Commons Sitting of 5 May 1971

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

NEW WRITS
For Goole, in the room of George Jeger, Esquire, deceased.—[Mr. Mellish.]
For Bromsgrove, in the room of James Cyril George Dance, Esquire, E.R.D., deceased.—[Mr. Humphrey Atkins.]

ORAL ANSWERS TO QUESTIONS
  SCOTLAND

    Attraction of Industry
    Mr. Douglasasked the Secretary of State for Scotland if he will make a statement regarding the relationship of the Scottish Council (Development and Industry) to the Scottish Economic Council with regard to the attraction of industry to Scotland.
    The Secretary of State for Scotland (Mr. Gordon Campbell): Apart from the fact that some members of the Scottish Economic Council are also members of the Executive Committee of the Scottish Council (Development and Industry) there is no formal relationship between the two bodies whose functions are quite different.
    Mr. Douglas: Whatever the formal relationship for the attraction of industry to Scotland, does the right hon. Gentleman accept that the recent local election results show that the Government's policy for the attraction of industry to Scotland is viewed with extreme disfavour by the Scottish populace?
    Mr. Campbell: I wondered how soon a reference would be made to these events. The Scottish Council and the Scottish
    1346
    Economic Council are, in their various tasks, both doing an excellent job.
    Mr. Grimond: Can the right hon. Gentleman say whether he has any information about what are the most important factors in attracting industry to Scotland or repelling it? Is it cheap credit, transport, the fact that firms can find environmental situations in Scotland that they cannot get elsewhere, or what? It is important to know the main factors.
    Mr. Campbell: It is difficult to give a categorical answer to that question. I will write to the right hon. Gentleman. We had a debate about these matters recently. There are some very important attractions and inducements that we can offer in Scotland, not only to industry which is mobile in the United Kingdom but also to industry abroad. In the case of United Kingdom industry, we have to beat inflation and to get growth and investment confidence again in order to attract it.
    Mr. William Hamiltonasked the Secretary of State for Scotland what official overseas visits he has planned over the next 12 months for the purpose of attracting new industry to Scotland.
    Mr. Gordon Campbell: Following the visit to Germany last year of my hon. Friend the Under-Secretary of State for Development, arrangements have been made between the Scottish Office and the Scottish Council for a campaign to attract industry from Europe to Scotland. This campaign will require extensive and frequent visits to Europe by those concerned in it; and my hon. Friend will be there again later this year to see how the campaign is going. Further Ministerial visits will be made when the need arises.
    Mr. Hamilton: Will the right hon. Gentleman tell us whether there is any concrete evidence of the results of this activity? In view of yesterday's events, would he not be making a better contribution to employment prospects in Scotland if he made himself a permanent emigrant? Is it not a disgrace that at a time when we are asking Scottish Questions for a whole hour there are no more than three Scottish Tory Members of Parliament on the benches opposite?
    Mr. Campbell: The evidence is apparent in inquiries which are being made,

    1347
    but naturally commercial inquiries are confidential until particular projects are announced by the companies concerned.
    Regarding yesterday's events, I should imagine that it is the Scottish Nationalists who may wish to become emigrants as they are the sufferers from what happened overnight.
    Mr. Maclennan: What steps has the Secretary of State taken to draw to the attention of foreign developers the advantages of the Highlands in the light of the ban which he put on the Highlands Development Board carrying out its own promotional exercises overseas?
    Mr. Campbell: I have put no ban on the Highlands Development Board. I have tried to rationalise and arrange the co-ordination of the promotion of Scotland as a whole, so that different parts of Scotland and different bodies are not competing against each other and also causing confusion when they visit other countries or other bodies abroad. The Scottish Council and the Government are working in partnership to achieve this kind of promotion for the whole of Scotland.

    School Milk
    Mr. Eadieasked the Secretary of State for Scotland how many school children in the county of Midlothian will cease to receive free school milk following the Government's announcement on 27th October, 1970.
    The Under-Secretary of State for Health and Education, Scottish Office (Mr. Edward Taylor): I am asking Midlothian educaton authority to let the hon. Member have an estimate.
    Mr. Eadie: Does the hon. Gentleman agree that the health of our children in Scotland is a matter of which we have been rather proud? How can we justify this piece of class-ridden legislation which will deprive thousands of school children of free school milk? Is he aware that already in the City of Edinburgh, for example, 30,548 children will be deprived of free school milk? How can he justify it?
    Mr. Taylor: The medical advice is that no untoward consequences need follow, any more than when the last Labour Government ended free milk to secondary schools in 1968. As a matter of prudence,
    1348
    arrangements are being made to keep watch on the long-term nutritional state of the children affected by the change.
    Mr. James Hamilton: Will the hon. Gentleman say what medical advice he sought and got? In the course of an Adjournment debate on the same issue recently, he said that he had not sought medical advice but that it was there if he wanted to avail himself of it.
    Mr. Taylor: The advice available in my Department and, if need be, outside will be used. Arrangements are being made at present and in the future to keep a careful watch on the situation.

    Grant-aided Schools
    Mr. Clark Hutchisonasked the Secretary of State for Scotland whether he has completed his review of the financial situation of grant-aided schools in Scotland; and if he will make a statement.
    Mr. Edward Taylor: My right hon. Friend has made regulations which will enable him to increase the present fixed grants so as to take account of rises since October, 1969 in the level of relevant costs. He is still considering the longterm grant arrangements in consultation with the schools.
    Mr. Clark Hutchison: Does my hon. Friend realise that that is a very satisfactory Answer? Will he step up the grants as much as possible, remembering the value of these schools and the good products which come from them? Will he settle the question fairly quickly, as a number of parents are anxious?
    Mr. Taylor: We appreciate that this is an urgent matter. It was because of some of the factors mentioned by my hon. Friend that the Government acted as they did.
    Mr. Sillars: Does not the hon. Gentleman think that it is advisable to review his Education (Scotland) Bill concerning fee-paying schools, especially in the light of the personal rebuffs which he and his followers suffered in the Cathcart constituency last night?
    Mr. Taylor: I am very touched by the hon. Gentleman's sympathetic reference to what happened in my constituency. He cannot have looked at the whole picture or he would have noted

    1349
    the result in the Langside ward, where we had a near-record majority.
    Mr. MacArthur: Will my hon. Friend ignore that comment from the hon. Member for South Ayrshire (Mr. Sillars) and devote himself, as he has done so admirably, to the defence of the variety of choice of Scottish education, which is one of the largest attractions which we have to offer and which has been at the root of the success of education in Scotland over the years?
    Mr. Taylor: I certainly agree that there is a real place for the grant-aided schools in Scotland, and the measures which we have taken have been fully justified.
    Mr. Ross: Was not one reason for the Tories justifiably doing so lamentably in Scotland yesterday that they robbed Scottish education of free milk for primary schools and effectively deprived pupils of school meals to subsidise snobbery in fee-paying schools?
    Mr. Taylor: The right hon. Gentleman's assessment of the situation is absolutely outrageous. Surely he knows that the responsible and sympathetic policy of the Government is to give assistance and welfare to those in need. The right hon. Gentleman will be aware that the new arrangements will offer free school meals to a larger proportion of pupils.

    Paper Industry (Pricing Policies)
    Mr. John Smithasked the Secretary of State for Scotland if he will cause the Scottish Development Department to initiate a study on the effects of unfair pricing policies by Scandinavian pulp and paper manufacturers on the paper industry in Scotland.
    Mr. Gordon Campbell: This is a matter for which my right hon. Friend the Secretary of State for Trade and Industry is responsible. In the light of further information provided by the industry he has decided to take up the question again with the principal countries concerned.
    Mr. Smith: I am glad that at long last the Government are to move at least a little on this matter which has caused about 1,800 redundancies in Scotland alone since the General Election. Will the right hon. Gentleman undertake to keep up the pressure, either from his own Department or from other Departments,
    1350
    to make sure that we stop this terrible drain on our employment situation caused through the decline in the paper industry?
    Mr. Campbell: I am well aware of the difficulties of international pricing policies in the paper industry. That is a matter for which my right hon. Friend the Secretary of State for Trade and Industry is responsible. The Regional Development Division of the Scottish Office keeps in close touch with the Department of Trade and Industry on these matters.
    Sir J. Gilmour: Does my right hon. Friend agree that in view of the Government's intentions to seek entry into the Common Market, there is a danger that the Scandinavian countries will try to run paper mills in this country out of business during the negotiations?
    Mr. Campbell: I am very much aware of these problems, which were aired in the House in a debate in which I took part when E.F.T.A. was formed 10 years ago. The Scandinavian countries are already competing with us as a result of that.
    Mr. Douglas: Will the right hon. Gentleman, in his deliberations with his right hon. Friend in the Department of Trade and Industry, stress the fact that many of these companies in the process of rationalising are looking searchingly at their Scottish factories and therefore there might be a danger of their closing Scottish branch factories even though they may be economic?
    Mr. Campbell: I will certainly draw my right hon. Friend's attention to what the hon. Member has said. It is a subject of which I am very conscious.
    Mr. John Wells: Will the Secretary of State look particularly at the urgency of the matter? As he said, it is the affair of our mutual right hon. Friend. It is not only a Scottish matter, but a national matter, and it is desperately urgent. Concerning Scotland, will he particularly look at the alternative supply of home-grown pulp wood in increasing quantities which could help the Scottish industry? Furthermore, will he look at the possibility of hard-wood pulp mills in Scotland, which would enable a still greater quantity of home-grown timber to be used?
    Mr. Campbell: I will certainly consider these matters. Having been involved with the pulp mill built at Fort William when I was a member of a previous Conservative Government, I am aware of the possibilities mentioned by my hon. Friend.

    Building Industry, Edinburgh (Unemployment)
    Mr. Strangasked the Secretary of State for Scotland if he will take special measures to alleviate unemployment in the building industry in the Edinburgh area.
    Mr. Gordon Campbell: We have already taken account of the unemployment situation in reaching our decision to schedule the whole of the Edinburgh area as an intermediate area. The construction industry will benefit especially from the halving of selective employment tax.
    Mr. Strang: Is the right hon. Gentleman aware that thousands of building workers in the Edinburgh area are unemployed and that at the same time thousands of families in Edinburgh are inadequately housed? Will he attempt to alleviate this crisis situation by inviting the local authorities and the Regional Hospital Board to advance, where possible, the starting dates for some of their major building projects?
    Mr. Campbell: I am aware of the need for more work for the building industry as well as of the unemployment situation in other industries. In various measures, such as the increased expenditure on hospital building and primary schools and also in measures put forward by Edinburgh, for example the modernisation of older local authority housing at Craigmillar, I will give every encouragement to getting ahead with building.

    House Improvement Grants
    Mr. Grayasked the Secretary of State for Scotland what proposals he has in mind for encouraging wider use of house improvement grants in the private sector; and if, in particular, he will examine ways of making local authority and building society loans more readily available to help private householders
    1352
    to improve the non-grant element of house improvement costs.
    The Under-Secretary of State for Development, Scottish Office (Mr. George Younger): We have just launched a campaign of national and local publicity to encourage more improvement and my right hon. Friend has recently removed the limit on the amount local authorities may lend for house purchase and improvement. We are in touch with the building societies about ways in which they might help.
    Mr. Gray: I thank my hon. Friend for that answer. Will he make quite sure that this publicity is continued, because many people want to become owner-occupiers? Therefore, the more publicity which can be given to the facilities which are available, the better.
    Mr. Younger: I entirely agree with my hon. Friend. I think that the grants given under the 1969 Act for house improvement are very generous, and I hope that they will be made use of by as many people as possible.
    Mr. Carmichael: Is the hon. Gentleman aware that while we are always interested to have a visit from an Under-Secretary at Woodside, it was considered just a little blatant for him to be there the day before the municipal elections to open some houses very much involved with some of the local councillors? We are, and will be, delighted with any measrures which are taken to improve and build upon the Labour Government's Act for the improvement of old property.
    Mr. Younger: I thank the hon. Gentleman for his support for what we are trying to do. It simply never occurred to me that there was any political connection whatever in that occasion.
    Mr. Wolrige-Gordonasked the Secretary of State for Scotland what is the number of house improvement grants approved since June, 1970; and what was the number approved in the comparable period prior to that date.
    Mr. Younger: In the nine months to the end of March, 1971, improvement grants were approved for 16,031 houses. In the nine months to the end of March, 1970, 13,517 grants were approved.
    Mr. Wolrige-Gordon: Is my hon. Friend aware that this is the kind of progress which we expect from the Government, and that this is a very important field in which to develop and expand this good work?
    Mr. Younger: I thank my hon. Friend. It certainly is something which we are anxious to expand in every way we can.
    Mr. David Steel: Is the hon. Gentleman aware that the upward movement in the figures is very gratifying and that we hope that they will accelerate upwards still further as a result of the publicity campaign which he mentioned earlier? Will he make effective use of television, in particular, in this campaign?
    Mr. Younger: We shall be using all forms of media, including particularly the local Press, which provides very wide and effective coverage for this purpose.

    Scottish Economic Development Council
    Mr. Dalyellasked the Secretary of State for Scotland on how many occasions Ministers have attended meetings of the Scottish Economic Development Council.
    Mr. Gordon Campbell: My hon. Friend the Under-Secretary of State for Development and I have attended all meetings of the Scottish Economic Council since I became Chairman.
    Mr. Dalyell: Is unemployment being used as an instrument of economic policy?
    Mr. Campbell: No, Sir.
    Mr. Ross: How many meetings have there been?
    Mr. Campbell: There have been four meetings and a lunch.

    Roads (Expenditure)
    Sir J. Gilmourasked the Secretary of State for Scotland what is the anticipated expenditure, at constant prices, on the construction and improvement of trunk and principal roads between 1970 and 1975; how much of this will be provided direct by the central Government; and what were the equivalent sums expended under these headings during the previous corresponding period of five years.
    Mr. Younger: Over the five financial years from 1970–71 to 1974–75 the total expenditure at 1970 prices is estimated at £234 million of which £204 million will be provided by the Government. Information at the same prices is not available for earlier years, but from 1965–66 to 1969–70 actual expenditure was £156 million, of which £139 million was met by the Government.
    Sir J. Gilmour: In view of that satis factory increase in expenditure, will my hon. Friend agree that the continuing expansion of the trunk road system is absolutely essential to the industrial wellbeing of Scotland?
    Mr. Younger: I entirely agree. We are pressing ahead with the road programme as fast as we can.

    Glasgow (Improvement of the Environment)
    Mr. Galbraithasked the Secretary of State for Scotland what financial contribution the Government is prepared to make towards improving the environment in the Glasgow area; and if he will define the circumstances in which this help will be made available.
    Mr. Younger: As indicated in reply to a Question by my hon. Friend on 31st March we are prepared to make available for improving the environment in Glasgow up to £1 million a year in Government grants for each of the next five years. We are discussing with the Corporation the detailed arrangements, including the preparation of the programme of works to be covered, which we have to agree with the corporation.—[Vol. 814, c. 394–5.]
    Mr. Galbraith: Is my hon. Friend aware that, if this job is done properly, Scotland will have, in Edinburgh and Glasgow, the first-class examples of eighteenth and nineteenth century development, which will be not only a delightful environment for the inhabitants, but a valuable tourist attraction? Will he do all he can to encourage this good work?
    Mr. Younger: I am very grateful to my hon. Friend, particularly in view of his known keen interest in this subject. I hope that this special grant provided by the Government will enable work to

    1355
    be done which would not otherwise have been done.
    Mr. Ross: The hon. Gentleman referred to a special grant. Which legislation does this come under? Apart from the £1 million from the centre, what expenditure does this involve for Glasgow?
    Mr. Younger: This remains to be seen in the details being worked out with the corporation, but much of this will be done under the Local Government Grants (Social Need) Act, 1969, and some of the other work under this special grant may be done under existing legislation. But all the money involved will be extra to what would have been given in any case.

    Rossend Castle, Burntisland
    Mr. Gourlayasked the Secretary of State for Scotland in view of the recent decision of the Fife Planning Authority, if he will now make a statement on the demolition of Rossend Castle, Burnt-island.
    Mr. Younger: My right hon. Friend has directed, under the Town and Country Planning (Scotland) Act, 1969, that the application from Burntisland Town Council to demolish Rossend Castle should be referred to him for decision.
    Mr. Gourlay: That is a most disappointing reply. Is the right hon. Gentleman aware of the resounding Labour gains in the Burntisland elections yesterday, which overwhelmingly supported those in favour of demolishing this castle? Will he now have regard for the democratically expressed wishes of the Burntisland people yesterday, of whom more than 63 per cent. voted, and authorise the immediate demolition of this hideous and dangerous monstrosity, which only a few cranks would want to preserve?
    Mr. Younger: As I think the hon. Member knows, I have to preserve the position of my office and the Secretary of State in this matter, as it might come to a public inquiry. But the only object of the information so far and of calling this in is to prevent this building from being demolished without full consideration whether it should be preserved.
    Mr. Gourlay: In view of the fact that the longer this process goes on the more this will cost the local authority—it is having to spend a tremendous amount of money to support this dangerous building—will the hon. Gentleman see that the decision is expedited and made as soon as possible?
    Mr. Younger: We shall certainly lose no time unnecessarily, but I think that the hon. Gentleman will agree that it would be a pity to do anything irrevocable without proper consideration.

    Mentally Handicapped Persons
    Mr. James Hamiltonasked the Secretary of State for Scotland when he expects to publish a White Paper on the mentally handicapped; and what steps he is taking at present to improve overcrowding and the provision of personal clothing to the mentally handicapped.
    Mr. Edward Taylor: My right hon. Friend does not at present contemplate publishing a White Paper for Scotland, but he is considering whether to issue any further guidance to hospital and local authorities on the planning of services for the mentally handicapped, including measures to relieve overcrowding in hospitals and to improve other facilities.
    Mr. Hamilton: Will the hon. Gentleman recognise that those of us who have mental hospitals in our constituencies know that many of them are grossly overcrowded? Will he agree that the mental health service is the Cinderella of our Health Service, and that many of the patients, for reasons well known to us all, require clothing? Will he now introduce some provision to obviate this difficulty?
    Mr. Taylor: I certainly share the hon. Member's view that more needs to be done and the additional funds which have been made available for the hopsital and social work programme should help in this direction. General guidance on clothing was given in 1968, when the therapeutic value of personal clothing was stressed.

    Drugs
    Mr. Adam Hunterasked the Secretary of State for Scotland what plans he has for extending facilities to the police

    1357
    to combat the misuse of drugs problem in Scotland; and if he will make a statement.
    The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office (Mr. Alick Buchanan-Smith): The police already have considerable powers of search and arrest. Specialised drug squads have been set up where needed and training facilities have been expanded.
    Mr. Hunter: Is the hon. Member aware that this misuse of drugs problem is not confined to the two largest cities in Scotland, but that certain smaller towns and counties are now affected? Will he ensure that everything possible is done and that every police force in Scotland is given every assistance and encouragement to stop this problem?
    Mr. Buchanan-Smith: I very much share the hon. Member's justified concern on this matter, in that this problem is not confined to Edinburgh and Glasgow. I am personally encouraged by the interest which the police are taking not only in dealing with those who are found with drugs but in taking positive preventive measures as well.
    Mr. Dalyell: Where have specialised drug squads been set up?
    Mr. Buchanan-Smith: There are specialised drug squads in Edinburgh and Glasgow, and other forces have officers specially trained to deal with this problem.

    Tayside Study
    Mr. MacArthurasked the Secretary of State for Scotland if he is yet in a position to make a further statement about the implementation of the Tayside Study.
    Mr. Younger: We await final decisions by the planning authorities on the formation of an industrial development agency and their detailed proposals for a basic programme of restructuring and rejuvenation of the region.
    Mr. MacArthur: Is my hon. Friend aware that a new factory is likely to be built near Perth by the Michelin Company? Does he share my belief that there is every reason, despite certain setbacks, for confidence in the continuing industrial development of Tayside?
    Mr. Younger: I entirely agree with my hon. Friend. I am aware that a representative of this company has been reported in the Press as saying that the company is strongly interested in ultimately developing at Perth. Naturally, I share my hon. Friend's hopes that this will eventually prove to be a most useful project.

    Disabled Persons (Cars)
    Mr. Dempseyasked the Secretary of State for Scotland if, with a view to avoiding disabled persons being stranded on lonely roads late at night due to the mechanical breakdown of disabled persons' cars, he will provide an additional seat in such cars for a passenger; and if he will make a statement.
    Mr. Edward Taylor: The implications of providing invalid vehicles with a passenger seat would be considerable and we have no plans to develop the service in this way.
    Mr. Dempsey: Is the Under-Secretary aware that a disabled person was recently stranded on a lonely highway until the early hours of the morning and that, but for the passing of a good Samaritan, he would have been stranded there till the following afternoon? Does he appreciate that these circumstances show the reasonableness of our request that an additional seat should be available for a passenger to ensure that the disabled have assistance whenever they require it?
    Mr. Taylor: I am distressed to hear about the case which the hon. Gentleman cites. However, his request, though a general one, would have real implications. A review of invalid transport is now being undertaken, but I cannot anticipate its outcome.
    Mr. Russell Johnston: I beg the Minister to consider this matter carefully because, apart from the valid point made by the hon. Member for Coatbridge and Airdrie (Mr. Dempsey), there is the antisocial aspect of a disabled person being obliged to travel alone. In the survey which he is conducting will he look with particular care into the difficulties confronting those with respiratory problems, who need transport other than that designed for people with a limited disability?
    Mr. Taylor: I am grateful for that observation, which raises an important aspect. It would be wrong for me to anticipate the outcome of the review, but hon. Members can rest assured that all important points will be taken into account.
    Mr. Wolrige-Gordon: Is my hon. Friend aware that there is support in all parts of the House for action along the lines that have been mentioned and that we must begin to move to the point at which the disabled are enabled to drive larger cars than the vehicles at present designed for them?
    Mr. Taylor: I am aware of the real and sincere feelings that are held in all parts of the House on such matters. We must bear in mind our financial resources, but I assure my hon. Friend that his views will be taken into account in the review.
    Mr. Ross: When will the review be completed? Will its findings be published?
    Mr. Taylor: The whole subject is extremely complex and much detailed consideration is necessary to ensure that the disabled receive fair treatment, within the resources that are available. I cannot indicate when the review will be completed, but when it is, an announcement will be made.

    GRADUATES EMPLOYED FULL-TIME IN SECONDARY SCHOOLS

    Number

    Ratio of graduates to pupils

    Honours

    Ordinary

    All

    Honours

    Ordinary

    All

    1960–61

    …

    *

    *

    10,025

    *

    *

    1:28·7

    1968–69

    …

    5,158

    6,206

    11,364

    1:59·0

    1:49·8

    1:27·0

    1969–70

    …

    5,355

    6,168

    11,523

    1:59·2

    1:51·4

    1:27·5

    1970–71

    …

    5,561

    6,630

    12,191

    1:58·8

    1:49·3

    1:26·8

    * Not separately available.

    Note: Teacher figures relate to qualified teachers only and exclude supply, relief and visiting teachers.

    Winter Works Programme
    Mr. Sillarsasked the Secretary of State for Scotland if it is his intention to introduce a winter work programme this year; and if he will make a statement about the size of such a programme.
    Mr. McElhoneasked the Secretary of State for Scotland what special work programmes he is now considering to alleviate the problem of the rising unemployment in Scotland.

    Teacher-Pupil Ratio (Graduates)
    Mr. Rankinasked the Secretary of State for Scotland what steps he is taking to maintain the teacher-pupil ratio among ordinary graduates in schools and also among honours graduates.
    Mr. Edward Taylor: With permission, I will circulate figures in the OFFICIAL REPORT which show that the ratio of graduates to pupils in secondary schools is being maintained.
    Mr. Rankin: Is the Under-Secretary aware that new methods of teaching are rapidly expanding at the primary and secondary level and that this offers a challenge to our present teaching methods? Does he have any information about the serious threat to our numerical standards in Scotland?
    Mr. Taylor: I would be very concerned indeed about any threat to our standards in Scotland. However, the number of honours and ordinary graduates who entered training last October was the highest ever, and reports from the colleges of education suggest that the numbers this year will be even higher.
    Following is the information:
    Mr. Gordon Campbell: At present I have nothing to add to the projects and proposals in the reply to the hon. Member for Fife, West (Mr. William Hamilton) on 7th April.—[Vol. 815, c. 135.]
    Mr. Sillars: As the only way to reduce unemployment in Scotland this year is by undertaking a massive public works programme, may I ask the right hon. Gentleman for an assurance that he will demand such a programme from the Cabinet and that, if his demand is refused, he will resign? At what point

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    in the rising unemployment scale will he deem it necessary to resign?
    Mr. Campbell: I would not say that that was the only way of dealing with the unemployment problem. I am keenly concerned with the long-term position as well as with special winter measures. In the recent winter I announced a programme for Scotland only. Previously such programmes have been announced for the development areas as a whole. I am anxious that we get the economic decisions right, with growth starting, so that we can get investment going again in Scotland.
    Mr. Grimond: Does not growth depend on having the proper infrastructure in Scotland? At a time when we have unused resources and may be going into the Common Market, is it not important that we should have, for example, a programme to improve facilities on the East Coast, so resulting in better transport arrangements to the Continent, with an improved land bridge, along with building up a big oil trans-shipment port in the North-West, particularly in view of accidents in the Channel?
    Mr. Campbell: I would not like to answer the right hon. Gentleman's final points off the cuff. I agree with him about the need for a proper infrastructure. A lot has been done, is being done and will be increasingly done in Scotland about this and, in particular, the road programme will provide a network of roads which will be of immense value to commerce and industry.
    Mr. Ronald King Murray: Will the right hon. Gentleman accept that as the general level of unemployment in Scotland is well above the national average while the general level of earnings is below the national average, he should refute the theory to which some of his Cabinet colleagues appear to adhere that the level of unemployment in Scotland is related to excessive wage demands? Will he refute that slander on Scottish workers?
    Mr. Campbell: The hon. and learned Gentleman is misinformed about the attitude of my Cabinet colleagues towards Britain as a whole. One of our problems arises from inflationary wage claims, but that is a matter for the country as a whole. The relative unemployment
    1362
    position in Scotland has unfortunately been much the same for many years, and that is something which the Government want to put right.

    Strikes
    Mr. Sproatasked the Secretary of State for Scotland how many persons were on strike in Scotland at the latest available date; and how this compares with the corresponding period over the last five years.
    Mr. Gordon Campbell: This is a matter for my right hon. Friend the Secretary of State for Employment, who is sending my hon. Friend the information for which he has asked.
    Mr. Sproat: Is it not a fact that the figures reproduced in the Press show that fewer people are on strike in Scotland, that the Government can take credit for this happy situation, particularly because of their firm stand on the Industrial Relations Bill, their handling of public sector wage claims, and their different attitude to abuses of strike benefits?
    Mr. Campbell: I understand that the figures which my hon. Friend will be getting go up to the end of 1970 and that they will not bring the position right up to date. However, I agree with his remarks about the aim of the Government, and we are having success in meeting inflation.
    Mr. Strang: Is the right hon. Gentleman aware that if the Government had spent as much time trying to create new jobs in Scotland as they have spent in trying to weaken the trade unions, the Conservatives would not have suffered such massive defeats in the elections yesterday?
    Mr. Campbell: I do not accept any of that.

    Public Expenditure Survey
    Mr. Douglasasked the Secretary of State for Scotland if he will make a statement regarding the relationship of the Scottish Economic Council to the Public Expenditure Survey.
    Mr. Gordon Campbell: Although there is no direct connection, naturally any relevant views of the Scottish Economic Council are taken into account in our public expenditure decisions.
    Mr. Douglas: Is it not a fact that the Scottish Economic Council gets sight of the "forward look" in terms of the Public Expenditure Survey? If so, what comments has the Council made about the levelling off in housing expenditure in Scotland come the mid-'seventies, which represents an utterly disgraceful state of affairs?
    Mr. Campbell: The hon. Gentleman misunderstands the role of the Scottish Economic Council. It is not an elected but an appointed body and it has no decision-making rôle. Its proceedings are confidential, in the same way that its predecessor's proceedings were confidential when the right hon. Member for Kilmarnock (Mr. Ross) was in the chair. Trends are discussed in general, but it does not have any special access to Government figures.

    National Health Service Charges
    Mr. Eadieasked the Secretary of State for Scotland if he is now in a position to make a statement arising out of representations made to him by the pharmacy industry in Scotland about proposed changes in prescription charges.
    Mr. William Hamiltonasked the Secretary of State for Scotland what further proposals he now has for increased National Health Service charges.
    Mr. Edward Taylor: Arrangements are being made for an early discussion of the Government's proposals with representatives of the pharmaceutical and medical professions.
    Mr. Eadie: In giving that answer, the hon. Gentleman must be aware of the mounting concern in Scotland about the proposed increases. Is he aware that pharmacists and their various associations have outrightly condemned increased prescription charges? What sort of co-operation exists between the right hon. Gentleman and the Secretary of State for Social Services in deciding this matter?
    Mr. Taylor: My right hon. Friend the Secretary of State for Social Services and I are considering the points which the chemists and doctors have put to us. It would be wrong for me to comment
    1364
    further until our discussions are complete. However, I repeat the assurance that cost-related prescription charges would not be introduced without the fullest consultation with the profession.
    Mr. Hamilton: Does the Under-Secretary recall that the Chancellor of the Exchequer said that the intention was to increase prescription charges up to 50p per item? What evidence would the Government require to convince them of the wickedness of such a proposition and the viciousness of the taxation involved?
    Mr. Taylor: The White Paper did not summarise the proposals in such detailed form. The proposals which we have put forward, our preliminary thinking, will be discussed with the chemists and the doctors. I assure the hon. Gentleman that the charges will not be introduced without meaningful and full consultation with them.

    Primary Schools
    Mr. Clark Hutchisonasked the Secretary of State for Scotland what action has been taken by his Department to give greater priority in areas where primary schools are below standard, and to secure a lowering of primary school class sizes generally.
    Mr. Edward Taylor: My right hon. Friend has added £4½ million for improvements to the building programme for 1972–73 and announced his intention to introduce more generous staffing standards. He has continued for three years the salary additions in schools of teacher shortage and has empowered education authorities to pay removal expenses to teachers coming to their areas to teach in these schools.
    Mr. Clark Hutchison: That also is a reasonably good answer. But what about making more money available for building new schools, which would greatly help the building trade, which is in difficulties?
    Mr. Taylor: All of us are concerned about the building industry's problems and indeed about problems in education. The extra £4½ million is in addition to the existing programme and will certainly help the building industry and, at the same time, help with our problems in education.

    Caldercruix, Lanarkshire
    Mr. John Smithasked the Secretary of State for Scotland if he will make an official visit to Caldercruix, Lanarkshire.
    Mr. Gordon Campbell: I shall be glad to visit this area of Lanarkshire when parliamentary and other calls upon my time enable me to include it in my programme.
    Mr. Smith: The Secretary of State will be aware that shortly after the announcement of the closure of Craig's paper mill at Caldercruix on 7th April, I wrote to him asking him to receive a deputation from local churches, trade union leaders, the county councillor and myself. Three weeks later, on 30th April, the Under-Secretary wrote to me saying that he saw no useful purpose in that meeting. Bearing in mind the absolute disaster which has hit the community of Caldercruix, is not the Secretary of State treating my constituents and, for that matter, myself, in an absolutely disgraceful way by refusing even to meet us to discuss the matter? Is he aware that the people will feel that they have been treated with contempt? What form of apology does he think that I should make to them on his behalf? Finally, if he will not meet people to discuss their economic problems, had not he better get rid of these responsibilities to some other Department?
    Mr. Campbell: The hon. Gentleman indicated in his speech that he is mistaken in this. As I informed him when we spoke about this at the time of the firm's announcement of closure, I am acutely aware of the effect of such a closure upon a relatively small community where the main source of employment is the factory to be closed. My experience of this comes from three years ago, when the closure of the railway works at Inverurie, near my constituency, occurred on a larger scale. But I would not wish to mislead anyone, including those in Caldercruix, into thinking that my responsibility as Secretary of State for Scotland covered international pricing policies for the paper industry or other matters connected with that industry. My right hon. Friend the Secretary of State for Trade and Industry, who is respon-
    1366
    sible for such matters, is very much aware of the problems, and my right hon. Friend the Secretary of State for Employment is giving all possible help to those made redundant.
    Mr. Ross: Surely the Secretary of State has sufficient Ministers—one in Scotland, a Minister of State, as well as a Minister who calls himself the Minister for Development on every possible occasion—that they can show their interest by meetting local people. He mentioned Inverurie. He should be aware that I met delegations from Inverurie here and the Minister of State met them in Inverurie. We did what we could. We were not as successful as we should have liked, but at least we showed our Ministerial presence and concern.
    Mr. Campbell: That was a case of a nationalised industry causing a change and the Government were much more affected. This is a matter in which new industry has to be attracted, and my right hon. Friend is mainly concerned with that. If I could do anything to help by seeing a deputation, I or my hon. Friends would be glad to do so. But I must make it clear that other Ministers have the responsibility. It would be wrong for anyone to think that it was within my responsibility to deal with these industrial questions. But I have every concern about the problem, and I have no intention of being discourteous, or anything else, as the hon. Member for Lanarkshire, North (Mr. John Smith) has pretended.
    Mr. Ross: If the right hon. Gentleman has no responsibility, why does he miscall one of his Under-Secretaries "The Under-Secretary of State for Development" when he now says that he has no responsibility for development?
    Mr. Campbell: For the same reason that one Department dealing with roads, housing and electricity in the Scottish Office has, since 1962, been called the Development Department. It was made perfectly clear—and if the right hon. Gentleman had bothered to read the announcement at the time, he would have seen this—that when my hon. Friend was given this title, it did not transfer any of the responsibilities which statutorily lie with other Ministers.
    Mr. Smith: On a point of order, Mr. Speaker. How can I be assisted to discover from the reply of the Secretary of

    1367
    State whether he will meet the deputation? That is my difficulty. If he will not, in view of the absolutely disgraceful nature of that reply, I beg to give notice that I shall seek an early opportunity of raising the matter on the Adjournment.

    European Economic Community
    Mr. Strangasked the Secretary of State for Scotland what further representations he has received from the Scottish inshore fishing industry about the present European Economic Community negotiations; and what replies he has sent.
    Mr. Buchanan-Smith: Since 7th April, I have met representatives of the Scottish inshore fishing industry. I told them again of the Government's immediate recognition of the problem on taking office last June, when we reserved the United Kingdom's position. I also reaffirmed our determination to raise this issue with the Community.
    Mr. Strang: Do the proposals put forward yesterday by the Norwegian Government for the modification of the common fisheries policy have the support of Her Majesty's Government? Will the Minister undertake to give the Government's considered public reaction to these proposals at the earliest possible date?
    Mr. Buchanan-Smith: I am aware of the Norwegian proposals. We are in touch with the Norwegian Government. We shall be studying the proposals closely. The negotiations on the Common Market are a matter for the Government.
    Mr. Strang: My question is very important. Do the Government intend to make public their considered reaction to the Norwegian Government's proposals?
    Mr. Buchanan-Smith: This is a matter between us and the Norwegian Government. On the overall negotiations on the Common Market, we shall be very closely in touch with the Norwegian Government over these matters.
    Hon. Members: Answer the question.

    Aluminium Smelter (Ross and Cromarty)
    Mr. Dalyellasked the Secretary of State for Scotland if he will make an official visit to the aluminium smelter in Ross and Cromarty.
    Mr. Gordon Campbell: I made an official visit to the smelter on 15th April. This was the third occasion on which I had personally visited the site since work was started there.
    Mr. Dalyell: In the absence of investment grants, what incentive is there for any subsidiary firm to go to Ross-shire?
    Mr. Campbell: A wide range of incentives has been announced since last October, including greater use of grants and loans under the Local Employment Acts, free depreciation, increased infrastructure and various other measures which I shall be glad to supply to the hon. Gentleman if he is not fully aware of them.

    Rural Bus Services
    Mr. Grayasked the Secretary of State for Scotland how many local authorities are currently using the power to support essential rural bus services; and what action is being taken by his Department to ensure wider use by local authorities of these powers.
    Mr. Younger: Five local authorities are receiving Government grant in support of rural bus subsidies; two more have submitted applications to my right hon. Friend; and I understand that others have proposals under consideration. Whether or not local authorities exercise their power is a matter for their own discretion, but my right hon. Friend has fully explained to them the financial support the Government can give.
    Mr. Gray: My hon. Friend will be aware of the very real hardship which can occur in rural areas in which bus services are at risk. Will he bear in mind the very great danger which would result from any further rail closures which may be contemplated in those areas, which would certainly make the position even more serious than it is at present?
    Mr. Younger: As my hon. Friend knows, the rail closure question is one for my right hon. Friend the Secretary of State for the Environment. On bus services, I hope that local authorities will take the closest look at any services which are being withdrawn in their areas, and will consider the fact that the Government provide a 50 per cent. grant

    1369
    immediately, and also support the remaining expenditure by the local authority through the rate support grant.

    Inshore Fishing Fleet (Landings)
    Sir J. Gilmourasked the Secretary of State for Scotland what increase has taken place in the last six years in the value and quantity of fish landed in Scottish ports by the inshore fishing fleet of Great Britain.
    Mr. Buchanan-Smith: Over the period 1965–70 there has been a 9 per cent. increase in landings by weight and 47 per cent. by value. With permission, I will circulate the annual figures in the OFFICIAL REPORT.
    Sir J. Gilmour: Do not those figures demonstrate forcibly the need to continue protecting our inshore waters? Is it not essential for the Government to go further than merely reserving their position? Should they not state categorically that they will not accept the Community's fisheries policy?
    Mr. Buchanan-Smith: I have already said, as have Government colleagues of mine, that we find the Community's fisheries policy unsatisfactory. This is precisely why we are taking the matter up with the Community.
    Mr. Maclennan: Why have the Government left it to the Norwegian Government to make public proposals for the protection of inshore fleets? Why cannot the British Government make proposals for the protection of inshore fleets which can be considered by the Community?
    Mr. Buchanan-Smith: Every Government applying for membership of the Community must make their own tactical assessment of the situation. The Norwegians have approached the matter in their way. They are perfectly entitled to approach it in their way, if they wish to do so.
    Following are the annual figures:
    The landings in Scotland of all kinds of fish by British vessels under 80 feet in length were:—

    Weight

    Value

    (000 cwt.)

    (£000)

    1965

    …

    5,799

    13,158

    1966

    …

    6,411

    14,281

    1967

    …

    5,015

    14,064

    1968

    …

    5,098

    15,052

    1969

    …

    5,952

    16,826

    1970

    …

    6,349

    19,363

    Passenger Transport Authority, Glasgow
    Mr. Galbraithasked the Secretary of State for Scotland what progress has been made to date in his discussions with the local authorities concerned with the proposed Glasgow area passenger transport authority; and if he will make a statement.
    Mr. Younger: I cannot yet add to the reply I gave to the hon. Member for Glasgow, Gorbals (Mr. McElhone) on 24th February.—[Vol. 812, c. 548–49.]
    Mr. Galbraith: Will my hon. Friend confirm whether as part of these transport inquiries the Lomond-Maryhill Road is to be advanced in 1975? If so, might he not reconsider the decision to massacre the beauty of the Great Western Road, which is about the most noble entry to any city in Europe and one which Glasgow should not be forced to lose in circumstances which now seem to have changed since my right hon. Friend made his decision?
    Mr. Younger: The Lomond Expressway is one of the questions that we must take into account in considering the whole matter of transport in the Glasgow area. I know my hon. Friend's interest in the Great Western Road. The corporation's present proposals involve a much smaller degree of destruction of the Great Western Road than was previously the case, and include the preservation of all the trees.

    Secondary School, Garrowhill
    Mr. James Hamiltonasked the Secretary of State for Scotland if he can now give the starting date for a secondary school at Garrowhill, Lanarkshire; when it will be ready for occupation; and whether the approved plans provide for a swimming pool.
    Mr. Edward Taylor: The education authority now plans to start this project in October, 1971, and hopes to complete it in time for session 1973–74. The sketch plans do not include a swimming pool, but the authority now proposes to provide pools at this and two other secondary schools and has asked for a meeting to discuss the matter.
    Mr. Hamilton: Is the hon. Gentleman aware that I met 254 of my constituents

    1371
    concerning this problem? I am happy to hear from him that it was in the initial stages the Scottish Office which denied local authorities the right to build swimming pools; this caused a great deal of concern as all the previous schools have swimming pools.
    Mr. Taylor: Swimming pools are expensive. We want to avoid undue duplication of facilities. In view of the authority's new move, I can assure the hon. Gentleman that whatever representations it makes will be very carefully considered.

    Teachers (Shortage)
    Mr. MacArthurasked the Secretary of State for Scotland what is his latest estimate of the secondary teacher shortage in those areas of Scotland where the pupil-teacher ratio is higher than the average.
    Mr. Edward Taylor: We have not made separate estimates for education authority areas, but the bulk of the estimated shortage of 1,000 teachers given in the reply to my hon. Friend the Member for Aberdeen, South (Mr. Sproat) on 23rd April is accounted for by three authorities: Glasgow, Lanarkshire and Renfrewshire.—[Vol. 815, c. 481.]
    Mr. MacArthur: In view of the grave position in those areas of Scotland, does my hon. Friend intend to raise the school-leaving age throughout Scotland in 1972–73? Is there not a danger that the raising of the leaving age in areas of grave teacher shortage will depress the standard of secondary education rather than elevate it?
    Mr. Taylor: On the general question of the school-leaving age, I have nothing to add to the replies that I gave to my hon. Friend on 3rd and 24th February and 7th April. We are closely studying the situation in places where there is a serious teacher shortage, and we will make every possible endeavour to attract teachers to these areas.
    Mr. Rankin: As we have not so far heard, at least not in my hearing, that there is a grave teacher shortage in Scotland, does the Minister stand by the description given by the hon. Member for Perth and East Perthshire (Mr. MacArthur)? Does the Minister intend
    1372
    to use something that he has never declared existed as a reason for evading his solemn duty to raise the school-leaving age?
    Mr. Taylor: My right hon. Friend, in his reply to my hon. Friend the Member for Aberdeen, South on 23rd April, indicated that the present shortage of teachers was estimated at about 1,000. As the hon. Gentleman knows from a previous answer that I gave him, the number of graduates entering the profession has been increasing, and we hope that that improvement will continue.

    Unqualified Teachers
    Mr. Rankinasked the Secretary of State for Scotland for what reasons he is refusing to end the reference panel system in education and the employment of unqualified teachers; and if he will make a statement.
    Mr. Edward Taylor: Because there is still a shortage of qualified secondary teachers in some areas. In future, however, the approval of the panel will be required before an unqualified teacher starts work.
    Mr. Rankin: Will the hon. Gentleman clear our minds on other answers which are contingent on this? Does he mean to lead us to believe that the number of unqualified teachers in Scotland is so great that it will bar educational progress in Scotland, and particularly the raising of the school-leaving age?
    Mr. Taylor: The hon. Gentleman consistently raises wider questions on matters relating to specific Questions. But in view of his interest in the matter, I can tell him that I certainly hope that the continuing improvement in secondary staffing will lead to a further fall in the number of unqualified teachers, which, at the last count, was only 380.

  CIVIL SERVICE

    Members of Parliament (Appointments)
    Mr. Arthur Lewisasked the Minister for the Civil Service whether he will give for the longest and most convenient stated period of time the names of Members of both Houses of Parliament who have been appointed by Her Majesty's

    1373
    Government to state boards and other paid appointments, the salaries now received and details of the appointments held.
    The Parliamentary Secretary to the Civil Service Department (Mr. David Howell): The information is not readily available and the cost of obtaining it would be disproportionate.
    Mr. Lewis: I am amazed at that reply because I can give the Minister the answer without going into any details. Can he explain why the Government attack increases for lower-paid workers when they ask for a few pounds a week extra, while at the same time thousands of pounds extra can be given to the higher-paid civil servants without a murmur coming from the Government? Only last week the Tory-controlled G.L.C. announced increases of £76 per week on salaries of £9,700 a year, and I am still waiting to hear an adverse comment from the Prime Minister or any other Minister about that. Will the Minister condemn such astronomical increases?
    Mr. Howell: All that is very interesting, but I cannot see how it arises on this Question.
    Mr. Lewis: On a point of order. If the Minister had given me the answer about salaries he would have seen the relevance on my question.

    Prices and Charges
    Mr. Arthur Lewisasked the Minister for the Civil Service whether he will cease the present practice whereby his Department keep under constant review the prices and charges for which he has responsibility, and initiate a system of monthly reviews of such prices and charges to enable him to show from month to month to what extent since June, 1970 the Government's policy of reducing prices and costs is operating so far as it affects his departmental responsibilities; and whether he will make a statement.
    Mr. David Howell: No, Sir.
    Mr. Lewis: Again, if only the Minister would give the information requested by my Question he would be able to see the relevance of my supplementary question on Question 35 and we should then be able to tell how far the Government
    1374
    are implementing their promise to reduce prices, to reduce the number of civil servants and to reduce the cost of the Civil Service, and we could have a month-to-month account to see how far the Government are succeeding. If the Minister will not give us the information, neither we nor the country at large can make a judgment of the Government's success.
    Mr. Howell: It is still difficult to see how these questions arise from the Question. The cost of collecting the answers to both these Questions would he disproportionate in terms of taxpayers' money.

    Entry into Homes (Statutory Powers)
    Mrs. Knightasked the Minister for the Civil Service what plans he has for seeking to reduce the number of persons who have statutory powers to enter the homes of people suspected neither of criminal activity nor of activities prejudicial to the state.
    Mr. David Howell: The operation of these powers is kept under regular surveillance in the relevant departments. If my hon. Friend has a particular statutory power in mind perhaps she will tell me.
    Mrs. Knight: Is my hon. Friend aware that the list of bodies which are given statutory powers to enter people's homes contains no fewer than 280 Schedules, Acts and parts of Acts? Is not this too long a list to be countenanced by a Conservative Government and must we not preserve the principle that an Englishman's home is his castle?
    Mr. Howell: I sympathise with my hon. Friend's concern. The complete list of names contained in my letter to my hon. Friend is for all the forms of entry into all forms of property. Entry into people's homes arises only under a minority of statutory powers. If my hon. Friend has a particular statutory power which is worrying her, I will look into it.

    Non-Industrial Civil Servants (Numbers)
    Mr. Geoffrey Finsbergasked the Minister for the Civil Service whether he can now state the number of non-industrial civil servants in post on 1st April, 1971 and 1st January, 1971.
    Mr. David Howell: On 1st January there were 499,690 and on 1st April, 498,425.
    Mr. Finsberg: I thank my hon. Friend for that reply, which indicates yet another promise kept. Does he hope to continue this satisfactory reduction?
    Mr. Howell: I am grateful for my hon. Friend's comment. It is the Government's policy to maintain containment and, if possible, to reduce the Civil Service. I think that my hon. Friend has recognised that this is a step in the right direction.
    Mr. Sheldon: What will impress the House rather more is the elimination of work, not the transference of work from inside the Civil Service to outside the Civil Service.
    Mr. Howell: I did not say anything about that. It is essential to the Government's policy to reduce the functions, from which will follow the reduction of burdens, from which will follow the reduction of numbers. That is the Government's aim. That is the policy we are pursuing.

    POST OFFICE INQUIRY (REPORT)
    Mr. Charles R. Morris: On a point of order, Mr. Speaker. In view of the
    1376
    very real concern expressed on both sides of the Chamber about the circumstances which led to the establishment of the committee of inquiry into the Post Office industrial dispute and the fact that its establishment was announced in the House, may I ask whether you have received a request from the Secretary of State for Employment or the Minister of Posts and Telecommunications to make a statement about the report of the committee which has been sitting during the past few weeks? If you have not had such a request, will you ask the Leader of the House why he has allowed Parliament to be ignored in this way?
    Mr. Speaker: I am not sure that I am under an obligation to answer the hon. Gentleman's question. If I had received such a request I would have called the right hon. Gentleman the Secretary of State for Employment.

BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY, 21ST MAY
Members successful in the Ballot were:

Mr. Lewis Carter-Jones.

Mr. George Cunningham.

Mr. Cecil Parkinson.

AGE LEVEL OF EMPLOYMENT
3.32 p.m.
Mr. Edward Milne: I beg to move,
That leave be given to bring in a Bill to make it illegal for employers to refuse employment, or for employment agencies to refuse to entertain an application for employment, on the sole ground that the person concerned is aged 45 years or over.
On past occasions when this subject has been discussed it has been against the background of massive redundancies and high unemployment in the mining areas and development districts. Today the problem has spread to the professions, the technical and administrative staffs, higher executives, and the gentlemen of the Press, who will now be able to frame their articles and editorials on the difficulties of securing employment when one is over 45 years of age with more sympathy than has sometimes been the case.
It has often been argued that the top-level people do not need help, guidance or assistance in seeking work, but this has certainly not been the experience of the past few months in particular and the past two years in general. People over 45 have much more difficulty in finding other jobs. Most of us, if not all of us, know that the reasons for the refusal of jobs rarely have anything to do with fitness for the job but have very much to do with the question of age.
I, like other hon. Members, have received numerous letters on the subject, including one which describes the problem as follows:
"Ours is a sick society and the discarding of able men merely because they are 50 is a distressing symptom of this sickness."
I do not need to convince my colleagues in the House or in the other place of the contribution that can be made to the life of the nation in all its aspects by the over-45s. No other part of our national life in trade, commerce, industry or the professions carries such a high percentage of its participants in the over-45 age group as do the two Houses of Parliament.
However, there are many thousands, not yet old, not yet voluntarily retired, who find themselves jobless because of arbitrary age discrimination. I was first prompted to tackle the problem by the introduction of legislation arising from
1378
the mining redundancies I have mentioned. Those redundancies, occasioned by pit closures in my constituency and throughout Northumberland and the rest of Britain, have demonstrated the adaptability of the unemployed in the older age groups to fit into the newer industries that are moving into the development districts. It is obvious, therefore, that a policy designed, and legislation introduced, to secure employment for the older age group is helpful to industry and the nation as well as to those being placed in the jobs.
The position has been aggravated by the unemployment of the past six months, and particularly the period towards the end of the year. In 1970 it is possibly true that British industry dis-hoarded men in a way that it had not done for years. In the first two weeks of 1971 10 major companies announced that they would be shedding 5,400 men, and as we have moved into the year the pace of redundancies has accelerated. We are faced with a major problem not only of rising unemployment but of a wider range of unemployed and unemployed in higher age groups than formerly.
It is in the interests of industry as well as the older job-seekers that labour forces should be balanced in age. Yet we still find the display advertisements in employment agencies telling people, "Stop looking for a job. We have 470 jobs looking for you, but no one over 45 need apply." Of 55,000 workless in the area of the northern regional office of the Department of Employment, 25,000 are over 45, 11,000 being in the 60–65 age group. We find increasingly that few appointments organisations will bother to register people who are 45 or over. A survey on the prospects of securing employment, based on Ministry of Labour Gazette figures gave a striking commentary on the problem. It showed that 22·4 per cent. of those becoming unemployed should get work without difficulty, and gave percentages of unemployed who would find difficulty in getting work on personal grounds for various reasons as follows: age, 23 per cent.; physical or mental condition, 20 per cent.; prison record, 1·6 per cent.; attitude to work 10·3 per cent.; colour, 0·9 per cent.; and so on. So, the biggest single factor in securing a job on becoming unemployed at the moment is age itself.

1379
Some people have doubted the purpose, value or effectiveness of legislating on this subject. But early in 1967, faced with a rising unemployment problem in some ways similar to the one we now face, the United States Congress decided to tackle it. President Johnson in introducing the legislation said:
"In our nation there are thousands of people who possess skills which the country badly needs. Hundreds of thousands, not yet old, not yet voluntarily retired, find themselves jobless because of arbitrary age discrimination."
The Bill is not just the simple suggestion of preventing something from being done, but has the purpose of promoting the employment of older persons based on their ability rather than on their age, to prohibit arbitrary age discrimination in employment and to help employers and workers to find ways of meeting problems arising from the impact of age on employment.
It would be unlawful for an employer or an employment agency to seek to engage or discharge any individual or otherwise discriminate against any individual because of his age. I have mentioned the United States legislation, and it is useful to remember that the age to which that related was 40. We in this Bill propose that it relate to those over 45. I am certain that since the Bill would determine that age must not be a factor in refusing employment to a man, the House will give permission to bring it in.
Question put and agreed to.
Bill ordered to be brought in by Mr. Milne, Mr. David Watkins, Mr. Robert Edwards, Mr. Leadbitter, Mr. James Hamilton, Mr. Ted Fletcher, and Mr. Fernyhough.

AGE LEVEL OF EMPLOYMENT
Bill to make it illegal for employers to refuse employment, or for employment agencies to refuse to entertain an application for employment, on the sole ground that the person concerned is aged 45 years or over; presented accordingly, and read the First time; to be read a Second time upon Friday next and to be printed. [Bill 164.]
ORDERS OF THE DAY

  INVESTMENT AND BUILDING GRANTS BILL
  Order for Second Reading read.
  3.43 p.m.
  The Minister for Industry (Sir John Eden): I beg to move. That the Bill be now read a Second time.
  Last October we announced our reform of investment incentives. This involved a number of changes of policy, including a cut in corporation tax, the abolition of investment grants and their replacement by new and improved writing down allowances, and improved building grants. The cut in corporation tax was enacted in the Income and Corporation Taxes Act (No. 2), which the House considered last autumn. Our proposals for improved capital allowances are contained in the Finance Bill. This afternoon we are concerned with a third, and very short Bill, which provides for the winding up of the investment grant scheme and the improvements in the rates of building grant.
  The merits of our proposals for improving the incentives to invest were debated by this House last November. They are, therefore, already widely known, and hon. Members will not expect me to rehearse them again now at any length.
  Briefly, the changes are being made because investment grants have proved to be both costly and ineffective. They have turned out to be an incentive not so much for the profitable use of new plant and machinery, as for the purchase of it. In addition, the investment grants scheme discriminated against the service industries, although they make an important contribution to economic growth and are good earners of foreign currency. It even discriminated between different types of plant and machinery bought by manufacturers, and, because it was complex and discriminatory, it led to difficulties and anomalies at the margins and was costly to administer for both industry and the Government, so it was absolutely right to end the scheme and introduce new proposals.
  Mr. Arthur Blenkinsop: The hon. Gentleman says that the scheme

  1381
  has proved unsatisfactory. Is he proposing to publish the details of the findings of the inquiry into the practical working of the scheme?
  Sir J. Eden: As the hon. Gentleman knows, under the auspices of the right hon. Member for Birkenhead (Mr. Dell), there was an inquiry, the substance of whose findings have already been given in an Answer in HANSARD to the right hon. Gentleman. The study was largely of a somewhat academic nature, so that it was felt right to produce the substance. But if I can find some convenient means of giving the full document wider publicity, I will do so. I undertake to look into that point.
  As a general incentive, grants are being replaced by reductions in taxation, achieved both by cutting the rate of corporation tax and improving the capital allowances available on fixed investment. The chief feature of this package is that, unlike grants, it will provide no incentive to invest unprofitably, but it will provide a powerful incentive for profitable investment. Obviously, the greater the prospective profit, the more powerful the incentive will be.
  I emphasise the need for profitable investment, for this is the key to secure employment in the future. There is no sense in the pursuit of investment for its own sake, simply as a statistical exercise. Equally there is no sense in undermining new investment by failing, through weaknesses in management or shortsightedness in labour, to make the best use of it. It must be clear to every hon. Member that the pressing need today is for efficient investment, and profitable investment is efficient investment. No business, whatever its size, can survive if it is unprofitable; no body of men, however skilled, can find security in an enterprise which is loss-making. This is as true in the regions and in development areas as it is anywhere else.
  Investment grants were, of course, used as a regional incentive. But despite the size of the expenditure their impact on the creation of new jobs was on the whole disappointing. We should be clear about what was happening. Any manufacturer buying a new piece of plant and machinery for use in manufacturing, in a development area was given a grant double the amount he would have received for investment elsewhere. There
  1382
  was additional help for setting up a new factory in the development areas. There was also for the replacement of existing machinery additional incentives and for the replacement of men by machines. These grants, like those in the rest of the country, were available regardless of the prospective profitability of the investment. So the money was being spent, but the actual needs of the areas were not being met.
  We are certainly not in favour of restricting labour-saving machinery to the prosperous areas alone. We aim to keep the balance. There is no doubt that the development areas are just as much in need of new and efficient machinery. We are continuing to give an additional incentive for investment in industrial plant and machinery in the development areas, but this is to be through free depreciations, a tax relief, which unlike grants, will be linked to profits. But we are also placing greater emphasis on the provision of additional industrial capacity. I think this is really what matters in the development areas. I am sure it is right in the regions to concentrate more on this than on saving labour.
  We are doing this, in part, by continuing in the intermediate as well as the development areas, the favourable 40 per cent. initial allowance for new industrial buildings which, like free depreciation, is linked to profits. And, for the development areas only, we are increasing the building grants, the availability of which is specifically linked to the creation of new employment. This is a much more balanced package. In our view regional incentives forcused on the creation of expanded industrial capacity are far more relevant to the needs of the development and intermediate areas than others in which the scales are unduly weighted in favour of the replacement of men by machinery.
  The effect of the changes that we made last October on public expenditure and, therefore, on the liquidity of the private corporate sector has been largely misunderstood. The suggestion that our changes were harmful to the liquidity of the private sector has gained wide currency, and we must establish the true position. Hon. Members will know that, as the Financial Memorandum to this Bill explains, the winding-up of investment grants is expected to produce gross

  1383
  savings of some £1,500 million over the period 1970–75. But this does not represent a net saving to the Exchequer. Although the abolition of grants and the substitution of capital allowances should, all other things being equal, cause savings for the Exchequer in the long term, the immediate effect is an Exchequer loss, or a gain in the private corporate liquidity.
  But all other things were not equal, because we cut the rate of corporation tax as well. The cut last October added £60 million to the liquidity of the private sector in 1970–71, and there was expected to be a further benefit of £90 million in the current financial year. There would have been Exchequer gains thereafter, but comparatively small ones for the first three years, if all had then remained unchanged.
  It did not. As the Chancellor said in the debate on the White Paper, it was only our first step towards creating a more favourable industrial climate. Since then we have had the Budget. The further cut in corporation tax then announced will add a further £55 million to private corporate liquidity this year and, together with the October measures, there will now be gains to corporate liquidity in every year until at least 1974–75. None of this takes into account the additional Local Employment Acts assistance.
  Mr. Eric S. Heller: Could the Minister briefly explain how it is that the industrial climate has improved with a scale of unemployment of 814,000?
  Sir J. Eden: The climate is improving because the measures which this Government have taken to stimulate the resurgence of confidence in the economy, through budgetary measures and the measures taken last October, which I have described. Rising unemployment is substantially due to measures taken by the hon. Gentleman's Government and the policies pursued by them.
  The cost of the improved building grants announced last October cannot be estimated with precision, since the exact cost will depend on decisions about investment and location that have yet to
  1384
  be taken by industry. They are, however, together with other improvements in assistance under the Local Employment Acts, including improved grants for infrastructure that were also announced last October, expected to build up to some £25 million a year. The White Paper last October estimated that the differential benefit provided to the development areas by the differential tax allowances, in conjunction with the additional assistance under the Local Employment Acts then announced, would be broadly equivalent to the differential in the rate of investment grants which the development areas had previously enjoyed. None of this, of course, takes into account the additional assistance that was made available in the expanded special development areas announced last February. In Committee there will be opportunity for discussion later on the detailed provisions of Clause 1. All I would say now is that with two exceptions the Clause is based strictly on the principle that investment grant should be paid only on those sums of money which on 26th October, a firm was legally bound to pay at some future date on providing an asset on which it has been the Department's policy to pay grant.
  The two exceptions are first that we shall not be precluded from paying grant if a firm makes a new contract after 26th October, for example with a different supplier, in substitution of one made on or before that date and the assets or services to be provided under the new contract are substantially similar to those covered by the original one, or if there are minor variations made after 26th October, 1970, in the specification of assets or services to be provided under a contract made before then. But I must emphasise that the Bill does prohibit the payment of grant where the applicant was not himself a party to a contract on 26th October, 1970.
  Secondly, we did not think it right that we should be precluded from paying grant on the cost of any import duty which a firm might have to pay on an asset which qualified for grant. Where a firm buys an imported asset from a supplier in this country, the contract price would include the import duty. But if he bought it direct from an overseas supplier, while the capital cost of the asset would include the import duty which he had to

  1385
  pay, it would not normally and probably could not be included in the contract price. It did not seem right to differentiate between the two types of case.
  Mr. J. T. Price: May I inquire if this provision would include British orders for ships built in foreign yards and imported into this country? Would this carry a claw-back of duty?
  Sir J. Eden: I will deal with ships later.
  A great deal of interest has naturally been shown in the way in which investment grants are to be ended. We took the view that the disadvantages of grants were such that the transition to the new system of capital allowances must be achieved as quickly as possible. Nonetheless we recognised that there would be firms who were legally committed by contracts made before the Chancellor's announcement and the publication of the White Paper on Investment Incentives to incur expenditure on or after that date. We felt it right that grants should continue to be paid on such expenditure, but that it would be wrong to extend the arrangements to cover commitments falling shot of a binding contractual obligation. I am sure it was right to draw a distinction between those who, by acting on their decisions, have committed themselves at law to incurring expenditure, and those who have not.
  The possible effect of these changes on individual investment decisions has been exaggerated. Of course, particular projects have had to be reconsidered. There is nothing novel about this; indeed it would be strange if it were not being done. It is both normal and prudent for firms to keep projects under continuous review from the moment a decision to proceed has been taken. It is inconceivable that any self-respecting management would fail to assess the significance of changed circumstances affecting the basis of their original investment decision.
  The change in incentives is just one factor—and possibly not the most important—among many which have to he taken into account. The rapid rise in wage-levels and their consequent impact on industrial costs is undoubtedly a much more serious consideration. Even so, of the comparatively small number of development area projects which we have
  1386
  been told are being reconsidered since October 1970 there seems little doubt that most will eventually go ahead.
  Following the publication of the White Paper, a number of hon. Members and firms have asked what criteria we propose to adopt in deciding whether a contract existed on 26th October. The answer is that we shall be guided by the established law of contract. We do not intend, nor does the Bill seek, to introduce a new definition for the purposes of the transitional arrangements. We shall wish to satisfy ourselves in each case that the applicant was legally bound by his arrangements on 26th October to incur the expenditure in respect of which grant is sought. We shall therefore require evidence that firm orders, and not merely inquiries or indications of intent, were either orally or in writing made by the applicant and accepted by the supplier before 27th October. I should make it clear that orders placed but not accepted before 27th October or mere letters of intent written before 27th October will not constitute evidence which will enable us to pay grant.
  The Finance Houses Association sought a concession in the Bill which would allow a finance company to receive grant in circumstances where the hirer had made a contract for the asset in question with a supplier before 27th October but the arrangements between the finance company and the other parties had not been made by that date. I have had discussions with the association, but I saw no alternative but to keep to the strict principle outlined in the White Paper that to qualify for grant on expenditure incurred after 26th October the applicant, on that date, must have been under a contractual obligation in respect of the expenditure.
  I apologise to the House for the fact that this is a complicated matter. However, I think it absolutely necessary—and I know that hon. Members will appreciate this—that I spell out these things because there are many people outside the House who are taking a great interest in the terms of the proposals.
  Mr. Dick Douglas: In view of the complicated nature of the contractual arrangements which the Minister for Industry has described, would

  1387
  he indicate whether, because of the differences in Scottish law, he has had discussions with Scottish interests?
  Sir J. Eden: I have not had direct discussions with Scottish interests, but I shall ask my hon. Friend the Under-Secretary of State if he can shed any light on the interesting point which the hon. Member has raised.
  Mr. J. T. Price: If the hon. Gentleman is not clear in his own mind, may I make a helpful suggestion to him? Faced as he is with all the academic arguments to which he has referred, may I suggest that he publishes the White Paper, which is half promised, and adjourn the debate until such time as the House has had a reasonable change of digesting all this academic piffle? If he did that, we should be better pleased with him.
  Sir J. Eden: The hon. Gentleman misunderstands the position. The White Paper was published and it spelled out very clearly the terms on which grant would be paid. I am merely underlining the matter for the purposes of discussion on the Bill. The hon. Gentleman is getting confused with some other form of inquiry to which his right hon. Friend referred.
  I have explained to industry how investment grant can be paid, in sale and lease back cases, to a person who had a contract on 26th October. This should overcome the difficulties on hired assets without breaching the principle to which I have referred. I am sure it would be wrong to go further than this in making a concession in favour of companies which ignored the White Paper and entered into arrangements on the assumption that grant would be paid to someone who had no contract at that date.
  The Chamber of Shipping made similar representations to those made by the Finance Houses Association in respect of arrangements for the "sale and lease back" of ships made, for financing reasons, after 26th October, 1970. Its main object was to ensure that both investment grant and free depreciation should be available on ships contracted for before 27th October if their purchase was financed in this way. The Chamber's point has now been met by provisions in the Finance Bill relating to free depreciation. Where "sale and
  1388
  lease back" takes place shortly after delivery of an asset, grant may be paid to the first owner provided he placed his contract before the cut-off date and met his obligations under it, and provided the second owner agrees to observe the conditions of grant.
  Under the terms of the Finance Bill, to which the House gave a Second Reading last week, free depreciation may be given to the second owner provided the transfer is effected before the ship is brought into commercial use. As regards transfers to an associated shipping company, difficulties might arise over payment of grant, but, as we have told the Chamber of Shipping, this could be overcome if the first company chartered instead of sold the ship to its associate.
  Dame Irene Ward: I am very interested in what my hon. Friend has said, and I thank him for giving way. Is the Chamber of Shipping satisfied? Representatives of the Chamber telephoned me yesterday and asked me if I would speak today. Unfortunately, I shall not be able to try to catch your eye, Mr. Speaker. [HON. MEMBERS: "Shame."] I have other things to do—very important things. My hon. Friend has made a very interesting statement about the Finance Bill, and I merely wish to know from him whether it satisfies the Chamber of Shipping. If he can tell me that I shall know where I am, and so will the Chamber.
  Sir J. Eden: I am sorry that my hon. Friend will not be able to take part in the debate—
  Dame Irene Ward: I may do so later.
  Sir J. Eden:—but the Chamber of Shipping is not completely satisfied, and I make that clear. As my hon. Friend knows, in answer to a request which she made, I went to the length of arranging publication of the correspondence between myself and the Chamber of Shipping.
  Before I turn to Clause 2 and the question of building grants, there are two points on which I might call ancillary questions on Clause 1—
  Mr. Simon Wingfield Digby: Before my hon. Friend leaves the question of shipping, may I ask him this? Is not the big grievance of the shipping industry that the long-standing custom of ordering an entire ship and specifying things like radar and containers at a later

  1389
  date will be ignored and that the transitional arrangements will cost the industry about £9½ million?
  Sir J. Eden: My hon. Friend's point has not been ignored, but it has not been met, because if the extras, as I think they are commonly referred to, which I accept can be pretty substantial items, had not been the subject of a contractual arrangement entered into before 27th October, they would not fall within the provisions of the transitional arrangements. We must stick by that because, although it is possible to make out a case, careful study of any case at once shows that the principle is opened wide and destroys the whole basis of the proposals I am putting before the House. I am sure it is right to stick strictly to the principle I have already defined.
  There are two points on the ancillary provisions of Clause 1 to which I wish to draw attention—
  Mr. George Lawson Mr. George Lawson (Motherwell) rose—
  Sir J. Eden: I must proceed. No doubt many hon. Members wish to take part in the debate, and I hope that the hon. Gentleman will allow me to continue. I have given way a lot. This is a highly complex subject, as the House recognises.
  Subsection (5) of Clause 1 gives legislative effect to the intention, which I expressed to the House on 12th February, of imposing time limits on applications for investment grant. As soon as possible after the Bill becomes law, we intend to make an order under this subsection which will have the effect of precluding payment of grant on expenditure incurred before 1st January, 1969, unless an application, in a prescribed form, is made before the end of this year. Industry will have had nearly a year's notice of this first time limit and we shall similarly give ample notice of further time limits and of any change in the interval between the incurring of expenditure and the closing date for applications.
  Secondly, I should refer to subsection (7). This will repeal the provision of the 1966 Act under which the Department is required to make an annual report to Parliament. The reason for taking this step now is simply to avoid
  1390
  the need for further legislation later. But I should like to make it clear to the House that we shall make suitable reports for so long as the annual sums paid out are substantial; and the report for the year 1970–71 will be in the same form as those of previous years.
  I now come to Clause 2—
  Mr. Lawson: Before the hon. Gentleman leaves investment grants, will he give me some enlightenment on this point? If in the opinion of the hon. Gentleman and his Government the investment grant as a means of attracting industry to a development area is inferior to the income tax allowance, why, in the difficult Northern Ireland area, is the investment grant being retained?
  Sir J. Eden: That is primarily a matter for the Northern Ireland Government and dependent on the special circumstances obtaining in Northern Ireland. I have described the needs of development areas in this country and the measures we are taking to meet them. I am certain that what I have proposed will go very much further to improve the economic prospects of these areas than the expensive measures introduced by the previous Government.
  I now come to Clause 2, which deals with building grants. Its main purpose is to implement the proposal announced in the White Paper on Investment Incentives, published last October, to increase by 10 percentage points the rate of the building grant payable under the Local Employment Acts in the development areas. The White Paper describes a number of steps we intend to take to provide further assistance to industry under these Acts, but the increase in the rates of building grant is the only one that requires legislation.
  The Clause at first sight may appear to cover an unnecessary amount of ground in achieving this end, but it will be seen that not all of its provisions are new. The original provisions for building grants in the Local Employment Act, 1960 have been altered and tidied up by several later Statutes, and the Bill restates the relevant provisions of the Local Employment Act, 1963, and Part II of the Industrial Development Act, 1966, in order to reduce the need for continual reference back to these other Statutes. The Clause gives effect to the intentions

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  which I explained to the House on 28th October last year about the circumstances in which the increased rates of grant will apply.
  Broadly speaking, they will be available for buildings started on or after the date of the publication of the White Paper and, so that firms which have received offers or payments of grant for such buildings at the existing rates before the Bill becomes law should not miss the benefit of the new rates, there is a provision to enable us to make appropriate adjustments in these cases. We are seeking discretion to make exceptions in special circumstances to the general rule that the new rates shall not apply if any of the relevant work was done before 27th October, 1970. It is possible that a quite exceptional case may occasionally arise in the future when in all the circumstances it would seem unreasonable to refuse the new rate. I emphasise that we expect to make use of this discretion very sparingly and only in highly unusual cases.
  The only other point I need mention in connection with the increase in rates is the provision in subsections (5) and (6) for transitional arrangements in the event of future changes in the coverage of development and intermediate areas. They do not affect the existing powers to make changes of this kind, but deal only with the effect on projects with which some progress has been made while the site was still in the development or intermediate area.
  The present transitional provisions relating to building grant in Section 21(4) of the 1966 Act cover the possibility of a locality ceasing to be included in the assisted areas. Subsection (5) restates them with a small change, the effect of which would be to broaden the circumstances in which projects planned in an assisted area could receive grants after it had ceased to be one. The 1966 Act did not, however, contemplate the existence of different rates of grant in development and intermediate areas for which the Bill provides. Consequently, additional provisions would be needed to determine the appropriate rate of grant in the event of a transition from development to intermediate areas status or vice versa. Subsection (6) provides for this.
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  In addition to providing for the increase in the rates of grant in development areas, we are taking the opportunity in the Bill to seek an alteration in the basis on which building grants are calculated generally. At present the amount has to be based on the actual cost of providing the building after deducting certain broadly defined types of expenditure. The Clause would do away with the obligation to make exclusions on the basis of these broad definitions, which involve a great deal of scrutiny of building details to little purpose, and would enable us to decide how much of the whole expenditure should be approved for the purposes of the grant.
  I assure the House that we have no intention of making any major changes in the range of costs taken into account in calculating the grant. The object of the new provisions is to enable us to define more clearly and precisely the expenditure which will be eligible for grant, and so both to clarify the basis of calculation for applicants and to simplify and speed up the processing of applications.
  When the Government took office last year we were confronted with a thoroughly unhealthy economic situation. Following four years of deflation the economy was stagnant and growth had dropped to a mere 1 per cent. Despite the lavish use of public money in the form of subsidies and grants, the corporate sector was severely depressed. Company profits as a share of total domestic incomes fell, company liquidity was hit and unemployment more than doubled between 1964 and 1970. At the same time, following the total collapse of their prices and incomes policy, right hon. Gentlemen opposite permitted an unprecedented acceleration of wage and cost inflation to develop.
  We are determined to reverse this process of low growth, low profits and low job opportunities accompanied by high cost inflation which has been our experience in the last few years under the previous Government. The reductions in the burden of tax on the individual and the corporate sector and the overall stimulus of the Budget are a beginning, but they have already given a much-needed impetus to industrial confidence. Seen in this context, with its

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  emphasis on value for money and profitable investment, the Bill is an important element in the general strategy to strengthen the economy, and I commend it to the House.
  4.17 p.m.
  Mr. Eric G. Varley: With the exception of the last two or three sentences of his speech, the Minister for Industry has introduced the Bill in a manner which might suggest to an innocent spectator that it is a routine Measure, an uncontroversial and simple piece of tidying-up legislation after the mini-Budget of October last year. But we on this side of the House refuse to be beguiled by the hon. Gentleman and our contributions will be much more contentious than most of the hon. Gentleman's speech. The Bill is a doctrinaire and irrelevant Measure which will deter much-needed investment and still further tilt the balance against the weaker regions of Britain. When one looks at what has happened to the weaker regions of Britain in the last few months, it seems that the Government have a special vendetta against them.
  As the Minister said, the Bill abolishes the payment of investment grants which were paid under Part I of the Industrial Development Act, and we fundamentally disagree with the manner in which it has been prepared and brought to the House. The introduction of investment grants provided a more readily understandable form of investment incentive and a major instrument in the armoury of regional development incentives. Following the rationalisation of traditional industries, there is no doubt that without investment grants the regional unemployment problem would have been even worse than it is now. When the Industrial Development Act was introduced in 1966, the present Chancellor of the Exchequer, who was leading for the Opposition at that time, described the Bill as "Socialism with a vengeance". But from the cries of private industry and leading Conservative spokesmen now that the grants have been abolished—whether it is Socialism or not—there appear to be many people who want to go back to them.
  The British Shipping Federation, about which there has been some concern expressed in this debate, had this to say:
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  "Shipping has made no use of this form of investment grant over the past five years"
  and went on to say:
  "Further orders are bound to be affected by the stoppage of investment grant."
  We know that the chemical industry, the steel industry and many professional bodies have voiced concern about this matter.
  There is a tremendous amount of confusion as to the manner in which grants have been abolished and the way in which allowances have been substituted. However, it is no part of our case to help the Government out of their confusion. They have a duty to give an explanation to the hon. Member for Tynemouth (Dame Irene Ward)—
  Dame Irene Ward: I will get an explanation.
  Mr. Varley: No doubt the hon. Lady will receive an explanation, but I do not think it will be this afternoon. It is certainly the Government's responsibility to explain to her, to my hon. Friend the Member for Motherwell (Mr. Lawson) and others who represent shipping constituencies how the proposal will work out. This matter is of crucial importance to them and to others.
  Investment grants were simple to calculate. They did not depend on future tax rates. It is true they were not related to profits, but is it part of the Government's case—and from what we heard in the Minister's speech today it may well be—that private industry which has been receiving grant unrelated to profit has been squandering this money? If the Government are saying that, it is a grave indictment of private enterprise. It was precisely the type of investment which when applied to development areas attracted the thrusting, vigorous entrepreneur, the sort of spirit which hon. Gentlemen opposite profess to encourage. I cannot understand why the Government say that the grant was not linked to profit and therefore was wasteful. The majority of the money went to private enterprise. If the hon. Gentleman is saying that it has been squandered, then it is a massive indictment of his friends in private enterprise.
  The Minister made great play about the waste of resources. I am surprised

  1395
  that he did not call in aid Mr. Jeremy Bray; it may well be that the Parliamentary Secretary will do so a little later in his reply. It may be that that is the sort of bombshell that is to come. Mr. Bray's solution to these problems is not what is being proposed by the Government. It was not a question of going back to allowances. Mr. Jeremy Bray's solution to some of the problems is to see how far there can be an extension of public ownership.
  What is being overlooked by the Minister and the Government is that when it comes to regional development we need a proper spread of industry, capital-intensive, and indeed labour-intensive, industries. In the short term capital-intensive industries attracted substantial grants, but they were short-term grants with long-term aims. If one is to maintain a living community with a strong industrial base from which full employment is eventually to be built up, then there must be diversified industrial strength.
  For example, it is being suggested that the weaker regions of Britain, which have suffered most from the rationalisation of traditional industries, should only have a form of incentive which attracts shirt factories or the manufacture of dolls' eyes? I saw an article in the Sunday Times on this aspect quite recently. The suggestion apparently is that all that is required by the regions, by Wales and Scotland, is some sort of shirt factory and that they do not want other industries. The pay-off from investment does not come immediately but in a steady build-up. Although it is easy for the Minister to make short-term calculations—and no doubt we shall have them today from hon. Members opposite—I would ask whether the oil refineries would have gone to the development areas, or the aluminium smelter to Invergordon, without investment grants?
  Mr. William Ross: And Government initiative.
  Mr. Varley: My right hon. Friend the Member for Kilmarnock (Mr. Ross) knows more about these matters than most, and I would agree with him when he mentions Government initiative. It is absolutely essential that there should be a proper spread of industries throughout the weaker regions of Britain.
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  The Minister in introducing the Bill made great play with the cost of investment grants to public funds. Before the General Election there were all sorts of claims by Conservative Members of Parliament in regard to the abolition of investment grants which, they said, would mean a saving of some £600 million. But here again we were not given the true picture. There is no evidence at all which I have seen to show that over a period investment grants cost more than the previous system of investment allowances. There is much confusion about this. Last October the Government gave a qualified estimate that total savings up to March, 1975, would amount to about £200 million, but in February of this year the Industrial Editor of The Times said that the Treasury had revised its estimates and that the saving now would be only about £45 million. Last December the Chief Secretary to the Treasury, in answer to a Question in this House, said that there would be no significant savings at all before 1972–73.
  The game was really given away by the present Secretary of State for Social Services when leading for the Opposition on this subject and writing for the Spectator on 21st March last year, when he said:
  "We are certainly not pretending that a mere shift from grant to allowance would save money."
  That is what the right hon. Gentleman said before his party came into power. Let us be clear about this matter once and for all. Let the hon. Gentleman when he replies give a definite statement as to the figure the Government expect to save. Let him say exactly what the saving will be, how it is calculated, and on what assumptions it is made. Investment grants are not only easily calculated, but the true cost is there for all to see. This is not the case with allowances.
  The confusion began a long time ago. We all remember the Selsdon Park conference, which took place from 30th January to 1st February last year. On the following morning The Times and Financial Times set out the details of how the Conservative Government would abolish investment grants. However, this news did not get through to some of the Members of the then Opposition who are now members of the Government. It did not get through to the Secretary of State for

  1397
  Scotland when he was Shadow Secretary of State for Scotland—
  Mr. Ross: We must not expect too much.
  Mr. Varley: Again I would agree with my right hon. Friend that we should not expect too much of the right hon. Gentleman. When the right hon. Gentleman was Shadow Secretary of State, speaking from this Dispatch Box in Opposition on 16th March last year, he pointed to the
  "… concern on both sides of the House that the system of grants for development should be made more effective—not abolished, as is sometimes incorrectly ascribed to us."—[OFFICIAL REPORT, 16th March, 1970; Vol. 798, c. 10.]
  That is what the right hon. Gentleman thought at that time. Therefore, it must have come as a surprise to him when he saw his name printed on this Bill.
  Mr. Ross: He got a bigger surprise yesterday.
  Mr. Varley: I am sure that many of my hon. Friends will have, seen the monthly survey of business opinion in Monday's Financial Times. I was astonished when the Minister said that confidence was returning and that the Budget had done this, that and the other. When one examines the Financial Times Monthly Survey of Business Opinion relating to capital investment, reflecting people who expect an improvement in investment over those who expect a decline, the marked dip in confidence comes almost precisely with the Government's decision to abolish investment grants. I am surprised that the Minister can make statements such as those he made today about confidence, when we see this kind of evidence.
  It is clear from the survey that, in the engineering sector, one of the three industries surveyed, there are now only 18 per cent. expecting industrial investment to improve, with 46 per cent. expecting it to decrease. In balance of payments terms, in terms of international competitiveness, the anticipated decline in engineering investment is very serious.
  The position is even worse when one looks at paper, packaging, printing and publishing, another sector surveyed by the Financial Times. Only 6 per cent. expect an increase in investment, with a massive 87 per cent. expecting a decrease. Only
  1398
  in brewing is there any optimism. This at least must gladden the hearts of the fund collectors in the Tory Central Office. But even the brewers add a cautious note. They say that even their demand may be affected by the higher level of unemployment.
  Part of the Financial Times survey which makes very dismal reading says:
  "The Budget has yet to halt the slide in industry's capital spending plans, as the boost to the economy which was the centre-piece of the Budget judgment is expected to take some considerable time to show through … Those who expect to spend less now outnumber those who expect to spend more. This is the first time the 'downs' have outweighed the 'ups' in the four years of this monthly survey."
  Clearly the decision to abolish investment grants in the way that they were abolished, though we do not say that they were absolutely perfect, played a major part in the loss of confidence.
  I said earlier that the differential rate of the investment grants in development areas was a valuable aid to regional development. The House is now familiar with the disastrous levels of unemployment in various parts of the country, and there have been many opportunities in the past few weeks to highlight the figures. No doubt those of my hon. Friends who catch your eye, Mr. Deputy Speaker, will outline the position in their individual constituencies. It is not for me to say that, measured by any standards, the unemployment position in the development areas has deteriorated.
  In 1969–70 the regional differential element of investment grants accounted for over £100 million. While the Government will try to say that their package for the development areas is broadly equivalent, they will have to prove it. So far, they have not proved it.
  It was the manner and the nature of cutting off investment grants at a stroke—about the only thing that was cut off at a stroke—which did so much damage to the regions. Immediately, confidence began to drain from the development areas. In its place, we have confusion. The House need not take my word for it, because the Director-General of the C.B.I. has said as much. The Guardian of 13th March reports:
  "The Director-General of the Confederation of British Industry, Mr. W. O. Campbell Adamson, has called for a basic re-examination of regional problems in a speech strongly

  1399
  critical of recent changes in Government policy. He told members of the North-East Development Council at Durham yesterday that a lack of clear objectives and confusion brought about by changes had fundamentally weakened the whole creditability of the system. 'Since it has been proved highly dangerous to rely upon the continuance of any particular incentives, businessmen have simply discounted them,' he said."
  I can go even one better. Viscount Ridley—
  Mr. Heller: Who is he?
  Mr. Varley: If my hon. Friend will be patient, I shall reveal who lie is. A speech of his is reported in the Sunday Times of 14th March under the heading, "Tory Attacks Regional Policy", as follows:
  "Viscount Ridley, Conservative chairman of Northumberland County Council, attacked the Government for lacking a clear financial and economic policy for the development areas in a speech at the party's Local Government conference in Newcastle yesterday. There had been a vital loss of momentum in the flow of inquiries for new industry in the North-East, and 'an almost total lack of new business since June.' Substitution of free depreciation for investment grants had in some cases been 'quite harmful'."
  My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) asks who is Viscount Ridley. He is the brother of one of the Under-Secretaries of State in the Department of Trade and Industry—
  Mr. Heffer: The difference being that he has more sense.
  Mr. Varley: The Under-Secretary of State has taken the wise precaution, unlike the Secretary of State for Scotland, of ensuring that his name does not appear on this Bill.
  Mr. Ross: He is keeping out of the way.
  Sir J. Eden: The hon. Gentleman has claimed that there was a fall-off in interest in going to the development areas. The figures do not bear out what he has said. In the nine months beginning 1st July, 1970, the share of I.D.C.s going to assisted areas increased considerably over the same period a year previously.
  Mr. Varley: I have checked all the available figures in the last few days. The most recent information came in an Answer to a Parliamentary Question by the Secretary of State for Trade and
  1400
  Industry only the other day about I.D.C.s. That shows that, compared with any quarter over the last 15 months, the position has deteriorated. It has deteriorated especially since June.
  I rather go along with Viscount Ridley. His view was reported as recently as 14th March. I would not normally associate with someone like Viscount Ridley, because I am particular about the company that I keep. But on this occasion, Viscount Ridley will do for me.
  The Director-General of the C.B.I. called for a review of regional policy. He ought to have known that the Government claimed that they had already had one. On 22nd February, the Secretary of State for the Environment announced in a Written Answer:
  "… no further changes in … regional policy are planned at … present ".[OFFICIAL REPORT, 22nd February, 1971; Vol. 812, c. 42.]
  The Government's Election manifesto said that they would initiate a thorough-going study of regional policy. The very same words appear in paragraph 14 of the White Paper on Investment Incentives (Cmnd. 4516). But everyone knows that no such thoroughgoing review has taken place. It has been a complete charade. There has not been a thorough-going review. There has been a trickle of announcements in response to planted Questions about I.D.C.s. There have been Opposition censure Motions. Rabbits have been pulled out of hats, and so on. But the very least that the Government can do now, if they seriously maintain that there has been a review, is to produce a White Paper setting out the nature of the detailed study of the cost effectiveness of investment grants before they ended them. Surely that is not too much to ask.
  We have had many White Papers from this Government. We have had them on commercial radio, on the export of Arts, and we have even had one on olive oil. Surely we ought to have a White Paper on a subject which is so vital to the future prosperity of all those living in development areas and intermediate areas. Even this Government ought to respond to the confusion. If they cannot respond to the confusion that some of their hon. Friends have expressed today in their interventions during the Minister's speech,

  1401
  at least they ought to produce a White Paper to satisfy Mr. Campbell Adamson.
  The Explanatory and Financial Memorandum says:
  "The administration of investment grants requires a staff of about 1,000."
  Apparently this staff will go. It is always a good thing to fire civil servants. A Tory Government firing civil servants will always get a cheer. Firing civil servants is a blood sport for the Conservative Party. It is always good for a cheer in that sense.
  But we all know that the numbers of civil servants have not gone down significantly in the last 10 months. If there is any despondent civil servant working in some investment grant office in the North-East, in Cardiff or in Southend when the last investment grant claim has been processed, he need not worry, because by 1973 when we have the value-added tax he and thousands of other civil servants too will be needed.
  It might be useful to look ht what is happening in other countries concerning investment incentives. In the Common Market, grants for machinery and equipment are paid in France, Belgium, the Netherlands, Luxembourg and Italy—five out of the six. Yet the Government expect us to go into Europe—I do not know whether we shall succeed—in competition with those countries having abandoned the instrument which they regard as so essential.
  The present Chancellor of the Exchequer said in 1966, that the investment grant was "Socialism with a vengeance". But it is not only the Common Market countries which have succumbed to "Socialism with a vengeance". There is an example nearer home, as my hon. Friend the Member for Motherwell pointed out earlier. In paragraph 2 of the White Paper on Investment Incentives, we are told:
  "In the Government's view the investment grants scheme has involved a high public expenditure cost without achieving its objectives."
  It goes on to talk about
  "investment leading to waste of resources. The scheme discriminates.… The discriminatory nature of the scheme".
  It is all terrible stuff as far as the Government are concerned.
  1402
  But, turning to paragraph 23, it says:
  "The application of these proposals to Northern Ireland will be discussed with the Government of Northern Ireland."
  What happened after these discussions with the Northern Ireland Government about these wicked Socialist investment grants? They were kept in Northern Ireland. No doubt the hon. Gentleman who is P.P.S. to the Minister is grateful for them. They are very pleased with them in Northern Ireland. I have obtained a copy of the OFFICIAL REPORT of Stormont. Mr. Roy Bradford, then the Minister of Commerce for Northern Ireland, announcing that statement on 16th February, said:
  "… these grants which nobody else has … Surely this is a cause for sober satisfaction when it does not exist anywhere else in the United Kingdom.… we are now in a position to offer more generous grants than any other area of the United Kingdom.… In terms of what we can offer compared with what our competitors for new industry are offering we are much better off than any other area in the United Kingdom."
  Socialism with a vengeance!
  Mr. J. T. Price: Racial discrimination.
  Mr. Varley: But Ulster Tories boast that they are the only ones who have still got investment grants, and they are grateful for them.
  We know that by abolishing investment grants there is no real saving to public funds. If there is, we ought to have precise information from the Government.
  Going back to tax allowances will mean interminable wrangles between company accountants and officials of the Inland Revenue. I know that my hon. Friend the Member for Westhoughton (Mr. J. T. Price) was always active in the House on investment allowances when it came to cars. Again, we shall not have investment wholly related to basic essential equipment to modernise our factories and improve our competitive position. We shall be going back to wrangles whether the carpets and curtains in the managing director's office or the cups and saucers or furniture are plant "for the purposes of trade", using the jargon of the Finance Bill. It is well known that under the allowances system, before the Industrial Development Act 1966, even rented television sets attracted allowances.
  The ending of investment grants without a proper study has caused investment

  1403
  uncertainty throughout the country in steel, shipping, chemicals, and elsewhere. There is no doubt that it has also caused confusion in the development areas. Many major industries, vital to the economic well-being of the nation, have been badly hit. For all those reasons, we shall vote against the Bill tonight.
  4.45 p.m.
  Mr. John Sutcliffe: The hon. Member for Chesterfield (Mr. Varley) mentioned his one time colleague and my predecessor, Dr. Jeremy Bray. If there was one thing on which Dr. Bray agreed with this Government and disagreed with the Opposition, it was the waste of resources arising from the Labour Government's investment grant policy. He even went so far as to say that it would be cheaper to send workers to live at Government expense in the South of France. Whatever his solution may have been, his point was that there was a case for spending the money better than it was being spent.
  I want to raise a point of principle. The Bill allows investment grants to be made in respect of sums falling due under a contract made before 27th October, 1970. This is a reasonable provision for most construction operations, but I believe that it will apply unfairly to deep mining operations.
  I wish to demonstrate this by giving a number of reasons. The length of the construction period for a deep mine is very much longer than that for even the largest factory complex—up to six years compared with two or three years.
  Contracts can be placed only in stages as the work proceeds, because with mining it is not possible to predict at the start exactly what work and equipment will be needed in the later stages; nor is it economic to place orders for equipment which will not be needed for several years.
  The cost of opening a deep mine may be very considerable—up to £40 million—and the construction period may be up to six years. Therefore, it is not feasible to complete the detailed design at the time when the shaft sinking begins. This is partly because of the amount of design work involved and partly because, until the work proceeds, it is not possible to know exactly what will be required at different depths of the shaft.
  1404
  As the design work is done in stages, so the establishment of prices for the work and the equipment has also to be done in stages, because neither the purchaser nor the contractor can give a price for work or equipment which is to be done or supplied several years ahead. Neither is it feasible for the mining operator to enter into a single contract for differing activities; he has to retain in his own hands the direction and control of the whole operation. It would obviously be foolish to order equipment some six years before it will be used, because the most up-to-date equipment will be required when the mine goes into operation.
  As I have said, the design work and the placing of contracts proceed in stages. The whole operation is nevertheless virtually committed when work starts on the sinking of the main shaft. It is a single highly integrated complex; each contract is totally dependent on all the others and meaningless in isolation. Some contracts depend on the grant of statutory approvals, and the design work on which these contracts are based cannot proceed until the terms and conditions of those consent are known. Because of the uncertainty about the future stages of the working, relations between the mine operator and the contractors are often left for some time on the basis of exchanged letters of intent, rather than on the basis of formal contracts.
  The mining operation may have been well advanced on 27th October, 1970, but, even so, it may not have been possible to place contracts for all the work and the equipment that would be needed to complete the whole project. On the other hand, it will not, apparently, be open to a mining operator to claim the extended assistance under the Local Employment Acts which applies to development areas and which is referred to in paragraph 14 of the White Paper on Investment Incentives. The reason is that the project was started before 27th October, 1970.
  A deep mining operation appears to fall between two stools, and I believe that these operations should be a specific exception under the terms of the Bill. They would constitute, not a wide, but a very limited exception and result in little increase in the cost to public funds. Although the shipping industry has been

  1405
  mentioned, I think it is true to say that the peculiar circumstances which apply to deep mining do not apply to a similar extent to other sectors of industry, and that the problem in deep mining operations is sufficiently special to justify special treatment.
  The financing of deep mining is a problem to be taken very seriously indeed, because great benefits can accrue to the national economy from developments of this kind. That is why I intend to press this case, and I remind my hon. Friend of the Government's own words in paragraph 5 of the White Paper:
  "In deciding to end the investment grants scheme the Government are conscious of the need to avoid any sudden reduction in companies' cash flow and the profitability of their investment."
  If those words have any meaning at all, the case that I have sought to make for a modification of the Bill must be a good one.
  4.53 p.m.
  Mr. T. W. Urwin: My hon. Friend the Member for Chesterfield (Mr. Varley), in an excellent opening speech, has made clear what the reaction of this side of the House is to the Bill. As I see it, the content of the Bill is summarised in the paragraph headed "Financial effects of the Bill" in the Explanatory and Financial Memorandum, where one gets the information—startling to many hon. Members, but even more startling to those outside the House—that as a result of the abolition of investment grants there will be a saving of £1,500 million by the Government up to 1974–75.
  It is, to say the least, not surprising that the prospect of the forfeiture of such an amount from the massive investments provided by the previous Administration in new job generation in development and intermediate areas has caused consternation and a great deal of alarm in those areas. This policy is construed as a major departure from the conceptual approach to the manifold problems of the areas concerned of maximising all the physical resources, to the ultimate advantage of both the regional and the national economy.
  We are in a period of rapid escalation of unemployment, and I was more than a little surprised to note that the Minister
  1406
  scarcely referred to unemployment, save at the end of his speech. It is unemployment, and the relationship of the Bill to that problem, which concerns everybody on this side of the House, and it causes us, almost compels us, to examine the Bill not so much from the angle of what it seeks to provide but rather from the point of view of what it proposes to take away from the less prosperous regions, together with the immediate and foreseeable effect on the economic development of those areas.
  The Minister treated us to a somewhat long discourse on the incentives to profitability under the new system. He omitted to refer to the position of many small firms with low profit margins in the development areas. These firms are highly efficient but under the new system, because of the departure from the provision of investment grants, will profit to a lesser degree than will the much larger firms, and at the same time the difficulties of their being able to expand will be increased.
  The advantages accruing to industry generally as a result of the change are largely unquantifiable because of the longer time factor involved in making payments under the new system. The new scheme can, to a large extent, be regarded as a disincentive to prospective developers in development areas, rather than as something that will provide, as the Government should do, new and additional stimuli to mobility.
  I detected a note of complacency in the Minister's speech. The Government cannot afford such a luxury, nor can they derive any satisfaction or encouragement from the response to their proposals by industrialists, well-informed people, members of local authorities and economists. There has been a wholesale condemnation not only of these proposals but of the general package which the Government have evolved through this system of spasmodic appearances and statements by Ministers about regional policy.
  My hon. Friend the Member for Chesterfield referred to the Selsdon Conference. I have said on more than one occasion that stemming directly from that conference, when the Conservative Party's proposals for regional policy became manifest, was a decline in confidence among industrialists in the development areas. During frequent incursions into

  1407
  the Northern Region during my time as Minister for the North I had many opportunities to discuss with people established in the region what the consequences might be of changes such as those which were being considered at Selsdon, and which have now been put into effect.
  An integral part of the package deal is the abandonment of the regional employment premium by 1974. The Minister spoke about savings, and about the amount of money that would be paid in return for those savings, but he made no reference to the £100 million that will be saved after 1974 as a result of the abolition of the R.E.P. This was intensified during the General Election, and the Chancellor's formal decision in October achieved at one stroke a monumental decline in confidence in industrial investment in the development areas—especially the Northern Region.
  In the paragraph headed "Financial effects of the Bill" we are told that the cost of increasing the rates of building grant will depend substantially on the response of industry. Again we are faced with the indefinable. Although the promotion of new industry means to some extent an open-ended commitment within the confines of Government policy, we have no idea of the present Government's ceiling for the investment of public money in the development areas. Perhaps the Minister will give us some idea of how far Government investment is estimated to fall short in the first nine months of their first year of that vouchsafed to those areas by a Labour Government.
  The Minister intervened in the speech of my hon. Friend the Member for Chesterfield when he was describing the effects of Government policy on the development areas. There has been an overwhelming decline in industrial inquiries since 18th June last year. The Minister told us somewhat piously—as did his hon. Friend in answer to my Adjournment debate on Monday—that the share of industrial development certificates in development areas has increased since 1st July. Perhaps it has, but what we are more concerned about is the actual flow of jobs.
  According to figures given me last Friday by the Minister's Department, in the March quarter of 1965 4,580 new jobs were created in the Northern Region;
  1408
  in the same quarter in 1966 it was 3,600; in 1967 5,650; in 1968 4,180; in 1969 5,460; in 1970 3,620; and in the first quarter of this year, directly contrary to what the hon. Gentleman claimed, the number has fallen alarmingly to 2,720. We are getting an increasing share of the cake, but it is a smaller cake, and we are getting fewer jobs.
  Obviously, in the first half of 1970, despite Selsdon Park, many people still firmly believed that a Labour Government would be returned to office. Many people are now wishing that they had returned a Labour Government, having seen the sorry mess which the Conservative Government are making of regional policy. In the first half of 1970 it was estimated that 13,900 jobs were created as a result of I.D.C.s in the Northern Region. In the second half of 1970 it had fallen to the absymally low figure of 4,400. As I have said, it has fallen even further in the first quarter of 1971, to 2,700.
  The clear indication is that we have lost the sharp impetus to industrial expansion and relocation in the development areas as a result of the policies developed by the last Administration not being pursued. There is much to be said for continuing policies which are proving successful in terms of new job generation rather than creating uncertainty, which was the result of some of the remarks of Campbell Adamson, Director-General of the C.B.I., a few weeks ago. Industrial activity is declining massively, and the Bill contains nothing to help us recover the position which we had attained by mid-1970. It is also clear, despite what the Minister said, that the Government's total financial commitment to industrial production will be substantially less as a result of this decline next year than it will be this year.
  The same section on the financial effects of the Bill refers to a loss of about 1,000 jobs in the Civil Service as a result of the abolition of investment grants. My hon. Friend has suggested that these 1,000 will be easily absorbed among the many thousands more who will be required to man the V.A.T. offices if that tax ever gets off the ground. But I hope that we do not have an intellectual transfusion in the shape of 1,000 civil servants to the 814,000 already unemployed.

  1409
  The Minister said that the Government are determined, as part of their legislation, to reverse the trend. The 72,300 unemployed in the Northern Region are anxiously looking forward to the day when this policy begins to develop and some incursions begin to be made into the intolerably high level of unemployment in the development areas.
  The Bill does nothing to improve the existing facilities which the present Government inherited to stimulate industrial production in the development areas. Quite the reverse; the Minister said that the position of the shipbuilding industry will become increasingly worse as a result of the abolition of investment grants. If he thinks that that is a commendation, he will have a lot more to put up with from this side of the House before the debate is over.
  Paragraph 14 of the Command Paper on investment incentives said that a thorough-going review of regional policy had been put in hand. We expected from that simple statement of fact that there would be a comprehensive review—there has been time to conduct one—of the whole field of regional policy, and that something much more tangible and constructive than this Bill would have emerged. Instead, we have had a multiplicity of statements from Ministers which have done nothing but add to the confusion and the growing lack of interest in industrial development in the development areas. Together with my hon. Friends, I look forward to voting against the Bill.
  5.10 p.m.
  Mr. James Hill: Hon. Members on both sides are agreed that the only point over which we need strike sparks is the withdrawal of investment grants.
  Scarcely a mention has been made of building grants, though it has been pointed out that the increase in the rate of these grants can be effected without further staff requirements. Doing away with investment grants will save £1,500 million, and that cannot be bad. It has been said that the popular Tory image is of a party trying to do away with civil servants as a sort of blood sport. If this is so my right hon. Friend has has quite a field day in that respect.
  1410
  About 1,000 civil servants will not be required, and that, too, cannot be bad.
  I must comment at the outset on the extreme shortage of I.D.C.s, to which reference has been made. As I represent an area of the country which might be considered one of the more prosperous parts of the United Kingdom it might be suggested that my constituency should not get as many I.D.C.s as the development areas. Nevertheless, my constituency could do with more I.D.C.s. However, as a practical politician, I appreciate that it is not simply the question of the issue of an I.D.C. but the fact that for every acre of land used for industrial purposes, about 20 acres will be necessary to accommodate the amenities and housing which the factory workers will need.
  I feel that my right hon. Friend made out a good case for the withdrawal of investment grants inasmuch as he quoted the capital allowances on investment and spoke of the corporation tax reduction. This will all work in the right direction.
  In his poignant plea on behalf of deep-cast mining, my hon. Friend the Member for Middlesbrough, West (Mr. Sutcliffe) mentioned his predecessor, Dr. Jeremy Bray, about whom we do not know whether it was his twilight song which brought him out strongly against investment grants. Indeed, Dr. Bray went much further and said that the jobs provided by these grants had cost so much that it would have been cheaper to have sent the workers to live in the South of France, but he claimed that it had cost about £20,000 in subsidies for each worker whose job had been created by investment grants. He also claimed that I.C.I. had received £106 million in investment grants over three years, of which perhaps £40 million represented the development area differential. Yet employment by I.C.I. had remained steady at about 127,000 persons.
  The Financial Times made this point stongly in an article on 29th October, 1970, which said:
  "British investors are among the most encouraged in the world. Despite the change, Britain remains among the countries where new investment is given the most official help."
  Despite this, high-level subsidy investment in the manufacturing and related industries represents a lower percentage

  1411
  of the gross national product in Britain than in any other major Western European country, with the exception of Italy. We had 7·5 per cent. in 1969. Comparable figures for France, the Netherlands and Belgium were 9·6 per cent., 8·7 per cent. and 8·3 per cent. respectively. Those statistics were given in a Written Answer on 8th March.
  As an hon. Member who represents a great—indeed, the foremost—seaport in the United Kingdom, I do not for a moment suggest that the removal of investment grants—as all other Members will say who are affected—should apply to my constituency—[Interruption.] While this may seem a colloquial and insular point of view, the Chamber of Shipping is worried about the way in which these grants are being removed.
  The Bill gives effect to the October White Paper—there seems to have been some doubt about whether there was, in fact, a White Paper in October—and shipping has made good use of this form of investment in the last five years. It has greatly helped the industry to reequip and redeploy in the face of the immense technological and trading changes which have revolutionised world shipping.
  Mr. Heffer: What about orders during that period?
  Mr. Hill: I had intended to deal with that point, which the hon. Gentleman made from a seated position.
  Further orders are bound to be affected by the stoppage of investment grants—[HON. MEMBERS: "Hear, hear."]—and, in deference to my Front Bench, this move is bound to have an effect on the rapidly rising capital and operational costs of the industry, which are already outstripping revenue. Indeed, considering the period through which we are passing, within half a decade Southampton will have no liner trade at all.
  When we in Southampton talk of re-equipping, we mean containerisation and we look for more prosperity in the expansion of our docks to take further trade from London and Liverpool, which do not seem to be able to cope with the orders they are getting.
  Mr. Urwin: You must be joking.
  Mr. Hill: We in Southampton do not joke about these things. We are the foremost container seaport in the United Kingdom.
  In January, 1966, total orders by United Kingdom owners were for 4·6 million deadweight tons. By January, 1971, the figure had increased to 22·6 million. This represented annual average capital investment of £100 million. The Chamber of Shipping is, therefore, disappointed at the Rochdale Committee's recommendation that there should be no substantial change in the level of assistance accorded the shipping industry, on the basis that investment grants must go for the whole of industry.
  Mr. Albert Booth: The hon. Gentleman said that average annual investment by owners in shipping had been running at £100 million. Does he agree that that figure is somewhat outdated and that the present sum is £300 million?
  Mr. Hill: I agree. I should, of course, have referred to £300 million and not £100 million.
  When ordering a ship, which is not something most of us have to do, one places the order complete in all respects necessary for operation, though it is unusual for the contract to cover more than the hull. For example, items like radar and technical equipment, including the engines, are usually left so that the most modern equipment may finally be used in the vessel, and it may not be chosen for a year or more after the completion of the hull. The delay in ordering engines for the "Queen Elizabeth 2" resulted in a delay in her maiden voyage.
  These are the sort of things which should be pointed out to my right hon. Friends. Naturally, we shall never fall out over this. We feel that they are doing an extremely good job in very difficult times. They were left with an inheritance which no one would have wished on them. It is only too clear now that the sun is on the horizon and it will not be very long before we see results. But on this Bill, we should be satisfied if my right hon. Friends could have another look at the way in which the investment grants have been removed from the shipping industry.
  5.21 p.m.
  Mr. Frederick Willey: I shall be brief. The Minister and the Secretary of State are victims of their own castigation. If ever there were lame ducks, they are the Secretary of State and his Ministers. They are lame ducks in a glass duck-house.
  On the Bill, I agree that whatever the merits of the argument about the replacement of grants by allowances it is flatly rejected by everyone in shipping, and consequently by all shipbuilders. The main stay of my constituency is shipbuilding, so I join them in opposing the Bill. I join also the North East Development Council in protesting that the replacement of grants by allowances amounts to a serious cut-back in the inducements to industry to come to the North-East Coast. With our present heavy unemployment, we cannot afford to be so prejudiced.
  I did not intervene to pursue the dialectics of this particular controversy. They are marginal and peripheral. They obscure the stark reality that development area policy has failed. The witnesses of that failure are the development areas themselves. After 25 years the development areas remain. They remain more heavily scarred by unemployment than they were in the years immediately after the war.
  The self-same areas remain—monuments to the failure of the policy that has affected them. Indeed, they have been extended; the disease has not even been contained—the canker has spread.
  I have heard successive Ministers, one after another, saying that it would take time, that it would take five years, perhaps, or even 10 years, to finish the job. But not five years, not even 10—more than 25 years have gone by and the problem is worse than when we started. Year in and year out, the development areas have endured twice as much unemployment as the rest of the country. This is not a regional but a national failure. The development areas have remained a constant indictment of our failure to make full use of our national resources. All that we can do is to continue saying the same thing and pursuing the same policies.
  The Secretary of State for the Environment flamboyantly talks about tidying up the pit heaps, and I should be the last
  1414
  to discourage him; but it is sobering to reflect that longer ago than I care to remember, Ramsay MacDonald used to make the same speeches.
  The fact that these ugly eyesores still disfigure our countryside in the development areas exposes the lack of pace and dynamism in our development area policy. In any case, this does not go to the heart of the problem. The crux of any effective policy affecting the development areas is a policy of industrial location. This is a mixed, complex problem which demands a national concerted effort and acceptance of intelligent national planning, and a recognition that a healthy private enterprise should also serve the national good. It demands—this is our national tragedy—what many comparable countries with which we are now in competition, have been able to invoke.
  But we shall not get this through any blanket formulae, however great the differentials may be. This is not a matter that can be left to subsidies and clerks. It needs the courage of judgments and the vitality that will induce their acceptance, pragmatic partnership between planners and industry, and, above all, recognised and identifiable responsibility. It demands nothing short of a complete restructuring of development area policy, an escape from Whitehall, more direct regional responsibility, and more direct participation by industry.
  As has been repeatedly said, the Government promised a through-going study of regional development policy. I am willing to accept their good intentions, but they have been hamstrung by their doctrinaire dogmatism. They have been smothered by the clerks. I ask them to forget the Bill and to set up a high-powered working party and to tell its members to take their jackets off and to try to devise the real development area policy that the country desperately needs.
  5.27 p.m.
  Mr. Robert Redmond: The right hon. Member for Sunderland, North (Mr. Willey) is right to talk about the infrastructure of some of our older industrial areas, and I shall take up that point shortly.
  I was interested in what the hon. Member for Houghton-le-Spring (Mr. Urwin) said about small firms which have low profit margins and yet are highly efficient. My experience is that the small firms

  1415
  usually show a better return on capital invested than many of the larger firms. I know something about small firms, and from discussion with not an inconsiderable number of them, my experience is that they prefer the idea of allowances as opposed to grants. But then the hon. Gentleman went on to talk about unemployment in the Northern Region. I do not have the figures for the Northern Region or for the area which I know far better, the North-Western Region, which contains the Merseyside development area. But I know, very definitely, that the number of unemployed in the North West area was greater last June than in 1964, when the previous Government came in to operate the policies which we are now putting into reverse.
  We cannot take the Bill on its own. We have to refer to the whole financial package that the Government is producing. But I am sure that you, Mr. Deputy Speaker, would not allow me to make a speech which would be more appropriate to the Second Reading of the Finance Bill.
  The hon. Member for Chesterfield (Mr. Varley) and the hon. Member for Houghton-le-Spring spoke about regional policies. That is a subject dear to my heart and relevant to the Bill. But the hon. Member for Chesterfield mentioned the investment expectations which industry appears to be holding at present, and he coincides that with the Bill. It is a coincidence. I think that it is a coincidence, because business cannot invest if the money goes to pay excessive wage claims. A number of companies with which I have had discussions in the last week have said that they must see what will happen to their wage cost before they begin to think about any further expansion.
  How do the Opposition square the declared aim of the Labour Government's policies, namely, to be of help to the development areas, with what happened at the English Electric Napier factory at the Kirkby Industrial Estate in the constituency of the then Prime Minister? The General Electric Company, helped by the I.R.C., took over the English Electric Company and almost immediately closed that factory which provided employment for several thousand people in a development area. If the Labour Gov-
  1416
  ernment's development area policies were a benefit to industry, surely the General Electric Company would have concentrated at Kirkby and not run away from it. That example is sufficient to shoot down in flames the whole of the Labour Government's policy.
  Mr. J. T. Price: The hon. Gentleman is adducing a strong argument, but judgments on a matter like this cannot be made on an isolated incident with only part of the facts being revealed. There were many other factors involved in that closure and it would take the hon. Gentleman till 10 o'clock to debate the matter properly. The hon. Gentleman is taking advantage of patient people like myself by making such points.
  Mr. Redmond: I am glad to hear that the hon. Member for Westhoughton (Mr. J. T. Price) is patient. I was patient with him during the proceedings on the Industrial Relations Bill. The fact remains that that was a very large factory in a development area receiving all the aid due to a factory in a development area, but a large corporation which took it over found it more economic to do the work elsewhere.
  The statement in the Explanatory and Financial Memorandum that the Bill will effect a saving of about 1,000 staff has excited comment amongst Opposition Members. However, this is precisely what we promised to do—to reduce the size of the Civil Service. Every time the Government fulfil a promise the Opposition show surprise, because they cannot understand how a Government can fulfil their election promises. It has been argued that with the introduction of a value-added tax these civil servants will be required again. We have already been told that the civil servants needed for the value-added tax will come from the Special Commissioners because they will not be working on surtax.
  Mr. Douglas: Will not the administration of tax-based incentives require a transfer of civil servants from the Department of Trade and Industry to the Inland Revenue? Will the hon. Gentleman consult his Front Bench as to the numbers involved?
  Mr. Redmond: I cannot accept that, unless we accept that the civil servants who used to look after investment allowances with the Inland Revenue were

  1417
  moved to the Board of Trade to do this. I still maintain that we are making an overall saving in the Inland Revenue Department.
  The whole trouble about investment grants is that they provide cash irrespective of a firm's profitability and viability. In many cases they provide cash for the unprofitable business and take it in taxation from the profitable business which should be encouraged.
  I think it was Abraham Lincoln who said—at any rate, if he did not say it it is still true—that we can never make the weak strong by making the strong weak.
  Mr. J. T. Price: It was Mark Twain who said that.
  Mr. Redmond: I thought it was Abraham Lincoln, but the saying was right. The Government's job must be to do everything possible to get the maximum growth in industries and firms which are healthy and which have proper prospects or which would have them but for high taxation.
  As I represent the constituency of Bolton, West I cannot in my heart feel completely happy about the matter of building grants; because the Bill continues the principle of the policy of the Labour Government with regard to development areas and intermediate areas and there is no apparent change for old industrial towns like Bolton which is neither a development area nor an intermediate area but which geographically lies between both. To the south-west of Bolton is the Merseyside development area. To the north-east of Bolton there is North-East Lancashire. Bolton is an old industrial town squeezed between two areas which get building grants. My colleague my hon. Friend the Member for Bolton, East (Mr. Laurance Reed) raised this matter in an Adjournment debate last week. I hope that later this evening the people of Bolton will be given some reassurances.
  In older towns such as Bolton, which have no status either as development areas or as intermediate areas, there is a form of obsolescence which is worrying everyone there. Lancashire has the most industrious people in the world and the finest people for industry, but because of the obsolescence in these areas they are tending to drift away, with the result that the average age of the population
  1418
  is increasing. There is a lack of buoyancy in the rateable value. This can only result in the long term in trouble unless action is taken to correct the trend.
  Subject to that, I support the Bill and will certainly vote for it, hoping that something will be done in Committee.
  5.37 p.m.
  Mr. Peter Hardy: Fortunately, I have the figures which the hon. Member for Bolton, West (Mr. Redmond) omitted to bring into the Chamber. The north-western area has an unemployment total of 109,578. The hon. Gentleman said that the figure was quite high before the General Election. The rate of increase in the North-West is higher than in any other part of England and Wales. Scotland is a different kettle of fish.
  I hesitate to criticise any hon. Member from another area, but I should have thought that anyone concerned to reduce the unemployment rate in his own area would be very anxious to ensure that the Government did not throw away the valuable inducements offered by the previous arrangements. During recent months, in several weeks 10,000 people have been made unemployed, and in an even greater number of weeks there have been announcements by British industry of a further 10,000, 12,000 or 15,000 jobs which are likely to disappear soon.
  In this critical situation it is untimely for the Government to bring in these proposals, particularly as there is a declining number of jobs available. The number of unfilled vacancies in the last six months has fallen by about 55,000. The Yorkshire area has suffered a considerable reduction in the number of jobs available, particularly in the number of jobs available for young people. Yorkshire has a male unemployment rate of 5·1 per cent. It is about that in my constituency.
  In recent days I have been astonished to learn that the Government Front Bench believes that there is a great deal more vigour and activity in the economy than we in the Yorkshire region have noticed. For example, last Thursday the Secretary of State for Trade and Industry told the House that in the first three months of this year there had been 1,083 inquiries as compared with 538

  1419
  inquiries in the first three months of 1970.
  Mr. Neil Kinnock: On the basis of that figure does it not appear that more inquiries have been made at the Department than jobs are being created by the Department?
  Mr. Hardy: I certainly think that that is the case and I intend to say a little more about it.
  We had the Secretary of State telling the House that there were 1,083 inquiries in the first three months of this year, and yet in my constituency and all the others I know, and others about which I have been told by my colleagues, we are all convinced that the number of inquiries by industry has dropped considerably. In my area they have virtually dried up since the mini-Budget in October, when the proposals were first made.
  The result is that the improvement which we were making in the South Yorkshire intermediate area has stopped. We began to reduce our unemployment in 1969, and this reduction continued through 1970, so that I could be told by the Under-Secretary of State for Employment in answer to a Question I asked in the middle of March that unemployment in March, 1971, was somewhat less than in March, 1970. I think that the hon. Gentleman felt that we should congratulate him. I was very pleased about the answer, because I want to see unemployment drop in my area no matter which Government are in power. Unfortunately, the improvement we managed to make because of the intermediate status we were given has now stopped. With the announcement in March of closures and redundancies in the Special Steels Division of the British Steel Corporation, we shall face a very serious situation and I shall find many hundreds of my constituents unemployed. There will be a reduction in the inducements we can offer to new industry which would give them some hope for the future.
  The Minister suggested that we should be far more concerned about the development of labour-intensive industries, and this is desirable. I want to see labour-intensive industry developed in my constituency, but there are other points. When we consider unemployment we tend to think of the individual or the
  1420
  family affected by the blight oppressing so many parts of the country, but we should also remember the effect upon the community of the present decline in activity and the present hopelessness.
  My constituency provides an example. The major part of the closures in the Special Steels Division seems to fall in the urban district of Rawmarsh, where three parts of the Parkgate section of the Rotherham works of the Division are to close. Rawmarsh is not a salubrious watering-place. It is a town of about 20,000 people which has grown up on steel and coal. It is a town which has created a great deal of wealth, and the people of Rawmarsh and anyone with sense wish it to create a great deal more. The problem of the town was the historic one of decay, dereliction and substandard houses. The local authority has made tremendous strides in the past three or four years in clearing the slums and sub-standard houses which proliferated around the steelworks. The result is that we now have splendid housing estates. The council has done many other things to improve the condition of its people.
  Everyone seemed to think that the place would further improve. But now hundreds of men in that district will be redundant. Some got their notice this week. They will find it difficult to pay the rents of the new houses the council so wisely and properly built, and will find life very much more difficult. At the same time we shall find, as the local authorities in my area have found, that the decline in the level of inquiries about industrial development creates an intolerable situation. Therefore, we have the community effect, the tremendous loss in rateable value which will reduce the capacity of that council, like so many more, to promote further improvement of the conditions and environment of the people.
  As a result, I am not too worried at this stage in our history whether I get labour-intensive or capital-intensive industry in my area, because we need to create wealth in such areas. Instead of creating wealth, we have the creation of anxiety. It is seven weeks tomorrow since the Secretary of State for Trade and Industry promised to announce to the House his decisions about the short-term financial and development plans of the British Steel Corporation. We are still waiting. The right hon. Gentleman has one week

  1421
  left, because I think that he said he would do it within six weeks to two months. We hope that he will make an announcement by a week tomorrow which will relieve my constituents' anxieties.
  Mr. Raymond Gower: I am not trying to be difficult, but merely asking a question for information. The hon. Gentleman is painting an interesting picture of part of his constituency. In view of the difficulties of the works to which he has referred, is he making a special case that those difficulties could be remedied by the retention of investment grants? I was not sure whether that was his point, because he said earlier that it was not in the development area.
  Mr. Hardy: It is an intermediate area, not a development area. Certainly, the development grants would be of considerable assistance to the steel industry.
  I have met both management and men at that plant. I visited the works within two or three days of the British Steel Corporation's announcement. The men said, quite responsibly, that they were not seeking to keep open plants merely to keep them open, that they accept that there must be change and rationalisation. Part of the plant is a blast furnace which came into commission in 1905. They are not saying that that blast furnace should remain open, but they are saying that they should be offered jobs in the Corporation or outside when the closure takes place. That is sensible.
  I am concerned, therefore, not merely about the effect upon the individual and the community but with the whole question of the attitudes of the labour force in the steel industry and the rest of my constituency generally. The weekend after the announcement, I went into the Labour Club at Rawmarsh and spoke to some of the men who are likely to be affected. I was very impressed by one man of middle years, who is not an active party political worker and I do not think is even an active member of his trade union branch committee. He is an ordinary, middle-aged, middle-of-the-road, modest man, the sort of man Conservative hon. Members would describe in times of national emergency as the salt of the earth. He told me, "I have been working at that place for many years. I have never been involved in an industrial dispute. I have always sought to do my part
  1422
  to promote increased production, and now I am likely to get my cards. We might have been better off if we had been militant."
  Unfortunately, that sort of shifting in attitude is likely to prove dangerous. I say "unfortunately", because I think that it is unfortunate for Britain. We heard earlier in the debate that Northern Ireland is being excluded from the new methods of assistance. That suggests to me that if my workers start throwing bombs or creating a tremendous fuss and disturbance, behaving in a way entirely alien to the habits and behaviour of South Yorkshire, we might begin to get more consideration from the Government. It is ridiculous that we are prepared to reward civil disorder and irresponsibility. My people are responsible. In my area we are not volatile either in our industrial or social conduct. Yet we are likely to suffer very severely under this Government.
  I want to quote from the words of the present "Secretary of State for Unemployment" on the subject of employment just before the last General Election. He said:
  "If we could get back to Tory policies, the unemployment situation would be a great deal better.…"
  He probably may feel that it will be better when it reaches 1 million. A little later he said that it was a mistake for the then Government
  "not to have taken steps specifically to encourage industrial investment.…"—[OFFICIAL REPORT, 6th May, 1970; Vol. 801, c. 421–25.]
  I do not think that the Bill will act as an encouragement to industrial investment. Clause 1 provides a complex arrangement which seems to me to make delay unavoidable. If delay is unavoidable, it will reduce the attraction of the scheme to industry.
  Under Clause 2, the Secretary of State can reduce the assistance to be given if he feels that it is not likely to provide an adequate amount of labour. My earlier point about the need for capital-intensive as well as labour-intensive industries is relevant, and I hope that we shall get guidance from the Government about the scale of values they envisage so that we can tell at what point the Minister will begin to reduce the level of grants that he makes available. If we

  1423
  are to have this kind of provision, we should have from the Government at the same time as this complicated Bill some idea of the scale of the problem they expect to affect the country within a reasonable time. In that debate on 6th May, 1970, the present Secretary of State for Employment said that the Labour Government should
  "… tell us what their forecasts really are, give us reasons for those forecasts, and tell us and the country what hard action they will take to bring down this unemployment.…"—[OFFICIAL REPORT, 6th May, 1971; Vol. 801, c. 430.]
  The only forecast I can see which is relevant to the present situation is that in 1974–75, there will be a reduction of £150 million in public expenditure on the promotion of industrial and economic activity in regions such as the one I represent. The right hon. Gentleman said on 3rd February, 1970:
  "We … want … some plain truth and some hard, properly-thought-out action. We want no more dishonest assurances. The facts, when compared with the promises, are inexcusable."—[OFFICIAL REPORT, 3rd February, 1970; Vol. 795, c. 225.]
  The facts are inexcusable—perhaps even more so than the promises so lavishly made last June by the present Government.
  5.52 p.m.
  Mr. John Hall: Before I consider the general principles of the Bill and of investment grants, I want to ask the Government for guidance. Under Clause 1, as I understand it, any expenditure which has been incurred before 27th October, or any contracts which have been made before that date but where the plant or equipment may be delivered after that date, will become eligible for grant under the old scheme. The problem which occurs to me is not an unusual one. This concerns where a firm building an item of plant, which may be costly, has placed contracts, before 27th October, for different parts of it to be made by outside firms. The parts are delivered either before or after that date but the plant is not assembled. A good deal of the cost of the plant is the labour put into it by the employees of the firm erecting the plant for itself.
  In the case I have in mind, the total cost incurred by the firm through its own labour and resources is about £50,000.
  1424
  All that sum will be incurred after 27th October, although it relates directly to orders placed before that date. Indeed, the plant, which have been delivered, will be quite useless unless it is assembled and put into use, which will be after the relevant date. It is not clear to me from Clause 1 whether such a piece of plant or equipment would be covered under the previous arrangements, as allowed for in the Bill. Perhaps my hon. Friend will tell me.
  On the matter of general principle, I was interested in the speech made by the right hon. Member for Sunderland, North (Mr. Willey) who, I regret to say, is not with us now. He threw some doubt on the efficacy of the policies followed by successive Governments for many years since the war. I understood him to express doubt as to whether all the efforts that had been made by successive Governments had in fact stimulated investment to the degree we should like to see, particularly, of course, in the development areas, on which we have been concentrating, I think that he is right.
  The record of capital development since the war has been disappointing, to say the least. It has been patchy. During a few years it rose at a not unreasonable rate, but in general it has been far lower than it should have been, and certainly in recent years much lower than that of our major industrial rivals. So far we have not succeeded in finding a way of stimulating investment as we should like to see it.
  We have concentrated much of our effort in the past, and again in this Bill, on the development areas. I wonder sometimes whether this is quite the right way. One example, although it is not covered by the Bill but is part of the development incentive, is the regional employment premium. It was introduced by the last Government with the best of intentions. It was designed to encourage industry to develop in those areas where development was required so as to stimulate the provision of more jobs. It did not do that. In many cases, the firms which benefited were those already situated in development areas and in some cases they used the premium for developing improvements in their plant and general lay-out and organisation which were designed to reduce the number of jobs rather than increase them.

  1425
  It seems to me that the best way to encourage industry to go into the development areas is not to give direct benefits but to improve the areas themselves. One must ask, "Why is it that it is so difficult very often to get firms to go to development areas?" There are a number of answers. One is that the communications are not what those firms need. The areas may be a long way from their main markets. It may be difficult to get employees to go to development areas or to get the right type of employee for that particular type of industry.
  I have always thought that the best way of encouraging development in the more difficult areas is to improve the facilities and amenities of those areas. I would sooner see money spent on better communications, whether by rail or road or docks or harbours, and on improving the area generally so that people would be encouraged to go to live there. We should make these areas attractive propositions for industrialists who have to consider the long-term economics of any developments they may have in mind.
  Mr. Kinnock: In the last financial year, the regional employment premiums in Wales totalled £13 million. I agree that improved communications are vitally necessary, but how many miles of motorway could be built with £13 million? Does not the hon. Gentleman accept that the injection of £13 million would help the Welsh economy and have a much more dramatic effect on the mounting unemployment problem than the building of a couple of miles of new motorway?
  Mr. Hall: It would be difficult to prove that expenditure of that money would be reflected in real advantage to industry in that area, except to add to its profits or ability to meet overseas competition. It would be hard to say even that it would give more jobs to any appreciable number in such areas. I have some experience of industry in South Wales and I would not believe that the premium was used really for the purpose for which it was basically intended. I agree that £13 million would not go far towards improving the infrastructure of the area, but if one is to take measures which are designed to make a development area more attractive to industry, it might be better in the long run to spend more
  1426
  money on improving communications or providing conditions in which industry would flourish rather than give the money in the form of direct grants to industry.
  We have been encouraged from time to time to look at our investment grant system and to take account of the incentives given by our industrial competitors overseas. We know that when a foreign firm is considering where to base a factory in Europe it often takes into account the investment grants and other benefits available to it in a given area. For example, an American company may wish to set up a factory serving Europe and might have a number of alternatives. It might have the alternative of coming here, of going to Eire, which gives generous allowances, or of going to one of the other European countries which also give facilities and which may be nearer to the centre of the Common Market, which we may or may not join.
  We have often been tempted to compete by offering facilities and benefits which we think will attract industrialists from outside, but I am not certain whether this is the right philosophy. If we look at the benefits that we have gained in the past by the large amounts of money that have been spent in this way over the years, under both Governments, I do not think it can be said that there has been a large measure of capital expansion and development. No hon. Member could claim that the policies followed by either Government have succeeded.
  I am not sure, although I prefer this way of approaching the problem to the previous one, whether it will succeed. I prefer this method, because it is far better to apply the help so that it goes to companies which make profits rather than to companies whether or not they make profits. To that extent it is an improvement, and it is also an improvement in that it is simpler to administer and is likely to result in some saving of money. That is the only value, if we accept that there will not be much value from the total money spent.
  The right hon. Member for Sunderland, North was right when he said that the whole problem requires extremely careful examination. I do not know what departmental committees or other committees have been set up to look at this problem from time to time, but I imagine

  1427
  that it has been studied fairly intensively. I am not certain yet whether we have studied it sufficiently, because in looking at the way in which industrialists are encouraged to invest more money, to expand in what we consider to be the right places, we have to do mole than produce a Bill which deals with incentives. There are a range of measures which have to be introduced in a number of different ways, some of them through the Budget and Finance Bills. We perhaps have not carried out sufficient investigation into this difficult and intractable problem.
  I was interested in the comments in the Hunt Report made by Professor Brown in his note of dissent when he referred to the fact that investment grants tend to attract capital-intensive industry into development areas when what we really require are labour-intensive industries. He said:
  "… since capital costs are still subsidised in development areas twice as heavily as labour costs, a good deal of the tendency presumably survives. It is contrary to good sense in that it means the concentration of capital-intensive industry where labour is relatively most plentiful, leaving labour-intensive industry on the whole where labour is scarcest, it makes investment grants expensive to the Exchequer in relation to the amount of unused labour absorbed into employment, and promotes a geographical concentration of particular kinds of industry that has no obvious economic merit, even if it is not in some degree uneconomic in terms of transport costs or concentrations of economic risk. It seems to be rather important that incentives (at least when they reach anything like their present scale) should be balanced between assistance to capital and to labour costs."
  Mr. Douglas: The hon. Gentleman has answered the point I was about to put, in the last few words of the quotation, which indicate clearly the need for a regional employment premium. That is why Professor Brown, in other works, has supported the idea of a premium, which the hon. Gentleman rejects.
  Mr. Hall: I agree that it means no more than is said, but I do not accept the view that the regional employment premium is the best way of achieving this balance between capital and labour costs. This is a different view about the instrument to be used. Professor Brown is right in his general view of the effect of development grants. They do attract capital-intensive industries, because it is the capital-intensive industries that are
  1428
  most concerned with the size of the investment grant that they are likely to get. It can make a great deal of difference to their plans if they know that they can get greater allowances for putting in expensive plant from Government or taxpayer sources. It plays a large part in the calculation of their cash flow.
  Mr. Gower: Is it not one of the difficulties that some of the most modern and interesting industries which every area longs to have tend to be expensive in terms of capital? If we leave to the development areas merely those which are labour-intensive will it not mean a deprivation in these areas in future?
  Mr. Hall: I apologise for the fact that I have failed to make my meaning entirely clear. I agree with my hon. Friend. It would be true that if we were to allow the capital-intensive industries to go only to certain areas, not to areas where there is a labour surplus, it might have undesirable effects upon the general balance of industry throughout the country. All I am saying is that the effect of the investment incentives in the Bill will be to encourage capital-intensive industries to go to areas where there is a surplus of labour, whereas we should have some system which effects a balance between the two so that we can encourage the development of some areas which tend to be labour rather than capital-intensive.
  The investment grants are most attractive to the major spenders, those who have to put in very expensive plant. A consideration of the grants they will get can play a big part in their decision over where to site a new factory or plant. While supporting the Bill as an improvement on the present system, I think that we must go much further than we have so far done into finding, first the solution to the problem of encouraging faster capital expansion than we have had hitherto, and secondly we must find a rather different way of dealing with special development areas which have their own problems. There are the difficulties with the grey areas and the areas just outside the boundaries of both which become slightly grieved because they feel that they have as much right to be considered as the development and grey areas.

  1429
  The right hon. Member for Sunderland, North made a brief reference to the establishment of regional authorities, and I think that he was probably on the right lines. I was not entirely certain of what he had in mind, but my view is that as we move towards regional government and we have the country divided up into some much larger regions we might find a much better way of dealing with local unemployment problems and the development areas than we have so far.
  6.8 p.m.
  Mr. John Horam: I was amused by the slightly Olympian, if rather vague, remarks of the hon. Member for Wycombe (Mr. John Hall). At one stage they even sent a tremor of apprehension down his own Front Bench. If he stays in the Chamber longer after finishing his speech than he was in it before he got up to speak he may be interested in some of the comments I have to make.
  The Government's proposed changes are quite absurd. I believe that the Government will regret ever having brought them forward. They are absurd first because they mean that this country will be stepping one way just at the moment when all the other major industrial nations are stepping the other. Secondly, they are absurd because the Government have done this in the middle of the worst investment recession since the war—a piece of monumentally inept timing, about the worst by any Government since the war. Thirdly, this Measure will be a serious setback to regional development. Fourthly, it is utterly mistaken in principle—so mistaken that it calls into question whether the Government really understand the relationship between investment and economic growth. That is a very serious matter.
  The latter point is the heart of the matter. In their White Paper on Investment Incentives, the Government set out their argument against investment grants. Two of the three reasons they give are trivial and I will not waste time on them. The third is the nub of the issue:
  "Investment grants benefit firms whether or not they are making profits and they can therefore result in uneconomic investment and waste of resources".
  The Minister spoke at considerable length and with considerable vehemence about
  1430
  the subject of profitability, and several hon. Members opposite reiterated the same point. By contrast, the new system—tax allowances—is profit-oriented. A company receives the full benefits for its capital investment only if it is making reasonable profits. If it is not making reasonable profits, it receives very little help.
  That is fine if one wants to maximise profits. But one does not necessarily want to do that. Nor do the Government say that their aim is to maximise profits. Their aim is clearly stated in the White Paper on Investment Incentives, the first sentence of which shows the significance which the Government attach to this matter:
  "It is the Government's objective to secure an improvement in the long-term rate of growth of the economy".
  That is a laudable aim. Indeed, it has been the aim of every Government since the war. But it is quite different from saying that we want to maximise profits. Profits and growth are related, but, they are not identical and considerations of maximising long-term economic growth can run contrary to considerations affecting short term profitability. I believe this to be the case with investment.
  Let me give an example of the sort of thing I have in mind. In Japan, the Government and country have achieved a rate of investment double that which we in this country have achieved. They are investing each year twice the proportion of the gross national product which we are investing. The main reason for that is obvious. The Japanese have managed to achieve a sustained and high rate of economic growth. We have not managed to do that and therefore the proportion of our gross national product which we are devoting to investment is much lower.
  But there is another point. The Japanese do not worry too much about profitability. The rate of profitability of their major companies is quite low; the rate of return is relatively miserable. Some of the things which Japanese businessmen and industrialists go in for would not be given a second glance by British industrialists. Japanese businessmen are concerned with production and growth and winning world markets, and they are quite right. Of course their approach leads to some waste, but it is

  1431
  more than offset by the extra wealth created by going hell for leather.
  Mr. Gower: Surely the hon. Gentleman is aware that all the evidence shows that the Japanese entrepreneur has the advantage of a system of expense allowances which would not easily be tolerated in this country. I hope that the hon. Gentleman appreciates that. It is contrary to the ideas of most of us about the fairness of a tax system.
  Mr. Horam: I would not argue that the expense account system in any country has a major effect on economic growth. The argument of those of us on this side of the House is that it has no effect on economic growth. The Japanese system may be wasteful, but the wealth created by this approach entirely outweighs any waste. And since the Japanese go for growth year by year, we can understand why they are rapidly overhauling this country in the economic growth table.
  This shows that we need, not better quality investment, more capital intensive investment or more profitable investment, but simply more investment. This is the fundamental point, and this is preeminently what investment grants give. They are simple and crude, and they give a direct and handsome immediate cash benefit to the industrialist, who does not have to wait. He does not have to fiddle around with complicated and complex calculations about his accounts and future profits, with the uncertainty that all that involves. He knows then and there that he will get the money on the nail. In the nature of things it is obvious a priori that this will give more investment, which is what we want.
  Mr. Cecil Parkinson: The hon. Gentleman has made the assertion that investment grants create more investment. We have had them for some years. Can the hon. Gentleman produce a single statistic to back up his assertion?
  Mr. Horam: The Government do not deny that my assertion is true. They argue that the new system will be less wasteful of investment. They have not said at any stage that it will bring more investment, and indeed it will not.
  I will take the point further. Last Sunday the lead story on the front
  1432
  page of The Sunday Times Business News was headlined
  "Study reveals U.K.'s road to export ruin".
  It sounds rather like a Victorian tract against drunkenness, but the story beneath the alarming headline was rather interesting. It dealt with a detailed analysis of Britain's export trade which was undertaken by the National Economic Development Office. It showed that one of the reasons for Britain's relatively poor performance over the years was that it is relatively poorly represented in those product groups in which growth is fastest, particularly advanced engineering and chemicals. This re-emphasises the point. If we do not invest much, we do not achieve much high technology, and it is in the area of high technology that growth is fastest.
  We have not invested much in those areas mainly because our rate of growth has been slow. No statistic about investment will ever prove that one system is better than another because the whole thing is so affected by total growth rate. Nonetheless, one can work from a priori assumptions, as we are doing, and as right hon. and hon. Members opposite are doing in the debate.
  We have invested less in these high technology industries because we have a low rate of growth. But we have also invested less because we have given too much consideration to the question of profitability. It is in the areas of high technology that it is most difficult to obtain high profits year in and year out. Rolls-Royce is the most recent and perhaps the most spectacular example of this tendency which is endemic in other areas of engineering and chemicals. The profitability of the smaller chemical companies shows that they have been extremely poor performers. I.C.I. has been rather erratic, and the performance of the car industry and some engineering industries is well known to be rather poor.
  In these circumstances it would have paid the Government and the country to subsidise investment in these industries, even if the return on the investment had been low. This was the direction in which the policies of the last Government were moving. The Industrial Reorganisation Corporation, the creation of the Ministry of Technology and the systems used and the investment grant system

  1433
  were part of this. It has been blown aside by the naïve and out-of-date ideologies peddled by the Government.
  There are other reasons why the new system, with its emphasis on profitability, will damage our economic growth. For instance, many of our larger and international companies pay very little tax in this country, for various reasons, because much of their trading is done abroad. They will suffer as a result of the new system. It is these multinational and large international companies which undertake most of the world trade, and we cannot afford to put ourselves at a competitive disadvantage in this field.
  Again, our economy has benefited a great deal over the last few years from foreign investment in this country. The development regions have taken advantage of this. It is reckoned in one calculation that one-third of the total fresh investment in the last six years which has gone into development areas has been investment by foreign based companies. These, too, will be hit by this new system because they will no longer have the immediate incentive of large cash grants. We know the importance of this in Scotland. The latest news from there is that the Chevron Oil Company is reconsidering the investment of a large amount of money, according to The Scotsman, because of the change-over from investment grants to investment allowances.
  This is true also of new companies. We all know that new companies have a gestation period during which their profitability may be extremely low, or when they may be totally unprofitable, regardless of the eventual failure or degree of success of their venture. In this period cash grants can be of inestimable value to them.
  Mr. Gower: Will the hon. Gentleman relate that to the problem of most of the development areas? Do development areas really look to absolutely new companies for their salvation? Is it not inevitable that the companies which are steered into development and intermediate areas are existing companies which are moving rather than absolutely new companies?
  Mr. Horam: Proportionately, existing companies must have a larger share than new companies of any new investment
  1434
  simply because they are existing companies and have larger resources, but that does not alter my point that anything we can do to help new companies in the first years of their life may be of great advantage to the economy as a whole—and at small cost.
  Thus, in many ways this reversion to pure market principles, reinforced by the emphasis on profitability, undertaken by the Government is wholly wrong. Market forces are too narrow for the national economic good. We need to widen the whole idea of market forces by using the modern planning tools, largely developed on this side of the House, which are available to a modern Government. Instead, the Government have taken a step back into the narrow confines of 19th century economics.
  The crying shame of it all is that the grant system had begun to work very smoothly and well. Like all innovations, when it first came in there were transitional problems. Indeed, there has been a great deal of litigation over the years between the Ministry of Technology and companies which wanted investment grants, the most famous example being the protracted case of the British Oxygen Company against the Ministry of Technology. But by and large industry got used to this system and liked it.
  Inside the Civil Service we have created a substantial body of people who understand the system and who have themselves benefited from their contacts with industry. This is something which our Civil Service badly needs. We are well behind the French, for example, in the understanding of our Civil Service of the needs of industry. Now all this is to be lost. All this is to be changed, and it is to be changed at a moment when we have an investment crisis, just when order, stability and confidence are at a premium.
  The Minister sought to prove that the system was no worse financially, and that the cash flow situation had not deteriorated in the last few months. That may or may not be true, depending on how one looks at the figures. But when we have to go through such a major change, with all the administrative complications—and the Minister's speech reflected the administrative complexity—the change itself produces consequences and trouble which we simply cannot afford at this

  1435
  moment of our economic history. No wonder we have been hearing the most uncomradely epithets from industrialists who financed the return of this Government. That is certainly a piece of investment they will rue. If they set that against their profits, they might think twice about future elections.
  Mr. John Hall: The hon. Gentleman will recall that during the election, and indeed before, the proposals which are now before the House were put to the country, and industrialists knew precisely what they were voting for.
  Mr. Horam: They will have second thoughts when they see the goods. There is a great difference between the euphoric simplistic statements of Selsdon Park and the reality of this Government, and the whole country bears witness to that.
  As the Government are pushing through this massive change at such a time, one might suppose they would have some pressing reasons for doing so. One might suppose that at last this country in a major aspect of its industry was being brought up to modern practice or brought in line with the best industrial nations, or with the Common Market. The Government are very keen with food levies and value added tax to get us in line with other countries, but quite the reverse is true, as my hon. Friend the Member for Chesterfield (Mr. Varley) pointed out. Five out of the six Common Market countries have investment grants.
  Who have tax allowances? South Africa and Australia. The one is a slave economy and the other would be in desperate trouble were it not for its mineral boom; both are part of the dear old Commonwealth. This is an absurd example of the Government going in the wrong direction at the wrong point in history.
  Indeed, if I may add further to this point, this very week the Governments of the Six countries and the Commission are meeting in Brussels to look at their respective regional policies. They intend to harmonise those policies, and one decision which the Commission is pressing for and which it is virtually certain to get, is the standardisation of investment grants. It is perfectly plain that they will do this. First, five out of six countries already have them and,
  1436
  secondly, the Commission knows that they are better. That is why they are standardising investment grants.
  What will happen if and when we get into the Common Market? Presumably, in three years' time, or possibly four or five years' time, not much longer, we shall be going back to investment grants, so as to harmonise with the Common market. How will the Government explain this to their friends in industry? After five years of one system and five years of another system, how will they explain going back to the old system? Is not this absolute insanity?
  In short, the Government are making fools of themselves by introducing this change. I look with a certain relish at them making fools of themselves from a strictly political point of view, but it is none the less causing our economic growth rate prospects serious harm. From that point of view I wholly disapprove of the change.
  6.28 p.m.
  Mr. Ronald Bray: I regret that, in many respects, other than in the OFFICIAL REPORT, I cannot in my remarks follow the hon. Member for Gatehead, West (Mr. Horam).
  Speaking as a Tory, a Conservative or a capitalist, I see the main purpose of the Bill as being to make money work. There is no guarantee that money given away in the form of a grant will actually produce a worth-while return. If, however, a person buys the most profit-earning machines suited to the job, whether it be in manpower, high value equipment or any combination, and a profit is made, he will receive a certain amount by way of investment allowances. This puts people on their toes to achieve a proper return. It is what they must do to get the money.
  The change in policy will have the great advantage of ensuring that the Government know what their expenditure will be in a given period. Under a system of grants people may either buy their plant and equipment from a British manufacturer or import it. In other words, they can buy ad lib and, if they wish, can then get a grant. However, they will not buy equipment if they find that it ties up too much of their capital and if they can make do equally well with less expensive plant. This was

  1437
  the fallacy of the previous scheme which was operated by the Labour Government. The idea then was that if enough money was put into an area something would happen and, it was hoped, business would continue to operate. That at any rate was the theory. Our theory, which has been proved in practice time and time again, is that with efficient management and the right tools and products a profit can be achieved, ploughed back into the business, and in this way generate capital. This is the fundamental purpose which lies behind this change. I regret that right hon. and hon. Gentlemen opposite failed to realise these facts of life when they were in Government.
  I have always been against grants or any form of cash hand-out because I believe they make industry inefficient. We have seen what has happened in Rolls-Royce, which in one form or another has received large amounts of Government aid. That company appeared to look on that money—as indeed do other companies—as a method of helping itself. I would not use the term "lame ducks", but that is what companies become if they are over-reliant on outside support. That is the picture as I see it.
  In respect of shipbuilding, I see the reason for the continuation of grant because it involves long-term policy. [HON. MEMBERS: "Oh."] But at the same time I would be against it as a basic principle if I were making a decision.
  Mr. Heffer: There is always an exception.
  Mr. Bray: Once the door is opened to one form of grant, the door is opened to all the rest. I would not favour such a system in any way.
  We have heard a great deal about development areas and intermediate areas. I am privileged to represent a constituency in which three out of four of my towns are of intermediate status. Despite what has been said by hon. Members opposite I am happy to say that the area is improving notwithstanding what the previous Government are said to have done. The area is improving because there is the will to improve. There is good administration within many of the small factories, and these firms are working hard and not merely
  1438
  bewailing their lot. If they run along to Whitehall every minute of every day, caps in hand, they not only undermine the confidence of the people living and working in their area but deter other people from moving into it since it is felt that it is not a happy area in which to live or a profitable area for investment.
  The intermediate and development areas, many of which are represented by hon. Members opposite, would do a great deal better if they were prepared to stand on their own feet and not bleat left, right and centre, "We want more this, more that and more of everything. If we get enough in the way of grants, we might get rid of our unemployment." It is well known that there have been fewer jobs in certain development areas within the last year or so than there were six years previously. Therefore, it would appear that the policies of the Labour Government have not worked satisfactorily.
  I suggest that if the policies of the pre-1964 Conservative Government in the form of allowances had been maintained we would have seen far greater development in those areas than we have witnessed over the past few years. I may be regarded as dyed-in-the-wool in my thinking on this subject. However, I do not mind being accused of this, since I am convinced that if people have money they have got to make it work. It is essential that they should get a fair return upon it. That is the purpose behind this Bill, and for that reason I give it my support.
  6.36 p.m.
  Mr. Eric S. Heffer: The hon. Member for Rossendale (Mr. Bray), who has just spoken, can be considered as an honest representative of the Tory Party. He outlined the old-fashioned basic Tory philosophy, and I have no intention of taking up all his points—
  Mr. Blenkinsop: You cannot. He has gone.
  Mr. Heffer: If the hon. Member has now left the Chamber, I will not spend any time dealing with his speech. It is hardly worth doing so if the hon. Member is not prepared to listen to the speeches of other hon. Members.

  1439
  The White Paper on Investment Incentives begins in paragraph 1 by saying:
  "It is the Government's objective to secure an improvement in the long term rate of growth of the economy. This calls for the creation of an economic climate within which individual firms can plan with confidence an expansion of their output and for the removal of obstacles which are likely to discourage or impede such expansion."
  I suggest that that is something of a sick joke. We must look at the situation which has developed since the White Paper was produced in October last.
  We were told months ago that the Government policy aimed at getting rid of investment grants and replacing them with investment incentives. I should like to quote from Newsletter No. 38 of the North-West Industrial Development Association:
  "Tight monetary control has undoubtedly contributed to the current difficulties of industry. In conjunction with rising costs and low profit margins, the Treasury's tough monetary policy has placed many firms in a very difficult financial position from which they have tried to extricate themselves by trimming back investment programmes and by shedding labour wherever possible. These difficulties have not been helped by the change over from cash grants to tax allowances for investment announced by the Chancellor last October. A number of companies such as Shell have given the revised system of incentives as one of the reasons for deferring investment plans. Capital expenditure programmes are being scaled down in many sectors, particularly in oils and chemicals, where the change-over in investment incentives has made a big difference to previous calculations of cash flow and post-tax profitability."
  The North-West Industrial Development Association is not a dyed-in-the-wood affiliate to the Labour Party. As far as I know, it has on it no revolutionary Marxist of the International Socialists. It has on it highly respectable people from various parts of the North-West, some of whom are members of the Conservative Party and one of whom is the leader of the Conservative Party in Liverpool. I assume that documents of this sort go out with the full agreement of members of the association. In fact, so perturbed is the association at the present unemployment situation in the North-West that it has asked for a special meeting with the Prime Minister.
  The Development Association has this to say about redundancies in general:
  1440
  "Unfortunately, during periods when the national economy is slack, it is the relatively less prosperous parts of the country, including much of the North-West, which suffer most".
  Let me give details of the present unemployment position in the North-West. At the March count a total of 106,256 persons were registered as unemployed, a rate of 3·6 per cent. compared with the national rate of 3·3 per cent. Of course, it has gone up since. A year ago the rate in the North-West was 2·7 per cent. Males account for 87,768 of the region's total unemployment. Male unemployment is running at 4·9 per cent. compared with only 1·6 per cent. for females. The region's unemployment black spots are the Fylde area with 5·9 per cent., Lancaster-Morecambe 5·4 per cent., Merseyside 5·6 per cent., Ormskirk-Skelmersdale 5 per cent., Southport 4·9 per cent., Wigan 4·7 per cent., and Congleton 4·8 per cent.
  Mr. Redmond: Has the hon. Gentleman figures to show what the unemployment position was in Merseyside in 1964, when the policies of the last Conservative Government were in operation?
  Mr. Heifer: Oh, yes. The hon. Gentleman should not ask me questions about unemployment on Merseyside. If I know about anything at all, it is about unemployment on Merseyside.
  Mr. Laurance Reed: Then what about answering the question?
  Mr. Heifer: I will tell the hon. Gentleman the position in 1963–64. Under a Tory Government we had 29,000 unemployed. At the moment, under a Tory Government, we have 41,000 unemployed. That is the present unemployment position on Merseyside, and the rate has shot up in the last nine months since the Tory Government came to office.
  No one has been satisfied that any Government has solved the problem of unemployment. Throughout the six years of Labour Government I made speeches in this House consistently urging that policies should be pursued which lowered the level of unemployment on Merseyside and elsewhere. Sometimes I spoke against my own Government's policy when unemployment was allowed to rise. Certainly we did not solve all

  1441
  the problems. However, we contained the position. We held it.
  Really, we were running faster in order to stand still. As soon as we had a Conservative Government and once investment grants were removed, there was a rapid rise in unemployment affecting development areas like Merseyside. It is no good right hon. and hon. Gentlemen opposite pretending that nothing has happened in the last nine months and that they are not responsible for the rising level of unemployment.
  I have always regarded unemployment as a crime. It is a crime against people who are pushed on to the streets because they have no work. I have walked the streets of Liverpool seeking employment. We have had a pool of unemployment for years, it being the residue of the mass unemployment that we experienced before the Second World War. We have never solved the problem on Merseyside. But the Labour Government contained it and brought it to its lowest level.
  Mr. Richard Body: Is the hon. Gentleman saying that it never rose beyond 19,000 in the years when he was making the speeches to which he has referred?
  Mr. Heffer: I did not say that it did not rise beyond 19,000. I said that there were 29,000 unemployed when the Conservatives were in office before, and it is 41,000 now. Certainly it rose beyond 19,000 under the Labour Government, but it never rose to the level at which it stood when the Conservatives were in office in 1963. That happens to be a fact, and before hon. Gentlemen attempt to argue about it, they ought to look at the figures.
  Mr. Laurance Reed Mr. Laurance Reed rose—
  Mr. Heller: No. I shall not give way any more. I know that hon. Gentlemen opposite do not like my speeches. Their thinking is not in line with mine. They must accept that they do not like what I say.
  One hon. Member referred to the position at General Electric. In fact, it was at Napier. The whole G.E.C. complex on Merseyside was not closed down. The hon. Gentleman will be interested to know that on that occasion I led deputations of Liverpool Labour Members of Parliament to see my right hon. Friend the Member for Bristol, South-East (Mr.
  1442
  Benn), and I also went to see Arnold Weinstock. Arising out of those meetings, there was a phased programme. I was not happy with it, of course. I wanted the work to remain on Merseyside. But that was one battle that I did not win.
  When the Cammell Laird shipyard came under pressure, it appeared that it would have to close. It would have closed on the basis of the "lame duck" theory, and one of the biggest shipyards in the country would have gone out of existence. It was saved by the intervention and policy of the Labour Government. Today, Cammell Laird is working on Merseyside and making a profit. That was a battle that we won, though we did not win them all.
  One or two semi-critical speeches have been made today by hon. Gentlemen opposite about the Government's policy on investment grants. When are they going to stand up like men and refuse to go in the Government Lobby? When will they do what some of us did when we disagreed with our Government and be prepared to vote the other way? Hon. Gentlemen opposite should not come into the House and be critcal of hon. Members on this side, as well as of their own Front Bench, unless they are prepared to fight for what they believe. Politics in this country have got into a bad situation because not enough people are prepared to get up and follow through their beliefs by acting on the basis of their convictions. Hon. Gentlemen opposite can do that tonight. I do not ask hon. Gentlemen to vote with the Opposition—of course not—but I ask them to have sufficient conviction to show their opposition to the Government by refusing to go into the Lobby and giving them 100 per cent. support on the Bill.
  I mentioned earlier that the North West Industrial Development Association was so concerned about the situation that it had aked for a meeting with the Prime Minister. The association issued a Press release on 22nd April—at the risk of boring the House I shall read it, because it should go into the record—in which it said:
  "Unemployment has risen sharply in the North West in recent weeks and there has been a spate of company anouncements of redundancies and factory closures. Few companies are planning new development and many projects n the pipeline are being deferred. During

  1443
  the past 12 months redundancy announcements affecting some 40,000 work people in the North West have been made."
  It ends by saying:
  "The Association is concerned that little encouragement is at present given to firms to expand and feel that the Government must take much stronger measures to stimulate industrial investment and consumer demand in order to provide more employment opportunities. The Government appear to attribute all our current economic difficulties to the problems of wage-cost inflation but the Association considers that this is but one of a number of factors causing the current recession in economic activity."
  I should like now to refer to redundancies and closures which have taken place in the North-West: British Tissues is to close its two factories near Garstang and 300 people will be made redundant; Butterworth and Dickinson, textile engineers of Burnley, where 200 workers were employed; Courtaulds, Stockport, 100 workers; Arthur J. Green, 50 workers. I could go on right through the list: 260 workers, 483 workers, 130 workers, 250 workers, and so on. This is a long list of closures which have taken place in the last few months as a result of the Government's policy.
  There is another list headed,
  "Major employment losses (not connected with complete closures)."
  I shall not read them all; I shall read only those affecting Liverpool: C.A.V. (Joseph Lucas), 175 workers; Joseph Lucas again, 700 workers; Silcock and Lever Feeds Ltd., 450 workers. In Kirby, which we regard as part of Liverpool, Bird's Eye, Ltd., 240 workers; Fisher Bendix, 175 workers; Wallasey, Cadbury-Schweppes, 1,200 workers. At Birkenhead, Cammell Laird has had to put off 400 workers; Electro-Hydraulics Limited, 400 workers; and Bear Brand 60 workers. All these redundancies in Liverpool have taken place within the last few months. The numbers are growing the whole time. The problem is developing week after week. If one goes round the council estates in Liverpool one will find that in every street one or two workers are now unemployed. This situation has developed rapidly because of the Government's failure to deal with it.
  I welcome only one part of the Bill—the building grants. Many hon. Members will know that I am, and have been for some time, concerned with unemployment
  1444
  in the building industry. I have argued again and again that all Governments should take positive action to deal with the growth of unemployment in the building industry. Althought I do not regard building grants as a final solution, I think that they are a step in the right direction. Therefore, I welcome that part of the Bill.
  What do we find in the construction industry in the Merseyside area? In 1968 the number of wholly unemployed construction workers was 4,952. The number today is 7,176. That includes, for example, 337 joiners and 196 bricklayers. I could go through the list in that way. This is at a time when we have vast areas of the city of Liverpool practically derelict, not a house or building being put on them, people demanding houses, and a need for a real public works programme to ensure that we have more schools and improved hospitals. The Labour Government tackled this problem much better than this Government, but it needs to be speeded up.
  No Government have finally solved the problem of the regions. It is a longstanding difficult problem which will require a different answer from that which has so far been given by either Government. Whilst I believe in holding the financial carrot before the noses of the industrialists to attract industries into those areas, and whilst I agree with au I.D.C. policy—incidentally, I.D.C.s were controlled much better by the Labour Government than the Tory Government—that does not in the long run solve the problem.
  I believe that two things must be done. First, there must be a general reflation of the economy to get a general upturn. For the regions, whilst I think that the Government should reverse their policy and get back to a policy of investment grants, we need a planned approach to the development of industries in the development areas. That can be done only on the basis of public ownership. There is no other answer to this problem. If we are to ensure that new industries are developed in those areas, it will have to be on the basis of a planned approach. We could do this by linking such industries with the necessities of the under-developed parts of the world. We could gear and build factories in our development areas to produce goods for

  1445
  shipment abroad to assist the underdeveloped countries. We could ensure that the financial aid granted to those countries was part of this process. That is the only real answer to this problem in the long run.
  In the meantime, the Government must get back to a policy of investment grants, and of assisting the shipping industry, because the cry from the heart that has been heard in the House today on behalf of the shipping industry is genuine. Our shipping industry was about to collapse, and it was saved by the policies of the Labour Government. If the industry does not receive equivalent aid in future, there is no guarantee that we shall have a shipping industry of the kind that we have had during the last few years.
  I believe that even at this late hour the Government should be prepared to reverse their policy, but, of course, they will not do so, because they do not really care about the level of unemployment. Hon. Gentlemen opposite come to the House and say that they are as deeply concerned as we are about the rise in unemployment; but I do not believe they are. If they were as concerned about the problem as we are, they would have taken positive action within the last nine months to bring down the level of unemployment.
  The reason why the Government are prepared to allow unemployment to rise is that they wish to use the weapon of unemployment against the rising standards of British workpeople. Unemployment is one of the Government's weapons. Their other weapon is the Industrial Relations Bill. This is all part of the strategy of the Government, the most reactionary Government that we have had since the end of the Second World War.
  The era of Macmillan, with his middle way, has gone. We now have a Government which, while not being entirely Powellite—the right hon. Gentleman would like the Government to go further—have gone well along that path. I think the House should recognise what is happening, and ensure that the Bill is thrown out.
  7.3 p.m.
  Mr. Raymond Gower: Towards the end of his speech the hon. Member for Liverpool, Walton (Mr. Heifer) said that the only solution to the
  1446
  problem was public ownership. I have had the good—or bad—fortune, at different times, to have visited many countries in Europe where there has been a high proportion of public ownership. I have seen a lot of evidence that their system has not protected them from severe distortions of their economies from time to time.
  The hon. Gentleman suggests that public ownership is the answer to all our problems, but there is a good deal of evidence from many countries which have embarked on a system of almost complete public ownership that the distortions which occur in their economies are sometimes much more severe than those in countries which have a widely distributed form of industrial ownership.
  The hon. Gentleman said that there was an insuperable gap between himself and some of my hon. Friends, between that side of the House and this, on matters of this kind. I think he is wrong, because when he says that he wants to get rid of unemployment, and when he says that part of his political life has been spent in Liverpool hating it, he should realise that we are as prepared as his hon. Friends are to applaud him for that view. We see, as he does, the undesirable disfigurement of society and its values that is caused by the predicament of those who cannot find work when they want it.
  I was a Member of the House throughout the 1951 to 1964 period, when successive Conservative Governments were in power. At no time during that fairly long period did unemployment reach the very high levels to which the hon. Gentleman referred. Indeed, just as Labour Governments did, so postwar Conservative Governments benefited by the experience of those who were here before us. Only recently I have been re-reading some of the long history of legislation dealing with the problems of the less fortunate parts of the United Kingdom. As the hon. Gentleman will recall, the history of this legislation goes back to the inter-war years, when our predecessors had to deal with similar problems, but when they had much less experience and know-how than we have today.
  The long history of finding methods to give special aid to industry has been

  1447
  divided into two headings: first, to encourage more intensive capital investment; second, to steer industrial investment and development into those areas which we now describe as development areas but which in earlier times were called special areas, depressed areas, and so on.
  Those two forms of aid are not always the same. The hon. Member for Gateshead, West (Mr. Horam) appeared at times, no doubt unwittingly, to be speaking about investment under those two heads as though they were the same thing. The hon. Gentleman may agree that there are two different kinds of incentive. The first is that which makes our industry tend to invest more in new equipment, in re-tooling, and in replacing obsolescent machinery. The second is the much more specialised incentive which is designed to attract industry to development areas or to intermediate areas. Those two incentives often overlap, and they often share a common device, but at times they are not the same thing.
  Several hon. Members have referred to the importance of matters other than the kind of help given by Measures such as we are debating today. Several have referred to the importance of improving the infrastructure, the communications and the whole tone of life in some areas. I believe that in the long term those factors may be just as important as—in some cases more important than—the financial incentives embodied in legislation of this kind.
  The accessibility of an area can be of vital importance. When we think of the harsh competitive atmosphere of international trade, I hope that both sides of the House realise that our industry has to be extremely efficient to compete in the world in this part of the twentieth century. Our industry has to be well equipped, well tooled—
  Mr. Heffer: That can be done only with investment.
  Mr. Gower: I accept that, but I suggest that the other things to which I have referred are also important, such as infrastructure and communications. These should be the best that we can provide, both in the short and in the longer term.
  I am the first to admit that when one compares investment grants with invest-
  1448
  ment allowances, the former have a superficial attraction which is not possessed by the latter. To the newcomer embarking on a new venture, the prospect of having an immediate grant is an attractive proposition. I am not sure, though, whether this is in the best interests of everyone, and, particularly of the development areas.
  Surely any hon. Member representing part of a development area would want, in most cases, those firms which come to his area to be highly efficient, with some history of achievement, rather than firms starting from scratch. That is why I asked the hon. Member for Gateshead, West whether he was thinking only in terms of new firms. Surely the biggest help will be given in future, as in the immediate past, by firms which are already well established and are moving either all or part of their undertaking into a development area.
  It is not always easy to persuade a firm to do this. In some cases the inducement of a grant may do the trick where the much more long-term benefit of an allowance might be more difficult to interpret and sell. Nevertheless, on balance, it is more consistent with the long-term interests of our industry, and certainly with the long-term interests of the development areas, that we should have a method which is likely to bring into these areas the efficient firms and those which are likely to stay and have a durable and prolonged record of success.
  Mr. Kinnock: The hon. Member is emphasising the longt-term benefits of this policy. Is he familiar with the saying of John Maynard Keynes, that in the long run we are all dead?
  Mr. Gower: That sort of specious remark does not contribute a great deal to our discussion. The development areas need industry which is likely to be successful not for six months or a year or two but for a fairly long period. I am not talking in terms of a lifetime, until we are dead, but in terms of perhaps a few years.
  With a system of grants, one may attract a number of entrepreneurs who are willing to have a go. They may not even have the ability, the experience or the training to undertake a successful industry in a particular area, but they may be induced to do so by the promise of an

  1449
  instant grant based on nothing but the hope that they will make some contribution in the area.
  But with the arrangement embodied in the Bill we have some assurance that all those who will benefit will be firms which will demonstrate over a year or two their ability to serve the area. To that extent, while the allowance may lack some of the ostensible, superficial, perhaps specious, attractions of the grant, I believe that it is more soundly conceived. To that extent, I agree with those who have spoken in its support.
  The type of company which we want in our development areas can be varied. One hon. Member said that many would come from overseas. There is nothing wrong with that. I would be the last to say that we do not want investment from overseas. We have had valuable investment from North America, Switzerland and other places in Europe, and no doubt we shall have more. But we do not want to attract firms from those countries merely by incentives which will seem attractive to them but which will not be designed to make them stay with us for a fairly long time. This applies just as much to overseas companies as to those which move from Greater London or the Midlands.
  This Bill is merely a part of the whole. The hon. Member for Walton supports building grants.
  Mr. Heffer indicated assent.
  Mr. Gower: I think he will agree that the Bill's provisions for building grants are an improvement on what has gone before. In addition to this Bill, there are valuable incentives in the system of depreciation which has proved its merit over generations. It has been a method of accounting which has been shown to be effective for many years, both here and overseas. That is also embodied in changes introduced in the last few months.
  I deplore any attempt by anyone to form final conclusions about changes in such a short period. It is unfortunate that anyone should suggest that our present difficulties are due to any changes like this. I believe that most of them are due to the fact that, in addition to these difficulties which have existed during the term of the previous Government,
  1450
  there has been over the last two years a gradual growth to an inflationary state which has not been contained. It is a difficult matter. I am not blaming anyone—it is the result of a number of factors—but we surely cannot discuss this Bill without making some reference to that. Unless we solve the inflation problem, these employment problems must prove far more difficult to solve.
  We must meet at the same time the problems which have produced this grotesque inflation, which cannot do any good to anyone. The hon. Member for Walton said that he regarded unemployment as a crime. I do not quarrel with that term. Certainly, although the failure of an industrial enterprise is not a crime but a misfortune, the result may be equivalent to something criminal. It is a misfortune to those who fail in the industry and to those who are employed in it. But inflation also—
  Mr. Heffer: I was not talking about the failure of a firm in normal circumstances, which results in people being unemployed. I was talking about the fact that at the moment unemployment is being deliberately allowed to rise, the fact that it is a planned instrument of the Government. That is what I find absolutely criminal.
  Mr. Gower: It would be quite inexcusable if that were so, but it is quite untrue. I am sure that not one member of the Government would agree with the hon. Member, and it is deplorable that he should say that.
  I admit the awful effects of unemployment. Indeed, I understand what the hon. Member meant by saying that it was criminal. But also criminal in his terminology, in certain circumstances, are the effects of inflation. I have seen evidence of those who have not been able to enjoy a State pension, who have made a modest saving in a long and hard-working life, and who have seen the value of that saving destroyed by the cruel effects of inflation. We want to banish and exorcise both. We want stability in our national finances, side by side with industrial growth which will provide continuity and improvement of employment. For that, both sides of the House should fight together, and we should not denounce the methods of our opponents.
  7.18 p.m.
  Mr. Neil Kinnock: I am very pleased to be called to speak after the hon. Member for Barry (Mr. Gower), especially since he described a remark of mine as specious. Perhaps I might be allowed to explain at greater length what I meant by taking that quote from John Maynard Keynes—although from the activities of the Government at present one would think that Keynes had never been born. What he meant was that an overwhelming concern with what could happen in the long run is generally intended by politicians to obscure what will happen in the short and medium term.
  What I accuse the Government of—and, unfortunately, also the hon. Member for Barry, who is not usually given to excesses—is that they are trying to explain away several of their policies in terms of a long-term benefit—"We will overcome inflation and so on in the long term"—because, in the short term, as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said, there is a deliberate creation of unemployment, and, I might add, in certain Government policies, a deliberate creation of price rises.
  The hon. Member for Walton said that unemployment was criminal. There are crimes of omission and commission, and the fact that my hon. Friends are saying that unemployment is criminal is indicting the Government for their crimes of omission. There are a number of things which they have not sought to do to prevent the level of unemployment rising, and that is what we consider to be criminal.
  The debate has shown a fundamental difference, not only in aims but in methods of achieving a regional balance. In last Thursday's debate on unemployment the Secretary of State for Trade and Industry said there was little difference between us in aims. The Government must be judged not on their targets or what they protest to be their aims but on the results we have before us, and on the basis of those results it seems that the economy is entering a major recession.
  Setting aside the aims and going on the basis of the results after a comparatively short period of Conservatism, we have the most profound reasons for being
  1452
  critical of the Government. The function of regional economic policies, in whichever country they have been practised, is to create differentials between the prosperous, generally over-populated areas, and the depressed, generally under-populated and under-used areas of the economy.
  The value of any regional economic policy for the employers and people of the regions must be judged on the relative worth of the development incentives in the prosperous, non-assisted regions compared with th edepressed, assisted ones. On this, if on no other, point the Government have manifested their complete cynicism by refusing to acknowledge the value of discriminatory assistance, which is being reduced by them as a conscious end of policy.
  It is not an accident that this assistance is being reduced. It is being done by design, and the Government are introducing measures which will reduce the differential between the prosperous and depressed areas of the nation. For that they cannot be excused. No Government can protest that they earnestly desire to assist the regions and simultaneously introduce measures which will reduce the relative attractiveness of the depressed areas.
  After talking about the "unanimity of purpose" of hon. Members on both sides of the House in wishing to attain full employment throughout the country, including the regions, the Secretary of State went on to speak on Thursday about his review of regional policy and said that he had done it in two directions, which I suppose is typical of a Government with two faces.
  However, the right hon. Gentleman cannot protest that he is trying to do something to maintain the prospects of the regions if, at the same time, he is introducing policies which will cut down the margin of differential between the regions and the over-developed areas. As a general principle, it is logical to say that, at best, a Tory Government act in this matter unwillingly and churlishly and have a clear lack of commitment to regional development policies.
  Mr. Wilfred Proudfoot: Does the hon. Gentleman recall the Hailsham Report and its importance for the North?
  Mr. Kinnock: I am well aware of the activities of the "Stop-go Peer", but few people will give very great praise to either the antics of Lord Hailsham in trying to inaugurate a regional policy or to the consequences of that policy, especially compared with the concrete and identifiable results achieved under the conscious development area assistance policies practised in recent years under Labour in the North-West, Wales, the North-East, Scotland and elsewhere. If the hon. Gentleman really believes that Tory policies have been successful, he cannot base that belief on recent election results.
  The T.U.C.'s 1971 Economic Review contains a lengthy section on investment policies. The Congress reckons that the £100 million differential that existed under Labour between the depressed and prosperous areas will be replaced through the investment allowance system to provide a differential
  "of about £75 million in aid to Development Areas. In practice, the estimate of £75 million is likely to be a maximum figure, since it must be based on optimistic profitability estimates. Profitability of enterprise in Development Areas is likely to be less initially than the national average, particularly for new firms."
  At worst—I am not supposing that this will happen—the differential could be nil, for if the Government base the differential mainly on the creation of profit, it is conceivable, especially in the current economic climate, that few firms in the regions will be able to make the sort of profits that will qualify them for the incentive allowances which the Government are proposing.
  The closing of this margin between the prosperous and depressed regions could mean the throttling of economies like Wales and Scotland, which are dependent to a large extent on the injection of discriminatory assistance. It could put Wales and the other development areas out of the current technological revolution, and that would be a disaster not only for the workers and businessmen of Wales but for the British economy, for a dead Wales or a stagnating Scotland would be a direct encumbrance on the already over-congested other regions.
  Not only will the change in the system of assistance to the regions bring a reduction of investment in the regions, it will have a disincentive effect on investment generally, something which those even
  1454
  outside the regions should note. The T.U.C. reckon—and I have no reason to doubt its estimate—that by 1974–75 the incentive to investment will be reduced by £150 million nationally, and to anybody who has studied any sort of economics the reasons for this will be obvious. Karl Marx was probably the first to put his finger on it, and certainly John Maynard Keynes did so when, in his general theory, he said that in a mature economy the lack of opportunity for fresh investment meant a lowering of the propensity to invest.
  There is, therefore, a great argument in favour of giving major investment assistance in a mature economy—as much, if not more so, in a mature than in an under-devesloped economy. By neglecting this truth, the Tories have shown themselves prepared to do a back-dive, way back to the days before Keynes influenced economic thinking throughout the world.
  For new and expanding industries in the regions, the gearing of incentives directly to profit levels will be a positive disincentive to development. Already they are asking why and how they should develop. The removal of Government assistance with cash will have dire consequences for many firms in these areas. In an economy which is already under-invested, which is not sufficiently capital intensive and which has over the years shown itself to lag behind its major industrial competitors in capital investment terms, it is clear that the Bill will have a major disincentive effect on capital intensive firms to invest.
  I have heard hon. Gentlemen opposide declare that they intend to provide labour-intensive industry in the regions. As the representative of a South Wales constituency with one in ten men unemployed, I would welcome labour-intensive industry in my area. If anyone can draw my attention to a thriving, modern, high technology industry which can offer guarantees of security for the future and which is labour-intensive, we should be glad to have it. But everyone knows that no such industry exists. The future belongs to capital-intensive industry. There is no reason why Wales or the other regions—but for some peculiar quirk of Tory philosophy—should be denied capital-intensive industry. But under the Bill, denied they will be, because there is a disincentive.

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  Turning from the general principles, a very illuminating document has been published by the economic panel of the Welsh Council, entitled "Investment Incentives". At the earliest possible date, recognising the difficulties that this new scheme will present to Wales, the Welsh Council produced a worthy document, for which I applaud it on the subject of the changeover from investment grants to investment allowances.
  This is an interesting description of what the change will mean. It is a practical document, and I quote from it. The panel says this:
  "The value of the new incentives depends on the circumstances of the individual firm."
  We should not be surprised that it depends upon the fortunate circumstances of an individual firm whether it will benefit under the Bill. It will not be the first time in the history of British regional economic policy that we have been prepared to award assistance only to firms which are completely redoubtable, so safe, secure and assured of a future that they do not need the money which the Government are prepared to offer in one form or another. But what one wonders at is the fact that the Government are now prepared to return to the system where they are to award money only to the safest possible firms. That is like confining discretionary building grants to Buckingham Palace and the Hilton Hotel. In our regional development, there is no point in confining assistance to industries which do not need it.
  I come to matters of detail. The Welsh Council considered the position of different firms. The report says that a firm with
  "… a profit-making base against which reliefs can be set, and the differential advantage to a firm deciding to locate a unit within a development area as opposed to outside a development area can be materially improved if there is a large element of building expenditure."
  That is a very substantial "if". Again,
  "… in the case of a subsidiary of an overseas group, the fact that profitability within two years from the commencement of a project … focuses attention on the rent-free period and the new increased rates of building grants."
  "Focuses attention" in the same way, I suppose, as Dr. Johnson tells us that death concentrates the mind. The change-
  1456
  over from investment grants to investment allowances, I suppose, in the same way focuses attention of the firm on its position.
  "A company moving to a development area and transferring plant and machinery will have a higher ratio of new investment in buildings and will benefit from the increase in the rate of building grant."
  But this applies only to firms transferring plant and machinery. We are very glad to have them.
  Two matters arise. First, how many firms transfer their plant and machinery? Second, in an economy renowned throughout the world for harbouring ancient machinery, is it really a laudable comment on the nature and conduct of our economic affairs to say that here is a Government positively encouraging the retention of out-of-date machinery by its regional policies? Another interesting point—because it is native, home-grown development that people in Wales and Scotland want; firms which put down roots—is that the panel goes on to say:
  "A new firm commencing production in a development area is likely to have a lower capacity to borrow and a reduced cash flow in the earlier years.
  The home-grown firms will, during the period of this Administration and under this Bill, become almost a thing of the past. The document goes on to several different kinds of firms, but of each one the best it can say about the Government's policies is that their effect will be of dubious value to the Welsh economy, with which the report is concerned, and the worse it can say is that they will be of absolutely no value. In many ways, the findings coincide with those of the O.E.C.D. report on inflation published in December, a report which asks for more assistance for the regions, as a deflationary measure if nothing else, and a report which the Government have completely ignored.
  More than ever before, under any kind of regional development policy, it appears that the regions are depending to a greater extent upon the buoyancy, the affluence and the security of the whole national economy. We can draw no comfort from that, because a Government who have presided over an increase in unemployment to 814,000 can hardly qualify for the title of "Growth Men of the Year"; neither can a Government who acknowledge that we have a liquidity crisis

  1457
  throughout the whole business economy enjoy any confidence in the regions when they produce legislation which will mean less cash available for regional development. The Government's cafeteria economics—the Budget, the hit-or-miss reflationary measures, cuts in corporation tax and income tax—will be a total failure as a method of shaking out industry and bring job security to the regions.
  In the main, cuts in corporation tax and S.E.T. will be a little cash bounty that firms expected to pay but will not have to pay. The seed corn will be gobbled up either in the form of rising prices or by being distributed in the form of extra dividends—which I suspect will happen—neither of which will be any good to the regions.
  In his opening remarks, the Minister talked about the balance being one of Exchequer loss and corporate gain. Yet again, as another piece of legislation comes before the House, we see an even more insidious reward being paid to the people who financed the Tory assault on power last June. They can simultaneously fulfil their so called promises, to cut taxation and public expenditure, but for the big boys, the firms which make large profits and those who dictate economic movement in our economy, there is an under-the-counter return in the form of tax reductions. This is not only an insidious policy; in economic terms, it is ridiculous. Sooner or later, the Government will have to revert to the policy which we followed before.
  7.38 p.m.
  Mr. John Biffen: I suspect that for years the House has entertained, to some degree, the belief that there was a causal relationship between investment subsidy, in one form or another, and the subsequent quantum of investment. There were many who believed that that causal relationship could be refined and perfected. That view was most eloquently expressed—with, perhaps, an engaging air of omniscience—by the hon. Member for Gateshead, West (Mr. Horam), who said that what we wanted was simply more investment and then talked about the modern planning tools which he believed could be directed to the refinement of that investment.
  It is a measure of the very substantial nature of the Bill that Clause 1 totally
  1458
  repudiates that thesis. I congratulate my right hon. Friend on the Bill, and will be delighted to support it in the Lobbies.
  The hon. Member for Liverpool, Walton (Mr. Heffer), who is always very keen to encourage a certain degree of independence—so much so that he confuses many of his hon. Friends as to whether he is really a trusty or a screw—will not find me rising to his blandishments. There were times in the last Parliament when he and I were happy to share a Lobby, and if I can persuade him to drop his Common Market dogmatism there might even be such times again.
  Mr. Stanley Orme: If the Tory Government introduce a statutory incomes policy we shall be only too glad to join the hon. Gentleman in the Lobby against it.
  Mr. Biffen: I do not see why we should not anticipate happier times. If I were to follow that line of argument, however, my speech would be much longer than it is intended to be and would preclude several hon. Members opposite and several of my hon. Friends from speaking.
  I want the Minister to be fortified in the knowledge that all academic learning and fashion is no longer on the side of those who argue that investment grants or investment subsidies or investment allowances somehow or other have a material and identifiable contribution to make to the levels of investment, let alone to the quality of that investment. Perhaps the latest contribution from an academic source is to be found of all places coming from the University of Lancaster, which hon. Members may have had the chance of reading in the latest issue of the Moorgate and Wall Street Review.
  My main object is to give three simple reasons why I am very happy to be supporting my hon. Friend the Minister in the Lobby tonight. The first may seem a peculiarly odd reason. It is very much a House of Commons reason. One of the premier Committees of the House—the Public Accounts Committee—has twice reported on the abuses to which the whole system of subsidised investment can give rise—once under the system of investment allowances which existed before the 1965 legislation and again more recently on the question of investment grants which were finding their

  1459
  ways overseas. In both instances the difficulties tended to arise from the highly technical way in which the investment subsidies were being paid, and, above all, in the case of the grants the question of foreign recipients was wholly contrary to any intent entertained by the original authors of the legislation.
  I think to think that in this Bill the flaws that have been highlighted by one of the premier Committees of the House will be taken care of.
  The second reason turns much more upon the matters raised by the hon. Member for Bedwellty (Mr. Kinnock) and concerns the whole question of the reshaping of the pattern of public expenditure and the question of tax reduction. I do not live in quite the happy jingling capitalistic world that the hon. Gentleman portrayed for the Tory Party, in which there are substantial business payoffs. Perhaps I have not yet learned how to pitch my price. The hon. Gentleman does his argument a disservice, because I do not think that the considerations that have prompted these changes can be in any sense explained in terms of pork barrel politics. It goes much wider than that.
  I do not want to sound like a sort of Tory Trotskyite, but one of the things that should properly be exercising the attention of the House has been the emergence of a kind of managerial class in industry which has become increasingly unresponsive to pressures, to pressures above all through shareholders or through other public agencies. I am particularly concerned at the development of such a managerial elite enjoying very close and cosy relationships with government and turning to government for a major source of its funds in preference to other more diffuse, possibly more critical and less co-operative agencies.
  One of the consequences of what is being proposed—the reductions in taxation and the reductions in the subsidy to investment—will be that British business and British businessmen will be obliged to face far closer scrutiny, perhaps often ungenerous and uncomprehending scrutiny. I am sure that they will believe that civil servants and politicians can often be induced to be much more understanding, and can be flattered into being much more understanding, than
  1460
  possibly the British public can be if they are asked to subscribe for many risky capital ventures.
  I believe that that will be beneficial if it curbs to some extent the power of business bureaucracy. I believe that business bureaucracy, allied to governmental bureaucracy, even in a national setting, let alone in the wider setting of a Common Market, should properly exercise the vigilance of all those who believe that the division of power is perhaps one of the necessary attributes for some continued degree of liberty in a contemporary industrial society. I put it in these generalised and, I fear, rather pompous terms but I think it is none the less a point of real substance, because there is no doubt that my hon. Friend will be under belligerent attack from many of the business managerial elements so often portrayed as representing the heartland of Tory interests. It is an indication of the significance of the policy that there is this apparent paradox.
  The House should be under no illusions about the real significance of what my hon. Friend is doing in terms of public expenditure and in terms of funds available for tax reduction. As the table in the White Paper "Investment Incentives"—Cmnd. 4516—indicates, there is an availability to the Exchequer for tax reduction of sums rising to £150 million by 1974–75. I suspect that if the table had been projected beyond that period it would have been evident that that figure would have become greater.
  The third point concerns the extent to which the Bill might have some impact upon levels of unemployment. The hon. Member for Walton made, as we would expect, a trenchant speech on the issues of unemployment. He said that once the investment grants were removed there was a rapid rise in unemployment. The hon. Gentleman was speaking in respect particularly of Merseyside, although I am sure he would apply that observation to the United Kingdom generally. That implies a causal relationship which it is difficult to demonstrate.
  I am unmoved by the proposition that the levels of investment grants have an effect upon levels of unemployment. We may instinctively believe that this is so, or that it is not.
  I want to quote one piece of evidence Out of courtesy to the hon. Member

  1461
  for Gateshead, West and other hon. Members from the North-East, it is appropriate to quote someone with working political experience of the North-East, and I want to read a short passage from a speech by Dr. Jeremy Bray, when he was a Member of this House, speaking in the debate on 3rd November, 1969, on investment grants when he said:
  "In many cases the effect of this indiscriminate hand-out, given without any test of the number of jobs created, is actually to reduce employment in the development areas. I.C.I., probably the biggest single recipient, has received £106 million in investment grants in the last three years, of which perhaps £40 millions represents the development area differential. Yet employment in I.C.I., net of acquisitions, has remained steady at around 127,000 for the past four years. In effect I.C.I. has been given £40 million for making no contribution to development area policy."—[OFFICIAL, REPORT, 3rd November, 1969; Vol. 790, c. 721.]
  Those words constitute a fairly formidable indictment of a policy from which my hon. Friend the Minister of State is very rightly now moving.
  I would like to take this one stage further. For a number of years we have followed a policy which has, broadly speaking, in terms of fiscal measures sought to subsidise investment and tax the use of labour. I wonder whether over a long period of time we should not be surprised if this has some effect upon the general levels of employment. I leave it no more than a question mark, but I am not entirely surprised to see emerging what seems to me to be a fundamental change in the pattern of employment in this country. I am delighted that the Government are seeking to reverse the former trend by cutting investment subsidies and reducing the tax on labour, for example, by halving the selective employment tax.
  Mr. Dennis Skinner: I have listened intently to the hon. Gentleman's argument. I wonder whether he will now be prepared to lead a deputation from the Oswestry local authority to the Department of Trade and Industry to ensure that the inclusion of Oswestry as an intermediate area two months ago is cancelled.
  Mr. Biffen: I am happy to lead the Oswestry Rural District Council wherever it requests me. I have always found that a prudent and courteous way to
  1462
  behave to the Oswestry R.D.C., and I shall continue to observe that sensible and courteous attitude to the local authority which comprises one-third of my constituency.
  The Government deserve very strong encouragement and applause for pursuing such a major change in their policy in respect of investment taxation and their regional policy which is quite independent of what is being planned at Brussels. All the signs are that there will be a move to have a harmonised policy in respect of the tax treatment of investment. The Government are rightly raising a flag of national independence. I welcome it, and it will be one more reason for my support in the Lobby tonight.
  7.54 p.m.
  Mr. Dick Douglas: The hon. Member for Oswestry (Mr. Biffen) referred to what the Public Accounts Committee has done, but he will appreciate that in any form of incentive there are bound to be anomalies. I do not wish to defend the anomalies in the administration of investment grant procedure. They were serious, but fortunately the House managed to plug one or two of the gaps. Even after the switch from investment grants to tax-based incentives there are bound to be anomalies, and there must be a great deal of administrative work to ensure that the asset upon which the tax allowance is claimed is really on the premises concerned. No matter what the system of giving incentives to industry, there will be some form of bureaucracy to administer it.
  What we are discussing today is whether the removal of a piece of the regional incentive jigsaw by the Bill is merited. In examining the results of the Government's policies, we must have regard to the fact that the dismantling of the Labour Government's regional economic incentives and of their overall policy has resulted in high regional levels of unemployment. It is no accident that the present level of unemployment in Scotland is 50 per cent. higher than it was in June-July, 1970. The Government can make repetitious excuses about inflationary wage settlements and so on.
  I would cross verbal swords with my right hon. Friend the Member for Sunderland, North (Mr. Willey), who

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  said, I hope inadvertently, that little or nothing had been done in the way of regional policies to cure the regional imbalance. I deny this as it affects Scotland. I ask the Government to look very searchingly at what has happened there, particularly over the past 10 years, with the alteration in the whole basis in the structure of the Scottish economy. Hon. Members on both sides should realise that in 1970 we were capable of looking forward to a period of sustained growth in the Scottish economy. We had reduced the imbalance between the level of unemployment in Scotland and the level in the rest of the United Kingdom. We had narrowed the incomes gap, and had reduced the net migration gap. We had improved the infrastructure generally. The character of the assets which are ill-used or unused in Scotland in 1971 is totally different from what it was in 1961. In the main, the mines that were to be run down have been run down. Some of the shipyards, it is sad to say, are no longer the size they were, but the shipyards we have are not lying unused, and generally they are not wasting assets. Many of the assets now unused are capable of being brought into economic performance again if there should be a resurgence in economic activity in the United Kingdom as a whole.
  I must accuse the Government of a doctrinaire attitude here. I am sorry to use that verbal shorthand, but the fact is that they have a doctrinaire attitude towards regional policy which is unjustified in the circumstances. I am very mindful of Scotland's problems, but the area of the United Kingdom with the most pressing regional problem is Northern Ireland. What is the Northern Ireland Government doing? On 20th April a Bill was introduced into that Parliament with the following provision in Clause 4:
  "The Ministry may make to any person specified in an order made, subject to affirmative resolution, by the Ministry with the approval of the Ministry of Finance, grants of such amounts and on such terms and conditions … as the Ministry may consider proper, for the purpose of enabling that person to stimulate or assist industrial enterprise, the development of industry or the provision of employment."
  Here we have a Tory Government—the most Tory of all Tory Governments—
  1464
  using the grants system. I read a Press report of the speech by the Prime Minister of Northern Ireland to the Irish T.U.C. He said that he would not be doctrinaire and would use any device, including public ownership. My hon. Friend the Member for Liverpool, Walton (Mr. Heifer) and I may disagree with him on the method of approach, but he said that he was not afraid of public ownership, certainly not on the lines of this Bill, Clause 5 of which says:
  "The assistance which may be given by the Ministry under section 1 of the Act of 1966 to any company incorporated in the United Kingdom may include or consist of the subscription for or acquisition of any shares or stock in that company or that company's holding company."
  Here again are a Tory Government taking measures not unlike those employed by the last Government under the Industrial Expansion Act and through the Industrial Reorganisation Corporation, which the present Government are wiping out.
  In terms of the overall impact of regional policy in Scotland, the North of England, Wales and Northern Ireland, we have to consider the character of the decisions. I want to press the Government about their decision to site the third London airport at Foulness. That decision, it is argued, was taken on social grounds, but parts of the Secretary of State's statement bear more searching analysis, because they indicated further studies of the possible relationship of the airport to a seaport and industrial development in that area.
  The whole objective of regional policy, going back prior to the Barlow Report in 1940, was on the basis that the metropolitan area was too overcrowded and that therefore we had to restrict the growth of excessive industrial and commercial development in that area. I do not expect a direct reply tonight, but if private and public money is to be used in such ventures as Foulness, the rest of the country will give its answer at the next General Election. It might be too late then in relation to the development of resources and in terms of planning expediency, but the rest of the country will not tolerate this type of subvention of private enterprise by the Government in this already congested area of the United Kingdom when areas like Scotland are so badly in need.

  1465
  For example, the Clyde Port Authority cannot, because of the Government's mishandling of the capital market, particularly in relation to the Mersey Docks and Harbours Board, go to the capital market to raise the relatively paltry sum, in this context, of £20 million for the development of port facilities in Scotland. The same applies to other public concerns in Scotland and to Scottish industrialists. We shall watch very searchingly what happens at Foulness, and the test of the Government's design to get the concept of one-nation going will be closely related to their regional policy. That is why we are so concerned when we see the over all dismantling of the last Government's policy and why we are so manifestly opposed to the Bill.
  8.5 p.m.
  Mr. Ian MacArthur: I am glad to follow the hon. Member for East Stirlingshire (Mr. Douglas), if only to reject at once his proposition that the proposed change fro mas ystem of inducements based on grants to one based on allowances has contributed in any way to the increase in unemployment in Scotland. I believe, as does my hon. Friend the Member for Oswestry (Mr. Biffen), that the nature of the inducement is almost totally irrelevant, and possibly totally irrelevant to the level of unemployment today.
  The hon. Gentleman made it clear that he wants us to retain the pattern of inducements introduced by the Labour Government, to return to investment grants rather than have the investment allowances proposed in the Bill. He made the point, fairly, that, no matter what the pattern of grants or allowances, there will be inescapable anomalies. That is bound to be so. He will also agree, whatever his strength of feeling, that there is conflicting evidence about the effectiveness of the two systems as a means of attracting new industry to the development areas. The Select Committee on Scottish Affairs spent a great deal of time studying this question, and its conclusion in its report last year was, in effect, that certain firms preferred grants while other firms preferred a system based on tax allowances.
  The attraction of the tax allowance system to me is surely that it benefits firms which operate profitably, and the
  1466
  attraction in that is that we want to see Scotland with profitable industry. We in Scotland have suffered too much in the past from the closure of factories which were operating unprofitably or whose profits represented an unacceptably low return on the capital employed. Surely it is profitable industry that we should encourage most of all because profitability is the best guarantee of employment and profitability provides the new investment for new growth, new development and more jobs in the future.
  The hon. Gentleman also invited us to look at the change in the pattern of industry in the last 10 years. He made the important point that the pattern of our industrial assets in Scotland today—and I agree with him—is very different from the pattern of the assets we had 10 years or more ago. I say "or more ago" because the change started before 1961 and it progressed under both Governments. The quality of the assets today is such that they could make an active contribution to prosperity in an atmosphere of growth.
  I have referred to the evidence considered by the Select Committee. We have evidence of another kind—performance. I prefer evidence of that kind, which is real evidence, to the theoretical strictures which we have just heard, though I do not want to be discourteous to the hon. Gentleman. But the introduction of the free depreciation tax allowance in the Conservative Budget of 1963 generated enormous interest in the development of industry in the development districts, particularly in Scotland. There is no doubt that in Scotland, judging by the figures, the free depreciation system helped to produce growth of employment. The extent of this success was masked. I believe, by the general success of Conservative policies in Scotland at that time. The hon. Gentleman may look surprised, but I remind him that employment in Scotland increased by 30,000 between 1960 and 1964.
  I recall the significant figures in the White Paper, "Development and Growth in Scotland, 1963–64", published in September, 1964. It reviewed the progress of the Central Scotland Development Scheme. There was a paragraph which showed that the increase in employment between mid-1963 and mid-1964 in Scotland was proportionately larger than the

  1467
  increase in the rest of Great Britain. At that time, anyway, Scotland was in the lead. I do not believe that the significance of that advance has ever been fully realised. It is clear that the benefits of the free depreciation system must have made at least some contribution to that progress.
  Mr. Douglas: I do not want to be in the least doctrinaire, and if we cannot determine the value of one system as against another, why does the hon. Gentleman not persuade his Government to let the two systems run in harness, to allow firms to opt for cash grants or tax-based incentives for, say, three or four years? The effectiveness of the systems could then be proved.
  Mr. MacArthur: I prefer a single clear-cut system, which is far less confusing, and I prefer this system because of the evidence that we have of its performance and because of the contrary evidence that we have about the system which operated under the former Government. When the hon. Gentleman's right hon. Friends were in power, they scrapped the free depreciation allowance and introduced investment grants. I suppose it is fair to say that the new system introduced by them was never really tested.
  This was because industrial advance in Scotland, as everywhere else, depends on growth in the total economy, and economic growth virtually vanished under the damp and clammy hand of the last Government. Whether or not the scheme was properly tested, it did not continue the growth of employment in Scotland which had previously been experienced. A decline swiftly set in. In my constituency we were previously outside the development districts, but we became part of the new Scottish development area with the apparent attraction of the investment grant system. Employment in Perth had been declining over the previous years, but despite the heady claims made by Labour spokesmen at the time, despite this new development area status and the apparent attractions of the grant, the decline continued. Indeed, it accelerated. The fact is that twice as many jobs were lost twice as fast.
  The clearest evidence lies in the White Paper published by the Labour Government in January, 1966, the notorious
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  White Paper called, "The Scottish Economy 1965–1970. A Plan for Expansion." This forecast an increase of between 50,000 and 60,000 jobs in Scotland by 1970—[Interruption.] The hon. Member for East Stirlingshire, instead of making those noises, would be better advised to get up and make a public apology for his right hon. Friends. There was not an increase in jobs but a decrease. We lost 82,000 jobs in Scotland over that period.
  The plan was a total failure, and the bequest which the Labour Government made to us was of 82,000 lost jobs in Scotland, high and rising unemployment, a stagnant economy and an intolerable burden of taxation. It is interesting to note that to reach that target of a net increase of between 50,000 and 60,000 extra jobs it was necessary in the Government forecast to produce 20,000 extra jobs in construction and 60,000 extra jobs in the service industries. That was in January, 1966, and that was what the then Secretary of State for Scotland said.
  Three months later, with the Election safely out of the way, the selective employment tax was introduced, placing a heavy burden on the very industries which the Government were pledged to encourage in Scotland. This tax was a very grave imposition on Scotland, particularly in areas such as the Highlands where employment had been primarily in the service industries. Far more money has been sucked out of the Highlands of Scotland by S.E.T. than has been injected into the Highlands by the splendid work of the Highlands and Islands Development Board.
  This tax held back the development of the service and construction industries which had been growth points in the Scottish economy and which are generators of industrial development, as the White Paper recognised. I welcome the halving of S.E.T. and its projected abolition in two years' time, because this is of particular help to the Scottish economy. I emphasise S.E.T. because I do not believe that the Bill can be seen in isolation. Of itself the Bill will not create new employment. It must be seen as one in a series of measures; it must be seen in the context of the reduction in taxation and the future abolition of S.E.T., the 5 per cent. cut in corporation tax, and the new spirit of confidence in industry and commerce.

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  These are among the many factors generating new growth without which there will be little development in Scotland or anywhere else. The Bill must also be seen against the background of unemployment in Scotland, which is intolerably high, and the wage-cost inflation, which has increased the already rising unemployment.
  I mentioned the return of confidence in industry. Confidence begets investment and growth, and it is growth of the total economy of the United Kingdom that will produce new jobs in Scotland and bring our heavy unemployment down. But confidence requires the spur of certainty that wage-cost inflation will be brought under control. That battle is well advanced but not yet won.
  I welcome the Bill, not by itself, but as one of a series of measures which will produce confidence in Scotland. I welcome it because it is geared to profitability, and we need profitable industry in Scotland to generate new growth. I welcome it, too, because it does not discriminate, as did the grant system, against the service industries, which were and will be a growth point in the Scottish economy.
  8.17 p.m.
  Mr. Arthur Blenkinsop: I will not follow the hon. Member for Perth and East Perthshire (Mr. MacArthur) in discussing the Scottish position because I would not be qualified to do so, near as my constituency is to Scotland, but I find it extraordinary to hear him discussing what he describes as the new-found industrial confidence in the future when all our experience, in Scotland and elsewhere, is that there is a general run-down of employment, a closing-down of factories, with further redundancies, which can only mean that there are extreme doubts on the part of business men over the future after the Budget.
  I found the contrasting views from the other side of the House most interesting. They appear to be mutually exclusive, in that one set of hon. Members declared that they support the Bill because they see it as a stage in the general policy of the Government to disengage from interference, or intervention, in industry generally, while many other hon. Members opposite have said that they see the
  1470
  Bill as being a more practical method than the previous grant system of assisting industry in development areas and elsewhere. They cannot have it both ways. I suspect that those who see this as one example of the Government's major change of policy are right, alas. I see it as only one measure among many. I see it as part of the Government's tearing down of positive efforts of construction—for example, the destruction of the Industrial Reorganisation Corporation, of the Prices and Incomes Board and of the Land Commission.
  Mr. MacArthur: Hear, hear.
  Mr. Blenkinsop: These were destructive measures. Few, if any constructive alternatives were offered. Yet every one of the Labour Government's proposals, as more and more independent commentators are recognising, requires some alternative to be put in its place, if not its reintroduction, because all of them were constructive efforts to put some kind of basic development opportunities before industry. The Bill, apart from one Clause which we accept, is just another of many of the destructive measures of the Government.
  I wish to deal with the argument put by some hon. Members opposite that the Bill represents a more practical method of assistance. Let us assume that that was the Government's intention in introducing the Bill. What I find impossible to understand is why the House has not been brought into the confidence of the Government and presented with the facts and figures and information which would help us to make our own individual judgments. I gather from the Minister's reply to my intervention in his speech that he would consider the possibility of going further than merely giving information by way of answer to a Written Question and see whether it was possible for the House to have a fairly full account of the studies which we know were carried out into assistance by way of investment grant and the other forms of assistance in development areas. I am unable to accept that it was not possible to make that information available before the Bill was introduced.
  Why should the Government introduce their proposals, and, indeed, announce their rejection of the investment grant

  1471
  procedure, before letting the House have the information which emanated from the studies initiated by my right hon. Friends? This was not a new matter. It was discussed many times in the House, and my right hon. Friends in the previous Government initiated a series of inquiries to establish the facts. But we have never had a full report of those inquiries, and I should like to know why.
  If it is said that the Bill has been introduced because it proposes a more efficient way of making aid available in the development areas, why cannot we be trusted with the full information which resulted from the studies? It is intolerable that the Government, which when they came to office took pride in saying that they would be open in their dealings with the House and the country, should on so many occasions hide what we might reasonably regard as important information.
  I am not one of those who say automatically that the possibility of review of the investment grant procedure should be ruled out. It is perfectly fair to say that that procedure and others which we introduced require full investigation. I certainly would not wish Government money to be wasted and not to be as effective as we want it to be. Many of us—and not only Dr. Bray, who, alas, left us as a result of the last election—had criticisms to make of the effectiveness of some forms of regional support which the Labour Government introduced. Of course an investigation should be carried out, but the results of it should be presented to the House and we should have the opportunity of discussing them fully. The views of hon. Members with experience in the areas should be taken, and then the Government should come to a decision but in the meantime maintain the investment grant procedures.
  Mr. James Hamilton: Dr. Jeremy Bray has been mentioned many times on both sides of the House. Would my hon. Friend agree that in some cases, when an investment grant is made for a new machine, a new machine is absolutely necessary because of the obsolescence of existing machinery? A better performance is achieved with a new
  1472
  machine and there is more possibility of maintaining jobs in the factory, whereas if the old machine is retained loss of jobs is possible because of loss of orders.
  Mr. Blenkinsop: Yes. I did not agree with many of Dr. Jeremy Bray's criticisms. I had doubts about some of the examples he quoted of funds being made available to, for example, the chemical industry and elsewhere which he thought included an element of waste. We cannot merely ask what new jobs have been created. We must try to determine what the situation would have been in the area in question had the grants not been made available and what loss of employment might have resulted if the modernisation resulting from the expediture of very large sums had not been carried out. It might very well have meant that the North-East of England would have lost some very important industrial development, and many people working there now possibly would not be working there.
  I take the point made by many hon. Members. I do not assume that the only thing we need to encourage in development areas is labour-intensive industry. Capital-intensive industry is also needed. I do not know the answer to the point raised by one of my hon. Friends who said, "Tell me a labour-intensive industry which is modern and developing". We automatically regard labour-intensive industries as industries which are declining. It may be worth investing considerable national funds to encourage the development of capital-intensive industry in the North-East, Wales, Scotland and elsewhere, around which smaller industries may collect. This is the sort of argument we should be having, based upon tangible material produced from investigation. It is incredible that we should be confronted with this legislation without such evidence.
  I have not just started to complain about unemployment; I have been doing so for the past three years. My constituency and the constituencies of some of my hon. Friends have suffered grievously. In the past we have not accepted the answers given by our hon. and right hon. Friends. But when we set the actions taken by the Labour Government against the actions taken by this Government there is no doubt where the

  1473
  advantage lies for the development areas. Then at least we could see the reason for the difficulties we faced. There was the decline in the coal industry and the modernisation of the shipbuilding yards.
  Today, the real tragedy is that the problem is universal and occurs in every industry in the area. Pay-offs are announced almost every day of the week in the local Press by firms of all kinds, not just by one or two major industries. Today, one of the few hopeful signs is a revival in the mining industry, which provides the only new opportunities for jobs in my constituency. Shipbuilding is under severe threat, partly Government-induced, because of the new anxiety and uncertainty imposed by the Government on the shipbuilding and ship repairing industries. In my constituency 14 or 15 per cent. of the men are out of work, and this is 50 per cent. worse than a year ago, when there was real hope of the future. Industrialists in the area were saying then that if only the Government could maintain for a reasonable period a clear line of policy they would have more chance of success, but the Government have destroyed our hopes without giving us the information on which to base our judgment.
  8.32 p.m.
  Mr. Cecil Parkinson: I came to the House this afternoon looking forward to hearing Herr Willy Brandt and to doing some constituency work. I learned the hard way the lesson which all new Members of Parliament have to learn. I returned the smile of one of the Whips—which will not happen again—and that is why I have spent three hours listening to this interesting debate and doing something which was not part of my plan. The smile on the face of the tiger has become real to me.
  I must declare an interest. I act as financial adviser to several groups of building companies and I have, therefore, a particular interest in the building industry. I listened with interest to the hon. Member for Liverpool, Walton (Mr. Heffer). He gave a moving and persuasive account of his feelings about unemployment in the building industry. His speech symbolised the speeches and attitudes of many of his colleagues in the debate today. The Labour Government, in their six years of office, did more to damage the prospects of the building
  1474
  industry than any Government in our history. Nobody knows that better than he does. His attitude to the building industry was schizophrenic. The building industry was not regarded as a manufacturing industry and had to bear the whole burden of S.E.T.
  Mr. Heffer: Let us put the record straight. I personally opposed S.E.T. as it applied to the building industry from the day it was introduced.
  Mr. Parkinson: I thank the hon. Gentleman for that information, but it does not affect the point I was making. I am talking about the hon. Gentleman's Government, not about the hon. Gentleman in particular.
  We have also heard a lot about investment grants. The building industry was not regarded as an industry important enough to qualify for investment grant. It was only at a later stage that it qualified for grant. It was regarded on Government instructions as an industry which must be classed as among the lowest possible priority borrowers. Bank manager after bank manager has informed me that the building industry was at the bottom of the list of priorities. It can be no surprise to anybody that, during the period of office of the Labour Government, some 7,000 building companies went out of business and left the industry in a highly damaged state.
  If the hon. Gentleman reads his newspapers today, he will see in the Financial Times and Daily Telegraph headlines such as
  "Prospects for the building industry better than for some years."
  The Chairman of the London Brick Company said in a recent statement:
  "During 1970 there was a further reduction of 7 per cent. in the commencement of new houses, bringing the fall over a three-year period to nearly a third."
  It is no good hon. Members opposite pretending that the building industry's problems and the problems of other industries began on 19th June since the chairman of that large company said that the decline began some three years earlier. Nor is it any good hon. Members opposite trying to relate that decline to the cut in investment grants. It was a minor part of the total investment incentive programme. It did not make or break the building industry

  1475
  and did not cause unemployment, about which the hon. Member for Liverpool, Walton feels so strongly and speaks so movingly.
  I think it was Aristotle who said that a prerequisite to the enjoyment of drama was a willing suspension of disbelief. Such a suspension is certainly a prerequisite of enjoyment of speeches by hon. Members opposite because, as one listens to them, time and again one gets the impression that all our problems started on 19th June. They talk as though the fall in investment, and indeed the lack of any increase in the amount of investment, is to be laid at our door and at the door of the Bill which we are today discussing.
  We have heard hon. Members from various regions of the country talking about a decline in the amount of employment and a fall in investment, but anybody who has had anything to do with business will remember the sort of situation that faced the average business when we came to power and took over the situation. Businesses in general had faced a major squeeze of cash; bank finance was not available in the quantities needed and this was being done as a matter of Government policy. They had experienced interest rates at levels that made it uneconomic to raise money to finance projects.
  When we came to power the profits in industry were declining in ratio, and we all know the figures of the fall. The amount of profit available for investment was falling. Business also faced severe increases in taxes and a brake upon cash resources which are the source of investment funds. We faced a capital market shot to pieces. It was certainly no joke a year or two years ago for a small company trying to raise money in the capital market. Companies were experiencing a bad squeeze and had available to them no approach to the market. They had the prospect of falling profits and high taxes. This was nothing to do with whether there were investment grants or investment allowances.
  It is no good the hon. Member for Chesterfield (Mr. Varley) saying that future investment entirely depends on assessments for the future and that people will not invest unless the future is bright. This is one element in the overall situa-
  1476
  tion, but the other is the availability of cash. One can raise money only on the basis of past performance. A firm can go to the market and say, "This is what we have done, and this is what we plan to do—will you advance funds?". If a company has a bad record or a shortage of cash, its opportunities for raising finance are very much reduced. These are the real reasons why investment is falling and unemployment is rising, and nothing that has happened since June has affected the situation.
  In our daily newspapers, we read of chairman after chairman saying that the prospects are better. They are better than they have been for some years, and the future looks rosier. I hope that that is as good news to the hon. Member for Walton as it is to me, because I am one of those Conservatives—and there are more than 300 of us in this House—who get no pleasure from the increase in unemployment. However, we do no service by pinning the blame on the wrong cause and hiding the facts from the people.
  This Bill will not be the cause or the cure of our bad investment record. It will not result in a fall or an increase in unemployment over the next few months. However, it is a correct and sensible Measure which has my support, and I hope that the House will permit me to say why.
  The hon. Member for East Stirling-shire (Mr. Douglas) said that there would be no administrative saving since the Inland Revenue would require extra staff. I am a practising accountant. My firm produces tax computations and capital allowance computations. Merely adding another list to capital allowance computations will require no additional effort. The production of an investment grant claim involves a tremendous amount of work, and it must all be checked. I know how much less work there was in the days when we made investment allowance computations and capital allowance computations. It is no good saying that there will not be a reduction in work. There will be a very substantial reduction. Any hon. Member who does not believe me is welcome to talk to my partners about how much less work this Measure will involve for my firm. We have mixed feelings about it, because we make a living by charging our clients for the

  1477
  amount of work that we do. But there will be less work for us and for the Department. On this occasion, the hon. Member for East Stirlingshire is not correct in his assertion.
  An interesting feature of investment grants is that very few facts are known about them. There is massive scope for speculation, and they represent a wonderful opportunity for a prolonged debate in which no one will be able to prove anyone else right or wrong. But one fact is known. It is that, in the year to 31st March, 1970, the Government paid out £568·8 million and that a thousand people were employed in the administration of that expenditure. Any of us facing any form of expenditure would want tangible evidence that we were getting value for money. In the same way, when the Government are spending £570 million of taxpayers' money, one would expect them to make sure that they were producing a worth-while result. One would expect them to want some assurance that the expenditure was effective.
  One looks round to see whether anyone appreciates these payments and says anything on their behalf, or to the contrary. The Report of the Public Accounts Committee in the last Parliament was quite clear on the subject. It said that much of the expenditure was made in respect of investments which would have been made in any case. There was no worthwhile evidence to the contrary. Certainly the Public Accounts Committee could find none. Its finding was that, on the whole, much of the investment would have taken place in any case, so that the expenditure did not generate very much.
  Despite having more investment incentives than any other major Western European country, we lag behind. There is no evidence of a spectacular upsurge in investment because of the grant. Over the four years since the grant was introduced compared with the four years before, in real terms there was no increase in investment. We know that £570 million was spent. That is still the only thing that we know. We also know that there was no increase in investment as a result of that expenditure.
  Do we aknow that that expenditure went to hands which used it well? Do we know that it generated anything?
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  No, because the grant is totally indiscriminate. To qualify for the grant one has only to submit invoices which prove that the expenditure has been incurred. The Government then send a cheque, and that is the end of their interest in the matter. So there is no way of knowing whether that £570 million found its way into hands capable of using it. It just disappeared into the pot, and nobody can prove whether it was well or badly spent.
  No Government should dispense £570 million on the basis of such a set of surmises, hopes and ambitions without access to evidence that what they are doing is producing results. It seems an extraordinary way to run a country's finances. I am sure that none of us would apply the same criteria to his finances or to the finances of any business in which he was involved. If he did, it would be a rapid way to bankruptcy.
  We have had preliminary results from the survey on the effectiveness of business investment. The preliminary finding was extremely interesting. It showed that 60 per cent. of the investors, who account for 60 per cent. of the investment, prefer the free depreciation method. They think that it is better and they welcome it. There is no need to remind hon. Gentlemen opposite that the free depreciation method has been introduced for the development areas. The very method which 60 per cent. of the investors making 60 per cent. of the investment think is preferable is being extended to the development areas.
  All that we know in favour of the investment grant system is the claim by, for instance, the hon. Member for Gateshead, West (Mr. Horam) that investment grants are producing more investment. That is a totally unsubstantiated claim. The hon. Gentleman is in no position to substantiate it and I cannot argue about it, because nobody really knows. However, £570 million of the nation's money has been spent and nobody has the faintest idea whether it is doing any good.
  I shall not rehearse the reasons for my belief that a return to capital allowances given to businesses which make profits as a relief against tax is a more suitable method. They have been rehearsed time and again from this side of the House, and I find them convincing.

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  When the new system is introduced we shall be cutting out the indiscriminate hand-out of £570 million, we shall be ending discrimination against the service industries which are producers of tremendous invisible earnings, and we shall still leave British industry with more investment incentives than any other industry in Western Europe. British industry will have no excuse, nor will it look for one, because our measures have, in the main, been very enthusiastically welcomed by industry.
  Earlier, we had a quotation from Campbell Adamson. In one long passage, with which I shall not bore the House, he wholeheartedly welcomes our measures. This is a sensible Bill which will cut out waste and encourage worth-while investment. I wholeheartedly support it.
  8.50 p.m.
  Mr. James Hamilton: I do not propose to follow the hon. Member for Enfield, West (Mr. Parkinson) in what he said, because I am not an accountant, but my son-in-law is, and he is in good company this evening because he is very much in favour of investment grants, as is every speaker from this side of the House.
  Many hon. Gentlemen on the Government benches have shown that they are concerned about the Government's policy, and I remind them that the C.B.I. at least in Scotland, is very much in favour of the previous Government's investment policy, as was the Chamber of Commerce in Glasgow, the British T.U.C., the Scottish T.U.C., and the present Secretary of State for Scotland. My hon. Friend the Member for Chesterfield (Mr. Varley) reminded the House that when the Secretary of State for Scotland was a member of the Opposition he said that he and his party were in favour of increasing investment grants, and not demolishing them or departing from them. I think it is only fair to mention that.
  I am prepared to recognise that the Government are not callous enough to allow the unemployment figure to get to the 1 million mark. We in Scotland know better than most people what unemployment means. In Lanarkshire we have an unemployment figure of 7·3 per cent. That does not take account of the
  1480
  many redundancies which have been announced, but have not yet occurred—I refer to the Rolls-Royce redundancies—and on the basis of that situation we must be concerned about the Government's policies.
  When my Government were in office, I put to them points of view expressed to me by various industrialists in my constituency. Leading industrialists in Lanarkshire have said categorically that investment grants were of tremendous assistance to them, not only in maintaining their existing labour force but in giving them the added incentive to employ more people. In my constituency we have Honeywells, the computer manufacturers, General Motors, Ranco, and the Caterpillar Tractor Company. These are all American companies which came to Lanarkshire because of assistance given by the previous Tory Government, which was continued by my Government when they were in office. Among them, these firms employed more than 12,000 people, and I think therefore, that when they put forward a point of view we should examine it very carefully.
  Some of these firms have put forward one matter which I think is worthy of recognition and of being analysed. They say quite clearly that companies which have gone to the development areas and are making profits—they make no secret of the fact that they are making profits because, whether we like it or not, companies are in business to make profits—and which in the initial stages received grants from the Government should be relieved of 50 per cent. of the corporation tax, that no further grants should be given to them, and that no depreciation allowance should be given, as suggested in the Bill. They merely suggest that there should be a 50 per cent. reduction in the corporation tax, the rate of which is now, I believe, 42½ per cent. I hope that when the Minister replies to the debate he will deal with this issue, because we are all concerned about the situation.
  We are agreed that the Clause about which we disagree is Clause 1. Little reference has been made to Clause 2. I propose to refer to it, because I have written to the Minister and sent him a copy of a letter that I received from one of my constituents. He is an industrialist

  1481
  who has been giving steady employment. He decided that, so as to stop goods coming from the South, from areas which are not development areas, and from some continental countries, he and one or two others should start a new company.
  At the Department of Trade and Industry, the civil servants told him that he was not entitled to the grants, because he was the managing director of the company which I mentioned in my correspondence. They said that if he was prepared to move South he could get all the grants, and that if he moved 30 miles to Irvine in Ayrshire he would also get all the grants.
  This is ludicrous. He is being asked to move 30 miles from a special development area with unemployment at 7·5 per cent. to another special development area. Paradoxically, if a company 30 miles away moved to my area it would get all the grants. I was amazed at this episode because my constituency cannot afford to lose 24 jobs.
  The Government must take into account expert advice on investment grants. Everyone involved in industry is entitled to be considered, including the unions. They are not only fighting for wages and conditions; at the moment they are fighting for their very existence and are trying to assure their members of the fundamental right to work and the right to leisure.
  Some hon. Members opposite have been reckless enough to say that the £570 million has been squandered. Sometimes the civil servants are attacked because they are not doing what they have been asked to do. But they go through an application with a fine-tooth comb and, in the interests of the taxpayer and the Government, find out to the best of their ability whether a company is an asset. I would not decry the civil servants. Our criticism has been levelled against the Government. We are the legislators, and the administrators only carry out the legislation.
  I ask the Government at this late stage, in the interests of the special development areas particularly, to do something sensational to inspire confidence; otherwise, the 1963 Scottish unemployment total of 136,000 will be surpassed. Even hon. Gentlemen opposite must regard
  1482
  that as an unenviable record. I therefore ask the Government to give serious thought not only to my point of view but to the view of the Secretary of State for Scotland, who, I know, is very much in favour of increasing, rather than abolishing, investment grants.
  9.0 p.m.
  Mr. Michael Foot: In some respects this debate has taken a different course from the one I had originally expected. In view of the arguments which have arisen in most of the other debates on regional policy since the Tories came to power, I had expected that there would be a renewal of the discussion of whether the system of investment grants or the system of taxation allowances provided the same amount of assistance for the regions generally.
  After all, that has been the claim—or should I say counter-claim?—which has figured most prominently in previous debates, though very little has been said about it today. It is significant that few hon. Gentlemen opposite, including the Minister, sought to sustain the case which the Government have made in the past in this respect. Instead, they relied more on theoretical arguments.
  Indeed, the hon. Member for Enfield, West (Mr. Parkinson) underlined that it was impossible for hon. Members on either side to prove their case, because the whole thing was hypothetical. In that case, an extraordinary light is cast on what the Government have claimed for this change on previous occasions, but I will come to that later.
  Perhaps one reason why this debate has taken a different course is because of the Minister's speech. One of my hon. Friends said that he had struck a note of complacency. That was a moderate expression, because when the hon. Gentleman talked of a resurgence of confidence in our future industrial prospects, far from merely striking a note of complacency he was treating us to a positive symphony of smugness.
  We appreciate that the Minister is in some difficulty. The Bournemouth backwoodsmen have forsaken the forest and are rampaging all over the countryside. One is bound to wonder, therefore, whether the anthem of complacency to which we were treated was the hon. Gentleman's swan-song. I certainly do

  1483
  not propose to come to his rescue, and I am sure I shall have the support of my hon. Friends in saying that.
  Perhaps that was one reason why this debate had taken that course. Instead of our discussing the complicated figures which have been given in these debates, one hon. Member after another, from both sides, has been quoting specific practical examples. It is of some interest that every industry mentioned by hon. Members, including hon. Gentlemen opposite, has resulted in a plea for the continuance of investment grants.
  The hon. Member for Enfield, West said that we could not judge these matters because of the hypothetical nature of the figures. He should have been here to hear the rest of the debate, instead of being bullied by his Whips to come in late in the day. His hon. Friends with practical experience have pleaded on behalf of the mining industry, shipping and one industry after another in favour of investment grants. Indeed, all hon. Members who have spoken in practical terms have said that investment grants should continue, while those who have spoken in highly theoretical terms have said that there might be a case for tax allowances.
  Let me seek to fortify that claim with some particular examples. First, an example from my own constituency, about which I have had correspondence with the hon. Gentleman. We have had references to many of the major industries, but it is quite right that somebody should speak on behalf of the small businessman. Since no one on the Government side has done so, we on this side undertake the responsibility. I received a letter from the director of a small mining firm in my constituency—I sent the letter to the hon. Gentleman—and I now read it.
  "We have been engaged in mining works at our Tredegar Colliery, basing all our plans and calculations upon the Investment Grants in the Industrial Development Act of 1966 and we will experience considerable difficulty, to put it mildly, and may have to reduce staff, due to the present Government changing horses in mid stream. We are engaged upon mining coal, with particular emphasis upon Coking Coal which we supply to the British Steel Corporation and because of the Investment Grants for mining works have been able to increase our employees from six to 25 and are bent upon seeking out and opening up further seams of coal. All our employees are
  1484
  experienced mine workers who have been thrown out of work by the closure of N.C.B. mines, and should we be forced to reduce staff, or even close down, these men will go back to the unemployed list. Whilst we realise that the new Government are unlikely to continue Labour's policy, we feel that it is extremely unfair to completely change the Law during the course of an existing project and we would therefore ask for your guidance and support in attempting to get permission to continue with the Investment Grant system, in our case, until the completion of this particular project."
  So, without much hope, I wrote to obtain the guidance of the lion. Gentleman, and he replied as follows:
  "Inevitably our decision may result in some firms receiving less in investment grants than they had expected when deciding to launch their programmes. I see great difficulty, however, in extending the transitional arrangements. To do so would prolong the transitional period and increase the cost to public funds of a scheme which has not in general given good value for money."
  The hon. Gentleman then goes on with the general argument, to which my businessman friend in Tredegar said—and in Tredegar we put these matters very moderately, as the hon. Gentleman is well aware—
  "Sir John Eden would appear to miss the point entirely in that we are not asking for feather-bedding but that up to the present time we can see no way in which a company can make a profit by digging a hole, and until we do make a profit from 'our' hole the Tory tax allowance doesn't help us one jot."
  Tens of thousands of small businessmen are affected by a similar situation. But if the Government are not prepared to be interested in what is said by small businessmen, let us look at what some of the big ones have to say.
  The top financial expert of Rio Tinto Zinc, Mr. Alun Davies, in a recent article in the magazine "Mining and Metallurgy" says:
  "There has in recent years been a large-scale revival of interest in mineral exploration in the United Kingdom".
  Perhaps I may say in parenthesis here that one of the subjects that a previous Member for Ebbw Vale, Aneurin Beva, was interested in years ago was that there should be a proper geological survey of the country so that we could make the best use of its resources. And this is the opinion of an expert engaged in the business of mineral exploration:
  "There can be no doubt that there are three main reasons for this. Changes were promised

  1485
  to the tax system to make it attractive to the landowner to exploit a mineral royalty."
  This was carried out under a previous Labour Government.
  "The precarious tenure of mineral companies was to be strengthened; and, perhaps most important of all, the investment grant system applied to mines, with its high-risk capital-intensive and long lead-time characteristics, the mining industry was particularly well served by the investment grant system, which supplied a stimulus to investment that is totally absent from the new tax-related allowances which are to replace it."
  The hon. Member for Middlesbrough, West (Mr. Sutcliffe) supported the same case in that industry. There is no doubt about what happens in that industry.
  I do not know what consultations the Minister and his friends had with the British Steel Corporation before deciding to abolish the investment grants, but the decision should not have been taken without an understanding of what the consequences would be for the Corporation. It is not easy to work out the exact figures, but it is probable that the Corporation will lose about £100 million a year because of the withdrawal of investment grants and very little of that amount will be recouped in the tax allowances. That £100 million a year was to form a very considerable part of the total amount which the steel industry required to carry out the whole of its development programme. It was reckoned that over the next 10 years more than £1,000 million would be used by the Corporation to assist it in its investment programme.
  Therefore, perhaps the major single consequence of the abolition of investment grants was the striking of a savage and immediate blow at the Corporation's finances.
  It is no good businessmen opposite like the hon. Member for Enfield, West and others telling us that these are such hypothetical matters that nobody can work out exactly what they mean. They can be worked out. They have been worked out in the case of the steel industry. What the steel industry has is a programme, different sections of which are still awaiting Government approval, of £3,000 million to £4,000 million over the next 10 years. The Corporation had a right to calculate that part of that huge amount would be financed by in-
  1486
  vestment grants, but a considerable part was to be financed from its own resources. The whole of that calculation has been knocked sideways by this action by the Government. The Corporation's cash flow position has been damaged over the last three or four months in a most grievous fashion. More serious still, the industry's whole investment programme is affected by this action.
  Mr. Norman Tebbit: My understanding of what my hon. Friend the Member for Enfield, West (Mr. Parkinson) said was, not that a calculation could not be made of how much a company had spent or how much it had received in investment grants, but that it could not be calculated in a sensible manner whether it would have chosen to make investments on that scale or some other scale. That is not what the hon. Member for Ebbw Vale (Mr. Michael Foot) is attributing to my hon. Friend.
  Mr. Foot: I am not trying to misinterpret the hon. Member for Enfield, West. If he were here to speak for himself I do not think that he would accuse me of having done so. He made it part of his case that it was impossible for one side or the other to prove its case for investment grants or tax allowances, because both calculations were so largely hypothetical. I say, and I do not think that this can be refuted, that in the case of the steel industry the exact figure is not easy to calculate but that it is about £100 million a year; the Corporation says that it is about £100 million a year, and no doubt the Minister will give us his estimate of what damage the Government have done to the Corporation by this Measure.
  We should be glad if the Minister would deal with that question first, particularly as in another place recently he was responsible for boasting that he and his Government were assisting the steel industry. The assistance they gave to the steel industry to which the hon. Gentleman referred was that the Government had graciously agreed that the plans for Llanwern should go ahead, and the hon. Gentleman accused me of being churlish in not welcoming that announcement. I had to point out to the hon. Gentleman that that approval had been given by the Labour Government 12 months previously.

  1487
  In the case of the steel industry the Secretary of State for Trade and Industry has held up a large part of the investment programme, although apparently nobody has told the Prime Minister exactly what is happening. This is not an original state of affairs. It happens in the case of the steel industry as with other enterprises. What has happened in the case of the steel industry and its investment is that the Secretary of State for Trade and Industry, having held up the whole investment programme of the industry, now claims credit for having released parts of it. This reminds me of the story in Victor Hugo's book, "Ninety-three-", of the sailor who let loose a battering ram against his ship which almost shipwrecked it and then at the last moment, by a feat of agility, managed to stop the damage being so considerable. What happened to the sailor in the story I recommend as what might happen to the Secretary of State. The sailor was first decorated and then shot.
  Let me come to a further practical proof that anyone who has studied the matter prefers the investment grants. There have been many references to what is happening in Northern Ireland. The Government there prefer to go ahead with the investment grants. It is no good the hon. Gentleman saying, as he did in answer to questions, that it is a matter for the Northern Ireland Government, and that we cannot go into it. There is a logical argument which he must acknowledge. Will the Minister who replies to the debate tell us why he thinks the Northern Ireland Government are as foolish as some of his hon. Friends have been saying? The hon. Member for Enfield, West said that it is absurd and outrageous to use the investment grants system, and that no sensible businessman would prefer it. Yet at this very moment the Industries Development (Northern Ireland) Bill is passing through the Stormont Parliament. What does the Minister say about that? Does he think they are fools to make this choice?
  The fact is that Northern Ireland is the only part of the United Kingdom where Tories represent a development area, and where they happen to know the facts they prefer to choose investment grants. I hope that the hon. Member for Belfast, South (Mr. Pounder), who is standing so
  1488
  diffidently in a part of the House to which I think I am not entitled to refer, will return to his place. He is the only Member for a Northern Ireland constituency who has dared to show his face in this debate.
  Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. I think that I am right in saying that this Bill does not apply to Northern Ireland.
  Mr. Foot: I am most grateful to you, Mr. Deputy Speaker, for underlining my point so perfectly. That was one of your most powerful interventions, if I may put it that way. I greatly look forward to hearing you on a future occasion, because you have emphasised the fact that where the unemployment is highest in this country even this Government have not dared to put through measures withdrawing investment grants.
  The matter is more serious than that, even. It raises serious constitutional questions. I do not know which way the Northern Ireland Members will vote. Maybe the hon. Member for Belfast, South has been attending the debate as a kind of non-voting Parliamentary Private Secretary. I hope that neither he nor any other hon. Member for a Northern Ireland constituency will dare vote for the Bill, because in Northern Ireland they vote for investment grants. Are they to come to Westminster and vote against our having the same kind of assistance as they vote for there? We will not stand that from these saboteurs from Stormont, these people who come here with their I.R.A. political tactics, trying to upset our way of presenting our case. It would be a most disreputable state of affairs if the Bill were carried through the House of Commons with the cynical votes of those from Northern Ireland, who are the only Tories who really know how the investment grant systems work.
  I come to the other major aspect of the debate which has been curiously overlooked in our previous arguments—the claim that tax allowances can assist the regions as well as investment grants or that the money provided for the regions will be just as great.
  I do not know what claim the Government are going to make on this occasion. I am not sure which horn of the dilemma they would prefer. They can take their choice. If they say they

  1489
  do believe that the allowances and the support for the regions provided by their policy will be just as effective in amount as is provided now, then they will find themselves awkwardly placed by the fact that every Treasury Minister has said that it is impossible to calculate what the assistance will be. On the other hand, if the Under-Secretary of State chooses the other horn—I am giving him every assistance in dealing with the matter—and says that it is impossible, a matter of guesswork, that no one knows how the assistance will be taken up and that no one can calculate whether the regions will get as much assistance as under the Labour Government, he will make a monkey of the Prime Minister. The hon. Gentleman may say that that is probably the easier choice because that was what was done by the Financial Secretary to the Treasury.
  The name of the Financial Secretary is attached to the Bill, but he has not dared to show his face here all day. I am not surprised. He had an argument with my right hon. Friend the Member for Birkenhead (Mr. Dell) on this matter and retired completely from the debate. Hon. Members can look up the exchange in HANSARD of 22nd February. I shall not read the whole column but it is all there. The Financial Secretary told my right hon. Friend:
  "one cannot state this because it depends entirely on the nature of the take-up".
  I could read out whole lists of quotations from letters which have been sent to my hon. Friends by the Department saying that it is impossible to calculate what assistance will go to the regions under the tax allowance system. That is the state of affairs. On 22nd February my right hon. Friend put a question to which we have not yet had the answer, and that is why I am so indelicate as to put it again. He interrupted the Financial Secretary to say:
  "If one cannot state it, why did the Prime Minister state it on Thursday and why did he repeat it today?"
  In other words, the Prime Minister has continued to repeat the claim that the regions are going to be as well off under this system as under the previous one. The Financial Secretary knew better than the Prime Minister. He replied by sidestepping the whole question very skilfully—indeed, so skilfully and with such agility that I think he should win instant
  1490
  promotion in this clodhopping Administration. He said:
  "I was not hre today and did not hear what my right hon. Friend said"—
  lucky he—
  "but I was present on Thursday and heard what he said then, and that is what I said to the right hon. Gentleman a moment ago. It is possible to give the relative value of the various incentives which are available to measure the differential in attractiveness between investment in special development areas and the rest of the country."—[OFFICIAL REPORT, 22nd February, 1971; Vol. 812, c. 226–7.]
  But that is only part of the question. The other part is about how much employment is going to be affected. What is going to happen in those areas depends not only on the relative amount but on the total amount as well, which the Government say they cannot calculate. Yet the Prime Minister says that the regions are not going to be worse off.
  We believe that the regions will be worse off under this new policy, partly for the reasons adumbrated by my hon. Friends, with expert knowledge of different industries, and partly for the reasons which have been given by those speaking for shipping, for the mining industry—indeed, for every industry mentioned in the debate.
  We also believe it because we do not think, in spite of all their professions, that hon. Gentlemen opposite are really interested in what happens in the old development areas. The Conservative Party has never been very much interested in them. The real reason, as my hon. Friend the Member for Bedwellty (Mr. Kinnock) pointed out in what I think everyone will agree was a remarkable speech, is because this policy fits into the rest of the economic thinking of hon. Gentlemen opposite. We can call it the policy of stand on your own feet, away with the lame ducks, link everything to profitability, no distortion of free market—the "Heath-Powell policy" or the "Heath-Powell-Eden-Biffen policy". It is all one policy.
  Mr. James Hill: Prosperity.
  Mr. Foot: Oh yes. The Prime Minister talks in this way because the Prime Minister thinks that when he reads a statement in the campaign of the Conservative Party it is one of the eternal verities. For the Prime Minister the proof of the pudding is always in the cookery

  1491
  book. If anyone wants to know where the Prime Minister is heading they have only to listen to the right hon. Member for Wolverhampton, South-West (Mr. Powell) who says it in much better English.
  The right hon. Member for Wolverhampton, South-West describes exactly where this laissez faire policy will go. He is opposed to all regional policy on the same grounds as he is against lame ducks, the distortion of the market economy, and is in favour of the laissez faire doctrine. One complaint against the right hon. Member for Wolverhampton, South-West—not the only complaint—is that he enunciates this discovery of the laissez faire doctrine as if he had suddenly discovered the secret of perpetual motion; he comes out with it as if it was something new. Let alone this being a cure for the distressed areas, it is the cause of the distressed areas.
  For generations laissez faire doctrines were the cause of every major distressed area in the world—whether it was Ireland in the famine, the dust bowls in the United States, or what happened in South Wales or Scotland in the 30s. We are therefore bitterly opposed to this Bill, because we regard it as part of the policy of tolerating mass unemployment, part of the policy of seeing the regions return to the kind of desperate situation that they knew before.
  I was struck by the speeches made today, and in a previous debate, by my hon. Friend the Member for Gateshead, West (Mr. Horam) who spoke of how fragile are the advantages that we have in the regions, how easily the regions can be plunged back into the kind of desperation they knew before. It is a very difficult contrivance to get new industries in as older industries decline. It takes every kind of device that can be organised; it needs a Government who have a driving will to achieve it. Anyone who believes that there is such a driving will has only to listen to the speeches of the right hon. Member for Wolverhampton, South-West, or the speech of the Member for Bournemouth, West (Sir J. Eden), or above all to the speech of the Prime Minister himself.
  They are dedicated to the idea of laissez faire in economics. They believe
  1492
  that competition is the only way in which these matters can be solved. It was laissez faire economics and competition allowed off the leash in that fashion which drove tens of thousands out of Wales, Scotland and the North-East. It happened before, we are determined that it shall not happen again. Some one once said, speaking in this House:
  "I would speak so loud that it will be heard outside this House."
  We on these benches are determined to speak loud on this question of unemployment, day after day, week after week, month after month, until the policy is changed. Many of us were not satisfied with the policy followed during the previous six years. Many of us expressed our dissatisfaction with an unemployment total of 600,000. Many of us fought it, and we shall continue to fight it. Reshaped policies will be needed to reduce it.
  Right hon. and hon. Members opposite are leading us not to the kind of policy backed by public ownership which some of us call Socialism, which is the way to solve these problems, but to what they gave us in the 1930s, and they had better make up their minds and learn that this country will not stand for it. We shall not stand for it in Wales, Scotland or anywhere else. We shall fight this Bill and all the Government's other measures until we have a Government in power which are determined to ensure that for the first time, on a major scale, the regions have a proper deal.
  9.30 p.m.
  The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): The hon. Member for Ebbw Vale (Mr. Michael Foot) has spoken with a loud voice tonight. I remember his speaking with a voice a few decibels lower when he was sitting on this side of the House. If he spoke about unemployment with such a loud voice then, a fat lot of good it did the people of this country. Nevertheless, it is a great pleasure for me, for the first time, to follow the hon. Gentleman in debate. We all enjoyed his speech. No one enjoyed it more than himself. It was, however, something of a surprise to find him winding up the debate for the Opposition. I expected him to open it. Anyway, it is nice to have another "Shadow" Under-Secretary of State for Trade and Industry.

  1493
  Many interesting points have been made in the debate, and I will endeavour to answer as many of them as I can. Many of them were entirely predictable, but some were important. May I say to the hon. Member for Bothwell (Mr. James Hamilton) that I was concerned with what he said about the firm on which he has had correspondence with me. We will continue that correspondence, and if the hon. Gentleman is dissatisfied I shall be only too delighted to speak to him. I have noted what he said. I should not like to feel that any of the officials in my Department were doing anything to damage the position of such firms. We shall look at the matter further.
  I echo what was said by my hon. Friend the Minister for Industry, and wish to make clear the aims of our policy. We are determined to reverse the processes of low growth, low profit and low job opportunities accompanied by high wage inflation which we have had in the last few years. Our cuts in taxation and reformed incentives are a beginning—only a beginning—and the Bill, placing emphasis on profitable investment, is an important element in our general strategy.
  The hon. Member for Chesterfield (Mr. Varley) announced—I did not hear the hon. Member for Ebbw Vale repeat it but I assume that he endorsed it—that the Opposition will vote against the Bill. They, and the country, should be clear what they will be voting against. They will be voting against a change to a system designed to encourage profitable investment, both in the regions and elsewhere, and against an increase in building grants.
  The hon. Member for Chesterfield in an interesting speech made several statements about investment grants and taxation which should be corrected. He complained that the accountants find the administration of these matters in industry enormously difficult; but the accountants who have to do this would hardly recognise what he said. The hon. Member for Chesterfield said that grants were good because they were more readily understandable. They were so understandable that the English Institute of Chartered Accountants recommended two different methods of accounting for them. The Scottish Institute recom-
  1494
  mended a third method and the Institute of Cost and Works Accountants published an article about 10 pages long showing the inadequacies of all these methods, and saying how difficult the accounting was.
  The hon. Member for Chesterfield said that grants were more certain because their value was not affected by future changes in tax rates and because the Treasury could work out "their absolute true cost". This is absolutely wrong.
  Mr. Varley: If I did say that, what I meant to say was that when the grants had been made the true cost was there for all to see. It depends, as many of these measures depend, on the actual take-up of industry. This was never the case with allowances.
  Mr. Grant: I am sorry if I misquoted the hon. Gentleman, but that was the impression I had. Grants were deducted from the cost of an asset for the purpose of capital allowances. The rates of grant, the rates of capital allowances and the rates of tax interact, and a change in one affects the net cost of both the others. This is one part of the difficulty which accountants and others have in dealing with the supposedly understandable grants. My hon. Friend the Member for Enfield, West (Mr. Parkinson) in an extremely interesting speech made broadly the same point.
  My hon. Friend the Member for Tynemouth (Dame Irene Ward), in an intervention, drew attention to the attitude of the Chamber of Shipping, and my hon. Friend the Member for Dorset, South (Mr. Evelyn King) also referred to this. As my hon. Friend the Minister for Industry said, the Chamber of Shipping does not view the scene with entirely unalloyed pleasure, but it has recognised that the Government have been most helpful to the shipping industry in several respects, notably in the so-called assignment of contracts, which is a complex matter of great importance for it. This help will be given in the main through the provisions of the Finance Bill, which will permit free depreciation to be claimed by a finance company which has assisted a shipping company to finance the purchase of a ship by buying it and then chartering it back to the shipping company. The

  1495
  difficulties arose on the extras which go into a ship. Unfortunately, we have not felt able—
  Mr. Douglas: The hon. Gentleman should not continuously refer to the extras. We are talking about a bulk carrier for containers. The containerisation of a ship is not an extra. By drawing a deadline on 27th October the Government are drawing a deadline for a considerable proportion of the capital cost of that asset; so, with great respect, the hon. Gentleman should not talk about extras.
  Mr. Grant: All right; if the phrase offends the hon. Gentleman I will use another one. The phrase is well known to apply to things over and above the ship itself which have to be used in a vessel—
  Dame Irene Ward: Perhaps my hon. Friend, having listened to that intervention as he was speaking about my intervention, would like to know that the Chamber of Shipping will not be satisfied with what is being done in the Finance Bill, because it wanted an alteration of the system over which, quite wrongly, my Government have "done them in".
  Mr. Grant: The answer to my hon. Friend is that what is to happen in the Finance Bill will be of help to the industry. Therefore, I ask her to await those debates, and, if there is any difficulty, no doubt she will pursue the matter there.
  Dame Irene Ward: I will.
  Mr. Grant: But I repeat that the provisions in the Finance Bill will be of value to the industry, and I believe that the industry understands this.
  I want to deal with one point on which the industry is disappointed, and that is about its request that investment grants should be made on ships in regard to extras or containers which have not been contracted for before 27th October, even if the ships for which they were destined have been contracted before that date. To do this would run counter to the whole principle on which Clause 1 is based. All expenditure incurred before 27th October will be considered for grant, but not that after that date.
  We should not get the matter of extras out of perspective. Although some un-
  1496
  doubtedly are expensive items in relation to the total cost of the ships, they can hardly be regarded as of major significance. Less than 5 per cent. of total expenditure in connection with ships ordered before 27th October is involved. On this basis, the grant on this expenditure is less than 1 per cent. I mention this matter in order to get the thing into proportion.
  Mr. Douglas: What is the total figure?
  Mr. Grant: No, I must move on.
  Mr. Douglas Mr. Douglas rose—
  Mr. Grant: No, I will not give way again. My hon. Friend the Member for High Wycombe (Mr. John Hall) referred to another aspect of difficulty under the Bill, the question of self-built assets. He asked for guidance about how firms which build their own assets will fare under Clause 1. I can tell him that any expenditure which they incur before 27th October will continue to be eligible for investment grant, as also will expenditure on the components which they had contracted to buy before 27th October specifically for a piece of eligible plant, even if they paid for them afterwards. Expenditure after 27th October on general materials labour and overheads—for example, on installation of equipment—will not be regarded as expenditure directly related under a contract to an eligible asset, and we shall not be able to pay investment grant on it. The expenditure will qualify for the new capital allowance under the Finance Bill.
  My hon. Friend the Member for Middlesbrough, West (Mr. Sutcliffe), and, indeed, the hon. Member for Ebbw Vale, raised the matter of the mining industry. The only difference between them was that my hon. Friend put the matter quite clearly, whereas the hon. Member for Ebbw Vale treated us to an interesting correspondence with his constituent in Tredegar. However, I got the point and I think I understand what he was getting at.
  I appreciate the problems in regard to the mining industry. We understand its difficulties, particularly the high risks involved in searching for and proving mineral deposits, and the long time which may elapse before expenditure on successful exploration can be recovered. We have had extensive talks with the industry

  1497
  and are considering what we can do to help. Those discussions will, of course, continue.
  Mr. Michael Foot: Does the hon. Gentleman mean that the propositions he is putting forward to help the mining industry—and presumably also the shipping industry, because a specific undertaking was especially given to the shipping industry in the Conservative manifesto—will be dealt with at Committee stage?
  Mr. Grant: It will be possible for anyone in Committee to raise these matters, but so far as the mining industry is concerned I can go no further than to say that discussions are continuing with the industry to see what we can do to help.
  I move on to deal with the regions, which are very important, and many of the speeches today have been made by hon. Members who come from development areas. Hon. Members opposite have suggested that the Government have not carried out the thorough review of regional policy which we promised. This is untrue. A review has been carried out.
  Mr. Douglas: Where is it?
  Mr. Grant: As a result, we have taken a series of new initiatives. The previous Government, in our view, failed to take effective measures to deal with regional disparities. Indeed, they failed to recognise the true nature of the problem. Therefore, as soon as we took office we set in hand a thorough review of the measures to encourage industrial investment and the coverage of areas in which the incentives are deployed. The first priority was to try to get the economy on a healthier footing—
  Mr. Gerald Kaufman: A £600 million surplus.
  Mr. Grant: I am interested to hear the suggestion that the economy was in a healthy state. However, as I say, our first task was to get the economy on a sound footing, in the interests of the nation and the development areas as a whole. The first results of the review were published in the White Paper in October. They gave greater emphasis to profitable investment and greater employment.
  1498
  The other major aspect—
  Mr. Kaufman Mr. Kaufman rose—
  Mr. Grant: No, I shall not give way. The House knows that I normally give way and have given way a number of times. But I usually confine myself to hon. Members who have taken the trouble to spend most of the time of the debate in the Chamber.
  The other major aspect of the review dealt with the areas in which the regional incentives were available. Our conclusion was that the previous Administration's policy failed to deal with the real problems of older industrial conurbations with high and persistent unemployment which they have had for a number of years. Therefore, in February we announced measures to give these areas special priority by extending to them the special development area status and by substantially increasing the operational grant. Because of the shortage of mobile industry, it was impossible to extend intermediate area status except in a few special cases. But we are confident that the measures that we are introducing will be better tailored to meet both the need throughout the country for profitable investment and the special need in the development areas to provide additional industrial capacity which will lead to the provision of more employment.
  As a result of the Government's reappraisal of the needs of various areas, we now have coherent evidence of priority as between special development areas, development areas and intermediate areas, and we have incentives to meet their needs. Hon. Gentlemen opposite do no service to the development of their regions or of their own constituencies by falsely denigrating the very great assistance which has been given.
  Mr. Varley: If the hon. Gentleman is making the case that a thorough review has taken place, will he now give an undertaking that a White Paper will be produced so that we may make an evaluation of the review.
  Mr. Grant: I shall give no such undertaking. We have published one White Paper already, and the information is readily available to anyone who cares to look at it.
  Mr. Blenkinsop Mr. Blenkinsop rose—
  Mr. Grant: I can help the hon. Gentleman. I shall be coming to his point about the Manchester review.
  A number of hon. Members have referred to Dr. Jeremy Bray. In view of the remarks that have been made about him, his ears must be burning. My hon. Friend the Member for Oswestry (Mr. Biffen) quite rightly referred to the fact that Dr. Bray said in his speech:
  "In many cases, the effect of this indiscriminate handout, given without any test of the number of jobs created, is actually to reduce employment in the development areas."
  My hon. Friend might have gone further and read another part of that speech in which Dr. Bray said:
  "Industry could have no cause for complaining, given two years' notice of a cut-off in the payment of the investment grant differential at the level of £5,000 per job created on projects costing more than £1 million."—[OFFICIAL REPORT, 3rd November, 1969; Vol. 790, c. 721–3.]
  By contrast with the previous Government's policy, in this Bill we are providing a switch in emphasis to employment-creating investment. The increased rates of building grant linked to employment will, together with the initial allowance of 40 per cent. on new industrial buildings and the other regional measures, provide a stronger incentive for industry to locate its new investment in the development areas, which will provide new jobs of a lasting nature.
  I now turn to the survey to which the hon. Member for South Shields (Mr. Blenkinsop) referred. That survey was set in hand by the right hon. Member for Birkenhead (Mr. Dell), and the results are not yet published. I cannot go beyond what my hon. Friend the Minister for Industry said as to the publication of that document. It is complex and of a somewhat academic nature. Nevertheless, my hon. Friend has indicated what course he proposes to take. The important thing to learn from it is that most of the people who invest in industry—60 per cent. of them—indicated that they preferred allowances to the investment grant system.
  The hon. Member for Chesterfield prayed in aid in his case no less a person than Mr. Campbell Adamson of the C.B.I.
  Mr. Varley: And Viscount Ridley.
  Mr. Grant: Mr. Campbell Adamson, in his position at the C.B.I., is in a better position to assess industry throughout the country than Viscount Ridley. Speaking in his capacity as Director-General of the C.B.I., Mr. Campbell Adamson said:
  "The Government has responded to three of the main requirements the C.B.I. has put to it to help increase investment. There is the cut in Corporation Tax and Income Tax, and the switch from grants to profit related incentives, and the spread of incentives to the service industries."
  Mr. Varley Mr. Varley rose—
  Mr. Grant: Perhaps I may finish the quotation. It was well after the White Paper—November, 1970.
  "We have long argued that the main aim of the Government should be to get the economic climate right. The measures the Government have taken are in the right direction."
  Mr. Varley: Is the hon. Gentleman saying that the document from which he has just read indicates a speech made by Mr. Campbell Adamson in November, 1970? If so, Mr. Campbell Adamson, on 13th March, 1971, said:
  "Since it has been proved highly dangerous to rely upon the continuance of any particular incentives, businessmen have simply discounted them."
  This was after that.
  Mr. Grant: Yes; but this speech was made after the C.B.I. had studied the White Paper. It is true, as intelligent people admit, that the effects of regional incentives—this comes out in the report which the hon. Member for South Shields wants to see—are marginal in nature. Nevertheless, the report shows, and it is accepted, that a clear majority of investing firms prefer tax allowances to grants. This we have acted upon, and are acting upon in the Bill. But it shows—this is consistent with what the Director-General said—how marginal the effect of the incentive is compared with other factors.
  Mr. Michael Foot: On a point of order, Mr. Speaker. I apologise for interrupting the hon. Gentleman at this stage, but he is referring to this document to such an extensive degree that I think you would agree that it ought to be laid before the House.
  Mr. Speaker: So far as that sort of point of order is concerned, I shall consider the matter.
  Mr. Grant: My purpose, Mr. Speaker, in referring to the document was that the hon. Member for Chesterfield, in opening, prayed in aid the words of the Director-General of the C.B.I. Therefore, I think I am entitled to deal with that point in this way. It is true that the effect of incentives is marginal.
  An hon. Member mentioned business confidence in the regions. Consistently, Labour Members have put down Questions about the number of firms which have said that they are reconsidering projects, trying to attach this to the fact that the firms are worried about the investment incentive changes. They have repeatedly tried to represent the information given about the number of firms which have told the Government that they are reconsidering projects as showing the number of projects abandoned because of the change. This distorts the true situation. Sensible firms keep any project under constant review from the moment of a decision. Of course, they will reassess changes in incentive. Of course some may make different plans, but many others will take advantage of the new measures.
  Since 27th October 63 firms have told the Government that they are reappraising projects in the development areas, but only seven have said that they are cancelling or postponing projects because, or partly because, of the changes in investment incentives. These figures clearly represent an insignificant proportion of all the projects which industry has in hand.
  The hon. Member for Ebbw Vale made a deplorable accusation at the end of his speech. I accept that he gets excited—sometimes so excited that I think he is going to have apoplexy—but in so doing he should not make false accusations that, in some way, this Government are deliberately causing unemployment—
  Mr. Kaufman: It is true.
  Mr. Grant: This comment of the hon. Member for Ebbw Vale shows particular effrontery. I shall prove this by drawing to the attention of the House exactly what happened when they were in charge.
  I would quote the hon. Member for Heywood and Royton (Mr. Barnett), who, as recently as 4th November, 1970, talking about investment grants, said:
  "… one must first look at the economic situation that existed at the time of the cash investment grant. During that period"
  —that was the period when the hon. Member for Ebbw Vale was hammering this Government, or shouting loudly—
  "we were consistently running a deflationary policy …".—[OFFICIAL REPORT 4th November, 1970; Vol. 805, c. 1183.]
  That is what we have inherited. Our policies are aimed at creating a situation in which we can reverse these inflationary policies, but responsibly.
  I am glad that the hon. Member for Ebbw Vale wound up, because he is the successor to and distinguished biographer of the late Aneurin Bevan, and one of the phrases of that gentleman which I like best was, "Why look at the crystal ball when you can read the book?" We can read the book on the effect of investment grants. When the Government took office we inherited a situation of domestic economic crisis of great magnitude. We had economic stagnation after four years of inflation. We had a growth rate which had fallen and which fell a further 1 per cent. in the last year of the Labour Government, and we had a situation in which company liquidity showed a huge deficit of £1,214 million in 1970 and a situation in which unemployment under a Labour Government had more than doubled.
  At the same time, the previous Government promoted an unprecedented acceleration of wage and cost inflation, following the break-down of their statutory incomes policy and their retreat in funk from their Industrial Relations Bill. This is what we inherited; which we suffered. But we are determined to rectify it. This Bill is one step in that direction. I hope, and confidently predict, that it will be passed by the House tonight.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 224, Noes 189.

  Division No. 355.]

  AYES

  [10.0 p.m.

  Alison, Michael (Barkston Ash)

  Archer, Jeffrey (Louth)

  Awdry, Daniel

  Allason, James (Hemel Hempstead)

  Astor, John

  Baker, Kenneth (St. Marylebone)

  Adley, Robert

  Atkins, Humphrey

  Balniel, Lord

  Batsford, Brian

  Hamilton, Michael (Satisbury)

  Owen, Idris (Stockport, N.)

  Bennett, Sir Frederic (Torquay)

  Hannam, John (Exeter)

  Page, Graham (Crosby)

  Berry, Hn. Anthony

  Harrison, Col. Sir Harwood (Eye)

  Parkinson, Cecil (Enfield, W.)

  Biffen, John

  Haselhurst, Alan

  Percival, Ian

  Biggs-Davison, John

  Havers, Michael

  Pounder, Rafton

  Boardman, Tom (Leicester, S.W.)

  Hicks, Robert

  Powell, Rt. Hn. J. Enoch

  Body, Richard

  Higgins, Terence L,

  Price, David (Eastleigh)

  Boscawen, Robert

  Hiley, Joseph

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

  Bossom, Sir Clive

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

  Proudfoot, Wilfned

  Bowden, Andrew

  Hill, James (Southampton, Test)

  Pym, Rt. Hn. Francis

  Boyd-Carpenter, Rt. Hn. John

  Holland, Philip

  Quennell, Miss J. M.

  Bray, Ronald

  Holt, Miss Mary

  Redmond, Robert

  Brinton, Sir Tatton

  Hordern, Peter

  Reed, Laurance (Bolton, E.)

  Brocklebank-Fowler, Christopher

  Hornsby-Smith, Rt.Hn. Dame Patricia

  Rees, Peter (Dover)

  Bruce-Gardyne, J.

  Howe, Hn. Sir Geoffrey (Reigate)

  Renton, Rt. Hn. Sir David

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

  Howell, David (Guildford)

  Rhys Williams, Sir Brandon

  Howell, Ralph (Norfolk, N.)

  Ridley, Hn. Nicholas

  Bullus, Sir Eric

  Hutchison, Michael Clark

  Ridsdale, Julian

  Butler, Adam (Bosworth)

  Iremonger, T. L.

  Roberts, Michael (Cardiff, N.)

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

  James, David

  Roberts, Wyn (Conway)

  Carlisle, Mark

  Jenkin, Patrick (Woodford)

  Rost, Peter

  Channon, Paul

  Jennings, J. C. (Burton)

  Russell, Sir Ronald

  Chapman, Sydney

  Jessel, Toby

  Sandys, Rt. Hn. D.

  Chataway, Rt. Hn. Christopher

  Jopling, Michael

  Scott-Hapkins, James

  Churchill, W. S.

  Kellett, Mrs. Elaine

  Sharpies, Richard

  Clarke, Kenneth (Rushcliffe)

  Kershaw, Anthony

  Clegg, Walter

  Kilfedder, James

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

  Cockeram, Eric

  Kimball, Marcus

  Shelton, William (Clapham)

  Cooke, Robert

  King, Evelyn (Dorset, S.)

  Sinclair, Sir George

  Cooper, A. E.

  King, Tom (Bridgwater)

  Skeet, T. H. H.

  Cormack, Patrick

  Kinsey, J. R.

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

  Costain, A. P.

  Kitson, Timothy

  Soref, Harold

  Crouch, David

  Knight, Mrs. Jill

  Speed, Keith

  Crowder, F. P.

  Knox, David

  Spence, John

  Curran, Charles

  Lane, David

  Sproat, Iain

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

  Legge-Bourke, Sir Harry

  Stainton, Keith

  Dean, Paul

  Le Marchant, Spencer

  Stanbrook, Ivor

  Deedes, Rt. Hn. W. F.

  Longden, Gilbert

  Stewart-Smith, D. G. (Belper)

  Digby, Simon Wingfield

  Loveridge, John

  Stoddart-Scott, Col. Sir M.

  Dodds-Parker, Douglas

  Luce, R. N.

  Stokes, John

  Dykes, Hugh

  McAdden, Sir Stephen

  Stuttaford, Dr. Tom

  Eden, Sir John

  MacArthur, Ian

  Sutcliffe, John

  Edwards, Nicholas (Pembroke)

  McCrindle, R. A.

  Tapsell, Peter

  Elliot, Capt. Walter (Carshalton)

  McLaren, Martin

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

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

  McMaster, Stanley

  Taylor, Frank (Moss Side)

  Emery, Peter

  Macmillan, Maurice (Farnham)

  Taylor, Robert (Croydon, N.W.)

  Eyre, Reginald

  McNair-Wilson, Michael

  Tebbit, Norman

  Fell, Anthony

  Madel, David

  Thatcher, Rt. Hn. Mrs. Margaret

  Fenner, Mrs. Peggy

  Maginnis, John E.

  Thomas, John Stradling (Monmouth)

  Finsberg, Geoffrey (Hampstead)

  Mather, Carol

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

  Fisher, Nigel (Surbiton)

  Mawby, Ray

  Thompson, Sir Richard (Croydon, S.)

  Fletcher-Cooke, Charles

  Maxwetl-Hyslop, R. J.

  Trafford, Dr. Anthony

  Fookes, Miss Janet

  Meyer, Sir Anthony

  Trew, Peter

  Fortescue, Tim

  Mills, Stratton (Belfast, N.)

  Turton, Rt. Hn. R. H.

  Foster, Sir John

  Mrscampbelf, Norman

  van Straubenzee, W. R.

  Fowler, Norman

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

  Vaughan, Dr. Gerard

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

  Mitchell, David (Basingstoke)

  Waddington, David

  Fry, Peter

  Moate, Roger

  Walder, David (Clitheroe)

  Gibson-Watt, David

  Molyneaux, James

  Walker-Smith, Rt. Hn. Sir Derek

  Gilmour, Sir John (Fife, E.)

  Money, Ernie

  Walters, Dennis

  Glyn, Dr. Alan

  Monks, Mrs. Connie

  Ward, Dame Irene

  Goodhart, Philip

  Monro, Hector

  Warren, Kenneth

  Goodhew, Victor

  Montgomery, Fergus

  Weatherill, Bernard

  Gower, Raymond

  More, Jasper

  White, Roger (Gravesend)

  Grant, Anthony (Harrow, C.)

  Morgan-Giles, Rear-Adm.

  Wiggin, Jerry

  Gray, Hamish

  Morrison, Charles (Devizes)

  Wilkinson, John

  Green, Alan

  Mudel, David

  Wolrige-Gordon, Patrick

  Grieve, Percy

  Murton, Oscar

  Woodhouse, Hn. Christopher

  Griffiths, Eldon (Bury St. Edmunds)

  Nabarro, Sir Gerald

  Worsley, Marcus

  Grylls, Michael

  Noble, Rt. Hn. Michael

  Gummer, Selwyn

  Onslow, Cranley

  TELLERS FOR THE AYES:

  Gurden, Harold

  Oppenheim, Mrs. Sally

  Mr. Paul Hawkins and

  Hall, Miss Joan (Keighley)

  Orr, Capt. L. P. S.

  Mr. Hugh Rossi.

  Hall, John (Wycombe)

  Osborn, John

  NOES

  Albu, Austen

  Benn, Rt. Hn. Anthony Wedgwood

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

  Allaun, Frank (Salford, E.)

  Bennett, James (Glasgow, Bridgeton)

  Campbell, I. (Dunbartonshire, W.)

  Allen, Scholefield

  Bishop, E. S.

  Carmichael, Neil

  Armstrong, Ernest

  Blenkinsop, Arthur

  Carter-Jones, Lewis (Eccles)

  Bagier, Gordon A, T,

  Boardman, Tom (Leicester, S.W.)

  Clark, David (Colone Valley)

  Barnett, Joel

  Booth, Albert

  Cocks, Michael (Bristol, S.)

  Beamy, Alan

  Brown, Ronald (Shoreditch & F'bury)

  Cohen, Stanley

  1504

  1505

  Coleman, Donald

  Hughes, Robert (Aberdeen, N.)

  Pavitt, Laurie

  Concannon, J. D.

  Hughes, Roy (Newport)

  Pentland, Norman

  Corbet, Mrs. Freda

  Janner, Greville

  Perry, Ernest G.

  Cox, Thomas (Wandsworth, C.)

  John, Brynmor

  Prentice, Rt. Hn. Reg.

  Crawshaw, Richard

  Jones, Barry (Flint, E.)

  Prescott, John

  Crosland, Rt. Hn. Anthony

  Jones, Dan (Burnley)

  Price, J. T. (Westhoughton)

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

  Kaufman, Gerald

  Price, William (Rugby)

  Dalyell, Tam

  Kerr, Russell

  Probert, Arthur

  Davidson, Arthur

  Kinnock, Neil

  Reed, D. (Sedgefield)

  Davies, Denzil (Llanelly)

  Lambie, David

  Roberts, Albert (Normanton)

  Davies, G. Elfed (Rhondda, E.)

  Lamond, James

  Roberts, Rt. Hn. Goronwy (Caernarvon)

  Davies, Ifor (Gower)

  Latham, Arthur

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

  Davies, S. O. (Merthyr Tydvil)

  Lawson, George

  Rodgers, WiHiam(Stockton-on-Tees)

  Davis, Clinton (Hackney, C.)

  Leadbitter, Ted

  Roper, John

  Deakins, Eric

  Lee, Rt. Hn. Frederick

  Ross, Rt. Hn. William (Kilmarnock)

  Delargy, H. J.

  Lestor, Miss Joan

  Sheldon, Robert (Ashton-under-Lyne)

  Dell, Rt. Hn. Edmund

  Lewis, Arthur (W. Ham N.)

  Shore, Rt. Hn. Peter (Stepney)

  Dempsey, James

  Lewis, Ron (Carlisle)

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

  Doig, Peter

  Lipton, Marcus

  Silkin, Rt. Hn, John (Deptford)

  Dormand, J. D.

  Lomas, Kenneth

  Silkin, Hn. S. C. (Dulwich)

  Douglas, Dick (Stirlingshire, E.)

  Loughlin, Charles

  Sillars, James

  Douglas-Mann, Bruce

  Lyon, Alexander W. (York)

  Silverman, Julius

  Duffy, A. E. P.

  Lyons, Edward (Bradford, E.)

  Eadie, Alex

  McBride, Neil

  Skinner, Dennis

  Edelman, Maurice

  McCartney, Hugh

  Small, William

  Edwards, Robert (Bilston)

  Mackenzie, Gregor

  Spearing, Nigel

  Edwards, William (Merioneth)

  Mackie, John

  Spriggs, Leslie

  Evans, Fred

  Mackintosh, John P.

  Stallard, A. W.

  Faulds, Andrew

  Maclennan, Robert

  Stewart, Donald (Western Isles)

  Fernyhough, Rt. Hn. E.

  McMillan, Tom (Glasgow, C.)

  Stoddart, David (Swindon)

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

  McNamara, J. Kevin

  Stonehouse, Rt. Hn. John

  Fitch, Alan (Wigan)

  MacPherson, Malcolm

  Strang, Gavin

  Fletcher, Ted (Darlington)

  Mallalieu, E. L. (Brigg)

  Taverne, Dick

  Foot, Michael

  Marsden, F.

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

  Ford, Ben

  Mason, Rt. Hn. Roy

  Tinn, James

  Fraser, John (Norwood)

  Meacher, Michael

  Torney, Tom

  Freeson, Reginald

  Mellish, Rt. Hn. Robert

  Urwin, T. W.

  Galpern, Sir Myer

  Mendelson, John

  Varley, Eric G.

  Gilbert, Dr. John

  Millan, Bruce

  Wainwright, Edwin

  Gordon Walker, Rt. Hn. P. C.

  Miller, Dr. M. S.

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

  Gourlay, Harry

  Milne, Edward (Blyth)

  Walker, Harold (Doncaster)

  Grant, George (Morpeth)

  Molloy, William

  Wallace, George

  Grant, John D. (Islington, E.)

  Morgan, Elystan (Cardiganshire)

  Watkins, David

  Griffiths, Eddie (Brightside)

  Morris, Alfred (Wythenshawe)

  Weitzman, David

  Griffiths, Will (Exchange)

  Morris, Rt. Hn. John (Aberavon)

  Wells, William (Walsall, N.)

  Hamilton, James (Bothwell)

  Moyle, Roland

  Whitehead, Phillip

  Hamilton, William (Fife, W.)

  Mulley, Rt. Hn. Frederick

  Whitlock, William

  Hannan, William (G'gow, Maryhill)

  Murray, Ronald King

  Willey, Rt. Hn. Frederick

  Hardy, Peter

  O'Halioran, Michael

  Williams, Alan (Swansea, W.)

  Harper, Joseph

  O'Malley, Brian

  Williams, W. T. (Warrington)

  Harrison, Walter (Wakefield)

  Oram, Bert

  Wilson, Alexander (Hamilton)

  Hattersley, Roy

  Orbach, Maurice

  Wilson, William (Coventry, S.)

  Heffer, Eric S.

  Orme, Stanley

  Woof, Robert

  Horam, John

  Oswald, Thomas

  Houghton, Rt. Hn. Douglas

  Owen, Dr. David (Plymouth, Sutton)

  TELLERS FOR THE NOES:

  Howell, Denis, (Small Heath)

  Pannell, Rt. Hn. Charles

  Mr. William Hamling and

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Parker, John (Dagenham)

  Mr. John Golding.

  Hughes, Mark (Durham)

  Parry, Robert (Liverpool, Exchange)

  Bill accordingly read a Second Tune.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  INVESTMENT AND BUILDING GRANTS [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to preclude, subject to certain exceptions, the making of grants under Part
  1506
  I of the Industrial Development Act 1966 in respect of expenditure incurred on or after 27th October, 1970, and to make further provision with respect to grants under section 3 of the Local Employment Act, 1960, it is expedient to authorise the payment out of moneys provided by Parliament of any increase attributable to the said Act of the present Session in the sums payable out of moneys so provided under the said Act of 1960.—[Mr. Patrick Jenkin.]

  FISHING VESSELS (GRANTS)
  10.10 p.m.
  The Minister of Agriculture, Fisheries and Food (Mr. James Prior): I beg to move,
  That the Fishing Vessels (Acquisition and Improvement) (Grants) (Amendment) Scheme, 1971, a copy of which was laid before this House on 20th April, be approved.
  This is a short Scheme and, in itself, straightforward. It gives effect—[Interruption.]
  Mr. Speaker: Order. Will hon. Members withdraw in a quiet and orderly fashion.
  Mr. Prior: It gives effect, so far as the fishing industry is concerned, to the changes the Government announced last autumn in the whole system of investment incentives. We have, of course, just had a very full debate on the Bill which seeks to apply these proposals to industry generally. The House, therefore, has had an opportunity to examine the overall policy of which this Scheme is an example. Our task now is to consider the Scheme against the background of these wider proposals for industry as a whole.
  Hon. Members will recall that, before investment grants were introduced in 1966, the acquisition or improvement of fishing vessels attracted grant at the rates which appear in the Scheme before us tonight. The previous Administration did not, however, make such vessels eligible for investment grants. Instead, they added 10 percentage points to the rates of grant already available. What we are now doing here is to restore the grant rates to the level they were at originally in 1966. In the case of inshore vessels—that is, those of less than 80 feet in length—the rate of grant will again be 30 per cent., and for deep sea vessels it will be 25 per cent.
  That, broadly, is the purpose of the Scheme. But, in view of the somewhat unusual procedural background against which it has been made, I ought perhaps also to draw the attention of the House to two specific features contained in it.
  First, the Scheme allows applications made up to and including 26th October last to be approved for grant at the old
  1508
  rates. This is essentially where it differs from the Scheme which was laid last December and which, as I said on 6th April in reply to the hon. Member for The Hartlepools (Mr. Leadbitter), my right hon. Friends and I have now decided not to ask this House to approve. That scheme required an application to have been received—as opposed to made—by the White Fish Authority or Herring Industry Board by that date in order to qualify for the higher rate of grant. So, by making this change, we are endeavouring to meet one of the points made by the Select Committee which was concerned to ensure that no bona fide application which may have been made before the policy change was announced should be prevented from benefiting from the higher rates of grant merely because it happened to have been received after the deadline originally laid down.
  Secondly, the new Scheme differs in that it specifies that the lower rates of grant shall not apply to any applications approved before it comes into operation. This will, I believe, meet another of the points which troubled the Select Committee. The Committee was worried lest an application received on 27th October and approved that same day might be nullified. In practice, there is inevitably a time gap between the receipt and the approval of an application. But the revised Scheme makes the criterion for approval the making rather than the receipt of the application, and this makes it clear that for any such application the approval already given would stand.
  I hope, therefore, that, against this background, the House will be prepared to give this Scheme a fair wind. In saying that, I recognise of course that hon. Members on both sides may well have received inquiries from their constituents about when they can expect to receive grant, and I for one very much regret any delay there may have been in certain cases on that score.
  I think that this is one of those difficult situations which are bound to arise from time to time in the consideration of Statutory Instruments. Government Departments are not omniscient, and it is valuable to have the oversight by the Select Committee. I am sure the House would agree that, in the light of the differing views taken of the earlier Scheme by the Select Committee and by the

  1509
  Special Orders Committee in another place, it was right for us to reconsider the position and to replace the original Scheme. This has, as I say, led to regrettable delays, but I do not think that their effect should be exaggerated: a number of applications require a lengthy technical appreciation before approval could be given anyway, and, in these cases, scrutiny by the White Fish Authority and the Herring Industry Board is proceeding in the normal way. Moreover, there is also inevitably a time-lag between approval of the application and payment of grant. Either way, however, I am sure that everyone would agree that our main concern now must be to ensure that, subject to the approval we are seeking, this new Scheme should come into operation as soon as possible.
  10.17 p.m.
  Mr. Robert Maclennan: We have had a remarkable speech from the Minister, in the light of the history of the Scheme and the seriousness of the Measure. The Scheme which the Minister asks us to approve has a remarkable history. It seeks to implement a decision of the Government announced as long ago as 27th October to cut grants for the improvement and acquisition of vessels. It takes the place of another Scheme which was approved in another place but was withdrawn by the Government when it was drawn to the attention of the House by the Select Committee on Statutory Instruments that it purported to have retrospective effect where the parent Statute conferred no express authority so to provide. In the formulation of their policy, and attempts to implement it, the Minister of Agriculture, Fisheries and Food and his colleagues the Secretary of State for Scotland and the Secretary of State for Wales have risen to a level of incompetence which is fortunately rare, even in Conservative Governments.
  The Minister has tried tonight to satisfy the House that the defects of his action over the previous Scheme have been rectified by the new Scheme. Unfortunately, that is far from being the case. The validity of the Minister's action in issuing a directive to the White Fish Authority and the Herring Industry Board on 27th October to stop approvals of applications for grant assistance is still very much in question. It is astonish-
  1510
  ing, in view of the evidence which was before the Select Committee, that he has not chosen to say one word about this. Nothing he has said tonight removes the uncertainty in the industry about the effect of his actions. In view of his obduracy, it appears probable that only a court will be in a position to decide whether he has acted ultra vires, and only a court will be able to provide the remedy for those who have had their applications for grant held up by the Minister's fiat.
  It is important, when considering whether the House should approve this scheme, to have regard to the circumstances in which it was originally brought forward. The decision was announced on 27th October last, apparently in order to meet the requirements of the Chancellor of the Exchequer, who that day brought forward his mini-Budget. On the same day, a directive was issued to the White Fish Authority and to the Herring Industry Board to prohibit the approval of applications for grants received on or after that day. Then a period of seven weeks elapsed before the Government brought forward the 1970 Scheme to implement their decision in Parliament. A further period elapsed, and it was not until 16th February that the Select Committee on Statutory Instruments issued its report, a most exceptional proceeding which has occurred in only a handful of cases out of the many thousands of statutory instruments that pass through this House. It drew the attention of the House to a defect on the face of the scheme.
  Following this report, my right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes) asked the Leader of the House what the Government's intention was in the light of the report. The one saving feature of the Government's action was the reply of the Leader of the House two days later to my hon. Friend the Member for Kingston upon Hull, West (Mr. James Johnson)—that the Government had decided to withdraw the Motion relating to the scheme. However, a further delay occurred and it was not until six weeks later, on 6th April, that the Minister of Agriculture himself indicated that he would lay a new scheme before Parliament and there has been since then yet another delay, this time of a month, before

  1511
  the new scheme has been brought before the House tonight.
  A number of charges arise against the Government's handling of the scheme. In the first place, it was apparent that the policy decision announced on 27th October was hastily arrived at and was taken for reasons totally unconnected with the well-being of the fishing industry to meet the convenience of the tidy-minded Chancellor of the Exchequer, who wished to seek from as many Ministers as possible some recognition of his general policy of withdrawing investment grants. The second charge is that the Minister was slow to produce the Scheme to implement that policy and that when he did it was defective.
  The third charge is that, although the scheme meets the Select Committee's narrow point of criticism of the old scheme with regard to applications received and approved, it does not validate the Minister's action in issuing the directive of 27th October. The evidence which was taken by the Select Committee from the Minister's officials reveals that there are a number of serious points of criticism which can be made of his action in regard to the issuance of that directive. First, it is provided by the parent statute, the Sea Fish Industry Act, that if a scheme is to be varied or revoked it shall be done by means of the introduction of a new Scheme.
  What the Minister has done in effect is to prevent payment under the existing Scheme and prior to the introduction of the new Scheme by the issue of a direction to the authority purported to be made under the general powers contained in Section 4 of the Act. In my view, which I think may be shared by the House, the Minister acted ultra vires in issuing that directive. The Select Committee has questioned whether the directive was of a general character such as to fall within the power contained within Section 4.
  I put forward another point in support of the view that this is ultra vires. By normal canons of statutory interpretation, when a special provision is made for the termination of a Scheme it is hard to argue that those special provisions can be derogated from by general power contained in an earlier Section of the same Act.
  1512
  In my view every applicant—and I understand from a letter I have received from the Under-Secretary of State for Scotland that there are 670 outstanding applications affected by the directive—is put in the position of not knowing whether he is entitled to a grant at the existing rate, under the old Scheme, of 40 per cent. in the case of inshore vessels and 35 per cent. in the case of vessels over 80 feet, or whether he is entitled only to the new rate.
  The Act provides in Section 57 that the Minister must make the Orders by Statutory Instrument but he cannot prevent payment by means of a mere Ministerial fiat. I suppose it will remain to be tested in the courts, as it undoubtedly will be, but it is an appalling fact that the Minister has paid no attention in the course of his all too brief speech to the confusion he has created by his actions.
  There are consequences arising from the Minister's ineptitude in implementing the policy announced on 27th October to which he has not given a fair or adequate answer. For more than six months the fishing industry has been starved of public money for investment in new boats and the necessary improvement of existing boats. During this time complete uncertainty has prevailed about the Government's ultimate decision over pending applications and about the level of grant which the Government would set when they finally brought forward their Scheme. The Minister appears to dissent from this view, but I received a letter from the Chief Executive of the White Fish Authority, Mr. Meek, as recently as 2nd April which showed that the uncertainty affected not only the fishing industry but also the administering authority. The letter says:
  "As you know, it was the Minister's intention that grants should be payable from 27th October onwards a a rate of 10 per cent. less than had previously prevailed. Now that he has withdrawn the Order which he laid we can only wait and see what future action is proposed."
  Six months after the policy we still do not know whether it is to be implemented or what the Government's intentions are.
  A third consequence of the Minister's inaction and the uncertainty has been that in many cases—I believe the Minister may have been referring to them when he spoke of our constituents pressing us on this point—fishermen have been driven

  1513
  to reconsider their proposals to improve their boats and to acquire new ones. The evidence of this is manifold. I simply refer to the case of one of my constituents, who said in a letter to me:
  "We are in a position where we cannot wait for the Government to decide. The builder is keeping a berth vacant for us and he also has an engine of the type we want."
  It is not surprising that the builder had a berth vacant for him because the evidence is mounting daily that shipbuilders around the country have many berths vacant and alarm has been expressed in many parts of the country by boat builders as to the consequences of the Minister's action—or, rather, inaction.
  In The Scotsman as early as 26th January concern was expressed by Mr. James Miller of St. Monance—probably known to the Under-Secretary of State for Scotland, who is present. He said:
  "The cut in grant is bound to put a brake on new building. We turn out a lot of seine netters in the new 54 ft. class and a young skipper would have to put down about £8,000, which doubles his previous deposit."
  But these concerns have been borne out, and on 23rd April, in the Fishing News, it was reported that
  "lack of orders for new fishing boats is causing concern to some yards in the North East of Scotland."
  This was made clear at a launching from the yard of Jones, at Buckie, whose Member I do not see in the House. The evidence is multiplied throughout the country.
  In the Aberdeen Press and Journal of Wednesday, 28th April, it was said
  "Broch man hits at fish policy".
  It went on:
  "'I know what I am talking about', said Mr. Cowe in regard to boat building."
  [Laughter.] The hon. Member for South Angus (Mr. Bruce-Gardyne) may not find as amusing as the Minister of Agriculture the predicament of the boat builders in the North-East of Scotland.
  The report continued:
  "'According to my information, the situation in the Scottish boat building yards generally is that work is on hand for longer or shorter periods during this year but new enquiries are not coming forward. There has unfortunately been delay in introducing the amended scheme. This should be submitted to Parliament again very shortly."
  1514
  That is an admission by the Under-Secretary of State for Scotland, so it appears that Mr. Cowe's concerns, which were voiced in very strong language, were entirely justified.
  But I invite the House to reject the Scheme not only on grounds of the incompetence with which the Government have managed it but also because the cuts proposed have not been justified as being in the interests of the fishing industry, which it is the business of the Minister of Agriculture to protect. It is astonishing that he did not seek to do so. Unlike his hon. Friends in the Department of Trade and Industry who, albeit unsuccessfully, tried to persuade the House and the country that cuts in investment grants are positively beneficial to industry, the Minister of Agriculture has merely said that the cuts are necessary if the Government are to be consistent. Necessary for what purpose, I ask? What kind of logic is it that abolishes investment grants entirely for manufacturing industry and feels obliged to cut the grants by 10 per cent. for this industry?
  The Minister has said nothing about the condition of our fleet or about the ageing fleet. He has not said that in January of this year the average age of a trawler was over 13 years. He has said nothing about the condition of the inshore fleet. Does he not care? Why does he remain silent? He seeks to justify his action in terms of the general financial policy of the Government. Perhaps that explains why the Government had no consultations with the fishing industry on the merits of their proposals. The Under-Secretary of State for Scotland wrote to me on 8th January and said:
  "We did not consult the industry about it or expect that fishermen would welcome it."
  How right he is!
  The Minister might have sought justification for the cuts in terms of the prosperity of the industry. He might have spoken on the rise in quayside prices, or the possibility of increased profitability allowing the fishermen to proceed with their obligations even at the reduced rate, but he has offered no such explanation. The present prosperity of the industry is in large part due to the efforts of the Labour Government and to the increased grants made available in 1968 by my right hon. Friend. But the Minister should

  1515
  have had regard to the anxieties about the future and the possible effect of entry into the E.E.C. He should have had regard to the imponderable but real effect of consumer resistance to higher prices and to the rapidly escalating costs which affect this industry just as much as manufacturing industry.
  In the light of these facts my hon. Friends will, I believe, find it appropriate and necessary to reject this wholly shameful Scheme.
  10.39 p.m.
  Mr. Patrick Wolrige-Gordon: I will not follow the hon. Member for Caithness and Sutherland (Mr. Maclennan) in his historical analysis. We are discussing boat-builders, and he would have to be a good boat-builder to produce a boat to ride out the heavy weather the hon. Gentleman made of his speech.
  Earlier today we discussed the Investment and Building Grants Bill, which is of basic importance in the battle to attract new industry to development areas. We are now discussing something that is even more important; namely, the maintenance of established industry. Boat-building in my constituency is very important. Not only does it employ a number of men in its own right, but in building new boats it is able to service and repair the existing fleet. Remove its opportunity to build and one will risk losing not only the fleet of the future but the fleet of the present.
  My right hon. Friend's statement was absolutely clear, and I am sure the fishermen and boat-builders will feel the same way. The harsh fact that the Government must face is that from the date this Scheme was announced there has not been a new order placed in my shipyards in the North-East. The Government are under a misapprehension—and I am sure they do not take this attitude—if they really think that the cause was the mix-up over the introduction of the Scheme, as the Under-Secretary of State suggested in a letter to me dated 8th April. Proof that this is the case is indicated by the fact that after the confusion arose about the Order tentative inquiries came in.
  The Under-Secretary also pointed to the fact in his letter that uncertainties about the European Economic Community could also be affecting directly invest-
  1516
  ment plans by the fishermen. In all conscience, I would be very slow to advise fishermen to build until we see how that particular matter turns out. However, some fishermen are already suggesting lightly that if we are going to join the E.E.C. we shall need the best equipment all the more to compete effectively.
  The truth is that the E.E.C. is a contributory cause only and that the fishermen and boat-builders directly concerned are adamant that it is the extra 10 per cent. of capital invested, bringing it to 25 per cent. as a result of lopping off this 10 per cent. grant, which is the hold-up. Some 25 per cent. of what could well be a £100,000 bill is a tremendous sum for a private individual in Fraserburgh or Peterhead to find in a high risk industry, even though for many it is a profitable industry and has been for some time.
  Moreover, there is the uncertainty about how long this grant is to remain. Might it not come back later? This is always the trouble when Government seeks a certain amount of disengagement. Not that I do not welcome a policy of disengagement. To a certain extent the wholesale and indiscriminate injection of Government money helps to increase costs in certain industries and certainly helps to increase individual reliance on that help rather than on personal resources, but disengaging is a very ticklish and delicate affair. A man crippled in a car accident is not helped by immediately removing his walking stick. Similiarly, removal of this amount of money at one stroke needs steady, sensitive care, not just the incision of a surgeon's knife.
  This is why I deplore the refusal by the Government to meet a deputation of my boat-builders. I do not know where the Government get the idea that if they promise to meet a deputation on some matter or other it raises expectations which can only be disappointed. I do not expect that they only have to meet one of my constituents to be immediately converted to his point of view. But I do expect from my own Government the highest standards of personal consideration, respect for the individual and a readiness to discuss matters of crucial importance to my constituents' well-being. I am in no doubt at all that this is what is involved here, and it involves

  1517
  a large number of people. As at 18th March this year the number of men employed in shipbuilding and repairing in the 18 yards belonging to the Fishing and Boat Builders Association was almost 1,100. They can build 63 vessels per annum. They have orders in hand for only 20, and inquiries have dried up. Men are beginning to drift away from the yards. Technical courses and skilled training may go into decline if there is no immediate and obvious use to which to put that training
  The situation could hardly be more serious. But I think it could be redressed without any drastic alteration in Government policy. Keep the 10 per cent. off the grant, but accept that a 25 per cent. initial deposit it too high. Add the 10 per cent., therefore, to the loan facility. After all, the Government get that money back with interest, and they have very few disappointments. They could not ask for better security than the men of the Scottish fishing industry.
  There is one other brief point that I want to raise, since it could help in this situation. I understand that the Irish fishing industry has just had its best year yet. The Irish are inclined to buy second-hand boats sometimes from Scotland. But invariably they get their new boats from France, Norway or Poland. The reason is that they get a 25 per cent. grant from their Government and raise the other 75 per cent. by means of a loan in the country concerned backed by its Government. They cannot do that here, and I do not understand why. Why cannot exchange facilities for this kind of guarantee be arranged? Demand is great, and our boat-building yards are fully competitive. The only real holdup is the non-supply of loans from this country.
  The money must be available. Presumably the White Fish Authority and the Herring Industry Board are loaded with loan facilities for our own fishermen which are not being taken up because of the difficult grant situation.
  I hope the Government will give careful consideration to what I have said. It is urgent beyond words.
  10.47 p.m.
  Mr. Kevin McNamara: If ever a Government's policy was condemned out of the mouth of one of their supporters, it was by the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon)—
  Mr. Wolrige-Gordon: Certainly not.
  Mr. McNamara: The hon. Gentleman has complained about unemployment in his boatyard and has referred to uncertainties about the E.E.C. If that is not condemning his Government, I do not know what is.
  My hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) spent a great deal of time attacking the constitutional improprieties of the Minister. My hon. Friend was right to do so, because the right hon. Gentleman spent a lot of time trying to defend himself. But this should not hide from us the disastrous effects that the Scheme is likely to have on the fishing industry, and it should not hide from us the fact that, of all the mean and nasty acts of this Government towards British industry, this is the meanest and nastiest, in view of the small amount of money involved in terms of Government investment in industry as a whole, and its effect on the large number of people involved in the industry.
  We should not be surprised, because the right hon. Gentleman has, if I may mix my metaphors, sold the fishing industry down the river. He represents a fishing constituency in this House, and it would be interesting to know his attitude towards fishing subsidies. His attitude to food subsidies in general is ambivalent. He does not like them. However, since he has a constituency interest, he is prepared to go along with them for the fishing industry. However, when he seeks to support subsidies in order to help the Lowestoft industry, at the same time he supports a policy which could kill his own industry if we go into the E.E.C. and adopts the Common Market policies for fisheries which are the subject of negotiation at the moment.
  The assertion that this is an iniquitous Scheme comes not only from the hon. Member for Aberdeenshire, East but from two gentlemen who, to my knowledge, are not card-holding members of the Labour Party. I do not think they are

  1519
  even members by virtue of being members of the Transport and General Workers Union. I refer to the Director-General of the British Trawlers Federation and the President of the Hull Fishing Vessel Owners Association.
  The Director-General of the British Trawlers Federation, Mr. Austen Laing, had this to say about the Scheme:
  "The investment grant for fishing vessels has been reduced to the level which prevailed prior to the introduction of investment grants for industry generally."
  The right hon. Gentleman said that the Government were restoring the position. This is like restoring a building site to its original condition by pulling down the building erected on it.
  Mr. Laing continued:
  "It must not be thought, however, that with the abolition of these grants for industry and the reversion to the 25 per cent. rate for fishing vessels that we are returning to the position that existed when grants earlier were at 25 per cent.
  At that time we enjoyed no investment allowances whereby we were permitted, for tax purposes, to depreciate to the extent of 140 per cent. of the net capital cost of the vessel. These investment allowances have not and apparently are not to be reproduced, so that now we can depreciate for tax purposes no more than 100 per cent. of the net cost of the vessel.
  Consequently, not only are we worse off than we were last week"—
  that was when the grants were announced—
  "we are also worse off than we were when the grant was raised from 25 to 35 per cent."
  Far from restoring the position, the right hon. Gentleman is putting it in a much worse position.
  When we consider the prices of new vessels at between £1 million and £1,300,000, it means that, having to pay 10 per cent. more, the increase in the cost of a new vessel is between £100,000 and £130,000.
  Mr. Laing goes on:
  "In all fairness, it ought to be acknowledged that the cuts suffered by the fishing industry under 'the Barber's knife' have been relatively slight for, after all, other shipping as well as all manufacturing industry ashore have had their grants abolished completely."
  That is very nice. I suppose we should be grateful for having only our fingers amputated instead of losing a whole arm. This is the attitude being taken.
  1520
  I wonder what attitude a distinguished fishing vessel owner in Hull will be taking as a Conservative candidate in Hull when trying to justify to his prospective constituents a tax measure by the Government which will affect their livelihood and employment prospects either in shipyards or on fishing vessels. He will have a very difficult boat to row in the municipal elections.
  I turn now to what a fishing vessel owner actually says about it:
  "Mr. Jonathan Watson Hall, President of Hull Fishing Vessel Owners' Association, said owners would now have second thoughts about building. He stated that even with the 35 per cent. grant, increasing costs have made the situation bad enough. Coupled with this, the inability to get fixed prices left the final cost of a new vessel in doubt.
  Mr. Watson Hall pointed out that among increases the rate at which money could be borrowed to build ships had gone up by 1½ per cent. a short while ago and that this in itself had affected the building situation."
  Granted that there has been a recent cut in the Bank Rate, but one cannot see that it will have an appreciable effect with increasing costs.
  The whole matter of investing in the fishing industry and in new vessels is of primary importance at the moment. The Fishing News, in its last issue, talks of a new investment policy by the West German Government industry, which is to spend £30 million on 15 new vessels with a freezing capacity of between 40 and 50 tons per day and a hold capacity of 800 tons. This is the kind of competition which our vessels will have to face if we go into the Common Market.
  At a time when we should be seeking to expand our fleet, improve the quality of our vessels, and get rid of the old vessels which can be so unseaworthy on occasions, the Government are deliberately cutting grants in a mean and nasty fashion.
  We must also consider the effect that this will have on the safety factor involved in the building of vessels. My hon. Friend spoke about the average age of the fleet. We have recently had a vessel go ashore off Iceland. That vessel, the "Caesar", out of Hull, is over 20 years old. But for the weather conditions, we might have had a tragedy to compare with those terrible disasters we experienced in Hull a few years ago. Fortunately, by the grace of God, we avoided it. But these old

  1521
  vessels must be replaced, and safety factors should be our prime concern. My Government, to their eternal credit, introduced special grants for safety facilities. Now when there is to be a cut back on vessels, there will be a great temptation to cut back on these safety and welfare facilities. I should have thought that the Minister would have tried to set the industry in that context.
  Prices are firm and catches are earning good money, but this is because there is a shortage of fish, and it is no reason for cutting the grant. It is in those circumstances that an impetus should be given to the owners of vessels to build, and the impetus of that extra 10 per cent. would have been welcome.
  We must consider not only the policy of the E.E.C. and the uncertainty about building vessels but also the fact that we know nothing of the Government's policy on the operating subsidy which ends halfway through this year, and which we introduced with such great success. On all these counts, the Government are creating a very stormy climate for the fishing industry.
  When this first cut was announced, Fishing News, in an editorial which went on for two pages, said:
  "Coming as it has between consideration and decision, the cut in the grant to 25 per cent. could not have been more ineptly timed."
  If that was true in November, it is even more true today.
  "It is almost as if the Government had decided that we should cease to be a trawling nation and that we should seek our fish at high import prices from the better supported industries of other countries."
  It went on:
  "As we are sure this was not the intention, we must attribute the cut and its timing to inexperience or bad advice."
  In terms of the Minister and this Government, we have had inexperience and bad advice, and what we are saying is that the Government are deciding that we should cease to be a major trawling nation.
  10.58 p.m.
  Sir John Gilmour: One of the difficulties in fishing debates is sorting out the information as it applies to the different sections of the industry. The hon. Member for Kingston upon Hull, North (Mr. McNamara) mentioned the distant water vessels and the fact that
  1522
  there has been a shortage of fish. But an answer given me by my right hon. Friend today shows that the landings of the inshore fleet in Scotland over the period 1965–70 went up by 9 per cent. in volume and 47 per cent. in value. It is reasonable that, in considering the increase in value, my right hon. Friend should consider whether the rate which was paid last year or the year before is necessarily the rate which should be paid over the next years.
  When I talk to the fishermen or boat builders in my constituency—Mr. Miller of St. Monance has been mentioned—they tell me, "What is causing us trouble is not the rate of grant, but what is to be future of the fishing industry. What are the Government's intentions towards seeing that there is a good future for the industry?" They say that the rate of grant they are paid does not matter in the least and that unless they know that there is a future for the industry, there is no purpose in replacing any of their boats.
  It is much more important to us today to know what the future of the fishing industry is to be. I glean from what my right hon. Friend has said that if he considers it possible to reduce the rate of grant payable for fishing vessels, he must think that the future of the fishing industry is good, because he would not present a Scheme to that effect if he thought that the future of the industry was in any doubt.
  I take a certain amount of cold comfort from what my right hon. Friend has said, because it means that he must be saying to his right hon. Friends in the Cabinet that a policy that would reduce the profitability of the industry is not something that he can honestly support if, at the same time, he is applying a reduction in the grant for fishing vessels. I therefore feel that we ought to rest our case on this today.
  There are, however, one or two questions which I wish to put to my hon. Friend the Under-Secretary before he replies to the debate. Does he feel that 80 ft. is a magic figure for an inshore fishing vessel? I have heard a great many people say that there is a need for vessels to be designed and built in such a way that they can operate economically with the smallest number of crew, catch the maximum amount of fish and be of

  1523
  maximum efficiency, and they ask whether an 80 ft. cut-off is inviolable. I therefore ask my hon. Friend to consider this.
  I should also like to hear from my hon. Friend, because of the figures he gave in his answer today concerning the profitability and the increasing catches of the inshore fleet, what is the relative situation concerning repayment of loans as between the inshore fleet and the middle-distance and far-distant fleets. This information would be helpful to us.
  I am certain that no one, in any industry, is ever happy at a reduction in any grant which is paid to it. On the other hand, what we are all striving for—at least, on this side of the House—is to establish in the industry a situation in which everyone is able to make a profit without being grant-aided before he can make that profit. My right hon. Friends must jolly well ensure that the policies they advocate for industrial fishing in the North Sea and round the coasts of Scotland allow our fishing fleets to operate profitably over the next 10 or 15 years. Unless they work to this end, it does not make a hoot of difference what Scheme they put before us today, because otherwise the whole thing will simply be hot air.
  11.03 p.m.
  Mr. Albert Booth: As the Minister has pointed out, the Statutory Instrument which we are debating replaces a previous Instrument which was laid before the House and then withdrawn before it was debated. The reason for its withdrawal, as the Minister has also said, is that the Select Committee on Statutory Instruments reported the previous Instrument to the House on specific grounds. The grounds on which the Select Committee can report a Statutory Instrument to the House are narrowly defined. It does not follow that the grounds as stated in the Report to the House contain in any detail the criticisms implicit in the decision to report to the House.
  In introducing the Scheme, the Minister has either blatantly disregarded the very serious criticisms implicit in the evidence taken by the Select Committee or hopes that the House has not read the evidence. I suggest this, certainly in part, because the previous Instrument was withdrawn
  1524
  between the time when the evidence was taken by the Select Committee and the date when that evidence was published.
  The House was, therefore, told of the withdrawal of the Instrument before having an opportunity to read the evidence. Only one of the criticisms implicit in the evidence of the Select Committee in respect of the previous Instrument has been met in the Instrument which is before the House tonight, and while I wish to be brief, because a number of hon. Members are anxious to speak on the subject, I must mention the other criticisms.
  The first is the failure of the Minister to comply with Section 4 of the Sea Fish Industry Act, 1970, which lays upon him and his fellow Ministers who are signatories to the Order a clear requirement to publish the directives which he sent to the White Fish Authority and the Herring Industry Board. The Ministers gave a Written Answer on 27th October and the terms of that Answer were not the precise terms of the direction that had been sent to the Boards.
  I therefore ask the Minister tonight, before we decide whether to pass this Instrument, why the terms of the directive which was sent to the two Boards were not published. While, as Chairman of the Select Committee, I have a considerable interest in this matter, I certainly had not seen the terms of the directives until I read them in the evidence of my own Committee. In other words, I heard them for the first time when the evidence was taken. This is, therefore, a serious matter.
  Far more serious, though—and this is the burden of my main complaint against the Government—is the fact that they did not comply with the strict statutory requirement of the parent Act, under which this Instrument is made, to consult the two Boards before they gave directives.
  When the representative of the three Ministers came before the Committee to give evidence and was questioned on this point of consultation he said that the nature of the consultation was inevitably limited because the Government had taken an overall decision about investment grants. When pressed further, he said that consultation was necessarily brief. However, when pressed still further, it transpired that there had been no consultation whatever.

  1525
  In fact, a civil servant had telephoned the Boards on the day the directives came out, probably in the morning, and said, in effect, "This afternoon you will receive a directive." What sort of consultation was that? Why did not the Government comply with the requirement to consult, which is clearly laid down in the Act?
  I remind the Minister that if, under a Bill about which there has been a lot of discussion recently, a requirement to consult were laid on trade unions before they issued a notice to strike and a union official telephoned the boss in the morning telling him that a strike would take place that afternoon, the unionists concerned would not get much sympathy from the Industrial Court. That is the degree of consultation, if one can call it that, that took place in this instance.
  The parent Act gives the Minister power to give general directions to the fishing Boards. It is, however, highly questionable whether the directives sent on 27th October were of a general nature. Indeed, somebody whose application was received the day after might have been forgiven for thinking that it was not a general directive, but highly selective, in that it has a particular effect upon applications which by now would have been approved but for that directive, on the 27th October.
  In the strict legal sense the question that the House must answer is: can the Minister, within the powers conferred upon him by the parent Statute, give a directive which relieves the White Fish Authority and the Herring Industry Board of their statutory duty to approve grants? They have a statutory duty to approve grants, and on my reading of the parent Act it is by no means clear that the Minister can take that statutory duty from them. It was implicit in the debates that took place on the parent Act that the general directions to be given were to influence the boards in the type of vessels which would qualify for grant. It was certainly not implicit that the Minister should have power to say, "You shall not approve on this date", or "You shall not approve between certain dates." The Minister has gravely failed in the duty placed upon him by the Act in that respect.
  1526
  Lastly, the Minister has failed to meet the serious criticism that his directive has a retrospective effect which he has no power whatsoever to apply to any applications for grants. The major criticism in respect of the retrospective effect is not the one that the Minister has met—the question whether an application is received on the day before, or the actual day of the directive. Although legally important, that factor can have had only a small effect. What is of real importance in terms of retrospection is the fact that no grants have been approved between 27th October and today. People may have suffered loss of grant for several months as a result of the directive.
  The Government have been seeking, in legislation this year, to put 10 million trade unionists within a legal framework. I suggest that before they start putting other people in a legal framework they should stick within the legal framework within which they themselves are intended to work.
  11.13 p.m.
  Mr. Iain Sproat: I am glad to have a chance to intervene in this debate, which is of great importance to my constituency of Aberdeen and to the whole of the Scottish trawling industry. I shall be succinct, and concentrate on one subject—the problem of financing the replacement of old trawlers, about which people in Aberdeen are extremely concerned. Forty vessels of the fleet—that is, about one-third of the fleet—are over 12 years old and 42 are over 10 years old. It is obvious that at this stage plans for replacement should be well in hand, but they are not, because of the shortage of finance. Money is simply not available.
  It cannot be paid out of profits, because they have been pretty tight. It cannot be paid out of reserves, because the reserves are not sufficient to keep up with the rapid rise in costs. I draw my right hon. Friend's attention to the fact that in Aberdeen we feel that the trawling industry has never received support comparable to that given to the agricultural industry. Many of my constituents feel strongly about it. They cannot get money from the White Fish Authority, because since 1966 loans have not been available for boats over 80 ft. Representations have been made to the Government to

  1527
  change this, but none has met with any success.
  People cannot get money from that source, and the third source—namely, loans under the Shipbuilding Industry Act Scheme—has no relevance to the trawler owners of Aberdeen, owing to the limitations placed upon the amount of loans. The result is that in Scotland in the last two years only two large trawlers and a few inshore trawlers have been built.
  In Aberdeen there is no disagreement with the general philosophy of the Government that we should cut down the extent of the grants made available by the last Government. They are all agreed that they have to stand on their own feet—to use the current phrase. They accept that, but they say that to cut back the grant by 10 per cent., when no loan facilities are available, puts them in an impossible situation.
  The result is that Scottish trawler owners must now pay 75 per cent. of the replacement cost of vessels whose cost has risen, since existing vessels were built, by about 250 per cent.—that is exchanging like for like and not taking into account improvements in vessels and so on, which will obviously cost much more pro rata than the original vessel. That sum amounts to roughly £20 million, including both under 80-ft. and over 80-ft. vessels. Twenty million pounds over the next 10 years is something that they cannot contemplate in the present situation.
  I know that my hon. Friend looks at these problems sympathetically and with great knowledge from his constituency. I ask him to bear in mind that my constituents engaged in the Scottish trawling industry feel that either loan funds should be given to the White Fish Authority for the building of these new boats, or that guarantees should be given to the Authority so that the loan money can be found elsewhere by the Authority and given to the industry. The Scottish trawling industry at present feels strongly that it is at a crossroads and it would like a firm indication tonight of the Government's policy regarding its future, because it feels that it is being sacrificed to the under 80-ft. boats—rightly or wrongly, this is the impression that has gained ground—and it wants an indication of the Government's priorities towards it.
  1528
  I hope that the Government will look again at this matter and give sympathetic consideration to making available, in one form or another, loans for the Scottish trawling industry. If they do not, there is grave danger of a serious decline in that industry with incalculably harmful consequences to the port and the city of Aberdeen.
  11.17 p.m.
  Mr. Ted Leadbitter: My hon. Friend the Member for Barrow-in-Furness (Mr. Booth) nut a very pertinent set of questions to the Minister, and I hope that the Minister will seek to satisfy him. But, in view of the Question which I put to him on 6th April, I feel that my hon. Friend's questions are more pertinent, in view of the gravity of the situation which has developed because of the withdrawal of the original Scheme and because of the lack of consultation to which my hon. Friend referred.
  I asked the Minister of Agriculture, Fisheries and Food
  "… how many applications have been received for grants for the provision of fishing vessels since 27th October, 1970; what is their total value; how many have been granted; how many decisions were delayed or refused; what explanations has he given …"
  I put that Question for an obvious reason. I have become aware of the concern in the industry arising from the lack of consultation and, indeed, the dilemma in which many hon. Members with fishing interests were placed when the Statutory Instrument was laid in that period. Therefore, when I received the Answer, I was astounded that my suspicions had not only been confirmed but that the situation was much worse. The Answer was in these terms:
  "These grants are administered by the White Fish Authority and Herring Industry Board, who tell me that by the end of March …"—
  that is this year
  "… some 700 such applications had been received in Great Britain, though none have as yet been approved."
  When I was a member of the Estimates Committee that studied the fishing industry in 1966–67—as a consequence we produced the tenth Special Report for the observation of the Department—I was fully aware of the concern in the fishing industry about grants and replacement of vessels.

  1529
  I was not the only one. In 1967 the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon) said this:
  "The cost of a new boat with new gear today is almost prohibitive for any young man starting out … It would not be possible"—
  that is, to start out—
  "without these grants, and I am glad that the Government"—
  it was then a Labour Government—
  "have increased the rate."—[OFFICIAL REPORT, 26th July, 1967; Vol. 175, c. 686.]
  I am sorry to make this reference to the hon. Gentleman in absentia, but he said exactly the opposite today. That is typical of the changing posture of hon. Members opposite. I do not doubt the hon. Gentleman's sincerity. No one should doubt the sincerity of an hon. Gentleman who expresses concern about his constituency. The hon. Gentleman expressed concern about the unemployment and lack of activity in the yards in his constituency. Yet he welcomed the philosophy of disengagement.
  The hon. Member, unlike the Minister, does not have the advantage of a brief prepared by professional advisers. The Minister is totally and irrevocably responsible for a situation which has caused hardship to at least 700 applicants for grants and to the seamen. The Minister's Answer to me continued:
  "I am informed, however, that it would not be practicable to provide the other detailed information in the form requested."
  I had asked the Minister to state the total value of the grants. I subsequently became Chairman of the Estimates Sub-Committee. From personal knowledge and experience I can say that it would have been possible for the Minister, if he had wanted to be frank with the House, at least to have given me a broad general valuation of what the applications involved.
  The Minister's Answer continued:
  "Approvals were deferred until the Fishing Vessels (Acquisition and Improvement) (Grants) (Amendment) Scheme, 1970, could be brought into operation. Differing views, however, were taken of that Scheme by the Select Committee on Statutory Instruments of the House and by another place and the Special Orders Committee there, and my right hon. Friends and I thought it right to examine the resulting situation with care."—[OFFICIAL REPORT, 6th April, 1971; Vol. 815, c. 80.]
  1530
  Why did the Minister give me an explanation which has been confounded by my hon. Friend the Member for Barrow-in-Furness?
  Second, if the Government decided as a result of the Select Committee's view to consider the situation with care, why did not they consider it with care before? The trouble is that they produced a Statutory Instrument without consultation with the industry and without complying with the normal considerations.
  In addition, I should have expected the Minister to be very careful to note the Fleck Committee's recommendations on grants, and to consider the well-known, established practice that such schemes have to be prepared by the Department and the Treasury after consultation with the statutory bodies and the industry, and then submitted to Parliament. That was not done.
  After all this time the Minister has now got around to placing before Parliament the new Statutory Instrument. He has failed to say what the consequences will be for the industry. He said that there is a new percentage rate of grant, qualified in terms of length of vessel and the other matter to which he referred in a dismal, elementary speech. I do not think that the civil servants in his Ministry could have written it. He has sat on his bottom and tried to find a small excuse for his past inefficiency. Why not be honest with the industry and the House for a change and tell us by what amount his Ministry calculates the fishing industry will be deprived of financial support? To what extent has consultation with the industry brought about any area of agreement? Is not he aware that the industry is anxious to have more aid? The hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon), who I am glad to see has returned to the Chamber, declared in 1967 that the price of ships was prohibitive, but it is more so today. I am glad to see him back. There is no case for a reduction in grant.
  We are entitled to an explanation why there are now 700 applications not dealt with. We do not know the extent of the hardship. We do not know what representations have been made to him, and we do not know why it has taken so long to bring this Statutory Instrument before the House after such a mess was made of the first one.

  1531
  Much mention has been made of other matters concerning the industry, not the least of which is the Common Market. There are many hon. Members who thought that those of us who were anti-Common Marketeers were rebels, but we are now becoming quite respectable, I gather. The consequences of joining the Common Market would be very hard on the fishing industry. I leave that matter there.
  The men who go to sea require vessels with modern equipment, including navigational equipment, and they require confidence in the House. There may be arguments one way or another when we talk about industry or the economy in general, but we are talking about a specific industry now. The men in the fishing industry work in very dangerous conditions, and it is important that confidence in that industry should be supported by a Government at least being more frank with it than they have been.
  11.30 p.m.
  Mr. Hamish Gray Mr. Hamish Gray (Ross and Cromarty) rose—
  Mr. Speaker: Order. I understand that the Under-Secretary of State wants to begin his reply at twenty-eight minutes to eleven o'clock, so the hon. Member for Ross and Cromarty (Mr. Gray) has two minutes.
  Mr. Gray: This will be a very brief contribution, Mr. Speaker.
  It is only fair to say that anyone who represents a constituency with any fishing interest must regret the necessity for reducing the amount of money which is to be available for these boats. But I thought that my right hon. Friend made a reasonable case for a decision which I would not pretend to enjoy having to bear any more than any other hon. Members who represent fishing constituencies. It is significant that the hon. Member for Caithness and Sutherland (Mr. Maclennan) had to spend so much time making heavy weather in criticising my right hon. Friend.
  Whatever the fears and troubles the industry sees in the reduction of grant, in the eyes of the industry they are minute compared with the problems which it sees should we join the European Economic Community. It is not unnatural that an industry so dependent on our own shores
  1532
  and the fishing rights and limits around them should have genuine fears as to what would happen were those limits to be removed. I hope that my right hon. Friend will convey to our negotiators the very genuine fears which exist in the inshore fishing industry about the possibility of joining the Common Market without adequate safeguards of the limits. I hope that the Government will give full consideration to the points made by my hon. Friend the Member for Aberdeenshire, East (Mr. Wolrige-Gordon), because he may find something of a compromise in them.
  10.32 p.m.
  The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office (Mr. Alick Buchanan-Smith): I am grateful to my hon. Friend the Member for Ross and Cromarty (Mr. Gray) for his brief speech. I apologise to the House for taking so short a time to reply, but in view of the number of hon. Members who wished to speak I thought it best to compress what I had to say. I appreciate the points raised by hon. Members who represent fishing constituencies. I understand their feelings, and also the feelings of those who were unable to speak and would like to have done so. I appreciate that most of hon. Members who spoke had in mind the genuine interests of the fishing industry. I, too, want to help those who gain their living from the sea.
  Two main arguments have emerged. The first is the legal argument, specially raised by the right hon. Member for Barrow-in-Furness (Mr. Booth) and several others. The second argument is on the financial effects. I will deal with the legal argument first. I listened with respect to what the hon. Member for Barrow-in-Furness said because of his position on the Select Committee. Obviously, the Government paid considerable attention to the Select Committee's Report, but to put this matter into perspective one must remember that the view of the Select Committee of our House was not the view taken in another place.
  Even in this matter it is not so cut and dried as we might like. The important point of retrospection is dealt with in the way we have reintroduced this Scheme. It covers the point in that no applications which are approved are

  1533
  affected by this Scheme. The fact that the cut-off date is the making of the application in the current Scheme and not, as in the previous Scheme, the receipt of the application, makes absolutely certain that this question of retrospection ought not to apply.
  The question of consultation with the industry was referred to. I freely admit that consultation with the industry was brief, but it did take place. It took place in the context of the budgetary proposals of the Chancellor. In that context of decisions affecting not only the fishing industry—
  Mr. James Sillars Mr. James Sillars (South Ayrshire) rose—
  Mr. Buchanan-Smith: No, I will not give way. I have given hon. Gentlemen the chance to speak. I could have cut some hon. Gentlemen from the debate and got to my feet earlier. While these consultations were brief, at the same time they did take place in the context of the wider background in which budgetary decisions were being taken. The action was the only action a responsible Government could have taken.
  The direction given to the Herring Industry Board and the White Fish Authority was of a general character. It was not specific and it affected all the applications made after the announcement, not any particular application. I would remind hon. Gentlemen that Ministers have discretion to publish the direction in such manner as they think fit and a Written Answer to a Parliamentary Question was an entirely appropriate thing—
  Mr. McNamara: Typically cowardly.
  Mr. Buchanan-Smith: The—
  Mr. Booth: When did the consultation take place? Why was it said that consultation had not taken place?
  Mr. Cledwyn Hughes Mr. Cledwyn Hughes (Anglesey)—rose—
  Mr. Buchanan-Smith: I am sorry, I will not give way. Many hon. Gentlemen wanted to speak and I left myself with seven minutes in which to reply. In deference to those who have taken part in the debate it is only fair to reply to those who have asked questions.
  I should like to deal with the question of the financial effects of the Scheme which is the important—
  Mr. Maclennan: On a point of order. The Minister has suggested in his last remarks that he is unwilling to answer questions because he had to allow hon. Members to have the opportunity to take part in the debate. When my hon. Friend the Member for The Hartlepools (Mr. Leadbitter) sat down no one rose to speak and Mr. Speaker had to get up and indicate to the Minister—
  Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order, I am afraid that that is not a point of order for me.
  Mr. Buchanan-Smith: I should like to deal with what the hon. Gentleman has said. I purposely left myself nearly three minutes to deal with the real matter of this Scheme. He has now left me with half a minute. He dealt purely with the legalistic arguments and he hardly dwelt for a moment on the effect of the Scheme. At the same time he chided this Government for taking seven weeks to make the Scheme. I would remind him of the behaviour of his own Government when they introduced the first of two Schemes introduced in 1967. It was made on 8th February. To what policy statement did that Scheme relate? It was related to the policy statement made the previous March. Twelve months earlier—twelve months.…
  It being one and a half hours after the commencement of Proceedings on the Motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).
  The House divided: Ayes 147, Noes 124.

  Division No. 356.]

  AYES

  [11.40 p.m.

  Adley, Robert

  Berry, Hn. Anthony

  Brinton, Sir Tatton

  Alison, Michael (Barkston Ash)

  Biffen, John

  Brocklebank-Fowler, Christopher

  Archer, Jeffrey (Louth)

  Biggs-Davison, John

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

  Atkins, Humphrey

  Boardman, Tom (Leicester, S.W.)

  Carlisle, Mark

  Awdry, Daniel

  Boscawen, Robert

  Chapman, Sydney

  Baker, Kenneth (St. Marylebone)

  Boyd-Carpenter, Rt. Hn. John

  Chataway, Rt. Hn. Christopher

  Balniel, Lord

  Bray, Ronald

  Clarke, Kenneth (Rushcliffe)

  Cooke, Robert

  James, David

  Pym, Rt. Hn. Francis

  Cormack, Patrick

  Jopling, Michael

  Reed, Laurance (Bolton, E.)

  Crouch, David

  Kellett, Mrs. Elaine

  Rees, Peter (Dover)

  Curran, Charles

  Kershaw, Anthony

  Rhys Williams, Sir Brandon

  Deedes, Rt. Hn. W. F.

  Kilfedder, James

  Ridley, Hn. Nicholas

  Digby, Simon Wingfield

  King, Evelyn (Dorset, S.)

  Roberts, Michael (Cardiff, N.)

  Dodds-Parker, Douglas

  King, Tom (Bridgwater)

  Rossi, Hugh (Hornsey)

  Dykes, Hugh

  Kinsey, J. R.

  Rost, Peter

  Edwards, Nicholas (Pembroke)

  Kitson, Timothy

  Sandys, Rt. Hn. D.

  Elliot, Capt. Walter (Carshalton)

  Knight, Mrs. Jill

  Scott-Hopkins, James

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

  Knox, David

  Sharples, Richard

  Emery, Peter

  Legge-Bourke, Sir Harry

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

  Eyre, Reginald

  Longden, Gilbert

  Shelton, William (Clapham)

  Fenner, Mrs. Peggy

  Loveridge, John

  Sinclair, Sir George

  Finsberg, Geoffrey (Hampstead)

  Luce, R. N.

  Soref, Harold

  Fisher, Nigel (Surbiton)

  MacArthur, Ian

  Spence, John

  Fletcher-Cooke, Charles

  McCrindle, R. A.

  Sproat, Iain

  Fookcs, Miss Janet

  McLaren, Martin

  Stainton, Keith

  Fortescue, Tim

  McNair-Wilson, Michael

  Stanbrook, Ivor

  Fowler, Norman

  Mather, Carol

  Stewart-Smith, D. G. (Belper)

  Gilmour, Sir John (Fife, E.)

  Maxwell-Hyslop, R. J.

  Stokes, John

  Goodhart, Philip

  Mills, Stratton (Belfast, N.)

  Stuttaford, Dr. Tom

  Goodhew, Victor

  Miscampbell, Norman

  Tapsell, Peter

  Gower, Raymond

  Mitchell, David (Basingstoke)

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

  Grant, Anthony (Harrow, C.)

  Moate, Roger

  Taylor, Frank (Moss Side)

  Gray, Hamish

  Molyneaux, James

  Taylor, Robert (Croydon, N.W.)

  Green, Alan

  Monks, Mrs. Connie

  Tebbit, Norman

  Crylls, Michael

  Monro, Hector

  Turton, Rt. Hn. R. H.

  Gummer, Selwyn

  Montgomery, Fergus

  van Straubenzee, W. R.

  Hannam, John (Exeter)

  More, Jasper

  Waddington, David

  Harrison, Col. Sir Harwood (Eye)

  Morgan-Giles, Rear-Adm.

  Walder, David (Clitheroe)

  Haselhurst, Alan

  Morrison, Charles (Devizes)

  Walters, Dennis

  Havers, Michael

  Onslow, Cranky

  Ward, Dame Irene

  Hawkins, Paul

  Oppenheim, Mrs. Sally

  Warren, Kenneth

  Hicks, Robert

  Osborn, John

  Weatherill, Bernard

  Hiley, Joseph

  Owen, Idris (Stockport, N.)

  White, Roger (Gravesend)

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

  Page, Graham (Crosby)

  Wilkinson, John

  Hill, James (Southampton, Test)

  Parkinson, Cecil (Enfield, W.)

  Wolrige-Gordon, Patrick

  Holt, Miss Mary

  Percival, Ian

  Worsley, Marcus

  Hornsby-Smith, Rt. Hn. Dame Patricia

  Powell, Rt. Hn. J. Enoch

  Howell, David (Guildford)

  Price, David (Eastleigh)

  TELLERS FOR THE AYES:

  Howell, Ralph (Norfolk, N.)

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

  Mr. Walter Clegg and

  Hutchison, Michael Clark

  Proudfoot, Wifred

  Mr. Keith Speed

  Iremonger, T. L.

  NOES

  Allen, Scholefield

  Gourtay, Harry

  Mendelson, John

  Armstrong, Ernest

  Grant, John D. (Islington, E.)

  Millan, Bruce

  Bagier, Gordon A. T.

  Hamilton, James (Bothwell)

  Miller, Dr. M. S.

  Bennett, James (Glasgow, Bridgeton)

  Hannan, William (G'gow, Maryhill)

  Milne, Edward (Blyth)

  Bishop, E. S.

  Hardy, Peter

  Morgan, Elystan (Cardiganshire)

  Blenkinsep, Arthur

  Harper, Joseph

  Morris, Alfred (Wythenshawe)

  Booth, Albert

  Harrison, Walter (Wakefield)

  Morris, Rt. Hn. John (Aberavon)

  Brown, Ronald (Shoreditch & F'bury)

  Horam, John

  Murray, Ronald King

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

  Houghton, Rt. Hn. Douglas

  O'Halloran, Michael

  Campbell, I. (Dunbartonshire, W.)

  Howell, Denis (Small Heath)

  Oswald, Thomas

  Clark, David (Colne Valley)

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Owen, Dr. David (Plymouth, Sutton)

  Cocks, Michael (Bristol, S.)

  Hughes, Roy (Newport)

  Parry, Robert (Liverpool, Exchange)

  Cohen, Stanley

  Janner, Greville

  Pavitt, Laurie

  Coleman, Donald

  John, Brynmor

  Pentland, Norman

  Concannon, J. D.

  Kaufman, Gerald

  Perry, Ernest G.

  Cox, Thomas (Wandsworth, C.)

  Kinnock, Neil

  Prentice, Rt. Hn. Reg.

  Crosland, Rt. Hn. Anthony

  Lambie, David

  Prescott, John

  Dalyell, Tam

  Latham, Arthur

  Price, J. T. (Westhoughton)

  Davies, Ifor (Gower)

  Lawson, George

  Price, William (Rugby)

  Davis, Clinton (Hackney, C.)

  Leadbitter, Ted

  Probert, Arthur

  Deakins, Eric

  Lestor, Miss Joan

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

  Dell, Rt. Hn. Edmund

  Lewis, Ron (Carlisle)

  Rodgers, William (Stockton-on-Tees)

  Dempsey, James

  Lomas, Kenneth

  Roper, John

  Doig, Peter

  Loughlin, Charles

  Ross, Rt. Hn. William (Kilmarnock)

  Dormand, J. D.

  Lyon, Alexander W. (York)

  Silkin, Rt. Hn. John (Deptford)

  Douglas-Mann, Bruce

  Lyons, Edward (Bradford, E.)

  Sillars, James

  Eadie, Alex

  McBride, Neil

  Skinner, Dennis

  Edelman, Maurice

  McCartney, Hugh

  Spearing, Nigel

  Edwards, William (Merioneth)

  Mackenzie, Gregor

  Spriggs, Leslie

  Evans, Fred

  Mackintosh, John P.

  Stallard, A. W.

  Faulds, Andrew

  Maclennan, Robert

  Stewart, Donald (Western Isles)

  Femyhough, Rt. Hn. E.

  McMillan, Tom (Glasgow, C.)

  Stoddart, David (Swindon)

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

  McNamara, J. Kevin

  Stonehouse, Rt. Hn. John

  Fitch, Alan (Wigan)

  MacPherson, Malcolm

  Strang, Gavin

  Fletcher, Ted (Darlington)

  Marsden, F.

  Taverne, Dick

  Ford, Ben

  Meacher, Michael

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

  Gilbert, Dr. John

  Mellish, Rt. Hn. Robert

  Tinn, James

  1536

  1537

  Tomney, Frank

  Watkins, David

  Woof, Robert

  Urwin, T. W.

  Weitzman, David

  Varley, Eric G.

  Wells, William (Walsall, N.)

  TELLERS FOR THE NOES:

  Wainwright, Edwin

  Whitehead, Phillip

  Mr. William Hamling and

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

  Wilson, Alexander (Hamilton)

  Mr. John Golding.

  Walker, Harold (Doncastcr)

  Wilson, William (Coventry, S.)

  Resolved,
  That the Fishing Vessels (Acquisition and Improvement) (Grants) (Amendment) Scheme, 1971, a copy of which was laid before this House on 20th April, be approved.

  CONSTRUCTION INDUSTRY (SAFETY REGULATIONS)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hawkins.]
  11.48 p.m.
  Mr. James Hamilton: Before I came to the House I worked in the steel construction industry for many years. I was national president of my trade union which at that time was the Construction Engineering Union but has since been amalgamated and is now the Construction Section of the Amalgamated Union of Engineering Workers.
  Accidents at work bring a great deal of distress to the people who suffer them and to their wives and families, and we in this House, as the legislators for the country, do not apply our minds sufficiently to this problem. We are rightly concerned at the number of days lost through industrial action, but tend conveniently to forget that more working days are lost through injuries and industrial disease than through industrial action. I have been given some figures by the British Safety Council and I am greatly indebted to that Council, as indeed is British industry as a whole, both workers and management, for the part it plays in industrial safety.
  The figures are as follows. In 1969, 8.5 million days were lost through industrial action, but in the same year 24 million days were lost through accidents and industrial disease. In the same year there were 649 fatal accidents in British industry. Of these some 65 were in the construction industry. Therefore in 1969 one in two fatal accidents occurred in the construction industry. The number of reported accidents in industry was 322,390. Some 44,570 of those were in the construction industry, a figure of one in seven. It would appear to be an
  1538
  accepted fact that the construction industry seems to be the worst possible industry in regard to the incidence of accidents, including fatal accidents.
  In 1965 about one in every 31 operatives sustained an injury on site which resulted in an absence from work of three or more days. By 1969 the incidence of reported injuries rose to one in every 27 workers. This may be misleading owing to the possibility of under-reporting, an occurrence said to be common in the construction industry. Taking this into account, the incidence of reportable injuries may have risen from one in 22 in 1965 to one in 19 in 1969, allowing for a 40 per cent. under-reporting. The incidence of fatal accidents has also increased over the last five years from one in 6,030 on 1965, to one in 4,500 in 1969. Since there is less possibility of underreporting in this sphere, these figures may be taken as accurate.
  This is a bleak prospect. A new recruit entering the civil engineering side of industry, taking a man with an average working life of 35 years, has a one-in-50 chance of sustaining a fatal accident. A recruit to the building trade has a one-in100 chance of being killed at work. In general industry, the figure is one-in-450.
  One cannot make these points without trying to find the causes. Many points of view are put forward by legislators, employers and trade unions. I believe that each and every one of us must accept our fair share of responsibility. The workers themselves in many instances do not apply the existing safety regulations, nor do some employers. On the steel construction side of industry I have discovered that 51.1 per cent. of accidents are caused by men falling from various heights; accidents caused by objects falling from construction sites amount to 18.5 per cent. These figures relate to the period between 1965 and 1969. Machines, hand tools, stepping on or being struck by objects, and handling difficulties are the main causes of other percentages which I do not intend to mention.
  It is interesting to note that in 1969 in my part of industry, on the steel construction side, 16 steel erectors were killed

  1539
  and 1,323 injured. This is to be seen against a working force of some 40,000 steel construction workers. In 1966, there were 21 fatal accidents and 1,367 accidents. In 1967, the respective figures were 19 and 1,535. In 1968, 19 and 1,499; in 1969, 38 and 1,206; in 1970, 20 and 1,311. From 1965 to 1970, the figures have changed little. The responsibility is shared by workers and management, but one of the major causes is that workers in this dangerous trade earn, as senior erector craftsmen, 10s. 9d. an hour. To make a reasonable wage, even when working at 500 feet, they rely on bonus payments, forgetting their responsibility for their own safety and for their wives and families.
  When I was a union official, my members constructed the Forth road bridge. Our members constructed the Severn bridge and the Tay road bridge. Their work is of national importance. Every power station built since the war has been built by the steel erectors. The safety regulations on the construction of the Forth road bridge were of the highest order, which I would recommend to any employer, but even then, two of our members were blown off a catwalk in a gale and fell into the river. One of the bodies was recovered half an hour later but the other has not been found to this day.
  There seems to be no safety regulations for material stacked in a construction yard. I remember seeing a pile of steel flange plates fall inwards on a lad of 29 who lost both his legs. This left a marked impression on me. I was sick for days, not only at what I had seen but at the thought that anything similar could happen again. At Longannet power station, in Scotland, we had three accidents in one month. Our members had to take industrial action to get the management to admit them as members of the site safe safety committee. This is a serious problem and I hope that the Minister will try to assist those of us who are trying as best we can to bring some stability and responsibility into this industry.
  A similar situation arose at the power station at Kings Norton, London. I gather that members of my union are still fighting to be recognised as appropriate persons to serve on these safety committees. Could anyone in any circumstances accept a situation where
  1540
  legislation does not make it mandatory that men working in the industry should be eligible to be members of their appropriate safety committee? It is nauseating and disgusting to talk about the numbers of days lost through industrial action. However, it would be interesting to discover the numbers of days lost because men have to take industrial action to get recognition of their right to serve on safety committees.
  I am aware that the Robens Inquiry on Safety and Health at Work is now taking evidence. My trade union, via its general secretary has given evidence to this inquiry. I sincerely hope that when the inquiry is concluded, the Government will waste no time in laying its report before the House so that we can look at it and at the same time perhaps strengthen the regulations.
  The last Government introduced the Employed Persons (Health and Safety) Bill which, because of the election, did not really get off the ground. I assure the House that the trade unions were very much in favour of that legislation. We all have a part to play. We can apportion the blame, as it were, in different directions; but the legislators are responsible for expediting the best possible safety regulations for industry as a whole, particularly regarding steel erection.
  Bearing in mind the numbers of accidents which take place at work and the trials and tribulations to which I have referred, I hope that the Government will continue to build up the industrial rehabilitation units. The unit in my constituency is making a tangible contribution towards rehabilitating not only my trade union members, but workers throughout the whole of British industry who have had accidents at work and who, in many cases, are not capable of pursuing the jobs they were doing prior to their accidents.
  I thank the Minister for listening so attentively. I shall now resume my seat to give him the maximum time in which to reply.
  12.3 a.m.
  The Under-Secretary of State for Employment (Mr. Dudley Smith): The hon. Member for Bothwell (Mr. James Hamilton) has, quite rightly, referred to the distress and difficulties which arise for families and relatives when people are killed in accidents in the construction

  1541
  industry. Indeed, we read about crashes on the M1 and other horrific incidents which get temporary headlines in the newspapers. Unfortunately, accidents are all too frequent in the construction industry, and in industry generally, and, apart from small coverage in local newspapers, they rarely achieve the publicity which they deserve to discourage others finding themselves in similar situations.
  I am glad that the hon. Gentleman was able to raise this subject tonight. It is fitting that we should discuss the safety conditions of workers on what was, until a few minutes ago, the 200th anniversary of the birth of Robert Owen, who could be described as one of the fathers of the Factories Act.
  It is perhaps especially fitting, because it was at New Lanark, not many miles from the hon. Gentleman's constituency, that Robert Owen first went to manage a cotton-spinning mill and did much to improve the conditions of sanitation, welfare, hours and wages, in which even children of 10 years of age toiled for 12 and 13 hours a day. Happily, times have changed and Owen's vision of decent conditions of life for factory workers has long been a reality.
  The hon. Gentleman has raised an aspect of industrial safety with which my Department is concerned, namely, the construction industry. He has a lifetime of experience in the industry, and he knows better than most that regulations reduce the heavy toll that accidents have in industry, but that they are not entirely the answer. The co-operation of managements and workers in observing the regulations is vitally necessary. Nevertheless, regulations are needed to provide a yardstick for the industry, and we have a comprehensive set of fairly up to date safety regulations for the construction industry which have been contributed to by successive Governments.
  There are three current codes of construction safety regulations made under the Factories Act. They apply to both building operations and works of engineering construction. In addition, certain provisions of the Factories Act apply to the construction industry; for example, those concerned with the guarding of machinery. Then there are other special codes of regulations such as the
  1542
  Work in Compressed Air Regulations and the Asbestos Regulations.
  In addition to regulations for safety in the construction industry, there is a code of regulations governing health and welfare which was made by the previous Administration in 1966. These require the provision of adequate washing facilities and sanitary conveniences on sites. They also oblige contractors to provide necessary and suitable protective clothing for anyone who has to continue working in the open air during bad weather. The provision of adequate and suitable shelter and accommodation and for clothing and for taking meals near the site is also catered for in the regulations, as is proper provision for first-aid, which is not to be under-estimated.
  I am glad to say that these regulations have resulted in a general improvement in the standard of welfare facilities on sites. This is perhaps more noticeable on sites run by the large contractors, but I assure the House that my Department is keeping an eye on compliance with the regulations by the smaller contractor, since these matters cover the whole spectrum of industrial operations.
  In terms of the number of regulations applicable to it, it is fair to say that the construction industry is a highly regulated one.
  Until comparatively recently, the inspection of construction sites was part of the normal work of the general factory inspector. Two developments which took place in the early 1960s, however, led to a change of practice. First, the scope of the Construction Regulations, which had hitherto been confined to building operations, was extended to civil engineering construction. Second, analyses of the figures of accidents reported to the Factory Inspectorate revealed that they were rising at a faster rate in the construction industry than in industry as a whole. Because of this, separate construction districts were established in November, 1966, coinciding with the area of the regional Factory Inspectorate divisions, and construction district inspectors were appointed. The latter are general inspectors who have specialised in construction work.
  At first, the construction districts were staffed entirely from the general inspectorate. But it had also been decided to set up a Construction Inspectorate, to be

  1543
  recruited from among persons with considerable practical experience of construction work and recognised expertise in the industry. The first of these construction inspectors was recruited in April, 1968, and there is now a grand total of 81 inspectors engaged solely on construction work. A competition for the recruitment of additional inspectors is being held at the moment.
  We are convinced that their practical experience enables construction inspectors to enforce the regulations in greater depth at a much earlier stage than newly-recruited general factory inspectors. One indication of this is that since the reorganisation there has been a 50 per cent. increase in the number of firms which have been prosecuted.
  I would not wish to claim that regulations and their enforcement by the Inspectorate are anything more than two of the factors which influence construction industry safety. As I said at the outset, both sides of industry have, and do play, a constructive part in improving its safety record. Over the past two years, the trade unions and employers' organisations concerned have co-operated and in the production and publication of a comprehensive manual on construction safety, which will be well known to the hon. Member.
  I was glad to be able to attend the recent exhibition on construction safety material in this House which was sponsored by my hon. Friend the Member for Epping (Mr. Tebbit). That most interesting exhibition also marked the publication by the National Federation of Building Trades Employers and the Federation of Civil Engineering Contractors of the final chapters of the safety manual which is now almost the Bible of the construction industry concerning safety. That manual explains in simple terms the legal obligations on employers and employees under the regulations and offers advice on working methods and practical safeguards to meet those obligations. It is of immense value and I hope that it will play an increasingly important part in the safety of the industry as time goes by.
  There are, of course, many other instances of management's interest in the promotion of safety in the construction industry. The hon. Member rightly says that we must keep management on its
  1544
  toes. I believe that we should keep everybody concerned with the industry on their toes in the interests of society.
  The Oil and Chemical Plant Constructors Association is bringing out a safety manual on the civil engineering work peculiar to that industry and the Concrete Society is co-operating with the Institution of Structural Engineers in the preparation of a code of practice for temporary support work in the construction of bridges. Both projected publications are to be discussed this year at conferences at which the Factory Inspectorate will take an active part.
  The hon. Member rightly spoke from his experience about steel erectors who work at heights, where, alas, even a minor slip or mistake can result in a horrifyingly fatal fall. Like the hon. Member, we are concerned that the incidence of accidents, especially fatal ones, resulting from falls is still too prevalent.
  What, then, can be done to bring down this devastatingly unhappy toll? Successive Governments have made comprehensive safety regulations concerning all aspects of the construction industry, as I have tried to relate. The last code of safety regulations—the Construction (Working Places) Regulations, 1966—contains detailed provisions for safeguarding, among other things, the conditions under which steel construction workers do their job. For example, Regulation 38 deals with the provision of safety nets or safety belts for such workers in circumstances where a safe working platform cannot be provided. In addition, the British Standards Institution has issued specifications on the design and strength of suitable nets and belts.
  I am pleased to say that a British Standards code of practice advising contractors where and how to use safety nets is in an advanced stage of preparation. I am confident that where these regulations are adhered to, even work at great heights can be safely carried out, as was shown during the construction of the Forth Bridge, where nets were widely used.
  The hon. Member referred to the Forth bridge, of which he has great personal knowledge. When the Forth bridge was first built in the nineteenth century, there were 70 fatalities. We can thank the regulations of successive Governments that in 1964 there were no more than

  1545
  four fatalities. Even so, I agree very much with the hon. Member that four are too many.
  While it is true to say that the regulations are wide-ranging, they are legal instruments and, perhaps, for this reason they are not always easily understood at site level. The admirable manual on construction to which I referred should help. So also should the steel erectors' training courses that are run at the Redpath-Dorman Long Centre in Middlesborough. This is one of the many examples of management doing its best to promote safe methods of work, and I am glad to report strong union cooperation in this.
  These courses, which are organised by the firm's chief safety officer, are, I am glad to say, also open to steel erectors from other firms. They have been publicised in the industry and I hope that no opportunity will be missed by those involved to take advantage of this training.
  I wish to stress again that everybody connected with a site or any sort of construction work, management or workers, has a part to play in seeing that safe methods of working are used and that the regulations are observed. There is no room for taking risks and this aspect requires a partnership between both sides of industry. I am glad to say that the Training Board has taken this lesson to heart and is doing all it can to promote safety.
  I am pleased to announce, in response to the hon. Gentleman's moderate and sensible speech, that the provisional figures for 1970 show that total accidents in construction have been reduced from an average of 45,000 annually in recent years to just under the 40,000 mark, the lowest total for nine years. Fatal accidents are down by 20 per cent. from last year's figure of 265 to 206.
  1546
  This is an impressive performance and represents a lot of effort over the years. This reduction gives one a certain amount of heart, but until the figures are brought down even further we must not start waving flags.
  In discussing overall accident statistics, it is important to remember that an accident becomes legally notifiable to the Factory Inspectorate only if it causes absence from work for more than three days. In this context, I remind the hon. Member of what I said when his Friend the Member for Halifax (Dr. Summer-skill) raised the subject of industrial accidents generally last December. The three days' absence criterion is about 50 years old, but the economic pressures and social conditions that existed when this criterion was made have, happily, changed for the better.
  It is generally accepted that because workers are no longer subject to the sort of economic pressures that at one time might have caused them to return to their jobs in the minimum time, the figures of reported accidents do not give a fair indication of the safety performance of the construction industry or for that matter, any other branch of industry.
  I cannot, however, accept that any valid conclusions can be drawn from a comparison between the number of days lost through industrial injuries and the number of days lost through strikes. Absence from work through injury or sickness is a greater hardship to the workman and his family than the temporary disruption of a work plan may be for his employer.
  The Question having been proposed after Ten o'clock 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 eighteen minutes past Twelve o'clock.

  Second Reading Committee
  Wednesday, 5th May, 1971
  [MR. HAROLD GURDEN in the Chair]

  The Committee consisted of the following Members:

  Mr. Harold Gurden (Chairman)

  Abse, Mr. Leo (Pontypool)

  Madel, Mr. David (Bedfordshire)

  Bell, Mr. Ronald (Buckingham, South)

  Munro, Mr. Hector (Dumfries)

  Bishop, Mr. E. S. (Newark)

  Redmond, Mr. Robert (Bolton, West)

  Bray, Mr. Ronald (Rossendale)

  Silkin, Mr. S. C. (Dulwich)

  Cox, Mr. Thomas (Wandsworth, Central)

  The solicitor-General Sir Geoffrey Howe)

  Harper, Mr. Joseph (Pontefract)

  Stokes, Mr. John (Oldbury and Halesowen)

  Harrison, Colonel Sir Harwood (Eye)

  Hiley, Mr. Joseph (Pudsey)

  Walters, Mr. Dennis (Westbury)

  Jones, Sir Elwyn (West Ham, South)

  Weitzman, Mr. David (Stoke Newington and Hackney, North)

  Lyons, Mr. Edward (Bradford, East)

  McCrindle, Mr. R. A. (Billericay

  Wilson, Mr. William (Coventry, South)

  Mr. K. A. Bradshaw, Committee Clerk.

  RECOGNITION OF DIVORCES AND LEGAL SEPARATIONS BILL [Lords]
  10.30 a.m.
  Resolved,
  That if the proceedings on the Recognition of Divorces and Legal Separations Bill [Lords] are not completed at this day's sitting, the Commitee do meet on Wednesdays at half-past Ten o'clock.—[The Solicitor-General.]
  The Solicitor-General (Sir Geoffrey Howe): I beg to move,
  That the Chairman do now report to the House that the Committee recommend that the Recognition of Divorces and Legal Separations Bill [Lords] ought to read a Second time.
  The Bill amends the law with a view to ratification by this country of the Hague Convention on the Recognition of Divorces and Legal Separations. Although it is comparatively short, the Bill deals with an important matter and is the fruit of long consideration and study, both internationally and in the United Kingdom. The problem which the Bill
  handles is familiar to many, namely, that of the "limping marriage", the case in which one party may secure a divorce which will be recognised in the country where it is granted but will not be recognised in other countries, or be recognised in some but not in others, so that the extent to which either of the parties to the limping marriage is free to remarry in other jurisdiction where he or she may happen to be living is in doubt, and one partner may regard himself as free while the other may not.
  Plainly, this is a field in which it would be desirable to rationalise and standardise the law of recognition internationally, although this raises difficult matters. It is equally desirable for the law to be rationalised in the context of our own systems of law in this country in the various jurisdictions which comprise the United Kingdom.
  Traditionally, the law in England and Wales recognises a divorce if it is pronounced by the court of the domicile of the parties or if it is recognised by the court of their country of domicile. Additionally, as a result of statutory provisions which have been in force for some years, under Section 40 of the Matrimonial Causes Act, 1965, we recognise decrees where the petitioner has been ordinarily resident for three years or where the parties were domiciled here before the husband deserted the wife.
  In addition to those basic provisions, the position has been, as some would say, liberalized, or, as others would say, made more complicated, as a result of the decision of the House of Lords in the Indyka case in 1969. There was then added as a new ground for recognising a decree a real and substantial connection on the part of the petitioner with the country in whose courts the decree was pronounced. Subsequently, that was extended to a case in which the decree was pronounced by a country with which the respondent had a real and substantial connection. The law was, therefore, liberalised by extending the range over which we should recognise decrees pronounced in other jurisdictions, but it certainly was not placed upon a very secure or lucid foundation. The judgments in that case suggest, I think, some eight alternative grounds for recognition, although the "real and substantial connection" one is that which has prevailed. Nor is it clear how far Scots law would follow the decision in that case, which was a decision on English law.
  It is perhaps just as well, therefore, that matters were moving ahead, while that case was going through the courts, towards the solution which is now proposed in the Bill. In 1966, I think, The Hague Conference on Private International Law submitted the first draft for a Convention of this kind. In May of that year, the then Lord Chancellor set up a broadly based Working Party under the chairmanship of Mr. Justice Scarman, Chairman of the Law Commission, to consider what was taking place at The Hague. The Working Party made two reports, which were the foundation of comments and recommendations from this country to those who were at work at The Hague on the draft Convention.
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  Finally, in 1968, the 11th Session of The Hague Conference settled the draft Convention which gives rise to the present Bill was adopted, having derived great benefit from the contributions made by the representatives of this country.
  In May of last year, the last Government announced their intention to adhere to the Convention. The matter was referred to the English and Scottish Law Commissions for consideration as to how to implement it in this country. We signed the Convention on, I think, the glorious 1st of June last year and, in November, the Joint Report of both Law Commissions on the Bill was published. In January, my noble and learned Friend the Lord Chancellor announced the intention to introduce legislation, which the Committee may feel to be doubly welcome and convenient in the light of the state of play following the Indyka decision.
  I said that I should mention certain matters which the Bill did not do and could not properly seek to do. It does not seek to change the substance of divorce law within this country. It does not seek to deal with the separate important matter of matrimonial property, which is still under consideration, nor to deal with the position in relation to polygamous marriages, or potentially polygamous marriages, which are the subject of a report published by the Law Commission in February, this year.
  It does not seek to alter the basis upon which courts in this country take or accept jurisdiction in respect of matrimonial matters. Specifically, hon. Members may have in mind the question of the extent to which our jurisdiction law still depends on domicile and the extent to which the case has been made out for giving the wife a separate domicile from that of her husband, which has been one of the proposals contained in the Report of the Law Commission's Working Party and made by a number of other people. That is a matter of domestic law.
  Nor does the Bill deal with the related question of the reciprocal enforcement of maintenance orders, which is complex, important and difficult. Again, work has been going on for some time on that matter, and it is still going on. It will plainly need to be the subject of separate legislation when that work has been completed.
  Nor—and this is more in the context of the Bill—does it deal with the problem considered in another place and thrown up, if that is the correct phrase, by the Qureshi decision. That was a case in which it was held that a divorce obtained in England or Wales by non-judicial means, in other words, other than through our own courts, for example, by means of a Talak, was effective if both parties to that kind of proceeding were domiciled in a country where that form of divorce was recognised and effective.
  There are, rather to my surprise, about 150 applications a year for licences to remarry on the grounds of such divorces. I am not able to tell the Committee how many are successful. About half are founded on Talaks, and of the remainder about one-third each depend upon Hindu, African and Greek law. The effectiveness of that kind of a divorce, a non-judicial divorce, is not affected by the Bill. The Bill touches upon decrees obtained under the law of any part of the British Isles, and such a decree or divorce would not have been obtained under the law of any part of the British Isles.
  It touches upon decrees obtained abroad. There are substantial difficulties both of policy and of formulation as to what the right view should be in relation to the Qureshi type of case. The noble and learned Lord, Lord Simon of Glaisdale, moved an Amendment in another place to try to deal with that in the context of the Bill. It was not accepted and the matter is still being considered, at the invitation of my noble and learned Friend the Lord Chancellor, by the Law Commission. The Committee may feel that this is a matter for consideration not so much today, as in Standing Committee, but all the problems arising from that kind of situation have not yet been sufficiently ironed out for one to be able safely to reach a conclusion.
  Having spent some time saying what the Bill does not do, may I shortly try to explain what it does do?
  Clause 1 provides that a decree granted in the British Isles shall be recognised anywhere within Great Britain, so that a decree granted by any one of the jurisdictions which make up the British Isles, Northern Ireland, Scotland, England and Wales, the Isle of Man, the Channel Islands, should be recognised anywhere within Great Britain. The Isle of Man
  1552
  and the Channel Islands can legislate for themselves and Clause 9 gives power to the Stormont Parliament to legislate along similar lines, if it so pleases.
  Clauses 2 and 5 deal with the separate question of overseas decrees. Clause 2 defines which they are talking about in that sense, as any decree obtained by judicial or other proceedings and effective under the law of the country where it was pronounced. It sets out three grounds on which in England and Wales and in Scotland we will recognise overseas decrees pronounced in the way that I have described. The first is that the court is in a country in which either spouse was habitually resident. That is a new concept in this field, although it is not new in some other parts of our law. The second is if the decree was pronounced in a country of which either spouse was a national. The third is if it was pronounced by the court of the country in which either spouse was domiciled, in so far as domicile is relevant to the law of that country.
  Clause 4 makes matching provisions for cross-decrees. Clause 5 states the effect within this country of findings and facts arrived at in foreign proceedings.
  Clause 6 deals in essence with three matters. It preserves the rule that a divorce recognised by the country of domicile should continue to be recognised; it preserves certain statutory provisions; apart from that, it makes the provisions of the Bill exclusive on this question of recognition. Clause 7 provides that if the decree is recognised here, non-recognition of it in any other country shall not impair the recognition conferred in this country.
  Clause 8 makes certain exceptions. It excludes from recognition cases where the marriage was not effected according to the law of the part of Great Britain in which the proceedings are taking place. It enables recognition to be denied where there was no reasonable notice given to the party in question, or no reasonable opportunity of challenging the proposed decree.
  Mr. David Weitzman: What is the meaning of the words in Clause 8(2)(b):
  "manifestly be contrary to public policy."
  What does the addition "manifestly" mean?
  The Solicitor-General: There are a number of detailed considerations about the formulation of Clause 8(2)(b) and that phrase. It could have been approached on the grounds of its being unconscionable or wrong. It was not thought right to make a series of specific provisions, but there might be cases where a decree had been pronounced according to the law of some country simply upon the basis that one of the parties was of one race and one of another, for instance, a ground for granting a decree which would not commend itself to anyone looking at public policy from the point of view of this country. On the other hand, if one made it simply "contrary to public policy", it would leave the matter very much at large.
  The hon. and learned Member will know that public policy has been described as an unruly horse and I think that the expression makes the horse a trifle less unruly.
  Sir Elwyn Jones: Is a manifest horse more unruly than a horse?
  The Solicitor-General: I am not sure that the right hon. and learned Gentleman chose the right question. I think that the word "manifest" is intended to imply a degree of inherent strength in the horse.
  Mr. S. C. Silkin: I do not want to deflect the hon. and learned Member from his horses, but is not the point that we are simply following the wording of the Convention? The Law Commission commented that the word "manifestly" in our law probably added nothing anyhow.
  The Solicitor-General: I was coming to the point that these are the words of the Convention. There has been some discussion of whether they are appropriate. Burt they seem to be not inappropriate, and I should have thought that an advocate of the talent of the hon. and learned Member for Dulwich (Mr. S. C. Silkin) would find no difficulty in generating some value from the word "manifestly" if it were a case where he thought it appropriate to do so. At all events, this is the foundation of the wording of the Convention.
  In fact, the Bill proceeds a little further than the Convention in some respects. One possibility was that we should afford
  1554
  recognition only of decrees granted by countries which had themselves ratified the Convention. This would seem a recipe for complexity and uncertainty, so the Bill extends recognition to decrees granted in all countries. Secondly, Clause 1 provides for mutual recognition, as it were, within the British Isles, which goes outside the scope of the Convention.
  One other point to which I ought to call attention is that the Bill extends recognition along the lines suggested to all decrees, whenever they have been granted. In doing that, it is not doing any more than judge-made law would do, or has done in previous cases, as happened, for example, in the Indyka decision. That effectively changed the law in relation to existing decrees, whenever they had been granted—it was not merely a prospective change. This seems to be a sensible way of achieving the clarity and certainty which is the objective of the Bill.
  It is upon the basis that the Bill achieves that kind of clarity and lays a secure foundation for diminishing and eliminating, as far as possible, the problems created by the limping marriage, that I commend its principle to the Committee.
  The Chairman: I remind the Committee that this is a Second Reading Committee and that, although there may be Committee points which are perfectly in order, they might be better expressed in the Committee stage.
  10.52 a.m.
  Sir Elwyn Jones: The Committee will be grateful to the Solicitor-General for the lucid way in which he explained what the Bill does not contain and what it does contain. In another place, the noble Lord the Lord Chancellor said that he commended the Bill to his House and he added:
  "To some extent I fear that it is an act of faith, because we do not know how it will fare in another place."—[OFFICIAL REPORT, House of Lords, 16th February, 1971; Vol. 315, c. 487.]
  I do not know why the noble Lord has so little faith in the House of Commons, with which he played political musical chairs with such distinction. We can assure him and other members of the Government that so long as they confine their legislation to law reform, we shall

  1555
  give those measures our enthusiastic support. Indeed, for the Opposition it is gratifying to see the Solicitor-General at last doing the job which he ought to have been doing instead of messing about with matters in which legal changes are likely to prove disastrous. But, having made that non-partisan observation on this highly uncontroversial occasion, I certainly indicate at this early stage the Opposition's support for the Bill.
  The Lord Chancellor has generously acknowledged that the Bill arises from, and had its origin in the days of, the previous Administration. The United Kingdom delegation to The Hague Conference on Private International Law, which prepared the Convention, played an outstanding part in the deliberation of that Convention. When this country signs Conventions and thereby gives its approval to them, early steps should be taken to make the changes in our law which may be required to give effect to those Conventions. Without being too pompous about it, I think that this country tends on the whole only to sign and ratify Conventions which it intends to carry out. It does so only when the conventions are practicable and capable of enforcement. So we are pleased with what has been done by the Government in following up the work of their predecessor in this matter.
  As the Solicitor-General has pointed out, the Bill goes further than the Convention in that it applies to all overseas countries and not merely to the parties to the Convention. That was a recommendation of the Law Commission which, I feel sure, we would support. Having mentioned the Law Commission, I again pay my tribute to the Commission and its members for their continuing admirable contribution in law reform. It would be quite intolerable, as the Solicitor-General has pointed out, if we were to have two codes of recognition of foreign decrees, one applicable to the parties to the Convention and the other to non parties.
  The other change which the Bill introduces outside the scope of the Convention, as the Solicitor-General has pointed out, is to be found in Clause 1, by which English and Scottish courts are to recognise divorces granted in each other's courts and elsewhere in the British Isles,
  1556
  notably the Channel Islands and the Isle of Man. What goes on in the land North of the Border, with their pursuers and their feuers and their Gretna Green, is often wrapped in mystery. But we have no reason to doubt that the principles of natural justice are applied in the courts North of the Border as they are applied in our courts. Indeed, during the years when I had the privilege of holding the office of Attorney-General, I learned much wisdom from North of the Border, and we introduced into our law several of the healthy provisions which operated North of the Border over the centuries.
  The Solicitor-General has indicated that the purpose of the Bill is to reduce the number of limping marriages. That is a rather unattractive expression and one is tempted to be frivolous about it, but it is not a frivolous situation. Much misery and frustration arise when there are two inconsistent laws about marriage and divorce in two separate territories which affect the men and women involved. It is painful to have a situation where a man or woman may be regarded by the law of one country as of married status, but by the law of another country as single, or, even worse, as married, but to a different partner. Obviously, that state of affairs, if it is capable of remedy, ought to be remedied.
  I am glad, however, that, while the Bill pays due regard to the principle of international comity, Clause 8 has been introduced to establish and assert expressly the principle that the Bill does not require the recognition of the validity of an overseas divorce, or legal separation if it was obtained—this is in subsection (2)(a)(i) and (ii)—in effect contrary to the principles of natural justice in that no notice of the proceedings was given or one of the parties had no opportunity of taking part in them. Then there is added the all-embracing provision in paragraph (b):
  "if its recognition would manifestly be contrary to public policy."
  In my view, it is clearly right that that principle should be expressely stated in the Bill, lest cases arise in which our courts might be forced to recognise a foreign decree in circumstances in which it would be unconscionable to do so. In this connection, I can do no better than quote the eloquent words of Wharton,

  1557
  the learned author of "Private International Law":
  "To stretch international law further would be to engraft on free countries the paralysing restrictions of despotism."
  That is noble language, but language which is not mere wind—if I may descend to a more direct expression on the matter—bearing in mind what went on in Nazi Germany and what still goes on today in some countries.
  The field in which the most odious form of discrimination is still capable of arising is racial disqualification and discrimination. Racial disqualification which restricts human freedom by penalising certain classes of the population to the profit of others is intolerable. The old jurists used to call them privilegia odiosa, and odious they indeed are. It would be intolerable if we in this country were compelled to recognise the products of such odious privilege as a necessary part of the law which our courts should enforce.
  I had the privilege recently of appearing in the case of Myer v. Myer, in which a decree pronounved in a Nazi divorce court, where the wife concerned was dragooned and intimidated into taking the proceedings, was ruled by the courts of this country not to be a valid decree. It was reassuring that that decision was made to set aside the doubts which were creaed by the earlier case of Igra v. Igra.
  Accordingly, I welcome Clause 8. It may well be that we shall discuss in Committee whether the word "manifestly" is necessary. The effect of it would seem to be to restrict the discretion of the court in this respect. I recognise that there is need for certainty, that there must not be too much discretion, and it may well be, therefore, that the word serves a purpose in limiting judicial discretion in the kind of way which Lord Simon of Glaisedale suggested was the appropriate course. However, you have already warned us, Mr. Gurden, about the temptation of taking Committee points at this stage, and I shall not transgress, although it is a matter of importance to be considered in due course.
  I support the Bill and we shall do our utmost to give it a speedy passage.
  11.3 a.m.
  Colonel Sir Harwood Harrison: I hope that I shall not transgress your ruling, Mr. Gurden, but I think it right that someone not well versed in the law should say something at this stage. It appears to me that the Bill is well worth while. However, the Solicitor-General used the term "foreign countries" and I am wondering what is embraced by the reference to divorces in foreign countries.
  There are some foreign countries which are fairly stable and there are those which split or have revolutions or revolts. One can think of Nigeria, or of Pakistan, where the revolt seems likely to be put down. To bring it a little nearer home, should we recognise Rhodesia as a foreign country for the purposes of the Bill? There has been a great deal in the newspapers about certain divorces granted there not being valid in this country. There is here, therefore, a wide point of principle raised, and I shall be glad if the Solicitor-General will touch on it in his reply. Is Rhodesia, or any other country which might find itself in a similar position, a foreign country in the context of this Bill?
  11.5 a.m.
  Mr. E. S. Bishop: As one of the few non-lawyers present, I should like to ask a few questions. I welcome the Bill, basically, because it is designed to sort out some of the problems in the current situation, and it will help to deal with the growing number of people who come to this country, immigrants and others, who may wish to have their status regularised in relation to their previous marriage.
  In the light of the comments made by the Solicitor-General, I think that one will be anxious to make sure that, in covering recognition of overseas marriages which one party may wish to terminate or to have accepted as being terminated, one must be clear that both parties did, in fact, take part in the marriage proceedings and were aware of the circumstances when the divorce was granted. That may be dealt with by Clause 8.
  The other factor of some importance in this connection is the question of proof. There are words like "residence" and "domicile" in the Bill. I understand that these words can have different meanings. I have been looking at Joseph Jackson's book, "The Formulation and

  1559
  Annulment of Marriage". On "residence" alone he has 20 pages, and another 20 on "domicile". One wonders how some of the people who come to the registrar for recognition of their divorce, or marriage, if it ever existed, will be able to prove some of the points which, quite rightly, have to be proved in this respect.
  Not long ago, I was in New Delhi as a member of the Inter-Parliamentary Union delegation, and I had the chance of seeing the immigration officer to sort out a point for an Indian constituent of mine who was seeking a husband for his daughter and who had problems in getting the man over for them to marry, and so on. That is immaterial here, but, at the same time, I was made aware of some of the problems of marriage in that part of the world. This applies to a varying extent in other places, too. I understood—I hope I am being fair about it—that about 80 per cent. of the women of the Punjab are illiterate. In such circumstances, some of them may not have been fully aware of the commitments on which they were entering at the time of marriage, and they certainly may not be fully aware of the legal implications of proving a divorce.
  Another factor in that part of the world is that there is, in many cases, no proper registration of the initial marriage. If the parties with whom we are concerned are from that kind of background, illiterate and probably unaware of the circumstances of marriage—certainly not aware to the extent that we should be in this country—the burden of proof of marriage or divorce will be very difficult.
  There are also problems of impersonation and so on. I saw some women seeking to come to this country and I sat with the immigration officer when they were interviewed, with their children. In one case, a woman said that her husband was in Birmingham. When she was asked his name, I do not think that she was quite clear what it was, and she certainly did not know the date of the marriage. Consequently, there was some problem of ascertaining whether she was eligible to come as the spouse of someone in this country. She did not know the dates of birth of her children. One has to bear in mind that kind of problem, and it will not do for us to sit here in a semi-judicial atmosphere and be unaware of
  1560
  some of the questions with which we may be faced when the Bill becomes law.
  There are the problems, also, of other nationalities and the formal and legal requirements which may have been followed. If we untie a marriage in the legal sense, what will happen to the religious aspects? In some communities there is a civil as well as a religious ceremony, and one may be legally untied in one but not in the other. We can well imagine the confusion, especially with people whose literacy is not as great as it is in this country, in having to sort out situations of that kind.
  Both proof of marriage and proof of divorce are of material importance. If people were not really married at the start, and one party or the other claims that there was a divorce, there are problems of inheritance, bastardy, nullity and so on, which are certainly relevant to the issue at the time when the registrar or other authority has to decide on the validity of a marriage or divorce.
  I am anxious, in particular, about the position of wives, who may be affected by these situations. Hon. Members will recall my interest in the Matrimonial Proceedings and Property Bill when the Divorce Reform Bill was going through the House. One would like to think that those who may be affected by the legal recognition of marriage or divorce envisaged in this Bill were aware of the full nature of their situation and the consequences. In the Divorce Reform Act, there is a Section dealing with reconciliation and so forth. One hopes that both parties will be aware of what is happening and that wives, in particular, will be aware of the probable loss of rights which could follow from the recognition of their divorce in this country.
  I shall not go at this time into the other problems of maintenance, especially the problems of enforcement of maintenance orders if one party goes abroad, a matter which I have raised with the Solicitor-General in recent weeks. But it is important that those who may be affected by this Measure shall be aware of what is happening and the consequences, especially concerning the wives and children.
  There are the added problems created when husbands or wives, after recognition of the proceedings, go abroad, with

  1561
  all the accompany difficulties which that may bring.
  Those are some of the points on which, as a layman, I have been concerned. We are dealing here, among others, with people who may be less able to look after their rights or be aware of all the implications of their situation. I hope that the Bill will be followed by measures to make these matters known so that the consequences may not be unexpected at a later date. In any case, if husbands, or wives, are not responsible, as they may be under British legislation, for consequences following divorce, the State may have to assume responsibility. This is another wide point to be considered in due course.
  Having looked through the work to which I have referred, "The Formulation and Annulment of Marriage", which has nearly 470 pages dealing with all the requirements of existing British legislation, I can well imagine the immensity of the job before us, especially when we come to consider foreign and other divorces. I hope that the Solicitor-General will be able to give some assurances on the points which I have raised.
  Mr. Edward Lyons: We welcome the Bill, but it could give rise to some abuse. For the first time, the British courts will recognise divorces granted by the country of nationality of the person obtaining the divorce. As I understand it, he may at present be domiciled in England, so that a foreign national domiciled in England could go to his solicitor wanting to divorce his wife, and the solicitor could say to him, "You have no grounds at the moment in England, but you happen to be a national of X country. Go there for a divorce." Or he might say, "Go to the country of which you are a national, where the laws as to maintenance are more lax, and divorce your wife there".
  In other words, from now on, there will be people in this country who will have a choice of where to obtain a divorce according to which place suits them better—England, the country of their domicile, or the country of which they are a national if that country is prepared to divorce its own nationals even though they are not domiciled in the country of which they are nationals.
  1562
  Therefore, although the Bill would reduce the number of limping marriages, it will give rise to more calculation among lawyers, and it may give unfair advantages to certain people, particularly men, in obtaining divorces more easily and avoiding responsibility for maintenance.
  The Bill, as has been said, is silent about the enforceability of the wife's right to maintenance where the divorce is granted overseas. One hopes that there will be legislation soon to enable the courts in this country to ensure that wives living here who had been divorced abroad would have their rights to maintenance protected.
  This relates also to the protection of polygamous and potentially polygamous marriages, which arose in discussions on the Nullity of Marriages Bill. The Committee may be aware that, although we will consider someone married who married by a polygamous form, say, in Pakistan, we will not enforce that marriage in terms of maintenance or in any other way in this country. So a wife, who may be the only wife of a husband but who was married potentially polygamously under the religious customs, for example, in Pakistan, can be thrown off by her husband here and she cannot go to the English courts for maintenance. The State may step in and provide her with social security, but the British legal system does not permit her to claim maintenance against her husband.
  There are growing numbers of people in this country who were married under a potentially polygamous form, under a religious ceremony, for example, in Asia, and it seems that the time has now come when the wives of those marriages living in England should be entitled to claim maintenance in the same way as any other wife living here can do when the husband is guilty of a matrimonial offence. That, too, produces the complication that if a man has three wives, he is not committing adultery if he confines his attention to only the three, but if he were to have sexual relations with a fourth, not being a wife, the other three wives would be able, and in my submission should be able, to claim maintenance against him. That is rather complex, but it is clear that we will reduce limping marriages by the Bill, but

  1563
  increase the abilities of certain husbands to prevent their wives from having their just rights, and will enable certain spouses to obtain divorces elsewhere which the law of England would not enable them to obtain.
  Although we now permit a wife who is not domiciled in England, or whose husband is not domiciled in England, to divorce here if she has lived here for three years, we do not extend that to wives whose husbands are domiciled in Scotland. In other words, a wife of a Yemeni or a Frenchman living here for three years, if the husband is domiciled in one of those countries, can take divorce proceedings here and get a divorce; but not if the husband is domiciled in Scotland, even though that husband is resident in England. So if a couple live in England and the husband is really domiciled in Scotland and the wife wants a divorce, she cannot do it in England; she has to go to Scotland. Nothing in the Bill alters that situation.
  It seems absolutely absurd. First, the woman may be a poor, working woman—the English solicitors do not understand Scots law anyway and the same presumably applies in reverse in Scotland. The consequence is that considerable extra expense has to be incurred for a woman to go to Scotland, to have Scottish legal agents employed. There are also questions of legal aid, because I am not entirely clear that the English Law Society is prepared to give legal aid to an English woman living in England when the husband is domiciled in Scotland and she wishes to divorce him. We ought to reach a stage where if an Englishwoman wants to divorce her Scottish-domiciled husband, she should be able to do so in England, and such divorces should be recognised.
  I appreciate that this is not entirely within the scope of the Bill. One would wish, with the world shrinking as it is, for, a Royal Commission to be set up to try to simplify English and Scottish law, to take the best from both, rather than to go on in this curious way when it is easier to get a divorce if one is married to a foreigner and one is living in England than it is to get a divorce if one is living in England and is married to a Scot, which is an absurdity in so small an island as this.
  1564
  With those comments and reservations, I welcome the Bill.
  11.24 a.m.
  Mr. Silkin: I listened with great interest to the practical remarks of my hon. Friend the Member for Bradford, East (Mr. Edward Lyons), who always has a knack of putting his finger on the points which require to be looked at. Although he rightly said that many of the points he raised were outside the scope of the Bill, there is much to be be said for looking at this whole question, particularly of the assimilation of English and Scottish law, to see what can be done.
  I am not sure that I would agree with him entirely that a Royal Commission would be appropriate. The Law Commissions Act expressly stated that one of the functions of the two Law Commissions was to assimilate English and Scottish law. A useful report on this occasion has been produced by the two Law Commissions working in harmony, as so often happens. The Government might feel that the proper course would be to ask those two Commissions together to look at this whole wide subject, to see whether we can move towards a comprehensive family system, embracing everyone living in the United Kingdom.
  Sir Elwyn Jones: Is my hon. and learned Friend aware that the English and Welsh Law Commission and the Scottish Commission not only work together harmoniously, but recently did so in Cardiff, the capital city of Wales?
  Mr. Silkin: I am obliged to my right hon. and learned Friend. I must plead the fault of not mentioning the country of my birth and his, which customarily and wrongly one tends to embrace in the term "England".
  Tributes have been paid to the Law Commission and others. I think it would be right to pay a tribute to the context of this debate to The Hague Conference on Private International Law, whose efforts produced the Convention upon which the Bill is based. I had the privilege of coming into contact with The Hague Conference a great deal when I was a member of the Council of Europe, and I know what valuable work is done by it.
  It is of interest that the countries which took part in the work of preparing the

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  Convention were limited in number and it is an indication of the forward-looking approach of this country that, although there were only 24 countries represented on the Conference, of which all but four were European countries, and although on the 16th February, when the Bill was introduced in another place, we were the only signatory of the Convention—perhaps the hon. and learned Gentleman would tell us what the present position is—and although the Convention itself does not enter into force until there are three instruments of ratification, where-upon it becomes open to any country, none the less we have gone forward, as the last Government promised, with this legislation. At present we are standing on our own and, as has been said, we are going beyond the bounds of what the Convention would require, and I welcome that.
  There are one or two points which I will raise which may be said to be Committee points, and I heed your warnings, Mr. Gurden. I mention them only to give the learned Solicitor-General warning so that he may consider them, and I do not particularly expect him to reply to them today. They occurred to me on reading the Bill and the debates in the other place.
  First, it seems to be generally accepted—indeed, much of the debate in the other place was founded upon the assumption—that the Bill will apply so as to recognise those divorces which are not the subject of court proceedings, such as the Talak system. I do not dissent from that intention, but the Bill appears to be orientated very much towards court proceedings.
  Several Clauses seem to depend upon court proceedings. For instance Clause 8(2) talks about notice of proceedings and says:
  "This Act does not require the recognition of the validity of an overseas divorce … and if it was obtained by one spouse … without such steps having been taken for giving notice of the proceedings to the other spouse as … should reasonably have been taken."
  Clause 5 says:
  "… any finding of fact made in the proceedings by means of which the divorce or legal separation was obtained …".
  Looking at those Clauses in isolation from what was said in the other place
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  about the intention, one might suppose that we were dealing only with divorces which were the result of some sort of court proceeding. We are told that that is not so.
  We have the overall provision in Clause 8(2)(b) which excludes those divorces the recognition of which would manifestly be contrary to public policy, and there may well be a difficult border line between divorces of that kind and divorces which are perfectly proper according to the particular system of marriage giving rise to them, but where there is nothing necessary other than for the divorcer to say, "I divorce you" three times, and that is virtually an end of the matter. For the avoidance of doubt it may be desirable to insert a provision to make it clear that that kind of divorce is covered. The hon. and learned Gentleman might consider that before the Committee stage.
  There is another point which the Committee may like to think about in the same way. Clause 4(2) provides that where a legal separation is converted in the country of origin into a divorce, the validity of that divorce is recognised, even if, taken on its own, it would not have fulfilled the qualifications in the Bill as to the date of nationality, or habitual residence, for example. What the Bill does not expressly say is whether, if what is recognised is a legal separation and not a divorce, it is recognised in the sense that it is regarded as being the equivalent of a judicial separation in this country, so that in this country it may in due course be converted into a divorce, given the necessary jurisdiction. One would have thought that that ought to be so, but perhaps the hon. and learned Gentleman will think about that, too.
  Having raised those few points and invited the hon. and learned Gentleman to say something about the suggestions of my hon. Friend the Member for Bradford, East, I, too, add my welcome to the Bill.
  11.32 a.m.
  The Solicitor-General: By leave of the Committee; may I shortly reply? I shall not deal with the avowedly Committee points just put to me by the hon. and learned Gentleman the Member for Dulwich (Mr. S. C. Silkin), not because they do not deserve consideration, but

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  because I have not been able to give them the consideration they deserve.
  I very much appreciate the welcome for the Bill by all hon. Members who have spoken and I join in expressing thanks to the Law Commissioners for the prolonged and painstaking work they had to do in order to produce these recommendations. One or two hon. Members seemed to speak with diffidence. My hon. and gallant Friend the Member for Eye (Sir H. Harrison) contributed as a layman in these proceedings, and the hon. Member for Newark (Mr. Bishop) suggested that he, too, was a layman. He is now a semi-fledged expert on these matters and the kind of animal who makes a useful contribution, if he will forgive me for putting it that way, with a foot in both worlds. All hon. Members who take part in these discussions are contributing because we are dealing with human problems on which it is wrong for lawyers to be regarded as having any kind of exclusive prerogative.
  The point raised by my hon. and gallant Friend about the position of foreign countries arises in two halves. In general terms, the validity of an overseas decree, if it is to secure recognition in this country, must be something obtained by judicial or other proceedings in any country outside the British Isles and effective under the law of that country. In order to reach, as it were, first base for those purposes, it would have to be established that the country in question was indeed a country.
  That sounds like a circular question, but one can imagine the difficult questions that could arise in respect of proclaimed courts in proclaimed break-away countries, whether in the Indian subcontinent, or in Africa. It is a question which would have to be looked at in each case to see whether there was something that could be acknowledged as a country which had an effective system of law. In considering that, our courts would have to apply their usual tests and would, no doubt, in some cases be guided by a certificate from the Secretary of State for Foreign Affairs as to whether we recognised such a place as a country before the question could arise as to whether the decree was effective in the law of that country.
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  I am sorry if that seems to be an unsatisfactory answer to a question posed in general terms, but I am hesitant to give particular answers to particular hypothetical examples, because they might all be slightly different. One would have to be satisfied that it was a country and that the decree was effective in the context of the law of that country.
  Rhodesian divorces have been a matter of discussion and concern, and they have been considered and debated in the House this year. Starting from first principles, the position is that for a decree granted in Rhodesia to be recognised in this country, it would have to be effective under the law of Rhodesia, and whether it was so effective is a question which would have to be determined in the courts of this country by reference to the particular circumstances.
  So far, there has been one case before the courts of this country, as hon. Members will know, the Adams case, in which the question arose. The noble and learned Lord, Lord Simon, who was then still the President of the Probate, Divorce and Admiralty Division, held that a decree granted in the Adams case was not valid because the judge in question had been appointed after the unilateral declaration of independence and had not been appointed in accordance with the law in Southern Rhodesia, and as it has remained in force and as laid down by Parliament in this country. He had been appointed under the law claimed to be effective in Rhodesia by the current regime there; so the decision in that case was that a post-U.D.I. appointed judge could not grant a valid decree.
  Other possible variations and permutations will obviously occur to hon. Members regarding the validity of the appointment of particular judges. Another case is shortly to come before the courts in this country dealing with one of those variations about which the President of the Probate, Divorce and Admiralty Division made some observations in the Adams case. I do not think that I should try to forecast the outcome on that point.
  As a result of the decision in the Adams case, the Southern Rhodesia (Matrimonial Jurisdiction) Order, 1970, was introduced and approved by Parliament in order to mitigate the hardship

  1569
  that in certain cases valid divorces could not be obtained in Southern Rhodesia and in other cases divorces already obtained there would not be regarded as valid and effective in this country. Speaking broadly, that order confers jurisdiction on the courts of this country to grant decrees in respect of people who were domiciled in Southern Rhodesia and who would not under our ordinary law qualify for divorces in this country, but who are enabled to do so on much easier qualifying conditions than the general law would allow.
  I hope that the Committee will agree with me that, although there are questions regarding the position of decrees of divorce pronounced in Southern Rhodesia which need consideration, they are questions which must be considered in the context of the continuing emergency—if that is still the right word to apply to it—and of the law which this Parliament can pass and has already passed to deal with the problems which arise.
  Sir Elwyn Jones: Does what the hon. and learned Solicitor-General has just said mean that the Bill has no impact upon recognition of Rhodesian court decrees of divorce?
  The Solicitor-General: The Bill leaves it to the courts of this country to decide whether a decree pronounced in Rhodesia is effective under the law of that country, and it leaves it to Parliament to decide, as it has done in the 1970 Order to which I referred, what, for that purpose, the law of that country should be. The Bill—rightly, the Committee may feel—does not seek to change that, because it would not be right to intrude a particular variation in the context of a general Bill.
  The hon. Member for Bradford, East (Mr. Edward Lyons) raised a number of interesting points. I shall not comment on all of them. He drew attention to the possibility that, by reference to nationality as a ground of recognition of overseas decrees, we might be introducing a dangerously wide or new principle. Certainly it is a new principle formulated in that form, although it was one of the foundations of the decision in the Indyka case.
  The hon. Member may have overstated the extent of the danger, because at the moment a person claiming foreign
  1570
  nationality—an American, for example—can secure a divorce decree in a state or states of the United States, dependent not so much on his nationality, as on other very lax qualifying conditions, which would give rise to exactly the sort of danger the hon. Gentleman has in mind. The consequence would be that the wife, if she were left in this country, would be the other half of a limping marriage, because we should not recognise the divorce, although the reality would be that the marriage had come to an end. The consequence even now would be that she would have no effective remedy in respect of maintenance. It may therefore be thought that, by dealing with the "limping" aspect, one is at least clarifying on a wider basis the matrimonial status, although I accept that it is still necessary to try to deal, as we hope to do, with the problem of reciprocal enforcement of maintenance orders.
  The hon. Gentleman also mentioned polygamous marriages. He and I exchanged observations about those during the proceedings on the Nullity of Marriage Bill. I must reiterate what I then said: important though the way in which the courts of this country handle polygamous marriages is certainly likely to become, it is much too difficult a question to answer lightly and it is one which—happily, the Committee may think—is outside the scope of the Bill.
  The hon. Gentleman also raised the question of conflicting domiciles in the United Kingdom. This is certainly an interesting point and, once again, it is difficult. In its Working Paper No. 28 the Law Commission made proposals for jurisdiction in the course of which it considered whether the basis on which English, Scottish and Northern Irish courts could take jurisdiction could be harmonised. It expressed the view, which seems to me to make sense, that it would be difficult to move in the direction suggested by the hon. Gentleman until the substantive divorce law within those jurisdictions was brought into line.
  We must recognise—and I am sure that the hon. Member for Dumfries (Mr. Monro) would wish me to recognise—that the divorce laws of Scotland, England and Wales are founded upon different traditions, backgrounds and patterns of behaviour. The matter is now being considered by another Standing Committee.

  1571
  When on the Latey Committee we had to consider the harmonisation of the laws about consent to marry as between England, Wales and Scotland, we were surprised by the extent of the variation. It would not be right in the context of procedural matters to try to produce a shotgun marriage between England and Wales and Scotland in substantive law if that had to be done before we could harmonise the jurisdictional considerations.
  Therefore, I hope that the Committee will agree that, while assimilation is desirable, it must be undertaken at a pace which both countries will accept, and that it is in that context that we must look at the harmonisation of competing jurisdictions.
  Mr. Lyons: What would the Solicitor-General say to a simple extension of the present situation, namely, that a three years' residence for a wife in England should be enough to enable her to divorce in England a person demiciled in Scotland in the same way as she can divorce a person domiciled in America, France, or wherever it is? In other words, one would just include Scotland in the present general definition.
  The Solicitor-General: I would say that that is one of the questions considered by the Law Commission in its working paper upon that footing and upon variations such as a shorter residential qualifying period. But it points out that without changes in the substantive law and without provision for staying competing proceedings in both countries and various other changes, it would be difficult procedurally to move to that. It would lead to the encouragement to forum shopping within this country. People would pop from one jurisdiction to another and would reside there for the necessary period, and so on.
  It would seem not to be a rational basis for sorting out the problem in question, although I agree with the hon. Member that I have myself often been irritated when advising people in that kind of situation to find that it is more difficult to advise them when the spouse comes from Northern Ireland than when he comes from North Carolina. However, it is a matter which is the subject of a Law Commission working paper, and I think that it must be considered in the context of jurisdiction.
  1572
  The hon. Member for Newark referred to a number of interesting matters. He pointed to the difficulties, perhaps inherent under the provisions of the Bill, of proving habitual residence. Unhappily, this is one of the matters about which there probably always will be difficulty. I suggest that it will be a great deal easier to prove habitual residence than to prove domicile, because domicile is a metaphysical concept.
  If the hon. Gentleman has studied any of the cases about this and has seen the extent to which one has to delve back into the motivations of people to discover where their domicile is, he will agree that "habitual residence" is better and certainly easier than establishing "real and substantial connection". If he were to say to his constituents, "You must tell me that you have a real and substantial connection", they would understand him less, I fancy, than if he were to say, "You are habitually resident here".
  Mr. Silkin: I wonder whether the Solicitor-General would take the view on Clause 5(2) that a finding of fact of habitual residence, or whatever it may be that is necessary in order to found the jurisdiction of the foreign court, would be implied from the fact that it had acted, so that one would not need to prove that especially. It would seem a little odd if one had to prove both the divorce and that upon which the jurisdiction of the foreign court was founded.
  The Solicitor-General: That is a part of the Bill in respect of which there have been some changes in another place. There have been arguments about that, and I would rather not answer at the moment. Certainly we will look at it later.
  The other point made by the hon. Member for Newark was that it is important that people should know what is going on and be aware of the consequences of the Bill. I entirely agree. Many of the substantive problems still remain to be solved, partly by improved enforcement of maintenance orders—and we can come to that—partly by alterations in matrimonial property law. Even aside from that, it is important that people in respect of whom foreign decrees have already been pronounced should know that this legislation is going

  1573
  through, although I dare say that it will appear in lights as the lead headline of every local paper in the country that we are considering this legislation!
  Sir Elwyn Jones: Not in the Stratford Express.
  The Solicitor-General: I think that the right hon. and learned Member is probably right. Nor, I fancy, in the Surrey Mirror. But at least it will be more likely to be observed that Parliament has made these changes than a decision in the courts, which can effect as substantial a change as the Indyka case did. It will be known that we are providing for recognition on this extended basis.
  The points raised by the hon. and learned Member for Dulwich will certainly be considered, so that I am in a position to answer them if and when he raises them in Standing Committee. My impression is that Clause 2 makes it plain that this is not concerned only with judicial proceedings. For example, speaking of notice of the proceedings, Clause 8(2) says:
  "having regard to the nature of the proceedings … should reasonably have been taken"
  This indicates that both kinds of proceedings are in mind, judicial and non-judicial.
  One other adherent to the Convention is shortly expected. Indeed, the slowness of progress in securing recruits to the banner may be an additional reason for our proceeding in the way proposed and

  THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:

  Mr. Gurden (Chairman)

  Mr. McCrindle

  Mr. Ronald Bell

  Mr. Madel

  Mr. Bishop

  Mr. Monro

  Mr. Bray

  Mr. Redmond

  Mr. Harper

  Mr. S. C. Silkin

  Sir H. Harrison

  The Solicitor-General

  Mr. Hiley

  Mr. Stokes

  Sir Elwyn Jones

  Mr. Walters

  Mr. Edward Lyons

  Mr. Weitzman

  extending these provisions even to countries which do not adhere to the Convention.
  I hope that I have dealt with the points raised by hon. Members so far as I am able. Others will certainly be looked at before the Bill proceeds to Standing Committee. It is upon that basis that I commend the Bill to the Committee.
  Question put and agreed to.
  The Solicitor-General: Perhaps I may be allowed, on behalf of the Committee, to express our gratitude to you, Mr. Gurden, for presiding over us, and in particular for the firmness with which you reminded hon. Members of the fact that Committee points are for consideration in Standing Committee. I am sure that has helped to accelerate the proceedings and bring us to the close of this stage.
  Sir Elwyn Jones: I reciprocate that expression of gratitude, Mr. Gurden, and say that we hope that we may have your guidance at the later stages of the Bill.
  The Chairman: I am grateful to hon. Members for helping the expedition of the Bill, and to those hon. Members who did not make a contribution; they helped, too.
  Ordered,
  That the Chairman do now report to the House that the Committee recommend that the Recognition of Divorces and Legal Separations Bill [Lords] ought to be read a Second time.
  Committee rose at eight minutes to Twelve o'clock.

  Second Reading Committee
  Wednesday, 5th May, 1971
  [MRS. JOYCE BUTLER in the Chair]

  The Committee consisted of the following Members:

  Mrs. Joyce Butler (Chairman)

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

  Mahon, Mr. Simon (Bootle)

  Bowden, Mr. Andrew (Brighton, Kemptown)

  Marsden, Mr. Frank (Liverpool, Scotland

  Clegg, Mr. Walter (North Fylde)

  Mason, Mr. Roy (Barnsley)

  Costain, Mr. A. P. (Folkestone and Hythe)

  Nott, Mr. John (St. Ives)

  Dunn, Mr. James A. (Liverpool, Kirkdale)

  Rees, Mr. Peter (Dover)

  Grant, Mr. Anthony (Under-Secretary of State for Trade and Industry)

  Shaw, Mr. Michael (Scarborough and Whitby)

  Harper, Mr. Joseph (Pontefract)

  Hughes, Mr. Mark (Durham)

  Taylor, Sir Charles (Eastbourne)

  Johnson, Mr. James (Kingston upon Hull, West)

  Taylor, Mr. Frank (Manchester, Moss Side)

  King, Mr. Evelyn (Dorset, South)

  Woodnutt, Mr. Mark (Isle of Wight)

  Miss J. Beston, (Committee Clerk)

  MERCHANT SHIPPING (OIL POLLUTION) BILL [LORDS]
  Resolved,
  That if the proceedings on the Merchant Shipping (Oil Pollution) Bill [Lords] are not completed at this day's sitting, the Committee do meet on Wednesday next at half past Ten o'clock.—[Mr. Anthony Grant.]
  The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): I beg to move,
  That the Chairman do now report to the House that the Committee recommend that the Merchant Shipping (Oil Pollution) Bill [Lords] ought to be read a Second time.
  In October last year, I had the task of introducing the Oil in Navigable Waters Bill which was intended primarily to enable the Government to accept Amendments to the International Convention for the Prevention of Oil Pollu-
  tion of the Sea by Oil, aimed at reducing pollution. The Merchant Shipping (Oil Pollution) Bill, which comes to us unamended from another place is concerned with questions of liability and compensation should oil pollution occur and is based on another Convention, namely the Convention on Civil Liability for Oil Pollution Damage.
  It was the "Torrey Canyon" disaster that revealed certain gaps in the law relating to compensation for oil pollution damage. In particular, it raised doubts whether, in some circumstances, cleanup costs were always recoverable—particularly if the proceedings were based on negligence—and whether the extent of shipowners' liability was high enough for such damage. There were also considerable jurisdictional difficulties in bringing proceedings at all.
  An international legal conference involving 48 countries was accordingly held in Brussels in 1969. Although there were wide differences of view at the Conference on such basic points as the person on whom liability was to be imposed, the type of liability and the limits of liability which would be appropriate, a compromise was eventually reached which was largely formulated and put forward by Lord Devlin, the leader of the United Kingdom delegation. As a result, the Conference adopted the Convention on Civil Liability for Oil Pollution Damage which was laid before Parliament last July.
  The main provisions of this Convention are, first, that the shipowner should be liable, regardless of fault, for oil pollution damage caused by escapes of oil from a loaded tanker, except where such damage results from, for instance, an act of war, or the action of a third party intended to cause damage. Liability also covers clean-up costs.
  Secondly, in the absence of fault or privity—by which we mean an element of personal fault as opposed to responsibility for the acts of others, on the owner's part—he should be entitled to limit his liability to 2,000 gold francs—about £56—per ton of his ship's tonnage, with a ceiling of 210 million gold francs, or about £5·8 million. This limitation fund will be available to victims of oil pollution damage only and will be separate from any other limitation fund that the owner may be entitled to establish, for example, in respect of personal injury.
  Thirdly, the Conference decided that compulsory insurance with direct recourse by the claimant against the insurer should be applied.
  As I have said, the Convention was a compromise. The United Kingdom opposed the provisions for strict liability on the owner and direct recourse against insurers, particularly because the insurer is deprived of almost all the defences he would otherwise have against his insured. Nevertheless, taken as a whole, the advantages to us as a claimant—bearing in mind that the majority of tankers passing our coasts will be compulsorily insured against polluting the shores of Convention States—far outweigh the
  1578
  disadvantages, because we hope that most West European Governments will subscribe to the Convention.
  The Convention enters into force 90 days after ratification by eight States, including five each with one million gross tons of tankers. No country has as yet ratified the Convention, but the Bill puts the United Kingdom in a position to do so. The Bill goes beyond the Convention in that it makes special provision for clean-up costs in certain cases not covered by the Convention; for example, where fuel oil is spilled from a dry cargo vessel. It also applies to all ships and not just to sea-going vessels. Neither of these points is in our view in conflict with the terms or the spirit of the Convention. They amend the law in cases to which the Convention does not apply.
  Provisions concerning liability are not always easy to follow, and I should like to run briefly through the Bill. Should any points arise in the debate, Mrs. Butler, and I am fortunate to catch your eye, I shall, with the permission of the Committee, deal with them at the end of the debate.
  Clause 1 makes the shipowner liable for oil pollution damage in the United Kingdom and in Convention countries, and for the cost of measures taken to prevent or minimise it, resulting from the escape of oil from a tanker.
  Clause 2 provides for exceptions from liability, where the owner shows that the discharge or escape of oil is due to an act of war or similar circumstances, or
  "… an exceptional, inevitable and irresistible natural phenomenon …"
  There is a significance in these words—they mean roughly what is generally termed an act of God. I believe act of of God is something which is not entirely understood in other countries, but that is the reason for the words.
  Also excluded is the deliberate act or omission of a third party intended to cause damage, for example, sabotage by a person outside the ship or wholly to the negligence of Government or other authority in maintaining lights or other navigation aids.
  The form of strict liability imposed on the owner by Clauses 1 and 2 taken together was a basic part of the compromise embodied in the Convention.

  1579
  This particular form of liability is imposed on the owner and no one else, so that the claimant knows that there is a person against whom he will be able to proceed. Even in cases involving the negligence of third parties he will be able to proceed directly against the tanker owner or his insurer without being left with only a possible case in negligence or otherwise against the third party. However, subject to certain limitations, nothing in the Bill will affect his rights against such third parties as there may be.
  Clause 3 confines the owner's liability for oil pollution damage to that imposed by Clause 1, and prevents his servants or agents being open to actions.
  Clause 4 permits the shipowner to limit his liability to 2,000 gold francs for each ton of the ship's tonnage—that is to say, £56—with a maximum of 210 million gold francs—or £5·8 million—except where there has been "actual fault or privity" on his part. As hon. Members may appreciate, these sums may well not be sufficient to cover damage from a catastrophic disaster, but work is already proceeding in I.M.C.O. to provide further compensation over and above that in the Bill for victims of oil pollution. The figures in the Convention represent the highest limits insurable by shipowners, and the source of the new fund will be the oil companies.
  Clause 5 lays down the procedure for the setting up and distribution of the limitation fund.
  Clause 6 ensures that where an owner is entitled to limit his liability and has paid the amount of his limitation fund into court, any ship or other property of his which may have been arrested is to be released.
  Clause 7 deals with the situation where an owner is liable under the Bill and has paid his limitation fund into court and proceedings are being or might be brought against someone else concerned in the management or navigation of the vessel, such as a charterer under the ordinary rules of law, and that person is entitled to limit his liability under the merchant shipping Acts. In such a case, it is contemplated that a claimant should be confined to his remedy against the owner and the fund set up by him.
  Clause 8 covers the situation where an owner may be liable for damage in both
  1580
  the United Kingdom and some other country which is party to the Convention.
  Clause 9 prevents any court in the United Kingdom hearing a claim under Clause 1 more than three years after the damage occurred or more than six years after the original incident.
  Clause 10 requires any ship registered in the United Kingdom carrying a cargo of more than 2,000 tons of oil in bulk, wherever it may be, or any ship registered elsewhere entering or leaving a United Kingdom port or terminal with such a cargo, to carry a certificate of insurance—or other security—covering its owner's potential liability for oil pollution damage. The Clause makes the absence of a certificate, rather than the absence of cover, a criminal offence. It provides for a fine of up to £15,000 where no certificate is carried, and a fine of up to £200 for failing to produce an existing certificate.
  Ships requiring a certificate of insurance fall into three categories: United Kingdom ships, ships registered in other Convention countries, and ships registered in non-Convention countries. As regards ships registered in other Convention countries, it is the responsibility of their Governments to issue certificates, and the appropriate United Kingdom authorities will accept these. At to ships registered in non-Convention countries, the Clause gives the Secretary of State powers to recognise specific countries—both Convention and non-Convention as acceptable authorities for the issue of certificates. The object of these powers would be to ensure that certificates were worth while, and that they were given by countries which were able to appreciate the creditability of the insurer or of the person giving the security.
  Clause 11 gives the Secretary of State powers to issue certificates for United Kingdom ships. It also enables him to refuse to issue a certificate if he is dissatisfied with the reliability of the insurer or the extent of cover provided. These arrangements respect the international character of the marine insurance market, and leave it open to United Kingdom shipowners, if they wish, to place their insurance with foreign marine insurers.
  Clause 12 implements that part of the 1969 Convention which provides for the direct action by a claimant against the

  1581
  insurer. The insurer will be able to limit his liability to the figure appropriate to the owner, but will only be able to invoke the defences available to the owner and not to plead defences which would be normally open to him as an insurer—for example, misrepresentation—other than that the damage was caused by the wilful misconduct of the owner.
  Clause 13 implements the provisions relating to jurisdiction and enforcement of judgments. It makes it clear that claims under Clause 1 come within the jurisdiction of the Admiralty Court. However, it provides, following the Convention, that a claimant is only to bring proceedings for pollution damage in a State where damage has occurred, and enables the judgments of other Convention countries to be registered in this country and enforced as if they were judgments of our own courts.
  Clause 14 makes special provision for ships owned by Governments or used for Government purposes.
  Clause 15 is designed to help a claimant in cases not covered by Clause 1 where the Convention does not apply; for example, where fuel oil is discharged or escapes from the bunkers of a dry cargo ship or a tanker in ballast through the carelessness of the crew. It does not impose any fundamentally new type of liability on anybody, but makes it clear that where oil is discharged through carelessness and, under existing principles of law, proceedings on the part of any person, for example, the owner of the neighbouring beaches, would lie against the person responsible, then anybody who has taken reasonable measures to clear up the pollution will be able to recover the cost of those measures from that person.
  In particular, this provision should assist local and harbour authorities who consider that they may be met with the argument that, in incurring clean-up costs, they were not acting in defence of a proprietary interest or in pursuance of a duty and consequently could not recover. The Clause should overcome that difficulty.
  Clause 16 applies to hovercraft, and I think that Clauses 17, 18 and 19 speak for themselves. If there are any queries on them, I shall be happy to deal with them when I wind up.
  Clause 20 is important because it provides for different parts of the Bill to be brought into effect on different dates. A number of parts of the Bill, particularly those relating to the nature of liability for oil pollution—Clauses 1, 3 and 15—can be brought into effect immediately. Others can be brought into effect only when the necessary steps have been taken internationally for the purpose. For instance, Clauses 4 to 7 are incompatible with the existing 1957 Brussels Convention on Limitation of Liability, and we shall have to reach some arrangement with the signatories to that Convention. Most of the Bill, including much of the compulsory insurance provisions, depends on the 1969 Convention being in force.
  I mentioned earlier the work going on at I.M.C.O. on the setting up of a fund to provide compensation to at least double the limits provided for in the Bill. The United Kingdom has co-operated fully, and progress in I.M.C.O. has been rapid. A diplomatic conference is planned for December of this year. Whether we shall ultimately find the final package acceptable is too early for me to say; we are, however, behind the work in principle, as are other signatories of the liability Convention.
  There are, additionally, two important voluntary schemes, set up by the tanker owners and the oil companies respectively. One is the Tanker Owners Voluntary Agreement concerning Liability for Oil Pollution, known as TOVALOP. This is an agreement between tanker owners to pay larger sums in compensation—£4·2 million or £42 per ton—for oil pollution damage than they are obliged to under current law. The international oil industry has also set up, from 1st April, 1971, a fund to pay compensation beyond this up to a maximum of 30 million dollars per incident. It is called Contract Regarding an Interim Supplement to Tanker Liability for Oil Pollution—more popularly known as CRISTAL. The Government welcome these interim arrangements pending the entry into force of the I.M.C.O. Convention.
  As a major importer of oil and an island surrounded by busy sea lanes, the United Kingdom has a major interest in promoting the entry into force of the Convention. The potential dangers have been kept in our mind by the run of recent incidents, particularly in the

  1583
  Channel. It is the Government's view that, if we are in a position to ratify the Convention, we will encourage other nations to act similarly. I understand that some of our West European friends are already working on whatever domestic legislation is necessary, and I hope that they will give this work a high priority. I think that the Committee will agree that the present state of the law in this field is far from satisfactory, and that the Convention and the Bill will go a long way towards guaranteeing a claimant recompense for damage or losses suffered.
  I must stress that the Bill is designed to enable us to ratify the Convention. On one or two rather technical points we intend to propose Amendments arising from the discussions in another place and from representations made to us about detailed effects of the Bill. Generally speaking, however, the provisions of the Convention have to be accepted as a package: even though we do not like all its provisions, in our view the advantages far outweigh the disadvantages. We cannot amend the Bill in such a way as to alter the substantive provisions of the Convention, and still ratify it. The Bill represents a substantial improvement of the law in this field, and I hope that hon. Members will give it their full support.
  10.48 a.m.
  Mr. Roy Mason: The whole Committee will be obliged to the hon. Gentleman for his lengthy and detailed explanation of the Bill, for which, as he knows, there is an urgent need. It is one of those measures flowing from the 1969 Brussels Convention and, as he and most members of the Committee also know, one of those that we were preparing before we left office, as was the Oil in Navigable Waters Bill.
  The Committee must be aware that much has happened since 1969, when the Convention meeting took place, and since the preparation of the legislation on oil in navigable waters and of this Bill. The hon. Gentleman said, or implied, that many of the accidents, collisions, and strandings which have occurred in the Channel recently have acted as a spur to preparing this legislation and moving it through the House faster than would otherwise have happened. That is right. There have been many oil tankers in collision, strandings,
  1584
  loss of life—a series in our Channel that has caused us all much concern.
  But the perturbing features of all this is the slow-moving and cumbersome machinery of the Intergovernmental Maritime Consultative Organisation, the more rapid technological changes of the oil tankers in size, tonnage of oil carried, and manoeuvrability, and the resultant increase in accidents, loss of life, and serious threats of oil pollution in our straits and in the English Channel.
  To emphasise the point: I.M.C.O. decided, on 28th November, 1968, to convene an international conference, which was held in Brussels in November, 1969. The Bill had its Second Reading in another place in March, 1971. We are probably the first country to legislate. But, as the hon. Gentleman said, before the Convention is ratified, eight States must legislate, five of which must have a million gross tons of shipping each. Then another 90 days must elapse before the Convention is internationally recognised. So this is a very slow procedure.
  I know that we are dealing with international law covering international waters but, as no doubt most members of the Committee will recognise, we in the United Kingdom are likely to be the greatest sufferers from oil pollution. Of all countries, we have the greatest percentage of oil tanker accidents off our shores. It is certainly in our interests at least to speed up the I.M.C.O. procedures.
  Above all, it is more important to aim at regional agreements which recognise the most dangerous waters, and to obtain international recognition of them. For nearly two weeks there has been on the Order Paper a Motion headed "A Charter for Channel Safety". That charter—our charter for channel safety—is designed to establish such a regional agreement and, in particular, it is framed for the prevention of accidents and oil pollution, and not just to act after a threat of oil pollution on a big scale.
  The opening sentences of the Convention itself make a laudable preface to the Bill. The International Convention on Civil Liability for Oil Pollution Damage states:
  "The States Parties to the present Convention, conscious of the dangers of pollution posed by the worldwide maritime carriage of

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  oil in bulk, convinced of the need to ensure that adequate compensation is available to persons who suffer damage caused by pollution resulting from the escape or discharge of oil from ships, desiring to adopt uniform international rules and procedures for determining questions of liability and providing adequate compensation in such cases, have agreed …"
  this Convention. That is an admirable preface, and is the guts of the Convention itself.
  This is a substantial Bill. Having dealt with criminal liability in the Oil in Navigable Waters Measure, we are now moving on to civil liability and compensation.
  The hon. Gentleman mentioned some of the main points of the Bill, but five points crystallise it in my mind. First, it imposes a statutory financial liability upon an oil tanker owner for any oil pollution he causes; any losses incurred by those harmed by oil pollution; any damage done and the cleaning up costs involved. Second, the liability is unlimited if it is his own fault. Third, if there is discharge which is not his actual fault, and damage occurs and payment must be made, a ceiling of total cost is established; that is, £56 per ton of the ship's tonnage or a maximum of £5·8 million. Fourth, it applies only to oil tankers which carry in bulk a cargo of more than 2,000 tons of oil. Finally, a system of compulsory certification has to be established, showing that the vessel is covered for owner's liability in the case of oil pollution damage.
  These are great advances. Every local authority on our coastline, every Member of Parliament representing a coastal constituency, all those people who have been appalled at the damage caused in many ways by oil pollution, and the Government, too, in the light of the "Torrey Canyon" experience of establishing guilt and obtaining payment, will wish to see the Bill quickly enacted and then internationally ratified.
  I have a number of queries to put to the hon. Gentleman, and I hope that he will be able to give us more substantial replies. The first is in respect of Clause 2, which deals with the exceptions from liability. I shall quote the relevant passage:
  "(2) The owner of a ship from which persistent oil has been discharged or has
  1586
  escaped shall not incur liability under section 1 of this Act if he proves that the discharge or escape—…
  (c) was due wholly to the negligence or wrongful act of a government or other authority in exercising its function of maintaining lights or other navigational aids for the maintenance of which it was responsible."
  Subsection 2(c) may refer to coastal aids provided by Governments. That is not made clear. It could mean lights and navigational aids on ships, for which, in a State fleet, a Government might be responsible, or a firm which is responsible for the maintenance of the navigational equipment might be responsible.
  This is a loophole which ought to be blocked. In the English Channel there have been collisions and strandings due to inadequate or badly maintained navigational aids, and I know that my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) may even refer to the flags of convenience vessels which might prove to be more guilty than the rest. But Governments can be negligent, so can firms—"authorities" is a wide word to use in the Bill—yet have no responsibility for any oil pollution damage that is caused as a result of that negligence. It could pay oil tanker owners to have long-term contracts of maintenance with navigational equipment firms, so that, in the case of a stranding or a collision caused by officers of little experience or doubtful qualifications, who themselves have not kept the lights or navigational aids and equipment in good working order, they could easily opt out of pollution payments.
  Is that not feasible? Is it too much of an exaggeration? The Clause does not make it clear. There would seem to be a loophole. The Clause is badly drafted; it does not state whether it refers to coastal States, coastal aids, lights, or radar equipment on the shore line, or in State fleets. Firms supplying navigational equipment and aids on board ship could themselves be guilty and yet, according to the drafting of the Bill, they could opt out of payment for pollution damage. I hope that the hon. Gentleman will be able to give the Committee an explanation.
  Secondly, I draw the Minister's attention to Clause 10, which concerns fines. Is the Minister really satisfied that the

  1587
  evader of compulsory insurance against liability for pollution should, if caught, be liable to a fine of only up to £15,000 and, if he fails to produce a certificate, a derisory £200? I should have thought that the moods of Committees on these Bills in recent times would have indicated to the hon. Gentleman that these fines are regarded as small and derisory. He must consider bringing them into line with the fines that we imposed on those guilty of illegal discharges of oil into the sea when we passed the Oil in Navigable Waters Bill. I hope that the hon. Gentleman will agree to consider increasing the penalties so that we can appropriately consider Amendments in Standing Committee.
  I also draw the Minister's attention to the costs of pollution, which are dealt with in Clause 4. The costs relating to tonnage may be a good yardstick, but I am not very happy about it, and I am particularly unhappy about the £5·8 million maximum. That figure will stand for some time. To what tonnage does that ceiling now relate?—100,000 tonners? Already we have vessels of 150,000 tons and 250,000 tons on the high seas. A 375,000-tonner was launched only a fortnight ago in Japan. The size of oil tankers has already exceeded the ceiling in the Bill. I hope that the hon. Gentleman will be prepared to reconsider the ceiling figure.
  Let us examine this in more detail. The hon. Gentleman mentioned TOVALOP and CRISTAL. I should like to draw the attention of the Committee to the way in which these organisations have developed. TOVALOP is the Tanker Owners' Voluntary Agreement Concerning Liability for Oil Pollution. That agreement, signed in 1969, imposed responsibility upon participating tanker owners for reimbursing Governments to a maximum of 10 million dollars per incident for cleaning up oil spills and pollution. It covers 80 per cent. of the world's tanker tonnage.
  Since that agreement was established, CRISTAL has been formed—Contract Regarding Interim Supplement to Tanker Liability for Oil Pollution. It is a contract signed by a number of leading oil companies and the tanker owners as a further measure to fight oil pollution. Both bodies are ahead of any inter-
  1588
  national legislation, and credit ought to be given to them for it.
  The interesting feature of CRISTAL is that it not only supplements the TOVALOP agreement but provides for compensation up to 30 million dollars per incident involving the participating companies, and the oil companies which have been responsible for CRISTAL are themselves receiving over 70 per cent. of the crude oil and the fuel oil transported over the oceans.
  I draw attention to the provision for compensation of up to 30 million dollars per incident. That is well above the ceiling figure mentioned in the Bill. The oil companies themselves, internationally banded together, have a voluntary agreement under which they are prepared to pay more than we are prepared to put into legislation. The hon. Gentleman mentioned it in passing, but he did not stress the point. I want to quote the Chairman of the oil companies' International Marine Forum when they decided on this measure. He said:
  "Both the CRISTAL and TOVALOP agreements are designed primarily as interim measures pending the coming into force of international conventions dealing with tanker owner liability for all oil spills and a supplementary fund supported by cargo interests."
  In other words, when the Bill is enacted and international ratification follows, the total sum per incident will fall. That must be avoided. It must be deplored by any of us who are interested in dealing with the oil polluters. In the light of this possibility, perhaps the Minister will tell us whether he is giving thought to amending the ceiling figure.
  I hope the Committee is seized of my point; CRISTAL and TOVALOP—the internationally recognised voluntary agreements between tanker owners and oil companies—will immediately cease to have effect, in terms of their interim measures, as soon as Her Majesty's Government or any other Government ratify the Bill.
  The hon. Gentleman referred to the fact that at the 1969 Brussels Conference, I.M.C.O. agreed to set up an international compensation fund for oil pollution damage. That might be the bridging of the gap. It is to be based on two principles; first, that victims should be fully and adequately compensated under

  1589
  a system based upon the principle of strict liability and, secondly, that the fund should, in principle, relieve the ship-owner of the additional financial burden imposed by the present Convention.
  I know that work has begun on this new international agreement, but what of the time scale? As I have already indicated to the Committee, we think about a conference in 1968, we have it in 1969, and we are leading the world—and we introduce a small Bill two years after that. Three to four years elapse before the first major maritime nation in the world acts. Here we are considering an international agreement to pay the right compensation to the victims of oil pollution. The hon. Gentleman ought to indicate what the time scale is likely to be. In any case, we may have to re-enact the core of the Bill.
  Having in mind the TOVALOP and CRISTAL can collapse after two or three States have agreed on this measure, having given way to this legislation, and remembering that the ceiling rates will have fallen and, meanwhile, more large oil tankers will have taken to the seas, it is evident that there is likely to be a setback in terms of the payment of adequate compensation for oil pollution damage.
  Finally, we ought to be informed what progress in legislation other countries are making. It is essential to get ratification as quickly as possible. In particular, I should like to know whether France, Belgium and the Netherlands are making any progress. Have they started to legislate? Are they themselves pursuing the goal of making the polluter pay as urgently as we are? As we all know, especially hon. Members representing Channel coast constituencies, it is just as much in their interests as it is in ours.
  This Measure is welcomed by us all. Indeed, any anti-pollution Measure is bound to be very popular today. I only hope that other countries who are concerned will be seized of its importance, and will follow the British Government's lead to obtain speedly international recognition.
  11.9 a.m.
  Mr. Peter Rees: I have the honour to represent a coastal constituency, and I have seen at first hand over the past few
  1590
  months the devastation to the beaches of East Kent caused by oil pollution. I also had the privilege of accompanying my hon. Friend the Under-Secretary on a visit to a tanker during its enforced stay on the Goodwin Sands, and saw at first hand what measures his Ministry was taking to cope with any oil pollution.
  With that background of experience, I welcome the Bill. If I make any criticisms or comments about it, it is because I am concerned to see that its provisions are wide enough. I appreciate that it implements an international Convention, so that scope for amending it is not large; all the same, my hon. Friend has indicated that there is the possibility of technical Amendments. If, therefore, I look this particular gift horse in the mouth, it is only to ensure that its teeth are sharp enough. With that prelude, I wish to raise one or two matters which I hope he will be able to deal with later this morning.
  First of all, will the Bill cover damage to marine life outside territorial waters but inside the 12-mile fishery limit? I have it in mind particularly that off the coast of East Kent there are very important mussel beds that lie partly within and partly outside the three-mile limit. A severe oil pollution might well damage them irrevocably. Will either the country or individual fishermen be able to claim damage for loss of livelihood?
  Second, is the devastation to our beaches covered adequately? I can see that it is possible to quantify the cost of bulldozing and covering the beaches with detergent. One can quantify the cost of the men who have to be drafted in to cope with these emergencies. I have seen at first hand the devastation just prior to Easter and it did impose a great strain on the local authorities. Beyond that, how does one quantify in monetary terms the loss of amenity due to severe pollution of the beaches?
  I need not stress to my hon. Friend that the beaches at Deal, Walmer, Kings-down and St. Margaret's Bay have suffered acutely over the past few months, and I am not confident that they have been adequately cleaned up. This is not due to any lack of industry on the part of local authorities; the nature of the pollution is such that it is very difficult in the short run to make the beaches fit for holiday makers, and so on. Can one

  1591
  quantify that damage? If so, will one be able to recover it under the terms of this Bill?
  There is a smaller but none the less acute problem for those who have suffered. Some of my constituents with houses fronting the sea have found their houses covered with a fine oil film as a result of north-north-easterly winds whipping the oil slicks off the sea. Of course one can trace the oil to a discharge, or a wreck, but if householders in that situation were to claim under the Bill, might they be met with the plea that there was, in lawyers' terms, a novas actus interveniens? Was the causal chain broken? Did this really result from the discharge, or was it a new factor, an act of God, the wind whipping the oil off the sea?
  I hope that my hon. Friend will be able to give a reassurance on this point, because although it does not affect very many householders, it is obviously acutely worrying to those who find the facades of their houses covered with this noxious film, the stench of which persists for many days.
  There is always the problem of identification. Although the Bill purports to give remedies to people who suffer, we must consider the practical difficulties of bringing an action under it. I can illustrate this aspect by practical examples that occur to me as a result of the happenings before Easter in East Kent. We had a major tanker, the "Panther", carrying 25,000 tons, stranded on the Goodwins, and although luckily it was pulled off before it broke its back, there was some slight discharge over the days it was stranded. Over and above that, there were discharges, one understands, from the wrecks that are being systematically demolished on the Varne. The "Texaco Caribbean" and the "Brandenberg" are being blown up piece by piece. That inevitably liberates oil from their tanks. Over and above that, by an extraordinary mischance, in the weeks before Easter there was a strong north or north-easterly wind which brought in oil slicks, obviously of an earlier date.
  It seems to me that this will raise extraordinarily complicated questions of identification for anyone who wants to take advantage of the Bill. Can the Minister give us any helpful clarification
  1592
  on this point? It is not enough to say that there are theoretical remedies. One must consider the cost and the time involved for an householder or person whose livelihood is threatened, and reassure him that he has a practical remedy.
  Like the right hon. Gentleman the Member for Barnsley (Mr. Mason), I am a little worried about the scope of Clause 2. We are told that a tanker owner can avoid liability if he shows that the discharge or escape resulted from an
  "… exceptional, inevitable and irresistible natural phenomenon …"
  That phrase is not known to English Admiralty lawyers. It introduces a wholly new concept. Is a severe storm, for instance, an irrestible, inevitable and exceptional phenomenon? As the right hon. Gentleman the Member for Barnsley has pointed out, with tankers growing ever larger it may be that one day they will build something that is too large and it will break its back in a storm in the Straits of Dover. Will the owner then be able to plead that this was a natural phenomenon that was inevitable, exceptional and irresistible? It will be no comfort to my constituents to hear that the phenomenon was exceptional, inevitable and irresistible. They will be concerned with the practical consequences. I therefore ask my hon. Friend whether this phrase is a little too loose, a little too widely drawn?
  The right hon. Gentleman the Member for Barnsley has to a certain extent anticipated my worries over paragraph (c) of Clause 2. He talked about coastal lights. I have in mind, taking a practical example in the Straits of Dover, the wrecks on the Varne. They have been ringed around with lights, one understands, by Trinity House, but even so there have been some very close shaves in recent weeks. Would one of my constituents who suffered oil pollution because a tanker ran over those wrecks be involved in complex and expensive litigation, trying to establish how far it was the responsibility of the British Government to light those wrecks, and how far they had been effective in fulfilling their responsibilities? These are not fanciful problems, but real problems related to actual situations which have occurred in recent months in the Straits of Dover, with which I am acutely concerned.

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  These are some of the points that have worried me and I have no doubt that other hon. Gentlemen will find others. I have raised these points, not in any captious spirit, but to make certain that the mesh is drawn tightly enough. I welcome the Bill, but after the traumatic experiences of the past few months people on the east coast of Kent are profoundly concerned with these problems. They are not just academic problems, or things that have happened to the coast of Brittany; they do happen and have happened to the coast of Britain. We are concerned to see that any legislation passed by the Government is drawn as tightly as is consistent with the reasonable and economic importation of oil.
  11.18 a.m.
  Mr. John Prescott: I welcome the Bill. Many of its provisions follow the Convention recommendations, and it is also in line with the provisions contained in the Oil in Navigable Waters Bill. They are all aimed at tightening up restrictions, and attempting to deal with a very real problem that has been highlighted in the last few months, namely, the pollution and risk the lives of seamen caused by oil tanker collisions.
  I welcome the Bill because it goes some way to tackle the problem with which we are faced. But problems arise concerning international control and sovereignty—the question whether we can handle legislation dealing with problems in international waterways. There is the problem of the flags of the vessels concerned, and the country whose responsibility it is to maintain and prevent pollution on its coastlines.
  Difficulties also arise concerning the way in which the jurisdictions of the courts of various countries will apply in these cases. For example, when a collision or an act of pollution has occurred, and we are seeking to apportion responsibility, if claims are brought to light, moneys can apparently be deposited with certain courts in France or Great Britain, for example. The one court will make the jurisdiction for both countries. We begin to see problems arising when the courts of one country decide the issue for people who have claims for damages in this country.
  The Bill deals with the problem of consensus. The Minister pointed out that
  1594
  it was not exactly as the British Government had wished it would be. I wonder whether he can state the reasons why the Government were not satisfied with the Convention and with the Bill, in the sense that they were not too happy about the owners facing up to their full responsibilities in the matter.
  However, the Bill goes further than the Convention, and the Minister is to be congratulated for that, and for recognising that problems can arise, particularly in respect of oil and pollution caused by dry cargo vessels. We must extend the legislation beyond tankers, to other vessels. The Bill goes some way in extending its provisions to all sea-going vessels.
  The Conventions, with which we have been dealing, going back to the 1954 Convention on Oil in Navigable Waters, and the various pieces of legislation which various Governments have brought in to face the obligations under these Conventions, are very welcome. This legislation is particularly welcome because it places responsibility firmly on those answerable to anyone wishing to make a claim in a case of pollution.
  It tightens the checking procedures, and also provides for the coverage of an international insurance system that will allow moneys to be made readily available to those who have damages in such circumstances. We are well aware that the costs involved in cleaning up after pollution, and the damage caused by oil, are tremendous. The Bill is a welcome step forward in attempting to deal with this.
  However, I am somewhat alarmed by the criticisms that my right hon. Friend the Member for Barnsley (Mr. Mason) made. He highlighted the fact that a number of the voluntary arrangements that have been brought in—including CRISTAL and TOVALOP—are a means by which the industry itself has attempted to cover the huge costs involved. If it is the industry's intention to remove this supplementary insurance, in favour of what is proposed in the Bill, that would be a retrograde step. Perhaps the Minister will be able to provide some assurance about that.
  I do not want to deal too much with criticisms of the Bill. There are some points that I would like to bring up, possibly in later stages, particularly as

  1595
  my right hon. Friend the Member for Barnsley made a very wide-ranging speech, which dealt admirably with a number of the fears which we have about this legislation.
  I would reserve myself the right to make one or two criticisms, and ask for assurances. One matter that concerns me is the operation of the certificates of insurance. The Bill clearly states that the country involved will be directly responsible for seeing that the ships bearing its flag have the certificate of insurance which is required under the Bill. It places responsibility firmly on the State.
  I welcome the provisions giving the Secretary of State power to decide that certain insurance certificates are not sufficiently comprehensive, and to refuse the entry of certain vessels into our waters, or to make those countries bring their certificates of insurance up to standard. The Secretary of State may be able to exert some pressure in those circumstances. The reason for making that point will become more valid when I deal with the question of the non-signatories to a Convention and those countries who do not face up to their responsibilities.
  Can the Minister also assure us about the manpower? If we are to have certificates of insurance, and provide that certain papers must be made available, failing which a captain can be fined up to £100, it involves having people who will be prepared to inspect vessels, and to check the situation and have the necessary sanction force to see that the laws are obeyed.
  The importance of this legislation is only as important as the chance of getting away with it. If the inspection procedures are not efficient and people think that they can get away with it the sanctions will not be binding upon them, and there will be a greater chance of people departing from what is required of them under this legislation.
  I have the same reservations concerning things which have been interpreted as acts of God as those which were described by my right hon. Friend the Member for Barnsley. The paragraph that causes most concern is Clause 2(c), which refers to
  "the wrongful act of a government or other authority in exercising its function of main-
  1596
  taining lights or other navigational aids for the maintenance of which it was responsible."
  Inquiries into recent Channel collisions have shown that navigational equipment was not up to the standard required; indeed, in some cases it had been out of operation for a considerable time. I take the point made by my right hon. Friend that possibly this is referring to the coastal authorities, and the responsibility of those authorities in this sense, but that is not made clear. It would seem to be a serious loophole, giving exemption to those who could claim exemption in the case of a collision or stranding, or the creation of pollution. Could we have a tightening up of that provision and some comments from the Minister about it?
  The main point that I wish to make is the main point to be made against all international legislation, namely, that a Convention represents the generally accepted opinion of all countries involved, in this case through the International Marine Consultative Organisation.
  It suffers, as we have pointed out, because it is a consensus, but at least it is a step forward.
  There are very real difficulties in international control. It must be recognised that all parties to these agreements want a general level of aceptability. Though the consensus may lower the standards of what some of us feel should be enforced it creates an international acceptability which, in the final analysis, is the only way of solving an international problem.
  International agreement is of value only if all parties are prepared to observe it and carry out its intentions. A number of countries signed the provisions contained in the Oil in Navigable Waters Act, 1955. Liberia—a country of which I have considerable criticism—signed those provisions, and we must remember that Liberia is responsible for almost 24 per cent. of world tanker tonnage. It is the major tanker-owning country.
  Most of the accidents that have occurred in our Channel waterways—be they the result of collisions or stranding—which have given the impetus to the legislation with which we are dealing today, have not concerned vessels of Britain, Norway or any other major maritime country; they have concerned

  1597
  ships belonging to the Liberian States or sailing under the Liberian flag.
  Liberia does not face up to her obligations under this Bill. If these major tanker-tonnage owning countries do not play a forceful rôle in this matter this legislation, although still welcome, will not be as effective as one would want it to be. Hence we need the imposition of some sort of control of the Channel waterways, and of internationally-accepted standards on the part of those vessels that come into our waterways.
  I note that the Brussels Convention of 1969—over two-and-a-half years ago—has now been signed by 29 countries. Liberia has still failed to sign it, as have Greece and Japan. They are the very countries that are creating the major part of the pollution problem. They are also responsible for almost half of the world tanker tonnage.
  Some of the countries who have not signed the Convention are responsible for almost half the world tanker tonnage. More important, they have been responsible for the recent collisions and strandings of vessels which led to the pollution problems in the Channel. We know from the inquiry reports into these collisions that they have been the direct result of the navigational incompetence of those on board. I therefore suggest that a serious loophole exists in relation to this problem.
  I agree that this is not the legislation in which we would have to embody the terms of agreement for the control of the Channel waterways. That must come later. I remind the Minister that when we were discussing similar Bills we pointed out that international action would have to be taken because the problem arose outside our territorial waters. It was regarded as impossible to deal with at the time, but we welcome the Government's action in taking steps to try to get that sort of agreement.
  We are very concerned that those countries who do not sign the agreement—in this case the Convention—and declare that they intend to observe and ratify it, create serious difficulties in attempting to deal with this problem.
  I hope that in the later stages we may be able to deal with the more detailed aspects of the Bill, and that the criticisms
  1598
  that we have made at this stage will be answered to a certain extent by the Minister, and dealt with more fully in Standing Committee.
  11.34 a.m.
  Mr. Mark Hughes: I am in some difficulty in welcoming a Bill which, in essence, is based on at least three fundamental misconceptions. It is based upon the misconception that pollution is a matter of tar on beaches, that territorial waters have a relevance to the question of pollution as a whole, and that innocent right of passage cannot be interfered with. The ecological idiocy of thinking of pollution simply in terms of lumps of oily tar on beaches is too obvious to need stating.
  Unfortunately, as the hon. and learned Member for Dover (Mr. Peter Rees) raised with the question of the mussel beds, it is clear that the question of pollution goes far beyond tar on beaches. It is not now necessary to consider whether lobsters and king crabs are sedentary or swimming species. I know that there is an international dispute between France and Brazil on such matters at the moment, but mussels are clearly a sedentary species in respect of which pollution damage can take place. The concept that by calculating the cost of cleaning we can compensate mussel bed fishermen is unacceptable, being based on this narrow human inconvenience definition of pollution. It is not that on one Easter or summer holiday the beaches of a beautiful part of the country are spoilt by tar; it is that we are permitting our fellow human beings to poison the seas around our coasts, and that our only claim to our successor generation will be to ask their forgiveness on the ground that we did not know what we were doing.
  That is totally unacceptable. The level of research that we undertake into marine pollution, not only by oil but by other toxic wastes—and here I gladly pay credit to the research done by the oil companies—is totally inadequate. If a civil engineer were establishing a sewage disposal plant he would calculate how many million gallons of water went in at the front end to dilute the sewage that was being treated. We pour untreated sewage into the Irish Sea and the North Sea, and we have not a clue about the rate of substitution of the water in those seas.

  1599
  We do not know how fast the Irish Sea replaces the sea water therein. All we say is that if we can find who put the oil on the beaches in the Irish Sea we can take him to civil liability at court. That is no cure. It is like suggesting to those who adulterate food that they should be liable to have to pay the cost of having the carpet cleaned when one has been sick. That is no solution to the problem of oil pollution by ships.
  Remember, also, that in the formulation of such conventions we have taken too much notice of the "Torrey Canyon" type disaster These disasters represent a very small percentage of the sources of pollution round our coasts.
  We say that territorial waters represent the limits beyond which we cannot interfere with the right of innocent passage over the high seas. Hon. Members must know, surely, that the three-mile limit is based upon the range of cannon, circa. 1670. If we are to determine our concepts of biological and ecological pollution on the range of cannon three hundred years ago, we are out of our minds. This has no relevance at all. To believe that territorial waters, when it comes to pollution, have some magical quality, is a deplorable position for any intelligent man to take up.
  In the Continental Shelf Act, 1964, on which the Minister heard me animadvert in the debate on the Oil in Navigable Waters Bill, we claim up to the 200 metre isobath the exclusive right to the exploitation of sedentary species. We vested that right in the Crown. At the beginning of the Third Reading debate in another place, it was signified that the Queen had graciously granted Parliament the right to dispose of the Crown's rights in this matter in connection with this Bill. Here we have the Crown's unquestioned and internationally accepted right to enjoy the exploitation of sedentary species far beyond territorial waters.
  How does the Bill propose to start to calculate the effects on sedentary species out to the 100 metre isobath? We do not have the first idea about what is happening to the sedentary species at that depth, or what the effect of poisoning one sedentary species will be at a later point in the marine food chain. We are in a state of regrettable ignorance. It is a personal sorrow to me that the Bill be discussed
  1600
  in Committee when the hon. Member for Bolton, East (Mr. Laurance Reed), who is probably the most knowledgeable marine biologist in the House, is not present. I greatly regret that we do not have the benefit of his knowledge in this discussion.
  None the less, we are placed in the position of having to welcome a Bill which tinkers at the margins of the problem rather than getting anywhere near the reality. As long ago as 1942, over the Gulf of Korea, a treaty was signed between this country and Venezuela—far beyond territorial waters. In that treaty the right of innocent passage was expressly excluded from any interference. There are many other examples. Now why did we do that? We did it because there were oil deposits beneath the sea. As long as there is a sordid commercial advantage in going beyond territorial waiters, then we will do it. As long as we claim ignorance, we can poison the seas beyond that limit and nobody says "Nay". The shipping interests, quite properly, claim that the right of innocent passage is too important to be jeopardised by unilateral action.
  As many of my hon. Friends have said, international action is clearly more desirable than unilateral action, but the slowness of I.M.C.O. and the reluctance of many other countries to start to think in terms of pollution prevention on an international basis lead to the position where we in this country are likely, for many reasons, to be as bad a sufferer, whether it is in the loss of particular species of marine life, the general running down of a putrid sea round our coasts irreversibly poisoned, as appears to be the case already with the Baltic. Are we to be told that we can do nothing because we have to wait for international agreement? That impotence, that unwillingness to take a firm national position as a lead to other countries, seems to be the greatest misfortune in the Bill. It is highly commendable, except that every concept on which it is based is wrong.
  11.44 a.m.
  Mr. Frank Marsden: The hon. and learned Member for Dover (Mr. Peter Rees) referred to the peculiar phraseology, to say the least, of Clause 2(a). Does this paragraph cover bad navigation

  1601
  in fog or not taking reasonable precautions in a storm? Surely, the aim of the Bill is to make a polluter pay. I hope that the Minister will later make some reference to this Clause and this paragraph.
  11.45 a.m.
  Sir Charles Taylor: I want to refer to one aspect very briefly. The Bill is rather inclined to ignore the causes of some of the accidents that have occurred in the narrow waters of the English Channel. I believe that one of the major causes of accidents is the use of automatic pilots. Unfortunately, some of these large oil tankers are apt to switch over to the automatic pilot: they do not keep proper watch, but blind on through the Channel under the automatic pilot.
  There should be some penalties against any captain who uses automatic pilots between, say, the Isle of Wight and Ramsgate or the mouth of the Thames. They should not rely on the automatic pilots while they are in those very narrow straits. If automatic pilots are found to have been used in a ship that was guilty of causing an accident, penalties should be prescribed against the shipping company that allowed them to be used, on these occasions.
  11.47 a.m.
  Mr. Mark Woodnutt: As my hon. Friend the Member for Eastbourne (Sir C. Taylor) has mentioned the Isle of Wight, I must say that this Bill is extremely welcome to us, and we ought to congratulate the noble Lord, Lord Devlin, on the remarkable job he did in leading our delegation.
  Will the Minister make clear what are our powers of enforcement of this Measure before it has been ratified by the minimum eight States? It is my belief that if a ship polluted our waters and we were able to seize it, we would be able to take action under the Bill. I should like my hon. Friend to make that clear.
  Another point, which has been mentioned twice before, is that although, undoubtedly, a Force 10 gale is an irresistible natural phenomenon, it is certainly not exceptional. I should like it made clear that subsection 2(a) does not include Force 9 or Force 10 gales.
  11.48 a.m.
  Mr. Albert Booth: The only serious test that one can apply in judging whether legislation on this subject will be successful is whether it will prevent pollution. In so far as, by providing remedies and making legal liabilities one can be certain of preventing pollution from taking place, this type of legislation has an important rôle to play. However, I want to make clear, even at this stage, the attitude I take to the Bill.
  One can say glibly that prevention is better than cure, but in the case of oil pollution of our seas one can go a step further and question whether there is any cure once pollution has taken place. One can take various steps to ameliorate or reduce the offensive results of oil pollution but, on such ecological evidence as we now have, it will be a bold man who states that one can completely cure the effects of a massive discharge of oil into our seas. We shall not know for possibly another 50 years just how much damage has already been done to our marine environment as a result of discharges which have already taken place.
  In this connection, I underline, as has been said from this side, that most pollution takes place as a result, not of accidents but of deliberate decisions of shipowners or their agents; of decisions to pump oil waste overboard on a dirty night when they are not likely to be caught doing it; to take a cheap short cut in building a vessel; to engage in shoddy operating procedures rather than spend the money necessary in operating the vessel to ensure that oil does not go overboard accidentally.
  It is because we now have concrete evidence that most pollution takes place in this way rather than by accidents, whether we call them acts of God or anything else, that we are entitled, to demand the severest possible penalties—and when we come to the Committee stage we shall discuss the penalties in detail—and also to take the view that when legislating on oil pollution one must make is absolutely impracticable, in the long run, for anybody to operate in a way that jeopardises our environment to the degree that is now, apparently, the case.
  My first point concerns the difficulty of proving who is responsible for pollution. It is good and desirable that one should state liability in a Bill such as

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  this. But all who have any knowledge at all of shipping practices will realise the difficulty of proving that a particular discharge of oil came from a particular vessel. This must be more a problem for the United Kingdom than for a number of other Convention countries, largely because of the high numbers of tankers passing through our waters, especially the English Channel and the North-East Approaches.
  If only one tanker per year passes an island and there is a discharge within 12 hours of that tanker passing the island, one is pretty sure which vessel was responsible for it, and it will not be difficult to prove by an analysis of the oil on board and the oil on the shore. But when, as in the case of the constituency of the hon. and learned Member for Dover (Mr. Peter Rees), hundreds of tankers pass within a comparatively short time, travelling in opposite directions, it is almost impossible to prove which one was responsible for a particular discharge, unless provision is made for access to records of the operating procedures on the tankers and to the records which will have to be kept as a result of the Oil in Navigable Waters Act.
  I hope, therefore, that the Minister will indicate his thinking on the question of the difficulty of obtaining evidence and the right of access to ships' records for anybody wishing to make a claim in respect of oil pollution damage.
  My second point is: how far it will be possible, in defence in an action brought for pollution damage, to argue the effectiveness of operating procedures on board a vessel? If we want to encourage owners and their agents to use the best operating procedures on tankers, it is not unreasonable to legislate, as a line of defence, for a good and consistent record of the best possible type of operating procedures to avoid a discharge. Without my going into the arguments at great length—as the Minister heard them rehearsed on the previous Bill—I hope that he will indicate whether it is his view that, under the terms of the Bill as at present printed, such a line of defence or argument would be open; and, if not, whether he will, in Standing Committee, be prepared to consider an Amendment at least to test the feasibility of this idea.
  11.55 a.m.
  Mr. Frank Taylor: I very much applaud the introduction of the Bill and hope that it will become law and enforceable at the earliest possible moment.
  I am uncertain whether I can speak as a Member for a seagoing constituency—I do not know whether the Manchester Ship Canal so qualifies me—but I have a close knowledge of the "Torrey Canyon" and of Cornwall, and have a bird's eye view of all the problems down there. I can say categorically that, whatever compensation is allotted, it will never compensate the people who live on the coast and have to suffer from it; nor the visitors who come to a coastline which is polluted by oil.
  I am particularly interested in, and to some extent concerned with, Clause 10, and the penalty for not being properly insured. If one considers the latest tanker of nearly 400,000 tons, and if the figure of £56 a ton which is quoted has any relevance to the value of the contents, we are talking about a tanker with perhaps £20 million worth of cargo. When we value the tanker, we are perhaps talking in terms of £30 million which is at risk. A maximum penalty of £15,000 looms very small in comparison to that total. That should be taken into account, as well as the £200 maximum fine for the master for not producing an insurance certificate. These figures should be married up in some way.
  I am particularly concerned with the question whether we shall be able to ensure that these ships are properly insured. We lay down all the rules in the Bill, but a ship passing through the Channel and not calling at a British port may never have to produce a certificate to anyone here. We know that many countries will not honour the rules. What can we do to make sure that they are insured? It is no use our having a major tragedy in the Channel, and having millions of pounds worth of damages against a company that is quite unable to pay. If such a calamity occurs, the fact that there is a £15,000 fine to pay on top of that will neither be here nor there.
  I would like the Minister to look very seriously into the implementation of the requirement to be properly insured.
  Mr. Joseph Harper: I must apologise; it is no discourtesy to you, Mrs. Butler, or to the Committee, that I keep flitting in and out. I have to keep my eye on another Committee further along the corridor.
  I agree wholeheartedly with what my hon. Friend the Member for Durham (Mr. Mark Hughes) had to say about pollution in general. We are really only scratching at the surface in the Bill. I have heard it said that pollution is worldwide, and that what is one country's out-tray is another's in-tray. But that is no excuse for dividing the Committee against this Bill or for chucking it out altogether. We welcome it, and in Standing Committee we shall seek to amend it in certain ways.
  One of the points that I wish to make concerns Clause 2. The Explanatory Memorandum makes three main points. It says:
  "For example an owner will not be liable if he can show that oil escaped as a result of an act of war, act of God or wilful act of a third party;"
  But Clause 2 contains the words
  "resulted from an act of war, hostilities, civil war, insurrection or an exceptional, inevitable and irresistible natural phenomenon;"
  I take that to mean an act of God.
  I wonder why the Explanatory Memorandum refers to "an act of God", and then leaves those words out of the Bill. When oil escapes, who will determine what is an act of God and what is not? Will it be left to the courts, or will the Minister in his wisdom, lay down a sort of code of ethics, or a rigid code, providing that if there is a fog of above a certain density, or if there is a Force 10 gale, or a tidal wave, it is an act of God?
  It reminds me of the coal-mining industry. Whenever there was an explosion in which more than a certain number of men were killed it was always described as an act of God. I do not know how God came into it at all. God did not compel people to work down the pit, or on the pit top, or wherever the explosion occurred. Should it have been described as
  "an exceptional, inevitable and irresistible natural phenomenon"?
  I wonder whether the Minister can give us some idea whether he intends to set down a rigid pattern of what will be considered as an act of God, or whether
  1606
  it is going to be left to the courts. I know that every Bill that we publish, and every Bill that becomes an Act of Parliament, adds more money to the learned profession, and the courts are kept even busier. But I should like to know whether the Minister can tell us what is an act of God, and how he is going to apply it.
  Mr. Grant: This has been an extremely helpful debate. I appreciate very much the support that has been given to the passage of the Bill, and I have been extremely interested in the many points that have been raised, many of which are Committee points. We can go into more detail in Standing Committee, but I shall do my best to reply to as many as possible of the points that have been raised.
  We had a very interesting speech from the hon. Member for Durham (Mr. Mark Hughes). I always listen to his speeches with great interest. He took us into the realms of philosophy. He raised the general question of pollution rather than the detailed aspect of a useful but limited Measure. It would probably be unwise for me to engage in a long dissertation with him at this time, although I appreciate what he said in the broadest terms. I only hope that other countries will also heed what he said, and will take as much interest in the question as he does.
  He is right in saying that oil pollution is not the only form of pollution. I can think immediately of two others—starvation and disease. Without the use and transport of oil throughout our world I suspect that these two forms of pollution—which the hon. Member may agree are infinitely worse—might become much more rampant.
  However, I want to bring the hon. Member and the Committee back to the Measure. He should think through what he says when he tells us that we should take unilateral action. It is important and sensible to secure international agreement on all these matters. I suspect that that is more effective. People who advocate unilateral action must think right the way through the consequences of their action.
  That leads me to the point raised by the right hon. Member for Barnsley (Mr. Mason) and others, about the general slowness of getting international agreement. In this instance I.M.C.O. has

  1607
  worked rather fast, by its perhaps somewhat slow and cumbersome standards. I do not think that it can be criticised. I detect an increasing international interest and concern about these matters on the part of other countries. I can assure the Committee that the United Kingdom will be in the lead in urging other nations to take action to ratify internatonal conventons as vigorously as possible.
  The right hon. Member for Barnsley asked what progress had been made by other countries. Some countries do not need to pass legislation; they can proceed either by decree or their own national law. But we have impressed on our European colleagues the need to speed up their procedures to ratify the Convention. My understanding is that France and the Netherlands are taking steps towards ratification, and other countries are sympathetic.
  Certainly that consideration applies to Belgium. I am not certain at this stage whether Belgium needs to pass any law, but I can certainly find that out for the right hon. Member. Certainly it is wholly sympathetic to this legislation. In all, 31 countries have signed the Convention. Most of them prefer to await the outcome of the fund negotiations, later this year, but our action on this Bill will, I am sure, encourage others to follow our example.
  The right hon. Member for Barnsley also drew attention to a possible loophole in Clause 2(c), in the exceptions provided if a Government or other authority has been guilty of a negligent or wrong act. That is a Committee matter, but I can say that we will look at this very closely and see whether a loophole exists. If necessary we can come back to the matter in Standing Committee.
  I now turn to the question that has exercised the minds of many hon. Members—the exception in Clause 2(a), on the question of act of God. An act of God is something which, if not well known to lawyers, certainly occurs in English law. But the words "act of God" are not understood in other countries; indeed, in some ways the phrase is incapable even of translation. Therefore, the phrase "act of God", known to English law, is certainly not appropriate to an international matter and the wording which, I think, stems from the Convention, was
  "… exceptional, inevitable and irresistible natural phenomenon …".
  1608
  I am advised that this is a stronger and a tougher phrase than "act of God". I assure my hon. Friend the Member for the Isle of Wight (Mr. Woodnutt) that it would not be possible to use a Force 10 gale as an
  "… exceptional, inevitable and irresistible natural phenomenon …".
  because it is certainly not exceptional.
  Hon. Members will be relieved to hear that this wording is much tougher, and does not afford even such a wide defence as does the phrase "act of God" in English law.
  The right hon. Member for Barnsley drew attention to the cost of pollution. The practical situation is that, at the moment, it is possible for victims of pollution to claim under TOVALOP up to the limits prescribed therein, and to go further than that through the other voluntary agreement, CRISTAL. These will apply, and CRISTAL will continue to apply, until the further limits are agreed, as we hope they will be by the end of this year. CRISTAL has to lead in order to give some incentive to governments and countries to get on with the matter.
  CRISTAL has said that it will continue its limits until about 1973 or 1974, after which time it expects countries to have completed their ratification so that the new limits can apply, and therefore replace CRISTAL. In that sense, therefore, the ceiling figure is already at CRISTAL limits and, after the Convention which takes place later this year, this will be embodied into the Convention. That deals to some extent with the time-scale for further compensation.
  Mr. Mason: Is the hon. Gentleman suggesting that when the I.M.C.O. international agreement on compensation for oil pollution is established, at least the figure within that international agreement will be 30 million dollars per incident, which is the figure that CRISTAL now operates? In other words, I would not wish to see us coming back to reenact the core of the Bill on the basis of a new international convention with a ceiling figure lower than that which CRISTAL has been operating.
  Mr. Grant: I can reassure the right hon. Gentleman on that point. When the next Convention is agreed and it

  1609
  applies legislation, no one has suggested, and I would not expect it in any way, that the limits therein would be less than those which CRISTAL provides. That is not our expectation or intention.
  The question of the fines has been raised by a number of hon. Members on both sides and I recall very well what occurred with the Oil in Navigable Waters Bill. But I must make it clear that we are dealing with a very different kind of offence from that dealt with in the Oil in Navigable Waters Act. That Act dealt with a criminal offence—the deliberate discharge of oil into navigable waters. Here we are dealing with failure to have an insurance certificate, and we consider that in this case the £15,000 fine is adequate. The offence of not producing a certificate, for which the fine is £200, is something quite different. This penalty is intended to deal with a bloody-minded skipper or crew member who refuses point-blank to take the certificate out of his pocket.
  These two offences are not analogous to what is in the Oil in Navigable Waters Act. No doubt we shall look at them again in Standing Committee, but I ask hon. Members to consider in the meantime the different natures of the specific offences. At the moment, I am not persuaded that they are wildly out of line.
  Many questions were put to me by my hon. and learned Friend the Member for Dover (Mr. Peter Rees) who has considerable constituency interests, as have so many of my hon. Friends. He asked me about damage to marine life outside the three-mile limit but within the 12-mile fishing limit. This will be covered only if the damage is within territorial waters and the claimant can show that he has suffered damage—that is to say, that he is the owner of an oyster bed, or something of that kind. The Bill follows, as it must, the Conventions, and at the Brussels Conference it was decided that damage outside territorial waters should not be covered and that the question of remoteness of damage should be left to the relevant rules of municipal law.
  My hon. and learned Friend also referred to houses which were covered with a fine oil film blown in from the sea by the wind. This is exactly the sort of case that would be covered, and a
  1610
  claim could be made assuming, of course, that that wind was not an exceptional phenomenon. But it is almost inconceivable that that defence could ever arise in the Channel and, if it did, it would be such a sensational matter as to cause a considerble furore and be well understood. In most cases, however, particularly in the cast to which he referred, I imagine, and we consider, that this is just the sort of thing that would be covered by the Bill.
  My hon. and learned Friend and the hon. Member for Barrow-in-Furness (Mr. Booth) referred to the great difficulty of identifying oil slicks. This is inevitable. But the sort of damage of which we are thinking—the really serious damage, involving large sums of money—usually comes from a well-known and identifiable source. It is difficult to identify every spot of oil that comes on to the beach, but every spot of oil does not necessarily cause a substantial amount of damage of the sort about which one would want to bring civil proceedings.
  Obviously, one can never get into a situation where every spot of oil that lands on a beach has a five-pound note attached to it, but in the major oil slick cases or the serious pollution cases in which one would envisage litigation and claims being made. I believe that source would be reasonable identifiable. My Department has improved very substantially over the years, following the "Torrey Canyon" disaster, that means of identifying the source of oil slicks.
  The hon. Member for Kingston upon Hull, East (Mr. Prescott) drew attention to Liberia. It is important to get matters into perspective, and it would be quite wrong if I were to say that Liberia was the only guilty party in this respect. It is not. It is the name which most readily springs to people's lips when they are discussing this problem, but it would be wrong to suggest that Liberia was the sole offenders.
  A better way to put it would be that there are a great many countries which could well emulate the example of Britain in endeavouring both to deal with oil pollution and to raise their standards of shipping generally.
  Mr. Prescott: I do not suggest for one moment that it is the sole offender. All

  1611
  I am seeking to try to prove is that it is the major offender in these incidents. As it is also one of the major countries, with the largest tanker-owning fleet under one flag, it is of major consideration to the Committee. It is not the sole offender, but the major offender.
  Mr. Grant: True. Be that as it may, the fact remains that the Bill will be a considerable improvement. It will be possible to impose Convention liability on non-Convention countries, such as Liberia. Although we would naturally like the other States, like Liberia, to ratify the Convention, the Bill will do just that so far as we are concerned, and once the Convention is fully ratified it will be possible to deal with non-Convention States, such as Liberia. Liberia is a contracting party to the original 1954 Oil Pollution Convention, although her accession did not take place until some time after 1954.
  Mr. Prescott: And with reservations.
  Mr. Grant: Yes. She attended the conference which drew up the 1962 Amendments, and has accepted these Amendments. It is true that she has not yet accepted the 1969 Amendments to the Convention.
  As I indicated earlier, the Bill and the Convention will enable us to deal

  THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:

  Butler, Mrs. Joyce (Chairman)

  Marsden, Mr.

  Booth, Mr.

  Mason, Mr.

  Bowden, Mr.

  Prescott, Mr.

  Clegg, Mr.

  Rees, Mr. Pete

  Costain, Mr.

  Shaw, Mr. Michael

  Grant, Mr. Anthony

  Taylor, Sir, C.

  Harper, Mr.

  Taylor, Mr. Frank

  Hughes, Mr. Mark

  Woodnutt, Mr.

  King, Mr. Evelyn

  with countries which are not parties to the Convention. That applies also to the question of insurance certificates. It is true that a non-Convention country ship may be floating about airily without proper insurance, but provided the Convention is ratified—particularly by European countries—power will exist to deal with the situation, and by countries which are non-Convention and do not have proper insurance will find themselves unable to trade or to go to ports of other countries. Clearly that is an incentive to get themselves properly covered.
  I have endeavoured to deal with most of the points that have been raised. This Measure will set an example to the other Convention countries. It will indicate that Britain is very much in the lead. It will assist people who suffer from the curse of oil pollution, and make their recovery of compensation easier. It is a Measure that I commend to the House and the Commitee. I am grateful for the support that has been indicated.
  Ordered,
  That the Chairman do now report to the House that the Committee recommend that the Merchant Shipping (Oil Pollution) Bill [Lords] ought to be read a Second time.
  Committee rose at twenty-one minutes past Twelve o'clock.