FINANCE BILL

HL Deb 27 July 1960 vol 225 cc803-20

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 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 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 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, 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 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 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.

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 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 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 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.

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 themvis-â-visthose 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.

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 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 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 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.