Lords Sitting of 19 December 1945

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers.
The Lord Brabouroe—Sat first in Parliament after the death of his brother.

STATUTORY ORDERS (SPECIAL PROCEDURE) BILL.
Returned from the Commons, with the Amendments agreed to.
POLICE (OVERSEAS SERVICE) BILL.
Returned from the Commons, with the Amendments agreed to.
STATUTORY INSTRUMENTS BILL.
Brought from the Commons; read 1a, and to be printed.
BUILDING RESTRICTIONS (WAR TIME CONTRAVENTIONS) BILL.
Brought from the Commons; read 1a, and to be printed.

BRITISH AIR SERVICES.
VISCOUNT SWINTON:My Lords, I desire to ask the Minister of Civil Aviation a question of which I have given him private notice—namely, when the promised White Paper on British Air Services may be expected.
LORD AMMON: My Lords, on behalf of my noble friend the Minister of Civil Aviation, who left for Bermuda by air this morning, I am asked to inform your Lordships that the White Paper on British Air Services will be available this afternoon at five o'clock.

PRIVATE BILL STANDING ORDERS.
Order of the Day for consideration of the Report from the Select Committee read.
THE ACTING CHAIRMAN OF COMMITTEES (VISCOUNT MERSEY): My Lords, I will not detain your Lordships for more than a few minutes. Your Lordships will recall that at the beginning of this Session the House appointed a Committee to consider the revision of the Standing Orders relating to Private and Provisional Order Bills. The preliminary work entailed in this revision was begun in 1943 by an Unofficial Committee of the House of Commons, assisted by officers of this House. The Unofficial Committee made their Report to the Chairman of Ways and Means in October, 1944, and their recommendations were approved by the House of Commons in February of this year. The revision, which the Committee appointed by your Lordships has had to consider, has been based largely on the work of this unofficial Committee. It may interest the House if I read a passage which occurs in the Report made to the Chairman of Ways and Means:
" The Standing Orders have never received so comprehensive and so complete a scrutiny from the point of view of practice, interpretation, and draftsmanship, since they became a code of considerable length in the middle of the last century."
These words are equally applicable to the revision which has been carried out of the similar Standing Orders of this House.
Before I ask your Lordships to agree to this Report, I think the House should understand that no new principles have been embodied in the revised Standing Orders, and that only minor variations in procedure have been made. These variations are referred to in the Report of the Committee. An additional advantage is that the Report brings the practice of this House very closely into concurrence with the practice followed in the House of Commons. Your Lordships may feel satisfied that the necessary revision of the Standing Orders has been completed and I think this House should be grateful to the eminent members of the House, to the officers of the House, and to several outside interests who undertook, by serving on the Committee, the task of supervising this revision. I think your Lordships may rest assured that it has been well done. I may add that on the last occasion on which the Committee met, though I was in the Chair, invites et indignus, I was flanked by two ex-Lord Chancellors. I beg to move that the Report be now considered.
Moved, That the Report be now considered.—(Viscount Mersey.)
On Question, Motion agreed to.
VISCOUNT MERSEY: My Lords, I beg to move that this Report be agreed to.
Moved, That the Report be agreed to.—(Viscount Mersey.)
On Question, Motion agreed to.

PERSONAL BILLS.
VISCOUNT MERSEY: My Lords, in moving the appointment of the Personal Bills Committee, perhaps I may explain to your Lordships that this Committee is familiar to your Lordships under the title of the Estate Bills Committee, and has been appointed each Session since 1941. The Committee will, in future, be called the Personal Bills Committee, as the Order of Reference under the new Standing Orders, which your Lordships have just approved, will be enlarged to include all Personal Bills which are presented to Parliament. Apart from this slight extension of the scope of the Committee, no material alteration is made in the procedure on these Bills. This matter is also referred b in the Report of the Committee Which has just been considered. Your Lordships arc no doubt aware that there are two Fills pending in Parliament which will be referred to this Committee—namely, the Marquess of Abergavenny's Estate Bill and the Rhodes Trust Bill. I am very grateful to the noble Lords who have consented to serve on this Committee to consider these two Bills. I beg to move.
Moved, That the Personal Bills Committee be appointed, to which all Petitions for Personal Bills, presented during the present Session, which have been certified as such under the provisions of Standing Order 3 relating to Private Bills, shall stand referred; and that the Lords following, with the Chairman of Committees, be named of the Committee:

E. Drogheda,

V. Hutchinson (E. Donoughmore),

V. Hailsham,

L. Simonds

—(Viscount Mersey).
On Question, Motion agreed to.

BUSINESS OF THE HOUSE.
2.40 p.m.
LORD AMMON: My Lords, on behalf of my noble friend Viscount Addison, I beg to move the Motion standing in his name. The same Motion has already been passed in another place.
Moved, That the proceedings in Secret Session of the House during the last Session of Parliament be recorded in the Journals of the House.—(Lord Ammon.)
VISCOUNT CRANBORNE: My Lords, before we pass this Motion I think we ought to have a little more information. There are a good many noble Lords who are not at all happy about this proposal. We do not know exactly what its meaning is. It says:
"That the proceedings in Secret Session of the House during the last Session of Parliament he recorded in the Journals of the House."
Does that merely mean that the bare subject is to be recorded and the vote, if any, or does it mean much more than that? Does it mean that from now on any member of your Lordships' House, or of another place, is-free to quote his remembrance of what was said in a Secret Session two or three years before? It seems to me that if that is what it means it is open to a great deal of criticism and might lead to serious abuse—I do not mean necessarily intentional abuse, but actual abuse—because, after all, there is no official record in existence by which to check any statements which are made, and memories are becoming cloudy and some people are a little rash in what they say. It is not at all impossible that somebody might get up here in Public Session and say that a certain noble Lord said something or other in Secret Session, and the noble Lord who was attacked would have no means, so far as I can see, of refuting the statement made. I do not say that it is necessary for us to negative this proposal now, but at any rate we should have more information about it, and personally I think that it requires a Good deal more consideration. I should like the matter to be postponed until a later date.
LORD AMMON: My Lords, I think that perhaps the noble Viscount, the Leader of the Opposition, has read more into this than there is in it. All that it requires is a record of the bare Resolutions which have been passed. There has been no

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verbatim report of the Secret Sessions. If the noble Viscount is not satisfied, he can raise the matter later, when the noble Viscount, the Leader of the House, is here.
VISCOUNT CRANBORNE: If we pass this Motion, will it mean that from now on it will be possible for any member of this House to quote from memory something which was said in Secret Session during the last Session of Parliament?
LORD AMMON: No; as far as I understand it, all that it is proposed to record is simply the bare Resolutions passed. No one can prevent people from talking and saying what they like.
2.44 p.m.
VISCOUNT SWINTON: My Lords, the noble Lord, in moving this Motion, said that he was inviting us to pass a Motion similar to that passed in another place, but as a matter of fact the Motion before another place is entirely different from this. The Motion before another place, in simple language, means that although everything which has been said in Secret Session was absolutely secret and every member was bound to preserve that secrecy—and I presume that it was in fact protected by privilege outside—people will now be free to say whatever they think took place in Secret Session (because, as the Leader of the Opposition has said, it cannot be more than that, there being no record). In future, anybody can give an account anywhere of what he believes took place in Secret Session. That is the Motion before the House of Commons. Yet the noble Lord said that he was proposing that we should pass a Motion similar to that passed in another place to-day.
I would go further and ask, what is behind this? We are not-bound by many rules of order in this House, but I think that at any rate there would be a rule of order which precluded discussion (and a vote if necessary) on this subject to-day, on a Motion which merely asks that certain proceedings in this House shall be recorded in the Journals. I do ask, however, what is behind this. What are we going to be asked to do if we pass this Motion? What is the point of it? Hitherto the House has kept these proceedings secret. The whole essence of a Secret Session is that it should be secret,
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and that people should he able to say in secret what they certainly would not say openly in the House, so that there can be that frankness which in a time of great emergency is necessary.
A case may arise where the Government wish to take the House fully into their confidence, and where it is desirable that people should speak with complete frankness, that being the whole intention of a Secret Session. That being so, what is the advantage of recording in the journals of the House the information which probably would be recorded—namely, the subject under discussion and the names of the speakers? I take it that that is all that would be recorded, because the Clerk of the Parliaments is the only person other than members of this House who attends a Secret Session. The vote would also be recorded where a vote was taken. I cannot see any object in placing that on record, unless it be to go further and say what has been said. Moreover, noble Lords who have spoken in Secret Session, under the impression that they were doing so under the seal of secrecy, might be placed in a very invidious position if this information is given to the world; they would be asked what they said in Secret Session. If we pass this Motion I think it will lead on inevitably to the suggestion that, having published the names of the speakers, there can be no objection to saying what took place.
This matter is put before us at very short notice. I saw it only a few minutes ago. We have all been taken by surprise by it, and certainly we did not expect it to be moved formally, without any explanation of why it is moved and what is behind it. It would be a very good thing if some further explanation were to be given, and the whole matter stood over. There can he no urgency about it.
2.49 p.m.
THE EARL OF ROSEBERY: My Lords, I should like to say a word on behalf of the Liberal Nationals whom I represent in this House, because we feel very strongly about this. There can be no possible secrecy in the future should a Secret Session be held if we agree to this. This means the end of all secrecy. It is not a matter of certainty that Secret Sessions will be held only in war-time. There might easily he a Secret Sesssion in peacetime, and it might be fraught with much

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more danger and much more difficulty, if anything came out, than it was in time of war. I am sure that all your Lordships recognize that quite clearly.
Then there is another point. Viscount Swinton has asserted that the Motion is not, as Lord Ammon said, the same as that put before another place. It is entirely different. But we must realize that it is either intended to be the same as that put forward to another place or to lead up to what is happening in another place. It will be of no interest to posterity to know that Viscount Addison spoke in a Secret Session in this House, but it will be of the greatest interest to posterity to know what the noble Viscount said in that Secret Session. I can see no conceivable reason for just putting down the name of a speaker if you cannot also put down what he says. The effect of this will be that in future everybody speaking in a Secret Session will be, so to speak, looking over his shoulder, realizing that both his friends and his opponents can go out and say openly, after a time, what they purport to think that he said. Only last night I was discussing with several other members of your Lordships' House some of the very able speeches that were made in yesterday's debate. On two or three occasions we differed entirely as to exactly what was said by a particular Lord yesterday afternoon. And yet we are going to lay ourselves open in the future—this of course does not matter to me for I am getting on, but there are young members who may get up and speak and it may affect them—to the risk that in, say, twenty years' time those of us who spoke may be told what we were purported to have said in a Secret Session of the greatest importance.
I look at this with the greatest suspicion. Mr. Herbert Morrison said—I think in another place but it may have been outside—that there was no point in keeping these matters secret now because he was taking off Defence of the Realm Regulations, and this would allow people to publish what was purported to have taken place in Secret Session. I would like to ask the noble and learned Lord who sits on the Woolsack if this is correct. I do not think that Mr. Herbert Morrison or anyone else can take away privileges of this House. Surely it would have been against the privileges of this House, long before the Defence Regulat-
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ions came into operation, if a newspaper were to have published what was purported to have been said in a Secret Session here? I speak with diffidence on this point. I am not a lawyer, nor am I very fully conversant with the laws of this place. But I do think that, if a newspaper published that, we should be able, and rightly so, to bring the proprietor of that newspaper to the bar of this House and ask him some very pertinent questions. I do not quite understand what Lord Ammon said about postponing this Motion. Does what he said mean that if we stop now, the position will be as if this Motion had not been moved at all and that nothing will have been done?
LORD AMMON: Yes.
THE EARL OF ROSEBERY: Then if that is the case I will say nothing more.
2.55 p.m.
VISCOUNT SAMUEL: My Lords, I think the House should be grateful to noble Lords on the Front Opposition Bench for drawing the attention of the House to the implications of this Motion. We should, rightly, be very jealous to safeguard the secrecy of sessions which purported to be and were declared to be secret, and in which, on that understanding, members of this House took part. I think that before proceeding to a decision on this matter, either to-day or at any subsequent date, we should be informed, first of all, just what it is that is proposed to be published. If it is merely the bare text of the Resolutions which have been passed, and which it is necessary to record in the Journals of the House for any legal or quasi-legal reasons, I do not think that objection could be raised to that now. If the idea is that anything more should be published, then reasons should be given for the proposed publication.
The noble Lord who moved this Motion said it was for the purpose of bringing the procedure of this House into conformity with that of the other House. Noble Lords who have spoken subsequently have said that this is not the same Resolution as that which has been, or is about to be, passed in the other House. Consequently we ought to have an explanation of the other Resolution and of why it is proposed to depart from it here. Again, this Motion deals with Secret Sessions of this House "during the

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last Session of Parliament." I do not remember if there were more than one such Session—I rather think there were —during the war. If so, why are not all of them covered by the Resolution? Why should it be limited to one Session? Perhaps, in the circumstances, the Government may think well to withdraw this Motion or to move that the discussion be now adjourned and proceeded with after the Christmas Recess.
LORD AMMON: I think perhaps it will short circuit matters if 'I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

DOCK WORKERS (REGULATION OF EMPLOYMENT) BILL.
2.57 p.m.
Order of the Day for the Second Reading read.
THE PARLIAMENTARY UNDER -SECRETARY OF STATE FOR WAR (LORD NATHAN): My Lords, this Bill which is entitled the Dock Workers (Regulation of Employment) Bill might have been described as the Decasualization of Dock Labour Bill, for it seeks to settle, once and for all, the problems of decasualization in an industry which has, for more years than most of us can remember, been subject to the evils attendant upon a system of casual labour. Your Lordships are familiar with the causes of casual labour in the docks. This problem first became the subject of attention and, indeed, of anxiety towards the end of the last century. This was due to the efforts of the union which had been founded under great difficulties in 1888. It was due also to the writings of the late Charles Booth in his London and Riverside Labour and his monumental work Life and Labour of the People in London. It was also due, in part, to the public attention drawn to this subject by the historic dock strike of 1889 with which were identified the names of those conspicuous figures—alas now dead—John Burns, Ben Tillett and Tom Mann, and which resulted in the award of the "docker's tanner" which represented a minimum rate of sixpence an hour.
Apart from the fundamental difficulties of the industry which give rise to the casual nature of the employment. The
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position was aggravated by the excessive numbers of men seeking employment in the docks, the methods of engagement and the general conditions associated with the work. For instance, a man might be engaged for, and paid off after, only an hour's work. The men who sought work at the docks fell into three main categories. There were those who were bona-fide dockers who, normally and consistently, attended at the docks and looked to dock work for their ordinary means of livelihood. Then there were the men normally employed in some other industry but who, particularly during a period of trade depression, sought employment in the docks and wharves. And then of course there were the so-called unemployables. It was, and indeed commonly it still is, assumed, quite wrongly, that dock work is entirely unskilled and can be done efficiently by anyone. There was, therefore, a tendency among those employed in other industries to resort to the docks regardless of the effect on the employment of the regular dockers. The excessive labour supply which thus became available meant that cheap labour was indeed obtainable, but it was uneconomic because it was often inefficient. Then there was the haphazard way in which men were selected by the ganger which lent itself to many abuses which became the subject of controversy and discussion familiar to your Lordships. Those, therefore, who were interested in this problem of the docks during the later part of the last century sought to secure the setting up of what has been called a "fence" round the general dock workers and granting to them some token or tally, which doubtless many of your Lordships have seen, by which they could be recognized at the call places and thus be enabled to obtain preference of engagement.
It was thought that by this means the bona-fide docker could be assured of a larger share of the available work. This, indeed, was the germ of the principle of registration. It is perhaps worth while noting that although a good deal of amplification has taken place meanwhile, the essential principle put forward nearly half a century back still holds good. One of the earliest attempts to erect a "fence" was in the early nineties, when' the dock companies in London which preceded the Port of London Authority inaugurated a system of tickets, the object being to group the men to be employed

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in order of preference of engagement. Ultimately there were three classes of ticket—the A ticket for the regular men, the B ticket for the first preference casuals, and the C ticket for the remainder of the casuals. This system met with a good deal of success, but owing to, its limited scope it did not prevent the influx into the dock areas of very large numbers of men unable to find employment elsewhere. It was in 1912 in Liverpool that the first comprehensive effort was made to regulate the number of dock workers in a port and to systematize the method of engagement. The system provided for registration of dockers, for the issue of the metal tally to each registered docker, and for the weekly payment of wages at one office, at a single office, notwithstanding that a man might have been employed by several employers during the week. The employers who were parties to the scheme undertook to give preference of employment to the tally holders, and not to engage any other man when suitable registered men were available.
After a few years came Lord Shaw's Committee, which urged the importance of schemes of registration, both for employees and for employers, and subsequently the schemes of registration were established in a considerable number of ports. Following the Maclean Committee of 1930 to 1931 they were extended so that upon the outbreak of war in 1939 registration schemes were in effect in all the principal ports of the country, with the exception of Glasgow where rather special conditions at that time prevailed. There were two weaknesses in the schemes at that time. In the first place they were purely voluntary, and it was impossible to enforce them and fully implement their underlying principles. In the second place they carried with them no guaranteed wage. It was not until the beginning of 1941 through the present Foreign Secretary, who perhaps, earned almost his first great reputation in the public mind as the Dockers' K.C., that the decasualization of dock-labour was really tackled in earnest.
In March of that year schemes were established in Merseyside and Clydeside under the control of the Minister of War Transport, and in these schemes for the first time the dockers enjoyed a guaranteed weedy wage. These schemes were entered into voluntarily by the employers
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and workers alike. Later in the year the then Minister of Labour and National Service made the Essential Work (Dock Labour) Order under which the dock labour schemes were set up in all the principal ports of the country. These schemes have been formally approved by the Minister of Labour and National Service, and they are' administered by the National Dock Labour Corporation, of which my noble friend Lord Ammon is the distinguished Chairman. Under these schemes dockers enjoy the benefit of a weekly guaranteed wage.
In the short retrospect in which I have indulged, it is clear, from that alone, that it is a far cry from the days of the 89 strike for a "tanner" an hour to the present time, when practically every docker in the country can look forward to a weekly wage packet which he knows will not fall below a specified amount. The objects of this Bill, which it must have been a great satisfaction to my right honourable friend Mr. George Isaacs, the Minister of Labour, to introduce and to see pass through the House of Commons, is to ensure that never again will casual labour with its attendant ills be a characteristic of this important industry. Having given an over-all description of the purposes of this Bill, I do not think your Lordships will require me to go through the clauses. I am wholly at your Lordships' disposal, but on the assumption that I interpret the minds of your Lordships correctly, I now move the Second Reading of this Bill.
Moved, That the Bill be now read 2a— (Lord Nathan.)
On Question, Bill read 2a, and committed to a Committee of the whole House.

FINANCE BILL.
3.9 P.m.
Order of the Day for the Second Reading read.
THE SECRETARY OF STATE FOR INDIA AND BURMA (LORD PETHICKLAWRENCE): My Lords, when a person has undergone an operation and borne it with great fortitude, he looks forward with joy to the time when he is first able to get out of bed and put his foot on the ground. He feels confident that he will speedily resume his full activities and that his troubles and trials are past. But when

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the moment actually comes for this action on his part, he finds his expectation far from fulfilled. For the first time he is conscious of the extent to which his strength has been sapped, and he may then fall into the equal error of a pessimist's outlook on the future. In fact, if he is patient and does not overtax his strength during his convalescence,' we have every reason to believe that before long he will regain his full vigour and perhaps achieve more vigour than he ever had before.
That seems to me to be very much the position of this country which, at the present time, is recovering from six gruelling years of war. There had been an expectation that, as soon as the actual fighting ceased, the sacrifices of the people would be over, that national expenditure would be rapidly reduced, that the time would be very short before we could return to a balanced Budget, and that there would be an opportunity for the public to purchase what they had been prevented from purchasing for so long. The reality, I am afraid, is very different from the expectation. Sacrifices are not yet over, and rationing continues. There is a very definite and proper reason for this. It is simply that the physical limits of production remain in the change-over from war to peace.
With regard to the question of Budget equilibrium, in the Spring Budget of this year, the then, Chancellor of the Exchequer, Sir John Anderson, budgeted for a probable reduction of £500,000,000 when it was quite uncertain when the Japanese war would come to an end. It has been suggested in certain quarters that this reduction ought to be very much greater in view of the fact that the Japanese war ended so early. Of course, it is true that very substantial cuts in expenditure have been able to be made. First of all, there is the demobilization, resulting in the reduction of pay to the Services and in the upkeep of the war. There is the cutting down, the cancelling, of the cost of the manufacture of the sinews of war; but there are certain things that must be remembered on the other side which have made the end of the war produce not only not such great reductions in costs hut, in some cases, greater costs than there were during the continuance of the war.
In the first place, there is the complete cessation of the Lend-Lease provi-
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sions which applied not only to munitions and therefore involves us in paying for a great number of articles for which, during the war, we did not have to pay. In the second place, there has been the period of holiday given to the Services which still continues for eight weeks after demobilization. Then there are the gratuities and lump sum benefits, and the balance of payments to manufacturers who did not cease producing the moment the guns ceased to fire. Also, there is the compensation for broken contracts and the necessity of holding the cost of living stable which is, I think your Lordships will agree, a most important thing to do and which, in view of the cessation of Lend-Lease, involves a considerably greater sum which is likely to total as much as £300,000,000 in the present financial year.
I am glad to say, as your Lordships are no doubt aware, that costs have already turned downwards and their reduction is likely, progressively, to increase. Even so, I do not think we can possibly expect that in the financial year after the present one we shall see a balanced Budget. I would remind your Lordships that, after the last war, several years elapsed before the Budget even balanced on paper, and that, even then, into the balance were taken the sale of a large number of war assets which really, in a sense, should have been credited to capital and not treated as current receipts. But the Chancellor of the Exchequer in another place has already promised that in the financial year 1946–47 we shall proceed to a return to the Estimates, and that we shall not pursue the line of credits practised during the war. We can be quite certain that the Treasury will keep a lynx eye on expenditure, and that every expense not required for the reconstruction of the country will be cut down.
Coming to taxation, if we were to do our very utmost to balance the Budget next year, there would be no case for any reduction of taxes in the year 1946–47. But, in accord with the view taken by the previous Chancellor of the Exchequer, Sir John Anderson, the present Chancellor of the Exchequer takes the view that there ought to be some relief of the burden after the severe years through which we have passed. That, of course, must be on the assumption that it does not encourage people to spend recklessly

913
their purchasing power, which could only lead, so long as goods are in short supply, to the most dangerous matter of inflation. Therefore, such reductions in taxation as are promised must be most carefully watched, and every effort must be made to continue to secure savings, as has been done during the continuance of the war. I am happy to note that all over the country the yield of the Savings Weeks and the steady savings that are going or. is still of a considerable amount. If savings continue into the next year, I think the reduction in taxation will not result in the inflation which would be so very dangerous and which, after the last war, played such a serious part in leading to the difficulties and disasters with which were subsequently faced. It is no good providing more money except in so far as there are more goods to satisfy the purchasing potentialities of the public.
That, my Lords, is the background against which this interim Finance Bill—the last war-year Budget—has got to be considered. What are its provisions? I will first make reference to a very important proposal which is a carry-over from the Spring Budget and which is contained in Part V of the Bill, Clauses 51–56, relating to the relief from double taxation. Under its provisions a United Kingdom concern, trading in the United States, will bear the full United States tax, but will be given a credit for that tax against the United Kingdom tax, so that, in effect, it is left plying the higher of the two taxes only. Similarly, an American concern trading in this country will remain liable to the full amount of the United Kingdom tax, but will receive a credit against its American tax. I think your Lordships will agree that this is a very proper provision. It was originally devised during the Coalition Government, and I am quite sure it will be of reasonable value to the taxpayers of this country. There are somewhat similar provisions in the matter of Estate Duty which again will, I think, commend themselves to your Lordships. Other provisions of this character are in course of negotiation with other countries so that, in the end, it is hoped to make them of universal application.
I turn now to some of the proposals which originate in this particular Budget. In the sphere of indirect taxation there is only one substantial change, and that is in the matter of Purchase Tax. It has
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not been possible to make any wide reduction in the Purchase Tax. There has been a reduction on a range of articles of special importance in connexion with the housing programme. I explained to your Lordships a few moments ago that great care was being exercised in expenditure, but that those things that were required for reconstruction would be pushed forward. It is felt that the reconstruction of the inside of the houses should proceed with the reconstruction of the outside, and therefore this small reduction has been made towards that end. In addition to that, there has been a concession made which I think will appeal to your Lordships in omitting Purchase Tax from wireless sets for the blind, and there has been a further reduction in the matter of war memorials.
The largest changes brought forward in this Bill, however, are, of course, in the matter of direct taxation. The first change is the bringing to an end of the system of post-war credits. That is not to say, of course, that there is any repudiation of any kind—far from it—of the post-war credits that have already been created. They amount to the very substantial figure of some £800,000,000, and at the appropriate time those postwar credits will, of course, be honoured. What is proposed is that no future postwar credits should be added to those which are already in existence. In view of that, there is a very considerable relief of immediate taxation in the shape of the restoration of the personal allowances—the amounts people can deduct from their income before they are called upon to pay tax. There is a restoration of those, not merely to the figure they were at before they were reduced, but slightly above that figure.
VISCOUNT ELIBANK: May I ask if that £800,000,000 includes both commercial credits and individual credits—that is, those of individuals who have paid Income Tax and Surtax and are receiving certain credits back? Does it embrace the whole lot or is it only commercial credits?
LORD PETHICK-LAWRENCE: I am not quite sure what the noble Lord means in regard to commercial credits. I do not know if he is referring to E.P.T. These are what are called the post-

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war credits. They relate solely to certain forced loans, as it were, that were imposed upon Income Tax payers at some period in the war—I think it was 1940 or 1941—when two things were done. One was to lower the personal allowances in regard to the amount of the deductions before tax was levied, also the reliefs in various ways, including reductions in relation to earned income. It has nothing to do with commercial credits at all. These items amount to £800,000,000 and will remain at that figure until they are released, but they will not be further added to in future. I hope I have met the noble Lord's point.
VISCOUNT ELIBANK: Thank you.
LORD PETHICK-LAWRENCE: I should say that these alterations to direct taxatior do not come into effect during the current financial year. The reason why, for the first time, these things are mentioned before the spring is that owing to the institution of pay as you earn in the matter of income, it would be exceedingly difficult to introduce changes in the Income Tax after the financial year had begun and even at the beginning of the financial year. In order that the necessary books and tables can be prepared, it is essential that these changes shall be announced considerably in advance. That is why my right honourable friend the Chancellor of the Exchequer has made this announcement in this Autumn Interim Budget; but these changes will not take place until the financial year 1946–7.
Then there is the main fact of the reduction of the Income Tax which is foreshadowed, from 10s. to 9s. in the pound. For persons whose incomes slightly exceed the Income Tax figure to-day there is a reduction of the rate. While the Income Tax in the present year stands at l0s. in the pound, for the first range of incomes it is not levied at the rate of l0s. in the pound, but at the rate of only 6s. 6d. The new proposal is that tax on the first range where Income Tax begins to fall shall in future be at the rate of only 3s. on the first £50 and 6s. on the next £75 of taxable income.
VISCOUNT SIMON: Which clause is that?
LORD PETHICK-LAWRENCE: I think it is Clause 17 of the Bill. If the
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noble Viscount will look he will find it there. There is a slight increase in the rate of Surtax on the higher slices of income above £2,500. The effect of that is to take back from the higher ranges of income a small part of the benefit conferred by the reduction of the general level of tax. It is a small part at the earlier stages but it means in the higher slices that they pay the same as at the present time. All the items I have mentioned up to now come into effect with the next financial year.
I now come to the Excess Profits Tax which is changed from the 1st January next year so that the relief will apply to the accounting year of 1946. The Excess Profits Tax is reduced from too per cent. to 6o per cent. Of course, under the present law the post-war refunds of 20 per cent. on tax paid at the l00 per cent. rate, promised under the legislation of 1941, will begin to be made next year. The recipients of the refund will be required, as is already the law, to undertake that the refunds will be used for redeveloping and re-equipping trades or businesses and will not be distributed in any way for the benefit of the shareholders or proprietors. Observance of this undertaking will be watched by an advisory panel of business men appointed by the Treasury. That 20 per cent. is quite distinct from the 40 per cent. reduction in the tax which applies to the following year—the calendar year 1946. This reduction in direct taxation will cost £322,000,000 in a full year, but against that the Exchequer will no longer incur liabilities for Income Tax postwar credits amounting to £225,000,000 a year. The increase in Surtax will bring in about £7,000,000 a year.
I turn from those changes in direct taxation to motor taxation. This is a carry-over from the Spring Budget; the changes were already envisaged then. The proposal in the Bill is that as from a certain specified date all new motorcars will pay tax on a different basis from that existing at present. It is proposed that, instead of paying what is known as a horse-power tax, they will pay on the basis of the cubic capacity of the cylinder; there will be a series of steps for every l00 cubic centimetres of the cubic content of the cylinder. With regard to this taxation, I would like to say that it is, of course, impossible for the Exchequer to part with any revenue, certainly at the present time, from motor taxation. Many

917
changes have been suggested. Some have asked that the whole of the present method should go, and that in its place should be substituted a method whereby all the burden would be thrown on a tax on the motor fuel, petrol or whatever it may be. The practical difficulties of that change are very considerable, and the Chancellor did not feel he could accept that proposal.
There have been suggestions that the taxation should proceed by larger steps instead of the small steps that the Chancellor has proposed. However, the debate in another place brought out the fact that on the whole the method which the Chancellor has adopted met with the least criticism. I should explain to your Lordships—although some of you probably know a great deal better than I do—that there is a considerable difference of opinion among the motor manufacturers, the motor trade and the public on this subject. Therefore, the Chancellor of the. Exchequer has to do his best, not to, satisfy everybody (which is quite impossible), but to find the least number of enemies to whatever proposal he finally adopts. It was decided in another place. —and I think it will commend itself to your Lordships—.that the method he has adopted is perhaps, in all the circumstances, the one that is going to create foe least difficulty.
Those are, broadly, the main features of the Bill which I am asking you to pass to-day. I would like to say this in conclusion. The main objects of the reduction in taxation are to encourage the enterprise of the people of this country and to give them heart to face the future. The effect of the changes in direct taxation is to release money for industry—the alteration in the Excess Profits Tax is an example of that—and to give hope and encouragement to a large number of people who have been weighed down by Income Tax. The reduction in the main rate of tax will do that: for a large body of people; as many as 2,000,000 people at the lower end of the scale will escape the tax altogether. I am confident that this relief to those small people will do a great deal to give them confidence to face the years to come.
As I said at the beginning, we are not yet out of our difficulties and we have still got considerable sacrifices to make; but I think that as we have gone through the six difficult years of war—what I have
918
called, by analogy, our operation—we shall face the period of convalescence with equal confidence, knowing that if our difficulties are still considerable, there is a time coming, which is not so very far distant, when we shall be able to engage in the full activities of life with the full vigour of a great nation.
Moved, That the Bill be now read 2a(Lord Pethick-Lawrence.)
3.38 p.m.
VISCOUNT SIMON: My Lords, it is, I think, the custom in this House in recent years that the debate on the Finance Bill should not he regarded as one of the principal features of our Session. Ever since the Parliament Act of 1911, although your Lordships have the opportunity of passing the Bill, and will doubtless do so, your main privilege is not passing the-Bill, but paying the bill, or such part of it as happens to fall to your lot. I shall therefore not occupy very long, but I would like first sincerely to thank my noble friend opposite for the trouble he has taken in giving us this detailed exposition of the most important features of the finance of the year as reflected in this Bill and in the Budget which preceeded it.
I do not know that I should entirely agree that we have yet reached the point where the invalid was putting his foot on solid ground. I am myself of opinion that you do not reach solid ground in the matter of a Budget and a Finance Act until you have estimates of what you believe you will be required to spend, until you set that sum against the sum expected to be produced by existing taxation, and then determined whether in those circumstances it was necessary to add to or to reduce taxation so as to make the two things balance. I hope that the fact that we have been through a great war does not in the least alter the view, which ought to be maintained in this country, that as soon as possible we should get back to that position. I do not regard the invalid, or, as I would rather say, the wounded taxpayer as yet being in a position to feel that his feet are on solid ground, but I am very glad to know that it is the intention of the Chancellor of the Exchequer to get back to the method of Estimates, instead of lump votes, in 1946–7. The sooner, the better.
I think in its broad features we have to recognize the fact that we are still in a period of war finance; it is still a war

919
period. Looking back, I think that the principles upon which our war finance was based, and which were laid down at the very beginning—my noble friend opposite and I had many opportunities of discussing them in another place—were perfectly sound. They were, in substance, four. There was first the principle that you must steel yourself at once to endure greatly increased direct taxation. I recall that even when the modest figure, as it seems to us to-day, of 7s. 6d. in the pound was proposed, there were some very authoritative critics who thought it might turn out to be too big a jump. I did not think so, and it did not turn out to be so. It was perfectly right to go on steeply to the terrible figure of rips. in the pound. I am very glad that the Chancellor of the Exchequer has found it possible to make some reduction at this stage. Nine shillings is better than ten, from the point of view of the man who has to pay it.
The second great principle—it is not involved in the Finance Bill, but it is a great principle—was that in time of war it ought to be possible to borrow money very cheaply indeed. That was in some quarters regarded at the beginning of the war as surprising, and it certainly was not our experience in the war of a quarter of a century ago, when we were borrowing at six and seven per cent. and not making a very good thing out of it either. Putting those two principles together, we have had this very satisfactory and, to many people, very surprising result, that we have actually been able, in spite of the enormously increased size of our burden, to raise more money annually by taxation than we have had to raise by borrowing. That is a very outstanding fact. It has gone on all through the war, and goes a long way to explain how it is that, while our difficulties are very great, they are nothing like what they might have been had we acted less prudently.
Thirdly, there is the proposition, which I regard as quite essential, which was also laid down at the beginning of the war— namely, that it is necessary in such circumstances to provide what are quite frankly subsidies for the purpose of keeping down the price of absolutely necessary commodities such as milk and bread. Although the figure has become a very big
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one, I am not disposed to quarrel with it as long as it is reached on perfectly sound principles. There is no justification, in my humble judgment, for making these enormous subsidies in order to keep at a low level the price of commodities if at the same time there is a great rise in costs of production. It is not a good reason for increasing wage rates if at the same time subsidies are being paid in order to keep the cost of prime commodities down. I think that those two things have to be regarded in relation to each other.
The last of the principles which applied right through the war is that we must throughout pursue a most determined crusade for national savings, not merely for the purpose of gathering very necessary money for the State to use, but also for the purpose of restraining in every possible way, as the noble Lord opposite has just indicated, the unwise spending of the income which must, in war-time, come in great abundance into very many homes. Those principles have been observed throughout, and I still regard ourselves as being for this purpose in the war period.
I wish very much that it had been possible for the noble Lord to tell us that there had been in fact a greater reduction in expenditure since the fighting stopped. It seems to me to be a very serious fact that that has not happened. Quicker demobilization would, as far as it goes, undoubtedly save an enormous outlay which is now represented by what is being paid to those who are waiting to come home, and not all of whom, I fancy, can be regarded as very usefully employed. In the same way, I confess to my own surprise—I have no private information —that it is not possible more quickly to cut down what really are war orders, and that it is felt necessary to go on spending money in ways which were perfectly justified when there was a war in front of us, but which seem to me not to he justified at all as soon as the expenditure is not directed to that purpose.
Those are some of the larger reflections which occur to me. I do not wish to go through this Finance Bill, but I note the two or three main provisions in it which affect people of different kinds. To my way of thinking, apart from everything else, there is a perfectly good financial object in reducing the Excess Profits Duty,

921
as is done in Clause 29, to 60 per cent. I should not be justified, save in Secret Session, in saying what I myself had thought about making it too per cent.; but at any rate it seems to me plainly right on every ground that it should he:educed to 60 per cent., and I am very glad indeed to see that in this measure.
I ventured to ask my noble friend, as he was explaining the Budget, which clause is is which states how these various reliefs are increased, and he quite rightly referred me to Clause 17. I commend the study of Clause 17 to those who think that it is easy to put Income Tax law in a few simple and intelligible phrases. I defy any ordinary person to read Clause 17—I shall not occupy time in doing so—and to derive any sort of notion of what it is about. I do not blame the draftsmen, because I have had my hand in some of these things before. But those who think that half-a-dozen sensible, clear-headed business men could re-write the Income Tax Acts in the form of a series of simple and intelligible propositions are quite wrong. It is an enormous task, and it gets more complicated as time goes on.
That this Finance Bill contains much that may be of benefit to the public I do not dispute; but the fact remains that it consists of sixty-two clauses, with the elegant addition of ten schedules; and, though I dare say that confers in many directions much-needed relief, he would be a rash man who would say that it will not provide further problems of interpretation and construction. While I share to the full the feeling of everybody that we ought to make our laws intelligible to the I would warn any thrifty taxpayer against the idea that he will understand exactly where he stands in this matter if he spends 1s. 3d. on the Finance Bill which is now before us!
3.48 p.m.
LORD TEMPLEMORE: My Lords, I am afraid that your Lordships may think me somewhat presumptuous in joining in the discussion on the Finance Bill in this House, and I need not say that I do not pose in any way as a financial expert; but the truth is that for a good many years, while the late Mr. Neville Chamberlain and the noble and learned Viscount who has, just sat down were Chancellors of the Exchequer, I had charge of the Treasury
922
in this House, and I introduced the Finance Bill for four or five years running. I remember that on those occasions the late Lord Arnold. who I wish was still with us, used to join in, and for two or three years running we had the trio Templemore-Arnold-Strabolgi; I think that it never varied.
I speak to-day as a mere member of the general public, as somebody who is a taxpayer and a ratepayer, and I wish to try to put forward the views of the people with whom I normally mix in my daily life. The Chancellor's Budget, with which he was very pleased, and with which the noble Lord seemed very pleased to-day, had a great Press and a great reception, and I suppose we cannot complain. But I am not very enthusiastic about it, because, with the exception of the reductions in Excess Profits Tax and Purchase Tax, which are very right and proper, nobody is going to get very much out of it until next April, and, although the Chancellor of the Exchequer made a vague promise of more possible reductions in taxation next spring, and the noble Lord who introduced the Bill also gave us a hint of that kind, that must surely depend on how things go between now and then, and whether trade is going to revive. I hope that it is, but I am not sure; and, to judge from the gloomy and depressing speeches of the President of the Board of Trade, I do not think that a great improvement is likely to happen, although we hope it will.
Moreover, as has been said by my noble and learned friend who spoke last, on account of the way in which the Budget is presented, which is inevitable, we do not know in the least what expenditure we are in for. I very much hope that that will be altered, and I think that it is going to be altered in the next Budget, which is to be brought forward in the spring. But we do not know. All we do know is that we are, at present, still spending at the rate of about £13,000,000 a day, which is about £5,000,000,000 a year. To that I will refer a little later on. But to take the Finance Bill as it stands, consider the reduction in the Purchase Tax. It has, as is right and proper, been taken off a variety of articles to be found in the First Schedule. They are all things to do with housing, such as stoves, grates, ranges, fireplaces, and so on. As I say, that is right and proper, and I am very

923
glad to see that the tax is to be taken off those things. But I wish the Chancellor could have seen his way—and I almost think that he might have done—to take the tax off other items of household goods which are very badly wanted, just as badly, in fact, as many of the things mentioned in the Schedule. I refer to frying pans, kettles, brooms, knives, forks and spoons and things of that kind which are beginning to appear in larger numbers in the shops. I think that the tax might have been taken off them. If it were possible in this House I should like to move an Amendment in the Committee stage to omit the tax on some of those things. But the noble Lord need not be nervous; I know the customs and forms regarding the Finance Bill in your Lordships' House, and I can assure him that I shall not delay its passage into law any longer than I can help.
Now I wish to say a word about income Tax and Surtax. I am going to do what I know is a very dangerous and unpopular thing—that is, to say a word in defence of the Surtax payer. As your Lordships know, and as the noble Lord has explained, the Chancellor of the Exchequer recouped himself for his loss over the shilling reduction in the Income Tax by adding to the rate of Surtax, and it is done in the way that your Lordships know. On slices of income over £2,500 threepence out of the shilling is taken; over £5,000 sixpence is taken; over £6,000 ninepence; and out of the income over £12,000 the whole shilling is taken back. I could understand this being done if the Chancellor of the Exchequer had been working to a balanced Budget, because we have often seen it in the past. He takes off taxation here and puts it back there. But that is not so in this case, because we are given in the Budget no estimate of expenditure, and we do not know what amount the Chancellor of the Exchequer is budgeting for. As regards Income Tax and Surtax we have been told that in the Income Tax remissions he is giving away £322,000,000 and the amount that he is going to get back by the increased rates of Surtax is only £7,000,000. So that does not really make an argument of it at all.
No, to my mind this increase of Surtax is clone for a very different reason—a political reason, and not a financial reason
924
at all. It is done to enforce, so far as possible, and so far as they can, that plan of making everybody and everything equal, which is so dear to the Socialist mind. It is done as part of the system of levelling everyone down to a dead level—which I believe is fatal to hard work and initiative. That this is so is evident from the various remarks on Surtax payers which fell from the lips of the Chancellor of the Exchequer during the debate on the Budget and the Finance Bill. It is almost as if he said—varying the remark of the countryman when he put his foot on a toad—"I'll larn you to be a Surtax payer." One of the remarks he made—I am not allowed to read his observations so I paraphrase them—was to the effect that a great number of Surtax payers did no work at all; they lived on inherited incomes derived from investments. And he made other remarks of a like nature. Well, assuming that they do so live there is no crime yet in being a Surtax payer and living on an inherited income. It may be that it will become so later on if this Government have their way, but at present there is nothing wrong in it.
There are, I believe, some 125,000 Surtax payers in this country and your Lordships will realize—though I think the Chancellor of the Exchequer must have forgotten it—that there are quite a number of respectable people among them. For instance, there are the right reverend Prelates who sit, or who sometimes sit, on the Benches opposite, Ministers of Cabinet rank in His Majesty's Government and the Chief Whip in another place. All these are Surtax payers and they work very hard indeed. But, apart from these, there are many thousands of others, who do a vast amount of work in politics, local government, industry, the professions, commerce, and so on. In my opinion the proportion of the 125,000 who do nothing at all for the common good is very small indeed. I say this: that the remarks of the Chancellor of the Exchequer about the general run of Surtax payers are very unfair and calculated to cause prejudice. To my mind they are fitting for the hustings, the political platform, but not for the House of Commons.
This system of penalizing this very small class—125,000 out of 45,000,000 inhabitants, among them 30,000,000 voters—will to my mind discourage enterprise, hard work and initiative. What is more, it will instil into the minds of the

925
rising generation—and I am not at all sure that this is not what the Government mean to do—that it is wrong and immoral to do better than your neighbours or to rise out of the general rut of mediocrity. That is not the way in which this country became great, nor is it the way in which it will be able to carry on in the difficult years that are to come.
Next I would like to say a word about economy. To my mind the fact that we are still spending £13,000,000 a day is most disturbing. I do not know whether your Lordships realize that it means that we are spending the total amount which was budgeted for in Mr. Gladstone's great Budgets of the sixties of the last century, in five days, and the total amount budgeted far in Mr. Lloyd George's first Budget of 1909 in about a fortnight. I think a good deal of explanation is required of the fact that by next April we shall have knocked off only about £200,000,000 from the 5,000,000,000 provided last April, although by next April the war with Germany have been over eleven months, and the war with Japan eight months. Where is the money going? I know that Lord Pethick-Lawrence did give a certain explanation at that Table when introducing the Bill. But he did not really bring very much comfort to my mind.
There are various things I should like to know. Are the Government reducing as quickly as possible the redundant numbers of the Armed Forces, especially the very large Staffs of the Armies in the field and at home? I am rather relieved at the absence from this House to-day—although I would welcome their presence otherwise—of the noble and gallant Earl, Lord Cavan, and the noble and gallant Viscount, Lord Trenchard, because I might get into trouble with them afterwards for saying what I am about to say. In my opinion the Service Departments are every bit as bad as other Departments when it comes to reducing Staffs, can say that from personal experience, because I served in a very junior capacity in the War Office in the year 1920, just after the last war, and I remember very well the cry of horror which went up in the branch where I was when, about 1920, an order, or at least a mere suggestion, came round that the very swollen redundant staff might be reduced. There was a terrible to-do. The end of it was that they began at the wrong end, and they got rid of the Staff-Captain. I was all
926
right. There were two of us, and the other fellow went. I saw some months ago that Field-Marshal Montgomery said that he had already reduced his Headquarters Staff in Germany by 16 per cent: and he hoped by Christmas to reduce it by 40 per cent. I am very glad to hear it. I hope it is, but I should like the Chancellor of the Exchequer and the Treasury to step in and say, "Reduce it by 50 per cent. or 60 per cent." That is the way these things should be done. I hope His Majesty's Government are watching these subjects very carefully.
All over the country there are what I call little pockets of men still under arms. I see many of them in the district I come from. What are they doing? So far as I can see, not very much. I hope they will be demobilized as soon as possible, because it means that all these little pockets, or a great many of them, entail the retention of houses which are badly wanted back by their owners to live in, and they are costing the country a great deal of money. I have in mind one or two particular houses in the area in Hampshire where I hail from, and I have given the noble Lord, the Under-Secretary of State for War, particulars of these. I spoke to him about them the other day, and he was going to be here to give me a reply, but he has gone away on official business to the Admiralty. Through the noble Lord, Lord Pethick-Lawrence, I should like to thank him for some information he has sent me privately about this. I bring up this question of the houses not to stress the hardship which it causes to the owners, which it undoubtedly does, but merely to show that these houses are, after all, in a very small part of England. I know four, five, six, perhaps seven of them. But that is happening all over the place, and it must entail an immense sum, probably running into millions, for rent, rates, and so forth, and then for compensation at the end, which of course must increase every day they are occupied.
Also, what about the other Government Departments? What is happening there? I think that about the only economy that is being made in that direction—and I believe it was invented, or thought of, by the Coalition Government, or the Conservative Government before this one—is that the Ministry of Supply is doubled up with the Board of Trade. I heard

927
with great delight on the wireless two rights ago that the Ministry of Information was going to be done away with, and I threw my hat in the air. But a minute or two later I was not quite so certain, because I heard they were going to keep on something in its place. If it is going to be kept on, I hope it is not going to be just a duplicate of the present Ministry, and that it is really going to be cut down. The present Ministry has employed 5,000 people, and it is costing £5,000,000 a year. Let us get rid of it or cut it down.
I should feel easier in this matter if I saw any keenness on the part of the Chancellor of the Exchequer to effect any reduction. I could find very little indeed about that in his speech on the Budget, except a vague general statement about lopping all expenditure found to be unnecessary. Of course, he could hardly have said less. He objected to the idea of another committee like the Geddes Committee. I think he said he did not want "a crowd of that kind dancing around." I do not know what particular antics the Geddes Committee indulged in, but I am perfectly certain that they made certain limpets dance out of their appointments who would have otherwise got out in very slow time indeed. Then we had Mr. Glenvil Hall, the Financial Secretary to the Treasury, who, in the course of his reply on the Budget, said that although there was Treasury control, it was control with a difference, and any schemes for the betterment of the country or of its people which came to the Treasury and had anything in them, would get the support of the Treasury. I should like to see the words added, "Provided that we think the country can afford it." But there was nothing of that kind. That is what makes me so uneasy.
The Government and the country have got a good lot on their plate. What shall we think of them in the future? I have put down some items such as Defence Forces, pensions, subsidies for the cost of living, health, education, Colonial development, and so on. They are very desirable things in their way, and very necessary, I am sure, for a prosperous country. I look forward to very large Budgets indeed for the whole of the rest of my life, and we must not forget that in addition to the money in the Budget, there are the local rates. In the local
928
authority of which I am a member, we have got to put our rates up very considerably on the next Budget day, when it comes in May, and I am sure that the rates of a good many local authorities will go up, which will very nearly cancel out the relief given by the Chancellor of the Exchequer.
This Government will be judged when they next appeal to the country on the success of their efforts to restore prosperity to this land. If they have failed to do so, they will meet with the fate they deserve, and that would not greatly trouble me. But Conservative though I am, I can assure His Majesty's Government that I do not want them to fail from any Party point of view. I want this country to be prosperous again, with taxes lowered and liberties restored—a really happy England. That is what I want to see. I do not think His Majesty's Government are going the right way to get that. But there it is. That is the way they have chosen. They will not be able to get any of these things unless they lop off this unnecessary expenditure. I entreat the Government to treat this matter of economies, large and small, seriously. If they do not do so now, the time will come when they will be forced to and then they will have to face an indignant country, loaded with debt, atrophied by control, and lulled into indifference and false security by the sight of this continued lavish expenditure.
On Question, Bill read 2a: Committee negatived.
Then, Standing Order No. XXXIX having been suspended (in pursuance of the Resolution of December 11), Bill read 3a, and passed.

MALAYA.
4.10 p.m.
VISCOUNT MARCHWOOD VISCOUNT MARCHWOOD rose to call attention to the policy of His Majesty's Government in Malaya; and to move for Papers. The noble Viscount said: My Lords, my reason for placing this Motion on the Paper today, is that during the past few weeks I have met a number of my old friends and associates from Malaya and have found among them a good deal of legitimate curiosity, not untinged with a certain measure of concern, which I must confess I to some extent share, regarding the Imperial Government's plans for the future administration of British

929
Malay. This solicitude on the part of old Malayans is unselfish and disinterested, for no person could spend the best part of a lifetime in the green and pleasant land that stretches from the Burmese frontier to the Straits of Singapore without acquiring a very real affection for the country which has been so highly favoured by nature and its very likeable people. There are also material factors which in spite of the remoteness of the Malayan Peninsula should excite more than a passing interest in the recent announcement that a Malayan Union is to be created consisting of two of the three Straits Settlements and the nine protected Malay States. The' trade of Malaya in 1926 was more than double that of all other British Colonies put together. In 1938 it was still more than all the trade of our seventeen African Colonies and more than half that of the Indian Empire. Penang and Malacca are the two Settlements to be included in the Union, whilst Singapore will be constituted a separate Colony for the present, though it is stated that "the many ties between it and the mainland" may well work towards "its ultimate inclusion."
Seeing that the Straits Settlements are British possessions there is no legal or moral objection to the home Government giving them a new Constitution or a new shape if it convinces the inhabitants of the desirability of change. But to split the Straits Settlements into two without consulting the views of the inhabitants and while they are still sore from the Japanese invasion certainly appears somewhat hasty. I hope some convincing explanation will be forthcoming as to why Singapore is to be severed from its natural hinterland and separated from its sister Settlements Penang arid Malacca with which it has been united for so many years to their mutual advantage. It is possible there may be some overriding consideration of Imperial defence that justifies this far-reaching step. Should this be the case I trust we may be told what is the actual position.
The inclusion of protected Malay States in such a Union is legally and morally on a different plane. Briefly the history is that between 1874 and 1888 a condition of anarchy, civil war and Chinese faction fights prevailed, and Great Britain with a certain amount of reluctance, at the request the Straits-born Chinese, persuaded the Rulers of the four Malay States
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Pahing, Perak, Negri Sembilan and Selangor, which afterwards were federated in 1895, to accept British Residents, whose "advice was to be asked and acted upon in all questions other than those touching religion and custom." The next important happening was in 1909 when Siam transferred to us "all the rights of suzerainty, protection, administration and control" which they possessed over the four northern Malay States, Kedah, Perlis, Kelantan and Trengganu, which in effect made them dependencies of Great Britain. The British Government of that day however abjured any right of absolute ownership and made treaties with the Rulers, exchanging the right to administer for the right to advise.
Later in 1914 H.H. the Sultan Ibrahim of Johore agreed to have a British Adviser whose advice was to be asked and acted upon. Johore together with the four Northern Malay States comprise the five unfederated Malay States. Later still Great Britain made agreements with Kedah and Perlis which provided that they "would not be merged or combined" with any of the other States or with the Colony of the Straits Settlements "without the written consent of their respective Rulers-in-Council." In view of these very definite undertakings I hope the fullest opportunity will be provided the Malay Rulers to debate in Council the entry of their States into any Malayan Union and that nothing will be taken for granted in this respect. Apart from the fact that a Union of the nature proposed makes the machinery of administration less cumbrous, it does nothing to make clear the intentions of His Majesty's Government regarding the inhabitants of Malaya. It seems obvious however that if the words used have meaning, the Malay Sultans will have to forfeit rights and privileges highly prized by their Malay subjects.
A further matter which will affect Malay rights, unless there are safeguards which have not been divulged, is that birth in Malaya, or a suitable period of residence, is to qualify Chinese and Indians to be citizens of this Malayan Union with "all the rights which the term implies." It is only right that we should be told what the term does actually imply, and whether Chinese and Indians will be admitted to the superior Civil Service in the Malay States. In

931
the past they have enjoyed seats on all the State Councils and the subordinate service, but as long ago as 1904 the Malay Rulers objected to foreign Asiatics being appointed to that service and regulations were altered so that administration should only be carried out by Malays and Europeans. Recently some of the superior posts in the Straits Settlements have been thrown open to the locally born, but the Malay States have, I understand, never been advised to accept other than British and Malay officials. The position is fully justified seeing that ninety per cent. of the population of Kelantan and Trengganu, for example, are still Malay. Therefore the Malays are the people to be considered.
It is my experience over twenty years that the Malay believes implicitly in the Englishman's word. He believes the Englishman's word is his bond. We must see to it that we do not break faith in any way and whatever changes may be introduced the interests of the Malay must remain a paramount consideration. The Chinese and Indians, it must always be remembered, were admitted to the Malay States on British advice and if the Malay is edged out of the administrative field it will cause considerable dissatisfaction and bitter resentment. For these reasons the Malay Rulers should be given time and opportunity for discussion and consideration of these far-reaching proposals, not pressed for a hurried decision while their people are still suffering from the effects of the Japanese occupation. The Straits-born Chinese of Penang and Malacca, who are loyal British subjects, should also be given an opportunity of expressing their opinion regarding the partition of the Straits Settlements. The splitting of their business area and ceasing to be the proud subjects of a British Colony may well be viewed by them with deep concern and resentment. The "Pax Britannica in Malaya" was established with practically no bloodshed! The material progress has been prodigious; the standard of living of all classes was remarkably high; we have given them security, education and a fine system of internal communications.
For these many reasons it is much to be hoped that His Majesty's Government will not substantially alter the method of recruitment of the Malayan Civil Service
932
unless it be to increase the number of Malays employed in the higher branches. Malaya in the past has been fortunate in its administrators. There have been occasional "misfits" among the Governors but there have also been men like Sir Frank Swettenham, Sir John Anderson and Sir Hugh Clifford, who were in the direct line of succession to the great pro-consuls of the past. It will be a sad day if we alter the system which exists. The Malayan Civil Service has also produced an excellent crop of Governors for other Colonies, like the late Sir William Peel for Hong Kong, Sir Andrew Caldecott for Ceylon and Sir Arthur Richards for Jamaica and Nigeria. We must think well before we "so reform" this service as to alter its whole complexion.
My Lords, this fortunately is not a Party question and it can be discussed with detachment and impartiality. I regret that a deplorable cold prevents my putting this more forcefully, because I feel acutely on the matter. I do not question for a moment the good motives of the authors of this scheme for a Malayan Union, but it would be interesting to know whether the peoples of Malaya have expressed any wish for it. I hope the noble Viscount who is going to reply, will let the House know as much as he can in this respect. My desire is to elicit the fullest information the Government can give its, entreat it to hasten slowly, and above all to safeguard the interests of the Malays. To represent the Malays of the ruling class as indolent and unenterprising hedonists, who must always be kept in leading strings, is misleading. The late Sultan Idris of Perak I recall in my day as a man of strong character and marked ability, also the present ruler of Johore the Sultan Ibrahim, who has been a prisoner in Malaya throughout the war and whose loyalty to the British Crown and courageous behaviour during the Japanese occupation have been widely acclaimed.
So when it comes to the actual constitution-making, I would enter a plea that those whose task it will be, should call into consultation recognized experts like Sir George Maxwell, Sir Richard Winstedt and Sir Arthur Richards who have gained their experience and knowledge on the spot, as well as the permanent officials of Whitehall versed in Malayan affairs. Also they should not entirely ignore the busi-

933
ness men, the leaders of commerce, shipping, mining and agriculture, whose efforts have helped so largely to make Malaya such a loyal, contented and prosperous member of the British Empire. I beg to move for Papers.
4.29 p.m.
VISCOUNT ELIBANK: My Lords, I would like to congratulate the noble Lord who has just sat down upon the eloquent and instructive speech which he has given us this afternoon. He has a good deal of experience of Malaya. He knows it probably better than any other member of your Lordships' House. He knows its conditions and he knows the races and how they are divided, as he has shown us this afternoon. Words of advice coming from him cannot be held lightly or, I submit, be regarded by the Government as other than worthy of consideration. I myself happen to know Malaya; I have been there and I still have interests there. Consequently, if I speak to your Lordships this afternoon very briefly on this subject, I do so as one who has a certain knowledge of what he is talking about.
I do not propose to go through again what my noble friend has said so eloquently; I want rather to come to the position as it is. In August last, the Japanese surrendered and towards the end of August Singapore was liberated. Time went on and the rest of the Malay States fell once more into our hands—I suppose not before the middle of September. About a month afterwards, in about the middle of October, there appeared in the Press the announcement of a new Constitution which was to be imposed in Malaya, described as the Malayan Union. I confess that I was considerably astonished at seeing that announcement because I could not understand how the Government had arrived at the conditions upon which they could prepare or draw up such a Constitution or such a Union. I think it will he admitted that conditions in Malaya to-day probably do not resemble the conditions as they were before the war; and even had this Constitution been drawn up before the war, I contend that it would not necessarily have been suited to the conditions which exist at present.
My noble friend raised the question of whether the Sultans and all the other interests concerned had been consulted
934
before this arrangement was come to and announced, through the Press. I venture to suggest there was no possibility that the Sultans or the people of Malaya could have been consulted about this matter. Even to-day there is a British military Government in Malaya; the civil Government has not even yet been restored. How, therefore, could the Sultans or anyone in Malaya have been consulted about this Constitution? I want to know—and I want to know very definitely—who was consulted about this new Constitution which is to be imposed upon Malaya. Were the Sultans consulted? Were any representatives of the Chinese consulted? Were any representatives of the Tamils consulted? Were any representatives of the large European interests consulted?
Malaya, as my noble friend has said, consists of four unfederated States, five federated States and three settlements called the Straits Settlements. My noble friend has described to you how, those various States came under our control. What I want to point out is that in no case—and I have been in most of them—is any one of these States anything but a protectorate of this country; in no case has the Sultan surrendered his sovereign rights over one of those States. The Straits Settlements might be called a Crown Colony, but as to the other States, the Sultans have merely asked us for our protection and to put in British residents to advise them on how to govern and keep conditions right in their Sultanates. In those circumstances how can we say: "We have decided this country' will be better governed if a unified Government is imposed on you. You have got to lump it and take it "? That is the position in which they have been put.
I do not know how the Government are going to expand their announcement; I do not know whether they propose to issue a White Paper which can be fully discussed. I submit that a mere announcement in a newspaper of a new Constitution is not the proper way to do things. It ought to be done in such a way that Members of Parliament and members of your Lordships' House can study it and can understand all its implications. A mere announcement to the Press is not sufficient. I say without hesitation that the whole thing is premature and ought not to be carried out until the Sultans,

935
the people in the country and all the various interests have been consulted, and until they have had an opportunity to say that this is a good plan, or not a bad plan, or that something else is better. But you cannot ride roughshod over Protectorates in that way. It has never been our custom to do so, and I for one object to Parliament taking such a course.
I want to ask a second question. What steps do the Government propose to take to implement this announcement in the papers which was made so prematurely? Who knows what the conditions are in Malaya to-day? It has still, as I say, a British military Government. Those of us who have interests in Malaya do not know at all, even today, what is the state of those interests; we cannot find out. We are trying to find out, and the Colonial Office is helping us to do so; but when we do find out, they may be entirely different to what we think they are. Therefore I do beg that the Government will hold their hands over this.
Another question which I wish to put to the noble Viscount who is going to reply is whether the Government will consider, as soon as is feasible, sending out a properly constituted Commission. The time has not yet come for that. As my noble friend has suggested, the people must be given an opportunity of recovering after the miseries which they have suffered during the Japanese occupation. When they have done that, however, and Civil Government has been restored, I ask the Government whether they will send out a Commission, as was done recently in the case of Ceylon, and as has so often been done elsewhere in the past, to go into all the problems involved in an attempt to reach a settlement in this very complicated matter. I ask the Government to-day to give me some indication of whether they are prepared to do this. My noble friend has described the importance of Malaya from the point of view of trade. It is very important; and, in view of the fact that Commissions have been sent to Ceylon and to many other countries, and in view of the need for a thorough investigation into the position in Malaya before the Government implement what I regard as a dictatorial measure of union over Sultans who have entrusted themselves to our protection and to nothing else, I hope that this, will be done.
4.42 p.m.
LORD FARINGDON: My Lords, I rise only to put a question to my noble friend who is to reply, and I shall not take up your Lordships' time in controverting the eloquent remarks of the noble Viscount who has just sat down, although I take a view absolutely opposite to his; I consider that the Government deserve enthusiastic congratulations on the steps which they appear to be taking for the unification and development of Malaya, because I believe that no development, political or economic, is possible without unification. I wish to ask my noble friend whether, in this new organization, the British Government will see to it that adequate measures will be taken for the protection of the peasant, and particularly for the protection of his land-holding, against the moneylender and against people who are perhaps better able to take advantage of modern economic conditions than he is. This is a common problem throughout the East, and it is one which I am certain that the Colonial Office have in mind. I should like an assurance that in the new set-up some such provision will be included in the Constitution.
VISCOUNT MARCHWOOD: The Chinese Protectorate oat there used to be a most efficient service, and I sincerely hope that it will be continued for that kind of work.
4.44 P.m.
THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT ADDISON):My Lords, I thank the noble Lord for having given us notice of his intention to raise this matter, and for having sent us beforehand a note of some of the points which he has raised to-day. I should like to express my sympathy with him in what I hope is the exceedingly transitory affliction from which he is suffering, and from which I have sometimes suffered myself. I should like to assure the noble Lord, Lord Faringdon, that the considerations which he has advanced are considerations to which I know that the Secretary of State for the Colonies attaches the greatest possible importance. That is one of the most important matters which we have to keep in front of us—to give the native populations a fair chance in life. That is what we are going to try to do.
I should like to thank the noble Viscount, Lord Marchwood, for the

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entirely sympathetic and knowledgeable contribution which he made. To the noble Viscount, Lord Elibank, I would say that any suggestion that we have approached the native Rulers in a "take it or lump it" attitude is wholly different from the truth. Nothing could be more conciliatory than the steps which we have been tilting and that we wish to take. Sir Harold MacMichael, who has been out there for some considerable time, has been conducting negotiations with the native Rulers and others with conspicuous success and amity all round. That is the plan of advance which we shall certainly follow. With regard to the general question, I am sorry that the noble Viscount saw the announcement to which he relays only in the newspapers. It was made in the House of Commons on October 10, so that he could have got it from there if he had so desired.
VISCOUNT ELIBANK: I went to the House of Lords Printed Paper Office to-day to try to get something, and they went through the list and told me that nothing had been published; so that I did do my best to get it.
VISCCUNT ADDISON: Yes, at rather a late hour, unfortunately.
VISCOUNT ELIBANK: I do not think that that matters.
VISCOUNT ADDISON: I am not concerned with the difficulties which may have arisen between the noble Viscount and the Printed Paper Office, but the announcement was made in the House of Commons on October 10, and I have here the words used by the Secretary of State. I am sorry that the noble Viscount overlooked that. My only point is that there has been nothing hole-and-corner about this.
VISCOUNT ELIBANK: I am sorry to interrupt, but I have been in South Africa and did not arrive in this country until October 5. That is why I missed it.
VISCOUNT ADDISON: I am not suggesting that the noble Viscount was remiss; am only concerned to prove that His Majesty's Government were not remiss and did not make the announcement through the channels of the Press, but made it to Parliament in the proper way. That is the only point that I wish to make. It is suggested that there shall be constituted a Malayan Union of the nine
938
States, and that it shall include the two Settlements of Penang and Malacca. The noble Viscount, Lord Marchwood, seemed to have some misgiving as to the wisdom of including them. The matter has been, of course, very carefully considered, and I think it is clear that any union for administrative or economic or other purposes of this territory would be lop-sided if it did not include them.
VISCOUNT MARCHWOOD: I referred to the separation of those two Straits Settlements from the third. My point was that Penang and Malacca are being separated from Singapore. Originally the three of them formed the Colony, but now a new Colony is being constituted in Singapore, and the other two are being placed in the Malayan Union.
VISCOUNT ADDISON: I am coming to that. Penang and Malacca arc being included in the Union, and it is suggested that there should be a separate administrative unit in Singapore. That is what the noble Lord questioned. I am at the moment only on the point of the inclusion of Penang and Malacca with the rest of what we hope will be the Malayan Union. He knows much more than I do of the economics of the district, and I am sure he will agree with me that administratively and for other reasons of future development—which is all that we are looking to—it is right that Penang and Malacca should be included in the governmental institutions of Malaya. I shall deal with Singapore separately. Sir Harold MacMichael has been out there for some considerable time conducting negotiations. Those negotiations have not been conducted in the least in the spirit suggested by the noble Lord. They have proceeded in the friendliest possible way, and I am glad to say that they are being attended with conspicuous success. I am not able to-day to announce the final conclusion of the agreement which will be proposed by him, but we hope very shortly that it will be possible to do so. I can only say that Sir Harold is making most excellent progress in the friendliest possible atmosphere.
I think the noble Viscount made some inquiry in particular as to our relations with Kedah and Perlis. In both these cases the State Councils are being consulted arid the information so far available to me suggests that they are entirely

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agreeable to the proposals that have been put before them.
VISCOUNT MARCHWOOD: Is that the Rulers only or the Rulers in Council?
VISCOUNT ADDISON: The information before me says the State Councils.
VISCOUNT MARCHWOOD: I am delighted if everybody is agreeable.
VISCOUNT ADDISON: I quote the words from the papers which have been supplied to me—"The State Councils arc being duly consulted." Another important part of this proposed scheme to which I hope the noble Viscount will not take exception—for we think it is of great importance—is the establishment of a basis for Malayan Union citizenship. It will be open to all those, of whatever race or creed, who can claim by birth or by reason of a suitable period of residence that Malaya is their home.
VISCOUNT MARCHWOOD: May I interpose again to ask this question? Is that in connexion with the superior Government Service?
VISCOUNT ADDISON: I am dealing with the basis of Malayan Union citizenship for the community. I will come to the Services in a minute. As I was saying, it will be open to all on that basis. I am quite sure that that is right. As the noble Viscount knows, in some States there are greater proportions of Chinese than in others. In some cases the population is almost entirely Malayan. Whatever the position may be in that respect, the people will be able to become citizens of the Union provided that they have the necessary qualifications. It is proposed that the public Services shall be open to all citizens of the Union if they are good enough to qualify for them. I think that for a wide field of public Services, both administrative and technical, the people of Malaya are admirably suited; and so far as they do prove themselves so suited, the Services will be open to them. I think that is the answer to the point raised by the noble Viscount.
And now may I say a word about the proposed separation, for the time being, of Singapore? Singapore, as the noble Viscount knows well enough, is geographically and in many other ways in a unique and special position. By far the greater
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part of Singapore's economic interests are external to Malaya—they are in fact world-wide. Singapore's position therefore is different from that of other parts of the territory. It is proposed that Singapore should have special administrative machinery, and it will be so constituted at the beginning. But we recognize that there are inseparable links between Singapore and the rest of Malaya and I can give my noble friend the assurance that if, in the course of time, both the Union and Singapore desire it there will be no obstacle to the formation of a united political organization embracing both areas. But for the present it is proposed for the reasons I have mentioned that Singapore shall be separately administered. Our plan is shat there shall be the fullest opportunity for the native races, both in administration and in cultural and economic development, to make the greatest possible progress.
I should like to say that so far as my information goes—and I have had long conversations with my noble friend on the subject of course—I can say that Sir Harold MacMichael's suggestions are apparently being received with exceeding good will. And the maintenance of that good will will be our purpose throughout. I think that I have given noble Lords an indication of the scheme for the Union of all States except Singapore, and the general scheme of economic organization that will be worked out.
VISCOUNT ELIBANK: May I be allowed to interpose to ask the noble Viscount this question with regard to the status of citizenship that is to be given? Will it permit the Chinese, if they become more numerous, virtually to take over the Malay State? Is there anything to secure the Malayans themselves in their own heritage? I foresee that the Chinese, prolific and numerous as they are, may in time subordinate the Malays to themselves as a race.
VISCOUNT ADDISON: I think the noble Viscount knows enough about British ideals and methods of government to understand that it is not our policy to establish privileged minorities. We do not go in for that sort of thing. If, in the course of development in some States, as may be the case, the Chinese have become or do become more numerous, it will be open to them to become citizens of the

941
Union if they possess the necessary qualifications. You cannot start making distinctions and, as I say, it is not our policy to establish privileged minorities. What I can say on the whole scheme is that it aims to give better opportunities for the native population, and I have no doubt that the Malays will take full advantage of it. It is our earnest desire that they shall, and we shall certainly do all that we can to help them to the fullest possible extent. I think I have now answered the various points which have been raised.
4.58 p.m.
VISCOUNT MARCHWOOD: My Lords, I should like to thank the noble Viscount very much indeed for his very comprehensive reply. I feel that it will go a long way to allay the doubts and anxieties which have been felt and which I have tried to put before the House. The last thing I would wish to do would be to say one word which would contribute anything but good will to the efforts now in progress. I can see that endeavours are being made to bring about a position out there which will be for the well-being of the inhabitants of Malaya and the Empire.
In saying that I would again stress that, though the noble Viscount said that the Government do not favour the establishment of a privileged minority, it must be borne in mind that the position out there is rather unique. The Malays are ruled by their Rulers but we advise them. Therefore, if the Chinese are in a position where they have a preponderance in numbers, I would not wish to see the Malays ousted. The total Malay population is only 2,250,000 as against double that number of Chinese, so I feel there is a danger of administrative posts being taken from them.
I raised that point because that is the one main question which I wish the Government to consider when they are setting up this Malaya Union. I wish it every possible success because I feel that if we can get the good will of the peoples there, it is going to be the sheet-anchor of success. I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

LEGAL AID FOR POOR PERSONS.
5.2 p.m.
VISCOUNT SIMON VISCOUNT SIMON had given Notice that he would ask His Majesty's Government whether their attention has been called to the Report of the Committee on Legal Aid and Legal Advice for Poor Persons which was presented to Parliament in May last; and whether His Majesty's Government are taking any steps to implement the Committee's recommendations. The noble and learned Viscount said: My Lords, as the Paper shows, I have a question down to members of His Majesty's Government about the Report of the Committee on Legal Aid and Legal Advice. The question is, I venture to think, of very great importance and interests many members of your Lordships' House who are not able to be here to-day. With your Lordships' leave, I propose not to put that question to-day and I hope to he able to put it on Thursday, 31st January.

NATIONAL FIRE SERVICE.
5.3 p.m.
LORD LLEWELLIN LORD LLEWELLIN had the following question on the Paper: To ask His Majesty's Government how many persons were employed full-time in the fire services taken over by the National Fire Service, at the nearest convenient date prior to the taking over; how many persons are in the National Fire Service now, and what steps are being taken to reduce the latter number. The noble Lord said: My Lords, I beg leave to ask His Majesty's Government the question which stands in my name.
LORD WALKDEN: My Lords, the whole-time strength taken over by the National Fire Service in 1941 was about 97,000. It was later increased to 128,000 and is now about 35,000. The strength has been further reduced but it is not yet possible to state what will be the ultimate figure or on what date it will be reached.
LORD LLEWELLIN: I am very much obliged to the noble Lord. I should like to ask him two supplementary questions. Does the figure extend to the whole of Great Britain and Scotland as well, and do I understand from his reply that there were 97,000 full-time employees in the service of municipal fire brigades and that that has now been reduced to 35,000, or was it a figure for the general fire service?
LORD WALKDEN: I cannot say precisely whether Scotland is covered but the figures for Scotland would be very small. There are not so many people there.
LORD LLEWELLIN: And not so many fires.
LORD WALKDEN: It was in 1941 that the National Service was set up and as I said they numbered about 97,000 That would be all and sundry that they took over, merging into the Service. I cannot say if it was restricted to boroughs or particular types of public bodies but they got together 97,000.
THE EARL OF ROSEBERY: My Lords, I quite accept these figures and I realize that, having had something to do with the. Fire Service. I should like to know if the figures include Scotland. Perhaps the noble Lord would let me know at a later date.
LORD WALKDEN: I am informed that they do include Scotland.
THE EARL OF ROSEBERY: And the North of Ireland?
LORD WALKDEN: Yes.