HL Deb 29 March 1960 vol 222 cc424-40

2.41 p.m.

Order of the Day for the Second Reading read.

LORD CRAIGTON

My Lords, throughout wide areas of the Highlands and Islands of Scotland sea services have traditionally been the basic means of communication. The geographical facts dictate this form of transport, and whatever advances may be made in other forms of transport it is clear that sea services must remain an essential lifeline. This Bill, in Clause 1, sets out its purpose: to provide for the maintenance and improvement of sea transport services serving the Highlands and Islands.

Under subsection (2) of Clause 1 the meaning of "sea transport services" is so defined as to include not only ancillary services (by which is meant piers, with their waiting rooms, and so on), but also public transport services of any kind, included in an undertaking which consists substantially of sea services. As part of the Government's drive for the improvement of conditions in the Highlands and Islands this Bill gives new powers to provide financial assistance over a limited but essential field. I would remind your Lordships that considerable financial assistance is already available under other Acts for sea services, to which I will refer briefly later in my speech.

Let me take first the kind of help that can be given under this Bill and to whom it can be given. There are three classes of persons to whom the Secretary of State is authorised to give assistance, and they are set out in the three paragraphs of subsection (1) of Clause 1. First in paragraph (a), there are those who are "wholly or mainly engaged in providing" sea transport services serving the Highlands and Islands. This, my Lords, is the main provision. The person or company receiving help under it must be a Highland concern wholly or mainly engaged in the provision of sea transport services serving the Highlands and Islands. The words "wholly or mainly" are necessary because Government assistance must not filter through to channels not connected with the Highlands. This line of demarcation is made doubly clear by subsection (2) of Clause 2, which prevents the giving of help to a body which may run a shipping service in the Highlands but also provides regular public transport services outwith the Highlands. Secondly, in paragraph (b) of subsection (1) of Clause 1, my right honourable friend the Secretary of State may assist local authorities within the meaning of the Harbours, Piers and Ferries (Scotland) Act, Act, 1937"— that is to say, town or county councils—who provide, or may provide, sea ferry services. Lastly, in paragraph (c), my right honourable friend may assist those "who propose to provide such services."

As I have said, considerable help is already available in this field under other Acts. This Bill can help local authorities and others in the provision of sea ferries, but ferries can be helped also, where they are part of a classified road system, under the Development and Road Improvement Fund Act, 1909. This Bill can help any organisation that qualifies in the improvement and preservation of their piers; but the Congested Districts (Scotland) Act, 1897, and the Fisheries Act, 1955, already make provision for help for transport and fishery piers. Last summer the Government announced that they were prepared to spend over £1½ million under these provisions over the next five years.

Turning again to the Bill, Clause 2 specifies the methods by which the Secretary of State may give assistance under the Bill. He can do it by way of either grant or loan, or both; and under subsection (1) (b) of Clause 2 he can do it by building ships and chartering them to operators, though rightly under this Bill the Secretary of State cannot himself operate these ships. Clause 3 gives the Secretary of State the necessary powers to acquire ships in order that he may charter them for use in the Highlands in accordance with the provisions to which I have referred. Going back to subsection (3) of Clause 2, this requires the Secretary of State to lay before Parliament a draft of any undertaking made under Clause 2 (1) (a) in which the annual advances exceed £10,000. This will give Parliament an opportunity of commenting on the services to be provided, on the rates to be charged and on the amount of subsidy to be paid. Clauses 4 to 6 are formal.

My Lords, this Bill is needed for three main purposes. First, it gives the Secretary of State a general power to assist those who provide, or who wish to provide public sea transport services serving the Highlands. Secondly, the Bill will cover the assistance given to Messrs. MacBrayne's. Up to the present the Secretary of State for Scotland has been answerable in Parliament for MacBrayne's, and the subsidy has been charged to his Vote since 1928, but the Minister of Transport, with the Postmaster General, has been the formal contracting agent. The Secretary of State, with his special responsibility for Highlands affairs, will now have under this Bill a full and formal responsibility.

The third main purpose for which this Bill is urgently needed calls for a little more explanation. A small local firm—the Orkney Steam Navigation Company—has for many years operated two ships from Kirkwall serving the North Isles of Orkney. The ships, the "Earl Sigurd" and the "Earl Thorfinn", are both over thirty years old and must be replaced at once. The population of these North Islands has decreased slightly since before the war, but the islands are growing in their importance to agriculture. The cattle population, indeed, has increased by nearly 30 per cent. as compared with before the war, and the sheep population has kept up well. Even so, this good little agricultural community can no longer support its shipping services, as at current prices the cost of replacement of the ships is more than the islands could be expected to bear. The islanders need a better service than is now provided by these rapidly ageing vessels.

The problem has been fully examined first by the Advisory Panel on the Highlands and Islands and then by an independent shipping expert, the late Mr. William MacGillivray, of Prince Line and Furness Wilily, who at the Government's request carried out an investigation on behalf of the Orkney County Council. The solution is found in this Bill. The Secretary of State proposes to finance the provision of two modern ships for charter to a suitable company to be formed. Full details are still to be worked out, but it is intended that both the Government and Orcadian interests should be represented on the company. The agreement will include conditions as to freight charges, fares and level of services, and since the agreement must be laid before the House the final picture will be fully disclosed to the public.

In providing ships for the new company, and indeed in all the discussions that will take place before Messrs. MacBrayne's contract is due for renewal after 1961, in all the thoughts about these new ships, full regard will be had to the needs of tourism. In all that is being done with regard to the North Islands of Orkney, the Orkney County Council are being fully consulted. Because of the age of the present ships we want to try to have the replacements in service by the summer of 1961; so I hope your Lordships will be able to give this Bill a fair wind. I beg to move that it be now read a second time.

Moved, That the Bill be now read 2a.—(Lord Craigton.)

2.51 p.m.

LORD STONHAM

My Lords, again in the absence of my noble friend Lord Greenhill, it is my pleasant duty to welcome this Bill and to congratulate Her Majesty's Government on the neatest piece of nationalisation that we have had for nine years. Indeed, I applaud the Government's flexibility. Only six months ago they were saying in their Election manifesto: We are utterly opposed to any extension of nationalisation by whatever means. Now they are proposing to spend, in each of the next two years, £250,000, and thereafter, we hope, much larger sums, on building ships, piers, harbours and ferry boats, and in fostering and promoting transport services in the Highlands and Islands of Scotland. It is encouraging to find that the wind of change is blowing in the Orkneys as well as in Africa. We are very glad to find that the Government are not allowing their doctrinaire beliefs to stand in the way of their practical acknowledgement of the fact that the social and economic wellbeing of the people of the Highlands and Islands of Scotland cannot be improved without a considerable extension of public enterprise. Indeed, when possibly we come at a later stage to discuss the larger ramifications of transport, we hope that they will extend to the British Transport Commission the same consideration and understanding with regard to the uneconomic units which they operate for the social good of our people.

This Bill, as the noble Lord, Lord Craigton, has indicated, will provide in the Orkneys, Shetlands and elsewhere, services similar to those which have been for years provided in the Western Islands by David MacBrayne, Limited, at a public cost which this year amounts to £282,000. But the continued decay and depopulation of these Islands is a tragedy. It was indeed encouraging to hear from the noble Lord that agricultural output is increasing, but I think it is unhappily true that the population everywhere is still declining. We hope that this Bill, welcome and helpful as it will be, is but a forerunner of other energetic measures to foster trade and industry in the Islands so that the present inhabitants will stay and thrive and increase. For that, of course, they must have not merely sea transport services but cargoes to put in the ships, and for that they must have industry.

We also welcome in this Bill the Government's acknowledgement of the imperative need for Parliamentary control over the investment of public money in private industry, by their insistence that the terms and conditions attaching to any advance exceeding £10,000 in any one year must be submitted to Parliament for approval. In other words, they are providing what we on this side of your Lordships' House have persistently demanded with regard to other expenditures of public money but have not got: that is, a statutory instrument giving real control—and it is deplorable that the Government did not make a similar arrangement with regard to the £50 million loan to Colville's. I hope they will certainly do so in future, similar cases.

On this point, I shall be glad if, when he comes to reply, the noble Lord will give an indication of some of the conditions which will be laid down in the contracts which are entered into between firms and the Secretary of State and which are to be laid before Parliament if they cost more than £10,000 in any one year. For example, will the Secretary of State insist that in the contract there shall be a section covering the levels of freight and fares? It would defeat the object of the Bill if we were to give a large sum of money to a private company and then were to give them carte blanche with regard to the level of charges for fares or freight; because one of the major economic problems in the Islands is the high freight imposed on everything that they bring in and everything that they send out. Also, would the Government insist on the appointment of a director to the Orkney Steam Navigation Company, or to any other company which takes it over? Messrs. MacBrayne have a monopoly in their zone, and the Orkney company or their successors will have a monopoly in their area; and since there will be no competition, there should obviously be a Government-appointed director to voice Government policy.

I should also be grateful for the noble Lord's confirmation of certain assumptions that I have made on my reading of the Bill. It is quite clear from the Bill that the Secretary of State would be empowered to help sea transport services, and that means, according to the Bill, public transport services, including the ancillary services necessary for their proper function. But in the Islands the journey by public transport will probably start by bus; then there will be a sea journey by steamer or ferry; and then, possibly, a further road journey. I should like to know what kind of undertakings will be eligible to apply for a grant. Obviously, steamers and ferries will be eligible, because they will be sea transport; but will an undertaking which includes roads, ferries and a steamer service—all three—be eligible in so far as the road section is concerned? Will an undertaking which merely includes—

LORD CRAIGTON

Does the noble Lord mean road transport or the building of roads?

LORD STONHAM

I am sorry I did not make myself clear. I meant road transport, and not the building of roads. I was thinking in the main of buses. I take it that since the Bill says that an undertaking which to a substantial extent, wholly or mainly, provides sea transport will be covered, it means that an undertaking which covers road transport, ferries and steamers will be eligible for grant. I should like to know whether one which provides merely road transport and a ferry service would be eligible, though I assume that one which has merely a bus service, whether it is privately owned or municipally owned, would not come under this Bill.

Another point is with regard to piers, jetties and harbours. They are certainly ancillary to sea transport services. In the main, they would be owned by local authorities which are not substantially engaged in sea transport services. I was interested to hear the noble Lord refer to the county and town councils under the Harbours, Piers and Ferries (Scotland) Act, 1937. As I noted his words, he said that county and town councils which run sea services would be in a position to apply to the Secretary of State. My information is that that 1937 Act affects only county councils, and that the town and district councils do not run any of the sea services: they run sea services, if they do it at all, only as agents of the county councils. Therefore, under this Bill as it stands, it would not be true to say that the district councils could apply direct to the Secretary of State.

If my assumption is correct, I think that that is a major weakness, because there is strong criticism of the apathy and dilatoriness of some county councils, particularly the County Council of Argyll, in applying for necessary amenities of this kind. This is a point about which we feel rather strongly, because obviously the district councils could most nearly represent local interests in this matter and would be more alive to the needs of the people in the areas. I do not think it would be an argument to say that some of them are not very large, in that they have not many people—some as few as 2,000 and up to perhaps about 20,000—living in their areas. Assuming that my reading of that point is correct, we feel that it is a defect of the Bill, and it is one which at a later stage, we shall attempt to remedy by tabling a suitable Amendment.

I should like the noble Lord to deal with a point arising in Clause 2, which precludes the Secretary of State from making grants to persons operating transport services outwith the Highlands. Clause 1 permits consideration of schemes put forward by persons who propose to provide services in the Highlands. Would this allow a company already engaged in the coastal trade—for example, a Clyde-based firm—to submit a scheme, provided that they formed a separate undertaking, to operate in the Highlands? Would a similar scheme be considered if it was put forward by a Scandinavian firm? I ask this because it is hoped that the Outer Seven pacts will lead to a considerable increase in trade between Scandinavia and Scotland, and it is quite possible that if, as we hope, that increase does take place, this could be linked with the provision of services to the Highlands and Islands. I hope that if help from such an experienced quarter is offered we shall be in a position to accept it.

This, in our view, is a useful and welcome Bill which will help a hardy and deserving people who have been neglected far too long. We hope that when it is on the Statute Book it will be used urgently and with vigour. And we hope that before long the Government will produce another measure designed to help these same people to increase the range and volume of their produce and so achieve a better and more comfortable standard of life.

3.3 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I thought that I was going to be a lone wolf in speaking on this Bill, and I am pleased that the noble Lord, Lord Stonham, has weighed in with his usual verve. But I think the noble Lord is slightly off the rails in his remarks regarding nationalisation. You cannot regard this Bill as a nationalisation Bill. I do not think any of us objects to State intervention for communal purposes; but that is quite different. What we object to is when the State seeks to seize these great wealth-producing industries which produce our standard of living, and destroy that wealth.

In speaking on this Bill I have to declare an interest, because I have spent a great deal of my life in the Western Highlands and Islands and I have also travelled many thousands of miles on MacBrayne's ships. I realise that the immediate purpose of the Bill is to help the shipping service to the Northern Islands of Orkney. I have been round the Orkneys, but I have never been on that shipping service and therefore cannot comment on it. I have, however, a good knowledge of the shipping services in the Western Isles, and it is on the wider aspect of the Bill that I should like to make a few remarks.

As the noble Lord, Lord Craigton, pointed out, we have to look at these shipping services in quite a different way from other shipping services. Here we have scattered communities over an extensive area. The people in the Western Isles look on the sea as the average person on the mainland looks on his trunk road. The sea is, in fact, their road. If a farmer wants to go to market, he usually has to go by sea; everything he buys or sells has to come or go by sea; and if his wife wants to go to a decent shop, she too has to go by sea. It is only right that the Government should support these shipping services, because if the inhabitants are to have a service up to twentieth century standards it cannot be provided by private enterprise, owing to the de-population of the Highlands—although when the tourist industry grows it may be a different matter.

I should like to say a word or two about MacBrayne's. We have had this contract between the Ministry of Transport, the Postmaster General and MacBrayne's since 1928 to provide the conveyance of mails and for maintenance of general services, and I understand that the subsidy is running at about £370,000 a year. This contract expires in 1961. I suppose that it is too early for the Minister to say what form the new agreement will take, but I do ask that in the new agreement the question of freight charges should be closely looked into. The excessive freight charges on MacBrayne's are renowned throughout the whole of Scotland. I will not weary your Lordships with the scale of these charges. Suffice it to say that if a farmer on, say, the island of Mull, of which I have great experience, wants to buy hay, it will probably have to come from Glasgow, and by the time it has arrived in Mull he has had to pay in freight charges the original cost of the hay over again, or at least, up to 70 per cent. of that cost. That seems quite excessive. To a great extent that applies throughout the scales of charges.

Take, for instance, the transport of cars. The Government are anxious for an increase in the tourist industry in the Hebrides. The charges for cars are far too great. If you send your car by MacBrayne's, they can drop it in the sea or bash it around, and you get no compensation at all. A short time ago you had to drive up two planks. It was a balancing act; it was just like a tight rope. If the tide was low you came down with a bang, and it was odds-on that you might go into the sea, But it is now done by derrick, which is of some help.

There are two clauses which I do not quite understand. For instance, under Clause 2 (1) (b) the Secretary of State may enter into contracts for the chartering of ships. How is the chartering freight to be worked out? Is it to be according to the rate prevailing on the Baltic Exchange, or is it to be a rate which the Secretary of State himself decides? In other words, is it to be a hidden subsidy? Also in Clause 2—and I think the noble Lord, Lord Stonham, mentioned this—I do not understand why the Secretary of State cannot go outside shipping services working in the Hebrides, because it is quite possible that there: may be some shipping service that has never been in the Hebrides and which could perhaps give a far better service than MacBrayne's. I think this clause appears to tie the hands of the Secretary of State. I suppose there would be some difficulty over accounting if a firm from outside which has other shipping services were brought in, but that difficulty should not be insurmountable.

According to the Financial Memorandum to the Bill, the Secretary of State is to be allowed £250,000 for the first year. If he is to have a new agreement with MacBrayne's; if he is to repair piers, harbours and jetties, and if he is going to build ships, I cannot see how £250,000 is going to get him very far, because it is impossible to build even an ocean-going trawler for £250,000. I hope the Government will not spoil the ship for a ha'porth of tar, so to speak. If we are going to help the Highlands and Islands, I do not think we ought to quibble over £100,000 here or there.

There is one other thing that I should like to ask. If I came to the Secretary of State and said, "I should like to start a shipping service in the Hebrides", I should perhaps get a grant. If I made a profit out of that service, should I have to hand that profit back? I hope that the Secretary of State, if he makes grants, will decide what freights ought to be charged. Of course, it is easy to ask for more money, especially if it is the taxpayer's money. We embark on a terrifying public expenditure of funds to-day, but if Her Majesty's Government will perhaps be slightly more generous with the Western Highlands and Islands, I feel sure that in the future they will retrieve it through a great expansion of the tourist industry.

I am quite certain that the Hebrides and the Western Islands generally have a great future from the point of view of the tourist trade. But we shall have to improve these shipping services. Personally, from a selfish point of view, I am afraid that the tourist trade will spoil the Western Highlands and Islands, because their charm, certainly to myself, is their great loneliness and their beauty. On the other hand, it is obvious that the inhabitants will benefit to a great extent from an increased tourist industry. I congratulate Her Majesty's Government on promoting this Bill, and I sincerely hope that it will usher in a new era of prosperity for the Western Highlands and Islands.

3.18 p.m.

LORD REA

My Lords, may I welcome the Bill from these Benches? I should perhaps declare an oblique Parliamentary interest in this particular matter, as the Member for these Islands is known to be connected with my Party. Perhaps on his behalf I should demur slightly at two remarks which fell from the noble Viscount who has just sat down. The first is that there are no decent shops in Orkney, and the second that the best hay is grown in Glasgow. Apart from that, I think the Bill is excellent, and I particularly sympathise with the noble Viscount in applauding the proposal to subsidise piers.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I often have to buy quite a lot of hay, and it is impossible to buy it in the Oban area. It has to come from the Lowland area, through Glasgow.

LORD REA

I appreciate the noble Viscount's point. I hope he does not seriously think that I was criticising his charming speech.

3.20 p.m.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, I agree that the noble Viscount's speech was quite charming. He charmed us because he let us into the secret thinking of Toryism behind such matters as are portrayed in this Bill. It is quite a harmless departure from the rigid Tory principle of private enterprise that you can always have a piece of nationalisation as a piece of national assistance. There must be Members of your Lordships' House who were Members of another place with my noble friends Lord Stansgate, Lord Attlee and myself in 1922 (and I see Lord Monsell opposite) and I think that if we were opened up we should find that stamped on our hearts. The number of Motions on the Adjournment that the poor Chief Whip of the Tory Party had to put up with in those days, especially in the fine days of Tom Johnston, are something to remember, and, from our point of view, to remember with delight. And here it is up again in the background, as it were.

It is no longer a question of subsidy, or of influencing in the House of Commons Post Office contracts; this is a direct proposal to make up for complete failure, after decades of public assistance, by getting the Secretary of State for Scotland to enter into an actual piece of national ownership and national direction. You cannot get away from the wording of the Bill. You do not need to go beyond the Memorandum on the front page. It is so simple. It is delightfully simple. It says that The Bill enables the Secretary of State, with the consent of the Treasury, to make grants and loans for public transport services provided for the Highlands and Islands in undertakings which consist of, or include to a substantial extent, public transport by sea: and to charter ships for such services. This sounds like a bit of national assistance. For this purpose the Secretary of State is authorised to have ships built for him or otherwise to acquire ships and to hold and maintain them. What is wrong with the description of my noble friend of this Bill as the first piece of nationalisation for nine years? Of course it is. If you look at the real circumstances of the case which have to be met, there is not the slightest doubt that in this modern age, this age of modern requirements, the people engaged in ordinary agriculture or any other pursuit, industrial or otherwise, in the Highlands and Islands deserve to have modern conditions provided for them. But obviously private enterprise cannot provide them, and so, after years of public grants to these services, the first piece of nationalisation is brought in. Why do not the Government admit what they are doing? Why all this shout against the principle of nationalisation when the only difference between them and ourselves seems to be that however far they go in the direction of national ownership they must always provide, somehow, that it is done in such a way and by such means that private enterprise reaps a substantial profit from it?

We shall have much more to say about this aspect of the case. I have not the confirmation yet from the Chief Whip, but I take it that we shall be discussing iron and steel on Monday. We shall be able to return to the general question and we need not be put off with the answer for the moment of that excellent Minister the Secretary of State for Scotland, on the general principle. We can see the needs of the inhabitants of these beautiful although sometimes wild areas in North West Scotland. We welcome the principle in the Bill to bring to them assistance. But, for heaven's sake, let us have it straight! This is a piece of nationalisation. Congratulations to the Government!

3.26 p.m.

LORD SALTOUN

My Lords, I have just come from Orkney, from Hoy, to be exact, although it must be much better known to my noble and gallant kinsman, Admiral of the Fleet Lord Fraser of North Cape. I should like to say one word on this Bill. It seems to me a small Bill on which to build a Party platform, but I am glad to welcome it and learn, for the sake of my friends in Orkney, that the Government are going to cast a friendly eye on the shipping services of the Islands. It is not before its time, I would add. I do not know much about the shops in Kirkwall but I do know this: that it contains the oldest free public library in Britain and a very learned librarian, and I find as I go north that the culture and learning of the general population increases as you get nearer the North Pole. For that reason I would ask Her Majesty's Government whether they are keeping the same friendly eye on Shetland as the Orkneys. I have not gone to Shetland by boat for a very long time; I have always flown; but Shetland is never very far from my mind. Unless my history is very out of date, Her Majesty's title to the Orkneys and Shetland is derived from security for the payment of a Queen's dowry; and if we neglect the Shetlands when we ought to take trouble about them I sometimes wonder what situation would be brought about supposing that the Kingdom of Norway wanted to pay the dowry and resume ownership of the Islands. If my history is correct, that is an additional reason for not neglecting the Shetlands but for making them feel that they are part with us, by the way we look after and serve them.

VISCOUNT STANSGATE

My Lords, may I ask the Minister this question? This is an extremely entrancing debate, much more interesting than appeared on the Order Paper. Is it a fact that this is a Bill for subsidising Scandinavian shipping firms in order that the Seven may beat the Six?

3.28 p.m.

LORD CRAIGTON

My Lords, the noble Lord, Lord Saltoun, said that this was a very small Bill on which to build a Party platform. It is, after all, a very shaky and small Party platform that the noble Lords opposite have at the present time. The noble Lord, Lord Stonham, referred to the Bill as the neatest piece of nationalisation, and the noble Viscount, Lord Alexander of Hillsborough, gave us a lecture on doctrine. As I was listening to him I could not help thinking that there was one fundamental difference between the two sides of your Lordships' House—that we can learn and we can change in a changing world. We have no Clause 4. We can do the sensible thing when it is necessary. I was glad to hear the noble Viscount refer to MacBrayne's. For twenty years from 1928 to 1948 MacBrayne's, a private company received a subsidy. He said that private enterprise cannot do it in the case of the Highlands and Islands; that we have learnt that private enterprise has not been able to do it since 1928, and we have to face facts as they are. If the noble Viscount and the noble Lord, Lord Stonham—wio, of course, really does know all the answers—cannot see a dividing line between help with finance, and nationalisation, then I am afraid we shall not be able to explain it to them any more.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

It is a matter of ownership.

LORD CRAIGTON

There is not a great deal of difference, except in degree, between lending money to build a ship and building the ship and lending the ship. We are lending finance in the form of a ship.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, would the Minister answer this question? Is it not the fact that this Bill provides for ships to be built for the Secretary of State for Scotland, and then gives him the right to control them, maintain them and keep them? Is not that the essence of the Bill?

LORD CRAIGTON

The noble Viscount said one word that makes all the difference. He said "control" them—no. Maintain them, if necessary, yes; but control them, no. That is the difference. We do not believe that the men of St. Andrew's House can control the ships better than those who are concerned with them.

VISCOUNT ALEXANDER OF HILLSBOROUGH

How can the Minister possibly make that statement when you give power to charter—that is, to lend for a fee—a ship which you own and which you have yourselves to undertake to maintain? How can one tell whether what the Minister says is right until one has seen the terms of the charter? I should not accept that until I had seen the terms of the charter, which is a contract.

LORD CRAIGTON

I agree in detail with the noble Viscount, and the. Bill provides that when the charter is a major one the terms will be available to this House.

The noble Lord, Lord Stonham, asked about the level of freight charges in the agreement. The position is that an agreement will be made, which of course will be disclosed to this House and which will, among other things, fix a level of freight charges and fares; and it will probably provide that no change in the general level (we shall not particularise details in the general level) should be made without coming back to my right honourable friend. The noble Viscount, Lord Massereene and Ferrard, also raised this point. He asked, "What happens if we make a profit?" Another noble Lord said that the charges may be too high. This requires a nice balance between the interests of the taxpayer, incentives to the operator to make it worth while to operate efficiently, and the growing needs of the user for fair transport charges. We have to meet all these three considerations in this contract. It has been done before, and I have no doubt that it can be done again.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

It sounds like control.

LORD CRAIGTON

Sufficient control to give the taxpayer a fair deal, certainly.

The noble Viscount asked about the appointment of the Government director. I said "Yes" in my speech, and "Yes" to Orcadian interests on the board. Then I was asked for the kind of undertaking that was eligible for grant. I will not read Clause 1 (2), but the position is that it must be a company which operates in the Highlands, and, whatever transport it may have, in its widest sense it must be ancillary to the sea service. We do not think that that will give any great difficulty, because the noble Lord went on, as did the noble Viscount, Lord Massereene and Ferrard, to ask, was Clause 2 (2) not rather holding back—was it not rather restrictive? The answer is that any firm having a Highland service, however good, which was part of a bigger service, would be able to qualify for assistance under this Bill, subject to everything else being equal, by forming a separate company.

VISCOUNT STANSGATE

That is, a Scandinavian firm?

LORD CRAIGTON

Anybody at all who is going to help the Highlands. But if my right honourable friend were giving finance to a large company, maybe in some other country, which was going to help the Highlands in their shipping services, it would be most difficult to go delving down into the books and trying to check up the use which was being made of the taxpayers' money. But there is no real difficulty in forming a separate company.

The noble Lord, Lord Stonham, asked about the position of district councils. The position is that now the county councils have power to delegate authority to them. They are not in the Act to which he referred. But before one alters the position of district councils in this respect (because finance and other things come into it) one would almost require a revision of the whole structure of Scottish local government. It is not nearly as easy as it sounds to make any change there.

LORD STONHAM

My Lords, may I intervene? The noble Lord agrees that he was not correct in saying that county and district councils could operate this service, or qualify for grants, because the district councils cannot?

LORD CRAIGTON

I was not going to make the point because the Scottish set-up is a little different from the English set-up. I said that county and burgh councils are included. The district councils are another limb altogether. What I said, the noble Lord can read in my speech, and it was in fact correct.

The noble Viscount, Lord Massereene and Ferrard, and the noble Lord, Lord Rea, supported us, and I am grateful for their support. I am grateful for Lord Massereene and Ferrard's constructive remarks. I noted what he said about the MacBrayne contract. It is too early to say what form the agreement will take, but I have noted his comments, especially on the freight charges. About this quarter of a million pounds, which he says will not get the Secretary of State very far, the answer is that you cannot spend all the money at once, and it is not the end, by any means. We have to negotiate before acquiring ships, and we do not want to show our hand and disclose to those with whom we might have to negotiate exactly how much money is needed. I can assure the noble Viscount that, subject to those magic words, "with the consent of the Treasury," my right honourable friend will find all the necessary money.

Finally, the noble Lord, Lord Saltoun, asked, would I keep a friendly eye on Shetland? I can assure him that I have been looking at the situation most carefully. It is very hard indeed to know what more we can do. If there is anything we can do in Shetland, then we shall most certainly do it, and I know that the Shetlanders will do everything they can to help themselves.

On Question, Bill read 2a, and committed to a Committee of the Whole House.