prices
    Mr. Molloyasked the Secretary of State for Trade and Industry what measures he now proposes taking in view of the accelerated rise in prices during recent months.
    The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies): We shall continue to encourage competition and to impress on the public the fact that inflationary wage settlements make price increases inevi.
    Mr. Molloy: But is the right hon. Gentleman aware that the Government's conspicuous incapacity to hold prices, or to deal with any other public issue, is causing grave concern in the country, and that the ever-rising cost of living is having a serious effect on the low-income groups and the disabled, and is he aware that
    2
    there is also grave apprehension because of the—
    Mr. Speaker: Order. There are 103 Questions today to the Secretary of State for Trade and Industry, and I should like hon. Members to limit themselves to one supplementary question each on any Question. The hon. Member has already asked two.
    Mr. Molloy: I was going to ask the Secretary of State whether he would give consideration to a temporary freeze on prices over decimalisation day.
    Mr. Davies: No, we do not contemplate a freeze on prices. As to the general question raised by the hon. Gentleman, attention should be drawn to the rate of increase in earnings, which is two-and-a-half times that of prices, and which is having great effect on price levels.
    Mr. Mason: But is the right hon. Gentleman aware that in recent months there have been rising prices for spirits, beer, cigarettes, petrol and food, and that with decimalisation day there is likely to be more rounding up than rounding down, which will necessitate more increases, and that food prices will rise by another 2 per cent. according to the Minister of Agriculture during this year and that our devaluation advantage is being rapidly eroded, and that this is a high price to pay for our entry into the European Economic Community? Is the right hon. Gentleman not concerned about that, and should he not attack prices instead—
    Mr. Speaker: Order. It is making Question Time intolerable if we are to have speeches and whole series of supplementary questions. I have received many complaints that we are not getting through enough Questions. There are 103 to the Secretary of State today, and I must ask Front Bench spokesmen as well as back-bench Members to obey the rules.
    Mr. Davies: The more reason, therefore, for all parties to join together in trying to restrain the most compulsive effect on price levels, and that is the level of wages.

    Oil Supplies
    Mr. Eadieasked the Secretary of State for Trade and Industry if he is satisfied that oil supplies will be sufficient to meet consumers' needs in this country during the winter months; and if he will make a statement.
    Mr. John Davies: The arrangements which have been made by the leading oil companies for obtaining supplies should be sufficient to meet their commitments this winter.
    Mr. Eadie: Will the right hon. Gentleman accept that there is public anxiety about future oil supplies, and will he agree that there is also concern about prices—that, for example, 1d. on a gallon is equal to about 19s. 4d. per ton of coal? Is it not time that he made a statement—
    Mr. Speaker: Order. The hon. Member is asking three question on one supplementary. I must ask for one only.
    Mr. Davies: The question of prices is, of course, for the companies themselves in the light of competition which exists in this field. With your permission Mr. Speaker, I shall be answering a Question on certain aspects of oil supply later.
    Mr. Lane: Is it not a fact that the oil companies, largely operating under private enterprise, have succeeded in maintaining supplies through two very difficult years in the face of considerable problems and can be relied on to go on providing an increasing share of our energy supplies in the years ahead, despite their present difficulties?
    Mr. Davies: The oil industry has a good record for maintaining supplies under difficulties, and certainly will have to use its abilities to a singular degree in
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    future when more dependence will be put upon it for the maintenance of supplies.
    Mr. Eadieasked the Secretary of Trade and Industry what representations he has received from the steel industry about oil supplies and the recent price increase; and what reply he has given.
    The Minister for Industry (Sir John Eden): I am aware of the steel industry's concern about the increase in the price of fuel oil, but I have not heard of any difficulty about supplies.
    Mr. Eadie: Has the Minister made a calculation of what the additional cost will be to industry as a consequence of the increased price?
    Sir J. Eden: No. The consequent increases are primarily dependent upon the nature of the contracts entered into between the steel industry and the companies concerned.
    Mr. LaneWill my hon. Friend confirm that over the past 20 years the wholesale prices of oil have risen substantially less than the prices of coal, gas and electricity?
    Sir J. Eden: Yes, Sir. That is correct.

    Newburn (New Industry)
    Mr. Bob Brownasked the Secretary of State for Trade and Industry if he will take steps to encourage new industry to the location of the industrial site at Throckley in the urban district of New-burn, Northumberland.
    Sir J. Eden: The Department will continue to bring this local authority site to the attention of suitable industrial inquirers.
    Mr. Brown: Is the Minister aware that since last June unemployment in the Newburn Urban District Council area has increased by 9 per cent. and that it is more imperative than ever to bring new industry into the area?
    Sir J. Eden: I am aware that there were fewer people unemployed on Tyneside in December, 1970, than in December, 1969.

    Northern Region (Industrial Locations)
    Mr. Bob Brownasked the Secretary of State for Trade and Industry what were the numbers of industrial inquiries

    5
    for locations in the Northern Region outstanding on the first day of June 1970 and each subsequent month to date, with the anticipated number of jobs involved in each case.
    Sir J. Eden: Figures are not readily available in the form requested but I am ciculating in the OFFICIAL REPORT figures of the number of inquiries received for industrial locations in the Northern Region for each of the months referred to. The number of jobs involved is not known.
    Mr. Brown: Is the Minister aware that his Department's officers locally are seriously concerned about the fall-off in inquiries, and more so about the withdrawal of firms who were actively pursuing the idea of going into the Northern Region?
    Sir J. Eden: The decline of interest in the development areas was apparent before the change of Government, and this represents the consequences of economic policies pursued by the
    previous Administration.
    Following is the information:

    Month

    Number of Inquiries

    May

    …

    …

    …

    19

    June

    …

    …

    …

    19

    July

    …

    …

    …

    24

    August

    …

    …

    …

    21

    September

    …

    …

    …

    10

    October

    …

    …

    …

    15

    November

    …

    …

    …

    12

    December

    …

    …

    …

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    Regional Policy
    Mr. Kaufmanasked the Secretary of State for Trade and Industry when he expects to complete his study into all aspects of regional policy; what form it is taking; and whether he will invite non-governmental bodies to submit evidence.
    Mr. Armstrongasked the Secretary of State for Trade and Industry whether he has now completed his review of regional policy; and if he will make a statement.
    Mr. James Hamiltonasked the Secretary of State for Trade and Industry whether he has now completed his review of regional policy for Scotland; and if he will make a statement.
    Mr. Blenkinsopasked the Secretary of State for Trade and Industry whether he will make a statement on the result of his review of regional policy.
    Mr. John Davies: Statements about the Government's regional policy review will be made shortly. The Government are taking full account of the views expressed by a wide range of organisations.
    Mr. Kaufman: In view of authoritative statements that unemployment will rise this winter to one million, and since firms are pulling out of development areas, instead of going into them, because of the Government's policy, and since incentives are being withdrawn, should not the Government take action, instead of leaving it to the development associations despairingly to try to get together to do the job which the Secretary of State's Department is there to do?
    Mr. Davies: The hon. Gentleman quotes conjectural statements as justification for doing something which the Government are already doing, which is to try to find exactly which measures would be the most appropriate, not only to cope with short-run problems in the regions but also to provide a sound future for the regions and to meet the need for industrial growth in the areas concerned.
    Mr. Armstrong: Does not the Secretary of State agree that it was foolish and irresponsible for the Government to announce changes immediately they came to power, costing, according to the North-East Development Council, £38 million a year in aid to the Northern Region, and to create a complete crisis of confidence in all sections of the community in the North before the review policy has even been decided?
    Mr. Davies: The position of the Government was reviewed most carefully whilst in Opposition, and the decisions which were announced on 27th October were the result of mature study of the problems concerned. It would therefore be quite unnecessary to suggest that any longer period of study was required. The underlying problem is the poor response of the economy generally, which largely was engendered by the weak economic policies of the Opposition.
    Mr. Blenkinsop: Is the right hon. Gentleman aware that in areas like ours male unemployment is now over 13 per cent. and that the position is getting steadily worse, with firms contracting because of Government policy?
    Mr. Davies: The policies which are responsible are those of the last Administration. The policies of the present Government will bring back economic welfare.
    Sir H. Legge-Bourke: Will my right hon. Friend, when considering regional policy for the East of England, pay particular attention to the fact that in the Borough of Wisbech, in my constituency, we are appoarching all too fast a rate of unemployment of nearly 7 per cent., so that it is important that boroughs of that size should get consideration?
    Mr. Davies: In the course of the review which we are carrying out, all areas of the country are being carefully considered. For this reason it will take some time to come out with well-reflected policies in this field.
    Mr. Benn: Will the right hon. Gentleman deal more satisfactorily with the question, why did he change existing policy before the review was complete or, alternatively, if the review had been done before the election, why is he now continuing with a review when his policy has already been announced?
    Mr. Davies: The reason for the change of policy was that quite evident failure of the policies pursued by the last Administration to attain an effective industrial superstructure throughout the country. The faults were quite evident to us all. The changes were, therefore, urgent and were carried out urgently. As a longer-term measure, the whole review of the structure of regional policy is being carried through.
    Dame Irene Ward: Is my right hon. Friend aware that the North of England would be better served if grants could be paid quickly? There is a great deal of criticisms about the length of time it takes for the Government to pay the grants they have decided to give. Could he perhaps get on with paying what is our due?
    Mr. Davies: I, of course, take due note of the point made by the hon. Lady—
    Dame Irene Ward: "Hon. Friend", please.
    Mr. Davies: I say so with absolute justice—"my hon. Friend". I will up-braid my Department suitably on her account.
    Mr. Heffer: Is not the right hon. Gentleman aware that it is impossible for the Government constantly to hide behind the argument that the level of unemployment has increased because of the previous Government' policy? Is he not aware that the so-called changes carried out by his Government have led to a rapid increase in unemployment in every development area? It is not a review we want, but action now to bring down the level of unemployment in Liverpool, on the North-East Coast and in similar areas.
    Mr. Davies: I am not clear, Mr. Speaker, what the question was in that speech. However, the undoubted responsibility of the Labour Party for the extent of wage inflation has played a major part in the damage to the economy.
    Mr. Blenkinsop: In view of the unsatisfactory nature of the answer, I beg to give notice that I shall raise the matter on the Adjournment as soon as possible.

    Chain Letter Selling
    Mr. Kaufmanasked the Secretary of State for Trade and Industry if he will introduce legislation to make illegal the trading practices of the kind detailed in the communication to him dated 11th November from the hon. Member for Manchester, Ardwick.
    Sir J. Eden: No, Sir. In such instances of "chain letter" selling methods as I have seen, the nature of the scheme was adequately explained. I see no reason why people should not be left to decide for themselves whether to participate.
    Mr. Kaufman: Is the Minister aware, that, despite the inquiry of a few years ago, the practice of the firm Bezelplan Ltd., of conning unsuspecting customers out of their money without necessarily giving them any goods in return, is continuing? Should he not look at the

    9
    matter again with a view to a further inquiry and trying to stop people losing money to this firm?
    Sir J. Eden: I am ready to have a look at it again, but so far we have had only six complaints about three schemes of this kind, and we must leave the vast majority of people to use their commonsense.
    Mr. Kaufman: In view of the totally unsatisfactory nature of the reply, I beg to give notice that I shall raise this matter on the Adjournment at the earliest possible opportunity.

    Coal (Imports)
    Mr. Skinnerasked the Secretary of State for Trade and Industry whether coal will be imported at such times that stockbuilding takes place, particularly in the summer months; and if he will make a statement.
    Sir J. Eden: It will certainly be necessary to rebuild stocks to healthier levels for next winter and imports could no doubt make a useful contribution to achieving this objective.
    Mr. Skinner: Is the Minister aware that by continuing to import coal during the summer months, when stocks will be built up as a result of the industry's efforts, he is, on the one hand. deliberately raising prices, because imported coal costs about £3 a ton more than indigenous coal, and, on the other hand, helping to throw more British miners on the scrap heap?
    Sir L Eden: The main thing to have in mind is that a continuing gap between demand and supply would harm the long-term interests of the coal industry. The question of prices is one for the importer.

    National Coal Board (Chairman)
    Mr. Skinnerasked the Secretary of State for Trade and Industry if a successor to Lord Robens has been chosen; and on what conditions he will be appointed.
    Mr. William Hamiltonasked the Secretary of State for Trade and Industry if he is yet in a position to announce the name of the new Chairman of the National Coal Board.
    Mr. John Davies: I shall be making an announcement about this appointment in due course.
    Mr. Skinner: Will the Minister, when instructing the new Chairman of the Coal Board, tell him, as distinct from the previous policy announced a few months ago, not to hive off lucrative parts of the coal industry and also to take into account the recent actions of the Government with regard to Rolls-Royce?
    Mr. Davies: The only instructions I could give to the chairman of this industry derive from powers given to me by Statute. If, as I expect, I am given certain additional powers by Statute, I shall exercise them.
    Mr. Hamilton: Would the Secretary of State not consider advertising the post, setting out the required qualifications but ruling out any possibility of the appointment of a Rolls-Royce director?
    Mr. Davies: I certainly will give careful consideration to the point made by the hon. Gentleman, but I do not anticipate any need to advertise the post widely in order to make a successful appointment.
    Mr. Michael Foot: Will the right hon. Gentleman give an assurance that any future Chairman of the National Coal Board will be absolutely free to make any comments he wishes on any proposals which come from the Government suggesting the hiving-off of part of the industry?
    Mr. Davies: I have never endeavoured to put a bridle on the tongue of the present Chairman. I would not expect to do otherwise with any new Chairman.

    Leather Gloves (Imports)
    Mr. Wingfield Digbyasked the Secretary of State for Trade and Industry what additional countries will have the right to send duty-free leather gloves into the United Kingdom as a result of the United Nations Conference on Trade and Development generalised preference scheme recently agreed to by the British Government; and what steps he is taking to safeguard the leather glove industry in the south-west.
    The Minister for Trade (Mr. Michael Noble): The question of which countries

    11
    should benefit from U.N.C.T.A.D. preferences is under discussion between the industrialised countries. We have reserved under our scheme the right to withdraw a product from preference if it results in such increased imports and under such conditions as cause or threaten serious injury to domestic producers.
    Mr. Wingfield Digby: Would my right hon. Friend exercise that right in regard to leather glove-making, which is an important, and indeed essential, industry in North Dorset and South Somerset, since this is a serious matter for those areas?
    Mr. Noble: I had recently what I hope was a satisfactory meeting with the National Association of Glove Manufacturers, which put its case to me clearly and well. There are certain things which may be needed to provide the statistics which would be required to take any necessary action. The association is co-operating with my Department to provide the statistics, but I cannot guarantee to keep out gloves altogether.
    Mr. Maclennan: Is the right hon. Gentleman aware that imports of leather gloves from Portugal, the products of sweated labour, are already making the position extremely difficult in regard to the domestic manufacture of leather gloves?
    Mr. Noble: Imports of gloves from Portugal come under the E.F.T.A. treaty and are not affected in any way by this Question.
    Mr. Skeet: Would my right hon. Friend also bear in mind the difficulties of leather manufacture in North Bedfordshire due to importation and competition from plastics?
    Mr. Noble: If my hon. Friend's question relates to gloves, of course I will.

    United States of America (Restrictive Trade Legislation)
    Mr. Kenneth Bakerasked the Secretary of State for Trade and Industry what recent representations he has made to the United States Government about demands for protectionist legislation in the United States of America.
    Mr. Dalyellasked the Secretary of State for Trade and Industry what discus-
    12
    sions he had with the United States Government about the introduction of protectionist legislation in the United States Congress; and if he will make a statement.
    Mr. Noble: During my visit to Washington last month, I reaffirmed our opposition to restrictive trade legislation.
    Mr. Baker: Is my right hon. Friend aware that, since his visit to the United States, Congressman Wilbur Mills has reintroduced his Bill into Congress and that if the Bill becomes law in the present session of Congress it will lead to a trade war and to an avalanche of retaliation, from which we should all suffer? Could this view be expressed yet again to Mr. Nixon?
    Mr. Noble: My hon. Friend is no doubt aware that the Prime Minister spoke to President Nixon about this matter. I am quite convinced that our views are well known, not only to the President but to all the senior administrators in the United States.
    Mr. Dalyell: Did the right hon. Gentleman in his Washington talks raise the issue of the international company and the difficulties that might well confront many multilateral companies of the kind we have in Central Scotland?
    Mr. Noble: No, Sir.

    Bishop Auckland, Shildon and Barnard Castle
    Mr. Boydenasked the Secretary of State for Trade and Industry how many new jobs are expected to arise from the industrial development certificates issued during the three months ending 31st January, 1971 in the employment exchange areas of Bishop Auckland, Shildon and Barnard Castle.
    Sir J. Eden: During the period 1st November, 1970 to 31st January, 1971, one industrial development certificate was issued in the Bishop Auckland Employment Exchange Area and none in Shildon and Barnard Castle Employment Exchange Areas. It would not be right for me to give the estimated additional employment for an individual project.
    Mr. Boyden: Would the hon. Gentleman agree that the flow of industrial development certificates in 1969 and early

    13
    1970 was reasonably satisfactory, and does he blame the Labour Government for the sudden cessation of certificates? surely the blame clearly lies on the present Government.
    Sir J. Eden: In the comparable period 1st November, 1969 to 31st January, 1970, one i.d.c. was issued in Bishop Auckland and none in Shildon and Barnard Castle—exactly the same number.

    Building Firms (Bankruptcy)
    Mr. Boydenasked the Secretary of State for Trade and Industry how many building firms went bankrupt in 1970.
    Sir J. Eden: Figures for the whole year 1970 arc not yet available. For the first nine months the number of Receiving Orders and Orders of Administration (under Section 130 of the Bankruptcy Act, 1914) made in England and Wales in respect of sole traders and firms in the construction industry was 729. In the same period there were 199 compulsory and 401 creditors' voluntary liquidations of companies in this industry.
    Mr. Boyden: Is this not a most unsatisfactory position? Would the Minister not tell his right hon. Friend, who is responsible for building, that much more needs to be done about the building industry than just holding contractors to two-year firm contracts?
    Sir J. Eden: The number of bankruptcies in the construction industry from 1965 to 1969 has been increasing on average at about 10 per cent. per year.
    Mr. Chichester-Clark: Is my hon. Friend aware that by far the largest single contributory factor on this matter was the imposition of selective employment tax? That, of course, was not imposed by the present Government. Is he further aware that the building industry produces a quarter of the total yield of that tax?
    Sir J. Eden: Yes, Sir. I am aware of both those facts. This is one of the reasons that we have made the firm pledge to get rid of S.E.T.
    Mr. J. T. Price: Is not the hon. Gentleman aware that bankruptcies and winding-up orders in the building and construction industry are not a recent phenomenon, that many builders go into
    14
    the speculative building of houses with nominal capital and, having completed a particular scheme, then get out with the aid of any kind of legal instrument so as not to be in the position of having to face the complaints of house purchasers who are duped by unsound companies? When will the Government tackle the spurious builders who make a mockery as between purchaser and vendor?
    Sir J. Eden: I am aware that bankruptcies in the construction industry have been going on for some time. There were some 957 in 1969. But as for the other matters, they are more a question for my right hon. Friend the Secretary of State for the Environment.

    European Economic Community
    Sir A. Meyerasked the Secretary of State for Trade and Industry (1) if he will give the latest available details of the growth, since 1958, of United Kingdom exports to the European Economic Community;
    (2) if he will give the latest available details of the growth of intra-European Economic Community trade since 1958.
    Mr. Noble: United Kingdom exports to the European Economic Community measured by their dollar value grew by 91 per cent. per annum between 1958 and 1969, and by 15 per cent. in 1970. E.E.C. intra-trade similarly measured increased by 161 per cent. per annum between 1958 and 1969 and by 20 per cent. between the first nine months of 1969 and 1970.
    Sir A. Meyer: I am obliged for that answer. Would my hon. Friend agree that the contrast between those two sets of figures shows how desirable it is for Britain to be part of the duty-free trade area represented by the E.E.C. since this would enable our overseas trade to grow much more rapidly than at present?
    Mr. Noble: I can at least agree with my hon. Friend that trade with the E.E.C. countries has shown a very valuable increase in this period.
    Mr. Raphael Tuck: On the contrary, are we not getting on very well with the Common Market without entering the Common Market?
    Mr. Noble: Although that could be adduced from the figures I have suggested, there is no doubt that by reducing tariff barriers we might well do a great deal better.
    Mr. Body: Would my hon. Friend not agree that by this time next year tariff barriers will be reduced by, on average, 7·6 per cent.? Will there not then be still greater prospects for the extension of imports to the E.E.C.?
    Mr. Noble: We are getting into deep hypothetical waters. There is no doubt, on the evidence in regard to increased trade, that if we were to achieve entry, trade would increase considerably faster.
    Mrs. Renée Shortasked the Secretary of State for Trade and Industry what assessment is being made in his Department of the effect of Great Britain's entry into the Common Market on the economy of India.
    Mr. Noble: We cannot make a reliable estimate of the effect which British entry into the E.E.C. would have on the Indian economy. However, as my right hon. Friend the Chancellor of the Duchy of Lancaster informed the House on 4th February, it was agreed at the Ministerial Meeting in Brussels last week that the enlarged Community would be ready to examine any problems which arose for Asian Commonwealth countries in the field of trade with a view to reaching appropriate solutions.
    Mrs. Short: But in all the statements from the Government Front Bench about the Commonwealth, emphasis is always given to the Commonwealth Sugar Agreement, which does not affect India. Will the right hon. Gentleman look carefully at this matter and ask his right hon. Friend the Prime Minister what Mrs. Gandhi said to him when he saw her in Delhi recently?
    Mr. Noble: I can assure the hon. Lady that though the key Commonwealth questions may be sugar from the Caribbean and dairy products from New Zealand, the particular interests of Asian countries have never been overlooked. As my right hon. Friend told the House only last week, if there should be problems the E.E.C. has agreed to examine them with great care.

    Industrial Investment
    Mr. Sheldonasked the Secretary of State for Trade and Industry what further estimate he has made of the level of industrial investment in the first quarter of 1971.
    Mr. John Davies: Information about investment intentions is collected only for calendar years and not for quarters. Statistics of actual investment will be collected only after the quarter has ended, and will not be available until June.
    Mr. Sheldon: Since the figures of the Secretary of State's Department show that this year investment will decline in manufacturing industry for the first time since there was last a Conservative Government, when will the Minister do something about this most critical issue and, in particular, reconsider the effects of the change from investment grants to allowances? Whatever may be said in favour of that change, which is very little, it was obviously an appalling piece of economic mistiming. What will the Minister do about that now?
    Mr. Davies: The Government have in no way lost confidence in the rightness of their decision to change from investment grants to allowances. It is undoubtedly true that the state of investment at the moment is far from satisfactory. This is attributable far more to the uncertain state of the economy, largely promoted by the inflationary level of wage settlements.
    Mr. Michael Foot: Would the Minister agree that the abolition of investment grants will inflict upon the British Steel Corporation an injury of about £100 million a year? How does he propose to make that good?
    Mr. Davies: The British Steel Corporation will lose investment grants, as will other sections of industry. On the other hand, they will have the opportunity to enjoy the advantage of investment allowances.
    Mr. Sheldon: There is none.
    Mr. Davies: The initial allowances—
    Mr. Sheldon: There are no investment allowances.
    Mr. Davies: Yes, there are. The steel industry will have this opportunity, as

    17
    will the rest of industry. It must be for the industry to be able to grasp this opportunity by becoming profitable.
    Mr. Barnettasked the Secretary of State for Trade and Industry what action he is taking to improve the level of industrial investment.
    Mr. John Davies: We are seeking to improve the climate for growth and investment in the long term by reducing taxation, providing tax allowances for investment and curbing wage inflation. Substantial addtional incentives are available in the Development Areas.
    Mr. Barnett: Where are the funds to come from for new industrial investment in the short term? The Minister will be aware that the Prime Minister has said that he is not encouraging price increases, so they are not to come from that. There is no relaxation of the money squeeze. On the best interpretation of the new policy, there will be no increase in the cash flow. Surely the Minister needs to take positive action. What does he propose to do to increase industrial investment?
    Mr. Davies: Apart from the taxation reductions which have been made by the Government, the hon. Gentleman will agree that funds are not unavailable to undertake investment. Uncertainty is the problem facing investment, and that uncertainty is spurred by inflation.
    Mr. Bruce-Gardyne: Would not my right hon. Friend agree that the decline in industrial investment is very largely a reflection of the more serious decline in corporate profitability over the last four or five years? Since hon. Gentlemen opposite constantly clamoured for this decline in corporate profitability and their right hon. Friends on the Front Bench constantly legislated to achieve it, would it not be more proper if they welcomed this decline in industrial investment?
    Mr. Davies: Certainly they should welcome it if it represents the result of their own endeavours, as it appears to. The share of trading profit before tax has markedly reduced over the last five years. Undoubtedly this is one of the factors propelling uncertainty.
    Mr. Dell: On the subject of uncertainty, will the right hon. Gentleman make a further statement about the position of
    18
    firms which, in the midst of major projects, suddenly found on 27th October that the whole basis of their investment planning had been changed? Will he adhere rigidly to 27th October, or will he assist these firms at all?
    Mr. Davies: The question of the exact use of the date is for my right hon. Friend the Chancellor of the Exchequer. As for the rigidity involved, it was concealed to no one that the Conservative Party's views on the subject were that incentives to investment should be related to the tax system and should not be in the form of cash hand-outs.

    Competition in Industry
    Mr. Sheldonasked the Secretary of State for Trade and Industry if he will make a statement on further Government action to increase competition in industry.
    Mr. John Davies: I shall be developing over the coming months the policy I outlined in the statement which I made to the House on 17th December.—[Vol. 808, c. 1577–86.]
    Mr. Sheldon: Is not the Minister aware that this policy is clearly becoming not credible any longer, at a time when the Government are taking no action to end the cartel of the banking system, in the matter of interest on deposit accounts, and when they are taking Rolls-Royce into public ownership? Is not the Minister aware that the British public are utterly confused as to what the Government's enonomic policy is all about?
    Mr. Davies: I am far from aware of that fact. The Government's policy of seeking to intensify competition is warmly shared by the people of this country.
    Mr. Dell: Will the right hon. Gentleman say when he expects to receive the first proposal from the Monopolies Commission about the reference of a monopoly? Can he also say when he intends to make his first reference of a monopoly situation to the Commission?
    Mr. Davies: I hope to make a reference to the Monopolies Commission very shortly.

    Cotton Textiles
    Mr. Barnettasked the Secretary of State for Trade and Industry if he will make a statement of the Government's policy on imports of cotton textiles.
    Mr. Noble: As announced in the House on 22nd July, 1969, a tariff is to be introduced on cotton yarn and woven cotton textiles from the Commonwealth Preference Area on 1st January, 1972. The present system of quota controls will then be terminated. Work is proceeding on the implementation of this decision, which the present Government have endorsed.
    Mr. Barnett: The Minister will be aware that there are people in Lancashire who fear that this switch away from quotas will mean the death knell of the Lancashire textile industry. Will he at least keep a close eye on the situation, and if there seems to be a need to revert back, will he do something about it immediately?
    Mr. Noble: The hon. Gentleman takes a great interest in this matter and will know that this move was proposed to the Government by the Textile Council. Although I cannot deny that there may be people who are worried, there are ways and means, if there should be serious damage, of stopping this type of import entering in too great quantities.
    Mr. Dell: When the statement was made on 9th July, there was also a proposal that there should be further discussions with the Indian Government as to assistance to India when the new tariff was introduced. Has that proposal made progress?
    Mr. Noble: Yes, Sir. Discussions have been taking place with the Indian Government who, because of their particular arrangements bilaterally, might be severely affected. We have arranged that if this should happen there are ways, by aid and other means, to compensate for it.

    Coal Industry
    Mr. William Hamiltonasked the Secretary of State for Trade and Industry which undertakings of the coal industry currently running at a loss he plans to hand over to private interests.
    Mr. John Davies: I have nothing to add to what my hon. Friend the Minister for Industry said in the House on 3rd December.
    Mr. Hamilton: The right hon. Gentleman will be aware that the junior Minister, on the Second Reading of the Coal Industry Bill, said that it was Government policy to hand over these loss
    20
    making ventures in the public sector to private enterprise. Does the right hon. Gentleman not see the absurdity of the Government's policy that where they hand over loss-making ventures in the public sector, they hand them over to private enterprise, but where the losses are in the private sector, they nationalise them?
    Mr. Davies: What the Minister said—my hon. Friend and I are in full agreement on this—is that what is necessary first is to carry out a proper inquiry of what precisely are the non-colliery activities in the coal industry and the results in profit or loss. When that has been done, one would be able to take decisions, but not before.

    Smokeless Fuel
    Mr. Blakerasked the Secretary of State for Trade and Industry if he is aware of the comments about the shortage of solid smokeless fuel in the Report of the Domestic Coal Consumers' Council for the year ended 31st October, 1970; and what steps he proposes to take.
    Sir J. Eden: The steps which the Government have taken were described in the reply I gave to my hon. and learned Friend the Member for South Fylde (Mr. Gardner) on 22nd July, and since then restrictions on imports have been removed. As a result of these measures, taken with the relatively mild weather to date, there is now reasonable ground for hoping that shortages during the present winter will be avoided.
    Mr. Blaker: Is my hon. Friend aware that the Report referred to put the blame for the shortage of solid smokeless fuels last year squarely on the shoulders of the Labour Government? Will he accept my congratulations on improving the situation?
    Sir J. Eden: I happily accept any congratulations that my hon. Friend wishes to send my way. He is quite right in saying that a developing shortage on the solid smokeless fuel front has been apparent for a long time.
    Mr. Arthur Lewis: Can be have published in HANSARD a detailed list of the number of tons dug by each Minister since right hon. and hon. Gentlemen opposite have been in office?
    Sir J. Eden: Not without a disproportionate cost.

    Nationalised Industries (Pricing Policy)
    Mr. Kenneth Bakerasked the Secretary of State for Trade and Industry when he intends to refer the pricing policy of a nationalised industry to the Monopolies Commission.
    Mr. John Davies: As I told the House on 17th December, I shall be ready to seek information and assistance from the Commission on the operations of the nationalised industries, in appropriate cases. But I have no present plans to do so in respect of their pricing policy.
    Mr. Baker: Does my right hon. Friend agree that it is an abuse of the monopoly powers of nationalised industries such as the Post Office and the railways to grant inflationary wage demands which can be met only by imposing increased prices on the consumer, and that many hon. Members would welcome the reference of such increases to the Commission?
    Mr. Davies: My hon. Friend will realise that references to the Commission in relation to the nationalised industries must be on a strictly voluntary basis for the time being. I fully appreciate the danger of granting inflationary wage increases and their impact on price levels.
    Mr. Palmer: Is the right hon. Gentleman aware that it has been stated that he is interfering actively with the pricing policies of the electricity boards? In the circumstances, is it necessary for any price increases to go to the Monopolies Commission?
    Mr. Davies: Interference is a matter of interpretation. The Chairman of the Electricity Council is good enough to consult me, and certainly I take that consultation very seriously. However, I would hardly call that interference. I prefer to call it taking a reasonable interest in the welfare of a very important industry.
    Mr. Michael Foot: Does the right hon. Gentleman agree that there is no need for intervention in any proposed price increase in a nationalised industry since the whole question was dealt with "at a stroke"?
    Mr. Davies: Taking that question seriously, I believe that it is necessary for
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    there to be consultation and an under standing between the industries and the Minister responsible.

    Bathgate
    Mr. Dalyellasked the Secretary of State for Trade and Industry if he will make an official visit to Bathgate.
    Sir J. Eden: Neither my right hon. Friend nor I have plans at present to do so.
    Mr. Dalyell: Is the Minister aware that in the Bathgate area, as in many other engineering districts, there is grave concern this weekend about what is to happen to sub-contractors who may be involved in Rolls-Royce? Will he do his best to ensure that either the Chancellor of the Exchequer or the Minister of Aviation Supply clarifies the position in the following debate?
    Sir J. Eden: I am sure that that will be done, and I give the undertaking for which the hon. Gentleman asks.

    Australia (Trade with the U.K.)
    Mr. Hayhoeasked the Secretary of State for Trade and Industry what proportion of Australian exports came to, and imports came from, Great Britain in 1960 and 1970.
    Mr. Noble: The proportion of exports was 24 per cent. in 1960 and 11 per cent. in the year ended October, 1970; for imports, the corresponding proportions were 33 per cent. and 20 per cent.
    Mr. Hayhoe: Can my right hon. Friend say how these sharply reducing trends compare with those for Australia's other major trading partners, such as Japan and the United States?
    Mr. Noble: In general terms, exports have gone very much more readily both to the U.S.A., mainly in meat and wool, and to Japan, in minerals and commodities of that sort. That has been the pattern for a number of years, and probably it suits the Australian market quite well.

    British Steel Corporation
    Mr. Strangasked the Secretary of State for Trade and Industry what plans he now has for the British Steel Corporation; and if he will make a statement.
    Sir G. de Freitasasked the Secretary of State for Trade and Industry when he expects to be able to announce the Government's policy on the selling off to private interests of parts of the British Steel Corporation and, in particular, that part of the industry which is in Corby, Northamptonshire.
    Mr. John Davies: I will make a statement as soon as I am in a position to do so.
    Mr. Strang: Is not it high time that the right hon. Gentleman ended the present uncertainty in the steel industry? Can he assure the House that he will not hive off the profitable sections of the B.S.C. and, furthermore, that the Corporation will be allowed to go ahead with the proposed greenfield steel complex?
    Mr. Davies: When the hon. Gentleman talks about it being high time, he seems to take little account of the fact that this enormous industry requires careful study to ensure its future prosperity. I do not propose to make precipitate statements before having a good understanding of that towards which the future is best directed.
    As for hiving off, equally I can give no assurance. I shall examine the structure of the industry with care and attention.
    Sir G. de Freitas: Is the right hon. Gentleman aware of the great apprehension among the steel workers of Corby in that they are still under the threat of being handed over to speculators? Is not it time that they knew their fate?
    Mr. Davies: I am sorry about the doubts that there may be, but I am disinclined to accept that the expression "speculators" is appropriate to this case.
    Mr. Gregor Mackenzie: Is the right hon. Gentleman aware that a number of hon. Members raised this matter in July of last year, when it was indicated that the Minister was carefully preparing plans? There seems to be a difference of emphasis between the Secretary of State and the Minister for Industry, which is causing a great deal of apprehension. Certainly in my area it has given rise to a great deal of concern.
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    Will the right hon. Gentleman complete his plans quickly, so that the future of the Scottish steel industry can be settled, once and for all?
    Mr. Davies: There is no difference between my hon. Friend and me on this subject.
    Mr. Benn: On three occasions today the Secretary of State has said that he is considering a matter: first, regional policy; second, competition policy; and now, the future of the nationalised in dustries. Should not he now be in a position to tell us about the Government's policy, right hon. and hon. Gentlemen opposite having been in power for seven or eight months?
    Mr. Davies: I am disinclined to leap in and make precipitate judgments. I believe strongly that wiser judgments are made after deliberate and careful thought as opposed to many actions taken by right hon. and hon. Gentlemen opposite when they were in office.
    Sir G. de Freitas: On a point of order. In view of the totally unsatisfactory nature of those Answers, I beg to give notice that I shall seek an early opportunity to raise the matter on the Adjourment.

    Edinburgh, Leith and Portobello (Development Areas Status)
    Mr. Strangasked the Secretary of State for Trade and Industry when he intends to announce his decision on the inclusion of Edinburgh in the development area.
    Mr. Murrayasked the Secretary of State for Trade and Industry whether, in the light of recent figures showing that, despite depopulation, unemployment in the Leith Employment Exchange area is at its highest level for 20 years, he will now expedite his review of Leith's development area status.
    Sir J. Eden: I would refer the hon. Members to the reply given to their Questions on 9th November by my hon. Friend the Joint Parliamentary Under-Secretary of State.—[Vol. 806, c. 5–6.]
    Mr. Strang: Is the Minister aware that the people of Edinburgh are anxiously awaiting this decision? Can he assure us that he will take into account not

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    only the sharp rise in unemployment in the Edinburgh, Leith and Portobello employment exchange areas but also that in employment exchange areas just outside Edinburgh?
    Sir J. Eden: I am aware of the need for an early decision on this matter. I hope that it will be taken fairly soon.
    Mr. Murray: Is the hon. Gentleman aware that, in view of the announcement about super-development area status for the Clyde valley, there is a risk of adverse repercussions on the east end of the central belt of Scotland and that these may be particularly bad in Leith, which does not have full development area status, and Edinburgh, which is denied development area status altogether? Would it not be more sensible to back this super-development area by making the whole of Scotland a development area?
    Sir J. Eden: A statement on the review of development area policy will be made before long. Although Edinburgh's employment situation has worsened in recent years, unemployment in the Edinburgh group as a whole is still well below the average for the Scottish development area. I am aware of the representations of the local authorities in that part of the country, and they will be taken fully into account.
    Mr. Varley: Does not the welcome announcement last week about making West Central Scotland a special development area show the inconsistencies of Government policy? Have not they got themselves in a muddle? Should not they get the review completed as quickly as possible so that the uncertainties which exist throughout the region can be removed?
    Sir J. Eden: It shows that we are ready to make an announcement as soon as we have taken a decision.

    Public Corporations
    Mr. Douglasasked the Secretary of State for Trade and Industry if he will publish a White Paper on the methods of valuation of the shares and/or assets of public corporations which he is considering transferring to private enterprise.
    Mr. John Davies: No, Sir. But I shall, of course, see that the House is properly
    26
    informed about any sales that engage my responsibilities.
    Mr. Douglas: Does the right hon. Gentleman accept that this is a matter of grave public importance and concern, in view of recent developments? Do not we need more information than has been given in the past and, in present circumstances, might possibly be given in the future? May I press the right hon. Gentleman to reconsider his answer and to give the House a White Paper setting out the terms upon which these vital assets might be sold to the private sector?
    Mr. Davies: I am sympathetic to the hon. Gentleman's interest in the way in which these prices may be set in future. However, it is only fair to point out that the variety of problems in the industry is such that it makes the definition of all-embracing rules very difficult. I shall be concerned to see that this House is properly informed of the considerations applied in individual cases.
    Mr. Frank Allaun: Is the right hon. Gentleman aware that many hon. Members on these Benches believe that the next Labour Government should take back, without compensation, the most profitable publicly-owned assets which the present Government propose to sell off and that if any speculators burn their fingers in this respect they have only themselves to blame?
    Mr. Davies: I find this constant reference to the word "speculators" deplorable—[Interruption.] To start with, the hon. Gentleman is speaking of what are purely hypothetical, not practical, considerations. The hon. Gentleman makes vague menaces about the future on issues of which he has no precise knowledge and then implies that these are involved with speculators with whom, equally, he has no acquaintance whatever.

    Upper Clyde Shipbuilders
    Mr. Douglasasked the Secretary of State for Trade and Industry if he will make a statement on the future of the Government's holding in the Upper Clyde Shipbuilders.
    Mr. John Davies: I am not yet in a position to make a statement, but will do so as soon as possible.
    Mr. Douglas: I thank the right hon. Gentleman for that reply. Will the Secretary of State expedite the making of a statement on the Government's holding in U.C.S., because this vital industry to the West of Scotland requires reassurance in order to calm the fears which many people might have about further redundances in an area of already high unemployment?
    Mr. Davies: I hope that the hon. Gentleman will need to wait very little for this statement.
    Mr. Benn: Has the right hon. Gentleman had any recommendation for support from the Shipbuilding Industry Board, and can we expect a statement this week?
    Mr. Davies: I am not certain whether the right hon. Gentleman is referring to the broad issue arising from engaging the Shipbuilding Industry Board or the particular issue arising from the Question. On the particular issue arising from the Question, close consultation has taken place with the Board.
    Mr. Rankin: Is the right hon. Gentleman aware that in his hands at present lies the future safety of 8,000 employees of U.C.S.? Will the right hon. Gentleman give an assurance that those jobs and their future are in safe keeping?
    Mr. Davies: I hope that the hon. Gentleman will be prepared to await my statement. I can very clearly assure the hon. Gentleman that the difficult problem involved in this situation are very much alive in my mind.

    Eastern Europe (Trade with the U.K.)
    Mrs. Renée Shortasked the Secretary of State for Trade and Industry what steps he is taking to stimulate and expand Great Britain's trade with eastern Europe, in the light of West Germany's improved relations with Poland and the Union of Soviet Socialist Republics.
    Mr. Noble: The Government will continue to offer the full range of export services to all British exporters, on whom responsibility for the expansion of trade with Eastern Europe chiefly depends.
    Mrs. Short: I thank the right hon. Gentleman for that reply, which is reasonably encouraging. If the right hon.
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    Gentleman asked his right hon. Friend about his experiences in his previous job, no doubt he could tell him that the West Germans work very hard in Eastern Europe and, even at a time when their relationship with the Soviet Union was less favourable than now, were in fact doing a great deal more trade in all the Eastern European countries than we ever did. Will the right hon. Gentleman, therefore, bear in mind that this is a very profitable and expanding market for British industry—[Interruption.]
    I find it very difficult, Mr. Speaker, to make myself heard against the row coming from hon. Gentlemen opposite. Shall I start again?
    Mr. Speaker: Order. The hon. Lady had already asked one supplementary question.
    Mrs. Short: Will the right hon. Gentleman, therefore, give special attention to this matter, particularly in view of the drop in engineering orders which we have recently experienced?
    Mr. Noble: I assure the hon. Lady that trade with all these countries has been increasing at a satisfactory rate. I shall, of course, consult my right hon. Friend the Secretary of State about any tips which he can give to encourage our people to work as hard as the West Germans.
    Mr. Maxwell-Hyslop: Will my right hon. Friend bear in mind that expanding trade with Eastern Europe often means taking horticultural or agricultural produce which is already in surplus in this country?
    Mr. Noble: I am certain that my hon. Friend knows how well briefed I am on this matter by many of my hon. Friends. It is true that some horticultural products are taken. The figure is about 2 per cent. to 2·5 per cent.

    Night Charter Flights
    Mr. Allasonasked the Secretary of State for Trade and Industry what is his estimate of the resulting increase in cost of the average package tour if night charter flights were abandoned between 11 p.m. and 6 a.m.
    Mr. Noble: By a substantial amount, although I cannot give a figure.
    Mr. Allason: Will my right hon. Friend comment on the one figure which I have seen, an increase of only £9, coming from a very distinguished member of the industry? If it is a figure of this order, does it not mean that the air fare for a holiday is very little more than the air fare for a normal flight, in which case there would be very little hardship for the traveller compared with the extreme hardship for those who have to live underneath these night flights?
    Mr. Noble: I accept my hon. Friend's worries about the hardship from noise, and so on. It is very difficult to give an accurate figure. We know that it would mean utilising aircraft about 25 per cent. less at the peak period of the year, but this is very difficult to calculate. However, even £9, if the particular tour is in the £25 to £30 bracket, is a pretty steep increase.

    Developing Countries (Generalised Preferences)
    Mr. Roperasked the Secretary of State for Trade and Industry if he will publish in Trade and Industry an article summarising his Department's plans for implementing the United Nations Conference on Trade and Development agreements on generalised preferences for developing countries.
    Mr. Prenticeasked the Secretary of State for Trade and Industry whether he will publish a White Paper explaining the progress made towards agreeing a system of generalised preferences for the manufactured goods of developing countries in the markets of developed countries, and setting out Her Majesty's Government's proposals for legislation on this subject.
    Mr. Noble: We expect to introduce enabling legislation during this Session. There will be no White Paper, but an account of our proposals and those of other countries will be given shortly in Trade and Industry.
    Mr. Roper: Does the Minister agree that there is a need for a clear statement on this matter, particularly in view of the very unsatisfactory statement by President Pompidou at the weekend in Dakar?
    Mr. Noble: I agree about the need for a clear statement. I am certain that
    30
    the hon. Gentleman will find that the publication Trade and Industry is absolutely clear on this subject.
    Mr. Biggs-Davison: Is my right hon. Friend aware that some of us do not necessarily find President Pompidou's desire to retain preference for the French Community unreasonable and that some of us want to retain preference for Commonwealth developing countries?
    Mr. Noble: There are very considerable built-in advantages for the Commonwealth developing countries. This is what the House is concerned about.
    Mr. Pavitt: Is the right hon. Gentleman aware that comparing G.S.P. and Commonwealth preference in regard to India, the consequences are pretty disastrous? Will the right hon. Gentleman therefore advise his right hon. Friend in Brussels to do something much better than G.S.P.?
    Mr. Noble: I think that I have already answered this point in reply to a previous Question.

    British Exports (Distribution)
    Dame Patricia Hornsby-Smithasked the Secretary of State for Trade and Industry what proportion of British exports in 1970 went to the sterling area, excluding sterling countries in Europe, western Europe as a whole, the European Free Trade Association countries, and the European Economic Community, respectively.
    Mr. Noble: 22, 47, 16 and 22 per cent. respectively.
    Dame Patricia Hornsby-Smith: Will my right hon. Friend say for which areas, respectively, those figures represent an increase or decrease in trade over the last 10 years?
    Mr. Noble: I am afraid that my right hon. Friend will have to put that down as a separate Question, because I have not the figures here.

    Western Europe (Trade Expansion)
    Dame Patricia Hornsby'-Smithasked the Secretary of State for Trade and Industry whether he is aware of the forecast the United Nations Economic

    31
    Commission for Europe made in October, 1970, of the extent to which Great Britain would gain from increased trade in western Europe; and whether this forecast is in line with his own assessment.
    Mr. Spenceasked the Secretary of State for Trade and Industry whether he is aware of the forecast in the United Nations Economic Commission for Europe report of October, 1970, as regards trade expansion in western Europe if the Community is enlarged; and to what extent this forecast agrees with his own assessment.
    Mr. Noble: The Economic Bulletin for Europe, Volume 22, Number 1 of last October provides no such forecasts, but it does comment that an enlargement of the European Economic Communities would give a new impetus to trade expansion. I share this view.
    Mr. Body: Would not my right hon. Friend agree that the same report warns this country that our entry will cause a serious deterioration in our balance of payments position?
    Mr. Noble: That is a separate question. I think that I have given the answer to the Question that I was asked.

QUESTIONS TO MINISTERS
Mr. Molloy: On a point of order, Mr. Speaker. At the commencement of Question Time you rebuked both back and Front Bench Members on this side of the House for the alleged plurality of their supplementary questions on prices. May I point out that many of us have attempted to put down Questions on prices to other Ministers responsible, as indicated by the Prime Minister, but have failed to get those Questions accepted? The Leader of the House has, nevertheless, agreed to look into this complaint. Would you bear with our feelings when we put down Questions about prices on behalf of our constituents? The only Minister whom one can acquit as having the nerve to answer such Questions is the Secretary of State who has been answering from that Box today. We are placed in a grave dilemma, but I hope you will realise that it is not entirely our fault.
Mr. Speaker: I was not rebuking the hon. Member earlier on. I was only suggesting that if we were to get as many Questions as possible called and answered it was wise to restrict the length of supplementary questions, and I think that today, if I may say so, the House has done very much better than it has done on any other day since I have been in the Chair.

MIDDLE EAST (OIL)
Mr. Benn (by Private Notice)Mr. Benn (by Private Notice)asked the Secretary of State for Trade and Industry if he will make a statement on the oil situation following the threat of a total ban on exports by the oil-producing countries.
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies): The Organisation of Petroleum Exporting Countries has resolved that in the absence of an agreement with the oil companies on increased revenues each member country exporting oil from Gulf terminals shall introduce on 15th February legal and legislative measures to implement the producing countries' objectives. In the event that any oil company fails to comply with these measures within seven days of their adoption in the countries concerned nine O.P.E.C. members have resolved to take measures including a total embargo on shipments by such company. Discussions between the Gulf countries and the oil companies are continuing. I am being kept closely informed about the developing situation and I am sure the right hon. Gentleman will not wish me to prejudice the position by additional comment at this time.
Mr. Benn: I appreciate the reasons given by the right hon. Gentleman, and I am grateful for his reply, but may I ask whether he is satisfied that there are sufficient supplies to enable the British position to be safeguarded, and are plans for petrol rationing now in preparation?
Mr. Davies: The right hon. Gentleman will know that the Government make provision to ensure that there are adequate supplies to meet a short-term difficult situation, and they are therefore content on that subject.

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On the other aspect of the problem, I think it is right to say that while negotiations are continuing between the commercial interests involved it would be wrong for me to take any further step of the kind suggested by the right hon. Gentleman.
Mr. Lane: Would not my right hon. Friend agree that one of the helpful factors is the considerable community of interest between the oil-producing and oil-consuming countries, and that the oil companies, in their efforts to reach a settlement which is fair to everyone concerned, deserve to be supported from both sides of the House?
Mr. Davies: I am sure my hon. Friend is right in saying that there is this real community of interest, and I am sure that both sides of the House are strongly behind the oil companies in their desire to achieve a fair and reasonable settlement in their commercial discussions.
Mr. Marsh: Can the right hon. Gentleman give the House some indication of the ultimate supplies possible of high quality sterling oil from Nigeria?
Mr. Davies: The right hon. Gentleman will have to put down a separate Question on that subject. He is asking about potential supplies, which is an extremely technical subject.
Mr. J. T. Price: Now that the House is confronted with this crisis in the oil situation, will it not become apparent to all those propagandists who in the past have been agitating for the run-down of the coal industry and have made this country more and more dependent on oil that not only are we vulnerable to having our supplies cut off in war, but also to international blacklegging, organised at the point of production? I am sorry, I should have said blackmail.
Mr. Davies: I had seized on the hon. Gentleman's Freudian slip. He will be aware that one of the factors in considering the whole future of our coal industry has always been the security that it grants us in terms of indigenous supplies of energy.

NORTHERN IRELAND (SOLDIER'S DEATH)
Mr. Bob Brown (by Private Notice)Mr. Bob Brown (by Private Notice)asked the Minister of State for Defence if he will make a statement about the death of Gunner Curtis in Northern Ireland.
The Under-Secretary of State for Defence (Mr. Ian Gilmour): At 1 a.m. on Saturday 6th February a military detachment came under fire from an automatic weapon sited at the junction of Lepper Street and New Lodge Road. Five soldiers were hit, one of whom, Gunner Curtis, was killed. I wish to take this opportunity of offering my sincerest condolences to the wife and other relatives of Gunner Curtis.
Mr. Brown: Whilst naturally associating myself with the Minister's expression of sympathy to the widow and to this young soldier's parents, I should like to ask two questions. First, why was this grief-stricken young widow flown from Germany to Heathrow and then put on an overnight train to Newcastle, instead of being flown direct from Germany to Newcastle, where there is a perfectly good airport? Second, why has not this boy's body been brought home before now? Does not the Minister think that it is adding to the grief of the widow and the parents of this boy by delaying the return of his body to Newcastle? Will he give the House an assurance that the body will be brought home today?
Mr. Gilmour: As to the first part of that question, presumably it was thought more convenient as the plane was flying back to London, but I regret any inconvenience that was caused. On the second part, whether there should be a military funeral, or whether the body should be flown home to Newcastle is entirely a matter for the family and we shall respect their wishes.
Mr. Chichester-Clark: While associating myself with the sympathy expressed by my hon. Friend and the hon. Member to the family of this young boy, and paying tribute to the courage of the troops in this difficult situation, may I ask my hon. Friend whether he is aware of the fact, which might be better known in this country, that groups of I.R.A. men are now known to be paying sums of between

35
15s. and £3 to use small children to go out and pelt troops with missiles, while they shelter behind the children in doorways, sometimes armed with automatic weapons?
Mr. Gilmour: I am not aware of any economic connection between the I.R.A. and small children, but the House will be aware that small children have been involved in disturbances over the last few days. I am sure the House will regret this fact. We are also well aware that there are extremists who are fomenting these disturbances.
Mr. Edward Short: Perhaps the Minister will allow me to associate myself with the expressions of sympathy to this young man's widow who is my constituent. Is the Minister aware that there is a growing feeling of unease among the public about the situation in Northern Ireland? Our young soldiers often have to stand and take it, and it is difficult to see how it can be otherwise if their presence is not to become entirely oppressive. Has not the time come when the role and deployment of our troops in Northern Ireland ought to be reviewed, and has not the time come also for a radical new initiative to solve the whole Irish problem?
Mr. Gilmour: Nobody in this House is happy with the present situation in Northern Ireland. Every hon. Member regrets the disturbances that have taken place. The deployment of troops is continuously under review. I do not think that the right hon. Gentleman intended to criticise the present deployment of the Army, but we of course keep this matter under review.
As to whether there should be a reappraisal politically, that is not a matter for me, but I am sure the House is concerned at the moment that these disturbances should be stamped out.
Captain Orr: Is my hon. Friend aware that everybody in Ulster joins with the two hon. Gentlemen opposite in the sympathy expressed to the relatives of this gallant young soldier, but that, in our view, by far the best method of bringing this unpleasant business to an end is to see that the perpetrators of these outrages are speedily brought to justice by every possible means open to
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us, even, if necessary, the use of the power of internment.
Mr. Gilmour: My hon. and gallant Friend will be aware that political measures to be taken by the Northern Ireland Government are not a matter for me.
Mr. Ford Mr. Ford rose—
Mr. Bob Brown: On a point of order. The second reply to my question was completely unsatisfactory and unless I can have an assurance from the Minister that this boy's body will be brought home forthwith, I will have to seek to raise this matter on the Adjournment—
Mr. Gilmour Mr. Gilmour rose—
Mr. Speaker: Order. The hon. Member must make up his mind. Either he is seeking to raise this matter on the Adjournment or he is not. I will allow the Minister to answer that.
Mr. Gilmour: Further to that point of order. I made it clear that this is a matter for the family to decide and not for the hon. Gentleman or me—
Mr. Brown: They have decided.
Mr. Gilmour: —and if the family decide that they wish the body to be flown home, of course it will be flown home.
Mr. George Thomson: Is the hon. Gentleman aware that I understand from my hon. Friend the Member for Newcastle-upon-Tyne, West (Mr. Bob Brown) that the family have decided that they would wish the body flown home, and that, in those circumstances, we should be grateful for the Minister's assurance that this will be done, that the family's wishes will be met, as he says is his aim, with the greatest sense of urgency?
May I associate myself with the expressions of sympathy which have been made? Is the hon. Gentleman aware that the whole House will deplore this new wave of fanaticism which our Servicemen are facing in Northern Ireland and will, in particular, treat with the contempt it deserves the attempt to use children in the firing line in these activities? Is he aware that the Government will have the support of the House and that our Servicemen will have the

37
support of the House in restoring the possibility of peaceful change in Northern Ireland?
Mr. Gilmour: On the first part of the right hon. Gentleman's question, I think that I have made it quite clear that if the family wish the body to be flown home this will be done forthwith. As to the rest of the right hon. Gentleman's question, I am grateful to him for what he says, and I am of course in full agreement with what he says.
Mr. Pounder: Like all those who have spoken, may I also offer my expression of sympathy, not only to the relatives of Gunner Curtis but to those soldiers injured in recent days? The Army conduct in Belfast in very difficult circumstances has been one of great fortitude. On the point which the Minister made in answer to my hon. and gallant Friend the Member for Down, South (Captain Orr), if the security forces in Northern Ireland seek permission for extra powers or extra reinforcements, can my hon. Friend assure us that these will certainly be made available?
Mr. Gilmour: My hon. Friend will know what reinforcements have recently been flown into Northern Ireland. It is not for the security forces to ask for additional powers. That is a political matter, and it will be decided upon by the Northern Ireland Government in conjuction with my right hon. Friend.
Mr. Speaker: I did call Mr. Ford.
Mr. Ford: Will the hon. Gentleman say what arrangements have been made in the present circumstances to inform relatives in this country of the deaths of troops in Northern Ireland or anywhere abroad? What degree of seriousness of wounding is necessary before the relatives are so informed?
Mr. Gilmour: Of course, as soon as a soldier is killed, his relations are informed. The same applies when a soldier is wounded.

CONSOLIDATED FUND BILL (DEBATE)
Mr. Speaker: Perhaps it will help if I inform the House that in the debate on Monday, 15th February, on the Second Reading of the Consolidated Fund Bill,
38
hon. Members may hand into my office by 9.30 on the morning of Friday, 12th February, their names and the topics which they wish to raise. The ballot will be carried out as on the last occasion. Hon. Members should give their full name plus the topic. Hon. Members may hand in only their own names and topics.
The Consolidated Fund Bill includes the Civil Vote of Account for the Financial Year, 1971–72, House of Commons Paper No. 143, and certain Civil and Defence Supplementary Estimates for the current year set out in House of Commons Papers Nos. 158, 159 and 160. It will be in order on Second Reading of the Bill to raise topics falling within the ambit of the expenditure proposed in those Papers. I shall put out the result of the Ballot later on Friday, 12th February.

LAOS
Mr. Latham: I beg to ask leave to move the Adjournment of the House under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration; namely,
"the now confirmed military incursion into Laos by South Vietnamese forces with United States support, such representations as have been made and are being made by the British Government in this matter, and" —
[Interruption.] May I urge you, Mr. Speaker, to restrain hon. Members opposite from appearing to show a callousness and indifference to the suffering of the Vietnamese people, the Indochinese people and the American nation?
I want to include in my submission also
"the danger of British involvement in a general conflagration in South-East Asia under South-East Asia Treaty Organisation and the Treaty of Manila."
Last week, I made a similar application concerning unconfirmed reports. Next day, I think that the House was grateful that you allowed a Private Notice Question, although the matter might still have been held to be a hypothetical one—[Interruption.] You will recall that, at that time, the Foreign Secretary told the House that he had been unable to obtain corroboration of the reports—[Interruption.]
Mr. Speaker: Order. I should be grateful if hon. Members would restrain this buzz of conversation.
Mr. Latham: Thank you, Mr. Speaker.
Last week, as I was saying, a Private Notice Question was allowed on what might then have been held to be still a hypothetical matter. The invasion of Laos is no longer hypothetical, no longer a matter of kite-flying under a cloak of censorship to test world reaction in advance. It is, sadly, now a tragic reality.
There is no longer a news censorship and one assumes, therefore, that the Foreign Office is now officially aware of what is happening. Also, I am making the presumption that the British Government would still claim to have some influence with their American allies.
I submit that the matter is now specific enough, and that the importance of the issue can never have been in question. I seek to make only two other points on this point of order. First, in regard to urgency, I think that the grave risks and the dangers involved should be quite clear. There was, in 1964, a reply by the then Foreign Secretary, who is now Foreign Secretary again that British forces could only be involved in going to the assistance of American forces if there were a danger of a general conflagration in South-East Asia. That now seems to be an imminent risk with every step by which the war is escalated and prolonged.
Second, you may consider, Mr. Speaker, that under Standing Order No. 9 it could be held that there are other ways of bringing this matter before the House, but I submit that it was demonstrably inadequate to have an Answer to a Private Notice Question last week to cover this issue, and, second, that even a Ministerial statement would be an inadequate substitute for a proper debate by the House.
I would therefore ask you, Mr. Speaker, to allow this vital, important, urgent and dangerous situation to be discussed by the House. I request you to place my application before the House.
Mr. Speaker: The hon. Member asks leave—and I am grateful to him for giving me notice—to move the Adjournment of the House for the purpose of discussing a specific and important matter
40
which he thinks should have urgent consideration, namely,
"the now confirmed military incursion into Laos by South Vietnamese forces with United States support, such representations as have been made and are being made by the British Government in this matter; and the danger of British involvement in a general conflagration in South-East Asia under the South-East Asia Treaty Organisation and the Treaty of Manila."
As the House knows, under Standing Order No. 9, Mr. Speaker is directed to take into account the several factors set out in the Order but to give no reasons for his decision. I have given careful consideration to the representations that the hon. Member has made, but I have to rule that his submission does not fall within the provisions of the Standing Order. Therefore, I cannot submit his application to the House.
Mr. Dalyell: On a point of order, Mr. Mr. Speaker. May I ask whether it is in order, in your judgment of a situation such as my hon. Friend has raised, to suggest that the wishes of the Opposition Front Bench are taken into account?
Mr. Speaker: It certainly is not in order. Under the Standing Order, Mr. Speaker is not allowed to give his reasons or particulars of the matters which have affected his mind. If the House should choose to change the terms of the Standing Order it will be open to the Chair to give reasons and to comment generally, but as the rules are at present I am directed not to give any reasons.

BILL PRESENTED
  ROLLS-ROYCE (PURCHASE)
  Mr. Frederick Corfield, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Carr, Mr. Secretary Davies, Lord Balniel and Mr. David Price presented a Bill to make provision for and in connection with the acquisition for the benefit of the Crown of any part of the undertaking and assets of Rolls-Royce Ltd. or its subsidiaries, and the carrying on of any undertaking so acquired, and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed.

  ROLLS-ROYCE LIMITED
  3.51 p.m.
  Mr. Jeremy Thorpe (Devon, North): I beg to move, That this House do now adjourn.
  Mr. Speaker, on Thursday last you ruled that events connected with Rolls-Royce were a proper matter for debate under Standing Order No. 9 as a matter of urgent importance to this House, and it is in that spirit that I rise this afternoon to initiate this short debate.
  The disaster which has overtaken Rolls-Royce is not limited in its effect to one firm. Its impact on many other firms dependent on Rolls-Royce could well set off a chain reaction graver than any of us in this House realise and certainly can foresee. But, just as signficant, I suggest that bound up in these events is the good faith and the commercial credibility of this country. For 50 years Rolls-Royce has been synonymous with excellence in the engineering sphere all over the world. Indeed, any advertiser who wished to sell his product would be tempted to refer to it as "the Rolls-Royce of its kind". The fact remains that at this moment there are only three really important aero-engine firms in the world—Pratt and Whitney, General Electric and Rolls-Royce. It is the third which has now been compelled to appoint a Receiver.
  Bankruptcy is the only form of suicide permitted by the law to put a firm out of its agony; but also it is the only way in which a firm, and sometimes indirectly a country, may renege on its responsibilities and its liabilities. Perhaps the supreme irony of the situation is that Rolls-Royce at this moment, if one considers the Olympus 593 turbo-jet engine for the Concorde and the RB162 lift jet for the V.T.O., is technologically ahead of both the United States and of Europe.
  Of course, grave mistakes have been made. We would not be debating the issue today were it otherwise. It is quite clear that the firm underestimated the technical problems. Its research costings were millions of pounds too low. and we have seen the cost of the launching rise from £65 million to £75 million to £135 million and now to £170 million. It
  42
  is also clear that the financial control was totally inadequate.
  It has also been suggested that the previous Government, although applying stringent conditions for the granting of launching aid, carried out insufficient research into the viability of the original contract and thereafter failed to make financial checks on the progress of the company.
  However, it is not my purpose this afternoon to hold an inquest. It is my purpose to try to cure the patient. If there is to be an inquest, I suggest that the Chamber of the House of Commons is perhaps not the best forum for a discussion of complicated financial and technical problems. It may well be that the Select Committee on Science and Technology or some other body will wish to go into those matters.
  Indeed, within a wider context it is, I suggest, vital that we discuss the whole question of the relationship between the State and private industry, which raises problems substantially the same, whether we live in a Marxist or capitalist society. They are certainly not resolved by falling back on the doctrinal formulae of the past in regard to the relationship between the two. I believe, however, that it is right that we should hold this debate because it is clear that we can raise the questions which are worrying many thousands of people in this country, and it is clear also that the Government can give some indication of their intentions.
  In view of the shortness of the debate and the many right hon. and hon. Members who are closely interested and, indeed, who represent many thousands of constituents whose employment is at stake, I shall be as brief as possible in order that many other Members may intervene.
  I want first to examine the impact which this disaster has had at home and abroad, and then to comment on Her Majesty's Government's present proposals. The mere fact that the Bill is not yet at a stage in which we can consider it—at any rate, it may be available to other hon. Members, but I should find myself slightly inhibited in examining it whilst I am on my feet—does not preclude us from examining some of the basic principles involved.

  43
  First of all, there is the domestic economy. The grave issue here is whether or not the RB211 contract can or will be renegotiated. If it is not, there will be many very grave problems. The Financial Times suggested on Friday that there could be as many as 40,000 redundancies, half amongst Rolls-Royce employees and half amongst the 112 subcontracting companies which are dependent on the RB211. I believe that is an underestimate, because there are many firms which are already restricted by the Government's tight money policy and could be pitched into bankruptcy.
  Of course, there is the added importance that unemployment would occur in many areas which are development areas where there is little alternative employment and where already much taxpayers' money has been invested in trying to improve the infrastructure of the economy in those areas. We need only consider that the engine pods are supplied by Short Bros. and Harland of Northern Ireland to realise what would be the effect on the economy if there were increased unemployment in Northern Ireland, quite apart from the political implications there. Therefore, there are very great social costs involved. There is the cost of redundancy, unemployment benefit, loss of profit and loss of taxation. Therefore, I say straightaway that if the decision be that the RB211 contract is not to be renegotiated, the social costs which this country will have to pay, quite apart from the economic ones, are very high indeed.
  I believe that the situation is no less serious internationally, because if we are compelled through default to cancel a major aeronautical contract it will throw into doubt our credibility, our commercial competence and our good faith in all spheres of advanced science. Lockheed was perhaps entitled to wring its hands and say that it had at the moment been left holding the largest glider in the world.
  If this contract goes, there is no doubt that this country—and let us made no mistake about it—will be out of the large aero-engine business forever. The danger is this incident will throw doubt upon our credibility in other related spheres of defence technology.
  At this moment, in the computer industry we are seeking closer co-operation with the French and the Americans. In
  44
  the nuclear power field we are about to bring off a major deal with the Germans and the Dutch. At the end of March we hope that the test flight programme for Concorde will have been completed. The indications are that the tests will be successful, and our salesmen will then have to set off to sell an aeroplane powered by Rolls-Royce engines. The customer will ask: "Can you deliver? Is your estimate of the cost correct? What about your delivery dates?"
  It is perhaps ironic that the Concorde project, on which we have spent £1,000 million jointly with the French, is the aircraft for which we at the moment have no orders. Its development costs were initially put at £150 million. The immediate reaction to that estimate by my colleague Eric Lubbock—who, I hope, will within the foreseeable future be able to bring to the House once again his knowledge of the scientific and technical subjects on which we knew him to be so expert—was to bet, and this was in December, 1962, a monkey to a mousetrap that the production cost of Concorde would be multiplied by five. He was wrong: it was an underestimate.
  Therefore, we have Concorde on the one hand and, on the other, the possible cancellation of this engine when perhaps £150 million or £200 million more could enable us to continue with a project for which there are already firm orders for 178 aircraft and possibly 600 engines.
  Therefore, the first question that I want to ask the Government is: what assurances did the Government, or have the Government, given to the United States Government about their willingness to bail out the Lockheed contract? The circumstantial evidence is that between 27th and 29th January the American Government received information—
  Mr. Eric S. Heffer (Liverpool, Walton): Typical Liberal.
  Mr. Thorpe: And what is not typically Liberal is the inability to hear an argument from another quarter.
  The first indication is that Mr. David Packard, the Deputy Secretary of Defence, was certainly under the impression—I put it no higher—that the British Government intended to bail out the Lockheed contract, as a result of which Lockheed, on 1st February, agreed to

  45
  absorb a 200 million dollar loss on the C5A—on the basis of its belief that there would be guaranteed delivery by Britain.
  If, and the Prime Minister shakes his head, that is absolutely untrue, I feel bound to say to him that this at least was the impression which the American Defence Department had, and which it therefore transmitted to Lockheed, as a result of which many decisions were taken. If there is a misunderstanding on the issue, it is all the more important that the Government should take care in future that no further misunderstandings of this sort should arise, because a little later I shall suggest that very close governmental co-operation may be necessary.
  There is no question that if this contract is to be renegotiated it will have to be on the basis of Government-to-Government. After all, the banks have had their fingers severely burned. It was the banks which, on commercial grounds, sparked off the bankruptcy of Rolls-Royce, and if a negotiation is possible which will be underwritten by the American banks there is no question but that this will have to be underwritten by the British and American Governments.
  We all know that, in effect, what has happened has been a race against time whether Lockheeds or Rolls-Royce went bankrupt first, but there is a tremendous similarity between the position of the British Government and of the American Government in regard to this contract. Lockheed is the largest United States defence contractors and its continuation in business is vital to the Americans for the Polaris and Poseidon programmes. But we must also realise that the Nixon Administration, following well-established Conservative precedents, might be disposed to follow precisely the same course; namely, to nationalise those sections which they need for their defence interests, to sell off those sections which are profitable, and to leave a shell to carry the liabilities and obligations of the bankruptcy.
  I therefore move to the first question that I want to put to the Government, which is whether or not we as a House believe that the proposals for nationalisation, such as we have seen them so far—we do not have the advantage of the Bill—are adequate to face this situation.
  46
  I believe that the Government are entirely right to bring forward the proposal to nationalise the aero, marine and industrial gas turbine divisions. The Government, after all, are the only body which could act decisively to keep intact this sector of Rolls-Royce.
  The Prime Minister rightly pointed out on Saturday that Rolls-Royce are suppliers of aero-engines to 81 air forces and 200 civil airlines, and I believe that the protection and maintenance of those sectors of Rolls-Royce is not only essential to our own defence but is essential to the defence of the Western world. Indeed, the multi-rôle combat aircraft is the most important military collaborative effort that we are at present carrying out with the Six.
  But I wonder whether the proposals of which we have read go wide enough? Personally, I believe that only those rare creatures in the political spectrum who have the most purblind faith in the free market would be happy to see the car division of Rolls-Royce bought up by a foreign consortium. Whilst I see that David Brown, who, I think, on the basis of his expertise, may well have some claim, is in the running, I very much doubt whether there is any British consortium which could find the necessary capital to take over the car division of Rolls-Royce.
  But on the basis of the Government's criterion of preserving those parts of Rolls-Royce which are essential to our defence effort, I suggest that they must look again at the question of taking over the car division as well. The car division, too, is involved on vital defence work. It produces many of the diesel engines that are needed for tanks. It has a licence to produce the Wankel rotary engine, which is being introduced into many of our fighting vehicles.
  So I believe that the Government, and I accept the prospect of nationalisation, at which the party opposite has only recently arrived, in their present approach are being far too restrictive. I suggest to the Government that if they are right to nationalise these sectors of Rolls-Royce, and I believe, frankly, that they had no alternative, they would be wrong if they were to do a three-pronged operation which is what I understand they have in mind—first, to strip the company of its

  47
  profitable sectors and sell them off; then, to retain what they need in the interests of national defence; and, finally, to leave a shell to carry with it to the grave of bankruptcy the Lockheed contract and any other liabilities and obligations. I suggest that this would come perilously close to using a legal device to avoid paying one's debts.
  This is a new situation. It is the first time, I believe—I am subject to correction—in which an act of nationalisation has been carried out with a contingent liability to a foreign company. What has happened is that, a receiver having been appointed, the Government have moved in to make a compulsory purchase order in advance. If the Government are merely doing this as a holding operation, subject to the qualifications which I have made about the extent of their acquisitions, I believe that what they are doing is absolutely right. However, I greatly hope that they will go further and indicate to the American Government that they are prepared to renegotiate if possible the RB211 contract. This will mean that the four airlines will have to be prepared still to buy, that Lockheed's are prepared to waive their penalty clause, and that we can get a realistic escalation clause based upon a realistic initial costing.
  Then I hope that, subject to that, the Government will indicate that they are prepared to adopt the BP solution of taking a 51 per cent. share in the whole of Rolls-Royce. This would mean either that they would create a new company and give a one for one share to the existing shareholders or that they would revive the existing shell. If this could be done, I believe that we have a prospect of providing the necessary finance and of paying the debentures and secured creditors and indeed the shareholders.
  Let us remember when talking about shareholders that we are talking about £2 million-worth of shares which are held by the workers of Rolls-Royce. We are talking about countless pension funds which had invested in Rolls-Royce. It was a blue chip security up to about a week ago.
  I therefore hope that the Government will go much further and will not think that their job is merely to bring about a moratorium but will try to refloat the ship
  48
  as a whole. We shall also look carefully to see what is to be the measure of compensation in which the Government will be the only buyers. It would be an irony of politics if it could be said that a Conservative Government had nationalised with inadequate compensation. This would be Socialist robbery indeed.
  There is then a wider question. I think that Britain has rightly decided that we will not compete for the exploration of space with America and Russia. We have already opted out of the market for large airliners, as the Boeing 747 and the Douglas DC10 testify. Where do we draw the line? Which will be the next technology where we say that we as a nation are incapable of competing in the world markets? This is a very important question.
  I genuinely believe that the attitude of the Government and of the country and the decision which the Government ultimately take on the RB211 will draw the sharp line between the areas where we compete and those beyond which we will not go. We are in effect to seek out the areas where we are still in business and those from which we retreat.
  There is no doubt that the lesson of Rolls-Royce is that the company overreached itself. It tried to develop on its own. Indeed, the case for a European-based aircraft industry seems to me now to be obvious. Only a European- or an American-based aircraft industry will be sufficient to compete in the world. There is also the question of whether we are now going to run the risk that Britain will become the industrial sub-contractors—the sweated labour—for other technologies. That is a situation which I do not want to see Britain adopt.
  So far I think that the Government have been right in ensuring that there is a moratorium and in preserving our vital defence interests, but I greatly hope that they will now go further and arrive at an arrangement which will preserve Britain's good name and our commercial competence. There is a limit to what the taxpayer is expected to pay to bail out companies which have made commercial mistakes.
  There is also the very difficult sphere of determining where the commercial considerations of a company end and the political persuasions of a Government

  49
  begin and where commercial judgment has been affected by political persuasion, sometimes in the very best interests of the country but leading to a commercial decision which a company might not otherwise have taken. It is a very difficult dividing line.
  In the whole of the Rolls-Royce fiasco there are wider considerations. If the RB 211 contract is not renegotiated, Britain will not only create very wide-scale unemployment; not only shall we drive many associated companies into bankruptcy; not only will we start a chain reaction, but I believe that we will do very great damage to our commercial credibility in the world at large.
  Difficult though this may be, I think that it is essential that once the Government have taken over Rolls-Royce they use their very best endeavours with the American Government to see if the whole of this contract cannot be renegotiated, because I also believe that this country and the House have more than a moral obligation inherited from the previous Government. It is very easy for politicians to say, "We are not bound by anything which our predecessors did. We do not like their politics. We do not like their policies. We have overthrown them. All is changed".
  Modern technology and modern business are not quite as simple as that. This was a contract aided and abetted by the previous Government, welcomed by the Opposition, welcomed by the Liberal Party, and welcomed by the whole country, as a great coup for Britain. It is that contract which has fallen foul.
  The firm involved is a firm to which I believe quite apart from financial considerations we also owe a very great moral debt. It is dangerous—at no time is this more true than when one is addressing a Tory Government—to try to bring into the realms of commerce any suggestion of sentiment or any sense of history. However, if the House will allow me to take that supreme risk, and even if the hon. Member for Chigwell (Mr. Biggs-Davison) cannot remain awake until the end of the quotation, I want to remind the House—
  Mr. John Biggs-Davison (Chigwell)Mr. John Biggs-Davison (Chigwell)rose—
  Mr. Thorpe: Since this is a short debate—
  Hon. Members: Hear, hear.
  Mr. Speaker: Order. The right hon. Gentleman has already been speaking for half an hour.
  Mr. Thorpe: Since this is a short debate, and you have already rightly implied, Mr. Speaker, that I have taken rather longer than I should—[HON. MEMBERS: "Hear, hear."]—I shall at least comfort myself with having so revived the hon. Member for Chigwell that he has been able to rise to his feet.
  Mr. Biggs-Davison: I wanted to ask the right hon. Gentleman whether he realises that he has shortened the time available for the debate by the inordinate length of the brief which he is reading out, written, no doubt, by Mr. Eric Lubbock, who was well repaid by the glowing tribute paid him in the right hon. Gentleman's speech.
  Mr. Thorpe: That remark may have been worthy of the hon. Gentleman, but I very much doubt that it is worthy of the seriousness with which the entire House wishes to debate the position of Rolls-Royce.
  Shortly after the war, Lord Tedder—[Interruption.]—I did not come to the House, after pitching out a Tory, to be shouted down. Shortly after the war, Lord Tedder unveiled at Rolls-Royce at Derby a window to the memory of the R.A.F. and the Battle of Britain. Many hon. Members who are connected with Rolls-Royce will know it well. He said:
  "For many months before the actual Battle of Britain, and during 1940, I saw at first hand many of the problems, and many of the crises, which, had they not been solved and overcome—on the drawing board, in the laboratory, in the foundry, on the test rigs, in the machine shoos and on the production line—would have lost the Battle of Britain before it began to be fought in the air."
  The reputation, the skill, and the integrity of Rolls-Royce have for many years been bound up with and been synonymous with the commercial expertise of this country. It is the Government's job not merely to skim off and sell the profitable sectors, not merely to take what they regard as being in Britain's defence interests, but to try to retain in being—I believe that this is the argument which

  51
  the right hon. Gentleman the Secretary of State for Trade and Industry successfully tried to impress upon his colleagues in the Cabinet—to try to retain and maintain the unity of this tremendously great international organisation.
  It will take a lot of hard bargaining with the American Government, and I do not suggest that we should meet the full cost of refloating the RB211. I am suggesting that it is the Government's job not only to have a moratorium but to take over and keep in being Rolls-Royce as an entity in itself, bringing to bear the best management, technical, commercial and financial expertise. They should try to renegotiate the RB211 contract, the symbol of whether or not we keep in the aerospace race, which, in my opinion, this country is well capable of doing.
  Let it not be said merely that this is a hard commercial decision, bankrupting one section and allowing it to take all the liabilities away, while the Government skim off what is profitable, selling that and keeping only what we need for our defence interests.
  If the Government do that, they will not have risen to the occasion. If, on the other hand, they say that they will try to renegotiate this contract and will try to retain the unity of Rolls-Royce, they will give hope to many thousands of men and women who are employed in Rolls-Royce, and they will give the firm a chance to rise again. If that can be done, the British nation will feel that there is here symbolised a determination to fight back and see that ultimately the commercial and technical genius of the British people can win through.
  Mr. Speaker: I have the names of well over 30 right hon. and hon. Members who wish to speak in the debate. There are two hours and 25 minutes left. I ask hon. Members to be as brief as they can.
  4.25 p.m.
  The Chancellor of the Exchequer (Mr. Anthony Barber): Last Thursday afternoon my right hon. Friend the Minister of Aviation Supply made a statement about the position which had developed with regard to Rolls-Royce. A Bill to give effect to the Government's intentions has already been introduced; it is available in the Vote Office, and the Second Reading debate has been arranged for
  52
  next Thursday. Obviously, I cannot anticipate discussion on the Bill itself, but I welcome this opportunity to give the House some further explanation of what has happened.
  The House will recall something of the history of the RB211 project, but it may be helpful if I briefly recapitulate some of it.
  On 1st April, 1968, the right hon. Gentleman the Member for Bristol, South-East (Mr. Benn), then the Minister of Technology, made a statement to the House about the Rolls-Royce order to supply the RB211 engine to Lockheed. I need not go over that statement, in which the right hon. Gentleman explained the then Government's part in the venture. Suffice it to say that in due course the previous Administration made arrangements to provide launching aid of up to £47 million. That was intended to cover 70 per cent. of the estimated cost of launching the engine, which was then put at £65 million. Later, the estimated cost was increased to £75 million.
  The next development of significance in the present context came in 1969 when the Industrial Reorganisation Corporation undertook an examination of Rolls-Royce affairs in order to see whether additional funds should be provided. As a result of that examination, and following negotiations with the company, the I.R.C. agreed to make a loan of £10 million. This was to be followed by a further loan of £10 million, which, for reasons I shall explain, was never made. There were to be changes in the company's management. As the House will be aware, the Board was strengthened by the appointment of Mr. Morrow and Lord Beeching, and a new post of financial controller was created. Also, there was to be a structural reorganisation within the company, which was to lead to economies of about £10 million a year, although, in fact, insufficient time had elapsed for much to be achieved in that direction.
  There was much more to the history of this affair but, in view of the limited time available for the debate, I shall confine myself to that account of the past history. I come now to the immediate past.
  In the autumn of last year the new Government were informed by Rolls-Royce that the cost of launching the

  53
  RB211 had risen to £135 million, compared with the original figure of £65 million, which, as I said, had been later increased to £75 million.
  The House will realise that my right hon. Friends and I were both surprised and shocked, to put it mildly, at the revised estimate which was put before us. The decision which we reached last autumn was taken only after the most careful consideration of all the facts as they were then made available to us.
  We were told that the technical opinion at that time was that the development of this engine within the revised cost estimates was practicable, although tight, and this, of course, was a crucial factor. Therefore, bearing in mind the magnitude of the programme and its obvious importance, the Government decided that they would take part in a combined operation with the company and with its bankers to meet the increased cost, the Government for their part making a further contribution of launching aid up to a maximum of 70 per cent. of the increased cost over £75 million; that is, 70 per cent. of the £60 million, or £42 million of additional launching aid. This made at that stage a total Government contribution of up to £89 million towards the launching cost of the RB211, that £89 million included the £42 million which the Government had, on certain conditions, agreed last autumn to make available. The banks were at the same time to make available a further £18 million. All this was subject to certain conditions, and to one condition in particular which was an entirely new one and one which the whole House will, I am sure, agree was a most prudent one in the circumstances.
  Because of the size and complexity of the operation, because there had already been such a large cost escalation and because the position had deteriorated so markedly my right hon. Friends and I took the wholly unusual step of making it a condition of the provision of new launching aid that there should be an independent outside check of the company's position and prospects. I think the House will agree that it was just as well we did. Consequently, a firm of acountants, Messrs. Cooper Bros., was asked to undertake the investigation.
  54
  Meanwhile the Government decided not to make any further assistance available through the Industrial Reorganisation Corporation beyond the £10 million which had been committed under the previous Administration. Further changes in the management of Rolls-Royce were made and Lord Cole was invited to serve as Chairman. Lord Cole took over early in November in very difficult circumstances, and he deserves the gratitude of the House and of the taxpayer. The provision to further launching aid was made conditional on a satisfactory report to the Government from the independent accountants, and one of the consequences of this condition has been that no part of the £42 million was advanced to the company.
  The independent accountants did not complete their investigations before the events of last week. Their preliminary inquiries enabled them to provide considerable assistance to the Government in considering the further and very difficult situation which developed after 22nd January. It was on that day that Lord Cole told the Ministry of Aviation Supply that in the opinion of the executive committee of the Rolls-Royce Board the RB211 development and production programme could not be met. Rolls-Royce, so we were informed, considered that it had either to stop the RB211 forthwith or to postpone delivery in the hope that the extra six to twelve months gained would enable the engineering problems to be overcome.
  The company kept the situation under day-to-day review, and on 26th January the board decided in principle that, subject to discussions with Lockheed and the Government, the company should not continue with the RB211 project.
  What was it that led to this sad and momentous conclusion? What had gone wrong? What had gone wrong was that the launching of the RB211, which represented a major advance in engine technology, had been undertaken by the company in the face of intense competition, and in these circumstances it was led into major errors of commercial judgment. There have been, as we now know, gross underestimations of the development time and hence of the overlap between development and production programmes. This in its turn led to major increases in the cost of production. But—and this was

  55
  the hard commercial fact—Rolls-Royce was nevertheless bound by those terms of the contract which provided for a fixed price and which it had originally signed in the spring of 1968.
  Mr. Dan Jones (Burnley): And which was virtually forced upon it.
  Hon. Members: By the Minister.
  Mr. Jones: By the American lobby.
  Mr. Barber: No doubt the right hon. Gentleman who was the Minister of Technology at the time will have something to say about the situation then.
  Mr. Jones: And so will we.
  Mr. Ivor Richard (Barons Court): Will the right hon. Gentleman give way?
  Mr. Barber: No. I must emphasise here that the situation disclosed to the Government by the Rolls-Royce Board was the result of a totally new appraisal by the new management of Rolls-Royce of the consequences of continuing with the project. The conclusion of the Rolls-Royce board was that:
  "… it was not feasible for them to proceed with the RB 211 under the present contract."
  Mr. Robert Sheldon (Ashton-under-Lyne): Will the right hon. Gentleman give way on this particular point? It is an important matter.
  Mr. Barber: No.
  Mr. Sheldon Mr. Sheldon rose—
  The Deputy Speaker (Miss Harvie Anderson): Order. It cannot help either side of the House or any opinion when discussing a grievous national calamity of this nature to have the House unwilling to hear the Chancellor.
  Mr. Barber: The hon. Gentleman knows perfectly well that I normally give way frequently. There are many hon. Members who wish to speak in the debate.
  Let me give the figures to show what has happened. The Rolls-Royce commitment to Lockheed was to deliver 540 engines at a price of £350,000 each, at a specified time and with a specified performance. Last November when we decided to provide additional launching aid subject to the investigations by the in-
  56
  dependent accountants, the estimated production costs had already risen to £410,000 per engine. Hon. and right hon. Gentlemen may well ask why last November, when it was then known that every single engine delivered would be sold at a loss, the Rolls-Royce board nevertheless decided to continue with the project.
  The answer was that it had committed itself to a contract with penalty provisions which would become operative in the event of the non-fulfilment of the contract. The consequence was this: contract price per engine £350,000, estimated cost of production last November £410,000 per engine, estimated cost of production now about £460,000 per engine. That is to say, on the information now available, on every engine delivered to Lockheed there would have been a loss of not less than £110,000 and the commitment was to deliver 540 of the engines. The House will see that on present estimates of production costs, the actual losses on production alone would have been at least £60 million. If the production costs had gone up further the loss would have been greater.
  That is not all. The launching costs are now estimated to be much higher than was estimated only last November. A provisional estimate now puts them at £170 million at least, or at least £35 million more than the estimates of last November. Of course, cost escalations of this kind—and we could not be sure that we had seen the end of them—are, frankly, insupportable in a project governed by a fixed price contract.
  On Thursday last the right hon. Member for Bristol, South-East (Mr. Benn) put this question:
  "… can the right hon. Gentleman"—
  that is, my right hon. Friend the Minister of Aviation Supply—
  "tell us, with regard to the RB211, why there should not be a provision governing this great engine not dissimilar from that governing the Olympus 593 engine, where there has been even greater escalation but where, under the contract authorised in 1962, the Government have covered the escalation?"—[OFFICIAL REPORT, 4th Feb., 1971; Vol. 810, c. 1924.]
  I must say to the right hon. Gentleman that, quite frankly, I was surprised, in the light of all that had happened, that there should be any suggestion that the Government under the existing contract

  57
  should have poured yet more of the taxpayers' money into the RB211 to cover the cost of escalation.
  Mr. Sheldon Mr. Sheldon rose—;
  Mr. Barber: As far as this—
  Mr. Sheldon: No questions? Is the case so weak?
  Mr. Barber: As far as this one engine is concerned, the position last week, as we knew it, was that the estimated launching costs had risen to at least £170 million and that the estimated production losses had risen to at least £60 million. Furthermore, and, of course, of great importance, in addition to these costs there were open-ended commitments in respect of potential claims for delay in delivery of the engine.
  So far as the Government were concerned, the position last week was this. To have bailed out the company by keeping it as such in business would have involved the Government in either of two alternative commitments. The first would have been a commitment to provide Rolls-Royce with the full assistance required for it to complete the RB211 contract and to meet all the costs of the open-ended claims. The second alternative would have been the assumption, in the event of withdrawing completely from the contract, of meeting all the running-down cost and the open-ended claims. To have entered into any such commitment as either of these would have involved the Government in assisting the company to carry on the business when the directors themselves knew that it was insolvent and there was no reasonable prospect of meeting the liabilities as they fell due, and this the Government, obviously, could not do.
  Mr. Anthony Wedgwood Benn: May I ask the right hon. Gentleman one factual question? He has given the revised launching figure of £170 million and the production loss of £60 million. Could he give the House an estimate of the penalty payments on the assumption that £170 million produced the engines, though late?
  Mr. Barber: No. I cannot give that, and all I would say is that I think the House will appreciate, in view of what has happened, and of what may or no
  58
  be the future of the RB211, that it would be very unwise to go beyond what I have said. [HON. MEMBERS: "No."} As far as these particular liabilities are concerned, what I can say is that it would be £50 million provided that they were only six months late, but I think that to go beyond that would not be right in the circumstances.
  Mr. Phillip Whitehead: Give us the facts.
  Mr. Barber: If I may continue, I want to say this to the right hon. Gentleman the Member for Devon, North (Mr. Thorpe), who, I thought, at one point was urging us to go wider. The Government's conclusion was clear. He mentioned on one occasion, and one occasion only, the word "taxpayer". This Government are responsible to the taxpayer and we are not prepared to provide the massive sums required to keep the company as such in business, with or without the RB211; nor were we prepared to do what some hon. Members opposite have proposed; namely, to acquire the shares of the company, because this would have involved assuming in full the company's huge liabilities—again, at the expense of the taxpayer. Equally, however, we were not prepared to accept any risk that the activities of Rolls-Royce which are vital to our national defence should stop; and, to put it bluntly, without Rolls-Royce engines many of the aircraft of the Royal Air Force would be grounded.
  With regard to the divisions of the company where we are acquiring assets, I should like to say this. It would not have been possible to separate the civil and the military sides of the business, even if we had wished to do so, because their organisation and their activities and facilities on which they depend are closely integrated. We had also to bear in mind the international collaborative programmes and the fact, as the right hon. Gentleman said, that many foreign air forces and some 200 of the worlds' airlines are dependent upon Rolls-Royce engines. Consequently, the Government decided to acquire the assets referred to by my right hon. Friend on his statement on Thursday.
  The extent of the acquisition will depend largely upon the future of the RB211, which the Government, as the House knows, are exploring with the

  59
  Receiver. The assets to be acquired by the Government will be vested in a company with limited liability, the shares of which will be held by the Government. This will make it easier for private capital to participate in due course. The overriding consideration, as, I think, was recognised by the right hon. Gentleman, has been to act quickly and decisively in the national interest to ensure the continuity of the operations of the aeroengine, marine and industrial gas turbine engine divisions of Rolls-Royce.
  Mr. Sheldon Mr. Sheldon rose—
  Mr. Barber: No. As far as the future is concerned, the legal position is, of course—and this is very important—that the Crown has inherent power to dispose of the assets which we shall be acquiring following the passage of legislation now before the House. There is, therefore, no question of further legislation being required in the event of the disposal of those assets, or, in whole or in part, of the Government's shareholding in the new company.
  Several Hon. Members Several Hon. Members rose—
  Mr. Sheldon: On a point of order. This is, as you know, Mr. Deputy Speaker, a most serious point. Is it in order for the right hon. Gentleman to come to this House and to make a statement about one of the greatest companies of this country and not say what the Government themselves did to attempt to renegotiate the contract with Lockheed?
  Mr. Deputy Speaker: The hon. Member knows that that is not a point of order.
  Sir Charles Taylor: On a point of order. Mr. Deputy Speaker. As my right hon. Friend has shown quite categorically that he is not prepared to give way during his speech, is it right that hon. Members opposite should keep interrupting him—when he has said he will not give way?
  Mr. Deputy Speaker: A point of order shortens debate.
  Mr. Barber: The future of Rolls-Royce is of course, as the right hon. Gentleman said, a matter of concern to a number of other Governments because
  60
  of the international collaborative programmes to which I have referred. As regards the United States, when my right hon. Friend the Prime Minister spoke to President Nixon, the President said that the American Government would be prepared to co-operate with the British Government and Lockheeds in exploring the future of the RB211. Urgent discussions with the Lockheed Corporation and with the United States Government are, therefore, taking place. Obviously, I cannot anticipate the outcome of these discussions but I must emphasise that the Government have no liability in respect of the contract between Lockheeds and Rolls-Royce, and, if the project is to continue, there must be a completely new arrangement.
  I am conscious that these developments will, as the board of Rolls-Royce has already explained, make substantial redundancies inevitable. I am afraid that, as far as this is concerned, there is nothing that I can now add to what my right hon. Friend said on Thursday. Just before I came over to the House this afternoon, I spoke to the Receiver about the question of redundancies because I felt that, as I was reporting to the House, I should speak to him myself. He told me that he has been in touch with the unions and that he has assured them that before any action is taken which affects redundancies the unions will be consulted. I only wish there were more information which I could give. I have done my best, but I am afraid that, at this stage, it is not possible.
  The right hon. Gentleman the Member for Devon, North referred to the future of Rolls-Royce trade creditors and subcontractors, and this is a very important point. As has already been announced, steps will be taken to ensure that banks will not be prevented by current credit restrictions from accommodating, subject to normal banking criteria, those companies, trade creditors, suppliers or subcontractors of Rolls-Royce, who may need additional temporary finance as the result of these developments.
  The House should also know that, subject to the passage of legislation, it is the Government's intention to appoint Lord Cole and Mr. Morrow, in whom they have full confidence, to the board of the new company.

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  There is much more, if I had had the time, that I should have liked to say. I have stated the hard facts so that the House may judge the Government's decision, but behind and beyond these compelling facts no one who has lived with this problem can be wholly devoid of emotion. As the right hon. Gentleman said, this is a great and symbolic industry. There are also the personal tragedies of those families who reap the consequences. True, it was open to us, backed by the resources of the State, to take action the consequence of which would have been to avoid the appointment of a Receiver, with all that that signifies, but, as I said before, we have a responsibility to the taxpayer, and I have no doubt——
  Mr. Peter Shore Mr. Peter Shore(Stepney)rose——
  Mr. Barber: I have no doubt——
  Mr. Deputy Speaker: The right hon. Member for Stepney (Mr. Shore) knows that the Chancellor of the Exchequer has said he will not give way.
  Mr. Barber: I have no doubt whatever that the decision which we took was the right one.
  4.50 p.m.
  Mr. Anthony Wedgwood Benn: There is nobody in the House today who would have wished this situation upon us. At least we are united in this. I had imagined when the Chancellor came to the House and decided to open the debate that he would have been more forthcoming than he has been. I say this not in a malicious way but because the decision announced by his right hon. Friend last Thursday was probably the most important industrial decision announced in the House since the war, and we have nothing from him but two figures, and one that I had to draw out of him, by which to judge it. The House is entitled to the fullest information about this matter as to the past, the present and the future. I would welcome an inquiry into it from my point of view, making available all the information that was open to me, and I accept the full responsibility for the part that I played in it.
  The debate must cover ground a little wider than the right hon. Gentleman the Leader of the Liberal Party or the Chancellor of the Exchequer covered. First, there must be reference to the back-
  62
  ground of the order, not so much for historical reasons but because it bears greatly on the central question now, which is whether or not the RB211 should be kept going. Secondly, we are bound to consider the Government's handling. Thirdly, we are bound to consider the future of the company in the new position. I reiterate—particularly after having heard the Chancellor of the Exchequer's speech—the necessity for a White Paper to be made available to the House before Thursday to allow us to consider the facts. The Cabinet must have had tons of paper before it during its critical meetings last week, and some of that paper could be and should be made available to the House.
  There is no dispute in the House about Government support for civil aircraft. It has gone back many years. Launching aid was designed and introduced, in 1960, I think, to allow British aerospace firms to launch successful projects. In many cases the return on investment does not come directly from the aircraft or the engine actually launched but either from the spares which come later or from the fact that launching aid may fund a basic development out of which a whole new family of engines or aircraft may come. That is why the Government are bound to take a longer term view of the decisions required of them in this area.
  In the early 1950s it was thought by everyone that speed would be the future of air travel. It was only in the later 1950s, when Rolls-Royce and other engine manufacturers began to study the further development of air travel, that they recognised that four consideration would be dominant. First, there would be an enormous increase in the volume of air travel; secondly, the public would want, and would be able, to move into the so-called air buses; thirdly, this would require more powerful and quieter engines; fourthly, the major growth would occur in the United States.
  I want to say in passing something which is very relevant to the debate. The House and the country as a whole are greatly concerned with the environment, particularly with aircraft noise and the siting of major airports. The case for this generation of aero-engines is that it is the answer to the problem of aircraft noise. In coming forward with its proposals for a high technology engine

  63
  Rolls-Royce argued, and argues even more strongly now, that the whole future of the British aero-engine industry depends upon being able to produce an engine of the kind known as the RB211, or the RB207, which was produced at the same time. I urge the House to recognise that this is not a prestige project in the sense in which that phrase is often used.
  We are talking about the work-horse engines of the 1970s and the 1980. Rolls-Royce argued—and this view was accepted by both sides of the House and certainly by my old Department—that what we were discussing was the survival of Rolls-Royce, because if Rolls-Royce could not get an order for this engine the whole of its business would gradually fade away. The problem that confronted Rolls-Royce was that of finding orders and a market for its high technology engines.
  If anyone has any doubt about it, I can assure him that, since the survival of Rolls-Royce was at stake, all the drive to launch the RB211 came from the company from the very outset. My colleagues and I accepted—and I still accept—the basic argument that without the RB211 engine there is no future for the British aero-engine industry whether or not in public ownership.
  When we approached the question of funding this engine we had some experience behind us. The right hon. Gentleman the Chancellor mentioned my supplementary question about the Olympus 593 for the Concorde. I am glad he did. I say this not in a carping spirit, but let us compare the two contracts, one for Concorde with its Olympus engine and one for the RB211. When the Concorde was launched in 1962—and the right hon. Gentleman remembers it because he was a Treasury Minister throughout that period—there were no orders for Concorde. There are still no orders nine years later. There was an unlimited financial commitment by the Government. They agreed to pay all the escalation, which has been from £150 million to £825 million, of which I might add only £240 million has actually been spent by the British Government. The contract was embodied in an Anglo-French treaty with no break clause, and not a penny of the money of Rolls-Royce or of B.A.C. was put at
  64
  risk by the Concorde or the Olympus 593. If the Olympus engine had been funded on the basis of the RB211 Rolls-Royce would have been bankrupt in May, 1964, because the cost had doubled between 1962 and 1964 and—this is the point I was hinting at and which must be considered carefully—if the RB211 had been funded on the basis of Oylmpus 593 Rolls-Royce would have still been in business today.
  We are talking about two ways of fund-an advanced engine. We said to Rolls-Royce, that it must find an international partner, not go it alone. It must find a partner, as Plowden said, either a European partner—as in the A300B—or an American partner, Douglas or Lockheed. Secondly, we said that there must be launching orders before we would consider supporting the contract. Thirdly, we said that the Government commitment would be strictly limited. It was not a percentage of whatever the cost was; it was 70 per cent. of the initial cost which was a fixed investment of £47 million, and we said that Rolls-Royce and Lockheed must be prepared to put the full resources of their two companies behind the project.
  The question I ask myself now inevitably is "were those terms too harsh?" Certainly Rolls-Royce and Lockheed knew what the terms were. They were in no doubt whatsoever. They clearly understood what was at stake in launching the aircraft under those conditions, because we had discussed that with them beforehand. Rolls-Royce was continually searching for a market for these engines.
  In case anybody thinks that the Labour Government were encouraging Rolls-Royce foolishly, let me list the projects it put forward and what we did with, them. First, it wanted the RB207 for the European airbus, A300, and was supported by Hawker-Siddeley, by France and by Germany. This was rejected by the Government, because there were no orders. Secondly, it wanted the BAC211, urged from the Conservative side of the House, supported by B.A.C. and B.E.A.: rejected by the Government, again because there were no orders. Thirdly, it bid for the Douglas DC10, with the RB211 engine. Rolls lost the contract. Fourthly, it wanted the 10–11 contract which it won and which we are discussing. After that contract no fewer than three other projects were brought forward

  65
  by Rolls, one for the European airbus A300B, with an RB211, but again there were no orders.
  It should not be assumed that if one seeks European partners the problem of the aircraft industry is solved. Let me give this example. When we were considering the A300B, which was urged upon us by Hawker-Siddeley and by the French and Germans, the position revealed by our calculations was as follows. If 250 of them were sold, 90 per cent. of our money would have been lost. If 350 of them had been sold we would have lost 50 per cent. of our money. And at that time no orders had been placed whatever and we decided not to go ahead. Similarly, when the right hon. Gentleman considered the BAC311 he came to a similar conclusion.
  Sir Arthur Vere Harvey: In cataloguing the various projects which have been turned down, would the right hon. Gentleman go back a little further, to the TSR2? Will he accept that had the TSR2 proved itself, Rolls-Royce would have had a run of orders?
  Mr. Benn: We are now discussing the RB211 and the civil business on the question of launching aid. In the case of TSR2, it was the Government who were the customers. Even after TSR2 went the exports of the industry doubled during the period we were in power. This was in part because of the focusing of effort on those projects that we thought likely to be successful.
  Mr. John Wilkinson: Would not the right hon. Gentleman also agree that imports went up very substantially and that the net gain to our balance of payments was no higher during that period?
  Mr. Benn: I will come to that matter. This is one of the most powerful arguments for continuing the RB211 today.
  I have no doubt that the decision taken in March, 1968, which provided for recovery of investment by the Government by levy and with the family of engines that were to be launched, and the implied preference indicated in our own calculations, that it was right to go ahead at that time. I would ask the hon. Member for Woking (Mr. Onslow), who said on television that we
  66
  had forced Rolls into this, to consider carefully whether he is not being too flattering in thinking that a Minister could persuade two of the biggest companies in the world to produce an aircraft against their better judgment, and stake their money on it.
  Mr. Cranley Onslow: After the events of the last week, it would be a brave man who refused to disbelieve anything. Could the right hon. Gentleman say why he thought it right to manufacture the Lockheed order by making it possible for 50 of the aircraft to be underwritten by the Government? Why did he think right in the competition which went on between the A300B and the Lockheed 10–11 to use figures in the case of the A300B which meant that the consortium was buying two engines for the same amount of money Lockheed was paying for three?
  Mr. Benn: The hon. Gentleman's points are significant. The comparison we made in the case of A 300 B as compared to the Lockheed was a comparison based on orders. I beg the House to remember that, regardless of the figures given by the Chancellor of the Exchequer, we are talking here of engines for which there are already nearly 600 orders. By contrast, the Concorde, on which we in Britain have spent £250 million, has still not had a single order—[Interruption.] It has options, but no orders. The problem is this-and I am sure the House will not dissent. The difficulty today is in selling, and also in selling at a profit. It is not just a matter of manufacturing hardware.
  On the question of checking the contract, it was not the contract that was wrong. What was wrong was the estimate made by the company of the cost of developing the engine. This was a commercial deal. The price was fixed by competition. It was not Lockheed squeezing Rolls. It was General Electric and Pratt & Whitney, fat on their defence contracts, which squeezed Rolls. The Government did not have the expertise to check the figures of the most experienced air engine company in Britain. Any delay would have killed the contract. The Rolls board had accepted it. The Government by having a fixed price investment were similarly deliberately putting a squeeze to see that the company assumed its responsibility for its own decision.
  Sir Robert Cary: Was it not absolutely fatal for the whole of the contract that Rolls-Royce accepted it on a fixed contract basis?
  Mr. Benn: As I have said, it was not the contract that was wrong; it was the estimating that was defective. In 1968 one could understand Rolls-Royce being in difficulties in getting its figures right, but if The Times is to be believed on 21st July last year, two and a half years later, after the election, Sir Denning Pearson was assuring his shareholders that he had the resources to carry this through. Therefore, there is no question of his having come to me for further launching aid for this engine during the two and a half years following the contract when he might, it is argued, have had second thoughts.
  The truth is that I did have anxieties about Rolls-Royce subsequently—not on the RB211, but on difficulties with the Spey, problems with the Olympus, the RB199 and the fear of general overloading. I asked the I.R.C. to look into the matter. The I.R.C. came back with a report that indicated manifest financial accountancy weakness. I discussed the matter with I.R.C. and they put Lord Beeching and Mr. Morrow on the board. This report was available to the incoming Government in June.
  This matter bears very much on credit. Twelve months ago Lockheed nearly went bankrupt. Everybody knows it. The Galaxy, or C5A, had escalated; there were reports in February that Lockheed was on the point of bankruptcy, themselves victims of fixed price contracts. Everyone squeezes everyone else in this business. What happened then? I had an immediate message from Dan Haughton saying that if I wanted any further information about the position he would immediately make it available to me. I was told everything with total frankness by the Americans when they were in trouble. Mr. Haughton knew that if the Lockheed 10–11 collapsed Rolls-Royce would go with it. When I was in Washington in April I visited Mr. Packard in the Pentagon and discussed the problem of Lockheed with him then. He, too, was totally frank. I went to Burbank and discussed the matter with Mr. Haughton and he was totally frank. I come back to the different
  68
  treatment meted out to Lockheed by this Government when they were faced with a similar situation.
  Mr. J. Bruce-Gardyne: The right hon. Gentleman referred to the I.R.C. and, because of his anxieties, the appointment of Lord Beeching to the board. No doubt the right hon. Gentleman noticed a statement in yesterday's Sunday Times that his own Department was seriously concerned about the state of Rolls at the beginning of 1969, to such an extent that it wished to engineer what it described as "a palace revolution". That failed and they then referred the problem to the right hon. Gentleman, after which, according to the civil servant quoted in the Sunday Times, there was a deathly hush. Will the right hon. Gentleman comment on that report?
  Mr. Benn: I made the great mistake of not seeing the Sunday Times over the weekend. The story is totally untrue. I wish to put on record that I have every confidence in all the officials who advised me throughout this period, though I accept full responsibility. I will go further and say that I had confidence in Sir Denning Pearson and Sir David Huddie who carried the most appalling burden of responsibility in landing this huge export order. Neither the newspapers nor the hon. Gentleman, who is a very fair man, should seek now to try to drive a dividing line between me and those who advised me at that time. That story is totally without foundation. I put I.R.C. in and discussed the I.R.C.'s report with Sir Denning Pearson as soon as it was available.
  We come to the handling of this issue by the present Government. They too read the quotation from Sir Denning Pearson in July, after the election, which was reassuring. It was not until August that the figures came to the Department, and no doubt they caused alarm. Unfortunately, there have been three Ministers in charge of the aircraft industry since the election. There was the Minister who is now leading the Common Market negotiations, then the present Secretary of State for Trade and Industry, and now the right hon. Member for Gloucestershire, South (Mr. Corfield). heading a new Department. The I.R.C. has been abolished. There have been a number of changes which may or may not have

  69
  diverted Government attention from this problem. In November the right hon. Gentleman gave the figures and said that his Department was satisfied that the amount would be sufficient but that the accountants would have to look at it separately. We were invited to congratulate the Government on their handling of the matter, which we did dutifully with the help of the Whips in the Division Lobby.
  We come now to the present crisis and we have a little more information from the Chancellor today. First, he confirmed what Rolls-Royce said, that no money has been paid to Rolls-Royce since the debate in November. Then we had the report to the Government of the impending trouble. There were four alternative courses open to the Government. One was the course advocated by the right hon. Member for Wolverhampton, South-West (Mr. Powell): to let Rolls-Royce go bankrupt and leave it at that. That was rejected. The second course was to put enough money in to get Rolls-Royce going to complete the RB211 contract. The third course was to tell Lockheed the position and provide some funds to ease the negotiation, still under Rolls-Royce as a private company. The fourth course was to let it go bankrupt, but to take it all over and keep the RB211.
  The Government chose none of these courses. They chose to let it go bankrupt, to sell off profitable parts, and to let it go bankrupt in such a way as to escape the responsibility owing to Lockheed. One of the most serious aspects of this whole affair is the defaulting on Lockheed.
  The right hon. Gentleman gave figures: £170 million for launching, £60 million for production losses, £50 million for possible penalty payments. That has to be measured against a loss of credit and a loss of orders so colossal that it may well be the case that this was not justified. But the right hon. Gentleman did not mention two other factors which I am sure were in his mind. One was the Government's desire for an exemplary bankruptcy, and the other was to save the 6d. tax cut in the Budget. When he talks about the taxpayers, I wish that he would talk about the nation, because he might be surprised to find that the nation, in their capacity as taxpayers, would not
  70
  want to default upon their partners across the Atlantic.
  Mr. Tom Boardman: Will the right hon. Gentleman recall how he was responsible for Beagle going into liquidation and leaving its creditors high and dry, creditors incurred at a time when the Labour Government were in charge?
  Mr. Benn: The hon. Gentleman is totally wrong. I made it my business to see that every creditor in Beagle was paid. If the hon. Gentleman has to intervene, he ought to get his facts right.
  We are now counting the consequences of the Government's action. Twenty-thousand jobs are likely to be lost in Rolls-Royce and another 20,000 outside. Does the Chancellor know how many working days will be lost by those people? As a result of the bankruptcy, 10 million working days will be lost in a year; exactly the same amount lost in industrial disputes last year.
  Second, the workers lost £2,500,000 in shares. The balance of payments will be affected because B.E.A. and B.O.A.C. have still to buy aircraft with RB211 equivalents, but they will have to buy General Electric or Pratt and Whitney, and that will have to be borne on the balance of payments of this country which is not so altogether safe that we can afford to disregard it.
  Mr. Michael McNair-Wilson: If the right hon. Gentleman believes in the RB211 as much as he says, why did he not give Rolls-Royce an open-ended commitment to carry on with the engine?
  Mr. Benn: I gave the reasons: because I did not believe that the Concorde type of contract was right. But somewhere between the two, the unlimited escalation and the defaulting, lies the right answer to the problem.
  Mr. Norman Tebbit: Will the right hon. Gentleman give way?
  Mr. Benn: It is not unreadiness to give way that makes me refuse, but every time I give way I keep out a back-bench Member who wants to speak.
  It is possible that Lockheed will be forced into bankruptcy. It is most unlikely that the Pentagon will go to

  71
  Congress to raise money to bail out a British aero-engine manufacturer to preserve its engine in an American aircraft when there is major unemployment in the American aerospace industry; and when the British Government have allowed this default to occur. There are airlines such as Eastern Airlines, Air Canada, T.W.A. and Delta whose whole planning depends upon the 1011 with the RB211 engine. I do not know whether they are likely to go bankrupt, but I know, as does the hon. Member for Bristol, North-West (Mr. McLaren), that within 12 weeks the marketing teams from B.A.C. have to sell Concorde if it is to go ahead. We have been told by the Minister that the spring of 1971 is the key date. To the very airlines that were relying on the British Government's word on the Lockheed aicraft, the marketing men will say, "We have a marvellous supersonic British aircraft with a Rolls-Royce engine". They will get the answer, "When shall we get our 1011 with the Rolls-Royce engine, which was the contract signed in 1968".
  Will the Americans now buy the Harrier with a Rolls-Royce engine for their Marine Corps against a great deal of criticism from the American aircraft industry? What about the M.R.C.A.?
  The cost of this decision could be so enormous that the Chancellor, far from saving his Budget and the taxpayer, could be costing the country far more. No wonder Mr. Haughton, when he came to London, was shocked and appalled at what he heard.
  Hon. Members: So are we.
  Mr. Martin McLaren: Surely the right hon. Gentleman would not wish to say anything which would make the sale of Concorde more difficult?
  Mr. Benn: But how could I want to? I want to save the RB211 in part, to save the Concorde. But if the RB211 is allowed to go down the drain, then the hon. Gentleman and I will face the consequences in the City of Bristol which might follow from the failure to sell Concorde. I am afraid that when the Prime Minister spoke to the Young Conservatives yesterday about the need to rid ourselves of our illusions, he did not quite realise whose illusions were being got rid of and by whom on this occasion.
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  Our partners in America, and the French and the Germans, our potential partners in Europe, will all have their confidence in this country destroyed by the decision announced by the Chancellor to save his budget when he comes to it at the end of next month.
  The House must have the facts. When the Bill is introduced on Thursday, Rolls-Royce must be kept together. I cite the speech of the hon. Member for the Cities of London and Westminster (Mr. Tugendhat) about non-recurring management decisions in respect of mergers. We cannot have Rolls-Royce now trying to unscramble its component parts in order to sell them off, when the company must be kept together to save the RB211. There must be a quick and honourable settlement with Lockheed. It must be an honourable settlement. That is what the House wants.
  The RB211 is still the future of Rolls-Royce, whether publicly or privately owned, or owned in part by the Government and in part privately. There must be a future for this company in these advanced engines.
  There must be an inquiry. We must have the facts, Rolls-Royce must be kept together. We must honour Lockheed, and the full resources of the Government must be behind the new company.
  It is not without significance that the greatest industrial crisis in a single industry faced in the last 10 years has not been brought about by industrial disputes, but by management failure, commercial failure, and financial and technical failure. That should perhaps be set in the balance when we turn to other business later in the week.
  I believe that the lessons of this will take a long time to learn. Neither the Concorde nor this contract was perfect. However, if we as a nation wish to be in this business and to get the high living standards coming from taking risk, we shall have to put our hands in our pockets and pay for it ourselves. It is not only Rolls-Royce which went bankrupt, but the Government's whole industrial policy, at the time that they made their announcement.
  5.21 p.m.
  Sir Arthur Vere Harvey: In the latter part of his speech,

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  the right hon. Gentleman did a great disservice to the British aerospace industry. When he talks about the possibilities of the Harrier being cancelled and so on, he will not help the situation.
  I will explore the point about Lock-heeds later in my speech, but Britain as a whole owes the Rolls-Royce concern a great deal. The Merlin engine in the Hurricanes and Spitfires of 1940 saved the country in its hour of peril. However, one point must be made clear. I disagree with the right hon. Gentleman, the Leader of the Liberal Party. It is impossible to divorce historical features from the present situation. The jet engine came into being at the tail end of the war. It was invented by a Britisher, Sir Frank Whittle, and was developed by Rolls-Royce and Bristols. I wonder how many Americans today know that the jet engine was developed by Britain. The jet engine was given to the United States on a plate almost for nothing. It was a display of great generosity on the part of Britain.
  Since then, technology has advanced at a tremendous pace. Projects became more involved. At one stage, it was thought right to merge Bristols and Rolls. I was always doubtful whether it was wise, for geographical and other reasons. Without such a merger, at least we would have had some form of competition and substance, assuming that one company went wrong.
  The Rolls-Royce Company has always been technically biased. Going back to the days of the great Lord Hives and others, rather than being commercially biased, they were technically biased and perfectionists. A job was never finished with, and that costs a great deal of money. But that was not to the technical detriment of Rolls-Royce. In that way, it was able to build up its great symbol in the world. It brought about a high level of engineering, but at a price.
  The contract with Lockheeds for the RB211 was hailed by the Labour Government, including the right hon. Gentleman and his Prime Minister, as a great victory. One would have thought that they had played a leading role in the episode. That was the impression that they gave in this House and on television. The then Prime Minister, as usual, took credit for an achievement which had not concerned him a great deal. However, following the country's experience with the escalation
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  of costs in the TSR2 and Concorde projects, it was not very sensible, to put it mildly, to allow a company to accept a fixed-price contract where there was a Government involvement of 70 per cent.
  In drawing up a budget, it is practically impossible to have a fixed price on any contract of this kind. That is where the right hon. Gentleman was wrong in comparing the Olympus engine with the RB211. Had the Olympus venture dealing with the supersonic Concorde been placed on the shoulders of a free enterprise company, the resources would not have been sufficient to get it going.
  In the latter part of his speech, I thought that the right hon. Gentleman was defending his own skin more than the aerospace industry. We were told about the escalation of costs on the Concorde. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) did his best. He went to Paris and tried to cancel it. He was unable to do so. It was only six months ago that the right hon. Member for Bristol, South-East (Mr. Benn) was speaking with confidence about the Concorde. He did not today, though I should like to think that he still has confidence in its viability. It is a great venture which can still pay off, but there may be problems when it comes to getting it into Kennedy Airfield.
  The rot in the aerospace industry started with the Labour Government's cancellation of the TSR2. Here was an aeroplane which Wing Commander Beaumont, the test pilot, flew supersonic for eight hours and reported that it had given him less trouble than the Canberra. In the February before the 1964 General Election, the Labour Party almost scared the Australians out of buying the TSR2. Instead of buying Phantoms, had we gone ahead, the Americans might have been buying the TSR2, and Rolls-Royce would have had a steady flow of production on which to base future business.
  When he was Minister of Aviation, the right hon. Member for Stetchford even had the jigs and tools destroyed at a time when his Government had a majority of four, in case the Tories came back and wanted to revive the project. He said that there was insufficient space in the country to store the jigs and tools. That was at a time when there were empty hangars all over Britain.

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  I want now to discuss the future, because we must concern ourselves with what is to happen now. My right hon. and hon. Friends dealt with this matter immediately. There was no lag. I do not see what else they could have done. Listening today to my right hon. Friend the Chancellor of the Exchequer, I do not think that I read too much into his words: he said that talks were going on with the United States. In view of that, I ask right hon. and hon. Gentlemen opposite not to "flame up" the situation. Any news on the matter coming out of this House will be relayed back to the United States. I ask the Opposition to be patient and wait and see whether anything comes of the talks now being held.
  Mr. Dan Jones: The House knows that the hon. Gentleman carries a great deal of weight in the Conservative Party. Would his recommendation to his leaders be that we should seek to renegotiate the RB211 contract?
  Sir A. V. Harvey: If the hon. Gentleman can contain himself, I shall come to that. Government financial interest in aerospace industries over a number of years has not been very satisfying. I have in mind Short Bros. and Harland. With great respect to those who are trying to build up a viable business, they have not got very far. Though I am not a believer in nationalisation, it is the only way of dealing with the Rolls-Royce situation.
  The right hon. Member for Devon, North (Mr. Thorpe) said that he did not think that there was a motor car concern in Britain who could handle Rolls-Royce and Bentley cars. I disagree with him violently.
  Mr. Stanley Orme: What about Handley Page?
  Sir A. V. Harvey: The hon. Gentleman should not make that sort of personal reference. I left Handley Page 14 years ago because I disagreed with Sir Frederick Handley Page.
  Mr. Orme: I assure the hon. Gentleman that I was not making a personal reference. I had in mind the recent failure of Handley Page as a private concern.
  Sir A. V. Harvey: Had Handley Page been taken over by the Hawker-Siddeley Group, as was suggested at one time, I believe that all would have been well.
  Mr. Thorpe: The hon. and gallant Gentleman has just referred to me, and perhaps I might point out that I did not say that there was no British car firm capable of taking over Rolls-Royce. I said that there was unlikely to be one with sufficient capital to do so, and that the chances were that it would be bought by a foreign consortium.
  Sir A. V. Harvey: I should like to go with the hon. Gentleman, but on no account must the motor car division of Rolls-Royce fall into foreign hands.
  The David Brown Corporation and Rolls-Royce have had intimate discussions recently on the basis of forming a joint sales and spares organisation throughout the world. That collaboration could be advanced as they both make hand-made motor cars.
  As has been said, the aero engine and heavy marine projects must be kept going. The David Brown Corporation, through Vosper's and Thorneycroft's, has orders with the Brazilian Government worth about £100 million. Foreign Powers are depending on this company delivering its products in future.
  The right hon. Member for Bristol, South-East referred to the RB211. It is a remarkable engine, particularly in relation to noise. It is about half as noisy as existing jet engines, and the fuel consumption is extremely favourable. It has many features which put it far ahead of its competitors.
  The Lockheed TriStar is tailored for the RB211. We must consider whether Lockheed could wait, accepting the delay which we know to be inevitable with the RB211, or could wait perhaps even longer to redesign the wings and the aeroplane to take the American engine. These matters must be weighed in the cost, but time is more important.
  I was in the United States just before Christmas. Whilst talking to a director of one of the major air lines of America, he said," I am sorry that Rolls-Royce is going ahead with the RB211." I asked, "Why?" He said, "We want to get off the hook with the TriStar. We have a number on order, but we have

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  over-capacity in seats with the jumbo jets, so we want to get out." So there are problems in America in dealing with the national air lines. It may not be helpful to the situation to think that they do not want the aeroplane as badly as they did a year or two years ago.
  I hope that something will come of the talks which are going on. British industrial honour is at stake. Our exports to America are enormous and the future holds even greater prospects. I prefer to leave my right hon. Friends to do what they can on a mutual basis, Government to Government, to try to get something moving, if it fits into the Lockheed programme in time.
  Mr. Whitehead: Does the hon. Gentleman agree that it would have been better for Her Majesty's Government to have gone directly to the other parties in the deal, the American Government and Lockheed, as soon as they knew the situation at Rolls-Royce on 26th January before the bankruptcy?
  Sir A. V. Harvey: None of us know what discussions took place between Downing Street and Washington on the hot line. We know that the Prime Minister has had discussions with Mr. Nixon. We must leave it there. We would be well advised to leave the matters in the hands of the Government, and we may know something in a few days.
  I turn now to the bonus shares held by the staff and workers. We are told that the figure may be £2 million. I should like confirmation of that figure. Something should be done for these people in any new structure by giving them long dated or reasonably dated bonds to enable them to participate in the new company, whether wholly or partly retained by the Government or sold off. I believe that workers' shares should get some priority in any new company.
  Many people living on small fixed incomes in this country put their money into Rolls-Royce years ago when it was a real blue chip share in the stock market as a means of livelihood for their retirement. I hope that full consideration will be given, first, to workers and staff and then to other shareholders.
  We have been told that the banks will be tolerant to the small sub-contractors
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  I know several cases where companies are in grave difficulties. This is spread across the breadth of the country. We have not seen the end of it.
  I think that my right hon. Friends have dealt with a most difficult situation in the best possible way.
  Mr. Dan Jones: On a point of order. I have no doubt that the hon. Gentleman has forgotten the undertaking which he gave to me. The hon. Gentleman has already said that he will leave the matter to his right hon. Friends. I wonder whether he would be kind enough to commit himself one way or the other?
  Mr. Deputy Speaker (Miss Harvie Anderson): Order. That is not a point of order for the Chair.
  5.34 p.m.
  Mr. Walter Johnson: Although a full-scale inquiry is obviously necessary into what can only be described as a national disaster, I consider that there is nothing to be gained by recrimination, blaming each other, or trying to score party points.
  What we are talking about in this debate is the livelihood of thousands of highly-skilled workers who, through no fault of their own, suddenly find themselves facing unemployment. In my constituency, some 30,000 people work for Rolls-Royce. I am advised that over 50 per cent. of the staff could be affected, because they are directly involved in the research, development and production of the RB211 engine. These very highly-skilled workers, who have devoted most of their working lives to the company, ask nothing more than the right to work.
  I ask the House to consider what this will mean to Derby. There will be 15,000 people without work—and this in a town where the level of unemployment is the highest for many years. The whole town is stunned and shocked by the grave news. The prospects of reemployment in other industries in Derby are very remote. Large numbers of these workers are buying their own homes on mortgage and, therefore, it will be very difficult for them to move to another part of the country because they will not be able to sell their houses. There will be no work in the town so people will not he able to buy.

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  With my hon. Friend the Member for Derby, North (Mr. Whitehead) I have had discussions with the works committee and certain senior technical engineers. I am convinced that a further wholesale investigation should take place before Rolls-Royce and the Government completely abandon the RB211. This engine is acknowledged as the most advanced aero engine in the world. The vast and costly research and development which has gone into this engine—the rebuilding and retooling of the factory, special computers installed, and the most advanced automatic casting equipment in the world-will be wasted unless we continue with the RB211. All this must not be wasted. Nor should we allow these men with special skills to fall on the scrap heap.
  I am aware that the Minister has stated that the company stands to lose £110,000 per engine, but the engineers on the ground say that this figure is exaggerated, that they are now ironing out most of the technical difficulties and that production costs will fall. As an indication of the loyalty, faith, and belief of the workers in this great project, design teams have been working in their own time to eradicate these difficulties. These men ask for no more than the opportunity to work—to use their skill to build the world's most advanced engines.
  Surely it is in the interests of the nation that a full investigation should take place not just by accountants, but by specialist engineers. They should take evidence not only from top management, but from the engineers dealing with the research and production of the engine. I suggest that the works committee should be brought into the discussions. It has a big stake in this project, too.
  I should now like to say a word about the Government's part in the events leading up to the disastrous news which we heard last Thursday. According to normally reliable Press reports, the Government, through the Minister, gave an undertaking to his opposite number in America that they would back the RB211. I know that this has been denied, but the fact that the Americans are adamant that the British Government would guarantee the engine surely calls for a reply from the Government on this
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  most important point. I hope that the Minister will answer this point when he replies. Otherwise, the suspicion will remain that Rolls-Royce has been allowed to go broke so that it could opt out of the contract with Lockheeds. This would be a disgraceful state of affairs and make life very difficult indeed for British engineering exporters throughout the world. Would our word be trusted again? We should honour our obligations.
  Having said that, surely the American Government and Lockheeds could be more helpful? I am advised that some of the research costs have been due to modifications by Lockheeds on the airframe. This put up the cost. With regard to the delay in delivery, with the good will and enthusiasm of the staff, which are certainly there, the period of the delay could be shortened. It would not embarrass Lockheeds, because most of the airlines which have ordered the TriStar are facing huge losses and would welcome the delay in having to pay for TriStars. Surely Lockheeds could waive the penalty clause in these circumstances.
  I know that many hon. Members wish to take part in the debate, and so I will conclude by asking the Government to agree to this further investigation, to continue discussions with Lockheed, but above all to look at this grave situation not only in the light of economics and financial considerations, but please to take account of the human suffering that will arise if many thousands of workers are thrown out of work. These are men who have given a lifetime of loyal, devoted service to this company. I beg the Government not to abandon them.
  5.41 p.m.
  Mr. J. Enoch Powell: There are many hon. Members whose constituencies are affected, as, indeed, is mine, directly and indirectly by the consequences of these events, who want to take part in this debate, and I have promised to be extremely brief.
  The word "disaster" has been thrown about in comment in the last few days in connection with what has happened. It was used in this debate by the right hon. Member for Devon, North (Mr. Thorpe). I believe that the use of that term, and that whole approach to what has happened, does a great disservice. The relevant resources exist today exactly as they existed a week ago, or, for that

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  matter, months ago. The physical productive assets are there; and, of course, what is much more important, in fact what is decisively important, the men, with their experience, their skill, and their design ability, are there today as they were before. I associate myself with the hon. Member for Derby, South (Mr. Walter Johnson) in saying that what we ought to be debating this afternoon is not the past but the future.
  The practical question is: by what method we are to seek best to utilise those resources? What method are we to use? We know what method is to be applied in the case of all those assets which are not within the ambit of the Government's proposed legislation. Those assets will be bid for by those who believe that they have the enterprise, the managerial ability and the backing to make them profitable, and this will happen relieved from the incubus of that one disastrous train of events which led to the Receiver being appointed last week.
  For that side of this great undertaking there is a fresh start; but a different method is proposed in regard to the assets within the scope of the Government's legislation. There it is not to be private enterprise but the State itself which will bid to become the owner of the assets. Indeed, the State proposes to see to it that no one else is allowed to have a chance: no one else is to bid.
  It appears to me that all the reasons which have been urged for the application of a different method in the case of the aero and other engine assets from what is going to be applied to the rest of the assets do not bear examination.
  It is said that there are air forces and air lines throughout the world that are looking to the products of Rolls-Royce, and which are dependent on them, as to some extent, we in this country are. In that case, if there is such a demand for the future products of this side of the Rolls-Royce undertaking, then, indeed, they ought to be profitable. There ought to be, there no doubt is, good ground for private enterprise to bid for them, to manage them and to utilise them, like the rest of the Rolls-Royce undertaking.
  It might be a different question if the Government's case was that there was no demand for the potential output of the firm. The greater the demand, the more
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  compelling the demand, the more sure it is that private enterprise could make the best use of these assets.
  Mr. John Stonehouse Mr. John Stonehouse (Wednesbury) rose——
  Mr. Powell: I shall give way once. I must honour my undertaking.
  Mr. Stonehouse: Would the right hon. Gentleman welcome a successful bid for the aero-engine division of Rolls-Royce from the United States or Japan?
  Mr. Powell: Yes. I am not afraid to answer that question. I am not afraid to see any good money put into British industry, wherever it comes from. I have answered the right hon. Gentleman's question straight.
  The second argument which is used by the Government is that there is a defence interest here, an interest bound up with the defence of this country. But is it to be the Government's case that whichever firms we depend on for products to be used in our national defence must be taken into nationalised ownership? If that is so, this argument will carry us very far indeed.
  Finally, we are told by my right hon. Friends that these assets are going to be taken into national ownership and managed for the State by those who will have no personal responsibility whether they succeed or fail, until they can be restored to a profitable condition, when they may once again invite the participation of private enterprise. That is an extraordinary proposition to come from a Conservative Government—that State ownership is the natural instrument, the chosen method, for restoring unprofitable assets to profitability.
  I fear that by this decision the Government have done a grave wrong. They have done a grave wrong in the first place to those who are depending upon the assets, above all the human assets, being restored as soon as possible to their most profitable application—in the interests of the nation and in the interests of the workers themselves; for I do not believe, and the evidence does not support the proposition, that national ownership and State management are the best method to do that.
  I believe, however, that the Government have done even wider damage if

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  possible than that, because, by their decision in this case, they have cast doubt and discredit generally upon that belief in the principles of capitalism and private enterprise for which the Conservative Party stands.
  5.48 p.m.
  Mrs. Judith Hart: The right hon. Member for Wolverhampton, South-West (Mr. Powell) is a classicist, but I fear he would find that the scientists and technologists of ancient Rome and Greece had far less in common with him, and he far less in common with them, than he has with the mercantile capitalists in this country in the middle ages. What the right hon. Gentleman does not seem to understand is the role of private and public capital respectively in the kind of technological age in which we are living.
  I speak as someone who represents a Scottish constituency in which 4,000 workers would be affected were there to be wide-scale redundancies as a result of this crisis, and in the context of having 62,000 unemployed men and women in the west of Scotland already, a 9 per cent. rate of employment, and the fact that redundancies on any considerable scale—indeed, on any scale—are extremely serious. It is against that human background that I want to set my speech.
  There are occasions in this House when we are conscious of a national feeling about an issue as well as party considerations and party differences. This is one issue on which there are certain national feelings, certainly in so far as they are expressed by the trade unionists whom some of us have met over the last two or three days, about what should be done in this situation.
  I am talking now about the present and the future and not about the past. If we talk about the present and future and what people want to see done and what the workers in Rolls-Royce want to see the Government do, not only for them but for the country, there is a real identity of interest between both sides of the House and people outside. It is on that that we should concentrate our attention.
  What is clear first of all is that they are all concerned, and we are all con-
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  cerned, about the human effects of this in terms of unemployment and the immediate consequences of these terrible events. Second, we are concerned, I believe, about the longer-term economic effects, because what seems very clear is that, when not only a major British industry but one which occupies such a position of symbolic importance in the British nation as Rolls-Royce collapses, the consequences as they spread through the rest of the economy cannot be underestimated.
  I do not know—and neither can the Chancellor know—how many firms in Britain today are postponing their investment decisions for another three or six months. I do not know—neither can he know—just how much we are likely to see further decline in employment, investment and economic activity spinning off from the events of last week. What I am certain of is that whatever the Chancellor was planning as his Budget judgment and strategy will now have to be rethought as a direct consequence of last week's events and the events which we are living through today. So this, of course, is of tremendous national concern.
  Surely also of national and not of party concern—this is what the right hon. Member for Wolverhampton, South-West seemed not to understand in talking about the way in which private capital could keep in being the employment and skills of the workers affected by RollsRoyce—is that Rolls-Royce and the British aero-engine industry is infinitely more than the simple sum of its parts. It is not just the workers in the industry or the assets employed in the industry which are important: it is the concentration of skills, technologies, scientists and craftsmen in an industry which has led the world and has been a leading exponent of modern technology not only in Britain but in the world. That is of national concern.
  It is of national concern not merely that we keep certain parts of the industry going. It is of national concern, and of concern to the Chancellor, who is most concerned, rightly, with the taxpayer, that we look to the future of the British taxpayer. We must think not only of the Chancellor and his Budget and how much he will be able to give away in March: we must think of the long-term future of the British economy. In terms of the

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  long-term future of the British taxpayer, what matters is that this centre of technology, of advance, of all that we can hope for as we move forward into this scientific future, is kept as an integral unit in which it can operate to maximum efficiency and advantage to the country.
  These, therefore, are the three national interests with which we are concerned. We should now consider what the Government, in our view and that of the shop stewards of the industry, should do in this situation. First, it is clear, and emerges as a very strong view from the shop stewards of Rolls-Royce, that the first priority is that the Government must leave absolutely no effort unspared to secure a successful renegotiation of the RB211 contract.
  We know that the Government are in negotiation, and I know that the hon. Member for Macclesfield (Sir A. V. Harvey) said, "Let us leave it to the Government for a few days: let us not talk too much about this." But we must talk a little about it, so as to make it clear to the Government that the feeling of the House and the nation and the workers in the industry is that the Government's efforts must lead to a successful renegotiation of the contract. Unless the RB211 can be preserved, it will be inevitable—technologically inevitable, not just economically inevitable—that many of the skills and expertise and the concentration of excellence which is Rolls-Royce will have to be dispersed.
  Mr. Dan Jones: In fairness to the hon. Member for Macclesfield (Sir A. V. Harvey), he said that he would recommend to his Government the continuation of the RB211. My right hon. Friend should know that.
  Mrs. Hart: Yes, I heard the hon. Gentleman say that, but I also heard him say, "Let us not press this too hard; let us trust the Government to negotiate." I am prepared to accept that we should allow a little time for this, because, obviously, these negotiations must be extremely delicate, and we cannot question in advance. But we should go a little further than the hon. Gentleman was ready to go, and ask the Government to put every ounce of effort and skill in negotiation into ensuring that they are successful. They should be aware that this is the feeling of the House.
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  But, of course, if the RB211 is secured, we are then talking in a very different context, because the unemployment effects would be marginal. They would not be the kind of effects which the Press and many people have been taking for granted in the last two or three days. I would say to the Minister and the Chancellor that, in so far as some of us have been able to discuss this with the workers in the industry, we have found that not one worker in Rolls-Royce at this moment is prepared to accept that any redundancy is necessary. If the RB211 is secured and if, on the basis of that, Rolls-Royce can look forward to a successful future, we need not talk in terms of the tragic consequences of redundancy. It is that situation which we must seek to avoid.
  I am not prepared to accept that redundancy is inevitable, because I believe that it is possible for the Government, given the background of the present situation, and the factors affecting the American Government and Lockheeds which we have heard about today, to renegotiate successfully the RB211 contract. That must be the priority.
  Mr. John Nott: Does the right hon. Lady think that her very understandable desires in this respect would be helpful in the renegotiation of the contract on a successful basis by the Government? The Government must not go into the renegotiation, surely, with the House telling the other party to the negotiation that, at all costs, the Government must succeed. That is not the way to conduct negotiations.
  Mrs. Hart: Of course this kind of situation is always very difficult, and I recognise the difficulties from the Government's point of view. If, of course, they had a House of Commons which said, "We do not care whether you successfully renegotiate the RB211 or not," they could then hold a hand of strength and say that, since no one cared, they could negotiate successfully. But in justice to the workers of Rolls-Royce and the company's interests and the country as a whole, we cannot fairly take that attitude. We must say to them, "Of course you must do the negotiations, but please know that the country is hoping for and willing you to be successful in those negotiations."
  I do not think that makes it very difficult for the Government. Indeed, I should

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  have thought it strengthened their hand. But, having said that there is this tremendous united national concern, we then come to a point at which party considerations affect the issue. In my view, it is not so much that our party considerations affect it but that the Government's party dogmas affect the situation. If we are considering the real technological need to keep the skills of this industry together, let us get the matter into perspective. This is an industry in which on average the ratio of staff—that is, scientists, technicians, draughtsmen and supervisors—to productive workers is of the order of three to one, and I doubt whether there is any other industry in the country in which the ratio is anything like as high. We are, therefore, considering this high degree of concentration of skill.
  If the Government say, "We do not want to keep this concentration of skills together; we are only concerned with those parts which we regard as essential to our defence interests and our obligations to people abroad", we are bound to end up with a decision being reached, which is expressed in this very open-ended Bill which we have seen for the first time this afternoon, to nationalise those parts which the Government see as essential to be nationalised and to leave to private enterprise some of the identifiable and most profitable sectors of the industry.
  I say to right hon. Gentlemen opposite that they are bound to reach that conclusion because they take the wrong starting point. The starting point, while it should include British defence interests and obligations abroad, should essentially be that of how we can best keep for the future of Britain this spearhead of technological advance which is represented by Rolls-Royce. If they take that starting-point, there is no question that they should take into public ownership all the assets of Rolls-Royce. Nor should they consider the earliest possible moment at which they can hive off the profitable bits. The trouble about right hon. Gentlemen opposite is that in their anxiety to determine what are British interests they always make their determination in the interests of tomorrow and not of the day after tomorrow. They always determine this question in the short term and not in the long term.
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  While the Government are coming to the view that public ownership is necessary and in the public interest, we are bound to quarrel with them on their definition of how far public interest takes us. We are bound to say that in the public interest, in the cause of ensuring the best possible future in the aeroengine industry and the aero space industry, we believe that they are wrong in their limitation of the areas of Rolls-Royce which they want to transfer to public ownership. I doubt very much whether, as they proceed with the process of public ownership, they will find that it is as easy as they think to separate the little bits off to be sold back to private enterprise.
  The logic of the situation is surely this. If we are dealing with a highly competitive international industry, if we are dealing with a situation in which we have to develop in order to stay in business, we have to take into account all our national resources. Where do we find them? Many of them are found in the universities. Others are in technological institutions and in Government establishments concerned with R and D. The logic of nationalisation will drive the Government into such a degree of integration that we might as well not discuss the possibility of future hiving off because it will not be a practicable possibility, nor will it be desirable in the national interest.
  I say to the Government: Accept that in the efforts to renegotiate the RB211 engine you have behind you all the good will of all the industry of Rolls-Royce. You have the good will of the trade unions and those of us on this side of the House. But, equally, you should accept that on the politics of the public ownership proposals we shall be bound to quarrel with you.
  6.5 p.m.
  Sir Henry d'Avigdor-Goldsmid: I hope the right hon. Lady the Member for Lanark (Mrs. Hart) will take it as no discourtesy if in the interests of other hon. Members who wish to speak in this debate I do not follow her in her remarks. Not that I was not as intensely interested in them as any hon. Member with a direct constituency interest. I think I can say, like my right hon. Friend the Member for Wolverhampton, South-West

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  (Mr. Powell), that I certainly have an indirect constituency interest, although I appreciate that the problem is centred in other constituencies.
  We are discussing a tragedy. A curious assumption that I have noted throughout the debate is that the Rolls-Royce company was apparently surprised when it made this shocking discovery about the costs of the RB211 agreement into which it entered. In fact, the Rolls-Royce company has not been in profitability since 1961. My reading of the Rolls-Royce accounts is that 1961 was the year in which it started capitalising its R and D expenditure.
  May I draw an analogy? If one sets up a barrow and sells £ notes at 19s. 6d., the chances are that one does a very good business so long as one's capital lasts. If, at the same time, one puts a special credit to research and development amounting to 2s. for every £ note sold, one seems to be making a huge profit, but the problem arises when one reaches the end of one's capital. This is the end of the road which Rolls-Royce has now reached. It started on that road in 1961.
  It was a little like the story of the emperor's new clothes. Hon. Members will remember that the emperor's favourite tailor said to him, "I have here a material of such splendid gossamer quality that it is only perceptible to people with the finest sentiments. Only people with these special attributes can seen the beauty of this marvellous material with which I shall make you a suit" The emperor, of course, could not see the material but he was pleased. All his courtiers, naturally, were also very pleased. They all said what a wonderful suit it was. They did not like to admit to the tailor that they did not have the special qualities which enabled them to see the material. Then a little boy said, "The emperor has no clothes on."
  This is the position of that great company; the emperor has no clothes on. The trouble with this company is that it has been carried entirely by Government orders. I doubt whether it has been commercially profitable since 1961. Government orders have paid its overheads to a great extent. When that famous deal in 1968 with Lockheed was negotiated, no one really knew whether Rolls-Royce was really on its own or
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  whether the Government were behind it. There was, so to speak, what we call a grey area. I do not think that this contract that Lockheed insisted upon could really have been entered into by Lockheed on entirely commercial considerations. I believe the company insisted on it because it felt that at the last moment the Government would come to the rescue. I am sure, too, that Rolls-Royce would not have accepted this extremely arduous contract if it had not also had the feeling that at the end of the road the Government would bail it out. It is because there was this element of doubt between the company and its clients that we have reached this impasse.
  I thought that the right hon. Lady the Member for Lanark did herself less than justice in suggesting that a renegotiation would have been easy. From what we have heard I should have thought that over the last six months desperate attempts had been made by Rolls-Royce without any success whatsoever because the Lockheed company thought that it was on to a good thing. It thought that as a last resort Her Majesty's Government would bail Rolls-Royce out, and we see perhaps the change of emphasis that we have had with a change of Government.
  The interesting thing to me is that just at the moment when with the nationalised industries we are insisting on a tremendously commercial point of view being taken by them and their chairmen we are insisting that in the private sector the same principles are not being applied. I say that despite the frowns of my right hon. Friend the Member for Wolverhampton, South-West. I cannot help asking myself what, in fact, the directors of Rolls-Royce were doing.
  The right hon. Gentleman the Leader of the Liberal Party read a paper from his friend Eric Lubbock——
  Mr. Thorpe: Quite untrue.
  Sir H. d'Avigdor Goldsmid: There is no discredit——
  Mr. Thorpe: This is an unjustified assertion, and I do not think that the hon. Gentleman should press it.
  Sir H. d'Avigdor Goldsmid: I do not wish to say anything discreditable about Eric Lubbock or about his father. His

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  father was deputy chairman, and knew his business: when he was deputy chairman, Rolls-Royce was earning profits. As time has gone on I do not think that the independent directors of Rolls-Royce have served the company or the country very well. They should have been in the position of the small boy who pointed out that the emperor had no clothes on. That was what they were appointed to the board for. We had to wait until November, when Lord Coles assumed the role of the small boy and asked where the emperor's clothes were.
  Marx said that history repeats itself, the first time as a tragedy and the second time as a farce. In this case we have gone the opposite way round. We had the farce seven years ago, when Rolls Razor collapsed, and the reason which led to the Rolls Razor collapse was smaller but very similar to that which led to the Rolls-Royce collapse—an inability to find out the facts. I quite agree that in the Rolls Razor case a number of gentlemen enriched themselves very heavily and none has enriched himself over the fall of Rolls-Royce.
  So we have this tragedy, which has certainly hit almost everyone in the country. It was a company of national prestige, perhaps the single most important company by name in the country—and it has gone. I do not think that there is any question of an easy renegotiation. The attempt has been made, and has failed. So we have a tragedy which hits those directly employed in the business, those indirectly getting their living from the supplying businesses, and investors all over the country—and among investors I include all the pensions funds, which are very much hit, and those who ben-fit from pensions funds are hit as well.
  This is the tragedy we contemplate, and it is important that we should try to draw the lesson from it. That is why I have intervened, and not just in order to take up time that would otherwise be available to hon. Members who wish to talk of their constituents.
  6.15 p.m.
  Mr. Stanley Orme: I speak not because I have a direct constituency interest but because this is a matter which affects the whole House. It
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  also affects many skilled members of my trade union; draughtsmen and engineers who face redundancy. It is only right that their views should be put to the House.
  The right hon. Gentleman the Member for Wolverhampton, South-West (Mr. Powell) demolished the Conservative argument that one should take an industry into public control, get it back on its feet again and then sell it back to the private sector. He advocated, in effect, that this concern should continue to remain in the private sector and be resold, as it were, to interested parties, whether foreign or British. It is rather strange that he should make this suggestion when private enterprise has failed as dismally as has Rolls-Royce. What confidence can we have that private enterprise would be better under a different management?
  Mr. Powell: The disciplines of private enterprise have ultimately been applied even to this firm in a way that they cannot be to anything which the State owns.
  Mr. Orme: The right hon. Gentleman probably knows more about the disciplines of private enterprise and the private sector than I do. All I can say is that the disciplines he talks of do not seem to have served Rolls-Royce particularly well.
  The Chancellor of the Exchequer said that a major error of commercial judgment had been made by Rolls-Royce and that because of it the Government were now forced to take the aerospace section of Rolls-Royce into public ownership. I want to say, in answer to what the Prime Minister said over the weekend, that if it is in the national interest that sections of Rolls-Royce having to do with defence, and the like, should be taken into public control, it is also in the public interest that the profitable side, from which the nation as a whole would benefit, should also be taken into public control.
  The Rolls-Royce workers want to see this undertaking kept as a whole. We on this side cannot see the logic of taking over only the aerospace side, which is, at the moment, sustained in the main by public money. We want to know why the whole concern cannot come under public control.
  The problems facing skilled workers thrown out of work have been eloquently

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  described. We all know what the problems of industrial redundancy are. We have faced them, as have other hon. Members in the past. But here we have not just a question of redundancy but a question of the loss of skills to the nation if these units are broken up. These men are skilled engineers, technicians, draughtsmen, and people on the shop floor who have served apprenticeships. Hon. Members must know that if they are driven out of this work their skills may be lost to the nation for all time—and they are skills that we as a nation can ill afford to lose.
  It is on skills like theirs that our wealth is now founded. Our wealth is founded on our exports and on our ability to manufacture, and for that reason we must maintain this labour force. That is why it is so essential that the RB211 project should continue. We must have in mind not only its possibilities and prospects but the exchange values it will bring to us, and the fact that it will underwrite the maintenance of an aerospace industry which will disappear if the RB211 is dissipated in its entirety.
  The Chancellor of the Exchequer gave no details of the form which public control will take. No doubt we shall hear more about this on Thursday. As to the limited company, there will be no parliamentary accountability. The taxpayer, who will be directly involved, will not be able to ascertain what is happening or to question the control and conduct of the industry.
  We are introducing a form of public ownership in a sector where it has not previously existed. It would appear that there is now only a small section of the Labour Party which is not convinced that public ownership of this vital industry is essential.
  There should be accountability. The House will want to discuss the questions of management, the control of the industry in the future and the type of enterprise which is to be created by Rolls-Royce. We are entitled to express a point of view. The workers in the industry are very concerned about these matters.
  The workers do not want to contemplate redundancies, and we should not contemplate them if at all possible. However, if there is redundancy, will the
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  arrangements for redundancy stand as they would with any ordinary firm, or will the workers here suffer as the Handley Page workers did when that firm went bankrupt? I had dealings with the Handley Page workers over a number of months arising out of redundancies there and I know that the matter was never satisfactorily resolved.
  What has happened to Rolls-Royce and the problems it will face in future questions, as the right hon. Member for Wolverhampton, South-West so honestly said, the viability of private enterprise to resolve our problems in key industries such as this one in our present-day economy. Some of us think that private enterprise does not have such an ability, and what has happened to Rolls-Royce proves that we are right.
  6.23 p.m.
  Mr. Stanley R. McMaster: In view of the shortage of time I am sure that the hon. Member for Salford, West (Mr. Orme) will forgive me if I do not follow him in detail. I am largely in agreement—I never thought I would be—with much of what he said when dealing with the difficulties of those employed by Rolls-Royce directly or indirectly if the firm must substantially contract its labour force.
  I realise what a difficult period my right hon. Friend the Minister for Aviation Supply must have come through in the past few months leading up to this decision. Unlike in the case put by the right hon. Lady the Member for Lanark (Mrs. Hart), it is obvious that the contract for the RB211 would have bankrupted Rolls-Royce if Rolls-Royce had been left to continue it. It is also obvious that the private interests could not find the money required to keep the company in business.
  If the Government had not stepped in and decided to nationalise, the resulting unemployment would have been much severer than even that which has been contemplated by the House today. This event has been called a national disaster. In spite of what my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) said, I do not believe that the description "national disaster" overstates the matter.
  I urge my right hon. Friend the Minister to use his best endeavours to renegotiate the contract with Lockheed, for

  95
  the following reasons. I believe that this engine is one of the most advanced engines available anywhere in the world. If Britain is to remain in the aerospace industry, she must be able to design and produce advanced technology jet engines. These are engines with a high ratio bypass which are quiet—they are much quieter than the existing series of engines—and produce the tremendous power required in the airbuses of the future, the planes which will carry the passengers of the later 1970s, 1980s and 1990s.
  Much has been said about those directly affected in Derby and elsewhere. I want to deal with the position of those employed by sub-contractors such as Joseph Lucas and by Short Brothers and Harland in my constituency. At Short Brothers about 1,500 men are working on the pods for the RB211 engines. The House can imagine the dismay with which these men heard this news. This is the bread and butter of Short Brothers. The firm has other work on Skyvans and missiles which is successful, but if this contract goes it is not only a question of the jobs of these 1,500 men rising to an estimated 2,000; it may involve the whole company with a force of 6,000 or 7,000 men, plus 800 men employed directly in a small Rolls-Royce subsidiary factory in Dundonald in the constituency of my hon. Friend the Member for Down, North (Mr. Kilfedder).
  In view of the news which has reached us from Northern Ireland over the past weekend, it is unnecessary for me to stress the seriousness of the unsettled conditions and the civil disorder in the streets there. One shudders to think what would happen if a further 6,000 or 7,000 men were released to such conditions. Idle hands would soon turn to dangerous and perhaps evil ways in today's conditions in Northern Ireland; because there is no hope that these men could be otherwise employed in the Province.
  The Minister said that the Government would make every effort to redeploy the men involved in other industries; but there is no similar industry in Northern Ireland. These men would have to leave the Province—as many of them are family men, they would not find this easy—or would have to remain unemployed in Northern Ireland for a considerable time, if not for the rest of their working lives.
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  Therefore, in the interests of Rolls-Royce itself, of the subsidiary factories, and of the political state of the United Kingdom as a whole, this contract must be kept in being.
  It is also in the best interests of Lockheed to keep this contract going, because Lockheed cannot get another engine from Pratt and Whitney without incurring considerable extra expense. Not only would the firm have to pay much more for the engine; it would also have to redesign the plane. Those who know anything about the industry know what is involved in redesigning a plane. Why should Lockheed take such action for the sake of £120,000 an engine, which for 540 engines comes to a total of between £100 million and £150 million? Why should not Lockheed add a small percentage to the total price of the plane and keep the contract in being?
  Why should not the British Government get together with the American Government, because we know of Lockheed's financial difficulty, and renegotiate the contract so that Britain can remain in the aerospace industry, so that this engine can be preserved, and so that skills to which tribute has been paid by hon. Members on both sides can be retained in Britain?
  Much of the argument advanced by my right hon. Friend the Member for Wolverhampton, South-West missed the point. The sums and the risk involved in the aerospace industry are of such an order that it is impossible to expect the private sector to bear them. There are both technological and defence reasons for keeping Britain in this industry. The spin-off alone is worth a great deal to this country.
  The House was surprised at the research which has been done on carbon fibres, to mention just one aspect of research. Who, buying anything from a transistor radio to a car body, is not concerned with strong, light indestructible materials, much of the primary research on which is done in the aircraft industry in its work on the advanced materials of the future?
  For that additional reason, I ask my right hon. Friend to use his very best efforts with Lockheed and with the United States Government so that the contract may be preserved.
  6.30 p.m.
  The Minister of Aviation Supply (Mr. Frederick Corfield): This is a short debate. I have in the circumstances tried to cut my own time to the minimum, and I shall do my best to deal with as many of the points raised as is possible in the time.
  First, I take up the speech of my hon. Friend the Member for Belfast, East (Mr. McMaster). I wish to make clear, because some doubt was cast upon it by the hon. Member for Derby, South (Mr. Walter Johnson), the Government's position in regard to the RB211. We have said that we shall explore its future with the Receiver with a view to making it possible to continue if an acceptable contract can be negotiated, if an acceptable offer to negotiate such a contract is forthcoming. There can be no guarantee such as the hon. Member for Derby, South mentioned.
  It is on that question and on the future of the RB211 that the question of redundancies and the size of the redundancy problem rests. For that reason, I cannot give the House a clear idea of the magnitude of the problem. I can only say at the moment that the redundancy payments under the national redundancy payments fund are safeguarded, but it must be a day or two at any rate before this aspect becomes clearer.
  Mr. Benn: May I put to the right hon. Gentleman one question about redundancy payments which has been raised with me by the shop stewards at Bristol? They said that the Receiver had moved them from their full working rate down to a basic rate, and, if they work at that rate for six weeks and are then made redundant, some of them, they say, will lose £300 because their redundancy payment would be related to their last six weeks at work.
  Mr. Corfield: I must have notice of that. I have seen the Receiver for only about five minutes. I shall be seeing him again tomorrow, and I shall try to clarify that point.
  Mr. Dan Jones: It is more important to keep the RB211.
  Mr. Corfield: I come now to some of the more general points, and I shall try to put some of them into rather more accurate perspective. Understandably,
  98
  much has been said about the prestige of Rolls-Royce. The right hon. Gentleman the Leader of the Liberal Party equated the name with engineering excellence, and both he and the right hon. Gentleman the Member for Bristol, South-East (Mr. Benn) held the preservation of the RB211 to be essential to our engineering and commercial credibility. The point was made, too, that this project was thought to be a last chance for Britain to remain in the aero-engine league.
  I believe both those propositions to be questionable. In the first place, I suggest that the House should address itself to the alternative spectacle of a company constantly coming back to Parliament for more money, money measured in many tens of millions of £s, whether to meet faulty estimates of technical problems and the time and cost to be taken to overcome them, or whether to meet merely faulty financial estimates of a more general nature. Would that create confidence in the company abroad, or even at home?
  Again understandably, the right hon. Gentleman the Member for Bristol, South-East draws upon his experience as the Minister in charge of my Department, and I refer in particular to his views upon the reactions of our European partners. Well before the General Election, and with a fraction of the facilities which were available to him then and are available to me now, I was aware that, far from our French partners with the Olympus and our German partners with the M.R.C.A. and our other projects regarding the RB211 as in any way essential to the credibility of Rolls-Royce, they took a contrary view. In fact, their reaction was very different.
  Constantly, I have been told of their fear that Rolls-Royce's preoccupation with this engine was diverting resources which they felt were badly needed on the projects in which they are more closely interested, such as the Olympus, the Adour, the BS360, the RB199 and the M45.
  Mr. Dan Jones: Is that not a natural conclusion for people who have a vested interest in a particular project or engine?
  Mr. Corfield: Yes, that is so, but it is a reflection of their view that there

  99
  were defects in those engines which were delaying their delivery but which could have been solved more quickly had it not been for the diversion of the energies of Rolls-Royce to which I have referred. From what I have gleaned from the preliminary reports which are now beginning to come back from Germany and France, I believe that that view remains the same today. Certainly, in Europe the RB211 was coming to be regarded not as a great advantage to Rolls-Royce but as a project which was gradually sapping both its resources and its energies.
  Let us put into perspective also the claim that there was an enormous potential for this engine and that the loss of exports, as one hon. Gentleman put it, would far outweigh the cost of the massive rescue operation which would now be required to continue with that engine on the present contract. What are those prospects?
  At the outset, let us have right on the record the actual number of orders for the aircraft. At the latest count, there are 110 firm orders, with a further 68 which are not firm, including the whole of the 50 Air Holdings order, which is little more than a bookkeeping transaction, and a somewhat bogus one at that.
  Mr. William Rodgers: Bogus?
  Mr. Corfield: It is certainly not an airline order. What is the lesson of the DC10, the Lockheed 1011's nearest rival, which is doing so much better and selling to airlines so much better than is the 1011 itself? Clearly, what is attracting airlines to the DC10 as opposed to the 1011 is, in the first place, the availability now of a stretched version dependent on more powerful engines which are in production. Even if one were rash enough to discount the financial cost of going on with this engine and developing a more advanced version, whether it be the —61 or the —50, we must ask ourselves what can now be the prospect of such an engine being available in time to compete with versions of the CF6 and JT9 which are already in production and which to all intents and purposes equal, if they do not exceed, the estimated performance of the RB211? [Interruption.] I am replying to the idea that
  100
  there is an enormous potential market for this engine. I do not believe that there is now.
  Nevertheless, I believe, as my hon. Friend the Member for Belfast, East pointed out, that it may still be very much in Lockheed's interest to continue with it, for the very good reason that these engines are not readily interchangeable and, as my hon. Friend said, they require a quite major redesign of the aircraft in order to change from an RB211 to a JT9 or CF6, as the case may be. But it is not my idea, even if it be anyone else's, of retaining our position in the big engine league to develop at this enormous cost an engine which is to a large extent behind engines of equivalent power and performance.
  We have had the suggestion that in some way the British Government are reneging on their obligations. The right hon Gentleman the Leader of the Liberal Party said that Mr. Packard has been under the impression that the British Government would bail out the Lockheed contract and that was why Mr. Haughton had accepted the $200 million loss on the C5A.
  Mr. Sheldon: Would the right hon. Gentleman say whether an attempt was made by the Government to renegotiate the contract before his having to call in the Receiver, and, if so, was this unsuccessful, and why is he hoping for success afterwards when the Government position is so much weaker?
  Mr. Corfield: The Government were never, as the right hon. Gentleman has made plain, a party to the contract. It was for Rolls-Royce to negotiate. All I can say to the hon. Gentleman is that I put to Mr. Haughton a proposal as to what he might be able to offer and he said that he was not in a position to make any offer at all because of his own finances.
  Mr. Sheldon: When?
  Mr. Corfield: Three days ago, or the day before the Receiver was put in.
  Mr. Sheldon Mr. Sheldon rose——
  Hon. Members: Sit down.
  Mr. Sheldon: Was the threat of a receivership made?
  Mr. Corfield: There was no threat of a receivership. The hon. Gentleman knows, or ought to know, as well as I do that the company was in the position, had it gone on trading that it would be incurring grave penalties under Section 332 of the Companies Act.
  The view of the Leader of the Liberal Party is a complete distortion. No one who has followed fairly roughly, as I have done over the last year or more, the proceedings in the United States Congress on this contract can have any doubt at all that the question of whether Mr. Haughton was in a position to refuse this settlement of $200 million had anything whatever to do with his ability to complete the Lockheed-Rolls-Royce contract.
  Mrs. Hart Mrs. Hart rose——
  Mr. Corfield: I have——
  Mrs. Hart Mrs. Hart rose——
  Mr. Speaker: Order. If the right hon. Gentleman does not give way the right hon. Lady must not persist.
  Mr. Corfield: I have only 10 minutes; I thought it was a courtesy to the House to take only 20 minutes.
  The right hon. Member for Bristol, South-East mentioned that Lockheed was nearly bankrupt 12 months ago, or whatever it was. Does he or the House really think that in those circumstances the United States Government, against the background of all that was going on in Congress at the time, would have bought Lockheed out to save Rolls-Royce? He said that Lockheed was relying on the British Government's word. Whose word? His word? If he gave that word, why did he never tell the House? It the Government in effect, or in his opinion, adopted the position of a guarantor, why was that not made plain and clear in public and to the House?
  Mr. Benn: This is an important point. I said that when Lockheed was faced with possible bankruptcy there was total frankness on its part in dealing with me, and I contrasted it with what I thought to be the failure of frankness on the part of the Government in relation to Lockheed and the Americans. I never said that we were more than an investor to the extent of the £47 million, but
  102
  that Lockheed relied on the word of Rolls-Royce.
  Mr. Corfield: I took it down, and we shall see it in HARSARD, the right hon. Gentleman's words were, "the British Government's word". It could only have been his own. In other parts of his speech he was at pains to emphasise, as he has just done, that all the drive and initiative came from the company. Yet he goes on to talk of the possibility of more launching aid. The very basis of launching aid is that a large part, before this particular contract never less than 50 per cent., of the risk falls upon the company, and this is the basis of its incentive. In this contract in the early stages it was only 30 per cent. If we go on with this enormous escalation it becomes 100 per cent. underwriting by the Government, which is a complete negation of the whole principle of launching aid.
  The right hon. Gentleman went on to draw a comparison, I do not think a very close one, with Concorde. Surely the distinction here for the purposes of his argument is quite clearly that with Concorde and its engine there really is a true partnership with the French Government, a partnership in which the costs are equally shared. There was no such agreement here; the agreement with Lockheed was of a totally different nature.
  Then the right hon. Gentleman went on to say that he did not believe that the Concorde type of contract was the right one to apply here, presumably for the reason that it tied the Government too tightly. He proceeded, I think probably rightly, to approach this RB211 contract from a totally different angle. He did so with what object? Surely only with the object of ensuring that the Government were not bound to a wholly indefinite and open-ended commitment and were left an opportunity, should the necessity arise, of calling a halt.
  My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) criticised us for the nationalisation element. I would only ask him, as a former Opposition spokesman on defence: can he really in his heart of hearts believe that the uncertainties that would arise by having, so to speak, a Dutch auction for the parts of this great

  103
  enterprise is underwriting our defence with the surety that we on this side of the House regard as essential?
  Mr. Powell: Yes, without hesitation; and I regard the proposition which my right hon. Friend has just put to the House as humbug.
  Hon. Members: Oh.
  Mr. Corfield: If I were back in the barrack-room I would tell my right hon. Friend what I regard his views as.
  I conclude by referring to the comments of the right hon. Member for Bristol, South-East on openness. I can assure him that the openness with which relations were conducted under his auspices has continued in exactly the same way. I am bound to say that I have the greatest admiration for the way in which Mr. Haughton conducted his discussions with me, being completely frank about the Lockheed situation. I was very distressed that Lockheed was not given more notice of this calamity. This was a matter, as I tried to explain to the House the other day, which arose very suddenly. Efforts were made to get
  hold of Mr. Haughton by Rolls-Royce personnel but it was impossible to make an appointment with him before the appointment that had already been arranged for Tuesday of last week.
  If we are to talk about openness, I would ask the right hon. Gentleman to reflect on his own conduct. We were, after all, told on 1st April, 1968, of the winning of this contract. It was 19 months later before we were told of the negotiations for launching aid to which the contract was said to be subject when he made his announcement. On making inquiries in the Department I was surprised to discover that despite the fact that the announcement was made on 1st April it was not until August that Rolls-Royce submitted the contract——
  Mr. Ernest G. Perry Mr. Ernest G. Perry rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That this House do now adjourn.
  The House divided: Ayes 210, Noes 282.

  Division No. 125.

  AYES

  [6.50 p.m.

  Abse, Leo

  Davidson, Arthur

  Hannan, William (G'gow, Maryhill)

  Allaun, Frank (Salford, E.)

  Davies, Denzil (Llanelly)

  Hardy, Peter

  Allen, Scholefield

  Davies, G. Elfed (Rhondda, E.)

  Harper, Joseph

  Archer, Peter (Rowley Regis)

  Davies, Ifor (Gower)

  Harrison, Walter (Wakefield)

  Armstrong, Ernest

  Davis, Clinton (Hackney, C.)

  Hart, Rt. Hn. Judith

  Ashton, Joe

  Deakins, Eric

  Hattersley, Roy

  Atkinson, Norman

  de Freitas, Rt Hn. Sir Geoffrey

  Heffer, Eric S.

  Bagier, Gordon A. T.

  Doig, Peter

  Houghton, Rt. Hn. Douglas

  Barnes, Michael

  Dormand, J. D.

  Huckfield, Leslie

  Barnett, Joel

  Douglas, Dick (Stirlingshire, E,.)

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Beaney, Alan

  Douglass-Mann, Bruce

  Hughes, Mark (Durham)

  Benn, Rt. Hn. Anthony Wedgwood

  Driberg, Tom

  Hughes, Robert (Aberdeen, N.)

  Bennett, James (Glasgow, Bridgeton)

  Duffy, A. E. P.

  Hughes, Roy (Newport)

  Bishop, E. S.

  Eadie, Alex

  Hunter, Adam

  Blenkinsop, Arthur

  Edelman, Maurice

  Booth, Albert

  Edwards, Robert (Bilston)

  Jay, Rt. Hn. Douglas

  Boyden, James (Bishop Auckland)

  Edwards, William (Merioneth)

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

  Bradley, Tom

  Ellis, Tom

  Jenkins, Hugh (Putney)

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

  English, Michael

  Jenkins, Rt. Hn. Roy (Stechford)

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

  Evans, Fred

  John, Brynmor

  Brown, Ronald (Shoreditch & F'bury)

  Fernyhough, E.

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

  Buchan, Norman

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

  Johnson, Walter (Derby, S.)

  Callaghan, Rt. Hn. James

  Fitch, Alan (Wigan)

  Jones, Barry (Flint, E.)

  Campbell, I. (Dumbartonshire, W.)

  Fletcher, Raymond (Ilkeston)

  Jones,Dan (Burnley)

  Carmichael, Neil

  Fletcher, Ted (Darlington)

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

  Carter, Ray (Birmingh'm, Northfield)

  Foot, Michael

  Jones, T. Alec (Rhondda, W.)

  Carter-Jones, Lewis (Eccles)

  Ford, Ben

  Judd, Frank

  Castle, Rt. Hn. Barbara

  Fraser, John (Norwood)

  Kelly, Richard

  Clark, David (Colne Valley)

  Freeson, Reginald

  Kinnock, Neil

  Cocks, Michael (Bristol, S.)

  Gilbert, Dr. John

  Latham, Arthur

  Coleman, Donald

  Ginsburg, David

  Lawson, George

  Concannon, J. D.

  Golding, John

  Leadbitter, Ted

  Corbet, Mrs. Freda

  Gourlay, Harry

  Lee, Rt. Hn. Frederick

  Cox, Thomas (Wandsworth, C.)

  Grant, George (Morpeth)

  Leonard, Dick

  Crawshaw, Richard

  Grant, John D. (Islington, E.)

  Lestor, Miss Joan

  Crosland, Rt. Hn. Anthony

  Griffiths, Eddie (Brightside)

  Lever, Rt. Hn. Harold

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

  Griffiths, Will (Exchange)

  Lewis, Arthur (W. Ham N.)

  Dalyell, Tam

  Hamilton, James (Bothwell)

  Lomas, Kenneth

  Darling, Rt. Hn. George

  Hamilton, William (Fife, W.)

  Loughlin, Charles

  Lyon, Alexander W. (York)

  Orbach, Maurice

  Stallard, A. W.

  Mabon, Dr. J. Dickson

  Orme, Stanley

  Stewart, Rt. Hn. Michael (Fulham)

  McBride, Neil

  Oswald, Thomas

  Stoddart, David (Swindon)

  McCartney, Hugh

  Owen, Dr. David (Plymouth, Sutton)

  Stonehouse, Rt. Hn. John

  McElhone, Frank

  Palmer, Arthur

  Strang, Gavin

  Mackenzie, Gregor Pannell, Rt. Hn. Charles

  Summerskill, Hn. Dr. Shirley

  Mackie, John

  Pavitt, Laurie

  Swain, Thomas

  Maclennan, Robert

  Peart, Rt. Hn. Fred

  Taverne, Dick

  McNamara, J. Kevin

  Pendry, Tom

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

  MacPherson, Malcolm

  Perry, Ernest G.

  Thomas, Jeffrey (Abertillery)

  Marks, Kenneth

  Prescott, John

  Thomson, Rt. Hn. G. (Dundee, E.)

  Marquand, David

  Price, J. T. (Westhoughton)

  Thorpe, Rt. Hn. Jeremy

  Marsh, Rt. Hn.

  Richard Probert, Arthur

  Tomney, Frank

  Mason, Rt. Hn. Roy

  Rankin, John

  Torney, Tom

  Mayhew, Christopher

  Reed, D. (Sedgefieid)

  Tuck, Raphael

  Mellish, Rt. Hn. Robert

  Rees, Merlyn (Leeds, S.)

  Varley, Eric C.

  Mendelson, John

  Richard, Ivor

  Wainwright, Edwin

  Mikardo, Ian

  Roberts, Rt.Hn.Goronwy(Caernarvon)

  Walker, Harold (Doncaster)

  Millan, Bruce

  Robertson, John (Paisley)

  Wallace, George

  Miller, Dr. M. S.

  Rodgers, William (Stockton-on-Tees)

  Watkins, David

  Milne, Edward (Blyth)

  Rose, Paul B.

  Wellbeloved, James

  Molloy, William

  Ross, Rt. Hn. William (Kilmarnock)

  White, James (Glasgow, Pollok)

  Morgan, Elystan (Cardiganshire)

  Sheldon, Robert (Ashton-under-Lyne)

  Whitehead, Phillip

  Morris, Alfred (Wythenshawe)

  Shore, Rt. Hn. Peter (Stepney)

  Whitlock, William

  Morris, Charles R. (Openshaw)

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

  Williams, Mrs. Shirley (Hitchin)

  Morris, Rt. Hn. John (Aberavon)

  Short, Mrs. Renée (W'hampton,N.E.)

  Williams, W. T. (Warrington)

  Moyle, Roland

  Silkin, Rt. Hn. John (Deptford)

  Wilson, Alexander (Hamilton)

  Mulley, Rt. Hn. Frederick

  Sillars, James

  Wilson, Rt. Hn. Harold (Huyton)

  Murray, Ronald King

  Silverman, Julius

  Ogden, Eric

  Skinner, Dennis

  TELLERS FOR THE AYES:

  O'Halloran, Michael

  Small, William

  Mr. William Hamling and

  O'Malley, Brian

  Smith, John (Lanarkshire, N.)

  Mr. John Pardoe.

  Cram, Bert

  Spearing, Nigel

  NOES

  Adley, Robert

  Cockeram, Eric

  Griffiths, Eldon (Bury St. Edmunds)

  Alison, Michael (Barkston Ash)

  Cooke, Robert

  Grylis, Michael

  Allason, James (Hemel Hempstead)

  Coombs, Derek

  Gummer, Selwyn

  Amery, Rt. Hn. Julian

  Cooper, A. E.

  Gurden, Harold

  Archer, Jeffrey (Louth)

  Corfield, Rt. Hn. Frederick

  Hall, Miss Joan (Keighley)

  Astor, John

  Cormack, Patrick

  Hall, John (Wycombe)

  Atkins, Humphrey

  Contain, A. P.

  Hall-Davis, A. C. F.

  Baker, Kenneth (St. Marylebone)

  Crouch, David

  Hamilton, Michael (Salisbury)

  Baker, W. H. K. (Banff)

  Crowder, F. P.

  Hannam, John (Exeter)

  Balniel, Lord

  Curran, Charles

  Harrison, Brian (Maldon)

  Barber, Rt. Hn. Anthony

  Dalkeith, Earl of

  Harrison, Col, Sir Harwood (Eye)

  Batsford, Brian

  Davis, Rt. Hn. John (Knutsford)

  Harvey, Sir Arthur Vere

  Bell, Ronald

  d'Avigdor-Goldsmid, Sir Henry

  Haselhurst, Alan

  Bennett, Sir Frederic (Torquay)

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

  Hastings, Stephen

  Bennett, Dr. Reginald (Gosport)

  Digby, Simon Wingfield

  Havers, Michael

  Benyon, W.

  Dixon, Piers

  Hawkins, Paul

  Berry, Hn. Anthony

  Dodds-Parker, Douglas

  Hayhoe, Barney

  Bitten, John

  Douglas-Home, Rt. Hn. Sir Alec

  Heath, Rt. Hn. Edward

  Biggs-Davison, John

  Drayson, G. B.

  Heseltine, Michael

  Blaker, Peter

  Dykes, Hugh

  Hicks, Robert

  Boardman, Tom (Leicester, S.W.)

  Eden, Sir John

  Higgins, Terence L.

  Body, Richard

  Elliot, Capt. Walter (Carshalton)

  Hiley, Joseph

  Boscawen, Robert

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

  Hill, James (Southampton, Test)

  Bossom, Sir Clive

  Emery, Peter

  Holland, Philip

  Bowden, Andrew

  Eyre, Reginald

  Holt, Miss Mary

  Boyd-Carpenter, Rt. Hn. John

  Farr, John

  Hordern, Peter

  Braine, Bernard

  Fenner, Mrs. Peggy

  Hornby, Richard

  Bray, Ronald

  Fidler, Michael

  Brewis, John

  Finsberg, Geoffrey (Hampstead)

  Hornsby-smith,Rt.Hn.Dame Patricia

  Brinton, Sir Talton

  Fisher, Nigel (Surbiton)

  Howe, Hn. Sir Geoffrey (Reigate)

  Brocklebank-Fowler, Christopher

  Fletcher-Cooke, Charles

  Howell, David (Guildford)

  Brown, Sir Edward (Bath)

  Fookes, Miss Janet

  Howell, Ralph (Norfolk, N.)

  Bruce-Gardyne, J.

  Foster, Sir John

  Hunt, John

  Bryan, Paul

  Fowler, Norman

  Hutchinson, Michael Clark

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

  Fox, Marcus

  Irvine, Bryant Godman (Rye)

  Buck, Antony

  Fry, Peter

  James, David

  Burden, F. A.

  Galbraith, Hn. T. G.

  Jenkin, Patrick (Woodford)

  Butler, Adam (Bosworth)

  Gardner, Edward

  Jennings, J. C. (Burton)

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

  Gibson-Watt, David

  Jessel, Toby

  Carlisle, Mark

  Gilmour, Sir John (Fife, E.)

  Johnson Smith, G. (E. Grinstead)

  Carr, Rt. Hn. Robert

  Glyn, Dr. Alan

  Jopling, Michael

  Channon, Paul

  Goodhart, Philip

  Joseph, Rt. Hn. Sir keith

  Chapman, Sydney

  Goodhew, Victor

  Kaberry, Sir Donald

  Chataway, Rt. Hn. Christopher

  Gorst, John

  Kellett, Mrs. Elaine

  Chichester-Clark, R.

  Gower, Raymond

  Kershaw, Anthony

  Churchill, W. S.

  Grant, Anthony (Harrow, C.)

  Kilfedder, James

  Clark, William (Surrey, E.)

  Gray, Hamish

  King, Evelyn (Dorset, S.)

  Clarke, Kenneth (Rushcliffe)

  Green, Alan

  King, Tom (Bridgwater)

  Clegg, Walter

  Grieve, Percy

  Kinsey, J. R.

  106

  107

  Kirk, Peter

  Normanton, Tom

  Stanbrook, Ivor

  Knox, David

  Nott, John

  Stewart-Smith, D. G. (Belper)

  Lambie, David

  Onslow, Cranley

  Stodart, Anthony (Edinburgh, W.)

  Lane, David

  Oppenheim, Mrs. Sally

  Stokes, John

  Legge-Bourke, Sir Harry

  Orr, Capt. L. P. S.

  Stuttaford, Dr. Tom

  Le Marchant, Spencer

  Owen, Idris (Stockport, N.)

  Tapsell, Peter

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

  Page, Graham (Crosby)

  Taylor, Sir Charles (Eastbourne)

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

  Page, John (Harrow, W.)

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

  Longden, Gilbert

  Parkinson, Cecil (Enfield, W.)

  Taylor, Frank (Moss Side)

  Loveridge, John

  Peel, John

  Taylor, Robert (Croydon, N.W.)

  McAdden, Sir Stephen

  Percival, Ian

  Tebbit, Norman

  MacArthur, Ian

  Peyton, Rt. Hn. John

  Temple, John M.

  McCrindle, F. A.

  Pike, Miss Mervyn

  Thatcher, Rt. Hn. Mrs. Margaret

  McLaren, Martin

  Pink, R. Bonner

  Thomas, John Stradling (Monmouth)

  Maclean, Sir Fitzroy

  Pounder, Rafton

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

  McMaster, Stanley

  Price, David (Eastleigh)

  Thompson, Sir Richard (Croydon, S.)

  Macmillan, Maurice (Farnham)

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

  Tilney, John

  McNair-Wilson, Michael

  Pym, Rt. Hn. Francis

  Trafford, Dr. Anthony

  Madden, Martin

  Quennell, Miss J. M.

  Trew, Peter

  Madel, David

  Raison, Timothy

  Tugendhat, Christopher

  Maginnis, John E.

  Rawlinson, Rt. Hn. Sir Peter

  van Straubenzee, W. R.

  Marples, Rt. Hn. Ernest

  Redmond, Robert

  Vaughan, Dr. Gerard

  Marten, Neil

  Rees, Peter (Dover)

  Vickers, Dame Joan

  Mather, Carol

  Rees-Davies, W. R.

  Waddington, David

  Maude, Angus

  Renton, Rt. Hn. Sir David

  Walder, David (Clitheroe)

  Maudling, Rt. Hn. Reginald

  Rhys Williams, Sir Brandon

  Walker, Rt. Hn. Peter (Worcester)

  Mawby, Ray

  Ridley, Hn. Nicholas

  Walker-Smith, Rt. Hn. Sir Derek

  Maxwell-Hyslop, R. J.

  Ridsdale, Julian

  Wall, Patrick

  Meyer, Sir Anthony

  Roberts, Michael (Cardiff, N.)

  Walters, Dennis

  Mills, Peter (Torrington)

  Roberts, Wyn (Conway)

  Ward, Dame Irene

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

  Rodgers, Sir John (Sevenoaks)

  Warren, Kenneth

  Mitchell, David (Basingstoke)

  Rost, Peter

  Weatherill, Bernard

  Moats, Roger

  Russell, Sir Ronald

  Wells, John (Maidstone)

  Molyneaux, James

  St. John-Stevas, Norman

  White, Roger (Gravesend)

  Monks, Mrs. Connie

  Sandys, Rt. Hn. D.

  Whitelaw, Rt. Hn. William

  Monro, Hector

  Scott, Nicholas

  Wiggin, Jerry

  Montgomery, Fergus

  Scott-Hopkins, James

  Wilkinson, John

  More, Jasper

  Sharples, Richard

  Woodhouse, Hn. Christopher

  Morgan, Geraint (Denbigh)

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

  Woodnutt, Mark

  Morgan-Giles, Rear-Adm.

  Shelton, William (Clapham)

  Worsley, Marcus

  Morrison, Charles (Devizes)

  Simeons, Charles

  Wylie, Rt. Hn. N. R.

  Mudd, David

  Skeet, T. H. H.

  Younger, Hn. George

  Murton, Oscar

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

  Nabarro, Sir Gerald

  Sorel, Harold

  TELLERS FOR THE NOES:

  Neave, Airey

  Spence, John

  Mr. Tim Fortescue and

  Nicholls, Sir Harmer

  Sproat, Iain

  Mr. Keith Speed.

  Noble, Rt. Hn. Michael

  Stainton, Keith

  Mr. Speaker: The Clerk will now proceed to read the Orders of the Day.
  Mr. Gregor Mackenzie: On a point of order. While I and my hon. Friends appreciate, and were concerned about, the importance of the matter we have just discussed, and the effect which it will have on many of our constituencies, not least my own, you will understand, Mr. Speaker, that I am a little disappointed that the subject which I wished to raise, the present unemployment of 115,000 people in Scotland, was not able to be raised because of that Standing Order No. 9 debate which we have had.
  The subject which I wished to raise is of concern to many of my hon. Friends
  108
  in the House. I would ask you to think about this problem, how it comes about that Private Members' time can be passed over to another day. As I understand the situation, and from advice which I have had from hon. Friends of mine who have been Members of the House much longer than I, this is a novel situation in which a debate under Standing Order No. 9 has precluded a Private Member from raising a matter of considerable importance. I would ask you to consider and rule upon this point.
  Mr. Speaker: I have some sympathy with the hon. Member, but I am governed by the Standing Orders. I have acted in accordance with them. No doubt, note will be taken of what the hon. Member has said.

ORDERS OF THE DAY

  RATING BILL
  Order for Second Reading read.
  Mr. Speaker: I would inform the House that I have decided to select the Amendment in the name of the right hon. Gentleman the Member for Grimsby (Mr. Crosland) and his right hon. and hon. Friends.
  7.2 p.m.
  The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office (Mr. Alick Buchanan-Smith): I beg to move, That the Bill be now read a Second time.
  The Bill can be said to have its origins just over 40 years ago when Parliament enacted the Rating and Valuation (Apportionment) Act, 1928. In that Act, an agricultural building was defined as one which is occupied together with agricultural land and used solely in connection with agricultural operations on the land.
  This definition was adopted in the Local Government Act, 1929, which provided for derating of agricultural land and buildings in England and Wales. In Scotland, the same definition was adopted in the Valuation and Rating (Scotland) Act, 1956, which brought Scottish practice into line with that in England, as regards the method by which the derating of agricultural land and buildings was secured. Therefore, this is the main definition which has stood in rating legislation ever since that time. As regards England and Wales, it now appears in Section 26 of the General Rate Act, 1967, which was a consolidating Measure; in Scotland it is the 1956 Act which still operates. The definition was extended in 1961 for England and Wales and in 1963 for Scotland in a way to which I should like to refer later.
  In the state of development of agriculture in 1929, and even in 1956, this definition of agricultural buildings was not unreasonable. Buildings which were used for agricultural purposes were generally used in connection with the farm in which they were situated, and occupied by the farmer for those purposes, and normally they were used solely for those purposes.
  However, since the definition was established in the valuation code, there have
  110
  been developments which explain the urgent need for the provisions of the Bill which we are now considering. In the first place, there have been developments in farming practice which have been made possible by scientific and technical advances, and this is an important point, and one which I hope that hon. Members opposite in particular will appreciate because, in the terms of the Amendment they have put down tonight, they show little sign of understanding it.
  Whether it is in sheltering stock from exposure to the elements, whether it is in housing stock to one extent or another within a controlled environment, whether it is placing less reliance than in earlier days on the essentially variable quality and quantity of the feed which may be produced by a farmer on his own farm, whether it is in providing stock with the feed supplements and concentrates which scientific research and development have made available and which commercial producers of feedingstuffs are manufacturing—whether it is in these or in any other ways, there is no doubt at all that today's livestock farmer is doing no more than modernising his methods of production.
  Mr. J. T. Price: Before the hon. Gentleman proceeds to patronise this side of the House as not appreciating what is involved in all this, perhaps he will do his homework rather better than his brief suggests he has done. Many of us know the recommendations of the Brambell Committee, and some of my hon. Friends and some hon. Gentlemen opposite have made a special study of this matter. Some of us on this side of the House also represent farmers, and we hope that we represent them honestly and say what we believe to be true.
  Mr. Buchanan-Smith: I can understand the hon. Gentleman's intervening, but I wish he would give me a little more time to develop the argument, and I also wish he would read the terms of the Amendment put down by his right hon. and hon. Friends. I hope the hon. Member will give me time to develop this, that what the livestock farmer is doing today is no more than just modernising his methods in accordance with the various developments to which I have referred. I hope that the hon. Gentleman will see that what the farmer is doing is attempting to get the same kind

  111
  of return as other producers, whether in agriculture or industry, are seeking in following out similar processes of this nature which there have been in these different fields of activity. These include the improved utilisation of inputs, reduced labour costs per unit of production, a higher rate of turnover on working capital, and—perhaps one of the most important things—greater ability on the part of the farmer to meet changes in the patterns of consumer demand.
  If the livestock farmers were not to change and modernise their methods of production, if they alone were to set their faces against this kind of development, they would be hindered and, in time, wholly prevented from making available an attractive end product at a price which is acceptable to the consumer. I believe, too, that they would be incapable of competing effectively against overseas producers and, in time, they would perhaps themselves become a liability to the Exchequer. And if agriculture as a whole had not made these changes, I believe that there would have been a failure in enterprise and innovation which would have led to soaring increases in prices and in the nation's bill for imported livestock products.
  It is against this background—I hope the hon. Gentleman will give me credit for filling in this background—that producers using traditional methods are exempt from rates. As I said earlier, historically this is something which is not new and which goes back over many years. Therefore, in our view, it is entirely wrong that the rating law as it is at present should produce results which penalise livestock producers to such an extent, to cite an example from Scotland, that some have actually gone out of business due to the extent of their rating liability, and many others have decided against the use of progressive methods due to the extent of the rates liability which they would have incurred——
  Mr. F. A. Burden: Will my hon. Friend allow me?
  Mr. Buchanan-Smith: If my hon. Friend would let me conclude this point, I should be grateful. They have decided against the use of progressive methods because of uncertainty about the extent
  112
  of their rates liability, and that has hindered their adoption of these modern methods. Many hon. Members are familiar with the way in which this situation has developed through a series of court orders and legal precedents, and I will deal with this in a moment.
  Mr. Burden: Will my hon. Friend say whether it is the traditional farmers who are already receiving rate relief who are going out of business, or new farmers who are not getting rate relief, and, if so. what type of farmers are they?
  Mr. Buchanan-Smith: As I said a moment ago, the farmer who is not getting rate relief is the one who has been adopting the modern methods of production which I described. The purpose of the Bill is to help those farmers who are adopting modern methods.
  Mr. Robert Maclennan Mr. Robert Maclennan (Caithness and Sutherland)rose——
  Mr. Buchanan-Smith: I would rather get on with my speech and develop my arguments. The hon. Gentleman may have an opportunity to make a speech later.
  Mr. George Lawson: Give way. There is plenty of time.
  Mr. Speaker: Order. I can tell the hon. Member that there is not plenty of time. I have a very long list of speakers.
  Mr. Buchanan-Smith: I will summarise briefly by saying that these precedents established that the requirement of "sole" use in connection with agricultural operations on land has more or less to be literally complied with if the livestock building is to qualify for derating. It is not even sufficient if land is used to a significant extent in connection with operations in the buildings. This perhaps answers the point raised by my hon. Friend. By providing shelter or protection to an animal a farmer has removed himself, as the law stands, from the qualification which exempts him from rates. At the moment, the building must be used in a manner which is incidental and subordinate to the use of the land if he is to qualify for exemption. Over a considerable range of livestock production activities derating is available on buildings only if they are used in a manner which was appropriate, effective and sensible up to 20 years ago but which

  113
  has been rendered obsolete by technical developments of the kind to which I have referred.
  Therefore, rating law as it stands is acting as a general constraint upon livestock farmers. It also produces operational and regional anomalies of a most acute and inequitable kind. For example, buildings in which pigs are fattened to a material extent on brought-in feed are rated, whereas buildings used for breeding pigs which have perhaps limited access to land are not. Cattle courts used for housing cattle in the winter may be liable to be rated, whereas buildings used in connection with out-wintered cattle are not. Again, buildings used as deep litter houses for poultry are rateable but, on the other hand, buildings used in connection with birds reared in more traditional ways are not.
  Mr. Michael English: Accepting the hon. Gentleman's point about modern technological methods for poultry, does this mean that if the Bill is passed exemption will be lost for a modern battery hen production unit which covers the whole of the land?
  Mr. Buchanan-Smith: I am coming to the details of the Bill. If the building is contiguous with agricultural land the qualification will not be lost. Anyone who has had experience of the rating law and the way in which it has applied in recent years will know of the extraordinary number of anomalies which arise because of slight technical differences of production. Many laymen have expressed the view to me that in one circumstance a building will be exempt whereas, almost as a matter of chance, in another circumstance that building will not be exempt. These anomalies are not merely on the operational side, They have also applied regionally, which means that there has been an inequitable spread in the incidence of rating on buildings for livestock production.
  If one takes other costs, such as the price of feeding stuffs, labour or fuel, those additional costs are spread across and added to the overhead costs for the industry as a whole. The way in which rating has been applied has varied from area to area due to differences in the speed and comprehensiveness of the assessment process, and this has led to
  114
  big differences in rateable values and rate poundages.
  To take a national comparison, the rates burden on Scottish livestock farmers is proportionally much more severe than it is south of the Border. One-fifth of the total rates payable on these buildings in Great Britain as a whole is paid in Scotland, despite the fact that Scotland enjoys the 50 per cent. derating on these buildings which was introduced a year ago. It is for these reasons that we on this side of the House two years ago saw the need for this Measure. During the General Election we promised the farming community that agricultural derating would be extended, and we are now proceeding to implement this promise at the earliest possible opportunity.
  I turn to the more detailed provisions of the Bill. As I said earlier, the main purpose of the Bill is to extend the agricultural exemption from rates to buildings used simply, in the words of the Bill:
  "for the keeping or breeding of livestock".
  For the purposes of the Bill we have adopted the meaning given to the term "livestock"—and I hope this satisfies my hon. Friend—in the Agriculture Act, 1947, and the corresponding Agriculture (Scotland) Act, 1948, so ensuring that, subject to the other tests which are prescribed in the provisions, only buildings used for the production of creatures which are accepted to be agricultural in character will qualify for derating. It is only logical, if we do this, to extend the exemption to buildings that are ancillary to the livestock buildings. Derating is also extended to land occupied by these livestock buildings.
  Mr. John Brewis: Does not my hon. Friend agree that this definition extends the derating for agricultural purposes to buildings housing animals providing fur and wool—for example. mink farms?
  Mr. Buchanan-Smith: There is no difference from the definition in the Acts of 1947 and 1948, and to that extent there is no extension in the types of animal. Although we propose to make extensions, they do not include the specific exemption which the hon. Member for Nottingham, West (Mr. English) mentioned. Farming is essentially a rural activity, and the fact that it can be carried out in buildings does

  115
  not make it a suitable activity for built-up areas. I hope this covers the point raised by the hon. Gentleman a moment ago. That is why we consider that it should be a condition of rate exemption that the livestock and auxiliary building must be adjacent to or located within an area of agricultural land at least five acres in extent. We believe this helps to retain the specifically rural nature which we would regard as correct for agriculture.
  The other important provision in the Bill is that relating to buildings occupied by incorporated agricultural co-operatives. I mentioned a little earlier the extension of agricultural derating in 1961 and 1963. In the latter case it applied to Scotland and in the former to England and Wales. The extension was to buildings in the same kind of use as those already exempted, namely those solely used in connection with agricultural operations on agricultural land, but where the building concerned was occupied not by the occupier of the land but by an unincorporated syndicate of the occupiers of the land to which the building was ancillary.
  This provision arose in much the same way as the Bill. A case came before the courts where a co-operative syndicate—and I am sure we all support co-operative developments in agriculture—was formed by a number of farmers, the object of which was to purchase and work a grain dryer to dry the grain of the members of the syndicate. The courts at that time found that the grain dryer in these circumstances did not comply with the definition of an agriculture building and was thus rateable. The purpose of the provision was to enable a limited group of farmers, joining together in a sensible agricultural undertaking of a kind we all support, to be able to claim exemption from rates in circumstances similar to those in which an individual farmer carrying out the same operation could also claim exemption.
  At that time this kind of co-operative arrangement was in its infancy, but now not only has the practice of co-operation between farmers developed considerably over recent years but the agricultural industry has also recognised the advantages which come from incorporation for the purpose of carrying on joint enterprises. Thus, we now have in the industry corporate bodies which act on behalf of their members but whose agricultural
  116
  buildings do not qualify for rate exemption because they do not comply with the statutory definitions. This is an anomalous situation, and Clauses 3 and 5 provide for the buildings of incorporated co-operatives, whether subsidiary to the agricultural land or to the livestock buildings of their members, to be exempt from rates. These Clauses also extend, as is clearly appropriate, the exemption of buildings occupied by the unincorporated syndicates to those which are ancillary to the livestock buildings of their members. We are applying to these co-operative bodies the same kind of advantages that would apply to their members if acting in their individual capacity.
  Earl of Dalkeith: Does this mean that a body like the Scottish Agricultural Organisation Society will now be given the green light to proceed even more rapidly in the very good work in which it is already making such excellent progress?
  Mr. Buchanan-Smith: I am obliged to my hon. Friend for raising that point because in our consultations on the Bill we have discussed these matters with organisations interested in co-operation, one of which was the S.A.O.S. I am glad to tell my hon. Friend that the same applies to the Central Council for Agricultural and Horticultural Co-operation in England and Wales and that both bodies have welcomed the proposals in the Bill. We believe that this will be an encouragement to co-operative enterprise between farmers, which, as my hon. Friend and I know, is to the advantage of the industry as a whole.
  I wish to mention Clause 1(2) in regard to England and Wales and Clause 7 in regard to Scotland, which modify the law relating to the exemption of agricultural buildings of all kinds. I refer to the use of the word "solely", which, legally, has been the cause of so many complications and anomalies before the court. We felt that the introduction of this Bill was a good opportunity to look at the use of the term "solely" and have come to the conclusion that it should be somewhat relaxed.
  Therefore, while we are retaining the term "solely" both in the existing legislation and in the Bill, we provide that in determining both under the present legislation and under this Bill whether the

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  use is sole use, other uses for an insubstantial part of the total period of use will not disqualify an otherwise eligible building. In addition, provision is made by Clause 1(2) for England and Wales and by Clause 6 as regards Scotland for derating parts of buildings used for agricultural purposes.
  One of the questions probably in the minds of those who benefit from the Bill is how far the exemption of ancillary buildings will go. To such questions I can give only the most general reply since at the end of the day these matters are subject to interpretation by the courts. Under the present law the phrase
  "used in connection with agricultural operations on agricultural land"
  has been subject to interpretation by the courts in its application to various circumstances, and we have adopted similar phraseology in the Bill in the expectation that the courts in future will interpret it on similar lines. Thus, we believe that the existing case law will give guidance on where agricultural operations end and processing begins. This is an important point. Clearly, in such cases it is difficult to be dogmatic on specific examples, but it is not intended that trading and processing buildings should be exempted and we would not expect the courts to find otherwise. In the past they have made a strict and clear division between the two different operations.
  The financial effects of the Bill will be relatively small. It will not affect Government expenditure, and we estimate that, if it were not for the exemptions in the Bill, rates on the buildings covered by the Bill would not be more than £1 million in the rating year 1971–72 and might well be somewhat less. To put this figure into perspective, it compares with a total rates yield of getting on for £2,000 million. The Scottish figures within these totals are £200,000 in rates payable on agricultural buildings and over £200 million in total rates yield. Therefore, the additional burden on ratepayers will be small and, because of the effect of the resources element of the rate support grant, this burden will be well spread over the different authorities in different parts of the country.
  Mr. Lawson: Is the hon. Gentleman saying that this Bill will mean no extra
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  money whatever from the Treasury and that the entire cost is to be borne by the ratepayer?
  Mr. Buchanan-Smith: The burden which we are exempting with regard to the farmers is redistributed across local authorities as a whole. The effect in financial terms is relatively small. At the moment agricultural rates are part of farming costs and are taken into account in the Annual Review. In so far as farmers' prices are supplemented by deficiency payments, this has the effect of leaving the status quo.
  Mr. Lawson: Answer the question.
  Mr. Buchanan-Smith: If the hon. Gentleman wishes to make a speech on this matter later on——
  Mr. Lawson Mr. Lawson rose——
  Mr. Buchanan-Smith: I am not giving way. I have answered the hon. Gentleman's point.
  Hon. Members: Sit down.
  Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order.
  Mr. Buchanan-Smith: I have answered the hon. Gentleman.
  Mr. Deputy Speaker: The hon. Member for Motherwell (Mr. Lawson) cannot interrupt unless invited to do so.
  Mr. Buchanan-Smith: I have answered the hon. Gentleman's point. I have given him the financial figures involved. This explains fully and clearly that one is not trying to hide anything about the effects of the Bill.
  Mr. John E. B. Hill: As the Under-Secretary is concluding his remarks, may I ask whether he would say something about the unexpected omission from the benefits of the Bill of bee farmers, because they are a crucial part of agriculture. The bee has been included in the definition of livestock, and I understand that bee farmers have been omitted purely because the hive does not count as a fixed building and that ancillary buildings cannot be included?
  Mr. Buchanan-Smith: I hope that the hon. Gentleman will specify what kind of bee farmer he has in mind, otherwise it might cause confusion outside the House. I have kept bees, and I am horrified to

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  think that they may have been subject to rates. I hope that I have not said too much so far, because they have not been. But if there is an anomaly in this, I am grateful to my hon. Friend for bringing it to my attention. We can look at it during the Committee stage.
  I am very disappointed that the Opposition have thought fit to table a Motion declining to give a Second Reading to the Bill. I take this opportunity to comment on two gross misconceptions contained in the Motion. These are, first, that the Bill relates—in the terms of the Opposition Motion—to non-agricultural buildings and, second, that its provisions will significantly affect other ratepayers.
  Mr. John Silkin: I am afraid that I cannot read the word "significantly" in the Motion.
  Mr. Buchanan-Smith: If the right hon. Gentleman wishes, I shall simply say, "penalises other ratepayers". I apologise to the right hon. Gentleman for not quoting exactly. It is quite clear that that still does not get us away from the two misconceptions in the Motion, that it relates to non-agricultural buildings and that it penalises ratepayers. In tabling the Motion, hon. Members opposite have either not noticed or have chosen to ignore the requirement that in order to benefit from derating under the Bill buildings must be used for breeding or keeping livestock as defined by the Agriculture Acts of 1947 and 1948. Both these Measures were enacted under a Government formed by the party opposite. Moreover, it was the party opposite—I hope that the hon. Members will remember this—which first introduced the definition into the valuation code, in the Valuation for Rating (Scotland) Act, 1970, and Government spokesmen at that time stated that the effect they were seeking was to avoid introducing a new and untried definition of agriculture. Therefore, there is not a shred of doubt that the buildings to which the Bill relates are agricultural in character. By the action of the Opposition when they were in government, in relation to the 1970 Act, this has been acknowledged.
  Turning from the law to farming practice, I have taken the chance of checking on the proportion of currently rated livestock buildings which are found on farms.
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  There is a tiny class of landless or virtually landless buildings in urban areas which are arguably, in terms of what I said earlier, non-agricultural in character. But it is precisely those buildings which we have in mind to exclude from derating by the provisions of the Bill in that we require that they should have five acres of agricultural land contiguous to them.
  On the figures for Scotland available to me, there are some 1,300 holdings in Scotland on which at least one livestock building is rated. Of these, 1,100 exceed 10 acres in extent and the majority are much larger. Therefore, this shows the barrenness of the Opposition's suggestion that we are dealing with non-agricultural activities in practical terms. As to the effect on other ratepayers, I need say no more than what I said earlier—I hope that the hon. Member for Motherwell (Mr. Lawson) will take note of this—that the rates payable on buildings to which the Bill applies account for one-twentieth of 1 per cent. of the total rates yield.
  The Opposition Motion is clearly nonsensical, but I should like to commend hon. Members opposite for tabling it. It has served one purpose at least. It is right that the farming industry should know how it is regarded by the main parties which are represented in the House. The motion clearly demonstrates a failure on the part of right hon. and hon. Members opposite to comprehend the realities of modern farming and shows their ignorance of its practices and the extent to which the Opposition lack sympathy for its aims and objectives.
  Even for this, if for nothing else, I know that the Bill will be of great benefit, not only to the agriculture industry but to our food production generally. I hope that the House will regard the Bill as a useful and constructive Measure.
  7.38 p.m.
  Dr. J. Dickson Mahon: I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  "this House declines to give a Second Reading to a measure which, in rewarding those engaged in intensive animal production of a kind which can in no sense be called agricultural, penalises the ratepapers as a whole."
  I congratulate the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) on joining in our debates on rating, even though, from what

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  he said, one would think it was an Agriculture Bill. We are discussing a Rating Bill, and the long title makes it clear that we are discussing an alteration in the rating system.
  The hon. Gentleman founded his case for the Bill on two very substantial arguments. I dismiss for the moment his third argument about fulfilling an election promise. One can hardly look at the election promises given in the Conservative manifesto and say that this is a fulfilment of those promises. I have no doubt that there are many farmers who feel uncomfortable about the Bill and that the Tory Party has gone far too far in this case. I shall return to that third argument shortly, since the Minister of Agriculture dissents from this comment.
  The hon. Gentleman devoted most of his speech to justifying the Bill on two fundamental points and simply dragged in the reference to the Tory Party in the middle of his speech, a section which lasted but one minute. Whether the hon. Gentleman is fulfilling his pledge or not, I shall come to later. I want to comment an his two principal arguments. First he argued that this particular section of the agricultural industry was penalised—that was his own word. At the end of his speech he made clear that the word "penalised" was a pretty hefty word. The hon. Gentleman went on to say that sections of the industry were going out of business and that there were bankruptcies all over agriculture because of the absence of a Bill of this kind.
  Mr. Peter Mills: He did not say that at all.
  Dr. Mabon: What is going out of business if it is not a near bankruptcy or bankruptcy? He said that this section of the industry was failing to expand and that, in consequence, there was a soaring import bill which would be even greater if something was not done quickly.
  This mountain of argument is used in relation to £1 million. The industry is embarrassed by additional taxation of £1 million, albeit one-fifth of it in Scotland. That is said to be the reason why people are going out of business, failing to expand and causing a soaring import bill. In suggesting that, the hon.
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  Gentleman is guilty of collosal hyperbole.
  We are not debating a crisis in agriculture. We are debating a certain change in industrial rating, which is claimed to be an anomaly. We are not debating the fortunes of sections of a great industry about to crash. It is sheer exaggeration to suggest that that is the position.
  The hon. Gentleman lectured us towards the end of his speech and said that the £1 million that is involved represents half of 1 per cent. of the total rateable income and, in the case of Scotland, about £172,000 out of the total rating resources of about £200 million. But surely the obverse is also true. It cannot affect Scottish agriculture signicantly, and it is ridiculous to argue that this is a magnificent economic reform.
  The hon. Gentleman has tried to make a case on behalf of the Government that this Measure is designed to rectify a state of affairs in the industry, to save it from perishing or going into a decline, or at least to help it to expand.
  Mr. Buchanan-Smith: I wish that the hon. Gentleman would not exaggerate. He is putting his own words into my mouth. I said that it had the effect of hindering the adoption of modern methods, and it would lead to the necessity to import replacement livestock.
  Dr. Mahon: I will look at the hon. Gentleman's speech again, and no doubt he will do the same.
  The hon. Gentleman promised to give us the names of the bankruptcies in Scotland——
  Mr. Buchanan-Smith: I did not.
  Dr. Mabon: He said that he could mention a number of examples of bankruptcies in Scotland. No doubt we shall have some examples in Committee, But, names apart, can we have some figures about the development of intensive animal production units in Great Britain? We have been given no figures tonight. One would imagine that the industry which had improved and expanded considerably since 1956 had suddenly fallen upon evil days in 1963, when the first case came before a court, and that there had been a series of calamitous judicial

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  decisions thereafter which had caused sections of the industry to go out of business or fail to expand. Surely we can be given some figures showing the position of the industry.
  My figures do not suggest that this section of the industry has failed to expand. It appears to be doing quite well. It may be true that it will do better with the passing of this Bill. But surely it cannot be suggested that the industry needs saving and that this Bill is the way to do it.
  I realise that it is difficult for a Minister in charge of agriculture to make a speech about rating. No doubt the Minister for Local Government and Development, who is not a farmer, will be good enough to give us an agricultural appreciation of this section of the industry and its development over the last 10 years. However, the Under-Secretary has described the state of the industry and the evil influence of this part of our rating law. Is it true that this Bill will suddenly let free the forces of expansion and dynamism and save us from a soaring import Bill? I look forward to the hon. Gentleman's dissertation. I for one will appreciate even five minutes, and will appreciate some figures even more than his eloquence. Can we be given some figures about the development of intensive factory farming and its importance in relation to this Bill?
  From time to time, the Under-Secretary of State has spoken about anomalies in the rating system as they affect agriculture. The hon. Gentleman gave us three examples tonight, of which the third was the whole point of the Bill. At other times, in Committee, he has given us different examples. This Bill is not just an economic measure to rescue a section of industry which is now in distress. It is to rectify anomalies. The justification for the Bill is that it brings us closed to equity as between one section of agriculture and another.
  When the Scottish Grand Committee was considering the Valuation for Rating (Scotland) Bill which later became the 1970 Act, the hon. Gentleman for Edinburgh, West (Mr. Anthony Stodart) said:
  "A pig is an agricultural subject until four months old. Then, with the shadow of the bacon factory lengthening across its path it
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  becomes industrial."—[OFFICIAL REPORT, Scottish Grand Committee, 11th November, 1969; c. 12.]
  That is the hon. Gentleman's claim of an anomaly. He is entitled on that Bill or any other to maintain that it is an anomaly.
  The hon. Member for North Angus and Mearns later asked, "But what about agricultural research buildings? They are an anomaly and should not be rated, either." Then there is the argument that premises where food is prepared should not be rated. Finally, we have the one about the building in which allegedly well off agricultural workers leave their cars——
  Mr. Mills: Why should not they have cars?
  Dr. Mabon: Of course, they should. I am merely quoting anomalies cited by the Under-Secretary. When he was in Opposition he said that all these anomalies should be rectified. In this Bill, I wonder whether we are trying to rectify all the anomalies in agriculture as he promised.
  If this industry needs help, we do not turn to the rating system to secure it. We turn to the farm price review. If the industry needs help, the first question must be how much help it needs. Is £1 million enough? Is that the last demand that the industry will make to get on its feet? If that is the case that it needs £1 million, is this the right way of doing it? There are subsidies for fertilisers, lime, ploughing. field beans, field drainage, calves, beef cows, hill cattle, hill sheep, winter keep, silo, small farms, and business records. I am told that lame ducks are not on the list. It is perfectly legitimate, since we introduced the 1946 and 1948 Acts for Scotland, for us to say that if agriculture needs assistance, we will give it and that there are ways and means by which it can be done. This is not fairly one of these.
  The hon. Gentleman said that farmers would judge from a Bill of this kind the attitudes of the two parties. My party can be proud of what it has done over the years for the agricultural community. This tiny little Bill does not add very much to the agricultural industry or to the position of the industry vis-àvis its competitors overseas.
  Mr. Brewis: Was not the hon. Gentleman's Bill exactly half this tiny Bill? Did not it give only 50 per cent.?
  Dr. Mabon: Yes. We accepted that since these buildings were classed as industrial, they should be put on all fours with all other industrial buildings in Scotland. Our Bill was founded on the principle of equity.
  This Bill is unprincipled. There is obviously no principle behind it. I shall come to the Tory Party's promise later. I wish at the moment to stick to the anomalies.
  There are many anomalies in the rating system. I have mentioned some minor anomalies in agriculture. There is the substantial anomaly, no doubt endemic in the valuation system, that if one improves one's house one is penalised. Perhaps this is too much to swallow in one Bill. I certainly agree that this is the wrong Bill.
  District valuers of the Inland Revenue in England and Wales provide one method of valuation in England and Wales; Scotland has local assessors under Government control. Has anybody ever studied the two systems to see which is the better, if they are both the same, or if there is a correlation between them which is adverse to England and Wales or to Scotland? This is possibly a big anomaly in itself.
  There is the anomaly often referred to by my right hon. Friend the Member for Kilmarnock (Mr. Ross) as the synchronisation, or rather the lack of it, between the two systems whereby rating and valuation Bills and more important valuation reviews affecting Scotland are often out of time with those of England and Wales. Indeed, sometimes it is to our distinct disadvantage, and perhaps in others to our advantage, though I doubt it. This is a Rating Bill, not an Agriculture Bill. Surely that is a big anomaly. Is not that worth a lot of votes? Is it not worth a Tory promise? Is not that worthy of rectification?
  What about commercial derating? Where is the Under-Secretary of State for Health and Education who used to make those lurid violent speeches—that is the only description one can give of them—about the wickedness of the Labour Government in maintaining the present commercial system of rating in
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  Glasgow and other great Scottish cities. The hon. Gentleman demanded, with many many others, the setting un of a special committee to deal with commercial rating in Scotland—the Anderson Committee.
  That Committee reported last October. It was hoped that its recommendations would be considered by the Government and put into a new Rating Bill. But there is no mention in the Bill of the effects of the recommendations of the Anderson Committee. Are all those speeches about commercial derating in Glasgow to melt like snow off a dyke in summer and the great claims of the House of Fraser to have equity disappear also? What ingratitude is here when one thinks of the money raised by the House of Fraser in the past for the Tory Party in Scotland?
  Then there is domestic derating. The Tory Party has halved the amount of the domestic derating coming from the reform of local government finance which we instituted in our years in office and provided for in the last rate support grant order.
  Mr. Martin Maddan: It has not been halved. It has increased this year as in previous years, but not by as much. It has not been halved.
  Dr. Mabon: The hon. Gentleman has missed my point. In England regularly it was 5d. increase. I believe that it is now less than 2½d., or slightly more—[An HON. MEMBER: "Rubbish."] When we debate the Rate Support Grant Order for Scotland we shall expect to have the same treatment meted out. My information is that the regular increase has been halved from 10d. to 5d. in Scotland. I am interested in Scotland as well as England. I am advised that it has been changed in the Rate Support Grant Order.
  My point is that here are a number of other subjects which ought to have been considered in a Rating Bill. The local government associations all over the country tell us that this constant nibbling away at the system is narrowing the base of our rating system and, with the need for fresh sources of revenue, they are becoming alarmed at this process.
  I find it incredible that the hon. Gentleman the Member for North Angus and Mearns could touch on the Bill without touching on local government finance as

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  a whole. It is incredible to think that we are to have a paper on Wednesday or Thursday of this week announcing a reform of local government in Scotland—at least the Government's thinking on the Wheatley Report—to be accompanied, we understand, by a White Paper on Redcliffe-Maud by the Ministry over which the hon. Member for Crosby (Mr. Graham Page) presides. This very week we shall, therefore, be looking at the Government's proposed changes in the structure of local government. I should have great joy—but I shall not detain the House much longer—in quoting sections of speeches made by hon. Gentlemen opposite demanding that, with the White Paper on local government reform, there had to be—not there ought to be or there should be or please may there be, but there must be—a Green Paper or a White Paper on local government finance. If it is the case that there should be a White Paper on local government finance, why is it necessary to make changes in the Rating Bill, however minor in practice but substantial in principle, at this time?
  Redcliffe-Maud on this subject, in paragraph 539, says:
  "An important reform, and one obviously desirable from the local authorities' point of view, is the re-rating of agricultural land and buildings, whose exemption from liability to rates will seem even more anomalous when authorities uniting town and country are set up."
  This Bill is really one in the eye for Redcliffe-Maud. The Government do not even wait for any of these matters to be published or discussed they just precipitately introduce a Bill of this nature.
  If the hon. Gentleman is unmoved by that reference to an English Committee, may I appeal to him, on nationalistic grounds, to consider the Anderson Committee, Cmnd, 4366, which, in paragraph 62, on commercial derating—it looks at a wider compass than its own remit—says:
  "Having regard to the financial support which agriculture now receives from the Government and in view of the need, with steadily rising local expenditure, to maintain the widest possible rating base, we feel that a review of the provisions of section 7 of the 1956 Act is required. Even if it endorsed the continuance of agricultural de-rating, it would serve as a reminder that such de-rating was
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  not necessarily a permanent feature of the rating system."
  Therefore, these two Committees—no doubt much of the evidence can be adduced in support of the argument—point to the fact that we are on the brink, or ought to be, of a substantial reform of local government structure and finance. So why are we introducing a Bill of this nature restricted in its nature and inequitable to ratepayers as a whole?
  The answer is given in the hon. Gentleman's speech in the section dealing with the Tory Party promise. The hon. Gentleman spent only one minute on this The Tory Party manifesto says:
  "We will free from rates all buildings which a farmer uses for producing food from his land."
  Why all intensive livestock production buildings? Why is it so sweeping in the Bill? The Bill goes substantially further than the Tory Party's promise. It is very good that a party should fulfil its promise, but why to the point of distortion so that the very promise hurts the people that it was meant to serve? Are all these units owned by bona fide farmers? Will the agricultural community stand up for all these producers? I am told that not even a majority of those concerned are genuine bona fide farmers. The Tory Party, therefore, to fulfil a promise, is bringing in with precipitate haste a Bill which substantially deals with a section of the community which is not within the true definition of the word "agriculture". In time farmers are bound to see that this is not a good Bill. Certainly it is of limited benefit for the present to farmers. But it is a bad Bill in principle. I hope, therefore, that the House will see it that way and oppose it.
  7.59 p.m.
  Mr. John Stradling Thomas: Thank you, Mr. Deputy Speaker, for calling me in this debate and for giving me the opportunity to make my maiden speech in this House. I seek the traditional indulgence and tolerance for which the House is renowned towards maiden speakers.
  Although I am often referred to as the hon. Member for Monmouthshire, I have formally to decline the distinction, because I am in fact the Member for Monmouth, and I might say that no man

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  could ever represent a more beautiful, varied and interesting constituency. To the east we look to the Forest of Dean and the rich lush meadows of England, and to the west to the soft green hills of Wales. It is from this position as a border county that we derive our sense of pride in our unique position which is best summed up in the words England, Wales and Monmouthshire. Small wonder that the county's motto Utrique fidelis, Faithful to both, should illustrate our double allegiance to both England and Wales.
  It is with great pleasure that I should now like to refer to my two predecessors as Members for Monmouth. My immediate predecessor was a yonng man who gained the highest regard and affection of all those who met him, and who represented the Monmouth constituency well during the period from 1966 until June last year. I know that there are many hon. Members on both sides of the House who will join me in wishing him well in his new career.
  But for over 20 years the Monmouth constituency was served by, in fact the name of the constituency was almost synonymous with that of, Peter Thorneycroft, who now, as Lord Thorneycroft, sits in another place, and I am glad to say still makes a contribution to the public life of this country. I am very proud to follow a man who has made such a significant contribution to public affairs.
  I should now like to turn to the Bill that we are discussing and to the Amendment which has been tabled in the names of the right hon. Member for Grimsby (Mr. Crosland) and his hon. Friends on the Front Bench opposite. I listened with admiration to the eloquence of the hon. Member for Greenock (Dr. Dickson Mabon). His quotation about the little pig going to the bacon factory almost drew a tear from my eyes. But despite his strictures—and they were hard on my hon. Friend the Member for North Angus and Warns (Mr. Buchanan-Smith)—I still look upon the Bill, which the hon. Gentleman seemed to castigate severely for being inadequate, as fulfilling a pledge. The hon. Gentleman is obviously an all out derating man—that was the implication of his speech, which I found most interesting—but I nevertheless look upon this Measure as
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  a welcome example of the way in which the Conservative Party honours pledges given when in opposition. I gave this pledge on the faith that I had in our leadership. I therefore welcome the Bill, because it honours a pledge that was given by me on behalf of my party, and I like to see pledges honoured in this era when so much of political affairs is looked upon with cynicism by so much of the electorate.
  If there were no other justification for the Bill, it would undoubtedly be justified on the ground put forward by my hon. Friend the Under-Secretary of State, that the law on this subject has got into a quite incomprehensible tangle. I assure the House that I wish no disrespect to it when I say that at one time noble Law Lords—and I hasten to add that I wish no disrespect to another place—were sinking deeper and deeper into the fertiliser. Those who are familiar with the earlier cases will appreciate the point that I am making. They extricated themselves with some difficulty, but there is still undoubted confusion, and on those grounds alone the Bill is deserving of support.
  But there are other grounds. The present state of the law is frustrating the intention of the 1928 legislation which derated agricultural buildings in England, Wales and Monmouthshire, and it is important to note, as has been referred to briefly, but not taken up by hon. Gentlemen opposite, that in the present state of the law it is not only the intensive farming buildings which they dislike so much, but many of the traditional forms of agriculture, which are in peril of becoming rated, and I point out that although when we are talking about the global total of the effect of this on the total of rate revenues this seems a miniscule amount, when the point is made that £1 million is a small sum to return to the industry, what is important, and it cannot be denied, is that many farmers are making miniscule profits at the present time, and have been for some years.
  Under these circumstances, the full pressure of technology has had to be brought in aid under economic stress, and it does not need very much to topple the small man. My heart does not bleed for the big man, but I certainly think that many hon. Members, on both sides of the House, with agricultural constituencies

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  will know of many people who are in peril of having to bear a rate burden which was never intended, and who cannot afford it.
  It seems to me that the Amendment attacks the problem in the wrong way. It tries to make out that intensive animal production is not agricultural. This seems to me to be indefensible. Animal production for the purpose of providing food must, by definition, whatever adjective one uses, be an agricultural process, and when one appreciates how small the number of people in this country who are now engaged in agriculture is, and who meet so well the tremendous requirements of urban and industrial populations, it seems entirely wrong to set about attacking a rating Bill which sets out to relieve this sector by bringing in questions of farming practice which are described so often as factory farming.
  I yield to no one on either side of the House in my views on factory farming, but let us get this clear. Under the previous Government—and I pay tribute to them—codes of practice for animal welfare were introduced. It is our duty, therefore, not to confuse the issue by bringing in arguments about derating. It is our duty to look to those codes to see that they are properly carried out, strengthened as time will permit, and ultimately brought up to a standard of animal production of which we, the public and the farmers can be proud.
  I conclude by making two brief points to my hon. Friends. The first is about the loss of revenue. We know that the loss of rate revenue throughout the country is relatively small, but—and this is the difficulty—this loss will fall in the main on the poorer, smaller rural authorities, and I therefore ask my hon. Friends—they will be bringing in measures on local government finance—to look at this matter with a view to helping those authorities out of the difficulty, because I remind them that a little fertiliser spread around does a lot of good, and this help is needed by these authorities.
  Finally, I would draw attention to the problem over the word "solely" in Clause I, which refers to a "substantial part of the time". Trying to take the House into Committee would not be permitted, but I believe that this definition should be carefully looked into, because
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  there is a possible misunderstanding which could throw the courts and the law back into confusion. I hope that we will look at this line very carefully in Committee.
  I thank the House for its courtesy and the attention with which it has listened to me and I urge hon. Members on both sides to support the Bill.
  8.11 p.m.
  Mr. Raphael Tuck: I first have the very happy duty of congratulating the hon. Member for Monmouth (Mr. John Stradling Thomas) on an extraordinarily good maiden speech. In a small compass, he showed a picture of Monmouth which was far better than the most florid poster put out by the Western Region of British Rail. He has convinced me that I must go to Monmouth some time.
  Secondly, he gave his speech with a fluency which is extraordinary for maiden speakers. He made a telling speech, and I envy him. One hears hon. Members halting in their speeches and one has sympathy with them. I have no sympathy with the hon. Gentleman at all. He made a wonderful speech, and I think that we all hope to hear many more speeches in that vein from him—although I do not say that I agree with what he said.
  The part of the Bill to which I object is Clause 2, which would have the effect of freeing intensive livestock buildings from rates. It exempts buildings used for keeping and breeding livestock provided that they are surrounded by or adjoin an area of not less than five acres of agricultural land. This is a direct incentive to factory farming at the expense of the community, which will have to make up the saving in rates, and it will force the ratepayer to subsidise factory farming by an estimated £1 million a year.
  Broiler chickens and eggs are already being over-produced in Western Europe and America, and this results in hundreds of millions of £s being spent annually in trying to get people to eat more. Furthermore, in America there are many other ways of using eggs. The demand for eggs may be, and very often is, the demand for free range or semi-intensive systems. This Bill will free the giant

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  units from rates, and this will put more and more farmers out of business.
  I do not know whether the House has read Ruth Harrison's book, Animal Machines. Since it was written, conditions in intensive units have become considerably worse. The House may remember that the Brambell Committee made certain urgent recommendations, including a statutory prohibition of debeaking, spectacles and blinkers for laying hens, a prohibition of the docking of pigs' tails, a prohibition of the keeping of pregnant sows without exercise, of yoking and close tethering of calves.
  The Committee did not like the diet for calves, which was iron-deficient. It did not like depriving animals of bedding or the overcrowding of livestock. Not one of these recommendations for statutory control has been implemented. In addition to the white veal industry, there are units today containing hundreds or thousands of sow stalls, where these animals are kept and where they spend virtually the whole of their lives without even being able to turn around. We are threatened today with the battery-caged pigs and the Unicar system for cows, which keeps the animals immobilised on a wheeled contrivance which takes them to the milking mechanism and back again.
  These intensive units are a reservoir of disease. The Houghton Poultry Research Station did a flock survey, which revealed that 90 to 95 per cent. of birds had been infected with Marek's Disease, a form of cancer precipitated by stress. Also, of course, fowlpest casualties are very high; in January 1971, they topped 25 million.
  The hon. Member for Monmouth referred to the House of Lords in its judicial capacity. It held, in the case of Eastwood and Herrod—Herrod being the valuation officer—in February, 1970, that the 1928 Rating Act was intended to benefit agriculturists but not those conducting commercial enterprises where the use of agricultural land played only a small part in the enterprise. The buildings in question, which were broiler units, were held to be far outside its scope. Their use, said the House of Lords, was in no way ancillary to the agricultural operations on the land.
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  The intention of Clause 2 is to reverse this decision and enable giant producers to take over more and more of the agricultural industry and turn firms into nothing more than biological factories. I do not know whether the House knows that Belgian producers are threatening to burn down poultry units which these giants succeed in erecting in Belgium.
  I believe that the British people should be protected from this proliferation of factory farms. Many of them—including myself—detest them. In addition to being ethically indefensible, they are now producing a surplus of food. They are a threat to the health of the community and to the physical and moral welfare of those who work in them. This has been made clear by a report of the National Union of Agricultural and Allied Workers, which has given instances of lumps and chest and skin infection in workers. The report talks of a dehumanised outlook, especially among girls and married women.
  I am of the opinion that this Clause, far from offering protection, will force the general public to encourage this system. I would ask hon. Members opposite to consider amending the Bill so as to exclude from derating any buildings in which animals or birds are confined with no access to outside runs.
  8.18 p.m.
  Mr. John M. Temple: I start by congratulating my hon. Friend the Member for Monmouth (Mr. John Stradling Thomas) on a brilliant maiden speech. The commendation of the Bill which he gave was excellent, but when he sought to rescue the Law Lords from the midden, that was something of which we should take note and which would be a commendation in itself for passing the Bill.
  I should like to welcome the Under-Secretary of State for Home Affairs and Agriculture, Scottish Office, to the exclusive society of those who speak on rating Bills. There seems to be a tremendously wide interest in this Bill. Of all the Rating Bills on which I have taken part, this is one of the few which shows some consistency, which I commend in that what it seeks to do is bring all agriculture, including intensive production of livestock, within the ambit of derating, so that, for once in a way, we

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  shall as far as possible be free of court decisions, just because the Bill is so all-inclusive.
  Perhaps I should declare my interest, because I am a farmer. I am not a particularly intensive farmer. I have been visited by the Animal Welfare Society and I believe that my farm passed their inspection. I am also a member of the National Farmers' Union. In case the House should think that I am overbalanced in one direction, I may say that I am a Vice-President of the Association of Municipal Corporations, and of the Rural District Councils Association and I normally find myself speaking for the County Councils Association! I hope that in this debate I shall be able to maintain my equilibrium.
  Agricultural derating goes back to the depression times of the 1920s, and I can assure the House that things have moved on at a tremendous rate since those days. In the 1920s, we had horse and steam ploughs. Dairy maids sat on three-legged stools under the cows, pulling the teats, and the farmer's wife went round the farm with a bucket full of corn to feed the hens and came back with the same bucket full of eggs! We have moved into a different era, with the multi-furrow tractor plough, machine milking, and now the automated hen from which the egg emerges and disappears direct to the packing station.
  What the Government are doing is to acknowledge this step forward in the intensive production of livestock. The Government need not be at all afraid of that. I do not think this is a debate into which animal welfare should enter. There will be a time for discussion of animal welfare and the intensive keeping of livestock. I am sorry that the right hon. Member for Anglesey (Mr. Cledwyn Hughes) has now left the Chamber because he was responsible for the codes of practice relating to the keeping of animals under intensive conditions. Those codes are under review at the present time. I have given evidence to the Hewer Committee, and no doubt in due course those codes will be brought up to date.
  The intensive keeping of livestock is something which we have got to live with. Anybody engaged in agriculture knows that farm buildings today are constructed with the idea of multi-purpose usage. At
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  one time a building may be used for keeping cows, and on other occasions it may be used for pigs, sheep and fodder. I commend this flexibility. This outlook is endorsed in the Bill. The Bill provides for ancillary use of these buildings. I am sure that nobody would wish agriculture to be hamstrung by having one use attached to a particular building. It is important that these buildings should be utilised for 365 days in the year. They must be adaptable to the varying conditions of agriculture.
  It is for that reason, knowing that it is impossible to draw the line with regard to derating, that I accept what the Government have proposed. There is no need to draw a line. We must make this Measure all-inclusive.
  I am aware of the local authority association's views. Representations have been made to me and I shall refer to them in a moment.
  Last night I read something rather interesting in "Country Life". I always use "Country Life" instead of a sedative before I go to sleep. I was looking at a picture which showed a new oyster hatchery on Loch Creran, Argyllshire. A caption under the picture states:
  "The hatchery has a high export potential in processed oysters and oyster seed."
  No reference has been made to the fishing industry, but an oyster is livestock, and if hon. Members opposite press their Amendment they will lift from derating a rural industry which has been set up in Scotland in order that oysters may be bred on the banks of Loch Creran. I should think that when the news gets to Scotland that hon. Members opposite are against derating of that kind of building, there will be very severe criticism.
  Dr. Dickson Mahon: Would the hon. Gentleman tell us what is the rateable value of that oyster fishery and how much is paid in rates?
  Mr. Temple: I cannot say how much is being paid in rates, but I can tell the hon. Gentleman that the grant to that factory by the Highlands and Islands Development Board was £180,000. [Interruption.] I do not regard the production of oysters in a small establishment on Loch Creran as having anything to do with factory farming.
  Mr. Burden: It is not livestock.
  Mr. Temple: It is livestock.
  Mr. Burden: Not under the definition.
  Mr. Temple: My hon. Friend the Minister for Local Government and Development, who is the high priest in these matters, will soon clear up this matter, and we shall know whether I am right or wrong. The Rural District Councils Association informs me that fish hatcheries are within the ambit of this Bill for derating. Therefore, an oyster production unit certainly is.
  I said that I wanted to be fair in this matter and, having spoken for agriculture, I should now like to say something about the position of the local authorities. It is true that the contribution in the form of rates to the local authorities through the present rating of agriculture is very minimal. I use the word "present" because there is no doubt that there is "creeping rating" at present in agriculture. No one can say where the word "intensive" finishes and the word "extensive" starts. That is what this Bill is all about.
  Nevertheless, in some of the rural districts the impact of derating will be considerable. Whilst it has not been possible to get in touch with many rural district councils, the Southwell Rural District Council, which is in Nottinghamshire, will suffer a diminution of the order of a 4d. rate as a result of the Bill. I reaffirm what has been said from the Opposition Front Bench, that the local authorities are anxious about the erosion of the rate base. I share their anxieties.
  I would have wished that this Bill and previous rating Bills had been more extensive in character. There are many other anomalies, some of which have been referred to. I should like to mention one or two cases in which these anomalies should be picked up. No doubt, they can be picked up by my hon. Friend in his Green Paper. There should be no distinction between the rating of fixed and moveable plant in industry. That is an outdated distinction. Equally, I do not think that if charities are to be helped, they need be helped by all other ratepayers. In other words, the rating of charities should be reconsidered. Again, the nationalised industries are rated on a formula basis, and I do not believe that the formula really takes into
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  account the true earning power or worth of the nationalised industries.
  Mr. English: The hon. Gentleman mentioned Southwell, in Nottinghamshire. Is he aware that the point he makes is highly relevant because South-well has a cathedral of ancient vintage, which is part of the reason for its low rateability.
  Mr. Temple: I was not aware of that, but the 4d. off the rates is entirely in respect of the derating of agriculture.
  We must face up to the consequences of this total derating of agriculture. Agriculture is not, and I hope never will be, the depressed industry that it was in 1928, but significantly in 1929 there was a direct contribution by the Treasury in lieu of rates to the rating authorities. This only persisted for a few years and was allied to the contribution in respect of the derating of industry which took place at that time. We are now facing a moment in time when the whole of the support system in agriculture is being changed, and we should take this into account.
  It is significant that we may be joining the European Economic Community, and that the Irish Republic also has an application to join. In the Irish Republic, agriculture and all that goes with it, is rated. I believe that on the Continent of Europe there are property taxes—they are not called rates but property taxes—so it behoves us to look at the consequences of the Bill in the context of possible entry into the European Economic Community.
  Having taken part in rating debates over quite a number of years, I well remember my right hon. Friend the then Minister of Housing and Local Government—now Lord Brooke of Cumnor—in 1958 or 1960 giving as the reason for the non-rating of agriculture that it would take eight years to value all the hereditaments in the agricultural sphere. That was then a fact, and it was never contraverted.
  I think that my right hon. Friend was correct at that time, but no Government since then have ever sought to do away with agricultural derating nor would I myself seek to do it. On the other hand, I believe that there is an urgent need for local authorities to have further rate

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  revenue, and what I would like looked at by my hon. Friend the Minister is whether in lieu of the derating of agriculture some support could be given by direct means to the local authorities.
  We have examples of this in the Central Electricity Generating Board, the gas grid and the water undertakings, whereby these vast undertakings, which cover the whole of the country, are for rating purposes assessed on a formula basis and another formula takes care of the redistribution of the money gathered in over the whole country. Local Government finance experts are considerable wizards when it comes to formulation and formulæ, and it cannot be beyond their wit to suggest both the global sum and the distribution of that sum.
  I believe that that sum of money could perfectly well be obtained through an addition to the import levies, because it is at this present time that my right hon. Friend the Minister of Agriculture is looking at the whole system of agricultural support. Therefore, it seems to me to be a "natural" when the whole system of agricultural support and the whole system of local government finance are being looked at, that this proposal should be closely examined.
  I do not suggest that agriculture should be rerated, but that there should be a contribution in lieu of agricultural de-rating which should be made from the agricultural support system spread over, particularly, the county district councils—that is, the rural and urban district councils, which are now the greatest losers in respect of agricultural derating. A very much more equitable state of affairs would be arrived at for the ratepayers and also for the industry, because as we enter the E.E.C. there will be no suspicion whatever that agriculture was being given a hidden support through derating which has operated down the years.
  I hope that in a brief speech I have managed to retain my balance. I am wholly in support of the Bill, but I feel that this is an appropriate moment to look rather more widely at and take into consideration the fact that ratepayers are entitled to a contribution in lieu of rates as a quid pro quo for agricultural derating.
  8.34 p.m.
  Mr. John Mackie: Like the hon. Member for the City of Chester (Mr. Temple), I have to declare an interest. I, too, am a farmer. I do not have the interests that he has in local authority associations but I pay quite a lot of rates so that I have an interest there as well.
  I must emphasise that this is not a debate on intensive farming. I know that my hon. Friend the Member for Watford (Mr. Raphael Tuck) and many hon. Members on both sides have ideas on that subject, but this is not the place for arguing the pros and cons of intensive farming, and I hope that the debate will, as I think it should, be directed at what the Government are doing.
  Mr. Arthur Lewis: With respect, my hon. Friend the Member for Enfield, East (Mr. Mackie) has made a statement which cannot be borne out by the facts. This is a debate on intensive farming, because it is those very intensive farmers who, under the Bill, will be derated. Intensive farming is, therefore, obviously relevant.
  Mr. Mackie: Very well. If my hon. Friend will exercise a little patience, I will come to that point in due course.
  I congratulate the hon. Member for Monmouth (Mr. John Stradling Thomas) on his maiden speech. He was very cool, calm and collected. I am sure that the whole House will look forward to hearing him again, although most hon. Members like other hon. Gentlemen to sit down as quickly as possible so that they can have a chance to speak.
  On the matter of interpretation, the hon. Gentleman mentioned "intensive" and "factory" farming. I call myself an intensive farmer but by no manner of means a factory farmer, because I produce more food than I need to feed all the animals that I have although I keep them intensely.
  I call a factory farm one where animals are kept with practically no land. The animals live in buildings on an area of concrete. All the food they eat is brought from abroad or elsewhere. The farmer does not produce any food. That is what I call factory farming. There is a possibility that factory farming could be non-intensive, although I can hardly think of

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  an occasion when it could be non-intensive, unless one could look to the old milking sheds in Glasgow and Edinburgh in which they kept the cows: they kept them in the normal way and they brought in all their food. Any number of what I call "normal farmers" growing all their own food are intensive farmers, but I cannot imagine any such farmer, unless he is on a very small scale, being a factory farmer. I think that this distinction should be borne closely in mind in this discussion.
  The next thing that this debate is not about is whether agricultural land and building should be derated. There is an Act that says that they should be. I think that my hon. Friend the Member for Motherwell (Mr. Lawson) thinks that agricultural land should not be derated; but this debate is not about that question. If there is to be an argument about that, it should not be conducted tonight on this Bill; it should be conducted at some other time.
  The argument tonight arises on the attempt to put right the various anomalies which were mentioned by the Under-Secretary for State. I will not go over all those anomalies again. Suffice it to say that they exist. There are all the different interpretations which have been placed on the wording of the derating Acts. This debate is about the Government's plan to iron out these anomalies and the different interpretations.
  These differences arose from the development of intensive livestock keeping and the use made of such methods in starting factory farms. The Under-Secretary mentioned the word "solely". That word cost me about £100 a year in Scotland. Nevertheless, "solely" was put in, and livestock in buildings had to be husbanded along with the land attached to the farm. Many intensely-kept animals are never out at all; it was argued that they were nothing to do with land and were, therefore, rated.
  Factory farmers were used as an example, and more and more "normal" farmers had their stock buildings rated. As the Under-Secretary says, from then on it became obvious that some non-intensive stock keeping could also become rated. I could mention people buying bullocks in the back end, keeping them all winter, and selling them before they
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  go out in the summer: that could become rated, as could normal pig-keeping. So quite a lot of this happened and was happening, and I agree that something had to be done about it.
  The Under-Secretary was taken to task by my hon. Friend the Member for Greenock (Dr. Dickson Mabon) about his depressing tale of people going bankrupt and their being no increase as a result of rating these methods of production. The sections which are mostly concerned are chicken meat, egg production, pigs and beef. The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food has just conducted a census, and we find that the production of all four of those categories is increasing. As the Member for North Angus and Mearns (Mr. Buchanan-Smith), the Under-Secretary of State, must know, in Scotland, as in his own constituency, intensive beef raising has increased greatly. He may have a point if he suggests that it might have increased more—I do not know—but he certainly cannot say that it has not increased, and neither can one argue that farmers have gone out of it.
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Anthony Stodart): The hon. Member for Enfield, East (Mr. Mackie) has said, as did his hon. Friend the Member for Greenock (Dr. Dickson Mabon), that my hon. Friend the Under-Secretary of State said that farmers were going bankrupt. He did not say that. He said that they were going out of business because of rating. The hon. Gentleman must know of the well known and widely reported case of the calf unit in Midlothian which could not afford to carry on; there was an on-cost of £1 per head on every calf because the unit was rated, and it went out of business. That is a typical example.
  Mr. Mackie: There may be examples among farmers who are, perhaps, a little timid. I wonder whether that unit was making full use of its buildings. From my experience, it seems a very high figure for what the rating might have been. I know that the word "bankrupt" has been used, and the Under-Secretary of State certainly spoke of people not coming into intensive livestock rearing and of a lack of growth in production by such methods. That is the point I

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  was on when I said that the figures showed that there has been an increase, particularly among stock generally kept by intensive methods.
  I agree that something has to be done to remove the anomalies. I see that my right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes) is in his place. He will recall that when we were at the Ministry of Agriculture we were sympathetic and we were discussing the matter with the rating authorities. There is an argument about who should be responsible, whether agriculture or the rating authorities, but we felt—my right hon. Friend made this point—that, with the reorganisation of local government and the whole rating system coming under review, it would be a mistake to tackle the matter piecemeal. Whether hon. Members agree with that or not, it was a perfectly reasonable view to take.
  Most of my fellow farmers were a little impatient, however, and the Conservative Party in its election manifesto promised, as my hon. Friend the Member for Greenock pointed out,
  "We will free from rates all buildings which a farmer uses for producing food from his land."
  Like my hon. Friend, I am all for keeping promises, but, as I see it, the Government have gone far wider than that promise, and they have left the door wide open for factory farming to escape rates altogether.
  The Under-Secretary of State pointed out that there is a definition of farm buildings and farms. Of course there is; but every building which holds livestock is a farm building under that definition, as far as I can see, and I do not think that the hon. Gentleman can escape from that. The Bill says that any such building will qualify if it is surrounded by or is contiguous to—I leave out the reference to roads and ditches and so on—five acres of land. Everybody who wants to come in under this can get hold of five acres of land, put tin his buildings alongside it, and have nothing but factory farming. I regard that as absolutely wrong. The Government have gone much further than they said, and they will now let in what are without question industrial buildings and factory farms to qualify for derating.
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  I am glad to see present one of the Ministers from the Department of the Environment. I am coming now to the crux of the matter and what I consider to be a major mistake by the Government. As the Minister for Local Government and Development knows, we have fantastic problems in the environment now. Everyone knows of the factory farming now going on in the countryside, with intensive units which have not sufficient land to get rid of the farmyard manure. whatever it may be—hen dung, pig dung, cattle dung—and everyone knows of the troubles this is creating in the countryside. Many Ministers have been tackled about it already. All hon. Members must have had letters from constituents complaining about the smell, the spreading, and everything else. It has been a major problem for the last 10 years, and all because of too-intensive methods on too little land. I cannot emphasise that too much.
  The hon. Member for Edinburgh, West (Mr. Stodart), who is now Parliamentary Secretary to the Ministry of Agriculture, knows perfectly well that there should be in the Estimates—I hope that it will be the top Estimate, though I am not sure whether it is still there—a sum of £350,000 for research into ways of getting rid of farm slurry and so forth. He pressed for such research time and time again when he was in opposition. Yet he and his Department are doing something now which will increase the difficulty, not help to solve it. I am convinced that the problem will now increase as a result of what the Government are doing. I appeal to the Government to think again about this.
  Some minimum figure far above that mentioned ought to be used. An area of building sufficient to allow a reasonable living to be made with enough land to take all the farmyard manure made by the stock on that land should be determined. I think that 25 acres is the minimum, going up pro rata from that. It could be reduced with larger acreages. Some such system could help prevent what has been happening in the last 10 years when there has been great difficulty in getting rid of farmyard manure.
  I can give some figures of the areas required. On my farm in Scotland on 700 acres we have 75,000 square feet of buildings, which gives room for a

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  broiler house, a herd of beef cattle, 240 feeding cattle, 120 sows and all progeny, grain and straw storage, 100 acres of potatoes and tractor and implement storage. On my Essex farm we have about 57.000 square feet, which takes an intensive beef unit of 500 head, 40 sows and followers, grain storage, food processing, straw and hay storage and tractor and implement storage.
  It might be necessary to vary this in different parts of the country but I do not believe that it would be difficult to administer such a scheme. Both hon. Gentlemen on the Government Front Bench are farmers, and they want to get stock back on the land and they want the farmyard manure to increase the fertility of the land. The method outlined in the Bill will simply exacerbate our problems, and I appeal to the Government to look at this carefully before Committee to see whether they cannot bring forward some other system.
  8.48 p.m.
  Mr. F. A. Burden: There has been an awful lot of double-talk in the Chamber tonight about factory farming, intensive farming and the fact that this Bill is a rating Bill and nothing to do with factory farming. I was surprised at the hon. Member for Enfield, East (Mr. Mackie), who said that he did not style himself a factory farmer. He has a broiler-house, and I think many people would consider him to be a factory farmer.
  My hon. Friend the Under-Secretary, in opening the debate, said the Bill would help our balance of payments by reducing our food imports of agricultural produce such as cattle and pigs. He will recall a debate in another place a few days ago about exporting live animals for slaughter abroad. It was said then that there were considerable exports of farm animals from this country for slaughter on the Continent. It seems that there is plenty of room for retaining exports of meat in this country instead of importing such produce.
  Whatever we may call the Bill, its effect is to implement a promise made in the last Conservative manifesto, namely, to
  "free from rates all buildings which a farmer uses for producing food from his land."
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  Those were the exact words. There was no mention of factory farming, or intensive farming; but the Bill will assist factory farmers. In answer to an intervention of mine, my hon. Friend has already agreed that the Bill in no way affects the traditional farmer. In 1967 the party opposite produced a rating Bill that prescribed, as the condition of eligibility for derating, that farm buildings had to form an integral part of a farm unit that included agricultural land. Only three years ago the last Government either did not accept the need for derating these buildings on economic grounds, or considered that on ethical and other grounds we should not open the floodgates to intensive farming that derating would help to release.
  My hon. Friend, who was one of the spokesmen on agricultural matters when in opposition and who is now Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, constantly pressed for these buildings to be derated. As recently as 12th March, 1969, he urged the Labour Government, in the strongest possible terms, to take action. Whatever hon. Members who are farmers may say, the Bill is a Bill to derate intensive farming units. Whatever may be said about it, it is clear that the question of the welfare of animals must be a subject for debate tonight.
  Mr. Ronald Bell (Buckingham, South)Mr. Ronald Bell (Buckingham, South)rose——
  Mr. Burden: I shall give way later to my hon. and learned Friend. He has only recently come into the Chamber—[Interruption.] He came in during the last speech.
  The intention of the Bill is to afford special financial assistance to people engaged in carrying on farming practices that are causing increasing concern to many members of the public. Some of the practices are abhorrent to those members of the public. The Bill removes entirely the previous requirement that farm buildings should be eligible for de-rating only if they are part of a farming establishment that includes land and are situated on that land.
  The intention of the Bill seems to be that any building used for the keeping and/or breeding of livestock will be eligible for derating provided that the

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  definition of livestock, as laid down previously, is conformed to. There is already a considerable burden of rates in this respect—I believe that it is now £1 million —and if there is a considerable intensification and growth of factory farming and new buildings are set up there will be an increasing burden on the rates.
  When in 1947 it was provided that in order to qualify for derating a building should be an integral part of a farm concept that included land, factory farming was no more than an idea.
  Mr. Ronald Bell: What I was going to say was that surely one of the purposes of the Bill is to get rid of the artificiality of that definition. May I put this to my hon. Friend—on the question of the building being an integral part of the farm land? He may remember that there was an hilarious moment at the end of the last war when it paid, for the moment, to buy fatstock at a controlled price, starve them, and then sell them as store cattle at the free market price. If one put these cattle into one of these buildings——
  Mr. Burden: Would the hon. and learned Gentleman put his question, please?
  Mr. Ronald Bell: How would my hon. Friend say that that is an integral part of the land, since all that happened was that the cattle were not being fed?
  Mr. Burden: That is all history. The hon. and learned Gentleman may or may not be right, but my main concern at the end of the war was at the fact that the war had come to an end. I was not engaged in manoeuvring the markets at that or any other stage, and we are dealing now with the present and the future, and not the past.
  In 1947, under the Act as it then stood, there was no control of the type, standard, size or condition of farm buildings in so far as they were within that area of land required by the Act. My hon. Friend says that there is none now, and that is one of the points I want to come to in a moment, because I think that this is utterly wrong. Surprisingly, this Bill, despite the fact that the name of the Secretary of State for the Environment heads the list of Ministers presenting it, appears to me to lay down no standards whatsoever for the buildings, but extends the
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  derating to any building provided that it is used for the purpose of the keeping and breeding of livestock. As I interpret the intention, the only restriction on these buildings is that they shall adjoin an area of not less that five acres of agricultural land or are contiguous with or surrounded by an area of agricultural land.
  In my view, this is very loose wording and capable of very wide interpretation, because "contiguous" means "adjoining" or "near", and "adjoin" means "near" or "contiguous". It does not mean that it is actually alongside. My hon. Friend the Parliamentary Secretary to the Ministry of Agriculture smiles. I hope he has done his homework, because if he has he will know, as one of my hon. and learned Friends has said, that this is the definition, and it has been subject to a court case. What is "near"? Two anthills would be near if they were two feet apart; two villages would be near if they were two miles apart. It is capable of very wide interpretation.
  Surely a better definition, and a more concise definition, and one which would be much more easily understood and less capable of misunderstanding, would be "abutting". I would ask my hon. Friend, in all seriousness, to go into this matter, because it really should be looked at from the point of view of definition and clarification.
  Mr. Maddan: While I do not go along with all my hon. Friend is saying, I think he has raised a very important point. Do these five acres have to be in the same ownership as the building itself?
  Mr. Burden: I hope my hon. Friend will forgive me because I am coming to that point.
  If the building is surrounded by agricultural land, five acres of agricultural land, it is possible that there would be no objection on environmental grounds, but the terms "adjoin" or "contiguous" are utterly inadequate. Firstly, there is no requirement that the land to which the building is adjoining or with which it is contiguous shall be owned or leased by the operator of the building. Secondly, my hon. Friend should look carefully at the wide interpretation. There should be close control over this.
  The real purpose of the Bill is to provide further financial benefits for factory farming establishments. It is inevitable

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  that stimulation and extension of this trade will continue, and, as my hon. Friend knows, there is great concern by members of the public and by many farmers about the lack of supervision over the treatment of the animals which will be used in these factory farms.
  My hon. Friend the Member for Monmouth (Mr. John Stradling Thomas), in his interesting and fluent maiden speech, referred to the codes of practice. Those codes of practice were strongly criticised in October, 1969, when they were introduced by the right hon. Member for Anglesey (Mr. Cledwyn Hughes). Had he not undertaken to take them back and look at them again, there would have been serious danger of the Government of the day being defeated on them. Certain slight improvements have been made, and the codes are under consideration now. I hope that my hon. Friend will realise that feeling still runs high about this, and that he will ensure that considerable improvements are made.
  Mr. Cledwyn Hughes: The hon. Gentleman tends slightly to distort the welcome which the codes of practice received when they were published. They received considerable welcome in the House and throughout the country. There was criticism from several hon. Members on both sides of the House on three or four out of a large number of points. As a result, I undertook to have further studies made, and this is what the hon. Member is referring to. It would be wrong to say that there was great criticism and no welcome.
  Mr. Burden: I did not say that there was no welcome. On that occasion I said that they were better than nothing and that I had consulted Professor Brambell, who said that he would prefer to see the introduction of codes which went much further, but that the proposed codes represented some advance.
  Let us not live in a fool's paradise about these codes of practice. They are advisory only; there is nothing mandatory about them. The codes of practice connected with the Industrial Relations Bill are to be mandatory, enforceable by law. For animals the codes are to be advisory only. Animals surely need as much, if not more, protection than human beings, who can express their views vociferously, and loudly and leave no doubt
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  about their feelings. If there is to be a considerable extension of factory farming, how will it be possible, with advisory powers only, to supervise the activities within the factory farms? Factory farms are now to have the advantage of de-rating. It is necessary that the codes of practice should be looked at again. Certain activities should be banned. This should be made mandatory.
  Is the Secretary of State for the Environment prepared to accept responsibility for the large increase in the number of battery hens kept in this country—a practice which has ceased in Denmark because the Danes consider it to be cruel? Is my right hon. Friend prepared to accept responsibility for the extension of the treatment of sows now being practised by some factory farms in this country? They are put into metal cages where they live the whole of their farrowing life, unable to walk or turn round. The only time they are able to leave these cages is when they become barren. The boar is put to them about a week after they have their piglets and then the piglets are taken away and artificially weaned. An article in the Farmers Weekly for 24th July, 1970, stated that this was a new break-through, and that sows put to the boar more quickly could produce more piglets and thus lead to better economics for the farmer.
  Mr. James Scott-Hopkins: What has this to do with the Bill?
  Mr. Burden: This has a lot to do with the Bill since the Bill seeks to allow derating for factory farms. Is my hon. Friend prepared to give an undertaking tonight that if the Unicar unit comes to this country—it is, I understand, being experimented with in Sweden—it will be banned here? [Interruption.] My hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) keeps saying from a recumbent position that this has nothing to do with the Bill. It has a tremendous amount to do with the Bill, which will enable factory farming to continue and expand.
  Mr. Scott-Hopkins: Nonsense.
  Mr. Burden: It may be nonsense, but I am prepared to be judged by what I know is going on. Unless my right hon.

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  and hon. Friends are prepared to ensure that decent, humane conditions are laid down in regard to factory farming and its extension in this country, there will be a continuing rise in the public revulsion and abhorrence which is already felt by a great many people. Because I feel so strongly about this matter, unless I am given some undertaking that some control will be introduced to stop abuse taking place in these buildings which are to be derated, I shall not be able to support the Government in the Lobby tonight.
  9.8 p.m.
  Mr. Michael English: We all recognise the sincerity of the point of view expressed by the hon. Member for Gillingham (Mr. Burden) but I have some sympathy with one hon. Member opposite who earlier said that the rather select band of people who usually talk about rating tonight seem to have been invaded by agricultural and animal welfare interests. However, I trust that the Minister for Local Government and Development in his reply will put us back on an even keel.
  I want to stick to the question of rating for one simple reason. When the Under-Secretary introduced the debate, he made great play—he was trying to ride two horses at once—of the assistance being given to the agricultural industry. He then made the rather inconsistent statement that the sum amounted to only £1 million and would not affect the ratepayer.
  I can see why he had to make the latter point. It is estimated that the average increase in rate poundages in the forthcoming financial year will be 15 per cent. It is believed that some of the increases will be 25 per cent., and those are on every other ratepayer in that area. Whilst it may be laudable for the Government Front Bench to claim that a promise is being carried out, I should have thought some consideration might have been given to whether this was an appropriate year to caary it out and whether it was appropriate to talk about the need to suppress inflation and other things, for example wage claims, and to introduce this directly inflationary measure in a year when the increase in rate poundage is likely to be higher than for many years.
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  Carrying out this promise is likely to throw out of the window one or two items of Conservative Party policy. Let me try to name a few. Possibly both Front Benches are inhibited from saying so, but I am a total disbeliever in derating agricultural and, for that matter, various other properties. However, I do not wish the farmer to suffer. I do not believe in the derating of agriculture, and I do believe in the rerating not only of agricultural buildings but agricultural land but I am not suggesting for a moment that the farmer should thereby suffer.
  I suggest that a normal rating system which did not have these provisions would have certain great advantages. The first advantage is that any level of subsidy would be known. It is one thing to levy a tax and to use some of that money to assist people. One then knows the amount by which one is assisting them. But the Minister for Local Government and Development well knows that if I asked him the total extent of the subsidy to agriculture which the present derating provisions make—let alone the additions under the Bill—he could not tell me, because there has been no valuation. This means that we have a concealed subsidy to an industry.
  I should much prefer that the farmer, through deficiency payments or otherwise, was given amounts which can be known rather than amounts hidden away. Let us not forget that it was mentioned by an hon. Gentleman opposite that these provisions were introduced long before the present system of subsidies to agriculture, and they were introduced in order to avoid admitting that agriculture was being subsidised. When we arrived at the principle that agriculture can be subsidised, it seems that this provision could and should have been swept away. The Government are being very archaic in extending these provisions in any way. They ought to consider abolishing them. Why is it not done? For the old reason that it is the Treasury which is affected and not the farmer. It is the poor old local authority which is adversely affected to help the central Exchequer.
  Some items of Conservative Party policy have been thrown out of the window to implement their election pledge. What on earth has the whole idea of selectivity of subsidies gone? Is not this one of those subsidies which has been

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  criticised? Is not this given to everybody, to the man who has a few hens in a small building and to the great farmer who can produce 25 per cent. of the egg production of the United Kingdom? Is not there some element of unselectivity in this sort of subsidy?
  I should have thought that many members of the Conservative Party genuinely have a good case very often for saying that some subsidies should not be given out as blank cheques to rich and poor, but they can hardly be consistent in giving out another to this industry.
  For one reason or another every hon. Member who has spoken so far has asked why on earth, when carrying out a promise, do the Government have to put it forward in a way which is much greater than the original promise. The original promise related to the production of food. I do not eat leather. I have never eaten a mink.
  Mr. John Pardoe: The hon. Gentleman should try.
  Mr. English: The hon. Member for Cornwall, North (Mr. Pardoe) suggests that I should try. It might be rather expensive and unpleasant. However, is not it ridiculous to extend the promise quite unnecessarily?
  I could go on to make a series of Committee points. However, that would be undesirable in a Second Reading debate. But there is one which arose earlier in an intervention by me to the Under-Secretary, and I think that he should look at it. So far everyone has referred to this patch of five acres of agricultural land which is necessary to qualify. However, I am advised that the man who covers that five-acre patch with buildings will not get the exemption in the Bill, whereas, if he covers only four and a half acres with buildings, he will. That is what I mean by "the whole of the land". This may be the effect of one of the provisions in the Bill, and I should like the hon. Gentleman to look at the wording, which is a little odd in certain parts.
  He might also consider whether his Explanatory Memorandum is completely truthful. It says that there will be a slight saving in manpower. But there will be a need to inspect premises under Clause 1(2), which says:
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  "… 'building' includes a separate part of a building; and in determining … whether a building used in any way is solely so used no account shall be taken of any time during which it is used in any other way, if that time does not amount to a substantial part of the time during which the building is used."
  I fail to see how that provision can be enforced without an adequate degree of inspection which, incidentally, local authorities have not the power to do, although the valuation officers have. It will be very interesting in Committee to hear the Minister explain how he proposes to enforce this provision when the local authority cannot inspect and needs to inspect in order to do it.
  I promised not to get on to Committee points. But I should very much like the Minister to say whether he believes that, when we come to reform local government finance, we should extend the basis of local authority taxation for the benefit of all ratepayers, knowing clearly what our subsidies are, rather than diminish it and put more of the burden on fewer and fewer people.
  9.19 p.m.
  Mr. Ian MacArthur: I hone that the hon. Member for Nottingham, West (Mr. English) will forgive me if I do not take up his points. We have not much time available to us, and I want to raise a new matter which has not been touched on so far.
  I welcome the Bill because it removes an anomaly which has increased farming costs and acted as a disincentive to the adoption of modern agricultural techniques.
  While we are removing one anomaly, I hope that the House will consider extending the terms of the Bill so that we can remove another which is beginning to affect farmers in Scotland and may spread to England. It is that some farms in Scotland have been rated because the farmers keep ponies on their farmland. I believe that so far the problem has arisen only in the South-West of Scotland, and I know that my hon. Friend the Member for Galloway (Mr. Brewis), whom I am glad to see in his place, has constituents who have been affected severely. I am concerned about the problem, not yet for constituency reasons but because I am interested in riding as a sport.

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  Perhaps I might remind the House that it is a growth sport and a popular one. It has been estimated that 600,000 people go riding every week, and I understand that the figure is thought to be increasing by about 10 per cent. a year. If the law remains unchanged I have no doubt that the development of riding, show-jumping, showing, pony trekking and much else will be hampered and that many people, particularly children, will be obliged to give up this healthy and desirable sport.
  For example, many children are allowed to graze their ponies in farmers' fields, but the present interpretation of the law—at least in Scotland—is such that the farmer who lets out even a small corner of his farm for this purpose may find that he is thereby jeopardising the rating position of the whole farm. In consequence, grazing will no longer be available, and in a great many cases it will mean the end of the child's sport.
  I must declare a personal interest. My wife and I keep ponies on our land. That land might be rated if decisions reached in the South-West were to spread to Perthshire. But this personal circumstance is of little relevance. I am concerned about the harm which an extension of this ruling would do to equestrian sport in general and to the development of horse and pony breeding in Britain.
  The problem has arisen in Scotland because of the definition of "agricultural lands and heritages" in Section 7(2) of the Valuation and Rating (Scotland) Act, 1956, which states:
  "'Agricultural lands and heritages' means any lands and heritages used for agricultural or pastoral purposes only".
  The subsection goes on to provide other definitions, such as,
  "woodlands, market gardens, orchards, allotments or allotment gardens and any lands exceeding one quarter of an acre used for the purpose of poultry farming".
  In recent cases, however, it has been held that the grazing of horses or ponies is not an agricultural or pastoral purpose within the meaning of the Act. The effect of the decision has been very serious, although so far on a small scale, particularly for the farmer who breeds native ponies as an adjunct to his main farming enterprise.
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  For example, I have details of one farm which has been rated. This farm is stocked to the extent of one-third with hill sheep, one-third with hill cattle and one-third with Shetland ponies. It was held that because of the ponies the farm could not be regarded as being used exclusively for the purposes stated in the Act, and the whole of the farm was therefore rated—sheep, cattle, and all.
  This and similar cases are extremely worrying to all those who want to encourage riding. I have already mentioned the popularity of the sport, but any extension of this rating anomaly would put riding beyond the reach of many, either because their farmland might be rated because of the presence on it of a horse or pony—I accept that this is taking the matter to the extreme—or because they will lose access to grazing facilities because of the apprehension of the farmer owning the land. Further, pony club activities would be severely restricted—and it is the pony clubs which produce so many of our great young international show jumpers and horsemen generally. Indeed, the farmer who allows a cross-country event on his land, or opens tracks across his farm to pony trekking, will be most reluctant to do so for fear of the possible rating consequences.
  I promised to be brief. I hope that my hon. Friend who is to reply will be able to give some favourable reaction to the case which I have advanced. It is a real problem, particularly in Scotland, and if it persists and spreads, as it will unless we do something about it, I believe that it will do great harm to a sport which all in this House ought to encourage, and it will also do great harm to the breeding of native ponies, which is making a growing contribution to our export trade.
  I welcome the Bill, and I shall welcome it even more if this further anomaly can also be removed.
  9.24 p.m.
  Mr. Eric Deakins: This is a debate on agriculture as well as on rating. I should, therefore, begin by declaring an interest. I am not a farmer, but for the past 15 years I have been employed by the largest agricultural marketing firm in the country, and I am currently employed

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  by that firm part-time until the end of this financial year. Thereafter, I may retain some kind of financial connection with it. I hope that it will not be necessary for me to repeat my interest every time I get up to speak, should I chance to catch your eye, Mr. Speaker, in future debates on agricultural matters.
  I regret this occasion, because I regret having to speak against the opinion of the National Farmers Union, an organisation with which I worked very closely over many years, and for which I have a great and healthy respect. I also regret that, although I support the Amendment moved by my hon. Friend, I am not happy about part of the wording of it, as it seems to me that my right hon. Friends who drafted it know far more about rating than about agriculture.
  The Bill is an attempt to restore the status quo, and the question to which I want to address myself in my brief remarks is whether the Bill is going in the right direction. In seeking to find a solution to this question I went back to the early history of why agriculture was derated in the first place. I am sure it is well known to every hon. Member that in 1896 agriculture was given a 50 per cent. derating in the Agriculture Rates Act of that year. That was extended by 25 per cent. in 1923, and there was complete derating in 1928.
  I did not have to go back very far. In fact, the first speech that I read, that of Neville Chamberlain, then Minister of Health in 1923, gave succinctly the reasons for there being derating of agriculture, and I mention these to the House because I do not think that they are any longer relevant today. He said then:
  "The purpose of the Bill is to give assistance to agriculture … agriculture is in a desperate situation. Profits in many cases have vanished altogether. Wages have come down to a level which can only be characterised as deplorably low, and, indeed, unless something be done to assist the industry, it is clear that much land which is now arable must either go out of cultivation altogether or else go down to grass …"
  A little later on he went on to emphasise that the Bill was one
  "to relieve agricultural land, not at the expense of other ratepapers in the district, but at the expense of the general tax payer."—[OFFICIAL REPORT, 4th June, 1923; Vol.: 64, c. 1787–91.]
  The reason why he was able to say that was that in those days there was as annual grant from the Government to
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  make up the short-fall in rates to local authorities.
  I have three points to make about Neville Chamberlain's remarks in 1923, because I do not think that any of them are relevant to the subject of today's debate. First, in 1923 derating was the only means of giving assistance to agriculture. Second, that assistance was given entirely out of central Government taxation. Third, in those days agriculture did not enjoy the support, prestige or prosperity that it does today.
  The position today is that under the Agriculture Acts of 1947 and 1957 agriculture enjoys a large measure of prosperity. In spite of the undoubted shortcomings of the current system, I submit that since 1947 it has enjoyed the longest period of prosperity, if not in British agricultural history, at least since the abolition of the Corn Laws, and, therefore, I do not think that anyone in his right mind could claim that agriculture today is in the situation that it was when it was given derating in 1896 and again in 1923. The reasons for agricultural derating no longer apply.
  It is said that farmers are going out of production. This may well be so. Indeed, I know that this is happening on a rather small scale in livestock and pigs, but if farmers are going out of production, it is not because their intensive livestock units are rated. It is because of uncertainty about the future under the Government's import levy system, under the Common Market, and so on. Agriculture is now in a period of flux, and until we know exactly what is involved in the import levy system, and in our going into the Common Market, many farmers will be reluctant to invest more money, and, indeed, perhaps some of the weaker brethren of them will get out of production altogether.
  There is one other difference between the position in 1896 and 1923 and the position today. In those days, agriculture was supported out of central Government taxation in the form of this rating relief and a grant from the Ministry of Health. Today the general taxpayer still supports agriculture through the medium of the Annual Review to a great extent, a support which I and most of my hon. Friends fully endorse, but, in addition, the farmer is supported very much by the ratepayer.

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  This is mainly because the rising costs and the increasing scope of local government since 1923 have imposed an increasingly heavy burden on ratepayers in general. In 1923 the rates in Great Britain realised £175 million. In 1969 they realised about £1,650 million, or nearly 10 times as much. That is a very big burden on ratepayers. The extent of rate relief support to agriculture is not known. When I asked the Chancellor a week or so ago for an estimate he could not give me one, for the very good reason mentioned by my hon. Friend the Member for Nottingham, West (Mr. English), that agriculture has not been valued for many years.
  I now come to the wording of my right hon. Friend's Amendment, and there are a few words in it which I confess I do not follow. The Motion talks of
  "… intensive animal production of a kind which can in no sense be called agricultural …".
  I want to address myself to those three words "of a kind". If the English language means anything, these must mean that my right hon. Friends have in mind the fact that there are two sorts of intensive agricultural production, one which justifies derating and one which does not.
  I suggest that if agriculture should be derated virtually all intensive farming is agricultural production, whether it takes place in an urban area or in the country, because the intensive producer or factory farmer—whatever one calls him—has exactly the same problems whether he has five acres or two hundred. He has problems of effluent disposal, disease control, management techniques, feeding and so on.
  Why should agriculture continue to be derated, and, therefore, why should the Bill take us in the wrong direction? As our largest and most efficient industry, agriculture should be capable of standing on its own feet. It uses industrial methods of production, and there is no reason why it should not be treated as the industry which it has long claimed to be. The whole of agriculture should be rated, except, I propose, in special areas like hill areas, where this could be the means of giving support from the surrounding ratepayers as well as from general taxation.
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  It may be asked what effect this will have on agriculture. Of course there would be the vast extra costs. But so long as we continue to have an Annual Review and determination of guarantees, I hope that those extra costs, like all others in farming, would be taken into account in determining the level of those guarantees. If agriculture is to stand on its own feet as the Government want it to do, it cannot claim any special privileges with regard to being derated. At the moment it is standing on the feet of ratepayers. If it is to be subsidised—I fully support the subsidisation of agriculture—under the present system, the fairest way of doing it is not through the rates of other people but through central Government taxation.
  9.34 p.m.
  Mr. Robert Hicks: Since time is at a premium, I would ask the hon. Member for Walthamstow, West (Mr. Deakins) to excuse me for not following him closely.
  In my opinion, two of the fundamental characteristics of any legislation are first, it should be realistic, that is, in keeping with the conditions and situation existing at the present time and, second, that there should be the minimum opportunity inherent in the terms of that legislation for inconsistencies and anomalies to occur in its interpretation and implementation. These are but two of the features that should be apparent in any legislation.
  It is my intention to draw the attention of the House to a limited number of examples, all taken from my own Bodmin parliamentary division, that highlight the ludicrous situation that can result from the present law as applied to the rating of buildings used for certain types of farm activity. I should add that in my constituency agriculture has always been one of the basic economic pursuits, and I think it will be clear to hon. Members on both sides of the House that the current unsatisfactory position is, in effect, penalising many of those farmers who have simply moved with the times and have adopted new, more advanced and more efficient methods.
  My first illustration concerns the rearing of pigs for bacon. We have a situation in which two farmers live within a short distance of one another. Both farms are farmed by genuine farmers, long

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  employed in agriculture, and their fathers before them. Both farmers, as part of their overall farming pattern, are involved in the intensive rearing of weaners for bacon. The intensive unit of one farmer is rated while that of his colleague is not. The only difference between the two in the context of liability for rating is the fact that one of them keeps a couple of sows grazing in the field while the other one does not. This is the basis for one farmer having to incur an additional financial burden through the incidence of the rating premium.
  As a second example, I bring to the notice of hon. Members the case of two farmers both of whom include the intensive rearing of poultry as an integral part of their farm programme. Again, the building of one of them is rated while his neighbour's unit is not. The reason is that one of them keeps a few chickens out in the farmyard, which his wife looks after for pin money, and, therefore, he is exempt from rating, but his neighbour is not.
  A third case, brought to my notice only this morning, is that of a building used in a farm system for most of the year for storage purposes. For a few months of the year it is used for the fattening of turkeys. That building is not only rated; it is rated on an annual basis and not on a proportion of the year basis.
  One could go on giving these illustrations. Mine is a part of the world which has been hit by these various anomalies and somewhat artificial distinctions. I hope it is clear to all hon. Members that the present legislation is most unsatisfactory; that the wide range of interpretation places what I can only describe as an intolerable burden on local district valuers; it can, and certainly does, reduce a farmer's competitiveness in relation to his neighbour's because of this additional overhead through rating. Above all, it acts as a deterrent to the progressive farmer to modernise his methods of production. This must have an adverse effect on the efficiency of those sections of the farming industry thus affected, and in turn must reflect in an unfavourable manner on the final price paid by the consumer for those farm products involved.
  For these various reasons, I hope highlighted from my constituency, I certainly
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  welcome this Bill and all that it. stands for.
  9.40 p.m.
  Mr. William Molloy: I congratulate my hon. Friend the Member for Greenock (Dr. Dickson Mabon) on the admirable way in which he demolished the arguments of the Under-Secretary of State for Home Affairs and Agriculture, Scottish Office— —
  Mr. Arthur Lewis: There were not any.
  Mr. Molloy: The few there were my hon. Friend demolished quite splendidly.
  I was rather disappointed at the attitude of my hon. Friend the Member for Walthamstow, West (Mr. Deakins), who went into the semantics of our Amendment, not realising that although we appreciate his knowledge of agricultural economics some of us are also interested in and have seen some of the appalling behaviour of those using factory farm methods. I pay tribute to the courageous speech of the hon. Member for Gillingham (Mr. Burden) and, as he has said a good deal that I had intended to say, it will enable me to speak a good deal more briefly. Some of his hon. Friends chivvied and criticised him. They seemed to think that the reasons for the Government relieving people of paying rates, and their methods of doing so, should not be looked into too closely. That is a most amazing doctrine. We may wish to look into all sorts of other practices which the House may discover are not particularly healthy, when, no doubt, some hon. Members will adopt that same attitude.
  Some hon. Members opposite asked whether there could arise in this debate any great interest in factory farming, and whether it had any relationship to the Bill. The answer to that must be an unequivocal "Yes", because hon. Members on both sides have earlier referred to the Brambell Report, from which I want to quote. I hope that the quotation will show beyond a scintilla of doubt that people are concerned about factory farming.
  In Chapter I of a Report which has now become quite famous, the Brambell Committee stated:
  "We were aware of the extent of public disquiet concerning the welfare of animals kept intensively and consider it incumbent upon us to report as early as possible."

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  Great concern has been shown in the country about intensive and factory farming, so much so that the organisation of which I am President, the National Society for the Abolition of Factory Farming, which represents a reasonable cross-section of British society, has had considerable support from various parts of the House.
  Mr. Peter Mills: I am following with great interest what the hon. Gentleman is saying, and ask him a simple question. Does he check carefully all the food he eats, particularly that coming from abroad, where intensive methods are used far more than they are here, and where birds and animals are kept in conditions we would not allow?
  Mr. Molloy: That was not just a simple question, but a daft question. Does any hon. Member believe that everyone before sitting down to a meal, whether it be fish and chips or a great banquet, carefully examines the details of what went into it? In this debate the hon. Gentleman's intervention must be the highlight of utter stupidity, and I will now seek to restore the debate to the level at which it had been kept until the hon. Gentleman intervened.
  Many eminent men and women assisted Professor Brambell in his Report, and as another exhaustive report, that on the subject of local government, has also condemned any further action in regard to derating I am rather surprised that the Government should so promptly have dived in with this Bill. On the other hand, one can perhaps understand it in that the Government have completely ignored practically every other pledge they have given—whether it was at a stroke or at two strokes. In this modern age, we are talking about a two-stroke Government.
  The Government spokesman complimented himself and the Government on redeeming their pledge by introducing a Bill which is designed to give nearly £1 million to people who can well do without it. Even if they are entitled to some form of aid, as some parts of the farming community certainly are, there should be a way of giving them aid without punishing ratepayers.
  What the Under-Secretary said reminded me of last Thursday's episode.
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  The same Government who are now to relieve a certain section of the farming industry of having to pay rates to the tune of nearly £1 million pleaded with us and shed crocodile tears while explaining to us why they could not give old age pensioners another 2s. The Under-Secretary should have omitted that part of his argument.
  The argument as to whether certain sections of agriculture should be subsidised is outside the scope of the Bill. Some hon. Members opposite believe, as we do, that there must be a constant re-examination of how this great industry is to be aided. I, like the hon. Member for Gillingham, think that in presenting the Bill the Government have helped neither themselves nor the genuine farming community.
  Many members of what I call the genuine farming community find the activities of factory farming just as distasteful as some of us in the House of Commons do, and they condemn it. I therefore greatly regret that the Bill has been introduced in this manner. I believe that the Amendment, even though its wording may not be quite correct, is to be commended in spirit. It is an odious thought that factory farming is now to be encouraged in its loathsome activities. There should be more than one hon. Member opposite prepared to join us in the Lobby tonight against the Bill.
  9.48 p.m.
  Mr. John Pardoe: I support the Bill, but for only one reason; namely, that I am against the kind of snooping that has to go on to enforce the rating of intensive agriculture and the kind of snooping that the hon. Member for Bodmin (Mr. Hicks) defined when he drew attention to the anomalies in the Bill.
  Cases that I have seen in my constituency lead me to believe that it is impossible easily to distinguish between one building and another as to whether they are used for intensive or non-intensive purposes. An extraordinary degree of bitterness is whipped up between farmers and local authority representatives—I was about to say "paid informers". Somebody arrives on a farm and says, "We understand that the barn at the top of your cowshed is being used for chickens." The farmer says, "How did

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  you know?" His visitor says, "I am not going to tell you" Such incidents are causing much bitterness.
  The Bill will get rid of that. I know that, unfortunately, it will help people like Eastwood, although I do not think that it will help them much either way.
  Mr. Arthur Lewis: The hon. Gentleman may or may not be right there, but is not he aware that in our industrial cities people are very annoyed when they are reported as having had central heating put in and they then find not that they are derated but that their rates go up?
  Mr. Pardoe: I entirely accept that. It is just as mad to rate radiators as it is to rate five-month-old baconers. The Bill would get rid of one insanity, and I should like to get rid of the others as well.
  I come now to the basic question whether agriculture should be derated or not. It has already been said that it was derated originally because it was held to be a depressed industry. The hon. Member for Walthamstow, West (Mr. Deakins) quoted some words of Chamberlain, but he quoted them rather derisively, almost suggesting that that situation was a long way back and could never return. The hon. Gentleman the Member for the City of Chester (Mr. Temple) said that agriculture is not the depressed industry it was in the 1920s. I am bound to say that, if it is not, it is only a question of a fine balance. [HON. MEMBERS: "Oh."] It is only just a question of a fine balance, and more and more people in the far South-West whose views on agriculture I respect are beginning to detect the smell of the 1920s all over again.
  The Minister of Agriculture came down to Cornwall and Devon recently and told us that this was not so. I do not think that he had then read the speech of Mr. Plumb, the President of the National Farmers Union, when he spoke of the real danger of a rural slump. My experience—I am sure that it is the experience of many hon. Members in the South-West—is that that is only just round the round the corner. [HON. MEMBERS: "Oh."] It is no good hon. Members thinking that because farmers have
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  cried "Wolf" for so long we need not believe them. In fact, the wolf is really at the door. Injecting a few million "quid" of taxpayers' money every year at the Price Review will not change the situation. [HON. MEMBERS: "Oh."] It is easy for some hon. Members to write the problem off and think that agriculture is doing well enough. It is not doing well enough, and the return on capital is ludicrously small. No one is earning anything like even 2 or 3 per cent. on the value of his agricultural land, let alone a fair wage for his labour and management.
  While I accept that agriculture, therefore, has to be derated in its present situation, I realise that the effect in the rural areas will be serious. It will remove from the rural areas the rate income from one of their major industries. I accept the argument that it might be better to rate agriculture and bring money into the industry to pay the increased rates through the mechanism of the Price Review, but farmers are wary about that and do not believe that they will get the money. Indeed, I reckon that they would be on a pretty good hiding to nothing that they would not get it.
  I am sad that the Government have introduced the Bill at this stage, only a week or less before the announcement of their proposals for the reform of local government. To my way of thinking, the whole lot should be derated, not just a few intensive agricultural buildings. It is madness to retain the present rating system in our taxation system. If we are to have any kind of rating system, it would be far better simply to rate the value of the land, not the value of the developed buildings, and we could then argue about an exemption for agriculture in that context. However, on the basic issue of removing the anomalies in respect of agricultural buildings, I consider that the Bill ought to be supported, and I shall certainly vote for it.
  9.54 p.m.
  Mr. James Scott-Hopkins: I agree with the closing words of the hon. Member for Cornwall, North (Mr. Pardoe), but I must say that there have been occasions—part of his speech was an example—when there has been exaggeration. One of the dangers we face in agriculture is that people

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  exaggerate the problems, to the point of talking about the 1920s and approaching disaster. There are problems in farming, there is a lack of return on capital, but it is wrong to talk in terms of disaster and a return to the situation in the 1920s.
  I agree with the hon. Member for Enfield, East (Mr. Mackie) when he says that no matter what one's views may be about factory farming or intensive farming, the Bill is not the vehicle for that argument. This Bill relieves a certain proportion of people from rates, and it is correcting an inequality, an injustice, which has gone on over the years. It does not matter what one's feelings are about factory farming, whether one is for or against it. I respect the views of my hon. Friend the Member for Gillingham (Mr. Burden), who made a very courageous speech, but I disagree with him. That is neither here nor there. It is not on this Bill that we should have the main debate about whether factory farming should be controlled and how it should be controlled. What we are discussing is the adjusting of an anomaly which has grown up over the years. For many years rating has crept into agricultural buildings, starting with the obvious one of intensive buildings in the South and South-East. Gradually it has spread to the whole of the country.
  I welcome the Bill. Now we are in the position of saying that all agricultural buildings shall be derated. I understand the arguments put forward by the hon. Member for Nottingham, West (Mr. English) and the hon. Member for Walthamstow, West (Mr. Deakins), who said that there is a case for rating all agricultural land. There is, of course, and I disagree with it. I believe that it is right that it should not be so rated. That is the honest case to argue on the Bill, either for or against. Here we are bringing all agricultural buildings up to the state when they are derated, no matter to what type of farming use they are put.
  The only thing that causes me anxiety is this figure of five acres. Is there any point in having it here? Does it have to be in the same ownership as the person owning the building which is being derated? This can be dealt with in Committee, but I would suggest that it must be in the same ownership or
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  must certainly be rented by that person or else we would get into a difficult position.
  The only argument of my hon. Friend the Member for Gillingham with which I had some sympathy dealt with the point about "adjacent or contiguous" and how nearly contiguous and adjacent must they be. That is perhaps another Committee point, but it is something that ought to be cleared up now in broad principle. It is true that we are reaching a time when there will be a complete review of the rating system and this is an ideal time for the whole agricultural rating situation to be reviewed. That does not mean that now is not the time to honour our several election pledges and to put right an injustice which undoubtedly affects people. I do not believe that it has bankrupted anyone but it has certainly had an effect. This is why I fully support the Bill.
  9.59 p.m.
  Mr. Gavin Strang: This Bill is fundamentally about agricultural derating and it is significant that virtually no hon. Members opposite have faced up to this. Many people are under the impression that this principle of agricultural derating grew up between the two wars. The Times carried an editorial on the Bill which implied this. The Bill foreshadowed in Churchill's Budget of 1928 had nothing to do with this principle. It related to the derating of productive industries as well as agriculture.
  We have to go back to the last century to find any discussion on the question of agricultural derating. During the Second Reading of the Agricultural Rates Congested Districts, and Burgh Land Tax Relief (Scotland) Bill on 11th August, 1896, the Secretary for Scotland said that the purpose of the Bill was to relieve agriculture from the present injustice by lightening the burden of taxation which it had to bear and to that extent mitigating the depression under which agriculture was suffering.
  As my hon. Friend the Member for Walthamstow, West (Mr. Deakins) pointed out, the principle of agricultural derating makes sense only if we regard agriculture as a "poor sister" industry. Surely this is an appropriate time to consider the whole principle of agricultural derating. Hon. Members opposite

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  talk about reforming local government. They have always insisted that the reform of the finance of local government must go hand in hand——
  It being Ten o'clock, the debate stood adjourned.
  Ordered,
  That the Proceedings on the Rating Bill may be entered upon and proceeded with at this day's Sitting at any hour during a period of one hour after Ten o'clock, though opposed.—[Mr. Pym.]
  Question again proposed, That the Amendment be made.
  Mr. Strang: We know that the Government are thinking about the reform of local government finance, but we also know that they are introducing the most radical change in agricultural support since 1947. This is an ideal time to consider the question of derating. The Minister tells us that agriculture should stand on its own feet. That is impossible; our agriculture will always have to be supported. The question is whether it should be done through an agricultural support or a levy system.
  Why have the Government brought forward this Measure in such haste? I suggest that it is an attempt to buy popularity with the farmers. If so, it is a cheap attempt. We know why the Government want to buy popularity. Their proposals for agriculture will have serious effects on the industry, and they must try very hard to convince the industry that they are its friends. I have never understood why some people argue that Conservatives are the friends of the agriculture industry. They are certainly the friends of the landlords, but they are not the friends of the farmers—and they are certainly not the friends of the agricultural workers. After the Under-Secretary's role in closing the sugar beet factory at Coupar, I can understand why he should be anxious to improve his standing with the agriculture industry in Scotland.
  I agree that the Bill removes some anomalies in respect of the derating of agriculture. I agree that there is no reason why we should inhibit the development of intensive and more efficient farming. I also submit that it is not relevant to talk about animal welfare. Brambell did not advocate the derating of agriculture; it argued that the problem of animal welfare should be tackled. If the
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  Bill had been presented as a trivial agricultural measure to tidy up some anomalies we might have accepted it, although it is badly drafted. On the contrary, it has been presented as an important advance in agriculture.
  We have even been told that it will help our balance of payments. The Under-Secretary knows that the question of rating is trivial in terms of the extension of intensive livestock farming. A much more important factor is the price of barley.
  The Bill is not a serious attempt to help the agriculture industry; it is brought forward with highly dubious motives, and we must wait to see what the Government really are going to do for the industry.
  10.5 p.m.
  Mr. W. H. K. Baker: I take a totally different view from that of the hon. Member for Edinburgh, East (Mr. Strang). I do not think that this is what might be called a doctrinaire Bill at all. To my way of thinking, it is clearing up some very definite anomalies which have recently occurred in agriculture and its rating. Also, as my hon. Friends have said, it redeems a pledge which we made to the electorate in 1970. I think that is a perfectly reasonable thesis on which to bring forward a Bill of this nature, and I support it. Certainly, there are one or two questions I should like to put to my hon. Friend, and I hope that, at the end of the debate, he will be able to satisfy my curiosity.
  This Bill really has its genesis in the Act of 1956. Does the hon. Gentleman want to interrupt?
  Mr. Arthur Lewis: An hon. Friend of mine asked me a question and I said did not know but that I would ask the hon. Gentleman. It is this. Is the hon. Gentleman a farmer?
  Mr. Baker: Yes. I thought the House was aware of that fact. I apologise for not declaring an interest at the start.
  Mr. Arthur Lewis: Hear, hear.
  Mr. Baker: As I was saying, this Bill has its genesis in the Act of 1956, and if any further justification for bringing forward the Bill were needed it is to be found in the words of the hon. Member for Renfrew, West (Mr. Buchan) in

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  speaking to the Valuation for Rating (Scotland) Bill in the Scottish Grand Committee on 11th November, 1969, when he said that
  "the 1956 Act provided explicitly, from the quinquennial revaluation in 1961, for the rating of the dwellinghouse, and fully derated agricultural lands and heritages"—
  which, in Scotland, means buildings—
  "which were defined as including agricultural buildings, but to qualify for full agricultural derating, a building on agricultural land is required to be used for agricultural purposes only, and also has to be used solely in connection with operations on agricultural land in the same occupation."—[OFFICIAL REPORT, Scottish Grand Committee, 11th November, 1969; c. 3.]
  That, as I say, seems to me full justification for bringing forward the Bill, and it is really an indictment of the Opposition in moving their Amendment tonight.
  The hon. Member for Greenock (Dr. Dickson Mabon) mentioned tonight a figure of £172,000, which was the amount of money received from rates on agricultural land. He may look at his notes, but I can assure him that I took that point down. That is, surely, an extraordinarily small sum in relation to the total amount of rates which are collected in Scotland—an extremely small sum. It highlights the anomaly which we have. In my constituency I have had complaints from farmers in one parish that they have been rated on a type of intensive unit while others in other parishes have not been rated on the same type of building when carrying out exactly the same job in exactly the same circumstances and not very far away. It is this kind of anomaly that we wish to get rid of. It also seems anomalous to me that one type of agricultural building should be rated and others should not. Again, that is an anomaly we want to be rid of.
  There are three questions I would ask my hon. Friend. Two of them refer speci
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  fically to Scotland, and one is a general question. The first question concerns lotted lands. That, I assume, is a purely Scottish question, but, nevertheless, it is of great importance. I do not know, to be perfectly frank, whether it is a major or a minor question. Certainly, in my constituency it will be a problem in relation to the buildings covered by the Bill. It refers to the case where a steading has become built upon by ordinary commercial buildings or ordinary dwellinghouses and the land on which the animals feed is some way away. This raises the question, what is contiguous and what is adjacent. It also occurs where, by right, certain farmers whose farm buildings are within a village or a small township have the right by law to use certain common grazings out-with the burgh or village boundary. Will these people be protected under the terms of the Bill? It may be that they will to a larger or a lesser extent, and I am a little worried about the 5-acre provision—perhaps it should be enlarged.
  Then there is the case where, again through the growth of urban development, a steading has been left behind within the village or town and the land is outwith the burgh or village boundary where other building has crept on to the agricultural land. Again, is this in the same category as lotted lands?
  Finally, as there is a possibility—of which I personally am not altogether in favour—of us joining the Common Market, what is the position in the E.E.C. on the rating of farm buildings? Are we merely passing a law which will have to be scrapped if we should go into the Common Market?
  I welcome the Bill because it will iron out a number of anomalies. Without doubt, the effect of rating of the intensive unit has acted as a disincentive to increased production, and for that additional reason I welcome the Bill.
  10.12 p.m.
  Mr. John Silkin: If I were to follow the hon. Member for Banff (Mr. W. H. K. Baker) into his explorations of the Common Market I might get intrigued by the subject and be all too soon ruled out of order. So the best contribution I can make is to point out how wide-ranging the debate has been and how wide-ranging have been the views. I do not say this in a derogatory sense, but there have been differing views on the same side of the House, whether on the Government or the Opposition side.
  The hon. Member for Monmouth (Mr. John Stradling Thomas) in an elegant and pleasing maiden speech which I know the House was delighted to hear, talked about farmers making miniscule profits, but that view was not shared by his hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins), and there have been similar divergences on my side of the House.
  The questions which we have to decide tonight fall under three main headings. The Under-Secretary of State in his closing remarks waved the flag of war rather too proudly. He gave the impression that on the Government side every hon. Member was bursting to help the farmers and that on the Opposition side every hon. Member was bursting to destroy them. Like most exaggerations, it is pleasant to listen to, but it does not mean much. We are really discussing a much more serious question: whether the basis that is being chosen to assess agriculture is the correct one. That is all.
  Shall agriculture be derated? That was a question put by many hon. Members on both sides. The hon. Member for City of Chester (Mr. Temple), wearing his local government hat rather than his farmer's hat, was the first to ask it. My hon. Friends the Member for Nottingham, West (Mr. English) and the Member for Walthamstow, West (Mr. Deakins) asked whether derating was the best way in which we could help farmers. My hon. Friend the Member for Edinburgh, East (Mr. Strang) reminded us that the Minister of Agriculture believed that the best way to help farmers is to have them stand on their own feet, as he would put it. and my hon. Friend the Member for aWlthamstow, West, talked
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  about agriculture being forced to stand on its own feet——
  Mr. Arthur Lewis: Lame duck.
  Mr. Silkin: —webbed feet or not, on its own feet at any rate.
  This is a vital question. One of my hon. Friends pointed out that this is a rating Bill. For that reason, I do not feel, any more than the Minister does, I am sure, quite so alarmed at the stricture that neither he nor I is a practising farmer. We know a little about rates, and perhaps that is not inappropriate.
  We are bound to be very interested in the thoughts and opinions of the Association of Municipal Corporations and to be influenced by the near-probability that there will be a Green Paper or a White Paper—or whatever colour it may be—on local government finance in the relatively near future. It seems extraordinary that we should be going through the Second Reading of this Bill, to be followed by all the remaining stages, at a time when the House is rather pressed for time, when tomorrow or the day after tomorrow, in the sense used in the House, we shall have the Green Paper on local government finance.
  Mr. Charles Loughlin: Instant Government.
  Mr. Silkin: This is rather on a par with the impetuous nature of the Minister. [Interruption.] Oh, thoroughly. In general, he is well able to argue his case, but I wonder whether this impetuosity has not come a little too speedily. I do not say that the local authorities are complaining about not being consulted, but in their briefing they have said that they had consultations with the Minister in, I think, December, and that does not seem to give much time for consideration and for suggesting Amendments, which the local authorities are perfectly capable of doing and should be allowed to do.
  The Green Paper will presumably say that rating is to continue to be the principal source of revenue. One of the points the local authorities have raised is this: if that is so, should not all the exemptions to rating go? In that way, all of the community will be brought within the rating system, which will be fair to the ratepayers as a whole. Our saying that we must consider the question of rating

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  in this Bill, or in any other, does not mean that we on this side are unwilling to help agriculture. On the contrary, it means that we want to help in the most sensible way, and we do not think that this is the most sensible way to do it.
  The first question which must be asked is: is derating the answer in any event? The second question that one would need to ask is: if the answer is, "Yes, the most effective way to assist agriculture is to derate", is the practice which we have heard described today in fact agriculture?
  I freely admit that I am not a farmer. I am a former lawyer, with some knowledge of Latin, whose Latin taught him that agriculture meant the cultivation of fields. This is a point of view which, as I have been told by the Under-Secretary, is obviously 20 years out of date, as technology has come along, and I must be prepared for its advance. Nevertheless, I am mildly reassured that my point of view was shared by the highest judicial authority in the country, in Eastwood v. Herod, which took a very simple criterion in the law as it is today. Their Lordships said that the real test was whether the building put up was necessary to the cultivation of the land. If it was, it was part of agriculture. In that case, if agriculture was to be derated, it was to be derated. Or was it the other way round, as they said in this case, "Is the land merely used to assist the building?", because in the case of Eastwood v. Herod the land was used to provide barley for the feeding of hens, cockerels and chickens, and for no other purpose whatsoever? The feeding stuff might just as well have been imported, not from the farms around, not from five or 50 acres around, but from across the seas.
  Is a building in which animals are produced intensively necessarily agricultural? The Under-Secretary did us an injustice here. It is not necessarily an agricultural process. It is not even necessarily a natural process connected with the land. For these reasons, even if one accepts that agriculture has to be derated, it does not necessarily follow that the buildings in which these animals eke out their lives are also agricultural. Indeed, the Under-Secretary's own country, in its wisdom—because the Scots have a great deal more common sense than the English, and I did not mention the Welsh
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  as you will realise, Mr. Speaker—gave a 50 per cent. derating to these buildings because they rightly regarded them as industrial, and industrial buildings were 50 per cent. derated. Full marks to them for their sense and logic. I am sorry that at this moment his Scottish sense and logic have deserted the Under-Secretary, because otherwise he could see that this is really an industrial process.
  I appreciate that the present Bill originated from a promise in the Conservative Party election manifesto. I am never certain about instant election promises, any more than I am about instant government. After all—[Interruption]—today of all days we know that, because the Conservative Party's election manifesto also said that the party was against further nationalisation. I nearly said "ill thought out" instant promises are not very good politics. What the Conservative manifesto said which led to the Bill was:
  "We will free from rates all buildings which a farmer uses for producing food from his land."
  But, as we have just discovered, and as their lordships pointed out in Eastwood v. Herrod, this is not the case of an intensive farming building of the sort that we are discussing.
  As certain of my hon. Friends and the hon. Member for Gillingham (Mr. Burden) have pointed out, the expression "food" receives rather a wide meaning in the Bill. The definition which comes in Clause 1(3) refers us straight back to Section 109(3) of the Agriculture Act, 1947. In one of those splendid definitions which the Minister dislikes as much as I do because it is merely an inclusive definition saying that something "shall include" the thing, it defines "livestock" as including
  "any creature kept for the production of food, wool, skins or fur".
  It means that in this Bill, enabling the derating of an industrial building which can produce not only food but wool, skins and fur—
  Mr. Arthur Lewis: Rabbits and minks.
  Mr. Silkin: —one cannot help feeling that the Minister, in his impetuosity, has gone a little further than the Conservative election manifesto.
  The right hon. Gentleman has great goodness of heart. Probably the thought of people suffering from an insufficiency

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  of food was dominant in his mind and made him bring forward the Bill so quickly. The thought that they might be freezing in our climate also prompted him to extend derating to buildings used for the rearing of mink, chinchilla and silver fox, the well known clothing of the people of this country.
  However, as my hon. Friend the Member for Enfield, East (Mr. Mackie) pointed out, the Bill goes too far, anyway. In Clause 2(4) a building is described as one that is contiguous to five acres of agricultural land and, what is more, five acres of agricultural land which need not necessarily belong to the person who has the building. The Bill is even more helpful to the man who has the industrial building in which these practices take place because it says in Clause 2(4) that, in calculating the five acres of contiguous land,
  "there shall be disregarded any road, railway or water course".
  One could have the extraordinary situation where it would be possible to get agricultural derating on an intensive factory farm building situated in the East End of London and separated by first a road, then a railway, and then the River Thames from five acres of farmland on the other side of the river.
  Mr. Charles Morrison: Would not that sort of construction be governed by planning controls?
  Mr. Silkin: No. If it was in an industrial area, it would be very likely if not certain that planning permission would be granted.
  The Minister of Agriculture, Fisheries and Food (Mr. James Prior): Highly unlikely.
  Mr. Silkin: The Minister, that well known planning expert, disagrees with me. However, I take the opposite view.
  The other interesting feature is that if all or part of the five acres on the other side of the Thames were to be built upon—let us say that one acre had houses built upon it quite suddenly—the poor intensive farmer whom the Minister is trying to derate would find himself rated again.
  Several hon. Members have talked about anomalies, but a great number of anomalies will be created if this legisla-
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  tion ever reaches the Statute Book. One has to face some anomalies in this life. They are the anomalies which come from dividing lines and limits. But we should be most anxious to avoid the anomalies that we ourselves make.
  The third basis of discussion today was concerned with the treatment of the animals inside these industrialised factory buildings. Certain hon. Members—my hon. Friend the Member for Enfield, East was one—said that this had nothing to do with the subject. The hon. Member for the City of Chester said that, after all, there are ways and means of dealing with cruelty to animals and we do not therefore need to regard them when we consider the Bill. But we must take things into account, and this is one factor which must be considered.
  The effect of the Bill must be to extend the factory farming. I am no expert on this matter and do not claim to be. The hon. Member for Gillingham and my hon. Friend the Member for Ealing, North (Mr. Molloy) know far more about it than I ever shall. Indeed, my hon. Friend the Member for Watford (Mr. Raphael Tuck) made a very moving speech about the subject. But if they are right and if, as the local authorities say, there is no violent hurry for the Bill, because we have a Green Paper coming, we should be wise to drag our feet a little and say to ourselves, "If we are really going to intensify, increase, a system which is cruel to animals, let us have another look at it in the meantime."
  The Bill is not essential for anybody's sake. I have tried to show that it is not essential for the farmer's sake, and it is certainly not essential for the community's sake. We have a chance today to consider it. Nothing will be lost. Even the Under-Secretary, in his passionate party polemical speech, was unable really to get hold of any great enthusiasm for a division across the line. It is not a very important Measure. It is, however, a Measure which contains a number of principles which we should be unwise to throw away too easily.
  My hon. Friends and I have moved an Amendment. The Under-Secretary thought that we were being extravagant in our use of language. I think that was possibly because the hon. Gentleman

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  had not read the Amendment and, therefore, thought that the word "significantly" was included in it. We never said that the ratepayers as a whole would be "significantly" penalised, only that they would be penalised. Indeed, they will be penalised. If the Under-Secretary will permit a little research of my own in an area which he knows well—the north-eastern counties of Scotland and Angus—the difference in rateable value is over £50,000. I do not think that the lion. Gentleman will be telling the electors of Angus and Mearns that this is unimportant and that I am using extravagant language.
  Mr. Buchanan-Smith: I fought the election in that area, and it was in my election address; so there is no question of trying to hide anything, as I said earlier.
  Mr. Silkin: I think that what was in the hon. Gentleman's election address was,
  "We will free from rates all buildings which a farmer uses for producing food from his land."
  That, as I have been endeavouring to point out to the hon. Gentleman, is very different from what the Bill is trying to provide.
  I call upon my right hon. and hon. Friends to support the Amendment.
  10.34 p.m.
  The Minister for Local Government and Development (Mr. Graham Page): I first offer my congratulations, very sincerely, to my hon. Friend the Member for Monmouth (Mr. John Stradling Thomas) on his maiden speech, which was given with confidence, with eloquence, with some humour, and certainly with great knowledge of subject. His knowledge has been recognised outside the House by his membership of the N.F.U. committees, and it will now be recognised inside the House. It was very pleasant to listen to my hon. Friend's pinpointing of detail and yet very apt statements of principle. He said that as a result of the Bill loss may fall on rural authorities, and I promise him that this fact will not be overlooked when we come to the extensive review of local government revenue as a whole, which I shall mention later.
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  I do not intend to pretend that the Bill is anything other than a Measure to bring buildings used for intensive livestock farming into the area of agricultural derating. My hon. Friend the Member for Gillingham (Mr. Burden) said this, and I accept what he said. The man-in-the-street will probably be amazed to learn that buildings where 99 per cent. of the broilers sold in this country are reared and the buildings in which 90 per cent. of the pork and bacon sold in this country spend their pig life are not in law agricultural buildings. I am sure that this sort of anomaly will come as something of a shock to the ordinary man.
  Hon. Members have spoken of that kind of anomaly from their practical experience from one end of Great Britain to the other. In particular, my hon. Friend the Member for Bodmin (Mr. Hicks), in a short and effective speech, showed some of the anomalies, and at the other end of the country my hon. Friend the Member for Banff (Mr. W. H. K. Baker), from his practical knowledge, gave us some other examples, but I regret that his reference to lotted land does not give me the chance to give away anything to him because, as I understand it, lotted land is land within a village, and will not have the necessary five acres of agricultural land round it to qualify under the Bill. The hon. Member for Cornwall, North (Mr. Pardoe), too, gave some examples from his experience, and I think he was right in thinking that there would be less snooping—I use his word—under the Bill, and, therefore, a reduction in manpower.
  It is right that a Bill of this kind should give rise to discussions upon wider subjects than the narrow subject of the Bill, and we have had discussions on the incidence of rates, on the justification for derating, on the welfare of animals, even upon the Common Market and the law of rating going back to 1896. But the Bill itself is a modest Measure. It does not seek to embark on any great reform of the law of rating or, indeed, of the law relating to animal welfare. It is based upon the straightforward provisions of Section 26(1) of the General Rate Act, 1967, which says clearly:
  "No agricultural land or agricultural buildings shall be liable to be rated or to be included in any valuation list or in any rate."

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  One would think that any building in which poultry, pigs or cattle were reared would be an agricultural building, but under the existing law an agricultural building is not an agricultural building unless it is occupied together with agricultural land and is used
  "solely in connection with agricultural operations thereon,"
  or unless it is used
  "solely in connection with agricultural operations carried on on agricultural land"
  in the same occupation as the building. So, to be exempt under the present law from rating. buildings must be used for a purpose which is subsidiary to, or complementary to, the use of the agricultural land. It is not sufficient, as it was held in the Eastwood case, that the land produces one-eighth of the barley used in the broiler house, or that cockerels strut about on the land. That is insufficient under the present law. The use of the building must be subsidiary to the agricultural use of the land. It seems no more than common sense to provide, as the Bill does, that any building used for keeping or breeding livestock shall be an agricultural building and enjoy exemption from rating.
  Of course, one has to qualify that so that one is defining in a recognisable and reasonable and practical way. In order to qualify for this derating, the building must not be used for any other purpose for more than an insubstantial period of the year. I am not sure that this would cover the multi-purpose uses to which my hon. Friend the Member for the City of Chester (Mr. Temple) referred, but at least it overcomes some of the anomalies of a de minimis use of the land for some other purpose during the year.
  In order to qualify for this exemption, a building must also stand in five acres of agricultural land. I do not justify that by the fact that it is the nearest figure to two hectares when we convert to metrication, but it is justifiable as perhaps an arbitrary figure which is sufficient to exclude urban buildings. I can see that there will be many Committee points on this definition, but we have made a first shot at it. and we shall be only too open to consider constructive suggestions in Committee.
  I can dispose at once of the point made by the hon. Member for Nottingham, West (Mr. English). The area of
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  the buildings does not count towards the five acres. It is a well-established principle of agricultural law that agricultural land does not include the area covered by buildings.
  What is the alternative to the Bill? Are we to let the law continue——
  Mr. Loughlin: If there is an extensive farm project in the rural district of Newent in my constituency, which is paying rates, does the Bill provide for that intensive farming unit to be excluded from rates, and will the other ratepayers in the area have to find the money to give that exemption?
  Mr. Page: I can answer that briefly now, and probably in more detail later. A building qualifies under the Bill as an agricultural building if it is for intensive farming, and if it has five acres around it, it will enjoy the benefit of derating. The area within which it is situated may receive a benefit from the resources element in return for any loss which it may suffer. It may be one of those which are not receiving the resources element, but on the whole the loss of rates—I will come to the figure in a moment—will be spread so that it does not affect each area to any great extent.
  Mr. Mackie: The hon. Gentleman continually uses the phrase "surrounded by", but the Bill also refers to land "contiguous to" the building. The building to which my hon. Friend refers could be in an urban area; so long as it had five acres next to it, it would be covered.
  Mr. Page: The hon. Gentleman is quite right. It could be on the edge of five acres. It need not have any land surrounding it, so long as the five acres were contiguous to it. What we are saying under the existing law is that if one farms by the inefficient method of letting one's hens or pigs run around in the fields, rates are not payable, but that a farmer who farms in the efficient way pays full rates. Some producers are rated and some are not.
  Mr. Arthur Lewis: This is a serious point. The hon. Gentleman says that if a farmer is using industrial or high production methods within an area of 5 acres, he can be derated. He then ex-

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  plains the necessity for getting higher production. If there is in my constituency, which is purely industrial, a person who wants to set up a building to do exactly the same as a farmer in a country area, he has to pay a very high rate. Even though he probably has the same number of hens and carries on the same work, he pays a high rate.
  Mr. Page: That is true. The hon. Gentleman has stated the purport of the Bill correctly. The point is that we do not want this form of agricultural industry in the urban areas. It is as simple as that. We have given this rather arbitrary figure of 5 acres to make certain that this sort of business will not be carried on in an urban area.
  The present law—and I understand the Opposition case today—is that we shall derate only the farmer who has mud on his boots; that we shall not derate the fellow who is carrying out efficient farming. The fact is that because this livestock husbandry is most efficiently carried out by bought-in food, it has lost its direct connection with the neighbouring land. Therefore, we do not require the land to be in the occupation of the person who is operating the building. It is an agricultural operation—intensive livestock farming standing on its own as an agricultural operation. The real purpose of tying it to 5 acres of land is to refuse relief where those operations are not wanted and would be harmful.
  The hon. Member for Greenock (Dr. Dickson Mabon) asked what has been the development of intensive livestock husbandry over the year. I cannot give him a graph of how it has increased. I can only tell him where it has reached at the moment. In England and Wales there are 2,700 buildings of this type rated. That is 1 per cent. of the total agricultural buildings which are rated. In Scotland there are 1,300 units rated. I cannot say that they are all separate buildings, because sometimes they are grouped. That is just over 2 per cent. of the total agricultural buildings. The range of rateable values of these buildings is very wide. We had the example of the Eastwood case, which was a fantastically large building, where the rateable value was about £30,000. But
  184
  the smallest case which is now before the courts is a pig farrowing unit at Warrington with a suggested gross value of £50.
  There are no statistics by rating area of assessments of these livestock units, but I give some examples from those who have written complaining to the Ministry of Agriculture, Fisheries and Food of the rating of their buildings: in Kent, 8 acres of land, a pig fattening unit, £69 per annum; one from my hon. Friend the Member for Monmouth, a 22,000 broiler chicken house, £380 per annum; Wiltshire, 2,000 laying hens in a building, £698 per annum; Suffolk, 3,000 hens and 35 sows, building rated at £317 per annum; Yorkshire, 2,500 laying hens, £150 per annum.
  These are the sort of figures. We are not talking about relieving the big boys of farming all the way through. It is also the reasonable-sized farmer who will benefit from this derating.
  Dr. Dickson Mabon: Can we have the figures for the industry as such—its annual turnover? The hon. Gentleman has told us that 99 per cent. of broilers come from these units and 90 per cent. or so of bacon. But please may we have the annual turnover of intensive animal production units?
  Mr. Page: If one of those mysterious little notes arrives in the next 10 minutes the hon. Gentleman may get the figures. I am not sure that we have them, though, but if I am unable to give them to him now I shall write to him with the information.
  If this Measure would mean rewarding cruelty to animals I can assure the House that we would not undertake it, but I cannot understand how the use of these buildings as being subsidiary to the agricultural use of the land means the welfare of the animals. All we do here is to say that these buildings need not be subsidiary to agricultural purposes of the land in order to enjoy derating.
  I have very great respect for the views of my hon. Friend the Member for Gillingham—I know that those views are very sincerely held—but I can assure him that the new definition of "agricultural building" can have no effect one way or the other on the welfare of animals. He will know that the Brambell Committee

  185
  which was set up as long ago as 1964 and reported in 1965, found that the use of intensive systems of husbandry would not in themselves be regarded as objectionable, and might even benefit the animals themselves, but that certain practices were contrary to animal welfare and needed to be controlled.
  My hon. Friend will remember that a number of major recommendations were made by the Brambell Committee and were put into the Agriculture (Miscellaneous Provisions) Act, 1968, that the Farm Animal Welfare Advisory Committee was established in 1967, and that the codes which were prepared came before both Houses of Parliament, and received an overwhelming majority in another place and passed this House without a Division.
  But, as my hon. Friend said, everyone is not satisfied with the contents of these codes and a further report has been received from the advisory committee. On the results of its re-examination and advice from all the important bodies concerned, the proposed changes were circulated by the Government for further observations from those bodies on 25th November last. We are now awaiting the result of that consultation. I cannot give my hon. Friend any undertaking as to what might come out, except that the Government will certainly abide by the good advice which they may receive from the advisory committee and all the interested bodies.
  The Opposition's case as set out in the Amendment is twofold. It is, first, that intensive animal production is in no sense agricultural and, secondly, that we are penalising the ratepayers as a whole. I cannot believe that the first point is seriously put forward. The right hon. Gentleman the Member for Deptford (Mr. John Silkin) said that the real test was: is this operation necessary to the cultivation of the land? Of course that is the real test under the present Statute, and that is why the House of Lords decided as it did at the time. It is this award that we are altering, and we believe that in common sense anyone would believe that these were agricultural operations.
  The point about penalising the ratepayers is very important. This is, after all the Rating Bill, and we have to consider to what extent we are moving the
  186
  burden of the rates. It can be argued that agricultural derating in general penalises the ratepayer, but this remained throughout the term of office of the Labour Government and the Labour Party, now in opposition, is committed to the Acts of 1947 and 1948. It is committed even to derating mink farms. I am not so sure that I am so keen on passing on the derating in this case. Certainly when I drafted the Bill I did not have in mind the young lady who said she would do anything for a mink coat and who, now that she has got it, cannot button it up.
  All these subjects are worthy of public debate. We hope to stimulate a public debate on this as soon as possible, a public debate not only on derating but on the whole matter of local government revenue. Later this year we shall issue a Green Paper on this subject, and we can debate in full the sorts of problem which were mentioned by the hon. Member for Greenock, by my hon Friend the Member for the City of Chester and, in an interesting speech about subsidies to agriculture, by the Member for Nottingham, West.
  So for the present all we are doing is removing an anomaly in rating and bringing in a measure of justice. The anomaly appeared as a result of the Eastwood case only a year ago, and the present law makes no more sense than it would, for example, to say to a farmer, "If you use fertilisers on your crops we will rate you." There will still be some anomalies. My hon Friend the Member for the City of Chester seemed to imagine that oysters would be derated. I regret to say that oysters are not agricultural creatures and that whatever buildings they are housed in will not be derated. Nor, I regret to say, will bees.
  I can hold out a hope to my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur) that we can do something about the ponies he mentioned. We do it better in England, and I think we can amend the law slightly in Scotland on this point.
  Finally, I take very seriously the comment by the hon. Member for Enfield, East (Mr. Mackie) concerning the effect on the environment. In the course of the passage of the Bill I hope that we shall be able to study this point. It may not be the right Bill in which to bring in any

  187
  amendment of this sort, but I am sure that all right hon. and hon. Members have had complaints from constituents about the seriousness of these buildings to the environment. It is not necessarily the right Bill for that, but we can study it on this Bill.
  Government is a matter of balancing desirable objectives, but in this case it is
  balancing the desirable objective of the efficient production of food against animal welfare and conservation of the environment, and we shall try to achieve that balance.
  Question put, That the Amendment be made:—
  The House divided: Ayes 218, Noes 282.

  Division No. 126.]

  AYES

  [10.59 p.m.

  Albu, Austen

  Fraser, John (Norwood)

  Marsh, Rt. Hn. Richard

  Allaun, Frank (Salford, E.)

  Freeson, Reginald

  Mason, Rt. Hn. Roy

  Allen, Scholefield

  Galpern, Sir Myer

  Mayhew, Christopher

  Archer, Peter (Rowley Regis)

  Garrett, W. E.

  Meacher, Michael

  Armstrong, Ernest

  Gilbert, Dr. John

  Mellish, Rt. Hn. Robert

  Ashton, Joe

  Ginsburg, David

  Mendelson, John

  Atkinson, Norman

  Golding, John

  Mikardo, Ian

  Bagier, Gordon A. T.

  Gourlay, Harry

  Millan, Bruce

  Barnes, Michael

  Grant, George (Morpeth)

  Miller, Dr. M. S.

  Barnett, Joel

  Grant, John D. (Islington, E.)

  Milne, Edward (Blyth)

  Beaney, Alan

  Griffiths, Eddie (Brightside)

  Molloy, William

  Benn, Rt. Hn. Anthony Wedgwood

  Griffiths, Will (Exchange)

  Morgan, Elystan (Cardiganshire)

  Bishop, E. S.

  Hamilton, William (Fife, W.)

  Morris, Alfred (Wythenshawe)

  Blenkinsop, Arthur

  Hamling, William

  Morris, Charles R. (Openshaw)

  Booth, Albert

  Hannan, William (G'gow, Maryhill)

  Morris, Rt. Hn. John (Aberavon)

  Bradley, Tom

  Hardy, Peter

  Moyle, Roland

  Broughton, Sir Alfred

  Harrison, Waiter (Wakefield)

  Mulley, Rt. Hn. Frederick

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

  Hattersley, Roy

  Murray, Ronald King

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

  Heffer, Eric S.

  Ogden, Eric

  Brown, Ronald (Shoreditch & F'bury)

  Horam, John

  O'Halloran, Michael

  Buchan, Norman

  Houghton, Rt. Hn. Douglas

  O'Malley, Brian

  Campbell, I. (Dunbartonshire, W.)

  Huckfield, Leslie

  Oram, Bert

  Carmichael, Neil

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Orbach, Maurice

  Carter, Ray (Birmingh'm, Northfield)

  Hughes, Mark (Durham)

  Orme, Stanley

  Carter-Jones, Lewis (Eccles)

  Hughes, Robert (Aberdeen, N.)

  Oswald, Thomas

  Clark, David (Colne Valley)

  Hughes, Roy (Newport)

  Owen, Dr. David (Plymouth, Sutton)

  Cocks, Michael (Bristol, S.)

  Hunter, Adam

  Palmer, Arthur

  Cohen, Stanley

  Janner, Greville

  Pavitt, Laurie

  Coleman, Donald

  Jay, Rt. Hn. Douglas

  Pendry, Tom

  Concannon, J. D.

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

  Perry, Ernest C.

  Cox, Thomas (Wandsworth, C.)

  Jenkins, Hugh (Putney)

  Prescott, John

  Crawshaw, Richard

  Jenkins, Rt. Hn. Roy (Stechford)

  Price, J. T. (Westhoughton)

  Cronin, John

  John, Brynmor

  Rankin, John

  Crosland, Rt. Hn. Anthony

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

  Reed, D. (Sedgefield)

  Grossman, Rt. Hn. Richard

  Johnson, Walter (Derby, S.)

  Rees, Merlyn (Leeds, S.)

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

  Jones, Barry (Flint, E.)

  Richard, Ivor

  Dalyell, Tam

  Jones, Dan (Burnley)

  Roberts, Albert (Normanton)

  Darling, Rt. Hn. George

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

  Roberts, Rt. Hn. Goronwy (Caernarvon)

  Davidson, Arthur

  Jones, T. Alec (Rhondda, W.)

  Robertson, John (Paisley)

  Davies, Denzil (Llanelly)

  Judd, Frank

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

  Davies, G. Elfed (Rhondda, E.)

  Kaufman, Gerald

  Rodgers, William (Stockton-on-Tees)

  Davies, Ifor (Gower)

  Kinnock, Neil

  Roper, John

  Davis, Clinton (Hackney, C.)

  Latham, Arthur

  Rose, Paul B.

  Deakins, Eric

  Lawson, George

  Ross, Rt. Hn. William (Kilmarnock)

  de Freitas, Rt. Hn. Sir Geoffrey

  Leadbitter, Ted

  Sheldon, Robert (Ashton-under-Lyne)

  Dell, Rt Hn. Edmund

  Lee, Rt. Hn. Frederick

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

  Doig, Peter

  Leonard, Dick

  Short, Mrs. Renée (W'hampton,N.E.)

  Dormand, J. D.

  Lestor, Miss Joan

  Silkin, Rt. Hn. John (Deptford)

  Douglas, Dick (Stirlingshire, E.)

  Lever, Rt. Hn. Harold

  Silkin, Hn. S. C. (Dulwich)

  Douglas-Mann, Bruce

  Lewis, Arthur (W. Ham, N.)

  Sillars, James

  Driberg, Tom

  Lomas, Kenneth

  Silverman, Julius

  Duffy, A. E. P.

  Loughlin, Charles

  Skinner, Dennis

  Dunnett, Jack

  Mahon, Dr. J. Dickson

  Small, William

  Eadie, Alex

  McBride, Neil

  Smith, John (Lanarkshire, N.)

  Edelman, Maurice

  McCartney, Hugh

  Spearing, Nigel

  Ellis, Tom

  McElhone, Frank

  Stallard, A. W.

  English, Michael

  McGuire, Michael

  Stewart, Donald (Western Isles)

  Evans, Fred

  Mackenzie, Gregor

  Stewart, Rt. Hn. Michael (Fulham)

  Fernyhough, E.

  Mackie, John

  Stoddart, David (Swindon)

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

  Mackintosh, John P.

  Stonehouse, Rt. Hn. John

  Fitch, Alan (Wigan)

  McMillan, Tom (Glasgow, C.)

  Strang, Gavin

  Fletcher, Raymond (Ilkeston)

  McNamara, J. Kevin

  Summerskill, Hn. Dr. Shirley

  Fletcher, Ted (Darlington)

  MacPherson, Malcolm

  Swain, Thomas

  Foley, Maurice

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

  Taverne, Dick

  Foot, Michael

  Marks, Kenneth

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

  Ford, Ben

  Marquand, David

  Thomson, Rt. Hn. G. (Dundee, E.)

  Torney, Tom

  Watkins, David

  Williams, Mrs. Shirley (Hitchin)

  Tuck, Raphael

  Weitzman, David

  Williams, W. T. (Warrington)

  Urwin, T. W.

  Wellbeloved, James

  Wilson, Alexander (Hamilton)

  Varley, Eric G.

  Wells, William (Walsall, N.)

  Wilson, Rt. Hn. Harold (Huyton)

  Wainwright, Edwin

  White, James (Glasgow, Pollok)

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

  Whitehead, Phillip

  TELLERS FOR THE AYES:

  Walker, Harold (Doncaster)

  Whitlock, William

  Mr. Joseph Harper and

  Wallace, George

  Williams, Alan (Swansea, W.)

  Mr. James Hamilton.

  NOES

  Adley, Robert

  Fenner, Mrs. Peggy

  Knox, David

  Alison, Michael (Barkston Ash)

  Fidler, Michael

  Lambton, Anthony

  Allason, James (Hemel Hempstead)

  Finsberg, Geoffrey (Hampstead)

  Lane, David

  Amery, Rt. Hn. Julian

  Fisher, Nigel (Surbiton)

  Legge-Bourke, Sir Harry

  Archer, Jeffrey (Louth)

  Fletcher-Cooke, Charles

  Le Marchant, Spencer

  Astor, John

  Fookes, Miss Janet

  Lewis, Kenneth (Rutland)

  Atkins, Humphrey

  Fortescue, Tim

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

  Baker, Kenneth (St. Marylebone)

  Foster, Sir John

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

  Baker, W. H. K. (Banff)

  Fowler, Norman

  Longden, Gilbert

  Balniel, Lord

  Fox, Marcus

  Loveridge, John

  Barber, Rt. Hn. Anthony

  Fry, Peter

  McAdden, Sir Stephen

  Batsford, Brian

  Galbraith, Hn. T. C.

  MacArthur, Ian

  Bennett, Sir Frederic (Torquay)

  Gibson-Watt, David

  McCrindle, R. A.

  Bennett, Dr. Reginald (Gosport)

  Gilmour, Sir John (Fife, E.)

  McLaren, Martin

  Benyon, W.

  Glyn, Dr. Alan

  Maclean, Sir Fitzroy

  Berry, Hn. Anthony

  Goodhart, Philip

  Macmillan, Maurice (Farnham)

  Biffen, John

  Goodhew, Victor

  McNair-Wilson, Michael

  Biggs-Davison, John

  Gorst, John

  NcNair-Wilson, Patrick (New Forest)

  Blaker, Peter

  Gower, Raymond

  Maddan, Martin

  Boardman, Tom (Leicester, S.W.)

  Gray, Hamish

  Madel, David

  Body, Richard

  Green, Alan

  Maginnis, John E.

  Boscawen, Robert

  Grieve, Percy

  Marples, Rt. Hn. Ernest

  Bosom, Sir Clive

  Griffiths, Eldon (Bury St. Edmunds)

  Marten, Neil

  Bowden, Andrew

  Gummer, Selwyn

  Mather, Carol

  Boyd-Carpenter, Rt. Hn. John

  Gurden, Harold

  Maudling, Rt. Hn. Reginald

  Braine, Bernard

  Hall, Miss Joan (Keighley)

  Mawby, Ray

  Bray, Ronald

  Hall, John (Wycombe)

  Maxwell-Hyslop, R. J.

  Brewis, John

  Hall-Davis, A. C. F.

  Meyer, Sir Anthony

  Brinton, Sir Tatton

  Hamilton, Michael (Salisbury)

  Mills, Peter (Torrington)

  Brocklebank-Fowler, Christopher

  Hannam, John (Exeter)

  Miscampbell, Norman

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

  Brown, Sir Edward (Bath)

  Harrison, Brian (Maldon)

  Mitchell, David (Basingstoke)

  Bruce-Gardyne, J.

  Harrison, Col. Sir Harwood (Eye)

  Moate, Roger

  Bryan, Paul

  Harvey, Sir Arthur Vere

  Molyneaux, James

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

  Haselhurst, Alan

  Monks, Mrs. Connie

  Buck, Antony

  Hastings, Stephen

  Monro, Hector

  Butler, Adam (Bosworth)

  Havers, Michael

  Montgomery, Fergus

  Callaghan, Rt. Hn. James

  Hawkins, Paul

  Morgan, Geraint (Denbigh)

  Carlisle, Mark

  Hayhoe, Barney

  Morgan-Giles, Rear Adm.

  Channon, Paul

  Heseltine, Michael

  Morrison, Charles (Devizes)

  Chapman, Sydney

  Hicks, Robert

  Mudd, David

  Chataway, Rt. Hn. James

  Higgins, Terence L.

  Murton, Oscar

  Chichester-Clark, R.

  Hiley, Joseph

  Nabarro, Sir Gerald

  Churchill, W. S.

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

  Neave, Airey

  Clark, William (Surrey, E.)

  Hill James (Southampton, Test)

  Nicholls, Sir Harmar

  Clarke, Kenneth (Rushcliffe)

  Holland, Philip

  Nobel, Rt. Hn. Michael

  Clegg, Walter

  Holt, Miss Mary

  Normanton, Tom

  Cockeram, Eric

  Hordern, Peter

  Nott, John

  Cooke, Robert

  Hornby, Richard

  Onslow, Cranley

  Coombs, Derek

  Hornsby-Smith,Rt.Hn.Dame Patricia

  Oppenheim, Mrs. Sally

  Cooper, A. E.

  Howe, Hn. Sir Geoffrey (Reigate)

  Osborn, John

  Cornell, Rt. Hn. Frederick

  Howell, David (Guildford)

  Owen, Idris (Stockport, N.)

  Cormack, Patrick

  Howell, Ralph

  Page, Graham (Crosby)

  Costain, A. P.

  Hunt, John

  Page, John (Harrow, W.)

  Crouch, David

  Hutchison, Michael Clark

  Pardoe, John

  Crowder, F. P.

  Iremonger, T. L.

  Parkinson, Cecil (Enfield, W.)

  Curran, Charles

  Irvine, Bryant Godman (Rye)

  Percival, Ian

  Dalkeith, Earl of

  James, David

  Peyton, Rt. Hn. John

  Davies, Rt. Hn. John (Knutsford)

  Jenkin, Patrick

  Pike, Miss Mervyn

  d'Avigdor-Goldsmid, Sir Henry

  Jennings, J. C. (Burton)

  Pink, R. Bonner

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

  Jessel, Toby

  Pounder, Rafton

  Dighy, Simon Wingfield

  Johnson, Smith, G. (E. Grinstead)

  Powell, Rt. Hn. J. Enoch

  Dixon, Piers

  Jopling, Michael

  Price, David (Eastleigh)

  Dodds-Parker, Douglas

  Joseph, Rt. Hn. Sir Keith

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

  Douglas-Home, Rt. Hn. Sir Alec

  Kaberry, Sir Donald

  Proudfoot, Wilfred

  Drayson, G. B.

  Kellett, Mrs. Elaine

  Pym, Rt. Hn. Francis

  Dykes, Hugh

  Kershaw, Anthony

  Quennell, Miss J. M.

  Eden, Sir John

  Kilfedder, James

  Raison, Timothy

  Elliot, Capt. Walter (Carshalton)

  Kimball, Marcus

  Ramsden, Rt. Hn. James

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

  King, Evelyn (Dorset, S.)

  Rawlinson, Rt. Hn. Sir Peter

  Emery, Peter

  King Tom (Bridgewater)

  Redmond, Robert

  Farr, John

  Kinsey, J. R.

  Reed, Laurance (Bolton, E.)

  Fell, Anthony

  Kirk, Peter

  Rees, Peter (Dover)

  190

  191

  Renton, Rt. Hn. Sir David

  Stainton, Keith

  Vickers, Dame Joan

  Rhys Williams, Sir Brandon

  Stanbrook, Ivor

  Waddington, David

  Ridley, Hn. Nicholas

  Steel, David

  Walder, David (Clitheroe)

  Ridsdale, Julian

  Stewart-Smith, D. G. (Belper)

  Walker, Rt. Hn. Peter (Worcester)

  Roberts, Michael (Cardiff, N.)

  Stodart, Anthony (Edinburgh, W.)

  Walker-Smith, Rt. Hn. Sir Derek

  Roberts, Wyn (Conway)

  Stoddart-Scott, Col. Sir M.

  Wall, Patrick

  Rossi, Hugh (Hornsey)

  Stuttatord, Dr. Tom

  Walters, Dennis

  Rost, Peter

  Sutcliffe, John

  Ward, Dame Irene

  Russell, Sir Ronald

  Tapsell, Peter

  Warren, Kenneth

  St. John-Stevas, Norman

  Taylor, Sir Charles (Eastbourne)

  Weatherill, Bernard

  Sandys, Rt Hn. D.

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

  Wells, John (Maidstone)

  Scott, Nicholas

  Taylor, Frank (Moss Side)

  White, Roger (Gravesend)

  Scott-Hopkins, James

  Taylor, Robert (Croydon, N.W.)

  Whitelaw, Rt. Hn. William

  Sharples, Richard

  Tebbit, Norman

  Wiggin, Jerry

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

  Temple, John M.

  Wilkinson, John

  Shelton, William (Clapham)

  Thatcher, Rt. Hn. Mrs. Margaret

  Woodhouse, Hn. Christopher

  Simeons, Charles

  Thomas, John Stradling (Monmouth)

  Worsley, Marcus

  Skeet, T. H. H.

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

  Wylie, Rt. Hn. N. R.

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

  Thompson, Sir Richard (Croydon, S.)

  Younger, Hn. George

  Soref, Harold

  Thorpe, Rt. Hn. Jeremy

  Speed, Keith

  Tilney, John

  TELLERS FOR THE NOES:

  Spence, John

  Trew, Peter

  Mr. Reginald Eyre and

  Sproat, Iain

  Tugendhat, Christopher

  Mr. Jasper More.

  Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on second or third reading), and agreed to.

  IRON CASTING INDUSTRY (RESEARCH LEVY)
  11.10 p.m.
  The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley): I beg to move,
  That the Iron Casting Industry (Scientific Research Levy) Order 1971, a draft of which was laid before this House on 14th January, be approved.
  The main purpose of this Order, which my right hon. Friend the Secretary of State proposes to make under Section 9 of the Industrial Organisation and Development Act, 1947, is to replace the Iron Casting Industry (Scientific Research Levy) Order, 1967, so that the income obtained from the levy may be increased. The Order continues the imposition of the levy on the iron casting industry to finance scientific research to be carried out co-operatively within the industry by the British Cast Iron Research Association. The proceeds of the levy will continue to be collected by the Secretary of State and issued by him to the research association.
  During the last full year the statutory levy brought in £210,000 to the B.C.I.R.A., and the effect of the Order will be to increase that sum to approximately £300,000. The other grant-earning income of the research association in the year ending June, 1970, was £14,000, and it will probably be the same next year. The Government grant of 40 per cent. works out at £114.000 in the year
  Bill accordingly read a Second time and committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).
  ended June, 1970, and will be £120,000 in the coming year. On the other hand, the direct fees which the association has earned from contracts that it has undertaken on behalf of industrialists will go down from £133,000 to about £115,000 next year. The total income of the research association will rise from £471,000 to £549,000 as a result of the Order.
  The need to increase the levy is agreed by all concerned in the iron casting industry. It has remained at the same level for the last four years and has, therefore, been worth less because of the fall in the value of money. At the same time, the Government grant to the research association has fallen from 60 per cent. in 1953–54 to 40 per cent. in 1965–66, and it will fall further, to 35 per cent. in 1973–74. I am satisfied that this research is of benefit to the industry, and it is generally supported by those in the industry who will have to pay the levy.
  Without prejudice to our review of support for research associations in the future, we have come to the conclusion that it would be right to make this statutory levy by Order. The research association itself has been consulted; so has the Iron Council; so has the Confederation of Shipbuilding and Engineering Unions, whose members work in the industry.
  There are two changes which I should mention quickly to the House. The first is that the basis of the levy on the labour

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  element has been changed from the original 6s. per head per quarter to 0·14 per cent. of the total emoluments paid by each firm. This provides some hedge against inflation.
  Mr. Arthur Lewis: Did I understand the hon. Member to say it has been revised to prepare a hedge against inflation? I was told by this Government that there is going to be no inflation—that they are going to cure it. So why prepare for it?
  Mr. Ridley: If there is no inflation, as the hon. Member and I both hope, then there will be no change in the amount levied on labour, because the figure of 0·14 per cent. on emoluments will still be the same amount.
  Mr. Albert Booth: I understood the Minister to say that part of the levy is chargeable on emoluments. Does he mean emoluments assessable to income tax? If so, does he accept that there is an important distinction here?
  Mr. Ridley: The total emoluments paid to the staff will, of course, vary from case to case, but it is the total amount paid out to all the workers who are directly associated with the iron castings part of each business concerned.
  The second change is that the levy on production has been increased from 7½d. per ton to 4p per metric tonne. That, I agree, will take a little bit of working out, but it has been accepted by the industry, and, with the change to metric measure in the iron and steel industry, this will fit into the general practice developing in the industry.
  Mr. Gerald Kaufman: Is not this in anticipation of the decision on metrication which the Government have promised hon. Members opposite, particularly the hon. Member for Harrow, West (Mr. John Page) will not be made till this House has given them power to decide?
  Mr. Ridley: No. The hon. Gentleman, as always, is quite wrong. The iron and steel trades have taken a voluntary decision to adopt the metric measure, and they are perfectly entitled to do so, if they wish. The Government have in no sense taken the decision in the matter. They have asked that the new levy should
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  be expressed in metric tonnes, and we have merely complied.
  Mr. Eddie Griffiths Mr. Eddie Griffiths(Sheffield, Brightside)rose— —
  Mr. Ridley: I think I have now said enough to introduce the Order to the House. I will, by leave of the House, reply to any points or questions which are raised.
  11.18 p.m.
  Mr. George Lawson: I think we require very much more information on this Order than we have had so far. [HON. MEMBERS: "Hear, hear."] It seems to me that there are quite substantial sums of public money involved here at the present time, quite apart from the money to be raised from the industry. Part of my case is that information is not to be found in either the explanation given by the hon. Gentleman or the Order itself.
  As I understand the position, more money is to be raised than formerly by the industry, and the public purse is committed to meeting 40 per cent. of the sum of money, the minimum of which is £250,000. That is for the first three years. I am referring to the Annual Report of the B.C.I.R.A. itself. That is what I understand it to say. If I am wrong, or if the Annual Report is wrong, I have no doubt that the Minister will put me and the House right. From the Annual Report of the British Cast Iron Research Association for 1969/70, I understand— —
  Mr. John H. Osborn: Which page?
  Mr. Lawson: On pages 3 and 4 this matter is discussed. On page 3 the report says:
  "The Income and Expenditure Account for the year ended 30th June 1970 and the Balance Sheet as at 30th June 1960 accompany this Report … Normal grant-earning income amounted to £184,414, enabling B.C.I.R.A., to claim grant of £73,765 from the Ministry of Technology."
  On page 4 the Report refers to the minimum amount of £250,000 which is required to be raised from industry to qualify for grant. The undertaking to pay 40 per cent. of the amount raised commenced on 1st July, and the minimum amount could be …250,000. The hon. Gentleman shakes his head, but

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  that is my reading. This means a grant of £100,000, and if more than £250,000 is raised, the grant will be correspondingly higher. I should like an explanation of this.
  A substantial amount of public money is tied up in this. I am not condemning the use of public money—I have supported my hon. Friends in spending public money on adequate research—but I want it to be understood that this is what we are doing. Despite all the talk we have heard from the Government about industry standing on its own feet, I want it to be properly understood that it is not just money coming from industry that will be spent but substantial sums of public money.
  What machinery will be involved in collecting the money? I am not now talking of money coming from the public purse. The State undertakes to collect from the industry the moneys that will accrue from the 0·14 per cent. on emoluments and the 4p calculation on metric tonnage, and this is a substantial job. The Ministry of Technology did a much simpler job, less costly in terms of manpower and less apt to provoke the hostility of the people paying the money. How many people will be employed on collection? The old method was based on a simple calculation of the number of employees in a given firm. Under the new Order the calculation will be based on the emoluments of all the employees, with the exception of the people employed in supplying food. Maintenance men, clerks, directors, pattern makers, manual workers and the chaps who are conveying material by normal transport means will all be included. It is to be total emoluments calculated for income tax purposes, and so overtime and bonuses will enter into it. Producing that information not once but four times a year will be an involved job. I do not suggest that businessmen are dishonest—we know that they are very honest—but there must be adequate means of checking.
  Mr. Kaufman: My hon. Friend is making a powerful case. I remind him of the most remarkable point, about the hiving-off—if I may use that term in the presence of the Under-Secretary—of those staff engaged in the supply of food and drink. I have no views about this and
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  its significance, but their exclusion will make the calculation even more difficult.
  Mr. Lawson: I agree. My hon. Friend has a valid point. I do not know at what level the clerks will be included. Will a youngster who has just entered the organisation be included? Exceptions can make the calculation very difficult. In a very large works many people will be employed in the canteens. Will the people who clean up be distinct from those who serve in them?
  If a firm were told that it must calculate its total emoluments bill, that would be one thing. But I take it that directors' fees are also included, and even the money paid to research workers enters into it.
  Mr. Arthur Lewis: Is my hon. Friend suggesting that part-time directors earning £10,000 or £20,000 a year for two days' work a week also come into it?
  Mr. Lawson: That is my understanding, and that would add to the difficulty. The calculations would include in respect of a director who spreads his services over a group only that part of his emoluments directly related to this type of work; the firm must calculate what proportion of his services goes into the provision of the type of product with which we are concerned.
  Mr. Dennis Skinner: When my hon. Friend talks about part-time directors I am concerned about whether this conflicts with Clause 4 of the Industrial Relations Bill. They should know which union they should belong to.
  Mr. Lawson: That is a point worth following up. The Order states that there has been consultation with
  "substantial numbers of persons carrying on business in the iron casting industry and the organisations representative of persons employed in that industry appearing to him to be appropriate."
  It is what appears to him to be appropriate. It does not necessarily follow that that is everybody who is properly involved in this industry. There can be a considerable range of persons employed in it. Have their interests been taken into account? I do not know. That is a matter which we expect the hon. Gentleman to be able to tell us, and not just to give us the name of one federation. We want more than that on a matter of this kind. We want to know whether, for

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  example, the clerical and administrative workers were consulted in this matter. They are a considerable body of people. Has the organisation led by Mr. Clive Jenkins, the Association of Scientific, Technical and Managerial Staffs, beeen consulted?
  Mr. Arthur Lewis: I am obliged to my hon. Friend for giving way. I am a member of the A.S.T.M.S. I can assure my hon. Friend that Mr. Clive Jenkins has not been approached personally on this. It is shocking that he has not. I understand that a director of Guest, Keen and Nettlefolds, who is a big contributor to Tory Party funds, is now on the Wilferforce Inquiry. When he is spending time on that inquiry, would it be right pro tem to reduce the amount of money that he would have been earning at Guest, Keen and Nettlefolds, £20,000 a year whilst he was in the position of director, to 16 guineas a day on the Wilberforce Inquiry?
  Mr. Lawson: That should have been an extra charge on Guest, Keen and Nettlefolds. If there are these large fees being paid, Guest, Keen and Nettlefolds should have paid its share.
  Mr. Arthur Lewis: I agree.
  Mr. Lawson: How do we establish that Guest, Keen and Nettlefolds pays its full share? It would be easy once, but if it is quarterly how is some department of the Ministry for Trade and Industry to establish that that money was paid?
  Mr. Arthur Lewis: My hon. Friend is knowledgeable on this matter. This is a serious point. Has he stopped to think that if we have the situation, as we have, of a great organisation like Rolls-Royce going bankrupt because it cannot even price its contracts, what will be the position with more of these big companies like Rolls-Royce which cannot even work out their own contracts?
  Mr. Lawson: I remember that the previous Minister for Technology gave evidence to the Select Committee on Scottish Affairs of certain difficulties which existed. I will not mention names, but the Minister of Technology told us that many world famous firms kept no proper accounts. This practice seems to be all too common. How can the hon. Gentleman ensure that the method of
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  raising the amount of money we are discussing, which is 0·14 per cent. of the emoluments, is 0·14 per cent. of every person's emoluments in this industry, from the lowest—if I may use the expression—to the highest; that is, from the fellow who does the work to the fellow who supervises and says how well or otherwise it has been done? This is a tremendous calculation, and it must be done four times a year. If it is to be done at all, which I doubt, it can be done only by using enormously expensive manpower, drawn in this case not from the iron castings industry but from the State. In other words, public money will be spent on the supervision and running of the system, the collection of the money, and ensuring that the proper sums are paid.
  Mr. Kaufman: For once my hon. Friend is a little wide of the mark. Surely this work could be done by computer. If computers were bought for the purpose from I.C.L. in West Gorton, which is in my constituency, some good might come from the exercise.
  Mr. Lawson: A computer works only on the information supplied to it, and that information will be coming from individual firms. A firm is to be exempted if its liability is less than £3 10s. in the quarter, and every firm has to make its own calculation. One cannot expect a computer to turn incorrect calculations into correct ones. It can work only on the information that it gets.
  The State is tying itself to 40 per cent. of a sum——
  Mr. Arthur Lewis: I know that my hon. Friend is a diligent and hardworking Member representing a Scottish constituency, and that Scotland has many of our important industries. What does my hon. Friend suggest will happen in holiday periods? I have in mind the New Year, Burns Night, and so on. Will there be an extension of the period, because I assume that offices will not be working during those holidays?
  Mr. Lawson: I do not imagine that holiday pay would be included in the calculation. We have an extended holiday at New Year. At one time it was New Year only, but now it includes the Christmas period. But I doubt whether

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  holiday money would enter into the calculation, any more than superannuation and pension contributions would, but perhaps the Under-Secretary will be able to tell us.
  Has the hon. Gentleman calculated what the scheme will cost the State to run? The collecting will be done four times a year, and the State must ensure that each firm, whether it be G.K.N. or a little firm round the corner, pays its due share. How does the Hon. Gentleman propose to do that, and what will it cost?
  Why are we tying ourselves to 40 per cent. of the sum to be raised, with a limit of £250,000? If wages go on rising, and if salaries and directors' fees go on rising, that 40 per cent. will rise, too. I know that three years hence it is to fall to 35 per cent., but that will still be a very large sum of money.
  I am all for the principle; I am all for supporting research and development. But I should like the hon. Gentleman to square this with his political philosophy. He likes to talk about the Conservative Party philosophy. I think that he has to try to square this practice with that philosophy. I hope that he will explain the points which I have put, but I am sure that my hon. Friends will have more points to put to him tonight.
  11.41 p.m.
  Mr. Ray Carter. It is with some reluctance that I intervene. However, it is a serious matter for me, because the British Cast Iron Research Association's premises, workshops, and so on, are only just outside my constituency—in the small village of Alvechurch in the division of the hon. Member for Bromsgrove (Mr. Dance).
  Hon, Members: Where is he?
  Mr. Carter: I do not know. I was about to say that I hoped not to trespass on what is rightly the hon. Gentleman's preserve tonight. I had also hoped that the hon. Gentleman would wish to intervene in the debate, because I sure that he knows rather more than I do about this subject.
  A number of the people who work at the B.C.I.R.A. live in my constituency. I do not know them personally. Around
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  my constituency there are a number of establishments like the B.C.I.R.A., and the people to whom I have spoken, who are employed in similar capacities, are extremely disturbed at the attitude being expressed by the Government—in particular, the Department of Trade and Industry—about scientific research and development programmes.
  This has moved me to put down a Question to the Prime Minister asking him if he will reduce the number of junior Ministers at the Department of Trade and Industry by two. Judging by the laughter which I have witnessed coming from the Government Front Bench this evening, I feel justified in putting down that Question. So far that Question has not been answered; it is still on the Order Paper.
  Frankly, I am extremely suspicious about the Order for a variety of reasons, but principally because the Government spokesman in the Upper House said that the Government wanted to increase the levy upon the various firms within the cast iron industry in order to make up a shortfall which, as the Minister has made clear tonight, has been apparent for the past four years. I could quote what was said, but I understand that that is not in order in this place.
  Mr. Arthur Lewis: I should be interested to hear the quotation. If it is from a Minister's reply I think that my hon. Friend can quote it. I have not read it, so perhaps my hon. Friend will quote it.
  Mr. Carter: Perhaps you, Mr. Deputy Speaker, will rule whether I am out of order in quoting from this speech.
  Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. If it is from a Minister's statement it is in order; otherwise not.
  Mr. Carter: It is from a speech by Earl Ferrers.
  Mr. Arthur Lewis: If it is from a Minister, I should like to have it.
  Mr. Deputy Speaker: Order. I think I made a mistake. The hon. Member is entitled to quote from a speech made in the Upper House.
  Mr. Carter: Thank you, Mr. Deputy Speaker. I will quote what was said:
  "My right hon. Friend is satisfied that the Research Association does require an immediate increase in its income if its programme of

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  research is to be carried on at the required level and that the Levy should therefore be increased. The income from the present Levy has been virtually constant, and rising costs have already obliged the Association to cut back its activities and reduce its staff. My right hon. Friend is conscious of the role played by the Association in the iron casting industry and he is satisfied that, the British Cast Iron Research Association should not be allowed to suffer now because of insufficient income. In preparing the draft Order he has consulted and has received support from representatives of the industry and of the foundry workers both to the proposal to increase the yield of the Levy and to the suggested new methods of calculating the charges payable."—[OFFICIAL REPORT, House of Lords, 2nd February, 1971; Vol. 314, c. 1135–6.]
  It strikes me as an act of insincerity on the part of the Minister for him to come to this place and say that he wants to increase the levy because the net income of the association is not high enough. Frankly, that line does not square with what he has been saying in the past about research associations and the total rôle of Government in research and development.
  The Minister is on record, in answer to Questions that I have put to him, as saying quite boldly, "We want industry to bear a higher part of the cost of research and development", yet he comes to the House with a different set of reasons when he wants to increase the levy on the industry in order to aid a research and development organisation.
  If we look back to the Chancellor's economic statement just after this Parliament assembled, we see in it a deliberate action on the part of the Government to reduce Government aid and assistance to the research associations, of which the Cast Iron Research Association is one. The reduction amounted to about £2 million per year. I put it to the House that the real reason why the Government are increasing the levy on the component firms which contribute to the research association is to make up not for the shortfall in income but for the reduction in the grant given to it each year by the Government. That is the first point of fact on which I challenge the Government.
  The second matter about which I disagree with the Minister is the method that he has proposed to raise the levy. Is it the right way? I submit that it is the wrong way, for the simple reason that the new levy is based upon the total
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  emoluments paid out in any one year, or sub-division of that year as my hon. Friend said, and a proportion of that comprises the levy. I submit that this is a positive disincentive to firms to employed highly skilled manpower.
  Let us consider, for example, firm A. It may, by comparison with other members of the industry, be inefficient. This is probably due to the fact that it does not employ the right quality of labour, and hence, because it does that, the emoluments that it pays to its workpeople of that calibre are smaller than those paid by firm B, which has a high record of efficiency, due to the fact that it employs highly skilled manpower. Yet we find that the firm which is producing this increased efficiency, and hence, one must assume, this high output, is penalised, whereas the firm employing less skilled manpower and producing less output, and probably output of less quality, is in a better position. The way in which the levy is being raised is counter-productive and not in the interests of the industry as a whole.
  Mr. Kaufman: My hon. Friend is being far too kind to the Government. I suggest that what the Government are doing on this emolument-based levy is infinitely more sinister than he suggests. If he considers the matter carefully, he will realise that the implications of their action go much further.
  Mr. Carter: I am prepared to believe that, particularly as I recognise that my hon. Friend is one of the most observant and erudite hon. Members in the Chamber. I am prepared to back up what he says by my own personal experience at the hands of this Department, through Questions which I have put to it and answers which I have received from this very Minister who is here tonight. The answers have been most evasive. I have always said that the most important things in politics go by unseen. Many of us who are sincere in our efforts do not attempt to conceal what we are doing—if there is concealment, it is fortuitous—but with this Government I get the impression that there is a deliberate attempt to conceal their policy.
  The levy should be made so as to increase the levy positively at the point of collection. I agree with all that the

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  Minister said about the research association: it does very fine work and I have nothing but praise for its staff, and I hope that it prospers. But while it can do good work in its own right, I should have thought that the firms themselves could make a positive contribution of their own.
  Problems of research and development are very important so far as they affect British industry. I do not believe that this Government understand the true nature of their reports. An indication of the way in which they think and act is to be seen in their attitude towards employment and productivity. One of the first things they did when they recast the Ministries was to drop the word "Productivity" from the name of the Department of Employment. This is the clue to their thinking and to their absolute barrenness of thought about the basic problems of British industry. I could speak at length—[Interruption.] If the hon. Member wishes to intervene, I am prepared to give way: there is plenty of time.
  I am concerned particularly about the problem of the small and medium firms for which the research association caters. About 50 per cent. of British industry is comprised in this category. [An HON. MEMBER: "More than that."] I wish the hon. Member could give me a precise figure. [An HON. MEMBER: "Seventy five to 80 per cent."] That is an increase on the figure that I mentioned. But if only a marginal increase in productivity could be obtained in this large slice of our industrial and economic life, great benefits would accrue to the nation.
  Therefore, while I support the principle of increasing the grants and the total income of the research associations, and the B.C.I.R.A. in particular, I do not think that the method of obtaining the levy proposed in this Order is the right way of going about it. I know that the same principle is followed with respect to other research associations, but two wrongs do not make a right.
  I ask the Minister to consider this point, to go away and come back with a proper Order. It may take the Government some time to draw up an Order that is worthy of the debate that we are having tonight, but it is a very necessary job for all the reasons which I have
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  given. Small and medium sized industry needs the sort of facility which can be provided by this research association. I would have liked an Order that was equal to the task with which the research association is confronted. Therefore——
  Dr. John Gilbert: If I may interrupt my hon. Friend, he has often used the phrase "small and medium sized firms". Could he define the term so that we could be clear what he has in mind?
  Mr. Carter: I would say that a small firm employs 500 people or fewer.
  Mr. Kaufman: With respect to my hon. Friend, surely he is arrogating to himself something which he should not do. On page 2 of the Order he will see a reference to the Act of 1889. Surely, it is for that Act to interpret what is a small or large firm.
  Mr. Carter: I have not looked at the Order as closely as my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) has. Perhaps my hon. Friend will be called, in which case he can tell the House of the very profound points that he has evidently carefully considered. I have listened to him in the Tea Room, and I know that he has a point with which the House should be acquainted.
  I suppose that when one refers to a small or medium sized firm one has in mind 1,500 workers downwards—that sort of category. An earlier speaker said that this area of the economy comprises something like 80 per cent. I would have said it was rather lower than that.
  This Order is not worthy of the task with which it is supposed to deal. I urge the Minister to redraft the Order and he will then probably get the support of this side of the House.
  Mr. Deputy Speaker: Mr. Booth.
  Mr. Booth Mr. Booth rose——
  Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker. With respect, is it not the custom to call hon. Members alternately from either side of the House? I am not criticising the Chair—I think that you may have overlooked the fact—but two hon. Members on the other side of the House rose when the

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  hon. Member for Birmingham, Northfield (Mr. Carter) resumed his seat. I think that you may have been looking this way and did not notice them.
  Mr. Deputy Speaker: I am obliged to the hon. Gentleman. Perhaps the hon. Member for Barrow-in-Furness (Mr. Booth) will be kind enough to wait. Mr. Osborn.
  12 midnight.
  Mr. John H. Osborn: My hon. Friends will know that I am interested in the problem of financing research, and, in particular, to financing and management of industrial research in this modern age. Some hon. Members will be aware that I am interested in the foundry industry as such, but few may be aware that I am a Fellow of the Institute of British Foundrymen, although I must confess that, having been in the House for many years, my active interest in the foundry industry is now non-existent.
  I listened to the contributions made by hon. Members opposite. I could be unkind and say that they have had a lot of fun, but I should like them to know that those running the iron industry at present are concerned with its future and that if hon. Members had seen some of the reports produced by the appropriate E.D.C.s they would find that existing capacity is likely to meet orders in the foreseeable future because of a surplus in manufacturing capacity.
  Another problem that faces the iron foundry industry is that to an increasing extent it is tied to the motor industry an industry which at present is not renowned for its ability to provide a continuous flow of orders coming from its suppliers, for a variety of reasons. The hon. Member——
  Mr. Carter: Are not the points I made earlier amply borne out by the problems in the motor industry, part of which I have in my constituency? Would the hon. Gentleman not agree that a great deal more capital, research and development, and advanced technology in general is required within the foundry section of the motor industry? Would he not agree that this rather measly Order is not adequate to the needs of the motor industry in particular?
  Mr. Osborn: Hon. Members opposite must make up their minds whether they welcome the levy and the fact that money is being raised from the industry to finance its own research, whether they want just to criticise the levy as such, or even oppose the order.
  I remind hon. Members there have been Orders in 1966 and in 1967. When the hon. Member for Willesden, East (Mr. Freeson), then Parliamentary Secretary to the Ministry of Power, introduced the Order of 1967 he said:
  "The Order is acceptable to the bodies with whom it has been fully discussed in accordance with the 1947 Act."
  His final comment was:
  "We have had full consultation with the industry and the various organisations in it…"'—[OFFICIAL REPORT, 28th June, 1967; Vol. 749, c. 706–10.]
  Those words are almost identical with those used by my hon. Friend the Under-Secretary of State. The fact is that there has been full consultation with the industry as to how best to devise the levy. The hon. Member for Motherwell (Mr. Lawson) when he referred to the annual report and to the Order, commented on the peculiar nature of the formula that has been used. I can share his surprise. But if he looks at the 1967 Order he will find that the rate referred to is based on (a) "7½d. per ton of leviable iron produced" and (b) "on 6s. for every leviable worker employed by that person". He may comment on the nature of the agreement between the Minister and the industry on the alteration of the term of the levy, and particularly on how the levy has been prepared, but he must bear in mind that this is not a new measure but one that hon. Members opposite as supporters of the then Labour Government accepted as a reasonable way of financing research in the iron foundry industry.
  Mr. Kaufman: With respect, the hon. Gentleman is not taking into account the very significant differences between this Order and the Order of 1967. It is all very well to say that there was consultation in 1967 and that there has been consultation now, but the Prime Minister has shown at Singapore that the idea of consultation under this Government is very different from that under the previous Government.
  Mr. Osborn: Those who are actively concerned with the industry will treat those remarks with the contempt they deserve.
  Mr. Arthur Lewis: The hon. Gentleman has castigated my hon. Friend the Member for Motherwell (Mr. Lawson) and suggested that he is against the levy now although he supported a similar levy in 1967. My hon. Friend was at pains to explain that he was in favour of the principle but not in favour of the means of collection.
  Mr. Osborn: This is a new Order. A formula has been worked out by the industry and agreed with the Minister. It is legitimate to ask how the money will be collected, but it is not as though the industry has not been used to applying similar formulae. Without having had a Statutory Instrument, obviously the industry has somehow over the years had to find ways of raising money with which to finance development.
  This passage from the Annual Report has been quoted:
  "During the year, continuing the policy of the previous year, B.C.I.R.A. has had to operate on a reduced scale of activities in order to keep current expenditure reasonably in line with income."
  For some time those running the research association have been faced with a problem in financing their activities.
  Mr. Arthur Palmer: There is a very serious point here. The hon. Gentleman has referred to the industry's difficulty in obtaining sufficient money. There is this difference between this Order and the previous one. Previously the grant from public funds was 40 per cent. of the amount to be raised by private levy. It has been reduced to 35 per cent. in this Order. The absolute amount of money may be greater, but there is a reduction from 40 per cent. to 35 per cent. Did the industry have any opinion to express on this?
  Mr. Osborn: I am not a spokesman for the industry. I am merely arguing that this is an Order to help finance the activities of the research association. I have merely been approached by one or two members of the industry to inquire whether I as an individual back bencher would support this further Order. This
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  matter has been approved once by hon. Members opposite—in a different form of Order, it concede. When a further Order designed to help finance research comes forward, it is logical for someone who has been associated with the industry at least to contribute to the debate, although I have every intention of voting for the Order if we have to go into the Lobby.
  I can only quote from the Annual Report on the question of grant:
  "Grant continues at the rate of 40 per cent. of grant-earning income for the three years commencing 1st July, 1970, and reduces to 35 per cent. for the two years commencing 1st July, 1973."
  For two years it continues at the old rate and then it reduces.
  "The minimum amount which B.C.I.R.A. is required to raise from industry to qualify for Government grant is increased to £225,000 for the year commencing 1st July, 1970, and £250,000 per annum for each of the following years..".
  Those are the figures given in the Annual Report of the B.C.I.R.A.
  If there has been a change, I have not been notified of it perhaps because a communication which might have been sent to me has not arrived on account of the postal difficulties. This is the formation I am working on, and that is the reason why I questioned the hon. Member's observation.
  Mr. Palmer: I think that that confirms what I said, that there is a drop to 35 per cent. finally.
  Mr. Osborn: Yes. But on the real issue at stake here, one cannot, at this hour of the night, pursue the philosophy of financing the research associations.
  Mr. Eddie Griffiths Mr. Eddie Griffiths rose——
  Mr. Osborn: The hon. Gentleman can make his own speech. I have had many interruptions.
  Mr. Griffiths: This is a suitable hour, is it not—namely, midnight—for discussing this industry, which has been the Cinderella of the steel industry for far too long?
  Mr. Osborn: It is a matter for debate whether the iron industry regards itself as the Cinderella of the steel industry. But I shall not pursue this issue now.
  The question which we have to answer as a nation, as others have had to answer

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  it, is how to finance research, and where. I have asked my hon. Friend the Under-Secretary many Parliamentary Questions, and he has given me details of expenditure on grants to research associations in recent years. I take this from col. 194 of HANSARD of 18th January last: in 1966–67, these grants were £3·5 million; in 1967–68, £3·7 million; in 1968–69 £3·7 million; in 1969–70 £3·6 million; and next year they will be £3·6 million. But what is interesting is that expenditure on industrial research and support contracts has steadily increased, rising from less than £1 million five years ago to £4·4 million in 1970–71.
  Wishing to have more detail than that, I also asked my hon. Friend how the annual grants for the various research associations had operated in 1969–70, and he was able to give me a detailed breakdown for all research associations. This is in col. 191 of HANSARD of 18th January. The information is most instructive for those who want to see the full picture as it is now. Last year the annual grant to the cast iron industry was £80,405. The grant percentage of industrial income was 40 per cent., but there was also a capital grant of £60,000. I presume that that went into the financing of new building construction. In the Annual Report there is a fine picture of new laboratories, and I have assumed that the capital grant was for this purpose.
  If I wished to be awkward, I could quote from what was said by my hon. Friend the Member for Barkston Ash (Mr. Alison) when the levy Order was before the House in 1967. He asked for an assurance
  "that 'scientific research' ensures—probably presupposes—that a lot of this money will be available at the individual plant, and not spent simply on setting up new laboratories and new buildings".
  The hon. Member for Willesden, East gave an assurance
  "that the money will continue to be applied not just to laboratory work but more essentially to applied science".—[OFFICIAL REPORT, 28th June, 1967; Vol. 749, cc. 707–10.]
  I think that my hon. Friends were satisfied with that assurance, but we still have to come back to the iron foundry industry, as well as others, and consider how to devise ways of financing their research. It is fair to assume that my hon. Friend will continue the policy of previous Governments to reduce the per-
  210
  centage grant provided out of public money to research associations. This has been a continuing policy. The original object of grants from public money was to set up research associations. Thereafter by a variety of means, whether through a high rate of levy, or by contract or sponsored research, to an increasing extent they were expected to be self financing.
  Mr. Carter Mr. Carter rose——
  Mr. Osborn: No, I will not give way. The hon. Gentleman has made his speech and interrupted me several times.
  We have the problem now among many research organisations of devising means of continuing funds for the essential research, particularly in a basic industry; such as the iron foundry industry. This industry has made proposals to the Government based on two previous Orders. It has asked hon. Members to support these Orders, and I hope that, while hon. Members opposite are entitled—indeed it is their duty—to query the formula for raising the levy and details of the Order, they will accept the fact that the Order is based on agreement between the Government and the industry and will agree to support it.
  Mr. Albert Booth: There are many criticisms that could be made of the Order. Paragraph 7(2)(b) gives a list of the persons whose emoluments should be taken into consideration to determine the total amount of levy. Strangely enough, included in the persons to be taken into account are those engaged in:
  "activities carried on for the purposes of scientific research and development in connection with the industry."
  This appears to have the effect of placing a greater levy upon those casting firms which maintain a fairly high level of research on their own account than upon those which carry out no research, which I would have thought was the reverse of what should be done.
  There is a more serious difficulty in the way in which it defines what are leviable iron castings. Of the two components used for determining the amount of levy, by far the simpler one to determine should be the weight of leviable iron castings. Paragraph (2) says
  "'leviable iron castings' means iron castings as fettled, excluding pig iron and and any

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  other cast iron material re-melted or to be re-melted into other leviable iron castings."
  I submit that this is an impossible definition. No foundry worker can possibly say, at the time that he is making a casting, whether at some time in the future the casting might or might not be broken up and re-melted into another leviable iron casting. With the increasing obsolesence of iron castings it seems highly likely that a fairly high proportion of castings made in the next few years will subsequently be broken up and re-melted. If that is the case, is the Minister seriously suggesting that all of these are to be excluded from levy? I do not think that he can mean this.
  The main criticism advanced by my hon. Friends is that this Order complicates the levy system where simplification might be desirable and leaves unchanged or simplifies an area where refinement might be desirable. My hon. Friends have dealt with the complications, the keeping of records and the working out of emoluments. I will turn to the second difficulty; namely, the simplification where refinement is required.
  That is to be found in paragraph (7)(b), where the amount calculated at the rate of 4p for every metric tonne of leviable iron castings produced in the relevant production quarter is the formula used. It seems that the crudest of instruments is being used. Consider the man who is casting ballast blocks for cranes. He is putting through a high tonnage by a very simple casting process needing very little research, and yet he is having to pay a higher contribution towards the research levy than someone who is dealing with a highly intricate shape and possibly needs all the research assistance he can get.
  Finally, I turn to an aspect that the Minister has not mentioned; namely, the question whether any contribution is to be made by overseas managers of B.C.I.R.A. to the cost of carrying out the research being done. I can mention three firms all based in South Africa which are members of B.C.I.R.A.—Ace Pattern Makers and Founders, African Malleable Foundries, and Central Engineering Works, Johannesburg. Are those being asked to contribute at this rate? Has Parliament any jurisdiction over the
  212
  contributions of these members—or are British firms and the British Government to help out these South African firms as a form of overseas aid?
  The point might be made with a somewhat wider reference to some other firms overseas who are rightly members of B.C.I.R.A., such as Badische Maschinen, in Germany, which carries out some intricate and high quality casting.
  My hon. Friends and I have shown that much about this Instrument is open to objection, and unless we have a much more enlightening reply from the Minister I hope that my hon. Friends will divide on it.
  12.21 a.m.
  Mr. Bruce Milian: I am grateful to my hon. Friends and the Member for Sheffield, Hallam (Mr. J. H. Osborn) for their comments on the Order, which was introduced in an extremely cursory and offhand speech by the Under Secretary. Before we pass it we should have more information about it.
  It has been accepted on both sides of the House, as a general philosophy, that we should encourage co-operative research of the kind represented in this case by the British Cast Iron Research Association. It has also been accepted that that research should be financed partly by industry and partly by Government, and that the Government's contribution should be based on what the industry itself contributes. From that point of view I accept the intention of the Order. Nevertheless, when we have a new Order like this, which increases the amount of the levy, we are entitled to expect the Government to indicate what the additional moneys will be used for, and whether the Government are satisfied about the contribution that the association is making.
  The Under-Secretary said that the Order would increase the levy from about £209,000 last year to about £300,000, although after the various adjustments have been made in respect of the Government's contribution and so on I gather that the total increase in the association's revenue will be rather less than the figures I have quoted might have suggested. But the Government have not told us why this increase in the levy is required. The Under-Secretary said that he was satisfied

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  that it is required. He may be, but he is under an obligation to tell the House why he is satisfied, and at what speed the activities of the association are to be expanded.
  When we pass this Order this evening—as I hope we shall—are we making up for deficiencies in the last two or three years or, in allowing the industry this additional levy, are we allowing it to expand its work into fields in which it is not working at present? Anyone who reads the association's annual report will be impressed by the scale and variety of the activities in which it engages—and we would all wish to support its work. But we require from the Under-Secretary a more precise explanation where the additional money is to go than we had in the jumbled set of figures that we had at the beginning of his speech.
  The second thing about which we require a little more information is the change in the formula. Looking at the formula, and comparing the Order with the 1967 Order, it is by no means clear to me why the formula is being changed as it is at the present time. For example, the levy on emoluments is now expressed in percentage terms instead of in per capita terms, and it is also taking in a very much wider range of workers than the 1967 Order.
  My hon. Friend the Member for Motherwell (Mr. Lawson) raised a number of pertinent points about this, and it was not clear from the Minister's speech why we should now be moving from the levy based on a comparatively limited and restricted range of workers, which was the 1967 basis, to a levy which is based on a very much wider range of workers, and which might raise, as my hon. Friend pointed out, difficulties of definition and, perhaps, rather greater administrative costs and inconvenience than the 1967 levy. We require some explanation from the Minister on that point.
  Mr. Eddie Griffiths: Would my hon. Friend not agree that the reason why the Minister was vague on this point was that he is widening the scope of types of employees involved in this levy and doing so to cover up the fact that the number employed in the industry has been reduced considerably in recent years?
  Mr. Millan: This may well be so, but I think it is only the Minister who can give us the explanation for this. I know, for example, that there has been in recent years very considerable contraction of the industry in Scotland, a matter which worried us very much indeed, though I think it is reasonably stable at the minute; but, again, that is simply confirming the point I have made, that we require rather more explanation from the Minister than we have had so far this evening, and I intend to sit down in good time to give him ample opportunity to clear up these various matters.
  The third thing I want to raise with the Minister is this. He said that there had been consultations with the industry, the various representative organisations in the industry as well as the research association itself, but he did not tell us whether the industry was satisfied with the arrangements which are being put forward in this Order. In particular, he gave us no indication, as I recollect, whether the industry had accepted willingly, or had accepted under protest, or not accepted at all, the proposition that after three years commencing 1st July, 1970, the rate of grant from the Ministry to grant-earning income shall be 40 per cent. and then be reduced in the two subsequent years to 35 per cent. We require from the Minister some explanation why that reduction is being made. We particularly require the Minister to tell us whether the industry accepted the proposition which the Government put to it to reduce the grant from the Ministry to the industry.
  Finally, and this is very much related to the point I have already made, the Minister said that the present Order was without prejudice to the review which the Government are carrying out of help to the research associations. I do not know what the Minister meant by that. We have been told on a number of occasions that the Government are reviewing the whole field of science policy and particularly Government assistance to research and development whether through Government establishments or through research associations. I have complained before, most recently when considering the Atomic Energy Bill, of the very considerable uncertainty that there is now in industry about Government policy on this matter, and I have pointed out the

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  extreme desirability of the Government's bringing their review to a conclusion, and letting the House and industry know what their conclusions are as soon as they possibly can.
  I must say that it seems to me to be no encouragement at all to the British Cast Iron Research Association or to any other of these co-operative research associations—I think there are now 43 of them—to hear this qualifying phrase being put in by the Minister tonight. What exactly does it mean? Does it mean that the Government, having reviewed their policy towards research associations, will conceivably come along in a month or two months' time and say, "We are sorry. This promise we gave you of 40 per cent. grant for three years and then 35 per cent. in the next two years no longer stands, and we intend to reduce it to 25 per cent., or we shall eliminate it altogether"? Or do the promises which have been made to the association stand, regardless of the outcome of the Government's review?
  Before we pass the Order we should have an indication whether the Government have taken on a firm commitment to B.C.I.R.A., or whether the commitment is subject to change in the way I have suggested once the review of the research associations has been carried out by the Government.
  We have had an extremely off-hand introduction to the Order. I am grateful to my hon. Friends for raising these important points, and I hope very much—in fact I insist—that the Minister in winding up will give us more precise information about the many important points which have been raised.
  12.31 a.m.
  Mr. Ridley: I shall be delighted to try to respond to some of the questions which have been put to me, with the leave of the House, and to deal with them in the way that they were put to me.
  The hon. Member for Birmingham, Northfield (Mr. Carter) may be aware that my hon. Friend the Member for Bromsgrove (Mr. Dance) is seriously ill, which is why he is not here this evening. If the hon. Gentleman knew that, the tone of his remarks in relation to my hon. Friend were not well-considered, because he is clearly unable to be here.
  Mr. Carter: I was not aware that the hon. Member for Bromsgrove (Mr. Dance) was ill. I certainly meant no offence in what I said.
  Mr. Ridley: I am sure the House will be grateful to the hon. Gentleman for that withdrawal.
  I am glad that all the hon. Gentlemen who have spoken in the debate appear to be in favour of the Order. I wondered why so much criticism was brought against the Order when nobody seemed to wish to oppose it.
  The main point raised by the hon. Member for Glasgow, Craigton (Mr. Millan) was about what work the research association has been doing and will do, and how we justify this. It is not for me or for any hon. Member to specify exactly what work is being or should be done. This must be a matter for the research association, and I am sure we can leave it safely to the association to decide what work it is undertaking. In the last few years the activities of the association have had to be curtailed and reduced because the value of its income in real terms fell with the declining value of money. I do not think this is what the House would want, and it is not what the industry wants.
  As my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn), said, the industry has been widely consulted on this and supports the proposed level of the income for the research association which will result from the Order and from the Government grant. The association believes it to be necessary for its purposes. The question which arises for the Government, and, therefore, for the House, is whether we are prepared to make available the share from public funds which will result as the percentage of the statutory levy on the industry.
  Mr. Eddie Griffiths: Is the hon. Gentleman saying that the research association is more than happy with the contribution made by the Government?
  Mr. Ridley: I am coming to that point. I was saying that the people who will pay the levy are satisfied with the programme of research undertaken by the research association, and I am now

  217
  coming to discuss the Government contribution about which many hon. Gentleman have raised points, particularly the hon. Member for Motherwell (Mr. Lawson).
  Let me give the facts of the matter first. The Government's contribution has been negotiated for a five-year period, from 1970–71 to 1974–75. During the previous five years the grant was at 60 per cent. It is now at 40 per cent., and it is proposed to be at 35 per cent. for the next quinquennium, after 1973–74. This is not part of any policy change caused by the present Administration. It is part of a continuing pattern of reduction of Government contributions to research association funds which was started under previous Administrations and supported by the last Government just as it is by this Government. The maximum that the Government will provide in this quinquennium is £140,000 per annum. The cost is expected to be £120,000 in the next financial year, so it would take a very marked expansion of activity in the industry if we were ever to reach the maximum. The statutory control of the House over this expenditure is the limit of £140,000 built into the Government's liability to this particular association.
  The Government are not bound to provide this money under any legal obligation. It is merely an agreement between the Government and the association. It could, without anything being wrong at all, be varied upwards or downwards in years to come.
  I was asked whether the industry has accepted the drop in the percentage grant from 40 to 35 per cent. at the end of the present quinquennium. It has accepted it. Nobody likes to see his Government grant being cut, so it can hardly be said that this has been welcomed with open arms. But it is well known that all Governments have had a policy of reducing Government contributions to research associations, and this forms part of the normal pattern which both parties have supported and which this Government continue to support.
  Mr. Dick Douglas: This is an extremely important research association to Scotland. Would the hon. Gentleman look at this relationship anew? He will
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  readily agree that in the casting industry the value of the castings is going up while the tonnage is going down, and the number of employees is going down. The basis of calculation in the Order does not strike me as being valid into the mid-1970s and 1980s. In considering the method of calculation, has the association examined the formula that assesses the contribution from the industry on the basis of a percentage of sales rather than a percentage of tonnage?
  Mr. Ridley: I am coming to the method of calculation, but I must deal first with the Government's review of research association policy.
  We are aware that uncertainty is not helpful, and are pressing on as fast as we can. The Government are conducting a thorough-going review of the whole of their attitude towards research associations, and, therefore, we do not want to upset the agreed and accepted method of carrying on at present. We shall consider what our policy should be, and when the review has been concluded we shall announce the results in the House.
  The hon. Member for Motherwell asked about machinery for calculation. It is unchanged by the Order. The Department will still calculate the amount in exactly the same way as before. The collection costs about 4 per cent. of the proceeds of the levy, and we do not expect that percentage to vary. It is paid directly over to the research association by my right hon. Friend's Department.
  Mr. Lawson: The method of checking the continued accuracy of the contribution is much more involved. Would the hon. Gentleman explain how this is done?
  Mr. Ridley: I want to deal with this. First, on the definition point of what are emolument——
  It being one and a half hours after the commencement of Proceedings on the Motion, Mr. SPEAKER put the Question, pursuant to Standing Order No. 2 (Exempted business).
  Question agreed to.
  Resolved,
  That the Iron Casting Industry (Scientific Research Levy) Order 1971, a draft of which was laid before this House on 14th January, be approved.

  POLICE PENSIONS (REGULATIONS)
  12.42 a.m.
  The Minister of State, Home Office (Mr. Richard Sharples): I beg to mow,
  That the Police Pensions Regulations 1971, a draft of which was laid before this House on 28th January, be approved.
  These Regulations bring together in one instrument the provisions of the Police Pensions Regulations, 1966, and the nine subsequent amending regulations. Like the former regulations, they apply in England and Wales and in Scotland. In revoking the various superseded Regulations and restating the provisions in consolidated form, they provide a comprehensive pensions scheme for the past as well as for the future. I would emphasise that the rights of existing pensioners are fully safeguarded and are not in any way affected by the consolidation. I hope that as a consolidating measure, these Regulations will be welcomed by the House.
  A number of matters have been raised with me by hon. Gentlemen on both sides of the House.
  The opportunity has been taken in this consolidation to incorporate three quite substantial improvements into the Regulations. The first two of these improvements concern what is known as the augmented award for the widows or children of police officers who die as the result of injury received in the execution of duty in certain special circumstances.
  An augmented award is payable under Regulation 14 of the 1966 Regulations if the officer's death was the result of an injury received in the execution of duty where, in the opinion of the police authority, he was attacked in a manner likely to cause death, or he was effecting an arrest or preventing an escape from custody, or he was attempting to save or prevent the loss of human life. All these conditions turn upon the police authority's opinion of the circumstances.
  The view is taken that Section 5(1) of the Police Pensions Act, 1948, rules out an appeal to a court of Quarter Sessions—or, in Scotland, the Sheriff—except on the narrow question whether the police authority was or was not of that opinion. The forming of an opinion is a condition precedent to any entitlement arising.
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  The Police Pensions (Amendment) (No. 3) Regulation, 1969, which added to Regulation 14 the provision relating to the saving of life, came under criticism from the Select Committee on Statutory Instruments and in the House of Commons on the ground that there was no effective right of appeal against a police authority's decision not to award a pension; nor was there provision for the review of an earlier decision not to grant an award should further evidence become available.
  The Police Council has recommended that police authorities should be afforded discretion to enable them to make awards in cases where death results from injury received otherwise than in one or other of the circumstances to which I referred earlier, but in analogous circumstances where, in the opinion of the police authority, it would be inequitable if the augmented award were not payable.
  Draft Regulation 32 has regard to both of the matters to which I have referred. First, with regard to appeals, a justiciable issue arises where it is claimed that one of the conditions set out in draft Regulation 32(1)(a), (b) or (c) is satisfied. Regulation 32(1)(d) preserves some flexibility in cases in which the evidence is inconclusive by providing for an augmented award where the police authority is of the opinion that one of the conditions set out in sub-paragraphs (a), (b) and (c) may be satisfied and that it is appropriate that the Regulation should apply. Secondly, to meet the recommendation of the Police Council, draft Regulation 32(1)(e) provides for the payment of an augmented award where none of the conditions specified in subparagraphs (a) to (d) is satisfied but where the police authority is of the opinion that the circumstances of death were such that it would be inequitable if the award were not granted. This further discretion is not intended to cover all cases of death arising from duty. It will be for the police authority to judge in each case whether the circumstances of death were no less compelling than those specifically prescribed in the regulations.
  Draft Regulation 32(5) contains transitional provisions applicable to existing cases. Draft Regulation 43, which concerns the grant of an augmented award to dependent children, contains changes

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  consequential on those made in draft Regulation 32.
  I am sure that the House will warmly welcome these improvements in the provisions for payment of augmented awards on those very sad occasions when policemen in the execution of their duty lose their lives in particularly hazardous circumstances.
  The third improvement to which I would draw attention appears in the provisions for transferring pension rights between the police service and other employments.
  The arrangements for preserving pension entitlements on transfer have so far applied only to transfers between the police service, on the one hand, and the civil service and metropolitan police civil staffs, on the other. These arrangements have been reaffirmed in the 1971 Regulations; and they have been extended to cover various other employments in the public sector. The employments involved are those shown in Schedule 6 to the Regulations.
  It only remains for me to say that these Regulations, including all the changes made in them, have been drawn up by the Home Departments in full consultation with the local authority and police staff associations and that they have been agreed with the Police Council for the United Kingdom.
  12.51 a.m.
  Mr. Elystan Morgan: I am sure that the whole House is grateful to the Minister of State for having, with his usual courtesy, given us an outline explanation of the content of these Regulations.
  Since the Regulations consolidate nine Statutory Instruments which have governed the position in this sphere since 1966, it is natural enough that there should be broad agreement between both sides of the House about the major part of them. It is a great advantage to have such consolidations occurring every five or six years, so that we are able to have all the Regulations within one volume. But for some years yet it will be necessary to compare the new Regulations, if the House accepts them, with corresponding provisions in earlier Instruments.
  The Opposition welcome the few improvements which the new Regulations contain. In particular, the provisions
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  which provide for the transferability of pensions are welcome. It is obvious from Schedule 6 that there is a wide range of bodies within which transferability now becomes possible.
  There are one or two questions of detail which one could ask in this matter. Why, for example, are the Central Electricity Generating Board and the National Coal Board included, but the British Railways Board, for some inexplicable reason, omitted? I assume that before long we may see Rolls-Royce included in the Schedule, together with any other companies which might be the subject of theological conversions on the part of the Government. It would, I think, be of convenience to the House if the Minister could give some indication of what further developments there will be in relation to widening the area of transferability in the near future.
  It is no secret that the staff side of the Police Council has asked for considerably more than has been conceded by the Government in the new Regulations. I do not intend to go into detail, but my hon. Friends may wish to touch on one or two matters in this connection.
  There are two points which are worthy of mention. The first is in relation to the commutation of pensions. At present, this right applies only to pensions payable on retirement after 30 years' service, and I am sure that many Members consider that it would be proper to extend this right to all pensions.
  The second point arises in respect of war service. If a person was employed as a police officer before the outbreak of war in 1939, the years during which he served in the Armed Forces are counted as reckonable service for the purposes of pension, but if a person joined the police service immediately after the war, his years of service in the Armed Forces are not counted in the same way. It is considered by the Police Federation and by the staff side of the Police Council that it would be fair and equitable to treat persons who joined immediately after the war in the same way as those who joined the force prior to the war.
  Perhaps the Minister of State could explain the meaning of the words in Regulation 15 (e):
  "A reference in these Regulations to relevant service in the armed forces shall be construed as a reference to— …

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  (e) in relation to a serviceman (1939–1945), service in the armed forces up to such date as the Secretary of State on the application of the police authority of his former force may in his case have fixed."
  It appears that it is an arbitrary matter almost for the police authority to decide, and for the Secretary of State ultimately to pronounce upon. It seems repugnant to common sense that such a lack of uniformity could be possible in this connection, but there may be a simple explanation for it.
  In addition, perhaps I could mention very briefly the case of a police officer who has served in the force for only a few years and who is forced to retire prematurely on account of ill health, or who dies after a few years of service. As the Home Secretary and the hon. Gentleman know, it is the subject of a campaign by the Police Federation that where a person has served for not less than 10 years, but has not served for 20 years, it would be reasonable to grant that officer a credit of 20 years' service. It would mean that the sum paid monthly from a police officer's pay would be more and more regarded, in part at any rate, as an insurance against such an eventuality, and I do not think it would be unreasonable if the Home Secretary and the hon. Gentleman were to consider that a reasonable amendment to make in the very near future to the Police Pensions Regulations.
  I am sure that in mentioning those few points, which we regard as necessary improvements to the police pensions structure, we are in no way being irresponsible. It is surely a matter of agreement between both sides that the attractiveness of the police service in years past stemmed to a great extent from the substantial differential which was apparent in police pensions compared with pensions in so many other occupations. Happily, due to more progressive tendencies in society, such differentials are no longer at the same level.
  This is a disciplined service, with tight conditions of service, becoming less attractive in that respect than other occupations. At the moment, the police forces of England and Wales are over 10,000 under strength and it is highly unlikely, even with the best efforts of the right hon. and hon. Gentlemen opposite, that that
  224
  gap will be closed. There is every reason, indeed, to fear that it will become substantially wider in years to come.
  Therefore, I am sure that the Opposition are correct to lay stress upon the need not only for a substantial increase in police pay but for a substantial improvement in police pensions as well. It is only in this way that this arm of the public service, which is so essential to the maintenance of law and order, will be properly strengthened.
  I should like to end on a congratulatory note, in relation to Regulation No. 32. When we discussed this matter in the debate on the Police (Amendment) (No. 3) Regulations, in December, 1969, I thought that the House was confronted with the insoluble dilemma that, on the one hand, it was necessary, to preserve flexibility, for police authorities, in dealing with cases in which it might be doubtful whether the case actually came within the classical canons of rules as defined in the then Regulations, and on the other hand it was necessary to preserve what it had obviously been intended to give to a claimant in such circumstances by Regulation No. 5 of the Police Pensions Regulations, 1948—the absolute right of appeal to quarter sessions.
  But I heartily congratulate the Home Office legal advisers and the parliamentary draftsmen on having managed to allow the House now to give its sanction to Regulations which combine both benefits and to do so in a most subtle way. Therefore, the Opposition welcome the improvements, such as they are, but we ask the Government to apply their mind to the far more substantial improvements which are necessary. It is a pity that this process of consolidation, which we presume will not be planned again for some years, has been allowed to go by without making the fullest use of this opportunity.
  1.3 a.m.
  Rear-Admiral Morgan-Giles: At this monotonously late hour, I should like to ask one question and make one observation. The question concerns the transfer of pension rights. Many categories can do this, but there is no mention of the Armed Forces. When recruiting is so difficult for the police force, it would surely be a good idea to have some continuity of service conditions between the two, and Servicemen, at the

  225
  end of their engagements, should be encouraged to enter the police force. Also, what is the reason for the extraordinarily restricted definition of Servicemen in Regulation 89, merely as a policeman who has at some stage served in the Armed Forces?
  I suggest that the pay and pensions and conditions generally in the police force should now be in a special case. I hope that the Government will not be inhibited by any fears about comparability of wage claims or industrial disputes.
  1.5 a.m.
  Mr. Michael Cocks: The date of the coming into operation of this Statutory Instrument coincides with the introduction of decimalisation. I therefore wonder whether things have not been rushed a bit. There are substantial improvements which many of us would like to see, and I hope the Minister will keep an open mind on those matters.
  Reference has been made to the new occupations which are being added in Schedule 6 and to the position of non-comparable employment, and I shall not, therefore, touch on those matters now. However, we ought to bear in mind that, as we are thinking of decimalisation, there is the possibility of our joining the European Economic Community, and this will mean an increase in the number of jobs which may arise—for example, membership of Interpol. As there will be free movement within the countries, so also there will be free movement of the criminal fraternity, and the reduction of customs barriers will mean much easier transfer of stolen goods and money. This will mean a far greater number of short visits and possible interchanges between the police forces of the various countries.
  I should like to feel that as these Instruments are revised from time to time, there will be no deleterious effect on the standards of the British police because hon. Members will know that, for instance, on the question of retirement, in almost every other European country, apart from France, the retiring age is 60 at least, and in some cases it is even later.
  There is a reference in paragraph 12 to police cadet pensions. I should like to know whether there is any news of progress with regard to the Police Cadet (Pensions) Regulations. If these are not yet finalised, will the Minister at this
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  late stage consider extending the benefits to cadets under the age of 18? I understand that the argument is that they are not engaged on outside duties, but I cannot believe that inside duties are always free from risk. It is possible to imagine circumstances in which there could be a struggle inside a police station with a violent prisoner. Also these young lads attend public occasions such as football matches, and if some of their older colleagues should become engaged in crowd problems, involving violence, it is asking a lot of these young men to stand aside and not go to the aid of their colleagues.
  I believe that the greatest thing that we can give to the police force is peace of mind, not only for themselves but for their families. I was therefore sorry to see in paragraph 12, dealing with injury received in the execution of duty, that there is no improvement on the previous Regulations.
  I raise this point because recently a case came to my attention of a young constable who had made a non-periodic inspection of private premises and he had an accident on the premises, as a result of which he sustained an injury which eventually led to his being disabled out of the force. He is now working as a civilian inside a police station, but his prospects compared to what they were are very seriously damaged. The Federation has done all it can for him.
  He did not bring his case to my attention with any thought that he might get it reopened and get some gain from it. His principal motive was that he was desperately concerned about his colleagues still in the force going out for a scheduled duty and having this uncertainty in their minds as to how they stood should they be involved in the same sort of circumstances. He gave me in correspondence the case of Central Railway v. Bates, 1921, and I believe that this whole business is still built on a number of decided cases. Some way should be found to give the police a greater sense of security and a greater feeling that they will not find themselves in this sort of dilemma should they come to grief when on duty. He told me that when there is a break-in the first question invariably is: who checked the premises? This aspect should be looked at very closely.

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  There is a widening of police duties. Only recently we discussed the Fire Precautions Bill, under which inspectors may, if they have reasonable cause to think that they may be impeded in the execution of their duty, take a constable in with them. The constable then becomes at risk in the way I have mentioned, and just as there is the worry at the back of a man's mind about this sort of thing every time he goes on duty, there is the further worry, very often unspoken between a man and his wife, of whether he will meet with much more serious injury or possibly with death.
  Schedule 3 deals with widows' pensions. While I agree that there has been a substantial advance here, in this day and age we could very well think of the younger man who is unfortunate enough to lose his life. Surely to goodness, we can say that there should then be a presumption of 20 years' service in assessing his widow's pension rights. We hope that there will be very few cases of this kind and that they will be far between, and it seems a very small price to pay for the tremendous peace of mind that would be bestowed on officers and their families.
  There is a minor point. Paragraph 30(4), in page 26, deals with the case of police widows who are not covered by the provisions of the 1948 National Insurance legislation. How many of these good ladies are involved? It seems so trifling to worry about their getting an extra couple of pounds that I should have thought that this was a case where some sort of ex-gratia gesture could have been made in the same general spirit of the Government legislation.
  I join in welcoming the Regulations. I hope that they will give peace of mind to those concerned, and that in the very near future there will be improvements of the kind that have been mentioned on both sides.
  1.13 a.m.
  Mr. Charles R. Morris: I am grateful to have the opportunity to speak on these important Regulations, which affect a group of dedicated public servants to whom the nation and the community in general owe a great deal. I was grateful for the lucid
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  manner in which the Minister of State, Home Office presented them, but I hope that this atmosphere of almost complete approbation does not encourage either the hon. Gentleman or the Home Office to be complacent. Many people both here and in the country feel that although the Regulations envisage improvements in the scale of pensions the proposals are in some cases negative, and might even be thought to be almost parsimonious.
  One feature of the Regulations to which I draw special attention is the constant reiteration of the phrase
  "the policy at thority may, in their discretion".
  Possibly the best illustration occurs in Regulation 47:
  "Where a member of a police dies while serving as such and no other award is payable under these Regulations, the police authority—(a) may, if in their discretion they think fit. …"
  This phrase should be scrutinised more closely. As the Minister of State said, the police authority will express an opinion in these cases where men have given their lives in pursuing their duties as police officers. I say that in such cases discretion should not rest with the police authority. I accept that police authorities are composed of many worthy individuals, but if authorities are given discretion in some cases they will exercise it. Where a police officer loses his life in pursuing his duty and serving the community, his widow and dependants should have a statutory right to a scale pension worthy of the service he has rendered the nation.
  I have noted the statements that in these circumstances a widow or dependant might receive an augmented or special pension. As will be seen from Regulation 32 on page 80, even an augmented pension is by no means overgenerous. The reference is to half of an officer's pensionable entitlement:
  "Subject to paragraphs 2 and 3, the weekly amount of a widow's special pension calculated in accordance with this Part of this Schedule shall be equal to a half of her husband's average pensionable pay for a week."
  That is a not over-generous scale of pension for the widow of an officer who has given Es life in the service of the nation. I recognise that the Minister may well say that she will receive, in addition, a gratuity.

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  I have been interested in this point for some time. Over the years I have collected some of the reports about policemen who have lost their lives or been seriously injured in incidents. I was moved by the tragic circumstances in which Inspector Barry John Taylor lost his life at Pudsey on 15th February, 1970. Inspector Taylor lost his life in the tragic circumstances where an automatic burglar alarm called the police to the premises of a mill in Pudsey at 12.40 on that day. Four officers, including Inspector Taylor, went to investigate and found a Mr. Riley shot dead in his office. Inspector Taylor went to the rear of the building and confronted a man with a sawn-off shotgun. A shot was fired and Inspector Taylor fell back into the arms of one of his colleagues. He died in hospital. It is sad to relate that Inspector Taylor was 30, married, with two young children.
  Against the background of these circumstances I do not think that it could be claimed that the rates and scales of pensions envisaged in these Regulations are over-generous. Hon. Members may well take the view to which I have already given voice, namely that the scales can be improved upon and that they might be thought to be niggardly and parsimonious.
  In December 1969, Detective Constable Angus Mackenzie was shot in Glasgow. Can it be said that these pension proposals are generous against the background of the service which he rendered to the community? In August, 1969, a London Policeman, Constable Michael Davies, was stabbed to death at Queensmere, a large pond on Wimbledon Common in South-West London. In that case a worthy local resident, Mrs. O'Connell, a member of the Wandsworth Borough Council, inaugurated an appeal for P.C. Davies' family. But is that the way to look after the widows, children and dependants of police officers who have lost their lives in pursuit of their duty? Ought we to leave it to public subscription, a whip-round in the "local"? On the contrary, we ought to give proper rates of pension as an entitlement.
  I could cite many more individual cases—for instance, the three policemen who were shot in London in 1966—of police officers who have been injured
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  and lost their lives in pursuit of their duty, but I shall take up no more time. I leave this thought with the Minister. These officers are entitled to the generosity of the nation which they serve, and I hope that the Regulations are only a beginning of our recognition of the contribution which they give.
  1.23 a.m.
  Mr. Arthur Lewis: I wholeheartedly support the Regulations, but, like my hon. Friend the Member for Manchester, Openshaw (Mr. Charles R. Morris), I consider that the Government—I mean all Governments, and I make no party point—are most ungenerous towards these essential servants of the nation. Civil servants can have their non-contributory pension. Policemen have to pay about 6¼ per cent. towards their pension. We all agree that the police are underpaid, undermanned and overworked, and the salary now being discussed and negotiated is inadequate.
  Let us see that the police are treated like civil servants. Let them have a noncontributory pension scheme similar to the Civil Service scheme for gratuities and other benefits.
  I do not believe that there is any other section of Government employees who are so shabbily treated. Admittedly, Members of Parliament are even worse treated than the police, but that is no reason why we should treat the police shabbily. We are responsible in both cases, but, unlike us, the police are not able to come to the House to argue their case.
  Later this week, we are to have an opportunity to discuss giving a pension of £5,000 a year to a very honourable gentleman who has given great service, but only for 5½ years. I understand that later this week the Government are putting down a Motion so that I can discuss this at great length. I will then have the opportunity of comparging how Governments can act quickly to give large sums to people who—and I say this with the greatest respect—are not so worthy and so much entitled to the money as these people of whom we are talking.
  It was said quite rightly that no one would object to the police getting adequate salaries and there would be no question of comparability. I agree with

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  this generally but there are other State servants who are just as important as the police. There are the firemen who also do a good job and often sacrifice their lives. They are not as fairly or reasonably treated as they might be. I ask that these people be given a better crack of the whip than they have so far had. Let us give them the same kind of consideration we give to other State servants.
  I read in this week's Sunday Express, I think, of three or four police officers who had been on a charge and found not guilty but were told that they had to get out of the force or their pensions might be affected. If that is a true report it is a shocking thing. If these policemen —exonerated, without a stain on their characters—were subject to that kind of blackmail I hope that the Minister will look into it. This week an Order is to be laid dealing with the payment of suspended policemen. It is a terrible thing that a member of a police force, before he is found guilty, should be suspended without pay or on two-thirds pay. I hope that we will give to police officers the same conditions as we give to civil servants.
  1.28 a.m.
  Mr. Sharples: With the leave of the House. I hope that the hon. Member for West Ham, North (Mr. Arthur Lewis) will forgive me if I do not follow him in his arguments and deal with the case he has raised. It is always difficult to reply on personal cases in such a debate. I will look at the point he has raised.
  I am grateful to the hon. Member for Cardigan (Mr. Elystan Morgan) for the welcome he gave to these Regulations. We have, as it were, exchanged seats in the House since the General Election. I certainly took his point about trying to issue guidance in sorting through the Regulations, particularly as one amending Regulation follows another. I will examine the points to see whether anything can be done. The hon. Gentleman talked about the provisions for widening the scope of those employments contained in Schedule 6 and he particularly asked about British Rail. The position about British Rail is that discussions are going on. There is no reason why other organisations of that kind should not be added. They can easily be added to the list.
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  The hon. Member also asked about the commutation of pensions for people with under 30 years' service. I should like to consider that point. I note what the hon. Member says. His next point concerned Regulation 15(e). He asked for an explanation. This is pure consolidation. I looked up the 1966 Regulations and I found this provision in Regulation 109, word for word. It is derived from Section 4(1) of the Police and Firemen (War Service) Act, 1944. Policemen can count wartime service in the Armed Forces only up to a date fixed by the Secretary of State. The reason is that some men served in the Forces after the date at which they could be released. Where a man did so for his own purposes rather than in the national interest there would be no justification for his being allowed to count the extended period in the Armed Forces for police pension purposes.
  The hon. Member asked about awards for service of those who served less than 25 years. He will know that details of the awards for short service are contained in draft Regulation 21 of the associated Schedule—Schedule 2, Part II. The award consists of a gratuity for those with service of less than 10 years and a pension where service is 10 years or more.
  The next point raised by the hon. Member concerned ill health pensions. I understand that the enhancement of service for pension purposes after retirement on ill health grounds is a matter which could be considered in the review of pensions that the Police Commission is likely to undertake in the very near future.
  The hon. Member asked about the counting of war service for pension purposes. He will know that this matter has been under consideration on many occasions. l have little doubt that he had to consider it when he occupied the position that I now hold. A proposal that half such service should count received consideration in 1947, but it was not conceded because the local authority associations strongly opposed it. In 1952 the Oaksey Committee on Police Conditions of Service recommended that the war service of new entrants should not be pensionable. I understand that the matter has been raised on many occasions under both Governments, but I should be misleading the hon. Member if I were to

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  hold out any hope of there being much likelihood of a reversal of the position.
  Mr. Elysian Morgan: I am not sure whether I dealt with the matter during my tenure at the Home Office, as a junior Minister, but does not the hon. Gentleman accept that it is particularly unfortunate that at a time when persons employed by central Government bodies allowed this period of war service in these circumstances to be counted towards pension local government bodies succeeded in making an exceptional reservation in relation to police service? They are out of step with the general pattern in this connection.
  Mr. Sharples: I appreciate the hon. Member's point, and also the views of the Federation, but for reasons that I think the hon. Member understands I should be misleading him and the House if I held out much hope of a change.
  The hon. Member for Bristol, South (Mr. Michael Cocks), raised the question of awards for police cadets. If the present Regulations are approved by Parliament this evening it is my right hon. Friend's intention to make Police Cadet Pensions Regulations which will come into operation for parliamentary purposes on 22nd February of this year and become fully operative on 1st April of this year. They will apply, with modifications, certain provisions of the Police Pensions Regulations to police cadets aged 18 years or more.
  The hon. Gentleman the Member for Bristol, South, also raised the question of decimal currency. I can tell him that, as he knows, the Regulations now before the House are expressed in terms of decimal currency, and the roundings have been made so that they do not operate to the disadvantage of any pensioner.
  My hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan-Giles) referred to the question of service in the Armed Forces. Service in the Armed Forces is not transferable. Because of the incompatibility between Forces' pensions schemes and other pension schemes there are no transfer arrangements between Armed Forces' and any other public service pension schemes, and I am afraid that it would not be possible to act in the way he suggests.
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  I am afraid I cannot give the hon. Member for Bristol, South, the number of widows not covered by National Insurance pensions. I have not been able to find out the information in time.
  Mr. Michael Cocks: I appreciate that it is a little unfair to ask at this time of night, and it would not be reasonable to expect, the hon. Gentleman to produce the figures now, but would he, as a matter of interest, look at this, because I think the number must be small, and it seems a pity to put it in black and white, as it were, that we are not going to give to them?
  Mr. Sharples: Certainly I will look at it, and I will write to the hon. Gentleman and let him know.
  The hon. Gentleman the Member for Manchester, Openshaw (Mr. Charles R. Morris), said he hoped the reception the Regulations had had would not encourage the Home Office to be over-complacent. I can assure him that we are never complacent in considering matters of vital interest to the police and the public service. No Home Office Minister could ever be complacent in dealing with these matters.
  He referred to the question of augmented pension and said it was not overgenerous. Of course it is not overgenerous. No pension in these circumstances could be over-generous, no matter what the amount. He referred to the actual amount of the pension. I am sure the House realises that, in addition to that, there is an award of £3,000 as well.
  The hon. Gentleman also referred to Regulation 47(1)(a). It is quite true that under paragraph (a) gratuity to a dependent relative not exceeding the policeman's pension contribution is a discretionary award, but I would draw his attention to Regulation 47(1)(b) which says that there must be paid so much of the policeman's contribution as has not been paid out by way of gratuity under Regulation 41(1)(a). The discretion conferred by the paragraph to which the hon. Gentleman referred therefore only determines the person or persons who receive gratuity, not the total sum which must be paid by way of gratuity under the Regulations. I hope that that clears the point, which is complex.
  Mr. Charles R. Morris: It is indeed complex. I am grateful to the hon. Gentleman for giving way. The point I was making was on the phrase "in their discretion", which permeates the whole Regulations. If the Regulations go through discretion reposes in the police authority on a number of issues within the Regulations. Is it right that the police authority should be given this all-embracing discretion?
  Mr. Sharples: I think that that is a matter of opinion. My own feeling is that in the kinds of cases where discretion is given to the police authority, cases where discretion is given as to how the money is divided, it may be very much easier, in many cases, and the result possibly much more generous in some cases, if discretion is given to the police authority. Where we are dealing with the kind of situation which we have been discussing this evening, my own feeling is that if we tie things too rigidly we may sometimes not get the generosity we might otherwise have got. I think police authorities, on the whole, look at their role asking to interpret generously. Having said that, I hope the House will agree to pass the draft Regulations. I am grateful for the manner in which all hon. Members who have spoken in this short debate have taken the Regulations.
  Question put and agreed to.
  Resolved,
  That the Police Pensions Regulations 1971, a draft of which was laid before this House on 28th January, be approved.

  VEHICLES (EXCISE) BILL [Lords]

    HYDROCARBON OIL (CUSTOMS AND EXCISE) BILL [Lords]
    Orders for Second Reading read.
    To be read a Second time this day.

  SOCIAL WORK (SCOTLAND) ACT, 1968
  1.40 a.m.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hawkins]
  Mr. William Hannan: Even at this early hour I am grateful for the opportunity to raise in this short Adjournment debate the subject of the implementation of Part III of the Social Work (Scotland) Act, 1968. I could have wished that it had been at a more convenient hour for Mr. Deputy Speaker, the Minister and Officers of the House.
  Although there is no obvious widespread public anxiety expressed about the subject, the degree of interest of the limited number of people involved is more deep and intense than normally prevails on the introduction of new legislation. I refer to the members of children's panels who have offered to render voluntary service and the dedicated social workers.
  First, as a courtesy to the House, I should explain what we are talking about. Following the Kilbrandon Report on Children and Young Persons and the subsequent White Paper of 1966, the Social Work (Scotland) Act reached the Statute Book in 1968. Its purpose is the integration of the various social services existing in the local authorities in the form of separate welfare, child care and probation services into a single local authority social work department, and the replacement of juvenile courts by a system of children's panels. It is these lather vital provisions governing the change from courts to panels which are covered by Part III and which have not yet been implemented, although, in fairness, I should add that a major reorganisation has been proceeding since the passing of the Act with the other Parts of it.
  On 15th October, 1970, the Under-Secretary of State will recall that in speaking to the chairmen of children's panels he said that the Secretary of State for Scotland:
  "… intends to bring the new system into operation in early April 1971, and we shall do everything we can to ensure that this target date is met. If the expected progress is made.

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  it should be possible to announce the precise commencing date in January 1971."
  It is, therefore, at this point that my first questions arise. To be fair, the Under-Secretary explained at that time the reasons for the delay which, briefly, were that it was taking longer than was expected to make various preliminary arrangements. Therefore, it is in no acrimonious spirit but with a view to seeking a progress report on Part III that I want to put some questions to the Under-Secretary.
  The first and obvious question is, can the hon. Gentleman now inform the House of the precise date? I know it is unusual for Governments on either side to yield to questions of this character in Adjournment debates, but there is an opportunity for the Under-Secretary to set a precedent. If the hon. Gentleman cannot state the date precisely, can he say whether it will still be in early April'? Or, since the date was not announced in January as he promised, must we assume that the expected progress has not been made? If so, what are the remaining difficulties? For example. do they lie in the appointment of reporters?
  What is the number of reporters required? Am I right in thinking that it is 42 responsible local authorities that are eligible to appoint? Since in theory there is one for each local authority under Part III, including the large burghs. is 42 the requisite number? How many of that number have been appointed, and where have no such appointments been made? A reporter, who is an officer. vets the information supplied to him, all complaints, which may be malicious or trivial, and then considers whether they should go to a children's panel, so this is a very important post. A reporter may not be removed from or required to resign from his office by the local authority except with the consent of the Secretary of State, which suggests that the Secretary of State attaches great importance to the appointment.
  What is the breakdown by profession or calling of the reporters already appointed? For example, how many are lawyers or former policemen? How many are ex-Service officers? It would be a pity if an undue proportion are or have been associated with exercising discipline to the disadvantage of those
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  who accept a preventive correction approach.
  According to the excellent little publication, "Children's Hearings", no special legal qualifications are necessary for the appointment of reporters. Have lawyers been appointed generally? I can understand the reasons if a case is subsequently to go to the sheriff's court, but it would be interesting to know the breakdown of those appointed.
  Since the reporter can deal with cases in only one of three ways, none of which provides for a reference back to the police, are the police expected to continue to operate the existing warning system and liaison schemes illegally, as has been suggested in recent newspaper articles? I understand from the booklet that I mentioned that the police may in fact continue to issue warnings, with or without the reporter's consent. But I should say in fairness that that same critic admitted in the Press that the children's tribunals were a good thing, and he wished the panels well in their endeavours. The officer concerned has rendered very good services over the years to the police force in Glasgow.
  When can we expect the rules of procedure governing children's hearings to be issued? The point to which I have just referred may well be covered by the rules when they are produced. So far as I know, no such information has been provided, at least, in statutory form. When they are provided will they be in the negative or affirmative form?
  My next point is on the panel advisory committees. The difficulties in announcing the date arise from the incomplete number of advisory committees which have been appointed. As I understand it, one can be appointed in each local authority to assist the Secretary of State in selecting panel members. Are all advisory committees appointed? Again, may I have an indication of the type? Is it a cross-section of the community who have been appointed as chairmen?
  Similarly, from what walks of life do the panel members come? In conjunction with hon. Members on both sides of the House, my concern is that we shall not have people animated wholly by extreme leniency nor those desiring extreme retribution, but only sympathy tempered with firmness and shrewd common sense and

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  the ability to consider cases not in the context of their comfortable background and home but an ability to project themselves into the circumstances of inadequate housing, inadequate parents and deprived children. I should like some information on that point, particularly with regard to Glasgow. Is the number of panel members for Glasgow now complete or are there more still to come?
  While speaking about Glasgow, may I raise with the Under-Secretary the need for local officers to get out into the areas rather than have the social work department and its officers centralised in the City of Glasgow. Surely the need is for branch officers, perhaps, to begin with, in the north, south, east and west, to cut down their travel.
  I raise next the very important matter of residential accommodation. This is crucial to the successful operation of Part III. Hon. Members of the House in the 1950s will recall a series of Questions and Adjournment debates directing attention to the need for adequate provision of accommodation with suitable treatment facilities appropriate to the various needs of juvenile offenders or children in need. In too many cases—regrettably it still happens—those young people were put in prison because no other suitable accommodation was available. In my own constituency, after an inquiry, one institution was closed because young girls of 11 or 12 years of age were in residence with young women of 18 to 21 who were street-walkers. Those are practical physical difficulties which the administrators are anxious to avoid and overcome. But what are the Government doing to assist local authorities in the provision of better accommodation? What are the problems? In a recent Answer to me, the Secretary of State said that it is the duty of local authorities to provide such accommodation either by themselves or in co-operation with contiguous local authorities and voluntary organisations. Has he now asked the local authorities to provide proposals for these developments and, if so, with what results?
  I welcome the Statutory Instrument made in respect of registration of establishments, which, among other things, calls for all such places within Section 61(1) of the Act to register with the local authority as the registering authority. Such
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  places then become subject to inspection and must conform to certain standards.
  As I understand it, when Part III is brought into operation, remand homes will no longer be known by that name. What plans has the hon. Gentleman for the use of such accommodation? Will it be used as assessment centres, or can it be adapted to meet the needs of the panels' decisions as to the proper treatment for children?
  Can the hon. Gentleman say a word about training and recruitment? It is an open secret that there is an urgent need for more trained social workers. It is known that in more than one place a breakdown in the service has almost been reached. That is all the more reason for taking this opportunity to pay sincere tribute to the hard work and devoted service of the various directors and staffs concerned in bringing about this fusion of so many important services.
  Since this short debate is concerned only with the limited area of Part III, I will not pursue this next matter too far, but can the hon. Gentleman say a little about the rationalisation of the qualifications necessary? He will know that there were no less than five different certificates of qualification issued for the various professions separately. Are steps being taken to bring them together and have a generic certificate of qualification issued?
  Then, on finance, can the hon. Gentleman say a few words about the financial effect of introducing Part III? The Statutory Instrument says that the rates of travelling allowances and subsistence for members of children's panels will approximate to those prevailing for councillors. I do not take exception to that, but has an estimate been made of the total? Generally, expenditure under this head will be treated as relevant expenditure for the purpose of rate support grant, but will the hon. Gentleman bear in mind that, if this great progressive step in social reform is to achieve the measure of success that we all wish for it, still greater financial resources will be required to be allocated to it? There will be many new items. There was an increase between 1967 and 1968 compared with 1968–69, and there is no doubt that more resources will be needed if Part III is not to be crippled from its inception.

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  The question is not whether we can afford it, but whether we can afford not to do justice by this new Act, positively to meet the needs and provide the care for deprived, neglected children and, in the negative sense, to diminish the alternative course of wasted lives and vandalism.
  I urge the hon. Gentleman, not in any offensive but in a realistic fashion, to recognise that he has a responsibility for education. There are other developments which I have only mentioned but which, together with Part III, could be a charter for our young people. I know that the hon. Gentleman is personally not in favour of raising the school leaving age to 16, but his Government are. I hope that they will continue to press that, and for the implementation of the Report on Service for Youth. Together, I believe that they will achieve much to eradicate some of the delinquency. It is on the preventive side that we need to be active, rather than dealing with the results of vandalism, which is just as big a cost, and comparing one cost with the other.
  In the limited time now remaining to the hon. Gentleman, I hope that he will be able to deal with at least some of these points.
  2.0 a.m.
  The Under-Secretary of State for Health and Education, Scottish Office (Mr. Edward Taylor): I shall do my best to answer the various points which have been raised by the hon. Member for Glasgow, Maryhill (Mr. William Hannan).
  Concerning the school leaving age, the hon. Gentleman will know that the Government have made their views clear, and they are also my views.
  I am grateful to the hon. Gentleman for raising these points in this Adjournment debate. As he will see later, it is particularly appropriate that they should be raised today.
  Part III of the 1968 Act sets out the statutory framework for establishing children's panels and the children's hearings drawn from them. Their purpose is to consider the cases of children who may be in need of compulsory measures of care. The establishment of this new system was one of the two main aims of the 1968 Act. The other was the
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  establishment of the integrated social work departments within local authorities which have been in operation since 17th November, 1969. As a step forward in social reform, the new departments represent a change which can stand on its own merits. But they were also a necessary precursor of the introduction of the system of children's hearings.
  The three main components which are essential before the new system is introduced are: first, panel members selected and trained to take part in the hearings; secondly, reporters appointed with their staff and accommodation; and, thirdly, an effective framework of rules for the detailed operation of the system.
  There is no Parliamentary procedure to bring into effect the rules about which the hon. Gentleman asked.
  Last summer about 850 panel members were appointed in all parts of Scotland. They have been undergoing training and preparation both at universities and colleges and in their own areas.
  The hon. Gentleman asked about the make-up of these panels—in particular, in Glasgow. A very real endeavour has been made to choose the right kind of panels for the job. Glasgow will have a very heavy problem. This is obvious from the fact that it has by far the largest number of panel members. At present there are about 190 drawn from four times the number of volunteers and of much the same pattern as elsewhere. It was, however, suggested to the Glasgow Panel Advisory Committee last year that it should consider appointing about 40 more panel members, partly as a general safeguard and partly to see whether a higher proportion of members from manual occupations could be obtained. The advisory committee hopes to be able to submit recommendations to the Secretary of State shortly about this proposal, and special training will be laid on for these extra members, just as the present 190 have had preparation and training.
  Concerning the make-up of the panels elsewhere, the hon. Gentleman will be interested to know that Edinburgh University is undertaking a study of the age and occupations of those who apply and of those who are appointed, which should be available later this year. My Department intends to issue a circular

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  about the functions of the advisory committees, which will be expected to keep an eye on the workload of the panel members and to advise the Secretary of State if any additional apointments need to be made. The make-up of the panels will be under careful review, and we shall have this most helpful report from Edinburgh University.
  Regarding reporters, most of them have now been in post for some time, and only one or two smaller local authorities have not yet made appointments. The hon. Gentleman asked about numbers. There are 42 reporters required altogether. Three of these are combined posts. The only posts which remain to be appointed are Angus, Arbroath and Inverness-shire. Not all the reporters are lawyers. We have some who are policemen and others who are social workers. I am sure that the local authorities will bear in mind what the hon. Gentleman has said.
  The hon. Gentleman said that, this being an Adjournment debate, one would not expect a major announcement, but he invited me to establish a precedent in this connection. I am glad that, if it is a precedent, I can do so tonight.
  Although we had hoped to introduce the system in December, this did not prove possible because a number of reporters had not then been appointed, and because the preparation of rules of procedure took rather longer than had been expected. We therefore announced in October that we intended to bring the new system into operation in April. I am glad to inform the hon. Gentleman now that the Secretary of State has signed a commencement order which will bring the children's hearings into operation on 15th April.
  If in this debate we have established a precedent, I hope that what we have announced will also mark the beginning of something that will be well worth while for the whole of Scotland.
  On the question of staffing, services to children's hearings will fall to be provided by local authority social workers who already provide services to the courts, amongst many other functions. At present there are about 1,000 social workers in Scotland, of whom about 600 have some form of qualification. The independent Rowntree Committee which
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  considered social work in Scotland thought that we should aim at a figure of at least 1,500 social workers by 1975, the vast majority of whom should be trained. I think that this is a useful broad target to aim at, although it represents a very rapid expansion to an output of about 500 social workers per annum, which also allows for developments in residential social work and other needs. In 1970 the output of qualified social workers in the Scottish colleges and universities was 122. The 1971 figure should be about 50 per cent. above that, and we hope that the increase will be at least as much again in 1972.
  I deal next with the question which the hon. Gentleman raised about residential accommodation. He suggested that adequate accommodation might not be available. We do not, of course, know what view the hearings will take on the need for residential care away from home in cases coming before them. Since they will be concerned primarily with the needs of each child, their demand for residential accommodation may prove to be radically different from the present pattern of committals by the courts, which are subject to the constraints of statutory distinctions between specific types of accommodation and between the different types of sentences which can be imposed. At this stage, however, we can only judge the possible demand for residential care by what is happening at present.
  At the moment residential care for children who have committed offences or who need compulsory care and protection is primarily provided by 27 approved schools, all but two provided by voluntary bodies, providing altogether about 1,880 places. At present the schools have about 1,560 pupils. On the face of it, this might look as if there was ample provision, but, of course, the schools are differentiated according to the sex, age and religion of the pupils they take, there can be sudden fluctuations in the demand for places for a particular age group, and there may also have to be restrictions on intake from time to time because of staffing shortages or building work. This means that waiting lists build up and last year schools for the older pupils were particularly affected. Nevertheless, overall there has been a welcome drop in committals to the schools; the present population is about

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  120 lower than that at the end of March last year.
  The hon. Gentleman asked about remand homes, and what would happen to them in future. In future there will be no statutory distinction between what we at present know as approved schools or remand homes, and other types of homes for children. The hearings will be free to use children's homes for those who must be removed from their own homes but can go out to ordinary day school, and, indeed, children's homes at present accommodate a number of children who have come before the courts and who may be subject to probation orders or supervision orders or committed to the care of the local authority. There are at present about 5,750 places in children's homes in Scotland, but I accept that in some areas more accommodation is needed.
  The hon. Gentleman asked about the future building programme. The overall provision for capital expenditure on social work building projects, including accommodation for children, will be £3 million in 1971–72 and £3·3 million in 1972£73; this compares with a capital expenditure on these projects of £1·6 million during 1968–69—barely half the expenditure we expect next year.
  On the question of overall development, looking further ahead, the recent White Paper on Public Expenditure has shown that we expect expenditure on the social work services in Scotland to increase at constant prices from —20 million
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  this year to £27 million in 1974–75; this represents an average annual increase of 7½ per cent., a faster growth rate than for any of the other social services. We intend soon to issue a circular asking all local authorities to draw up plans for the development of the social work services for several years ahead, in which full account will be taken of the need for better facilities for children in trouble, as well as for the various other needs to be met.
  On the question of the costs of the new system, the direct expenditure by local authorities on the children's hearings and supporting staff is estimated at about £0·5 million in 1971–72, and —0·6 million in 1972–73. Indirect expenditure on supporting facilities cannot be estimated precisely, but the rate support grant settlement, the report on which will be made to the House on the forthcoming Rate Support Grant Order 1971, takes into account all expenditure by local authorities on social work.
  I am sure that the whole House will share the strongest wishes for the success of the new system.
  The Question having been proposed after Ten o'clock on Monday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at ten minutes past Two o'clock.