Lords Sitting of 27 July 1960

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Exeter

IMPORTUNING BY MALES
2.35 p.m.
EARL WINTERTON: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government how many convictions there were in the Metropolitan Police area in the years 1949 and 1959, respectively, for soliciting by males, and how many convictions there were in the same periods of adults for indecent assaults upon boys and youths.]
EARL BATHURST: My Lords, the number of males convicted of persistently soliciting or importuning in a public place in the Metropolitan Police District in 1949 was 470. In 1959 the number was 407. I regret that it is not possible to give figures for indecent assaults by adults on youths and boys, because this offence is not classified in the criminal statistics according to the age of the victim.
EARL WINTERTON: My Lords, I am much obliged to the noble Earl for his Answer.

DESPATCHES FROM THE CONGO
EARL WINTERTON:My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government if they will place in the Library copies of any despatches received from British Consuls in the Congo describing events there since the date of independence.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE MARQUESS OF LANSDOWNE): My Lords, since my noble friend put down his Question, my noble friend the Leader of this House has twice made very complete statements on recent events in the Congo, based on reports by Her Majesty's Ambassador and Her Majesty's Consular representatives in that country. There have also, of course, been detailed Press reports. Though I appreciate the importance of my noble friend's wish for full information on this subject, I do not think that it is necessary for the moment to publish any further material.
EARL WINTERTON: My Lords, may I ask my noble friend if he would give consideration to these three points, with a view possibly to the publication of a White Paper during the Recess? First of all, it is difficult to get an accurate knowledge of the number of Belgian women who have been attacked by Congolese and raped. There are terrible stories of this and there is a conflict of evidence in the Press. The second point is that it is very difficult to understand from the Press reports the extent of the administrative chaos, if it exists, in all parts of the Congo except Katanga. The third point, which is a delicate one, is that in one single newspaper, which I hope was incorrect, it was stated that Mr. Lumumba had been imprisoned recently for embezzlement. If that is true, it does not seem that he is quite a suitable person to be a V.I.P. in this country. One would like further information on these points. Perhaps my noble friend would give consideration to this.
THE MARQUESS OF LANSDOWNE: My Lords, of course we all appreciate that it is important for us to learn what lessons there are to be learned from this tragic situation. Naturally, Her Majesty's Government will give consideration to what my noble friend has said, and if it is deemed desirable, certainly we will consider later on the publication of as many of the facts of this unhappy story as can be revealed.
EARL WINTERTON: My Lords, I am much obliged to my noble friend.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, may I ask

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whether the noble Marquess is aware that the Opposition are very anxious that, in all these matters concerning the Congo, we should steadily pursue the line that it is in the hands of the United Nations Organisation? It would be a great pity if steps were specially taken to try to denigrate the native question in the Congo. But let all the facts be brought out, as they ought to be brought out, by the United Nations Organisation.
THE MARQUESS OF LANSDOWNE: My Lords, I am much obliged to the noble Viscount the Leader of the Opposition. I entirely agree with what he said.

ANTI-DAZZLE FENCE ON M.1 MOTORWAY
LORD ALLERTON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether the anti-dazzle fence on the motorway M.1 is considered to be satisfactory; and, if so, whether it is to be extended for the full length of the road, and when the work will be completed.]
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD CHESHAM): My Lords, the studies which have so far been undertaken indicate that the experimental length of anti-dazzle fencing on the M.1 gives satisfactory protection for the motorist against glare from approaching headlights. There are, however, some accompanying disadvantages. For instance, because the screen encourages drivers not to dip their headlights, there an increase in reflected dazzle from the headlights of following vehicles. It has been described as unsightly. In certain conditions it may help to form snowdrifts. It is therefore not yet established that in present traffic conditions the screen is a proper provision, and pending further experience of the experimental installation, my right honourable friend the Minister of Transport does not propose to extend it on the M.1.
LORD ALLERTON: My Lords, I thank the noble Lord for his reply.

DENTAL RESEARCH AND SUGAR CONFECTIONERY
THE EARL OF WOOLTON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government if they will state the figure that is being spent per annum through the Medical Research Council on dental research, and what proportion of this sum, if any, is being spent on the prevention of caries in children's teeth; and further, what relation this sum bears to the total Government expenditure on medical research; and, also, if they can give any estimate of the financial value of the production of sugar confectionery in this country.]
THE LORD PRIVY SEAL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM): My Lords, the Medical Research Council's current annual expenditure on dental research amounts to more than £35,000. The function of the Council is research, and not prevention, but a considerable proportion of their expenditure on dental research is used to support investigations into the early development of dental caries at all ages, including the influence of biochemical and bacteriological factors and the rôle of fluoride, calcium and other minerals in tooth formation and resistance to decay. Since these problems are studied in both adults and children, a separate financial estimate for work in children alone is not practicable. The sum spent by the Council on dental research represents about 1 per cent. of their total expenditure on medical research. I understand that the value of home-produced sugar confectionery, including chocolate confectionery, during 1959, was £193,000,000 and that the total consumption, based on prices paid by consumers, was £259,000,000.
THE EARL OF WOOLTON: My Lords, I am very much obliged to the noble Viscount for answering my Question. I wish that his reply gave me greater satisfaction. I know that the noble Viscount has taken a personal interest in this matter in his official capacity, and has spoken about it in the country, but I wish that he could give a little more satisfactory information. He said, I think,

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that £35,000 was being spent. Of course, £35,000 on the subject of dental caries in this country is—I was going to say insignificant; but surely it is ludicrous. Here is a disease (I am not making a speech, I hope) which may have so much effect on our health later on. I would ask the noble Viscount—and that puts me in order—whether he will take any steps to contact the makers of sugar confectionery to see whether, by an increase in chemical research, they cannot produce a confectionery which does not cause dental caries. Out of a turnover which the noble Viscount says is £259 million a year, there must be a great deal of extra profit which they might use to such a noble cause, and I ask the noble Viscount if he will inquire from them whether they would be prepared to undertake such research.
VISCOUNT HAILSHAM: My Lords, as my noble friend indicated, I have for some time been concerned about the lack of dental research in this country, and he quite rightly said that I drew attention to it—I think over a year ago now—in a public speech out of doors. Unfortunately, I satisfied myself—and I have again satisfied myself in connection with my noble friend's question—that the cause of this lack of research is not lack of funds but lack of interest and enthusiasm on the part of both dental and scientific graduates. The funds would be there if the promising leads and the available personnel were to come forward. That is what the Medical Research Council is for. Incidentally, the figure of £35,000 which I mentioned could have been slightly misleading. My noble friend asked me how much the Medical Research Council were spending on this subject, and I answered £35,000; and this is quite right. But, of course, there is £750,000 a year going on dental work in the universities through the University Grants Committee, and I should estimate that, if the true figure was to be found for the whole country, probably about a quarter of that would have to be added to the figure of £35,000, and it may be a little more, to take account of work in private institutions. However, that does not invalidate my noble friend's conclusion that the total sum represents a totality of effort which is much less than the requirement the country really has.
LORD TAYLOR: My Lords, is it not a fact that the tobacco manufacturers make a donation to the Medical Research Council for research into cancer of the lung? Might it not be of value if the sweet manufacturers were to consider a similar donation, because one wonders whether the noble Viscount is quite right in assuming that the lack of finance is not the limiting factor. It may be that if a sufficiency of high-level posts are offered, then people may be ready to devote their time to dental research work. In other spheres the difficulty has been that there is no career structure for research in the particular subject.
VISCOUNT HAILSHAM: My Lords, one does not want to turn away any suggestion which would result in private industries connected with particular subjects which may have quite important results on health supplying funds for research into the medical questions concerned. I should therefore think that, on general grounds, the noble Lord's question is a very reasonable one, and that his suggestion is one which might well be followed. But I should be less than candid with the House if I did not say this. All medical research, and indeed all scientific research generally, depends for its progress ultimately on the existence of promising leads and the availability of suitable personnel. This, as my noble friend said, is a subject about which I have taken a certain amount of trouble to ascertain the truth; and I can only say that on the evidence before me—which I have verified again since this Question was put down—I am satisfied that the trouble does lie in a lack of interest in the subject. After all, as the Minister ultimately responsible for the Medical Research Council, I should have already provided for them. But this is something I have not been able to do in spite of encouragement. And, incidentally, I am in a private capacity a trustee of other funds which would have money available for this.
The truth of the matter appears to be that there is a lamentable lack of interest in this subject; and I cannot say that too plainly. Of course I welcome the idea that donations should be given; in fact, the mere giving of donations may serve to arouse the interest. But I should be less than candid with the House if I did not stick to my original

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attitude, which is that I think there is a lamentable lack of interest in the subject.
LORD SALTOUN: My Lords, may I ask the noble Viscount if the researches which he mentioned earlier cover the question as to whether the use of what are commonly called chemical manures—sulphate of ammonia and things of that kind—in the growing of roots, leaves or fruits, has any effect on caries? I have some information which leads me to think that that is one of the causes. I should like to know whether the noble Viscount's research covered that point, or whether it will be directed to doing so.
VISCOUNT HAILSHAM: My Lords, we are getting into rather deep water for me. Without notice, I could not say what is the exact scope of the current research. As I understand it, there are two or three broad schools of thought in this matter, which is still rather hotly debated in scientific circles. One ascribes it to a bacterial action, and another emphasises a degeneration in a particular polymer in the teeth. Obviously diet must enter into it, and this was the significance of my noble friend's remarks about the confectionery industry. But I do not think much is known since the fundamental researches —which I am sorry to say were carried out a great number of years ago—which tended to point the finger at sugar rather than chemical manure.
LORD SILKIN: My Lords, is it not the noble Viscount's duty, in his present office, to see that an interest is created in this admittedly vital subject; and if, after to-night, he remains in his present office, will he use the very long Recess to inspire this interest?
VISCOUNT HAILSHAM: My Lords, I can only tell the noble Lord that I have done my best to excite interest in this subject, both by private stimulation and by public utterance. It is my duty, obviously, to encourage interest among the scientists who are capable of taking an interest in this subject. I should not say that it was within my capabilities, even if it is within my province, to
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compel it. The Recess is a very valuable period of time. Whether those who would otherwise take an interest will be in a particularly responsive mood during August, I do not know. But I know that the noble Lord's supplementary question will assist me in my difficult task.
LORD SILKIN: The Recess continues into September and October.
BARONESS HORSBRUGH: My Lords, may I ask the noble Viscount whether the result of the research that has taken place shows that if children's teeth were properly looked after we should not get these caries in the adult? Can nothing be done now about the school dental service?
VISCOUNT HAILSHAM: My Lords, my noble friend has raised an important question, but it goes well outside the realms of research about which my noble friend asked his Question. I happen to know that my right honourable friend the Minister of Health has been concerned about the school dental service, where the problem is a different one—the shortage of dentists. But, of course, quite apart from research, I do not think it requires any research to tell us that if children's teeth are not looked after you do get damage, from want of care and attention, which cannot be repaired in after-life at all satisfactorily. Undoubtedly, if one forgets for a moment the field of research, which is my province, and embarks for a moment on the wider field covered by the executive departments of my right honourable friends the Minister of Health and the Minister for Education, it is obviously plain that the dental health of the nation, whatever the actual cause of caries, would be vastly improved by an improvement in the school dental service.
THE EARL OF WOOLTON: My Lords, may I thank the noble Viscount for the courtesy he has extended to my Question? There is such an obvious interest in the House on this subject that perhaps it may be convenient if, after the Recess, I raise it in another form, when we can have a general debate. I should like to do that. I am most grateful to my noble friend.

BUSINESS OF THE HOUSE
EARL ST. ALDWYN: My Lords, I should like to inform the House that at a suitable moment after half past three a statement will be made by my noble friend Lord Perth on Malta.
GLOUCESTER AND SHARPNESS CANAL (WATER) BILLM
Read 3a, and passed.

CARDIFF CORPORATION BILL [H.L.]
THE CHARIMAN OF COMMIIIEES (LORD MERTHYR): My Lords, I beg to move that the Commons Message be now considered.
Moved, That the Commons Message be now considered.—(Lord Merthyr.)
On Question, Motion agreed to.
[The Message from the Commons was as follows:
That they have resolved, That the Promoters of the Cardiff Corporation Bill and the Esso Petroleum Company Bill shall have leave to suspend any further proceedings on the Bills until the next Session of Parliament.]
LORD MERTHYR: My Lords, beg to move the Resolution standing in my name on the Order Paper.
Moved to resolve, That the promoters of the Bill have leave to suspend any further proceedings thereon, in order to proceed with the Bill, if they shall think fit, in the next Session of Parliament, provided that notice of their intention to do so be lodged in the Office of the Clerk of the Parliaments not later than three o'clock on the day before the close of the present Session, and that all fees due thereon up to that period be paid;
That such Bill shall be deposited in the Office of the Clerk of the Parliaments not later than three o'clock on or before
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the third day on which the House shall sit after the commencement of the next Session of Parliament, with a declaration annexed thereto, signed by the Agent, slating that the Bill is the same in every respect as the Bill at the last stage of the proceedings thereon in this House in the present Session;
That the proceedings on such Bill shall be pro formâ only in regard to every stage through which the same shall have passed in the present Session, and that no new fees be charged in regard to such stages;
That the Standing Orders by which the proceedings on Bills are regulated shall not apply to such Bill in regard to any of the stages through which the same shall have passed during the present Session.—(Lord Merthyr.)
On Question, Motion agreed to.

ESSO PETROLEUM BILL
LORD MERTHYR: My Lords, I beg to move that the Commons Message be now considered.
Moved, That the Commons Message be now considered.—(Lord Merthyr.)
On Question, Motion agreed to.
LORD MERTHYR: My Lords, I beg to move that the Motion standing in my name on the Order Paper be agreed to.
Moved, That leave be given to the Promoters to suspend any further proceedings on the Bill until the next Session of Parliament.—(Lord Merthyr.)
On Question, Motion agreed to.

CONSOLIDATED FUND (APPROPRIATION) BILL
Brought from the Commons, endorsed with the Certificate from the Speaker that the Bill is a Money Bill, within the meaning of the Parliament Act, 1911, and read la.

FINANCE BILL
2.56 p.m.
Debate resumed (according to Order), on the Motion for Second Reading moved yesterday by the Earl of Dundee.
LORD FRASER OF LONSDALE: My Lords, I venture to suggest that we should look at the Finance Bill and the financial considerations which surround it with a certain amount of proportion—see it in its right proportions. I listened to considerable parts of the debate yesterday, and I have read other parts, as well as the debates in another place and comments in the newspapers over the last few weeks and months. I discern that the main issue between the political Parties in this matter seems to be whether we should try to control the background of our nation's financial affairs by financial means or by physical means—by financial controls or by physical controls. The old idea that "the man in Whitehall knows best" dies hard in the Labour Party, and variations of this theme are constantly brought to our notice: "If only this had been done, or only that were done, how much better it would be."
I beg leave to doubt the validity of this theory. Much as I respect the integrity and the ability of our civil servants in Whitehall, and much as I realise that ultimate control of financial design must be in their hands under the Ministers, I beg leave to doubt whether it is wise to try to get them to do more and more business, more and more commerce and more and more regulation. I venture to think that the market, in its widest sense, and the controls which arise from the laws of supply and demand, are better and more likely to serve our purpose. I believe that an impartial examination of the last fifteen years will show that we have done better in the last nine than we did during the previous seven.
In the debate yesterday, the noble Lord w ho spoke from the Opposition Front Bench, in what, if I may say so, was a notable speech, said that the financial crisis surrounding this country gave him as much anxiety as the threat of war itself—or words to that effect. I hope that I have not misquoted the noble Lord. I venture to think that that is the most grievous exaggeration. It is understandable that the Opposition
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should oppose. It is understandable that they should make the running with the small coin of Party clap-trap from time to time. We have all done that in Opposition. But that a Leader should pronounce that the present state of this nation is as perilous to ourselves or to mankind as upon the threshold of the last great war, seems to me wholly out of proportion.
LORD PETHICK-LAWRENCE: My Lords, I hope the noble Lord will forgive me for interrupting him. Of course he has not quoted me correctly. I said that in peace there was a danger to survival which was comparable to the danger in war. I was dealing with the economic situation. I said that if it was not dealt with it might mean that we lost our position as a great nation.
LORD FRASER OF LONSDALE: I thank the noble Lord, and of course I accept his interpretation of what he said. I am bound to say I prefer the perils of peace to the perils of war. Then I think it was the noble Lord, Lord Citrine, followed by the noble Lord, Lord Stonham, who said that the bank rate was a blunt instrument which caused great harm in its application, which upset people—or words to that effect. And others, including a noble Lord behind me, asked that these rates and other matters that are fixed from time to time should be fixed for long periods and not changed at all suddenly.
Pondering these matters, I beg leave for a few minutes to ask noble Lords to consider where we find ourselves. It has taken us hundreds of years to evolve a political system of government by consent through Parliamentary means. In passing, I would say that it is well to remember that, when some assume that our methods can be applied to others who are not yet ready for it. It has taken us hundreds of years. And it is only forty years since Maynard Keynes made popular, and even propounded, his idea, or the idea, that it would be possible to add to the ordinary economic controls of the market and the ordinary law of supply and demand some effort at a higher level by the Bank or by the Treasury, or both, to keep the ship of State sailing straight and well. We ignored Maynard Keynes throughout the greater part of the interwar period, and I blame the Tory Government for that.
LORD BOOTHBY: The Treasury.
LORD FRASER OF LONSDALE: Then came the war itself, and, of course, for obvious reasons, physical controls had to be applied, and shortages had to be dealt with as best they could be. But nobody could say that those measures were desirable. They were necessary to save our lives, but the sooner we got rid of them the better. But we did not get rid of them. Unhappily for Britain, this period was followed by the first seven years of Labour Government in power, and much as I admired Sir Stafford Cripps, whom I thought a virtuous and strong man, even that iron Chancellor was unable to restrain the eager iconoclasts and inflationeers behind him. So we had reforms which were valuable, and they remain, to the everlasting credit of our country, upon the Statute Book. But we had them accompanied by unstable finance, by such bad conditions that before very long the currency itself was deflated, along with Dr. Dalton.
Then came the Tories' period for nine years; and at first, of course, they were recovering from the effects of the war and the damage done by the Labour Government. And some of the trends which had been set up of rising prices continued because they could not be stopped in a hurry. But gradually the policy (and this is the great political clash of policy in this field) of abandoning physical controls, of allowing the terms of trade and the play of the market to intervene, began to take its effect, with astonishingly good results. Now, we have had for same few years a stable cost of living, accompanied by all the evidence of tremendous growth in our wealth and in the widespread wealth of the people. So much so that the days of poverty are largely gone, except for some old people, with whom I have a deep sympathy. The Welfare State, the magic words, are now giving way, even in the minds of Labour men themselves, to the affluent State, and we are all worried to death to know what to do with it. This stabilisation of the cost of living was one of the most important acts of State or of government, and it has now lasted for so long that we may hope that, with minor variations, it may continue.
Having regard to the denigration of Britain's efforts from so many speakers
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on the Opposition side, in both Houses; to the extent to which we are said to be in such a bad way—going downhill; all the promises of a year ago evaporating into thin air as we approach the slump—and to the crisis which is foreshadowed for us, may we, in the light of that greatly exaggerated view, make the briefest comparison of what has in fact happened to us in the last two years? In the employment field, unemployment is down by 100,000 persons as between this time this year and this time last year. Employment is up by half-a-million persons, and in the difficult areas where special measures are taken to create employment there has been such a notable increase that the Minister in the other House only the other day was saying that he could now take some two or three principal districts off the list of development areas.
Industrial production in the twelve months has gone up by 10 per cent. The balance of payments has improved in the same period by £27 million, and the gold reserve up to the last day of June is up by £56 million. Wages, as we were told only this morning from an official source, were 7 per cent. up at the end of April this year upon what they were at the end of April last year. It is still a twelve-months' comparison, but those are the latest figures available. The noble Lord, Lord Stonham, talked about 1½ per cent. He was not wholly incorrect, but, as often, a bit right and a bit wrong. The basic wage is a different thing from the money you take home, and it is the money you take home that counts in the family budget. Even in the few months since the last General Election wages have gone up by 4·2 per cent. Those are notable figures.
May I just remind your Lordships that in the last three years taxation in Britain has been reduced by some £400 million a year, and of course is still at that lower level. In other words, in this particular year, when everything is as gloomy as noble Lords opposite would see it, we are going to pay £400 million less taxation than we were paying three years ago. Surely these few figures (and I will not trouble your Lordships with more) make it abundantly clear that Britain is doing well.
What then is the measure of the criticism? I think it can be said that we have learned extraordinarily quickly how it is possible for the Treasury and the

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Bank to keep a measure of control upon the ship of State, even as a helmsman steers a vessel. If, at the moment when the vessel turns half a point to starboard, the helmsman apprehends it and brings his helm across gently with skill, she is back on course and she probably loses no distance, and certainly is not bumped by the waves. If he is a little sleepy at his post and takes a little time to apprehend the change of bearing, and has then to bring her back three or four degrees, he may check the whole ship; he may impede her progress; and if he does it much, he will affect the way she sails.
I think it follows from this analogy, which I venture to think is a true one, that the Treasury and the Bank must, between them, be constantly watching to see the small trends or changes of statistics, or small changes in the economic atmosphere, and must adjust themselves to them, and do it swiftly and perhaps do it often. It is not really a terrible affair to have the price of money changed. The price of other commodities changes. Rubber, copper, tin, labour, management, rents, all change from time to time. They go up, and they come down—particularly the prices of commodities. But money is a commodity, and that there should be a change in the value of money is nothing out of the way; nor, indeed, is it something that is going to cripple manufacturers as a whole.
It may be that the last change made in the "Never-never" system came at a time when some motor car manufacturers had over-produced, or had undersold, old models, and that it was the last straw which affected their sales policy, so that they had to find a few men redundant and "job off" a few cars. The redundancy of these men is a grievous hurt to them and their families, though I expect by now they have all been re-absorbed. Generally, that is what happens. When a crisis occurs in regard to employment in Luton or Liverpool or in one of the cotton towns, as I know from my earlier experience, one generally finds that, after a little time, it has been a nine-day wonder, and that the men are re-absorbed, often in comparable jobs, sometimes in better ones.
But look at it from the nation's point of view. If, instead of manufacturing,
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shall we say, a million motor cars—I take the figure at large; it may not be anywhere near the right figure—and selling them at the full price, in one particular year we sell 970,000 at the full price and 30,000 at a lower price, the nation has not really come to grief over it. The adjustment has been made, and we are ready now for the new models coming out at the Motor Show. It is obvious that every salesman and every manufacturer likes to keep this month's figures as high as last month's. If he is a chairman, in his statement to his shareholders, and if he is a salesman, in his report to his managing director, he likes to be able to show that this half-year is as good as the last half-year.
But this recession is hardly worthy to be called a recession. This small turndown of turnover of sales is really not the crisis which noble Lords opposite would have it to be. I venture to think that Britain is doing well, and that the Government have taken the right course. The nation seemed to think last October, whatever noble Lords opposite thought, that we were "having it so good" and the Government are now trying to make sure that we shall continue to "have it so good" and that it will stay good. I think we should be grateful to them for what they have done in these last nine years, and particularly in this last year, when courage was required to apply the helm at the right moment when the ship was going a little off course.
I have spoken of the helmsman. Perhaps it would not be inappropriate if I were to refer to the helmsman in this particular context. During this period he was Mr. Derick Amory. I knew him first as Minister of Pensions, in which office he was a sympathetic, generous and capable man—his attitude in these matters being not a little influenced, I daresay, by the fact that in a gallant action he was himself grievously wounded. He then went to the Board of Trade, then to the Ministry of Agriculture, Fisheries and Food, and then to the Exchequer. Now we are given to understand that he is to lay down the office of Chancellor of the Exchequer. He has conducted it with integrity, and if I were to write three words to describe him as I saw him in the House of Commons for so long, I would say that he is able, he is modest and he is kind. I cannot think of any three words which I should

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regard as paying a greater tribute than that. When he lays down his office I—am sure many others will wish to join me in this thought—hope, that his retirement, or whatever other office the winds of change may take him to, will do him good and give him pleasure.
3.16 p.m.
LORD LUCAS OF CHILWORTH: My Lords, I feel sure that the noble Lord, Lord Fraser of Lonsdale, will not take the slightest objection if I do not follow him into the tortuous financial paths, among the nettles and potholes, that he traversed in the early part of his speech. I suggest that there is one speech in the debate of yesterday which he could not have read—that is the speech of the noble Lord, Lord Brand, which I heard and read with the greatest of interest. On his dissertation regarding the motor industry I shall have something to say later on.
I intend to confine the remarks that I shall venture to make to your Lordships to what is, in my view, the one overwhelming problem that this country has to-day: how in the future are we to earn our daily bread? For the sake of dismissing it without further comment, I will accept Lord Fraser of Lonsdale's dictum that we "have never had it so good", and his theory as to why. I prefer to follow the noble Lord, Lord Brand, into the question: what of the future? The noble Lord said that our crucial task is to expand our exports. He will not mind my saying that that is one of the most obvious of a number of obvious remarks that were made yesterday. We cannot keep 52 million souls in this country on a rising standard of living unless we increase, and go on increasing, our exports. We have to put ourselves in a competitive position vis-ávis growing competition. All this is obvious. It has been obvious since the end of the First World War. Our visible exports have always been out of balance. All that saved this country from bankruptcy before the war was the great "invisibles" which the banking, insurance and shipping interests of the country built up.
Now, after fifteen years of peace, we are once; again exhorted, from the Prime Minister downwards, that we must export or die—a very different picture from that painted by the noble Lord who has just sat down—and the Prime
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Minister's words are echoed by the Chancellor of the Exchequer. We can understand that industrialists, listening to these exhortations, are now saying to themselves, "This is where we came in, nearly 40 years ago." All this is so obvious—obvious to everybody except the Treasury, because it appears to me and to many others that the fiscal policies followed by the Treasury, the Chancellor of the Exchequer and Her Majesty's Government for home consumption entirely ignore the dire necessity for this country to export.
I intend to give your Lordships an illustration. The illustration I will give is that of the most dynamic industry this country has, an industry which needs no exhortation; which is at the top of the list for exports, and which in 1959 contributed a higher proportion of our total visible exports than any other industry—16 per cent. I refer to the motor industry. It is the industry of which I was a member for many years. I have no axe to grind. I have no interest to declare except an abiding affection for an industry into which I was born and in which I lived all my industrial life.
Last year 16 per cent. of our visible exports were produced by that industry. It is one of the largest, if not the largest, industry in this country; and, whether we like it or not, the industrial economy of this country will be geared to the motor industry for the next ten years. I have stood at this Despatch Box in debates in your Lordships' House, speaking on aspects of our roads, and I have given forecasts (not my own personal forecasts but those I have received from others) as to the number of motor cars that were to be turned out by our factories in the next three or four years. Those who drive on our roads see them packed with cars, and it is even said that we shall have physically to control the number of motor cars that are built in this country. And yet, through all those wonderful achievements, our biggest and most dynamic industry is rapidly declining in its position in the world's exports; and in Europe its production is being overtaken by that of its competitors. That is a sobering thought for anybody who is thinking on the lines of the noble Lord, Lord Fraser of Lonsdale.

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In the last five years, production of motor cars in the United Kingdom went up by 51 per cent. In Italy production went up by 138 per cent.; in France by 143 per cent. and in Germany by 157 per cent.; and the United Kingdom percentage of European production fell from 38·8 per cent. in 1954 to 27·6 per cent. in 1959. Let us now take exports. There were record exports of £546 million from this great industry of ours in 1959— 16 per cent. of our total export business; and yet that industry is fast slipping down in the leadership. Here are the figures. In the same period—that is, from 1954 to 1959—the United Kingdom increased its exports by 47 per cent.; Germany by 191 per cent.; France by 385 per cent. and Italy by 400 per cent. The United Kingdom percentage of that total was 48·9 per cent. in 1954 and 27·4 per cent. in 1959. And we are not keeping pace. In real terms we are losing ground. We are not keeping pace with the dynamic impulse of Europe.
What are we going to do? We hear a lot of loose talk about pricing ourselves out of the market. In materials and labour the difference between the cost of producing motor cars in this country and in those countries I have mentioned—which are our principal competitors—is marginal. Only 5 per cent. of the content of the modern motor car has to be imported, except when, now and again, through circumstances which I quite understand, the steel industry cannot give the industry all the sheet steel supplies they want. What is the principal factor in these things? It is cost—and not the cost of material and labour. It is because we in this country cannot increase the volume of production so that we may get all the cost advantages that are gained by our Continental competitors. We artificially limit our home market and therefore put up our export costs.
Every motor car produced in this country carries purchase tax of 42 per cent. on its retail price. Our competitors about whom I have been telling your Lordships—France, Germany and Italy—vary in their internal user taxation between 9 per cent. and 24 per cent., with an average of 18 par cent.; and the whole prosperity of the motor industries of Germany, France and Italy, which
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were dynamic enough up to 1959 but in the first six months of this year have gone sky-rocketing, is based on marvellously increased home consumption. I will give your Lordships an example, and again I will take the years from 1954 to 1959. In those years the home market in the United Kingdom increased by 65 per cent. in France it increased by 79 per cent.; in Germany by 156 per cent., and in Italy by 75 per cent.
Now it is upon those facts and figures that I base my charge that our fiscal policy is directed without sufficient consideration for its effect upon our exports whose expansion is so vitally necessary. The noble Lord, Lord Brocket, questioned the wisdom of a 6 per cent. bank rate. The only thing a 6 per cent. bank rate does is to put up production costs. I do not know whether the Treasury will learn the lesson of to-day when, in spite of two increases of 1 per cent. in the special deposits, the bank returns for July show a rise in total loans of £100 million. The reason is that the country is bursting with prosperity, made artificial by a fiscal policy. We have nothing to fear from the Germans, the French or the Italians when it comes to producing high-class motor vehicles. We have nothing to fear from America. If we had only the handicaps placed upon our home market that they have upon theirs, the price of British products overseas could come down, the price at home could come down, and there would be no need to have this jumping about of hire-purchase terms which has been so disconcerting.
I am no financier. I am not like the noble Lord, Lord Fraser of Lonsdale. He seems to think that a daily change of bank rate is in the interests of industry.
LORD FRASER OF LONSDALE: Not quite daily.
LORD LUCAS OF CHILWORTH: Almost daily. Weekly, then; let us say weekly or monthly. My Lords, that is the position and these are the facts. The Government know these facts as well; I am not telling noble Lords opposite anything they do not know. But what are they going to do about it? Let us look at the markets. Where do we go? We have just seen a 66⅔ per cent. fall in our exports to the United States. Was any industry so dynamic as the motor

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industry in going into that market, when they must have known, and anybody with any sense knew, that it was anything but a honeymoon? You do not create a market of any great size in the United States of America before the Americans muscle in on it and show you the hack door. We have finished, in my view, with the Americas as a market. We shall sell specialised motor cars there, because it does not pay them to make them. But the compact motor car has been forced upon the Americans by our entry into that market and, believe me, the American manufacturer is not going to let go of it now. So where do we go?
I am gradually getting on to dangerous ground. I have listened with rapt attention to a lot of voices which have said that of course the Commonwealth can provide us with the markets. I do not believe it. British motor cars on entry into Australia are now taxed at 25 per cent. Admittedly, that shows a 10 per cent. preference. But Australia is now an exporter and has, quite rightly, her own secondary industries to protect. Canada will go the same way as the United States. Already Canada is applying to have a tariff put on the imports of British motor cars. Where do we go?
There is one market which we must get into. We shall be isolated if we stay out of one market, and that is the European market. I am not going into any detail of the pros and cons. I only hope that the Government will give us a lead in this matter. I come back to the first sentence I uttered: how are we going to earn our daily bread? To me, my Lords, that is a paramount consideration. We must increase our exports; we must have every encouragement from the Government to increase them. As to exhortation, I can assure you of this, having spent all my life in industry: it does not get under the skin of the industrialist. It never got under mine. What the Government have to do is to dangle more carrots in front of the nose of the donkey and throw away the stick with which they keep whacking the poor wretched beast's posterior. Incentive! That is the thing we have to find a way of giving the exporters of this country. If your Lordships do not mind my saying so., in the export market we cannot live on fun; it is the hardest of all the
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markets in the world. The noble Lord, Lord Mills, who has had even longer in industry than I have, does not need me to tell him that.
So, my Lords, that is the position as I see it. The Government must have rethinking upon their taxation policy. They must have a policy which will definitely encourage exports from this country. I have cited the motor industry because it is a good case. It is the best industry for exports in this country: 50 per cent. of its production is exported to the extent I have told you.
And now may I make an appeal on perhaps a slightly different aspect? I am appalled to-day at the lack of ambition, the lack of spirit of adventure in the young men. It was brought home to me forcibly recently when I was talking to a group of young executives, the brightest products we have, in the 32 to 33 age group, who were just at a time when they were having to educate their children, which involves all the expenses which your Lordships know exist. They were already in the surtax class, and when they wanted to become members of this property-owning democracy and purchase a house they found they had to pay Schedule A tax. One of them said to me, "Then you wonder that our one thought in life to-day is superannuation and pension and security!" When I was that age and I first started to pit what skill and brains I had after the First World War, if anybody had offered me superannuation and pension I should have laughed in his face.
But is there any joy in adventure? The noble Lord, Lord Brand, quoted Harold Wincott in the Financial Times. I read the article. It was very good. What did he say?—that up to a certain point nobody minded sharing prosperity with the Government on a fifty-fifty basis, but that all you did after that was to give the Government an increasing amount of money; and for all your enterprise, risk and trouble you got far less. How do you expect these men to take risks? By exhorting them, and by telling them that it is fun to take them? That will not put our exports on the map, believe me! It is no good: the Treasury have got to have the same dynamic spirit pumped into them as the Prime Minister of this country would pump into the industrial world.

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When we have that, my Lords, then we shall get where we want. But until then, until we give industry some encouragement—until we at least give them a fair chance to compete with their chief Continental competitors—do not handicap them vis-â-vis those Continental competitors. There is not one Continental manufacturer in the industry of which I am speaking who has to carry a home taxation anything like 42 per cent. The highest is 24 per cent., as I have told your Lordships, and the lowest is 9 per cent. Yet we expect the British motor industry to carry that rate of tax in the face of increased competition. The amount of American money that is being pumped into Western Europe to-day is staggering. With the amalgamations, there has been a dynamic increase. I have given your Lordships the figures showing the competition for the year 1939, and when figures for 1960 are available the increase will be even greater as a percentage of the total.
That is what we are facing, and I beg your Lordships not to take the complacent line advocated by the noble Lord, Lord Fraser of Lonsdale. I am not decrying British industry; I am not taking a gloomy view. We have the ability, we have the "know-how", we have the brains. But do not keep on whacking industry like a grandmother who always sends the maid up to the nursery to see what the children are doing and to tell them not to. The Treasury has no theory about anything except restriction. It has been so since 1920. All they can think of is restrict, restrict and restrict. One day the floodgates will burst, I am quite convinced. I repeat: British industry, the British people, are prosperous. You cannot stop the dam bursting. It burst months ago—that is why we had that Stock Exchange boom—and it will burst again. I hope that the Government will take at least what I have said as an earnest desire to make some contribution to the prosperity of this country in the years to come.
3.44 p.m.
THE MINISTER OF STATE FOR COLONIAL AFFAIRS (THE EARL OF PERTH): My Lords, I think it might be convenient if, with your Lordships' permission, I interrupted and made my statement on Malta now.
Her Majesty's Government, as has been repeatedly made clear, are anxious to restore representative government in Malta. During the fifteen months that the present Constitution has been in operation, important progress has been made in diversifying the economy, but it was never intended that this Constitution should remain in force any longer than was necessary. Her Majesty's Government have decided that the time has now come to work out a new Constitution, under which elections may be held as soon as it has been introduced.
Last December my right honourable friend the Colonial Secretary visited Malta, and during my own recent visit I had valuable informal consultations with the representatives of a wide range of Maltese opinion, and many professional associations and interests, on how to restore representative government, while at the same time not abandoning our responsibilities to the people of Malta.
Her Majesty's Government have come to the conclusion that the quickest and most satisfactory way of moving to early elections lies in the appointment of a small Constitutional Commission, including a member from another Commonwealth country, whose task will be to formulate detailed constitutional proposals, after due consultation with representatives of the Maltese people and local interests. The method of consultation will be for the Commission itself to decide.
The Commission will have to take account of Her Majesty's Government's intention that the Maltese people should be given the widest measure of self-government consistent with Her Majesty's Government's responsibility for defence and foreign affairs and their undertakings in respect of the public service, the police and human rights generally. Within this framework, the Commission will be free to make such recommendations as it sees fit.

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I am glad to be able to announce that Sir Hilary Blood has accepted appointment as Chairman of the Commission, and that Sir Alfred Roberts has agreed to serve as a member. As I have said, we also hope to add a member from another Commonwealth country. The Commission will go out to Malta as soon as possible. When its report has been received, Her Majesty's Government intend that elections shall be held on the basis of a new Constitution, in the drawing up of which the people of Malta, the Commission and the United Kingdom Government will all have played their part.
3.47 p.m.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, we are obliged to the noble Earl for letting us know about this statement of Government policy with regard to Malta at the present time. We welcome the fact that a Commission is to be set up; but we must remember that it is essential, for a satisfactory outcome of this Commission, that there should be co-operation by all sections in Malta, including the Labour Party, which, in the Legislature which does not now meet, used to carry a substantial majority. From that point of view, I am glad to know that a former President of the Trades Union Congress here is to be one of the Commission, which I take it will be composed of the three persons mentioned; and I hope that every possible step will be taken to get reasonable consultations with Labour as well as with the other sections of the Maltese population.
What I do not see in the statement is any formal recital of the terms of reference. Having regard to the constitutional conversations, the trials and the errors we have gone through so far on the matter, it is rather important that we in Parliament should know what are to be the Commission's exact terms of reference. That will then allow us to try to find out, in particular, whether the Commission, under those terms of reference, will be able to recommend a division of power between the Government of the United Kingdom here and the Government-to-be of Malta. I take it from the actual statement, which excludes from any possible future Constitution power for the Maltese Government to deal with defence and foreign affairs, that Her Majesty's Government
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rule out any question of the Island community of Malta being able to engage in what is called "self-determination". Perhaps before Parliament thinks about this, as we shall do through the Recess, and before we proceed on holiday, we ought to try to get that information from the Government.
LORD OGMORE: My Lords, I should like to assure the noble Earl that noble Lords on these Benches welcome the setting up of this Commission. I would ask him whether, in view of the fact that the political instability in Malta arises to a large extent from the economic difficulties, it will be possible for the Commission to make recommendations on economic grounds. Secondly, is he in a position to indicate what other Commonwealth country will be asked to appoint a member to the Commission?
EARL WINTERTON: My Lords, as the only one of your Lordships to be present in Malta during the referendum, and as one who is on friendly terms with more than one political leader in Malta, may I take the rather strange line, for the first time since corning to your Lordships' House, of associating myself almost entirely with what the noble Viscount the Leader of the Opposition said. This is a most vague statement. I do not know if the noble Earl, Lord Perth, is aware of this, but I put this very directly to him: the people of Malta say that if they were in Asia or in Africa, instead of in Europe, they would have been given what the majority of them want long ago—that is, the right of self-determination. I very much hope that when this White Paper comes out or an announcement is made, we shall be given far more details than have been given. Further, will not the Maltese people think that this is just another move to put off what the Government will have ultimately to face—that is, are they, or are they not, in favour of self-determination for Malta?
THE EARL OF PERTH: My Lords, may I say first that I very much agree with the noble Viscount opposite about the importance of all Parties in Malta co-operating with the Commission in their work. Clearly, that is of the greatest importance, and without it the task of the Commission would be a very difficult one. The noble Viscount is right

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in assuming that the Commission will be restricted to three members. At the present moment, I am not able to say from what Commonwealth country the third member may come, but as your Lordships know, several Commonwealth countries have special associations with Malta. So far as terms of reference are concerned, it is true that they are not set out in detail, but I think that, from the statement I have made, it is clear what is the purpose behind the Commission. It will draw up a Constitution with the widest measure of self-government consistent with defence, foreign affairs and one or two other matters being reserved to Her Majesty's Government, so that elections may be held in Malta. Although I have not the precise terms of reference, the purpose behind the appointment of the Commission is clear from what I have said.
The noble Viscount also asked—and the noble Earl, Lord Winterton, raised the same point—whether this rules out self-determination for all time. Of course, the answer to that is, No. These things never take that form. But at this moment we are proposing to get back to representative government, through elections, as soon as possible; and that is the purpose behind the Commission's work. I would only add, in reply to the noble Lord, Lord Ogmore, that we had not thought of the Commission working on economic questions and it has not been chosen with that in mind. There is already a five-year development plan going ahead. But if the Commission come across any economic point which they think is significant, I have no doubt that they will make an appropriate recommendation.
VISCOUNT STANSGATE: My Lords, has the noble Earl any indication of whether the Malta Labour Party will co-operate in this plan?
THE EARL OF PERTH: No, My Lords, I have none.
VISCOUNT STANSGATE: If they boycott it, will the Government continue?
THE EARL OF PERTH: My Lords, I think that that is one of those difficult hypothetical questions which the noble Viscount puts from time to time. In view of the general opinion expressed in your Lordships' House, which I am sure
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is the opinion of all in this country at the present time, I hope that we shall be able to get on with this matter and give Malta what we all want—that is, Parliamentary government.
EARL WINTERTON: Yes, My Lords, but cannot the noble Earl say whether the conditions which Her Majesty's Government are going to lay down are the same as those that have been laid down for Kenya? It has been said pretty clearly by his colleague that the Kenya Constitution will lead to ultimate self-determination or independence. Is that the view of the Government with regard to Malta? That is what we want to know.
THE EARL OF PERTH: My Lords, with regard to that, I can add nothing to what I have already said.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: My Lords in view of the way in which the Maltese people will examine meticulously the publication that is to be made, is it not important to make the terms of reference clear in that publication? If there is any difficulty, let us get over it as soon as possible. It is much better to do that than to have a statement which is not clear about what exactly is intended.
THE EARL OF PERTH: My Lords, I do not believe that there is any difficulty on the terms of reference. It is not something that I am aware of at all. I think that the purpose of the Commission is quite clear, and the terms of reference will certainly follow the lines laid down in the statement. But I will bear very much in mind what the noble Viscount has said about announcing the terms of reference.

FINANCE BILL
3.58 p.m.
Debate on Second Reading resumed.
LORD BOOTHBY: My Lords, if I may bring your Lordships back to the economic problem confronting this country, I should like to begin by saying that I feel that the crux of the problem has been succinctly put by the noble Lord, Lord Brand. It is, in fact, the insufficiency of our liquid reserves. By and large, as the noble Lord, Lord Brand, pointed out, they have remained

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at under £1,000 million over the past decade, as against liabilities, in the form of overseas sterling holdings, of over £4,000 million—that is to say, our reserves are only 25 per cent. of our short-term liabilities. And the fate of all bankers who accept deposits with inadequate cash reserves is the constant nightmare of every Chancellor of the Exchequer and every Government. We met it in 1947, and we met it again in 1951.
The remedy is clear enough. It is, as the noble Lord, Lord Brand, said, to build up an excess of exports, both visible and invisible, not only over imports but also over what we find it desirable or necessary to lend abroad. And it is easier said than done. The Prime Minister has been exhorting industrialists to do just this: to export more. But I want to examine for a moment what the Government have been doing. So far as imports are concerned, they have dismantled all our defences. I protested vehemently against this in another place. I have no dogmatic views, one way or the other, on the subject of physical controls. Where they are unnecessary, as the noble Lord, Lord Fraser of Lonsdale, said, they are obviously undesirable; but I have always thought that they should be kept in reserve, to be used in case of necessity. And they are not now in reserve.
The Government have also failed to reduce expenditure above the line. I know that this is an old theme; but the fact remains that a certain part of our expenditure on the Welfare State is wasteful. I do not think that there has been nearly enough pruning in sheer administration; but, of course—and this is not going to be very popular—the real enemy here is defence. We are no longer a great world Power in the 19th century sense of the term; and ever since the war successive Governments, both Labour and Conservative, have tried to behave as if we were—for example by having what has been called hitherto an "independent deterrent". I want to ask the noble Viscount, Lord Hailsham, who I believe is going to reply, what we have spent on defence since the war, and what we have to show for it to-day. But I would beg of him not to look up the figures now, because I am anxious that he should reply to this debate; and I believe that, if he did look at the figures
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of what we have spent on defence since the war, and what we have now got to show for it, he would be rendered unconscious and therefore be unable to make any reply at all.
As a result of this tremendous expenditure, we have to-day a system of progressive taxation on earned income which has been described by the noble Lord, Lord Robbins, as a discrimination against enterprise and ability such as has never before existed for any long time in any large-scale civilised community. The noble Lord, Lord Lucas of Chilworth, spoke a great deal about incentives, and seemed to imply in one part of his speech that a reduction of direct taxation would be a good idea. He talked quite a lot about carrots, and taking away sticks. I should like to ask the noble Lord if this is the new Socialism; because if so, it will be hailed with considerable interest by large sections of the public. It might even lead to my own transfer to the other side of the House, if it is really sincerely believed; because, for my part, I am convinced that direct taxation, which obliterates most of the difference between success and failure in business and which makes it almost impossible for anyone in this country to-day to save out of earnings, is at least one of the primary causes of our present difficulty. It is really true to say that there is practically nobody, at any level of our society, who can save substantially out of his or her present earnings.
But that is not all. Despite repeated appeals, Her Majesty's Government insist on maintaining the 2 per cent. stamp duty on Stock Exchange transactions. It does not bring in all that amount of revenue, but it does discourage investment in productive enterprise by those with moderate incomes; and, worse still, it discourages investment in this country from abroad, and therefore has an adverse effect upon our invisible exports and on our balance of trade. It is not without significance that a great deal more foreign money is at the present moment being invested on the Continent of Europe than it is in this country. While I do not say that this stamp duty is the only reason for that, it certainly plays a part.
Finally, there is the bank rate. Here the underlying philosophy of the Treasury seems to me to be to knock

823
the whole national economy about from time to time, in the hope that a reduction of imports will come as a by-product. I hope that the noble Lord, Lord Fraser of Lonsdale, will not take it amiss if I say that dear money is expensive. It is a truism; it is a platitude that dear money is expensive. I hope it will not startle your Lordships, but it remains a fact from which we cannot escape. It is expensive for the Government; it is expensive for local authorities; and it presses very hard on those who have entrusted their savings to the Government.
I will not comment on the present condition of the gilt-edged market, which the noble Lord, Lord Pethick-Lawrence, has already dealt with very well. I will content myself by saying that the two biggest swindles that have ever been perpetrated on the British public were the 3½ per cent. War Loan and what have since become known as "Daltons"—I am sorry the noble Lord has left the Chamber. As one of those swindles was perpetrated by a Conservative Government and the other by a Labour Government, your Lordships will observe that I am preserving the impartiality which becomes a member of the Cross Benches.
Dear money also directly hits the export trade, for the conduct of which industries—both large and small—require capital for the provision of credit to their purchasers overseas, and also for the purchase of stocks to ensure prompt delivery. I should like to suggest that the policy of attempting to increase exports by repressing industrial investment and development at home is, in the long run, a suicidal policy. Bank rate is the clumsiest of all methods of controlling monetary and credit policy; and that was brought out clearly in the Radcliffe Report. It hits the small man rather than the big; it acts as a restraint on productive investment which may be desirable and necessary; and at the same time it does not necessarily curb loan expenditure on those products which are neither desirable nor essential. It is, in effect, wholly non-discriminatory. It is a clumsy, blunt-edged weapon, as the noble Earl must know.
I was therefore horrified to hear him say yesterday—and I am referring to the noble Earl, Lord Dundee—that the Government intend to use the weapon
824
of bank rate more frequently (I think that is a fair expression), as one of the main weapons of their economic policy. It reminds me of nothing so much as Alice and the mushroom. First a nibble one side, then a nibble the other side; and never the right size. How do they expect the business community to plan ahead against this kind of background of constant change?
This brings me to a brief consideration of the Treasury, a Department for which I have never had any very warm affection or enthusiasm. I have been in public life on and off for 35 years. I have always thought that the Treasury was much too powerful, and I have always been quite sure that it is seldom right. I will now give an account of its recent activities which may differ slightly from that given by the noble Lord, Lord Fraser of Lonsdale. I will spare your Lordships by drawing a veil over the conduct of the Treasury in the interwar period, when it managed to maintain a steady rate of unemployment at levels between one million and two million for nearly 20 years. But after the war, what happened? We got off to a bad start with the American Loan, which was used as a drug. Then we had premature convertibility, which got rid of what was left of the American Loan, and forced us to repudiate the terms on which we obtained it. Then we had Crippsian austerity. Then we had a devaluation of the pound sterling, which was not so hot. Then we had a 7 per cent. bank rate and a credit squeeze. And since then we have been alternately putting on the brakes so hard and taking them off again so completely that the business community is dizzy, if not absolutely crazy.
That is the view of many industrialists who at the moment are trying to plan ahead, and do not know the background against which they must plan. It in no way detracts from the regard and affection with which, as the noble Lord, Lord Fraser of Lonsdale, said, Mr. Derick Heathcoat Amory is universally held, or the regret felt by all at his departure from the Government. Like most of his predecessors, he was a prisoner of the Treasury; but there were moments when he saw the light, and struggled against them.
The noble and learned Lord, Lord Radcliffe, is one of my oldest friends

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and no one has ever questioned his great abilities. But he has also great failings: he is modest, the is reticent and he is discreet. For my part, I have never been able to see that these alleged virtues are anything but grave defects. He is, in fact, all these three things; and I wish that he were standing here in my place to-day and really setting about the Government and the Treasury.
A NOBLE LORD: He is sitting here.
LORD BOOTHBY: He may have been sitting here, but I do not think he is now. Oh! I see that he is. If I had realised that the noble and learned Lord was here I do not think I should have said what I have said. Anyway, having started off, I may as well plunge on and say that he must be aghast at the manhandling of the Report of his Committee by the Treasury, who have clearly never read it.
I want to make one constructive proposal with regard to the new Chancellor of the Exchequer. I think that he ought to be given the Radcliffe Report as required reading; and I think he should also react a great part, if not perhaps all, of the evidence on Which it is based. Then I think he should sit for an examination, both written and oral, by Lord Radcliffe and his colleagues; and if he fails in that examination, he should be replaced.
I must also give one warning to the new Chancellor of the Exchequer. About half a century ago I was Parliamentary Private Secretary to the Chancellor of the Exchequer at the Treasury. One day a very high Treasury official came to me and said. "I want to tell you one thing. It will stand you in good stead, I think, as a promising young politician"— because that, incredible as it may seem, was what I then was. This high Treasury official continued: "There is only one man who has ever been able to make the Treasury do what it did not want to do, and that was Lloyd George. I can tell you something else—there will never be another." I think that that is true, certainly so far as my experience carries me."
In the last analysis it is the physical use of our available resources that matters—and I am now nearing an end. Look at what confronts us. In the
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Common Market they have set themselves a rate of expansion—that is to say, an increase of productivity—of between 4 and 5 per cent. per annum, and are now achieving it. In the United States, the Eisenhower policies have been jettisoned by both the Presidential candidates; and they now aim at an annual rate of economic growth of not less than 5 per cent., to be achieved by increasing both public and private investment. This is the measure of what we are up against, we who are doddering along at 2½ per cent. rate of increase at the present time. Do we aim to tag along like this for ever? Because we are up against two formidable, large and dynamic economies, as the noble Lord, Lord Lucas of Chilworth, rightly pointed out.
I certainly do not want to tread on ground I have already covered with regard to the Common Market. I know that there are strong feelings about this on both sides, but certain things have been put around which distort the issue and which, as Sir Winston Churchill, to use one of his favourite expressions, would say, "darken counsel." It has been said, for example, that over 50 per cent. of our trade is done with the Commonwealth. That is not true. It is less than 40 per cent., and, as the Financial Times pointed out a day or two ago, when exports to those areas of the Commonwealth which do not grant us preferences and the imports of raw materials which would in any case continue to enter the country duty-free are subtracted, the preferential element in Britain's foreign trade is not much greater than our trade with Europe as a whole. It will certainly diminish still further in the years that lie immediately ahead.
The second thing which is being whispered is that some people, and particularly M. Monnet, are bitterly anti-British and opposed to our entry into the Common Market. I can only say that I received a letter from M. Monnet, after my speech to your Lordships on the subject of the Common Market, telling me how much he agreed and approved of it. He sent me a copy, which I have here, of a declaration by the Action Committee for the United States of Europe, of which he is President, and from which I should like to quote one paragraph only which seems

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to me of the greatest importance. It says:
"The Action Committee, echoing the wishes of the vast majority of citizens in our countries, earnestly hopes that the United Kingdom and other European countries will simultaneously become members of the Coal and Steel Community, of Euratom and the Common Market, which are three facets of a single reality. This reality is the emerging European economic union, that is paving the way for a political unity, the exact nature of which cannot now be foreseen."
That is quite clear. They are not committed to any particular form of political integration; and it seems to me an awful pity, if we are going to be so slow, that we ourselves shall be able to take no part in framing the political union which is inevitably coming to Western Europe. I will content myself with saying just this. If we keep out of the Common Market we shall not like it, and I think the noble Lord, Lord Lucas of Chilworth, will agree with that.
What is our aim? What is the aim of Her Majesty's Government? It does not clearly emerge from any Government statements—still less from the Opposition. I listened the day before yesterday in another place to the speech of Mr. Harold Wilson. He accused the Government of being inept of giving no leadership, and of having no policy. Then what did he do? He chased his own tail for nearly three-quarters of an hour. The whole of the second part of his speech flatly contradicted the first part. He put out for half an hour all the advantages of going into the European Market, and then all the disadvantages. At the end, he came as near as a toucher to saying—if your Lordships will forgive this expression—that he did not really know what the hell we ought to do. This is the final impression that was given to me by Mr. Harold Wilson's speech. The Government were a shade more comprehensible, but Mr. Wilson sat down in a state of complete mental chaos, to which he had also reduced the whole of another place.
As I see it, three broad alternatives confront us. We can have another attempt to go back to the laissez faire multilateral system of the nineteenth century; we can relax into the rigid national, economic autarchy so dear to the heart of Socialist purists who want nothing better than to go back to the
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utmost misery and austerity in order to be able to get the chance to impose upon us their true-blue Socialism. That was implicit in Mr. Crossman's pamphlet: we do not want prosperity; we want misery, and only then shall we have a chance of getting real Socialism.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: My Lords, this speech, and many others made in the House during the last few years, forget that if a Tory Government had been returned in 1945 there would have been no recovery at all. We are living to-day upon the foundations that were laid then.
LORD BOOTHBY: We are living to-day, if the noble Viscount will forgive me, on the foundations which were laid by Marshall Aid. That is what brought about our recovery; and nothing else. We were just about sunk by the time that came along. We had lost the American Loan through our own folly, and Marshall Aid came in the nick of time to salvage us.
There is a third alternative, which I know is distasteful to the noble Viscount, and that is to build up regional, economic units capable of standing on their own feet in the modern world through effective economic co-operation within and between various groups of nations. That is what everybody is jibbing at at the present time on both sides, let me admit. I reject the first alternative, because it is quite impracticable. We cannot go back to 19th century laissez faire. I reject the second, because it would involve a drastic cut in our standard of living. But let us be under no illusion as to what is required by the third. It will demand greater surrender of national sovereignty, both in the political and economic fields, than either side in this country has yet been willing to contemplate. There is no doubt about that. There are the three choices, and which one we will take I do not know. I am quite sure in my own mind which one we ought to take.
Let me conclude with a quotation—a most remarkable quotation—from Barbara Ward's book, The West at Bay, which was published some years after the war, but which is still as up to date as ever. It is as follows:
"The British, the French, and the Low Countries, all assumed that the inter-war world"—

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that is, the world between 1918 and 1939—
"could be a recognisable version of the nineteenth century with a gold standard, with free trade, with national sovereignty (only slightly limited by the League of Nations), with liberal ideas and capitalist economics. The possibility that the first war had torn a gaping hole in the old fabric was not considered. Even the portent of the Russian revolution was tidied away behind explanations of the backwardness and barbarism of Russian society. Over these days the last light of the Victorian sun still streamed, the light of a safe world of order and progress, the light of great certainties and greater wealth. But the illusion cannot be re-created after this struggle. For this time, it seems, all the pillars have fallen. The last ray of the old sun has been extinguished, and if we of the Western world do nothing but look backwards, then 'we are for the dark'".
4.20 p.m.
LORD PAKENHAM: My Lords, if "we are for the dark", let it be in the company of the noble Lord, Lord Boothby, because I am sure he will cheer us all up and refuse to allow any of us for a moment to become unduly downhearted. There is no more delightful speaker in this House to listen to, and anybody who failed to enjoy a speech by Lord Boothby would, I think, be certifiable—and I hesitate to describe any noble Lord as being in that condition. I sympathise very much with the European ideas of the noble Lord, and perhaps he would allow me, as someone who shares those views, to express the ponderous hope that he will commend those ideas more persuasively to some of those on my Benches. He treats it so lightly and as so totally devoid of problems that some of those who are not converted find it difficult to take his arguments seriously. He speaks with an air of infallibility. I am all for infallibility, but coming from the noble Lord on these matters I am not sure that it is as telling as another form of argument may be.
LORD BOOTHBY: My Lords, the noble Lord would not deny that if you have faith it is infallible; and I have faith.
LORD PAKENHAM: Perhaps faith is to supplement reason and not supplant it. But I hope he will commend those ideas more astutely to my colleagues. He was not fair to Mr. Harold Wilson and the noble Lord, Lord Dalton, and quite a number of others among us whom we value very greatly. The noble Lord,
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Lord Fraser of Lonsdale, has left us. I was rather sorry to hear him say that the noble Lord, Lord Dalton, was deflated—I think in that context he meant devalued, but whatever word he had in mind it clearly was not a kind thing to say. I would ask the noble Lord, Lord Fraser of Lonsdale, to go to the North East Coast, which he may know, and if he remembers it before the war he will find many thousands of people who bless the name of the noble Lord. Lord Dalton, for what he did as President of the Board of Trade and Chancellor of the Exchequer.
My Lords, we have had a most interesting debate, and perhaps I may be allowed, without taking any sort of credit whatever, to pay particular tribute to the speech of the noble Lord, Lord Newton, who did what no other noble Lord has ever done—described me as his tutor. I dare say there are other noble Lords I have tutored, but none of them has thought it prudent to mention it. The noble Lord recalled that we were colleagues in the old School of Philosophy, Politics and Economics at Oxford. I am not sure that I am capable of teaching any of those subjects to a Conservative Minister, or ex-Minister as he is now. Philosophy is a difficult subject for politicians. Some people think that in the Labour Party we have too much philosophy, and we should say that in the Conservative Party they have too little. To look for philosophy in the Conservative Party is like looking for a black cat in a dark room; it may or may not be there, but so far it has not disclosed itself. The noble Viscount who is going to reply is a philosopher of a more ancient school than mine and he may put that right later on. The noble Lord, Lord Newton, and I studied politics together. I think, looking back, it was rather impertinent of me; to try to teach politics to the Conservatives would seem very injudicious. Here they are, having won three Elections with an appalling economic record. If that is not politics I do not know what it is. Perhaps I should have been better employed trying to teach economics.
It is economics that is the subject of to-day's debate, and we are trying to discuss the Government's economic record. The noble Earl, Lord Dundee, made a charming speech and he does not need

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me to tell him that he is always very acceptable in this House. He made the kind of speech which I have no doubt I should have made, or tried to make, lacking the charm, in his place. Indeed, it is the kind of speech I did make in his place for about six years when I helped the noble Lord, Lord Pethick-Lawrence, to speak in your Lordships' House for the much-berated Treasury. I hope the noble Earl will obtain ever wider opportunities; in the phrase of someone who was then Prime Minister of a National Government, I hope in the redistribution he will "go on and on and up and up".
We are told that all sorts of high positions are being allocated to this House. Perhaps we shall see the Chancellor of the Exchequer coming here, or perhaps, if the Economist is right, two Chancellors of the Exchequer. That is the latest idea; if you cannot find the right man, have a couple, and maybe the idea will be to have them both in the House of Lords. I only feel that the noble Earl is perhaps too sunny-natured for a Chancellor of the Exchequer. I think we need someone with more iron in his soul, ready to take occasionally a pessimistic view of things, or, should I say, an objective view of things.
If we look at column 715 of yesterday'sHansard we get a picture of the situation of the country, given us by the noble Earl, which has, on the whole, not been echoed in this debate except by the noble Lord, Lord Fraser of Lonsdale, who was very effectively answered in advance, if I may put it that way, by the noble Lord, Lord Brand. I will not weary your Lordships with what was said, and said more gracefully than I should say it, by the noble Earl, Lord Dundee, yesterday, but he did begin a passage, which comes in column 715 of Hansard, by saying:
"The country is enjoying greater prosperity that it has ever enjoyed before."
And he goes on to call attention to record levels in wages, production, exports, capital investment and private savings. Well, I am not disputing, of course, any facts which the noble Earl offers to the House.
But the noble Lord, Lord Pethick-Lawrence, put the situation in a very different perspective. I think all of us, however jaundiced we may be about one another's views, would agree that the feat
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of the noble Lord, Lord Pethick-Lawrence, at the age of 88, in delivering a speech yesterday almost without looking at any notes, was a prodigy which we may not see equalled in our time—except by the noble Lord, for many years. I happened by chance to-day to share transport to the City with a gentleman of 86, and I said to this gentleman, "You look much younger than that". He replied, "I am about a lot with young people. You smile more often with kiddies." And it may be that years of work in the House of Lords has kept the noble Lord looking so young, being, if I may say so, in the presence of so many juvenile minds. Whatever his secret, it is something we all greatly envy him.
With the diagnosis, or at any rate the account of the situation, offered by the noble Lord, Lord Pethick-Lawrence, not only has there been a good deal of concurrence, not only among those on these Benches, such as the noble Lords, Lord Stonham, Lord Lucas of Chilworth, and Lord Alexander of Hillsborough; there has also been a good deal of support from what one might call the more reserved view from the noble Lord, Lord Brand, and the noble Viscount, Lord Massereene and Ferrard, and other noble Lords opposite, such as the noble Lord, Lord Hawke. I feel sure that the noble Earl, Lord Dundee, has been the first to note that there has been much more agreement, so to speak, with the noble Lord, Lord Pethick-Lawrence, than with him.
Is there any hope amidst all this argumentation of reaching an agreed account of our economic progress during the 1950s. When we in debates elsewhere—and we have taken part in plenty of debates here—criticise the Party opposite for their very moderate showing during this period, they retort, not unnaturally, that we should have done worse, and they argue from what they think was our performance when in office and our policies now. It becomes fine Party knockabout, and economic sense is rather difficult to come by under those conditions. We hope that the noble Lord, Lord Boothby, will gradually establish himself as the most dispassionate economic commentator in this House; and so long as he achieves that without depriving us of his humour, may that time come soon!

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I should like to try to find a quotation from somebody who would not be regarded as a Party man, in so far as he had no leanings—certainly not Socialist leanings. I refer to Sir Oscar Hobson, the most distinguished of living financial journalists, who has written an article, as every month, in the current number of the Banker. This is the only passage I want to read to the House from these experts, but perhaps I could just set out Sir Oscar's views before I go on. He reckoned that it is
"only in the past year that the rate of growth of British industrial production has made a decent showing against that of other comparable countries. In the nine years 1950–1958 we were at the bottom of the ranking list with an annual increase of only 2·2 per cent. compared with—I spare my readers the mouth watering figures of Germany and Japan—4·3 per cent. for France, 4·5 per cent, for the Netherlands, 5·5 per cent. for Italy,"
Then he goes on to point out that this rate of growth during the 1950's—and my noble friends opposite have been in power for almost all that time—of 2·2 per cent. of increased production
"was well behind the comparable figure for the greater part of the despised 1920's "
and it is below the rate at which we have to progress if we are going to double our standard of life, as forecast by Mr. Butler, in 25 years.
Those are the facts, set out as dispassionately as we can ever hope to have them sec out, and certainly not set out by somebody favourable to our political point of view. I can only hope that the noble Earl, Lord Dundee, does not deny that in fact the record has been far from satisfactory during the 1950's. If he does deny that, and if that is the view of the Government, then it is very alarming indeed. If they really tell us that what they have clone is good, and that we must not expect anything better in the 1960's, then I think there is cause for despondency.
I do not myself think that we can find much to boast about in this period that ends in 1958; but we shall be told, not unnaturally—we were told by the noble Earl, Lord Dundee, and I think the noble Lord, Lord Fraser of Lonsdale, stressed the point—that there has been a big increase in production in 1959 and 1960. But the heartbreaking thing there is that as soon as we get under way with an increase in production, at once we find that we are going
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too fast and we have to be brought under control again. If your Lordships were to look at the Banking Supplement of the Financial Times as published this Monday, you would see that among the leading articles is one called "The Return to Restraint" by Professor Victor Morgan. Then one comes to an article headed "Once more the Squeeze" by Wilfred King, the editor of the Banker. In short, we are back again in the old difficulty that as soon as we try to run about with any reasonable degree of activity after our confined period of sedentary occupation we are threatened with a heart attack and we have once again to go slow.
That is the story, so to speak. We can attribute praise and blame as we think fit, and offer all sorts of remedies; but that seems to be the story that is in front of us in this debate. The noble Earl, Lord Dundee, defended (though I do not think he used the word) what is sometimes called "flexibility of monetary rates". He talked, in column 719 of yesterday's OFFICIAL. REPORT, of
"Necessary movements in a direction of credit restraint or relaxation."
I am afraid that most of us who have been in business during the last few years would agree with the noble Lord, Lord Citrine, who, at column 763, in his powerful speech spoke as follows:
"I am sure that this stopping and starting process would not commend itself to any businessman."
The same point was made just as forcefully and eloquently by the noble Lord, Lord Boothby, to-day. My noble friend (and the noble Lord) said that the businessman
"would prefer a long-term policy, so that he could see ahead and know how his business is likely to fare."
I am not arguing against all flexibility of interest rates; but the demand of the Government has gone much further than anything that could be called a reasonable flexibility, and I wondered whether I might call attention to some new figures, which have been available for some time but which have not been brought out up to now in this debate. I refer to the figures for hank advances made by the banks here since the war. Between 1946 and 1951 these hank advances roughly doubled. In 1951, they stood at £1,822 million. In 1954, they were still at about the same figure—in fact, they were rather

835
lower, at £1,804 million. But, there having been fairly steady progress, there was this stabilisation for those years. In 1955, there was a jump of £215 million. I should not like my objective pretensions to be destroyed by pointing out that 1955 was an Election year. Be that as it may, they did jump in 1955. After then, and from 1955 to 1958 they were steady again. In fact, in 1958, they were slightly lower than they had been in 1955. So there was no progress, measured in this way, between 1951 and 1954, and then again from 1955 to 1958.
But in 1959, with the removal of the credit squeeze—in fact it was removed in 1958—the figures go hopping up very fast, and by the end of 1959 they were £2,617 million. That was an increase of more than one quarter in one year—in the year 1959, compared with 1958. I suppose I must point out that that year was an Election year, but it may be that that was just a coincidence. But still there was this large increase again in 1959. Since then they have gone merrily ahead, and the last figure published to-day is £3,560 million. That is an increase of 67 per cent. since 1958. I do not think that anybody could feel that that was a kind of well-regulated progress. I think that most people, in thinking about it, would conclude that there was something pretty seriously wrong somewhere.
I should not like it to be thought that this extraordinary stagnation in bank lending, followed by an equally pronounced expansion, had been due mainly to changes in the outlook of banks in their general readiness to lend. It is true that they have gone in for hire purchase, and there is something over £100 million in loans for hire purchase. I have not seen the latest figures, but in May the increase of loans for hire purchase was something of the order of £120 million; but the total increase is, of course, many times that. The revolutionary change since 1958 is simply a reflection of the fact that banks are extremely competitive businesses who would naturally have expanded much more, had they been allowed to do so, in the period 1955 to 1958, but who were artificially restrained during that period. Since then they have been making up for lost time. That is simply a fact,
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as noble Lords are well aware. At the present moment, the ratio of advances to deposits is 46·3 per cent., which is very high when compared with the 1958 figure of 30 per cent. But this figure of 46·3 per cent. is not necessarily too high. It is high by any standard, but some people would say that it was not necessarily too high, because just before the war, or rather earlier, there was a still higher ratio.
What I am saying—I am afraid I am saying it in a rather complicated manner and rather quickly—is that though the banking part of our story is only one part of the story, it is a part which affects all the rest. When one thinks over the figures and the working movement that I have indicated, I think one reaches the conclusion that, somehow or another, we have not yet found the right answer. Some years ago, soon after I myself went into banking, I was among the first, though certainly not the first—I am not sure that the noble Lord, Lord Bothby, was not the first—in recommending a fundamental inquiry into our financial affairs. I think the noble Lord, Lord Boothby, was among the very early ones.
LORD BOOTHBY: My Lords, I was ahead of the noble Lord.
LORD PAKENHAM: I always try to yield precedence and I do not usually find that in any way difficult. The Radcliffe Committee has come and gone. The noble Lord, Lord Radcliffe, has come and gone this afternoon; and in spite of the great collection of knowledge with which that Report presented us, it hardly seems to have affected policy by one iota.
LORD BOOTHBY: Hear, hear!
LORD PAKENHAM: My Lords, I am pleased that the noble Lord, Lord Boothby is with me there. Where are we now? After this tremendous inquiry that we have had, we may have seemed to have shot our bolt. We cannot start another Radcliffe Committee and we are no wiser, it seems, in practical policy.
LORD BOOTHBY: My Lords, if I may interrupt the noble Lord, it is possible that one day the Treasury may read it. That is the great hope.
LORD BRAND: My Lords, may I ask the noble Lord whether the answer is

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not to increase our central reserves, so that we need not go up and down—and how will he do that?
LORD PAKENHAM: My Lords, I was hoping not to detain the House very much longer, but I believe the answer, logically, is that which was propounded yesterday by the noble Earl: to increase our exports. That is obviously the practical answer, for unless we increase our exports we shall never be able to increase our central reserves. That is the short answer—and I am not trying now to give the complete answer.
LORD BRAND: My Lords, would the noble Lord agree that in their policies both Parties—Conservative and Labour—go up and down because our reserves are too small? They try to create prosperity and then find they have gone too far and have to come back—and all because we are not viable so far as reserves are concerned.
LORD PAKENHAM: My Lords, the noble Lord tempts me to go very wide of my immediate remarks, but I would say that, although I was not then in banking, there was nothing in the period of the Labour Government which corresponded to the credit squeeze. I believe the noble Lord will agree that this tremendous shut-down of the credit squeeze, followed by the tremendous free-for-all is something which, on the face of it, had no parallel during the period of the Labour Government. I could pursue that thought further.
LORD BRAND: My Lords, I believe the noble Lord was a banker and he will remember when our credit was on the basis of 2½per cent. I do not believe the noble Lord, Lord Dalton, is present, but it will be remembered that his famous "Daltons" were issued because, as he then said, our credit was so good that we could stand a 2½per cent. rate. In fact, we could not. We were bankrupt at that moment.
LORD PAKENHAM: My Lords, the noble Lord, Lord Brand, wishes me to broaden my front wider and wider. I would only say that most dispassionate people consider that this country made a very remarkable economic recovery during the first two years after the war. The noble Lord, Lord Dalton, was Chancellor of the Exchequer during that time;
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and had he not resigned on a point of extreme fidelity to honour I believe that he would have been Chancellor for many years.
LORD BRAND: My Lords, if I may interrupt the noble Lord, I do not think that what he has said would be supported by those who bought "Daltons" at the issue price.
LORD PAKENHAM: My Lords, there are plenty of people who have had a bad time in gilt-edged, without the noble Lord, Lord Dalton coming on to their horizon; and to pin that on one man is hardly in keeping with the tremendous spirit of generosity that I have always found in the noble Lord, Lord Brand. I rather deplore the idea that in some way the noble Lord, Lord Dalton, has been responsible for our troubles.
LORD BRAND: I was only pointing out that the argument of the noble Lord, Lord Pakenham had one flaw.
LORD PAKENHAM: An argument usually has some flaw, but the flaw here has not yet been pointed out to me. I was pointing out that there had been a very irregular and extraordinary progression in the bank rate during the period I was discussing—the last nine years. The noble Lord asks about 1946 and 1947, and about the 2½per cent. rate—and we could go very wide here. But I have to reply generally that I feel that the noble Lord, Lord Dalton, did a first-class job under the leadership of my noble friend Lord Attlee. Returning to the last nine years that we are now discussing—
VISCOUNT HAILSHAM: We are discussing the Finance Bill.
LORD HAWKE: Is the noble Lord, Lord Pakenham, leaving the question of bank loans? It would be interesting 'to hear his views, as a banker, on the influence of this new form of very profitable lending—personal loans, which bring in about 10 per cent.—on the increase of bank lending. Previously bank overdrafts were much less profitable.
LORD PAKENHAM: My Lords, I have no intention of leaving bank loans until released by the noble Lord, Lord Brand. I will stay as long as I am questioned on them; but so far as personal loans are concerned, although

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I have not the figures, I do not think the total amount of personal loans would make much difference here. I think the noble Earl, Lord Woolton, would agree that that is not a really significant factor on the scale of things we are discussing. Hire purchase would be a larger factor, for there there has been an increase of more than £100 million; but here we are discussing an increase of about £1,300 million in eighteen months. That is not due to a change of policy of individual banks but to the fact that up to that time they were told not to lend more money than they had been lending. Then they were allowed to go ahead. There is no parallel with that in the period of the Labour Government. I am not coming forward as someone with a miraculous answer. Here is a problem which has not yet been solved, and I hope Her Majesty's Government are aware that it has not, for it would be a pity if they thought that in some way, and without anybody noticing it, it had solved itself. I am sorry to detain your Lordships a little longer but I believe you will understand.
Where were we before the Radcliffe Committee? Changes in the bank rate was regarded as the traditional method of regulating our credit. The bank rate is rather frowned upon these days for that purpose. My noble friend Lord Pethick-Lawrence has many times pointed out the weakness in that system. I am not sure that I go as far as he sometimes goes in his destruction of the bank rate method. I think that we are all agreed, since the Radcliffe Committee's Report was published, that the bank rate method, by itself, is not going to solve our problems; and it is not a method which can be over-exploited.
Then there is the method which was tried by the Government. Quite a number of Chancellors of the Exchequer in the past—no more than one at a time, but serving in quick succession—tried the method of political directives. Bankers dislike political directives in banking, and I believe that most people would agree that political directives should not be used unless they have to be. Bankers themselvs are anxious to pursue their own business and to make a success of it, and I personally favour free competition in banking. I believe that they should be allowed to compete
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freely one with another. Somebody has said that it is not a bad thing occasionally to rub in a platitude, so may I rub in one now? May I say that money is a peculiar commodity and that the amount of money provided in the community has social implications which do not arise in the case of motor cars or soap, for example.
Some method of regulation there must be if we are to keep the economy healthy and to see money and lending expanding in proportion to our powers of production. I am not criticising any individual, and certainly not the Governor of the Bank of England—a most distinguished man in every way. But I am bound to point out that the responsibility for finding the answer rests upon our rulers. Our present rulers have been presiding over our affairs for nine years, and look as though they have a long period ahead of them. They have the heavy responsibility of finding the answer which has not yet been found.
Some years ago in this House I ventured to suggest a system of variable liquidity ratios. The Government spokesman on that occasion, the noble and learned Viscount, treated that as something too complicated for your Lordships or, at any rate, for him; and with charming modesty he dismissed that topic as rather outside our range. But in fact something of that kind, or very close to it, has been introduced, through the system of special deposits, and I regard that, on the whole, as a step in the right direction.
LORD HAWKE: Hear, hear!
LORD PAKENHAM: I am glad that the noble Lord, Lord Hawke, agrees with me, and I am certainly not criticising the introduction of that system. It is not likely to be popular with bankers, because bankers, like other human beings, do not want to be interfered with more than is necessary. But taking it all in all, and comparing it with the use of the bank rate, which can be very deadly or very ineffective, and with political directives, which no one adopts unless he has to, it seems to be a process towards the right system.
LORD HAWKE: My Lords, does the noble Lord not think that these valuable liquidity ratios could be achieved by

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agreement rather than by the Bank of England's apparently having to wave a stick?
LORD PAKENHAM: My Lords, I noted very carefully and listened with special attention when the noble Lord was arguing along that line last night. With that in mind I drafted some conditions this morning of what would seem to me to be a satisfactory system. It seems to me that for success in this field there have to be conditions, three of which are essential. First, any system of regulation should leave room for effective competition between the banks. We must not go back to the period of a self-denying ordinance which operated during the credit squeeze.
Then there is a point which is made only by bankers—and it was made by the noble Lord, Lord Hawke, last night: that any system must impose on the finance houses, the outside sources of credit, regulations which are at least as strict as those imposed on the banks. I entirely agree with the noble Lord, Lord Hawke, and I am rather surprised with our authorities that something has not been done along those lines. I certainly agree that it must be. Thirdly—and here f go as far as I can with Lord Hawke—such a system must be thoroughly understood and, so far as possible, should be acceptable to the leaders of banks. I say "so far as possible" because I am afraid that bankers are not going to like very much any system that interferes with them. But it should be made acceptable so far as possible. So far as day-to-day operation is concerned, however, I think the decisions must be left to the authorities. You cannot consult the leaders of the banking world every time you want to make some alteration in special deposits and liquidity ratios and all the rest of them. So I go a long way with the noble Lord, Lord Hawke, if not the whole way.
I have said nothing about exports, not because they are not the most important of all, but because my noble friend Lord Lucas of Chilworth, and other noble Lords have already dealt with that so much more effectively than I could. The two deepest notes struck in the debate can be illustrated, it seems to me, by quoting a sentence from the noble Lord, Lord Citrine, who is not with us, and,
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later, one by my noble friend Lord Pethick-Lawrence. My noble friend, Lord Citrine, said this—arid I think he focused the discussion exactly [OFFICIAL REPORT, Vol. 225 (No. 110), col. 762]:
"We here believe"—
he meant those on our side of the House—
"that it is utterly impossible to solve this problem permanently without adequate and proper planning. The Government believe in what they are pleased to call private enterprise '."
I agree with my noble friend Lord Citrine that here there is a fundamental distinction of principle which would divide those of us who, so to speak, agree with the noble Lord, Lord Brand, and with many points in a further movement in Lord Brand's direction. I agree with my noble friend Lord Citrine—and I think that all who are on these Benches do—that here is a fundamental distinction of principle, though agree with what Lord Citrine said also: that how far the planning is to be carried is a matter of experience.
No-one outside a very heated Election is going to suggest that because we favour planning in certain vital respects, we favour it in all respects. The difference between us and noble Lords opposite is wide enough to be called a difference of principle. But I agree with the clear implication of the speech of my noble friend Lord Citrine, as I think others on this side of the House do; that in this way we shall continue to have a large sector of private business, and we must all, whatever our political Parties, make that sector successful.
As noble Lords opposite are aware, there have been many strenuous discussions in our Party during recent months about the place that public ownership should occupy in our ultimate policy. There is something called "Clause 4", which noble Lords opposite probably had not heard about until lately.
VISCOUNT HAILSHAM: I invented it.
LORD PAKENHAM: My Lords, the noble Viscount does make the most extravagant claims. I thought it was Sidney Webb who invented it—but they may have done it together. Perhaps what the noble Viscount means is that he popularised it. Nevertheless, there have been these strenuous discussions, and I

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should like just to offer two comments which, I suppose, could be discribed as personal, but certainly I think they would express the point of view of many members of my Party. I believe that in our Party, the Labour Party, we must make it plainer than hitherto (this point was made in the speech of my noble friend Lord Lucas of Chilworth as well) to the business community that we are not there to stick pins into them. We do regard them, apart from a few scallywags—and there are scallywags in all professions and Parties—as doing a patriotic job. They are earning a living for themselves and their families, and that is not a crime, so far as I am aware. We consider that while we allow or agree to a certain sector being a public sector, it is up to us to make them realise that we regard them as helping the country as much as anyone else. And I think we should make that plainer in the future than we have made it in the past.
But as regards the public sector and the question of how far it could be properly extended, it seems to me that there is an economic issue and also a moral issue. From the purely economic point of view, it seems to me that each industry should be considered on its merits; and that has, in fact, been the point of view of our Party for a number of years. I would suggest—and I speak here without any authority whatever, except a personal conviction—that if there is any view strongly held in our own Labour Party that some particular industry ought to be nationalised, we should have a public inquiry, even while we are in Opposition, and clear up the matter once and for all. That is a purely personal view, but I offer it as a view which I think would be shared by a number of members of my Party. But noble Lords opposite will never understand us on these Benches if they do not realise that in any matter of nationalisation, or planned economy or the public sector, and all the rest of it, we are not animated only by economics: there is also this moral issue.
The House responded unanimously and without distinction of Party yesterday to what was said by my noble friend Lord Pethick-Lawrence. He warned us of this scramble in this country at the present time for personal prosperity and wealth. Each of us, according to his
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different political views, will try to follow up that thought which the noble Lord placed before us so tellingly during the debate; and certainly the noble Viscount, Lord Hailsham, needs no instruction from me on how to apply moral ideas. It may be that some years from now this painful process of self-criticism which has been going on through our Party, and which I believe will be for the good of our Party in the end, will throw up novel ideas. But there is one thing which I am sure will always remain permanent in the Labour Party: we shall seek to give effect throughout all our policies—social and political policies—to a certain moral conviction about the infinite worth of every human being. That is our fundamental stand, and nothing will alter that, although it might come to be applied in different ways as the years pass. I would say to noble Lords opposite that we wish them all good fortune; that we shall assist by constructive criticism and, where necessary, correction in the heavy responsibilities that lie ahead. We know that they are, like ourselves, very anxious to serve the country, and we hope that they will be successful in that endeavour.
4.58 p.m.
VISCOUNT HAILSHAM: My Lords, this is the fourth consecutive Finance Bill in which I have played a part. I speak last in this debate only because I think it was thought more seemly that in a debate in which so many of your Lordships had spoken there should be a second Government voice, in place of that of my noble friend simply exercising his right of reply. At any rate, it affords me two very great pleasures. One is to say how much we on this side of the House appreciate the way in which my noble friend Lord Dundee opened the debate and handled the debate on behalf of the Treasury, having taken on the task which I have previously performed; and indeed, political differences apart, I think he commended himself to all parts of the House.
SEVERAL NOBLE LORDS: Hear, hear!
VISCOUNT HAILSHAM: The second is to congratulate my noble friend Lord Newton on his maiden speech yesterday. My noble friend referred to himself as "a bottle corked up ". He certainly opened an admirable vintage. I do not think lie was quite right in describing it

845
as effervescent. I thought—not champagne; a red wine, possibly: mature, full-bodied, full of fragrance and bouquet. And I hope that he will in due course let us have a pipe of the same stuff. At all events, I rejoiced, and I think all of us rejoiced, at the great success that he made with his first speech. I feel that he is a great acquisition to our numbers in debating strength. If I may venture a compliment of my own, it is a great pleasure to hear the real style of English Parliamentary oratory in its simplicity and perfection of diction and delivery from time to time. I think that both the way in which it was pronounced and the language which he selected, in its precision and delicacy of touch, are things which we should all do well to emulate.
My Lords, the debate to-day has, I think, been a little untidier than yesterday's, and a little more difficult to reply to. We have had many subjects. There was the Common Market; there was the contribution of the noble Lord, Lord Pakenham, to the labours of the Labour Party, into which I will not intrude; and the noble Lord, Lord Boothby, delighted us by breaking the solemn promise which he made on the last occasion en which he spoke about the Radcliffe Report, which was on November 11. He said then. when he came to hills peroration on the Radcliffe Report [OFFICIAL REPORT, Vol. 219, col. 532]:
"I promise that I have nearly finished, and will never, never mention the subject again so long as am alive. In fact, I can tell your Lordships that the Radcliffe Report and every document connected with it is now in my wastepaper basket. This is my swan-song: it is not a subject one can return to at frequent intervals and keep sane".
I was delighted, and I am sure your your Lordships were delighted, that the terrible menace of silence which he had levelled at our heads was withdrawn, and we hope we shall hear many more such onslaughts.
The debate has resolved itself very largely into a question whether my noble friend who proposed the Second Reading was right in the relatively optimistic picture which he painted of the prosperity of the country, or whether a slightly gloomier picture was right. The noble Lord, Lord Pethick-Lawrence, described it as something near crisis and, in language which, I agree with my noble
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friend Lord Fraser of Lonsdale, was perhaps a little rhetorical, as a crisis corn-parable even to that of a war. Making allowance for oratory—and nobody's oratory is more vigorous than that of the noble Lord, Lord Pethick-Lawrence—I would say that while my noble friend was right in his optimism the noble Lord, Lord Pethick-Lawrence, was right in his concern. There are features which give rise to concern in the present situation. In one of the earlier debates which we had, I described our condition as being "prosperity on a knife-edge"; and although, again, allowance must be made for the rhetorical, in such an expression I am not sure that I was not trying to express something which is perpetually with us.
My Lords, I should, however, like to start at the point at which the noble Lord, Lord Pakenham, stopped: that is, with a reference to the peroration of the noble Lord, Lord Pethick-Lawrence. Like the noble Lord, Lord Pakenham, I was moved by that peroration. It reflected the noble Lord's great sense of public spirit, statesmanship and patriotism. I happen to disagree with it, and I want to tell the noble Lord why I disagree with it—or, rather, why I disagree with his conclusion, although I accept his premises; because I think this is very near the kernel of the economic subject which we are talking about this afternoon. My Lords, the noble Lord said this [OFFICIAL REPORT, VOI. 225 (No. 110), col. 730]:
"I am terribly afraid"—
and he said, quite rightly, that he was speaking as near as possible to a non-Party point of view as a person speaking from the Front. Opposition Bench could (and I say, in parenthesis, that I am speaking as near as possible to a non Party point of view as a person speaking from the Government Front Bench can)—
"of the scramble in this country at the present time for personal prosperity and wealth. I do not care from which side it comes; I think it is a very dangerous system. People are anxious to feather their own nests and let the country go hang. I remember very well"—
and he went on to remind us that we would all remember—
"the great speech of Mr. Winston Churchill when he did not offer to the nation wealth or ease, but blood and sweat; and the country took up the challenge and gave its blood and sweat. And shortly afterwards Churchill said that he thought it was the country's 'finest hour'."

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My Lords, I, and, I think, the whole House, was moved by these words though not in the sense that the noble Lord, Lord Pakenham, meant—that is, to agreement; and I think it is well to state quite clearly why I did not agree with them.
I absolutely agree with the noble Lord in his underlying conviction; that what makes this country great—and, perhaps, much greater than its size, its numbers or its wealth would otherwise entitle it to be—is its sense of public spirit. This is something which pervades the whole of British life. It can be seen in the country magistrate discharging justice for nothing; it can be seen in the scientist working, at the great research councils; and perhaps it can be seen in us, speaking in Parliament—practically the only unpaid Legislature in the world, the House of Lords. It can be seen in a number of different ways. People in this country are genuinely anxious to live a life of service and patriotism, rather than one of mere profit; and I think there is a great deal more in that to explain the greatness of Britain than in all the wealth and ingenuity which we are able to assemble.
Moreover, I would also agree with the noble Lord that in a bounding economy—and, despite the Jeremiad of the noble Lord, Lord Pakenham, his colleague on the Front Bench, Lord Lucas of Chilworth, described this country as "bursting with prosperity", in striking contrast to the gloomy picture which the noble Lord, Lord Pakenham, was seeking to paint and lay at the Government's door—here are, of course, some superficial signs of a flashy materialism; and this, if it reflected the general mood or the ultimate purposes of the nation, would be a thoroughly dangerous and corrupt influence. I think I would agree entirely with the noble Lord, Lord Pethick-Lawrence, about that, but I am quite certain that it does not represent the view of either the Government or the people at the present time. And that brings me right into the centre of the economic subject which we are discussing this afternoon.
It is said that we are in some kind of trouble economically and financially. Personally, I should not like to put it like that. I should prefer the attitude of my noble friend, that we are seeking to avoid trouble which will certainly hap-
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pen if we do not take avoiding action. But this is very largely a debating point from the point of view of the underlying analysis of the situation. Whether or not we are in trouble now, the underlying difficulty which faces us as a nation is this. On current account, we are in credit; and we have been in credit for every year during the last eleven years, except, I think, for one or two bad years. On capital account, we are in deficit, and very heavily in deficit, and have been for every one of the last eleven years except for one or two very good years. I could give the precise figures, but they really do not matter. This is a true statement of our position.
Our overall deficit would be utterly different from what it now is if we were not spending, on current account about £62 million a year—no more, but still a substantial sum—in Europe on our troops there, and in the Far East a similar sum on our presence there. Our position would be altogether different if we were not spending on our capital account something like £100 million a year of Government money in aid of undeveloped countries, apart from the services we provide, and if we were not investing about £300 million a year across the exchanges in private money. These are the underlying facts of our situation. If we are in trouble, it is because of them. If those facts were not true, this debate would not be being held in these terms at all.
If I may come back to the noble Lord, Lord Pethick-Lawrence, and the point where I differ from him, respect, as I do, his sentiments and agree, as I do, with two of his premises, I still think that it is a remarkably odd comment upon the current situation, upon the Government and people of this country, who, if they are in trouble, are in trouble precisely because of the public service they are doing to the world, to talk of "feathering one's own nest" and a "scramble for profit" as being abiding characteristics of this people. It is a libel on British politics, a complete misconcepton, if that kind of notion gets abroad. I mention it not because I want to differ from the noble Lord in his notion (I hang on to his lips as one of the great purveyors of wisdom in this House) but because I think that this misconception is widely believed among the people of this country. I think that it

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is a wholly false picture both of the nature of the problem which we have to face and of the nature of the motives which underlie the policy of this country.
The trouble we are in is the trouble that, being a relatively small country, with a currency which is one of the great reserve currencies of the world, only a small portion of which is in the hands of this Government, but which forms the common currency of over half the trade of the world and of half-a-dozen or more of the major Governments of the world, with that handicap this country has to provide services for the world which are quite out of proportion to the sort of strength many other Powers, who could provide those services and do not do so, have got. I do not suggest for a moment that this is a wrong policy on our part. On the contrary, my own view, for what it is worth, is that if we did not perform these services, if we did not make some show as a defence Power by our presence in different parts of the world, if we did not finance underdeveloped countries and invest in their future and prosperity, we should be faced, even internally, with a much worse fate than we now have to face, because one thing that is certain about our prosperity (or reverse) is that a disastrous world is a disastrous Britain.
Other countries are perhaps not so vulnerable. America is not nearly so vulnerable. Though spending generously an even higher percentage of their national income on defence and foreign aid, the vast protected market they possess and the fact that the dollar is not an international currency in the same sense as ours is and that they can control it, render their economy far less vulnerable than ours. If we were to allow chaos and disorder to overtake the world, as they would surely overtake it if we did not play the part we are playing, then I think we should be pursuing a policy of folly, as well as of cowardice and weakness. If we are going to criticise our financial policy, let us remember that it is not the mad scramble after wealth which is causing us anxiety. It is our long tradition of public service in the international field, the burden of which is almost too heavy for us to bear and which, by one means or another, we are seeking to bear despite our weakness. It is not an ignoble and inglorious thing that we are discussing.
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I turn from the criticism of the noble Lord, Lord Pethick-Lawrence to the noble Lord, Lord Grantchester. The noble Lord is another speaker, if he will allow me to say so, for whom I have both affection and respect. He, too, has taken a considerable part in the four Finance Bills that we have discussed, but I find myself in some ways more in disagreement with him than with the noble Lord, Lord Pethick-Lawrence. His criticism, of course, is fundamentally the opposite. He said that this is a bad Finance Bill and enumerated the reasons. It is because he ultimately believes in laissez-faire, in which certainly I and most of us in our generation were brought up. So much does he do so that he criticises the modest proposals attacking two classes of device for tax evasion—dividend stripping and bond washing—and does so apparently on the ground that to attack tax evasion of this kind is to "create a nation of imbeciles". That was the phrase he actually used.
LORD GRANTCHESTER: My Lords, that is not true. I wonder whether the noble Lord would quote what I said.
VISCOUNT HAILSHAM: My Lords, I will read what the noble Lord said, because it struck me at the time as excessive. He said [OFFICIAL REPORT, Vol. 225 (No. 110), col. 732]:
"Do the authorities really think that a citizen, having the option to do a transaction in two ways, will, or even should, choose the way which will make his liability to tax larger? Do the authorities wish to create a nation of imbeciles?"
LORD GRANTCHESTER: My Lords, that is perfectly correct.
VISCOUNT HAILSHAM: My Lords, that is what the OFFICIAL REPORT has, and it accords with my own recollection. It is true that for many years interference in economic life by what is called the "credit squeeze" and the bank rate and by other economic actions taken by all post-war Governments, were anathema, because it was thought, for reasons which are perfectly familiar, that we could not interfere with economic laws and, if we tried to do so, all we should do would be to damage, without improving, the underlying situation. For various reasons, this not only is incorrect but also bears no relation to the post-war world at all. When the

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noble Lord equates the ordinary action of the conscientious taxpayer in trying to avoid a greater incidence of tax with the elaborate, ingenious and professional devices for avoiding the spirit of the taxation law comprised within the two phrases, "dividend stripping" and "brain"—no, not "brain", but "bond washing", I can only say that I think that in a certain area he is almost morally purblind.
LORD GRANTCHESTER: My Lords, I must really protest at the noble Viscount's inference in this matter. What I suggested was that, if the Government want to take any action upon this, they must define it strictly and submit the case to the jurisdiction of the courts. It is because they are departing from that principle, not because they are not entitled to make any action illegal, that I criticise their action. That you can do. But they must define it, and they must not give discretionary powers to the authorities to interpret the motives of the person who does it.
VISCOUNT HAILSHAM: In the first place, I should say that nobody has made anything an offence under the relevant clause of this Bill. All they have said is that if a particular type of tax avoidance device is employed, although it is neither ineffective nor an offence, the particular tax advantage which it would otherwise have had shall not accrue to it. I must say quite frankly to the noble Lord—and I think the noble Lord, Lord Pethick-Lawrence is perfectly right here —that I think the great majority of taxpayers in this country, whilst they do not wish to attract an unnecessary large burden of tax (this would be to carry patriotism to the point of quixotry), at the same time wish to shoulder a fair share of the burden laid upon them by law. We all know that there are people who indulge in quite different kinds of practices. If the noble Lord, Lord Grantchester, were to tell me that there is great difficulty in providing an objective legal distinction between the two classes, I should agree. Therein lies the whole problem. But if he says that there is no moral difference, then I am bound to say that he is saying something which I utterly fail to understand.
LORD GRANTCHESTER: My Lords, it is difficult to interpret anyone's
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motives. That is why I think it is serious when a Government departs from law.
VISCOUNT HAILSHAM: I should hope to persuade the noble Lord that in fact the Government have pursued a nice balance. It is not always impossible to divine the motives of a dividend stripper or a bond washer. Most of us can hazard a reasonable guess as to what they intend. It may well be—and I think it was conceded to be the case—that in the form originally drafted my right honourable friend's Bill cast its net too wide, because in a desire to take away advantage from, to my mind, a wholly morally reprehensible class of practice, he did in fact propose a law which could have been used to harry perfectly respectable taxpayers. But in the form in which it has reached your Lordships, the thing is very closely defined—although in language which I regret my noble friend Lord Teviot did not understand. Nor do I understand it, if by that is meant: could I give the House an absolutely judicial, watertight account of what it means? But I can tell the House what it means. It means that dividend strippers and bond washers will not get the advantage they expect if they do it this year. This, it seems to me, is an object which is thoroughly praiseworthy.
However, the noble Lord, Lord Grantchester, then went on (I take him as an example, although there were several of my noble friends who took the same line) to attack the Budget fundamentally on the opposite line to that of the noble Lord, Lord Pethick-Lawrence, on the hypothesis that there were vast sums of money to be saved to the public revenue if only the Government spending Departments would not be so profligate in their expenditure. This is something which the noble Lord, Lord Grantchester, has said before, and the answer, I am bound to say, I have given before. If these vast, undesirable expenditures exist, where are they? Hitherto, the noble Lord, Lord Grantchester, has said: "It is not my business to tell you where they are; but it is the Government's business to economise." But where are they?
LORD GRANTCHESTER: My Lords, the noble Viscount, if I may say so without offence, is again misrepresenting me. It is not a question of expenditure being undesirable but of choosing what is most desirable and limiting your

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expenditure to what you can afford. That is what we all have to do. There are many things which each of us would like to buy if we could afford them. It is all desirable expenditure, but we have to limit it by our income. That is what the Government should do.
VISCOUNT HAILSHAM: Again, I rather feel that the noble Lord is confusing the issue with which, he is presented. Of course, this is exactly what we try to do in the Government; this is exactly what is sought to be done in the Budget. But the noble Lord says it is a bad Budget; he says it is a bad Finance Bill, and a bad point on which the judgment has been taken. He says that too much is being spent. Which items would be hack off in this present situation? This seems to me to be a fair demand from any member of a Government under criticism. The noble Lord, so far, has never vouchsafed one.
LORD GRANTCHESTER: As the noble Viscount insists, I will give one. I would suggest the advances to, for instance, the steel industry, which I say they should have been allowed to raise in the market. That is the sort of expenditure which I think was totally unnecessary.
VISCOUNT HAILSHAM: This is a form of Government loan which would not save the taxpayer a single pound of money, because it is a loan and is not raised by taxes; and its main purpose is to do the very thing which, in the main, I think, has been demanded from all quarters of the House—namely, to increase the productivity of industry. I realise that as between those who belong to my Party and those who belong to the Party opposite there is criticism as to whether the ownership of that industry should be in one set of bands or another; but that the money should be forthcoming for The making of a strip mill in Newport and another one in Lanarkshire is something, I should have thought, which all public opinion in this country could conscientiously support.
The fact of the matter is this. There are, I believe, no significant economies which could be made. I should be more than pleased if anyone pointed them out to me, because there is nobody more anxious than my right honourable friend the Chancellor of the Exchequer to find
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out unnecessary sources of expenditure, if they can be discovered. Of course it can be said—and it is said every year, both inside and outside the Government —that in an expenditure of £5,000 million you can prune off certain items and yield £4 million, £5 million, £10 or perhaps even £20 million. That is worth having if you prune off unnecessary items; but you do quite a disproportionate amount of damage if you choose the wrong ones.
But the big money is not to be had there. The big money is to be had only by changes of policy, and changes of policy will involve one or more of the following sort of things. You can refuse to build roads; you can refuse to build hospitals; you can refuse to build schools; you can refuse to recruit teachers; you can disband your Army; you can close down Singapore, Malta and the British Army in Germany—any one of those things would yield very big money indeed. But I should be a very surprised man if any one of these things were done—at any rate, if they were done without careful consideration—and the result was not infinitely wore to this country and to the world than if we had kept on with them. I would venture to say to your Lordships, whose contributions to this debate I think have been remarkable, that it does not follow that because a Budget is hard and sometimes unpleasant it is necessarily the wrong way of tackling a financial situation.
LORD BOOTHBY: My Lords, the noble Viscount was careful to omit Blue Streak. That was a pretty formidable commitment.
VISCOUNT HAILSHAM: I think the noble Lord will give me credit for having answered fully on Blue Streak when Blue Streak was the subject of discussion. I do not think I can be said to have avoided that particular topic. All I say is that we must assume that this country is compelled by its tradition, its sense of duty and it sense of self-preservation to do more at the present time than a prudent country would in ordinary times be asked to afford. It is not necessarily a criticism of the Government that they are seeking to do it.
There is just one more word I should like to say about the main line of criticism which has followed from that

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point. Laissez-faire produces, in our experience, a rapid alternation of booms and slumps and a very high general rate of unemployment. Like the noble Lord, Lord Boothby, I do not claim to be a dogmatist on this point, but on the whole physical controls were the philosophy underlying the practice of the immediate post-war years, and on the whole I think the country does not want them. The country does not want them because, if anything is crude, blunt and unpleasant, physical controls, even where they are necessary, are crude, blunt and unpleasant.
We have, in fact, used this instrument of control, the bank rate and the credit squeeze. My noble friend Lord Dundee was taken to task because he had supported the view that there should be changes frequently. Of course, it all depends upon what you mean by "frequently". Looking back again on the four Finance Bills in a row in which I have taken part, I would point out that in 1957 we were dealing with inflation, and a chorus of criticisms was directed towards this Bench, saying that we must not try to deal with it in this way because it would not succeed, as it was not enough. It did succeed in dealing with inflation. The following year we had to deal with the world recession, which had the temporary effect of improving conditions of trade in our favour, but also deprived our customers of the means of purchasing from us. We had therefore to stimulate the economy. Were we wrong? The only criticism I heard at the time was that we acted too late, but not that we were wrong. Now all the omens point to a period of time in which demand is again threatening us with inflation, and again threatening our balance of payments. Are we wrong to apply the remedy, unpleasant as it undoubtedly is, which succeeded last time? If so, let us have an alternative. But I have not heard an alternative.
LORD BOOTHBY: The Common Market.
VISCOUNT HAILSHAM: The Common Market is another very interesting subject which I shall be glad to debate with the noble Lord. Lord Boothby.
LORD PETHICK-LAWRENCE: My Lords, I hesitate to interrupt the noble
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Viscount, because he is giving a good, interesting speech, which I am enjoying very much. I think I am right in saying that it was not the words of the noble Earl who opened the debate, but the words of the Chancellor of the Exchequer himself. I understood him to say that the economy of this country must be prepared for more frequent ups and downs than it has had in the past. I may be wrong in the use of the word "more". It was against that that I made a protest. I think we have had sufficient ups and downs, and I was much alarmed when he proposed to increase their frequency.
VISCOUNT HAILSHAM: My noble friend, who is perhaps better informed about this, says that the particular reference was to special deposits rather than to the bank rate. However that may be, I would wholly agree with the noble Lord that these changes are to be deplored. We do not like them; we do not want to apply them, except where we regard them as necessary. But I am driven back to the point from which my noble friend started: that we have, after all, four different objectives of policy. We have full employment, stable prices, expansion and a favourable balance of payments. Of course, it is true that the policies which produce any one of these do not necessarily produce the other three. The noble Lord, Lord Lucas of Chilworth, twitted the Treasury with always restricting. But I think it is also true that Government interference in economic affairs is more likely to take the form of restriction in some way than anything else. Indeed, it would be open to criticism if it were not. The truth is that all these economic evils which we collectively deplore are, in the last analysis, nothing more than slight deviations of conduct in the individual, multiplied by 50 million or by a large proportion of 50 million. Occasionally they have to be restricted. If they were not, there would be no case for Government interference.
We have had a fine debate, and I must apologise for having answered it at rather greater length than I had intended. I was deeply moved by many of the speeches made, and particularly by the spirit of public feeling which I think has animated all your Lordships from beginning to end.
On Question, Bill read 2a; Committee negatived.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July 14), Bill read 3a, and passed.

CHARITIES BILL [H.L.]
5.36 p.m.
Order of the Day read for the consideration of the Commons Amendments.
THE LORD CHANCELLOR (VISCOUNT KILMUIR): My Lords, I beg to move that the Commons Amendments be now considered. In moving this Motion may I say to your Lordships what I intend to do? I intend to take the Commons Amendments in four groups: first of all, Nos. 1 to 5, as they are little more than drafting; then Nos. 6 and 7 together, as they both concern a point raised by the noble Lord, Lord Charley; then No, 8, which deals with a point originally raised by the noble Lord, Lord Silkin, and then Nos. 9 to 31 tog ether because, with the exception of one or two on which I should like to say a word as to the Commissioners, they are little more than drafting. I hope that that coarse will commend itself to your Lordships. Of course, I shall be more than delighted to answer questions on any individual Amendment within the groups, should it appeal to your Lordships. At the moment, I am moving what is usually a formal Motion, That the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(The Lord Chancellor.)
LORD SILKIN: My Lords, I rise merely to say that the noble and learned Viscount, with his usual courtesy, had informed me of his intention of dealing with the matter in the way in which he has proposed. I think it is an admirable idea and I wholly approve, because I think it will be to the advantage of the House. In those circumstances, I reserve any comments that I may wish to make.
LORD NATHAN: My Lords, before this Bill proceeds to its final point and is passed by your Lordships' House, I may perhaps be permitted to say a word,
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because in this Bill, as your Lordships know, I have a sort of avuncular interest. It was some ten or twelve years ago that my noble friend Lord Attlee, then Prime Minister, asked me to become Chairman of the Committee on Charitable Trusts. It was in December, 1952, that the Report of my Committee was made to the then Prime Minister, Sir Winston Churchill. A considerable period passed before this Bill was presented to Parliament, in the first instance in your Lordships' House, but it now comes back to its final stage, and in a few moments it will pass from your Lordships' House.
I believe that all your Lordships will agree with me if I say that the smooth passage of the Bill through the House is mostly due to the care, the flexibility, the dexterity, the skill and the sympathy of the noble and learned Viscount who sits upon the Woolsack. It is the first Bill to deal with this subject comprehensively for over 100 years, and that it has attained its present form (reflecting, I am glad to say, many of the recommendations of the Committee over which I presided) is, I think, a monument to the noble and learned Viscount. I should like for my part—and I am sure that all your Lordships will share my feeling—to express to him cordial thanks for the way in which he has dealt with it and express the hope that he may look back upon it with satisfaction, as I am sure it will be for the welfare of those many organisations in whose interests it comes before Parliament.
THE LORD CHANCELLOR: My Lords, I am grateful and very touched by what the noble Lord, Lord Nathan, said. As he knows, but is too modest to disclose to your Lordships, the immense amount of preparatory work which I took over was done by him and his Committee, and I think "avuncular" was putting the matter in far too modest a way. I do not know whether the word ought to be straight "paternal" or "godfather"— certainly would not say the putative father. I think that all those interested are extremely grateful to him, and I am grateful to him for what he said. I am also grateful to the noble Lord, Lord Silkin, for accepting my proposal this evening.
On Question, Motion agreed to.

COMMONS AMENDMENTS
[The references are to Bill [98], as first printed for the House of Commons]
In the Title, line 5, after ("charities") insert ("or with respect to gifts to charity")
Clause 4, page 4, line 42, leave out ("not having") and insert ("having neither")
Clause 4, page 6, line 4, at end insert ("and for the purposes of this subsection building' includes part of a building")
Clause 5, page 6, line 32, after ("decision") insert ("of the Commissioners")
Clause 6, page 8, line 5, after ("district") insert ("and, in London, the Common Council of the City of London and the council of a metropolitan borough")
THE LORD CHANCELLOR: My Lords, I rise to move Amendments Nos. 1 to 5. As I have said, they are little more than drafting and consequential Amendments and Amendments of formal clarification. If there is any one on which your Lordships desire information, I shall give it. Otherwise I beg to move that this House doth agree with the Commons in Amendments Nos. 1 to 5.
Moved, That this House doth agree with the Commons in the said Amendments.—(The Lord Chancellor.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 10, page 11, line 5, at end insert—
("(6) The provisions of this section may be adopted in any urban district by resolution of the council, and shall thereupon (subject to any further resolution of the council revoking the adoption) have effect in relation to the district as if it were a borough.
A council passing any such resolution shall transmit copies of it to the commissioners and to the Minister of Education, and to the council of the county in which the urban district is situated.")
Clause 11, page 11, line 35, leave out ("(6)") and insert ("(7)")
THE LORD CHANCELLOR: My Lords, I now move that this House doth agree with the Commons in Amendments Nos. 6 and 7. Your Lordships will observe that they follow suggestions, made by the noble Lord, Lord Chorley, in the Committee stage in this House, and on both sides of the Standing Committee, that urban district councils should be empowered to maintain indices and undertake reviews of local charities. As I indicated, the Government do not think that the facts justify urban districts being placed on precisely the same footing as boroughs. The figures of local charities
860
provided by the Urban District Councils Association indicate an average of about five charities of all kinds per urban district. It is fair to say that some charities probably exist which have not come to the notice of the councils making the return; but even so the number existing in non-county boroughs is vastly more numerous; a sample count showed an average of 60 per borough.
On the other hand, this Act will last a long time, and urban districts of to-day may be the boroughs of twenty years hence. The Government have therefore agreed that individual urban districts, by taking certain formal steps, may assimilate their position to that of non-county boroughs, but they hope that before doing so a council will give proper consideration to the matter, consulting perhaps the Charity Commissioners and making sure that there is work it can usefully do. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(The Lord Chancellor.)
LORD SILK1N: My Lords, I only want to say, on behalf of my noble friend Lord Chorley, who is not here, that I am sure he will be very appreciative of the fact that his advice to the Committee of this House has been accepted by both sides in another place and that the substance of his Amendments is now before us and being accepted.
On Question, Motion agreed to.

COMMONS AMENDMENT
After Clause 13, insert the following new Clause—
Application cy-près of gifts of donors unknown or disclaiming
(" .—(1) Property given for specific charitable purposes which fail shall be applicable cy-pr ès as if given for charitable purposes generally, where it belongs.—

(a) to a donor who, after such advertisements and enquiries as are reasonable, cannot be identified or cannot be found; or

(b) to a donor who has executed a written disclaimer of his right to have the property returned.

(2) For the purposes of this section property shall be conclusively presumed (without any advertisement or enquiry) to belong to donors who cannot be identified, in so far as it consists—

(a) of the proceeds of cash collections made by means of collecting boxes or by other means not adapted for distinguishing one gift from another; or

861

(b) of the proceeds of any lottery, competition, entertainment, sale or similar money-raising activity, after allowing for property given to provide prizes or articles for sale or otherwise to enable the activity to be undertaken.

(3) The court may by order direct that property not falling within subsection (2) above shill for the purposes of this section be treated (without any advertisement or enquiry) as belonging to donors who cannot be identified, where it appears to the court either—

(a) that it would be unreasonable, having regard to the amounts likely to be returned to the donors, to incur expense with a view to returning the property; or

(b) that it would be unreasonable, having regard to the nature, circumstances and amount of the gifts, and to the lapse of time since the gifts were made, for the donors to expect the property to be returned.

(4) Whore property is applied cy-près by virtue of this section, the donor shall be deemed to have parted with all his interest at the time when the gift was made; but where property is so applied as belonging to donors who cannot be identified or cannot be found, and is not so applied by virtue of subsection (2) or (3) above.—

(a) the scheme shall specify the total amount of that property; and

(b) the donor of any part of that amount shall be entitled, if he makes a claim not later than twelve months after the date on which the scheme is made, to recover from the charity for which the property is applied a sum equal to that part, less any expenses properly incurred by the charity trustees after that date in connection with claims relating to his gift; and

(c) the scheme may include directions as to the provision to be made for meeting any such claim.

(5) For the purposes of this section, charitable purposes shall be deemed to 'fail' where any difficulty in applying property to those purposes snakes that property or the part not applicable cy-près available to be returned to the donors.
(6) In this, section, except in so far as the context otherwise requires, references to a donor include persons claiming through or under the original donor, and references to property given include the property for the time being representing the property originally given or property derived from it.
(7) This section shall apply to property given for charitable purposes, notwithstanding that it was so given before the commencement of this Act.")
THE LORD CHANCELLOR: My Lords, I now rise to move that this House doth agree with the Commons in Amendment No. 8—the new clause to be inserted after Clause 13. This clause has been inserted to meet the views expressed in both Houses, that provision should be made to enable gifts raised in
862
response to public appeal or public subscription for a particular purpose which fails or has been achieved to be applied cy-près. Your Lordships will remember that the noble Lord, Lord Silkin, raised this point, and I promised that I would deal with it before the Bill came back here. Hitherto, this has not been possible where the subscribers had a particular, as distinct from a general charitable, intention in making their gifts so that the money still belonged to them if the gift failed. Whilst it would be wrong simply to expropriate private rights over property, it is legitimate to take account of the realities of the matter and to recognise that for one reason or another very little of the money ever finds its way back to the owners.
The clause deals with the subject as follows. I hope that I make this clear, and I particularly hope that my noble friend Lord Saltoun will interrupt me without hesitation if I am not making any point clear, as I am very anxious that he should follow what we have in mind. It proceeds on the footing that the gifts still belong to the donors; otherwise they would already be applicable cy-près or would be bona vacantia, and it is thought that they cannot be bona vacantia. Subsection (1) of the new clause declares that property given for a particular charitable purpose shall be applicable cy-près if it belongs to, first, donors who cannot be identified or cannot be found and, secondly, donors who disclaim it. I do not think anyone could have any objection so far. The reasons for including donors who disclaim it are, first, that without it a mere disclaimer might result in the property becoming bona vacantia and, secondly, that subsection (4) back-dates a disclaimer in these circumstances to the date of the gift, which may be important for estate duty purposes.
The rest of the clause deals with the expropriation for Charity and schemes of various kinds of property coming unifier subsection (1) (a). A cy-près scheme may be made by the Charity Commissioners as well as by the court; but that does not apply To an order—my noble friend will appreciate that—under subsection (3), which may be made only by the count. First, the clause expropriates for amity all money subscribed in the ways mentioned in subsection (2), whether those subscribers want their

863
money back or not. But this subsection does not expropriate, for example, the value of an antique given to a charity sale, or, secondly, a subscription, because a subscription of that kind falls to he dealt with under the provisions of the clause.
Next, subsection (3) gives power to the court to expropriate for charity any property which it would be unreasonable to attempt to return to the owners, either because the expense would be out of all proportion to any success likely to attend the attempt, or because, for one reason or another, no sensible subscriber would now be expecting it back anyway. Then (and I think this is the point which my noble friend should specially have in mind) subsection (4) enables a scheme to be made in respect of the money for the time being unclaimed, but without prejudice to the right of the donor to claim his entitlement within twelve months. It is believed that this clause steers a proper and practical course between the extremes of the present law, on the one hand, and anything which might be regarded as sharp practice to the subscriber, on the other. That is what we have tried to do. It is a difficult problem, as I indicated, and I hope that we have been successful in the matter. I beg to move that this House doth agree with the Commons in Amendment No. 8.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
5.52 p.m.
LORD SILKIN: My Lords, it gives me great pleasure to commend this Amendment. It was an Amendment which I had the privilege of moving. I think it aroused a good deal of interest, not only in the House, but outside. We have particularly in mind the Gillingham bus disaster, where large sums of money were collected which subsequently turned out to be unnecessary because compensation was provided elsewhere. This created a problem as to what should be done with the money that had been collected. This Amendment deals with this type of problem in a completely satisfactory way. It required a good deal of careful drafting, and it becomes only too clear that my own Amendment was drafted in a wholly inadequate fashion. But the Amend-
864
ment now before us deals with the problem, and I personally feel very grateful indeed.
I feel grateful for another reason. The noble and learned Viscount, in connection with the previous debate, referred, quite incidentally, to the fact that a good many of us give our time here in the public interest, freely and without hope of reward. One of the ways in which we do it is to scrutinise most carefully complicated Bills of this kind and to put forward suggestions for amendment. One of the most gratifying things—one is only human—is that occasionally one's ideas are accepted. Nobody would wish to go on for ever putting forward Amendments which are never acceptable to the Government and never put into practice; and one gets a great sense of satisfaction to find that in an important matter of this kind, and not merely in a drafting Amendment, one has been instrumental in influencing an important piece of legislation. I hope that the House will forgive me for introducing this personal note, but as one who probably has moved as many Amendments in the last few years as any noble Lord in this House, I feel that there is some satisfaction in having Amendment No. 8 put to the House and accepted.
LORD SALTOUN: My Lords, perhaps your Lordships will allow me to be a little general in my comments, because I do not want to interrupt your Lordships by rising many times in the course of these discussions. In the first place, this Bill make a great change in regard to English charities. I am bound to say—I have never concealed it—that I view it with a considerable amount of apprehension. We are doing away with the old Charity Commissioners and we are setting up a new body, and I think that the future course of English charity will depend very much on how they handle the problems that come before them. I should also like to take the opportunity of repeating what I said on the last occasion this Bill was in your Lordships' House; that I and the charities which I was asked to represent, and which instructed me in this matter (when I say "instructed", I am using that word not in the legal sense, but in the sense that they told me what I had to say), owe a great debt of gratitude to the noble and

865
learned Viscount who has been in charge of the Bill for the concessions which he has given us and on which, I may say, we quite definitely now rely.
With regard to the clause immediately before us, I am bound to say that I am completely at issue with the noble Lord, Lord Silkin, and with the Government. I say that for this reason: it is founded upon the Gillingham case; and if I remember, the Gillingham case (I hope I shall be corrected if I am wrong) was one M which a motor bus ran out of control and killed a number of children. The Mayor of Gillingham raised a large fund for the benefit of the relatives of the children who were killed. But the motor bus company came forward and said that they would undertake all compensation, and it was therefore felt that this fund was no longer needed, and so the money had to be returned.
I hope and believe that my feelings in the mater are those of the man in the street. During the passage of the Bill through your Lordships' House, I quoted expressions of opinion and feeling of the workers in the Caledon shipyard in connection with the Broughty Ferry disaster. When they heard that the monies that they had given, in a very generous and full subscription, were going to other purposes than those of the bereaved families, they were most indignant. They said that, no matter how wealthy those relatives would be, they all wanted the fund to be distributed in that manner for which it had been subscribed. In the Gillingham case, my own feeling has always been that whatever money was collected should have, been given to the people who had been bereaved. That was the purpose for which it was subscribed. I am not one of those people who would ever dare to measure the value to a woman of the death of her son. I think that is the feeling of the general public.
I can give your Lordships a parallel case, rather before that time. It was an English case, and it makes my point quite perfectly, I think. It concerns the Mumbles lifeboat disaster. The institution to which I belong made what I think was a most generous subscription in aid of the bereaved families; a public appeal was launched and there was collected a large surn of money—I think it came to over £100,000. All of that money was
866
devoted to the eight families, and I hold that, in the same way, the money raised after the Gillingham disaster should have been devoted to the families who were bereaved.
It so happened that during that year the Lifeboat Institution had lost either two or three other people in circumstances comparable with those of the Mumbles disaster: they lost their lives on service while going out to save other people. It would have been a most pleasant thing for the Institution to which I belong to have had some of that large Mumbles Fund to devote to the families of the other people who had lost their lives in a precisely similar manner, but who happened not to be in that particular Mumbles boat. But it never occurred to us to put in a plea. We realised that the money had been subscribed by the public for these particular families and not for any other families. The other people were looked after, as was proper and right, and the whole of the money went, and is still going, to the bereaved families. That is the view of the man in the street, and that is my view on this matter. That is why I regret that the Government have taken up this clause.
It seems to me that if this is the law, if a public appeal for the victims of any particular disaster is to be issued in the future it will have to be stated that the funds will go to those people so far as is thought proper, but that if the amount exceeds the sum which the authorities consider is sufficient it can be applied cy près. If such an announcement were made, it would be doubtful if one would get as great a response from the public. That is one reason why I very much regret this clause. I realise that it is of no use to oppose it and I accept it. I hope that it will work reasonably well. I should like to ask the noble and learned Viscount a question on subsection (6). Is there any limit of time here? Does the limit of 40 years, under Section 17, apply or have any effect? Is there a limit on the time during which money or property can go back to the original donor or his representatives?
LORD SPENS: My Lords, may I say a word on this clause, as one who practised for many years in the Chancery Division and therefore had to deal with a good many of these charities which

867
failed? I should like to congratulate the noble and learned Viscount on the Woolsack and those who have drafted this clause on finding a solution for what was one of the most difficult problems with which we have ever had to deal in the Chancery Division and which, from time to time, resulted in vast quantities of money given to charities being wasted on expensive inquiries to try to find out from whom they had come and who could claim them.
If I may say so, with great respect, this seems to me to be an extremely useful solution to those difficulties and one which should avoid a great deal of the throwing away of charitable money in costs, which used to occur. I am particularly interested to see that subsection (7) applies to property given for charitable purposes, notwithstanding that it was so given before the commencement of this Act, and without any date as to how far back it goes. I apprehend that there must be a good deal of money which, as a result of those old inquiries, was added to funds in court and which has been lying there for many years. I do not know to what extent it is going to be possible now to get on its legs a scheme to deal with those funds on something analogous to cy-près for the purposes for which they were originally given. If that can be done, and if this opens up that machinery, there will be certain funds which are completely locked up at the moment made available once again for valuable charities. I hope that that may be possible, although at the moment I am not quite sure.
LORD HAWKE: My Lords, the noble Lord, Lord Spens, has raised a most interesting point. The only difficulty will be that while information about these funds may be available to the Charity Commission's lawyers it will not be so easily obtained by charitable trustees. I wonder whether there is any method by which publicity can be given to subsection (7), with a list of the amounts available and the type of object for which the original subscriptions were made, so that those who have in mind possible cy-près alternatives may have a sporting try.
THE LORD CHANCELLOR: My Lords, may I first answer the specific
868
points? My noble friend Lord Saltoun asked about the limit of time. There is no limit of time upon the right of the subscribers to have their money back unless, in theory, a scheme is made after the advertising, when the twelve-months' limit applies. Subsection (6) is just to make sure that rights are not lost because someone has died and passed it on to his heirs.
LORD SALTOUN: My Lords, may I interrupt the noble and learned Viscount? That was in my mind: that a man who is dying may take a long time to die, and twelve months may elapse.
THE LORD CHANCELLOR: My Lords, the heir has exactly the same rights, but of course the twelve-months limit applies but starts to run only after the scheme, so that there is a fair time allowed. On the very interesting and important point raised by my noble and learned friend Lord Spens, taken up so cheerfully by my noble friend, Lord Hawke, I should like to make some inquiries. I will write to them both on that point; and I hope that they will be satisfied. I am sorry that we have not entirely satisfied the noble Lord, Lord Saltoun, because he has given much attention to this Bill and been very helpful and reasonable, even when we have not satisfied him. But we have done our best to draw the limit and I believe that it will work well.
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 16, page 15, line 21, leave out ("of the land")
Clause 16, page 15, line 24, at end insert ("or for accepting the surrender of a lease")
Clause 16, page 15, line 29, after ("covenant") insert ("agreement")
Clause 19, page 21, line 16, at end insert ("save that where the Commissioners have by order removed a trustee, charity trustee, officer, agent, or servant of a charity under the power conferred by subsection (1) of this section, an appeal against such an order may be brought by any person so removed without a certificate of the Commissioners and without the leave of one of the judges of the High Court attached to the Chancery Division")
Clause 21, page 23, line 24, at end insert ("and to the value of the fund at the time of the transfers")
Clause 28, page 30, line 24, leave out ("expressly authorised") and insert ("for which general or special authority is expressly given")
Clause 42, page 39, line 20, leave out from second ("be") to end of subsection and insert ("subject to annulment in pursuance of a resolution of either House of Parliament")
First Schedule, page 45, line 16, leave out ("to meet any temporary need")
Page 46, line 8, at end inser—
("4. Legal proceedings may be instituted by or against the Commissioners by the name of the Charity Commissioners for England and Wales, and shall not abate or be affected by any change in the persons who are the Commissioners.")
Third Schedule, page 47, line 23, leave out paragraph 5.
Third Schedule, page 47, line 30, column 2, leave out line 30.
Sixth Schedule, page 51, line 35, column 2, at end insert—
("In this section 'building' includes part of a building.")
Seventh Schedule, page 56, leave out lines 48 to 54.
Page 57, line 43, at end insert—

("10 & 11 Geo. 6. c. 44.

The Crown Proceedings Act, 1947.

In section twenty three, in subsection (3), paragraph (d) and the word "educational' in paragraph (e).")

Page 61, line 25, at end insert—

"2 Edw. 7. c. 41

The Metropolis Water Act, 1902.

Subsection (2) of section one from 'having' on wards.

3 Edw. 7. c. 20.

The Patriotic Fund Reorganisation Act, 1903

Subsection (1) of section one from 'and power' on wards.")

Page 61, line 34, at end insert—

("10 & 11 Geo. 5.c. 16.

The Imperial War Museum Act, 1920

Subsection (1) of section one from 'and power' on-wards.")

Page 62, line 23, column 23, at end insert ("in the First Schedule, paragraph 2, from 'and power' onwards")
Page 62, line 24, at end insert—

("9 & 10 Geo. 6. c. 46.

The Police Act, 1946.

Subsection (1) of section five from 'and with' on-wards.")

Page 62, line 30, column 3, at end insert ("subsection (4) of section twenty-five".)
Page 63, line 16, at end insert—

("14 & 15 Geo. 6. c. 53.

The Midwives Act, 1951.

In the First Schedule, paragraph 5 from 'and power' onwards.")

Page 63, line 23, at end insert—

("2 &3 Eliz. 2. c. 55.

The Television Act, 1954.

In the First Schedule, paragraph 1 from 'and power' onwards.

4 & 5 Eliz. 2. c. 48.

The Sugar Act, 1956.

In the Second Schedule, paragraph 1 from 'and power' on wards.")

Page 62, line 25, at end insert—

("5 & 6 Eliz. 2. c. 15.

The Nurses Act, 1957.

In the First Schedule, paragraph 8 from 'and power' onwards.")

Page 64, line 53, at end insert—

("8 & 9 Eliz. 2. No. 1.

The Church Property (Miscellaneous Pro visions) Measure, 1960.

Section twenty three.")

THE LORD CHANCELLOR: My Lords, I now beg to move that the House doth agree with the Commons in the remaining Amendments, Nos. 9 to 31, which are drafting and clarifying Amendments. A number of them refer to mortmain appeals and I should just like to say one word on Amendment No. 12, because that gives an appeal as of right to the High Court Ito any person removed by the Commissioners under subsection (1) of Clause 19. If my memory is right, that was a point about which my noble friend Lord Saltoun was concerned during the Committee stage.
I should like to say only one other thing, which really arises under the more general remarks of my noble friend Lord Saltoun on the last Amendment. I wish to make a brief statement on behalf of Her Majesty's Government with regard to the Charity Commissioners, especially in view of what my noble friend has said. It has been said—indeed, it was repeated at the conclusion of the proceedings in another place—that uneasiness is still felt lest the independence of the Charity Commissioners is somehow being impaired because they are to be appointed by the Home Secretary and can be removed by him; and that through them the Government will be able to bring pressure to bear on charity.
In both Houses Her Majesty's Government have sought to bring out that this is not so. The Home Secretary will appoint the Commissioners to carry out their statutory functions. The Chief Commissioner, aided by his colleagues, will be responsible to him, as the head of any other public department is responsible to his Minister; and, of course, the Minister is, in turn, responsible to Parliament for the efficient conduct of the public service. But the Bill gives no power whatever to the Home Secretary to give to the Commissioners any directions or to influence their decision in an individual ease. The discretion they will exercise is their own and

871
it is subject to review, not by any Minister but by the courts.
It is often said that we have accepted this from this Home Secretary because he has undertaken that he will not do anything and, anyway, we do not think he would. But I do not feel that that is a material objection here, because both the larger political Parties have expressed their desire that charities should be insulated from political pressure. We think that in law the Bill does this effectively; and, in view of what has been said on both sides of both Houses, it is really unthinkable under our system of government that a Home Secretary, of whatever Party, would attempt by some extra-statutory means to influence the Commissioners in the exercise of their discretion by threats of dismissal or other pressure.
The Commissioners have been placed by Clause 1 (4) under an express statutory duty to act in the case of any charity so as best to promote and make effective its work in meeting the needs designated by its trust, and this serves to preclude their being activated by other considerations. What a future Government will do by legislation is something we cannot control. But it would have to be done by legislation, and not by action behind the scenes. I wanted to make that quite clear because I know that a certain amount of uneasiness has been felt, and I think that my statement should do the utmost that can be done to dispel it. I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(The Lord Chancellor.)
LORD SALTOUN: My Lords, I am very grateful to the noble and learned Viscount for Ills explanation. I am bound to say that I am very much reassured by it. I hope that the four noble Lords opposite will not cross the House to scratch my eyes out if I say that the new position of the Charity Commissioners seems precisely analogous to that of the old relieving officer when I worked alongside him. If I remember aright, he could not be given any directions by the Minister of Health and his removal was a major proposition. That seems to me to be a considerable safeguard.
On Question, Motion agreed to.

BUILDING SOCIETIES BILL [H.L.]
6.14 p.m.
Order of the Day read for the consideration of the Commons Amendments.
VISCOUNT HAILSHAM: My Lords, I beg to move that this House do now consider the Commons Amendments. This is a rather formidable task. There are 83 Amendments. I can suggest only one of two alternatives. One would be that I explain the important ones in a preliminary statement and then ask for the House to pass them en bloc; or alternatively to follow the line taken on the last occasion, which I think is the better course—that we deal with them in blocks of Amendments dealing approximately with the same subject. If that meets with the convenience of the House it is what I would propose to do. In the meantime, I move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(Viscount Hailsham.)
LORD SILKIN: My Lords, I think it would be preferable to deal with the Amendments by the second method which the noble Viscount suggested. It is not easy to follow these Amendments without giving far more time than has been available in the last day or two. I believe that these Amendments reached me only on Monday. But if the noble and learned Viscount would confine himself in his explanation to only Amendments of substance, I think that would be sufficient for the needs of the House. Probably there are not more than a limited number of that kind, and most Amendments would be drafting. I do not know whether the noble and learned Viscount can give guidance as to the number of Amendments of substance that there are in this formidable list.
VISCOUNT HAILSHAM: My Lords, I do not know that I can. I will be as brief as possible, but the truth is that, although I looked at this list of Amendments, it is impossible for me to say quite conscientiously that there is no substance in a great number. But I should think that I have now, with some amount of professional assistance, got a fairly good summary of blocks of Amendments, which should enable us to

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handle them, if I am not cross-examined too closely on the drafting.
On Question, Motion agreed to.

COMMONS AMENDMENTS
[The references ore to Bill [115] as first printed for the House of Commons.]
Clause 1, page 1, line 20, at end insert—
("For the purposes of paragraph (c) of this subsection, the amount in which a person is indebted to the building society shall be ascertained both immediately after the making of the advance and also at the end of a period of three months beginning with the date of the advance or (if sooner) at the end of the financial year in which the advance was made; and that paragraph shall not apply to an advance to any person so as to make it a special advance unless either the amount so ascertained on the first occasion exceeded ten thousand pounds (or, in a year for which references in this subsection to five thousand pounds are to he taken as references to a sum prescribed under this section, twice the amount of that sum) or the amount so ascertained on the second occasion exceeded five thousand pounds (or such other sum as may be prescribed under this section)".)
page 2, line 34, at end insert ("and may not make in that year any advances as respects which it cannot be ascertained at the time they are made whether they will be special advances or not")
page 2, line 38, at end insert ("and shall not make in that year any advances as respects which it cannot be ascertained at the time they are made whether they will be special advances or not").
VISCOUNT HAILSHAM: My Lords, may I move Amendments Nos. 1 to 3 in the first group? They deal with the case where a man gets an advance from a building society to buy a new house before the sale of his old house has been completed. The Amendments provide that if, as a result, two advances are outstanding to a single borrower for a short time, bringing his total indebtedness to more than £5,000 but less than £10,000, the second advance need not count as a special advance if the indebtedness is reduced to below £5,000 within three months or before the end of the financial year, whichever is the shorter period. This avoids what might otherwise have been something of an anomaly. I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 1, page 2, line 45, leave out ("other") and insert ("greater")
Clause 1, page 3, line 1, leave out ("(whether greater or less)")
VISCOUNT HAILSHAM: My Lords, may I now take Amendments 4 and 5? These two Amendments provide that the figure of £5,000 in the definition of a "special advance" will be a minimum figure. I beg to move that this House Both agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 5, page 6, line 45, at end insert ("on an application in writing made in accordance with the following provisions of this section.
(2) An application for permission under this section—

(a) may not he made in the financial year in which the building society is incorporated or, unless it was incorporated on the first day of any year, in the financial year next following that in which it was incorporated; and

(b) may not be made at any time in any financial year before the building society has, in accordance with the provisions of this Act, sent to the Chief Registrar its annual return (with the auditors' report annexed) for the last preceding financial year, and a copy of the corresponding balance sheet, including every document required by law to be annexed or attached thereto.

(3) On an application under this section the Chief Registrar shall grant permission if all the requirements set out in the Schedule (Requirements to be met by a new society desiring to advertise) to this Act are fulfilled as regards the building society making the application.")
Clause 6, page 8, line 21, leave out from ("and") to end of line 27 and insert—
("specifying the considerations which have led him to conclude that it would be in the interests of persons who have invested or deposited or may invest or deposit money with the building society to make the order, and shall also serve on every director of the building society a notice stating that he proposes to make an order;
(b) the Chief Registrar shall consider any representations with respect to the notice made to him by the building society within such period (not being less than fourteen days) from the date on which the building society is served with the notice as the Chief Registrar may allow and, if the building society so requests, afford to the building society an opportunity of being heard by him within that period;

875
(c) on making an order applying subsection (2) of this section the Chief Registrar shall serve on the building society, and on every director of the building society, a notice of the making of the order, and shall serve on the building society a notice specifying the considerations which have led him to conclude that it is expedient to make the order in the interests of persons who have invested or deposited or may invest or deposit money with the building society; and the Chief Registrar shall not have power to make an order unless all of those considerations were those, or were among those, which were specified in a notice under paragraph (a) of this subsection;
(d) a notice under this subsection may be served on a director of a building society by sending it by post to his address, or latest address, as notified to the Chief Registrar or registrar by the building society or the director, and failure to serve a notice under this section on a director shall not affect the validity of an order under this section.")
Clause 7, page 9, line 21, leave out from ("give") to end of line 30 and insert ("a direction—

(a) prohibiting the issue by the building society of advertisements of all descriptions, or

(b) prohibiting the issue by the building society of advertisements of any description specified in the direction, or

(c) prohibiting the issue by the building society of any advertisements which are, or are substantially, repetitions of an advertisement which has been issued and which is specified in the direction, or

(d) requiring the building society to take all practicable steps to withdraw any advertisement, or any description of advertisement, specified in the direction which is on display in any place,

or a direction which contains two or more such prohibitions or requirements.")
Clause 7, page 9, line 31, leave out from ("may") to ("be") in line 34.
Clause 7, page 9, line 40, leave out from ("and") to end of line 44 and insert—
("specifying the considerations which have led him to conclude that it would be in the interests of persons who may invest or deposit money with the building society to give the direction, and shall also serve on every director of the building society a notice stating that he proposes to give the direction;
(b) the Chief Registrar shall consider any representations with respect to the notice made to him by the building society within the period of one week from the date on which the building society is served with the notice and, if the building society so requests, afford to the building society an opportunity of being heard by him within that period;
(c) on giving a direction under this section (other than a direction revoking a previous direction) the Chief Registrar shall serve on the building society, and on every director of the building society, a notice of the giving
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of the direction, and shall serve on the building society a notice specifying the considerations which have led him to conclude that it is expedient to give the direction in the interests of persons who may invest or deposit money with the building society; and the Chief Registrar shall not have power to give a direction under this section unless all of those considerations were those, or were among those, which were specified in a notice under paragraph (a) of this subsection;
(d) a notice under this subsection may be served on a director of a building society by sending it by post to his address, or latest address, as notified to the Chief Registrar or registrar by the building society or the director, and failure to serve a notice under this subsection on a director shall not affect the validity of a direction under this section.")
In the Schedules
After the First Schedule, insert the following new Schedule:—

REQUIREMENTS TO BE MET BY A NEW SOCIETYDESIRING TO ADVERTISE
Special advances
1. The proportion of outstanding advances determined in accordance with paragraph (b) of subsection (3) of section one of this Act by the building society as at the end of the last financial year ending before the date of the application must not have exceeded ten per cent.
Liquidity
2.—(1) At the end of the last financial year ending before the date of the application, the value of the liquid funds of the building society must have been seven and a half per cent. or more of the value of the assets of the building society.
(2) For the purposes of this paragraph—

(a) the expression 'liquid funds' means the funds of the building society (whether represented by investments or on loan to a bank or held in cash) which were not immediately required for its purposes, less any amount due from the building society (whether immediately payable or not) otherwise than in respect of shares in, or deposits with, the building society, and

(b) the value of such of the funds of the building society as were represented by investments shall be the value at which they were taken into account in the balance sheet for the said financial year, and not any alternative value shown in that balance sheet.

Advances to officers of society, or companies in which they are interested
3.—(1) At the end of the last financial year ending before the date of the application there must not have been outstanding in whole or in part any advance made by the building society of which particulars were, in compliance with section fifty-four of this Act, shown in any annual return sent to the Chief Registrar by the building society, or in any auditors' report made to the building society.
(2) If particulars of any advance were so shown in any such annual return or auditors' report before the date of the application, the application shall be accompanied by a statutory declaration by the manager or secretary of the building society stating that the advance has been wholly repaid.
Avoidance of losses
4. The application shall contain or be accompanied by a report by the auditors of the building society stating that in their opinion the balance of the revenue and appropriation account for the last financial year ending before the date of the application represents a surplus after making any adjustments which in their opinion are necessary to provide for diminution in value of assets, or in respect of items of an exceptional or abnormal nature.
Interest on shares
5. The building society must not at the date of the application be in arrear with any interest due on shares in the building society.
Directors
6. The application must be accompanied by a statutory declaration by the manager or secretary of the building society stating that none of the directors of the building society held office at the date of the application for a fixed term exceeding five years from appointment, or for a term which was not fixed.
7. Neither any director of the building society nor the manager or secretary may at the date of the application be a person who has been a director or the manager or secretary of a building society at a time when an order has been made against the building society under section six of this Act or section eleven of the Prevention of Fraud (Investments) Act. 1958, or section eleven of the Prevention of Fraud (Investments) Act, 1939, unless the order was made more than five years before the date of the application.")
VISCOUNT HAILSHAM: My Lords, may I now take Amendments Nos. 6 to 10 and 61, the new Schedule? These Amendments follow the Government's decision that no right of appeal from the discretionary decision of the Chief Registrar can be provided either to the courts or to an ad hoc tribunal. Your Lordships will remember the discussions we had, and this was really to be expected, although I think it is to be regretted. The Amendments have the effect, therefore, following that decision, of narrowing the scope of the Chief Registrar's discretion and of requiring the Chief Registrar to state the reasons for his actions. In this way, we have gone as far as we can to meet the point of view expressed in this House and in the House of Commons that the Registrar's discretion was too wide and should be limited. I beg to move that this House doth agree
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with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 8, page 10, line 21, at end insert—
("Provided that the Chief Registrar shall not have power to require the production of documents which do not belong to the building society, and which are not deeds relating to property mortgaged to the building society, from a person who is or has been an auditor of the building society or from anyone other than a person who is or has been an officer or servant of the building society.")
Clause 9, page 11, line 15, after ("have") insert ("in his opinion")
Clause 11, page 16, line 23, at end insert ("and a trustee savings bank or other savings bank established under any Act of Parliament whether public or local")
VISCOUNT HAILSHAM: My Lords, Amendments 11 to 13 are minor Amendments. I beg to move that this House cloth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 14, page 18, line 10, after ("(2)") insert ("or subsection (3)")
Clause 14, page 18, line 10, at end insert.—
("(2) For the purposes of paragraph (b) of subsection (1) of this section a person who is a director or the manager or secretary of a building society shall be disqualified for reporting on any freehold or leasehold estate comprised in security to be taken by the building society in respect of any advance:
Provided that during the period of ten years beginning with the commencement of this Act this subsection shall not apply to a person who has been a director or the manager or secretary of the building society at all times since the commencement of this Act, but after the holding of the first annual general meeting after the end of the year nineteen hundred and sixty, only so long as at that annual general meeting and every following annual general meeting he has been authorised by a special resolution to make reports for the said purposes until the next annual general meeting, and for the purposes of this proviso retirement from office followed by immediate reappointment shall not be regarded as a break in the tenure of office.")
Clause 14, page 18, leave out lines 13 to 17.
Clause 14, page 18, line 29, after ("estate") insert ("and any person receiving a commission or gift for introducing the parties to the transaction involving that disposition")
Clause 14, page 18, line 42, leave out ("if") and insert ("(b)")
Clause 14, page 18, line 43, leave out from beginning to ("a")
Clause 14, page 18, line 45, after ("(2)") insert ("or subsection (3)")
Clause 14, page 18, line 45, after ("section") insert ("knowing or having reason to believe that it will be used, or is likely to be used, for the purposes of paragraph (b) of subsection (1) of this section")
Clause 14, page 18, line 45, leave out from ("be") to ("and") in line 46 and insert ("liable on summary conviction to a fine not exceeding two hundred pounds or to imprisonment for a term not exceeding six months")
VISCOUNT HAILSHAM: My Lords, may I take Amendments 14 to 22, inclusive, together? These Amendments waive the disqualification for reporting on the value of a property in respect of directors who hold office at the commencement of the Act, subject to the approval of the society in question and to a maximum period of ten years. The offence of preparing a report when disqualified is limited to the case where it is done knowingly, so as to avoid inadvertent offences. In this way, we seek to minimise the risk of causing hardship to individuals or inconvenience to building societies. It will be remembered that quite a number of noble Lords expressed a large difference of opinion when we discussed this matter in this House; indeed, perhaps this was the question which, on the whole, was the thorniest we discussed. This is really done to mitigate the hardships which some noble Lords (I believe my noble friend Lord Saltoun among them) anticipated would be the result of passing the legislation in its original form. I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House both agree with the Commons in the said Amendments.—(Viscount Hailshatn.)
LORD SILKIN: My Lords, I welcome these Amendments, but it is a pity that we were given such discouraging replies when we put the case in this House. We were then given to understand that this was wholly unacceptable to the Government. I do not know whether it was by the noble Viscount himself (it probably
880
was), but we were given what were apparently most convincing reasons for not accepting the Amendments which are now being put forward in a form which I think is undoubtedly a compromise, though a very satisfactory compromise. I think it meets the case of those who put forward the Amendment, and those who objected. But, if I may respectfully say so, I think it is a pity that we were not given a little more encouragement when the Amendment was originally put forward, and that the Government did not promise to give it further consideration.
VISCOUNT HAILSHAM: My Lords, I think it better, when one is limited as to what one can say, not to exceed those limits. Otherwise, one sometimes gets the reputation of breaking one's promises. I can only say, so far as the general point made by the noble Lord is concerned, that it illustrates the point he made earlier: that these debates do a great deal of good.
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 16, page 19, line 30, at end insert ("and section six of the said Act (which prescribes a period within which any advance in respect of which such a guarantee is taken is to be repaid) shall cease to have effect")
Clause 16, page 19, line 31, leave out subsections (2) and (3).
Clause 17, page 20, line 16, leave out from beginning to ("the") in line 25.
Clause 24, page 22, line 35, leave out ("an infant") and insert ("a person under the age of twenty-one years")
Clause 24, page 22, line 37, leave out ("an infant") and insert ("under the said age")
VISCOUNT HAILSHAM: My Lords, Amendments Nos. 23 to 27 are minor and consequential. I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Viscount Hailshatn.)
On Question, Motion agreed to.

COMMONS AMENDMENT
Clause 27, page 23, line 30, leave out from beginning to end of line 5 on page 24 and insert—
("(3) At any time—
(a) when an order is in force as respects a building society under section six of this Act or under section eleven of the Prevention

881
of Fraud (Investments) Act, 1958, or under section eleven of the Prevention of Fraud (Investments) Act, 1939, or
(7) Any dispute as to the rights of a member under this section which arises between the member and the building society shall be referred to the Chief Registrar, and the award of the Chief Registrar shall have the same effect as that of arbitrators under section thirty four of the principal Act.")
6.22 p.m.
VISCOUNT HAILSHAM: My Lords, Amendment No. 28 again deals with a question which we discussed in Committee here. The Amendment restricts a member's Tight of access to the register of mines and addresses of members to cases where a society has been subjected to an order by the Chief Registrar, has failed to meet a request for withdrawal of funds or is in arrears with interest. In other cases, a member may apply to the Chief Registrar for access, and the Chief Registrar will decide, after giving the member and the Society an opportunity to make representations, whether or no: to grant access. This meets with the widespread desire of small investors that membership of a building society should be a private matter, whilst ensuring that in appropriate cases members will be able to get in touch with one another in connection with the society's business. My Lords, again I beg to move that this House Both agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Leave out Clause 29 and insert the following new clause:—
Special resolutions
("(1) A resolution shall be a special resolution when—

(a) if has been passed by not less than three-fourths of the number of the members of the building society qualified to vote on a special resolution and voting in person, or by proxy on a poll on the resolution at a meeting of the building society, of which notice specifying the intention to move the resolution as a special resolution has been duly given;

(b)

(2) The members qualified to vote on a special resolution at a meeting of a building society shall be all the members of the building society who were also members at the end of the last financial year before the date of the meeting, except that, if the rules of the building
882
society so provide, members who, at the end of that financial year, or at the date of the meeting, did not hold shares in the building society to a value of one pound or more shall not be qualified to vote.
(3) For the purposes of this section—

(a) notice of a meeting shall be deemed to be duly given if the notice is given in the manner provided by this Act and the rules of the building society;

(b) the meeting of the building society shall be deemed to be duly held if it is held in the manner provided by the rules of the building society.

(4) Notwithstanding anything in the rules of a building society, the business which may be dealt with at the annual general meeting, or at any other meeting, shall include any resolution to be passed as a special resolution.
(5) In any rules made by a building society after the commencement of this Act the expression "special resolution" shall, unless the context otherwise requires, mean a special resolution as defined in this section.
(6) This section shall come into force as respects any resolution to be moved at a meeting held after the beginning of the year nineteen hundred and sixty-one.")
Leave out Clause 30 and insert the following new clause:—
Circulation of members' special resolutions
(".—(1) If a member of a building society applies in writing to the building society and gives notice of his intention to move a special resolution at a meeting of the building society, it shall be the duty of the building society to include in the notice of the meeting a notice specifying the intention to move that resolution as a special resolution at the meeting.
(2) If the applicant does not specify the meeting at which he intends to move the resolution, or if he specifics a meeting which will be held fifty-six days or less after the receipt of the notice by the building society, the building society shall act on the footing that he intends to move the special resolution at the first meeting of the building society held more than fifty-six days after the date of the application.
(3) If a building society fails to comply with an application duly made under this section, the building society and every officer of the building society who is in default shall be guilty of an offence under this Act.
(4) In this section the expression 'special resolution' means a resolution which will not be effective unless it is passed as a special resolution.")
After the clause last inserted, insert the following new clause:—
Cases under existing law in which a special resolution is required
(".—(1) A building society may alter or add to its rules by a special resolution, and any provision in its rules which authorises it to alter or add to its rules without passing a special resolution shall be void.
(2) in section thirty-three of the principal Act (under which two or more building

883
societies may unite) for the words from 'upon such terms' to the words 'for the purpose' there shall be substituted the words—

'(a) if the terms of the union are approved by a special resolution (as defined in the Building Societies Act, 1960) of each of the societies, and

(b) if the union obtains the concurrence in writing of the holders of not less than two-thirds of the whole number of shares in each society, whether they are present at the meeting or not',

and section nineteen of the Building Societies Act, 1894 (which amends the said section thirty-three), shall cease to have effect.
(3) In section twenty-two and paragraph 4 of section thirty-two of the principal Act (which relate respectively to a change of name and to a winding up) for the references to a resolution of three-fourths of the members of a building society passed at a meeting called for the purpose there shall be substituted references to a special resolution, and in section five of the Societies (Miscellaneous Provisions) Act, 1940 (which relates to a transfer of engagements), for the references to a special resolution as defined by that subsection there shall be substituted references to a special resolution as defined by this Act.")
Clause 31, page 26, line 5, after ("the") insert ("manner in which")
Clause 31, page 26, line 5, leave out ("to be given")
Clause 31, page 26, line 6, at end insert ("is to be given to members")
Clause 31, page 26, line 22, at end insert ("and a building society may, where it has by its rules provided for a matter specified in subsection (1) of this section, also by its rules expressly exclude the relevant provisions of that Schedule")
Clause 33, page 27, line 25, at end insert—
("(3) Notice of a meeting of a building society shall not be sent to members of the building society more than fifty-six days before the date of the meeting.")
Clause 34, page 27, line 26, at beginning insert—
("(1) Written notice of any meeting of a building society which specifies the intention to propose a resolution as a special resolution at the meeting shall be sent to every member qualified to vote on a special resolution at the meeting.
(2) Subject to the provisions of subsection (1) of this section.")
Clause 34, page 27, line 34, at end insert—
("(2) The accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.")
VISCOUNT HAILSHAM: My Lords, may I now take Nos. 29 to 38, which are really Amendments standardising and simplifying the provisions relating to the circumstances in which a resolution passed at a meeting of a building
884
society is required to be treated as a special resolution. They also lay down the requirements as to the circulation to members of special resolutions. My Lords, I beg to move that this House Both agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Viscount Hailsham.)
LORD MERTHYR: My Lords, for the sake of accuracy, may I point out a misprint? In the first subsection of the proposed new clause, Amendment No. 29, the letters (a)" and (b)" should I think be omitted, and the first word after "(a)" should be "it" instead of "if".
VISCOUNT HAILSHAM: I am much obliged to the noble Lord.
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 42, page 32, line 7, after ("year") insert ("by way of investments in or loans to the building society")
Clause 42, page 32, line 7, leave out from ("members") to ("and") in line 8 and insert ("or depositors")
VISCOUNT HAILSHAM: My Lords, Nos. 39 and 40 are drafting Amendments. I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 47, page 36, line 23, leave out ("that") and insert ("a")
Clause 47, page 36, line 35, at end insert—
("Provided that a person who is an auditor of a building society at the commencement of this Act shall, notwithstanding that he is not at the time a member of any of the said bodies, be qualified for appointment or re-appointment as an auditor of that building society at any annual general meeting of the building society if he is at the time of the said meeting authorised under paragraph (b) of subsection (1) of the said section one hundred and sixty-one to be appointed as auditor of a company.")
Clause 47, page 36, line 38, leave out ("that") and insert ("a")
Clause 47, page 36, line 40, after second ("if") insert (",or who employs")
Clause 50, page 38, line 10, at end insert ("made to the Chief Registrar")
Clause 52, page 39, line 21, leave out ("fourteen days") and insert ("one month")
Clause 53, page 39, line 38, leave out ("shares")
Clause 53, page 39, line 39, at end insert—
("shares the nominal value of which exceeded two and a half per cent. of the total paid up share capital of the company or other body corporate, or
(d) to a company or other body corporate of which, when the advance was made, or at any later time in the said financial year, a director or the manager or secretary of the building society was a director, general manager, secretary or other similar officer.")
Page 40, line 1, after ("his") insert ("employment by or other")
VISCOUNT HAILSHAM: My Lords, may I take Nos. 41 to 49 next? With the exception of No. 42, they are all minor and consequential Amendments. No. 42 again deals with a matter which was discussed in this House. It enables a present auditor of a building society not professionally qualified to continue to serve if he is authorised by the Board of Trade. I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENT
After Clause 53, insert the following new clause:
Officers not to take commissions for insurance business connected with the making of advances
(".—(1) Where—

(a) a charge upon a policy of life assurance is given as additional security for an advance made by a building society, or

(b) a building society makes an additional advance to enable payment to be made of a premium on a policy of insurance, or

(c) any policy of insurance is taken out so as to comply with the terms on which an advance is made by a building society, whether by way of insuring the property given as security for the advance or otherwise,

and the policy is effected through the building society, or the building society nominates or selects the person by whom the policy is to be issued, it shall be unlawful for a director or other officer of the building society in connection with the effecting of the policy to receive any gift, bonus, commission or benefit from a person by or through whom the policy was issued.
(2) A person who pays, and a person who accepts, any gift, bonus, commission or bene-
886
fit which it is unlawful to receive under the foregoing subsection shall be liable on summary conviction to a fine not exceeding fifty pounds or to imprisonment for a term not exceeding six months.")
VISCOUNT HAILSHAM: My Lords, Amendment No. 50 is a new clause which makes it an offence for a director or officer of a building society to receive a commission in respect of an insurance policy which is effected through the society or issued by someone selected by the society in connection with an advance. It is not suggested that this practice is necessarily improper in all circumstances, but it is, I should have said, undoubtedly open to abuse, and it is better (at any rate, so it is thought) that the commission should accrue to the society rather than to individuals. My Lords, I beg to move that this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 54, page 40, line 44, leave out from ("by") to end of line 47 and insert ("any member to whom the building society sends notice of a resolution to be moved at a meeting of the building society for the union or, as the case may be, the transfer of engagements to which the statement relates not later than he receives that notice")
Page 41, line 8, leave out subsection (4) and insert—
("(4) Where for the purposes of the said section five of the Act of 1940 the building society applies to all or any of the members of the building society to obtain their consent to the proposals, the statement shall, without prejudice to the provisions of subsection (2) of this section, be sent so as to be received by a member at or before the time when the application is made to him.")
Page 41, line 22, leave out from ("to") to end of line 23 and insert ("any such document as is mentioned in that section")
VISCOUNT HAILSHAM: My Lords, I think I am right in saying that Amendments Nos. 51 to 53, inclusive, are minor. I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENT
After Clause 54, insert the following new clause:—
Transfers of engagements and unions which involve a building society of Northern Ireland
(".—(1) A building society may, subject to the provisions of this section, by a special resolution transfer its engagements to a building society of Northern Ireland which undertakes to fulfil those engagements; and a building society may, subject to the provisions of this section, undertake to fulfil the engagements of a building society of Northern Ireland by a special resolution or, with the consent of the registrar, by a resolution of a general meeting or of the board of the building society.
(2) The transfer of engagements shall not take effect by virtue of this section unless or until the consent thereto in writing of the holders of not less than two-thirds of the whole number of shares of the building society acting under this section has been obtained:
Provided that if that building society makes an application to the registrar and publishes notice of the application in the London and Edinburgh Gazettes, the registrar may, after hearing the building society and any other persons whom he considers entitled to be heard, confirm the transfer of engagements notwithstanding that the concurrence of the holders of two-thirds of the whole number of shares in the building society has not been obtained in the manner required by the foregoing provisions of this subsection.
(3) The transfer of engagements shall not take effect by virtue of this section until the registrar has given his consent in writing to the transfer, and he shall not give that consent unless he is satisfied that the transfer of engagements will also take effect under the law of Northern Ireland.
(4) The registrar on giving his consent under the last foregoing subsection shall register the transfer of engagements and thereupon section five of the Building Societies Act, 1877 (which provides for giving effect to transfers of engagements) shall, so far as it forms part of the law of Great Britain, apply to the transfer of engagements.
(5) Section fifty-four of this Act shall apply in relation to a building society which proposes to act under this section as it applies to a building society proposing to become a party to a transfer of engagements under section five of the Societies (Miscellaneous Provisions) Act, 1940, but as if in the said section fifty-four—

(a) references to the other building societies concerned included references to any building society of Northern Ireland concerned, and

(b) references to section five of the said Act of 1940, were references to this section.

and the statement under the said section fifty-four as applied by this subsection shall indicate that the other party to the transfer of engagements is a building society of Northern Ireland or, as the case may be, that one or more of the other parties is or are a building society or building societies of Northern Ireland.
(6) A building society may not, under section thirty-three of the principal Act, unite with a building society of Northern Ireland.
(7) In this section the expression "building society of Northern Ireland" means a building society which is, or, for the purposes of the Building Societies Acts, 1874 to 1894, is deemed to be, registered in Northern Ireland; and references to a building society acting under this section do not include references to any such society.")
VISCOUNT HAILSHAM: My Lords, Amendment No. 54 is a new clause and represents the fulfilment of an undertaking which I gave to the noble Lord. Lord Milner of Leeds. Its effect is to permit societies registered in this country to transfer their engagements to, or to accept the transfer of engagements from, societies registered in Northern Ireland. Such transfers will be subject to the same procedure as transfers between British societies, and to the additional requirement of the approval of the Registrar. Complementary provision will doubtless be made in Northern Ireland legislation when circumstances permit. I beg to move that this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 55, page 41, line 28, leave out from second ("the") to ("for") in line 33 and insert ("words 'required by the Building Societies Acts to be sent to the registrar' there shall be substituted the words 'sent to the Chief Registrar of Friendly Societies or the registrar under or in pursuance of the Building Societies Acts, 1874 to 1960', and".)
Clause 58, page 43, leave out lines 8 to 12.
Line 14, leave out ("said Act of") and insert ("Building Societies Act".)
VISCOUNT HAILSHAM: My Lords, Nos. 55 to 57, inclusive, are minor Amendments. I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENT
After Clause 61, insert the following new Clause:—
Joint shareholders
(".—(1) Except where the rules of a building society otherwise provide, any notice or other document may be given or sent by the building society to the joint holders of shares in the building society by giving or sending it to the joint holder who is first named in their books (hereinafter in this section referred to as the senior joint holder), but this subsection shall not he read as preventing any joint holder of shares from exercising the right under this Act of a member to obtain from a building society on demand a copy of the balance sheet or of the annual return.
(2) Any shares in a building society which are held jointly shall, for the purpose of determining who is qualified to vote, whether in person or by proxy, on any resolution at a meeting held after the commencement of this Act and, where relevant, the number of votes any person may then give, be regarded as held by the senior of the joint holders alone; and accordingly a person who is only a member of a building society by reason of being a joint holder of shares, other than the senior joint holder, shall not be qualified to vote on any such resolution.
(3) For the purposes of the following enactments (under which the consent or concurrence of a certain number of members of a building society is required)—

(a) paragraph 3 of section thirty-two of the principal Act, and

(b) paragraph (b) of section thirty-three of that Act, as amended by this Act, and

(c) section five of the Societies (Miscellaneous Provisions) Act, 1940, and

(d) section (Transfers of engagements and unions involving a building society of Northern Ireland) of this Act,

any shares in a building society which are held jointly shall be regarded as held by the senior of the joint holders alone, and accordingly a person who is only a member of a building society by reason of being a joint holder of shares, other than the senior joint holder, shall not for the purposes of those enactments be regarded as being a member.
(4) The senior joint holder, and not any of the others, shall have the right to join in making any application under section five or section seven of the Building Societies Act, 1894 (which confer certain powers of inspection and investigation), and any reference in those sections to the total membership of a building society shall be read accordingly.
(5) The name and address of any person who is a joint holder of shares in a building society, other than the senior joint holder, need net on that account be entered in the register to be maintained under section twenty-seven of this Act, and if a name and address is so entered the entry shall indicate that the person named is a joint holder who is not the senior joint holder.
(6) Joint holders of shares in a building society shall be entitled to choose the order in which they are named in the books of the building society.")
VISCOUNT HAILSHAM: My Lords, Amendment No. 58 also fulfils an underking I gave in the course of the debate on May 12. I then promised that provisions would be inserted in the Bill to deal generally with the position of joint shareholdings. The clause ensures that one joint holder is regarded as acting for all joint holders for the purposes of attending and voting at meetings and so on, but the substantive rights of other joint holders to their property are not affected. I beg to move that this House Both agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said A mendment.—(Viscount Hailsham.)
On Question, Motion agreed to.

COMMONS AMENDMENT
After Clause 62, insert the following new Clause:—
Regulations with respect to form, etc., of documents, and fees
(".—(1) Without prejudice to any other power in that behalf conferred on him by this Act, the Chief Registrar shall have power with the consent of the Treasury by statutory instrument to make regulations with respect to—

(a) the form of, and the particulars to be included in, any certificate issued under the enactments relating to building societies, and any application, notice or other document made or sent to the Chief Registrar or the registrar under or in pursuance of those enactments; and

(b) the fees to be paid for the inspection, or the furnishing of copies, of any document in the custody of the Chief Registrar or the registrar, or in connection with the exercise by the Chief Registrar or the registrar of any of their functions under the said enactments.

(2) Section twenty-six of, and the Third Schedule to, the Building Societies Act, 1894 (which prescribe the form of certain certificates issued by the registrar), shall have effect as if contained in regulations under this section and may be varied or repealed accordingly.
(3) Section forty-four of the principal Act (which confers a power to make regulations with respect to certain fees, and generally for the purpose of carrying into effect the enactments relating to building societies), and so much of subsection (2) of section thirteen of the Building Societies Act, 1939, as provides for the form and contents of the return required by that subsection to be prescribed by rules under the said Act of 1939, shall cease to have effect.
(4) Nothing in the last foregoing subsection shall affect the continuance in force of any regulations in force at the commencement of this Act under section forty-four of the principal Act, or of any rules under the Building Societies Act, 1939, in force at that date and relating to the return required by subsection (2) of section thirteen of the said Act of 1939; but—

(a) such of the said regulations as could have been made under this section shall have effect as if they had been so made, and may be varied or revoked accordingly;

(b) such of the said regulations as could not have been so made may be revoked (but not varied) by regulations under this section; and

(c) the said rules may be varied or revoked by regulations under this section.")

VISCOUNT HAILSHAM: My Lords, No. 59 is a new clause simplifying the provisions in the Acts relating to the power to make regulations, and it is required primarily to facilitate consolidation. In those circumstances, I beg to move that this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Viscount Hailshant.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Clause 68, page 47, line 4, at end insert—
("(2) It is hereby declared that references in this Act to mortgages of land in Northern Ireland include references to registered charges which by virtue of subsection (4) of section forty of the Local Registration of Title (Ireland) Act, 1891, operate as mortgages by deed.")
Third Schedule, page 52, line 1, leave out paragraphs 4 to 7.
Page 53, line 10, leave out ("register of members") and insert ("books of the society")
Page 53, leave out lines 20 to 22.
Page 55, leave out lines 15 to 19.
Page 56, line 38, at end insert—
("Joint shareholders
14.—(1) A joint holding of shares in the society shall not give to any of the joint holders, other than the one who is first named in the books of the society, the right to attend a meeting or any right conferred by these rules on a member.
(2) Without prejudice to the generality of the foregoing provisions of this rule, any shares which are held jointly shall, for the purpose of determining which members are qualified to vote, whether in person or by proxy, on any resolution, and the number of votes they may give, be regarded as held by the joint holder who is first named in the books of the society.
(3) Any reference in these rules to the total membership of the society, or to any number of members of the society, shall be read as if any shares held jointly were held by the joint holder so first named.")
Fourth Schedule, page 57, line 12, at end insert—
("In section eighteen for the words that the provisions of this section have been complied with' substitute the words that the resolution has been passed as a special resolution as defined in the Building Societies Act, 1960'.")
Fourth Schedule, page 57, line 14, leave out ("present'") and insert ("purpose'")
Fourth Schedule, page 57, line 15, leave out ("passed")
Fourth Schedule, page 57, line 20, after ("present") insert ("at a general meeting of the society specially called for the purpose")
Fourth Schedule, page 57, line 21, leave out ("passed")
Fourth Schedule, page 57, line 23, at end insert ("Section four shall cease to have effect")
After the amendment last inserted, insert—
("In subsection (2) of section six, for the words the Gazette' substitute the words ' the London and Edinburgh Gazettes'.")
Fourth Schedule, page 57, line 27, at end insert—
("In subsection (3) of section seven, for the words the Gazette' substitute the words the London and Edinburgh Gazettes'.")
Fourth Schedule, page 57, line 32, at end insert ("In section twenty-three, for the words and in default of payment', substitute the word or'")
Fourth Schedule, page 57, line 44, at end insert—
("In subsection (2) of section five, for the words 'the Gazette' substitute the words the London and Edinburgh Gazettes'.")
Fifth Schedule, page 58, line 22, column 3, at end insert ("Section forty-four")
Fifth Schedule, page 58, line 26, column 3, leave out ("and three") and insert ("to four")
Fifth Schedule, page 58, line 33, column 3, at beginning insert ("subsection (3) of section three")
Fifth Schedule, page 58, line 33, column 3, leave out lines 34 to 37 and insert ("Section six")
Fifth Schedule, page 58, line 38, column 3, at end insert—
("In section thirteen, in subsection (2), the words from which shall be' to 'particulars as may be prescribed, and in subsection (3), the words from subject to' to 'Building Societies Act, 1874'.")
Fifth Schedule, page 58, line 41, column 3, at end insert ("and words whether they of the society'.")
Fifth Schedule, page 58, line 48, column 3, at end insert ("the words 'in such manner as he may prescribe' and".)
VISCOUNT HAILSHAM: My Lords, the remaining Amendments in the Bill—that is to say, No. 60 and Nos. 62 to 83 inclusive, we having already agreed

893
to No. 61—are, I am happy to say, all minor and consequential Amendments, and I now beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House cloth agree with the Commons in the said Amendments.—(Viscount Hailsham.)
On Question, Motion agreed to.

BLACKFRIARS BRIDGEHEAD IMPROVEMENTS BILL
  BRISTOL CORPORATION BILL
    BRITISH TRANSPORT COMMISSION BILL
    Returned from the Commons with the Amendments agreed to.
    HERTFORDSHIRE COUNTY COUNCIL BILL
    Returned from the Commons with the Amendments agreed to.
    MANCHESTER SHIP CANAL BILL [H.L.]
    Returned from the Commons, agreed, to, with Amendments: the said Amendments considered, and agreed to.

    OLDHAM CORPORATION BILL [H.L.]
    Returned from the Commons, agreed to, with Amendments.
    House adjourned at half-past six o'clock.