Lords Sitting of 29 June 1939

Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
The Marquess of Lansdowne—Sat first in Parliament after the death of his father.

MERTHYR TYDFIL CORPORATION BILL. [H.L.]
Returned from the Commons, agreed to, with Amendments: the said Amendments considered and agreed to.
COVENTRY CORPORATION BILL.
Brought from the Commons; read 1a; and referred to the Examiners.
SOUTH STAFFORDSHIRE WATER BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
JARROW CORPORATION BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
STALYBRIDGE HYDE MOSSLEY AND DUKINFIELD TRANSPORT AND ELECTRICITY BOARD BILL.
Read 3a, with the Amendments; a further Amendment made; Bill passed, and returned to the Commons.

NEWTON ABBOT AND DISTRICT GAS ORDER, 1939.
LORD TEMPLEMORE: My Lords, I beg to move that this Special Order be agreed to.
Moved, That the Special Order, as reported from the Special Orders Committee on Thursday last, be approved.—(Lord Templemore.)
On Question, Motion agreed to.

MALDON GAS ORDER, 1939.
LORD TEMPLEMORE: My Lords, I beg to move that this Special Order be agreed to.
Moved, That the Special Order, as reported from the Special Orders Committee on Thursday last, be approved.— (Lord Templemore.)
On Question, Motion agreed to.

SUTTON-IN-ASHFIELD GAS ORDER, 1939.
LORD TEMPLEMORE: My Lords, I beg to move that this Special Order be agreed to, with modifications.
Moved, That the Special Order, as reported from the Special Orders Committee on Thursday last, be approved with modifications.—(Lord Templemore.)
THE CHAIRMAN OF COMMITTEES (THE EARL OF ONSLOW): My Lords, I should like to say a word on a point which came before the Committee in reference to this Special Order. As your Lordships are aware, one of the duties of the Committee is to report to your Lordships' House if they have any doubt about the vires. I need not tell the whole story, which is rather lengthy and complicated, but it is quite clear there was a doubt about the vires. I understand that the decision of the Special Orders Committee to make a report to your Lordships on the matter was concurred in by the learned Attorney-General. It is hardly necessary for me to say how important it is that the Special Orders Committee should go very carefully into the question of vires. This, I think, is the first time a recommendation of the sort has been made to your Lordships by the Committee. I should like to emphasize that this really is one of the most important duties of the Committee. Obviously, if that examination were not strictly undertaken many matters might go forward in a Special Order which were really not justified under the Act on which the Special Order was based. Appeal to the Courts would be possible, but it would be very undesirable that your Lordships should concur with an Order which was ultra vires.
On Question, Motion agreed to.

MINISTRY OF HEALTH PROVISIONAL ORDER (HAILSHAM WATER) BILL.
Read 3a (according to Order), and passed.
MINISTRY OF HEALTH PROVISIONAL ORDER (LUTON WATER) BILL.
Read 3a (according to Order), and passed.
MINISTRY OF HEALTH PROVISIONAL ORDER (SOUTH KENT WATER) BILL.
Read 3a (according to Order), and passed.
DUNDEE CORPORATION ORDER CONFIRMATION BILL.
Considered on Report (according to Order).
DUNDEE HARBOUR AND TAY FERRIES (SUPERANNUATION) ORDER CONFIRMATION BILL.
Considered on Report (according to Order).

HALL-MARKING OF FOREIGN PLATE BILL.
Order of the Day for the Second Reading read.
4.22 p.m.
THE MARQUESS OF READING: My Lords, this is a short and somewhat specialised Bill, but none the less necessary in order to remove a long-standing inconvenience and anomaly in the existing legislation. The position can, I think, be shortly explained. By the Customs Act, 1842, Sections 59 and 60, it was provided that any plate manufactured abroad which was brought into this country for purposes of sale should be treated in exactly the same way as if it had been manufactured in this country and should be assayed and hall-marked in the same manner. Shortly after that Act was passed, in the same year, it was found that the provisions were too rigid and that some exemption from them must be supplied. By an amending Act of the same year, 1842, it was provided that if the importer could show that the plate

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had been manufactured abroad before the year 1800, then it was not necessary that it should be either assayed or hall-marked in this country.
That position has obtained ever since, but with rather curious results, because your Lordships may observe that instead of inserting in the exemptions a period of years, a definite year was put in, with the result that, the Bill having been passed in 1842, exemption was at that time provided for any plate which could be shown to be more than forty-two years old—that is, the difference between 1800 and 1842. The position now is that in order to obtain exemption the importer has still to show that the plate was manufactured before the year 1800, with the result that the exemption can now not be claimed for plate brought in at any point of time less than 139 years ago. The short Bill which is before your Lordships' House is designed to rectify that anomalous provision by fixing a period of 100 years. The first clause repeals, in effect, Clause 6 of the amending Act of 1842, and the second clause repeals a clause of an Act of 1883 which, as matters at present stand, imposes upon the Revenue authorities the duty to hold such foreign plate in bonded warehouse until the necessary steps have been taken for its hallmarking and assaying.
So much for the explanation of the Bill. May I add a brief word as to its history? Some three or four years ago the British Association of Antique Dealers, who, as your Lordships know, are a responsible, reputable and representative body, approached the Goldsmiths Company with a request that the necessary alteration in the law should be made. The Goldsmiths Company, in their turn, took the matter up with all the other assaying offices in England and Scotland and obtained their assent, as also the assent of the Hall-Marking Committee, which is a Committee on which are represented all those associations which deal with gold and silver plate in this country. Thereupon approaches were made to the Board of Trade, where they were sympathetically received; and indeed matters progressed so far that a clause embodying the provisions that are now in this Bill was originally included in the Finance Bill of last year, but was crowded out during its passage through
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another place. In those circumstances it was decided to embody these provisions in a Private Member's Bill. This Bill has already passed through another place without opposition or amendment, and in the circumstances, since the Bill appears to have many powerful and respectable friends and, so far as I am aware, no enemies, I trust your Lordships will give it your support. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(The Marquess of Reading.)
LORD TEMPLEMORE: My Lords, I have to say that His Majesty's Government give full support to this Bill; they think it is a good Bill and they hope it will pass speedily into law.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

POULTRY INDUSTRY BILL. [H.L.]
Order of the Day for the Second Reading read.
4.28 p.m.
THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (THE EARL OF FEVERSHAM): My Lords, in moving the Second Reading of this Bill I should like to refer briefly to the importance of the industry with which it deals. It is not so widely recognised as it should be that the value of the annual production of the poultry industry amounts to some £26,000,000, or over 10 per cent. of the total for the agricultural industry in Great Britain. As for the number of producers, it is so great as to defy exact calculation, because, as your Lordships know, nearly every farmer and smallholder keeps poultry, and in addition there are thousands of "specialists," as well as cottagers and retired professional men who keep poultry as a part-time occupation. Marketing and distribution must necessarily account for a further large number of persons who will certainly be affected by the provisions of this Bill.
In view of the fact that this Bill, which concerns such a large industry as I have indicated, has come to your Lordships' House before going to another place, perhaps I may be permitted to give a somewhat fuller account than I would otherwise have done of the way in which the

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provisions of this Bill affect the various sections of the industry. I do not propose to go far into past history, but I think the House will agree that the most appropriate starting-point is the Commission presided over for a large part of its deliberations by the noble Lord, Lord Addison, in 1934. This was a Reorganisation Commission for England and Wales, appointed under the Agricultural Marketing Acts, of which Acts the noble Lord was the parent. Its task was to prepare a marketing scheme for eggs and poultry which producers could adopt or not as they chose; and under the guidance of Lord Addison—though circumstances compelled him to relinquish the Chairmanship before the Report was signed—it used its opportunities to present the industry and the country with a picture of the poultry industry, of its accomplishments as well as of its weaknesses, which, if I may say so, provides an excellent foundation for a study of the industry's problems. A corresponding Commission dealt with the industry in Scotland, and it was the Reports of these two bodies that threw a spotlight on the two outstanding problems of the poultry industry—the serious losses due to debility and disease, and the need for improvements in marketing.
On the marketing side the Commissions drew our attention to the very rapid expansion of the home poultry industry between the years 1924 and 1934. They pointed out that marketing methods had failed to keep pace with this expansion and with the demand from the towns for regular supplies of standardised goods, and suggestions were made for remedying this situation. But the Commissions came to the conclusion that marketing improvements, important as they were, would not of themselves solve the whole problem. I believe the noble Lord opposite will inform the House that the Commission for England and Wales were deeply impressed by the evidence as to the losses from disease suffered by the poultry industry, and following a recommendation of that Commission a Committee was appointed, known as the Poultry Technical Committee, under the Chairmanship of Sir Duncan Watson, to whom we owe a heavy debt of gratitude. The proposals contained in the Report of the Technical Committee, which was published last year, were welcomed by the industry as a whole and have been closely
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followed in that part of the Bill which deals with stock improvement. As no doubt a number of your Lordships will know, since 1934 the economic position of the industry has become weaker, and the number of poultry kept on holdings of one acre or more in Great Britain has fallen from 69,000,000 to 59,000,000. At the same time the position in regard to mortality has certainly not improved. The losses due to disease have been estimated at more than £4,000,000 per annum. The Government have, therefore, brought forward legislation to deal with these problems under the two main heads—the heads of stock improvement and marketing—and it is proposed that the task of giving effect to the proposals on both sides of the industry should be entrusted to a single independent Commission.
Clause 1 accordingly provides for the establishment of a Poultry Commission on lines similar to those laid down in the Livestock Industry Act. Its membership will consist of a Chairman, and not more than eight members. The Commission will be assisted by two Advisory Committees, which will advise on stock improvement and marketing matters respectively. In each case the Advisory Committee will consist of members representing the interests of all classes of persons affected, together with a few independent members. The provision for these Advisory Committees will be found in Clauses 6 and 11 of the Bill, and also in the Second Schedule. The Livestock Act has in this case also set a precedent for the establishment of the Advisory Committee system, for it has been proved since that Act was passed that such a system works smoothly and well.
Clauses 2 to 5 contain the stock improvement provisions. The conclusion reached by Sir Duncan Watson's Committee was that disease and low vitality had become so serious that the situation was one of emergency, and that nothing short of control of stock distribution could bring about that substantial improvement which was necessary within a reasonable period. The first step in the control proposals is registration. Every distributor of poultry stock, whether in the form of adult birds, day-old chicks, or hatching eggs, will be required to register with the Commission. But the Commission will have powers to grant exemption from this obligation to register, so that it will be possible, if thought desirable, to leave free

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from control those small poultry keepers who may from time to time dispose of a few birds. The Commission will, no doubt, proceed at an early stage to lay down certain simple regulations which would be within the competence of any distributor to comply with. These preliminary regulations would enable the Commission to deal with the more blatant malpractices. Later the Commission may be expected to formulate more detailed regulations, designed to bring about a steady improvement in the standard of poultry-keeping generally throughout the country. The Commission will not, of course, be able, as it were by a stroke of the pen to eliminate disease and remove debility from our poultry flocks. The process is bound to be a slow one, but one effect of the Bill will be of course to encourage all who are concerned to pay greater care than perhaps they have done in past years to the question of stock production.
Clauses 4 and 5 of the Bill deal with voluntary accreditation schemes for breeders and hatcheries aiming at the production of healthy and high quality foundation stock. The Government have accepted the view that under existing conditions breeders are not in a position to maintain such high quality in their stock as is thought to be desirable, and it is therefore proposed to compensate them in a measure for the extra time and labour that will be required for record keeping, elimination of unsuitable birds, and so on, by the offer of Exchequer premiums. A total limit of £,250,000, spread over not more than seven years, is laid down, and the premiums are to be on a diminishing scale.
The marketing provisions are contained in Clauses 7 to 10. The main objective is the proper grading of home - produced eggs and poultry according to quality and according to size or weight. This grading will put the home producer in a better position in relation to his foreign competitors, and should help him to get a real footing in the larger urban markets, which to-day cannot depend upon odd lots of produce of mixed description. The requirement of testing and grading is also bound to lead to an increase in the practice of packing and grading at central points, and will therefore improve the machinery of assembly and distribution, so helping
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to solve the problem of local gluts, which cause great hardship among egg producers. Every retailer will be required in due course, subject to such exemptions as the Commission may decide upon, to sell eggs and poultry according to prescribed grades laid down by the Commission. But it would not be economical or reasonable to require every retailer himself to grade the eggs and poultry he sells.
In order to ensure that the produce reaches the retailer properly graded, it is proposed to register wholesalers and to require them to observe regulations which would be fitted to the circumstances of their own particular branch of the industry. The task of making regulations fitted to each of the branches of the wholesale trade will of course fall upon the Commission, which will be assisted by the Marketing Advisory Committee. Clause 7 contains the general prohibition of sales of ungraded produce produced in the United Kingdom but, apart from the Commission's general power to grant exemptions, certain forms of sale are specially excluded in the Bill itself. Wholesale sales by the producer which are in effect his final act in the process of production are excluded, as also are sales by the hotel and restaurant trades. The local authorities responsible for the administration of the Food and Drugs Act will co-operate by enforcing the grading provisions among retailers in their areas, but on the other hand the supervision of the wholesale trade will rest with the Commission.
Five clauses, Clauses 12 to 16, deal with the marking of preserved eggs. The present position is that home-produced eggs which are cold stored or chemically stored have to be marked as such, but for reasons of difficulty of enforcement there has been no corresponding requirement for imported eggs. There is a strong case for removing this discrimination and the case will, I believe, become even stronger if in future steps are taken by the industry to store eggs on a large scale in order to reduce the seasonal variation of supplies and prices. The principal new provision in this Bill is that by Clause 15 all eggs imported into the United Kingdom will have to be marked before arrival as having been preserved, unless they are exempted from that requirement by order or licence issued by Ministers. In practice these

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orders will be issued only if Ministers are satisfied that in the country in which the goods were produced there are satisfactory arrangements in force for marking preserved eggs as such before exportation. The Government will of course seek the co-operation of exporting countries in giving full effect to this new provision, and time will be required for the necessary negotiations to take place. For that reason these clauses will not come into effect immediately but, like a number of other clauses in the Bill, on a day which is to be appointed.
I now come to that part of the Bill—Clauses 17 to 19—dealing with quantitative regulation of imports which is designed to give effect to the proposals outlined in the statement made by my right honourable friend the then Minister of Agriculture on July 11 last. The provision follows the lines of that already adopted in the Livestock industry Act, and it is proposed to confer on the Board of Trade powers to regulate by order imports of eggs and egg products, and live and dead poultry, so far as may be necessary in order to secure the stability of the market. This is a necessary corollary to the measures of reorganisation provided for elsewhere in the Bill. The Government feel that if the task of establishing the poultry industry on a firm foundation is to be undertaken with energy and confidence, it is imperative that the industry should be adequately safeguarded against possible dislocation or deterioration of the market resulting from arrivals of eggs and poultry from overseas. At the same time there is no intention that quantitative regulation should be used as an instrument to raise prices above normal levels and so encourage an unhealthy expansion of the home industry.
Your Lordships will be aware that under Section 3 of the Agricultural Marketing Act, 1933, an independent body—the Market Supply Committee—has been appointed whose duty it is to review generally the circumstances affecting the supply of agricultural products in the United Kingdom, and in particular to advise Ministers on questions of import regulation either generally or in connection with marketing schemes. The Government propose to invite the Committee to keep under close review the market for eggs and poultry, so that there may
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be no delay in determining whether or not conditions are arising likely to endanger the stability of the market. It is also proposed to suggest to the Market Supply Committee that there would be advantages in setting up a fully representative Trade Committee to provide them with expert advice in carrying out this duty. Provision is further made, in accordance with the policy statement, for the regulation of imports in conjunction with and in support of any organised arrangements that have been or are being undertaken by the industry, for the storage of eggs during the spring flush with a view to modifying the extreme seasonal variations of supplies and prices, should such regulation appear to be necessary to secure the effective operation of such arrangements.
Storage schemes may be promoted under the provisions of the Bill dealing with service schemes or may perhaps be promoted independently of the provisions of this Bill. In any case it is clearly undesirable that any substantial efforts the industry may make by storage, in order to secure a more even distribution of supplies, should be jeopardised by excessive supplies of imported eggs. It is accordingly proposed that if the Board of Trade are satisfied that these storage schemes are sufficiently comprehensive and are effective in taking supplies off the market during the flush season, and that such a measure is necessary to secure their successful operation, the Board will be enabled, with the affirmative approval of Parliament, to take steps to regulate imports by order. The Market Supply Committee and the proposed Trade Committee will also be available for advising upon the operation of this aspect of supply regulation. Clause 18 of the Bill provides ample powers whereby the Board of Trade can ascertain the quantities of eggs put into storage, and can thus gauge the effectiveness of any storage operations undertaken by the home industry. The exercise of the powers to regulate imports for both these purposes is subject to the usual condition—namely, that due regard is to be paid to the interests of producers and consumers alike and to our commercial relations with other countries. Provision is made in Clauses 20 to 23 for service schemes on much the same lines as in the Livestock Industry Act. The underlying principle is to put the industry in a position to help itself.

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I do not think I need detain your Lordships at length with the remaining provisions of the Bill, which are for the most part concerned with general and supplementary matters, such as the power of the Commission to obtain information and conduct inquiries. I should perhaps mention that in Clauses 28 and 29 the opportunity is taken to amend certain provisions of the Merchandise Marks Act of 1926. Under that Act the penalties for removing the indications of origin from imported eggs are a fine of £5 for the first offence and £20 for the second or subsequent offence. It has been felt that these penalties are not sufficient to meet a case of deliberate fraud, and the new penalties, which follow those laid down in the recent Food and Drugs Act, are £20 for the first offence and £100 or three months imprisonment, or both, for a second or subsequent offence. The officers of food and drug authorities are also given greater powers of entry, and these powers are extended to the officers of the Commission.
In conclusion, I should like to say that my right honourable friend the Minister of Agriculture and his predecessors have had lengthy consultations with representatives of all sections of the poultry industry in framing these proposals, and my right honourable friend is most grateful to these organisations and to the individuals who have given their advice and assistance. While there are still points of difference, as is natural in so extensive a measure, the Government believe that the Bill presented to your Lordships' House will have the substantial agreement in all its major principles of the interests concerned. There is no need for producers or wholesalers to fear any sudden imposition of arbitrary regulation. Before any regulations are issued, ample opportunity must be given for discussion and the consideration of objections both by the Commission and by Ministers before confirming them. In any case, the main provisions of the measure will come into operation only after appointed days, which may be different for each class of product and for each particular purpose. I commend this measure to your Lordships' House as one calculated to raise the standard of efficiency of the industry, and to bring about valuable and lasting improvements in our marketing methods and in the health and quality of our poultry stock. I beg to move.
Moved, That the Bill be now read 2a.—(The Earl of Feversham.)
4.56 p.m.
LORD ADDISON: My Lords, I am sure we are indebted to the noble Earl for bringing before us, so simply, this highly complicated Bill. I thank him, in the first place, for the very friendly and appreciative reference he made to my colleagues and myself who studied this problem at the invitation of the Government in 1934. I am only sorry that successive Ministers have found themselves, as I know, between then and now, confronted with a good many difficulties and many rival interests in fashioning their proposals. That certainly must be taken into account when we look at the exceedingly complicated proposals now before us. But I wonder if your Lordships have apprehended from the description given by the noble Earl what the proposals are.
It is fair to assume that, seeing we have got 150,000 or more—probably more—egg and poultry producers in the country, they will not in the mass be very good hands at filling up forms. We cannot expect them to take a keen interest in regulations. Anything which is going to serve their interests must be simple. They must be able, I suggest, to understand it reasonably well. In this Bill, I see, there are at the start five or six different registers of various classes of people. There is a register of stock suppliers, there is a register of wholesale traders, and there is a register of licensed importers. There may be three different schemes, each of which will have its own register, so that there will be six registers of one sort or another open to the industry.
Then when you come to consider how many schemes the Bill provides for, there is one called the breeders' accreditation scheme—that is for accredited and expert breeders and suppliers of hatching eggs and so on. There is another and separate scheme for those who run specialised hatcheries—that is a hatcheries' accreditation scheme. There is another scheme for the sale and marketing of breeding fowls and hatching eggs. There is also another scheme, which is the only one with which the rank and file of the producers will be concerned: that is the scheme for the marketing of poultry products, which include chickens and eggs and ducks and so on. Finally, there

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is another scheme for market research and intelligence. So that there are no fewer than five separate schemes.
There are a great many producers up and down the country who have to carry on different sections of this business. The most successful and the most efficient, so far as we found them, are those who sell a lot of day-old chicks and hatching eggs, and, over and above that, have a large number of eggs to be sold in the ordinary way. Sometimes, instead of selling all their day-old chicks, they let a lot of them grow up; they become young cockerels, and have to be sold for the market. That is one section. Just see what this man is going to be landed with by this Bill. He will be registered on three separate registers. He will be on the register for the service scheme for poultry products; he will be registered for selling breeding fowls and hatching eggs; and then, I suppose, if he is an enlightened person, he will be on the register for market research and intelligence; in addition to which, if he is an accredited breeder, he will be a member of the breeders' accreditation scheme. If he has a hatchery, he will be in another scheme, the hatchery scheme. So this unfortunate man will have to make returns for no fewer that five separate schemes, and he will be on the appropriate register for each. I hope he will have a big enough business to be able to afford to employ a clerk. If he has not he will be in a very bad way. It is a bewildering business, and I am quite sure the rank and file of the producers have not the faintest idea of what is in front of them if they give a welcome to this part of the Bill. Happily, as one might say, the vast majority of producers will be concerned oily in the scheme for the sale of poultry products. I know something that lies behind these complexities. I am not altogether wishing to blame the Ministry, but this, unfortunately, betrays a surrender to all kinds of conflicting vested interests. It is market specialisation run to seed.
When I come to make one or two further criticisms, that comment is one of them; but first let me say a word about the noble Earl's remarks about the losses from disease. I entirely agree with everything he said. It could not be exaggerated, and I am sorry that one of the schemes, as it seems to me at all events, fails to deal with one of the most
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important contributory causes of the spread of disease. The first of the schemes under Clause 20 will be for people who are engaged in the production and marketing of day-old chicks and hatching eggs and so forth. The board can do various things. It can arrange for insurance; it can arrange for advertisements and measures calculated to improve conditions of sale by auction, and so forth. We found, and I am sure the noble Earl knows it is so, that one of the most important contributory causes of the spread of disease was really the publication of what can only fairly be described as dishonest advertisements. Advertisements are published widely saying that the advertiser undertakes to supply this, that and the other kind of stock, and a lot of producers, who have no special facilities for investigating the bona fides of the advertiser, buy stock and find themselves landed with a lot of weakly stock, often with disease breaking out quite soon after that stock has been bought. The stoppage of that is one of the most important things that ought to be done.
I hope that the necessity of making every breeder an accredited breeder, bringing him on to the register, making conditions and all that, will gradually weed out these very undesirable persons, but there is no doubt at all that one of the most important functions of a board dealing with the sale of this type of product should be to secure improvements in the conditions of sale in all forms, including the sale by advertisement, which is often the most poisonous and misleading of all. I cannot imagine why the Government have restricted the power of this board to an improvement of sale by auction. I hope it does not mean that they have surrendered to the interests which are pretty powerful in the industry and which flourish on the continuance of this kind of practice. I am using fairly strong language, but it is nothing like as strong as my colleagues on the Commission used, and nothing like as strong as has been used by other persons who have investigated this aspect of the question. That is the serious weakness of the Bill. The mischief can be stopped by not allowing these people to sell at all unless their premises are of a proper kind.
I remember one case we investigated where a man had most effective advertisements and, as far as we could find,

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he had no hens at all. All he had was an office, and he used to send round when he got an order and collect chickens and eggs from farmyards, where cockerels were running with hens, and send them. There might have been some that were good ones, but what he sold was not what he had purported to supply. I urge that this sort of undesirable method of supply should be most firmly prevented if we are going to eradicate disease from the industry. I agree with the noble Earl that it will be a considerable time before much progress can be made, and I wish the Minister and those responsible for these schemes every success in eradicating disease, but it appears to me that they have made it needlessly complicated.
May I come to another point? I see that there are provisions relating to importation in Clause 17. It is quite evident that you must be able to manage your importation. Apparently the method to be employed is contingent upon there being organised some comprehensive arrangements for the storage of eggs. And here is a serious deficiency in the Bill. The producer wants something that is simple. He wants something that will prevent the spring slump in prices. It often happens that prices drop to nearly one-third, or at all events to less than half what they were in the previous November. Prices suddenly drop when the hens begin to lay more eggs in the spring. There may be only a trifling excess on the market, nevertheless you get a precipitous fall in price. The sensible thing to do would be to have an arrangement whereby a percentage of these glut supplies could be taken off the market and properly stored. But who is going to be responsible? The noble Earl said that there might be various storage schemes. At least I understood him to say so. I say quite confidently that that happy-go-lucky way of dealing with storage is doomed to failure. If you are going to have an intelligent system for taking off a percentage of the surplus in any given week, so as to steady the precipitous fall in prices, it must be done by one body of persons who have the whole thing under review. It must be done by one board who have all the intelligence at their disposal and who have control over the distribution of eggs somewhere or other.
So far as I can understand the Bill, there may be piecemeal operations for
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the storage of eggs. There may be an organisation in Worcestershire and nowhere else, or there may be one in Norfolk and not one in Suffolk, and so on. It is completely impracticable. It will not in any way whatever steady the precipitous fall in prices, and I am surprised that a proposal of this piecemeal character has been introduced. Of course we have a Government that rather likes to proceed by piecemeal methods—they are rather in keeping with their character—but still it is hopelessly illogical. Apparently the organised control of importation is to be dependent upon the Board of Trade being satisfied that organised and comprehensive arrangements for storage have been set up. Who is going to set them up? Now I have a very grave criticism, and I hope that when the Bill gets into Committee your Lordships will be willing to look at this purely from the producers' point of view and will not support the Government blindly every time in the Lobby.
The rank and file of producers, who are not specialists, will be concerned with how they can get a decent market for their eggs and chickens. Everything depends upon the machinery whereby a sale is effected. Under Clause 20 (2) it will be seen that a marketing scheme may be prepared by persons engaged in the production of any poultry products or in the marketing of any poultry products. What does that mean? The whole purpose is that we should get a marketing scheme that will be helpful to the producers. That is what it is meant to do, I suppose. I suggest that it is completely alien to the purpose of the Bill that wholesale distributors, for example, should be entitled to set up a scheme which will become an approved scheme and which will cut out the producers from having a scheme of their own at all. That is entirely wrong.
As the Bill stands, a scheme may be prepared by either of these two parties. It will be much easier for the highly-organised marketing firm to prepare a scheme. They could do it easily, and they certainly will, and we shall have a repetition of what has happened under the Bacon Board. There what happened was that the factory interests produced a scheme—they called it a bacon scheme—and the sale of pigs by the producer was not regulated in the interests of the producer but in the interests of the factory part of the business. The result was

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that very soon the farmers found that the price had slumped. They did not see why they should supply pigs to the bacon factories when they could make a better price for pork, and the whole thing, I believe, is still in the melting pot. The purpose should be to have a scheme operated by and on behalf of the producers. It should be limited to that purpose. If it is not, I am quite confident that the interests of the producers will be sacrificed as they have been in the case of pigs. When the Bill goes into Committee I shall move the omission of the words in line 27 on page 24, and I hope your Lordships will support me in that in the interests of the producers, regardless of the exhortations of the Government Whip, because this is a serious defect in the Bill.
Your Lordships will observe that the Government propose to make grants in aid of what are called packing stations. That comes as a sort of afterthought in Clause 36. That clause provides that if the Ministers are satisfied that satisfactory arrangements have been made there shall be a packing station. But that is an essential ingredient in the whole thing. You cannot work organised marketing at all—unless you deliver yourselves bound into the hands of the wholesalers—except through the medium of some kind of packing station where eggs pass through a channel over which control can be exerted. Packing stations should not be a sort of sideshow. They are an essential ingredient in the logical working of a scheme. In my opinion it should be provided that all the packing stations should be under the direction of the board which operates the scheme for the sale of poultry products—the whole lot—and that they should be operated by and on behalf of the producers only. I am quite at a loss to understand why this sort of afterthought is inserted as placing some premium upon the establishment, here and there, I suppose, of packing stations, for the packing station system is essential to the successful working of the scheme.
There is one other criticism I have to make, and that is with regard to the third class of scheme. I hope I am not confusing any of your Lordships, but the Bill itself is confusing. There is a third class of scheme dealt with in Clause 20, on page 25, for the encouragement of market intelligence and research. Why should there be a separate scheme for
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market intelligence and research? It means, I suppose, a separate register of all the producers contributing in whatever way may be chosen to this scheme, and a separate board—a separate everything. Why? The other boards, whether they like it or not, will have to have a system of market intelligence. They cannot work without it. The Poultry Products Board, the Hatcheries Board, all of them, must of necessity, if they are going to do their business, have a market intelligence service. I cannot imagine why one should be divorced from the other. Therefore I hope your Lordships will be willing to insert power to provide market intelligence in both the other schemes, and delete the provision for it in Clause 20, because it is an essential part of every scheme. I am glad that some contribution to research is forecast, but the very efficient Committee to which the noble Lord refers have the matter in hand, and I am inclined to think that they will manage it better than this piecemeal business.
After all, this Bill contemplates that there may be a separate scheme for market intelligence and research. Well, there may not; but as a matter of fact research into the prevention of disease and the improvement of stock is one of the most important services we can possibly render to the industry, and it should not be dependent in this way upon a board or a scheme being set up or not. I think it is the duty of the State, just as we do in other directions, through this appropriate and excellent Committee to foster research schemes, to secure their proper direction, and so on. It is not the business, as such, of one of these separate little boards; it is a highly specialised business requiring the best scientific service that we can command, and I suggest that it is the wrong approach altogether to research to put it into the hands of a separate board which may or may not be created. It is the duty of the Government to see to it, and to make good grants for it.
I should like to pay tribute to what the Ministry has been doing in this respect. I remember that we were confronted with the shameful fact that, while the industry was suffering a loss of from three to four million pounds a year from disease, the total that we were contributing as a nation to research on those dis-

863
eases was, as far as I could ascertain, £10,000 a year; that was all. I do not know how much it is now; perhaps it is very much more, perhaps it is a little more. But it is a disgraceful position, and I think it is the business of a State Department to deal with this matter. It may be that when the producers' schemes are running well a very small levy may quite properly be made in aid of research; still, the direction of research, the conduct of it and all the rest of it should be under the charge of a national body, and it should be a State body, as it is already in medicine and in other branches of agriculture.
Then there is one thing omitted, a power which these boards should have and which I should like to see inserted: that is in regard to the supply of feeding stuffs. One of the biggest drawbacks of the small producer is the high price he has had to pay for his feeding stuffs. I do not know what percentage they now form of the price of a dozen eggs, but it is very considerable, and it is quite evident that the service of assisting the producers to get their feeding stuffs and their rations well mixed at cheaper rates is one of the most important services a central board could render. I should like to see this power of a central board incorporated in the Bill. It is really unfortunate that the Minister has not gone for the establishment of one central board to deal with all these various matters, but has allowed himself to be persuaded into introducing this exceedingly complicated and, I am afraid, rather bewildering set of proposals. I hope they will succeed, but I am very much afraid that once they begin to be understood by the rank and file of producers, the producers will get horrified at the prospect of the forms, returns, reports and all the rest of it that they may be called upon to provide and which may greatly prejudice the success of the measure.
LORD HARMSWORTH: My Lords, I should be very glad if my noble friend below me would explain one point in connection with this Bill. Under the terms of this Bill it is obviously going to be an exceedingly hazardous risk and laborious form of employment to keep a fowl. May I ask him whether bantams are included in the Bill?
LORD STRABOLGI: Or fighting cocks!
5.26 p.m.
LORD REA: My Lords, I have no desire to raise any objection to the main principle of this Bill, which seems wholly admirable as an effort to improve the quality of poultry and of eggs. I am, it is true, a little concerned lest inadvertently it should add still further to the cost of living by putting up the price of a very cheap and wholesome imported food. But to-day my principal reason for troubling your Lordships is that I am afraid that, unless attention is drawn to the point in good time, there is a serious chance that quite unintentional injury may be done to a trade which at first sight appears to have nothing to do with the poultry or egg industry. I am referring to that Cinderella of British trade, the shipping industry. Your Lordships may perhaps be surprised to find that this industry is in any way concerned with this Bill, but when I inform you that the imports of eggs from overseas amounted last year to no less than £12,500,000 sterling, and that much of this, particularly of the eggs from the more distant ports, is carried in British ships, you will see that it is of really vital interest to a much distressed industry that it should not be inadvertently interfered with. I might point out that from China alone the import of eggs to this country amounts to nearly £3,000,000—that is, about one-third of the total imports from China. And, what is important in these days, when we are considering how we can help Chinese trade, that import alone is sufficient to pay for half the whole of the exports we send to China. Therefore I submit that it is worth while for your Lordships' House to spend a few minutes considering how you can avoid a hardship on a trade which in other debates has been admitted to be of the most vital interest to this nation in the most dangerous times through which we are passing.
This trade happens to be a very highly organised one, for which almost special ships and certainly special refrigerating machinery have to be built. They take years to build, and the trade, carried on as it is under somewhat complicated conditions, has to be organised a long way ahead. What I am really afraid of is that we may once more experience difficulties that have occurred under previous legislation of this kind. It is perfectly true that the Bill does not in specific terms

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prohibit the importation of eggs, but it empowers the Board of Trade by order to regulate importation into the United Kingdom of poultry and poultry products. I am very much afraid, especially after the very candid statement made by the noble and learned Lord on the Woolsack last week, that when regulations come to be considered by this House we may be told that even if they are not drafted with the care that some of us desire, they must be accepted in the form in which they stand—
THE LORD CHANCELLOR (LORD MAUGHAM): I never said that.
LORD REA: Very well; I am far from being able to enter into controversy with the noble and learned Lord on the Woolsack, but some of us were a little concerned at the way in which regulations, no doubt of vital importance, go through this House at rather shorter notice and with less examination than some of us would desire.
LORD STRABOLGI: The noble Earl, Lord Stanhope, said that on the last occasion.
LORD REA: I beg the noble and learned Lord's pardon; the remark to which I referred was made by the noble Earl the Leader of the House. That, however, was a mere illustration of the point that I am desiring to make. Both here and in another place these regulations, though they have to be confirmed by both Houses of Parliament, come up at inconvenient times and cannot be amended, and therefore the only way in which we can safeguard interests which might unwittingly be interfered with is to see that proper safeguards are put into the Bill when it passes through Parliament. That is my excuse for, at this early stage, drawing attention to a danger, which may occur, of serious interference with trade by regulations put into force at very short notice without proper consultation with those concerned, with the possibility of producing the almost scandalous state of affairs that we have found under previous regulations, where shipments have been legal at the time they were loaded, but illegal and not allowed to be landed when the ship arrived at its destination. I am sure it is nobody's intention that that should take place. This Bill provides specifically for
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consultation with all classes of persons concerned, whether producers or consumers, and I venture to submit to your Lordships that there are others concerned—namely, the carriers. Those engaged in the trade have very vital interests, and I would like an assurance from the noble Earl in charge of the Bill that this comparatively small, but very important, point may be considered, so as to safeguard those interests when we come to a later stage of the Bill.
5.32 p.m.
LORD PHILLIMORE: My Lords, the noble Earl in charge of the Bill paid a very proper tribute to Lord Addison, than whom no one has been more deeply immersed in the complexities of agricultural legislation, but I must say that I received some of Lord Addison's remarks with a certain amount of sardonic satisfaction. I was delighted to find that even he, who was the originator of the first Marketing Act, was somewhat troubled at the complexities introduced in the life of the producer by such interference with industry. That was an admission which I took to be a very valuable one as coming from Lord Addison's side of the House. Also I was not displeased to find that the noble Lord's opinion as to tariffs had so radically altered since 1931, when I, amongst others, in vain recommended that no marketing scheme was worth anything unless a certain amount of protection against foreign producers was coupled with it. Now I find the noble Lord saying that it is quite necessary to have State management of importation.
LORD ADDISON: I am sorry to interrupt, but management of importation is not necessarily the imposition of a tariff.
LORD PHILLIMORE: I quite admit that. It is, however, a form of protection. It is also true, I think, that all these Bills of this nature do introduce great complications into the work of producers, but I submit that it would be a mistake to fall upon this Bill because it covers, under various headings, various specialised sides of agriculture. Agriculture is in its nature so diverse an occupation that it is impossible to treat it in such a wholesale way as the noble Lord suggested. I think that from his admissions made at other times he would himself have drawn attention to the complexity of the industry with which we are now dealing.

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This Bill, to which I and those for whom I am speaking accord a very hearty welcome, does deal with many sides of poultry production and marketing, and deals with them, as I see, in a practical, close and well-considered way. It was not possible, I submit, if a satisfactory result was to be obtained, to throw all these various complicated sides of the industry together, and make one sweeping recommendation with regard to the whole. It was absolutely necessary to go into detail, and to divide up the various functions of the producer and marketing, and so on. I personally, and those for whom I speak, are very grateful for the Bill, and particularly for the recognition that disease has been the worst injury to the poultry industry during the last few years. The noble Lord, Lord Addison, and I are both working on a scheme which involves the purchase of hundreds of thousands of young stock or eggs, and the greatest difficulty of that association has been to obtain healthy stock. I venture to say that no-one will, in the end, be more grateful for the Bill than the Durham miner, whose keen interest in poultry has been so greatly and recently developed. In particular, he will have cause to be grateful for the provisions as to disease.
The noble Lord, Lord Addison, if I may return to him once more, for he is a formidable and well-informed critic, wished to complicate the Bill still further by adding foodstuffs for poultry to the many other functions which the Bill sets going. I submit that that is far too difficult and different a side of the question to include in a Bill of this character. There is only one suspicion that I have as to the Bill at present, and that is that the grading of eggs provision may let slip through certain categories of persons, and certain categories of trades, which it will be desirable to rope in. I notice that already the direct seller is very properly exempted from the grading provisions. I think it will probably be necessary, as the Bill goes through the House, to look further into that point, and see whether such bodies as the Wholesale Co-operatives, and so on, are clearly within the Bill, as they should be. With these few remarks I beg to give the Bill a hearty welcome.
5.38 p.m.
THE EARL OF RADNOR: My Lords, I also, like Lord Phillimore, welcome this Bill, because it deals at last with a problem which has been exceedingly complex, and it deals with a section of the agricultural industry which has been crying out for something of this nature for a very long time. I also welcome the Bill for the reason given by Lord Strabolgi on the First Reading in this House—namely, that at long last the Government have seen fit to introduce a major measure in the first instance in your Lordships' House. I hope that the precedent will be followed more frequently in future. May I also say that I hope it will not in future be done in quite the same way? I think it was generally understood, originally, that the Bill was going to be introduced in another place, and consequently those organisations that are interested in the details of the Bill took steps to get their points of view represented in the other House. At the last moment things were switched over and the Bill was introduced in this House, and so far as one organisation is concerned, which is actively interested in the Bill, it has been unable to find anyone who has the time to represent its point of view. It is most desirable that the view of those interested should have an opportunity of being put forward for discussion when a Bill is before Parliament, and I put that point to the noble Earl in the hope that on future occasions there will be a better opportunity for those people to put their views forward.
This is a very complex Bill. In the main it is on the same lines as the marketing schemes with which we are familiar, but it does depart in one major respect from marketing schemes that have hitherto been put into operation, in that the Commission which does all the work is not democratically elected. The noble Lord, Lord Addison, knows a great deal better than I that it was very difficult—I believe he found it impossible—to devise a satisfactory scheme of election for a Commission to deal with the poultry industry; there are so many concerned in it, and so many of them are small people. But I do not know that it is not a good thing that it should be so. I speak from perhaps rather bitter experience of the activities of the democratic principle in connection with

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the Pigs Marketing Scheme, in that I was defeated in a democratically run election, and perhaps my views have been coloured somewhat by that event. But I then came to the conclusion that the farmer is by nature an autocrat, and is not an entirely suitable medium for the democratic principle.
Well that is the only major point of difference between this and any other marketing scheme. Apart from that, it has the usual complications of many different possibilities of schemes, a multiplicity of committees, both advisory and other, all to be set up to harry the unfortunate producer. But it has worked in other schemes, and presumably it will work under this scheme; though I must confess that I have some sympathy with Lord Addison is his complaint of the number of possibilities of different schemes which may affect any individual producer. In that connection I would draw your Lordships' attention to the two schemes contained in Clauses 4 and 5, the breeders' accreditation scheme and the hatcheries accreditation scheme. It is true that they have one major difference, which is that in the case of the breeders' accreditation scheme there is a certain amount of money made available to assist them; but I really do not know what hatching is but breeding poultry in some form or another, and equally I do not think you can breed poultry without hatching eggs. I cannot see, after a study of both those clauses, why those two schemes should not be run into one. It seems to me that these two classes of people are exactly the same.
On that point, and particularly on Clause 4, dealing with the breeders' accreditation scheme, I would like to echo what has already been said regarding the importance of improving the health of our poultry. It is well known that generally speaking it has deteriorated very seriously for several years past, largely, I think, owing to the desire on the part of producers to get a hen which will produce more and more eggs. The result has been that the stamina of the poultry generally has gone down, and they are therefore less resistant to disease. But that, I believe, will be dealt with under the scheme which is to be set up by the Commission under this Bill. I hope that in course of time it will succeed in improving the quality of our poultry, and that the industry will therefore be
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better off economically. Your Lordships will note in subsection (6) of Clause 4 that this scheme has to be confirmed by a Resolution of the Commons House of Parliament. That is, of course, because there is finance in it. There is a great deal besides finance in it (or will be) but it has to go to the Commons, otherwise presumably it would not be confirmed by anybody. It seems to me that this might well go through the same process as other marketing schemes, and come before both Houses for confirmation and criticism; because, so far as I can see, in the whole of this Bill there is no means by which the aggrieved producer, or the producer who has any objection to the scheme, has a chance of voicing his views publicly, and if the scheme came before both Houses of Parliament there would be an opportunity for careful consideration.
There is only one other matter to which I want to refer, and that is that in Clause 6 you have a Stock Improvement Advisory Committee, and in Clause 11 a Marketing Advisory Committee. I would ask your Lordships to look at the composition of those two Committees side by side. The Stock Improvement Advisory Committee is to consist of "the producers in Great Britain of such fowls or eggs as aforesaid," while the Marketing Advisory Committee consists of "producers in Great Britain of poultry products." Those are, as far as I can see, the same. Then, in Clause 6, "persons who carry on in Great Britain the business of supplying such fowls or eggs," and, in Clause 11, "persons who carry on in Great Britain the business of selling poultry products, whether by wholesale or by retail." Those people are very much the same. Then, in both clauses you have "(c) local authorities in Great Britain," and "(d) such other persons.…", and they are both the same on these Committees. Would it not be possible for the two Committees, which are identical as far as I can see, to be run into one? It is a multiplicity of committees which sometimes frightens people off these schemes, and it would, I believe, help generally if the procedure could be simplified in some such way. These criticisms that I have made are really only very minor criticisms, and virtually on Committee points. I hope that your Lordships will give this Bill a Second Reading and that it will pass into law

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substantially in the form in which it is now and will give that assistance to the poultry industry which is so much required.
5.48 p.m.
THE EARL OF FEVERSHAM: My Lords, I think it has been agreed by all those who have taken part in the debate that this Bill is of a complicated character, but it is not nearly as complicated as the noble Lord, Lord Addison, would have the House to believe. The noble Lord suggested that under the Bill there will be so many schemes of one kind or another that it would be possible for one producer to have to submit himself to a register six times. With regard to Clauses 4 and 5, to which my noble friend Lord Radnor drew attention, they deal with voluntary schemes, and therefore there is no compulsion on those who have breeding establishments or hatchery undertakings to join such a scheme. The noble Lord, Lord Addison, very properly devoted many of his remarks to Clause 20, which is the first clause dealing with service schemes. I would remind the House again in respect of those service schemes that they are not compulsory. They follow the precedent which was set in the Livestock Industry Act, whereby a scheme cannot come into operation unless a preponderating number of those connected with that section of the industry vote in favour of it.
LORD ADDISON: With great respect to the noble Earl, there is no provision for voting in the Bill.
THE EARL OF FEVERSHAM: If the noble Lord will turn to Clause 22, and also to the Third Schedule, he will see that exactly similar provisions rule in regard to the confirmation and publication of service schemes as appear in the Livestock Industry Act, which means that the Minister cannot sanction a service scheme unless the majority of those connected with that branch of the industry are in favour of such a scheme being instituted. I hope, by bringing those two instances to your Lordships' notice, it will be appreciated that although the complexity of the provisions for the various schemes is necessarily great, it is not by any manner of means implied that every producer or distributor has to submit himself to the regimentation of marketing restrictions and regulations.
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The noble Lord, Lord Addison, has referred to the fact that the Reorganisation Commission envisaged a Marketing Board for both eggs and poultry. Under that scheme the country would be divided into areas, with a single packing station for each area, and the board would have power to fix minimum prices and prescribe selling grades. It is important that the House should appreciate that whether the proposals of the Commission should be adopted or not was a matter for the producers themselves. In actual fact, the producers of eggs and poultry have not adopted these proposals. The reasons are well known. They derive from the character of the poultry industry, to which Lord Addison made some reference. It is, as is generally recognised, a large and important industry, but it is one composed of an enormous number of units of varying sizes, many very small, and therefore is difficult to organise. The register of stock suppliers and wholesalers proposed under this Bill will not affect the ordinary producers of eggs and poultry for consumption, nor will the accredited schemes, which concern only those breeders or hatcheries, as the case may be, who care to join them. Service schemes are not compulsory under the Bill. The industry can utilise that clause of the Bill if it so desires. On the other hand, if the proposals contained in the Report of the Reorganisation Commission, of which Lord Addison was an eminent member, were brought into effect, every producer would have to register and send in returns. As it is, ordinary producers—that means those who are not producing stock birds—will not have to register at all unless they choose of their own accord to set up a service scheme. It is unnecessary to point out that ordinary producers far outnumber the breeders.
My noble friend Lord Radnor asked a question as to why the Bill had to be made, in his view, unnecessarily complicated by a similar provision being included for both breeders and hatcheries. My noble friend failed to draw a distinction between these two sections of the industry. Clause 5, which deals with the hatcheries accreditation scheme, applies primarily to undertakings where a large quantity of eggs—say 30,000 or 40,000—are hatched by scientific processes and where the eggs for that purpose are bought from breeders. That is quite a different section of the industry from the

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breeders' side, which may concern a much smaller unit that does not buy any eggs from exterior sources but relies upon its own stock for breeding and hatching purposes. Therefore it was felt that it would be more effective if there were two separate schemes whereby, on a voluntary basis, the persons engaged in, say, hatcheries would be able to formulate their own scheme and most probably buy their eggs in large quantities from the breeders' accreditation scheme which had been set up.
THE EARL OF RADNOR: Surely there is bound to be a lot of overlapping in that case. It is not every hatchery that keeps a chicken, nor is it every breeder who sells all the eggs he produces for hatching purposes.
THE EARL OF FEVERSHAM: There are a few instances of undertakings which could be described, for the purposes of this Bill, as both breeders and hatcheries; but, by and large, it is correct to say that hatchery undertakings are that side of the industry which concentrate upon the purchase of eggs in very large numbers for hatching, whereas the breeders' undertaking is often not on such a large scare and is more self-contained. I am assured that it is necessary, as the Technical Committee recommended, that this distinction should be drawn.
My noble friend Lord Harmsworth asked whether the bantam was included in the provisions of this Bill. I can assure the noble Lord that the bantam, for the purpose of this Bill, is defined as a fowl. The noble Lord, Lord Rea, together with the noble Lord, Lord Addison, raised an important issue with regard to import control. Import control by order of the Board of Trade is not dependent upon a storage scheme being in force. Without any such scheme the Board of Trade can control imports if desirable in order to secure the stability of the market. The noble Lord, Lord Addison, made some reference to the question of storage. As regards storage schemes, the Board of Trade has to be satisfied that a scheme is sufficiently comprehensive before it will be accepted as the basis for import regulation. It will be appreciated that every section of the industry must have its interests properly safeguarded, and although the ultimate objective is to get, in effect, something of the nature of that which has been out-
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lined by the noble Lord, it is, as I have indicated, necessary that considerable time should be taken in the process of building up such a scheme.
I should like to assure my noble friend Lord Rea that, as regards import regulation, the Bill provides for consultation with all parties that are concerned. It is suggested that regulation of imports should take place after consultation with the Market Supply Committee, and that Committee should set up a Trade Committee which would be an expert consultative committee, and that all sections of the industry, including the distributive interests, should be able to give their advice and to make their views known. Regulation under the Bill will not, of course, necessarily be continuous as is the case with a number of other commodities to which he referred. As I have indicated it will be applied in order to safeguard the stability of the market, which is obviously in the interests of all parties—producer, consumer, wholesaler and importer. It will be necessary, as I indicated in my earlier remarks, for the Board of Trade to give some indication to the country of origin when such regulation is to take effect.
My noble friend Lord Addison referred to the important question of research. I wish to say now that, apart from the provision for a service scheme under this head under the Bill, which is voluntary, the Government already make a substantial provision, as he will well know, for poultry research. The announcement which was made in July last on the poultry policy of the Government included a statement that the Government would facilitate the establishment of a special research station for the investigation of poultry disease, and also that the Commission to be set up under this Bill would be asked to formulate a scheme for the establishment of a progeny testing station. I would like to inform the noble Lord that actually, at the present time, proposals for the research station are under consideration. I am afraid I have not dealt with all the points that have been made, but, as my noble friends Lord Radnor and Lord Addison have intimated to your Lordships, some of the questions raised in the course of this debate are essentially Committee points, and I shall have the opportunity of further looking into them after reading the Report of this debate.
LORD ADDISON: May I intervene for a moment, with your Lordships' permission, to ask the noble Earl, in making the inquiries that he has just promised, to inquire into the accuracy or otherwise of two statements he has just made. I do this now so that he can give the answer when we come to the Committee stage. I understood him to say that as far as the average producer is concerned the producer will be a voluntary participator. As I read it, the Commission have to be satisfied by persons substantially representing all interests. There is nothing to say how that is to be ascertained, but I take it that the scheme may then be imposed on all producers, whether they like it or not, and that it is not a question of whether they can voluntarily participate. I am only asking the noble Earl to look into it. It is not provided for in the Schedule or anywhere else.
THE EARL OF FEVERSHAM: I should like to assure the noble Lord that in respect of the approval of such schemes, the majority concerned in that section of the industry must be preponderatingly in favour of the scheme.
On Question, Bill read 2a, and committed to a Committee of the whole House.

MINISTRY OF SUPPLY BILL. [H.L.]
Order of the Day for the Second Reading read.
6.8 p.m.
THE MINISTER FOR THE COORDINATION OF DEFENCE (LORD CHATFIELD): My Lords, in moving the Second Reading of this Bill perhaps it would not be inopportune for me to point out that I am undergoing a somewhat new experience. No doubt my feelings are somewhat like those which your Lordships might have if you were suddenly placed on the bridge of a battleship and told to take her smoothly and safely to port. I hope I shall have the indulgence of your Lordships in my novel experience this evening. This Bill follows on a statement made by the Prime Minister in another place on April 20 last, when he said that it was the intention of His Majesty's Government to introduce a Ministry of Supply Bill, and to institute a Ministry of Supply which would have over it a Minister of Cabinet rank, and that the Bill would be so
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framed as to enable it to be developed in the fullest way as a Supply Ministry, although for the time being, at any rate, the intention was that it should be administratively circumscribed within certain limits.
It was said that it would deal with three things initially, and, firstly, with the problems of Army supply, considerably expanded as they have been by the recent decisions to increase the strength of the Army and the Territorial Force. Secondly, it would deal with the responsibility for certain general stores—what is called common user stores—which the War Office already supplies to various Departments, including the Civil Defence Department, and that this particular function would be progressively extended as was found desirable. Thirdly, it would take over responsibility for the acquisition and maintenance of the reserves of certain materials, including raw materials—that is to say, those materials required for the defence programme. He also said the branches which would be transferred from the War Office to the new Ministry would include those dealing with research, with experiment, with production, design and inspection. In addition, the ordnance factories would be taken over, and the Bill would include powers to take priority over industry for Government orders for defence. He said also that a Ministerial Priority Committee would be set up. This Bill which is before your Lordships follows precisely the lines indicated in that statement by the Prime Minister.
In moving the Second Reading of this Bill I think I ought to make a few remarks to your Lordships, first, as to why it is being introduced at this particular moment, and not at any other moment, and secondly, as to why the action of the new Ministry is to be limited beyond what some would consider necessary—that is to say, that it will not cover at first the whole field of supply. The reason why the Bill is being introduced at the present time is that it is in the proper sequitur to a number of other measures that have been recently introduced by His Majesty's Government. I refer to the Military Training Act and to the large increase in the Territorial Army. These measures, which were necessitated in themselves by the international situation, have completely

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changed the hypothesis on which Army supply has up to the present been based, but they have not necessitated any change in the hypothesis for the Navy or the Royal Air Force. That is an important factor to be borne in mind. So we have been Faced with a sudden problem of great emergency and magnitude which requires exceptional and rapid action. On the principle of putting first things first, it has been necessary to put aside lesser considerations and principles which have guided us in the past. But if you are going to judge the wisdom of the Government's action, I think it is necessary that all of you should be perfectly clear as to what are the conditions under which we have been working in the last ten or twelve years.
I should like to remind your Lordships that after the War, when the Ministry of Munitions was abolished and the vast accumulation of stores that it made was scattered to the winds, it was thought necessary to consider once again in 1923 whether it was right to go on working in watertight compartments, the Army and the Navy Supplies and Contracts Departments being completely shut off from each other, with a new service introduced which equally was not in touch with the others, or whether it would not be wise to set up a Ministry of Supply in peace for all time. A Committee was set up to go exhaustively into that question. I was on that Committee. We sat for three and a half years and we heard witnesses of every type on the matter. We definitely came to the conclusion that it would not be a wise step to set up a Ministry of Supply in peace. We considered that, better than that, the proper step was to make the Service Supply Departments co-operate and that each Department should create its own connection with industry and work out its own requirement; of industry in war. The three Supply Departments, we thought, should be completely coordinated and made to work together harmoniously.
The Government in 1927 accepted that Report and it had the most beneficial effect on the relationship between the three Service Departments. I refer to the Principal Supply Officers' Committee and the Supply Board. The great effect that was made by that decision, and the effect it had on the Services themselves, I do not believe is fully realised by those
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who are not in those Services. Anyhow, during the last two or three years, without any special powers to our Defence Ministers, without any undue disturbance of industry—and what disturbance there was having been voluntarily accepted—it has enabled the Navy to start its vast rebuilding programme; it has enabled the Royal Air Force to set up a vast new organisation in industry on a scale never before envisaged; and it has enabled the Army, with its limited hypothesis up to this year, to provide the necessary weapons until this new problem arose—and that without any friction or serious clash between the Departments of State. Any difficulties that there have been have been readily resolved either by the Principal Supply Officers' Committee, now under the Chancellor of the Duchy, or by the Supply Board, under Sir Arthur Robinson. I think myself—and I have had very considerable experience on both sides of this problem in the last fifteen years—that the success that has been achieved is not so much a matter for acrid criticism as a great tribute to the decision made in 1927. It is always easy to find faults in people or in organisations, but the good points are sometimes apt to be swept away by a stroke of the pen.
Now, however great may be the advantages of setting up a Ministry of Supply in certain circumstances, we must not forget that there are also disadvantages. There must be disadvantages if you tear away from the Services their supply sides and thereby compulsorily separate the fighting men who have to use the weapons produced from those who design and produce them. That is an undoubted fact which is fully recognised by those who deal with these matters. But, at the same time, it has always been recognised that the time might well come, when some new and special problem was before the country, when it would be wise to set up a Minister of Supply and to give him special powers at a time when you would have to raid industry much further than you have ever contemplated doing in the past, to disturb and to take so much of the country's industrial resources into the defence programme that it could only be accomplished by some very special and arbitrary measure. But that does not to my mind make it wise to disturb those parts of the supply machine which

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are working efficiently and harmoniously, so long as they continue to do so. I believe that the new Ministry will have a vast and difficult enough task in what has been allotted to it.
Now, if I may come to the Bill itself, of which I believe it is proper for me to make some small explanation of the principles, your Lordships know that the Bill is divided into three Parts. The first Part provides for the powers which are to be permanently entrusted to the Minister. It also provides him with a Parliamentary Secretary. Part II provides special powers to be given temporarily for the purpose of securing the supply required during the continuation of our expanded defence programme. Part III of the Bill contains the more or less formal provisions which are needed. As regards Part I, Clause 1 merely enables a Minister of Supply to be appointed. Clause 2, which is one of the major clauses, and Clause 3 give general powers for the supply of any article required for the public service, but the Minister is only to exercise those powers in regard to supply to any other Government Department if that Department's supply powers in regard to the articles required have been transferred to the Minister. The transfer is effected, as stated, under the authority of Clause 3 by Orders in Council. It is provided in Clause 6 that these Orders in Council shall be submitted for the prior approval of both Houses.
The scope of the powers to be transferred to the Ministry are shown in a White Paper, Command 6034, laid before Parliament on May 31. In that statement the phrase "articles required for the public service" should be carefully noted, because it occurs frequently in the Bill, and a very wide range is given to it by Clause i8 of the Bill, which provides that articles required for the public service cover, not only the normal supplies for the public service, but also the materials needed for the maintenance of essential civil industries in the event of war, reserve stocks and materials, as well as plant and machine tools needed for the production of any supplies that are required. Clause 4 gives power to the Minister to finance an accumulation of reserves if that is considered to be the most effective way to secure the carrying out of the defence programme, or, in
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emergency, stocks of materials for the maintenance of essential civil industries. Clause 5 gives power to the Minister to call for a return of stocks of articles which might be required for the public service.
In Part II of the Bill, which deals with the temporary powers of the Minister, there is a very important clause—Clause 7. The first subsection of Clause 7 is to secure priority for Government orders over anything else. The second and third subsections are to requisition output if the exercise of the power under subsection (1) does not achieve the desired result. Subsection (5) enables a controller to be appointed to carry on the whole or part of any business in which the person fails to comply with the Minister's direction. Subsection (6) fixes the price in the case of difficulty occurring between the producers and the traders on the one hand and Government Departments on the other. Clause 9, which is also part of the same group of powers, enables business records to be examined relating to articles required for the public service. Clause 8 gives power to require available storage accommodation to be placed at the disposal of the Minister, and Clause 12 gives power to require the protection of essential plant required for defence manufacture.
Although all these powers are expressed to be exercised by the Minister, it is of course intended that they shall be exercised in consultation with other Departments, in so far as the supply functions of these Departments are not transferred to the Minister of Supply. Further, the exercise of powers as to priority would be subject to the general control of the Ministerial Priority Committee which has been set up. As I have already stated, there has not been up to the present any substantial need to use priority powers, but with the extending programmes for the Army it has seemed desirable that they should at any rate be available. I should like to say one word about the appointment of controllers. That is a very drastic sanction which we hope will never have to be put into force. Similar powers were in the possession of the Minister of Munitions in the last War, but they were only used on two or three occasions during the whole period of the War.
In addition to providing the Minister with great powers over industry, Clause 7 gives a measure of protection as regards private contracts which may be set aside

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by reason of Government priority, and also provides in subsection (6) a resort to arbitration in the event of it being impossible to settle the price by negotiation between the Minister and the contractor. I shall propose at a later stage a change in the method of selection of arbitrators as shown in the Bill, by reason of the discussion which took place at the Report stage in another place. The Amendment which I shall propose will provide that the panel of arbitrators shall be appointed by the Minister, and it is the intention that he shall appoint these from as wide a field of selection as possible, and that he shall appoint a Chairman and Deputy Chairman, who shall be persons with wide legal experience and capable of bringing an unbiased judgment to the task which will fall on them, of selecting from the panel the arbitrator or arbitrators to be appointed to deal with specific cases.
Clause 10 prescribes the powers of persons appointed as controllers. Clause 11 provides protection for directors of businesses who, in producing articles required for the public services, contravene the memorandum and articles of association, or, in case of statutory companies, the governing statutes. Clause 12 provides power to the Minister to require any contractor or sub-contractor to carry out whatever protective measures may be considered necessary to protect essential plant in his works from air-raid damage. Clause 13 is for the authorisation of the temporary powers in Part II, which has been proposed as being for three years, that being the same period as that during which the Military Service Act will run. If this part of the Act is still needed at the end of the three years, then it may be extended from year to year on an Address to His Majesty by both Houses of Parliament. Part III of the Bill contains general provisions regarding the administration of the Ministry, and as regards expenditure, which I need not refer to any more at this stage.
This Bill asks, as your Lordships will see, for new and extensive powers, to be energetically but reasonably applied. It adds a new powerful driving cog to the general supply machine, that can be clutched into those wheels where it can be best applied, but will not throw out of gear the delicate parts of machinery that are already working smoothly and effi-
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ciently. At the same time the Government can at any moment, by Order in Council, extend or re-direct the new power to be created into other unlimited Government spheres as and when they think it wise so to recommend. May I assure you, my Lords, that this question of a Ministry of Supply Bill has been considered in the past, as now, not from a narrow Service outlook, nor as a political issue, but rather in the very spirit that I know animates everybody in this House, of doing what is wisest and best in a difficult emergency and acting on the best balance of advice at the disposal of His Majesty's Government. I beg to move that the Bill be read a second time.
Moved, That the Bill be now read 2a.—(Lord Chatfield.)
6.33 p.m.
LORD ADDISON: My Lords, I must apologise for having to address your Lordships for a second time on the same day on the Second Reading of a Bill. It so happens that by the accident of Parliamentary business, it relates to two measures which concern Departments to which I have been attached. Thus I am fortunate enough to be able to say with what pleasure we have all listened to the noble and gallant Lord who has just spoken. I did not know whether to admire more his charm and lucidity or his brevity as compared with the Minister of Supply in another place. I have here before me a copy of the speech of the Minister of Supply on the same topic in another place, and I see that after he had occupied no fewer than nine and a half columns of the OFFICIAL REPORT, he craved permission to pass to the actual Bill itself. How long those nine and a half columns occupied I do not know. I confess I find them somewhat boresome reading because I think that any competent foreman of the works department would have been familiar with all his arguments and would have regarded them as commonplaces.
Another thing which I admired about the noble and gallant Lord was the agility with which he skated over the Government's change of view. We have discussed this matter I think three times in this house, and twice on formal Motions. One was by Lord Mottistone. I am not sure that Viscount Swinton did not also take a hand on one occasion and I had a hand at another time. We received most

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convincing arguments from the Government why it was undesirable, in these critical times, to set up a Ministry of Supply. So satisfied were the Government supporters that when we had the temerity to carry the matter to a Division, only seventeen of your Lordships voted for the Motion. I remember that the Lord Chancellor had been most unfortunately coached because he relied upon the Report to which the noble Lord has referred, and whoever had coached him had unfortunately omitted to point out that the governing consideration before the Committee was an instruction that the Report was to be drawn up on the supposition that there would not be a major European war for, I think, ten years. Of course, that was a very important governing consideration which made all the difference.
THE LORD CHANCELLOR: The noble Lord referred to it himself. We were all perfectly aware of that.
LORD ADDISON: I drew the attention of the Lord Chancellor to it. He had prepared an argument with great care and lucidity to convince us that a Ministry of Supply was not necessary, but he had overlooked that instruction.
THE LORD CHANCELLOR: May I suggest that the noble Lord might now refer to the Bill before us?
LORD ADDISON: I am coming to the Bill, but I think I am entitled to make these observations and I must say I am doing so because I admire the way in which the noble and gallant Lord passed over what had taken place on previous occasions.
LORD CHATFIELD: I think, perhaps, I might justify what I said rather more than Lord Addison accepts. What I said was that it was quite true that at the time when we were considering this question we were not considering a vast programme of armaments, but rather a period of disarmament, and the situation was not the same as now. But, nevertheless, we studied the problem not from the point of view of the situation at the time, but as a matter of principle, and our decision and recommendations were given not on a matter of expediency at the moment, but on a matter of principle.
LORD ADDISON: Yes, that is true, but I am drawing attention to the fact that the critical situation of the last few months, in which these Motions were discussed in your Lordships' House, is quite different from the circumstances which accompanied the setting up and the deliberations of that Committee. It reminds me of a man who, when confronted with a difficult situation, said: "What is the use of having a mind, if you cannot change it?" That is the attitude of the Government on this important matter.
Well, having spoken in support of a Ministry of Supply on two or three separate occasions, I certainly shall not oppose it now. We welcome this conversion, and I have only just this to say, that I am doubtful whether the noble and gallant Lord will find that he can continue the limitations upon the functions of the Minister which his present proposals indicate. I think particularly, with regard to the common user of supplies, that the functions of the Minister of Supply should immediately be extended to cover a very large volume of ferrous and non-ferrous metals and other supplies, which are required by all producing Departments and by all the major industries. Otherwise, we shall have a very needless inflation of price and, I am afraid, serious delay. It is true, I think, from what I learn, that the work before the Minister in expediting the supply programme, of the War Office particularly, is exceedingly urgent, but there are one or two quite obvious things, for example scientific instruments, which are required by all the Services. I suggest that the Services' common user should be extended to them, and it is very urgent that it should. However, these are minor matters. I rise on behalf of my noble friends to say that I am glad at last that His Majesty's Government, in this matter as in others, have come to our point of view, and that we live in hope.
6.42 p.m.
VISCOUNT SAMUEL: My Lords, I am sure your Lordships appreciated very greatly the manner in which the noble and gallant Lord has presented this Bill. His opening observation reminded me of something that was said about Lord John Russell who, it was alleged, was a man who was quite capable of undertaking any task suggested to him, even that of commanding the Channel Fleet. However

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incompetent Lord John Russell or any other statesman would have been to discharge that office, certainly the noble and gallant Admiral has shown as great efficiency at the Ministerial box as on the Admiral's bridge. His lucid, comprehensive, and compact exposition shows that he has Parliamentary qualities which will be a strength to the Government, and also a service to the whole House.
My mind necessarily goes back to previous discussions, to which my noble friend Lord Addison has referred. More than a year ago, on May 23, 1938, my noble friend Lord Mottistone moved a Motion for the establishment of a Ministry of Supply. I gave him such support as I could, the noble Lords, Lord Addison, Lord Trenchard and others supported him, but the noble Viscount, Lord Stone-haven, opposed, and on behalf of the Government the noble Marquess, Lord Zetland, who is now on the Government Bench, gave to the Motion an emphatic negative. That was the famous occasion on which he used the phrase that ought to become perhaps classic, that the mind of the Government was to introduce such a measure "sooner or later, perhaps." Then six months later, on November 1, we had a two days' debate on national defence, initiated by the noble Lord, Lord Strabolgi, when again this matter was given prominence and the establishment of a Ministry of Supply was supported once more by the noble Viscount, Lord Trenchard, and also out of the fullness of their experience by the noble Viscount, Lord Swinton, and the noble Lord, Lord Milne. Once more the Government rejected the suggestion, and the Leader of the House, the noble Earl, Lord Stanhope, gave an accumulation of reasons why the establishment of a Ministry of Supply was open to grave and irrefutable objections: it would involve delay rather than accelerating supply, it would introduce confusion rather than greater simplicity, it would be useless unless it included compulsory powers, whereas compulsory powers could only properly be exercised in time of war. However now, under the pressure of public opinion, the Government are taking a different view, and the least convincing part of the noble and gallant Lord's speech was, I think, that in which he gave reasons for this change of attitude.
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As long ago as the time of the grave crisis last September the noble Earl, Lord Baldwin, speaking in this House said that he would "mobilise our national industry tomorrow." Some of us wondered why our national industry had not been mobilised in the "yesterday," rather than waiting for the "to-morrow." But the task now is one of mobilising our national industry for purposes of defence, and that is far too vast an undertaking to be left to the Supply Departments of the Service Ministries. They cannot cope, and are not designed to cope, with that task. It needs close and constant contact with the industrial leaders throughout the country, with the trade union leaders and the Labour movement in general, and it undoubtedly requires a special Department and a special Minister devoted to the one object. As soon as it became apparent that we had to have an immense programme of national defence it should at the same time have been obvious that the creation of a Ministry such as this was essential. The conditions already, in 1936, were wholly different from what they were in 1923 when the Committee sat to which the noble and gallant Lord referred.
The scope of this Bill is very narrow. It has the title of a Ministry of Supply Bill, and it may be it takes powers to extend the functions of the Minister more widely than at first, but in fact it is at the outset little more than a Ministry of Army Supply Bill. No doubt the Army requirements are the most urgent, on account of the great expansion of those forces during the last few months, but the Air Force also is now on an immense scale, and for my own part I cannot doubt but that great advantage would be gained if some parts, at any rate, of the requirements of that Ministry were to be included within the functions of the Minister, if not immediately, at all events after a not very long interval. The Bill, however, it must be said, does give elasticity. It allows for growth, and no doubt the task devolving upon the Minister is a very delicate one at the outset in order to fit in the new system with that which already prevails. There are competitive claims from the various Departments—and they are necessarily competitive—and a great deal of tact and discretion as well as drive will be required from the head of the Department. The success of the Ministry must necessarily

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depend very largely indeed upon the personality of the Minister.
This is little more than a legislative framework—and I do not complain of that; it is a mistake for the Legislature to try to deal with these matters in too great detail itself—a framework which will be filled in by administrative action. And for my own part I feel, as I have said, very little doubt but that the powers of transfer should be exercised in the near future, and the functions of the Minister enlarged. One of the reasons why it is desirable to concentrate in a single hand a very great deal of this business is the financial reason. The competition between Departments must have, directly or indirectly, some effect upon the prices that have to be paid. The Departments may not exercise control in an equal degree upon the prices that they are charged, and contractors are naturally tempted to give priority, unless there is some instruction from above as to priority, to Departments where the financial conditions may be easier. This financial aspect has, I venture to say, been too little considered, and the noble Lord who has spoken has said nothing with regard to the control over expenditure that the Minister of Supply ought to exercise. We have never adopted a policy of "Peace at any price," but we have adopted a policy of "Arms at any price." Whenever there is war or danger of war, Treasury control is necessarily relaxed, the tap is turned on, the golden stream pours out, and frequently a great deal of it runs to waste.
In the latter years of the Great War the House of Commons appointed a Select Committee on National Expenditure, of which I had the honour to be Chairman. We sat during two sessions of Parliament. We were a numerous body, and we divided ourselves into a number of sub-committees which examined the expenditure at home, and at the Front to some extent, of all the various Departments concerned in the War. We found that the waste in many directions was immense, and such of our recommendations as were put into immediate operation did, I believe, save the taxpayer many millions of pounds. Nevertheless every member of that Committee was convinced of the fact that there had been, and still was, a vast deal of avoidable waste through lack of
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financial control. I had to preside not only over the whole Committee but also over the sub-committee dealing with the War Office, which then included the Air Force. The Air Force at that time seemed to have even less adequate control than the other Departments. It was a new organisation with no financial traditions, and the waste there in many directions was undoubtedly colossal. Whether the Air Ministry at the present time is still inclined to extravagance I do not know. I have heard rumours, but have no personal knowledge and so cannot speak. When men's lives and safety are directly concerned, the Department of course must have the best and must not be stinted. Nevertheless there can be adequate regard for life and safety and at the same time a proper control over expenditure.
I would draw attention to the statement that was made when, with the consent of all Parties, the nation embarked on its great new policy of defence. In March, 1936, a Government White Paper was issued in which the following sentence appeared:
"His Majesty's Government are determined that the needs of the nation shall not serve to pile up extravagant profits for those who are called upon to meet them."
Ministerial declarations were made at the same time to a similar effect. That was three years ago. I have been provided with a statement showing some of the dividends which were, in fact, paid last year compared with the dividends paid immediately before that statement was made.
I shall trouble the House with a very few of these figures because they are of very great importance and have a direct bearing upon the Bill now under discusssion. Of steel and general armament makers, Thos. Firth and John Brown earned a dividend in 1935 of no less than 21 per cent. free of tax. In 1938 that was increased to 30 per cent. free of tax. They actually paid in 1935 12½ per cent. free of tax, and in 1938 17½ per cent. Hadfields earned in 1935 a dividend of 14 per cent., and last year 34 per cent. In 1935 they paid a dividend of 7½ per cent., which was increased last year to 22½ per cent. Vickers' dividend was increased from 8 per cent. to 10 per cent. in the same period, and meanwhile the capital had been increased by 50 per cent. Among shipbuilders, Cammell Laird earned a dividend in 1935

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of 3·2 per cent. and in 1938 of 19·7 per cent. In the one year they paid 3·3 per cent., and in the other 10 per cent., and the capital was also doubled.
LORD MANCROFT: Can the noble Viscount say whether these increased profits were made out of armaments or whether a large amount of these increased profits were made out of purely civil work, such as mercantile shipbuilding, as in the case of John Brown's?
VISCOUNT SAMUEL: I had not overlooked that point, and was going to state that of course it is impossible to say whether the whole of these profits were made out of armaments; but these are the leading armament makers.
LORD MANCROFT: The noble Viscount will mislead the public if these figures go forth without specific explanation that there is no implication that these great profits have been made at the expense of the country's misery.
VISCOUNT SAMUEL: I did not say anything about the country's misery, and I was going to say, if my noble friend had not interrupted me—I had it in my notes—that of course one does not know how far these profits were due to armaments and how far to other business; but there is no reason to think other business should have made these immense profits and should have led to the very large increase in the capital of many of these firms. There is also the case of Yarrow's. They show an increase in their dividend from 10 per cent. in 1935 to 20 per cent. last year. No one would doubt that Yarrow's are mainly an armament-making firm. Fairey Aviation earned a dividend in 1935 of 4 per cent., which increased in 1938 to 25·7 per cent. tax free, and the dividend paid increased from 5 per cent. to 15 per cent. tax tree on a capital which had been doubled. I could give other instances if necessary, but I have said enough to show—in fact it is quite notorious—that the armament firms of this country have mace very large profits during the last three years, and their shareholders have benefited accordingly. The fact is admitted. The Government are now introducing a new system of taxation, and my noble friend opposite would not suggest that the Government would go to the trouble of introducing a new Armaments Profit Duty if they did not think there had been excess profits made.
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Indeed they have frankly stated that the measures they had taken have not proved adequate, and that further measures of a fiscal character have had to be taken. The Armaments Profit Duty, however, leaves a very large part of these profits to the firms concerned, and only applies to contractors who do armament business to the value of £200,000 or more.
I mention these facts in order to urge that this new Ministry should make it one of its chief purposes to ensure an adequate control over the profits made from Government contracts. It is not enough to have an Armaments Profit Duty, for the reason I have stated that it does not apply over the whole field and only deals with a part of the profits. There should be a more adequate control in the terms of the declaration made three years ago that:
"His Majesty's Government are determined that the needs of the nation shall not serve to pile up extravagant profits for those who are called upon to meet them."
I trust, therefore, that this Department will have a strong accounting and control branch, that although of course speed should not be sacrificed to financial considerations, it will recognise that financial waste is always a sign of inefficiency, and that the motto of the new Ministry should be "Speed without wastefulness."
7 p.m.
VISCOUNT SWINTON: My Lords, I should like to join with noble Lords who have spoken in congratulating my noble friend on the charm and clarity of his speech, and equally upon the skill with which he piloted this Bill at this stage through the snags and shoals which, to the simple mind, would hardly appear to exist at all, so smooth was its passage. I also want to join, as one who has steadily in this House advocated the creation of a Ministry of Supply, my congratulations to those which have been given to the Government on their conversion, or partial conversion. Perhaps, rather than partial conversion, I should say that part of the Government appear to have been converted but part are still living in sin, because it is only part of the work of supply which is to be transferred to a Ministry of Supply, while a very large part, or, at all events, quite as much, remains outside the net as is to be transferred within it. I should hardly like to think that the "agreement to differ" which brought such comfort to the mind

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of my noble friend who has just sat down was finding its way back into the Cabinet. I hope and trust that is not so.
I make no apology for speaking now. This is the only opportunity, when this Bill comes up for Second Reading, of asking your Lordships to devote some little further time to the consideration of the principles involved. It is the most important Bill, industrially and strategically, that we have been called upon to consider, and it is important that we should consider it with the thoroughness and the gravity that it deserves. The issues involved are very familiar to your Lordships. We have debated them in this House. We have had the experience of men like Lord Addison, who was himself a Minister of Munitions in the War, and of impartial and very authoritative men like Lord Trenchard and Lord Milne. The argument of all those who, like them and myself, have advocated a Ministry of Supply, is essentially this, that such a Ministry would be absolutely necessary in war and, that being so, the Ministry ought to be created now. It ought to be created now because the Ministry as it should function in war must be ready to function and its very readiness would, I believe, be a very material deterrent to war itself. What should that organisation be? It is, as I see it, essential that it should be that organisation which is required in time of war. You need not exercise all the compulsory powers. All the arguments that the Leader of the House addressed to us on a previous occasion as to the undesirability of setting up complete compulsory control of the whole of industry is utterly irrelevant, if I may say so with respect, to the question of whether or not you should have a complete and effective Ministry of Supply in being. You need exercise none of the compulsory powers unless you find that they are necessary; but the organisation must be there; it must be established and equipped and ready to function as you would require it in war.
What, then, should that organisation be? What should be the responsibility of this Minister of Supply and over what should he operate? I submit that he should be in charge of the full field of supply for the three Services which he will have to cover in time of war, and
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that he should have that executive responsibility here and now. I do not want to discuss now how far that should go in Admiralty matters. A great deal may be said in support of pure shipbuilding being kept outside. I do not think it would be proper to digress into that at this moment, but I am quite sure of this—and I speak from experience almost as long as my noble friend, with whom I have had many happy years of working—that there is a mass of Admiralty work which calls for the same material, calls for the same labour, often skilled labour, and is placed actually in the very same factories as work for the Army and the Air Force. Over that wide field of what really is common service I have no doubt at all that the Minister of Supply should function.
I dwell on this because my noble friend in his speech spoke of these very questions of principle. What has been the Government's answer when pressed on this, and pressed, believe me, with no feeling of hostility, because there is only one thing we all, I believe, want to do, and that is to get the best organisation for this country in these difficult times? I think it was my noble friend Lord Zetland who rebuked me on a previous occasion, and said how wrong it would be to establish a Ministry of Supply because it would interfere with ordinary business. Well, I never have understood why one single Ministry should interfere with ordinary business more than three separate Ministries or sections of Ministries operating independently. But we all agree to-day that business has got to be interfered with, and that the first call on business is for the munitions required by this country. That argument, I take it, is no longer advanced.
Then came the argument, on which my noble friend based himself in large measure to-day, about the danger of dislocation. There may be two opinions about that. Personally I believe that argument to be greatly overrated because what is proposed by all of us who advocate a Ministry of Supply is not the creation of some entirely new Ministry, or rather of new personnel and sections of Departments. We are not advocating the finding of something entirely new, and transferring from one set of men to another set of new men the functions of supply. That is not the proposal at all.

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It is not the way it is being carried out here. What is happening even in this truncated Bill is that the whole Supply Department of the War Office is transferred to the Minister of Supply, precisely in the same way as part of the Air Ministry or part of the Admiralty would be transferred. It is a merger of the Supply Departments under one executive head. It has been said they are very competent people who are doing this work. No one knows that better than I do. I have had the privilege of working with them and seeing them in all their Services, and I know they are competent. I wish to pay my tribute to them; but they will not be any less competent when working in a merged Department, as they would have to do in war, than they are to-day in their separate spheres. The final argument, and the argument which was used most forcefully before and again was enforced very much by my noble friend the Minister for Defence to-day, was that it is wrong in principle to separate the Supply Departments of a Service Ministry from what he called the user. There is very much to be said in favour of that. I admit that on the Esher Committee, Lord Esher and Lord Haldane, I think, took a different view.
If I may go back for a moment there is a point which I wanted to make before about dislocation. I believe, as I say, that the danger of dislocation is overrated. To-day—certainly I can speak for the Air—you have Vast orders which have been placed, which will occupy firms for a long time, taking the whole output of factories, and behind them further orders which the manufacturers know of, so that they can jig and tool for them. The amount of dislocation is, as I say, greatly overrated. But whatever measure of dislocation there may be, is it not important that it should be faced now in time of peace rather than in time of war? I should have thought that was really unanswerable.
Now I come back, if I may, to the argument so much stressed by the Minister for the Co-ordination of Defence, the importance of not separating the user from the supplier. I always felt that that was an argument that had to be met, and in a recent debate I propounded the solution that the members for supply on the different Councils—the Admiralty, the Air and the Army Councils—who become
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the principal officers of a Ministry of Supply, should remain members of their respective Service Councils, and the noble Viscount, Lord Trenchard, and the noble Lord, Lord Milne, both said in this House that they thought that was a complete answer to that problem. Incidentally, I would like to ask my noble friend whether the chief officer of the new Ministry of Supply—who I suppose will be the very distinguished sailor and public servant who has been Director General of Munitions Production, I think that is his title, in the War Office—will continue to sit as a member of the Army Council. I most sincerely hope that the answer is in the affirmative. But what I think is in the minds of most of us in regard to that argument about not divorcing the user and the supplier, is that you will have to make this an effective Ministry in war, and, that being so, you should do it now.
Observe, my Lords, that this Bill departs entirely from the principle upon which the noble Lord has laid such stress. The Admiralty and the Air Ministry are still to adhere to the principle that the user and the supplier are to remain one and the same, but in the War Office that principle is no longer to apply. Yet surely to-day in the War Office, under the new expansion scheme, the problems of strategy and the problems of organisation must be—at least so I should have thought—as closely interlinked with the problems of supply as they are in the Admiralty and the Air Ministry, who are in the full vigour of the execution of their great programmes. It is only in the War Office that this principle is transgressed, but most effectively transgressed. What happens? What happens is this, that you transgress this principle of not divorcing the user and the supplier without making a really effective Ministry of Supply. I know that powers are taken under which it can be made a real and effective Ministry, but what I think we want to know is what is the Government's intention. How far do they intend to go, and when do they intend to carry out this extension?
I am bound to say I myself am not at all reassured by the statement made by the Minister-designate of Supply in another place. It really was a most extraordinary speech. He said: "I am taking over the War Office supply because the Secretary of State wishes me to do so.

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He wishes to use me as an agent, or wishes"—I will not say to pass the buck, that would be improper—"to transfer these responsibilities. But you really would not suggest," he went on, "that I should go and take over from the Air Ministry or the Admiralty, unless the Ministers there want to make me their agent or would like to discard their functions also." With great respect, you cannot approach this great principle as if the Minister was setting himself up as an agent to be employed or not to be employed by commercial firms, if they thought fit, in this market and not in that market. It is a tremendous question of principle. It is a question of what is the right principle, and it ought not to be left to the idiosyncrasy of Ministers to decide. It is a question on which the Government must make a decision on the merits of the case, and it must not depend on the wishes for the time being of this or that Minister. As the noble Lord, Lord Addison, pointed out, this Minister is not going to function as a Minister of Supply at all under the present arrangement. He simply is the Director-General of Army Supplies taken out of the War Office and put apart.
It is said that he is to take over the common services, but on that the noble Lord, Lord Chatfield, was, I think, very frank, and he has given the information that I wanted and that I think we all wanted. The common services which this Minister is to take over under the present plan are merely those services which up to this moment the War Office has been conducting as agent either to the Air Ministry or the Admiralty—nothing else. Compare that with the field which was covered by the Ministry of Munitions in the War. By common services in a Ministry of Supply I understand—and I think all who feel as I do understand—not just those things which the War Office does to-day as an agent, but the provision of articles which draw on a common stock of material, or which require similar industrial facilities. That is really what we mean by common services as they would be conducted by a Ministry of Supply in war.
I do not want to labour this, but it is a vital matter. Let me therefore put certain examples to my noble friend. All of these cases—I could multiply them indefinitely—are cases where the supply of the article draws on the
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same material, the same labour and often in actually the same factories. Take guns. As I understand it, and I have read the Minister's speech in another place, he will be responsible for guns of a type which the War Office use. If it so happens that the Admiralty or the Air Ministry are using a machine gun or a Bofors gun which is of the kind the War Office also use, then he will place the order for it; but if, as they do in fact to a great extent, they use different machine guns and different other kinds of guns, although it is the same labour, the same material and very often the same factories, he will only place an order, as I understand it, for those guns of the War Office type.
Take shells. He will order shells for the Army, but he will not order shells for the Navy. He will order shell cases, but he will not order bomb cases for the Air Ministry, and he will not order mines or depth charges, because they are not Army requirements. If fuses are to go into a shell used by the War Office, they will be the responsibility of the Minister of Supply; if the fuses are required for a weapon that is not a War Office type, then they will not come within the purview of the Minister of Supply. Take scientific instruments: my noble friend Lord Addison referred to them. It is always very difficult to get the highly-skilled men and also the special material which are necessary, and which can only be found in a few firms, so that the same firm has to take orders from the Admiralty, the War Office and the Air Ministry. If it is a War Office scientific instrument, the Minister is responsible; if it is a scientific instrument for the Admiralty or the Air Ministry—the Minister is not responsible. The same with wireless: if it is a wireless used by the Army, the Minister orders it: if it is a wireless used by the Air Ministry or the Navy, the Minister does not order it, although I suppose the orders in many cases are going into the same shops.
Take explosives: I think there the War Office has been the agent for the Air Ministry and not for the Navy, and therefore the Minister will place orders for explosives for the War Office and the Air Force, but will not place orders or have any responsibility for explosives for the Admiralty. I do not know what the responsibility is for uniforms and clothing. Presumably the Minister orders the Army

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trousers but does not order the Air Force trousers, and he would certainly not be allowed to order the trousers for the Navy—at least, I presume so, but perhaps I shall be corrected if I am wrong. Take also motor transport, which all the Services require in a greater or lesser degree. It may be that if the Navy and the Air Force bought exactly the same kind of motor car which is bought by the Army, then the Minister would place the order. I am not even sure in that case, but certainly if they required different kinds of transport from that which the Army required, then the Minister would supply the Army but he would not supply the Navy or the Air Force.
I could go on indefinitely with a list like this, but is it not only common sense that when vast demands are made on industry already, and demands far greater even than this will be made if we come into war, it will be absolutely necessary to vest in one purchasing authority all these common purchases? I would beg of the Government to consider whether it is not wise to vest that purchasing authority in the new Minister to-day.
Take research, to which my noble friend referred. The research for pure Army purposes will vest in this Ministry; but how closely interlocked all that research is to-day ! Those of us who have been concerned with these things know that so well. I agree with my noble friend that we do work closely, we have worked closely together, but I am sure it would be much better if, where so much of this is in common, the responsibility of supply and the responsibility of research were in this Minister.
Then I come to the question of priorities, and I really must deal with that. One of the great advantages of a Ministry of Supply is that the Minister of Supply is the authority—subject to the final Cabinet authority in case of dispute—who has the responsibility to determine priorities. He has no such power at all under this Bill. He has not. I will show your Lordships that he has not any real power to determine priorities. He cannot have. He has a power to say that a particular factory shall deliver a Government order before it delivers a private order, but that is not what I mean by priority. He has not the power under this Bill to say: "You shall deliver that order for the War
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Office in priority to the Air Ministry order or the Admiralty order." That is all going to be dealt with through a system of priority committees. I do not believe in committees for getting executive action. The Minister cannot have that power to-day, because he is merely a War Office agent, and of course you cannot give a mere War Office agent, sitting in a separate building, power to decide on priorities between the War Office and the Air Ministry, or between the War Office and the Admiralty. But if the Minister, as he would have in a Ministry of Supply, has the executive responsibility for delivering the goods, the common goods, to each of the three Services, then of course, because it is his executive responsibility, because he is the man you shoot at if there are not guns for the Navy or guns for the Air Force as well as guns for the Army, there devolves upon him the duty of assigning the priorities—subject always, of course, to the supreme authority of the Cabinet.
This Bill does not set up a war organisation; it is not pretended that it does. I would beg my noble friend to tell us what is the organisation which the Government believe will be necessary in time of war and which they intend to use in time of war, if war should come. They must have taken their decision on that; they must know how much in their opinion ought to be vested in this Minister in time of war. I cannot believe that it is only these functions which are assigned to the Minister under the White Paper, which has been quoted—of course it is not. If these were all the functions which the war Minister of Supply is to exercise, the whole of the rest of the powers in the Bill to extend would be meaningless. I would beg the Government to use those powers in the Bill, when they get it, now, to create and operate a Ministry of Supply covering the full field which they mean that Ministry to cover in war. I believe that is a necessary preparation for war, and I believe that in creating that effective Ministry of Supply with, the full powers and the full field it would have to exercise in war, we are not only making our preparations complete but we are perhaps establishing a very effective deterrent to war and an insurance of peace.
7.29 p.m.
LORD GAINFORD: My Lords, I rise only for one moment to deal with a point on behalf of industry. Industry is very

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much perturbed at certain permanent powers which are included in this Bill. In Clause 2 powers are given to the Minister to buy, manufacture or otherwise produce any articles required for the public service. When we turn to Clause 18 we find that the expression "articles required for the public service" means:
"(b) articles which, in the opinion of the Minister, would be essential for the needs of the community in the event of war; and
(c) anything which in the opinion of the Minister is or is likely to be necessary for or in connection with the production of any such article as aforesaid."
What industry is apprehensive about is not that the powers proposed to be given in this Bill shall operate for a limited period, but that those powers should be in the permanent part of the Bill.
I would point out that just as in Egyptian history there rose up a new King over Egypt, who knew not Joseph, so in the event of a permanent provision of this kind being placed on the Statute Book, it would be possible for a Socialist Government to nationalise nearly every industry in this country, and it would have unlimited powers if it were deemed advisable to exercise those powers. Industry is quite prepared to do its utmost for the Government in the present emergency; it is willing to help in every possible direction; but it does ask that the Government should put some limitation upon the power of manufacturing and production given to the Minister in perpetuity. While I am putting down an Amendment to deal with the subject, I do feel that it is a matter of sufficient importance for the Government themselves to put down an Amendment, which would at any rate limit that power of manufacturing and producing against private enterprise, and not support what might eventually become a Socialist policy.
I recognise to the full that the Minister and present Government, as the Minister of Supply said in another place, have no intention whatever of superseding the normal processes of trade. He said he was not going to start enormous State manufactories. And again to-day the noble and gallant Lord stated clearly that it was not the intention of the Government to put industry out of gear. While the White Paper shows that it is their intention to be quite reasonable in regard to industry, industry is apprehensive upon
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this particular point, and I press the noble and gallant Lord to introduce some Amendment on behalf of the. Government which will meet that apprehension, which in my opinion is a reasonable one, on the part of industry.
7.33 p.m.
LORD BARNBY: My Lords, my first need is to draw your attention to the clock, and ask you to bear in mind not what it says at this moment, but what it said at the hour at which consideration of this Bill was begun. I think you will understand then the difficulty in which I find myself in addressing the House at this moment. It seems to me regrettable that with full knowledge of the pressure of Parliamentary business, it should not have been possible to arrange the order of business somewhat differently. Surely the hour at which consideration of this important Bill was begun suggests that there might well have been some revision of the Order Paper. I know it is presumptuous for a Back Bencher to suggest such a thing, but in the interest of those who have to speak one must express regret that some such rearrangement was not made.
I cannot help reminding your Lordships of the vast importance of this measure. It is a Bill which proposes revolutionary changes in the practice of this country, perhaps not unnecessarily, and that the discussion of it should be limited, under the constitutional arrangements that we have in this country, to such a parsimonious and meagre amount of time as has been allotted to it by those in control of the House, is much to be regretted. Further, I would remind your Lordships of the wealth of talent and experience possessed by members of this House, and that they should be condemned to discuss a matter of this character in such a limited space of time will, I am sure, be a matter of surprise to the country. I feel sympathy with the noble and gallant Lord in charge of the Bill in the desire that he should not lose his dinner, but we have heard Lord Swinton, speaking from his great experience, and we have also heard a distinguished past President of the Board of Trade, and the noble and gallant Lord is going to be denied, except at the expense of his dinner, the opportunity of dealing with the most momentous arguments which have been put forward.

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Naturally I want to associate myself strongly with a great deal of what Lord Swinton said. As to general agreement with the Bill there can be little doubt. The fact that it should have been introduced by the noble and gallant Lord, coupled with the conviction of his vast experience from a technical as well as administrative point of view, gives encouragement to anyone that the manner in which it has been presented and prepared is necessary. I listened with attention to the three debates which took place in this House in the early part of this year, to which reference has already been made, and while refraining from speaking myself, I listened with surprise because in those three debates a great part of the attention was given to the question whether or not there should be a Ministry of Supply, and little time was given to the powers to be conferred. As Lord Swinton has said, the essential part is the priorities, not only the priorities of production, but the priorities of the different Services concerned.
My ground for asking your indulgence at this hour is that having been in charge of one of the major controls in the last War, and having preceded that by being loaned to the Army Contracts Department, and subsequently being transferred to the Ministry of Munitions, I have had considerable opportunity of observing the workings of a Ministry of Supply. At this hour, one would need courage to deal with points in detail, but this is the only occasion one has for expressing one's views and attempting to be helpful. I venture to think, too, that the noble Lord in charge of the Bill is being robbed of an advantage which he himself would have welcomed, of hearing more than twenty minutes of constructive criticism from Lord Swinton, with his great experience, to which contribution might also equally have been made by other members of the House.
The point really with regard to the Bill is, as has been expressed by Lord Gain-ford: Shall the powers be permanent or temporary? Shall those great powers that have been offered to the Ministry be included in Part I or in Part II? I wish to associate myself emphatically with the suggestion of the noble Lord, Lord Gain-ford. He, like myself, is able to be in close contact with what we recognise in this country as the mouthpiece of organised industry, the Federation of British
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Industries, and the need for having industry effectively organised is daily becoming clearer. The existence of the Federation of British Industries is of great assistance to all the Government Departments, and particularly in a case like this, in which I am sure that the noble and gallant Lord in charge of the Bill requires the fullest collaboration of industry.
He was good enough in the course of his remarks to reassure the House on the question of the panel of arbitrators and the manner in which equity and justice for industrialists is going to be assured, and we welcome that statement. On Clause 12 there is the question of the compensation which is to be allowed to industrialists for the expenditure which they are likely to be called upon to make, and while it is provided that 27½ per cent. may be recovered in the taxable year there is some doubt as to the manner in which the remaining 72½ per cent. is to be dealt with. It is suggested that a proportionate amount shall be regarded as permissible to be added to the price of the contracts. But there appears to have been in another place no assurance that the amount to be received under this head would actually escape taxation under the new Armaments Profits Duty. That is a very important matter for industry as a whole, and I hope it will be possible to clarify that point.
The question of priorities, to which the noble Viscount, Lord Swinton, referred, has another angle to which I have given more particular thought, and that is the priority in production of any industrial machinery. With orthodoxy disproved in so many matters, I feel that it may well be that these powers must be co-ordinated very closely with the question of priority for export. I raise this point because in these days it is becoming daily more clear that a "white war" or the economic argument—whichever term you like to employ—is an integral factor of the situation and, as the noble Viscount, Lord Samuel, explained, in these days the tap is turned on and the golden stream flows out. That is what we are proposing to do to-day, and it is inescapable; but if we are going to go on spending on this vast scale it is equally necessary that we should provide the means with which to pay, and that must be by means of our export trade. We are not going to live on merely making armaments, and the provision of ex-

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change change and the protection of sterling are matters essential to the welfare of the country. No reference has been made to them at all in the introduction of this Bill.
I know that it is heresy to suggest such a linking of powers. One shrinks from the idea that these great powers could be permanent, but if after all the Government have decided, and continue in their determination, that they shall be permanent, then I urge that the question of the priorities of the export trade be dealt with and given the proper consideration. It may well be that in order to protect sterling we must give some stimulus to export trade by some rebate on taxation. It may come from the control of imports and under those conditions one immediately thinks of things like legislation insisting on a larger amount of offal in wheat, machinery for insisting on the larger use of tobacco from South-Eastern Europe, and the conservation of oil for internal road transportation. All of these would involve the control of imports, which again must not be in conflict with the Ottawa Agreements. But under Clause 12 there is a call for the due functioning of industry, and that involves efficiency for domestic production and for export.
That brings us to the desirable action which has been urged by the President of the Board of Trade, and persistently and energetically by the Minister for Overseas Trade—namely, the assistance that is necessary to the countries in Europe which we have guaranteed. The first thing is to strengthen their economic life, so that they may help themselves. That involves priorities for the export of whatever may be necessary for that purpose, including not only armaments but matters for civilian development, so that they may help themselves in every way possible. Then we see that British productive capacity is limited without control, and that brings up the necessity, which is well urged, for the powers which are being provided by the Bill. In referring to the guaranteed countries and the powers which can be given under the Bill, and the relationship of civilian necessity and military necessity in production, I urge again that this should be outside the provisions of the Export Guarantees Act. It may well be said that there is no connection between the two, but I
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urge that there is, because it is clear that this economic armament is just as important as military armament.
At this late hour I shall, like other speakers, be denied the opportunity of saying much that I would have liked to say, but one assumes that if the intentions of the Government are as rigorously applied in the passage of this Bill through this House as they were yesterday in regard to the Civil Defence Bill, there is little likelihood of large concessions being obtained. All the same, I conclude by urging that the noble and gallant Lord in charge of the Bill may give consideration to the points which have been made.
7.49 p.m.
LORD CHATFIELD: My Lords, we have had a most interesting, but all too short, discussion, and I should like, in the first place, to express my thanks to many noble Lords for the very kind remarks they have made about the manner in which I introduced the Bill, which I appreciate very much. I also wish to thank your Lordships for the reception you have given in general to the Bill, and for the spirit of constructive criticism which has been so evident in all the speeches made this afternoon. I certainly sympathise with the noble Lord who has just sat down on account of the late hour at which we had to take this Bill. Unfortunately, the debate on the very popular—or was it unpopular?—measure that was being debated before was unduly prolonged. I had been waiting for some hours to come to this Box, but was not able to do so, but I am sure we shall be able on the other stages of the Bill to discuss a lot of the matters for which there has not been time to-night.
The criticisms which have been made of the Government's proposals have taken a course which probably is a natural one, because it is evident that this question of setting up a Ministry of Supply and of what powers should be given to it is a very controversial one. It is one on which we all may have different views and hold them perfectly honestly, and each of us with considerable common sense. There are undoubtedly, as I have explained, both advantages and disadvantages in the whole plan. There are pros and cons, and what His Majesty's Government had to do was to weigh up these pros and cons

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and make a decision. The noble Viscount, Lord Swinton, who so kindly mentioned me in his speech, was a member of His Majesty's Government not so very long ago, and I have no doubt, though I do not remember, that he then pressed the views he has so eloquently addressed to the House this afternoon to the effect that the Government were wrong in those days in not setting up this Ministry. I know there is a great deal in every argument he has used. I know them so well. You can say "Yes" almost to all his questions, and yet you can also say "No." That is the difficulty of the problem.
The noble Viscount, Lord Samuel, raised the question of finance and expressed the anxiety he felt at there being no co-ordination of financial control, regretting also that we were going to have only what he regarded as a half-hearted measure dealing with excess profits and so on. Whether his figures with regard to the dividends of the companies he quoted are really substantiated I am not able to say, but we all know, as my noble friend Lord Mancroft pointed out, that these armament firms are also very great industrial manufacturers. The greater part of some of these businesses is not armament work at all, and for many years they have had to live, not on armament work, but on their wits in private trade. For instance, John Brown's, we remember, built a big ship called the "Queen Mary." I dare say that helped to swell dividends though I do not think we can call the "Queen Mary" munitions. Nevertheless, it is impossible to say that the noble Viscount's feelings about these matters are entirely unfounded.
They may be, but the point is that whether we look back on the past with regret or happiness, it is a fact that in this Bill the Government are taking powers which are very important and in my opinion they really should be sufficient. They are taking very great powers in Clause 7 to enable the Minister to examine thoroughly the records and the books, or cause them to be conducted in the way which is necessary in order that the Ministry may satisfy itself, first of all, before the contract is made, or in other cases during the process of the contract being carried out, that the prices which have been agreed are right and not unduly beneficial to the contractor. In addi-
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tion, as your Lordships know, there has been recently introduced in another place the Armaments Profit Duty which will, as the Chancellor of the Exchequer remarked, catch the balls which the wicketkeeper has been unable to stop. I do not think I can say more than that on the financial question except that I believe it will be less unsatisfactory than the noble Viscount, Lord Samuel, feared.
The noble Viscount also referred to the difficulty of Ministers coping with industry. He said: "How can a Minister cope with industry when Ministers have so many other things to do?" It will be remembered that when the Ministry for the Co-ordination of Defence was set up three years ago, my predecessor was given the task of helping Ministers to deal with that very problem. When I took his place four or five months ago the Chancellor of the Duchy of Lancaster had this duty specially devolved on him of dealing with supply questions and helping the supply authorities in all three Services, as well as the Ministers, in dealing with industry, with labour questions, and with problems affecting the production of munitions.
My noble friend Lord Swinton also made a very eloquent plea for the setting up now of the organisation we must have in war. He said: "If you are going to have, as you must have, a Ministry of Supply in war—presumably going to the utmost limits to which that term can be applied"—I do not know whether he would include the construction of battleships and so on—"but to whatever extent you are to have such a Ministry in war time, it should be set up now." You certainly can use arguments to that effect, but the Government, having considered the matter, have for the reasons I urged in my opening remarks come to the conclusion that to set up a full Ministry of Supply now would be a disadvantageous act. The fact that the Government have come to that conclusion will probably not satisfy the noble Viscount, but I can only say that while one views with sympathy his conviction that that would be the best thing to do, I do not think, personally, that I agree it would be the right step to take.
Is it to be taken as an absolute fact that when war starts a Ministry of Supply must immediately be set up with full powers? I do not think that follows at all. It may or may not be necessary. I

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spoke on this matter before in your Lordships' House, and pointed out that when a war starts no one can say what is going to happen. The Departments may be functioning satisfactorily, and the hypotheses on which they may expect the war to continue may be all right. The supply organisation may be going on normally. On the contrary, in the first week of the war, you may have a change of circumstances which might necessitate the whole naval programme giving way to the air programme, or the whole of the air programme giving way to the military programme—nobody can be sure. To say before a war starts that you are to set up a full Ministry of Supply, taking away from the Services a well-functioning Supply machine—I do not believe that would be a wise step at this moment when, so to speak, we are almost verging on lining up in the trenches. I think it would be too big a thing to do. It might have the most catastrophic results in delays.
I think that the step we have taken to deal with the problem is the best one that could be taken. As it happens, it is the problem of suddenly increasing the Army in a pre-war period, instead of having to do it possibly, as it was previously envisaged that it might have to be done, at a time when war was already taking place. I think it was really the safest and best step to take. The noble Viscount, Lord Swinton, also asked me whether the Director-General of Munitions Production, Vice-Admiral Sir Harold Brown, would remain a member of the Army Council. I think the answer to that is that he will not, but as a matter of fact the precise form of liaison between the Service Departments and the new Ministry are still being worked out. The Bill has not yet passed through your Lordships' House, but there is a great deal of work going on to decide exactly how these transfers are to be made. They are very complicated and difficult matters, but I do not think the Director-General will be a member of the Army Council. There will, however, be a very carefully arranged form of liaison between the Departments.
VISCOUNT SWINTON: I am sorry to intervene; I do not want to press the noble Lord to answer if he cannot do so: but, assuming that the Director-General
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will not be a member of the Army Council, will the officer who is the chief responsible officer for Supply in the Supply Ministry be a member of the Army Council, or will it merely be a paper liaison between the Department and the Army Council?
LORD CHATFIELD: No, he will not be, so far as I am aware, a member of the Army Council. If I am wrong I will inform the noble Viscount at a later stage. *But there will be an arrangement made to ensure that the object which the noble Viscount has in mind is achieved. The noble Viscount hoped that the question as to whether more powers were to be taken over by the Minister himself would not be left to the Minister's own idiosyncrasies or feelings at any one moment, and he suggested that it should be done upon a much bigger scale. I can assure the noble Viscount that is what is fully intended. Of course the decisions that will necessitate Orders in Council being brought to your Lordships' House will be decisions which are made by the Cabinet; they will be Government decisions. It will be the duty of special members of the Cabinet to watch over the progress that is being made, and to see that the great machine which is being created by this Bill is worked with full efficiency and with full effect, and is extended when that should be necessary, subject to the approval of the two Houses of Parliament.
As regards articles of common user, I think probably it is not realised that these articles will be far more extensively adopted by the Minister of Supply than is anticipated. The White Paper may perhaps give a rather misleading impression that there are going to be very few things, only such things as already exist, that the Army work for the other Services will be taken over and that then there will be a full stop and nothing more will be done. That is not at all the intention. The intention is, having set up this Ministry of Supply, to make the utmost use of it that we can, and to take every advantage that can be obtained by means of common purchases and common contracts.
I would like for a moment to refer to the question of priority which was raised
*The words "the Minister of Supply will be a member of the Army Council" have been deleted from the original report of this sentence. See Cols. 976 and 977 for Lord Chatfield's correction.
by the noble Viscount, Lord Swinton. He asked how priority was going to be settled by the Minister. He must understand that these questions of priority are not going to arise suddenly now any more than they have existed for the last three or four years. We have always had questions of priority, and one of the results of the organisation that was set up in 1927 was to create what was called a Supply Board, and that Supply Board consists of a large number of Supply Committees. I think there are about ten of them, and each of the Supply Committees consists of a number of representatives of each Service, and whenever any question of priority arises it is those Supply Committees who first recommend how the priority shall be judged and to whom the priority shall be given. Then their report goes to the Supply Board, and the Supply Board, under Sir Arthur Robinson, gives a decision. If he is unable to get agreement, it goes to the Principal Supply Officers' Committee under the Chancellor of the Duchy; so that there is already in existence a priority organisation which has been wholly effective in the past, and there is no reason that I can see why it should not be wholly effective in the future. I do not believe there will be any great difficulty between the Services when the Minister of Supply is dealing with Army supply as well as with his other duties. In the past I think the priority organisation has worked quite satisfactorily.
Then the noble Lord, Lord Gainford, was apprehensive about the fact that in the permanent part of the Bill, Part I, powers are given to interfere, as he feels,
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with industry. As he is going to move an Amendment on the matter, I do not think I need deal with it extensively at the moment. However, I think I may say that we felt it was imperative that the permanent part of a Minister's work—after all, the temporary powers may be suspended at any time, if necessary—must be such that he must have wide powers of supply; and the real safeguard is the fact that the operations of the Minister will come under review by Parliament regularly. That, I think, is the real safeguard, and a very necessary safeguard, which the noble Lord requires. As it is so late, and as I have dealt, I hope, with most of the questions that have been raised, perhaps it would be sufficient now if I left the remainder of our discussion till a later stage.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

COAST PROTECTION BILL.
Amendments reported (according to Order).

BUSINESS OF THE HOUSE.
THE SECRETARY OF STATE FOR INDIA (THE MARQUESS OF ZETLAYD): My Lords, I understand there is a considerable amount of business upon the Order Paper for Tuesday, and I propose therefore that the House should meet at three o'clock on that day.
House adjourned at eight minutes past eight o'clock.