Commons Sitting of 9 February 1972

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  NEW ZEALAND AND AUSTRALIAN LAND COMPANY LIMITED ORDER CONFIRMATION BILL
  Read the Third time and passed.
ORAL ANSWERS TO QUESTIONS
  POSTS AND TELECOMMUNICATIONS

    Telephones
    Mr. Terry Davisasked the Minister of Posts and Telecommunications how many people are currently waiting for telephones.
    Mr. William Priceasked the Minister of Posts and Telecommunications what is his latest estimate of the number of people waiting for the installation of a telephone.
    The Minister of Posts and Telecommunications (Mr. Christopher Chataway): About 200,000.
    Mr. Davis: Since we have such a long waiting list for telephones, will the Minister give some attention to the priorities given by the Post Office in the allocation of telephones? In particular is he aware that, although the Post Office gives some priority to handicapped and housebound people, it does not give any priority to the relatives of housebound people? Does he agree that this reduces the revenue derived by the Post Office and the value of the telephone to housebound people because in some circumstances they can use it only to call a doctor, the police, the fire brigade or an ambulance?
    Mr. Chataway: The Post Office is anxious to do all it can to help those
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    with special needs. I am sure that it will take note of what the hon. Gentleman has said.
    Mr. Golding: Will the Minister consider increasing planned investment rather than reducing it as he announced at his last Question Time?
    Mr. Chataway: As I explained to the hon. Gentleman the last time I answered Questions, there is no question of a planned reduction of investment. There is a serious problem here which I have been discussing with the Post Office and I hope to make an announcement shortly about measures to deal with it.

    Television Reception
    Mr. Hicksasked the Minister of Posts and Telecommunications when he will announce plans for the construction of the necessary ultra high frequency relay stations that will have the effect of improving television reception in those parts of South and East Cornwall where the existing service is poor or difficult to obtain.
    Mr. Chataway: The improvement of television reception is primarily a matter for the B.B.C. and I.T.A. They tell me that although their plans include several relay stations in Cornwall they are not yet in a position to estimate when these will come into service.
    Mr. Hicks: Is my right hon. Friend aware of the urgency of the situation? Is he further aware that within South-East Cornwall there are certain pockets which have never really had satisfactory reception? Will he therefore use his influence to do whatever he can to remedy this situation as quickly as possible?
    Mr. Chataway: I know that the B.B.C. and the I.T.A. are anxious to press on as fast as they can. Cornwall has already had two high-power U.H.F. television stations. They were among the first 19 opened, and altogether 50 are needed in the United Kingdom. My hon. Friend knows that there are real topographical difficulties for small pockets in Cornwall.
    Mr. Scott-Hopkinsasked the Minister of Posts and Telecommunications how many viewers are still unable to receive any 625 line transmissions;

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    and whether he will devote extra expenditure to the elimination of areas where such conditions exist.
    Mr. Chataway: The B.B.C. tells me that 5 million people in the United Kingdom live in places where reception of 625-line transmissions is not yet possible. On the second part of his Question, I have nothing to add to my reply to my hon. Friend on 17th November, 1971.—[Vol. 826, c. 402–3.]
    Mr. Scott-Hopkins: Is my right hon. Friend aware that these people have waited long enough, while paying the full licence fee, to receive these transmissions? Will he try, particularly at a time when the economy is being expanded, to persuade the Chancellor of the Exchequer that it would be a worthy expenditure to give to these people the reception which the vast majority of people in Britain receive? Is he aware that at present those who are unable to receive these transmissions are being defrauded in the sense that they are paying the full licence fee but are getting only a half-rate service in return?
    Mr. Chataway: The broadcasting authorities are pressing on with this programme as fast as they can. My hon. Friend will be aware that those who live in rural areas are being heavily subsidised by those who live in the towns. For example, in my hon. Friend's constituency it will require 11 stations to complete the transmission service, and each station will cover only an average of 6,000 people. It is inevitable, therefore, that this will be quite a long and expensive job.
    Mr. David Steel: Will the rght hon. Gentleman accept that among these 5 million people are all my constituents, and that we are sick and tired of the Ministerial washing of hands of this matter, both by the right hon. Gentleman and by the Secretary of State for Scotland? Not only do these people not receive colour and B.B.C. programmes but incoming industry finds that when the executives and workpeople arrive their television sets cannot receive a single channel, because the modern sets do not receive 405-line transmissions. If the Government's regional policy means anything, it means creating proper public
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    facilities in the regions to which they are trying to attract industry.
    Mr. Chataway: I am as anxious as the hon. Gentleman and my hon. Friend to see 625-line reception extended as fast and as far as possible. But there is no evading the difficulties involved in covering the whole country.

    Radio Transmission (Regional and Outlying Areas)
    Mr. Milneasked the Minister of Posts and Telecommunications if he will make a statement on Her Majesty's Government's policy in regard to the provision of regional radio transmission and the extension of services to outlying communities.
    Mr. Chataway: I would refer the hon. Member to my White Paper "An Alternative Service of Radio Broadcasting", Cmnd. 4636.
    Mr. Milne: Is the Minister aware that his policy is breaking up, or is likely to break up, some of the excellent teams operating from the B.B.C. in Newcastle and is depriving the areas of North Northumberland in particular of the type of services they need regarding both weather transmissions and local news?
    Mr. Chataway: The hon. Gentleman may recall that the B.B.C., as part of the proposals contained in "Broadcasting in the 'Seventies", decided to assimilate Radio 4 to a single programme in England. I understand, however, that on V.H.F. the B.B.C. is continuing the regional opt-outs which provide news and weather forecasts on a regional basis.

    Radio Jackie
    Mr. Whiteheadasked the Minister of Posts and Telecommunications what communications he has received from the organisers of Radio Jackie about the operation of the law relating to broadcasting.
    Mr. Chataway: None.
    Mr. Whitehead: I am very surprised at that answer because I think that most hon. Members have received this communication from Radio Jackie giving an address at East Molesey, Surrey, and stating its policies for this illegal radio station. Will the Minister tell the House what steps have been taken to curb this

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    illicit radio station, or is he simply complacently regarding this as a rather unusual bid for a tender in commercial radio?
    Mr. Chataway: If it has not sent its literature to me it is perhaps because it recognises that these are illegal transmissions and that I have the responsibility for upholding the law. In fact, there have been a large number of prosecutions, and penalties have been imposed by magistrates in 13 successful prosecutions in connection with this operation.

    Overseas Mail
    Mr. Thomas Coxasked the Minister of Posts and Telecommunications if he will give a general direction to the Post Office Corporation to expedite the handling of mail to overseas countries.
    Mr. Chataway: No, Sir. This is a matter for the Post Office and it would not be appropriate for me to intervene.
    Mr. Cox: Would not the Minister agree that there are delays in the delivery of overseas mail? Certainly Christmas mail which was posted on or before the advertised latest date of posting was in some cases not delivered until January. This obviously causes a great deal of disappointment not only to the people here who post it but to the people who should be receiving the mail. Surely the right hon. Gentleman should show more consideration in this matter?
    Mr. Chataway: I am willing to show full consideration. I know that the Post Office would be anxious to take up any individual case that the hon. Gentleman may have. He will recognise that some of the delays—as in the United States, where there has been a dock strike, or in Canada, where there has been a mail strike—are due to difficulties at the receiving end.
    Mr. Kilfedder: Would not my hon. Friend agree that there is not much point in expediting mail unless it arrives at its proper destination? How did it come about that a letter from a brigadier in Norfolk to Colonel Derek Wilford, Commander of the First Battalion, Parachute Regiment, in my constituency was stolen and published without permission in a Dublin paper?
    Mr. Speaker: Order. That does not arise on this Question.

    Party Political Broadcasts
    Mr. Donald Stewartasked the Minister of Posts and Telecommunications whether he will now review the agreement of 1947 relating to party political broadcasting, with a view to achieving better representation of the smaller political parties; and whether he will receive a delegation from the Scottish National Party to discuss the matter.
    Mr. Chataway: No, Sir. This is not a matter for me.
    Mr. Stewart: May I express my disappointment at that reply? The Ombudsman has made a judgment which clearly lays the responsibility in the Minister's lap. Therefore, in view of the number of candidates fielded and the percentage of votes secured by the Scottish National Party—the same practice obtains in Wales—does not the right hon. Gentleman consider that this grossly undemocratic and unfair carve up by the Tory and Labour Parties should come to an end? Otherwise, is he not aware that, having exhausted all the possibilities, he might be leaving the way open for direct action to solve this problem?
    Mr. Chataway: I would not accept that the Parliamentary Commissioner lays the responsibility on me. It is recognised that the arrangements for party political broadcasts are made between the political parties and the broadcasting authorities. There is an allocation to the Scottish National Party and the Welsh Nationalist Party.
    Mr. Gregor Mackenzie: Is the Minister aware that, so far as I am concerned, the Scottish National Party can be on television as often as it chooses and for much longer periods? Much good it will do that party. Will the right hon. Gentleman bear in mind that we would regard this matter not as one for him or for the Post Office but as one for the major parties and for Mr. Speaker's Conference?
    Mr. Chataway: I agree with that.

    Giro
    Mr. Bruce-Gardyneasked the Minister of Posts and Telecommunications whether proposals by the Post Office

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    to revise the Giro tariff structure in conformity with the recommendations of the Cooper Brothers report would be subject to the 5 per cent. ceiling on nationalised industry price increases.
    Mr. Chataway: The scale and timing of any required tariff increase are being considered by the Post Office as part of the restructuring of Giro. Detailed proposals have yet to emerge.
    Mr. Bruce-Gardyne: But my right hon. Friend said only yesterday that he believed that commercial disciplines in the public sector were highly desirable for a good service. Will he not accept that, so long as the Post Office is allowed to operate tariffs designed to attract custom from the private sector through subsidisation from the results of its monopoly position, what can fairly be described as a bankrupt bucket-shop operation is operating in complete defiance of the principles which he enunciated yesterday?
    Mr. Chataway: Apart from that last description, I would go all the way with my hon. Friend's general proposition. As he knows, the tariffs here have remained the same since 1965 and, as a result of the investigation by Cooper Brothers, it is recognised that there has to be a radical alteration in tariffs as well as substantial changes in the way that the Giro is run.
    Mr. Richard: Is the Minister aware that we are wholly with him in his resistance to the absurdities of hon. Members behind him about the Giro and that we too regard it as a most valuable public service which deserves our full and wholehearted support?
    Mr. Chataway: The sentiments which the hon. and learned Gentleman expresses are very welcome. It would have been even more welcome if the conduct of the Giro before the present Government arrived had been rather more satisfactory.
    Sir G. Nabarro: Would my hon. Friend explain how, if he works within the 5 per cent. agreed with the C.B.I., he can possibly recover all the losses forward on this service, which now amount to £20 million or more, and hope to make a profit in future?
    Mr. Chataway: The C.B.I. initiative in certain circumstances allows variations
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    to the 5 per cent. ceiling, but, as I say, concrete proposals have not yet been put to me. I will certainly take into account all the relevant factors, including the policy of price restraint.
    Mr. Leslie Huckfield: Would the Minister recognise that these continued stupid snipings from his own back benches can only damage the future of Giro? After a long period of his own hesitancy, can he now reaffirm his own faith in its future?
    Mr. Chataway: I believe that my hon. Friends are anxious, as I am, to ensure that the Giro is making a profit as soon as possible.

    Telephone Kiosks (Vandalism)
    Mr. O'Halloranasked the Minister of Posts and Telecommunications what is the estimated cost of repairing and replacing damaged public telephone boxes due to vandalism in 1971; and if he will make a further statement as to what plans he has to combat this.
    Mr. Chataway: About £525,000 in the 12 months to 30th September last. The Post Office is actively pursuing countermeasures. Research is continuing on further improvements to kiosks.
    Mr. O'Halloran: I am grateful to the Minister for that reply. Is he aware, as I and many other hon. Members are, that in some parts of London it is almost impossible to find a public telephone kiosk that works? Would he bear in mind the idea of installing kiosks in large council estates, where perhaps the public could keep a more watchful eye on them?
    Mr. Chataway: The Post Office pays close attention to the siting of kiosks in its attempts to reduce vandalism.
    Mr. Arthur Lewis: Has the Minister considered the report that a system is possible whereby an entrance fee is put into the door before one can get in, the door is automatically locked and is not unlocked until one has used the telephone without damage, and therefore one would be automatically locked in if one tried to vandalise the telephone? We could then take action against the scoundrels who are causing this trouble. This is a feasible proposition.
    Mr. Chataway: I am sure that the Post Office will take note of that suggestion,

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    although I am sure it would be anxious to ensure that there was satisfactory means of exit.

    Postal Charges and Services
    Mr. David Clarkasked the Minister of Posts and Telecommunications what notice he has received from the Post Office Users National Council with reference to the Post Office proposals for the reorganisation of the distribution of Her Majesty's mail; and what action he is taking.
    Mr. Milneasked the Minister of Posts and Telecommunications if he is now in a position to make a statement in regard to Her Majesty's Government's policy in regard to post charges for printed publications, both home and overseas.
    Mr. Chataway: I would refer the hon. Members to the reply I gave on 27th January to my hon. Friend the Member for Belfast, North (Mr. Stratton Mills). There are no proposals to change the rates for publications sent overseas.—[Vol. 829, c. 520.]
    Mr. Clark: I cannot quite follow the Minister's reply. Could he explain how he intends to recompense the Post Office for any lost revenue incurred by his acceptance of the recommendations of the users council? Should we expect further tariff increases to meet these financial losses?
    Mr. Chataway: I am having discussions with the Post Office in conjunction with the review which my right hon. Friend the Chancellor of the Exchequer is having with all nationalised industries in the light of the difficulties which some are facing during the period of price restraint.
    Mr. Milne: It is rather surprising that these two Questions should have been answered together. Is the Minister aware that printed publications are almost the only sector in which we have a price advantage over European countries? Would the Minister consider this and the agreeable effect it could have on the circulation of many excellent publications and journals?
    Mr. Chataway: Discussions are continuing between those interests and the Post Office. As the hon. Member will know, a number of the recommendations
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    of the users council which were accepted by the Post Office and by the Government were designed to help these publications.
    Mr. Richard: Does the right hon. Gentleman's last answer mean that we can expect proposals from him in the relatively near future on how the Government propose to deal with the present financial position facing the Post Office? If we can expect proposals in this respect, will the Minister note that we would prefer him for once to come and put these proposals before the House rather than doing it by way of Written Answer or in a speech to the American Chamber of Commerce?
    Mr. Chataway: The hon. and learned Gentleman knows perfectly well that nothing I said to the American Chamber of Commerce yesterday contained news which ought to have been announced to the House. He also knows that it is not the practice to make oral statements in respect of every taraiff or price increase in the nationalised industries. But I shall continue as I have up to the present, to make statements in the House about all major matters affecting my Ministry.
    Mr. Richard: On a point of order. The Minister obviously did not answer my question about what proposals he has.

    Public Telephones (Transistorised Handsets)
    Mr. Pavittasked the Minister of Posts and Telecommunications if he will issue a general direction to the Post Office to make an increased number of transistorised handsets available in telephone boxes at Crown post offices for the benefit of persons with impaired hearing.
    Mr. Chataway: No, Sir. This is a matter for the technical judgment of the Post Office.
    Mr. Pavitt: Would not the right hon. Gentleman use his humanitarian influence to try to persuade the Post Office to do something for deaf people who find themselves in very distressful situations when they cannot communicate with their home? For instance, if at main-line railway stations and some main post offices a transistorised handset was available to enable a deaf person to communicate in difficult circumstances with his home,

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    that would be a great gesture for those who are hard of hearing.
    Mr. Chataway: I know that there are serious problems here, and the Post Office is anxious to help. It has 100,000 transistorised handsets in use by private subscribers. But in the case of public telephones there are difficulties still to be overcome in adapting equipment so that it would he suitable for the general public as well as for those who are hard of hearing.

    Postcodes
    Mr. Leslie Huckfieldasked the Minister of Posts and Telecommunications whether he will give a general direction to the Post Office not to use postcodes as a means of identifying individual addresses.
    Mr. Chataway: No, Sir.
    Mr. Huckfield: Does not the right hon. Gentleman know that the Post Office wants to give us each a number? Does he not also know that the Post Office has also been advertising to direct mail organisations that it can know us, identify us, code us and grade us by that number? As the Post Office has been advertising this service to direct mail institutions, does not the right hon. Gentleman consider that those who will be given these numbers ought to be told first?
    Mr. Chataway: The introduction of post coding means, as the hon. Gentleman says, that in many circumstances it is possible for those who wish to find out to ascertain an address. Of course, there are already other means of doing so. One may discover it from the electoral roll, for example. But if it is felt that there is an undue infringement on the rights of privacy of the individual—I understand that there have been no complaints, or very few, to the Post Office so far—it would be open to the Younger Committee to comment on it if it wishes.
    Sir G. Nabarro: Speaking as the President of the British Direct Mail Advertising Association myself, thus declaring my interest, may I ask my right hon. Friend to bear in mind that that important body exists to maintain high ethical standards in circularisation by post and is a close ally of the Post Office? Would he not
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    consult the association before taking further steps in the matter?
    Mr. Chataway: The Post Office values the business that comes to it from direct mail order and I am sure that it will take note of what my hon. Friend has said.
    Mr. Charles Morris: Is it not an imposition for the public generally to be obliged to use postal codes when there are only seven Post Office centres where letters so addressed can be sorted automatically? When will the Government and the Post Office Corporation announce their policy on the mechanisation of Post Office centres?
    Mr. Chataway: The aim of the Post Office is to increase the use of postcodes so that as mechanisation progresses the full economic benefits can be obtained from it. While I recognise that post coding can involve something of a chore for the individual, the fact is that it yields economies for the Post Office. The hon. Gentleman and the public are anxious that the Post Office should conduct its business as economically as possible.

    Broadcasting Organisations (Title)
    Mr. Evelyn Kingasked the Minister of Posts and Telecommunications whether he will now seek powers to ensure that, in the case of the broadcasting organisations, the adjectives "Independent" and "British" cease to be used.
    Mr. Chataway: No, Sir.
    Mr. King: Is not the B.B.C. just as independent as I.T.V. and is not the I.T.A. just as British as the B.B.C.? Does not the difficulty stem from the fact that "British" seems to imply that the corporation is part of the Establishment, which it is not? Does not some criticism of the B.B.C. stem from the pretentiousness of this word, which seems to imply that it is more British than it is?
    Mr. Chataway: I know that the B.B.C. protests that it is no less independent, and that independent television protests that it is no less British, and some of their critics protest that neither adjective is applicable to either organisation. But these are the names that have been given for the current Charter period and licence period to the two organisations. I should

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    not be justified in attempting to change them.
    Mr. William Price: Is it not clear that we are becoming a little too sensitive in the House—
    Sir G. Nabarro: Speak for yourself.
    Mr. Leslie Huckfield: Hark at who is talking.
    Mr. Price: —or, for that matter, in court? Is it not equally clear that any organisation, and particularly the B.B.C., which does its job correctly will attract its share of criticism? Will the Minister make it absolutely clear that he will have nothing to do with censorship from either side of the House?
    Mr. Chataway: The House knows that I have had nothing to do with censorship, but I believe that the broadcasting organisations ought to take very careful note of the criticism they receive and act on it.
    Mr. Robert Cooke: My right hon. Friend has referred to 1976. Would he not agree that the question of nomenclature could be looked at by any review body which may be set up meanwhile to look at the whole future of broadcasting?
    Mr. Chataway: I think that that is correct.

    British Broadcasting Corporation (Chairman)
    Mr. Stratton Millsasked the Minister of Posts and Telecommunications on what date the present term of office of the current Chairman of the British Broadcasting Corporation expires; and when he expects to make a statement as to the new chairman.
    Mr. Chataway: The appointment expires on 31st August, 1972. Lord Hill's successor has not yet been decided upon and I cannot say when an announcement will be made.
    Mr. Mills: When considering this appointment, would my right hon. Friend bear in mind the necessity for a fundamental reappraisal and redefinition of the rôle of Chairman of the B.B.C.? In particular, would my right hon. Friend consider arranging for the new chairman to be much more aloof from programme
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    making and from technical and administrative matters inside the B.B.C.? Would he also consider greatly bringing forward once again the rôle of Director-General, which seems under the present administration to have gone into a backwater?
    Mr. Chataway: Without commenting on my hon. Friend's particular proposals, it is absolutely right to consider carefully the function of the chairman when making this appointment.
    Mr. Hamling: May we hope from the right hon. Gentleman that when the new chairman is appointed the corporation will be even more independent than some of its present critics would like it to be? May we also expect that the corporation will give culture its rightful place and not, as is happening now, sack Charles Parker, one of the outstanding producers of documentary radio programmes, on the ground of expense, in view of some of the other rubbish that is being pumped out?
    Mr. Chataway: I am not in a position to comment about the particular appointment mentioned by the hon. Gentleman.
    Mr. Richard: The right hon. Gentleman used the word "successor" in answering the Question. May we take it from that that he has no intention of even considering the reappointment of the present chairman?
    Mr. Chataway: As far as I am aware, the present chairman has always made it clear that he would not be in any way open to an offer to continue for a further five years.

    Telephone Exchange Equipment
    Mr. Goldingasked the Minister of Posts and Telecommunications whether he will establish a committee of inquiry into the technical development of the Post Office.
    Mr. Sheldonasked the Minister of Posts and Telecommunications if he will make a statement on the modernisation of the telephone system and the introduction of new exchange systems.
    Sir H. d'Avigdor-Goldsmidasked the Minister of Posts and Telecommunications what request he has received from the Post Office Board for his approval to investment of £400 million in a United

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    States system of main exchange telephone equipment; and what action he proposes to take.
    Mr. Gorstasked the Minister of Posts and Telecommunications if he will set up an independent inquiry to advise him on the merits of the various telephone subscribing systems available before any final decision is taken on the investment of many millions of pounds of public money on exchange equipment required during the 1970's.
    Mr. Chataway: I have not yet received proposals for investment in the next generation of telephone exchange equipment, but I am fully apprised of the issues involved and will ensure that the national interest is taken fully into account before any decision is reached.
    Mr. Golding: Is the Minister aware that the Financial Times has revealed that manufacturers and the Financial Times itself are in possession of a document which discusses investment in the Post Office in the next generation? Will the Minister ensure that Members of Parliament are provided with such a document and plans for the spending of very many millions of pounds of public money on the modernisation of the telephone service?
    Mr. Chataway: There are many documents passing between the Post Office and its major suppliers, and I recognise that this is an important matter which the House will wish to consider. Hon. Members will have an opportunity to discuss the future of the telecommunications system when, as I must within the next 12 months, I ask the House to extend my powers to finance the long-term investment programme. No decision will be taken on the next generation of exchange equipment before that date.
    Mr. Sheldon: Is the right hon. Gentleman aware that it has been estimated that orders arising out of a decision to proceed with the TXE4 will involve £2,000 million? This is, therefore, a major decision which is being taken by the Post Office and concerns not only the Post Office but the whole nation. Does the right hon. Gentleman recall that on the last occasion when the Post Office was called upon to make a decision of this kind it arrived at the wrong one?
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    It is vital that the House and the country take part in a decision as important as this. Will the right hon. Gentleman release to the House the details of the discussions and the papers that are going forward between the Post Office and industry, which is disputing the claims of the Post Office in this matter?
    Mr. Chataway: I am sure that on reflection the hon. Gentleman will agree that it would not be possible for any organisation to release all the documents that pass between it and its suppliers when there is need to reach a decision of this kind. However, I entirely agree about the importance of getting the decision right on this occasion. I believe that there are advantages in the structure we now have compared with the structure of former years. The ring having disappeared, the three suppliers are in a position to argue their different views to the Post Office. The Government, at arm's length from the Post Office, have a duty to come to independent decisions.
    Sir H. d'Avigdor-Goldsmid: As the Select Committee on the Nationalised Industries will in the very near future want to take a good look at this matter, may I ask my right hon. Friend to consider taking the House rather more into his confidence on this absolutely vital matter?
    Mr. Chataway: I certainly wish to take the House into my confidence in all appropriate ways and, of course, my Department will supply any information which the Select Committee may wish to have. I emphasise that there is no question of a sudden or final decision being taken in this matter. The Post Office is considering a number of alternatives and there is no question of a decision being taken before the end of this year.
    Mr. Gorst: May I press on my right hon. Friend the desirability of his obtaining expert and independent advice from neutral sources before any decision is made on this very important matter which may involve the expenditure of many hundreds of millions of pounds over a period of years? Is he aware that the system which is employed eventually should be suitable for export, and that on past experience the Post Office is not necessarily the best judge of what is suitable for export?
    Mr. Chataway: I agree that suitability for export is one of the more important criteria, but I do not believe that on a highly complex and technical issue of this kind, where so much of the expertise is concentrated in the manufacturers and the Post Office, an outside committee of inquiry is necessarily the best way to proceed.
    Mr. J. T. Price: Is the Minister aware that in these short exchanges he has not gone nearly far enough to satisfy the apprehensions that exist on both sides about this matter? Is he not aware that when we decided, rightly or wrongly, some years ago by consensus politics in this House to set up the Post Office Corporation, an activity in which I took some part, we were not aware that we had gone much too far in hiving off major policy decisions from accountability to this House? Is the right hon. Gentleman therefore aware that he should not simply take refuge in the machinery that exists? Will he seriously reconsider this whole issue?
    Mr. Chataway: The first responsibility for a decision of this kind of course rests with the Post Office Board, but I have responsibility for approving the Post Office investment programme and, of course, I am answerable to the House for those decisions. I confirm that today. I assure the hon. Gentleman that when, in due course, proposals are put to me, I shall consider them extremely carefully.

    Pre-Decimal Stamps
    Mr. Arthur Lewisasked the Minister of Posts and Telecommunications whether he will issue a general direction to the Post Office Board to continue to honour pre-decimal stamps until February, 1973, and to give a full value rebate on all such stamps handed in for cashing.
    Mr. Chataway: No, Sir. This is a matter for the Post Office.
    Mr. Lewis: Has the Minister's attention been drawn to the fact that, apart from a one-inch single column stop-press item in one newspaper stating that as from 28th February pre-decimal stamps would have no value and would have to be traded in at a discount loss, the public have been unaware of this Post Office direction? Surely long and adequate notice of this decision should be given
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    by the Post Office, which should repurchase these stamps at their cash value. Why should the Post Office be able to give only two or three weeks' notice to persons who may have purchased books or large quantities of stamps and who will not be able to dispose of them al their full value?
    Mr. Chataway: The Post Office announced last July that £ s. d. stamps would not remain valid after the end of this month and that statement was followed by a reminder in January. In fact, these stamps will have been valid for six months beyond the point when pre-decimal currency ceased to be legal tender. The Post Office has behaved more than reasonably in the matter. On the question of discount, the Post Office has always charged a discount for the re-purchase of stamps, so that no new principle is involved here.
    Mr. Costain: Is my right hon. Friend aware that this decision is not generally known by the public?
    Mr. Lewis: Hear, hear.
    Mr. Costain: Will he give a general direction to the Post Office to frank letters between now and the 28th drawing the public's attention to this fact so that the public have a fair chance of using up their pre-decimal stamps?
    Mr. Chataway: I will ask the Post Office to take account of my hon. Friend's suggestion and to consider whether any further means exist to publicise these facts.
    Mr. Lewis: On a point of order. In view of the fact that the Minister has not given a satisfactory reply, I beg to give notice that I shall raise the matter on the Adjournment.

    Postal Services (Deficit)
    Mr. Charles R. Morrisasked the Minister of Posts and Telecommunications what action he now proposes to take to assist the Post Office Corporation with the financial deficit which it has incurred in providing postal services.
    Mr. Chataway: I have nothing to add to the reply I gave to the hon. Member on 2nd February.—[Vol. 830, c. 121.]
    Mr. Morris: Is the right hon. Gentleman aware that the situation has changed

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    since then and that the decision of the Post Office Users' Council over the proposed abolition of the second delivery adds up to a massive and mounting deficit with which the Post Office Corporation is faced? Why will the Minister not have regard to what the Prime Minister said about honest and open Government? Why will he not tell the nation that an increase in postal rates is now a distinct possibility?
    Mr. Chataway: I have never suggested that postal rates could be held at their current levels indefinitely, but I have made it clear that discussions with the Post Office about further remedial measures are being pursued in the wider context of the effects of the C.B.I. initiative on the nationalised industries, as was indicated in a statement to the House by the Chancellor of the Exchequer on 9th November.

    Communications Satellites and Towers
    Mr. Adleyasked the Minister of Posts and Telecommunications (1) what steps his Department is taking to acquire communications satellites to handle both national and international telephone calls;
    (2) whether the introduction of satellite communications systems will replace the construction by his Department of communications towers in city centres.
    Mr. Chataway: The acquisition of communications satellites and the construction of communications towers are both matters for the Post Office. I understand that the former does not replace the need for the latter.
    Mr. Adley: Whilst I am grateful to my right hon. Friend for that information, I am sure he is aware that many parts of the country have a long waiting list for telephones and that he is aware also of the importance to the aero-space industry of the Post Office's taking an active interest in satellite developments. Will he consider a reappraisal of the possibilities of the Post Office entering into discussions with our aero-space industry on the question of satellites? Secondly, will he take a long, hard look at the question of Post Office towers in certain of our cities, where the fingers of scorn which appear to many people to be represented by these concrete towers are not helping to preserve the landscape,
    1326
    which my right hon. Friend the Secretary of State for the Environment is so nobly trying to do?
    Mr. Chataway: There is a continuing study of the possible use of satellites but these are for international communications and primarily intercontinental communications. It is not felt that satellites could be economic for telecommunications within a country the size of ours. I am sure that the Post Office will take note of what my hon. Friend has said about towers.
    Mr. Robert Cooke: I hope my right hon. Friend will do his best to influence the Post Office in looking for alternative methods of providing internal communication, because many of our cities are threatened with the most terrible excrescences on the landscape which the city planners feel obliged to agree to because there is no alternative means. But perhaps if there is an alternative means in the offing they might be able to delay the damage.
    Mr. Chataway: I understand from the Post Office that there are no alternative means at present. But I am sure that it will take note of my hon. Friend's remarks about the projected tower in Bristol.

    Telephone Selling
    Mr. Spearingasked the Minister of Posts and Telecommunications if he will give a general direction to the Post Office to prevent the commercial practice of telephone selling.
    Mr. Chataway: No, Sir.
    Mr. Spearing: Does not the right hon. Gentleman agree that this sort of thing is not what the telephone service was originally installed for and that there are undesirable features of the practice? Will he reconsider that answer?
    Mr. Chataway: The Post Office has no power to prevent the use of telephones for this purpose. Therefore, I do not think it is for me to approve or disapprove of the practice. There is certainly nothing unlawful about using the telephone for this purpose.
    Mr. Rost: Is my right hon. Friend aware that I first raised this matter of the increasing abuse of the telephone system during the passage of the

    1327
    Unsolicited Goods and Services Act? Will he have words with his colleagues at the Department of Trade and Industry to see whether the Act can be amended to stop this increasing nuisance and protect the public?
    Mr. Chataway: I am sure my right hon. Friend the Secretary of State will take note of what my hon. Friend says.

    B.B.C. (Licence and Agreement)
    Mr. Evelyn Kingasked the Minister of Posts and Telecommunications on how many occasions in the last six months, during his period of office, he has drawn the attention of the British Broadcasting Corporation to a breach by it of the direction, given under section 13(4) of the Licence and Agreement, to refrain from expressing its own opinions on public affairs and matters of public policy.
    Mr. Chataway: None, Sir.
    Mr. King: Is my right hon. Friend aware, in the Irish context, that first our noble Friend the Secretary of State for Defence and then our right hon. Friend the Home Secretary both expressed public disapproval of what the B.B.C. was doing and that Lord Hill ignored the carefully-weighed and pondered advice of two Ministers responsible for troops and for the lives of their troops? As the Minister responsible for broadcasting, will my right hon. Friend comment on that?
    Mr. Chataway: I am aware, of course, that both my noble Friend and my right hon. Friend put squarely to the B.B.C. what they believe to be the national interest. However, both made it clear at the same time that there was to be no censorship and that it was for the governors of the corporation to make up their own mind.
    Mr. Kaufman: Is the Minister aware that many hon. Members on both sides would totally deplore interference with the B.B.C.s broadcasting programmes, however much we may disagree with them, which do not express an editorial opinion, as the B.B.C. did not in this case, to enable people of differing and well-known opinions to inform the public of their views? In order that this admirable freedom which the B.B.C. exercises, sometimes to our disapproval, continues, will the right hon. Gentleman
    1328
    ensure that the next chairman of the B.B.C. will be of a similar independence and will not be a grey, bureaucratic puppet?
    Mr. Chataway: This Government have no intention of exercising censorship over the B.B.C., but it must be open to Ministers and to anybody else to represent strongly to the B.B.C. any conviction they may have that programming decisions of the B.B.C. are wrong.
    Mr. Molloy: Is the Minister aware that his last answer will give great satisfaction to hon. Members on both sides and that the real damage to the national interest would have been to have any chairman or director-general of the B.B.C. genuflecting to any Minister, of whatever party?
    Mr. Chataway: But if that is meant to imply that the B.B.C. should never take advice or take note of representations made by the Government, I could not agree with the hon. Gentleman.

    Television Programmes
    Mr. Charles R. Morrisasked the Minister of Posts and Telecommunications what proposals he has now received from the British Broadcasting Corporation and the Independent Television Authority for the introduction of round-the-clock television programmes.
    Mr. Chataway: None, Sir: although, following my announcement on 19th January that I have ended the restrictions on hours of broadcasting, the broadcasting authorities do not need my approval for any such proposals.—[Vol. 829, c. 477.]
    Mr. Morris: Will the Minister bear in mind that, against the background of the announced intention of the I.T.A. to produce programmes extending over 105 hours per week, and if indeed we are to have breakfast-time television, reasonable and responsible people will expect the B.B.C. to be in a position to compete with such programmes? Will he bear in mind that that might well add to the financial difficulties facing the B.B.C., despite the increased revenue from colour television licences? Will he assist the B.B.C. in the difficulties with which it may be confronted as a result of this development?
    Mr. Chataway: I do not accept that the B.B.C. could legitimately be criticised in any way if it did not match all the hours that I.T.V. broadcasts. After all, there are two B.B.C. channels and only one I.T.V. channel. It does not seem to me that fair competition would in any way be upset by that arrangement.
    Mr. Richard: Has the right hon. Gentleman yet received any proposals from the B.B.C. with regard the financial effect that the removal of the restriction on hours might have upon it? If so, when is he likely to give us the answer?
    Mr. Chataway: It has not put any such proposals to me, and I should not expect any.
    Mr. Donald Stewart: On a point of order. In view of the Minister's unsatisfactory reply to my Question No. 7, I beg to give notice—
    Mr. Speaker: Order. The hon. Gentleman is too late.

  ENVIRONMENT

    River Pollution (Offences)
    Mr. Hardyasked the Secretary of State for the Environment what is the number of prosecutions and convictions and the average fine imposed during the last three years in cases where offences of deliberate and injurious pollution of rivers have been committed.
    The Secretary of State for the Environment (Mr. Peter Walker): As the answer contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT. The number of fines in 1970 was more than double the number of fines in 1968.
    Mr. Hardy: I thank the right hon. Gentleman for the information which I shall read with interest and for the report he issued to local authorities earlier this week. But does he not agree that the number of convictions obtained has been inadequate and that the level of fines imposed has been too low to prove an adequate deterrent?
    Mr. Walker: I do agree, and I hope that the new water authorities will propose to bring more prosecutions if necessary. I also consider that penalties
    1330
    should be revised, and I intend to revise them.
    Mr. Scott-Hopkins: Does my right hon. Friend agree that where pollution takes place a great deal of advance notice is necessary before serious fines are imposed, owing to the sometimes enormous cost entailed in curing the pollution, which in many cases has been going on for years and years?
    Mr. Walker: But the river authorities negotiate reasonably on these matters. The cases where fines should be imposed are those where due warning has been given and it is possible for proper action to he taken.
    Following is the information:
    Prosecutions for offences involving the discharge of poisonous, noxious or polluting matter into rivers are included in the record kept of all offences under the Rivers (Prevention of Pollution) Acts, 1951 and 1961. Details of the fines imposed cannot be obtained without undue cost. The following list of offences committed under these Acts for the years 1968–70 has been supplied by my right hon. Friend the Secretary of State for the Home Department; comparable information for 1971 will not be available until later in the year.

    PROSECUTION FOR OFFENCES UNDER THE RIVERS (PREVENTION OF POLLUTION) ACTS, 1951 AND 1961

    Persons found guilty

    Year

    Persons proceeded against

    Total

    Fined

    Otherwise dealt with

    1968

    33

    25

    23

    2

    1969

    39

    37

    35

    2

    1970

    64

    60

    58

    2

    Water and Recreation (Conference)
    Mr. Spearingasked the Secretary of State for the Environment if he can announce the date of the proposed conference on water and recreation; if he will publish the names of the bodies which he expects to invite to it; and what form it will take.
    The Under-Secretary of State for the Environment (Mr. Eldon Griffiths): The conference will be held on 28th February at Church House, London. For the list of bodies, I refer the hon. Member to the reply I gave him on 8th February and I am sending the hon. Member a copy of the provisional agenda.—[Vol. 830, c. 328–9.]
    Mr. Spearing: I thank the hon. Gentleman for that reply. Would he not agree,

    1331
    in examining the subject of water space, that gravel pits and reservoirs are very different from canals and rivers? If the Government wish to do something about this, will they listen to the representations of such bodies as the Inland Waterways Association which has asked them to reconsider the breaking up of the unitary canal system?
    Mr. Griffiths: The purpose of the conference is to allow all concerned, including the Inland Waterways Association, a full opportunity to put their points of view forward. I can assure the hon. Member that the total amount of water space, wherever available, can be better used for amenity and recreation and that is certainly the intention of my right hon. Friend.
    Mr. Maddan: Would my hon. Friend agree that there are a large number of people who believe that the best hope for the future of inland waterways is as part of a general water authority organisation?
    Mr. Griffiths: Yes, and it is the intention of my Department that the future of the waterways as a whole will be better than their past.
    Sir G. de Freitas: As the Question referred to what form the conference will take, will the hon. Gentleman say whether it will be quite clear that it will be possible for people to advocate the complete separation of the control of navigation from the provision of water because this is the fundamental point about which the inland waterways authorities and others are much worried?
    Mr. Griffiths: The terms of reference of the conference, which I will be glad to send to the right hon. Gentleman, certainly make it possible for people to put forward any such suggestions.

    Broxtowe Colliery (Refuse Tip)
    Mr. Kenneth Clarkeasked the Secretary of State for the Environment whether he will ask the Nottingham City Council to cease all work of preparing the proposed refuse tip on the Broxtowe Colliery site near Nuthall in Nottinghamshire until the Parliamentary Commissioner for Administration has completed
    1332
    his inquiries into the circumstances in which his Department failed to intervene in the granting of planning permission for this tip.
    The Under-Secretary of State for the Environment (Mr. Michael Heseltine): My right hon. Friend does not wish to intervene in planning decisions of purely local significance, which are properly the responsibility of local planning authorities. The city council's decision in this case accorded with the approved development plan, and my right hon. Friend did not consider that the planning issues required his intervention. It would be equally inappropriate for him to intervene now in the way suggested by my hon. Friend.
    Mr. Clarke: While thanking my lion. Friend for that reply and appreciating his difficulties, may I ask him whether he does not consider it disgraceful that this authority is this week beginning to tip refuse on the site at a time when the Parliamentary Commissioner is investigating allegations against his Department to the effect that public objections to this proposed site were not given a proper airing and that there was no public inquiry which his Department could have ordered? As his Department is under investigation in this way, cannot the hon. Gentleman at least request the local authority to stop facing the Parliamentary Commissioner and everyone else with a fait accompli, which it is clearly anxious to do?
    Mr. Heseltine: My hon. Friend will appreciate that this is essentially a matter for the responsible local authority. I remind him that the use to which this land is being put was confirmed within the development plan.

    A30 (Dual Carriageway)
    Mr. John Hannamasked the Secretary of State for the Environment what is the number of miles of dual-carriage-way along the A30 in Devon it is planned to complete in 1972, 1973, 1974 and 1975.
    Mr. Michael Heseltine: The improvement of the whole of the A30 in Devon is planned for completion by the end of the 1970s. Until detailed preparation has been completed, it is impossible to give precise dates.
    Mr. Hannam: Is my hon. Friend aware that that is a disappointing reply, because the development of the A30 is so important for the development of tourism in the West Country and for permitting the influx of firms which will make up for the jobs being lost in the Exeter area'? Will he do all he can to speed up the road-building programme in the Exeter area and in the West Country and Devon generally as this is an important matter?
    Mr. Heseltine: My hon. Friend will appreciate that the Government have given a massive injection of funds for the road-building programme in the West Country as evidenced by the M5 and A38. The Government are committed to the overall improvement of the A30.

    POPULATION GROWTH
    Mr. Michael McNair-Wilsonasked the Lord President of the Council what proposals he has for making the problems of excessive population growth better understood in the community.
    The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): The significance of population growth in this country is at present being studied by a panel appointed as promised in the White Paper Cmnd. 4748.
    Mr. McNair-Wilson: While I am grateful to my right hon. Friend for the reply may I ask him whether he is not taking a slightly complacent view of what is a clear-cut problem? May I draw his attention to a letter signed by a series of estimable doctors in the Lancet in which they pointed out that births in the United Kingdom annually exceed deaths by 300,000 and that by the end of the century we will be faced with at least another 10 million people, if not another 15 million? May I impress upon my right hon. Friend, since the United Kingdom now stands eighth in population density in the world, the need for an intensive and massive national educational campaign using television, newspapers, posters, lectures and so on, to make the ordinary person aware of the problem?
    Mr. Whitelaw: I would accept at once what my hon. Friend says about this being an important problem which raises many
    1334
    difficult and vital issues. The Government were right to respond to a recommendation of a Select Committee of this House and set up a Population Panel. They have agreed that a particular Minister, alas myself, should be responsible for answering in this House all questions on this matter. This is right. The Population Panel is an extremely erudite body and I am hoping to meet it in a week or two to discuss these matters.
    Mrs. Renée Short: Is the right hon. Gentleman aware that it is not erudite bodies we need to deal with the problem? [Laughter.] Would he not agree that there is now so much opinion on both sides of the House in favour of this move that his right hon. Friend ought to appoint a Minister to be responsible for the whole question of population policy? In the meantime does he not think that his right hon. Friend the Secretary of State for Social Services ought to have regard to the representations made by the B.M.A. and other bodies about the provision of adequate facilities through the National Health Service both for family planning and for carrying out terminations of pregnancy?
    Mr. Whitelaw: I appreciate all that the hon. Lady has said about the importance of this subject. I have been given the somewhat dubious privilege of answering these matters in the House and that I will seek to do, whatever be my qualifications one way or the other. [Laughter.] I do not wish in any way to make a laughing matter of this problem. It is right that the Population Panel should be given the opportunity to consider these matters. At the same time I will certainly put the representations which she has put to me to my right hon. Friend the Secretary of State for Social Services.

  HOUSE OF COMMONS

    Staff Canteen (Charges)
    Mr. John D. Grantasked the Lord President of the Council why all charges in the staff canteen at the Palace of Westminster have been increased by 25 per cent.
    Dr. Reginald Bennett: I have been asked to reply.

    1335
    As the staff canteen was running at a heavy loss, prices in general have had to be increased. Unfortunately, however, in the case of nine items the required increase was overestimated: these items have now been reduced.
    Mr. Grant: While thanking the hon. Gentleman for that answer may I ask whether he is aware that the Government have a policy of restraining price increases to 5 per cent. wherever possible? Would he not agree, upon reconsideration, that it might be better if the House set a better example towards its own employees?
    Dr. Bennett: This is certainly so but with the rate of losses on the catering side it would be quite impossible for such an increase to make much of an impression. Therefore the loss would have to be paid for through the pockets of. hon. Members. This is the dilemma.

    New Building (Physical Recreation)
    Mr. Dormandasked the Lord President of the Council if he will list the activities for which provision is being made for physical recreation in the new Parliament building; which bodies are being consulted in the matter; and when such facilities are expected to be available.
    Mr. Whitelaw: The Services Committee, in its Third Report of Session 1968–69, recommended that a swimming bath and a small gymnasium or exercise room should be provided in the new Parliamentary Building. This recommendation was accepted and was contained in the conditions for the architectural competition. It is hoped that the new building will be ready during 1977–78.
    Mr. Dormand: Is the right hon. Gentleman aware that that is a very unsatisfactory reply? Will lie confirm that the provision of such facilities, in view of the long hours we have to spend here, are essential if we are to be fit enough to do our jobs properly? Will he give an assurance that the facilities to be provided will cover at least the 13,500 sq. ft. recommended by the Services Committee? Will he ensure that action is taken now, at the drawing-board stage, so that these facilities are provided?
    Mr. Whitelaw: Certainly I note what the hon. Member says about the new
    1336
    Parliamentary Building. It would not be for me to say whether such facilities would be absolutely essential for our fitness in this House. There might be some of us—I think I would be one—who would be unlikely to use the facilities even if they were there, but I still regard myself as very fit.
    Mr. Sydney Chapman: Can my right hon. Friend tell the House when the result will be announced of the architects' competition for the new building, as many of us have more than a professional interest in it?
    Mr. Whitelaw: I think that very soon there will be an opportunity for all right hon. and hon. Members to examine the results of the architects' competition.
    Mr. Rankin: Will the right hon. Gentleman study the rise and fall of the last attempt to establish a gymnasium for hon. Members in order that success may possibly follow the second attempt?
    Mr. Whitelaw: I am always prepared to consider all rises and all falls and all questions.

MESSAGE ON BEHALF OF THE QUEEN

  Proclamation of State of Emergency
  Message sent on behalf of The Queen, signed on Her Majesty's behalf by Her Majesty Queen Elizabeth The Queen Mother and Her Royal Highness The Princess Margaret, Countess of Snowden, brought up, and read by Mr. SPEAKER, as follows:
  The Emergency Powers Act, 1920, as amended by the Emergency Powers Act, 1964. having enacted that if it appears to Her Majesty that there have occurred or are about to occur events of such a nature as to be calculated. by interfering with the supply and distribution of food, water, fuel or light, or with the means of locomotion, to deprive the community, or any substantial portion of the community, of the essentials of life. Her Majesty may, by Proclamation, declare that a state of emergency exists:
  We Counsellors of State, to whom have been delegated certain Royal functions as specified in Letters Patent dated the 4th day of February. 1972, being of opinion that the present industrial dispute affecting persons employed in the coal mines and the production and distribution of fuel constitutes a state

  1337
  of emergency within the meaning of the said Act of 1920 as so amended, have in pursuance thereof made on Her Majesty's behalf a Proclamation dated the 9th day of February, 1972, declaring that a state of emergency exists.
  Message to be considered tomorrow.—[Mr. Whitelaw.]
  Mr. Swain: On a point of order, Mr. Speaker—
  Mr. Speaker: I wonder whether the hon. Member would wait perhaps till the Home Secretary has made his statement. Perhaps the point of order would be more appropriate then.

  PROCLAMATION OF STATE OF EMERGENCY
  The Secretary of State for the Home Department (Mr. Reginald Maudling): With permission, Mr. Speaker, I wish to make a statement.
  Faced with the disruption of coal and electricity supplies caused by industrial action in the coal industry, the Government must take steps to discharge their responsibility to maintain essential services and to minimise the threat to the life of the community. They have therefore thought it right to advise the proclamation of an emergency under Section 1 of the Emergency Powers Act, 1920, as amended, followed by the making of regulations under Section 2.
  The regulations will come into operation at midnight tonight. Copies will be available this afternoon. My right hon. Friend will be making an announcement tomorrow about the arrangements for debating these regulations next week. They are based on those made in 1970, with some modifications, and confer on Ministers enabling powers which they will use only to the extent that necessity requires.
  Mrs. Shirley Williams: I am sure the Home Secretary will be aware that we have not yet seen the regulations. I trust that they will be available a little later this afternoon. I am bound to say that we on this side of the House regard this emergency as being very much of the Government's own creation, with the worsening position for employment in the
  1338
  steel, textiles and other industries as a result of falling stocks of coal. May I ask the Home Secretary, first, whether the Government now intend to make an effort to solve the coal strike by means of allowing the National Coal Board to make an additional—a fresh offer?
  May I ask him, secondly—he will understand that I must ask this question tentatively because we have not seen the regulations—whether the Government have any intention of using the Armed Forces in a situation which might involve them in moving through picket lines, and whether he is aware of the considerable crisis this would bring, granted the history of the coal mining industry?
  May I ask him, thirdly, whether, in the light of the statement made by the Miniser for Industry yesterday, when he said that the question of public order rested with the police, the Government are not now asking the police to undertake an impossible task, in the light of public sympathy, and feeling among the miners?
  Mr. Maudling: On the first point, I think the hon. Lady recognises that this is an emergency situation in which there is need for special powers. As for efforts to solve the crisis, as the House is aware, discussions are taking place, and I would not want further to comment on that at the present moment.
  The Government would contemplate the use of the Armed Forces only if that were absolutely essential to maintain vital services to the nation.
  On the point about the law of picketing, let me make it quite clear that it is well known and established that peaceful picketing is acceptable under the law; intimidation is not. It is the responsibility of chief officers of police to enforce the law. It is not for the Government to instruct them in any way about how to carry out their duties.
  Mr. Swain: In view of the discussions which are now taking place today, would not the right hon. Gentleman consider it to be wise momentarily to withdraw the state of emergency, because of the effect of the suspicions which are being aroused in the mining areas of Great Britain, on the ground that a state of emergency is a machine by which the Government intend to break this strike?
  Mr. Maudling: No. I do not agree with that. The Government have a responsibility, obviously, to maintain essential services. Part of the problem with this dispute is not only the present circumstances, but, as I understand it, that even when this dispute is settled it will take a long time to get back to normal production.
  Mr. Hastings: Would my right hon. Friend like to make a statement on the extent to which subversive and extremist elements, which have nothing directly to do with the miners' cause, have taken control of picketing?
  Mr. Maudling: I do not think I should like to add to what I have already said about picketing. The law provides complete freedom for peaceful picketing. but anything beyond peaceful picketing is illegal, and the police forces of this country, under their chief officers, are carrying out the law.
  Mr. Pardoe: Is the right hon. Gentleman aware that this is now the third proclamation of a state of emergency in the last two years by this Government? It could become a habit. Would he point out for the benefit of his bemused supporters why the Industrial Relations Act was not able to take care of this matter? Or is it, perhaps, that this kind of all-embracing, industry-wide, American-type strike is what the Government prefer?
  Mr. Maudling: With respect, I do not think that that question contributes much to the solution of this problem.
  Mr. C. Pannell: With regard to the opinion expressed by the Home Secretary on the regulation of picketing as being a matter for chief consables, will his Department, as the central authority, take note of the very uneven treatment being given to pickets up and down the country? Quite obviously, some chief constables have interpreted the law in a way in which trade unionists understand it; others are interpreting the law in a rougher and tougher way not envisaged by this House.
  Mr. Maudling: I think the House recognises that this is a very difficult problem indeed. The police are faced with great difficulties in dealing with particular situations. I think that, by and large, they are handling them with great tact
  1340
  and good sense. They have both to ensure that peaceful picketing is permitted and that intimidation is not permitted, but it is not the job of the Government, under our constitution, to order chief constables how to do their job.
  Mr. Roy Jenkins: On the last point, I cannot accept what the right hon. Gentleman appears to have put to the House several times, both now and previously, that it is no duty of the Home Secretary to ensure that there is uniformity of behaviour between chief police officers throughout the country in a national matter of this sort.
  May I ask the right hon. Gentleman about the serious danger to public order which has arisen at the Saltley gas depôt, of which he is aware? There is here a grave danger of injury both to police and pickets. There is great danger of this becoming a semi-local battleground, and there is great local concern. Does he understand—as I understand from the Secretary of State for Trade and Industry—that there is a system of Government priorities by which coke or coal is allowed out for hospitals and similar institutions?
  My hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell), who is there and has just been in touch with me by telephone, said that the chairman of the gas board is unaware of such a system applying to coke, but that the board would be prepared to operate such a system. My hon. Friend also informs me that the pickets would be prepared to accept such a system provided that the Government would act and give some guidance to the chairman of the board. A dangerous situation could thereby be avoided. Will the right hon. Gentleman assure us that he will act to co-ordinate matters with his right hon. Friends and ensure that the situation is not allowed to deteriorate through indolence?
  Mr. Maudling: The right hon. Gentleman, who has held the office which I hold, must know perfectly well that the Home Office issues guidance to chief constables and police authorities on the interpretation of the law, but the fact must remain—as it was in his day and is in my day—that the actual carrying out of those responsibilities rests upon the chief constables of police. I have said no more and no less than that.

  1341
  On the second point, at Saltley the police are doing their constitutional duty of allowing peaceful picketing but preventing illegal picketing. This they must do under the law, and it is not for me as Home Secretary to interfere with the police in carrying out the law.
  Mr. Roy Jenkins: May I come back to the urgent matter which I put to the right hon. Gentleman in the form of a question? I apologise for the question being long, but this is an extremely important matter. I put to him a dangerous situation and, in my view, a way of avoiding the acceleration of the danger. Surely the right hon. Gentleman can assure us that he will immediately consult his right hon. Friend and others concerned to see whether a solution can be found on a basis which does not involve a continuing great danger to life and limb of both pickets and police? Will he act in this matter straight away?
  Mr. Maudling: What has been said will be heard by my right hon. Friend. I must stick to this point. If there is danger to life and limb it arises from illegal picketing.
  Mr. Swain: On a point of order, Mr. Speaker. May I seek your guidance, Mr. Speaker. The Home Secretary no doubt has no evidence to prove his statement. We have specific evidence, and I have just presented the evidence to my right hon. Friend on the Front Bench.
  Mr. Speaker: That is a comment, not a point of order.
  Mr. Maudling: As I said before, the job of the police, which they are doing, is to ensure that peaceful picketing, which is legal, is allowed and that intimidation and unlawful picketing are prevented.
  Mr. Harold Wilson: The right hon. Gentleman has still failed to answer my right hon. Friend's question. While he is Home Secretary and can answer for the police, he is also Chairman of the Cabinet Emergency Committee. Surely he does not sit there considering points about the police and not looking at anything else. In that capacity will he tell the House that he will take up urgently with his right hon. Friend the point put by my right hon. Friend, that a system is in operation for the movement of coke and other supplies which does not seem to be known of on the ground? Is there
  1342
  any reason why the right hon. Gentleman 10 minutes ago could not have given the House an assurance that he will take up this matter? If there is not a reason, will he do so now?
  Mr. Mauding: I must go on repeating the simple point that peaceful picketing is allowed and is within the law of the land, and the job of the police is to ensure that peaceful picketing can and does take place. Anything beyond that is not permitted by the police. The management decisions of the National Coal Board or of anyone else are not for me.
  Mr. Roy Jenkins: Is the right hon. Gentleman not aware that the position in Saltley is grave and difficult for the Birmingham police as well as for everyone else. Is he not capable of a spark of imagination, instead of merely repeating these dicta? As Deputy Prime Minister, as I believe he is, and as Chairman of the Cabinet Emergency Committee, will he not try to find a way—for which I have offered him some guidelines—to help to solve this dangerous position?
  Mr. Maudling: I am giving the House the facts. People are entitled to use peaceful picketing and are not entitled to use unlawful picketing. It would be quite wrong to say that we should persuade people, because of unlawful picketing, to make judgments which they would not otherwise make.
  Mr. Harold Wilson: On a point of order, Mr. Speaker.
  Mr. Cormack: On a point of order, Mr. Speaker.
  Hon. Members: Sit down.
  Mr. Speaker: Order. I call the Leader of the Opposition on a point of order.
  Mr. Harold Wilson: The time of the House is being wasted. We are not getting answers to questions on an important issue which involves the safety of life and limb. The right hon. Gentleman is speaking for the whole Government, not just for the Home Office, yet he informs the House that it is not a matter for him. The Minister responsible is sitting next but two to him. In these circumstances, Mr. Speaker, may we ask either that the Prime Minister, whose

  1343
  writ presumably extends beyond his own Department, should answer these questions, or will you permit questions to the Secretary of State for Trade and Industry to enable him to answer my right hon. Friend's question?
  Mr. Speaker: I do not think that is a matter for me. It is up to the right hon. Gentleman to intervene if he wishes.
  Hon. Members: Answer.
  Several Hon. Members Several Hon. Members rose—
  Mr. Speaker: Order. This may perhaps resolve itself when we have some other questions.
  Sir D. Walker-Smith: Is not the law quite clear on this matter, based on the distinction which my right hon. Friend has made between peaceful picketing which is legal and intimidation which is not? Is not the application of the law in each case dependent as a matter of fact and degree on the individual circumstances of the case? If that be so, is it possible for my right hon. Friend to issue guidance which would govern in advance every particular situation?
  Mr. Maudling: General guidance has been issued and is already in existence, but particular situations must be judged on the spot.
  Mr. Leslie Huckfield: Is the Home Secretary aware that at Saltley picketing has been taking place, with about 20 arrests daily? Will he accept that it will not do for him continually to pass the responsibility to chief constables? Will he not make sure that those who are picketing can talk to those who are being picketed, and will he also interfere and force the West Midlands Gas Board to close down the plant forthwith?
  Mr. Maudling: I am not passing the responsibility to chief constables. They have it under the existing law.
  Sir D. Renton: For the removal of any misunderstanding that there may be, will my right hon. Friend confirm that even the Emergency Powers Act gives him no power to modify the responsibility of chief officers of police for enforcing the law?
  Mr. Maudling: Yes, Sir.
  Mr. Concannon: Is the right hon. Gentleman aware that some of us could give him reams of evidence of intimidation—and this intimidation is not from the pickets themselves, but from other people'? [HON. MEMBERS: "Oh!"] Yes, and we can produce that evidence. I ask the Home Secretary to be very careful about bringing the Armed Forces into this strike because, as a former member of the British Armed Forces, I can assure hon. Members that many members of the Services are former trade unionists, or have trade union members in their families many of whom are miners. I can tell the House that this is a very sickening thing to ask the British Army to do.
  Mr. Maudling: What I said on that point was very carefully considered
  Mr. Cormack: Is it not true that in constituencies such as my own, and where pickets are behaving entirely legally, there have been no untoward incidents?
  Mr. Maudling: There has been a large amount of picketing, much of which has been wholly legal. The job of the police is both to ensure that illegal picketing is stopped and legal picketing allowed.
  Mr. John Mendelson: In regard to the essential point made by the right hon. Gentleman about peaceful as against illegal picketing, may I ask whether he is aware that along with other Members from Yorkshire constituencies I received a telephone call from a member of the Executive of the N.U.M. about events yesterday morning outside the Saltley plant, where a number of my constituents, who were peacefully picketing, were prevented by police officers, with the use of a good degree of force, from making contact with lorry drivers in exercising their legal right to point out the situation to those lorry drivers? Will he issue instructions and guidelines to chief constables, as is his duty, to make sure that police officers do not prevent our constituents from exercising their legal rights?
  Mr. Maudling: Such guidelines already exist.
  Mr. Tebbit: Would not my right hon. Friend agree that the comments made by the hon. Member for Penistone (Mr. John Mendelson) a moment ago underline the danger that, when these disorderly

  1345
  scenes occur, the legitimate rights of men to picket can be affected? Does lie appreciate that my constituents, and constituents throughout the country, want the police to back the legal rights both of pickets to picket and of ordinary decent working men and women to go about their legal and legitimate business?
  Mr. Maudling: I entirely agree.
  Mr. Palmer: When the House comes to debate the state of emergency, could the right hon. Gentleman say whether the House will be given a full and frank statement on the exact electricity supply position? Over two-thirds of the electricity generated depends on coal and, however a power station is managed, it cannot be run without fuel. It is important that the House should know the facts.
  Mr. Maudling: Arrangements for a debate are in the hands of my right hon. Friend the Leader of the House. I will bear in mind what the hon. Gentleman has said.
  Mr. Arthur Lewis: Is the Home Secretary aware that many hon. Members on this side of the House know only too well from personal experience all about the law on picketing? Is he aware of the fact that it is not the duty of the police to use force to enable lorries to get through? Will he advise the police that its job is not to assist the strike-breakers in getting the lorries through, even though they might think it is their duty so to do?
  Mr. Maudling: The job of the police is to enforce the law—which is that peaceful picketing is permissible, but intimidation is not.
  Mrs. Shirley Williams: On a point of order, Mr. Speaker. I had the impression that the right hon. Gentleman the Secretary of State for Trade and Industry was about to attempt to answer the question put to him by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins). Will you give the right hon. Gentleman permission to do so, if he is now willing?
  Mr. Speaker: That is not a matter for me.
  Mr. Edwin Wainwright: Will the Home Secretary think more seriously about this problem? Is he not aware that in some parts of the country chief superintendents, and even chief constables, are allowing their police officers to arrest and handcuff pickets, whereas in other parts of the country they are simply arresting individuals?
  Is he aware that we received information yesterday that pickets in Birmingham were not allowed even to talk to lorry drivers and were manhandled by police, thus further aggravating the situation? Surely he should be more consistent and issue directions to ensure that the situation involving the arrest of pickets and others is more consistent than it is at present.
  Mr. Maudling: It is my impression that chief officers of police are carrying out the law, but if there is evidence to the contrary in any individual case, perhaps hon. Members will send it to me.
  Mr. Roy Jenkins: May I give the Home Secretary an opportunity to correct the impression he gave to the House a short time ago? This is a difficult situation which affects the police and for which the Home Secretary has some responsibility; it affects the Government's system of distribution for which the Secretary of State for Trade and Industry has some responsibility. This could become a still more dangerous situation. I have ventured to put to the Home Secretary a way out which could ease this position. Surely he can at least give the House the assurance that he will immediately, in his capacity as Chairman of the Emergency Committee, discuss this matter with his right hon. Friend and with anybody else concerned.
  Mr. Maudling: My right hon. Friend the Secretary of State for Trade and Industry has heard that suggestion, and I shall be happy to discuss it with him. What I am saying is that my responsibility at this Box is as to the duties of the police, which I believe they are carrying out very well. If there is any evidence to the contrary, I shall be happy to receive it from hon. Members.
  Mr. Alexander W. Lyon: Do the recommendations already issued by the Home Secretary to police officers define

  1347
  peaceful picketing as meaning that strikers are empowered to try to stop a lorry or to approach the lorry driver to speak to him? If these instructions do not make such a recommendation, would the Home Secretary consider publishing in the OFFICIAL REPORT the instructions which have been given to chief police officers?
  Mr. Maudling: I will certainly consider that suggestion. The law on picketing has been laid down in various court decisions, and the line between peaceful picketing and intimidation is not all that easy to lay down.
  Mr. Harold Wilson: Since there is no one who has been in this House for a quarter of a century who has even seen a Minister refuse to answer for the whole of the Government, which it is the right hon. Gentleman's duty to do, especially when one bears in mind that this is a grave occasion involving a declaration of a state of emergency, would you, Mr. Speaker, accept a Motion for the Adjournment of the House for 15 minutes to allow the Prime Minister to come to the House, or to allow one Member of the dozen Ministers on the Government Front Bench, to give an answer to my right hon. Friend on behalf of the Government?
  Mr. Speaker: I do not think I could accept such a Motion for the Adjournment.
  Hon. Members: Why not?
  Mr. Speaker: A question was asked by the right hon. Gentleman about a particular situation in a particular plant and whether that matter could be looked into. I must tell the House that I have received an application for a Standing Order No. 9 debate on that matter and the absence of any kind of assurance to look into that specific case may guide me in the decision I give.
  Mr. Maudling: I am sorry if I did not make the position clear, Mr. Speaker. This matter had been heard by my right hon. Friend the Secretary of State for Trade and Industry, who will clearly consider what has been said.

  WEST MIDLANDS GAS PLANT, SALTLEY
  Mr. Leslie Huckfield: On a point of order, Mr. Speaker. I beg to ask leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that should have urgent consideration; namely,
  "the need for urgent Government action to secure the closure forthwith of the West Midlands Gas Board plant at Saltley on account of undue provocation of pickets and the unfair burden placed on the police."
  This plant is one of the most important in the Midlands.
  Mr. Speaker: The hon. Member for Nuneaton (Mr. Leslie Huckfield) has asked leave to move the Adjournment of the House under Standing Order No. 9, for the purpose of discussing a specific and important matter that he thinks should have urgent consideration; namely,
  "the need for urgent Government action to secure the closure forthwith of the West Midlands Gas Board plant at Saltley on account of undue provocation of pickets and the unfair burden placed on the police."
  In view of the exchanges today I confess frankly that I feel myself placed in a very difficult position; and I shall not rule on this today. In other words, I cannot accept this application today.
  Mr. C. Pannell: Mr. Speaker, will your opinion tomorrow be conditioned at all by the fact that the Home Secretary will have got to his feet and gone into his Department and acted for once in a most sensible manner?
  Mr. Sneaker: I shall be conditioned by what has happened in the meantime.

  IRELAND
  4.0 p.m.
  Mr. John Biggs-Davison: I beg to move,
  That leave be given to bring in a Bill to amend the Ireland Act 1949.
  I begin by acknowledging my obligation to my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) who would have associated himself with this but has now to be overseas. Indeed, a number of minds, including that of my hon. Friend the Member for Londonderry (Mr. Chichester-Clark), have been working in the same direction, and the proposition that I seek to ventilate in a House deeply concerned for the serious situation in Northern Ireland was first put to me by a fellow Catholic serving in the Ulster Defence Regiment.
  The Ireland Act, 1949, was occasioned by Eire's departure from the Commonwealth, and declared, amongst other things,
  "the constitutional position and the territorial integrity of Northern Ireland".
  My proposition is to alter Section 2, which provides that Northern Ireland should remain part of the United Kingdom and that neither Northern Ireland nor any part of it should cease to be So
  "without the consent of the Parliament of Northern Ireland".
  This Bill would substitute for the words:
  "the Parliament of Northern Ireland"
  the words:
  "the people of Northern Ireland".
  My intention follows logically from the Downing Street Declaration of August, 1969. This reaffirmed
  "the clear pledge made by successive United Kingdom Governments that Northern Ireland should not cease to be a part of the United Kingdom without the consent of the people of Northern Ireland".
  This is a quotation from the first paragraph of the Declaration, which concludes:
  "The border is not an issue".
  That was the position of the Administration headed by the Leader of the Opposition and of the Northern Ireland Government. Nor is it incongruous with the speech delivered by my right hon. Friend the Prime Minister on Sunday at Harrogate. Hon. Members will have
  1350
  noted also what the Northern Ireland Prime Minister stated at Stormont yesterday:
  "The border is not an issue".
  Let us give effect to this assertion in the Declaration of Downing Street.
  At the present time it might be said that every General Election in Northern Ireland is a virtual referendum: for the Union or for a united Ireland. If, however, the border were taken out of Stormont politics, elections could be fought on policies rather than on the prejudices of the past; and men and women of the minority might find it easier to play their part in legislation and in government in Northern Ireland.
  The Prime Minister said at Harrogate:
  "It is not for us to tell the people of Northern Ireland that they must choose to join a United Ireland or that they must choose to remain part of the United Kingdom."
  My right hon. Friend went on:
  "It is a fact that at the present time a substantial majority in Northern Ireland insist on remaining within the United Kingdom."
  I myself would add that that substantial majority includes many Catholics. [Interruption.] Indeed, the voting figures in various elections would confirm that. But, as Her Majesty's Ambassador, Lord Cromer, said on American television on 4th February:
  "If the people of Northern Ireland voted to become members of the Republic we would do nothing to prevent or discourage this."
  My contention is that the effective vote for or against such a proposal, such a profound constitutional change, should not be that of the Northern Ireland Parliament of the day but should be that of the people as a whole.
  The mechanics and timing of a plebiscite cannot be entered upon now. It should not, in my view, be held too frequently. The interval should be long enough not to cause distraction from the problems of bread and butter, work and welfare, housing and health, education and development. In a wise leading article on 5th February The Times newspaper urged the Governments in London and Belfast to search for
  "an initiative that might overcome this reluctance on the part of the Northern Ireland opposition to enter into negotiation,"
  but added the warning that nothing should he done
  "which would be interpreted as a sign of weakness and acted upon accordingly by the

  1351
  I.R.A. and organisers of civil disobedience; or one that would provoke the Protestant part of the population to look after their own safety."
  This Bill, if enacted, would demonstrate that the I. R. A. 's method of trying to unify Ireland is an outrage upon the people's right to decide their future by equal and secret vote.
  Question put and agreed to.
  Bill ordered to be brought in by Mr. Biggs-Davison, Mr. Ronald Bell, Mr. Goodhart, Mr. Wall, Mr. Maginnis and Mr. Fell.

  IRELAND
  Mr. John Biggs-Davison accordingly presented a Bill to amend the Ireland Act 1949: And the same was read the First time; and ordered to be read a Second time upon Friday, 21st April, and to be printed. [Bill 81.]

BRITISH COUNCIL
Motion made, and Question proposed,
That this House takes note of the First Report from the Select Committee on Expenditure in Session 1970–71 and of the related Special Report—[Mr. du Cann.]
4.8 p.m.
Mr. Lewis Carter-Jones: May I say to the Chairman of the Expenditure Committee that my Sub-Committee will be very grateful to him for allowing this report from a previous Session to be accepted, because a considerable amount of work has been done by hon. Members on both sides of the House, by the Committee Clerk, our secretary, by certain members of missions overseas and by the British Council itself. It is for that reason that I am most grateful to the Chairman and this Committee for allowing this particular report to go through.
Although I could have dealt at great length with this very expansive report, I have felt that perhaps we ought to reply to the detailed observations we have had from the British Council and from the Secretary of State for Foreign and Commonwealth Affairs. I believe that my Sub-Committee would join with me in saying that the fact that we have had a joint report causes us great alarm and concern. The fact that the British Council, which prides itself on its independence, should have had to make a sub-
1352
mission together with the Foreign and Commonwealth Office tends to confirm what the Sub-Committee found at every stage of its investigation.
I ought to say at the outset that the Sub-Committee was agreed, and it was completely unanimous, that the British Council was doing a first-class job for Britain, and we felt that the Foreign Office was poking in its nose where it really had no concern.
I say that with a qualification. It is that the Foreign and Commonwealth Office must make up its mind whether the British Council is completely independent or whether the Department is to interfere. It cannot have it both ways. The Council tries to hold up its head, insisting that it is completely independent. However, as soon as it tries to take independent action, it is sat upon by the Foreign and Commonwealth Office—[Interruption.]I am glad to note that I have the support of a number of hon. Gentlemen opposite when I say that.
In this connection, we found a remarkable state of affairs in Germany. The Germans were completely straight forward. They told us that where a cultural relations organisation is sponsored by the German Government, the Government are in on it and its activities are part of their foreign policy. The Germans were completely honest about it. Apparently, it is only we who prevaricate.
I turn next to a matter which may affect the Treasury. The Sub-Committee's first two recommendations are concerned to see that the British Council should not be forced to withdraw representation for financial reasons, and, secondly, that for four, five or even six years in advance, the Council should know precisely how much money it has to spend.
It appeared to the Sub-Committee that the Foreign and Commonwealth Office, influenced by the Treasury, was sometimes, for the sake of a very small sum of money, compelled to withdraw British Council representatives, with disastrous effects on the relationship between ourselves and the country concerned. It is a great tribute to the British Council that it is accepted, welcomed and often blessed in the countries where it gives its services. When representation is withdrawn, the impact on our relations with the country concerned is frequently out of all proportion.

1353
Frequently, we were talking in terms of £50,000 or £60,000. No one in his right mind will say that it is worth while jeopardising international relationships for the sake of such a small sum. Accordingly, the Sub-Committee's first observation was to suggest that the Treasury, supported, I hope, by the Foreign and Commonwealth Office, ought to make quite sure that British Council funds are available for a continuing period of time so that no embarrassment arises.
The Sub-Committee, made up of a mixed bag of back bench hon. Members from both sides of the House, found itself questioning senior British Council staff and senior Foreign Office representatives overseas, as well as junior staff. No matter how long our questioning went on, we found that they welcomed the fact that we were challenging certain assumptions. In terms of feed-back, we were told time and time again by long-serving members of the British Council and of the Diplomatic Corps that they found it extremely challenging to have to answer questions which involved discussions of their practices and procedures.
One point of interest which arose in Germany is worthy of mention. In the developed countries, the British Council ought to think very carefully about the vast sums of money that it spends on libraries. In many towns in highly developed countries, the chances are that public libraries have better English sections than most British Council libraries. Six or seven Members of Parliament full of energy who are let loose for a quarter of an hour in a library are able to flick open a large number of books to discover how many times they have been taken out of the library. I am sorry to report that we did this during our German visit, only to find that the overwhelming majority of books had never been borrowed. That is not to say that the British Council is not performing a useful function. However, it should think twice about stocking a library in a highly developed country.
We did exactly the same exercise in British Council libraries in Nigeria and Ethiopia. We found that in most books there was hardly any more room for entries, so many times had they been borrowed. I hope that the British Council will look carefully at its policy in this connection.
1354
With the exception of one issue which it discusses, the Duncan Report met with the Sub-Committee's complete agreement. The one point of disagreement concerned the report's assumption that we are going into Europe. I do not intend to go into that at the moment. However, Duncan said that a lot more effort should be spent in Europe. Disagreeing with that, my Sub-Committee was completely unanimous in its view that the British Council could do the greatest amount of good in the underdeveloped countries. Since the British Council's finances had been stabilised and since there seemed to be no end to inflation, we felt that the greatest effort should be put overseas in under-developed countries, where we are made welcome, where tremendous use is made of our resources, and where we can do an even greater job in the long run.
The Sub-Committee was tremendously proud as a result of its visits to Addis Ababa, Lagos and Ibadan. We talk sometimes about the use to which we put rooms. Never have I seen libraries used as intensively as they are in those three centres. People queue for the right to sit there. Any British tax payer would have been proud to see what we did, and would have said, "If I am voting money for this cause, it is well worth-while". However, it should be pointed out that people queue to study, sometimes bringing their own books. That may be a minor criticism. Nevertheless, the use which is made of the books in our libraries in those three African towns has to be seen to be believed.
Everywhere we went, British Council representatives welcomed our questioning of its work methods. I am delighted to report that the Council has decided to invite independent people to challenge it in the future about the work that it is doing.
We encountered one matter which caused us some grievance and some sadness. We cannot understand why the Director-General should be appointed as a result of advertising. I make no bones about the fact that I do not like a "trawl". The idea of pushing out a net and trying to pick up the appropriate man seems to be about the most inefficient method of all. It is like saying "I want to catch a particular herring in the North Sea, so I

1355
shall trawl for it." I think we should use a combination of advertising and invitation and the existing staff should be allowed to feel that they have a chance to claim the job.
Although we made these observations, which were strong and forceful I think that in fairness to Sir John Henniker I ought to say that no criticism, implied or otherwise, was levelled at him. We wanted to put this on record, because if something financed from central funds cannot or will not accept that a public appointment should be publicly advertised we must be failing badly in our duty.
Perhaps the most exciting thing we saw—and I should like to talk about some of the exciting things—was in Addis Ababa.
Mr. Hugh Delargy: My hon. Friend may have finished the point he made about the Director-General, but surely he must be aware now that the recommendation has been accepted wholeheartedly by the executive committee, which advertised the appointment last October and the matter has been going forward to proper selection.
Mr. Carter-Jones: I am very grateful to my hon. Friend for bringing that point to my notice. The Chairman of the Expenditure Committee will now realise that, even if only for this reason, by allowing our report to go through he has done a power of good. We are most grateful to him for that.
The exciting thing we saw in Addis Ababa was a small number of enthusiastic people working on a shoestring, doing a wonderful job. It was a combination of effort between the British Council and the O.D.M. by which they were trying to establish television programmes, for limited distribution because of geographical difficulties, to teach English to people in the area.
Mr. Donald Coleman: Is my hon. Friend aware that there was a report by the O.D.M. when we sent a Sub-Committee and we formed the same opinion of the value of the great work which is being done in Addis Ababa.
Mr. Carter-Jones: This is another reason why the Chairman of the Expenditure Committee was right in allowing the report to go forward.
1356
It was remarkable to find two enthusiastic young men, working virtually all the hours which God sends in a not easy climate and under not easy conditions, turning out wonderful work. What was even more impressive was the fact that young V.S.O.s on their day off were going to the mass media centre to help in pushing out these programmes. The House should note that these young people, who are sometimes knocked hard for not being very helpful, in their free time were travelling long distances to promote this effort. I am glad that the British Council has accepted this policy.
I hope that I do not sound too much like a petty-minded administrator, but point 5 arose out of the question whether sometimes British Council personnel would be prepared to give a considerable amount of time to advising and helping people who come in casually. Sometimes they represent one-third or sometimes 50 per cent. of the staff, and they are absorbed in this task for virtually half their time. Unfortunately, no records have been kept on this subject. I am not the sort of person who feels, nor do I think my Sub-Committee feels, that we should keep records for the sake of keeping records, but in terms of job analysis it might have been helpful if a breakdown of the work load had been undertaken to ascertain whether or not an advisory service could have been given in the country concerned by a native of that country. It is worth while having a look at that.
I have mentioned the problem of library facilities. I sincerely hope that a much closer look will be taken at the problem of the relationship between the type of country and its wealth and the sort of library which we provide. I do not want to use the word "flashiness", but in terms of swish, smooth buildings, we cannot teach the Americans. Yet in terms of attracting people we can do equally as well as they can. In our survey we found that the work done by the British Council was as effective, as efficient and as well done as anything done by our American friends.
We came to the very serious problem of financing expensive tours overseas by drama groups. My Sub-Committee had extremely strong views about this, because we found that the British Council had what we thought the best and the worst of both worlds. We discussed the

1357
visit of the Royal Court Theatre Company, which presented the play "Saved" in Europe. This may be an admirable production, and I have great regard for the Royal Court, but I wonder who chose a play which is extremely difficult for the British public to follow in their own language and then spent a large sum of money for that difficult play to be put on in a foreign language for a limited number of people. It was a sort of esoteric production for a minimum privileged group. In terms of value for money, although we do not say that we are against the Royal Court, we think that the British Council should watch this very carefully. That was one side of the question, and we admitted that we might be wrong—
Mr. Will Griffiths: Does my hon. Friend think that the play "East Lynn" should have been put on? The fact that the play to which he referred is not widely known and is difficult to follow does not necessarily mean that it should not be displayed by the British Council overseas.
Mr. Carter-Jones: I accept the point made by my hon. Friend. It would be a very valid point if the funds of the British Council were unlimited, but unfortunately it works on a very limited budget.
I quote another example in which a highly competent actress and actor, Judi Dench and James Cairncross, went to Nigeria. From all inquiries we made, official and unofficial, those two players worked tremendously hard, certainly beyond the amount of money which they were given. They covered a vast amount of ground, met large numbers of people and did a power of good.
I have not been attacking "Saved". I am merely saying that when we made the comparison we felt that, given the limited resources, given the point about transport, that sort of undertaking—I am sorry to use the British Council's word which I cannot get used to and it was anathema to the Sub-Committee; somewhere along the line the British Council evolved a word "manifestation"—the Council does not send parties overseas to produce a manifestation. That may not be a new word, but it is not the word for which we would look in this context. We should like the British Council to
1358
review its policy on this matter, and I understand that it is doing so.
I come to recommendation (xv). When we talked about recruitment at the top, we felt that the staff association ought to make its views known to us. Accordingly, in the best democratic sense, the Sub-Committee invited representations. We were a little disappointed with the recommendations. It did not seem to us that the staff association had fully thought out precisely what it wanted. Apparently this was noted by the British Council and it has asked the staff association to make a further representation on what it thinks its needs are.
Finally, in the Conclusion, we have the observation from the Foreign and Commonwealth Secretary, the British Council, and a letter from the Secretary of State to the Chairman.
The Sub-Committee was unanimous that this organisation was doing an extremely good job. We were well satisfied with its performance. We felt that the British Council had a dedicated staff. We would ask it to look at and re-think some of its policies and activities. But, above all, we would say to the Treasury, "Make quite sure that, although the sums involved are small, you at least guarantee a continuing source of money to the British Council so that you do not cause unnecessary international conflict for the sake of pennies." At the same time we would say to the Foreign and Commonwealth Office, "Make up your mind whether you do or do not want to admit that you have control over the British Council." This is a matter on which it must make up its mind, because it has a say in the appointment of the Director-General, and it even has a say in the appointment of British Council staff overseas. When we pressed for the reason why this was so, we were staggered to find it was so trivial—that the man appointed did not know the language of the country. This may be true, but it is something which the British Council should have found out at the outset. I believe that the British Council's reputation will be enhanced if it is clearly part of the Foreign and Commonwealth Office activity or if it is given a separate Vote to finance its activities.
I wish the Council well. The report found that it worked well. I hope that it will go from strength to strength

1359
because, from our findings, it is doing nothing but good for this country.
4.43 p.m.
Sir Gilbert Longden: I am glad that time has been found to debate the extremely important report of the late Estimates subcommittee. I am most grateful for the way it was introduced by the hon. Member for Eccles (Mr. Carter-Jones) and for the very nice things he said about the British Council, of which I have the honour to be one of the three vice-Chairmen.
I will detain the House for a short time only in order to deal with one or two of the recommendations made by the Estimates Committee. I have already asked my hon. Friend if he will forgive me, and I now ask the hon. Lady and the House if they will forgive me, if, having made my remarks, I depart. Owing to the somewhat curious method by which we conduct our affairs, the Standing Committee of which I am a member began at half-past ten yesterday morning and finished at lunch-time today. I believe that it is to repeat that performance tomorrow. Therefore, I should be grateful for a little time off. I will, of course, read everything that is said in the debate.
"The Committee are in no doubt about the Council's actual and potential contribution to international relations and to educational development overseas."
I think that anybody who has been overseas and has seen the representatives of the Council at work—and I hope that they will always take that opportunity—will agree with that. I will come later to the criticism of the Foreign and Commonwealth Office and only say here that we do not in any way feel that the Foreign and Commonwealth Office pokes its nose into our affairs.
The first recommendation of the Committee is:
"The Government should take all possible steps to ensure that the Council are not forced for financial reasons to withdraw existing representations."
I am glad that that was the first recommendation.
Recommendation (ii) is:
"The Council should be afforded some guarantee that their budget will not fall below a certain level during the period reviewed by the White Paper on Public Expenditure."
1360
It would be a great asset if that could be agreed.
The Duncan Committee, too, found that the Council plays an important rôle in overseas representation and that it should not be subjected to financial reductions. Sometimes the Treasury does not always seem to be in its right mind. Withdrawal means that years of work are destroyed in a day, and it needs years more to rebuild.
Five years ago The Times published a report on its front page with the heading,
"British Council leaving six countries."
It went on to say how unfortunate that was. This was taken up by most of the other newspapers of the day, which, with one lamentable exception, were wholly favourable to the Council. The Guardian pointed out that the Council and the Overseas Service of the B.B.C. together cost a tenth of our aid budget and a hundredth of our defence budget.
The Sunday Times had an article by its deputy editor, Mr. Frank Giles, entitled,
"The Muffled Voice of Britain",
in which he questioned whether sufficient value was placed on the overseas information services, comparing the British with the more positive attitude of the French—and he might have added the Germans. A positive attitude in this matter simply means vastly greater funds. Mr. Giles went on to write:
"The limitations on the work of the British Council are another example of this shortsighted approach. … Anyone who travels widely, as I do, will know the sense of frustration and disappointment when he hears the laments in some foreign or Commonwealth country over the shortage of English teachers or English libraries. Changing national characteristics is a long, slow process which in some cases is never achieved. Presumably the British will continue for a long time to regard the export to foreigners of their own far from ignoble image as an optional, fringe activity, expendable when occasion demands it. If so, they will be making a big mistake."
Moreover, as the hon. Member for Eccles implied, we are not by any means always fittingly housed.
I think it is quite understandable that a joint answer should have been given to the report, because we work in partnership with the Foreign and Commonwealth Office. I will have more to say

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about that later. The answer here is that
"when an overall reduction in public expenditure has to be achieved, it is difficult to select the Council for exemption in such a context. Nevertheless, it would be the hope of the Government that the general level of the Council's work can be maintained during coming years."
It is certainly the hope of the British Council.
I should like to digress for a moment on "manifestations", which I entirely agree is an unfortunate word. I have not seen "Saved", so I cannot comment. No doubt some extraordinary things are sent overseas, but we are advised on the selection of companies and plays for overseas tours by an independent drama advisory committee under the chairmanship of Mr. Norman Fisher and by its overseas representatives. I do not see how we can do better than that.
Now I come to the criticism about the appointment of the director-general. The hon. Member for Thurrock (Mr. Delargy) who is another vice-chairman of the Council, has already said that that mistake has been corrected. I did not at the time understand why the appointment should not be advertised, and I still do not understand.
This time, an advertisement has been placed in all the papers and we had nearly 180 applicants. There is a very well qualified selection committee, consisting of the chairman and the three vice-chairmen, Lord Goodman, Mr. Feather and the hon. Member for Berwick and East Lothian (Mr. Mackintosh), the Foreign Secretary of the Royal Society, Sir Harold Thompson, Mr. John Whitehorn and Sir John Wolfenden—
Dame Joan Vickers: There is no lady member of the selection committee, although there is one on the executive.
Sir Gilbert Longden: There is one on both—Lady Albemarle.
The staff has always been given the opportunity of competing for this job, and this year is no exception. What is more, a new career structure for the staff has been finalised and will shortly come up for consideration by the Executive Committee.
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On another minor recommendation, that the Council should consult heads of mission before it sends out a representative, who is sometimes also cultural attaché, one must remember that the Council's representatives work in close and daily contact with Her Majesty's heads of mission and their staff and it would seem only common courtesy, to say nothing of common sense, to acquaint the head of mission of a proposed posting and ask for his comments. The occasions when such a posting has been changed because of unfavourable reaction are very few indeed, and such as there have been have been justified in the result.
I agree on this matter with my hon. Friend the Member for Westbury (Mr. Walters), who said on page 163:
"I should like to say from my own point of view that I am perfectly satisfied with the answers that have been given by the Council on this. It seems to me perfectly reasonable that the approval of the embassy should be sought."
I think so too.
Mr. Carter-Jones: The corollary to this is that the ambassador or the overseas representative has the right to scrutinise any appointment in any other field if the British Council is independent. It raises some very difficult problems. In my view, and that of the sub-committee, it challenges the ability of the British Council to choose wisely.
Sir Gilbert Longden: I am very sorry to have to say that I wholly disagree with the hon. Gentleman on this—
Mr. Ted Fletcher: The hon. Gentleman should say why.
Sir Gilbert Longden: I have said why.
Mr. Fletcher: Not in a very intelligent way.
Sir Gilbert Longden: I thought it was fairly clear. If one is sending a man out to work with some other men, I should have thought it was common sense to ask the head of the mission his opinion of the man, because he might know him; if they do not happen to get on together it is so easy to send that man to another post.
Mr. Carter-Jones: On our findings, we thought that there were other reasons, but

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in a large number of cases the ambassador said that it was because the man did not know the language of the country. I should have thought that the British Council would know this.
Sir Gilbert Longden: If a man is sent out who does not know the language, that must be the Council's fault. I do not blame the ambassador for that.
Mr. Richard Hornby: For information, I think that I am right in saying that in a very large number of appointments the number of suggestions or alterations received from ambassadors has been eight, and that on three of those occasions only has a change been made.
Sir Gilbert Longden: I know that it is a very small number.
On the question of the Foreign and Commonwealth Office and the independence of the British Council, I must put on record the Foreign Secretary's own views:
"In transmitting this Memorandum, I wish to draw your attention to one matter of general importance. Certain sections of the Report … deal with the Council's relationship with the Foreign and Commonwealth Office. Her Majesty's Government attach importance to the independent status of the British Council; this status enables it to conduct its work overseas comparatively detached from the vicissitudes of the day-to-day political relations between Her Majesty's Government and the Governments of the countries where the Council is operating. I believe that this detachment is understood and valued by these Governments and the peoples of their countries. But, as the Report itself remarks in paragraph 22 this independence cannot be absolute. The Council is financed from Government funds; and the Foreign and Commonwealth Secretary is answerable for the Votes concerned to Parliament."
That is the present position. I know that the hon. Gentleman has suggested a separate Vote, which is a matter to be considered, but that is how things are at the moment. My right hon. Friend went on:
"… the Government consider that, while the Council must enjoy the greatest possible freedom to conduct its activities in the way which it considers professionally most effective, its work nevertheless forms part of the officially-sponsored British effort overseas and the scale and nature of this work is therefore a matter of concern to them. I believe that the governments of the countries in which the Council operates are under no misunderstanding as to the nature of the interest of Her Majesty's Government in the Council, and are aware of the high degre of independence enjoyed by the
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Council in the fulfilment of the tasks with which it is charged. … The need for this approval "—
that is, the approval of the Secretary of State to the two appointments—
"does not limit the freedom of the Executive Committee to consider any candidate for these posts, nor does it confer a right of nomination on the Foreign and Commonwealth Secretary. But I regard this requirement as essential if I am to be able to discharge on behalf of the Government, my responsibility for ensuring that the Council assumes its proper place within the general framework of our relations with overseas countries."
Finally, there is the criticism of the Executive Committee. Under Clause 4 of our Charter, the management of the British Council is vested in the Executive Committee, and under Clause 6 all the powers of the British Council are vested in the Committee. We have an individual and a joint responsibility to ensure the efficient use of some £16 million per annum, plus half as much again of agency funds.
It is therefore a pity if, as the Estimates Committee found, this should be "a self-perpetuating body", "a closed corporation", whose "representative character should be strengthened." The Executive Committee consists of 20 people including Members from both sides of the House equally; of representatives of the universities, the publishing world, industry, the arts, the sciences, the unions and the B.B.C.; there are also representatives from Scotland, Wales and Northern Ireland and from the great Departments of State.
I should have thought that that was as representative a body as could well be collected. However, the Executive Committee has now decided that in future its members can only be re-elected—and they have to be re-elected every four years—once after they have reached the age of 65 and that they should be subject to retirement after they reach the age of 70. We intend, when considering the re-election of members of the Executive Committee, to consider first the general contribution which the member has made and secondly his record of attendance.
The whole question of "geographical priorities" of course engages our constant attention. We administer, as agents for the O.D.A., £8 million to £9 million a year which goes to the developing countries. However, we feel that we cannot ignore our friends and potential friends, or even our potentials enemies,

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and the difficulty of assigning the right amount of money to these three separate spheres is considerable.
It can best finish a necessarily brief intervention by quoting our conclusion:
"It is a cardinal principle of the Council's policy that everything it does should not only be to the benefit of Britain, but should also be and be seen to be of benefit to the receiving country."
4.51 p.m.
Sir Geoffrey de Freitas: My experience as a member of the Executive Committee of the British Council, though some years ago, leads me to believe that it could be improved, and my suggestion for improving it is simple. It is that nobody should be re-elected more than once. In other words, we should ensure a turnover in membership.
I make this suggestion not only because of my experience of the Committee but because it would enable more men and women who have served on the Committee to go out into the world, in whatever spheres they operate, with experience of the British Council.
They are thereby able to interpret the aims of the Council and encourage others to appreciate them. I am glad to hear that the Executive will now have a more flexible composition. As I have said, I would like it to go further and have shorter periods of membership.
I shall come to the point made by the hon. Member for Hertfordshire, South-West (Sir Gilbert Longden) about the relationship between heads of missions and British Council representatives abroad, and I shall be dealing with this subject from my experience.
It is important to remember, as the chairman, my hon. Friend the Member for Eccles (Mr. Carter-Jones) pointed out, that his sub-committee was complimentary to the British Council. When the report was published the Press unfortunately concentrated on one valid criticism, and that was the way in which the director-general had been elected. The Press did not criticise the directorgeneral—indeed, nobody has criticised him—but simply the method of his election. Unfortunately, the reports in the Press did not deal with other aspects of the report; but at least as a result of those criticisms there has been a change of procedure and we now have a better
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system for choosing the new director-general.
It is also important to remember that in the final sentence of its conclusions the Committee refers to
"the characteristic energy and dedication of the staff of the British Council."
I have seen the Council at work in West and East Africa, and whenever I have been abroad I have tried to meet the Council representatives and see the buildings in which they work. There is no public institution that I admire more, but I want us to give the Council the tools to do the job, and one obvious deficiency in its equipment is its buildings. In evidence before the Committee Mr. Phillips, the deputy director-general, said:
"I do not think our buildings should be a discredit to this country."
He added:
"Many of them are."
That was the statement of a most responsible man and not a wild statement by someone unfamiliar with the Council.
There are, of course, some good buildings, and many hon. Members will have seen them. For example, those in Nairobi and Madras are excellent. But some are squalid, and we should be ashamed of this. Consider the office in Bombay, one of the most important posts anywhere in the world. The Council's offices there are tucked away on the third floor in a back street in the French Bank building.
Despite the dreadful office accommodation in Bombay, the library's success is evident, and it is probably more like Lagos than Germany. In its unattractive accommodation in Bombay the British Council has managed, among its other activities, to establish a library containing 80,000 volumes with an annual turnover of issues of nearly half a million, and a paying membership of about 17,000 Indians who want to use the library. This is a fantastic achievement. I accept from what has been said that intensive use is made of the library in Lagos, but I think that Bombay even beats that.
At long last the Government have accepted the Council's view that it is nearly always better to build or buy than rent. What are the possibilities of obtaining better buildings for the Council and owned by the Council? Why not start with Delhi, which is by far the Council's

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most important post? In Delhi the Council has for many years had a valuable plot of land, but all along there have only been promises about building on it.
I have found over the years that the Council has been extremely successful in publicising British contributions to music, drama and the fine arts. Indeed, nearly 10 per cent. of the Council's total budget is spent on trying to organise overseas tours by British theatre, ballet and opera companies, as well as orchestras and exhibitions by British artists.
This is an enormous sphere of activity, and except for pointing out that it was the Council which introduced the Royal Ballet to North America—to Canada and the United States; the Royal Ballet now goes there on ordinary commercial tours—I shall concentrate on my experience of a theatre company which the Council sent to Ghana nine or ten years ago.
I refer to the Nottingham Playhouse. John Neville and Judi Dench went out to Ghana and had a tremendously successful tour. It is difficult for us in Britain to imagine what a great experience it is for people in a small country in West Africa, all of whose higher education is in English, to see an English Shakespeare Company. I returned to Ghana last month and it was clear to me that, 10 years later, those who had seen "Twelfth Night" and "Macbeth" performed by the Nottingham Playhouse regarded it as one of the great experiences of their lives.
It might help if I gave an illustration of the way in which the British Mission there and the British Council worked together. The President of Ghana asked that a special performance of "Twelfth Night" take place in his garden, and he made a big occasion of the event. The people responsible for protocol in the Ghana Foreign Office wanted me in the seat of honour with the President, but the Ghana Ministry of Education, encouraged by me, insisted that the British Council, and not the British High Commission, was responsible for this great event and that the Council representative should be in the place of honour. I mention this because in public there is a distinction, and there should be. That also shows how two British organisations can work together. But the identifica-
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tion of the Ghanaian Ministry of Education with the British Council was such that when Ghana some years later broke off diplomatic relations with Britain, the British Council stayed on. U.N.E.S.C.O. actually reported that the British Council was an integral part of the educational system of Ghana.
I again remind the House that all secondary education in Ghana—and there is plenty—is in the English language. It is not only our duty to these countries to foster the world language which we gave them; we should be foolish if we refused to take advantage of our natural place at the heart of their world culture. I hope that the Council will always remember the wholly disproportionate result of an effort in these smaller countries, which otherwise would never see Shakespeare performed on the stage by an English company.
My last point, which I do not want to labour, although it has been written about and discussed in the Press, is that unfortunately the Committee criticised the practice of high commissioners and ambassadors being consulted by the Council about the Council's representatives before they were appointed. An intervention put the figures in perpective. The Committee reported that out of 96 overseas representatives appointed by the Council over the past five years, eight had been queried by heads of mission abroad, and that in three of those cases the Council had agreed to alter the appointment.
I am not against the practice of consulting, because in private—but not in public—a British Council representative is often treated as if he were one of the staff of the British Mission. Occasionally the circumstances are such that he is forced to be regarded as a cultural attaché on the staff of the British mission. But it is not the British Council's policy or that of successive British Governments. It is important that if the British Council representative can at times be treated as a member of the staff of the British Mission, the head of the Mission should at least be able to say that he would welcome him or, in a very rare case, that he would not. Certainly in my experience a British Council representative has regarded me as someone who could intervene on some point with his office in London unofficially, and these things work out well.

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I spend a great deal of my time working, I believe in the interests of my constituents, for closer ties between this country and the countries of Western Europe. I wish we could offer a great programme for the expansion of British Council activities among our fellow Europeans. It will be increasingly tempting for organisations such as the British Council to do this. But it must not come at the cost of anything that the Council is doing in the developing countries.
This country inherited certain obligations towards the developing countries, and on the whole we have discharged them well. Above all, we have provided them with one of the great world languages, and their window on the world is English. We may have pulled down our flag and gone away, but certain duties remain and they can best be discharged through the British Council. I have seen it in action and know how well it performs its duties.
5.4 p.m.
Colonel Sir Harwood Harrison: I have always tried to follow the advice given by my hon. Friend the Member for Hertfordshire, South-West (Sir G. Longden), who said that when abroad he always visited the local British Council. I was very interested in what he and the right hon. Member for Kettering (Sir G. de Freitas) said about the relationship between the British Council and the Foreign Office. When I have spoken about this to our high commissioners or ambassadors—I did this quite recently—they have always paid the highest tribute to the work of the British Council in their particular country, and they never think of interfering, as I understand it, in any way. They regard the activities of the British Council as separate. What the Chairman of the Sub-Committee said may possibly be related more to the London level than on the ground.
I am particularly grateful to the hon. Member for Eccles (Mr. Carter-Jones), as Chairman of the Sub-Committee, and to its members for this very good and lengthy report. I am now a member of the Expenditure Committee, and so I was very anxious, after the work that has been done, that the report should be published, although late, because this subject comes under the Sub-Committee, of which I am Chairman, of the Expenditure Committee. I thought that it
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would be valuable as we were fairly hard pressed on the Sub-Committee on Defence and the Overseas Expenditure of the Foreign Office. I could not see where we could easily get such a long and detailed report.
During the Christmas Recess I visited the Far East and had the pleasure of calling on four offices of the British Council, in Singapore, Kuala Lumpur, Penang and Bangkok. It may be of some interest if I relate a few of my recent impressions. I turn to paragraph 50, on the subject of the teaching of English. It is true that in the more extreme foreign countries, such as in South America—I have seen it in Lima—this is a very important aspect. But in countries where we have had great influence in the past, where English is spoken by many people, such as in Malaya and Singapore, the great work of the Council is in the local Ministry of Education advising on the type of examinations and the type of programme for schooling rather than in the actual teaching.
We must take paragraph 76 in the context in which the evidence was taken, nearly two years ago, because from my visits I have gained the feeling that over the last 10 to 12 years the staff employed on the ground by the British Council is becoming more and more professional—professional in the right sense of knowing the job and being masters of it, both over personnel and in their tasks. Those I have spoken to recently now seem to think that there is a proper career structure.
I feel that the Council is recruiting a very fine body of British personnel. It should not be forgotten that many of those locally employed, too, give devoted service of a very high standard over many years. Here I should like to mention the lady who is secretary to our director in Bangkok. She has been employed there by the British Council for a great many years. I had the pleasure of talking to her at lunch one day. She was a great asset indeed to the director, Mr. Rutter. By that I mean no criticism of him, because I thought that he was a particularly good and outstanding man.
It is interesting that when one talks to these people one finds that a number of them prefer working for the British

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Council to, possibly, the Foreign Office. I think they feel they are closer to the local people, moving amongst them the whole time. Some of the personnel we employ have clever wives with university degrees who lecture in the local universities. I do not know whether the reverse is true if we employ a wife.
I was particularly impressed with two or three of the youngest of our new entrants and their obvious keenness and enthusiasm for their job. They were men of 23 or so. Most are imbued with their work and are doing a great deal to sell British culture. All of this can be reflected in the sales of our goods. If people are taught English and like our culture and our way of life, they will look towards us.
I am glad that the question of offices has been mentioned, as I regard it as most important. The situation and accessibility of the office is most important. It must look friendly and encouraging to someone who may be coming timidly for the first time. I was glad to find that in Singapore we are changing from an office which was not bad in itself but had a very bad entrance a little bit down a side road from a main street. It was necessary to climb upstairs to get to it. The office is being moved to the Cathay building where there is a lift. The Council will have good premises, which will be more welcoming, on the third floor.
I understand that we own only 21 of our offices and rent 130. That is a low percentage when we consider how expensive rents are compared with ownership. We own only 34 dwelling houses and have to rent 390. My Committee is examining accommodation and how much we own for Foreign Office staff. I found that the staff of the British Council were very alive to the problem of very high rents and the importance of ownership. It is nothing like as easy for the British Council as it is for the Foreign Office, because it has a very limited staff. A place may have a bachelor succeeded or preceded by a man with three children. In this country we own 11 offices and rent 19, which perhaps is reasonably good. Paragraph 83 concerns evidence on the building programme and the cutbacks. I hope that the situation is better today.
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I should now like to say something about the young men and women who go out as volunteers. There are about 1,450 serving in 44 countries for whom the British Council is responsible. I do not think everyone realises exactly what that entails. These responsibilties are met by the Council's representative in the country concerned. In countries having a large number of volunteers he has the support of junior staff specially earmarked for the work. The responsibilities include explaining to potential users of voluntary service the scope and value of the volunteer scheme; assisting potential users to identify suitable volunteer projects; assessing their proposals and forwarding them to the appropriate sending society in the United Kingdom, with recommendations and suggested priorities; presenting the personal particulars of volunteers selected by the sending society to a potential user; obtaining his approval; negotiating terms of service, including the financial contribution by the employer where applicable—very often the volunteers earn little more than pocket money; arranging the reception of volunteers on arrival; giving necessary local briefing, which is very important; introducing the volunteers to the employer; general welfare support for the volunteer at his post; and assisting the volunteer if he becomes ill or has to go to hospital, or if he is so ill that he has to be repatriated.
In the recent past the Council has had to deal with the enforced withdrawal of volunteers. We think of Eastern Nigeria, and only at the end of last year there was the withdrawal from East Pakistan. We often think of foreign refugees in such circumstances, but forget we have young volunteers out there.
Another task is to provide where appropriate through the Council the specialist field advisers, giving professional advice and support in English language and science teaching, acting as librarians, and so on. The representative also makes arrangements for travel on final departure. This is a very big task entrusted to the representatives of the British Council.
I am a little concerned that although the British Council, I understand, has quite a large say in the numbers of those going out, it does not have full control.

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Many of the young people go out after university education, which is probably better. A few go before they go up to university, but on the whole they are on the young side. Volunteers are full of a desire to help the less fortunate people in under-developed countries. That is a great characteristic of the young in this country. But I am somewhat worried that the Council does not have a bigger say as to where they go.
That was brought home to me in Singapore, a small island with 2¼ million people. It is like an enormous, highly-sophisticated city. A young volunteer goes there thinking the work he is to do is important, that he will be in a small group or even on his own with native people who he thinks are backward, but he then finds himself in that great sophisticated city.
I mentioned that to the British Council representative and he was most receptive. He sees all the problems. He said that after a time the volunteers accepted that they could do education, library work and so on, and that it was worth while. But it must be a disappointment to them, and I feel that there might be more liaison here. I recall a constituent who went out two or three years ago to a Caribbean island, where he did excellent educational work and developed a great deal of keenness among the boys. He started a popular and successful cadet force, not so much on Army lines as one more like a team of scouts.
The volunteers are an excellent source of recruiting for the British Council. I am sorry that in its otherwise full report the Committee did not pay rather more attention to what I regard as this very important aspect of the British Council's work, seeing that the keen youngsters who go out imbued with the very best ideals are used to the best of their abilities and in the places where they can be of the greatest use.
Mr. Neil Marten: As a member of the National Council of Voluntary Service Overseas, to which my hon. and gallant Friend was clearly referring, may I say that we have the closest contact with the British Council. We greatly appreciate all the work the British Council does to help volunteers from Voluntary Service Overseas.
Sir H. Harrison: I am sure that what my hon. Friend says is right. All I suggest is that they should be used in underdeveloped countries rather than in the more sophisticated countries.
5.20 p.m.
Mr. John P. Mackintosh: This has been a useful debate and, like everyone else, I am grateful to my hon. Friend the Member for Eccles (Mr. Carter-Jones) and his Committee for doing this work and giving us this chance to discuss the operations of the British Council. I must declare an interest as for some time I have been a member of the executive committee, a position which I took on with great readiness and which I thoroughly enjoy. One of the points which we are appreciating about the Council is that made by the Duncan Committee and others, that in large parts of the world the British presence is ceasing to be mainly political and military and is becoming instead much more of a cultural and economic presence.
As part of the shift of emphasis, more work and more importance is going to bodies such as the British Council. This aspect of the attempt to project Britain's influence and image overseas is carried out by a large number of associations, not only by the British Council but through the British information services, the Overseas Service of the B.B.C., and such special bodies as the Great Britain-East Europe Centre which deals with four countries. There are private contacts between the universities organised through the Inter-University Council and there are particular efforts, some of them most notable for what they do for this country. As an example, T met the other day the President of the Edinburgh College of Surgeons who is going out to Burma to examine. Every surgeon in Burma is a Fellow of the Royal College of Edinburgh. This keeps up a contact and an influence in many ways more effective than anything else we could do at this time when Burma is in part caught up in international pressures from major Powers.
It is this sort of influence which we can usefully develop and maintain and which is welcome because it has no political strings attached and does not draw the country into one or other of the major Power blocs. At the same time,

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it is difficult to assess the precise return to the British taxpayer for the money spent on the B.B.C. Overseas Services, the British Council, university exchanges, and so on. These are long-term benefits, attempts to sow good will and understanding between Britain and other countries which will yield dividends in a generation's time. It is often easy for critics to point out a particular item, a play or broadcast or an episode, and to ask, "What value did that have for us?" In thinking about this we have to try to assess the total impact. We must appreciate the work of people who are laying such broad foundations and who may find difficulty in seeing immediate returns.
We must also compare our work with that done by other countries. The French attach tremendous importance to this aspect of their diplomacy. Whereas the British Council spends £16 million a year, the French equivalent spends between £40 million and £50 million. Germany spends about £20 million. We do not want to enter into any direct competition, but it is worth noticing the importance which other countries, not world Powers but second-rank European countries, such as Britain, now place upon this sort of effort.
When we have assessed the overall rôle to be given to the British Council we have to look at the method by which we achieve our objectives. One of the methods we have adopted is this quasi-independence of the Council. This is the only point on which in emphasis I disagree with my hon. Friend the Member for Eccles. It seems unrealistic to say that the British Council should either be an integral part of the Foreign Office because it has a career structure or should be totally independent. This is an unreal contrast. The object of the independence is to put a bit of push behind it, and that is a reasonable position. The point is that it cannot ever be totally independent because it is financed by the taxpayer for purposes of interest to this country, and it would be ridiculous and scandalous if this money in any way undermined or countered the efforts of British foreign policy. It is an integral part of this policy. We are running the, Council to support and assist our foreign policy effort in certain areas. It is inevitable that the two should work together.
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This is not only true in terms of the overall direction from this country but, as my right hon. Friend the Member for Kettering (Sir G. de Freitas) said, it is important in the local territories. It would be impossible for a high commissioner or an ambassador if he felt that he could not entirely trust the work of the British Council. It would be similarly unsatisfactory for the British Council in the area if there were any element of ill-feeling between it and representatives of the British Government in the area. It is essential that they should work together. What is the point of independence? Why not adopt the same method as the French, by which the cultural effort is an integral part of the Foreign Office, just as we have now taken our commercial branch, which used to be separate from the Foreign Office, into the Foreign Office?
The answer was admirably given by my right hon. Friend the Member for Kettering when he pointed out that if the British Council retains a degree of independence in each territory, then the particular vicissitudes affecting our political connections need not touch the long-term educational and cultural work. This was admirably illustrated by the point about his experience in Ghana.
Mr. Carter-Jones: What saddened me as a member of the Committee was that the best statement on this, despite the fact that we questioned the British Council and others for a long time, came from the Departmental Observations on page 8, paragraph 4. The explanation that came out there should have come out in the evidence.
Mr. Mackintosh: I am not particularly concerned about where the explanation came out. The explanation I and others have given is valid. This quasi-independence yields positive benefits and at the same time ensures that this effort goes in the general direction desired by British foreign policy. It seems inevitable that the major control of this effort should be in the hands of the Foreign and Commonwealth Office and the Overseas Development Ministry.
To support this quasi-independence, which has genuine value, the British Council is under the control of an executive committee. That is a slight misnomer, because in practice it is an advisory committee. It meets once a month

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and as an executive body it cannot run the council or dispose of its funds or make appointments. What it does is to advise, to probe, to question, to give a kind of guidance over the years which in a way my hon. Friend's Sub-Committee has done so admirably in its thorough investigation. The Executive Committee has been simply turning to senior officials month by month and asking "What are your priorities? How do you spend your money? Why do it this way? Could you explain whether this yields better results than that?" There has been this probing, questioning and guiding, providing the sort of external advice and stimulus which a highly skilled professional body of men, like all other bodies of men and like this House needs or else it might otherwise tend to continue in the same direction without asking these fundamental questions.
In asking these questions, what have we discovered? What ought the Council to be doing to change its activities? On the whole, very little. We are agreed that broadly speaking it is going in the right direction. It is true, as my hon. Friend the Member for Eccles and others have said, that to close down an activity in a foreign country causes great loss and damage. This rather proves my argument about independence—that it is silly to close down to save a small sum of money if the result on international relationships is damaging. This is the inter-connection between the Council and this country's foreign policy. We cannot readily change the overall direction of our activities in the Council, we cannot suddenly increase or close down, without considerable damage.
Over a period of time the Council may obviously alter its activities. If we look at its spending, we can see hangovers of old policies. For example, only in this way can I explain the heavy expenditure in Cyprus and Malta—as the legacy of old imperial connections with these countries. On the other hand, as an example of new priorities, we may have taken too much for granted in the past that we could maintain the connection with the old white Dominions of Australia, New Zealand and Canada. It may be that generations are growing up in those countries who have not the automatic connection with this country which we assume. It may be necessary for the
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British Council to do more in those countries.
Similarly, there is a conflict between expenditure in the third world—Africa, for example—and Europe. I would agree, in this case, that the whole activity of the Council is in a different direction in the third world. It has a part in the educational system, a part in the training of teachers, in providing English language education, in providing libraries. In Europe, on the other hand, the Council is doing a different job, liaising between the efforts of universities and schools and other cultural contacts, between Britain and Europe, doing it not so much itself but by making it possible for other people to make contacts between organisations if they want to do that sort of work.
I agree with everyone who says that as this country grows closer to Europe—and I am one of the great protagonists of this country's entry into the Common Market—one does not necessarily see the British Council doing a great deal more work in Europe. It would be a disaster if it pulled out or reduced any of its work in the third world, where there might be no replacement for it, whereas in Europe there might be replacement through a university or a school.
On the question of control, the Executive Committee has already improved its methods of presenting its acounts. Its accounting in the past has tended to be the annual budgetary accounting of the sort we have in this House. It has made it very hard to use modern planning, programming, budgeting methods for adequately assessing what would be the cost, for example, of doubling any staff in a country, and what output would be obtained for increased expenditure in West Africa, for instance. The Executive Committee has the budget now presented in a more policy-forming method, which makes the control and discussion of priorities a good deal easier.
The Council's external posts have never been regarded as they are in the Foreign and Commonwealth Service. The senior posts in London are of equal rank in many ways to ambassadorships in Washington, Paris, Bonn, and a man may look forward to being an Under-Secretary in Whitehall or of going as ambassador to one of those posts. It is a curious

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fact that none of the senior posts in the British Council abroad is anything more than a "B" post, and, therefore, a senior job at which to aim in the whole British Council is the director generalship back in London. One of the jobs of staff structure reassessment should be to upgrade key foreign posts—in Germany, Nigeria, other key areas where the British Council is operating, and to make them of at least equal rank to that of senior posts back in this country so that a man in the Council may then end his career in one of those posts and regard it as a fully satisfactory career.
We should not be too alarmed about the number of younger people who may look to fields which would lead automatically not to further administrative service but to creative service in their own line of specialisms. In a big post one would have an expert librarian, a teacher of the English language, and so on, and someone doing arts and cultural work, and they should have a natural progression of achievement. The aim should not be merely to have a ladder of senior administrative posts but one for specialisms—it might be for a librarianship in some university in the third world, it might be the directorship of a theatre. One should not be too rigid about taking in people every five or ten years to do the sort of work which they can do in these fields, provided that the intake is of at least the same quality as before. Going further up the ladder of the Council involves detailed knowledge of the cultural structure of other countries, a skill which the original entrants may not have had or wanted to develop. There is legitimate ground for paying more to these young people to encourage them to go in not simply to Join the administrative structure but for this other work.
Finally on the question of staffing, I would say that the Duncan Report, suggestion, that, particularly in Europe, there might be supernumerary posts created to which distinguished figures in cultural life might be seconded for a limited time, is an exciting and useful suggestion.
Having made these remarks about staffing, accounting, and methods of work, I would close by once again congratulating the members of the Council on the work they do. Somebody once asked Bismarck what would be the preponder-
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ant diplomatic force, and he replied, "The greatest diplomatic force will be when the world speaks English".
The British Council does great service for this country all over the world. It is fantastic that now the second language in Poland is neither Russian nor French but English. That is an achievement of the British Council. It is playing its part in the educational structure of underdeveloped countries. It has been of real and permanent service to those countries. as well as to our own. It is hard work, because a man in it can never say at any moment, "This is what I have done for my country". This debate will be an indication that we appreciate the long-term value of that work.
5.36 p.m.
Dame Joan Vickers: I am very pleased to follow the hon. Member for Berwick and East Lothian (Mr. Mackintosh). I shall not follow him in all the details of his speech, but I would take up one point. I wish people in this House would not talk about the "Third World", as I thought we were trying to build up one world. It is degrading in that manner to talk of some people or countries as being in a "Third World".
The British Council is a very remarkable organisation. It was begun in 1934 and now serves in about 80 countries. It does a major job in creating good relations and understanding between other countries and the United Kingdom despite the fact, as has been mentioned by some speakers today, that so many of the countries have completely different political beliefs; for example, Pakistan. Regrettably, Pakistan has left the Commonwealth, but I hope the British Council will remain in Pakistan. It has already been allocated nearly £400,000 for work there in 1971–72. It will be very beneficial if we can keep this contact.
I have had the opportunity of working with the British Council, but not for the British Council. However, when I go abroad I always take an opportunity to visit its offices, as I have done in Australia, New Zealand, the Far East, and six African countries. Therefore I was astonished to read the observation by the Foreign and Commonwealth Office in regard to recommendations (i) and (ii). There is this statement:
"I recognise the need of the Council to be able to rely for planning purposes and for

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continuity of their activities upon some assurance of budgetary stability from one year to another".
This is really what it cannot do, this is a very great pity, as the further statement was made:
"When overall reduction in public expenditure has to be achieved, it would be difficult to select the Council for exemption in such a context".
We either wish to support the Council or we do not, and if we wish it to go on increasing its work and playing its very good diplomatic rôle between various countries it needs to know what is to be its financial support. I really wonder whether the person who drafted the reply has visited many of the overseas offices of the Council and has real knowledge of the work being done abroad and in this country by the Council. I have served as a civil servant overseas, and one of the first governors who came out from London to the territory in which I was working had never left the Colonial Office until he became the governor of that territory, there are far too many people in that category.
The Duncan Report, which, regrettably, has never been debated in this House, states that
"The British Council plays an important rôle in overseas representation and should not"—
I want to stress this—
"be subject to financial reductions".
The Duncan Report also praised the libraries and said that all library facilities, including film libraries, should be with the British Council. This is a wise recommendation. As the hon. Member for Berwick and East Lothian said, a large number of organisations are trying to provide similar facilities, and it would be more economical for all library and film facilities to be under the same head.
However, I do not agree with what the Duncan Report said about the shift of the balance of the British Council activities to Western Europe. Surely if we go into the E.E.C.—and I am a great supporter of entry—we should be able to put over our own point of view. It is unfortunate that out of 51 drama and music tours only 25 went outside Europe, six to Japan.
If cuts are to be made in staff, I suggest that they should be made in our Embassies and High Commissions, or
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in those who are in the Home Civil Service working overseas. In 1968–69 86,000 administrative and executive officers were employed—these are the figures given in the Duncan Report—and there may be more now. In the E class there are 84,000 and in the A class 2,600. Will my hon. Friend carefully consider a higher allocation of staff to the British Council?
The British Council produces the best documentation of institutions of higher education and the teaching of the English language in Britain. It is interesting to note that it is estimated that about £7 million a year come to Britain from the language teaching schools. This shows that the British Council is earning money and not just spending it. The British Council budget has grown from £3 million just after the war to £16 million, but, as a result of inflation, its resources are only at the 1965 level, which makes it all the more remarkable that its work has increased.
I agree with the hon. Member for Berwick and East Lothian on the need for a world language. That world language will be English. I recently attended a Commonwealth Parliamentary Association Conference at Kuala Lumpur which was conducted entirely in English. In Singapore there is now the South-East Regional School for teachers of the English language, which consists of highly qualified people from eight countries, and the standard is excellent. There is a crying need in many other countries for more facilities for the teaching of the English language and for libraries, books and the training of librarians. I hope that the British Council will concentrate on scholarships for training librarians, for which I found there was a great need in many countries that I visited.
Apart from all its cultural activities, the British Council is the only organisation in which it is possible to meet the people of the country. The doors are open for anyone to come in. In many Council offices I have seen people who it might be thought from their appearance—one should never judge by appearances—could neither read nor write, sitting down and resolutely reading. In some libraries new sections have been provided containing medical books for students, and books on science

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and technology, all of which are in great demand.
I have recently been abroad to India, and Indonesia where, I am glad to say, since confrontation has ceased there are two excellent offices. In Malaysia the offices were so crowded that people were sitting on staircases doing their studies. In countries which are becoming more nationalistic and in which the national language is replacing English, as in Malaysia—where before getting a job a person must pass an examination in the national language—it is all the more necessary for accommodation to be provided for people to learn the English language. In Singapore the British Council missed the opportunity of securing excellent accommodation because of the delay in getting a decision from the United Kingdom. In Japan, in fairly good accommodation, the Council provided opportunities for meeting the Japanese, particularly the Japanese women.
Recommendation (vii) of the Expenditure Committee's Report is excellent, but mass media projects are extremely expensive. Recommendation (viii) is not practical, and I hope that no attempt will be made to fulfil it. I agree with the observations of the British Council on recommendations (xii) and (xiii). Wherever possible, live presentations are better than films. For people whose command of English is not good it is much easier to follow a live presentation than a film.
The Duncan Report recommended the setting of an Estate Board with responsibility for the purchase and maintenance of buildings both for the Diplomatic Service and for the British Council. I agree with this recommendation and I hope it will be implemented soon.
The British Council should discontinue the practice of consulting ambassadors before confirming the appointment of overseas representatives. The person who works for the Council is usually of a quite different type from the person who works in the Diplomatic Service. Ambassadors and High Commissioners are appointed to represent the British point of view, whereas the British Council is concerned with cultural activities. I therefore strongly support the recommendation that the Council should be completely
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independent and able to appoint its own representatives.
The Council is the main organisation for introducing overseas students to families in Britain. In Plymouth, for example, several holiday courses are arranged each year, and the great advantage of these courses is that the students live with English families. Last Christmas about 30 students from Commonwealth and foreign countries lived with families in Plymouth.
I was amazed to see from the report that the Department of Education and Science has cut its grant from £10,000 in 1968–69 to the paltry sum of £2,000 in 1971–72. This is most unwise, especially as so much of the work of the Council is educational. It will be difficult to increase this work unless more accommodation is available, particularly for books, when this cut is made.
Recommendation (xi) on libraries is not practical. We cannot work on American lines. If hon. Members who write books were to donate copies this would be a help. Magazines are most welcome. I often wonder what happens to all the colour supplements of the Observer, The Times and the Daily Telegraph. I collect my copies and give them to a school in Plymouth. Thousands of weekly magazines could be collected, as is done by the Ranfarley Library depot. By this means a supply of interesting literature could be made available for handing out in overseas territories.
Women should have more say in work of the British Council. Only one woman was asked to give evidence to the Committee; there was only one woman on the Executive Council and she is the vice-chairman. There is no woman chairman of any of the British Council committees and no woman on eleven of the main committees. Although women do a marvellous job overseas, they do not seem to be able to get into the top British Council jobs abroad. On the educational side, I hope that consideration will be given to allowing women to play a more important part in the work of the British Council.
I should like to give full support to the excellent work carried out by the British Council. No doubt tomorrow one daily newspaper will have certain things to say about my remarks concerning the British Council. I can only say that my

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experience from visiting the many countries where I have seen the work undertaken by the British Council is such that I cannot speak too highly of this body. Therefore, I hope that the Council will be given adequate funds to carry on with its task.
5.50 p.m.
Mr. Edwin Wainwright: It is a pleasure to be able to take part in this debate, and we are grateful to the Government for allowing time for these Expenditure Committee reports to be discussed in the House. My hon. Friend the Member for Eccles (Mr. Carter-Jones), who was Chairman of the Sub-Committee which considered the work of the British Council, led the Sub-Committee extremely well, and we were grateful for his leadership.
I have been somewhat surprised to hear criticisms of the Sub-Committee's recommendations about the appointment of representatives of the British Council. We were not making the recommendation merely because we felt that the Foreign Office should not have the power, through its ambassadors, to agree the appointments. We merely wanted to emphasise that the British Council should be as separate as possible from the Foreign Office. Events in Ghana should have taught the Government a lesson. I feel that if the British Council appears to be too closely linked with the Foreign Office, the Council may in future be asked to leave the country concerned. This would be a tremendous loss to that country and would not be helpful to the interests of Great Britain.
I found the work of the Committee both interesting and stimulating. It is difficult to appreciate the work of the British Council unless one goes abroad and sees it in operation. The British Council seeks to promote abroad a wider knowledge of Britain and the English language and to develop closer cultural relations with other countries. This is something of which we can be proud, since work is carried out in 75 countries. Our nation and its institutions have proved to be stable and steadfast, and over many years we have built a reputation for being tolerant, compassionate and non-violent. We shall be failing mankind if we do not try to export this kind of prestige.
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The English language is important, it is spoken by many millions of people throughout the world, and the more we promote it the better it will be for world peace. I am glad to know that, even in Ethiopia, English is the second language, and I hope that it will become the second language in many countries. I say this, not because I want to push the English language on to other nations, but because I feel the more that nations speak one language, the better will be the development of understanding and peace.
The Sub-Committee had many sittings, and our visit abroad was extremely arduous. In fact, we hardly had time to look around the countries we visited. I remember our getting off the plane at Addis Ababa at about eight o'clock in the morning and meeting as a Sub-Committee at nine o'clock. We continued our work for the whole of that day until about eight o'clock in the evening; then we had another meeting at nine o'clock the next morning, finishing at about midnight, and caught the plane home. That was as much as we saw of Addis Ababa. But it was a very interesting visit. I feel that it is neither wise nor prudent to send a Sub-Committee on such a long journey in such a short period of time. I believe that a few more days would have given us a wider impression of the countries we visited and would have led to a closer study of the work of the British Council.
In spite of the cost of the Sub-Committee's visit, which took in Germany, Nigeria and Ethiopia, I feel that the visit was extremely worthwhile. It gave the Sub-Committee an insight into the work carried out by the British Council, and I should like to thank all the witnesses who gave evidence to us. Answers were readily given to our many detailed questions and, even though on occasions they might have been slightly embarrassed, witnesses were quite open in answering our queries.
On educational grounds I feel that the Council is doing an excellent and useful job. In many of the buildings abroad the British Council staff work under difficult circumstances. For example, in Cologne we saw the United States Information Services library which contained far better facilities than those in the British Council premises. It has been

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suggested that the British Council should own the buildings in which it works abroad, and certainly there is a great contrast between the buildings occupied by British staff and those of the United States personnel. This is not good for our prestige, although I am not suggesting that we can compete with the United States, since it is a much wealthier nation. However, we should make sure that the British Council is able to carry out its duties and responsibilities in reasonable surroundings.
We discovered that the library in Cologne was not used as much as it should have been. I believe we should not spend a great deal of money in Germany at the expense of the under-developed and developing nations. I know that it is fashionable to refer to these countries as the third world, and personally I prefer to call them the developing nations. However, I am sure that anybody using the phrase third world does not mean to denigrate those nations, we refer to them in that way merely as a matter of convenience. My hon. Friend was not seeking to say anything that could be harmful to the nations involved.
On this question of space in our libraries we found there were no rooms for meetings or lectures and that the library shelves took up a great deal of the space. It was recommended that the library shelving should be placed on wheels so that it could be moved about and room provided for lectures and meetings. I believe that that suggestion has been carefully examined by the British Council and that there may be some result.
At the United States Information Services library, we noticed that many periodicals were given away. These were unsold copies of periodicals from the United States. We found that there was some difficulty in the Council doing this because publishers in this country, unlike those in America, do not print a surplus. But I am quite certain that it would be possible to get spare copies from the publishers at a very cheap rate and to send them out. We found, especially in Ethiopia and Lagos, that there is a great demand for English reading matter.
The exchange of students to which reference has been made is very important
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because a great deal of the work of the British Council is taken up by looking after students who travel abroad and arranging the exchange of students as part of their duties and responsibilities. I am shocked at the suggestion that we should spend more money in Europe at the expense of the under-developed nations. I would not even accept that if it were related to the question of going into the Common Market, because those in Western Europe can well look after themselves. It is no good our building libraries there when they already have their own libraries, of a very high standard. I am hoping, therefore, that we shall not spend money in Western Europe at the expense of the underdeveloped nations.
We found that in Nigeria and Ethiopia films were useful, and this side of the work ought to be expanded. I do not know why we do not do this, because in this way we can attract more children with all kinds of films and can make life in the villages less distressing than it must be, and can reach a great number of people with our language. The problem is that of money. The question of the mass media has been raised. A wonderful job is being done in Addis Ababa. Fifty television sets were donated and now they have had another 75, but why can they not have more? More television sets would enable us to reach more children and to develop education in the schools.
The Committee was extremely impressed by the enthusiasm of the staff, who worked marvellously well, without concern for their own health. There is no doubt that the mass media can make a valuable contribution to the education of the people. I hope, therefore, that the Government will take note of this and try to ensure that more television sets are supplied to the British Council. It deserves our praise for the work it carries out in promoting international operations. No small responsibility lies on the shoulders of the Council, for it must never on any occasion give the impression to those in the country in which it is operating that there has been insufficient consultation. This is important in connection with taking films into villages. It is essential that permission to do so be obtained first. I am sure that the British Council representatives

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will ensure that that policy is carried out.
A word about the policy of Governments—one does not wish to be parochial on this. Why are we not increasing the amount of money spent by the British Council when we all praise it for the work it does? The amount is now just over £16 million, but I am informed that this is of no greater value than the 1964 figure. We are not taking into account the increase in the wealth of this nation. We should spend more money to try to make certain that the British Council can carry out its duties and responsibilities with forethought and care and without being too greatly worried about money.
An important factor is that if the British Council can budget only each year and there is a reduction in the following year, something already planned has to be cut out; and the worst thing one can do in these countries is to plan and to promise something and then have to say in the following year, "We are sorry; we cannot carry it out". The Government should consider allowing the British Council to budget for at least three years, guaranteeing that a certain amount will be provided—and one always hopes that it will be further increased. The British Council can then say, "Instead of planning for only 12 months hence, we will plan for 2½ years, which will enable us to make better schemes and to spend money more advisedly".
In conclusion, I wish to thank members of the Committee, who were so very helpful and who helped to make that visit most pleasurable, despite the hard work. I hope that if they send another small committee on such a visit, the Government will make sure that a few more days are allowed to enable more information to be obtained so that the committee can make an even better report.
6.8 p.m.
Mr. Richard Hornby: I should begin by declaring an interest as a member of the Executive Committee of the British Council. I have seen some of the Council's work both at home and abroad. In passing, we should remember that important work is being done by the Council in this country no
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less than overseas, particularly in its dealings with the exchange and reception of students and so on; so when I was invited last year to become a member of the Executive Committee I was delighted to have the opportunity of being more closely associated with the Council's work.
Secondly, I welcome very much the inquiry instituted by the former Estimates Committee and the report now published by the Expenditure Committee. It is worth noting at the outset that this is the second report in a relatively short period of time which has commended very warmly the value of the work of the British Council, the earlier report being that of the Duncan Committee already referred to in the debate. The essence of that work is the steps that are being taken to achieve a better understanding between ourselves and other countries and of us by other countries.
That work really involves their seeing the best of the things that we are doing and writing and the art that we are producing and other activities. It involves meeting needs and requests from other people who are anxious to see how others are grappling with the particular problems they face and finding out how best their needs can be met. It also involves teaching our own language, far and away the best instrument we have for the communication of our ideas throughout the world.
As such and in all these capacities, the work of the Council is a very valuable adjunct of foreign policy, and not just a promotion of our culture. As the hon. Member for Berwick and East Lothian (Mr. Mackintosh) said, foreign policy depends no longer on military presence or economic power alone. It depends also on an understanding of the values and cultures that countries uphold. It is to that end that the work of the Council is directed.
If the Council is to be able to do that work, it must be able to take a longterm view. That is right at the core of the Sub-Committee's report. The dangers of "stop-go" policies in this connection as in others have been emphasised. To take up a project, to initiate a teaching scheme link between a local authority here and some other part of the world and then to abandon it at the half-way

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stage is not only wasteful in money terms; it can be positively damaging to the relations between the two countries because of the resentment that the abandonment arouses.
I wish to refer to three aspects of the work of the Council. The first relates to its finances, the second to its priorities, and the third to its independence.
Dealing with finance, the Council is wholly dependent on its annual grant from the Government. I see no alternative source of funds. Certainly I see none which would provide the necessary volume of money.
One has to ask one question about the amount and another about the effect on the Council's work of funds coming from this source. I do not believe that the fact that the Council is financed by the Treasury is inimical to its reputation for independence. After all, the universities take 95 per cent. of their money from the Government, and they would be the first to cry out if they thought that their independence was threatened. I do not think that we need be worried about the nature of the source affecting the Council's independence.
I have one or two comments on the amounts and the way in which they are supplied. The Council has been treated stingily with regard to capital provision. Inadequate housing is perhaps the best evidence of that stinginess. As other hon. Members have said, it is folly, especially in capital cities, again and again, year after year to be renting instead of buying. What this policy must have cost the country over the years is anyone's guess, but, clearly, it is madness and should be stopped progressively at the earliest possible moment.
With regard to the current account, the problem that the Council faces is that the annual grant which is made to cover its schemes does not make any allowance for cost increases in the ensuing year. In the course of a year, as costs inevitably rise in this inflationary age, the Council is forced to chip away at its work before the next negotiation comes at the end of the year. An allowance should be made for estimated cost increases in the ensuing 12 months at each annual grant review.
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Then, as other hon. Members have said, it is important that a longer view than one year ahead should be taken. It is suggested that a five-year view ahead is to be preferred. I understand the anxieties of the Treasury that one cannot give absolute guarantees about amounts that will be provided. However, certainly it should give the strongest possible declaration of intent, and certainly a stronger one that the Council has had hitherto. Without that, there is a danger of cut-back, followed by waste, followed by the resentment to which I have referred.
The second aspect to which I refer concerns the Council's priorities. These are extremely difficult matters of judgment. They are difficult geographically and functionally. Decisions, reviews and discussions between representatives of the Council and the sponsoring Departments, especially the Foreign and Commonwealth Office, go on the whole time. Discussions in the Executive Committee go on the whole time, and rightly. Inevitably, one is making balancing judgments, for better or worse, with a little less here and a little more there.
There are three factors which go into those judgments. The first is the nature of the requests received, bearing in mind that, by the nature of its work, the Council must engage in projects which are wanted and which are to the direct benefit of those requesting and receiving its help. It has to be meeting needs all the time. Then there are its political priorities. There is a dialogue and a partnership with the Foreign Office which must go on all the time.
What is perhaps the most important factor when taking decisions is the resources available not only of money but of appropriate and skilled manpower. It is no good agreeing to requests or getting the political and geographical priorities right if, that having been done, the right person cannot be placed in the right post at the right time. The essence of the Council's work is the personnel function; in other words, finding people who can do the work, who are anxious to do it, who are trained for it, and who are adaptable and suitable for the places where they will be sent. Training, retraining, and providing a career structure with, possibly, a secondment and temporary appointment structure alongside

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it through which it is possible to get the appropriate skilled person to the right place at the right time is the essence of what this is about. It cannot be emphasised too much.
The third aspect is the Council's independence. It seems to me that the present position is an adequate compromise. In one or two respects, this otherwise very useful report makes heavy weather of this issue. I have discussed already the relationship with the Treasury. I do not regard that as damaging in terms of its nature. I am concerned only about its manner.
As for the Foreign Office and the question of contact with ambassadors before British Council appointments overseas are made, it seems to me that it is the only sensible course. The Council has the right to say "No" to a suggestion from an ambassador overseas that a certain appointment should not be made. However, we must bear in mind that the partnership overseas will be extremely close. Posts are often lonely unless the relationship is a good one. It is no good service to the individual concerned, to the work of the Council or to the work of the Foreign Office unless there have been private consultations before making individual appointments.
Mr. Stratton Mills: The B.B.C. Overseas Service is also financed by the Government. Would my hon. Friend expect an ambassador to be consulted about an appointment in respect of the B.B.C. Overseas Service?
Mr. Hornby: The two cases are by no means parallel. I am always chary of encouraging governmental interference in the media of communications. Then again, the relationship on the ground is not of the same kind. The B.B.C. representative is never a cultural attaché. He is never housed within the precincts of the overseas post. I think that my hon. Friend is making a totally false and misleading comparison.
With regard to senior appointments on which the Foreign Secretary has the right of veto—namely, the chairmanship of the Council and the position of the director-general—if part of the task of the Council's work involves discussion and deliberation about where to go, about political priorities and so on, it seems that those discussions can be held freely in
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the way that the Council would want only if there is a total degree of confidence in the man at the top. For that reason I should regard it as prudent that this relatively gentle Foreign Office interest in this field should be maintained as now.
In looking at what the Council should be doing, bearing in mind that demand for its services and help is always in excess of the supply of resources available, one should always be looking for what the Committee called the multiplier effect. In the educational field one cannot do all the job oneself but must concentrate on training the trainers of teachers. In Europe many contacts have already developed, and many of the actions taken by the Council will be in trying to bring professional bodies together to get on with the job in their own way. The most important multiplier of all is continued emphasis on the teaching and use of the English langauge, which I believe represents the best investment of all that the Council is doing.
I therefore suggest that the best thing which this House can do tonight is to ask my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs to give the strongest possible guarantee to the Council about the stability and improvement of the financial climate within which the Council can plan for its future.
6.22 p.m.
Mr. Ted Fletcher: I am certain that the House is grateful to my hon. Friend the Member for Eccles (Mr. Carter-Jones) for initiating this debate. I am in no doubt at all that the British Council is doing valuable work and is staffed by dedicated officers. It has a tremendous contribution to make to international relations and to educational development overseas.
Like the hon. Member for Tonbridge (Mr. Hornby), I want to divide my contribution into three parts—finance, priorities and independence—although I shall probably reach different conclusions from those which he reached. Although in money terms the income of the British Council has increased over the years, in actual terms the activity has not increased substantially because of the impact of inflation, rising costs, devaluation and so on.

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One has only to contrast the £16 million per year income of the British Council today with what is happening in France. There the budget devoted to cultural activities is three times as large as the budget controlled by the British Council. Approximately £45 million per year is spent by France on cultural activities abroad. We had the opportunity when we visited West Germany of speaking to German Foreign Office officials we found that, although their finance is channelled through three or four cultural organisations, the amount is well in excess of £20 million.
The first thing that the Government ought to do is to look very closely at whether we are getting value for money. If the Government conclude, as the Committee concluded, that we are doing so and that the British Council should expand, then more money should be devoted to the work of the Council. What I think the Executive Committee needs even more than additional finance is some stability. It needs an assurance that it will be able to plan for three, four, or five years ahead. That is not possible today. For example, in 1967–68 it was compelled to reduce its budget by half a million pounds. I know that there were special circumstances during that period because of foreign exchange problems, but nevertheless this meant that it had to withdraw from eight countries only to re-establish posts there 12 months afterwards.
In order to establish itself in a country it is necessary for it to spend at least two years making contact with the local population, to become assimilated in the community and to get into contact with educational institutions and universities. That cannot be done overnight. All this valuable know-how is lost when, because of some action by the Government, the organisation has to withdraw its activities from certain countries.
Of course, the Government issue a White Paper on Public Expenditure which attempts to project public expenditure for five years ahead. That is not very much use to the British Council because it does not deal in any detailed sense with what the British Council should spend, but deals only in a sort of global way with overseas expenditure. The two
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things which we need in this field are more money to be made available and a sense of continuity, and some guarantee should be given to the British Council that it can plan for at least three or four years in advance without the apprehension that the Government might take away half a million or a million pounds and as a consequence destroy the opportunities which the Council has to build good will in other parts of the world.
On the question of priorities, the Duncan Committee's Report stated:
"we consider that there is now a strong case for shifting the balance of British Council activities towards Western Europe".
Because of the political overtures that were being made at that time and are being made now with a view to our joining the Common Market, no doubt influence was brought to bear on the Government to give emphasis to the idea of stimulating British Council activities in Europe. Every member of the Committee will, I think, agree that this priority is wrong. I and my colleagues cannot claim to be in any sense authorities on the work of the British Council. We visited three countries: Ethiopia, Nigeria and West Germany.
Our experience in West Germany showed that there was little interest in the British Council libraries. For example, we went to a library at 10 o'clock in the morning and found one student sitting there. When we got into conversation with him we found that he was a citizen of the United States of America.
This contrasted greatly with the position in Addis Ababa and Lagos. In Lagos we found an astounding response. Every seat in the overcrowded library was occupied by a Nigerian student. Many other students were sitting on the stairs, in the corridors and in the compound, engrossed in reading English books.
There is a tremendous demand to learn English and to study English literature, but in my opinion this demand is not being satisfied.
Previous speakers have mentioned the inadequacies of the buildings. I know that the building in Lagos could be improved. It is bursting at the seams. It is not adequate for the task which it has to perform.

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I notice that the British Council proposes to spend £400,000 in the next five years on buildings. This works out at less than £100,000 per year spread over 80 countries. It is not possible to enter into any vast capital undertakings with such a small sum at the disposal of the British Council.
Our experience in Africa shows that there is a tremendous demand in both Ethiopia and Nigeria for a knowledge of English—in order to read English textbooks. These young people want to get to secondary and grammar school. They can do so only by studying in the British Council library. That demand is not reflected in Europe. After all, the citizens of West Germany can receive the B.B.C. international services, so they have the opportunity of listening to English. Many hundreds of thousands, if not millions, of tourists come from Europe on visits to this country, so they are in contact with British cultural and artistic activities. In my view, the emphasis on Europe is wrong. We should devote more attention to the problems of the developing countries. This is borne out by our observations particularly in Nigeria and Addis Ababa.
I turn now to the experiment which is going on in Ethiopia with the mass media centre. Here is a project of broadcasting sound and television programmes in English which reach 50,000 students. This is done on a shoe-string budget. The capital cost of setting up the radio station was about £40,000 and the running costs are about £23,000 per year. They are now thinking of extending the programmes from student to adult education. The Overseas Development Administration has made arrangements for 150 television sets to be made available. But even this provision is quite inadequate. I understand that there are as many as 400 students to a single television set. They sit round in a huge class to assimilate the knowledge they are getting through this television channel.
I pay tribute to the engineers in charge of this development in Ethiopia. They have vast technical problems with the mountainous country. Despite those problems, they are dedicated to the job. There are possibilities, because of close co-operation with the Ethiopian Government, of opening up other wave-bands, extending the time, and so on, but the
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capital just is not available for this development. The Government should look into this matter.
There was a suggestion that a soap manufacturer in Britain might be prepared to advance £40,000 to double the radio network if he had the opportunity of advertising his detergents on the radio or television. I am sure that if there were that demand—I do not think there is that demand in Ethiopia—this opportunity would be jumped at, because £40,000 is a small price to pay. It would cost the British Council £40,000 to send one of the Shakespearean companies behind the Iron Curtain for one or two weeks.
We should extend the idea of using the mass media, television and radio, to broadcast lessons in and knowledge of English to other countries. We have not explored this idea deeply enough. I hope that more money will be devoted to this venture. I was probably more impressed with this venture, because of the enthusiasm of the engineers and the fact that the staff of the British Council have voluntarily given of their spare time to running this radio station, than any other activity of the British Council.
I turn now to the point about independence. This is probably the most controversial subject which we have discussed in the debate. We questioned members of the British Council very closely about this matter. We know that if there is a break in diplomatic relations between this country and other countries the embassy staff have to pack their bags and go, but the British Council almost always remains because it is not regarded as an agency of the Foreign Office.
By contrast, let us look at what happens with the American Information Services. They are regarded as an agency of the State Department. Indeed, when there are, as often happens, demonstrations against American involvement in Vietnam, for instance — this often happens in the African countries—not only are the windows of the American Embassy smashed, but the windows of the American Information Services are smashed. Sometimes they ask for it. As a rule they have ostentatious places with the Stars and Stripes proudly flying. It is part of the advertising technique of the Americans lo show what they are

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doing for the under-developed countries. We are more modest. Nevertheless, the American Information Services are associated with American foreign policy.
We are told that the British Council is independent. I believe that we have not only to say that it is independent but to show that it is independent. Therefore, it seems to us that when staff for the British Council are vetted by the ambassador—the ambassador is asked whether a certain individual is acceptable to him; in other words, acceptable to the Foreign Office—it shows that there is some connection between the Foreign Office and the British Council. If the British Council is to be truly independent, it should, although it has to co-operate in day-to-day activities with the embassy, be shown to be truly independent. It is true that the budgetary arrangements mean that the Council is on the Foreign and Commonwealth Office Vote. Therefore, something should be done to end this. We ought to establish the fact that the British Council is entirely independent of the Foreign Office. Indeed, in the under-developed countries the British Council is regarded as a cultural centre and educational institution, not as an appendix to the Foreign Office, and it is important that we should safeguard this position.
I do not think that any member of the Committee will apologise for the fact that we probed this matter very deeply. We endeavoured to point out that in our view, if the Council is truely independent, it should show this publicly by saying that it will not be told by the Foreign Office whom it employs.
I pay tribute to the Sub-Committee's Chairman, my hon. Friend the Member for Eccles, who introduced the report. I think that hon. Members on both sides of the House who were on our small Sub-Committee know of the valuable work which the Chairman has done and the co-operation which we have had from the British Council during our investigations.
We have not produced a mind-shattering report; we are not suggesting drastic alterations; but we have made some modest recommendations which I think will go some way to improving the word of the British Council.
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We need to focus attention on the fact that there is a tremendous demand for a knowledge of English in the developing countries. A knowledge of English and of English ways and institutions is a passport to employment for millions of people, particularly in Africa and in India. We are not exploiting this desire to learn English and to learn about English institutions, because the money is not available. Therefore, I hope that members of the Executive Committee who have taken part in the debate will realise the necessity of pressing the Government to try to make more money available for this most important aspect of selling the British way of life to people abroad.
6.40 p.m.
Sir Richard Thompson: I must be the only speaker in this debate who is not either a member of the Expenditure Committee or in some way connected with the Executive of the British Council. This is not a disadvantage, because it enables one to look at the matter a little from the outside.
One message has struck anyone who has heard this whole debate, and it is one in which we should all rejoice; that is, that hon. Members on both sides thoroughly appreciate the work of the British Council and are conscious of what it does for our reputation abroad. I hope that this message goes out loud and clear. There is no activity of which it is easier to make fun than some activities of the British Council considered in isolation. As all Governments have economy drives and retrenchment, these activities, broadly described as culture, are the easiest to cut without anyone here feeling any difference. I therefore welcome our unanimity that this is a worthwhile activity for which we get a substantial return. I hope that this debate will help to cut some of the ignorant cackle about the Council's activities.
Many hon. Members have quoted figures of expenditure, but for a layman like myself the significant one is that—referring to the latest figure in this report, which is a year out of date—although the money voted has gone up to £13,473,000 in real terms, the British Council is providing its services for the same money as it got six years ago. We in this House are not doing that. Very few public bodies are.

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It needs emphasising that if economies should be made they are being made. The thing is being run on thrifty and sensible lines—thriftier perhaps than anyone would wish. But no one should think that this is a fringe activity with a cosy little budget enjoying itself without reference to the value of what it does. We get good value for money here.
As other hon. Members have said, comparing this £13½ million with the £40 million or £50 million which France, a comparable country in size and population, devotes to this activity or the £20 million that Germany spends we can see that we have a good bargain. We would all like the Council to have more, but the most important thing is to try to arrange that it has a predictable future; in other words, that it can look ahead with some confidence that it will not be suddenly chopped on a particularly vital programme. Continuity is the essence of the matter.
There has been a good deal of argument about independence and accountability, but this is overdone. If something depends on public money in the end, someone in the Government has to justify it. It would be very nice to say, "This is culture and education and we do not want any association with the Foreign Office or the Treasury", but without that association they would not get the money. This House would fail in its duty if it allowed even a small budget like this to be voted without any Minister having the power or the duty to defend it. Nice though it would be not to be attached to a Department, we must accept that it is public money and should be treated like any other expenditure.
In practice, what one calls the backseat driving of the approval of the Foreign Office for the highest appointments is not too onerous. It is exercised with tact and discretion. Here again, someone has to defend the British Council if it gets into trouble in the House. If it is not the Foreign Office, it will be someone else.
Mr. Carter-Jones: I completely agree with the hon. Member. All that we said in our report was that time and time again we were told that they were not answerable. I can understand this accountability where there is a Vote on
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the Foreign Office. The Sub-Committee was concerned that both sides claimed that there was complete independence.
Sir R. Thompson: I take the hon. Member's point, but I still adhere to mine. Total independence is not of this House, and the arrangement we have, although perhaps not logically defensible, does not work too badly—as with one or two of our other much maligned institutions.
I do not want to go through the minutiae of the report—those who compiled it are much better qualified than I am—but the basic question is: what is the British Council trying to do? What is its rôle, and is it devoting sufficient emphasis to it?
On page ix of the report, we read:
"The Council's Charter of Incorporation, drawn up in 1940, sets out their three principal aims as 'promoting wider knowledge of the United Kingdom and the English language abroad and developing closer cultural relations between the United Kingdom and other countries'."
Of those three things, the most important is promoting a wider knowledge of the English language abroad. This is the grass roots of what it is trying to do. I see on a later page that the Council devotes 31 per cent. of its budget to teaching English. I hope that that can be increased and that it will never lose sight of the fact that this is its first task.
Practically every speaker today has paid his tribute to the English language and all that it unlocks, and to the fact that it is a priceless means of communication with the rest of the world. I profoundly believe that. It follows that if one wants to understand our institutions, our culture, the considerable contribution which we have made to the life of this planet, one will get nowhere without first learning to read and speak English. Otherwise, one just does not have access to what we are trying to say.
The English language is the most powerful and effective instrument left to us for disseminating information about our kind of world, of which most of us, I think, are proud, and which unquestionably has made enormous contributions to the sum of human knowledge. If as a country which no longer has the enormous material power which at one time, within the memory of most hon. Members, we had, we are to win the war of

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ideas which is so essential, we must impart what we have to contribute through our own tongue. It follows that English teaching, particularly in the under-developed countries, should be a major effort, as I accept it is, on the part of the British Council.
There is one respect in which I wonder whether we are using all the assets we have in this context. The war-time coalition Government under Winston Churchill knew that at the end of hostilities they would have to put this message to the world on an international scale. That was why Winston Churchill at the end of the war took a leading part in buying the copyright for the nation of a universal language known as basic English. We paid about £25,000 for it in C. K. Ogden's great work, and we paid it with the intention of using this simplified language—which consists of only 850 words in the vocabulary with a very simplified grammatical form—to talk to the people of the under-developed world and to people in places where English was not understood.
A few basic books like the Bible are already translated into basic English and are in use. There is also a scientific dictionary because this language can be adapted to be the language of modern technology. It also has the advantage of being quickly mastered and, once learned, newspapers and, from them, books can easily be read by people of a very low educational standard. It is readily intelligible. It beggars description why, having purchased the copyright for this purpose, we have made so little effective use of it.
I have looked into this matter and can only conceive that somehow it got lost in the long grass of the old Ministry of Education in the days after the war when there were so many other urgent priorities. It seemed to be nobody's business to use it as a solution of our communications problem. Nevertheless, every contributor to this debate has spoken of the urgent need to spread the use and understanding of English. It therefore seems incredible that a body like the British Council, which I believe has experimented with basic English, should not embrace it and use it much more than it does at present.
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This is a waste of resources and a neglect of the nearest thing ever devised to a universal language in our own tongue. What a powerful means of communication this would be to the underdeveloped countries and what a quick and ready means of learning English for many in the Common Market which we appear likely to join in the near future.
No large expenditure is involved here. We do not have to buy anything from anybody. This is not a commercial venture. It already belongs to us, and people like Winston Churchill, Franklin Roosevelt and H. G. Wells—people qualified to judge—thought that basic English was the genesis of a universal language.
If we really want to develop the educational English teaching activity of the British Council, we should look once more at this means which lies ready to hand but which, for a reason I cannot ascertain—has it been neglect or prejudice?—has never been fully used.
Subject to that, I commend the activities of the British Council. We have a right to be proud that so relatively few resources have produced a result so greatly to the credit of our country.
6.56 p.m.
Mr. Frank Judd: Like the hon. Member for Croydon, South (Sir R. Thompson), I have neither had the honour to be a member of the Select Committee nor the honour to be a member of the Executive of the British Council. I, too, therefore, can bring at least an element of objectivity and disinterest to the debate.
I applaud and endorse the hon. Gentleman's remarks about the need for the British Council to be able to plan ahead with certainty. We understand all the difficulties imposed on the Council because of traditional Treasury policy. But it is important that where a long-term on-going operation of this kind is involved, those with responsibility for it should be able to look ahead with confidence.
I also join hon. Members in congratulating the British Council on its successful programme to date. As a member of the late Select Committee on Overseas Aid and Development I was able to see some of the work of the British Council

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in India and Pakistan. I am sure that I speak for all my colleagues who were members of that Select Committee when I say that we, like the Select Committee whose report we are discussing today, were deeply impressed by much of what we saw.
I wish, first, to stress the need for there to be a really representative cross-section of British life on the Executive of the Council. It should be self-evident that if the job of the Council is, among other things, to portray abroad the way of life in Britain, there must be among its governing bodies for all to see representatives of as many walks of life in Britain as possible.
Several hon. Members have referred to the Duncan Report. I was in the House when that report appeared and I was among those who felt that it was a pernicious and dangerous document. I did not like what it said about areas of priority and outer areas and its use of language which at times I thought was verging on the provocative.
It is tremendously important that the British Council should seize the opportunity of getting in on the ground floor in areas of the world where we are creating new relationships. As I have travelled in the developing countries it has sometimes seemed to me that other nations are proving much more effective in forming connections—friendships and relationships with newly independent countries—than are we and that they are prepared to take the risks and suffer the frustrations which are inevitable in the early stages because they see the advantages that will be reaped at a later stage.
In view of the close relationships which we were able to enjoy with much of the developing world until recently, in our capacity of the mother country of the Commonwealth, it is particularly tragic that others should be overtaking us in the closeness of their involvement with countries which, in one way or another, will have great significance in future. If we have encountered certain political and psychological difficulties in making the adjustment from our former imperial rôle to our new relationship, surely the Council is one of the bodies best able to take the lead in working out precisely what the new relationship should be.
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My next point is on the degree to which the Council should appear to be identified with the Foreign and Commonwealth Office in its work. This, too, has received a considerable amount of attention in the debate. I want to look at one specialist activity of the Council in this connection, to illustrate a particular problem that exists. One of the Council's functions, which it has conducted with very commendable success, has been to act as the overseas arm of some of the volunteer agencies involved in the British volunteer programme. It does seem that if volunteers serving within that programme are to be able to make the best of the projects to which they are assigned, they should be free of any criticism that they are acting directly as the tools of British foreign policy. If those who are responsible for negotiating the arrangements for their assignments appear to be too closely identified with the Foreign and Commonwealth Office, this danger will exist. Therefore, in one specific sphere, we see one of the potential dangers, or one of the potentially adverse consequences, of too great an identification with the Foreign Office.
While mentioning this aspect of the Council's work in its responsibilities for the British volunteer programme, I pay tribute to those of its staff who have been fulfilling their responsibilities on this front. Many of those volunteers who have served abroad would want to place on record their tribute to what has been done to make their work as fruitful as possible. Naturally, some people working on this front are more successful than others. The Council would be the first to agree that the temperament and personality of its officers looking after volunteers are of vital importance. Naturally, the officer who has a more institutionalised and less imaginative approach will not be able to develop the same sort of volunteer programme as those with greater imagination and flexibility.
My next point concerns education and can be summarised in this way. Understandably, in the past, the Council has been proud of its emphasis on what I have heard described by its officers as centres of excellence. This has been related to the traditional élitist approach towards leadership in a number of countries in which it is operating. I believe that the Council must take a

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very radical look at this sort of involvement if it takes on board seriously the problems of the developing countries. Perhaps among the most serious problems and difficulties which confront the developing world as a whole is the scale of illiteracy within it. U.N.E.S.C.O. and others have estimated that there are between 700 million and 1,000 million illiterates in the third world at present. This has to be judged not only in terms of 700 million to 1,000 million people, like any one of us in the House or outside, denied the chance to develop their personalities to the full in a way that becomes possible with literacy, but it also has to be seen in terms of a dead weight holding back the effective operation of the developmental plans of those with political, economic and social responsibility in the countries concerned.
If we are to battle effectively against this problem of illiteracy, the Council has a vital rôle to play, as the hon. Member for Tonbridge (Mr. Hornby) said earlier, in training the trainers, in making sure that it is contributing to effective educational work in the front line in society and that it is assessing the success of its educational programme not just in terms of the depth of knowledge available to a few who are fortunate in being amongst the more sophisticated members of society but also in terms of the degree to which a broad cross-section of the community is sharing in educational progress and the emancipation which that brings in so many ways.
In illustration of this point, I read some figures recently about the educational situation in India a few years ago, where it appeared that 90 per cent. of the graduates from Indian universities were graduates in law, arts and commerce, 3·4 per cent. in medicine, and 1·2 per cent. in agriculture. Obviously, if the British Council is priding itself on assisting in the development of India in such a way that an increasing number of people in Indian society can feel and appreciate material progress, it ought to avoid the temptation of being drawn, in India or anywhere else, into a too intimate relationship with the 90 per cent. of graduates who are obviously not having the same proportionate success, in terms of the overall impact on India,
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as the small proportion of graduates in medicine and agriculture are able to have.
It is not a matter only of getting the emphasise right in terms of collaboration with university students and university work; it is also important for seeing the rôle of the British Council outside the more academic institutions in those less high powered but, perhaps, in a way, more significant educational institutions throughout the country.
Another illustration of my point is that recently I visited Nigeria and spoke to senior officers of the government in Enugu, and the commissioners with whom I was speaking told me, amongst other things, how much they wanted Britain, presumably through the British Council, to expand the educational opportunities for graduates in terms of scholarships to universities in and beyond Nigeria and in academic advance at that sort of level. While involved in that discussion at Enugu, I could not help bearing in mind the tremendous problems of the North-East State of Nigeria, which is battling to achieve any significant degree of literacy at all amongst the wider population of that part of the Nigerian Federation. In its approach to its educational priorities, I hope that the Council will take on board all the time not only the need for qualitative achievement but the need, in terms of the challenge of the developing world, for quantitative achievement as well.
7.8 p.m.
Mr. Jasper More: I am glad that I am, at any rate, the third nonmember of the Sub-Committee or the Expenditure Committee to speak in the debate. We are grateful to the Government for giving us time to debate this subject, but I hope that hon. Members who were members of the Sub-Committee will not take this as any reflection on them, or misunderstand me, when I say that although all their contributions have been most interesting and informative to the House, there must be a certain unreality about the debate if they are made up mostly by members of the Sub-Committee.
When these Select Committees were proposed in the recent Green Paper, the Green Paper said that the object was to produce a significant strengthening of the

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parliamentary system. It referred to the fact that when debates had taken place on these reports, the interest shown by other hon. Members had sometimes been disappointingly small. If other hon. Members are to be drawn into these debates—and surely the debate will be more real if it is largely conducted by other Members—it is necessary for some effort to be made and opportunities given. I think that my right hon. Friend the Leader of the House, to whom I have talked about this, has taken the point, and I hope that in future efforts will be made to arouse a rather more general interest and to produce a rather more real debate. But I repeat how much we have appreciated the contributions from those who were on the Sub-Committee, particularly its Chairman. I found its report very interesting.
Very little has been said with which we could disagree, and I hesitate to repeat all the excellent points. I very much agree that if it is to do itself justice the British Council must have a guarantee of a regular financal budget. I support what has been said about the importance of the appearance of the buildings where the Council has offices in foreign towns. It would be better to have few but good ones rather than to try to proliferate.
I also agree with most of what has been said about priorities. It is a bit presumptuous of us to express our views about priorities in the actual activities. There was criticism of a certain play sent to a certain capital, but if the British Council in its wisdom decides that it would be a good thing to send a theatrical company to perform, say, "Hair" in Addis Ababa, or "Oh! Calcutta!" in Karachi, that is a matter for it. But it is essential, seeing that the British Council is so vulnerable to criticism, that it should not make an ass of itself, and the all-important thing is to make sure that it has sensible advisers.
The argument about priorities between what are called, rather patronisingly, developed and underdeveloped countries has been very interesting. It is surprising, in view of what has been said in the debate, that the Sub-Committee does not appear to have made any specific recommendation about it. The sad story of the library in Cologne with only one gentleman there, who turned out to he an American student, is indicative of the
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dangers that can be run in getting our priorities wrong. It is my view—not for the accidental reason that I happen to be against our going into the Common Market—that there are certain things in the developed countries, at any rate the European countries, that we cannot now hope to do. They have a certain outlook conditioned by long centuries of habit and practice. They believe in strange things like logic and reason, and I do not think they will ever be converted to the much better system we have, with our bumbling instinct for tradition and common sense which somehow manages always to produce so much better results.
I suggest as regards the European countries that the British Council might turn its mind to the theory that in cultural exchanges—films, lectures and things like that—there is much to be said for trying to spread the doctrine that the initiative should come from the receiving country rather than the exporting country, and that as far as possible the expenditure incurred should not necessarily be expected to come out of public funds.
I agree very much with almost everything that has been said about the underdeveloped countries. What the Sub-Committee saw in Addis Ababa and Lagos is indicative of what is needed. A large number of countries, particularly in Africa, are asking for what we can give them—language teaching and even the British way of life. Where they have not been corrupted by ideas like reason and logic we might even persuade them to understand things like democracy and the rule of law. I say to the British Council, "More power to your elbow in those directions".
I should like to stress the importance of what so many hon. Members have said about the career structure of the British Council, and particularly the choice of its Director-General. If any organisation is to be a happy and practical organisation, with good morale, those who serve in it must know that there are good prospects for those within it. I am sure that that is half the battle in creating a successful organisation.
May I once again express my admiration of the work the British Council is doing and our gratitude to the Sub-Committee for its excellent report.
7.16 p.m.
Mrs. Judith Hart: It may be useful if I make one or two comments now before the remaining Conservative hon. Members who wish to speak make their contributions to the debate.
May I say first, as someone who is a member neither of the Select Committee nor of any of the committees of the British Council, what an interesting debate this has proved to be and what an interesting report the Sub-Committee produced. The debate has tended to concentrate on two or three of the major issues which the valuable report threw up. I want to look at those as well as one or two other points.
The report looks at the British Council with its various faces. I have mainly met the British Council abroad in developing countries; I have little experience of it in richer, developed countries. Those of us who have met it abroad see it with its educational face, its cultural face and its diplomatic face, as being the British image to many people in many places. It is probably true to say that, certainly in the developing countries, more people have an image of Britain through contact with British Council activities than through direct contact with embassies or high commissions, which tend to have a rather restricted circle of acquaintances in the cities in which we find them.
I should like to look first at the question of long-term budgeting, which has been raised over and over again in speeches. The Foreign and Commonwealth Secretary's reply to this point was perhaps well-meaning, but it was somewhat vague and was certainly not adequate in view of the seriousness of the point made in the report. It is true that the long-term basic commitments of the British Council are very marginal in the whole programme of public expenditure, and, indeed, in the whole programme of overseas development aid and the spending of the Foreign and Commonwealth Office. In defence and foreign expenditure as a whole, of course, the amount involved for British Council continuing permanent activities is fractional. It does not make sense to read in the evidence of the British Council's need to withdraw altogether from eight countries as a result of a cut of £500,000 in 1967–68.
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The Committee was told that the saving effected by closing down in Fiji was £13,000, compared with a cost of £120,000 for the Royal Court Theatre Week in Belgrade. While we want the British Council, of course, to be adventurous in its cultural activities, I wonder whether these priorities were right.
In particular, I wonder whether the way in which the budgeting is done is as useful as it could be. We read in the evidence and the answers to the Sub-Committee's very sharp questioning that the division of expenditure was broadly 69 per cent. to the Foreign and Commonwealth Office and 31 per cent. to the Ministry of Overseas Development. That was evidence taken before the absorption of that Ministry into the Foreign and Commonwealth Office.
Clearly there is a significant difference in the budgeting question now that the Overseas Development Administration is part of the Foreign and Commonwealth Office. Presumably there is no longer quite the same distinction between the two sides of expenditure since all is coming from precisely the same source. It seems to me that it might well be better if there were to be a rather more formalised division in the budgeting of the British Council as between what one might call "continuing commitments"—maintenance of building and staff in different countries—and the more ad hoc commitments which change from time to time, from year to year and, indeed, sometimes from month to month, and which account for a large proportion of the British Council's expenditure. This would possibly provide a basis on which there could be a guarantee of a minimum budget that would not be disturbed, which would enable the British Council to avoid such devastating action as having to withdraw from a country if ever there were a critical economic situation in this country.
How, in the hon. Gentleman's view, does the merger between the O.D.A. and the Foreign and Commonwealth Office affect this position? What updating needs to be made in the Sub-Committee's conclusions on this and other related financial points as a result of the merger, which we on this side very much regretted?
I turn now to the question of education, which has been raised sharply on the issue of independence for the British Council and which is the other major theme to

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emerge in the debate. My hon. Friend the Member for Portsmouth, West (Mr. Judd) not unpredictably raised a key question about the British Council's educational activity. The point he made sharply focused the question of its dependence on or total independence from the Foreign and Commonwealth Office. There was considerable and interesting discussion about this in the Select Committee. The British Council said that it would like one pair of executive hands. It said that it would like to have a position in which it could be much more independent in its educational work. On the other hand, the Overseas Development Ministry, as it was then
"… accepted that an increasing proportion of overseas aid work in the educational field should become the responsibility of the Council, though they stopped short of suggesting that it should be transferred in its entirety to 'one pair of executive hands'. They considered such a proposition unworkable' because aid to education is a part of the total aid programme and cannot be dealt with in isolation'. …".
This focuses very much on the problem at issue here as to how completely the British Council should operate independently.
The Secretary of State for Foreign and Commonwealth Affairs stated that independence could not be absolute. He said:
"… in the provision of educational aid the Council acts increasingly as the agent overseas of the Overseas Development Administration. For these reasons the Government consider that, while the Council must enjoy the greatest possible freedom to conduct its activities in the way which it considers professionally most effective, its work nevertheless forms part of the officially-sponsored British effort overseas …".
On the whole, on this point, I find that I agree very largely with the Government. I do not believe—and this point underlay a good deal of what the Secretary of State said—that we can separate education from the whole process of development in a developing country because the large issues of education policy which are raised are essentially development issues.
In turn, these raise issues which are not just for educationists but for economists and specialists and, indeed, for politicians, because they often relate sharply to the kind of political judgments being made within a developing country about which way it wants to go. If it wants to maintain élitism, it will attach one of
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the first priorities to the kind of "centres of excellence" approach to education which my hon. Friend spoke about. It will be concerned with producing highly advanced university departments largely on the British model. If, on the other hand, it is seeking to abandon élitism and to have development which affects most of its ordinary people, it is likely to be much more concerned with the whole question of literacy, with education for the masses, with increasing the number of years which children stay at primary school, and so on.
This becomes a matter of economic, social and political judgment which should and does affect the judgment which the O.D.A. makes about its educational aid in the country concerned. That, therefore, in its turn must be allowed to influence the British Council acting as an agent in the development process for the O.D.A. in the way it spends its money, in the way it governs its technical assistance operation in education. It is not specifically for the British Council to make the judgment about how many more unemployed graduates there are to be or how many fewer illiterate children. That is not its speciality. One must accept that, whereas in all other sectors, the British Council must be encouraged to be totally independent, in this sector, where it acts as agent in the development process, the Secretary of State is probably right.
I have one narrow point about education which disturbed me somewhat when I visited Latin America recently. It concerns the English teaching tradition of the British Council. I was not altogether content to find—and I think that this may occur in other developing countries—that the British Council is using part of its funds to finance an English school where all the teaching is done in English. It is an excellent school with an excellent staff, but it is a fee-paying school for the middle class. This is not an argument about fee-paying schools in this country. But in at least one developing country the English-teaching effort of the British Council is at least in part being restricted to a middle-class élite and not being spread out to the mass of the population. I am not at all sure that this is the best way of doing it. Certainly I am not sure that it is necessarily in the best interest of the developing country itself

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Few of us liked the Duncan Report. It has been less popular than most of the expert reports published about various subjects in the last few years. What most of us did not like about it was the new priority it gave to Western Europe and the lessening priority to the developing world. This debate and the proceedings of the Sub-Committee have clearly shown that, as between these two priorities, hon. Members who have taken part in the debate and the Sub-Committee are clear that the priority of this House lies more with extending and pursuing the British Council's activities in the developing world, leaving what can be done in Europe as a second priority.
It is good to have established such a clear and unanimous conclusion of which I suppose the Government are bound to take account. This is the House of Commons being clear about its priorities. I was fascinated to hear and read of the libraries in Cologne and Nigeria. I have never visited a British Council reading room or library in a developing country without finding it full of people. If this is the point which the debate has allowed to emerge, then it has been most valuable. The members and the Chairman of the Select Committee are to be most warmly congratulated.
7.30 p.m.
Mr. R. Bonner Pink: I would like to follow the remarks of the right hon. Member for Lanark (Mrs. Hart) about the Latin American school she mentioned and the British Council sponsoring the teaching of English to middle-class children. I recall that school. From memory the situation was that universal free education has a long way to go and this was a means of starting the teaching of English in that country. It must be taken as a stop-gap. I agree that the aim is universal English teaching.
The right hon. Lady also spoke about budgeting. It is essential that the British Council should be able to budget more realistically. It is clear that if the Council is to carry out its work it must have some stability and continuity. It is fatal to British prestige abroad if a British Council office is closed down. The country concerned feels that we no longer have an interest in it. We know the pressures that there are to reduce expendi-
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ture, but in this service it is better to spread the butter a little more thinly over the whole range of the activities of the Council than to close down any operation.
The right hon. Lady spoke too about the independence of the Council. This worried the Sub-Committee a great deal. All those who have spoken today have mentioned it and it is getting a little out of proportion. We felt that this should be cleared up and that the Council should be independent. Both the Council and the Foreign Office contended that they were independent, but we found this difficult to believe, and the speeches today seemed to confirm that the Council is not independent. The German services are run by the German Foreign Office, and the impression I had was that the people in Germany would not believe us when we said that the British Council was independent.
Either we carry on and forget the whole thing, or admit that the British Council is not independent, or else we make it independent. Those are the choices, and possibly as a result of today's debate we have got this a little out of proportion. It might be better to drop it and leave matters where they are.
I add my tribute to those of other hon. Members to the hon. Member for Eccles (Mr. Carter-Jones) who was the Chairman of the Sub-Committee. He was a friendly, efficient and impartial Chairman and it was pleasant to serve under him. I endorse what he said about how impressed the Sub-Committee was by the work of the British Council. Apart from the evidence that we took in London, we visited Bonn, Cologne and Munich and saw what was virtually the sophisticated part of the work of the Council. Then we visited Nigeria and Ethiopia, which was the unsophisticated end. It was a pity, having gone to so much trouble and expense, that we could not have had more time and money and gone to South America or some similar place in an intermediate stage of development.
In the last 22 years there have been considerable changes of emphasis in the Council and in its priorities. In 1947 the emphasis was on a liberated Europe. From about 1954 onwards it has been on the developing countries, and I am certain that this is right. On the other hand, with our entry into Europe the

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Council may have to re-think its priorities and place more emphasis upon Europe. If it does it is essential that the Government provide extra funds so that money is not taken away to the detriment of valuable work being done elsewhere.
There are two facets to the work of the Council. There is the demonstration of British culture through the arts, literature, music and exchange visits, and there is the teaching of English as a tool for further advancement in developing countries. We saw that the libraries in Germany were not being used to the full. My impression was that the Germans were treating English as the first foreign language in their schools and universities. They had adequate English libraries, and the British Council library seems to be used mainly by British expatriates and was perhaps slanted for their benefit.
The university in Nigeria provided an excellent English library. There is no doubt that the Council's library was very much used, but it is true to say that it was also misused. A large number of students were using not books provided by the British Council Library but books from the university library or their own books which they had brought in. They were, clearly, using the British Council library because they had nowhere else to study. The university was not providing adequate accommodation, and, obviously, the students' homes were unsuitable. They were using the Council library not as a library but as a study room. Perhaps some steps can be taken to prevent misuse.
I turn to the reference to cultural "manifestations". I thought that was rather an unhappy choice of words because for me it always conjures up the Demon King coming through the stage at the pantomime. The Council can be criticised for some cultural activities, plays and so on, in that they did not mirror contemporary British life, which is what they should do if the British Council is to put across British culture. Some of the plays seemed to be slanted for the benefit of British expatriates rather than the local people, who I thought would not understand them.
In Europe we ought to concentrate more on youth exchanges, not only of students but also of apprentices and in-
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dustrial workers, to give them a new approach to things. The contacts with the British Council tend to be very much on an academic level, and it should extend those contacts to all classes of the community—industrialists, trade unionists and so on. In the developing countries we were told how effective the use of a travelling film van had been. They could set up projectors in villages and the drivers did the projecting. We thought that should be encouraged. It would need very little expense or effort in making a very worthwhile contribution, just as the mass media techniques developed in Ethiopia should be expanded.
There is no doubt that in the developing countries there is a great demand and need for English—for English as a tool. I support my hon. Friend in saying that possibly there should be more interest in and activity about the use of basic English, because the people in those countries need English as a tool. All air and all shipping movements are in English; virtually all science and all technical publications are in English. They cannot progress without English. The British Council has been most successful in teaching local teachers to teach English, but the problem is—and it is serious—that, having trained those teachers in English, having taught them to teach English, they leave teaching and go into industry, or the law, or Government service or politics, where they find they are more remuneratively employed. This is a problem to which apparently at the moment there is not an answer.
It is also important that more students in science should be trained. At the present moment there is a vicious circle. There are not enough science jobs to absorb the science graduates; there will not be those jobs till there are the science graduates to fill them. How one gets over a deadlock like that I do not know, but certainly it is a problem, which is recognised, and perhaps the British Council, which, I know, is doing its best, will find some means of helping.
This was a most extensive inquiry and I think that it is a most exhaustive report, if not an exhausting one. A number of the recommendations which we have made are practical recommendations, of which, I am sure, the British Council will adopt many. We were certainly most impressed by the work of

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the Council. We congratulate it on its work and we wish it well.
7.42 p.m.
Mr. Stratton Mills: By this late stage of the debate many of the points have been covered, and I will not detain the House overlong by a Cook's tour type speech on the activities of the British Council.
I join in saying how much I enjoyed working with the hon. Member for Eccles (Mr. Carter-Jones), who was an excellent chairman; and in saying what a happy Committee it was. It was one of the most interesting of which I have been a member, trying to involve oneself over an extended period in getting the feel of the work of an immensely interesting body. One felt a certain humility in being one of a group of Members of Parliament examining in detail the work of an organisation like this operating in 75 different countries, each having different problems and different methods of working. One hoped one was doing a useful job in pin-pointing deficiencies and matters which should he looked at further. I hope that our work has been a help to the British Council in holding a mirror, perhaps a rather crude mirror, to enable the Council to look at its activities. I hope it will be useful to the House in giving an opportunity to hear again a little of the detail of the work of the Council through the eyes of Members of the House.
One thing which strikes me as worth mentioning is this. I was in three countries and I was immensely impressed by the representatives in each of them. Each was an entirely different type of individual. One would not say that they were in the same kind of British Council mould. They were very different types of men. I was impressed by their skill, their hard work, their suitability for their posts, their adaptability, and also their ability to fire the imagination of those working with them. It is right to put that on record.
I refer specifically, following on from this, to recommendation (iii) in which we underline very strongly the importance of having an overseas inspection unit. I am glad to see that the British Council, in its reply, has broadly accepted this idea. I felt there was an inspection gap,
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since the British Council is working in 75 different countries, every community having different problems. I felt that the people from whom we took evidence in these countries had not had an interrogation-in-depth examination as to their methods of working. We all know that sometimes when one is doing a job one cannot stand back from it as often as perhaps one should to see how it is going and what the problems are and whether one is going in the right direction. I hope it may be thought that this would be useful, and I am glad to see that it is being accepted.
A fair amount of discussion has taken place here today on one of the central themes of our report—the usefulness of the British Council's work in under-developed countries such as Nigeria and Ethiopia. Other hon. Members have described it in detail and there is no need for me to repeat it. This is something to which the House could point a finger so that perhaps the British Council can re-examine its "geographical and functional" priorities. We used such a phrase in our report. Which of the countries are most important? Which countries in the developing world have priority over others? What type of activity should have the greater priority? I feel, on reflection, that not enough of this self-questioning has taken place. I hope our report may spur activity in that direction.
Refence has been made to "overseas manifestations". I do not want to repeat what has been said about that, but there is one small point which came to my notice recently and I mention it for the record, but I do not expect a reply to it at this stage. Perhaps my hon. Friend would ask the British Council to look at it. The National Youth Orchestra has done a great deal of work with the British Council overseas and it has made a particularly unique contribution. The orchestra has always been immensely popular overseas. However, I understand that it has not been abroad for the British Council since 1965 and is anxious to continue participation. Perhaps that matter could be looked at.
My hon. Friend the Member for Portsmouth, South (Mr. Pink) voiced something with which I particularly agree, the slight feeling one has that the British Council is over-academically oriented. It

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obviously is a gross generalisation to put it like that, but, nevertheless, one has this residual feeling that it was over-academically oriented, and we might, perhaps, see in the years ahead more concentration—for example on a wider spread of activity; for example, young apprentices and trade unionists, I am sure it would be right.
Another minor point which arose in our discussions and was mentioned today by the hon. Member for Berwick and East Lothian (Mr. Mackintosh) is the importance of sending out to the overseas posts for a limited period of a year or two people distinguished in the academic and teaching world. The suggestion was to give them a period of secondment. We had in mind particularly people of a high level in their own fields. The British Council is keen on this, and I am sure it is right.
On finance, the Duncan Committee pointed in the same direction as we did. I hope that our recommendations (i) and (ii) will be of help to the British Council in dealing with Government Departments and establishing a continuing level of financial expenditure over the next few years. I was encouraged by the tone of the Government's reply on this point. Hon. Members have emphasised that the contribution compared with France, Germany and the United States is on the lowish side, but the level of success and effectiveness of the Council's work is a matter of some pride.
I emphasise the nonsense of paying top rents for houses and offices in leading towns and cities. I am appalled by the rents being paid for private houses for staff. It was felt by representatives on the ground that it would have made greater sense economically to have purchased property five or ten years ago.
My hon. Friend the Member for Portsmouth, South was right in saying that the question whether the British Council would be more effective if it were independent of the Foreign and Commonwealth Office had got a little out of proportion. The arguments are finely balanced, but the British Council cannot have it both ways. One sees the fine cords over and over again coming back to the Foreign and Commonwealth Office, and it is, therefore, a mistake for the Council to oversell the point of independence, as it so often does.
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I was surprised that hon. Members who are members of or associated with the Council were so totally horrified by our idea. We might have said something which was intellectually obscene. The arguments put forward by the Foreign Secretary in his letter to the chairman were reasonable and, I thought, put the other side fairly. After spending a long time on this issue and seeing many aspects of the work, we came down on the other side and the arguments are in our report.
I hope that the discussions have been useful and will serve to set people thinking. This aspect may be reported on by another committee on some future occasion. We all enjoyed looking at the British Council, and I hope that to the people it serves and the people who work for it this will have been a valuable and useful exercise.
7.53 p.m.
The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Kershaw): The House is very much in the debt of my right hon. Friend the Member for Taunton (Mr. du Cann) for having moved the Motion this afternoon, and also of the Committee and the Chairman for having done their work in presenting the report to us. The work comes to us from the 1969–70 Session of the last Parliament, and it was appropriate that it should have been considered then. The British Council has not been inspected in this way for 21 years and during that time there have been many changes in the scale and character of its work.
The British Council was incorporated by Royal Charter in 1940. It has a small revenue of its own. The overwhelming bulk of its funds come by grant from the Foreign and Commonwealth Office. This year that grant amounts to £14·7 million, of which £5·6 million comes from the Overseas Development Administration. Thus, although the Council is independent in many senses—and Her Majesty's Government attach importance to this—its expenditure is properly the concern of the Government and the House.
The report contains 16 specific recommendations and three general observations. Some of the recommendations the Government regard as matters for the Council, and it is in the Government's interest that the Council should consider

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them and in the light of its own expertise evaluate them and, where desirable, put them into practice. When the Council has evaluated them it is proper for the Government to transmit the conclusions to the House, which my right hon. Friend the Secretary of State has done in the document which is before the House entitled "Departmental observations", printed on 11th November. From this document it will be seen that the Council is taking action on the recommendations of the Committee. Some of the recommendations concern the Foreign and Commonwealth Office more closely than others, and I will first turn to them.
First, the Committee felt concern about the relationship of the Council with the Foreign and Commonwealth Office. Right through the debate, starting with the hon. Member for Eccles (Mr. Carter-Jones), there have been references to this point. The Committee wholeheartedly endorses the opinion of the Duncan Committee that the British Council should be manifestly independent of the Government of the day, although it recognises that, as the Government provide the funds, the British Council cannot enjoy absolute independence. My hon. Friend the Member for Hertfordshire, South-West (Sir Gilbert Longden) and my hon. Friend the Member for Croydon, South (Sir R. Thompson) also drew attention to this financial dependence which the British Council must have.
Perhaps one can get an idea of the relationships which should prevail between Her Majesty's Government and the Council by setting out what the British Council seeks to do. The Council has grown to a large organisation with a budget of about £15 million a year. It also administers overseas, on behalf of the O.D.A., educational and training schemes costing a further £8 million. It employs some 2,000 London-appointed staff of whom 450 are serving overseas in 75 different countries, where they are supported by a further 2,000 locally-engaged staff.
The aims of the Council, as defined in its Charter, are to promote a wider knowledge of Britain and the English language abroad and to develop closer cultural relations between this and other countries. The activities undertaken in pursuit of this general aim are manifold and vary
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from country to country: but broadly speaking they fall into five groups.
First, there is the promotion of English language teaching, whether directly or by provision of expert advice to education authorities overseas, and advice on all aspects of education. My hon. and gallant Friend the Member for Eye (Sir H. Harrison) mentioned this.
Second, there is the promotion of British books and periodicals through maintenance of libraries, book display centres, exhibitions and text book schemes, as well as advice to overseas authorities in establishing and maintaining their own libraries. This work is important in three respects, since books are a valuable British export, a means of access to British intellectual and scientific achievements and a tool of educational aid.
Third, there is the exchange of persons, through both inward and outward visits of varying duration.
Fourth, and partly overlapping with this, there is the dissemination of information about British development in science, technology and medicine and promotion of contacts between British workers in these fields and their colleagues abroad, and, in particular, aid to science teaching in Commonwealth countries through the secondment of scientifically qualified Council staff.
Fifth, there is the promotion of overseas tours by British theatre, ballet and opera companies, orchestras and soloists, and of displays of the visual arts.
In developing countries the first four of these categories form an important element in the programme of aid provided by Her Majesty's Government. All are important in developed countries as a means of promoting greater understanding between the British people and the peoples of these countries, and as a stimulus to private contacts and exchanges which also contribute to this understanding.
The Council is the main instrument at the Government's disposal for the cultivation of good relations with Commonwealth and foreign countries through these means. During the last 20 years the emphasis of its work has been placed on the Commonwealth and other developing countries. I am confident that it will have an equally important

1425
rôle to play when we enter the enlarged European Community.
The right hon. Member for Lanark (Mrs. Hart) was disturbed by a fear that there might be some slurring between the amounts funded by the O.D.A. and the F.C.O. now that the organisations are under the same head. I can assure her that the obligations will be kept strictly apart, and indeed are now being kept apart. By a re-assessment of the relative duties between the F.C.O. and the O.D.A., the proportion to be given to the O.D.A. has been slightly increased. This means some 65 per cent. for the Foreign and Commonwealth Office for activities which we might broadly call information and 35 per cent. for the O.D.A. in respect of activities which we broadly call aid.
It is clear from this recital of objects and methods that the implementation of policy must be in the hands of the British Council, but the Government must be able to ensure that the money is spent correctly and efficiently. I believe that foreign countries understand this relationship and do not think any the less of the British Council for it. Indeed, an example was given by the right hon. Member for Kettering (Sir G. de Freitas), whose successor in Ghana was flung out when the British Council was allowed to stay. Sudan was a similar case and Iraq at present falls into the same category.
Lord Fulton said in his evidence, set out on page 176 of the report, that foreign Governments have no difficulty in recognising the British Council as an independent body. The hon. Member for Darlington (Mr. Ted Fletcher) said that if the British Council were independent, then it should show its independence. On the whole I believe that this has happened. The fact that the British Council can do things which diplomats sometimes cannot do shows that the British Council personnel are regarded as quite different personnel by foreign Governments. Foreign Governments have a much closer relationship between their cultural representation and the Government. Nobody pretends that the French and German cultural activities are not part of the activities of their embassies.
The Sub-Committee pursued this line of thought in objecting to the fact that the
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Foreign Secretary should have to approve the appointment of the Director-General and that ambassadors abroad should be consulted about local representation on the British Council. The right hon. Member for Kettering and my hon. Friend the Member for Tonbridge (Mr. Hornby) have both had close experience in these matters and have found it quite satisfactory, not that the ambassador should have a veto, but that he should be consulted in a friendly way to see whether he will be able to work with the man who is proposed for the job. The small number of cases which fall into the category where it is considered that the appointment would not work is a measure of the light rein which has been used. Therefore I cannot agree with that criticism.
There is another difficulty. In about a quarter of the countries the British Council representative is a cultural attaché of the Embassy. This is not our wish or that of the British Council, but depends on the country concerned. There would be difficulties in respect of diplomatic immunity in some of the Eastern countries, and in other countries, so that this duty must come within the responsibility of the cultural attaché and therefore the head of mission must be asked. Broadly speaking, the responsibility of the Secretary of State and the Ambassador is that if the Commonwealth Government or foreign government wish to make representations about the British Council, whether justified or not, they can do so only to Her Majesty's Government or to the ambassador en poste. It is necessary that they should have some kind of say in how they discharge their responsibilities.
On the same line of thought, the Committee wanted the process of choosing the Director-General to be revised to ensure that the permanent staff had a chance of obtaining the post. I am afraid that I am unable to follow the Committee's anxieties on this matter. On the last occasion when the present Director-General was appointed a large selection of names was obtained. The list contained the names of members of the permanent staff and a number were on the short final list. At present, as the hon. Member for Thurrock (Mr. Delargy) said, the post is being advertised and anybody,

1427
including staff, is eligible. All will be considered on their merits.
In recommendation (vi) the Committee wishes to see the method of election to the Executive Committee reviewed on the grounded that the Executive Committee may tend to become a self-perpetuating body. It is difficult to see how this thought could usefully be implemented. One alternative would be to give to outside bodies the right to nominate to the Executive Committee, but this would limit the field from which people could be drawn; otherwise the members should be nominated by the Government, as is the Arts Council. However, that would hardly be compatible with the independent status which we wish to emphasise.
At present there are eight ex-officio members appointed; up to 22 others are selected, four retiring each year. I do not regard it as a self-perpetuating body since five new people have been appointed in the last two years. By an informal convention, four hon. Members are on the Executive Committee. I think it was my hon. Friend the Member for Tonbridge who explained that further thought is being given to how the process of choosing people could be made more elastic and better than it is at the moment in order to meet this fear on the part of the Committee.
Other recommendations which have been made include recommendation (i) to provide that all possible steps should be taken to ensure that the Council should not be forced for any financial reasons to withdraw existing representations from overseas countries. Recommndation (ii) asks that the Council should be afforded some guarantee that its budget should not fall below a certain level during the period reviewed by the White Paper on Public Expenditure. Recommendation (xvi) refers to the possibility of borrowing overseas to help with the Council's capital programme and suggested that this should be examined.
As my right hon. Friend has observed in a document, we are fully conscious of the unfortunate consequences which withdrawal can have for the Council and generally for British relations with the country from which its representation is withdrawn. The Council's work is essentially long term in nature. A representation once established takes time to make
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its effect felt, and withdrawal means abandonment of an investment in good will and co-operation which takes many years to rebuild.
We also recognise the need of the Council to rely for planning purposes and for continuity of its activities upon some assurance of budgetary stability from one year to another. This is the kind of problem which arises elsewhere in public expenditure and which has to be taken into consideration by the Government when deciding the allocation of budgetary resources. Unfortunately, these resources are not unlimited. In the past there have been times when overall reduction in public expenditure has had to be achieved, and no one could rule out a similar necessity in the future.
On such occasions sacrifices have to be made and it would be difficult to select the British Council for exemption. Nevertheless, we hope that the general level of the Council's work will be maintained during the coming years, although in changing circumstances some variation may need to be made to ensure the most effective use of resources.
The Sub-Committee in its conclusions stressed the need for establishment of correct geographical and functional priorities as an essential pre-condition for effective work by the Council, and hon. Members have drawn attention to the importance of this point. These priorities necessarily change as time goes on. New demands for action by the Council arise, such as will be presented in the context of our accession to the E.E.C.
This means that, however much the Council tries to establish a pattern of work for a reasonable period ahead—and planning for the long term is essential for the Council which has to be given time to produce results—there will be variable factors of which account must be taken. I can only assure the House that the closest contact will be maintained between the Foreign and Commonwealth Office and the Council to resolve all these factors and to ensure that, so far as possible, the Council is given that assurance of stability which it needs if it is to do its job effectively.
As for overseas borrowing, this suggestion was considered in the context of the idea of an Overseas Diplomatic

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Estates Board. The Government, however, decided not to pursue that idea, as my right hon. Friend the Minister of State told the House on 11th November. The capital needs of the Council are fully recognised. Hitherto, though figures have varied from year to year, the average amount provided for this purpose has been about £450,000, excluding provision for assistance for hostel building under the Overseas Student Welfare Expansion Programme. It is recognised that the Council is an organisation which has to maintain a satisfactory image of itself overseas as part of the representation there of this country. The Government will naturally give as sympathetic consideration as they can to the need to improve the accommodation abroad of the Council in future years.
I noted with particular interest the very great emphasis on the value of teaching English and of the English language generally by hon. Members on all sides of the House. As I have related, that is one of the objects of the British Council. It is nowadays becoming more and more important that this should be done.
Perhaps I can make some kind of answer to other observations that have been made. Some were rather particular and for the British Council to answer in detail, but because hon. Members have been good enough to raise these points I should like to speak on some of them.
Two points were mentioned several times. The first was the question of libraries—whether libraries in developing countries were worthwhile and what should be done to improve them generally. First of all, the rôle of libraries in the developed and the developing world is often very different. The library service in the developing world, where it is often minimal, differs fundamentally from what it should be in Europe. In Europe the movement towards providing information about books, particularly those on science and technology, the promotion of books, and information retrieval rather than direct book provision may make European libraries appear rather less busy than in developing countries, such as that in Lagos.
Two hon. Members mentioned the British library in Cologne. I understand that when they were there it was officially closed and what the American student was doing there I do not know.
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Perhaps he was left over from a previous visit. But it has 6,000 members and I understand that issues in 1970 exceeded 35,000, so it is not entirely useless. A number of hon. Members made observations about how drama should be used by the British Council. This work of the British Council is a matter for the British Council itself and if it wishes to put on "Hair" in Calcutta or "Oh! Calcutta!" somewhere else, no one can complain. The Council has an independent drama advisory committee from which it takes advice, as it does also from its overseas representatives. One play, Edward Bond's "Saved", which was much criticised by the Sub-Committee, was strangely enough, asked for by the theatre authorities in Czechoslovakia and Yugoslavia and it won the second prize at the Belgrade International Theatre Festival where eight other countries were represented. I do not know whether the Sub-Committee saw it.
Mr. Carter-Jones: It so happened that I was in Warsaw at the time they were coming through and the response in the British Embassy was, "It seemed very good but we do not know what it was all about".
Mr. Kershaw: Part of the fascination of going to an intellectual play is that one does not know what it is all about, which is perhaps why they asked for it. But they tend to go that way in Eastern Europe, anyway, do they not?
The question of buildings was mentioned by the right hon. Member for Kettering, the hon. Member for Darlington and my hon. Friend the Member for Ludlow (Mr. More). One realises that some buildings are not up to par, but it should be realised that this is a question of money. I can assure them that this matter is kept very much in mind. It is a matter of great satisfaction that some of our new buildings are extremely good.
The hon. Member for Berwick and East Lothian (Mr. Mackintosh), my hon. and gallant Friend the Member for Eye and my hon. Friend the Member for Belfast, North (Mr. Stratton Mills) all said most encouraging and agreeable words about the staff of the British Council, which I am sure the staff will read with great satisfaction. My hon. Friend the Member for Devonport (Dame Joan Vickers), who had to leave the Chamber

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on another duty in the service of the House, made a number of valuable points and one in particular about exchanges between students which is being actively studied at present. The hon. Member for Dearne Valley (Mr. Wainwright) thought unsold copies of magazines might be sent out rather more than is done at present. This has not been overlooked but, unlike the United States publishers, the frugal publishers of magazines in Britain print fewer so that fewer unsold copies are available.
I was impressed by the speed of the visit paid to Addis Ababa. I do not know how hon. Members knew whether they were in Addis Ababa or Timbuctoo, being there for so few hours.
My hon. Friend the Member for Ton-bridge and my hon. Friend the Member for Belfast, North, called attention to the difficulty in choosing between buying and renting. This is very important also in the Diplomatic Service. It requires money. The principle certainly is accepted, but money is the difficulty. It is very much in the minds of those responsible for finding premises both for the British Council and for others. The hon. Member for Darlington spoke of the mass media. He may be interested to know that a special study is being made by the O.D.A. at present and an expert is leaving for Addis Ababa next week to make an assessment of its value and what can be done. Of course, the wishes of the country have to be borne in mind. This will be a valuable development in the future.
My hon. Friend the Member for Croydon, South, who has also had to leave the House, was very interested in basic English. I am afraid that I know nothing about basic English, but no doubt the British Council will study his words with interest. My hon. and learned Friend the Member for Ludlow said that in the work of the Council the wishes of the receiving countries are very important. Perhaps the hon. Member for Portsmouth, West who made some most interesting and eloquent remarks on education, would wish to bear that in mind, because I agree with his right hon. Friend the Member for Lanark that it is not primarily or solely for the British Council to say where the weight of its effort in
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the educational sphere should be placed in any particular country, though naturally it will give advice on that.
Mr. Judd: Would the hon. Gentleman not agree that if the British Council, on behalf of the British taxpayer, is participating in an operation in partnership with the Government on the spot, it should have something to say about priorities for the expenditure made possible by its own contribution?
Mr. Kershaw: I entirely agree with that, but one should not give the impression that one is trying to be didactic about this. Obviously that ought to be considered when our money is to be spent.
My hon. Friend the Member for Portsmouth, South (Mr. Pink) was interested in the youth programme. I can tell him that this is being closely looked at at present and I hope that we shall be able to expand it before very long. My hon. Friend the Member for Belfast, North, asked about inspections of posts abroad. The Council is exploring means of doing this rather more than it has in the past and in particular co-opting persons from outside Government to help with it. In particular, the Council has given attention to the possibility of programme analysis and review methods and an expert in this field is to go to Europe this month to make a preliminary study of what can be done. I am sure that the British Council will note what he said about the National Youth Orchestra.
I know that the British Council will be much encouraged by this debate. Those who have spoken, whether members of the Committee or not, have all been experts; and the British Council will be able to feel that this House is behind it in the work that it does. If there has been any criticism it has been of the Government for not giving the British Council enough resources to improve its activities. But I am sure that its work will continue to be as excellent, as it has in the past, and with the support and enthusiasm of this House behind it, will improve in the future.
Question put and agreed to.
Resolved,
That this House takes note of the First Report from the Select Committee on Expenditure in Session 1970–71 and of the related Special Report.

PROBATION AND AFTER-CARE SERVICE
8.20 p.m.
Mr. Edward du Cann: I beg to move,
That this House takes note of the First Report from the Select Committee on Expenditure in Session 1971–72.
The subject of this report is of the greatest importance. We have a fine, devoted probation service which stands at the crossroads. I believe that this House should do everything possible to ensure its future.
8.21 p.m.
Mr. John Hall: This report is the first fruit of the work of the Expenditure Sub-Committee on Environmental and Home Affairs, of which I am privileged to be Chairman.
I do not know the traditions on an occasion such as this, but I think it would be right for me to pay tribute to those hon. Members who have served on the Committee. They have been assiduous in their attendance, searching in their inquiries and ready to accept any personal inconvenience, whether it was the incarceration for a short time in gaol or the rigours of journeying to foreign parts. I want, as Chairman, to put on record my own appreciation of the work of the Committee.
It is only fair, also, to thank all those who gave so much time and trouble to preparing the memoranda submitted to the Committee, and who travelled such long distances to give evidence to it. It may be that some of them wondered whether their journeys were necessary from time to time. But their evidence was of great value. I have been told that it is against tradition to refer on these occasions to the Committee Clerks. The House is indebted to the Clerks who service these Committees. We are very fortunate in our Clerks.
The scope and form of the inquiry is summarised in paragraphs 1 and 2 of the report. Perhaps I might quote from paragraph 1, because it gives the philosophy behind our investigation and the considerations that we have in mind. We say that our inquiry has been
"… concerned not only with examining existing and projected future expenditure, but
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with the wider question as to whether or not changes in the Service, even involving greater expenditure than now envisaged, might result both in economies in the total cost of administering the penal system and in social benefits through a reduction of recidivism."
This goes further than one would normally expect. We go on to point out that because of the changes that have taken place in Scotland since the passing of the Social Work (Scotland) Act, 1968, we limited our inquiry largely to England and Wales, although we took evidence from Scottish authorities and have taken note in the report of what was said to us.
Our investigation showed no evidence of waste of public funds. We set that out fully in paragraphs 3 and 55. In paragraph 3 we say:
"… we believe that the Service suffers from the provision of too little rather than too much money."
It might put matters into proper perspective if hon. Members turned to paragraph 55, where we set out what the Clerk of the Lancashire County Council told us:
"If you bear in mind that the probation service in the whole of England and Wales costs the equivalent of the social services' expenditure in my own county, it puts it in perspective."
Our main conclusions are summarised briefly in paragraph 58, where we say:
"The probation and after-care service plays a vital rôle in the treatment of the offender. There is strong evidence that probation could produce in terms of rehabilitation at least as good results as imprisonment for many lesser offenders who are now sent to prison. An alteration of the emphasis of penal treatment in favour of probation could thus leave imprisonment mainly for those offenders from whom society needs to be protected."
An interesting table follows that paragraph. From it will be seen that in terms of prisoners per 100,000 inhabitants as at 1st January, 1971, the Netherlands comes at the top of the league table with 22·4, whereas England and Wales is second from the bottom with 72·4. Even making an adjustment for those awaiting trial—in other words, those on remand—and deducting them from the figure that I have, England and Wales still has 62 per 100,000 inhabitants. West Germany comes down to 65·4. Hon. Members can draw what conclusions they wish from the figures, but an inescapable conclusion is that we have far more prisoners per 100,000 inhabitants than most other

1435
European countries. That is a matter which must give cause for concern.
If the House accepts the Committee's main conclusion, which is summarised in paragraph 58, it follows that the probation service must be strengthend. A recommendation of this sort may seem odd coming from an Expenditure Committee. It will mean more expenditure on the service. However, the Committee believes that additional expenditure on the service will yield greater social benefit at less overall cost.
The Committee has made 19 recommendations. We would have made more, but some were anticipated by the Criminal Justice Bill, otherwise we might have got up to two dozen, with any luck. The recommendations in the Criminal Justice Bill relating to non-custodial or semi-custodial penalties are a considerable step in the right direction. The Committee welcomes them and has taken them into consideration in making its own recommendations.
I do not intend to take the House through all the recommendations. I prefer to concentrate upon Nos. (xvi) to (xix). Dealing first with No. (xvi), which refers to the provision of after-care hostels, we recommend that the provision should be accelerated. If, as we believe, aftercare hostels play a valuable part in the rehabilitation of offenders, they should be provided in greater numbers. At present, after-care hostels are run by voluntary organisations with Home Office grants. There is no evidence at the moment of any intention appreciably to increase grants or the number of beds which would be necessary if we were to make the aftercare hostels play a proper part in dealing with offenders.
Recommendation (xvii) arises out of paragraphs 46 to 54 of the report and deals with alternatives to imprisonment. Clauses 14 to 19 of the Criminal Justice Bill are concerned with the same subject. If we are really to develop effective alternatives to prison sentences, again it is essential that the probation service is properly staffed. It is unlikely that the target that the Home Office has set for itself to have 4,700 officers by 1975 will do any more than relieve the pressure that the service is now suffering. If we want to give effect to the provisions of the Criminal Justice Bill and, I hope,
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to the recommendations embodied in the Committee's report, it is vital that we increase the staff of the service. I should not wish to suggest any figure, but we ought to take into account all the additional burdens placed on the probation service which in themselves justify an increase, and to make certain that the increase is realistic.
In my view and the view of the Committee, this re-examination of manpower requirements, which is our recommendation, is urgent. The Economist, in commenting on the report said:
"At present there are 3,600 probation officers and the Government hopes that by 1975 there will be 4,700. Few of them feel that this number will do more than keep up with existing requirements, and any high-minded talk of alternatives to imprisonment is worthless if there are not enough trained people to carry them out effectively."
I think the House will agree with that comment by the Economist.
Turning to recommendation xviii, which refers to the need for a publicity campaign, the probationary service has suffered for a long time by being the Cinderella of the penal services. We found in evidence that probation officers felt that they tended to he looked down on by the rest of society. Perhaps that is putting it too strongly, but they felt a sense of being regarded as not quite accepted in the usual social strata in which they mix and of there being something "not quite nice" about being a probation officer. This idea has to be removed.
If non-custodial treatment of offenders is to become extended, and if we are to get the public to co-operate—as we must—in the treatment which offenders have to receive, and if we are to get the public to understand what the probation service is doing and the service it is rendering to the community, the public must be told much more about the service. The public must be told how it works, the type of people who go into it and the sort of problems which they encounter, to make them realise that the service is a vital part of the penal services of the country and that it makes a vital contribution to the work to which the services are committed.
Recommendations (v) and (vi) refer to volunteers. At the moment we have about 2,100 volunteers who are almost

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exclusively engaged in after-care. If the publicity given to the service was of the right order and the image—to use a popular word—was right, that would do very much to encourage the development of a larger volunteer service. One appreciates that we have to be careful in the selection of volunteers. Many who wish to volunteer are not necessarily of the right type, and if they were used in the service they might do more harm than good. On the other hand, a large number of people know nothing about the service, have never thought that they could play a part in it, and what they have heard about it does not attract them very much, but among them there are a large number who would be willing to play a part in it if they knew what the service was about. Without publicity of the right kind I do not think we shall increase the service to the number which we need.
We live at a time when, most unfortunately, crime seems to be on the increase, at a time when the resources of our police, our prison service and all the ancillary organisations are not only stretched to the limit but in many cases are stretched almost beyond the limit. The reasons for this are many and complicated, and it is not my intention nor purpose to go into them this evening, but I am certain that we shall not control crime without public acceptance that on the whole the existing laws are fair and reasonable. That, after all, is the responsibility of this House. We must have a police force which can make true the saying, "Crime doesn't pay." Unfortunately that is no longer true; crime pays today because it so often is not found out. Without a penal system which helps to make and not to break a man, without public understanding of the proposals contained in the Criminal Justice Bill and our recommendations, without the co-operation of the public in upholding the law, we cannot improve this situation.
I do not think we shall ever stamp out crime without the whole-hearted cooperation of the public in maintaining the rule of law. To some extent law is enforced by a form of confidence trick. It can be enforced only if people are prepared to accept its enforcement. If a very large majority refused to accept the law, the largest police force in the
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world could not impose the law on them. We cannot have the rule of law without the co-operation of the public.
This report deals with only one part of the penal services—probation and aftercare. My Committee believes that this is a very important part, indeed a vital part, of the penal system. We believe that if our recommendations are implemented to the full the improvement in the probation service could reduce very considerably the existing pressure on prisons. We believe that it should make possible the effective operation of those parts of the Criminal Justice Bill which deal with the non-custodial penalties. Indeed, we are of the opinion that without an improvement in the prison service it will not be possible to implement the Bill. We also believe that this would reduce the total cost of the penal system. To take one figure which is quoted in the report, whereas it costs about £20 a week to keep a man in prison it costs about £2 to put him on probation. This was an attractive idea to us, but it was not the main reason for our recommendations.
A number of hon. Members on both sides wish to join in the debate. Therefore, I will leave out much of what I wished to say.
The Committee gave a lot of time and thought to producing a report which it hopes will be helpful. We believe that if the recommendations are accepted they will lead to improvements in the service, which can only be of value to society as a whole. I hope that the House will accept the report.
8.35 p.m.
Mr. George Cunningham: I shall speak briefly, because these occasions should not be hogged by those of us who had the privilege of serving on the Committee. I pay tribute to the hon. Member for Wycombe (Mr. John Hall) for his chairmanship of the Sub-Committee. His hand was firm but always gentle and was much appreciated not only by me, but by other members of the Sub-Committee.
I look forward to the Minister's reply not just for what he will say, but because he has shown a willingness to introduce small changes in ways which assist the probation service, and the willingness to

1439
accept suggestions, especially from the other side of the House, is not so universal a habit among Ministers that it should be passed unnoticed. The probation service should take advantage of the hon. and learned Gentleman's period in the office which he now holds to try to push ahead the service.
I should like to mention one point about the choice of subjects by sub-committees. The Sub-Committees of the Expenditure Committee will achieve most if they choose subjects which can be treated in a non-partisan manner. This is the place for partisan debate. Committees of the House will get snarled up if they try to repeat in Committee the gladiatorial conflicts of the House. A lot of useful nonpartisan work can be done in Committees.
There has been some concern about the passage in the report in which we refer to the possible integration of the service into the social welfare departments of local authorities on the pattern that has already been adopted in Scotland. I can speak only for myself. I am quite clear that in the foreseeable future there will be no justification for making that move. Desirable changes in the intensity of probation coverage will make that change even less possible and right than it is now. The experience in Scotland is certainly far too short for one to be able to draw conclusions from it. But many experienced people in Scotland feel that the different experience required of the probation officer from that of other social workers is sufficient to justify the probation service continuing as a separate service under the Home Department.
In that connection, I suggest that the time has come to look at the financing of the service as between the national Exchequer and local authorities. At the moment the cost is borne roughly 50–50, but amongst the activities in which local authorities are to some extent engaged this is one where they have virtually no policy voice. Therefore, in logic it ought to be one where they do not have to find the money.
I can see no objection to switching the whole cost to the national Exchequer. Those who wade through all the evidence which we took will find that the only reasons adduced in favour of the present arrangement were that it was rather handy
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to be able to get a few desks and inkwells and that kind of thing out of the local authorities. That does not seem a sufficiently weighty consideration for putting a service which is principally under the control of the Home Secretary half into the purse of local authorities.
In the treatment of the offender, it is time that we paid more attention to watching over him for an indeterminate period after his offence, rather than incarcerating him for a finite period, determined at the time of his offence, which may later turn out to be too short or too long. It would be better for society to take the line that if a man who has proved himself a danger to society is found guilty, society's first job is to watch him, perhaps for a very long period. Watching him in the community may be far more important, and it may be possible in those circumstances to change his attitudes far more easily than in the atmosphere of prison.
At the moment we draw a very clear line between the period of incarceration and the period afterwards. I should like to see that line softened, so that the intensity of probation for most offenders immediately after incarceration, or conviction if they do not go to prison, is very intense supervision. The period that they spend in prison should be more flexible than is now possible under the parole system.
But if we are to do something like that we must have the capacity for a degree of intensity of supervision which does not now exist and is not yet being thought of. We mention in the report the experiments in more intensive supervision which are now being carried on, but these are not very intensive. I should like to hear the case stated or rebutted for even more intensive forms of supervision than are currently about to be experimented with in some parts of the country.
The probation service has a great "thing" about the concept of consent. The idea started with the necessity for the probationer to accept supervision. It is time to question that, and I personally think that it is time to give it up. Of course it is better if the man accepts the supervision but even if he does not it could be desirable in some cases not to imprison him but to impose supervision, with perhaps a semi-custodial sentence at

1441
weekends, and not to require of him the sort of declaration of faith in the doctrine of supervision which has always been an item of faith in the probation service.
We should also try to improve our methods of imposing punishment by fines. The pocket should be the principal way of getting at the offender who cannot be dealt with only by means of probation. The great difficulty is getting the money from the man. It is time to have another look at the possibility of getting the money by means of the Inland Revenue. I know that the Inland Revenue holds up its hands in horror and says that it does not want to become involved in this dirty business, but its reasons have not really stood up. There may be good reasons, but they need to be stated again and rigorously examined.
If we could find ways of ensuring that we could get the fines without a great expenditure of time and effort by the courts and without great cost, this would be a major new implement in our penal system. We need income fines, not capital fines. We should impose not a £50 fine once and for all but rather a £5-a-month fine. We must also find some way, of course, of deterring the offender from not paying the £5 every month.
In the tradition of the British way of doing things, once a service becomes a Cinderella, it goes on in that way for ever, and that has happened to the probation service. Our national or civil servants are paid adequately, if not more than adequately. Probation officers are also public servants, though they are proud of not being civil servants. Their work is at least as valuable as that done by the generality of civil servants and they should be paid at least as well.
One need only read some of the advertisements in New Society to get the picture. Untrained or little trained social workers are able to pick up salaries several hundreds of pounds in advance of the experienced probation officer. This cannot be right. It is no good trying to apply some sort of norm to the probation service and saying, "You have always had a raw deal. You will nevertheless get no more than 7 per cent." We must break out of this attitude towards the probation service and acknowledge that its needs in terms of pay rewards must be fulfilled.
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Of necessity, it should continue to have a flat pyramid in its hierarchy, but as one cannot hope to promote the average probation officer at say, 40, one must find a way of giving him at that age a huge annual increment, giving him the equivalent of the sort of income he would have got had he gone in for another profession.
Reference has been made to the London allowance for probation officers. I hope that the Minister will comment on this and particularly on the anomalous situation which has been created in the Inner London area.
Because we are short of time for this debate and a number of hon. Members still wish to speak, I will add only that most of the probation officers I know want to remain in the service. They want to go on giving the community their much-needed expertise. However, some, and especially those with families, have been pushed out by the harsh demands of money. I hope that in the near future we shall remove that restraint on the probation service.
8.48 p.m.
Mr. Arthur Jones: I welcome the opportunity which my membership of the Sub-Committee gave to get to know much more about the probation service and the opportunities my colleagues and I had of questioning some of the representatives who came to see us and the visits we made to see members of the service acting in their jobs.
This experience left me with a firm impression of the devotion that there is for what is a difficult and demanding job, not only in terms of one's social attitude but in terms of the strain under which probation officers often work.
I was particularly impressed by our visit to the Cromwell Road training centre for entrants into the probation service. There were mainly young people, aged between 23 and 25, undergoing training. Most of them had been in other jobs and had decided to enter the service. I was aware of their keenness, and their understanding of the social purpose of the work and of the obligations placed on those who take up a career in the probation service.
When one bears in mind the increased demands that will be made on the probation service by the Criminal Justice Bill—the community service orders, the

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proposals for day training centres, the whole question of more intensive supervision and hostel facilities—there is clearly a necessity for a substantial expansion of the service. It is to that that I address my contribution to the debate.
At paragraph 703 of the report, in answer to a question in which I was trying to assess the justification for additional resources for the probationary service, somewhat to my surprise I received the answer:
"The criteria for deciding staff needs are recognised widely as highly unsatisfactory."
It seemed to me at that time that there should be a much more definitive method of the assessment of needs, first, and then ways and means of assessing work load in the probationary service and trying to distill, as it were, the essentials of the work involved. Later, the report states:
"We do require to achieve some method of deciding what constitutes a reasonable work load to enable the probation officer to do his work properly and this is information which is simply not available at the moment."
I could not help but feel some measure of criticism in that answer. I should have thought that there should be some method of determining the requirements of the probationary service in a defined way.
Members of the Committee were told that a group of the Principal Probation Officers Conference, the south-east group, were engaged on a study to this end. But the evidence went on:
"We would want to test them out further but we have in fact broken each operation down into a series of units which can be fitted into the working week of a probation officer."
So, clearly, the inquiry and method of assessment is under way. I hope that every encouragement will be given to making an assessment of what is involved in this work.
I am sure that I speak for all of those who served on the Sub-Committee in recognising the invaluable work of the probationary service and the essential contribution which those in the service have to make to community interests not only, as they say, in respect of their clients but for the community as a whole, and the guidance they offer to those placed in their care. It is very difficult to see the rehabilitation potential, but
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that is part of the skill which probation officers bring to their work.
Although my hon. Friend the Member for Wycombe (Mr. John Hall) said that it was rather sordid to think in terms of pounds, shillings and pence, that is the duty of an Expenditure Committee. However, I look for the effective use of human and financial resources in this service, and my advocacy is that we should be able to present the facts on a basis and in ways in which they would clearly speak for themselves and thereby justify increased resources for this excellent and highly deserving service.
8.55 p.m.
Mr. Gordon Oakes: The right hon. Member for Taunton (Mr. duCann) emphasised at the beginning of the debate the importance of the probation service, the only social service in the country under the control of the courts, dealing not only with the aftercare of offenders and the prevention of crime by those who have been before the courts but also with 30,000 matrimonial cases a year.
It is a pity that we have so little time to debate such an important subject. As many hon. Members on both sides wish to speak, I shall be very brief. I know that the hon. Member for Northants, South (Mr. Arthur Jones) will forgive me if I do not follow him in some of the interesting points he made.
The Expenditure Sub-Committee which examined the probation service has told the House that it could find no evidence of waste. The key paragraph in its report is paragraph 55, which recalls that the Clerk to the Lancashire County Council, my own county, pointed out that the entire expenditure for the country on the service is equivalent only to the expenditure of his county council on its social service programmes.
The paragraph continues:
"The projections of expenditure to 1974–75 do not seem to allow for a massive injection of manpower, or an extensive capital programme."
That is a very significant thing for an Expenditure Committee to say. I hope we can hear from the Under-Secretary what the Government propose to do about the future capital expenditure of the service, which is already over-burdened and which will have far more duties put upon it by the Criminal Justice Act. The

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proposals to keep more people out of prison will expand the probation service enormously.
We have about 3,300 probation officers. The House has been told that their status is not very high. I think it is extremely high among those who know them. The sneers and jibes come from people who do not understand the service, who think that probation is a soft option. They never look beyond their nose to see the difficulties the probation officer faces. Probation officers work extremely long, irregular hours, night and day, and at weekends. They have to deal with a section of the community with which most of us dislike dealing. They must have extreme patience, sometimes in the most outrageous conditions.
For that, we pay them a basic salary scale of £975 rising to £1,851. Even the top grade, the principal probation officer, reaches a maximum salary of only £4,200. When we see in the advertisements, not only in New Society but in every national newspaper, as local authorities expand their social services programme, the salaries being offered not to the heads of departments, not to the deputies but to people way down the list who have nothing like the responsibility of a principal probation officer, we can understand why there is some low morale in the service, referred to by one of the witnesses before the Committee.
We need a much greater expenditure on salary structure. We need to end the present system under which a probation officer is lucky if he has a room to himself where he can interview properly, on his own, one of the people whom it is his duty to help. So often the probation officer is reduced to using someone else's room, back cupboards and the ends of corridors to carry out his work. There needs to be much more capital expenditure on facilities.
The Committee's recommendation (iii) causes me some alarm. It proposes that the matrimonial duties of the probation service should go to another agency. What the Committee does not say is what that agency should be. I can well understand its reluctance to describe an agency, because there is none. There is no other effective agency for dealing with matrimonial problems and reconciliation at that level.
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The probation service deals with about 30,000 matrimonial cases a year, and very often the marriages are saved. These are not just cases referred to the probation officers by the courts. Often the parties themselves go to the probation office before there are court proceedings. Any lawyer who deals with matrimonial cases knows that once a marriage gets into court and evidence is given the prospect of a reconciliation is very much more difficult than if the kindly advice of a probation officer to both sides is received before all the hurtful things are said and flung across the court in public. That is the service which the probation officers provide in matrimonial proceedings. I do not know any other service which could take it over.
It may well be that in future we shall have family courts, but at present the probation service does this valuable work and I should like to see the work retained under its care. If there is pressure on the probation service, I do not think that its matrimonial work should be thrown out, because many probation officers feel, rightly, that their duty should not consist solely of dealing with criminal offenders. They feel that they have a wider rôle in the community, and they should be given it.
When the Committee says that the matrimonial proceedings functions of probation officers should be limited to those cases where an offence has taken place, does that mean always a criminal offence? Very often in matrimonial cases the most grievous criminal offence has been committed by a man on his wife. The most severe brutality has been used; extensive injuries have been caused necessitating hospital treatment. Were it not his wife but some other member of the community, it is likely that such a man would be put on probation or suffer a severe fine or go to prison. But because it is his wife who is the injured party his action is not regarded or treated as a criminal offence because of the great difficulty which the prosecution always has in calling a man's wife to give evidence against him if she is reluctant to do so.
We must consider that often offences in a criminal sense are taking place in cases which a probation officer, by his advice and help, can assist in sorting out before the matter gets into court.

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We have the problem of the rising divorce rate, of large numbers of people having difficulties in their matrimonial relations. The probation service does a great deal to help, and I would like it to retain the service it is providing now.
I hope that the Under-Secretary of State will say something about the future organisation of the probation service, bearing in mind Clause 10 of the Local Government Bill, which we are considering seemingly interminably in Standing Committee. There is a great deal of doubt in the probation service, in the magistrates' courts and in the local authorities as to just what the Government intend to do with the magistrates' courts system itself—whether they intend to integrate it into a national courts structure, as the magistrates' clerks want, or whether, at least temporarily, they intend to reorganise it in the new local government structure. The probation service needs to know, and I hope the hon. and learned Gentleman will give guidance for the sake of its future.
I concluded by paying my tribute as a practising solicitor to the tremendous work that every probation officer does, not only for those whom it is his duty to treat but for those who need help at large.
9.5 p.m.
Dame Irene Ward: I am glad to have had the opportunity to serve on this Committee and to thank the Clerk to the Newcastle-upon-Tyne Magistrates, on whose Bench I have served for many years. I have consequently had wide contact with the probation service. The Chief Constable of Northumberland also gave evidence to the Committee. We in the North of England sometimes feel that little attention is paid to our views and I am glad to have this opportunity of raising certain matters.
I hope the report will stimulate the Secretary of State to go forward, argue with the Treasury and ensure that the important recommendations within it are put into operation within a reasonable time. There has been a great extension of crime in Newcastle and we know the value of the probation service and of its advice to magistrates. The probation service has been referred to as the
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Cinderella service, and it was a little unfortunate that the Home Office had to wait for a committee to draw attention to the services which probation officers render.
I well remember that when it was decided to extend the social services and link them with local authority services, many of the best probation officers came forward, attracted by the higher salaries, and took up posts in the new service. Because of their training and reputation the local authority services were only too glad to take them. We wish them the best of luck, but I have to point out that that took away many valuable officers from the service. I trust the Minister realises how unfortunate it was for the service to be left like this for so long.
We recommend the payment of realistic salaries. It makes me sad when I consider the services which probation officers have rendered in looking after the community as a whole and realise that they have had to wait until local authorities established this new service before the Home Office was sufficiently interested to pay them proper salaries. I understand that they have had a recent increase but it has been difficult to find out whether that has been paid. I do not know whether the new salaries are in line with those in the social service set-up. There are so many dedicated men and women in the service that they think more about helping and advising people than they do about their own position. It is therefore up to this House to see that those who carry out such valuable and dedicated work are given realistic salaries. We should not have to wait for the creation of a new service to draw attention to the poor salaries paid to these people. If the evidence given by the Clerk to the Newcastle Magistrates is read it will be seen that he agreed with me that it was this movement in salaries in the social services which made the Home Office get its skates on. I hope that the probation service will not remain the Cinderella service. I like everybody to be realistically paid.
There are a great many other recommendations which have been made and which I think are of vast importance, and I hope, and I am sure our Committee hopes, that we shall be told that the very

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wide-ranging recommendations which we have made will be accepted with great speed and put into operation by the Home Office. One of the tragedies of modern life is that we need dedicated service from this group of people, and yet it is very difficult to get their position established in a Government Department. The people whom the Department ought to be looking after always seem to go to the bottom of the list. I very much resent this, and so I am looking forward to hearing tonight that our recommendations will be accepted and acted upon. Then those who have served their country, the probation service and the Home Office so well will feel that at least they have the support of the House of Commons and of the Home Office.
That is all I want to say. I am not commenting on any other of the recommendations, but we must put on record that we demand action, and I hope we shall hear that we shall get it. We hope that these recommendations will be put into operation straightaway and that our probation service will have the same status and the same consideration from the Home Office as other departments have been able to get for those equally serving it very well indeed.
9.11 p.m.
Mr. William Wilson: I am glad to follow the hon. Lady the Member for Tynemouth (Dame Irene Ward) because I have always hoped, as a lawyer that one day I should be able to appear before her in her magisterial capacity.
Those of us who know the work of the probation service know the solid achievement of the probation officers in the service which they give to the general community of this country every day of the year. The police court commissioners from whom the probation service sprang would be proud indeed today to see the good service which the probation officers provide. It is long ago since I was at a divorce case in which the parties were Godley v. Godley and the probation officer intervened, and for the loss of my costs the parties were reconciled. Ever since that day I have had a high regard for them, because the Almighty himself could separate the godly only from the ungodly but the probation officer brought together the Godley and the Godley.
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I should like to pay tribute to the Sub-Committee's report. Its recommendations I substantially support, and the good work which has gone into it is apparent to everyone. There are two or three points on which I should like to comment.
First is the question of the probation officers collecting fines. This has been a practice I have never supported because always when a probation officer is asked to collect a fine it is because the court has come to the conclusion that it will be a bit difficult to get the money. That is the first point.
The next point is that it often happens that a defendant, after he has been fined, feels that he has been over-fined or even unjustly fined, and when the probation officer becomes the collecting officer, and talks about the payment of the money, then, in the eyes of that individual that probation officer has become part of the court machine. It is not the job of a probation officer to collect fines, and I hope that we shall find a way to avoid this.
It has been suggested that the matrimonial work done by probation officers should be withdrawn from them. The breadth of human experience and knowledge within the probation service is considerable and outstanding. For that knowledge to be lost by trying to create another matrimonial service would be wrong indeed. The work done by the probation service is so intermingled that it would be difficult to separate the matrimonial reconciliation work. There may be something to be said for differentiating between those who come to the probation matrimonial service as a result of criminal activities and those who do not. Some people are inclined to look upon the matrimonial service of the probation service as the poor person's marriage guidance council and think that a person who goes to the probation officer to be advised about marriage is not quite up to the grade. Experience shows that this is not so, and it would be wrong to move the marriage reconciliation service away from the probation service.
The report refers to a concerted national campaign to improve the image of the service. I hope that does not mean that a great deal of money will be spent upon advertising. To do that would not achieve very much. In

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Coventry within a stone's throw of where the probation officers practise there is a cathedral, a college of technology, an art gallery and museum and a block of council offices, all resplendently new. The probation service operates from two wartime wooden structures. The poorest building in the centre of Coventry is the building which houses the probation service. Instead of spending money on advertising in The Times and the glossy magazines the glories of the probation service, we should spend it on accommodation.
I conclude as I started with an expression of gratitude to the probation service. Those of us who are in the legal profession, whether on the judiciary bench or in the well of the court, know what good, solid work is done by probation officers. It is perhaps symptomatic that those who do the best work are the most poorly paid, and the probation service is a clear example of that.
9.20 p.m.
Mr. James Allason: It was a great privilege to serve on the Sub-Committee which examined the valuable and dedicated work on the probation service. What came out of our study was how underpaid the probation officer is when compared with the local authority social worker. It is a little difficult to compare the jobs, but in general the local authority social worker tends to have to refer to a higher officer for any decision, whereas the probation officer is out there on his own dealing with pretty tough customers and has to take his own decisions.
All four level of probation officer, from probation officer to senior probation officer, have to deal with heavy case loads on their own. There is not a bureaucratic chain of command, but as it were a flattened pyramid with little promotion available. Therefore, it is essential that the salary structure should taken account of this fact and that the probation officer should not be compared with a local authority social worker of the lowest grade. The salary should be substantially higher than that when one bears in mind the promotion prospects.
The probation officer faces ever-increasing duties, in particular the need to make more and more social inquiry reports to the court. These are of the
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greatest importance to the court. We discovered that it took about four hours to prepare such a report, and a document put in by the Hertfordshire authority put the preparation time at six hours. It is interesting that in Holland it takes an average of 20 hours to prepare a social inquiry report. These are tremendously important documents for the court.
There is undoubtedly a need for a lower case load. Surely probation officers should be dealing with probationers rather than undertaking all sorts of other duties. Hertfordshire estimates that some 1½ hours a month is spend by a probation officer with each probationer. This is much too short a period, particularly in difficult cases which need considerable attention.
It has been said that it costs £2 a week to keep a man on probation as against £23 a week to keep a man in prison. We in Hertfordshire would be very happy indeed to forgo a prison which the Home Office is attempting to wish on us. We feel that far better results could be achieved by spending much less money on intensive probation. There is certainly a need for intensive probation to be tried out. Why not try it out in Hertfordshire?
9.24 p.m.
Mr. R. C. Mitchell: May I in a short contribution reinforce two arguments. The first is that we should press forward with the argument that the probation officer is one of the underpaid workers in social service. I say this in spite of the fact officers have received a recent award. We can see on page 75 of the Sub-Committee's report details of comparative salaries in the social services. A principal probation officer receives £2,829 per year, which is a much lower salary than is paid to several grades in social work departments. This figure was before the recent pay award, and I should like to know whether it is possible to say how much more a principal probation officer will receive. I am referring to paragraph 402, on page 75. I do not know whether it is possible to be told how much he gets under the new award but I suspect that even with the new award he will still be a very long way down, perhaps equivalent to fifth or sixth in the social services department.
Secondly, I am very glad to see a trend in some parts of the country for

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principal probation officers to apply for and to be appointed as directors of social services. I do not know in how many cases that has happened. I am glad to say that it has certainly happened in Southampton and more recently in the constituencies of my hon. Friends the Members for Islington. It is a very good thing that principal probation officers can under certain circumstances be considered for and be appointed as directors of social services. This seems to be a very good and progressive move.
I would emphasise that I still believe that those in the probation service are underpaid, despite the last pay award, and I shall be interested to hear what the Minister says about that. I hope that from the review that is to take place we shall see something substantially better.
9.27 p.m.
Mr. Norman Fowler: Speaking as a non-member of the Committee, I feel that this is an extremely valuable report and anything I say should be taken in the context of the dedication of those in the probation service to their job.
The feature which comes out in this report is how little we know about the effect of the probation service. We know what it costs and its strength, but we know all too little about its success. This seems to me to illustrate one of the wider points about the situation on crime in this country—that our approach to it is decidedly amateurish when we decide which methods we are to use to tackle the problem. We blunder round seeking solutions, and yet even if we found solutions it is doubtful whether we would recognise them.
We deplore the great increase in crime, and it is right that we should do so, because it has been extremely serious. But in deciding which measures we are to use to tackle that increase, our approach is extremely amateurish and is not in any sense businesslike. My hon. Friend the Member for Wycombe (Mr. John Hall) almost apologised for introducing business techniques into this subject, but crime is an area in which such techniques could most usefully be introduced; for if we spend £10 million on prisons, the police or the probation service, we do not know what effect that will have. It is not a matter of stick-
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ing in a pin, although I suspect that in this field we stick in quite a number of pins. We simply respond to whatever the situation may be.
The probation service and the increase in its strength is a prime example. That increase has come because there has been an astronomical increase in the prison population. It has gone up to 40,000–14,000 of them living two or three to a cell. We recognise that we cannot build enough prisons for them all and we accept, therefore, that we can deal with the situation only by dealing with more people outside prison. That is not the same as saying that we believe that probation or non-custodial sentences are the most effective way of dealing with offenders. That is an area of research in which we have done too little work and to which the Government could very well turn their mind.
At the moment what we say about a new scheme—and my hon. Friend may confirm this—is that when it is introduced it would do no more harm than the scheme that it is replacing or outdating. There is the example of Holland, to which my hon. Friend referred, which has a low proportion of people in prison. But there again the Dutch are only working on a guess. They say, "As long as prison terms do not seem to have great effect, let us try shorter ones". This is the kind of amateur approach which the whole of Europe is taking to this problem. The Government have a great opportunity to lay the foundation for transforming this picture. Basically, we want more information on which to judge our policy decisions. We want to know the effect that more resources will have.
At present, we spend enormous sums on the detection and prevention of crime, and proportionately very little on the treatment of offenders. We want to know whether the proportions are right and what effect any change in them will have. Basically, we want a more professional approach than we have seen in the past half-century.
9.30 p.m.
Mrs. Shirley Williams: This has been a very good debate, though a rather short one, from which has emerged a strong consensus on both sides of the House about the future and the strengthening of the probation service. I

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compliment the chairman of the Sub-Committee and those hon. Members who served on it on what is an excellent report, which indicates clearly the importance of the service, the need for an expansion in its activities and, not least, the need for better conditions and improved salaries if we are to get that expansion.
The report comes at a time when we must admit that there is a considerable crisis of confidence in the probation service. It is not a crisis of confidence that I attribute to any Government. It has grown up in the last two years. As my hon. Friend the Member for Widnes (Mr. Oakes) said, anyone who knows the work of the probation service admires and respects probation officers. It is by definition a serious business when probation officers are not sure how much they respect themselves.
The crisis of confidence has flown essentially from three factors. The first was the passing of the Local Authority Social Services Act at a time when my right hon. and hon. Friends were in office, and the fact that the future of the probation service was no longer certain. To this day, the service does not know for sure whether it will remain under the Home Office or whether at some time, like the probation service in Scotland, it will come under the aegis of the social service departments.
As Mr. Hugh Klare are put it in his evidence to the Committee, the probation service is a social service for the courts. In a sense, it is a very different service from the others. I shall say later why I believe, in common with my hon. Friend the Member for Islington, South-West (Mr. George Cunningham), that the future of the service is best within the scope of the Home Office.
The second reason for this crisis of confidence was the very long-drawn-out salary negotiations last year. It must be said about probation officers that always they seem to have the extremely bad luck of coinciding with some sort of incomes policy, whether manifest or not, and normally come relatively badly out of their negotiations. That has been true, alas, under both Governments.
It is ludicrous that men and women undertaking work of this importance,
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which I am glad that the Committee recognised so strongly, should be paid on the sort of scales on which they are paid. The top scale for the basic grade officer, who does the crucial daily work with the offender, is what would be recognised in comparative professions involving comparative responsibilities as not being worthwhile. Yet, we expect these people to go on out of dedication when it is surely for the community to recognise their true worth.
The third reason for the crisis of confidence is the comparative salaries now paid in the directly competitive sections of the social service departments. As several hon. Members have pointed out, the comparison is so unfavourable to the probation service, some of it applying to people not as highly qualified, that it is surely past time that we made the situations of the two professions at least parallel.
The second part of what I want to say—and in deference to the House I will keep my remarks short—is that this situation of a crisis of confidence has grown up side by side with a growing burden of responsibilities placed on the probation service. One of the facts which the Committee brought out has been the astounding multiplication in demands for court reports, inquiries into family circumstances and the like. I thought one of the most arresting statistics in the Committee's report, and one which was pointed to by the hon. Member for Hemel Hempstead (Mr. Allason), was that nearly a quarter of a million reports are provided each year for the courts and are undertaken in an astonishingly conscientious way. There will, of course, be more demands for more reports as magistrates recognise their importance in sentencing policy and in deciding the correct punishment for an offender.
Side by side with this we have the growth of the parole system, which I think all hon. Members would like to see further expanded, and moving on to more difficult cases where there will be greater need for careful consideration, as the hon. Member for Nottingham, South (Mr. Fowler) knows, because he has knowledge of these matters. This is one of the most successful ways of dealing with recidivism. It is too early to judge, but so far the failure rate of about 5 per cent. is very encouraging when compared with

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the failure rate of other forms of dealing with the offender.
As my hon. Friend the Member for Islington, South-West pointed out, the growing burden of after-care placed on probation officers the need to extend this further. Then we have the Criminal Justice Bill which is passing through the House. Proposals in that Bill, such as a suspended sentence with supervision, community service orders and proposals for intensive supervision made by this Committee, a proposal for more hospital orders and the possibility of deferred sentence with a supervision order will all lay very heavy additional burdens on the overworked probation service. We know that the crisis which faces the prison service is now so serious that we can no longer neglect it. Although I hope it will not happen, I think the Minister recognises that we have reached a situation in respect of overcrowding which cannot be sustained for more than a few months without having serious effects on the rehabilitation side of the service. So it is essential to get alternatives to imprisonment. Yet we know of no way of doing this except by increasing the load on the probation service.
In an interesting report made for a Council of Europe Committee on crime problems, Mr. Sparks said:
"Institutional treatment is not more effective (in terms of preventing recidivism) than treatment in the community".
But of course what this means in the light of case loads, which again the Committee had in mind, would be totally impracticable. I believe that we have reached a stage at which the 4,700 target by 1975, as the Chairman of the Committee pointed out, may be inadequate for expansion. I do not want to risk suggesting a figure, any more than did the hon. Member for Wycombe (Mr. John Hall), but I should think that about 6,000 or 7,000 by 1975 would be more in line with the burdens which Parliament will be putting on the service.
The case load on probation officers is exaggerated in the case of prison welfare officers. The case load there is so great that it is literally impossible in some cases for a prison welfare officer to make even one visit to a man about to be released from prison. Yet the prison welfare officer can probably do as much as any-
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one to avoid that man's reconviction within a short period if he finds it difficult to readjust to the outside world. I therefore associate this plea for expansion with one for expansion of a linked prison welfare service.
Finally I turn to the future of the service and I strongly support what was said by my hon. Friend the Member for Coventry, South (Mr. William Wilson) about lightening the load on the probation service notably by lifting the responsibility for collecting fines in certain cases. As my right hon. Friend rightly said, this can destroy the relationship between the officer and his client and the usefulness of the work of the probation officer in his attempt to assist the offender.
The Minister will recognise that the Central Council for Training has suggested that a two-year course should be the minimum. Clearly this is an excellent long-term aim. But if the expansion is as important as I believe it to be and as the Committee has indicated it is, we must give some thought to the point at which we abandon the one-year emergency course, which has in many ways proved very successful as a form of training. I should think the general criterion should be: better a man or woman trained for one year than a man or woman not trained at all.
Turning to the future, I note that the National Association of Probation Officers, in its evidence to the Committee, said:
"Official thinking is not yet on a bold enough scale."
I think that is a fair criticism of the Home Office under both Administrations.
It seems clear that the probation service needs to be greatly expanded. If it is expanded sufficiently to give a proper scale of promotion and to link with the prison welfare service—and with other services as well—it seems that it should remain with the Home Office, for reasons which have been adduced in the debate. My hon. Friend the Member for Islington, South-West suggested that the whole cost might be borne by the national Exchequer. I do not disagree with that suggestion. But it is crucial that close links should be kept with local authorities. One way in which this might be done, which I commend to the

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Minister, is the suggestion that a probation officer representative might sit as an observer on the social service committee so that this crucial link is kept in the same way as, for example, teacher representatives sit on education committees.
I hope that the career structure, because the size of the service operates against promotion possibilities, will be such that senior hostel staff, with whom one hopes there will be more transfer in future, and the prison welfare officer can both be brought within its scope and that there will be movement among the sectors so that probation officers have institutional and outside experience.
I support the views of the Committee in suggesting that there should be a review of the grant for hostels, both aftercare and, for that matter, prison hostels under an order. The payment of £150 for a place and £250 in special cases is totally inadequate. Just as the Committee has indicated an advantage in extending probation against the cost of prison, it is also fair to point out that the cost of a hostel place is still considerably below that of the prison service.
I should like to emphasise—I need not labour the point, because it has been made by many hon. Members—the crucial need for better salaries and the recognition, above all, that the basic grade officer should be treated as the career grade. It would be a tragedy for the probation service if the only way in which a man could get a good salary was by changing to desk work. This is often destructive of the man who is doing the basic, crucial job with the offender. I hope that the Government, at the next review of salaries, in the light of the Butterworth Report, will consider the position particularly of the basic grade officer.
I hope that it will be possible to make the boundaries of local government and those of probation areas coterminous. My hon. Friend the Member for Widnes pointed out the problems which will arise from the reorganisation of magistrates' courts. It is clearly better if these two administrative areas can be kept closely in line.
I fully share all the views of the Committee about putting a new weight on
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alternatives to prison as a way of dealing with offenders. What seems to become clear time and again is that the way we treat offenders—I think that the hon. Member for Nottingham, South was rather hinting at this—appears to make remarkably little difference to the rate of recidivism. If so, if we can avoid the dangers of institutionalisation that follow so often from putting the inadequates, the minor offenders, the alcoholics, the drug addicts in prison, I think that we shall be praised by the prison service and may in time come a little closer to discovering a way to deal with crime.
9.45 p.m.
The Under-Secretary of State for the Home Department (Mr. Mark Carlisle): Like the hon. Member for Hitchin (Mrs. Shirley Williams), I should like to congratulate my right hon. Friend the Member for Taunton (Mr. du Cann), as Chairman of the Expenditure Committee, and particularly my hon. Friend the Member for Wycombe (Mr. John Hall), as Chairman of the Sub-Committee, as well as those hon. Members who served on the Sub-Committee and have produced what I honestly believe to be a most useful and helpful report on the probation service. I also echo what the hon. Lady said about the tone of the speeches today. I only regret, as she did, that we have not been able to have more time for this important debate.
It was appropriate that the Committee should have a searching inquiry into the probation service at a time when the service is at a new phrase of its development. It was important that the basic structure of the service and its general state of health should be assessed at this moment.
Although I accept that there are matters of concern with the probation service—no one in my position could be unaware of the problems which concern the service: its pay and manpower structure and its general future—it is putting it somewhat high to describe it as a crisis of confidence. Having talked to a fair number of probation officers in different parts of the country over recent months, and accepting that there are areas of concern, I yet believe that the morale of the service on the whole is happily high and that it welcomes the various new challenges which it is likely to face

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over the coming years in regard to alternatives to imprisonment.
Almost every hon. Member has mentioned pay. I do not want to minimise the views of the probation service, but the last award gave a senior man in the basic grade an increase of 16 per cent. My right hon. Friend the Home Secretary not only agreed the award but also agreed to set up the Committee of Inquiry which is now taking place under Professor Butterworth, the whole purpose of which is to evaluate the correct relationship between the pay of probation officers and that of other social workers. One of the matters which has concerned the service is the effect of the setting up of the local authority social service departments on their pay structure as an independent service.
This report was published as recently as the middle of last December, so hon. Members will understand that my right hon. Friend is not yet ready to make the written reply which it is customary for the Minister concerned to furnish. Therefore, even in the time available I obviously cannot give detailed replies to all the specific recommendations or all the points made in this debate. But what has been said tonight I have heard with interest and I can assure the House that it will be taken into account in the drafting of the reply which will be sent to my right lion. Friend, which is in process of preparation now.
One can draw certain general deductions from the report. The first is the feeling that there is nothing fundamentally wrong with the basic structure or format of the service. The Home Office would like to see the probation service continue as an independent service. Obviously, we cannot make any definite statement until the future organisation of the magistrates' courts is decided. This is a matter which must be decided in relation to the Local Government Bill. But we have made it clear, from the Answers given at Question Time, that the Home Office wants to see an independent future for the probation service.
Clearly coming out of this whole report is the fact that the existence of a strong probation service is central to any attempt to provide further non-custodial methods of penalty and that an expansion of the service from its present size is essential
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if those ends are to be achieved. This is clearly borne out in paragraph 3, to which my hon. Friend the Member for Wycombe referred, which speaks of the money that is required to improve and expand the service in a way which it is thought will yield a greater social benefit at a lower overall national cost.
In recent years the concept of the future of the probation service has changed a good deal. It is looked upon today by everyone much more as a developing service which will be responsible in future for the provision of a wide variety of treatments of delinquents in the community. This was started by the Labour Government, with the concept of parole, which has been a success, and since then we have seen the emphasis by criminal law reformers of all political shades on the greater use of non-custodial penalties.
As my hon. Fri end the Member for Nottingham, South (Mr. Fowler) said, all concerned have been faced with a real problem in terms of prison overcrowding, and we have had the report of the advisory committee recommending alternatives to imprisonment.
It is against this background that the Government have had to act. The philosophy which has guided our decisions in the last 18 months has been the need to tackle prison overcrowding in two ways; first, by building new prisons—I assure my hon. Friend the Member for Hemel Hempstead (Mr. Allason) that I am not pre-empting the question of Bovington in connection with new prisons—and second, as my hon. Friend the Member for Wycombe pointed out, by appreciating the need to divide the prison population so that prison is there for the violent and vicious for whom public opinion demands strong punishment, but recognising that within the prison population is a substantial number of people who are often petty inadequate offenders for whom it is proper for us to see if we have more constructive ways—more constructive than imprisonment—of dealing with them.
With that approach in mind, I will explain briefly—briefly because time is not available in this debate for a full explanation—some of the actions which the Government have taken. We have taken a series of initiatives under two broad headings. The first is the setting

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up of new facilities for non-custodial forms of treatment on an experimental basis. The second is the expansion of the resources of the probation service to enable it to meet the new demands that are being put on it.
As for the new alternative forms of punishment or penalty, I stress their experimental nature. Many of them are new. We are bringing them in on an experimental basis for two reasons. The first is to make sure that they are justified, and so we are trying them out on a limited scale. The second is to ensure that they do not overwhelm the probation service manpower resources by bringing in new tasks for the service before it is able to meet them.
Within the terms of the Criminal Justice Bill, which is now in Committee upstairs, we have introduced legislation for a combination of supervision with a suspended sentence. We have brought in a scheme for community service, and I was able to announce in Committee yesterday five probation areas in this scheme for community service by offenders. It is in these five areas that we hope, as soon as the Bill becomes law, to set up this experimental service.
The Criminal Justice Bill provides power for an offender to be required, as a condition of a probation order, to attend for a period a day training centre. and I am hoping to announce next week in Committee on the Criminal Justice Bill four areas in which we are hoping to set up day training probation centres.
Next, we have launched a programme of new probation hostels for adult offenders. This programme is aimed to provide 1,650 additional places in hostels for adults by 1976. This programme will not be easy to achieve and the rate at which it can be implemented is likely to be governed more by difficulties of finding suitable sites and obtaining the necessary clearances than by financial considerations.
We are also taking power to enable probation committees in future, as well as voluntary bodies, to provide aftercare hostels, and the Government are reviewing the question of the weekly grant for places at those hostels.
Finally, we have not overlooked the fact that it is in many ways in the
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traditional probation order that we still may have our greatest hope of seeing a greater number of people being dealt with in the community. We are considering schemes of different degrees of supervision in different areas of the country and monitoring their effectiveness as a means of probation.
I turn to what I said was the other aspect of this matter and the other approach which the Government have taken; that is, of expanding the resources of the service to meet these new tasks. Very shortly after coming into office we announced an increase in the target figure of the probation service from 3,500 to 4,700 by the end of 1975. I take full note of what is said in the Committee's report and what has been said in the House today on questioning whether that is an adequate target. We made it clear that it is a target for a rolling forward programme and it is reviewable annually, for a target for 1976 and then annually for another target.
We shall take into account what has been said during the debate. One of the serious problems is finding the training places to make sure that we do not expand the service at such a speed that it suffers a reduction in the standard of trained officers. During the last year we have opened an additional 100 training places, so that this year 450 trained officers will be coming into the service, as against 350 last year and under 300 the year before. We are planning for greater expansion, towards 550, we hope—although whether we can reach that figure I cannot say at present—coming into the service next year, from those who will be starting 12 months' training this year.
It is important that we expand the service as fast as possible commensurate with maintaining the standards necessary and providing adequate training places. We have attempted to do that. In the figure of 4,700 we allowed for an additional number of probation officers on the basis that more people would be dealt with in non-custodial ways.
Whereas the hon. Lady the Member for Hitchin (Mrs. Shirley Williams) says that the figure ought to be, perhaps, 6,000 or 7,000, the great difficulty is finding the training places to provide that figure at this stage. We must make sure that our expansion plans are realistic.

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The present situation is that the number of officers rose by 256 last year. It now stands at 3,608. I am absolutely confident, as is my right hon. Friend the Home Secretary, that we are determined to recognise the need for a strong and expanding probation service as being central to what we are trying to do in our penal philosophy and approach to crime in this country.
It is an important service. I agree with the hon. Member for Widnes (Mr. Oakes) that those who know probation officers recognise their worth and have great respect for them. I hope that as a result of this report what my hon. Friend the Member for Wycombe said about recognition of the place and the importance of the probation service will be widely appreciated and understood throughout the country. Certainly the Government have no doubt as to the need for an expanding service. I welcome the report. I shall do my best to make sure that there are written individual answers to the various individual recommendations.
Question put and agreed to.
Resolved,
That this House takes note of the First Report from the Select Committee on Expenditure in Session 1971–72.

PROBATION AND AFTER-CARE SERVICE

  BUSINESS OF THE HOUSE
  Ordered,
  That the Local Employment Bill [Lords] and the Summer Time Bill [Lords] may be proceeded with at this clay's Sitting, though opposed, until any hour.—[Mr. Rossi.]

ORDERS OF THE DAY

  LOCAL EMPLOYMENT BILL [Lords]
  Considered in Committee; reported without Amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without Amendment.

  SUMMER TIME BILL [Lords]
  Considered in Committee; reported without Amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without Amendment.

  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Rossi.]

  GLAXO (PROPOSED MERGER)
  10.3 p.m.
  Mr. Edward Milne: As with the subject matter of past Adjournment debates of mine, tonight's deals with a matter which, although it may have wide national and international repercussions, interests me because of its effect on my constituents and my constituency.
  The village of Cambois until four years ago had a proud mining history. Then the pit was closed and, in common with many others in South-East Northumberland, the village found that unemployment was its lot. But as a result of the efforts of the local authority, new jobs were found. Glaxo Laboratories Ltd. moved to Cambois and was officially opened last October. The mining village had moved into the pharmaceutical field, into the area of science-based industries. The adaptability of the workpeople in the area was recognised. The factory provided some 230 jobs, and there were

  1467
  prospects of a greater number of jobs—at least 2,000. Those prospects were shared with about 46 other plants throughout the country. The era of redundancy and closures, with all the attendant uncertainties, was over for the village.
  On 21st December, the following telegram was sent to the Secretary of State for Employment and the Secretary of State for Trade and Industry, with a copy to me. It was sent by Mr. Brian Hodds, manager of the Cambois factory. It stated more clearly than any words of mine can precisely what the situation is. It said:
  "The Works Committee, an elected body representing the 230 employees at the Cambois factory of Glaxo Laboratories Ltd., met yesterday to discuss the proposed takeover of Glaxo by Beecham. The following resolution was carried:
  'The Cambois Committee representing all grades of staff in the factory is unanimous in supporting the Board of Glaxo Group in opposing the Beecham takeover proposals. We are the newest factory in Glaxo and have been in operation for only 8 months but we are in full production and have already exceeded our targets. The majority of the staff come from the North-East of England where there are major unemployment problems. We appreciate the action of the Directors of Glaxo in investing in this area and we are confident that Cambois will play its part in the future prosperity of the Group.'
  During discussion members expressed concern at the effect that a change in top management might have on the working conditions and future prospects of staff at this factory and were particularly worried lest the long-term growth on this site so vital to employment prospects in this community might halted."
  So, this mining village, with its new developments and future prospects, was caught up in the tangle of City manoeuvring and high finance. I met the staff on 4th January and discussed matters with them. I wrote to the Secretary of State for Trade and Industry and asked him to refer the matter to the Monopolies Commission. Two or three days later, we were informed that he had decided against doing so. I wrote to him expressing my surprise and disappointment.
  Speaking for the workpeople employed in the subsidiaries of Glaxo throughout the country, where his union has a considerable membership interest, Mr. Alfred Allen, General Secretary of the Union of Shop, Distributive and Allied
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  Workers, and a senior member of the General Council of the T.U.C., among other complaints on this issue to the Secretary of State, said that it was deplorable that Press reports were the
  "… first and only information our members and the Union have received about the Beecham group bid."
  It is, of course, true that there had been talk in the trade Press and elsewhere on this matter. Studies had been in progress for some time with a view to a merger of Glaxo and Boots. These studies have now been finalised. Links between Boots and Glaxo would be a true merger as opposed to a blatant takeover bid by Beecham. There is also the question of the disquieting nature of reports about anti-trust litigation pending against Beecham in the United States, which would cost over £1,000 million.
  We are dealing to a large extent with a classic case of the development of firms in this country and their ability to provide the work our people need and the things that the country requires, fitting in with our economy both at home and abroad. The planned merger between Boots and Glaxo would be a logical combination of two of the strongest British pharmaceutical companies. The complementary nature of the two companies meant that a planned merger would provide maximum opportunity for growth without the cutbacks of rationalisation which are often the only justification for amalgamations.
  The matter was summed up in the issue of Chemical Age of 10th December, 1971, by Sir Ronald Edwards, Chairman of Beecham, who said:
  "Medium scale has its virtues and hitherto has served the United Kingdom industry well, but times are changing."
  Sir Alan Wilson, Chairman of Glaxo, said:
  "So far as I can see, the pharmaceutical industry will scarcely be affected whether we enter the Common Market or we do not. The reason for this is that within the E.E.C. as at present constituted there are numerous non-tariff restraints upon the free circulation of pharmaceutical products. …"
  In reply to my letter to the Secretary of State I received a letter on 25th January from the Under-Secretary of State which said:
  "We recognise fully the importance of these proposed mergers and the significance of the British-owned pharmaceutical companies concerned in them. The decision not to refer

  1469
  the Beecham offer was not an easy one to make. … You referred particularly to the concern of the staff of Glaxo at Cambois. The uncertainties felt by employees of the companies involved in proposed mergers is very understandable. …"
  The hon. Gentleman went on to say that the reference to the Monopolies Commission:
  "… could well mean a longer rather than a shorter period of uncertainty for those employed by the firms in question."
  This unsatisfactory reply prompted an Early Day Motion which expressed concern at the Government's failure to refer the take-over bid by the Beecham Group to the Monopolies Commission and further regretted that no information was given by Beecham Ltd. at the time of the take-over effort to disclose the details of the anti-trust suits currently pending in the United States. The Secretary of State may not have been aware of what some of his former colleagues have been up to in the City since he left it to join us on the green benches at Westminster.
  Had he pricked up his ears, read the trade journals and the American Press and the other sources of information available even to back-benchers, he would have realised that some investigation was needed. While he was talking about uncertainty and concern for the employees he was failing to tackle it in the right places. I am a layman, but I can read the journals and the reports. There are disturbing factors in the extensive antitrust legislation currently in process in the United States, operating against the Beecham Group. The Beecham take-over bid makes wholly inadequate disclosures of material potential liability affecting the value of shares, the shareholders, the employees and to some extent the economy of the country. One complainant in the United States is claiming damages in excess of 10 million dollars, while retail druggists have put forward a suit for damages of about 350 million dollars. These figures can be trebled by American Statute. Two of the complainants could be awarded punitive damages for alleged common law fraud and these damages could reach in one case a total of 1,000 million dollars and in another 700 million dollars. So if one takes merely the surface of the matter one can see that there are problems of
  1470
  considerable importance and that the decision is important.
  It is perfectly true that the Secretary of State has now decided to send both developments, the Glaxo and Boots merger, and the Beecham takeover bid, to the Monopolies Commission. We shall have to wait about five months before a decision is made, but when one looks at the figures which I have mentioned, when one looks at the nature of the charges and of the punitive damages for alleged common law fraud, even allowing for the extravagance of American legal claims and the extravagance, sometimes, of details in the American newspapers, one can see that, as I have already said, there are matters of deep involvement.
  There is a previous case, which is still going on in the area. If one looks at a report of February, 1969, one finds the Tetracycline case, a matter involving a number of companies including Bristol Myers whose portion of the settlement programme in this particular suit could be such as to be comparable with that which we are discussing and be approximately 19 million dollars, and that with the four other companies involved with Bristol Myers about 120 million dollars could be involved.
  It is perfectly true that on 21st January there was a Press release by Beecham's saying:
  "Guesses about the possible financial consequences of an adverse judgment are totally meaningless since both the timing and circumstances of a final decision are completely unknown."
  It says:
  "The figures in the Glaxo circular are irresponsible and misleading. Beecham has already made adequate provision against any likely contingency in its accounts."
  This may very well be the case, but it sounds vague and nebulous in the circumstances of this case. Moreover, when the Beecham Press handout talks about "adequate measures" having been taken, one asks, adequate for whom? Adequate for the company's auditors? Adequate for Hill Samuel? Adequate for the public? Adequate for my constituents at Cambois? Or adequate for the country's economy? We have to find out what is meant by "adequate".
  It is impossible in the time for an Adjournment debate to detail all the specific points and complaints, but this

  1471
  issue raises matters of national importance. The economic, social and industrial well-being of whole areas of Britain are undermined because as a nation we lack adequate procedures and regulations concerning information which giant companies must divulge and disclose at the time of take-over bids. So we are dealing not only with this particular take-over bid but with the whole question of procedure in this field. A take-over on inadequate information, such as would be the Beecham takeover of Glaxo, would be to the detriment of the country and of its pharmaceutical industry, and of the employees within that industry, and—as I said at the start—most of all, of the people I am proud to represent in this House.
  10.19 p.m.
  The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley): I am always glad when I have a chance to discuss the affairs of the Blyth constituency, even if indirectly, for, as the hon. Member for Blyth (Mr. Milne) knows, I once contested that constituency—unsucsessfully, in the event. I am glad the hon. Member has raised this matter, which spreads in importance far beyond Blyth because it is a matter of great national importance.
  The hon. Gentleman will appreciate that I cannot discuss the rival merits of the Beecham and Boots bid for Glaxo because these matters are now before the Monopolies Commission, and the last thing I wish to do is to prejudice through anything I might say the Commission's consideration of the issues. Nor is it the custom to discuss the reasons why Governments have made references of mergers to the Monopolies Commission. There is a long tradition behind this, and the right hon. Member for Grimsby (Mr. Crosland), on 29th February, 1969, when addressing the Manchester Chamber of Commerce, said:
  "Successive governments have taken the view that we must retain complete freedom to judge in each individual case what benefits and detriments there might be, and what factors might or might not be relevant."
  This is inevitable.
  I will say what I can to the hon. Gentleman about the present situation. The Beecham bid was made on 2nd December and, after careful consideration and analysis, the Government came
  1472
  to the conclusion that it would be wrong to make a reference of the Beecham bid. All the base suggestions that have been made, not by the hon. Gentleman but by another hon. Gentleman and some other people, that the Government had sinister motives I utterly repudiate and reject. The decision was taken on the industrial facts of the case.
  There was prime facie evidence, however, when Boots made its bid on 12th January that very different questions were raised. A significant degree of vertical integration was involved. Strong fears were expressed to us about the proposed merger by independent pharmacists and those who concern themselves with the freedom of consumers to choose.
  In this confused situation we concluded that the various factors had better be examined by the Monopolies Commission. The two bids cannot be seen in isolation, and it would have been impossible and wrong to have referred only the latter bid. This is a complex situation, which I am sure the hon. Gentleman will agree justifies a flexible approach, and that we have shown.
  This is not the first time that something like this has happened. On 26th January, 1966, the right hon. Member for Grimsby announced that it was not the intention of the Government on the information then available to refer to the Monopolies Commission the proposed acquisition of Amalgamated Dental Company by the Dental Manufacturing Company Limited. A week later a counterbid by the Dentists' Supply Company of New York was announced, and the Board of Trade decided that a reference of both merger proposals would serve the public interest, and an announcement to this effect was made on 10th February. So this is not a unique situation.
  To refer a merger proposal is not to stop it. It is entirely up to the Monopolies Commission to make its recommendation after it has considered all the evidence and the issues involved. If the Monopolies Commission decides that the merger should be allowed, the Government have no power to forbid it.
  The hon. Gentleman may well ask what is the policy for making references. It might help if I were to formulate some of the criteria which the Government have in mind. One cannot formulate set rules.

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  It would be impossible to do so because if one could there would be no need for a Monopolies Commission; it would be decided by the Government. The rôle of the Commission is to decide in this difficult area of policy whether or not a merger is against the public interest. The object of making a merger reference, therefore, is to ask the Monopolies Commission to see whether it would result in the elimination or reduction of competition and whether this, if it happened, would be against the public interest.
  The factors taken into account are the structure of the market for the product; whether competition exists; the ease or difficulty on the part of new firms of entry into the market; whether there is competition from imports; economies of scale in the process of manufacture; and whether it would justify concentration. Will the merger lead to increased efficiency and lower prices, and will it enable the company to meet foreign competition which may have already concentrated? These are the sort of ideas which motivate a Government in deciding whether to make a reference. This can often lead to a dilemma. The hon. Member will remember some of the concentrations brought about by the Industrial Reorganisation Corporation which led to serious concern as to whether a monopoly situation was being created. He would also remember the debates on the General Electric merger and the British Leyland Motor Company merger where the two difficulties of competitive policy versus the need for industrial efficiency were threshed out in public argument.
  The hon. Gentleman understandably expressed concern about employment prospects caused by such a merger in his constituency, and in particular at the Glaxo Laboratory at Cambois. He suggested that we should use the power of reference to the Commission, or the threat of such reference, on the ground of preserving employment. I am discussing this concept in the abstract, not in relation to the Beecham-Glaxo-Boots matter where it would be wrong to give explanations and where some assurances were given by Beechams on this score. Beechams said it saw no reason on present information for any significant redundancies or plant closures if its bid
  1474
  was successful. To that extent the hon. Gentleman has misinterpreted the situation as regards Beechams. But in general I would say that it is obvious that these considerations enter into our decision, as my right hon. Friend said in answer to a Question on Monday, though not perhaps in the direct way it had been suggested they should. There are no criteria in the Act laying down the grounds on which a reference could be made. It might he helpful, therefore, if I were to expound the Government's thinking on this point.
  If a proposed merger or takeover presages an increase in efficiency to match foreign competition or to give reduced prices, it could involve what is called rationalisation and, in turn, perhaps the closing down of uneconomic units to concentrate production in larger-scale efficient plants. This could result in redundancies. But to deny it could result in future uncompetitiveness and, hence, more widespread redundancies in the future. Provided adequate competition remains for the product, one might not feel a reference in such a case was justifield. But if a merger or takeover appears to be directed towards a reduction of competition by knocking out a competitor, it could equally result in widespread redundancy but with no corresponding benefit in efficiency and competitiveness. This would be a likely candidate for a reference. In between those extreme cases there is a widespread area of grey where the only policy is for my right hon. Friend to use his best judgment.
  What would be wrong would be to use reference to the Commission as a sort of blunt instrument to prevent mergers with employment considerations alone in mind. In any such case it is likely that the Commission would eventually allow the merger and nothing would have been achieved except delay and uncertainty.
  The ownership of companies is not a guarantee of future employment. One shares with the hon. Gentleman every concern about the unpleasantly high level of unemployment in his constituency. But the future of the successful plant and factory there depends not on whether a certain merger or takeover takes place but on whether the enterprise itself—the factory—is profitable and successful and on whether there is demand for its products. Glaxo alone cannot guarantee to provide employment for ever, nor can

  1475
  Beecham if it was successful in taking over Glaxo. It would be a factor making for more unemployment if the Government were to adopt a policy of denying industrial change and restructuring and rationalisation because they believed it would meet a short-term anxiety, but which in the long-term would result in uncompetitiveness and failure to sell in the markets of the world. To treat the Monopolies Commission as a sort of instrument for preserving employment in the short-term could actually be counterproductive. What really matters is that the plant is an efficient and effective producer in the industry in which it operates.
  I share the hon. Gentleman's concern over unemployment. In Blyth it has risen to 11·7 per cent. from 9·8 per cent. a year ago. In his constituency as a whole, the total number of unemployed persons is 2,849. However, I can tell him
  1476
  that there are 2,900 jobs in prospect over the next four years, and that is a situation which is happier and more promising than it is in many other parts of the country.
  I can understand the concern which the hon. Gentleman described over the future of the Glaxo factory at Cambois. But I hope he will assure his constituents that the merger and the takeover proposals which are now to be examined by the Monopolies Commission are in no sense a threat to employment. It is a modern, efficient, and by any standards not yet fully manned-up factory. Its future depends not on the persons who own it but on whether it is an efficient producer which earns its living for those who own it.
  Question put and agreed to.
  Adjourned accordingly at twenty-eight minutes to Eleven o'clock.

  Second Reading Committee
  Wednesday, 9th February, 1972
  [MISS JOAN QUENNELL in the Chair]

  The Committee consisted of the following Members:

  Miss Joan Quennell (Chairman)

  Albu, Mr. Austen (Edmonton)

  Green, Mr. Alan (Preston, South)

  Atkinson, Mr. Norman (Tottenham)

  Harper, Mr. Joseph (Pontefract)

  Cant, Mr. Robert (Stoke-on-Trent, Central)

  Hart, Mrs. Judith (Lanark)

  Holt, Miss Mary (Preston, North)

  Cunningham, Mr. George (Islington, South-West)

  Nott, Mr. John (St. Ives)

  Page, Mr. John (Harrow, West)

  English, Mr. Michael (Nottingham, West)

  Stoddart, Mr. David (Swindon)

  Eyre, Mr. Reginald (Birmingham, Hall Green)

  Tapsell, Mr. Peter (Horncastle)

  Walder, Mr. David (Clitheroe)

  Gilbert, Dr. John (Dudley)

  Wall, Mr. Patrick (Haltemprice)

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

  Walters, Mr. Dennis (Westbury)

  Warren, Mr. Kenneth (Hastings)

  Miss A. Milner-Barry, Committee Clerk.

  OVERSEAS INVESTMENT AND EXPORT GUARANTEES BILL
  10.30 a.m.
  Resolved,
  That if the proceedings on the Overseas Investment and Export Guarantees Bill are not completed at this day's Sitting, the Committee do meet on Wednesday next at half—[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 Overseas Investment and Export Guarantees Bill ought to be lead a Second time.
  The Bill has three purposes. It proposes, firstly, that the Export Credits Guarantee Department should be empowered to operate a scheme for insuring investment overseas; secondly, that the
  1478
  Overseas Development Administration should be empowered to give grants for the purpose of encouraging pre-investment studies abroad; and, thirdly, that the limits on the amount of liability that the Export Credits Guarantee Department may assume under the Export Guarantee Acts, 1968 and 1970 should be raised.
  The first two proposals were included in the White Paper—"Private Investment in Developing Countries", Command 4656—published in April last. They are essential elements in the Government's policy for encouraging such investment, and can conveniently be considered separately from the third purpose of the Bill.
  In the White Paper the Government set out their reasons for wishing to encourage

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  private investment benefits in developing countries. Given the right conditions, private investment benefits both Britain and the host country at the same time. Britain benefits through increased investment income and exports and in other ways. The developing countries benefit because British private investment provides capital, employment and a wide range of skills. These mutual benefits were recognised by the Pearson Report "Partners in Development", which affirmed that foreign investment had contributed greatly to the growth of developing countries and stressed the need for appropriate measures to encourage it.
  This is not to say that private investment is a substitute for official aid: rather their rôles are complementary. As hon. Members will know, we have recently announced in the White Paper on Public Expenditure a substantial increase in the size of the aid programme at constant prices over the next four years. But for a country such as Britain, in which private enterprise plays a major rôle in the economy, it is natural that a major part of the resources made available to developing countries should be in the form of private investment.
  Indeed, in 1969 and 1970 taken together direct private investment accounted for about one-third of our total flow of resources to developing countries. The maintenance of a high level of private investment is essential if we are to continue to meet the U.N.C.T.A.D. target of 1 per cent. of G.N.P. for total financial flows to developing countries, which the Prime Minister pledged that Britain would do its best to meet by 1975
  On the other hand, it is clear that no measures by us to stimulate the flow will achieve success unless the developing countries themselves are ready to welcome overseas investment. It is only they who can decide whether to provide the conditions in which private investment can make its contribution to the achievement of economic growth. Both capital and the management expertise that goes with it are in short supply, and there are many attractive opportunities for investment elsewhere.
  The Government have borne these considerations in mind in considering what incentives to offer to stimulate a greater flow of private investment to those coun-
  1480
  tries which wish to have the benefit of it and have shown that they will welcome it on fair terms.
  Of the various measures proposed in the White Paper for encouraging private investment in developing countries, the scheme for insuring investors against political risks of expropriation, war and currency inconvertibility, is the most important. I believe it to be essentially uncontroversial. I recollect that when the Government's decision to introduce the scheme was announced the right hon. Lady the Member for Lanark (Mrs. Hart) was good enough to describe it as sensible, as indeed it is.
  There is nothing new in the idea of an investment insurance scheme. The United States of America has operated such a scheme since 1948, Germany for more than a decade. Every major developed country in the free world has by now introduced one, and many of the smaller countries have done so as well.
  The United Kingdom is the conspicuous exception. Successive Governments have resisted the introduction of such insurance on two grounds. It was argued, firstly, that we could not afford to stimulate investment overseas because of balance of payments difficulties, and, secondly, that it was still worse to encourage riskier overseas investment.
  These arguments can no longer be given the same weight. The flow of investment to developing countries is not large in relation to the total flow of private investment overseas. With the balance of payments now in better shape, we do not have to worry about the scale of increase in the outflow which will be needed to meet the U.N.C.T.A.D. target in the next few years.
  The scheme will, of course, encourage some riskier investment—that is to say, investment that is riskier in political terms. But we do not see this as a drawback. On the contrary, we think that the absence of a scheme has unduly discouraged many firms from undertaking sound investment yielding attractive returns.
  An individual firm, unless it be very large indeed, cannot spread the political risks arising from its overseas investment and may therefore be more deterred by them than is appropriate to our economic interests. An insurance scheme will leave companies largely free to decide their

  1481
  investment policy by reference to commercial considerations. This should benefit not only them, but also the developing countries, particularly the poorer ones where the political risks may have seemed the most forbidding. It is sometimes said that private investment flows tend to favour the least necessitous of the developing countries. Investment insurance may do something to redress the balance.
  The decision to introduce an insurance scheme was prompted by the need to stimulate the flow of resources to developing countries, but there are commercial benefits to Britain. British industry has long pressed for a scheme. It says its absence has often placed British companies at a disadvantage compared with their competitors abroad who benefit from the protection which insurance can give.
  An investment abroad may often be necessary to secure the continuation of an export trade. In this connection, the view of the Reddaway Report may be recalled that investment in developing countries tends to be more worth while in terms of exports than investment in the more developed parts of the world. For example, many developing countries seek to replace by local manufacture or assembly their imports of certain types of consumer goods and mechanical and engineering products. When this happens British exporters are usually faced with the choice of losing the market altogether or investing in local manufacture which at least carries with it continuing opportunities for the export of plant, components etc. as well as invisible earnings.
  The objection has been raised that investors, when covered against political loss by insurance, may become less responsible or careful in their attitudes towards the Governments of the host countries and less ready to reach negotiated settlements of disputes.
  The host Government, it is said, may be more likely to take over an investment without paying compensation if the investment is insured. Experience, however—and other national insurers have acquired some already—does not bear out this thesis. Of course, the insurer must take care to protect his own interests, and E.C.G.D. is not unskilled in this. Under the provisions of the proposed scheme, which I will refer to shortly, the
  1482
  investor will not be covered for the whole amount of his investment, and he cannot claim at all if he has acted provocatively.
  As regards the attitude of the host Governments, they must heed the fact that they are dealing, not only with the company itself, but also with the national insurer whose attitude may be crucial for any future investment. I believe that the danger of expropriation will be reduced rather than increased by the scheme.
  Some have suggested that the job might be better done by an international body, such as the proposed International Investment Insurance Agency linked to the World Bank. But this has not yet got off the ground, and there is little prospect in the foreseeable future that it could replace national schemes, though a basis may be found on which it can supplement them. We are very willing to consider the possibilities along these lines.
  The existing official schemes vary in their terms and precise objectives. Before drawing up our own scheme we made a study of the principal ones, about which information was freely and generously given to us. We concluded that our own scheme should be based as broadly as possible and should be operated flexibly. Provided that the investor wants to invest and the proposed investment is acceptable to the recipient country, there is a prima facie case for believing that the transaction will benefit both parties. This does not mean that considerations such as the development value of the investment to the recipient country, which is stipulated as a condition in some other schemes, will be ignored, but rather that they will be judged against the criterion of risk.
  We shall not specify, as some schemes do, that the investment must further economic relations, but it goes without saying that cover should be refused if the proposed investment was considered to be harmful to the national interest.
  The operation of the scheme is to be entrusted to the Export Credits Guarantee Department. This Department has had a long and successful record in the insurance of export credit. Its experience is relevant to this new field. The discretion which is to be accorded to the Department in the operation of the scheme does,

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  however, place a heavy burden of responsibility on it. The Government have therefore appointed a small Committee consisting of members from the City and senior industrialists with special experience in the field of overseas investment, on whose advice E.C.G.D. can call. Unlike the Export Credits Advisory Council, the body which advises E.C.G.D. on export credit business, the new Committee is non-statutory and will give its advice on an informal basis; but it has some common membership with the Council.
  I am particularly grateful to Sir Frederic Seebohm, the Chairman of the Advisory Council, for agreeing to be Chairman of this Committee also, to which he brings an unrivalled experience. May I also express publicly my thanks to the other distinguished members of this Committee—Mr. G. S. Bishop, Mr. R. J. Blair, Mr. G. V. K. Burton, Sir Hector McNeil, Mr. E. J. Symons, and Mr. M. T. Wilson.
  To permit the maximum amount of flexibility, the powers proposed in the Bill are drawn in very general terms. It is impossible at the outset to envisage every type of circumstance or proposal that may be made, and the scheme that will be introduced if E.C.G.D. is given the necessary powers, will, no doubt, need to be reviewed in the light of operational experience. The details are contained in an outline description, of which I have arranged for copies to be put in the Library of the House and the Vote Office immediately after this debate.
  It may be helpful if I were to refer to the main provisions, now for the information of the Committee. The scheme will be open to all firms carrying on business in the United Kingdom, though there are special provisions affecting foreign-owned firms and overseas subsidiaries. There are at this stage no formal limitations on the scope of the scheme in so far as relates to particular industries or countries, but the insurer must have discretion to refuse the risk or to attach special conditions to his cover if he judges this to be prudent on commercial grounds, and a pattern will emerge as the scheme develops.
  Hon. Members will notice that the Bill makes no reference to developing countries—that is to say, it does not
  1484
  exclude developed countries. In practice, we think that nearly all the applications for insurance will be in respect of investment in developing countries for which the scheme is primarily intended. Should E.C.G.D. receive an occasional request for cover in a developed country, however, it is proposed to accept it for consideration in the ordinary way, bearing in mind the insurance principle of spreading risk.
  As we announced in the White Paper, the scheme will not cover existing investment—though it can cover major additions to such investment. The Government recognise the interests of industry in the protection of existing investment, and wherever possible we will seek to conclude investment protection agreements with developing countries. Insurance of existing investment, however, is a different matter. It would impose an immense load of work at the outset and would not serve any of the policy objectives to which I have referred. Existing investment is similarly excluded from all other national investment insurance schemes.
  However, investments which have to be committed before the scheme can be brought into operation—which I hope will be soon after Easter—can be considered for cover provided that the prospective investor consults the E.C.G.D. before committing himself.
  The White Paper visualised that only direct investment would qualify, that is to say investment in which the investor has a management or trade interest. However, there are a number of specialist institutions in the United Kingdom which invest in developing countries, and it would be wrong to exclude from cover the contributions they make to the flow of developmental resources. Accordingly, portfolio investment in a new project will be permitted, subject to a minimum amount initially of £50,000 and 10 per cent. of the total capital. Loan capital as well as share capital is eligible.
  The maximum period of cover is to be 15 years, with provision for covering earnings retained in the business up to 100 per cent. of the initial contribution. The normal percentage of loss payable will be 90 per cent.
  Mr. John Nott: Could the Minister go a little more slowly? I am most

  1485
  interested in this, but I cannot really keep pace.
  Mr. Grant: I apologise. I did not wish to detain the Committee unduly, but I shall repeat that for the benefit of my hon. Friend. I think that he heard me say that portfolio investment in a new project will be permitted subject to a minimum amount initially of £50,000 and 10 per cent. of the total capital. Loan capital as well as share capital is eligible. The maximum period of cover is to be 15 years with provision for covering earnings retained in the business up to 100 per cent. of the initial contribution. The normal percentage of loss payable will be 90 per cent.
  The cost of this cover is to be fixed initially at 1 per cent. per annum on the amount currently at risk, plus ½ per cent. per annum on the amount of any commitment by the insurer to cover additional amounts in the future. A flat rate has the merit of simplicity, and differentiation between developing countries on grounds of risk would conflict with the objectives of the scheme. This follows the practice of all other national schemes. The White Paper stated that initially the premium rates would be based on those charged by other countries that have had experience of similar schemes for a number of years. The rates chosen are near the upper end of the international scale and are intended to strike a balance between the conflicting objectives of attempting to make the scheme pay its way over a period and of encouraging new investment in developing countries. They will not, I think, be regarded as unreasonable.
  These are only a few of the features of the scheme, but they are the main ones. Hon. Members will no doubt study the outline if they wish to have further information on what, in detail, is a fairly complex matter.
  The White Paper stated it to be the intention that this scheme should pay its way. But I must sound a note of warning. The incidence of political risk is completely unpredictable, and no actuarial calculation of the risk is possible. The long period of the insurer's commitment means that the insurer can do nothing quickly to protect himself from the consequences of an increased incidence of loss.
  1486
  The two national insurers that have had the longest experience in this field—those of the U.S.A. and Germany—had until recently paid very few claims; but, since the publication of our White Paper, the United States insurer, the Overseas Private Investment Corporation, has become faced with the prospect of claims arising in Chile which exceed the total amount of its premium income gathered since the inception of its scheme more than 20 years ago. This is a salutary reminder of the dangers. We cannot claim, therefore, that loss will be avoided, but we believe that the risk of loss is acceptable when weighed against the scheme's prospective benefits to developing countries and to the United Kingdom.
  Hon. Members are not, of course, being asked to give E.C.G.D. a blank cheque. The Bill sets an initial ceiling of £250 million on the amount of the liabilities which it may assume. Additions to this amount will need the affirmative Resolution of the House, and a new Act would be needed before liabilities exceeding £750 million could be assumed. In addition, ordinary Vote provisions will, of course, have to be made and approved. It has not been easy to fix the right amount for the limit in the Bill, as we have as yet no experience of the demand for the scheme. Hence the provision for two increases without the necessity of a new Act. The figures appearing in the Bill have been adopted bearing in mind that United Kingdom gross investment in the developing countries is already over £200 million per annum.
  In conclusion on this aspect, it would be wrong of me to claim that the insurance scheme will have a revolutionary effect on the amount or direction of our overseas investment, but it will, I am convinced, do much in these uncertain times to encourage firms which are doubtful about the future climate for private investment. It is, I believe, an essential condition for the maintenance and expansion of the existing flow of developmental capital, and it fills a long-felt want by United Kingdom industry. I commend the scheme to the Committee.
  Clause 3, which is very much the concern of my right hon. Friend the Minister for Overseas Development and his Department rather than that of my Department, will enable the Overseas Development Administration to introduce a

  1487
  scheme of financial support for pre-investment studies by firms contemplating investment in developing countries.
  As I mentioned earlier, this proposal was included in the White Paper on British Private Investment in Developing Countries. We believe that a scheme of this kind will be a valuable incentive to British firms to consider opportunities for investment in the developing world which they might otherwise not have considered.
  The Clause is drafted in very broad terms; and, in order to give hon. Members more precise indication of the way in which it will be administered, copies of an outline description of this scheme also will be put in the Library of the House and the Vote Office immediately after this debate. Again, I will here only give the very broad outline of the way in which it will operate.
  A British firm wishing to study an investment opportunity in a developing country will be able to apply to the Overseas Development Administration for the study to be covered under the scheme. The firm will enter into a formal agreement with the O.D.A. before commissioning the study; it will then be responsible for carrying out the study and meeting the cost initially. If as a result of the study the firm decides not to invest, the O.D.A. will pay 50 per cent. of the costs incurred in accordance with the agreement, subject to a maximum contribution of £25,000 towards any one study. The necessary funds will be found from the Aid Programme. It will be a condition of our payment that if, within three years afterwards, the firm decides after all to proceed with the investment, it will have to repay the Government's contribution.
  The Bill does not limit this scheme to the developing countries, because it is impossible to draft a suitable legal definition of these. But the scheme will in practice apply only to countries regarded as developing by the Development Assistance Committee of the O.E.C.D.
  In addition to pre-investment studies in the strict sense, the Bill provides for the scheme to cover studies undertaken by British firms to determine the feasibility of management agreements with enterprises in developing countries. Although such agreements do not of
  1488
  themselves entail investment, we believe that they deserve support. The lack of management skills is one of the most serious brakes on development in many developing countries, and the provision of such skills is, therefore, a valuable contribution to development. It is also of commercial value to Britain, and may often lead in the long run to actual investment.
  The scheme will be available in principle to support studies by all British private firms. There is, however, one major exception which I should mention. We do not propose to cover studies in the oil and natural gas industries. There are a number of reasons for this: in particular, it is most unlikely that a scheme of this kind, and on this relatively small scale, would provide any incentive to oil companies to increase their investment overseas. Nor would it direct oil investment to developing countries which would not otherwise have received it.
  The scheme will, however, apply to studies directed at the exploitation of other natural resources. The development of mineral resources is among the most important ways in which a developing country's economy can be expanded. Unlike the case of the oil industry, a relatively small incentive, such as this scheme will provide, could be of assistance in helping a mining company to investigate known mineral prospects. It is, of course, also of benefit to Britain that British firms should be associated with the development of the world's raw materials. This is a good example of the way in which private investment in developing countries can be of great value to both the host country and Britain.
  There is an undeniable case for the use of official aid in support of private investment. Under previous Governments our aid programme to India, for example, brought significant relief to British firms operating there. As I have already said private investment has a major part to play in developing countries. It brings employment and capital, together with a wide variety of managerial, technical, and marketing skills. It is, therefore, of great value in the development process, and it is entirely appropriate to use a small part of the funds allocated for development aid in support of it.

  1489
  Many developed countries already operate schemes of this kind, and the Government believe that it is time for Britain to do the same.
  I turn now to E.C.G.D.'s existing powers to give guarantees for the benefit of exporters. As the Committee will be aware, there are statutory limits on the amount of liability that the Department may undertake. The limits take the form of monetary ceilings, under which figures of E.C.G.D. liabilities can revolve—that is to say, as old debts are paid, they make room under the ceiling for new cover to be given. However, because our exports have grown steadily in value from year to year and the proportion of total exports covered by E.C.G.D. has tended to increase, new liabilities have built up faster than old ones have run off, and the limits set by Parliament have gradually been reached. It has, therefore, been necessary for E.C.G.D. to come back to Parliament every few years to ask for higher ceilings.
  This happened last in 1970. The ceilings fixed by the 1970 Act were £4,000 million for Section 1, which covers "commercial" business undertaken with the advice of the Export Guarantees Advisory Council, and £2,500 million for Section 2, which covers other business undertaken in the national interest. When the 1970 Act was passed, the new limits were expected to last for three to five years.
  It is now clear that it will be three years rather than five, because E.C.G.D. business has been growing at the fastest of the rates in the range envisaged when the 1970 Act was presented to Parliament. This is a matter for great satisfaction, since it reflects a high rate of increase in, first, the value of business won by our exporters—the value of our exports grew by nearly 14 per cent. during 1971—and, second, the use made of E.C.G.D. cover—the proportion of our total exports insured by E.C.G.D. rose to 38 per cent. last year from 33 per cent. in 1969. An increase in the 1970 ceilings will be needed, at the latest by early next year, if the support given by E.C.G.D. to British exports were not to come to a virtual stop. We have, therefore, taken the opportunity of the present Bill to propose an increase in the ceilings.
  Once again, we are looking forward three to five years. Over such a period, great accuracy of forecasting is not possible, but the prospects for world trade
  1490
  are encouraging. I look forward with confidence to a continuation of the recent highly successful record of British exporters. This is likely to mean a correspondingly high demand for the services of E.C.G.D.
  At 31st December, 1971, actual and contingent liabilities under Section 1 were £3,561 million against the present limit of £4,000 million. The new limit we propose is £6,200 million. As I have already mentioned, Section 1 of the Act, which accounts for about 90 per cent. of the export business covered by E.C.G.D., is administered with the help of the Export Guarantees Advisory Council.
  Section 2 liabilities, actual and contingent, stood at £2,074 million on 31st December, against a ceiling of £2,500 million. We propose raising this to £4,300 million. Section 2 cover includes many of the long-term risks, and for this reason the limit figures turn over much more slowly than those for Section 1. Consequently, although Section 2 accounts for less than 10 per cent. of E.C.G.D. business in terms of exports going forward, a very much higher ceiling is needed relative to the value of current business than for Section 1. We expect fairly heavy demands to be made on the Section 2 limit in the near future, notably in respect of cover for aircraft, and we have therefore provided for a fairly generous increased. It is our firm intention that, in dealing with applications for Section 2 cover, E.C.G.D. should continue to exercise a proper underwriting judgment in the light of its now considerable experience, and reject any unduly hazardous risks.
  Adequate credit arrangements are now essential to survival as world traders on our present scale. I think it is the general view of those knowledgeable in the field that E.C.G.D. performs its task with considerable efficiency and imagination. Indeed, I am glad to know that it is generally held to be at least the equal of any other credit insurance organisation, and superior to most others in the range, quality, and flexibility of its services.
  Those are the three basic provisions of the Bill, which I commend to the Committee.
  11.2 a.m.
  Mrs. Judith Hart: We are grateful to the Under-Secretary of State for his

  1491
  full explanation of certain aspects of the Bill. Although we shall support the Second Reading, he must expect many questions at the Committee stage, and a number of proposals where we do not agree with certain aspects of the Bill or of the scheme to implement it.
  While it is sensible to provide an insurance scheme of this kind for private investment in developing countries—as the hon. Gentleman said, Britain is somewhat late in doing so; most of the other D.A.C. countries did it some years ago—I profoundly regret one point about which the hon. Gentleman has been very clear, that is, the motivation for bringing in the Bill now. He has been absolutely clear about it, and his right hon. Friend the Minister for Overseas Development was equally clear about it when we discussed the White Paper on the Floor of the House. The Government regard private investment as a major, if not the major, element in the British aid programme. Not only did the hon. Gentleman say that private investment was an essential part of the aid programme, but he said that it will be essential if Britain is to meet the 1 per cent. United Nations target by 1975. This, he said, was the stimulant. He used the word "stimulant".
  The Opposition do not regard the private investment element in aid as one-tenth as important as official development assistance. We regret that the Government increasingly put their emphasis on the private investment element rather than the official element. The aid programme continues to increase, but the theology of it is of great significance. Not only can one argue that private investment should be regarded as much the least important aspect of the aid programme, but one can now argue, with many sources to quote in aid, that private investment should not be regarded as aid.
  I was present at a conference at The Hague a few weeks ago, attended by a number of development specialists from the United Nations, from the O.E.C.D. and from other international bodies. The consensus, expressed in the report from that conference, was that no one in the development field now regards private investment as aid. There was a general consensus that the United Nations I per cent. target is, to that extent, not appro-
  1492
  priate and that the target which matters is the one for official development assistance.
  There are many reasons for this, which I shall not go into in depth. We explored them when we discussed the White Paper some months ago. Private investment cannot provide the essential infrastructure and services needed by a developing country. It would not seek to do so. It would not be profit-making to do so. No hon. Member would dissent from the statement that when a private firm invests abroad, be it in a developed or developing country, the motivation is not primarily to bestow benefit upon the developing or developed country. The primary motive is to make a profit. There is nothing wrong in the theology of private enterprise that that should be so.
  It is not surprising that private investment in the developing countries can contribute nothing to the essential services needed by developing countries, as these do not make a profit. They are costly. It is Governments who have to pay for them. Only official development assistance can help Governments to pay for those services. Private investment cannot help with what is increasingly realised to be the key sector in a developing country, the agricultural rural sector. There is little that private investment can do there. In the hey-day of imperialism, tea plantations, coffee plantations and rubber plantations were set up in Asia and in Africa, but we do not find an extension of that kind of private enterprise now in the agriculture of developing countries; there is a withdrawal from it. In Ceylon, for example, foreign plantation owners seek to leave Ceylon and have the Government take them over because it is no longer a very profitable operation for them.
  Private investment cannot help in that sector, yet it is here that the key to development so often lies. In developing countries, where from 60 per cent. to 80 per cent. of the population, and sometimes more, is totally dependent on the rural sector, this is the starting point for the raising of incomes, which in itself can promote industrialisation. It becomes the key. Private investment is rarely attracted to the poorest developing countries.
  Mr. Nott: I know very little about this subject, but I have always understood

  1493
  that the development of Mexican wheat in India was at the heart of the green revolution there. Surely this was, to some extent, sponsored by foundations in the United States, which came in the private sector. Is that not so?
  Mrs. Hart: The foundations, yes. I think that the hon. Gentleman is confusing his definition of private investment here. The Mexican wheat research, and the rice research in Mexico and the Philippines, was carried out in Mexico by the Ford Foundation and in the Philippines by the Ford Foundation and by the Rockefeller Foundation. The money came from private concerns, but it was essentially a charitable operation. There was no profit in it for the Ford or Rockefeller Foundations. They were giving money to development when they did that. Hon. Gentlemen cannot pray that in aid for saying that private investment can in any way contribute directly as investment to the agricultural sector.
  The third argument is that the poorest countries do not attract private investment. Indeed, at the last U.N.C.T.A.D. Conference in New Delhi in 1968 it was said over and over again by countries like Uganda and Afghanistan that they fail to interest private investment, mainly because they are too poor to have the market, partly because they are landlocked. To the extent that private investment may contribute technological skills or know-how, it certainly fails to do so in the most needy countries. Therefore, again it fails on a very sharp criterion of what is aid and what is not, in that aid must be increasingly directed to the poorer countries and not to the least poor of the developing countries.
  Finally, when looking at the contribution and the rôle of private investment we need to be clear about who gets the benefits. More and more studies are being done which show conclusively that the reverse flows back to the country from which the firm comes—back to Britain, in this case—are much greater than the flows that result to the developing countries.
  At the second meeting of U.N.C.T.A.D. the following figure was quoted on the basis of work done in the United States. In 1966 private transfers—that is, not just direct foreign private investment, but including export credits, invisibles, shipping, and the rest—were recorded as
  1494
  amounting to $5,000 million to $6,000 million. At the same time, investment income payments from developing countries to private firms in rich countries were estimated at nearly $5,000 million a year. Therefore, the measurement of reverse flows indicates clearly that the argument that private investment produces a flow of resources to developing countries is ill-based. The fact is that the flow is in the reverse direction and this is largely why the development specialists have been coming to the view that a 1 per cent. international target which includes private investment is totally unrealistic. It cannot be regarded as a flow of resources to assist development but rather as a reverse flow helping the private firm and the private interests.
  Having said that, and regretting the motivation for the Bill, regretting this Government's emphasis on the rôle of private investment as against the rôle of official development assistance, I turn to some of the provisions of the Bill and some aspects of the scheme.
  My first comment is that we very much regret the fact that, as the Under-Secretary has described the scheme this morning, the development interest is totally neglected in the insurance cover scheme. For example, the committee which he has announced under Sir Frederic Seebohm which is to advise E.C.G.D. on the implementation of the scheme, is, as he described it, a committee of industrialists, people with City and business experience, not a committee that he claims has any knowledge of development or of aid or of the needs of developing countries. In other words, it is an investor-oriented committee. The scheme is therefore investor-oriented rather than oriented to the developing countries.
  As another clear instance of this, in his full description of how the Government propose to proceed in implementing the Bill, the Under-Secretary has not mentioned the need for the approval of the host country before insurance cover is given. I am surprised at this, because the investment guarantee schemes that have been introduced by a number of countries provide that the scheme must be approved by the official aid agency of the Government—in this case, it would be the Department of Overseas Administration—or that the scheme must be approved by the host country to which

  1495
  the private investor is going, or that booth kinds of approval must be ensured before insurance cover is given and the firm is brought within the scheme. I am very surprised that this is totally missing both from the Bill and from what the Under-Secretary said in describing the way in which he proposes to operate the scheme.
  Then there is the question that the scheme is not to be confined to developing countries. It is to be allowed occasionally, in special circumstances, to cover investment in developed countries. We would like to know where some countries fall in his definition. Would it include, for example, Greece and Portugal? Would it include countries which do not normally fall within the list of countries to which Britain has in the past given development assistance and with which we traditionally involve ourselves? We are entitled to ask that the Bill itself should be a little clearer and more specific as to the limitation of countries to which the scheme could apply. It is not satisfactory that we have it as vague and as generalised as it appears to be now.
  The Under-Secretary said that the Government will seek to conclude investment protection agreements with host countries. Again, it is clear from any study of protection given to private investment in developing countries that bilateral protection agreements are infinitely more effective in assisting private firms if there should be war or political risks than an investment insurance scheme. To concentrate on one, with only a vague generalised reference to the other, is to get the thing upside down and not to carry out the purposes which the Under-Secretary claims to have in mind in introducing the Bill.
  There is the question of how far the expenditure incurred in this scheme will be regarded as private flows in the sense of the D.A.C. present figures. It is not at all clear whether it will.
  I turn now to one of the examples that the Under-Secretary gave. He quoted the great costs that there can be in schemes of this kind and illustrated the example of the United States at the moment meeting very heavy insurance costs as a result of expropriations in Chile. The Chilean case illustrates admirably what the politi-
  1496
  cal risks of expropriation are—I use the word used by the hon. Gentleman—particularly in view of one of the examples the Under-Secretary gave as being very valuable in terms of Clause 3 when considering the assistance to private investment to undertake investment studies.
  The Under-Secretary talked of mineral resources and the very valuable contribution that firms from Britain could make in developing the mineral and natural resources of developing countries. This comes into the picture, not only in terms of Clause 3, but also in terms of the insurance cover scheme, because presumably a firm which was developing mineral resources in a developing country would not only be eligible for pre-investment study help from the Department of Overseas Development Administration. It would also be a firm likely to be accepted into the insurance investment guarantee scheme.
  It is becoming increasingly clear that a developing country is unable to plan or succeed in development if it does not have control over its own basic resources. Therefore, when we talk of the natural resources of developing countries, be they copper or any other minerals, we are talking about the very heart of their potential for development, and in doing so it is totally unreasonable for private investors to suppose that a developing country will continue to be able to afford to permit private interests to be in control of these basic resources
  In many cases the political risk is really a political necessity, for the developing country. It must transfer basic resources into the hands of the State. It must carry out what it calls public ownership, what we call expropriation, which is necessary for development. Thus, insurance cover is a reasonable proposition and it is one of the reasons for welcoming the scheme, because it reconciles the interests of private investors with the interests of developing countries. But it does mean that one must be careful about the motivation when, as in Tanzania or in Chile, nationalisation takes place. Expropriation occurs, and there are then difficulties about the payment of compensation.
  Studies which have been made of private investment and the encouragement that can be given to private investment in developing countries show clearly that,

  1497
  as well as bilateral agreement with the host country, which provides more adequate protection than insurance cover alone, agreements on the legal system of compensation, which comes into play when expropriation occurs, tend to be more important.
  That is how it is seen by the World Bank, which takes as its criterion of whether a developing country is behaving well in a process of expropriation what legal remedies there are to pursue the question of compensation.
  There can be a danger of this insurance scheme being exploited, much as the Opic scheme in the United States is tending to be exploited by the copper companies which have been expropriated in Chile. It is becoming increasingly well known that during the past few years the reverse flows from Chile, the profits which have returned to the Anaconda Company, and the other copper companies in the United States, have been enormous because these companies failed to develop the copper mines normally, in anticipation of expropriation. Thus one has the situation that private companies, having nakedly exploited a developing country, are claiming insurance cover from official funds of the private firm's own Government.
  There can be some very difficult equations here. These must not be overlooked when one takes into account that expropriation is increasingly likely to occur. Although it may become irritating to private firms, it should be welcomed as part of the process of development. That is not a popular thing to say to people whose interests lie in private enterprise rather than in developing countries, but it is, nevertheless, happening.
  I should like to make one final reference to Clause 3. I know that my hon. Friends have much to say on the Bill. We have grave doubts about the wisdom of using official development assistance in order to give even a modest subsidy, since we believe that private investment is not to be regarded as aid. If the investment is not aid, it is illogical to use official development assistance to further private investment. We also have considerable doubts about the extent to which the official aid budget will be affected by this. It may be a tiny amount now, but it could be more. More than anything,
  1498
  it is the general principle which is involved here.
  While we welcome the introduction of the scheme on investment guarantees, we do so without the misconceptions of the Government about its effect on developing countries. We doubt the motivations which led them to introduce the Bill, and we shall have a number of specific points on which we shall require more information, and perhaps some changes in the Bill itself, as we move into the Committee stage.
  11.25 a.m.
  Mr. John Nott: I want to make one or two comments on the speech of the right hon. Lady the Member for Lanark (Mrs. Hart). She clearly knows a great deal about the subject—she held an important appointment in the last Government—but I think that her remarks were weighted by her political prejudice. We heard a lot of theology, and little practical advice. She told us that private investment might not be suitable for infrastructure, but she bracketed that with the comment that the Committee already realised this. We do realise that, and there was, therefore, no need to comment upon it.
  Private investment has been vitally important in the oil sector, in the mineral exploration sector, and in the agricultural sector, and it will continue to be so. I am not clear why the hon. Lady grew so vehement on the subject of private versus public investment. After all, a few years ago the Select Committee on Overseas aid—not a sectarian Committee, but one consisting of Members from both sides of the House—concluded, in paragraph 170 of its Report
  "that Britain should unilaterally insure private overseas investment in developing countries."
  That was the unanimous recommendation of that Select Committee, and its advice was good, even though the right hon. Lady may now dissent from its judgment on that occasion. That was the impression I gained from the tone of her remarks, because they were not friendly towards private investment. The right hon. Lady is entitled to her views on private investment, but both the U.N.C.T.A.D. and Pearson targets include a degree of private investment, and I am more inclined to pay attention to the U.N.C.T.A.D. and Pearson recommendations than I am to hers.

  1499
  As far as I know, the Pearson Committee laid down a percentage for public investment. It laid down 0·7 per cent. as the target for public investment, so I do not know why the right hon. Lady should get so heated about this subject. The Pearson and U.N.C.T.A.D. recommendations were in favour of a large proportion of the remainder—between the 0·7 and the 1 per cent.—being made up by private investment.
  I realise that the right hon. Lady sees herself as the protector of under-developed countries throughout the world, but I would have thought that without her assistance they are perfectly capable of saying that they do not want private investment. There is no obligation upon an under-developed country to accept investment if it does not want it. The evidence is that throughout the world under-developed countries are keen on receiving private investment. Such countries can make up their own minds without advice from the House of Commons. It is clear that in a great number of countries—Mexico, India, wherever one goes—private investment from overseas is greatly encouraged, and that is an extremely good thing.
  I would also have thought that the United States Agency for International Development is able to defend itself against Anaconda and the American copper companies, although no doubt A.I.D. may now and again need a little assistance from the right hon. Lady in deciding its policies.
  The right hon. Lady said that the whole scheme was investor-oriented. This is an insurance scheme and this is its purpose. To that extent, it must be investor-oriented; it is not an insurance on behalf of the host country. I do not think that the right hon. Lady is so totally against private investment as she makes out.
  I welcome this excellent Bill. Practically the first Amendment that I tabled when I became a Member of the House were Amendments to an E.C.G.D. Bill in 1967. Those Amendments, on 13th February, 1967, had the objective of giving an investment guarantee of this nature. It is rather a pity that we have had to wait so long, until the present Government came to power, to bring in measures of this sort. As the Under-Secretary said, we are one of the very
  1500
  last countries in the developed world to bring in an investment guarantee of this nature, and I certainly welcome it.
  May I ask the Under-Secretary, as presumably he will speak once more, if the insurance is available for what I might described as creeping expropriation. In circumstances where an under-developed country has private investment, and where bit by bit it makes it more and more difficult for an investor company to operate in the environment of the under-developed country—for instance, it may make its transport facilities more difficult to operate—and slowly the company is squeezed out after a period of years, which is a common situation, would the insurance be valid?
  I assume that insurance would cover convertibility and exchange risks. Would it cover devaluation or revaluation? I do not necessarily think it should, as this must be part of the judgment of the person making the investment. Will the insurance be able to cover reinvested earnings? The Under-Secretary said that 100 per cent. of the initial investment would be covered, but would it cover earnings which are brought back to this country?
  Finally, there is the question of the premium. The average premium of E.C.G.D. is now about ¼ per cent. on E.C.G.D.'s cover for exports. Figures that I read were that up to now only 4 per cent. of premium income over 20 years has been paid out in the case of the United States and 2 per cent. over 10 years in the case of Germany. I see that we want a conservative start and that experience must be gained. but 1 per cent. seems a rather high figure to get this off the ground.
  11.35 a.m.
  Mr. George Cunningham: May I, in the absence of my right hon. Friend the Member for Lanark (Mrs. Hart), say a word in her defence after the comments of the hon. Member for St. Ives (Mr. Nott), although she needs no defence from me. I did not regard any of my right hon. Friend's remarks as being unduly critical of the rôle of private investment in development. Everyone who has been engaged in this field for some time realises that there is some private investment which is very helpful and conducive to development of the host country and there is other private investment which is not.

  1501
  Of course a scheme of this kind is investor-oriented, in the sense that it is there to protect the investor against risks, but the investor-orientation to which my right hon. Friend was referring was the fact that it seems to us to be extended to protect the investor wherever he invests and whatever he invests in, whether his project is conducive to development or not.
  The hon. Member for St. Ives referred to the Pearson target within the target of 0·7 per cent. of G.N.P. for official development assistance. I hope he will join those of us who nag at the Government to give governmental support to that target. The difficulty is that the present Prime Minister, who paid a very noble part in 1964 in getting the original U.N.C.T.A.D. 1 per cent. target through, which related indiscriminately to private and official flows, has become stuck on that idea ever since. if the Prime Minister notices that those interested in this subject have moved on and greatly desire a target within the target, he himself refuses to see it or to mention it. While our performance on the 1 per cent. target—the public and private flows together—has certainly been rising, our performance on official flows has been falling sharply. It is not a case that our performance on the 1 per cent. target has been rising principally because of private investment. It has been rising because of the private flows, and mainly because of the export credits element in the private flows.
  It would have been more helpful if, instead of arranging the Second Reading debate and telling hon. Members that he would table a couple of papers that they would be able to read after the debate, which would enable them to study the scheme that he proposed to introduce, the Minister has tabled the schemes in draft to enable hon. Members to see them first. Instead of the Minister gabbling through his long written statement, which was not easy to follow, we could all have read it.
  I have no doubt that the bureaucratic answer is that until the House has given its approval to the idea on Second Reading it would be wrong for the Government to prejudge the matter by pretending that they had their ideas all worked out. That is a lot of baloney, and if that is an established practice of the House
  1502
  of Commons, it is one of the many daft practices which we ought to give up as quickly as possible. We could have a more useful discussion if we had the schemes with us here now. This morning's discussion and that to take place on some other occasion, because I cannot see that we can get through this important business this morning, must be imperfect because we are trying to remember such points about the scheme as the Minister saw fit to give us in his speech.
  There were a number of obvious points about possible schemes which the Minister did not cover. In the White Paper paragraph 11, the Government stated baldly that they had
  "considered, but rejected as being inappopriate and undesirable in principle, a variety of suggestions for subsidy, by way of grant or loan on preferential terms, of selective private investment in developing countries."
  No reasons were given as to why that was thought inappropriate or undesirable in principle. The Government may be right, but we are entitled in this debate, if not in the debate on the White Paper, to some explanation, and preferably a well reasoned explanation, of that decision.
  In the second half of that paragraph, the Government said:
  "Less direct methods of achieving similar results by tax concessions have also been rejected."
  Again, no reason is given. I presume that, if one asked the Minister why one cannot have fiscal devices to encourage investment in developing countries, he would say that it is impossible to devise fiscal means which discriminate between countries. In fact, the Americans do it. The Minister claims to be familiar with the way in which other countries operate their schemes in this respect. And so he should be; they have all been well set out in published documents. The Americans have found a way of doing it. It is moderately effective in giving a little edge to investment in developing countries, and I should like the Minister to explain why the Government could not do that sort of thing here.
  I doubt that the introduction of a scheme guaranteeing investment will have any visible, quantifiable or noticeable effect on either the volume or the distribution of British private investment. In some countries, for example, Canada, a

  1503
  country which is a big capital importer and where investors are not accustomed to investing overseas, or certainly in developing countries, the introduction of a scheme like this has a certain publicity effect in making investors more aware of market possibilities in developing countries, which may have an effect on volume and distribution. In the Scandinavian countries, also, which are not much accustomed to investing in developing countries, it may have the same effect.
  On the whole, British investors are well aware of the markets for investment in developing countries and of the risks involved. While it must have the effect of increasing the level of investment rather than decreasing it, we shall not see as a result of this scheme more than a 5 or 10 per cent. jump in investment. Moreover, one could never claim that the jump, if it came about, was attributable to the scheme. There may be some effect in switching what investment does occur from low to high-risk countries and from low to high-risk projects. But even that has been questioned by people like Professor Paul Streeton who have been operating in this field for a long time.
  I come now to Clause 4, which raises the ceiling for the outstanding credit under the Export Guarantees Act, 1968. In principle, it is desirable that those who wish to buy British goods should be able to have the extra facility available under this scheme. However, the Minister did not mention, and he should, the serious development in the statistics in recent times.
  As I said a moment ago, the part of our performance on the 1 per cent. target represented by the increase in the outstanding amount of export credits is high, and is becoming higher. Up to about five years ago, one took it that that figure was about £40 million to £45 million a year. It seemed to remain almost suspiciously static, and I suspect that its static nature was attributable as much to imperfections in the gathering of the statistics as to what was really happening. In recent years, it has gone wildly up. In the O.D.A.'s latest publication of statistics, the figures go up, from 1966 to 1970, £47 million, £41 million, £58 million, £110 million, to £181 million. In 1970, £181 million was the increase
  1504
  in the amount of credit outstanding, and that is only to developing countries. That is quite a bit more than the net outflow of official aid.
  Britain is not quite alone in this respect, but she is far in advance of the others. The other countries tend still to have something like a quarter of their official flows represented in the figure for the increase in export credits. If donor countries go on supplying export credits, on commercial terms, at that volume to developing countries, the indebtedness of developing countries will become even more serious than it is now. I do not say that, therefore, we should not have raised the limit on export credits, but this is an aspect of the situation and a danger of which the Minister should at least have shown some awareness when he introduced the Bill. He ought to touch upon it when he winds up.
  On the question of the insurance scheme itself, will the scheme cover oil? Will investment in petroleum exploration be coverable by the scheme? The United States scheme, which is much more ambitious than most others, does not cover oil. The Minister may say that it is not the Government's intention to use the scheme to cover oil exploration. If that is the case, I should prefer to see that exclusion written into the Bill and not left to Ministerial discretion, since investment in oil activities is a large part of our overseas investment, as well as that of the United States and all Western donor countries.
  I agree with my right hon. Friend in deploring that the Advisory Committee which is to help operate this scheme appears—although, again, we have to think of the names he mentioned and try to think who they are—to have no representation of people well informed on the aid and development scene. There is no provision, as my right hon. Friend says, such as there is in many other donors' schemes, that the O.D.A. has to agree to any specific proposal. There is no provision that the O.D.A., as such, will be represented on the Committee.
  It may be said that we do not do that sort of thing, and we do not provide that, when one Department does something, it must involve another Department. In fact, we do it every day, and it becomes so normal that we do not notice it. Almost every Bill says that we can do

  1505
  something "with the consent of the Treasury". It would have been perfectly easy to say that the E.C.D.G. can do this with the consent of the Overseas Development Administration, the Foreign Office, or whatever is required. That is what some other donors have brought themselves overtly and in terms to do, and it is something which we should consider when we look at the Bill in greater detail.
  The scheme is not limited to developing countries. I understand the difficulty in defining or in listing developing countries, but I was worried by the Minister's qualification to his statement that it was intended to operate the scheme only in developing countries. He implied that if an investor wants to invest in a developed country, that will be considered on its merits. If an investor comes along with an absolutely rock safe investment and chooses to pay the premium for it, why turn it down?—except that the risk thereby nominally taken on will bring one up against the ceiling earlier than otherwise, and will therefore, at least notionally, limit the amount of risk one can take on in developing countries. It would have been better to cut out developed countries entirely, and to say that there was no intention of operating a scheme of this kind in a developed country, leaving the definition of "developed" and "developing" to be decided by the Government at the time.
  The United States and Germany specify that it will be a condition of the offering of insurance that there should be an agreement between the donor and the host Governments about the protection of investment. I agree with my right hon. Friend. I cannot see why that is not a provision in our scheme, too. This should be explained. In the White Paper we told that the scheme will be introduced. As an afterthought, paragraph 10 states:
  "The Government will also seek wherever possible to conclude bilateral agreements …"
  Surely there is an inter-relation that if there is an agreement the risk is less. It would be normal and only prudent to obtain from the host Government that degree of assurance before taking on the risk. If there is no agreement, that would, on normal commercial criteria, justify a higher premium. That is what other Governments have done. If we
  1506
  intend to do something different, we should at least explain it.
  Most other Governments which offer a scheme of this kind specify that the projects covered must be projects with development priority or which are of a development character. The Danish scheme does that, as do the Swedish and Belgian schemes. On the Netherlands scheme—the Minister will be familiar with this, because he has gone into it deeply—I read an interesting passage:
  "After lengthy debates"—
  on the Netherlands Bill, like that which we re now discussing:
  "the Bill passed the Second Chamber with two amendments. … In the course of the debates great emphasis was placed by the Second Chamber on the primary requirement that investments by F.M.O. should have a substantial development value, and should in a meaningful way contribute to the social and economic advancement of the host country and as such be wanted by the host country. Amendments, stressing this point and requiring F.M.O. to receive in writing from the host country's competent authority approval of proposed investment were in agreement with the Governments views.…."
  That scheme is not the same as ours. It is a more direct investment scheme. The principle is the same. The Netherlands and the other countries which I have mentioned, and Germany, all specify—all, except Germany, very specifically—that the project covered by the insurance must have a high development value. The Germans are more vague in their wording and provide that the scheme must be a "worthy" scheme, but development value is one factor to be taken into account in deciding whether the scheme is a worthy scheme.
  One point of detail which the Minister should cover is this. So far as I can see in the Bill, while the person or company to be insured must be British or resident in this country, there is no requirement that if there is a local company that company must be controlled by the person being insured, and that he must have a majority control of it. I may have misunderstood the Clause. If so, I shall be grateful for reassurance. It is a common form in other schemes to specify that a company whose risks are being insured must, in its local activity—if there is a separate local activity—have a majority shareholding, because only then is it in a position to behave in such

  1507
  a responsible manner as not to provoke the expropriation.
  Clause 3, on pre-investment studies, raises a number of questions which the Minister only skated over. We should know more if we had had the privilege of seeing the description of the scheme before the debate instead of afterwards. My right hon. Friend asked whether the cost was to count as official aid. I should like to know whether the Government believe that the cost would count towards performance of the 1 per cent. target either as official aid or as private. I do not see how it can count as one or the other. It ought not to come out of the aid programme figure for domestic purposes. There are plenty of precedents, from the years of the Labour Government for spending money of a quasi-aid nature in developing countries but deciding that because it was not pure aid enough it should not come out of the purse of the Minister of Overseas Development but from some other purse. That should be done in this case.
  Some activities mentioned in the Bill will be self-financing. This activity will not. I hope that the Minister will say that the cost of the 50 per cent. share in the pre-investment studies, if it has to be paid, should be paid by the Government, but not out of the figure in the public expenditure lists for aid. We should also be told what the criteria will be for accepting investigations under the Clause.
  There is, in this Clause, as in other Clauses, no limit to developing countries. Who will assess whether a project is worthy of the Government putting in the 50 per cent. figure? If the 50 per cent. figure is always to be applied, why is it not in the Bill? If the Government intend that in particularly deserving cases they will be prepared to carry more than 50 per cent. of the cost—as the Americans do—the Minister should have mentioned that, and there should be a provision in the Bill that the norm will be 50 per cent. but that the Government have a special right, in extraordinary cases. to carry more of the cost for stipulated reasons.
  Those are all the points of a general character that I wanted to raise at this stage, but I should like to reheat that we could have had a much more useful debate had we been able to see the
  1508
  schemes in writing before the start of the debate.
  11.58 a.m.
  Dr. John Gilbert: I add my congratulations to the Minister on the general principle that lies behind the Bill. It has been long overdue. Having said that, there are many weaknesses and gaps in the Bill, to which I, like my hon. Friends, shall wish to draw attention during the Committee stage.
  Speaking generally, Clause 1 is particularly long overdue, though, like my hon. Friends, I have a certain reservation as to what increase in private investment this will lead to. Time alone will tell; it is not particularly fruitful to speculate about that now.
  Clause 3, in principle, is generally helpful, but I share many of the reservations of my hon. Friend the Member for Islington, South-West (Mr. George Cunningham).
  Clause 1(1) speaks about "insuring investment overseas". This is not a genuine insurance operation at all. It is a guarantee operation. An insurance operation is one which is properly founded on an actuarial basis. The Minister conceded from the beginning that we have no real basis for calculating what the loss experience is likely to be, and that the rates will therefore be set quite arbitrarily. He drew attention to the experience of the United States and Chile. We must be clear that we are not engaging in an insurance operation but in something of a totally different nature—a guarantee type operation.
  I should like briefly to draw attention to various serious lacunae in the Bill. First, Clause 1(2) provides that
  "The Secretary of State may under the arrangements enter into agreements with persons carrying on business in the United Kingdom".
  It would appear from that that any company or individual apparently domiciled in the United Kingdom would be eligible for guarantee coverage under the Bill.
  That is a very unsatisfactory state of affairs. The Bill is drafted far too widely. It would be intolerable if we were to be handing out guarantees to corporations which, though normally domiciled in this country, in fact have their major beneficial ownership abroad.

  1509
  I am thinking particularly of subsidiaries of multi-national corporations where the parent company is outside this country.
  One can imagine situations where the subsidiary in this country of an American parent company could ask the Department for insurance about an investment which it proposed itself to make in a third country. There is nothing in the Bill to prevent its being eligible for such coverage.
  If we accept that view, the Government will be in a highly exposed position. As the Minister knows, there are a great many countries where the writ of the United States investment guarantees scheme does not run. As my hon. Friends have pointed out, the United States and Germany have requirements, which are not laid down in our scheme, that no guarantees will be issued except in respect of countries with which the investing country has negotiated a bilateral agreement.
  As far as I can see, there is nothing to stop, say, the Ford Motor Company in this country having channelled through it a major investment by the Ford Motor Company of the United States in a country where the United States does not offer investment guarantee facilities. As the Bill stands, we should be in the position of having to guarantee an investment nominally undertaken by a company in this country but which, in fact, would be an investment by an American parent company.
  When one considers various other gaps in the Bill in terms of how one determines the nature of the political risk that shall bring the contract into effect, one sees that we shall be in a highly exposed position. For example, a host country might take violent umbrage at the activities of the United States Government
  One could envisage circumstances in which the behaviour and comportment of the investing company in that country were blameless but for some reason or other the host country took violent exception to an activity of the United States Government. The host country might for purely political reasons directed towards the United States Government turn round and nationalise, expropriate, confiscate or sequestrate the property of the investing company in its territory. We should then be paying the bill for political acts provoked by the United
  1510
  States Government. That is a degree of exposure which I for one find totally intolerable.
  Again, the Bill is very vague in its description of the types of loss which are covered. The only reference I can find in the Bill is this:
  "the Secretary of State undertakes to indemnify the other party to the agreement against any loss of a description specified in the agreement."
  Surely, before we can be prepared to agree to something like that we must have some idea of what the standard form of agreement says. Let us not be led astray by thinking that situations of this kind are on all fours with the other activities of the Export Credits Guarantee Department.
  Everyone accepts that export credit guarantees are a useful job which is done in business with every other country in the world. But we are dealing here with matters of high political sensitivity. It is very important that we should know what types of risk will be covered under the Bill.
  The hon. Member for St. Ives (Mr. Nott) raised the very important question of whether or not devaluation will be covered. I support his request for information on that. Will sequestration be covered? I could find no mention of it in the White Paper.
  The White Paper just talks about political losses in a very general way. It says:
  "The scheme will provide cover against all the main types of political' risks (i.e. loss due to expropriation…loss arising from damage to or destruction of tangible property as a result of war, revolution or insurrection "—
  there is no mention of civil war as distinct from insurrection:
  "and the inability to remit profits or earnings or repatriate the original investment but not for commercial risks."
  No mention is made of situations in which losses can arise where the host Government have broken a contract, shall we say, with the investing country. It makes no reference to situations where political conditions have arisen which make it impossible for the investor to carry on his activities profitably although there has been no overt political act or breakdown of law and order which could be said to have contributed to that state of affairs.

  1511
  I can see nothing in the Bill which refers to the responsibility of investors to behave properly, along the lines which my right hon. Friend the Member for Lanark (Mrs. Hart) indicated would be necessary in terms of some sort of code of agreement for the investing corporations.
  In this respect, I draw the Committee's attention to the phrase used in the United States agreements:
  "The term expropriation 'includes but is not limited to any abrogation, repudiation, or impairment by a foreign government of its own contract with an investor; where such abrogation, repudiation, or impairment is not caused by the investor's own fault or misconduct"—
  That is a very important condition:
  "and materially adversely affects the continued operation of the project.'"
  Clearly, we shall need some safeguards of that type. I hope that the Minister will be able to give them when he sums up.
  There are a great many other types of restriction on the activity of an investing country which can lead its operations to become unprofitable—restrictions on its ability to import vital materials or parts; restrictions on its ability to export to certain markets for political reasons; all kinds of political activities—tax discrimination against it, requirements of certain personnel policies, and so on. We want to know whether or not we shall be committed to covering losses caused by events however proximate to or remote from the operation of the investing corporation.
  There is another matter which is not covered in the Bill and with which I hope the Minister will deal. There is no mention of how we shall know when a loss is deemed to have arisen. One could get a situation where inconvertibility might be regarded as a loss. How long does the inconvertibility have to persist before it is determined that a loss has taken place? We need more information on that.
  What degree of inconvertibility will be deemed to have caused a loss? A host Government may declare that only a certain proportion of profits or capital may be remitted. If losses arise out of that because the other balances are frozen, shall we be exposed to risks of that kind? If there is a devaluation-
  1512
  type situation in which a certain proportion of capital and profits can be returned at a given exhange rate and the remainder at a considerably less advantageous exchange rate, are we supposed to be covering the investor for situations of that kind?
  It would be intolerable if we were to be in the position of being asked to give a blank cheque to guarantee investors who are putting an investment into a country merely to milk it and take out 100 per cent. of the profits year after year, rather than plough them back into a country where this type of investment is supposed to be encouraged by the Bill. On that point, we must be very careful to see that political losses are not allowed to' shade into commercial losses. It is often difficult to find a satisfactory dividing line between the two.
  The Bill says nothing about how we define "investment of resources". That phrase can cover a wide range of different types of investment. The White Paper referred to
  "new direct investment whether in equity or loan form",
  but that does not take us much further forward.
  We want an answer to the point raised by the hon. Member for St. Ives about whether retained profits are to be invested, and we want to know the term for which any investment will be eligible for coverage. If an investment has been able to exist unimpeded by political activities for 20 years, will the exposure of the British Government continue? Will the British Government still require insurance premiums to be paid on that investment? Will the rate start to drop after a certain period?
  There is, next, the point mentioned by my hon. Friend the Member for Islington, South-West (Mr. George Cunningham). We hope to see a requirement that the investment should be one where the investor obtaining a guarantee from the British Government would, in effect, have satisfactory control over the investment so that he could be held to be responsible for the subsidiary company acting in a proper and suitable way.
  With regard to the definition of the term "investment", again I draw the Committee's attention to the United

  1513
  States scheme which defines this very closely. I do not say that it should be the be-all and end-all of our own attitude, but it is worth considering:
  "The term investment is defined as including ' any contribution of capital commodities, services, patents, processes, or techniques in the form of (1) a loan or loans to an approved project, (2) the purchase of a share of ownership in any such project, (3) participation in royalties, earnings, or profits of any such project, and (4) the furnishing of capital commodities and related services pursuant to a contract providing for payment in whole or in part after the end of the fiscal year in which the guarantee of such investment is made.'"
  It is important that we should know exactly what type of investment we are being asked to provide guarantees for in the Bill.
  Further to that, I can find no provision in the Bill for any publication of reports of the activities of the E.C.G.D. under this investment guarantee scheme I draw the Minister's attention to Section 8 of the Export Guarantees Act, 1968, which provides that:
  "The Board of Trade shall publish quarterly—

  (a) a return showing the aggregate amount of the guarantees given under Section 1 of this Act since the date of the last previous return under this paragraph;

  (b) a return showing the aggregate amount of the guarantees given under Section 2 of this Act since the date of the last previous return under this paragraph, and of the amounts paid by the Board of Trade sine that date for securities created in pursuance of such arrangements…"

  That is the very least we could expect to have as reporting requirements under the proposed arrangements. For myself, I see no reason why the E.C.G.D. should not on a regular basis publish its country-by-country exposure under the scheme. The very least it can do is to indicate the number of guarantee applications that it has granted for each country.
  I entirely endorse what has been said by my hon. Friends on the subject of less developed countries. There is no reason whatsoever why we cannot have, if not a definition of less developed countries, a list of less developed countries, so that we know precisely to whom these guarantees will be available at any one time. If the list has to be changed from time to time, so be it.
  There is no point in trying to pretend that the information will not come out,
  1514
  because businessmen will constantly request guarantees in regard to every country under the sun. We shall be reduced to trying to pick up bits from the gossip columns in the financial newspapers to find out whether one country is in or another is out. A thoroughly unsatisfactory state of affairs has been contemplated. There is no reason at all why we cannot have a full list of the countries for which the guarantees are available.
  I note that paragraph 7 of the White Paper says:
  "ECGD will have discretion to decide whether to cover investments in certain countries or particular cases, or to restrict or modify cover in any way."
  That is basically a negative discretion, a discretion not to do certain things.
  It appeared to me that the Under-Secretary was seeking to give the E.C.G.D. unlimited discretion to guarantee investments wheresoever and in whatever amounts seem suitable to E.C.G.D. That, again, is the kind of blank cheque which I should be most reluctant to give to the Department—not that I have any criticism at all of the way in which E.C.G.D. has operated in the past. I have a very great admiration for its work. But we must realise that what is being proposed here is a very significant extension of its activities, and one which, as I said previously, has very sensitive political implications.
  I note that there is no mention either in the White Paper or in the Bill of any element of Commonwealth preference in the scheme. I keep a fairly open mind about that, but I should like to hear the Minister's views. The world is unfortunately becoming increasingly polarised into rival trade blocs. There is the Common Market, with its associated territories. There are more and more frequent reports in the Press that the United States is trying to set up a rival bloc involving itself, Australia, New Zealand, Canada, Japan and the countries of Latin America. We should be told exactly why there is no proposal for preference to our Commonwealth associates in the scheme.
  Bilateral arrangements with host countries have been referred to. It was pointed out that both Germany and the United States require arrangements of that kind before they are prepared to issue any type of guarantee arrangements.

  1515
  I have a relatively open mind about this subject. I can see drawbacks in either type of arrangement.
  There is no mention of bilateral arrangements in the Bill, although the Under-Secretary apparently has aspirations in that direction. If we are to have bilateral arrangements there must be some incentive for countries to enter into those arrangements. It is not good enough to say that we shall have bilateral arrangements with some countries and not with others: they must be with all or none. If guarantees are to be issued to certain countries which have not negotiated a bi-lateral arrangement with the United Kingdom, there will be no incentive for other countries to agree to such arrangements.
  If we are proposing to negotiate these arrangements, is it intended that they shall specify separate sets of risk? I am not familiar with the German scheme, but the United States negotiates separate arrangements to cover war risks, expropriation, and inconvertibility. It has three specific types of agreement with the less developed countries. Is it proposed that we should follow that pattern, or that we should attempt to negotiate comprehensive agreements covering all types of political risk? If the Minister proposes to try to obtain comprehensive arrangements, I warn him that he will find much resistance and some resentment on the part of certain developing countries because—understandably—they feel that their self-respect is involved.
  I have some reservations about the value of such arrangements, because I can understand why a less developed country should feel it demeaning to enter into an agreement which presupposed that it might at some time contemplate acting less than honourably towards those who had invested in the country. It might also feel it insulting that the agreement should envisage a civil war or revolution in the country. It would be understandable if the Minister found, when he came to negotiate agreements of this sort, that countries were extremely reluctant.
  The hon. Member for St. Ives raised the question of the rates charged. I, too, should like to hear more from the Minister on that subject. Is it proposed that we should have a single rate to
  1516
  cover all types of risk? Are the guarantees to cover all types of risk? Is it essential that someone applying for guarantees under the scheme should apply for coverage for all types of risk, or will he be able to specify the type of risk under the headings of war, insurrection or revolution, and inconvertibility? Will there be facilities for standby arrangements? The United States has an arrangement under which it charges ¼ per cent.—half the rate for the existing insurance—for standby arrangements under the scheme. That would be extremely helpful to investors and would materially advance the general objectives of the Bill.
  Is it contemplated that rates will vary from country to country, as between the different risks to be covered, and as between the different types of industry making the investment? Some industries have a high degree of exposure and are much more liable than others to be confronted with evidence of political hostility in the countries in which they have established themselves.
  The Chairman: Order. I remind the hon. Gentleman that this is a Second Reading debate. He is verging on the very detailed minutiae of the Committee stage.
  Dr. Gilbert: I accept your rebuke, Miss Quennell. You will be glad to hear that I have almost reached the end of my remarks. I wished only to give the Minister some warning of the sorts of point which I, for one, propose to raise at considerable length during the Committee stage, unless I receive assurances from him.
  I repeat that I give a warm welcome in principle to the Bill, but, when it comes to its detailed provisions, I find it in some respects far too wide and in others not wide enough. My hon. Friends and I will seek drastically to amend the Bill in Committee.
  12.25 p.m.
  Mr. Robert Cant: You give me courage, Miss Quennell, to rise to make one or two very general points, though you may rule me out of order for going too wide of the Bill. I suppose that it is inevitable that, in a Second Reading debate in a Committee Room, one becomes involved in such detailed points as those which have been referred to.

  1517
  Although I welcome the Bill, I think that, perhaps because we are in a period when we have a substantial balance of payments surplus, we are encountering some of the problems raised by export guarantees which were very widely discussed before we entered this euphoric period. One thing which emerges from the presentation of the Bill is that one of the important matters to which the Minister should give attention is the need for a world conference on the whole question of export guarantees. As it is evolving, this amounts to a question of subsidies to exports, barriers to trade, preferential arrangements, and so on. So, although in general terms I welcome the Bill, I feel that we should not lose sight of the fact that the world is getting into a strange position in this context. It may he, as my hon. Friend the Member for Dudley (Dr. Gilbert) has said, that the more we become polarised in terms of trading regions the more resentment and hostility will he generated if growing nationalism leads us into a period of increasing protectionism and declining world trade.
  The other aspect of the problem is that our expenditures in respect of export guarantees are rising very rapidly, probably much more rapidly than was expected. This, in a way, throws a burden on the balance of payments. Nobody bothers about that when we are in a situation of having a balance of payments surplus of considerable magnitude. However, the Government are being compelled to reflate. It would be out of place to bring politics into our sedate discussions. Nevertheless, the Government may find that they are caught up in a situation in which that reflation leads to a balance of payments deficit more rapidly than they might have hoped for the sake of their future election tactics. In such circumstances, these little rocks which formerly looked menacing on the seashore but which are now covered over at high tide might begin to figure in our arguments once more.
  In general, one cannot avoid this sort of programme, nor can one avoid extending the provisions which have been made in the past. It is rather like value-added tax, if I may throw that Common Market problem into our midst, in the sense that we are compelled to have the tax because other nations have it,
  1518
  though there might be profound arguments against it if it were taken by itself. The same is true of these export arrangements.
  I ask the Minister to keep an eye on this growing financial burden, because we shall not always, I hope, be in the position of having 1 million or 1½ million unemployed, and a glorious balance of payments surplus of £800 million. When that surplus disappears, we are likely to have an entirely different and less euphoric discussion of the role of export guarantees, the expansion of our arrangements, and so on.
  To develop that point rather differently, I do not wish to be called suspicious, but I think that we are moving into a new stage of economic development in which we may find that if we offer too generous export guarantees to underdeveloped countries we shall produce a problem for the balance of payments and, indeed, for British industry. I suspect that the Americans are suffering from that at the moment.
  Moving from the current account to the capital account, there can be no doubt that the United States is greatly embarrassed in terms of its balance of payments deficit because the multi-national corporations are moving considerable amounts of short- and long-term capital to the less developed regions. That will happen at an increasing pace, and it may affect this country within the decade. Therefore, that is again a situation on which we must keep an eye.
  If we ask ourselves why this is happening, clearly it is because the pattern of production in the advanced industrialised countries is changing rapidly. I remember meeting a delegation of industrialists from my constituency. One industrialist who asked questions about costs, production, and so on, was told point-blank by one hon. Gentleman opposite that the economic logic of the situation was simply that he, the industrialist, should re-establish his factory in South Korea. That may seem rather far away, and it certainly took my friend by surprise.
  What is happening is that, led by the United States, though certain European countries are following the trend, industries which need relatively cheap labour are tending to establish themselves in the countries of Asia. These are not high technology industries, but industries of

  1519
  the secondary technological level. This is happening at such a rate, certainly as far as the Americans are concerned, that not one television set bought in the United States now is produced there. I do not want to stir up alarm and despondency on a beautiful morning like this, but if we project our thoughts forward ten or fifteen years we may find our industrialists setting up this type of secondary technology well beyond the borders of this country, and certainly outside the Common Market countries—perhaps even in South Korea or Africa.
  I do not wish to dwell on that but, clearly, the more we develop export guarantees in the areas contemplated in the Bill, the more we shall encourage such a state of affairs. We shall encourage a two-fold effect. We shall put a strain on both the balance of payments current account and the balance of payments capital account, and we shall be faced with the controversy which is beginning to rear its head in the United States. As American productivity declines, unemployment rises. I think that we should consider carefully whether we should have more foreign investment abroad, or see to it that we keep investment in this country.
  I am sure that I have ranged far too wide, though I may perhaps have provided a counterpoise to the detailed arguments put forward from both sides. I conclude by saying that we must welcome the Bill and the proposals to extend the arrangements in question, but I suggest that the Minister should use the interest which the Bill will generate to remind his hon. Friends that the whole question of export guarantees raises an important question in world trade and that it will become much more important as the Government reflate the economy and the balance of payments situation declines from a rosy surplus into a deficit.
  Mr. Anthony Grant Mr. Anthony Grant rose—
  The Chairman: May I remind hon. Members that, in Second Reading debates, Ministers or hon. Members can speak twice only by leave of the Committee?
  Mr. Grant: Miss Quennell, I seek the leave of the Committee to speak again.
  The Chairman: Has the hon. Gentleman that leave?
  12.38 p.m.
  Mr. Grant: This has been an extremely interesting and thoughtful debate. It has ranged from detailed, but extremely helpful, probing points by the hon. Member for Islington, South-West (Mr. George Cunningham) and the hon. Member for Dudley (Dr. Gilbert), to the little treat of a broad-ranging, philosophical speech from the hon. Member for Stoke-on-Trent, Central (Mr. Cant), which reminded me of the times when I used to sit in Finance Committees and finance debates in the House and enjoy his contributions. I think that I need say to him only that many of his observations were meant for a wider governmental audience than myself, and I have no doubt that he will be returning to his theme in the Budget debates, for example. Nevertheless, I assure him that what he said about the dangers of the export credit rates and of a wild extension of export credit guarantees is well understood by the Government in general, and by the E.C.G.D. in particular. Britain and E.C.G.D. are very active and in the forefront of attempts to avoid the galloping credit race, which could do enormous damage to world economy. We appreciate what the hon. Gentleman says. We do not necessarily dissent from it. We have this very much in mind.
  Moving to the other end of the scale, very detailed matters have been raised which are primarily for the Committee stage. I say to the hon. Member for Islington, South-West (Mr. George Cunningham)—who has great expertise in this matter and understands the problem in considerable depth, from his past experience—that no discourtesy was intended by the fact that the outline scheme will not appear until after Second Reading. This is a Second Reading debate in the broad sense. When the hon. Gentleman studies the scheme in detail, he will find that many of the questions that he and the hon. Member for Dudley (Dr. Gilbert) raised will be satisfactorily resolved. So far as they are not, there is an opportunity to return to them in Committee and to table the appropriate Amendments. I assure both hon. Members that we shall carefully study their speeches.

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  I also assure the hon. Member for Islington, South-West that the O.D.A. will be consulted in all cases. It would not be appropriate to require in the Bill that the approval of the O.D.A. must be given. The O.D.A. has not been included in the advisory committee itself, because there are established Whitehall procedures for consultation. The hon. Gentleman can rest assured that the O.D.A. will not be isolated in this respect.
  Mr. George Cunningham: Why would it be inappropriate to provide in the Bill that the O.D.A. could be consulted? We provide that the Treasury will be consulted. What is the difference? I know it has never been done before, but too many things in this place are not done because they have not been done before.
  Mr. Grant: We will bear in mind what the hon. Gentleman said, but I believe that the established practice should apply in this case. The difficulties which he envisages are not likely to arise.
  My hon. Friend the Member for St. Ives (Mr. Nott) referred, as did the hon. Member for Dudley, to the dangers of creeping expropriation. The hon. Member for Dudley also wanted further information about the type of risk to be covered and similar details. It is our intention to safeguard against the risks which these two hon. Members had in mind. The precise scope of the risks is being worked out in the process of drafting the standard form of contract that will be used. The points which have been made will be taken carefully into consideration.
  My hon. Friend the Member for St. Ives raised the question of devaluation. Devaluation will not be covered, but lack of convertibility will be. Re-invested earnings can be covered up to 100 per cent.
  As I understand it, the rate of premium proposed is a little less than the United States' rate. We must bear in mind that investment insurance is a 15-year commitment. With other rates the period is perhaps shorter. I was right to say in my speech that, broadly speaking, we hit at the upper range in this particular field. This is probably about right.
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  In answer to the hon. Member for Dudley on the question of interest rates, we thought it right to have a flat rate, rather than a differentiating one for different countries and different circumstances, because this has the merit of simplicity. Differentiation between developing countries, on grounds of risk, would conflict with the basic objectives of the scheme. This is probably the right approach to take. As I said before, we intend to try to strike a sensible balance between what seem to be the conflicting objectives of making the scheme pay its way over a period and encouraging new investment in developing countries.
  The points raised by the right hon. Lady the Member for Lanark (Mrs. Hart), were of a broader nature. She referred a great deal to motivation. The Government believe that the fundamental motive behind this scheme is one which we can all share, which is to assist in the development of the developing countries. The difference between us is only one of means, not of fundamental motive. I hope that the right hon. Lady recognises that.
  I do not want to go over all the debate again, as to whether it is better to have official aid or private investment. I want only to say that the right hon. Lady highlighted one point of controversy. I maintain that our proposals are quite consistent with the Pearson proposals. They are consistent particularly with what we are in Britain—a country, rightly or wrongly, primarily concerned with private enterprise as the motive force in its economy. They are consistent with what other nations throughout the world, broadly speaking, have done. It is not right to suggest that we are doing something that is peculiar in the developed world as a whole. We are not. We are following the general broad pattern, though not in every conceivable detail.
  Official aid is important to developing countries, because of its greater continuity, its concessionary terms, and its availability for many purposes for which private capital is not readily forthcoming. It is precisely in recognition of this fact that the Government have announced substantial increases in official aid in the recent White Paper on Public Expenditure. This has been a pattern and

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  a policy which we shall adopt. Nevertheless, private investment brings benefit in the forms of essential capital and technical and marketing skill. The Pearson Report and the second U.N.C.T.A.D. both recognised the importance of foreign private investment in developing countries.
  The Government believe that both aspects or aid are important. They are complementary rather than in conflict. For a country such as Britain it is natural to expect that a substantial part of financial flows will be given in the form of private investments. There need be no excessive controversy in this respect.
  The right hon. Lady asked whether the repatriation of profits from foreign private investment cancel, in some ways, the value of investment in the developing countries. The Government do not believe that this is so. The Pearson Commission said that
  'available facts suggest that direct foreign investment has added substantially to the real national income of developing countries. In doing so, it has also enhanced their capacity to finance their future development.'
  Following that, the Government do not believe that there are dangers from repatriation of profits in the way the hon. Gentleman suggests.
  I apologise for taking the points rather at random, but it is as I took them down.
  The right hon. Lady referred to the question of the approval of the host country to an investment. The outline scheme will make it clear that any scheme or proposal must be acceptable to the host country. It will not be the practice of E.C.G.D. or its advisory committee to agree anything which was not manifestly acceptable to the host country. The outline scheme deals with this in greater detail.
  The right hon. Lady referred to the question of countries to which cover may be extended. She cited Greece and various other places. In principle, investment in all countries will be eligible for cover. However, the E.C.G.D. will have discretion whether to cover investments in certain countries and in certain cases or to restrict or modify its cover in any way, depending on the view which it takes of the risks involved. Decisions on individual countries will, in general, be
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  decided in relation to the circumstances of the application. We believe that it is right to give E.C.G.D. the discretion to consider each case upon its merits and that it would be a mistake to tie down too dogmatically, in an Act of Parliament, a set of criteria which might change from time to time. I am sure that we can trust E.C.G.D., with its great experience, to deal with this matter wisely and in the best interests of Great Britain and of the developing countries.
  Mr. George Cunningham: Is the Minister suggesting that the decision will be taken purely on commercial criteria? In the case of somewhere like Greece or Portugal, would there not also be the potentiality of a political bar to guaranteeing investment?
  Mr. Grant: I am not referring to a particular country, and I shall not name any particular country. Obviously, the E.C.G.D. will have to assess the nature of the political risk involved for which the applicant investor is seeking cover, before the insurance cover is given.
  Mrs. Hart: It is not just a question of political risk; it is a question of political desirability.
  Mr. Grant: That is true. I repeat that the E.C.G.D. will have to look at the circumstances of the particular case —whether it is in the interests of the developing country that the investment should be made; whether it is an acceptable risk, having regard to the national interest; and what degree of insurance cover should be given. It is not possible to be dogmatic in a Bill, and to lay down criteria. Each case would have to be decided on its own circumstances.
  On the question of an investment protection agreement or treaty with the host country, it was implied by some hon. Members—it may have been by the right hon. Lady also—that the insurance should be tied in some way to the existence of such a protection agreement with the host country. It is our view that this would be unduly restrictive, as negotiations for such a treaty are inevitably lengthy and, indeed, might not even be practical in some cases. Therefore, we do not think it is right to tie the insurance cover to a particular investment protection agreement with a country.

  1525
  On the other hand, the existence of such an agreement or treaty would be a significant factor in determining the availability and the terms of the insurance for an investment in a particular country. That is probably the right approach to the problem.
  There was reference to the question of taking out excessive profits in such a way that the investor in some way provoked the host country to expropriate. If I remember rightly, the right hon. Lady cited examples from Latin America. As I made clear earlier, we shall have the power to withhold cover in the event of the expropriation being provoked by the investor. This is considered in more detail in the outline scheme, where we deal with the question of particularly extortionate profit taking. Again, it seems right to leave the matter there.
  I take note of the right hon. Lady's remarks, but when she studies the outline scheme I doubt she will find it to be inconsistent with the view she holds in this respect. It is the intention of the Government that there should not be cover for a company which provokes forms of expropriation. Once again, this is a matter which can undoubtedly be dealt with best by leaving it to the discretion of the E.C.G.D.
  A great number of other points were raised, with which time is too limited for me to deal. For example, the hon. Member for Islington, South-West raised the question of costs. Under the investment insurance scheme, the administrative costs of E.C.G.D. in this respect, and any claims paid, will not count as an addition to our aid programme.
  The hon. Member for Dudley asked why, if the scheme is directed towards developing countries, will all countries be eligible for cover. The vast majority of applications will inevitably be for investments in the developing world, because the political risks there are thought to be the highest. We do not consider that there is any need to exclude consideration of the occasional cases where an investor might seek cover for investment in a developed country since this would help to spread the insurer's risk. It is best to have a reasonable spread of risks so far as possible. Certainly, however, it would be an unusual case in which investment would be backed in
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  what is, broadly speaking, called a developed country.
  I should like to answer the right hon. Lady on one of the points which bothered her particularly, both today and in the debate last June. She fears that the effect of these schemes would be to make the poorer countries—which are the ones particularly needing aid—in some way worse off than they are already. My view is different; the absence of insurance cover for investment in the past may have led, not unnaturally, to the poorer countries receiving less investment for that reason. The fact that such a scheme is being introduced, which will give cover against risks which hitherto have frightened away investors, will do something to redress that balance about which she is worried.
  I have dealt a far as I can with as many points as possible. There are many others of considerable detail which, as I said earlier, will be looked at extremely closely. It will be possible for the hon. Gentlemen, when they have studied the outline schemes, if they are not satisfied with them, to deal with these in Committee, when we shall consider sympathetically anything which they have to say.
  At the moment, we seek to introduce a scheme, which is new to this country but which has been in use in most other countries in the world, as I indicated. I believe it is something which will be helpful not only to the British industry, which wants it, and our own national interest, but also will be in the interests of the developing countries themselves. I hope, therefore, that the Bill will have a Second Reading.
  Question put and agreed to.
  Resolved,
  That the Chairman do now report that the Committee recommend that the Overseas Investment and Export Guarantees Bill ought to be read a Second time.
  Mr. Anthony Grant: Before you finally leave the Chair, Miss Quennell, on behalf of my colleagues may I express our gratitude to you for presiding over our proceedings, knowing—as I do personally—the heavy weight of constituency work which you have to do.
  Mrs. Hart: I support that expression of thanks. We hope that we may see you in the Committee stage of the Bill.
  The Chairman: I am most obliged. It has been a pleasant and constructive morning.

  THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE

  Quennell, Miss Joan (Chairman)

  Hart, Mrs.

  Atkinson, Mr.

  Holt, Miss

  Cant, Mr.

  Nott, Mr.

  Cunningham, Mr. George

  Page, Mr. John

  Eyre, Mr.

  Tapsell, Mr.

  Gilbert, Dr.

  Walder, Mr.

  Grant, Mr. Anthony

  Wall, Mr.

  Green, Mr.

  Walters, Mr.

  Harper, Mr.

  Warren, Mr.

  Committee rose at one minute to One o'clock.