Lords Sitting of 17 July 1961

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

TRADING AGREEMENT WITH UNITED ARAB REPUBLIC
2.35 p.m.
LORD BARNBY: 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 having regard to the recently announced bilateral commercial trading arrangement between British nationals and the United Arab Republic:

(a) If this arrangement was made without the intervention of the United Kingdom Government.

(b) If such bilateral arrangements can in any way prejudice or retard further distribution to the United Kingdom claimants against Egyptianised assets.]

THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE MARQUESS OF LANSDOWNE): My Lords, I presume that my noble friend's Question refers to the agreement concluded on July 9 between a British firm of export consultants and the United Arab Republic. Her Majesty's Embassy in Cairo extended to the firm assistance of the type normally given to United Kingdom exporters in overseas markets.
As to whether such bilateral arrangements can be prejudicial to the interests of claimants against Egyptianised assets the answer, my Lords, is No. The Foreign Compensation Commission have, as noble Lords are aware, already received for distribution the compensation for all Egyptianised assets under the 1959 agreement.
LORD BARNBY: My Lords, while thanking the noble Marquess for that reply, may I ask him, with regard to the
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first part, whether it is to be understood that this indicates the beginning of a departure by the Government from their purist orthodoxy of disapproval of bilateral barter arrangements, which it has been understood have hitherto been viewed with disapproval by the Government? With regard to the second part of his Answer, may I ask if he can say whether he is likely to be in a position to make some statement with regard to this matter before the House rises?
THE MARQUESS OF LANSDOWNE: As I tried to make clear in my first reply, the assistance given by Her Majesty's Representative in Cairo was perfectly normal assistance in a private commercial enterprise, and therefore there has been no alteration whatsoever in normal practice. With regard to the second question, I would simply say to the noble Lord, that I should hope so.
LORD BARNBY: My Lords, while thanking the noble Marquess for his reply to the second part of my question, may I say that on the first part I evidently did not make myself plain. For the record, I would say that I refer to what has hitherto always been regarded as the traditional attitude of Her Majesty's Government of frowning upon barter arrangements between countries. It had nothing to do with the active participation by Her Majesty's Government in such a deal.

BUSINESS OF THE HOUSE
EARL ST. ALDWYN: My Lords, it will be necessary to have a dinner adjournment this evening, the time of which will be fixed through the usual channels, when we see how we get on with the Finance Bill. Dinner will be available tonight for those Peers who desire it, and I should be most grateful if noble Lords could inform the Refreshment Department by four o'clock. We are having certain staff problems and unless noble Lords can warn us by four o'clock I am afraid they will not be able to have dinner, but there will be sandwiches available. To-morrow night we shall not be able to put on a proper dinner but sandwiches will be available in the Restaurant.
NEWPORT CORPORATION BILL
Read 2a, and committed to an Unopposed Bill Committee.

COVENT GARDEN MARKET BILL
2.38 p.m.
Order of the Day for the Third Reading read.
EARL ST. ALDWYN: My Lords, I have it in Command from Her Majesty the Queen to signify to the House that Her Majesty, having been informed of the purport of the Covent Garden Market Bill, has consented to place Her Majesty's interest, so far as it is concerned on behalf of the Crown, at the disposal of Parliament for the purpose of the Bill.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL WALDEGRAVE): My Lords, I beg to move that this Bill be read a third time. There has been so full a debate and it is so closely within your Lordships' recollection that I do not think your Lordships will wish me to make a speech at this time.
Moved, That the Bill be now read 3a.—(Earl Waldegrave.)
LORD HAWKE: My Lords, we have fought a good fight and we have lost. I can only hope that time will prove that we have been wrong. I hope that when the Market Authority is set up it will from the start realise that people will expect a really worthy development for this potentially fine area in London, not just a series of concrete office blocks.
2.40 p.m.
LORD MORRISON OF LAMBETH: My Lords, if I may respectfully say so, I agree with the polite and friendly observations which have fallen from the noble Lord, Lord Hawke, opposite. I do not propose to keep your Lordships long, but it will be remembered that there was some degree of controversy between myself and the noble and learned Viscount on the Woolsack and the Parliamentary Secretary to the Ministry of Agriculture about the position of the London County Council in this matter; and in order to refresh your Lordships minds I will quote briefly from the OFFICIAL REPORT. During my speech on Thursday last I said to the Lord Chancellor [col. 277]:
"My Lords, would the noble and learned Viscount tell us, in terms, what the L.C.C.
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said about what they want to be done with the Market?"
To which the Lord Chancellor replied:
"My Lords, if the noble Lord will contain himself for a moment"—
which I did—
"I will come back to the important point on which the London County Council are most anxious".
At col. 278 I again intervened and said:
"My Lords, I hope the noble and learned Viscount will not rebuke me again but I have a recollection that the L.C.C. gave evidence before the Runciman Committee. Does the noble and learned Viscount remember what line they took? I thought it was rather critical of the present site."
The Lord Chancellor replied:
"My Lords, I have the report and the evidence here, but I think it would be a pity if I interrupted my speech."
And that finished that.
Now we come to the Parliamentary Secretary. During his speech towards the end of the debate I said [OFFICIAL REPORT, Vol. 233 (No. 109), col. 315]:
"Will the noble Earl forgive me? I wish he would clear this up, because I raised this matter with the noble and learned Viscount who sits on the Woolsack. Will the noble Earl quote the positive approval of this Bill and this scheme by the London County Council—the positive approval? Because they gave evidence otherwise to the Runciman Committee."
And the noble Earl replied:
"My Lords, I was going through the list of authorities and bodies whom the Government had consulted, and whom it was their duty to consult. On the question of the London County Council and its degree of acceptance of the proposals in this Bill I have not a document to quote; but it would be unlikely that one would have a document to quote on this matter."
I thought it would be well, for the sake of the Record, to quote from a letter which I have received from the leader of the London County Council Sir Isaac Hayward. I am not a member of the Council and have no authority over its affairs. I submit that this letter is to a great extent on my side on matters as to the views of the Council on the merits, but in the end it is clear that the Council reached some sort of compromise about this scheme—possibly it has some relation to another scheme about which they reached a compromise as well—though it is not true, as I shall show, that they positively approve the Bill. I think it was the noble and learned Viscount the

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Lord Chancellor, who said, at the end of the day, that they "acquiesced in" the Bill; and that is true, because I want to be quite fair.
However, I will quote certain portions of the letter. I will not quote it all, because I do not think that is necessary, but if anybody wants the whole letter in the Record I do not mind. Sir Isaac Hayward says in this letter of July 14:
"It is quite true that as far back as 1950 the Council expressed the view that if the Government were to decide on a unified control of the wholesale markets serving the London area, the appropriate authority or agency for the County would be the Council. This view was reiterated in 1955 in the Council's evidence to the Runciman Committee in favour of the removal of Covent Garden Market."
The letter goes on:
"It was also recommended"—
this is by the Runciman Committee—
"that a public ad hoc authority should be set up to undertake the comprehensive improvement of Covent Garden, the development of a proposed new market in north-west London and the co-ordination of redevelopments and improvements at all the other London markets. The Council expressed regret …"
this is after the Report of the Runciman Committee—
"that the Runciman Committee had not supported the complete removal of Covent Garden.
In 1958 the Government announced that it had accepted the broad conclusions of the Runciman Committee in relation to Covent Garden; that steps would be taken to set up a statutory market authority for Covent Garden alone; and that it was considered unnecessary to proceed with the Runciman Committee's proposal for a London Markets Authority. The statutory Covent Garden market authority would, when set up, first concentrate marketing into a smaller area and ultimately provide and maintain up-to-date buildings in the area …
For some time before the publication of the Runciman Report the Council had been trying to do something positive to try to improve conditions as regard traffic and fire risk in the existing Covent Garden Market."
Finally, the Council secured some undertakings from the Government about this point. The letter also says:
"The City Corporation had been trying to get powers to set up a fruit and vegetable market on the Metropolitan Cattle Market site (Caledonian Market), Islington …"
Some arrangement has been reached that, in return for the transfer of that site to the London County Council, the Council will build an abattoir for the City somewhere else. Then the letter continues:
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"The Minister then asked the Council to negotiate for the acquisition of the St. Luke's site."—
I think that is in the Finsbury and Shore-ditch area. And here is the point where the Council, not improperly, co-operated with the Government for the sake of a public service.
"Having got so far, having pressed for the tidying-up at Covent Garden and it being clear that the Government had rejected the idea of a unified control of the London markets and accepted that Covent Garden should stay, our Committees agreed to accept the principle of the setting up of the new authority for Covent Garden in so far as it arose in connection with the proposal to acquire the St. Luke's site with a view to its being vested in due course in the statutory authority.
"From all of this you will see that we have accepted the situation in respect of Covent Garden, though with regret. From a town planning point of view, we think that on the basis that the Market has to stay more or less where it is in the centre of London, it should be moved to the Seven Dials area and rebuilt with adequate entrance and exit and car-parking facilities. At the same time the whole statutory market area should be opened up and redeveloped round the church and the Opera House (but not with blocks of offices) and made an area of high amenity."
My Lords, I thought it would be well to quote that letter in order to show that this question, which was never answered by the noble Viscount the Lord Chancellor or the Parliamentary Secretary, as to the Council's real attitude at the beginning and after the Report of the Runciman Committee was a contrary view from that taken by Her Majesty's Government in this Bill. But it was fair for me to make it clear also that they had in the end acquiesced in the passage of the Bill. I did not know all this. I was calculating and guessing at what might be the situation, but I was most careful never to say that the Council had opposed the Bill, or deposited a Petition, otherwise I should have been in difficulties. In the end, they acquiesced. On the other hand, I think that the Lord Chancellor and the Parliamentary Secretary might have admitted to the House, which they never did, that the Council, on merits, had opposed the Covent Garden rebuilding before the Runciman Report, at the time of the Runciman Report and after the Runciman Report. Possibly some arrangement has been reached between the Government and the Council which I, as one experienced in these matters, can understand, whereby friction between Her Majesty's Government and the Council has to that extent been removed.

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In conclusion, I want only to say that I still think we were right about this Bill. I still think that it would be right, over a period of years, to clear the whole of the central London markets out of central London—Covent Garden, the City Corporation markets and the others—and to have four mixed markets somewhere on the edge of the County of London, and to let them be run in London, as they are in the Provinces, by the municipality, namely, the London County Council. However, as the noble Lord, Lord Hawke, said, we had a good try. On one occasion we were successful and it was a great day. On another occasion we were unsuccessful, which from our point of view meant that it was not such a great day. We do not propose to divide against the Third Reading of the Bill, but we do think that Her Majesty's Government have lost a great opportunity to rationalise and clear up the London markets situation, the result of which would have been a great relief of London's traffic problem.
2.52 p.m.
EARL WALDEGRAVE: My Lords, I am sure your Lordships will be grateful for the trouble which the noble Lord, Lord Morrison of Lambeth, has taken on this matter in investigating with the London County Council to make the position quite clear. I should like to make only one further comment: that I did say on the last occasion we were discussing this Bill, on July 13, at Column 319 of Hansard:
"My Lords, I come to the question of the London County Council. They told the Committee"—
that is the Runciman Committee—
"and later the Government, that on town planning grounds they would have preferred to see the Market moved to a site elsewhere outside London."
I said that all through, and there was no question of my trying to conceal it. The London County Council made it clear to the Runciman Committee that they favoured the complete removal of the Market from the Covent Garden area. So far as I am aware, the London County Council's view on the matter is still the same—that is Ito say, on town planning grounds they would prefer to see the Market removed from its present neighbourhood.
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But on March 17, 1958, the then Minister of Agriculture had a meeting with the Leader and the Chairman of the Town Planning Committee of the London County Council, at which the Minister of Housing and Local Government was also present. At this meeting the Minister outlined his proposals for Government legislation to solve the Covent Garden 'problem, emphasising that the Government was not yet committed to his plan. The Leader of the London County Council reminded the Minister that the Council would prefer the removal of the Market to another area; but he went on Ito say that as the Runciman Committee had not recommended in this sense the London County Council were prepared to co-operate with the Government in putting into effect plans for improving the Market on or near its present site, if they should finally decide to tackle the problem in this way. He also stressed the importance of early action to reduce the acute fire risk and control the storage of goods and ancillary business around the Market. On a number of occasions since then the Government have paid public tribute to the assistance they have in fact had from the London County Council in carrying these plans forward. Therefore I do not think there is much difference between us, and I believe we have now explained to your Lordships fully all that has developed in 'these negotiations between the Government and the London County Council.
I did not want to make a speech, and I will not make a long speech on the Bill at this juncture. But it is vitally important that the present chaos in the Market should be brought to an end. When this Bill is on the Statute Book the chaos which affects not only marketing but traffic, and means also a grave risk to life from fire, can at last be tackled realistically.
On Question, Bill read 3a, with the Amendments, and passed, and returned to the Commons.

FINANCE BILL
2.55 p.m.
Order of the Day for the Second Reading read.
THE MINISTER WITHOUT PORTFOLIO (THE EARL OF DUNDEE): My Lords, I have been looking through the

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OFFICIAL REPORTS of our debates on the annual Finance Bill for the last few years. As a general rule, your Lordships prefer to have a short debate on the Second Reading. Last year we used it as an occassion for a two-day debate on the general economic situation. But this year we have had three fairly recent economic debates, the last of which was on May 17 when this Bill was going through its Committee stage in another place. I propose, with your Lordships' permission, first to summarise briefly the major changes but not the lesser changes in taxation which are proposed, and then to conclude with a few words about the economic situation to which the Bill is related.
My noble friend Lord Amory, in his Budget last year, took some modest steps in the direction of restraining expenditure by increasing taxation, because he anticipated that personal incomes were likely to rise more quickly than production, as indeed they did. The main theme, or the principal keynote, of this Finance Bill is the need to reduce excessive spending power. Except for a few minor adjustments in other branches of taxation, the only change in the Bill which will eventually reduce the revenue is the raising of the figure at which surtax begins for earned income from £2,000 to £4,000 plus the existing earned income allowance, which is two-ninths up to £4,005 and thereafter one-ninth up to a final figure of £9,945.
My Lords, £2,000 to-day is equal in value to somewhere between £600 and £700 between the wars when our present surtax structure was established, and it is equal to about £400 in 1909 when the first surtax was introduced by Mr. Lloyd George, incidentally with a higher starting point. British salary earners and professional men, business managers and executives who are earning incomes within the range of from £2,000 to £6,000 a year are at a considerable disadvantage compared with people earning similar incomes in Germany, the United States and other of our industrial competitors. The new starting point at £4,000 applies only to earned income, and the differentiation between earned and unearned income, which was first introduced into our tax system at the beginning of this century, has usually been justified by the argument that, whereas the owner of property
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can probably pass on at least some of his possessions to his children, the man who earns his living, other things being equal, normally needs to save a larger proportion of his income than the man who lives on the proceeds of past savings.
In order to compensate the Revenue for the loss which will eventually arise from this new surtax structure on earned incomes the Chancellor of the Exchequer proposes to increase the profits tax from 12½ to 15 per cent. It so happens that both these taxes, surtax and profits tax, are delayed in their action. They do not affect the revenue for the current year. Surtax on income which is now received becomes payable in January, 1963, and profits tax is payable either one year or two years after the profits to which it applies have been earned, depending on the time of the year at which the company closes its accounts. British salary earners who suffer from the present out-of-date surtax structure will not get any relief this year, but they may perhaps be encouraged by the knowledge that their position will be improved the year after next.
On the other hand, companies which know that they will have to pay a higher profits tax next year on their present profits may well be deterred by that knowledge from increasing their dividends now; and that is one of the purposes of this Bill, as it was of Lord Amory's Finance Bill least year. Lord Amory increased the profits tax from 10 to 12½ per cent. last year; the present Chancellor of the Exchequer has now increased it from 12½ to 15 per cent., so that it has increased by half as much again in two years, not because we object to anybody having more money, if that money represents an increase of real wealth, but because we think it right to restrain the inflationary increase of spending power at the present time.
The other principal changes in taxation proposed in the Bill are the 10 per cent. duty on television advertisements, which seems to have given considerable satisfaction to almost everybody except the people who are going to pay it—but it is not a very large amount, £7 million this year and £8½ million next year; the increase of 20 per cent. in Excise duty on motor vehicles, which is estimated to yield £25 million; and the duty of 2d. a gallon on hydro-carbon oils, which will produce £48 million this year and £50

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million in a full year. These three taxes together will raise just over £80 million of new revenue. If you add that to the approximate figure of £425 million, which is the estimated above-the-line surplus on the existing basis of taxation, you will then get an estimated above-the-line surplus for the current year of £506 million, compared with Lord Amory's estimated surplus of £304 million last year.
When we subtract that estimated surplus above the line from the estimated deficit below the line arising from the Government's capital expenditure, then the estimated overall deficit for this year is only £69 million, compared with £318 million last year. What that boils down to is that the Government borrowing should be reduced by about £250 million, which is quite a substantial amount. But it is only a fraction of the inflationary increase in spending power which was created last year by the rapid rise in personal incomes, which seem to be rising even faster in 1961. Our present estimates are that if they go on increasing at the rate at which they increased in the first quarter of this year, spending power, personal incomes, in 1961 would be increased by somewhere between £1,100 million and £1,200 million. Although industrial production, I am glad to say, in the last month or two has begun to grow again, its growth is nothing like commensurate with this growth of monetary income, which has already caused the price level to rise by no fewer than three points in the last seven or eight months after two and a half years of stability.
My right honourable friend has therefore asked in this Bill for power to use what are called the two economic "regulators" which are taxes that may be applied optionally, at the discretion of the Chancellor of the Exchequer: number one being the variation of Customs, Excise and purchase tax together, within a limit of 10 per cent. either way; and the other, number two, the payroll tax. Both of these were fully discussed by your Lordships on May 17. I explained to your Lordships then that although my right honourable friend recognises that there are some imperfections in the payroll tax, which we must seek to remove if it is to be re-enacted in 1962, he Still wants power to use it, if need be, in
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1961 since he considers that an imperfect instrument may be better than none at all. As for the number one regulator, variations in Customs, Excise and purchase tax, there was, I think, less criticism of that. Most of your Lordships appeared to regard it as a useful advance in the science of public finance.
My Lords, if these two regulators were both applied to their fullest extent for a full period of twelve months they would, between them, mop up another £400 million of spending power; but only eight months of the twelve would be in the present financial year, because four of them have already gone. After that, at the beginning of the next financial year, these regulators, if they are to be continued, will have to be renewed by receiving fresh authority from Parliament. I do not, of course, know at all what my right honourable friend's intentions are with regard to the use of these two economic regulators. But whether or not he decides to use them his Finance Bill is a major instrument in the economic policy of the Government.
I think, my Lords, that most Members of Parliament in both Houses and, what is perhaps more important, most trade union leaders and most employers have been educated in the last generation when we were all trying to solve the problems of unemployment and unnecessary poverty. Perhaps it is not surprising that in trying to deal with the problems of full employment and affluence, which are very different, their success has not always been remarkable, and that in many respects this country has been outstripped by countries whose old economies were destroyed in the war and who have had to start again from scratch, without the old inhibitions which still survive here. Although we have had a great deal of advice about it from all kinds of people, some of which has been very good advice, as a nation we have not really yet learnt how to cure the economic diseases which spring from the abundant prosperity which we now enjoy.
I always talk with great diffidence about any economic subject, because I am not at all well versed in political economy, but it seems to me that our fundamental economic difficulty is a very simple one, and I do not think it has

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really changed essentially in the last sixteen years; it is simply our disposition to spend more quickly than we earn. In the post-war sellers' market employers got into the habit of agreeing, not only to those wage claims which can be met by greater efficiency or economy of production and better salesmanship but also to those claims which can be met only by putting up prices, believing that they could easily sell at a higher price—which, of course, they usually can in the home market, because we are all giving ourselves more paper money with which to buy things. But, my Lords, you cannot build up a flourishing export trade, which is our eternal necessity in Great Britain, by yielding to the cost price inflation at home; partly because your prices will not be competitive, and partly because inflationary demand at home will lengthen your delivery dates, and your foreign customers will not buy from you on a twelve-month delivery basis if they can get what they want in six months from somebody else.
Of course, there are a great many other things in our economy which need improving, like restrictive practices. I myself believe that it is vital to our industrial future that we should abandon at least some of them. But even if we could get rid of all our restrictive practices to-morrow, if we insisted on paying ourselves a good deal more than the value of the increased production that we should expect to get, and a good long time before we got any of it, we should still have the same old difficulty of expanding our exports and of avoiding a foreign exchange deficit.
I think there are great improvements, too, which could be made internationally, in the international credit base, on which your Lordships had a debate two or three months ago, which would be to the great benefit of all the trading countries in the Free World. But however good and well-planned the credit arrangements to facilitate international exchange may be, if you consistently go on spending more than you earn the time will come when you will no longer be solvent. This problem of over spending, I think, is always essentially the same, whatever methods we may think right to use in trying to deal with it. We can use monetary methods, which means that you stop people borrowing
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money from the banks or from hire-purchase companies; we can use the fiscal methods, such as are contained in this Bill, which means that you stop people from spending their money by taking it away in taxation; or we can use physical controls, which means that you stop people from building offices or houses or flats, or something of that kind. It is always a question of stopping people from doing something, and it is sometimes very necessary.
As I think your Lordships know, in present circumstances we are not proposing to apply any physical controls; but I have often told your Lordships that we have no objection to them in principle, and we might think it right to use them in different circumstances. We are at present using a combination of monetary and fiscal controls. How much better it would be if there could be some voluntary agreement or convention among all sides in industry to stop cost inflation at the source by applying a reasonable wage policy, as was suggested not long ago in one of your Lordships' debates. That would be so much better far the country than first of all starting inflation and then the Government corning along with some of these remedies. But whether that is an impracticable dream or not, I do not know.
I think it is very misleading to talk about a foreign exchange crisis or an economic crisis, as we all sometimes do, because there has never been any crisis in the proper sense of the word, which means a decisive moment or a moment of change. What we have had are certain moments when, owing to some accidental development, the attention of the public has been sharply drawn to the existence of a continuing problem which is there all the time; and the problem is not just haw to stop cost inflation but how to stop it without, at the same time, retarding sound economic growth.
My Lords, we have had this much success: that our standard of living in Great Britain, according to one economist, has increased in the last ten years more than in the previous hundred years. I do not know what figures he was using for the previous hundred years, but the figures for the last ten years, based upon the real value of wages, show a rise of just over 30 per cent.—that is allowing,

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of course, for the decline in the value of money; and this in spite of cost inflation, which was in fact arrested for two and a half years from the spring of 1958 until the autumn of last year, and which we intend to fight again now.
At the same time, our exports continue to reach new records. I think an outside observer who began to study our economic problems in July, 1961, and who started off by looking at the record export figure of £331 million for June, at the unemployment figure of only 1·2 per cent. for June, and at the record level at which average wage earnings are running, would probably not be at all impressed by all the speeches which your Lordships are now preparing to make, and would probably be very puzzled to know what we thought was wrong and why we were worried about anything. Of course, the answer is that we are not doing enough in comparison with others, and that if we slide back into the position of a second-rate industrial Power we shall then become a second-class political country, too.
I think it was when we had our last economic debate that I pointed out to your Lordships that if we stopped giving anything at all in aid to underdeveloped countries, and stopped maintaining any defence forces abroad, if we could get rid of those two categories of unrequited exports, our trade deficit for last year would have been non-existent, and we might now even be adding to our reserves. But does anyone want to do that? I do not think any of your Lordships do, and I believe there will be very few people in the country who want to do it either. We have the resources, the skill and the brains to do very much better. All we need is common sense from all sides in industry, and I am sanguine enough to believe that we can get that, too. If we cannot, if we surrender to cost-inflation, and allow ourselves to slide downhill, we shall then receive very little consideration and no esteem at all either from Europe or from our own Commonwealth. One will regard us as a potential liability and not as an asset, while our own Commonwealth will look upon us as a broken reed which is of no further use to them. But if we can win the battle against our own weakness and against our own reluctance to move with the times, then
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we can still lead both in Europe and in the Commonwealth. I beg to move.
Moved, That the Bill be now read 2a.—(The Earl of Dundee.)
3.23 p.m.
LORD PETHICK-LAWRENCE: My Lords, we have listened to the noble Earl give a lucid account of what is in the Budget, and some picture of the prospects which he foreshadows in the early future. Perhaps I might be allowed, in the course of my speech, to make reference to that early future, because we understand, first of all, that to-morrow in the other place there is to be a debate on the prospects of the economic outlook, and it is suggested that a week from to-morrow the Chancellor of the Exchequer will be making another statement bringing up to date his attitude toward the prospects for the year. Be that as it may, my Lords, I propose to turn backwards, in the first place, to see what has been the attitude of this House and the country to what has been going on under the auspices of this Government in the last eight to ten years.
About a year ago, I remember making a speech in this House in which I painted a rather serious picture of the position of this country. During the debate I was taken to task by more than one speaker from the Government Benches on the ground that I was exaggerating the situation when I drew a comparison between the risk which faced us if we did not stand up together, man to man, in fighting the foreign foe, and the danger we faced if we did not stand up to the economic situation of this country. Looking at the situation which has developed during the last few months, and which is regarded as very grave in the opinion of a large proportion of the general public, and even by Her Majesty's Government, including the Chancellor of the Exchequer, I wonder how far noble Lords here would really differ to-day from the point I made a year or so ago when I drew attention to the grave economic danger and the grave peril with which this country was confronted in the economic sphere. It seems to me that the lesson of the intervening months, between the time I made my speech more than a year ago and to-day, and of the promised statements to be made by persons in authority on the Government Benches, is that my fear that unless we mended our ways we should economically cease to be a

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great Power in the world was not so preposterous as was thought at the time by certain noble Lords.
Now, my Lords, what is it that we take exception to in the policy of the Government? All along I have taken two things as matters of criticism of the Government. First of all, I have criticised, and I continue to criticise with confidence, their complete reliance upon a high bank rate and dear money in general as the main means of dealing with the economic situation. In the second place, I criticised a year ago, and I still criticise, the complacency in their policy which they have tried to put across to the country in coining the phrase—I do not care who used it, but it was not anybody on this side "You've never had it so good"; or, as a great many other people would put it, "I'm all right, Jack". Both those things are very dangerous shibboleths to describe the British people, because it places the advantage of apparent prosperity of private individuals as separate from, and even possibly at variance with, the prosperity of the nation as a whole, and the need we all have, to whatever part of society we belong, whether rich or poor, one class or another, to put the interests of the country as a whole before the interests of our individual selves. On both those indictments I arraign the Government for doing great damage to this country.
Now let me come to the question of the high bank rate and dear money in general. Two things are said in its defence. First of all, it is said that the Government at any rate succeeded in stopping the rise in prices of an inflationary kind. In the second place it is said that they were able to reinforce the amount of currency and exchange reserves in our vaults, so that we could face up to sudden gusts of ill-fortune in the international and national weather. I am quite prepared to admit that there is something in those claims, but personally I think that, when we come to look at them more closely, we shall find that they have not been nearly so successful as they may appear to have been.
Taking the second matter first, the extra strength of our reserves of currency and exchange, I must remind your Lordships that the result of the high bank
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rate was to bring to this country a fortuitous amount of hot money. Hot money is a bird that flies in and out at its leisure. It is quite true that the rate of interest of the bank rate brought into our Treasury quite a considerable amount of hot money. But it was frankly hot money, and we know to-day that there are strong signs of its going away again. It may well be, as I said with great thankfulness, that a number of international high financial authorities have not withdrawn their money as rapidly as they might have done, and that a certain amount of that so-called hot money is standing with us to-day. But it is a precarious hold we have on it. It can go at any moment, and that moment will come when the bank rate tends to come down. Therefore, I think that the advantages which are claimed for a high bank rate and dear money are not nearly so powerful as they appear to be to less informed persons, who are not aware of the real state of the facts.
In the second place, with regard to inflation, I have never denied the advantage of stopping inflation and stopping a rise in the price of commodities. But I would point out to members of the Government, who are flattering themselves with having succeeded in that respect, that there is another kind of rise of prices—I do not know whether it could strictly be called inflation or not—which is the exact result of a high bank rate and dear money. For instance, what is the effect of dear money? The first effect is to put up the rents of houses. A large number of people in this country are suffering from high rents, owing to the dearness of obtaining capital and covering the period of paying off the capital which has to be borrowed. Again, when it is a question of installing new machinery in a factory the rate of interest at which new capital has to be borrowed is a considerable factor, and a permanent factor, in the cost of the output of that factory.
I am not going to run through the large number of illustrations which I could give, but I would take as one more example the case of municipal rates. Owing to their public works, many municipalities have to borrow money, and it is well known that they have to borrow at a far greater rate of interest than prevailed in the old days.

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when the bank rate was low and they could borrow freely.
Finally, I think it is clear that the fall in the value of gilt-edged stocks, bringing a complete change in the whole outlook towards investment of that kind, is a very grave injury to the country. As I said to your Lordships not long ago, I was brought up to think of the importance of preserving the standard of the money represented by what we called the Funds in those days. I remember when 2½ per cent. Consuls were as high as 114, which is an unthinkable figure at the present time, when they have got down into the 30s—as low a figure as I have known in their history.
My Lords, all those factors are factors to set against what is alleged to be the wonderful achievement of the present Government in avoiding ordinary inflation. I myself would go so far as to say that, in a sense, dear money is in itself a form of inflation and, as such, can cause evils to the body politic and to the private citizen comparable to, if different in kind from, those of ordinary inflation. Those are the facts, as I see them, which make me very loth to do other than criticise the Government. I see grave dangers ahead.
I was reading the other day a well-known paper of high financial and economic standing. It stressed the importance of the Chancellor of the Exchequer using his powers, and using them speedily, to promote some change in the present situation. I thought that perhaps the writer was going to have some brilliant idea of a new method by which the dangers to which I have been referring would be overcome. But I found, to my horror, that the only things he was advocating was that the bank rate should go up at once to 7 per cent., that the Chancellor of the Exchequer should use all his powers to increase the tariffs on imports from abroad and to increase other taxes on the people. With all due respect to the editor of that paper, and the policy which it represents, that is trying to meet the difficulties of to-day with the old-fashioned, discredited methods that have done so much to produce stagnation in this country at the present time.
This stagnation, my Lords, is far greater than even the evils to which I have referred. I think that the most important criticism I have of the Govern-
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ment is that their policy has produced stagnation. It is beginning to bring inflation back again. From all the evidence available, it is quite clearly creating stagnation; and in the last resort it is that stagnation, more than anything else, that is bringing about our perilous position at the present time.
We in this country live on the favourable margin between our exports and imports, and if our imports exceed our exports, both visible and invisible, in volume and in value, we are in a parlous way indeed. Because we cannot live as a country, and no artificial aid which we get from abroad, for which we are grateful—people helping us to bolster up our reserves of currency and exchange—can really put us right unless we get our trade balance correct. I am happy to see that in the last few months there has been some recovery, but it is much too early to judge whether that recovery is of real significance or whether it is just a flash in the pan. Going back over a period of months, our position remains exceedingly serious. I cannot avoid criticising the Government for the part they have played in that, for both the reasons I have given hitherto. I have never denied that changes in the bank rate may at times be justified and, in times of crisis, inevitable; but I have maintained, and maintain more vigorously than ever, that changes in the bank rate should at most be one of several of other pieces of machinery which should bolster up our position.
I have said earlier in my speech that I dislike particularly the Government's pretence that all is well, because "I'm all right, Jack—and you need not worry about the nation." I see the noble Viscount, Lord Amory, quite properly, shaking his head. I never charged him with taking that view, but there are people who have taken it. I think that is a most dangerous position. I have known the people of this country all my life, with an increasing respect for them. If they are treated properly, if they are faced with the facts and told that the nation can succeed only if they are prepared to make sacrifices individually, they will play their part. What I complain about in the Government is that they have taken the opposite position. The people have been led to believe that they can be well off themselves even

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when their country is going downhill economically. They cannot. And when they wake up to find that they have been betrayed in that way, I think they will show their resentment.
But we have not yet got to that stage. We have reached the stage where the people must be told the facts and told that they must tighten their belts; and, above everything—and this is essential with the British mind—they must believe that they are getting "fair do's". The question that we on this side of the House ask is: in this Budget, which the noble Earl has so clearly laid before us, do the ordinary people think that they are getting "fair do's"? I emphatically state that they do not think so.
Let me just recall certain of the facts of the last few months. In the first place, we had the imposition of a special rate, a doubling of the tax on medicines which the bulk of the rank and file of the ordinary people of this country must have in order to preserve their health. We on this side of the House objected to that at the time. We said that we were quite prepared to consider imposts upon every section of the people, provided they were fair, but that, in fact, we regarded that as an unfair impost. What was the next thing? The next thing that happened was that the Chancellor of the Exchequer made certain alleviations on surtax. I said from these Benches that I thought it was perfectly reasonable and fair that he should allow surtax payers relief on earned income with other income tax payers. So far as that was concerned, I thought it a perfectly legitimate relief of taxation when people were improperly dealt with under the laws of the country. What I took exception to then, and take even stronger exception to now, is the enormous other concession made at the same time to the earned income tax payers through a very large increase on the basic amount from which their surtax begins. I think that the time when he was making the other concession was not the time when he should also make his gifts of largesse to these people and raise the money from other people.
In the course of the debates in another place a further concession came to light. I would not say for one moment that it was a trick of any kind; I think the words of the Chancellor of the
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Exchequer were not 'fully understood; but during the debates on the Committee stage in another place it became evident that, to a certain extent, unearned income was also going to gain advantage from the terms of the Bill. I do not want to argue the point here; it is a most complicated one and I do not think anyone in a speech could possibly make clear what the distinction is.
I only say that, first of all, we have had the relief to surtax payers allowing them to deduct two-ninths (I think it is) of their income for surtax purposes; secondly, we have had the very large concession to surtax payers who pay on earned income; and thirdly, we have had an explanation (I am not suggesting anything improper at all) of something which was not appreciated at the time, but by which, to a certain extent, what are called investment incomes gain a certain amount from the new law regarding surtax.
LORD HAWKE: My Lords, I hesitate to interrupt the noble Lord, but this point interests me. This is the first I have heard of it, and it is good news to me. Can the noble Lord tell me exactly how I shall benefit?
LORD PETHICK-LAWRENCE: It is so complicated a point that it would take a considerable time to explain. I would refer the noble Lord to a debate in another place towards the end of the Committee stage in which the Opposition moved an Amendment and it was resisted by Sir Edward Boyle. There was no charge of a breach of faith on either side, but it was found that the law as lit is now embodied in the Finance Act does provide in certain circumstances a relief to unearned income which was not appreciated at the time when the statement was originally put forward. As I say, it would take far too long to explain, but the noble Lord will find it on almost the last day of the Committee stage.
I think the result of those facts has been to produce in the minds of a large number of people a sense of unfairness; and one thing for which the British people as a whole will not stand is something that they regard 'as unfair. I regret, therefore, that these remarks of political persons or non-political persons against claims for higher wages for the working people fall upon deaf ears. They are bound to fall upon deaf ears so long

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as there is It sense of unfairness. There is that sense of unfairness throughout the country, particularly among the working people, in that so much has been given to persons of high position and wealth. If that is so, then they are going to claim whatever they can get from the body politic in the shape of a higher standard of living for themselves.
If you grant that I am right in thinking that these people regard the set-up at present as unfair and rigged unfairly against them, then you must admit that until you can convince them that the situation is not unfair, no amount of blaming them for trying to get a higher wage and inconviencing the community in so doing will get you anywhere at all.
Those, broadly, are the points I want to make. First of all, I claim that the Government have failed through their obsession in favour of monetary policy. I admit that the bank rate may have to be used in certain circumstances, but the reliance on it of the Government, in conjunction with certain people with financial minds, is a slightly mistaken one if it is going to take the prime place. Secondly, I think it is essential that what we do in the matter of relief taxation not only should be fair but should be realised to be fair by the bulk of the people. When it comes to the new regulators which the Chancellor of the Exchequer may be putting on, I think I am right in saying that the noble Viscount who is to follow me was himself very doubtful about the desirability of what is known as the payroll tax; but he was in favour of the other. For my part, I am not enamoured of either. I am not in favour of the payroll tax for the reasons which the noble Viscount, Lord Amory, gave; and I am not in favour of the other tax, which in itself is an unfair tax, because it is one which falls on the humbler people more than it does on the well-to-do, and it increases the price of all the necessary simple things of life. To my mind, those two things are enough to mean that the working class people of this country will not be guided by the views of people in high places in the Government, because they are not prepared to admit the fairness of the distribution that is being made.
Finally, I repeat once more my belief that the high bank rate and dear money policy is a form of inflation in itself which is quite as injurious to the produc-
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tivity of the nation as an inflation of the direct kind. Much as I hate it, and much as I would go a long way to stop inflation of the ordinary kind, such as rises in prices, I think the Government may easily tumble over backwards into a form of inflation which must be just as injurious as the inflation to which the noble Viscount and myself are strongly opposed.
3.50 p.m.
VISCOUNT AMORY: My Lords, once again I am sure your Lordships, having listened to the noble Lord, Lord Pethick-Lawrence, will feel, as I do, that the lucidity and the moderation with which he has addressed us this afternoon is a never-ending source of satisfaction to his friends. I do not think the noble Lord will expect me to agree with him on interest rates, because we have crossed swords on this matter before. I accept with alacrity his statement that he is prepared to accept them as one of a series of measures in appropriate circumstances, and that is the way I myself look at them. I cannot accept his view that high interest rates are in themselves evidence of inflation. They reflect, when they are necessary, the supply and demand situation for capital in real terms. I agree entirely with the noble Lord that the attitude, "I'm all right, Jack" is as despicable as the attitude we experienced after the war for some years of, "I couldn't care less". They are both absolutely unrelated to the needs of the nation. I think I am on record on a number of occasions when I was in office as saying that although the expression "We've never had it so good" is factually correct, it is a most dangerous basis for our future conduct and actions.
The noble Lord, Lord Pethick-Lawrence, has said that the Budget and Finance Bill of my right honourable friend the Chancellor of the Exchequer is unfair. If I thought that, I should regard it as a very serious criticism indeed, because I agree with the noble Lord that our nation gives the best account of itself only when it feels that the treatment of everyone is as fair as can be achieved. But when we view this Budget against the background of recent Budgets, I cannot think for a moment that anyone can really conclude that it contains anything which is unfair. I should have thought that the reduction in surtax, against the background of

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other reliefs that have been made over recent years, was certainly not unfair; in fact, many people feel that it is overdue. I do not think that the reaction in the country generally has been a reaction which gives one to think that people generally—the man in the street—regard it as unfair. The noble Lord, of course, did not mention the increase in profits tax that has been made at the same time. Nor can I agree with the noble Lord that the specific increases in health charges justify the term "unfair", because what, in effect, has happened is that a proportion of the increased cost of the Service, equivalent to the proportion that has been paid hitherto since the scheme started, has been passed on to the user—just about the same proportion. Unless one takes the view that the original basis of that Act was unfair, I do not think that this action can justify that term.
Finally, if I may say so with respect, I do not think the noble Lord's allegation that there is criticism against the Government for having brought about a stagnant economy can be justified by the facts. Your Lordships have considered that question at length on other occasions, and I will not deal with it further now, except to remind your Lordships that, as my noble friend Lord Dundee has said, the level of our standard of living to-day is higher than ever it was; and, what is more important, the level of personal savings and investment is far higher than ever before.
During the past ten years, the internal wealth of this country, in real terms, has increased faster than at any other time in our history. As my noble friend Lord Dundee said, the problem here is that we must keep a perspective, and the danger is that the results which I have mentioned have been brought about at a cost, in one respect, which is very serious; that is that it has been brought about to the detriment of our balance of payments. I think—and I do not mind how often this is said from every quarter of this country—the lesson we must learn is that it is no good improving our standard of living, or our savings or investment, even in real terms, unless in our particular circumstances at the same time we accompany those things with a sound balance of payments.
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Now may I turn to the Finance Bill and say that I believe my right honourable friend the Chancellor of the Exchequer is to be congratulated on the Finance Bill, because it gives effect to his Budget proposals with the added merit that he has produced a Bill very much shorter than I produced last year—I think about a quarter of an inch less in thickness, and perhaps about three-quarters of a pound less in weight. Generally, the proposals seem to me to be entirely in tune with the needs of the economy. One proposal I do not like—I make no secret of it—is the fuel tax. One I am doubtful about the efficacy of is the payroll tax. Otherwise I think it is a good Bill, and I am in agreement, if I may respectfully say so, with every word my noble friend Lord Dundee used in his observations this afternoon.
I am going to comment briefly on only one aspect, and I want to apologise to my noble friend the Leader of the House if, because of another public duty, I have to be absent during his winding-up speech. The aspect to which I should like to refer is the other regulator that my right honourable friend has introduced, which is the power to vary indirect taxes by order. The advantages of this device seem to me to be considerable. It is quick acting; it will influence mainly—if it is used—consumer spending power, and it will involve no new administrative machinery. In the short term I think it is an effective club for my right honourable friend to have in his bag, and I hope that he will not hesitate to use it. But like any other method of mopping up spending power through increased taxation, it is an antidote rather than a cure. It is a device for neutralising the consequences of damage which has been already caused. I am sure the Chancellor of the Exchequer will agree that what we must find at any cost is a method of avoiding that damage before it takes place.
There can be no question, when we look back over the past fifteen years, that the greatest single cause of our economic troubles has been the regularity with which, with the exception of two or three years, wages have more than absorbed the whole benefits earned through increased productivity. This factor has been a far more potent one than any other in landing us in trouble

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every year or two through rising costs and excessive demand. Of course, the years since the war have been utterly different from anything that was experienced before the war. There are no precedents on which we have been able to act, and that applies to Governments in every country. Even economists, so seldom in doubt, have been in very considerable doubt as to what consequences would flow from new circumstances and hitherto untried economic policies. Inevitably, therefore, it has been a period of trial and error. We must learn from our experiences and not repeat our mistakes. And here I am afraid, to date, in this business of the inflationary consequences that have followed from these excessive increases in monetary incomes, we do not seem yet to have learnt from our experience. I have ventured to say on a good many occasions over the past four years that the pace of expansion that we can safely undertake without certain damage to stability of prices and our balance of payments is directly related to our success in keeping this increase—both in wages and in profits—within the limits of the new resources that we can earn through increases in productivity.
My noble friend Lord Dundee told us that this year the increase in spending power, I understood him to say, which would arise from this increased money income would amount to £1,100 million to £1,200 million. I have always said that to the extent that we failed in the task of keeping the increase in money incomes within the new resources earned, the Government of the day would be forced to adopt unpleasant remedies to mitigate the damage caused. But really, to go on like this is not a sensible or efficient way of tackling the problem. Surely we ought as a nation to choose a better way of tackling the problem itself at its roots. I found myself in substantial agreement with a leading article in The Times recently to the effect that my right honourable friend the Chancellor of the Exchequer could not do this job alone; it must in the main be done by the nation; I am sure that is right. The Government's task is to give the right guidance and the right leadership, but whether results will follow or not will depend upon the conduct and reaction of the nation as a whole.
There is only one thing I want to do to-day and that is to suggest what I
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believe to be the most sensible way of tackling this problem. Let the leaders of the employers and the trade unions form a joint standing council for industry. Let this council set up a permanent joint intelligence, information, research and planning staff. The rôle of the organisation must be a positive one: the promotion of efficiency and co-operation in British industry, including planning for development and expansion at the maximum rate consistent with price stability and sound balance of payments. Then let the Government support and work with this Council in every way appropriate in its field of responsibilities and functions. I believe that a joint staff of persons drawn from both sides of industry, with some economists and some statisticians added, would be able to give a council of that kind objective information and advice and provide them at the very least with a solid basis of agreed factual information, and I hope more than that—increasingly with agreed advice and guidance. My Lords, we waste so much time and effort in quarrelling about factual information, on which there is no reason in the world why we could not agree if we really wished. Later, after getting the information, when 'we come to questions of policy it may well be that we shall find ourselves in disagreement.
In the late war many people foretold that the inter-Service staffs and inter-Allied staffs would not work because of differing attitudes and rivalries. Most of them, when favoured with good leadership, did function, with steadily increasing efficiency. I believe that if, as an act of faith in the future of our country, both sides of industry were to resolve to try this road, a new spirit of positive teamwork might well permeate the whole of industry, with consequences that would revolutionise the prospects of our national economy.
I know well that support for such a project would involve radically new thinking on the part of both trade union leaders and employers. I think that on the part of trade unions a new attitude, if I may respectfully say so, would be justified by two considerations. It would involve an appreciation by the unions that their functions and responsibilities to their members have changed with the vastly changing conditions over recent

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years, and in particular as a result of the acceptance by Governments of all Parties in this country of a responsibility for maintaining full employment. It would also involve ready acceptance by all concerned that the trade unions are an accepted national institution, with a continuing rôle of the utmost importance to play in industry, and that all employed workers ought to belong to a union or an association. I am sure many responsible and able trade union leaders know in their heart of hearts that short-term gains in monetary incomes are of no lasting benefit to their members if those increases are accompanied by consequences that damage the basic strength of British industry. Such gains, indeed, cut at the very roots of the standard of living and of the security of employment on which it rests.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: My Lords, I think the noble Viscount is making a very important part of his speech on these things which I have listened to with very great interest in the last few minutes, but when he comes to speak of this joint council as a properly set up body, will he include in that someone to deal with purely financial and monetary staff, not merely some economist or other? I have not so much faith in some of the economists. And will he be able to explain to us how it is that the pound has lost its value to 14s. since 1951 and what those things are? Is it suggested that the trade union officials will be able to persuade their members that they cannot go on asking for more wages when their spending power is being continually reduced in this way.
VISCOUNT AMORY: Of course, in reply to the noble Viscount, the lost purchasing power of the pound has been due to the inflation from which we have suffered. In my opinion, the biggest single cause of the inflation from which we have suffered is the tendency for money increases to rise faster than productivity, and the purpose of my proposal here is to get those basic facts better understood and accepted; and I believe that this is the best way of doing it. The joint council would not be just a conference for consultation but a standing body employing permanent staff.
If I may, I will quote an instance where I have seen something of this kind
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happen, and that is in one of our national institutions now known as the Annual Price Review for Agriculture. I remember that some years ago, in our discussions with the National Farmers' Union, we used to spend a great deal of time quarrelling about factual information. Then the Ministry of Agriculture and the National Farmers' Union got together and appointed a joint working party (my noble friend Lord St. Aldwyn will remember it) whose function was to get all the facts and present the Ministry and the National Farmers' Union with agreed financial and economic data. That procedure has been highly successful as a basis for subsequent policy discussions, and I believe that the same thing could be applied in this far wider and more difficult field; that is, to a study of the whole intelligence and information and factual basis which must be the background of our industrial effort.
LORD CITRINE: My Lords, may I intervene to ask the noble Viscount a question? Is he not aware, as a member of the Government of the day in 1957, that the broad proposal he has just put forward is almost identical with the views which I gave the Government and Mr. Thorneycroft, as Chancellor of the Exchequer, in 1957, and that it was rejected by the Government in favour of the setting up of the Cohen Committee on Prices, Productivity and Incomes? Is the noble Viscount not aware of that fact?
VISCOUNT AMORY: I own that I was not aware, and I must apologise if I ought to have been, that the noble Lord made a suggestion of this kind; that there should be set up a Standing Council with a joint staff. But if he did then I give him the fullest credit for a degree of prescience which I admire to-day.
LORD CITRINE: There is a record of this in the Treasury proposal to set up this Council on Prices, Productivity and Incomes. I pointed out at the time that it was not merely the ascertaining of facts which was at stake but the application of any recommendations that were made; and I tried to make it clear at that time that it was what followed the report which was infinitely more important than what the report itself contained.
VISCOUNT AMORY: May I make a deal with the noble Lord? If he will support me this afternoon I will gladly call this the Citrine Plan.
I should like tremendously to feel that a project such as I have described, or something like it, would receive the earnest, urgent and objective study of the leaders of both sides of industry, because I sincerely believe that it points the only road suited to this nation of ours, towards real practical progress and sound expansion. Meantime, as I promised your Lordships to be brief, I should like only to add, as regards the rôle of my right honourable friend the Chancellor of the Exchequer in this matter, that I know him to be a man of outstanding ability and energy and courage, and I have no doubt whatever that he will follow up his Budget and Finance Bill with practical measures of a kind and on a scale adequate to the needs of the situation.
4.15 p.m.
LORD BROCKET: My Lords, I am very much reminded of thirty years ago, just after I was elected to the House of Commons in June, 1931. That autumn, your Lordships will remember, we had the formation of the National Government and what we called the Snowden Budget. The present Chancellor of the Exchequer prepared a small Budget on the last Budget day, but whether he will have to legislate in any other way than for the two regulators which he has provided is, of course, a matter to be seen. I feel this afternoon in a very interesting position following a former Chancellor of the Exchequer. I do not know what sort of cows the noble Viscount has, but he is dual-purpose himself; he is a sort of shorthorn, because he has been Minister of Agriculture—if I may say so, a very successful one—and also Chancellor of the Exchequer, and I think we are very fortunate in your Lordships' House in having such Members with such experience in another place.
Before, I come to the main theme of what I was going to say, may I, speaking as an industrialist, welcome very much Lord Amory's suggestion of the setting up of a joint council of some kind. It was very helpful, I think, that the noble Lord, Lord Citrine, should have thought of this even in 1957, and if the noble Lord, Lord Citrine, had had better atten
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tion from the Government of that day I am sure we should be in a much better position at the present time.
LORD CITRINE: I agree.
LORD BROCKET: I have spoken on several occasions in debates on the Finance Bill in your Lordships' House, and I always feel that on the whole we are hardly allowed enough time to debate it. We have had economic debates recently, but I welcome being able to express a few thoughts on the Finance Bill, although we have no power over finance except that of advice. I have on several occasions followed, either more nearly or a little further away, speeches by the noble Lord, Lord Pethick-Lawrence, and I should like to pay him this tribute: that he has made very wise, well-thought-out speeches on almost every Finance Bill since I have been in this House. I should also like to say that on the question of money rates I always agree with him. It may not be acceptable to Her Majesty's Government to say that I disagree very much with their views on rates of money and on bank rate. Whereas in the past the bank rate used to be looked after by a non-nationalised Bank of England, in the last few years I have always thought that the bank rate variations, up and down, must be an agreed policy between the Treasury and the Bank of England. I must admit that although, as the noble Lord, Lord Pethick-Lawrence said, a high bank rate may attract hot money from abroad, I feel that on the whole a high bank rate does far more harm than good and is in fact inflationary in itself.
The noble Lord, Lord Pethick-Lawrence, mentioned the question of rates—that is, rates with a big "R"—imposed by local authorities, which never seem to go down but keep on going up. I sympathise with the local authorities whose rates go up because they have to borrow money to build their council houses—and I have said this before. If they borrow money at 7 per cent. they will have to charge 30s. a week extra on the rent of a council house above what they would have to charge if they could borrow the money at 4 per cent. That is quite easy to work out. What happens? Of course, the person living in the council house wants more wages to pay the rent, and

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that is absolutely inflationary. I cannot regard anything as more inflationary than that.
We have lately had the raising of building society rates to 6½ per cent., and I am told by those who know that that was caused by the increase in profits tax imposed by the last Budget, which we are discussing to-day. Profits tax, as your Lordships know, was increased from 12½ per cent. to 15 per cent., and that increase. I believe, was the last straw which broke the camel's back, or the building societies' back, and they had to raise rates to 6½ per cent. I cannot imagine anything more inflationary than that for people who wish to own or build their houses, and it is just one more example of a high bank rate causing inflation. As an industrialist I would point out that when we want to build factories or put up further plant in order to export or to supply the home market, we now have to pay a very high rate, instead of a low rate to get the money. That must, in effect, cause higher prices either in the home market or the export market. In fact, speaking as one connected with various industries, I cannot imagine anything more inflationary than a high bank rate, except high taxation itself.
Now we have the two regulators proposed in the last Budget. What the Chancellor of the Exchequer is going to do, one has no idea, except that I do not imagine that he would have proposed the regulators if he had no thought of using them. I believe that part of the recent inflation since the Budget has been caused by the uncertainty of when and how these regulators will be used. In my opinion, there is nothing more damaging to industry than uncertainty; and the very fact that we have had these regulators hanging over our heads for the last three months has, I believe, caused a certain amount of inflation. As to this poll tax, or, as I have seen it expressed, this "up-the-pole" tax, I personally will not criticise it, because I know there are other Members of your Lordships' House who will do so. I merely say that I think it is a bad tax, and I only hope that at the last moment the Chancellor will not use it.
I now come to the other regulator, the power given to the Chancellor to impose
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an extra 10 per cent. on customs or excise or tariffs, or anything else. That, I believe to be an absolutely fatal tax. I think that if the Chancellor imposes it he will have round his head the biggest round of wage rises that he has ever had. It is quite useless for members of Her Majesty's Government, or for the Chancellor, to ask the trade unions not to ask for higher wages when the cost of living is going up. I do not call this tax a regulator; I call it an accelerator. When this is put on, if it is put on, I feel quite certain that the trade unions not only will ask for higher wages, as they have already, but will be justified in asking for them. I believe that nothing can be worse from the point of view of encouraging inflation than this accelerator, the power to impose which is allowed to the Chancellor in his last Budget.
There has also been 2d. per gallon put on fuel oil. I noticed that the noble Earl, Lord Dundee, said that this adds £48 million to the revenue. The way I look at it is that it adds £48 million to the cost of travel and heating, both in industry and in housing. Therefore, it is inflationary, because it is obvious that those who have to spend £48 million extra will want more wages to provide the £48 million. I feel that that was a most unwise thing to do, except, of course, that it may well be that it was done as a sop to solid fuel and perhaps may encourage the use of coal or other solid fuels which are produced here rather than abroad. So far as that is concerned, I can see the point; but I feel that it is a most damaging amount to put on to the cost of living or of manufacture.
The noble Earl, Lord Dundee, said that the regulator would "mop up" £400 million of spending power in a full year, if applied in full. That means that £400 million of spending power may be, to use his words, mopped up; but it also means that the wage earners of this country will require £400 million more in wages in order to pay these extra costs. Frankly, although we may dislike the words quoted by the noble Lord, Lord Pethick-Lawrence and by my noble friend Lord Amory, "Never had it so good", if this is all done I feel (to coin a phrase) we shall never have had it so mad, because I think it is a mad thing to do.

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Now I should like to come to the question of exports. The other countries in Europe—particularly the defeated countries, such as Germany, and I think I might include Italy as a defeated country, because it had a bad time in the war—have really gone ahead more than we have. They have had to go ahead. Germany had to work harder. We in this country were on the winning side in the war, and we have not had to rebuild whole towns, like Cologne and other places in Germany. I was travelling in an aeroplane with a Pole the other day and he told me how marvellously Warsaw had been rebuilt. These countries have had to work. The countries hove had to be rebuilt. They have had to export. They work far harder than we do in this country.
I was most interested to hear that our standard of living here is 30 per cent. higher than it was a hundred years ago. I hate to say so, but is that not perhaps one of the reasons why we are not exporting as much as the other countries? If our standard is 30 per cent. higher, that means that our costs are higher and we cannot compete with other countries. I am not advocating that we should have a lower standard of living, because the fact is that once you have raised your standard of living you cannot very well put it down.
Except perhaps in 1931, when Mr. Snowden in the National Government had the courage to tell the nation what the position was and really economised in Government expenditure, no Government since has really economised in Government expenditure. From time to time we have pious statements that economy is going to be the order of the day. When I was in the House of Commons 30 years ago, the annual Budget was £700 million a year. It is now, I think, eight times that amount. I happen to know this figure because a pension scheme of the company of which I am chairman started in 1928, and the other day we wanted to find out how much the 1928 pound was worth now in order to consider whether we could raise pensions. We found it was worth 7s. 7d. To get back to the question of economy, in 1931 our Budget was in the neighbourhood of £700 million. It is now £5,600 million, or thereabouts, which is much more than three times the amount. The pound may be worth
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roughly one-third of what it was in 1928 but our expenditure has mounted and mounted.
There is one matter of which I disapprove greatly—namely, this surplus of £506 million over or above the line. I have a sneaking suspicion that Her Majesty's Government like to have this large surplus above the line, because if the nationalised industries went to the stock market to borrow money they would not get all of it. I do not think they are sufficiently credit-worthy, and, quite frankly, I do not think their behaviour makes them sufficiently creditworthy.
LORD BARNBY: Without Government guarantees.
LORD BROCKET: Without Government guarantees. I feel that this £506 million is, to use the expression which the noble Earl, Lord Dundee, used, mopping up the £400 million of expenditure, and that it loads another £506 million on to the backs of the taxpayers of the country. They have to get that from somewhere—in other words, from increased wages or from somewhere else. As a supporter of the Government I feel—I am sorry to have to say this—that in a year's time we may well look back and think that this Budget is not quite so good as some noble Lords and also some supporters of the Government in another place think it is. I personally feel that inflation, which is always with us, increases in strength from time to time, and at present there is certainly an increase in the strength of inflation. We are in an inflationary period. I am sorry to slay that I think this increased inflation will be looked at as partly due to the mistaken policies of the Government and of the Chancellor of the Exchequer.
4.30 p.m.
LORD WALSTON: My Lords, I find myself in agreement with a great deal that has been said by the noble Lord, Lord Brocket, Who has just sat down. In particular, I agree with his final remarks. After all, it is now ten years that we have had a Conservative Government, and we must, whatever side we may be on, give either credit or blame to the Government which has been in power for those ten years for the state of the country to-day. Admittedly, from time to time—the noble Viscount, Lord

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Amory, said he is sorry, and the noble Lord, Lord Bracket, also said he was sorry—they did not listen to the good advice given by my noble friend Lord Citrine in 1957. Possibly on reflection they will find many other pieces of advice given by my noble friends on this side and by my friends in another place which they are sorry they did not listen to. But they must take the responsibility for not having listened to those pieces of advice and they must, as I say, not only take the credit for what has gone well during the latter part of those past ten years, but also take the blame for what has gone badly.
There is no need for me or for any of my noble friends on this side to point out that to-day things are not going well. The Prime Minister and the Chancellor of the Exchequer and many other prominent members of the Government have made us only too well aware of the actual state of the country to-day. So that is not a point to be laboured at this stage. But I think it is only fair to say that, although we have had a Conservative Government in this country for ten years now, we have not had anything like full-blooded Toryism during that time. It is quite possible, I believe, that full-blooded Toryism might have worked, but it would have been a very drastic pill to administer to the country and would almost certainly have resulted in the Government which put it forward not being elected at the next Election there was—the intervening one between 1951 and to-day. It would, of course, have involved a fairly rapid dismantling of the Welfare State; it would have involved the abolition of exchange controls, the setting free not only of the people but also of the pound and letting it find its own level and letting the people find their own level. It would have involved lower taxes and also a higher cost of living, higher prices for food, higher rents, greater expenditure for people with less money on education and health services. In other words, it would have involved a far greater expenditure than there is to-day on the necessities of life.
The result of that might well have been—and I certainly should not wish to deny it—that people would have been forced to work harder simply in order to provide themselves and their families
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with those necessities. Furthermore, we might then, with full-blooded Toryism, have followed the example of the United States, where not only are the necessities of life expensive so that people have to work hard to get them, but the luxuries—television sets, motor cars, refrigerators, and all that—are relatively cheap, so the extra marginal effort needed just to work that little harder once you have the necessities is not so very great after all, and the incentive is there to do your bit of overtime in order to get those extra luxuries. My Lords, that is what, in my opinion, a really full-blooded Conservative Government with the courage of its convictions might have done, and it might have succeeded in achieving economic growth in this country.
Whether the Government did not do so because it did not have the courage to do so, or whether it did not do so—and I hope this is the reason—because it had an innate sense of justice which shrank from causing suffering among a large class of people who were not well able to protect themselves from what would have resulted from this, I do not know. But although I have said what I think they might have done. I am not for a moment saying that I wish they had done it, because not only do I believe that it would have been an extremely undesirable and extremely unjust thing to do, but I believe that it would have led to a very large amount of unrest and strife in this country which it would have taken us probably far longer than ten years to emerge from and to live down.
But, in spite of the fact that we have not had this full-blooded Conservative economic policy, we have year by year since 1959 had Budgets which by degrees have whittled away the Welfare State, so that year by year we find that the gap between the rich and the poor has grown ever wider. This has led to the situation which we have to-day. It has not, unfortunately, led to an economic recovery; it has not led to the recurrent crises becoming a thing of the past and to the economy of this country going ahead on full expansion, not only competing with but outstripping the economy of other European countries. It has, in fact, done just the reverse, and to-day we are passing through what is called a "crisis". But in my opinion

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that is a misleading term, because to most people a crisis means something which rises to a sudden rapid crescendo and then fails away again, very often without any action being taken.
My Lords, I do not believe that this is a crisis of that sort. This is not just a temporary difficulty of balance of payments because there happens to be a war in Korea, because the terms of trade turned against us or because of a mere external cause for which we cannot be held responsible and which, in the nature of things, will in a month or so disappear. It is something which is innate in our present economy and something which cannot be overcome—and here the noble Viscount, Lord Amory, said something with which I entirely agree. It is not something which can be overcome by short-term palliatives, whether in a Budget or as part of our general economic programme. It is a deep-seated cause which has brought this about, and simply raising the bank rate will have no effect in curing that deep-seated cause. Of course, I agree wholeheartedly with the remarks of my noble friend Lord Pethick-Lawrence about dear money. I think it is worth remembering that, although raising the bank rate may once more, as it did in the past, attract "hot" money into this country, "hot" money has "cold feet" and it can very easily take fright.
LORD BARNBY: Hear, hear!
LORD WALSTON: And it has and will run away. It has run away. So I hope that if 'we are forced into raising the bank rate as a temporary measure to overcome this immediate and very serious need of this country we shall not then sit back and say, "We have done our job. Let the industrialists, let the trade unions, get on with it." What in fact has been happening over the past ten years is very simple indeed. We have been consuming more than we should; not necessarily more than we have produced. We have been consuming more than we ought to, taking into account the investments which it is essential for us to make if we are to maintain our economic position in the world. In passing, I would say we have been encouraged in doing that by this frightening rise in hire purchase.
Not only have we seen spending more than we should, but we have been living
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on credit before we have produced the goods. That (is an additional factor which is now catching up on us and is aggravating (this present state of affairs. In all that, of course, we have been encouraged by this doctrine of "free-for-all"—not sufficiently free, as I said, to be true Conservatism, but sufficiently free—
THE LORD PRESIDENT OF THE COUNCIL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM): The noble Lord keeps on talking about "full-blooded Tories" and "true Conservatism". This is all very well, but I would ask him, when using his descriptions of other people's theories, to define them a little better. No Conservative has ever believed any of the things which he has described as "true Conservatism", and I think I know as much about Conservative thought as most people. I would therefore suggest that he uses another word as his Aunt Sally. He is quite entitled 'to knock it down if he wants to, but he should use a word of his own devising, and not a word which belongs Ito other people.
LORD WALSTON: I apologise to the noble and learned Viscount and to his Party. I certainly do not wish to set up the Conservative Party as an Aunt Sally. I have far too great a respect both for Aunt Sally and for the Conservative Party. I can only say that, from some of my reading in certain papers, and from remarks by same people who are normally supporters of the Conservative Party, this has been the extreme—the logical extreme, I would say—of the policies which have been suggested. But I wish to make it perfectly clear in what I am saying—and I am sorry if I did not—that this is not the policy which the Conservative Party have been pursuing, although I do think it is a policy which logically they might well have pursued.
Leaving aside Aunt Sallies, and the Conservative Party at the same time, what is more important now is what can be done in this country to cure this procedure which has been going on for many years—and out of deference to the noble and learned Viscount I will not say "for ten years". We must, in the first place, produce more; and we must export more, which probably means that we must consume less at home. Those are the two very simple facts which

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many people throughout the country have been stressing for a long time. It is in the light of that, I think, that we should examine the present Budget and see how far it is likely to achieve those two ends. Obviously, it would take far too long to go through the whole of the Budget proposals, and many noble Lords have already mentioned several of them. I would agree entirely with the noble Lord, Lord Brocket, in his condemnation of the fuel tax. To put on a tax which is going to raise production costs by £48 million or £50 million at the present time seems to me the most direct contradiction of the principle of lowering costs that one could possibly conceive. So I would suggest to your Lordships that the fuel tax cannot be supported on that test.
The same goes for the poll or wages tax. One can imagine economists, sitting in the seclusion of their common rooms and their lecture halls, saying, "We want to make better use of labour. The way to make better use of any commodity is to make it more expensive, so that the consumer of that commodity will be more careful with it". That is a sound theoretical argument. But suppose you take the next step and say: "Therefore, let us make labour more expensive; and let us make labour more expensive, not by putting up wages, because that is inflationary, and there will then be more money to spend, but by putting a tax on labour so that the employer will be more careful of his labour, and the worker himself will not have any more money to spend". That, again, sounds very well in theory, but any of us who have practical experience know that it will not work: and in the columns of The Times to-day, I think it was (it was one of the papers) there was an example of the effect that this poll tax is likely to have on an individual firm. We all know that it is not in any way going to make employers economise on labour. We all know, too, that it is an open invitation to unions to say, "If this extra tax can be afforded, then pay it to us", and up will go wages again.
Then we have the increase of purchase tax and Excise duties. Again I do not want to repeat the arguments of the noble Lord, Lord Brocket, but although there is something to be said for it, if properly
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administered—and I would not wholeheartedly condemn it—it will, in fact, put up the cost of living; and unless other steps are taken it will undoubtedly increase the pressure for higher wages. Furthermore, of course, it is a tax which is going to fall heaviest on the people with the smallest incomes—the old-age pensioners and the lower-paid workers; the farm workers and so on. It will leave the people who are better off relatively unaffected, and will fail to diminish their spending or the inflationary pressure which comes from them.
Finally, we come to the surtax concession—and that, I believe, my Lords, is the crux of the whole problem. Here I would take up the theme which my noble friend Lord Pethick-Lawrence so ably started to develop. What is essential in this whole situation is that there must be a feeling of justice and a feeling of fair play throughout the whole country. My Lords, some of you, or many of you—probably all of you to one extent or another—are employers of labour. How would you, individually, like to go along to the men who work in your factories, to the men who work in your offices, to the men who work on your farms, and say to them, "It is true that we have given the management more money to spend; more to the three or four people at the top; but because things are so bad in this enterprise we ask you to tighten your belts and to take less and have a lower standard of living"? You could not do it. You know that it would not work, and it would go against the grain of every one of you. Yet that is precisely what the Chancellor of the Exchequer is doing in this Budget.
Had he said, "The country is booming; we are in a strong financial position; we believe that the surtax payers have waited for a long time for a little benefit; we shall give it to them now and, in due course, we shall pass it down the line", he might have got away with it. But he is not saying that. I will not repeat what he is saying, but we know the position of the country and we know that it cannot afford any increase anywhere. We are talking of cutting down; and to talk of restrictions and belt-tightening and at the same time to give away £60 million to people with an income of £3,000 or £4,000 a year,

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simply is not going to make it possible to get the co-operation that one must have in this country if we are to come out of our present situation.
Now, my Lords, I should like just to give you two short examples of the way that individuals actually work when it comes to material well-being and money. These are two personal examples that I have come across in the last few years. Fairly recently there was a rise in building workers' wages, and I employ a certain number of builders on my estate. Among them are two brothers, one a craftsman and the other a labourer. They work together. Their differential before this rise took place was 10s. a week. When the rise took place, because it was a proportionate rise, the differential became 12s. 6d. The brother who was the labourer, not the craftsman, came to me and said, "This is not fair. I am perfectly happy to work with Bill, but although I am 10s. a week less good than he is I am not 12s. 6d. a week less good than he is". He was very unhappy about it; and so was his brother. Eventually, I finished up by saying to them, "I suppose, really, you would have been happier if there had not been any rise at all?", and they said, "Yes, I think we should have been".
We could call that a sense of justice, or we could call it jealousy—I do not know; but it is a very real factor in dealing with human beings. It is not a factor which is on only one side, only on the weekly wage earners' side. I remember on one occasion canvassing in a country village when I was a Parliamentary candidate. A woman came up to me and said, "You can't expect me to vote for your Party. You are putting up council houses now which have two lavatories. I do not have two lavatories in my house one is quite enough for me. Surely, for the working class one lavatory is ample. Do you expect me to vote for a Party that puts two lavatories into council houses?" That is exactly the same attitude. It is the refusal to allow other people to come up closer to you, and the desire to retain what you may say is a just division, or what you may say is the status quo—I do not know what it is. However, as a practical politician trying to get the country to work together, that is a very important factor which must be taken into account.
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I am quite convinced that so long as we have the present Budget, which is giving away this £60 million to the surtax payers, it is going to be absolutely impossible to get this working together, this co-operation between employer and employee, which is so essential.
VISCOUNT HAILSHAM: My Lords, the noble Lord keeps on saying that something is being "given away" Would he not think it more creditable to him to say that they are allowing the surtax payers to retain a little more of what they have earned for themselves?
LORD WALSTON: My Lords, that is a perfectly fair way of putting it. All I can say is that I hope the noble and learned Viscount will use his very well-known forensic skill to persuade the people of this country that it is so.
VISCOUNT HAILSHAM: Perhaps it would come better from the noble Lord by his not putting it in an inaccurate way.
LORD WALSTON: My Lords, all I am saying is that hitherto he and his colleagues have failed to do that, and I certainly cannot see them doing it. But I am no lawyer; I am not learned. I very much doubt whether any member of the present Government can do it.
My Lords, in all seriousness, if we are going to have one nation and not two, those are factors which must be taken into account. And if we are going to make appeals to-day to the country, as we must make appeals, to work together for the good of the country, it must be made abundantly clear that the people who are running the affairs of this country share the same ideas and ideals of justice as the ordinary man in the street shares. I do not believe that any clever arguments or even, in certain cases, logical arguments are going to win the day. It is something which is felt at the heart, not understood by the brain. That is where I believe the Government have failed to-day.
I do not know, any more than probably any of your Lordships knows, what is going to happen next week when the Chancellor of the Exchequer announces his new proposals to save the country. But I suggest to your Lordships that unless, at the same time as he does that, the concession of allowing people to keep a

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greater proportion of what they have earned than they have kept in the past is postponed till the country has come out of its difficulties, all of the appeals for self restraint, belt-tightening and cooperation will fall on hostile ears, and it will require a very much greater effort on the part of all of us on both sides of the House to put it across to the people, as put it across we must. I do ask noble Lords opposite and their friends in another place to consider this matter very seriously, and to believe that we, and the workers and the unions also, I am sure, want to work with them for the country; but their actions at the present time and under the present Budget make that working together a very uphill struggle indeed.
4.55 p.m.
LORD BALFOUR OF INCHRYE: My Lords, in moving the Second Reading of the Finance Bill my noble friend Lord Dundee used, understandably, what I would term a narrow focus on the economic situation. He reminded your Lordships that we have had various economic debates. He had knowledge, as we all have, that the Chancellor of the Exchequer is shortly going to make a statement on the financial economic position, and therefore his speech was very naturally on a somewhat narrow front. I am so glad that my noble friend Lord Amory, and others, have widened the basis of this debate, because, after all, this is an opportunity—probably the last opportunity before we rise for the summer, somewhat unique by fortuitous circumstances, in that there is to be an economic debate apparently in another place; and there is also to be a statement next week by the Chancellor of the Exchequer—for your Lordships to make contributions to the wider picture of the economic field.
I think the gravity of the present position is admitted by all who have any knowledge of political economic fields. My noble friend Lord Dundee did not like the use of the word "crisis". He preferred the expression "a moment when the attention of the public is sharply drawn to a difficulty that has been with us for a long time". That is to me another way—a rather longer way—of saying "crisis". Of course, the talk of "touching the brake" or "pressing the accelerator" has gone. We are
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in the midst of a grave economic emergency which has justified much preparation and publicity for an important statement by the Chancellor of the Exchequer in another place this week and, also, if the newspaper reports are correct, for the Prime Minister to broadcast to the nation. So, my Lords, I think we are justified in saying (and I would use the word) that we are in something of an economic crisis.
I think the question which all of us ask ourselves is whether the steps Her Majesty's Government are about to take will temporarily lift our difficulties, or whether they are going to be steps which are going to set us on the path of soundly-based progress. The holidays are nearly upon us. Our people are, quite rightly, packing up and planning to go off to the seaside or to go abroad for a well-earned rest. We have at home a very full employment, and high demand—everything is apparently prosperous. But I would hazard a guess that, unless the Chancellor's proposals are seen by the world to be effective for something more than the immediate, the Parliamentary Recess is likely to be interrupted for discussion of a more serious position than we have to-day.
The facts of the position have been stated so often that there is no need to repeat them, except to say that the import—export gap yawns. We are glad that there is some slight improvement, but the gap still remains serious. Our invisible earnings are running down at an alarming rate, and our gold and dollar reserves are inadequate. Against that background we have arms expenditure which is rising, production growth which we all admit is inadequate and, most serious of all, a new round of wage claims completely unrelated to productivity. And all this with the nation divided within itself, politically and economically, on many great issues and the treatment of those issues. The result is that we are a nation facing a crisis without an inspiration or any single great purpose.
I do not believe that this is the fault of this Government. I do not believe that it is the fault of any one Government, or of Parliament. I believe that it is the result of something like sixteen years of what I would term softness in some directions and often acceptance

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of indecision under the label of compromise, of hesitation under the label of consideration and of complacency under the label of confidence. Let me give one example, our economic policy. I do not want to elaborate it in any degree, but only to us it as an illustration of my point about indecision.
Our economic policy has been based on world liberalisation of trade, the willingness of British industry to accept all competition and an aim towards universal free trade. If you back that policy, which I personally do not (though that is beside the point), you must be consistent. If you back that policy, is it right to deny the steel industry the cheapest coal from America? If you back that policy, is it right to tax the raw material of industry, oil, 2d, a gallon. If you believe in that policy, is it right to allow State transport monopolies and sheltered industries to have wages leap-frogging unrelated to productivity? If you believe in that policy, is it right to resist the free import of Hong Kong textiles? I do not agree with that policy, but if you do pursue it, you should have the courage to take it to its ultimate and not compromise. Because if you compromise, you fail all round.
If we have not been thorough in the past, now, in time of crisis, we must be ready not to be doctrinaire, either to Left or Right, either free trade or protectionist. It may be that the Government may have to come to some compromise with the rigidity of theory and possibly follow Sir Roy Harrod's ideas on some control of unnecessary imports and of investment, whether physical or monetary, and on some check on the building boom. It may well be that if the State takes 43 per cent. of the gross national product, we should have some scheme to see that the balance of 57 per cent. is used to the greatest national advantage.
That is in the material field; but I believe that there is a far greater task for Her Majesty's Government in the field of what I would term morale. The restoring of the national purpose and the national morale is the Government's greatest task and greatest responsibility to-day. And to do this, exhortation and declaration are not enough. Alarming by fact exposure is not enough. Impos-
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ing remedies and sacrifices on other people is not enough. It is by their example and by their actions that the Government must lead in the revival of national inspiration. I believe that the first thing to accept is what has been said in the debate by your Lordships to-day—that no Government to-day, of any particular complexion, can really do anything big in the way of leadership without carrying with them the trade unions, both the trade union leaders and the trade union rank and file. To-day we have trade union leaders, fine, good citizens, queueing up to repudiate the Chancellor's appeal for wage restraint. Any idea of direct conflict with the trade unions on a major scale is unthinkable and would lead to national disaster.
Faced with this basic fact, I should like to pursue a little further (because my mind has been running on much the same lines, and it is the duty of us all to speak out) the ideas put forward by my noble friend Lord Amory. The noble Earl, Lord Dundee, wondered whether it was not an impracticable dream (I think those were his words) that there should be a period of co-operation and peace between the trade unions, employers and Government in this country. I believe that the Government should say to the people, "A halt to our differences and arguments!" They should say to the nation, "We will tell you what we face, and now let us lift a year of time above the years of the past and of the years to come and make it a year of national effort." Let the Government say, "For the next twelve months we accept something like an economic Battle of Britain." If your Lordships remember, in those days all were for all and none for one; and no one had any idea of unofficial stoppages or wild-cat strikes. All worked for Britain.
To-day, the trade unions are suspicious and resentful. I think that there has been far too much play on the surtax question. I am not going to re-argue the matter, but I disagree profoundly with the speech of the noble Lord, Lord Walston, on that point and agree entirely with what my noble friend Lord Amory said. But never mind that. Though the trade unions are suspicious and resentful, they must respond to the appeal to leave out of the arena of controversy for this year of effort our current differences. I

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should like to see from the trade unions a halt to wage claims unrelated to productivity and to calls for shorter hours; a lifting of restrictive practices in a big way, and only those wage rises asked for and accepted which are related to any rise in the cost of living. That would take a lot, and it asks a lot from the trade unions; but I know that the trade union leaders are patriotic men who can give a lot if they feel it is right to do so. Then I would say to the employers that it is important that they make a big and radical contribution. Let it be agreed that profit margins are not to be raised; that any profit rise is ploughed back for the benefit of industry, and that dividend distribution will be stabilised for this one year of effort.
I think that the biggest contribution would have to come from Her Majesty's Government. I would suggest to the Government and to the Chancellor of the Exchequer that he gives a Budget pledge that next year his Budget shall be a Budget of no remissions and advantages for any one section over another, of no increases in personal benefits for any one section over another. The Government would have to set an example of restraint in their own expenditure, without any attack on the Welfare State. We must also see, so far as we can, in spirit and in act, whether we can call a halt to Party strife and provocation, going for what we agree on and agree to do, rather than playing with differences. That would need machinery, and my noble friend Lord Amory has suggested some machinery.
I believe that the only people who could make this year of effort a year lifted out of the passage of time would be the Government, led by the Prime Minister. I should like to see something beyond what my noble friend Lord Amory suggested—namely, a national recovery council of the Government, trade unions, employers and, I would hope, the Opposition as well. If at the end of the year of effort we so wished, we could dismantle the council and revert to the freedom and luxury of controversy. But meanwhile, we might have lifted from the passage of time one year of national greatness, during which I believe we might have helped to save ourselves and, in doing so, save countless others who look to Britain's spirit for guidance and a
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material support for their progress. I hope the Government will not turn away from the concept that imaginative bigness is needed to revive and direct our people's spirit, without which we can do nothing.
5.12 p.m.
LORD BARNBY: My Lords, I am glad to find myself following my noble friend Lord Balfour of Inchrye because he has just made an inspiring appeal on a very lofty plain as to what is needed to unite the nation in accepting what we are warned will have to be great sacrifices. I am also glad that my noble friend gave good reasons why we should regard this as an opportunity for wider reference to economic subjects; and, indeed, the noble Earl, in moving the Second Reading of the Bill, embraced this himself. We recognise that we have no powers to modify the Bill that we are now discussing, but we have the privilege, as my noble friend, Lord Brocket, said, at least once a year of expressing our thoughts.
The noble Earl, Lord Dundee, reminded us that the Bill includes references to two new types of regulators. Other speakers have already pointed out how it seems likely that both of these will add to the cost of living; and doubtless that has occurred to the Chancellor of the Exchequer in proposing them. As a simple industrialist, it seems to me obvious that they will increase costs. If it results in damping down industrial production which will not find its way into export, then we shall have lost a great deal of potential production and lower activity must inescapably mean that a point will be reached when costs will increase, profits will fall, and revenue will decrease.
It is going to require great courage by the Government to see this through. Quite simply, to some extent employment will be disturbed. But we have had assurances by the Government that they will resist wage advances in the nationalised industries. These set the pattern. If it is that the Government are going to see this through, then we can face the situation with more confidence. The Chancellor of the Exchequer is reported in the Press on Saturday last to have said:
"We cannot afford the restrictive practices, whether of management or labour, that are too readily accepted now. We cannot afford the easy complacancy with which increases in costs derived from these and similar inefficiencies are added to prices".

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Whatever may be the effect in the home market, there is a general hope that exports may be increased. But in all these exhortations to export which we have had, it is inescapable that people say or think to themselves: "Are exhortations really enough? To be practical, do we need some incentives?" Incentives are required in everything in life to get results; our whole industrial structure is based on the idea that you must give incentives to production. We are always urged in this country that conscious incentives must be foregone and we must not give a naughty lead to other countries. Only two weeks ago we read in the Press (I will not take the time of your Lordships to quote details) of specific concessions to export industry being given by Italy. I do not know whether the noble Viscount, when he comes to reply, will be able to give us some interpretation in the terminology of difference between incentives and concessions; but the Board of Trade have consistently adopted the attitude of resistance to incentives.
Frankly, there are an enormous number of people in industry who just do not believe in this resistance to incentives and feel that we should adopt the attitude of other countries and use them. Take G.A.T.T. as an illustration. The shackles of G.A.T.T. are accepted by us, but others disregard them. Only to-day reference was made in this House by Question to barter transactions. There has been an attitude by the Government that they disapprove of strict barter transactions. I suggest that this purity of orthodoxy which we have so consistently attempted to urge on others, and have loyally adopted ourselves, is perhaps something which of necessity we shall be compelled to review.
My noble friend Lord Amory made a contribution to the debate for which we are all grateful and which to-morrow we shall all read with the greatest care. After many points of most important analysis there was one which will receive particular attention. It stirs my memory to revert, for the purposes of record, to a partially similar experiment which was tried in the middle 'twenties. Sir Alfred Mond, that great statesman who subsequently became the first Lord Melchett, was seized with the dangers and difficulties (and they were real, as others will remember; I was a Member of another
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place at the time) of the discord in relations between employers and workers. He worked out that we should have seven representatives of industry, and seven of organised labour. I was privileged to be one of the seven employers.
I can remember the massive characters who constituted those representatives of organised labour. It was called the Mond-Turner Conference. The representatives were Ben Turner, Jimmy Thomas, Will Thorne, Ernie Bevin, Ted Richards, and I cannot remember the others. Particularly do I remember it because the noble Lord, Lord Citrine, then a young Assistant Secretary of the Trades Union Council, was Secretary of the Mond-Turner Conference. We sat for months. They produced a Report which I am confident had a great bearing on industrial relations at that time. One thing is certain; these seven employers came into intimate personal friendship with those seven great personalities in organised labour, and I think that contributed a great deal to the result.
VISCOUNT AMORY: My Lords, may I interrupt my noble friend to say that I agree with him very, much about the Mond-Turner Conference? That Conference may well have been before its day, but I think it would be timely that we should be thinking along the same lines to-day.
LORD BARNBY: My Lords, I entirely agree it should be tried. I presumed to introduce that only because it seemed to be in support of the most valuable contribution which my noble friend made, and which I hope will be studied nationally with great care.
There is currently a great national debate over the Common Market. There is one thing in that connection which seems to me obvious. If we are going to substitute a bigger volume of trade with Europe for a lesser volume with the distant Commonwealth, then invisible earnings from shipping will make a smaller contribution to the balance of payments. My noble friend Lord Balfour of Inchrye gave in his opinion what seems to be in the minds of a good many to-day: that entry into the Common Market can produce some shock to the nation; and that after the softening years of a Welfare State, also trade union rigidities and restrictions,

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low work loads and shorter hours, we need this shake-up. This is going to include free entry of 'workers from Treaty countries. Surely that must cause some thinking by organised labour. But whatever it is, let us hope, as my noble friend Lord Balfour of Inchrye has emphasised, that we can achieve this without wide-scale industrial disturbance.
I suggest that shorter hours are not a solution, and yet that practice is being extended every year. Shorter hours mean less productivity, a higher break-even point, higher costs and less competitive power. It is inescapable. We certainly want higher earnings, based on productivity, a very different thing from higher wages. I mention P.A.Y.E. However it is going to be done, there must be more incentive to workers to work overtime. How the Government can work it out is a matter for them, but overtime must be paid well, and there must be some remission incentive in taxation.
The Chancellor of the Exchequer has emphasised that our payments overseas are too great. The noble Earl emphasised that contributions to underdeveloped countries should not be cut. Quite frankly, I differ from him. I believe that if these payments are made outside the Commonwealth, it is a question of whether we can afford it. There should certainly not be, as was stated in this House recently, 50-year interest-free loans. Such largesse we cannot afford; we are not rich enough. We are told that the individual must not spend more quickly than he earns. Surely the Government likewise should spend less, cut back Government expenditure. We all know how easy it is to use such a flippant phrase, and how difficult it is to achieve it. However, the Government are the ones holding the tiller.
In conclusion, inspired by what my noble friend Lord Balfour of Inchrye said when he referred to these questions of starts and stops, palliatives, patching, trimming, plastering and constantly unsettling industry, I cannot find a better way to express the thoughts I have than to quote from a recent letter in The Times from a large industrialist banker, Mr. Lionel Fraser. He said:
"The present situation shows again that there is no alternative to a coherent long-term economic policy, a design for the future, and
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true success will only attend it if it is understood and supported by the man in the street."
My Lords, as a supporter of the Government, I support the Bill which we are discussing.
5.27 p.m.
LORD POLWARTH: My Lords, it always seems a little hard that, though we are all taxpayers, we cannot discuss this Bill in detail. But we can console ourselves with the reflection that we can perhaps discuss it a little more dispassionately and also in the wider context of the economic field. There is an added consolation for amateurs in economics like myself in that we can have the privilege, as we have come to expect, of hearing such admirably lucid contributions as we have had from the noble Lord, Lord Pethick-Lawrence, and the noble Viscount, Lord Amory. For that alone it has been worth my while coming here to-day from Scotland. No doubt at this moment the Chancellor of the Exchequer looks upon us here as a sort of tiresome old nannie who is preventing him from starting to play with the toys which he has been given on Christmas morning. One thing seems probable, which is that, having been given two very exciting new toys, he is going to want to play with them as soon as possible and not leave them in the cupboard.
I will be as brief as I can and confine myself to only two aspects. I hope your Lordships will forgive me if I relate them both rather specially to our viewpoint in Scotland. We are no less aware of the need for strong measures at this time than are any of the rest of your Lordships, but our domestic economy is in some respects different from that of the rest of the country. Our views may therefore differ as to the nature of the remedies required and the means of putting them into effect. May I take this opportunity of apologising in advance to the noble Viscount who is to reply because I may be discourteous enough to leave before the end of the debate? It is all a question of the time of departure of the plane to Scotland.
My first point relates to the field of exports, about which I should have thought we might have heard rather more in this debate to-day. We all agree that an increase is vital and we are all making a great effort. We have these

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great Export Councils, the Western Hemisphere Export Council, the Export Council for Europe, and many other bodies which are putting in stalwart work in this field. In Scotland, we have constituted an Export Committee on which are represented all the leading bodies with interests in export. They are making great progress and are encouraged under the leadership of that champion of overseas trade, Sir Robert Maclean.
Scottish companies are going out actively and aggressively selling abroad. One consequence of that has been the number of inquiries about export business which are going through the offices of the Scottish Council (Development and Industry) who are handling some 200 inquiries a month from firms, an increase of same 40 per cent. over the equivalent for last year. That, I think, is a very heartening indication of the increased interest that is being taken by industry in export, not only in the traditional field, but in many new industries such as aero engines, rail freighting equipment and electronics. Even shipbuilding, despite its difficulties, is making a come-back, and I think we can take a pride in that only a fortnight ago one of the Clyde shipyards secured an order for a 54,000-ton tanker from Norway, the first Norwegian ship order placed in Britain this year. That was due to efforts made to increase their efficiency in building and also—if I may declare a slight interest—to the readiness of our financial institutions to take perhaps a rather more liberal view of financing this kind of business than they used to in the past.
All this is fine; but the Government have a big part to play as well. Their responsibility is high. Last week I asked two different industrialists what they ought to do and what they thought the Government ought to do. Each of them said, in more or less similar terms, though one was somewhat more polite in language than the other, "Not, on any account, to mess up the home market". I think there is a lot of truth in this. The home market is bound to be the basis of our trade. Without the home market, export trade cannot flourish. The Government seem to think the way to encourage exports is to damp down the home market by increased duties and taxes and so on.
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That, I think, is a mistake, because overseas markets are uncertain now.
There are some changes from uncontrollable causes: to take only one example, one recently announced closure of a factory in Scotland, I understand unofficially, was due entirely to the tariff policy of one of their principal customer countries. These companies must have a reasonable degree of certainty with the home market if they are to pursue an export trade aggressively; and I say "certainty", that word already used by other speakers. The worst thing of all is frequent changes of rates or tax and fiscal policy, because that causes uncertainty. And this power to regulate and alter rates and duties works both ways. Take one industry, the refrigerator industry. In 1958 hire purchase restriction was swept away. Everybody went into the market. Capacity was increased far beyond what in fact has turned out to be an economic level; and then when restrictions were replaced later on in 1960 the industry found itself, and still finds itself, in a difficult situation. In that case the sudden removal of restrictions was just as damaging as their imposition. Far from helping the export market, that sort of thing damages it.
If a general in war finds his headquarters is threatened he does not just say, "Right, we will not worry about it; we will reinforce our outposts." Not a bit. He devotes all his troops first to maintaining his base, and that is what the industrialist quite naturally and rightly thinks. If he is in difficulty in the home market he is going to have to throw his energies into putting that right and will not be able to concentrate on his exports. What is wanted is not a stick to beat him out of the home market but a nice juicy carrot to lead him into the export field. It must be quite obvious that the grass is greener on the other side of the fence. The problem is how to make that obvious; and while it has generally been turned down, I find myself more and more turning to the thought, the serious thought, that there must be financial incentive to exports. It is given by other countries, although they may not say so, and I cannot help feeling that some kind of system could be devised, say by remitting profits tax on that portion of turnover related to export. I believe it would go a long way to securing results.

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Then I come to my second point, which is this. It is agreed, I think, that much of our troubles stem from an overloaded economy, a point on the standard of living which we are now earning by our own efforts. I ask the Government, in contemplating the measures that they have in mind, to remember that not all of the United Kingdom is in quite such a bloated condition. We still have a high rate of unemployment in some areas; Northern Ireland has the highest rate of all, some 7 per cent. unemployed, compared with some 1½2 per cent. for Great Britain and Northern Ireland combined. Scotland has 2½8 per cent. It is unevenly spread; it is quite a lot in some areas but is better in others. Still the fact that there are 60,000 out of work in Scotland is not a cause for complacency, because it represents a waste of productive assets.
Now I recognise that successive Governments, by their legislation and in other ways, have taken the view that this situation should be put right. We have had the Local Employment Act, now nearly two years old, and we have had continuous efforts by the Government and by other bodies to improve the position. The aim is to keep unemployment down to the national average—that must be our immediate target—and to staunch the migration of workers away from Scotland. We are very grateful in Scotland for the remarkable and inspiring efforts that have been put into this matter by the present Secretary of State and by his assistants, including the noble Lord, Lord Craigton, who is with us here to-day. Few people in Scotland realise entirely the detailed and persistent effort that the Secretary of State has devoted to this field of industry, while at the same time hiding his light under a bushel. I think we owe a lot too to him and his Department, although I think there are many improvements which could be made in the working of the local employment machinery. But that is a subject for another day.
There are also a great many people in Scotland who have been working hard on this problem and with a fine measure of success. Of course, we have our troubles. We are still too dependent on our basic industries. The coalmines are obviously going to employ
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fewer men because of increased efficiency, and shipbuilding and its associated industries are making sterling efforts in the face of the much smaller market for ships. But some of these industries have had setbacks in the near past and we have had a number of closures of companies announced recently.
In spite of that, I think we have a great many reasons for encouragement. The range of our production has been greatly increased now. There is a much wider range of industries, and now we have the motor industry and all that I hope it will bring in its trail. But here again is an industry particularly affected by upsets caused by changing rates, taxes, hire-purchase restrictions and other things Quite a lot of our industrial field, it is fair to say, is in a state of increased new growth. That is due to the cultivation of the ground, selection of the seed, planting, fertilising and sowing both by Government and by private enterprise. It is in this new growth that our hopes lie for the future, and it is a growth remarkably free from the weeds of over-employment and inflation which have appeared so much in other parts of the country.
The noble Earl who opened the debate said that in applying these measures the difficulty was to avoid restriction of industrial growth. I agree that this is desperately important, so it is with some apprehension that we watch the Chancellor of the Exchequer approaching with his two new weed-killers (if I may continue the metaphor), and no doubt others also, which are still on the secret list until Tuesday week. As your Lordships who are gardeners know, one of the characteristics of weed-killers is that they are most effective on young and vigorous growth, and these particular ones which he has in mind seem to me to be very far from being selective in their operation. These two new taxes look like killing not only the weeds but a good deal of the healthy growth at the same time.
In this field of new development, as in the field of exports, we must have this reasonable certainty and continuity if industry is to flourish. Look at what happened in the previous crisis of 1957. There was already an upsurge of new industrial development at the time, particularly in Scotland, greatly encouraged

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by the availability of new factories to rent. Along came the credit squeeze and, I think, a virtual cessation of all building of new factories. That freeze cost Scotland and other parts of the country dear in terms of new industry and expansion of existing industry. Those companies expanded elsewhere, either in the South or overseas.
As a side line, though I am not concerned with that to-day, the Government will remember that the consequences in terms of employment or unemployment also cost the Government something in the way of votes in Scotland at the 1959 Election. So I hope that the Chancellor will remember both 1957 and 1959 when he thinks about his two new toys and, in particular, this possible payroll tax. I make no bones about it, my Lords; I think that in its present form it is a thoroughly bad tax. At the level at which it is proposed, the maximum level, I do not believe that it will discourage companies from keeping on labour. I think it will bear hardly on those companies which are labour intensive and, by their nature, cannot cut down on labour. It will, in fact, merely add to the costs of production and, therefore, to inflation.
I congratulate the Government of Northern Ireland upon having already secured in advance exemption from this tax. I think the Chancellor of the Exchequer might go a bit further, and I would make the concrete suggestion that, if it is found necessary to apply it at all, it should not be applied to employers of labour situated in the development districts; in other words, the districts where the Government are trying to encourage new industrial growth. It would be criminal to discourage growth in these areas by unnecessary imposts and by uncertainty.
My Lords, having said this, and having spoken in particular about Scotland, may I make it quite clear that we are all in this together? We are all ready to play our part in putting the situation in order, and in agreeing to any measures that are really necessary to do so. The only thing that I do beseech the Government, and the Chancellor of the Exchequer, in particular, is: do not, in the course of those measures, frustrate our efforts to expand our industry and increase its productivity, because those
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are the real keys to our future wellbeing.
5.45 p.m.
LORD HAWKE: My Lords, I welcome the Finance Bill as being more original in thought than any I have met for many years. I should welcome still more radical changes, and I have the feeling that perhaps the Chancellor of the Exchequer is feeling his way. The country has undoubtedly prepared for a drastic overhaul of the whole taxation system, and my feeling is that the Chancellor was not entirely unsympathetic. But, though the spirit was willing, I have no doubt that the flesh was weak, in that I doubt whether the Inland Revenue would have been able to cope with a vast amount of new work; because—and there is no doubt about it, my Lords—our taxation system has got into the most awful mess.
Monetary receipts which can be classified as income are very heavily taxed; on the other hand, monetary receipts which can be classified as capital get off scot-free. The result is that some of the best brains of the country are employed in switching natural income into unnatural capital. Such is the weight of tax on the higher incomes—and the Chancellor has given relief only in a limited field—that an insidious system of business expense allowances has had to spring up. Like so many things starting legitimately and harmlessly, it is now a subject of grave abuse, and in many quarters it has created a great sense of injustice. It is greatly exercising the minds of the professional middle classes of this country, who are the backbone of the brains and the conscience of the country. President Kennedy seems to be of the same mind. He has gone to his Congress with precisely the same problems, to seek changes to end the widespread abuse of business expense accounts. He has not got all he asked, but apparently the Committee in question have agreed to make it much more difficult for American businessmen in future to claim tax deductions for entertainment, yachts and hunting lodges; and tax deductions for club dues and fees will be prohibited completely. Note that, my Lords.
I suggest that, if the Chancellor of the Exchequer were to insert the word "necessarily" as applying to expenses charged against both Schedule D and

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Schedule E, probably the whole situation would immediately come under control. Chancellors of the Exchequer in the last two years have aimed a mild blow at one or two of these things, first at the super-tax farms and now at the more expensive motor cars. It would be unfair to deny business men the opportunity of charging transportation expenses, because they do need transportation to carry on their business; but it should be transportation, and not necessarily luxury. One can buy excellent transportation for £1,000—transportation 'that will go at 80 Miles an hour, and keep up 60 m.p.h. all day, so I do not quite see the logic of the Chancellor's limit of £2,000. Perhaps next time he will think better.
I am glad that he has got his regulators, though I agree With my noble friend Lord Polwarth that it is difficult to see a situation in which the payroll surcharge could possibly serve any useful purpose. But I believe that the others definitely could. The surcharge on import duties 'would seem particularly relevant to our needs, were it not for the fact that I believe we have so hedged ourselves round with restrictions and undertakings to G.A.T.T. and the like that I do not know whether, in fact, that can be used.
I hope that next year we shall see a radical revision of the taxes on higher incomes, perhaps with the quid pro quo of a tax on realised capital gains. It is argued that this would bring in nothing, because one would have to set off capital losses; but I have never seen the moral necessity for having that, although there should certainly be a set-off for immediately reinvestment. In other words, the object of the exercise would be to tax capital gains spent as income, and not capital gains made in the switch from one investment to another. The grand strategy would be to try to bring the country back to the old Victorian conception whereby the better-off citizens lived and saved out of their genuine income. The Chancellor of the Exchequer might look at death duties from the same angle. If the made the rates reasonable I believe that he would be perfectly justified in rounding up properties in the Bahamas, and so on. As it is, the Chancellor is merely encouraging rich men to die poor after
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disposing of all their assets among their various relatives, who possibly live a life of extravagance upon them. The traditional friend of the Chancellor, the miserly millionaire, has no encouragement in our fiscal system to-day.
However, it is the balance-of-payments situation that is worrying us today much more than our fiscal system, and what is a disquieting situation is terribly complicated by this ever-increasing volume of mobile money in the world, able to move at will between various money markets and stock exchanges of the world. It is nervous money; it is timid money, some of it aiming at safety in Government bonds and banks, some of it at gain on stock exchanges. But it is directed by skilled professionals who are sensitive to every slight puff of wind of change in the world—in fact probably rather too sensitive. And this is in a world where the monetary reserves are quite inadequate to provide a means of settlement for the existing volume of this mobile money. Moreover, the mobile money is probably coming into being at a faster rate than the reserves are increasing.
The central bankers of the world know this problem perfectly well, but they cannot agree on a worthwhile solution. The recent solution they thought up was obviously only stop-gap; that is, to take in each other's currencies; for the moment any currency becomes under some suspicion, naturally the operation tends to break down. They unanimously reject, however, the solution which I believe is the only feasible and simple one, which is to increase the price of gold in terms of all currencies. Meanwhile, currencies are under suspicion in turn: the United States dollar, the Canadian dollar, now the pound. When will it be the turn of a European currency? If we see a Berlin crisis in the autumn we shall see a tremendous flight of money from somewhere to somewhere else; I cannot pretend to predict where, but it will certainly flit.
Our own position appears rather bad, but I do not think we should exaggerate. As a nation we simply love to exaggerate our difficulties. We are never happier than when our backs are to the wall: when the Australians are about 500 for two, and we can wallow in our miseries; and there is a very grave danger of that happening to-day, I believe. Then we

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get on to the stage of wanting to cut down everything. Some of my noble friends wanted to do that this afternoon. I cannot imagine a more disastrous policy for the Commonwealth, for ourselves and for the world at large. Yet I thought we had learned our lessons from the disastrous mistakes we made in the days of Mr. Snowden.
At the same time, my Lords, we must not minimise our difficulties. What is the cause of them? Some of our traditional markets are undoubtedly rather fiat. Who in Africa is going to invest confidently at the moment in British capital goods? Commodity prices, on the whole, are rather low, probably because America has been very slow to get out of its depression; and the same is true of Canada. But the United States and Canada are coming again, and if that is the case they will once more start using commodities on a big scale. Then, of course, we have had the resurgence of Japan and the Continent, and anybody who, like me, has had to sell goods against the Japanese in pre-war days, knows that is a pretty impossible business. In fact, there is a bigger manufacturing capacity at the moment than there is consuming power in the markets of the world. In some cases our prices are alleged to be too high, and perhaps in shipbuilding they are. But we are exporting at a high level, and the figures look like going up. As I say, we must not exaggerate.
Our invisibles, on the other hand, are doing badly and we are importing a lot more than we did a year or two ago—more than we can afford—and most of the excess imports are coming from the non-sterling area, particularly from North America and, to some extent, from the Continent. Some people have suggested that this is because British industry is not competitive. I do not think that at all. I think that people are buying American and Continental goods in the shops for psychological reasons. An affluent society likes American gadgets, and so many people have travelled abroad that they have a taste for Continental artistry, in apparel, in foodstuffs and the like, and they will go on buying more of those imported goods if they can. That is all very well if we can export enough to pay for them. But with many of our best export markets rather in the doldrums we cannot afford
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to indulge ourselves quite so freely as we have been doing.
The Chancellor of the Exchequer is in a most terrible dilemma. We are so completely bound up by trade treaties and the like that it is uncommonly difficult for him to reduce imports without calling in some emergency operation, as so many other countries do, and possibly inviting unpleasantness. One must remember in these matters that there always appears to be one law for the foreigner and one for the British. If other nations get into a jam of this sort the first thing they do is put on quotas and licences on British goods. This course apparently is closed to us because we are British. The only other course the Chancellor can take is to take so much purchasing power out of the market that our citizens cannot afford to buy either British goods or foreign goods. Both of those courses are very unsatisfactory. I believe that the proper remedy is for a little of everything, to aim at keeping our export costs down and encouraging our manufacturers to get business overseas, and particularly to improve their selling organisations and employ salesmen who talk the languages and so on. At the same time, I suggest that he should explore every possible method of doing what every other country does in balance-of-payments difficulties; that is, to cut down some of the imports, particularly the dollar imports, which it has been importing too freely. If we find that we cannot afford to buy deutschmarks to keep our troops in Germany it will look rather silly if our shops are full of hock and German cameras.
The Chancellor will undoubtedly have to take steam out of some portion of the home market. I suggest that the building and construction industry is particularly overloaded at the moment. I have been one of the few Conservatives who have consistently maintained that there should always have been some small measure of building control kept on. I was led to that conclusion by seeing what went on in South America, where there was nothing of the kind and essential construction was never done at all because the private sector was too attractive. In previous difficulties we have always had to cut down Government construction because there was no method of cutting down private construction, except by rather clumsy monetary means. To-day,

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I suggest the priorities are quite clear: they are homes, roads and various Government work such as prisons and hospitals which we know we need so badly. Shops and office buildings and administrative buildings are not nearly so urgent, and I hope that the Chancellor of the Exchequer will take steps to give expression to priorities of that sort.
It is platitudinous to say that we cannot go on increasing personal incomes at the present rate unless we can produce more for export. But it is extremely difficult to stop any wage claims. There are subversive elements in industry which are bent on the downfall of Britain, and if the unions will not back wage claims the Communists and the Syndicalists undoubtedly will. So the unions too are going to be in a grave dilemma. My noble friend Lord Amory suggested a grand council of industry. I must say that I was always much more attracted by Lord Chandos's plan, which was that there should be a bargain with the trade union side of industry for a regular wage increase of 2 per cent., or whatever it was, per annum, for five years. I would qualify that by saying that it should either be an increase of monetary wages or a corresponding decrease of taxation, which I believe would be the right way of increasing purchasing power at a steady rate per annum.
The Chancellor of the Exchequer cannot do much more than create an atmosphere in which employers will resist unreasonable demands and in which strikes to enforce those demands would not get any public support. But it is the Prime Minister who must put the issue before the nation. That is not at all an easy task when the margin of austerity required is not a large one. The British people will always respond to an appeal to tighten their belts by six holes, but it is much more difficult to put over the idea of tightening a belt by one or two holes. At any rate, the Prime Minister would have to show that we believe in Britain and that, in the past, it has always proved unprofitable to sell Britain short.
6.4 p.m.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: My Lords, to-day we have not had quite the attendance in your Lordships' House that some of us would
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have expected at such a stage in our country's economic history as has been revealed in the course of the speeches by the Chancellor of the Exchequer, both in the House and in the country. I must say that I find it a little difficult to get very excited (shall I say?) about the main features of the debate that we have listened to so far, except that I must at the outset pay a tribute to my noble friend Lord Pethick-Lawrence for having once again given such a calm, deliberate and completely reliable analysis of the situation as he has given us this afternoon. I personally am most grateful to him.
The noble Earl, Lord Dundee, who introduced this debate upon the Second Reading of the Finance Bill, obviously seemed to speak from a sense of responsibility, not being quite so free in speech, as he so often is when speaking without notes. We all like to hear him when he speaks freely, but he seemed to have a burden upon him this afternoon. No doubt, as the noble Lord, Lord Balfour of Inchrye, said, there is enough in the situation to be able to prove, in spite of the gentle words of the noble Earl, that we are in a crisis. It seemed to me that the noble Earl did his best to try to reassure us that everything was going to be all right so long as the workers and perhaps, in a lesser degree, the employers might be got together to do something about it.
It really is not quite so easy as that. The noble Earl said something which was not out of accord with the spirit of what the noble Viscount, Lord Amory, said later in the debate. I took down the phrase he used—namely: How much better to have agreed control of wages! That is what the noble Earl said. I wonder whether he would go so far as to say: How much better it would be to have agreed control of profits! You have nothing like the kind of general principle in what is being recommended on the one side as on the other. Whilst of course you check profits by means of increasing from time to time your excess profits duty overall, you have been giving a fair measure of largesse in relief to the surtax payer which is not in accordance with that principle.
The other particular point in the speech of the noble Earl to which I wished to draw attention was that he said that one

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of the troubles, at any rate, that we have to deal with is that we have been spending more quickly than we earn. That is true of many fields—certainly of the home market. I am not sure that in one part of their career the Government have not helped in making that operative. Having read the comments in the Sunday Press of yesterday and in The Times and the Guardian this morning, for example, on the publication of the feature by Professor Wilson on Independent Television, I should say that one of the reasons for that statement made by the noble Earl about spending more quickly than we earn is the extraordinary increase in what I call pressure salesmanship by the introduction of the entirely new system, from 1953 onwards, of Independent Television and its extraordinary spate of advertising.
It is perhaps a happy thought in the mind of the noble and learned Viscount the Leader of the House that he foresaw this. He made good speeches against the Bill which gave the authority for this. But I am quite sure that he did not anticipate that there would be quite the result in the home market that has supervened. I do not see why we should not come back to a further study of this question before Parliament is much older. Then the noble Earl said just a word or two on the main points in the Finance Bill.
There it is. You have a serious position with regard to the balance of payments. The Chancellor of the Exchequer wants to cut down spending power. The noble Earl says to us this afternoon that the Bill seeks to do just that in all its provisions except one, and that the one in which it does not seek to do it is that which deals with the relief to the surtax payers—and that is perfectly true.
This afternoon Conservative Peers have been pretty well in accord in trying to show that it is necessary, in order to deal with the economic position, to have much more co-operation between the two great powers of industry, the workers and the employers yet they say there is nothing unsocial or unfair in the Chancellor's introduction of this relief to surtax payers. I was 100 per cent. with my noble friend Lord Pethick-Lawrence in the way in which he put the matter this afternoon. He was seeking to show that when the country may be up against it at any time, especially in an economic difficulty, it is astounding how the people get together
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in the general cause if they can be shown that they are not themselves going to be treated unfairly. It is a question of fairness. So it has been the intention of many speakers since to show that there is no unfairness in this extraordinary relief which is to be given to surtax payers in this Budget.
My Lords, is that so? We on this side of politics have got out for ourselves a little table of comparison in this matter. The relief to the surtax payers, in the first year in which it is fully operative, will amount to a larger total sum than, for example, the increased charges in National Health Insurance. Really, there was no need to have what I might call the special, emergency Budget of the spring of this year, raising the National Health charges, unless you were going to give the relief to the surtax payers. You are giving more to surtax payers in this Budget than you will get under the additional charges for National Health Insurance. When we look at the actual comparison of the effect on different classes of income in the community over the last five years of Conservative Budgets, including the present one, we have a few figures which are extraordinarily interesting. All these figures can be obtained, I think, by putting them together from the Financial Statements which were issued in those years.
In the first year, for a man with an income up to £600 a year, you have tax at the rate of about ld. in the pound for a married couple with two children under the age of eleven. By 1961–62, there has been a reduction in the total tax of 13s. 4d., but with the increase in insurance contributions, operative from the emergency Budgeting position of last spring, instead of being that much better off, 13s. 4d. a year, the income of that group will now be minus £12 18s. 3d. a year. Now let us take the other extreme.
LORD HAWKE: Would the noble Viscount repeat the years he is comparing?
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I am comparing 1961–62 with 1956–57.
LORD HAWKE: The 1956–57 income ought to be adjusted upwards, naturally, for the fall in the value of money, so the noble Viscount ought to compare it with a man with an income of, roughly, £750.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I do not think so. I am taking the figures on the actual incomes as they are subject to payment of tax to the tax collector.
LORD HAWKE: We are dealing with two different pounds of income. The noble Viscount is comparing 1957 pounds with 1961 pounds. They do not compare.
VISCOUNT ALEXANDER OF HILLS BOROUGH: These figures are taken from the Financial Statements issued by the Government, and I do not think I can be accused of unfairness in quoting the Government's figures. Now I take it at the other end, the larger surtax payers. If you take a family of a man with two children who had an income of £2,000 a year, his net rate, after all his allowances in the 1956–57 Budget, was 4s. lid. Under this Budget, in the year in which the surtax relief becomes fully operative, if the income tax rates do not change, and after allowing for the reduction of income tax in between, the married man with two children earning £2,000 a year will be £23 15s. Od. a year better off. At £3,000 he will be £257 10s. Od. better off; at £5,000 he will be £861 17s. 8d. better off; at £10,000 he will be £2,101 10s. Od. better off; and a £20,000-a-year man will be £3,049 15s. Od. better off.
Compare that with a net loss in benefit to the man earning £600 a year who has two children and a wife. He will make a net loss on the whole of those five Budgets combined, compared with what the Government are now proposing to do for surtax payers. Is that the basis for getting that recognition of fairness between the main classes for which the noble Viscount, Lord Amory, and others, are now pressing in their appeal to the workers for co-operation? Of course it is not. That is why I think my noble friend was right to point out that if you want to get together like that you must have circumstances and facts which will make the working people themselves recognise that there is no unfairness. And it seems to me that at present such circumstances do not exist.
If you read the leading article in The Times of last Thursday, you will see that there is a pretty genuine concern in other places than, say, the leadership of the Labour Party about this matter. The article says that the
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"surtax reductions have aggravated the Government's problem. The dilemma is not stated merely to deplore it. It is the heart of the whole matter. In spite of the virtual abolition of poverty, in spite of the rise there has been in the rewards of labour, in spite of the fact that one of the disadvantages the Labour Party has to contend with is that the great bulk of the nation now regards itself as middle class, Britain is still a jealous and divided nation."
I have not seen anything very much in the Government's action in the last nine and a half years that would be likely to remove that. The Times goes on to say:
"For this it is not enough to blame the contumacy of the workers. Short-sighted and unduly suspicious they may be.… An effective answer to those who say all that is wrong is that wages are too high would be to publish the menu of one of those luxury hotels that cater for expense accounts."
I think the noble Lord, Lord Hawke, was quite correct when he referred to business expenses in the circumstances that he did this afternoon.
The leader in The Times goes on:
"Britain's failure to improve exports is more due to the apathy of managements than to the shortcomings of workers."
The ordinary Labour speaker who goes to address a meeting and who says things like that is, as a rule, either entirely ignored in the news section of the Press, or criticised for having over-stated the case. But when the country comes up against an economic crisis, such as we now see we are going to be faced with, then an appeal is made from the other side. It was interesting to me when I heard from the lips of the noble Viscount, Lord Amory (I took his words down this afternoon, and I think I have them correctly) that "You never had it so good" was a dangerous basis.
VISCOUNT AMORY: My Lords, would the noble Viscount just complete my words? I said that, though factually correct, it was a dangerous basis for future acts and conduct.
VISCOUNT ALEXANDER OF HILLS BOROUGH: "Though factually correct." Well, I beg to challenge that, if I may. I notice, on going back over my papers, that at the time of the General Election, on September 23, 1959, the Leader of the Conservative Party, the present Prime Minister, said:
"To-day the British economy is sounder than at any time since the First World War. Sterling has been re-established as a strong and respected currency. Our balance of payments is strong. I do not remember any time in my life when the economy has been so sound."

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Does the noble Viscount agree that that was the true position?
VISCOUNT AMORY: Yes.
VISCOUNT ALEXANDER OF HILLS BOROUGH: He does. Well, the present Chancellor of the Exchequer does not seem to agree about that. Nor did it match up with the statement made by a former Chancellor of the Exchequer, Mr. Thorneycroft. There is a grave dichotomy between the two. I wish I had time—I will have at some time—to go back and point out the differences between those statements.
Let us look at what Mr. Selwyn Lloyd says about it. This is what he said on April 17 of this year in the House of Commons [OFFICIAL REPORT, Vol. 638 (No. 90), col. 797]:
"… it cannot be disputed that prosperity did not rest on a sufficiently sure foundation."
He also said:
"… 1960 was … a year of rapidly rising real personal income … But the other side of the medal was the dangerously high pressure of demand on productive resources, the signs of a return of increasing costs and prices, the failure of our exports to increase sufficiently, and the consequent serious weakness in our balance of payments."
On any basis of calculation, the balance of payments during 1960 was very unsatisfactory.
That statement was made a little more than three months after the statement the Prime Minister made in his propaganda appeal in 1959 for the voters' confidence, Moreover, when you consider the differences that we have had in the last 9½ years in this balance-of-payments position, there has surely been an enormous amount of ground for the critics, some of them in the City and more outside the City, to complain about the Government's failure to deal with the balance of payments on a long-term and steady basis. They have complained, as Mr. Selwyn Lloyd was saying only last week, that the Government have been constantly accused of "Stop and Go". The electors may well have to say to the Conservative Party at the next Election that they have done some of their "Stops" and some of their "Goes" to fit in with Elections.
The careful examinations of the Budgets of 1955 and 1959 were surely calculated to encourage the mass voter to feel that the Government were doing wonderful things for them; yet within
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a few months, each time, the exact reverse has been stated. They have said "You go and do this. You get their vote". Then you get the extraordinary effect on the balance of payments of the lack of proper economic planning, and there has to be a special appeal to the people to get together. The Government say: "Don't ask for any more increases of wages. Of course, we will do a little by putting an extra tax or two on profits. We may beg them not to pay out so many dividends, but we are forced, out of social justice to give this relief on surtax to people with large incomes." Nevertheless, they will go on increasing the cost, if necessary, as I gathered from the noble Viscount, Lord Amory, this afternoon, of every piece of extra service put into the Health Service and the Welfare State. They say it is reasonable to ask the people themselves to pay for that. Therefore, it goes on adding up.
In the long run, except by application to the National Assistance Board, the size of income of the people is getting more 'serious under the Welfare State. It is a very perilous way in which to try to induce a sense of fairness into the minds of the people in the country. I thought it was just as well to put that before your Lordships this afternoon.
With regard to the body that it is proposed to set up, the noble Viscount, Lord Amory, said that he was rather encouraged to go on in that direction because of his experience with the agricultural side of industry and what is called the Review of Prices. He said that the great thing was to get to understand and to know the facts, to have working parties, and so on and so forth. Believe me, I can assure the noble Viscount that if he went to the thoughtful people in the trade union movement, not only at headquarters but at branches, he would find they have a pretty good idea of What are the facts. I am all in favour of such consultation between trade unions and employers as will produce (shall I say?) an expanded explanation of the facts of the situation concerning either the particular industry or the national economy. But believe me, the working class of this country are not quite so ignorant of these matters as is suggested, I think, in the noble Viscount's statement.
However, I will say that I myself arm concerned about the poor attendance at

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the branch meetings of trade unions, and that very large parts of the population, not only the working class, are perhaps very much of the spirit of a text that the noble Viscount the Leader of the House will know very well. It is a very rarely quoted one and is contained in a very small book of the Prophets, Zephaniah, where punishment is proposed for those who settle on their lees and say that the Lord will do no evil, neither will he do any good. In other words (I think it was the noble Viscount, Lord Amory, who recalled this expression to my mind this afternoon), they say, "I couldn't care less". I think that charge could be made of some of the people found in all sections of our population—they "couldn't care less".
Nevertheless, there is enough knowledge and experience in the trade union movement for them to see that they have to go on safeguarding the rights of their members, and that they have to examine very closely the economic measures proposed. When you come to speak about restricting spending power, I wonder What are the facts in the real restraint of the spending power of the worker? The workers are the largest consumers of ordinary goods in the home market. Let us go back over the last 9½ years and see how far the cost of living has gone down because of a restriction of spending power. Every time the Government put a tax upon goods—and how right the noble Lord, Lord Brocket was on this this afternoon!—we have an increase in prices. Unless you control prices at the same time as you put on taxes—and you have always been unwilling to do that in the Conservative Party—up go the applications for increases in wages; and as the cost of living goes up it is reflected in the increased cost of wages in every section of production.
If we want to get an idea of the effect of this policy of the Government, which they have applied from the moment they became the Government in 1951, on the basis of "Set the people free!," "Stop rationing", "Give up controls: let the people have what they like!", we have to look at the grave results which this has had upon the national economy. Let us take the matter that is now being
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freely bandied about—the cost of our defence, and the suggestion that we ought greatly to reduce the money which is being spent on our defence commitments overseas. I wonder how many of us have looked at the comparison of the cost of our defence in the last few years. In the last year for which I was responsible as Minister of Defence, the total of the military budget was £759 million, and the number of personnel 850,000. If we take another crucial year, 1951–52, the year of Korea and of greatly increased demand for the Services, which was started by the Labour Government and carried on by the first post-war Conservative Government, the military budget was £1,131½ million, and the personnel 866,000. In the year 1961–62, the budget was £1,655 million and the personnel 444,000.
This increased cost, reflected in every Department providing for defence, was the result, not completely but largely, of the Government's failure to deal with the economic problem of the State. Economic writers in the newspapers who are critical of Government policy come back again and again to the point that somehow Government expenditure must be reduced. The question is whether Government expenditure is being reduced on the right things, and whether things are being expanded which ought not to be expanded. In his Liberal days, Sir Winston Churchill used a saying which I repeated many times 50 years ago, and which is not altogether out of relation to the 1961 political programme of Conservatism. You will not bother with the Weights and Measures Bill. You do away with the Road Traffic Bill until some other time. But you must have a Budget for reducing surtax for the rich and must force through a Licensing Bill that no true lover of temperance wants. Sir Winston's comment on that side of Toryism was:
"The Tory Party is the Party of vested interests, with the open hand at the Treasury and the oven door in the public house."
Nobody can use language quite so appropriate on matters of this kind as this great master of invective.
To-day we are facing a coming economic crisis—and what is promised? Apparently a soft-hearted appeal to the workers of this country to come together to try to get you out of economic difficulties into which you have so largely

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been responsible for leading them. On the other hand, there is no need to be downhearted about the position that could be attained, if you had a policy of real economic planning. It is stimulating to find that now in certain capitalistic circles they are no longer against national economic planning. They are for some planning. They find that they are gradually being converted. Like the noble Lord, Lord Barnby, they see that they cannot rely merely on an increased bank rate, which is as capable of producing inflation as not; they want planning. The noble Lord, Lord Hawke, just now said something about how other countries would deal with the situation with which we are faced—I cannot remember his exact words and will look it up in the morning. But he said that we cannot do that—we are British.
LORD HAWKE: My Lords, may I refresh the noble Viscount's memory now? I said that other countries were able to impose quotas, licences and tariffs when they got into difficulties, but that apparently there is a different rule for the British.
VISCOUNT ALEXANDER OF HILLS BOROUGH: My Lords, I am not at all loth to practice anything which is reasonable in an economic plan which will bring about what we want—an expansion of British production which will not simply go to expand the home market but will go into export and so maintain that vital thing, our balance of payments. Other countries are doing that successfully, and at last, apparently, even some experts in industry and finance are beginning to see the daylight in this respect.
No doubt, with my colleagues, I shall have an opportunity of bringing our views again before the House, when the expected statement of the Chancellor of the Exchequer is made. The papers say to-day that it is possible that this most important statement will be made tomorrow in another place by the Chancellor of the Exchequer. I hope that he will announce as quickly as possible what he intends to do because, as noble Lords have already said, uncertainty is one of the worst factors of the present situation.
The last thing I want to draw attention to is the position of the local autho-
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rities, who are so often attacked about their public works. Perhaps they are the most hard hit of all by the Government's general financial plans to deal with crises. Their expanding programmes of school building, health work and, in particular, housing have to be financed by money borrowed at 6¼, 6½ or 6¾ per cent., and this creates such a charge for them to pass on to people who are engaged in educating their children, or those who have to pay higher rates for council houses, or those who are building their own houses or buying their houses by mortgage from building societies and have to pay higher site costs plus rates, that you cannot expect to get a united effort from these people, until you have some better change to offer them than that which is facing them at the present time. I beg the Government to come down to brass tacks and to consider, as the first brass tack that has to be taken out, departing from the policy on which they have so far relied in dealing with economic difficulties, and to come to economic planning and to a fairness of taxation as between the various classes of the community.
6.40 p.m.
VISCOUNT HAILSHAM: My Lords, we are, I am afraid, all "waiting for Godot", in the sense of waiting for a statement from my right honourable friend, and I think the debate we have had this afternoon has to some extent been inhibited by that understanding, which is as common to Members of these Benches as it is to Members opposite. Nevertheless, if I may say so, I think the debate has been a useful one and has revealed a much closer agreement on all sides than perhaps might be assumed from the vigorous tone of the noble Viscount who has just resumed his seat. I think we are all agreed about the inadequacy of the attitude of mind exhibited by such phrases as: "I'm all right Jack", or "You never had it so good", or "I couldn't care less", or "A free-for-all"; but then, I think we always have been agreed about these things.
I would only suggest, quite humbly, that we should stop trying to attach these phrases to one another and unite in saying that they are inadequate phrases: because it will be within the recollection of noble Lords that I have again and again pointed out in this

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House that the original context of the only one which could by any stretch of the imagination be attributed to a member of the Government is that it was said by way of rebuke to a particular audience which had complained of its lot when it had no right to do so. I would suggest, therefore, that we can unite upon a view of the national necessity which points out the weakness and the limitations of such a phrase: indeed, I would say, quite gently and I hope without offence, to the noble Lord, Lord Pethick-Lawrence, whose contributions year by year in this debate are so valuable and so much appreciated by all sides of the House, that "I'm all right, Jack" was not a film about the Primrose League or even about the Conservative Government, but was a film about the trade union movement. Although I should probably be the first to agree that I'm all right Jack" is about the opposite of the real and the best traditions of the trade unions, there are people who have discerned in certain elements of the trade union movement in recent years a tendency towards just that attitude of mind.
That brings me to the second point upon which I think we can claim to be agreed, and also the point at which there has been some divergence of opinion—because I should like to discuss that, too. I think we are all agreed that if we are going to approach our national economic problems we must do so in the belief that the kind of policy which we are seeking to carry out is one which can be described as fair. The noble Lord, Lord Pethick-Lawrence, used the phrase "fair do's", and I do not complain of that. He went on to say that it should not only be fair, but should be seen to be fair. Again, I do not think I quarrel with that. But here I would make a serious qualification. In my view, at least, the necessity of economic policy is to be fair; and the noble Lord, Lord Pethick-Lawrence, will remember that to be fair is not the same thing as to seem to be fair; and to seem to be fair is not the same thing as to be seen to be fair. I agree that the policy must start by being fair, and I then say that it must be seen to be fair, because everyone must unite to show that it is fair.
But I fear that underlying some of the strictures from the other side of the
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House this evening there has been a confusion of thought attached to being seen to be fair. I think we are always rather apt, on all sides in this country at the present time, to be afraid of being really fair, for fear lest somebody call us unfair if we are. Here is the point at which I join issue with the criticism which has been levelled against us by noble Lords on the Benches opposite, and especially, I would say, by the noble Lord, Lord Walston, because I think, at least, that this attack upon the surtax reliefs is not a case of attacking a real injustice, but a case of a demagogic attempt to represent as an injustice what is in fact a belated act of social justice. The noble Viscount, Lord Alexander of Hillsborough, quoted certain figures which he had got, as he quite frankly said, from his Party sources, as he is well entitled to do. The comparison he made was between a man earning, I think, £12 a week, or £600 a year, in 1956—then and now. But his comparison is fallacious, because he omitted to state that even in the last eighteen months wages had risen 8½ per cent., and therefore the truth is that the man who was earning £600 a year in 1956 would now be earning £15 a week—that much more. This is the fallacy of the noble Viscount's whole attitude of mind, which I wish now to analyse at a little greater length.
VISCOUNT ALEXANDER OF HILLS BOROUGH: My Lords, I must point out that I was not dealing with how the wages of individuals in the community have increased in any of the examples I quoted. I was talking about what is the rate of net taxation upon that sum of income gained by anybody. I am entitled to quote it from that point of view and examine its fair social justice from the point of the income quoted.
VISCOUNT HAILSHAM: And I am entitled to point out the fallacy of that attitude, and that is what I propose to do. I think we must examine this a little more fully. My noble friend Lord Dundee, when he opened the debate earlier in the afternoon, pointed out that, broadly speaking, the internal wealth of this country—the standard of living, if you choose to call it that—has risen more in the last ten years than in the hundred years before that; and that has largely been made up (and I am glad to know that it has been made up; I do

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not want any mistake about that) by increases in wages which have gone on consecutively since the war. I am delighted that that has been so, because that seems to me to be something which has been a real gain in our time. When I was a boy, and when I was a young man, we were constantly having to deal with problems of malnutrition, unemployment and poverty. This has all been swept away, and in the last ten years, at any rate there has never been such an increase in the standard of life of the whole community. But I must say this bluntly to noble Lords opposite: the bulk of that has gone to the wage-earning classes.
These surtax reliefs are not going to the great industrialists. I know that the noble Lord, Lord Walston, represents a type of enlightened employer in the industrial and agricultural life of this country. But the independent professional classes, others who earn salaries, and smaller businessmen, have not gained in proportion either to the capital wealth of the great concerns or to the wage-earning classes. And it is they who will in fact be benefiting to a large extent by these reliefs which we are now discussing. They do not necessarily have much capital. The noble Baroness, Lady Summerskill, was putting to me in this House, only about five days ago, "If you want your research workers in a particular field, you have got to pay them properly". What we are talking about when we are talking about these surtax reliefs is precisely the first-class scientific research workers, precisely the professors, precisely that level in industry. It is they who have not enjoyed the increase of benefit in the last ten years about which I have been talking. Perhaps the noble Lord will forgive me. I will give way, but I want to conclude this point or, at any rate, to develop it a little further.
The fact of the matter is that the level of surtax placed at £2,000 and remaining at £2,000 since, I think, 1920, is an anomaly and an anachronism in our time. It is pure demagoguery to pretend the contrary. The other day I made an inquiry as to What the average male wage-earnings would be in 1984 if we continued the present trend. The average would then be £2,000 a year. It is really absurd to pretend that this level
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of £2,000 is otherwise than an anachronism at the present time, or to denigrate as amongst the more wealthy members of the community—as amongst the kind of rich who are supposed to be trampling down the faces of the poor—these people who are going to get this income relief. The big industrialists may not need it. By and large their salaries have risen high enough at the top of industry, and their capital investments have appreciated enough for them not to worry about surtax. But the people you are attacking when you attack the surtax relief are the ordinary professional class people who have not enjoyed an increase of Standard of life at all comparable to those which I have been describing. It is in fact the middle class who are being attacked by this kind of demagoguery, and not the very wealthy.
LORD PEDDIE: My Lords, I hope the noble Viscount will pardon my interruption, but I want to make a suggestion. I am at a loss to understand the argument the noble Viscount has advanced concerning the connection between the change in the standard of living over the past decade as compared with a hundred years ago. Is he telling the House that the standard of living over the past ten years, from 1951 to 1961, is greater than the increase in the standard of living of the workers from 1851 to 1961?
VISCOUNT HAILSHAM: My Lords, I was referring to something in the earlier part of this debate, which I do not think the noble Lord heard. I was not claiming a statistical analysis of my own. I was only referring to what had taken place. The actual statistical analysis matters nothing compared with the fact (with which the noble Lord, Lord Walston, and my noble friend Lord Dundee are agreed) that in the last ten years the internal wealth of the country has increased, at any rate, on the scale and of the order of that which I have described. I say, therefore, that we must avoid, in our determination to be fair, the fear of being called unfair. On the contrary, we must seek to be fair.
Now I turn from that to the economic situation and to the Budget proposals. I think the first decision which had to be made by my right honourable friend when he introduced his Budget was

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whether he was going to introduce a counter-inflationary Budget or some other kind of Budget. His primary decision was to raise a surplus above the line of £506 million a year, which he did by increasing taxation by a net total in the full year of £80 million. No one, at any rate, has questioned that decision. The more striking proposal which he included was the proposal, which has been much discussed in this debate, of adopting two new so-called economic regulators to deal with the threat of inflation. I should be the first to agree that any form of proposal by which an attempt is made to deal with inflation by putting on taxes is very much a pis aller. It will have the difficulties which have been urged on both sides of this House. In other words, it will, by the imposition of taxation, either cause hardship or add to cost. That is the common feature of all taxation demands. It is also the feature of all the economic regulators at the hand of any Government by which to attack inflation.
We know that hire purchase restrictions, for example, bear hardly on particular sections of industry, and they are unjust in that respect. We know that the higher bank rate has the disadvantage which the noble Lord, Lord Pethick-Lawrence, described; it raises the interest rates, and this may hit both the ratepayers and others who legitimately need finance. It may affect the level of rents and that can cause hardship. And so on. The choice of whatever regulator you choose will cause economic hardship, and none of them can be justified except in terms of an over-riding necessity to defend the economy against inflation. It is a second-best. It is a pis aller to take money out of internal demand, by Government action, to achieve that purpose.
It has the effect, of course, to which noble Lords have referred when they speak of this "Stop and Start" and of the sudden jerks in the economy brought about by Government action to control inflation. Of course there is a better policy. But a better policy demands acceptance by the great mass of the people—and that means the wage earner, because wage earners constitute the great mass of the people—of voluntary restraint in the extent to which they seek higher returns for their labour. If
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that is not the case, then if a Government does its duty it will be compelled, in one way or another, to introduce new regulators, or to take other steps by means of law, to stop and start as the economy requires it. I will return to that at a later stage of my argument.
I think one can say that the novel experiment which my right honourable friend has taken in his Budget, which consists in seeking the right from Parliament to introduce new rebates or new taxes during the course of the financial year, has not been criticised as a constitutional device. Indeed, one noble Lord—I think it was my noble friend Lord Hawke—congratulated the Chancellor on an imaginative and original Budget. I fancy that he had this particular feature in mind. It is a feature of the Budget which I think ought to come in for praise. My right honourable friend has taken this now course to add, as I think my noble friend Lord Amory said, a new club to his bag—a new means of dealing with inflation, not instead of but in addition to the other instruments which previous Chancellors have enjoyed.
I come from that to what I think is a melancholy feature of this debate. This is the point upon which my noble friend Lord Amory dwelt in what. I must acknowledge, was a most helpful and, I should have said, a most brilliant speech. It is of course true that in this Budget we have been driven again to the use of counter-inflationary devices which we should gladly have avoided if the pressure of inflation had not compelled us to adopt them. My Lords, it means, I think, just this. Since the war there have been a series of what I will call financial crises or economic crises—the word has been criticised on both sides of the House, but it is not a bad word, because we understand what it means. It is true that there have been a series since the present Government took office in 1951–1951, 1955 and 1957 we can remember.
The prime feature of all these crises is that they entail painful and unpopular Government action. They received painful and unpopular Government action. But we weathered them. The only difference from the two previous crises under the Labour Government is that the first drove them into a devaluation which

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they did not weather, and the second into a General Election, when they left us to clear up the mess. But what has been common to both Parties since the war has been the liability of the British economy to recurrent emergencies of this kind. I have no doubt whatever that we shall weather the present emergency; all experience leaves us to believe that we shall. But I think my noble friend was perfectly right, that what should give us pause at this moment in our history, what ought to cause us momentary reflection and, I think, a new departure in policy, is the recurrence of the disease for so many times under so many different Governments, and met by so many different methods. It is this which ought to give rise to a more national and possibly less partisan approach than has been possible in recent years.
It was for that reason that I welcomed the speech by my noble friend Lord Balfour of Inchrye, because, unless I am mistaken, he was very much of that opinion too. I must say that I have come to the conclusion, as I think he has done, that the time has arrived when the British people, quite apart from Party politics, should make a new, resolute and prolonged effort to get out of this recurring sequence of balance of payments crises and into a situation when, if regulators are necessary from time to time, they do not involve sudden changes in the pattern of economic life. I would agree with him too, and I would agree with the noble Viscount, Lord Amory, that if this is to be done we must face, without political preconceptions, certain facts of life which I think all Parties have been reluctant or unable to grapple with hitherto, and we must face them in the knowledge that the Government will fail unless the people recognise that the effort cannot be made by the Government alone—or by any section of the people alone—and that national efficiency demands a whole series of efforts. And I would say, sadly, but still with some conviction, that in my judgment those efforts would not be complete at the end of one year as my noble friend suggested. I think it will require an absolutely concerted, determined direction of policy stretching over several years at least.
And I would say that my noble friend Viscount Amory was right in drawing attention to one underlying fact. In our
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country the working population is growing in numbers by only one half of 1 per cent. a year. Any increase in national wealth, if it is to be enjoyed without inflation, must therefore depend mainly upon the growth of output per worker. Output, if I may say so, is a word I would use to describe various kinds of efficiency and production.
In the past ten years the average growth of output per worker has been approximately 2 per cent. per year. Now, my Lords, no increase in personal income of any sort, no increase in wages and salaries, which in total exceeds this figure, can be other than inflationary. It does not matter what political or social philosophy we adopt. No increase above the average increase in output per worker can be other than inflationary. Until this record is improved, every attempted wage or salary increase, by any organised body whatever, which exceeds it, is, in substance—however reasonable it may seem to those who make it—an attempt to get something at the expense of everybody else. There may be cases, of course, when such an attempt is justified. We all know that relativities cannot be permanent everywhere. But it cannot be justified in every case. In the great majority of cases my conviction is that it has not been justified at all.
The fact is that during most of the 1950s, whilst the average annual growth of output per worker has been of the order of 2 per cent., the average annual increase in wages and salaries was 6½ per cent. against the figure of 2 per cent. In 1959, it was 5½ per cent., but it has grown much more rapidly since.
LORD SILKIN: My Lords, may I just ask the noble and learned Viscount, while he is speaking of wages and salaries, whether he would not say a word about profits? Have they not been rising even more rapidly than the figures quoted?
VISCOUNT HAILSHAM: The answers to the two questions put by the noble Lord are, respectively, "Yes" and "No", and he will hear in about two minutes' time, I hope, exactly why the answer is "Yes" to the first part of the question, and "No" to the second. But it is a fundamental fact that one has to look to the future to get to the bottom of this matter. No remedy which does

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not acknowledge that fact is fundamental. Every successive Government has tried to tackle it, and no Government has succeeded. It is no good noble Lords opposite, and, may I add, no good for highly respected leaders of the trade union movement, trying to strike defiant attitudes at successive Chancellors who draw attention to a fact as fundamental and obvious as this. If the country does not in this matter accept some voluntary restraint it must get restraint which is not voluntary. If the Government does its duty it will come from the Government. If it does not, the restraint will come from outside this country, by way of a flight from the pound, which is only another way of describing a lack of belief, by people outside this country, that we can be trusted any more as a nation.
It is a perfectly fair point made by the noble Viscount, Lord Alexander of Hillsborough, when he spoke, and by the noble Lord, Lord Silkin, a moment ago, to say that when we talk about wages and salaries it is also equally imperative to talk about profits and dividends. I think that of course one must compare the difference in nature between the two kinds of personal income, but it also happens that there is a perfectly fair answer. I think the House should know, although it is not in my judgment a conclusive point at all, that while wages and salaries have risen steadily profits have, in fact, shown no such steady rise. Between the first quarter of 1960 and the first quarter of 1961 profits actually fell by as much as 61 per cent. whereas wages and salaries during the same period rose by 8½ per cent. And if one takes a longer period, which I think one should, profits have certainly not risen in the same proportion as wages and salaries. Between 1954 and 1961, for example, the total rise in wages and salaries was 53 per cent., whilst the total rise in profits was 42 per cent. Moreover, it must be remembered that in absolute magnitude—and, therefore, in the size of the contribution which they make to the inflationary pressure—company profits amount to little more than one-quarter of the amount of wages and salaries.
I accept, however, the fundamental point made by the noble Lord, Lord Pethick-Lawrence, that it is necessary to ensure that a fundamental balance
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of justice remains and that one cannot deal with the one problem without discussing the other. I would simply say to the noble Lord that while profits are, in fact, at least controllable in principle by an appropriate instrument, that is, by taxation—and it is not altogether irrelevant to point out that the taxation of profits of companies has been put up this year in order to countervail the relief in surtax, and last year by my right honourable and learned friend's predecessor—no appropriate instrument for the direct control of wage and salary increases has as yet been devised. We are, therefore, put into the position that one has been rising uncontrollably and the other has risen less, and on occasion recently has, in fact, fallen, and is controlled and controllable.
It is for that reason that I was particularly attracted by the suggestion of my noble friend Lord Amory, which he agreed, if he received support from the other side, to call the Citrine plan. I, of course, can say nothing about that this afternoon, but I promise to put that suggestion to my right honourable and learned friend and see whether it is favourably received. I would close, because I fear that at this late hour I have strained your Lordships' patience somewhat long. I feel that the time has come to get to grips with what my noble friend Lord Amory has described as the fundamental problem of the recurrent series of crises from which the nation has suffered since the war.
LORD STONHAM: My Lords, the noble Viscount has just said that profits were controllable by means of taxation and that wages and salaries were not, and that if the Government did not control them they would be controlled from outside by means of a flight from the pound. In those circumstances, what do the Government propose to do?
VISCOUNT HAILSHAM: My Lords, said clearly, throughout my speech, that I do not propose this evening to anticipate my right honourable and learned friend's statement, and I should not be expected to do so. If, however, the noble Lord reads what I have said during the course of my speech, he will see that I have said a good deal of what needs to be done. I was about to end by giving what can only be a personal opinion about certain other matters.

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My Lords, we have deliberately made full employment the policy of this country since 1945. In times of boom this has created a difficult labour shortage over some parts of the country, although I agree with the noble Lord, Lord Polwarth, when he pointed out that other parts of the country did not enjoy that situation to the full. It would, I suppose, be possible, for a Government that was sufficiently ruthless, to slow down economic activity to the point at which jobs and vacancies were in balance. But it is surely a curious, even a Gilbertian, situation which would require one to create spare capacity in order to avoid inflation. It would be impossible to act in such a way without creating unemployment in areas where, at the moment, economic activity has not yet reached its fullest extent.
Rather we should set ourselves the deliberate task of adding, to the concepts of full employment and social security which on the whole have been common to the parties since the war, a third concept—that of national efficiency. Statistically, this might be measured in terms of gross domestic product per worker—t hat is, the total output of goods and services per worker. We should then seek to identify in each realm of economic activity the steps necessary to achieve or to improve it, and let nothing, neither vested interest, restrictive practice nor, as my noble friend Lord Balfour of Inchrye said, political doctrine, stand in our way. Let us in that spirit look at the entire economic theme: investment, mobility and training of labour; the level of wages and salaries; the level of profits and dividends; aids to industry; restrictive practices; tariffs; taxation; public expenditure and administration. Let us acid the third concept of national efficiency to our other public aims, and I think what we shall get to an end of our recurrent crises over a period of years.
There is, however, another factor without which we cannot succeed, and that is the factor upon which many noble Lords, from all parts of the House, have rightly laid stress. That is the need to call upon the feeling of patriotism which is never far beneath the surface of the people of this country. I do not think that they will fail to respond when they are shown the need. I do not suppose for an instant that a Government composed, as it in-
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evitably is, of members of one Party can succeed by themselves in making an appeal of this kind. I recognise, of course, the substantial justice of the demand with which we have been faced from the Benches opposite, that whatever proposals we make should be shown to be fair. I sincerely ask noble Lords, in all quarters of the House, to take this as what it is, not a challenge to remedy the defects of policy of a single Party, but at attempt to overcome a recurrent difficulty with which our country is faced.
On Question, Bill read 2a: Committee negatived.
Then, Standing Order No. 35 having been suspended (pursuant to the Resolution of July 13), Bill read 3a, and passed.

BUSINESS OF THE HOUSE
LORD NEWTON: My Lords, this may be a convenient moment to adjourn for dinner. I hope your Lordships will agree with me that three-quarters of an hour will be enough.
LORD OGMORE: My Lords, before the House adjourns, I should like to make one objection to adjourning, which, I understand, is to some extent due to the Hansard staff, with whom I have great sympathy and who have our admiration for the way they carry out their duties. I do not think that the Government's allocation of time for the Licensing Bill is a proper one. Licensing is a most important subject. The Bill will affect the social conditions of our people for many generations. With much of the Bill I wholeheartedly agree; there are certain parts which I do not oppose. The Bill, however, is coming on on three occasions at a late hour in the evening. On Thursday night it came on after a long, heated and interesting debate on whether we should sell broccoli in one part of London or another. It came on in a very small House, I may say. I do not think there were more than four or five people listening to this important Bill last Thursday; a few more turned up for the Division, but the actual people listening were very few.
To-night it will come on at about 8 o'clock, again after an interesting and important debate on the Second Reading of the Finance Bill, and I do not

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think many people will really be fresh enough to give it the consideration that it ought to have. To-morrow it is to come on after the debate on the Committee stage of the North Atlantic Shipping Bill, another important Bill, which, no doubt in its Committee stage will give rise to quite a number of differences of opinion, and there are several Amendments down. In these circumstances, one cannot but say that this Bill is not having the consideration that we should give it. One of our major tasks is to be a revising medium, and I do not think this House is being given the time or the opportunity to give this Bill in Committee the consideration it ought to have.
LORD MACDONALD OF GWAENYSGOR: My Lords, might I, in just a sentence or two, support the noble Lord? Over the week-end I have met quite a number of people. They asked me what happened last Thursday night in the House of Lords. They have not seen or heard of it in a single paper—not a word—and they wondered why it was kept out of the Press. I told them that this came on so late, because of other important matters and procedures, and that it was not likely that the Press would take notice. But the people of Wales are concerned about this Bill, and they think that although the Bill itself is shabby treatment for Wales, this is making the shabby treatment shabbier still.
VISCOUNT HAILSHAM: My Lords, whatever else can be put to the door of the Government, we cannot be blamed for the Press coverage that this Bill received, especially during a week when other things were happening which attracted a good deal of public notice. The actual allocation of time to this Bill has, as noble Lords will be aware, been fully discussed through the usual channels. The Government have changed their plans two or three times to my knowledge, in order to meet the convenience of as many noble Lords as possible in the requirements of the Bill, and I do not think we can be charged with being unreasonable or unthoughtful in the matter. Naturally, nobody could be sorrier than I am that any noble Lord is inconvenienced at any time, but at this time of the year we always find difficulty. The other place sends its
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legislation to us about now, and this happens every year. We do our best to carry through our business, and I can only say how grateful the Government is to Members of the House for giving so much of their time and undergoing so much inconvenience, in order to do the legislative business which is required by Parliament.
[The Sitting was suspended at twenty-four minutes past seven o'clock, and resumed at five minutes past eight o'clock.]

LICENSING BILL
8.5 p.m.
Order of the Day for the House to be again in Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Brecon.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD AILWYN in the Chair.]
Clause 6:
Sunday closing in Wales and Monmouthshire
6.—
(2) There shall be no poll under this section for a county or county borough unless it is requisitioned by not less than five hundred local government electors for the county or county borough, and a requisition shall not be effective unless—
(a) it is contained in one or more requisition papers in the form in the appendix to the Second Schedule to this Act, signed by the requisitioning electors and giving the particulars of them required by that form; and
LORD MACDONALD OF GWAENYSGOR LORD MACDONALD OF GWAENYSGOR moved, in subsection (2) (a), after "electors" to insert:
"in the presence of a person and at a place appointed for the purpose by the council of the county or county borough".
The noble Lord said: One term that was used by the noble Viscount the Leader of the House was "We must be fair", and I agree, and all I ask for is fairness regarding not only this Amendment but all subsequent Amendments. May I add—I hope I shall not be misunderstood—that I am a little worried that the Bishops' Bench has been empty throughout the debate on this Bill. I know that they are people active in the Temperance Council of the Christian Churches. I am

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delighted to see the right reverend Prelate the Lord Bishop of Liverpool this evening.
The noble Lord, Lord Amwell, seemed concerned when discussing Lord Ogmore's Amendment as to where I really stood. Did I think that legislation could make people good morally? I had better read his own words because I want to link up [OFFICIAL REPORT, Vol. 233 (No. 109) col. 378]:
"I do not believe you can make people moral by Act of Parliament. This is the way in which certain sections of people with strong and honest convictions, like the noble Lord, Lord Macdonald of Gwaenysgor, seem to think this can be done."
I would assure noble Lords present that I do not take that attitude. I do not think legislation will make us a moral nation in itself. I agree with him. I have been an anti-prohibitionist. My method of dealing with the drink issue has always been, and still is, a very direct method: slow maybe, a roundabout way—that is, first of all by the right type of education, especially in the schools.
LORD OGMORE: Was the noble Lord ascribing that sentence to me?
LORD MACDONALD OF GWAENYSGOR: No; to the noble Lord, Lord Amwell. What I was referring to was my personal position. I think the best approach to the drink problem is first of all the right type of education, especially in our schools and colleges; wise legislation—I think that is necessary; but I would also emphasise the example of the older generation. Those three ways, in my opinion, are the best ways of handling this problem. They may be slow and hard, and they may take a long time; but I cannot think of any other method that would be permanently effective.
The Amendment I now move and the two following Amendments are all related. To some extent it is a waste of time to move them separately. I have them all in mind in making my brief submission. When this Bill is passed and the ballot has been arranged, it is important that this House along with another place gives guidance. Here we have seventeen different areas in Wales needing seventeen officers of one kind or another to supervise the ballots, and we feel that we, as Parliament, ought to give guidance. This machinery has been
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decided on, and we do not think it ought to be left to each official in his own area to deal with this matter in the way he desires. We want to add dignity to this ballot. We want it to be a ballot of importance. We do not want there to be an idea that anything we do is good enough and that we can get away with it, as is the tendency in regard to cinemas. This is not a cinema issue, not by any means. The cinema issue is quite different from this issue. I am anxious that we should give guidance to the people who are responsible in these seventeen areas as to how to conduct the ballot in such a way that they know that the future of Wales is involved. I beg to move.
Amendment moved—
Page 12, line 44, after ("electors") insert the said words.—(Lord Macdonald of Gwaenysgor.)
THE MINISTER OF STATE FOR WELSH AFFAIRS (LORD BRECON): I can quite understand the reason for the noble Lord, Lord Macdonald of Gwaenysgor, proposing these Amendments. The effect of accepting the Amendments would mean that requisition papers for a poll would be signed in the presence of a person and at a place appointed for the purpose by the County Council or County Borough Council concerned. The purpose of the Amendments, I take it, is to ensure that all signatures to a requisition paper are the valid signatures of duly qualified electors.
I would point out that it has not been thought necessary to make similar provision about signing requisition papers in a particular place, and in the presence of a particular person, in legislation relating to other kinds of local polls—as the noble Lord has said, a poll for Sunday cinemas, which he refers to as being in a different category to this one. In particular, there is no such provision in the law relating to requisition for "temperance polls" under the Licensing (Scotland) Act, 1959. I am sure that the noble Lord would not wish Ito give the impression that stricter safeguards are needed for the people of Wales than have been found necessary for the people of Scotland. Temperance polls in Scotland have been part of the law since 1920. In any event, Clause 6 (8) (b) of the Bill, by attracting paragraphs 18 or 19 of the Ninth Schedule to the Local Gov-

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ernment Act, 1933, already makes it an offence for any person fraudulently to sign or forge a signature to a requisition paper or to attempt to do so.
I think the point here is that if a particular person is appointed say, in the City of Cardiff, to receive these signatures, he is not in any position to check the person. He gives his name; he does not know him, but he can give his number from the voters' list. I cannot believe that those in favour of Sunday opening and those against will have any difficulty in getting 500 valid signatures, and these proposed Amendments, I think, make it just more difficult and inconvenient for people, by requiring them to go to some central point—probably at specified hours—to sign the requisition paper. Perhaps in a large county like Cardiganshire one spot would be most inconvenient for everyone to go to. I hope that, for these reasons, the noble Lord will not press his Amendments.
LORD OGMORE: Before we leave this particular part of Clause 6 may I ask the noble Lord, Lord Brecon, whether he can clear up a point which I raised last Thursday as to the position of Servicemen who are away from home on Service, in Kenya or Malaya, Hongkong or anywhere else? I have been informed that such Servicemen or women will not be able to vote at a poll under Clause 6 because they are not on the local government register. The noble Lord was not absolutely certain about that. So that we may know where we are, perhaps he will try to find out, if it is possible, and clarify the position.
LORD BRECON: I shall be very happy to look at that question. I understand the postal vote does apply to the elections; but, in so far as the Servicemen are concerned, I will make inquiries and write to the noble Lord in a day or so.
LORD OGMORE: One point is that there is bound to be some delay before the papers come back, if they have to go out to Hong Kong, Malaya and so on. There would be delay which may not be allowed for in the clause.
LORD BRECON: Very well.
On Question, Amendment negatived.
8.16 p.m.
LORD MACDONALD OF GWAENYSGOR: In his absence, my noble friend Lord Silkin has asked me to move the next Amendment, which is to leave out Clause 6. The question I am being repeatedly asked nowadays is: how did this clause get into this Bill? That is a difficult question for me, because I have no idea, and that is my usual reply—"I have no idea." But these friends of mine seem to have some ideas, and in North Wales they are rather shrewd people. They put their point of view in question form. Let me just give your Lordships the questions. Is it because the Government have no views on Sunday opening of public houses in Wales? Or is it that they favour Sunday opening but are inclined to the view that it would be unwise politically, in this respect, to put those views in legislative form, in the form of a Bill? They go on to say that that would mean that the Welsh Grand Committee would meet to adjudicate upon the Bill, and that would be discrediting the Government. Somebody else disagreed: he thought the Government would make a better effort to find out what is the feeling in Wales on this issue.
Now for months—I think I could say, for years—this question of opening a public house on Sunday in Wales has been before the people in one way or another. Licensees and victuallers—not all the licensees, by any means—have seen to it in various forms that somebody is impressed (and I rather think it is the Minister for Welsh Affairs and the noble Lord, Lord Brecon) that there is a big demand for this in Wales. I would say that the demand for the closing of the clubs is, if anything, bigger than that for the opening of the pubs in Wales. Now the demand for the closing of the clubs comes from one section of the population: the demand for the opening of the pubs comes from another section. So far as the demand for closing or opening is concerned, that is a matter to be decided, but I am quite satisfied in my own mind that so far as the demand in Wales is concerned there is nobody entitled to say that there has been a bigger demand one way or the other.
Of course, what I feel has been happening is that somebody has been

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arranging for people to go around Wales to eavesdrop here and have a chat there and bring back information. Then, as a result of all this investigation, it has become known that the majority in Wales would vote for Sunday opening. Now, the Government could bring in a Bill, but the M.P.s of the Tory Party in Wales would never approve of that. They would realise that for the Government to bring in a Bill putting forward Sunday opening would be electorally disadvantageous to them. That would not do at all. No; they must find a means of getting the pubs open on a Sunday which does not discredit the Government. And the way to do it is to organise something: get a scheme; work it out; get your clever men on the job—and this is the result of the cleverness. That is what they say to Wales now, having consulted I do not know whom.
I know the leaders in Welsh thought and in Welsh life as well as anybody else in the world. I see them frequently. We seldom meet without discussing this. Those men have not been consulted. Men in very high positions have not been consulted in any shape or form. As I said on Second Reading, it is easy to pretend that you have consulted this, that or the other person. I have seen that game going on in the industrial world. You consult those who you think matter. Then you say to yourselves, "Ah, if we don't consult somebody else, they might be concerned," so you consult them just to put them off. They accept what you suggest because you have talked to them. I am afraid there is a lot of that going on in Wales.
What we want to ask ourselves is this: is it the right thing to throw this matter at Wales in this way? Is it right to say to Wales, "We have our views as a Government. It does not need a very keen or acute mind to read between the lines of every statement made by every member of the Government. They are all obviously leaning towards the opening of the pubs on a Sunday." What should the Government do? Are they frightened because it happens to be an unpopular issue, and they then try to avoid a decision on the matter and say, "No, it is not our policy. Wales has had a chance to vote; they voted this way and therefore we must respect the wishes of Wales and arrange legislation accordingly."? On Thursday last we discussed
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the method. I thought and still think that Lord Ogmore's Amendment took the right lines. We should not have seventeen separate ballots in separate places on the same day. To have the people voting in local areas is not the way to treat Wales. Give Wales a national ballot, if you give them a ballot at all.
What this Amendment will do is this. At the moment the Government have nothing whatever to lose by accepting it, nothing to lose at all. Wales will realise that the Government have intended to be fair, as was emphasised before in the previous debate by the noble Viscount the Leader of the House, who constantly said when addressing my noble Leader, "We must be fair. That is all we ask." Let this clause go entirely for the time being. Go back to Wales; talk to those who matter in Wales. Have a commission for whatever you may call it) to go into the matter.
After all, we must now realise that Wales will have something new if the pubs open; but, in addition to the pubs opening, these refreshment rooms and cafés will open too in Wales. I myself am very anxious that Wales should be recognised for what she is. She is a nation. There is a danger of those in England not always recognising that. The feeling of nationhood is stronger than ever at the moment. This clause is rather in the direction of denying that nationhood and unity. A united Wales is a possibility, but not with a clause like this. If this machinery operates, I feel very much that there will be disunity and division in Wales because of the operation of this clause. That is why I am so anxious that this clause should not remain in the Bill. I beg to move.
Amendment proposed—
Leave out Clause 6.—(Lord Macdonald of Gwaenysgor.)
8.24 p.m.
LORD OGMORE: I have a good deal of sympathy with the noble Lord, Lord Macdonald of Gwaenysgor, because, quite frankly, I am in my own mind genuinely very doubtful whether the clause as it stands at present will be satisfactory so far as Wales is concerned. As the noble Lord, Lord

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Brecon, knows, I have for years pressed for Sunday opening for licensed premises in Wales, under certain conditions. I pressed for that when it was very unpopular to do so. In fact, I was more or less—I will not say turned off the Tourist Board, but because nobody else on the Tourist Board agreed with me, it was better to leave it. Several Ministers came down to speak at the various clubs in Wales—at least Conservative clubs. They also failed to support my line of thinking. The Labour Party failed to support me. As the noble Lord, Lord Brecon, knows, I was alone on this point.
I believe that the club system in Wales is pernicious and that the proper way of dealing with it is not to close the clubs, which is impracticable, but to allow public houses to open under certain conditions. I had a deputation of licensed victuallers to see me, although I had no connection with them. It was all reported in the Press and can be verified. They said that they agreed with my proposal that licensed premises should be allowed to open on Sunday provided they made the necessary provision for those who wanted to eat a meal. One of the great problems in a country like Wales, especially in West Wales, where there are long distances from one town to another, is that it is difficult to get anything to eat on Sunday. One can go a long distance before getting anything.
It seems to me that this goes back to the old idea of the innkeeper who has to provide accommodation and fare for man and beast. We can go back to the time of Chaucer and the Tabard Inn, from which the Pilgrims set off on their journey to Canterbury. Chaucer sets out in clear language what a great man the innkeeper was, because he provided victuals and wine and accommodation. I had hoped that in Wales we would have the same sort of spirit. At that time that was my proposal: that if premises were prepared to make the necessary alterations or provide the necessary accommodation for people who wanted to use the house as it should be used, then they could have a licence on Sunday.
I still think it is a pity that the Government did not make this qualification in the Bill. But the great opponents of
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this idea have been the brewers in Wales, who do not wish in any way that public houses should reoccupy their traditional position. They have been interested only in how much beer and other intoxicants they could sell. This has been particularly vicious because, of course, they sell more beer on Sunday in the clubs than they sell in any public house on any single day in the week. So far, so good. Your Lordships can see that I have been no enemy to public house opening, and, in fact, have supported it.
The Government have put the ridiculous provision in this Bill for seventeen polls on whether licensed premises should be open or not on Sunday. I do not want to reiterate what I said previously because it would only delay the Committee, but what we have to see to-day is that this absurd provision for seventeen polling disticts in a small country like Wales is so harmful that it will vitiate any good consequencies that the Bill will bring. I confess I am in some doubt about whether it will bring more benefit or otherwise. If all districts decide one way or all decide the other, then it will not matter; but it is hardly likely that all the seventeen will decide one way and we will be in the position of having six or eight of them "dry" on Sunday and the remainder "wet". If that be the position, I think that this Bill will do far more harm than it will do good. Unfortunately, the noble Lord who is in charge of the Bill cannot tell us what the result will be. What the Committee are being asked to do is put its money on a very uncertain horse—or, rather, seventeen very uncertain horses. Nobody knows which of these horses will win or in what order they will come home. Although this is all right for Ascot, it is not the sort of proposition that ought to be put up to Parliament. I should like to hear what the noble Lord has to say, because, as I say, I am very dubious about this. I am only sorry that the Government did not accept my Amendment to allow Wales as a country to decide one way or the other, because this, I believe, would have been the statesmanlike course.
LORD BOSTON: While I sympathise with the noble Lord, Lord Macdonald of Gwaenysgor, I think we should remember the number of English people who live in Wales. This Bill will also affect the

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thousands of visitors from England and elsewhere who go to Wales. Their point of view ought to be taken into consideration, as well as those people of Wales who feel sincerely that public houses should remain closed.
LORD BRECON: We have listened with great interest to the speeches from noble Lords, and we can all agree on the sincerity that they have shown on this question of whether public houses in Wales should open on Sundays. Your Lordships will have realised the great and sincere differences of opinion that are held in the Principality, and as time passes I believe that these differences are becoming greater. In bringing forward a Licensing Bill the Government could not remain silent on the question of Sunday opening in Wales. Since the Bill was published, strong views on both sides have been heard throughout the Principality and also in another place. I believe that had the Government ignored the question, without doubt an Amendment would have been put forward when the Bill was in another place and the Government would have had to declare their views. These considered views of the Government have been declared in Clause 6, and we believe the only way in which the views of the people of Wales can be consulted is to allow them the right of local option in counties and county boroughs.
The noble Lord, Lord Ogmore, has again raised the question of local polls as against the national referendum. My noble and learned friend the Lord Chancellor replied to the point about a national referendum at our last Committee meeting.
LORD OGMORE: May I say that the Lord Chancellor tried to prove conclusively that the referendum was un-English, and then suggested that, as it was un-English, we should have seventeen referendums.
LORD BRECON: The referendum for which the noble Lord was asking was for the whole of Wales. The noble Lord, Lord Macdonald of Gwaenysgor, said on Second Reading that my right honourable friend the Minister for Welsh Affairs and I trot around the country having conversations with the wrong people. I should like to assure the noble Lord, and the noble Viscount who leads the Opposition as well, that
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that is quite wrong. My right honourable friend and I meet as many people as we can, who can and do represent to us all opinions on many topics; and I believe we do this with reasonable success. The case for Sunday opening was put to me in 1958 by the Licensed Victuallers Defence League for England and Wales, and at that time I said that if I was to receive a deputation from that organisation I must receive and hear a deputation from those who took an opposite view. One month later I received the Temperance Council of the Christian Churches of Wales. I was in no doubt, after receiving these deputations, that there were strongly-held and very sincere opinions on both sides.
I am sure that the only way this question can be solved is in the manner suggested in Clause 6, because this will allow the people of Wales—and not only the leaders—to voice their opinions and make their own decision. By having local option, it will allow for the different feelings held in various parts of Wales, and they will be able to express themselves. The noble Lord, Lord Ogmore, said on Second Reading that the position in Wales at the present time is a complete and utter farce; that clubs are increasing, and we have 1,400 at the moment; and that the present laws are being circumvented every Sunday. We believe that Clause 6 will give to Wales the more realistic approach to the present most unsatisfactory state of affairs.
The noble Lord, Lord Lindgren, spoke of his visits to Wales and what went on. Since the Act of 1888, Wales has changed out of all recognition. Our industries are to-day more diversified than they have ever been. We have industries which work three shifts a day, seven days a week, throughout the year; and there are men and women who do not regularly get every Saturday off. This change of the industrial pattern changes men's habits, and our laws should from time to time take account of these changes. We in Wales also have a considerable tourist industry. While the Welsh Tourist Holidays Board have declared themselves only in favour of drinks with meals, I am sure that visitors to Wales will welcome the change. Perhaps we shall see fewer people going out of Wales on a Sunday and an increase in our tourist industry, which will bring

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prosperity to many small hotels that are at present able to keep open only for such short periods of the year.
This Amendment in the name of the noble Lord, Lord Silkin (I am sorry he is not here now), is to omit Clause 6, and there would then be no specific provision at all in the Bill relating to Sunday opening in Wales. This I believe would be wrong, and what the noble Lord, Lord Silkin, said on Second Reading was this [OFFICIAL REPORT, Vol. 232 (No. 103) col. 1339]:
"The question is: what is to be done? Should we permit complete freedom to open public-houses in Wales? I would have said Yes".
I was glad to hear the noble Lord continue to say that, as the present law has been the law for many generations, the Government should have some form of consultation with the Welsh people. This is exactly what the Government are proposing in Clause 6. The very sincere views put forward by noble Lords are that the people of Wales do not want Sunday opening. If that is so, then why not let the people have this local option, and the result of the polls would declare those views expressed by noble Lords, so that they would have nothing to fear. But those of us who have lived all our lives in Wales know that very differing views are held in various parts of Wales, and the only way in which this very important question can be settled is through the local poll. I ask your Lordships, for the reasons I have given, not to accept this Amendment.
LORD MACDONALD OF GWAENYSGOR: Let me say at once that I was rather surprised to hear that there was nothing which could be done except to introduce this clause. What prevented the Government from bringing in a Bill? If the Government believe that Sunday opening is the right thing for Wales, well, Wales is part of the United Kingdom, and the Government ought not to create a scheme which prevents them
from declaring where they stand. Every member of the Government in his speech on this question has indicated his sympathy with the opening of pubs on Sunday in Wales. My personal complaint is that that is not governing; it is avoiding the issue. That is shifting the responsibility on to somebody else, rather than run the risk of some electoral disadvantage in consequence of bringing in a Bill. This is a question which should be dealt with by a Bill. Though I should oppose it, that is the way to do it.
With regard to the tourist industry, when are the Government going to drop this idea? Last year the tourist industry reported the highest ever influx into Wales, and the pubs were closed. Why keep on talking about this tourist business? I have met scores of these visitors, but never one who said, "Wales would be more attractive if your pubs opened on Sunday." Not a single person on earth have I met who said that. I am tired of the argument about the tourist industry. The tourist industry made its biggest impression on Wales last year, with the pubs closed.
This is a grave issue for Wales. This Bill would be a far better Bill without this clause and the Government would still be the Government, believing what they thought best. I suggest that this clause should be withdrawn, and I appeal to Members of the House. I appreciate very much the remarks of the noble Lord, Lord Boston. He lives in Wales, and speaks for Wales, although he is not a Welshman. I appeal to all members present to give Wales further consideration. Lot this clause go out of this Bill for the time being, and later on, after further consultation and further consideration, bring in some other method of dealing with this problem.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 8; Not-Contents, 35.

CONTENTS

Alexander of Hillsborough, V.

Lucan, E. [Teller.]

Peddie, L.

Burden, L. [Teller.]

Macdonald of Gwaenysgor, L.

Stonham, L.

Colwyn, L.

Ogmore, L.

NOT-CONTENTS

Ampthill, L.

Balfour of Burleigh, L.

Brecon, L.

Auckland, L.

Bathurst, E.

Bridgeman, V.

Baldwin of Bewdley, E.

Boston, L.

Buckinghamshire, E.

Chesham, L.

Hampton, L.

Newton, L. [Teller.]

Craigton, L.

Hastings, L.

Northesk, E.

Crathorne, L.

Hawke, L.

St. Oswald, L. [Teller.]

Denham, L.

Howard of Glossop, L.

Strang, L.

Dundee, E.

Lansdowne, M.

Strathclyde, L.

Fortescue, E.

Liverpool, L. Bp.

Torrington, V.

Fraser of North Cape, L.

Merrivale, L.

Waldegrave, E.

Goschen, V.

Mowbray and Stourton, L.

Waleran, L.

Grenfell, L.

Newall, L.

Resolved in the negative, and Amendment disagreed to accordingly.

Clause 6 agreed to.
Clause 7 agreed to.
Clause 8:
Special hours certificates for premises providing music and dancing
8.—(1) Sections one hundred and thirteen to one hundred and nineteen of the Licensing Act, 1953 (which provide for extended hours in premises providing music and dancing, but apply only to specified parts of the metropolis), Shall extend to any area in England or Wales which is subject to statutory regulations for music and dancing, and shall accordingly be modified in accordance with the Third Schedule to this Act.
(6) The permitted hours on Saturdays under section one hundred and seventeen of the Licensing Act, 1953, shall be the same as on other week-days, and accordingly proviso (a) to subsection (2) of that section (under which on Saturdays those hours end at midnight) shall be omitted; and in that section "weekday" shall include, and be deemed always to have included, Christmas Day, when not a Sunday, and Good Friday.
8.49 p.m.
LORD STONHAM LORD STONHAM moved to leave out subsection (1). The noble Lord said: It may be as well for an Anglican to follow the Nonconformists in these matters, and also one who, as probably your Lordships know, is not an abstainer. In fact, I may well say that if there is one thing that I like better than one glass of wine, it is two glasses of wine. But then I leave it, and I do not think that that makes me other than an advocate of temperance.
Now this Amendment and the two subsequent Amendments are supported by the Temperance Council of Churches, and your Lordships doubtless received, as I did, a letter from the Temperance Council. In these days of pressure groups about which we hear so much, I personally thought that that letter was a model of what all kinds of similar communications addressed to your Lordships should be. It seemed to me to express views firmly but with a true and proper
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sense of humility, which I found very convincing indeed.
This particular subsection, which my noble friends and I propose to delete, would extend to all parts of England and Wales the provisions for special hours certificates which at present obtain only in the metropolis. At present those special hours are allowed only up to 2 a.m., but under the provisions of this Bill they will be allowed until 3 a.m. Your Lordships know as well as I do that, in the West End of London, 2 a.m. under the present Act has meant just nothing at all. If the clubs or establishments have wanted to carry on until 3 or 4 o'clock in the morning they have done so, and the police have been virtually—not utterly, but virtually—powerless to prevent them, such is the difficulty of getting evidence and, when that evidence is obtained, such is the difficulty of getting a conviction, and also the sheer impossibility when a conviction has been obtained of effectually closing down the premises or putting a stop to offence. It is that kind of thing which it is now proposed shall be extended over the whole of the country, and I wonder what case the Government is going to put up for it. Will they tell us what is the demand? Has there been this tremendous enthusiasm all over the country for licences to extend hours in licensed restaurants and clubs to 3 o'clock in the morning? I just do not believe it.
I have no great experience of night life, either in London or in the Provinces, but it does so happen that next month, towards the end of August, I am going to Manchester which, as the noble Earl, Lord Bathurst, will know, is one of the largest provincial towns; therefore, if there is a night life in the very early hours of the morning in the Provinces, one would expect it to be in Manchester. I am going there for the purpose of attending a very large exhibition, which is being held at Belle Vue, Manchester, and at the City Hall, and during the

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week there is going to be a dinner for the exhibitors and others. I saw the card this morning and it is marked "Men only", and I noticed that there is to be a cabaret and we shall be entertained by Mr. Tommy Trinder. It is going to be an absolute whale of an evening, and it is for men only. But I also notice that it ends at 1 a.m., which means that the function will be ended and the drinks will be ended at 1 o'clock in the morning, although it is a special function, and presumably everybody will be safely tucked up in his bed long before 2 o'clock. That is, I would submit, a fair sample of the demand and the night life in one of the largest provincial cities in the country, which now, presumably, if this subsection is left in the Bill, is to have the opportunity of extending hours until 3 o'clock in the morning.
I used to live, and I wish I lived there now, in a lovely West Country town, Taunton, which has 30,000-odd people. Anyone who has ever lived in the West Country loves it and knows it. I am thinking that it is not only Manchester, Liverpool, Birmingham, Coventry, Wolverhampton and all those places where this can happen, but in my Taunton somebody can open a place like this. Well, anybody who goes through the streets there at half past ten at night, winter and summer, knows that there is not a soul about except the policeman. We are told nevertheless that they want a night life and to stay up to three o'clock in the morning. There is absolutely no demand whatever, except that when the facilities are there there will be people who will come forward and endeavour to use and exploit those facilities and create a demand. Presumbably it will be supported by a lot of undesirables, and perhaps young people will be induced to stay up until three o'clock in the morning drinking at these places, with disastrous results of all kinds.
Is it suggested that this is necessary outside London in order that we should earn a lot more dollars or foreign currency from the tourists who demand this kind of thing? The tourists who come to this country, having seen London and having perhaps sipped its night life, go into the provinces; they go to look at the real England or the real Wales and
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Scotland, at our ancient history, our ancient buildings, our lovely countryside, and in the main they would be astonished and horrified if, as it were, having visited Stratford-on-Avon, Anne Hathaway's cottage and perhaps attended a play at the Memorial Theatre, they were then asked, "Would you like to come and see the Stratford-on-Avon red light district and sit up until the early hours of the morning?" It really is absolute nonsense.
There is another aspect of this, quite apart from the fact that there is no demand at all. When this 2 a.m. special hour was introduced it was at the time when my right honourable friend Mr. Chuter Ede was Home Secretary, and it is thought that at that time he largely introduced this extension because of the difficulties which the police had in policing the illegalities which were going on. It was thought, vainly of course, that if it became legal through extended hours certificates to stay open and serve drinks until two o'clock the police would not have the trouble and would not be subject to the temptations they were otherwise subject to. We all know that was vain. When it is legal to stay open and serve drinks until two o'clock, then a number of unscrupulous people will find that if they can go on into illegal hours, instead of charging £2 for a bottle of champagne they can charge £5 and make a great deal more money out of it. Is it suggested that that is the kind of thing that is wanted in the provinces? I do not think so.
There is also this. Our provincial towns, large and small, are not used and accustomed to a night life which extends to the early hours of the morning. Mostly the inhabitants are busy work-a-day people with their lives centred in the factories and shops. They have to get up in the morning to go to work, whether they are workpeople or executives. To have places of this kind, with cars arriving and roaring away and all kinds of disturbance, cannot do any good at all and will only cause endless annoyance and disturbance. There is the point, too, that if young people go to these places and stay up drinking until the early hours of the morning it may lead to additional accidents and many other kinds of trouble. I think we all agree that the case Q have stated is an accurate one and I think it is incumbent on the Government, if they are not prepared to accept

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this Amendment, to show, first of all, because it is most important, what evidence there is from the licensed trade or the clubs or intending proprietors or restaurants for a demand for extended hours in this way until three o'clock in the morning—and if there is no such demand then surely there is no reason for making this concession—and secondly, whether the police and local authorities in the Provinces and in large towns have been consulted as to the possible effects of this extension in their areas. Unless the Government are prepared to give a satisfactory answer on those two points, they should accept this Amendment. I beg to move.
Amendment moved—
Page 17, line 25, leave out subsection (1).— (Lord Stonham.)
LORD OGMORE: I should like to say a word in support of the noble Lord, Lord Stonham, but from a rather different point of view. I agree with what he said; I think it is sound. But to my mind there is another reason which I think the Government should take into account, and I hope they will do so before the noble Earl replies. I refer to the impact that this Bill and the proposals in it will make upon the country as a whole. On Saturday last the Chancellor of the Exchequer spoke at a Conservative Meeting at Hawarden Castle in Flintshire, the home of Mr. Gladstone, who would not have approved of many of the measures in this Bill. I say nothing about the fact that Mr. Selwyn Lloyd was prevented, because of traffic congestion, from arriving by car and had to start to walk. That is some indication of the failure of the Government's road transport policy. He had to "thumb" a lift on a motor cycle, and arrived about fifteen minutes late. I say nothing about that, although in certain circumstances it might call for comment if this were a different debate.
But when Mr. Lloyd got to Hawarden Castle he made a statement which has had a serious effect, and has been considered with great seriousness all over the world. I quote from the Sunday Times:
"He made no secret of his conviction that sacrifices and new disciplines would be needed to meet the economic challenge and that tough measures would have to be taken.… He gave a stern warning intended to brace all
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sections of the nation for rigorous remedies: 'I am determined that some of the present trends in our economy should be changed. I shall recommend such action as I think necessary to secure this, however unpopular or unexpected. I am not afraid to ask the British people to bear the necessary burdens or accept the necessary disciplines designed to secure, not just survival, but also the maintenance of our position as an up-to-date progressive, dynamic influence in the world'."
After Mr. Lloyd made that serious statement of our position in the world to-day and the situation in which we find ourselves, the Government propose that, throughout England and Wales, premises of this sort shall be able to have an extension from 2 in the morning, which I should have thought quite late enough, to 3 o'clock.
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR THE HOME DEPARTMENT (EARL BATHURST): In London.
LORD OGMORE: In London. I should have thought that this in itself was a complete refutation of all that Mr. Lloyd said. The Government cannot have it both ways. Either we are in a very serious economic situation and we need rigorous discipline and must forgo the sort of laxities provided in this Bill (as they may be in certain circumstances), or we are not. They cannot have it both ways; the Government cannot have their cake and eat it. I certainly think that to bring forward a measure of this kind only 48 hours after the speech of Mr. Selwyn Lloyd will not impress the public at all.
It seems to me that the difficulty in our economic situation to-day is to get people to realise that there is a serious economic crisis looming ahead in the near future. In these days, it is most difficult to persuade people of that fact. They just do not understand. I think the Government ought to do nothing which in any way obscures that issue, because unless we can persuade people to understand the dangerous economic situation this country is in the Government are going to find it very difficult to get us out of it.
We have been hearing something about the Continental Sunday and the Continental way of life. I would point out that in France General de Gaulle has had to take very severe measures with regard to drinking and the opening for long hours of licensed premises, clubs

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and other establishments. He has been trying to close them down. So little is General de Gaulle enamoured of the Continental way of life that the noble Lord opposite has been extolling that he has been trying to revert to the British way of life. So we have the absurd position that here on this side of the Channel we are trying to go over to the French way of life, and 23 miles away across the Channel, in France, they are trying to go over to the British way of life. Of the two, I would back General de Gaulle. I think he is perfectly right. He has seen what these extended hours of drinking in clubs, restaurants, and so on, mean. I believe that the limits that are already in operation are correct and that no extension whatsoever is called for.
9.7 p.m.
EARL BATHURST: The noble Lord, Lord Stonham, moved one Amendment but really spoke on the three Amendments which are down in the name of his noble Leader.
LORD STONHAM: If I may interrupt the noble Earl, I certainly did not intend to. I did not say a word about Good Friday, Christmas Eve or Sundays: and I certainly intend, with your Lordships' permission, to move the next Amendment separately.
EARL BATHURST: I quite understand the noble Lord. I was going to ask him whether he would wish that, or whether he would have preferred me to speak on the principle of the three Amendments, which is, of course, this general extension. I quite understand what the noble Lord and his noble Leader mean, and I will keep myself to the Amendment before us on the Paper now, which is with regard to the specialised extension to two o'clock and the extension of drinking-up time to 2.30, which at present exist in London and which, under this Bill, will be allowed in the rest of England and Wales.
The noble Lord said that his Amendment is sponsored by the Temperance Council of the Christian Churches, and I received their letter as did many others of your Lordships. That is a point of view. As I have said to the noble Lord, Lord Macdonald of Gwaenysgor, I personally
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appreciate the point of view which such people express. But, my Lords, there are others in this country, and in the course of our Second Reading debate and the first part of our Committee some days ago I mentioned the ordinary man and the ordinary woman. In the remarks that I shall be making, I shall be having in mind the ordinary men and the ordinary women who wish to take advantage of this Bill. The noble Lord, Lord Stonham, said in the course of his speech that in night clubs and in restaurants which must shut at 2 o'clock at present there is difficulty in the way of the police obtaining evidence in order to bring about a conviction. That is quite true, and that is one of the reasons for this extension, which is now going to cover the rest of England and Wales.
LORD STONHAM: May I put a point to the noble Earl? In some six burglaries out of ten the burglars are not caught. Would that be a good reason for giving licence to burglars?
EARL BATHURST: With great respect to the noble Lord, I really do think that that is a very different matter.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: Very difficult to answer.
EARL BATHURST: People in London, who may be perfectly law-abiding folk normally, may wish to drink a little after two o'clock, but under the present law they are committing a crime. The people in the Provinces, if they are in the right sort of establishment, may drink until 12 o'clock with drinking-up time. We are going to allow those people in the Provinces in England and Wales to drink until 2 o'clock, with drinking-up time until 2.30. The difficulty with proving an offence in the Provinces, but one committed at a more modest hour, is, of course, exactly the same as exists in London.
The noble Lord mentioned his right honourable friend Mr. Chuter Ede and the measure which he brought in to enable establishments to remain open in London until 2 o'clock, with drinking-up time until 2.30. There is no doubt that London's West End night life (if that is what it should be called) is most popular in this country. One has only to see the numbers of people who go into the restaurants and night clubs of the West End, residents of London, visitors from

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the Provinces, and overseas visitors as well, to realise that. I have heard from many friends on the Continent that the night life as it exists in the West End of London is by far the finest and, if I may say so, also the cleanest, that exists anywhere in the world, and it is the most enjoyable for the ordinary man and woman. That is what will be extended to such places in the Provinces, as I hope I shall show in a moment.
The noble Lord mentioned Manchester. Although I have been past the establishment to which he will be addressing himself shortly, I have not been inside, and I should be interested to hear a report upon the results of his evening. But ever since music and dancing licences have been granted in Manchester, I am quite certain that, whatver the entertainment sought, Manchester is a much brighter, gayer and pleasanter place to live in. I think the same will be true in other big centres, such as in Bristol, from which I do not live so far away, and other places as well.
The noble Lord, Lord Ogmore, addressed himself to the question of economics, and mentioned the statements of my right honourable friend who braved a motor-cycle ride to his meeting All I can say on this point is that it is a delight to know that such members of the public do exist, and that there are such real "good Samaritans", in the old sense of the words, as Mr. Crate with his motor-cycle, who was, in fact, a member of the Socialist Party. I do not know whether this is the right place to thank him publicly, but it is very good to know that such good Samaritans are on the road. And I must say that I have always had a very much higher opinion of men or women who ride motor-cycles than is ordinarily held of them by Members of your Lordships' House and by people in many other places. But that is a long way from what the noble Lord, Lord Ogmore, was saying.
Nevertheless, my right honourable friend will recommend such action as may be needed in the economic spheres—and my noble friend, Lord Dundee, is much nearer to that sort of sphere than I am. But I cannot believe that this Bill, which is a permissive relaxation of licensing laws, which all and sundry will agree are out of date in this country, can make any real impact upon our economic situation. If my right honourable
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friend takes such measures or action as he may recommend, your Lordships or anybody else will be able to take advantage of these laws. But such is the Parliamentary timetable, and such are the programmes that must be brought about, that this is the time that this promised measure has come to fruition. It will not be the fault of this Bill if more money is spent on alcohol; it will be the effect of actions taken in the course of the next few days.
The noble Viscount also mentioned the Continental Sunday, During my Second Reading speech I said that one of the possibilities open to Her Majesty's Government was to adopt the Continental Sunday in toto, but we did not believe that that was what the ordinary man and woman wanted. It is for that reason this Bill comes before your Lordships with all the safeguards that take up so much space in the Bill.
Clause 8 (1), which the noble Lord's Amendment proposes to delete, extends to England and Wales generally the provisions at present limited to an area in the West End of London, which is specified by the Secretary of State—that is, the area with drinking hours until 2 o'clock in the morning and drinking-up time until 3.20. These are known as "special hours certificates". In the case of licensed premises, the licensing justices must be satisfied, first, that a music and dancing licence is in force for the premises, and secondly that the whole or any part of the premises is structurally adapted and bona fide used, or intended to be used, for the purpose of providing music and dancing and substantial refreshment, to which the sale of intoxicating liquors is ancillary.
In the case of registered clubs, where a music and dancing licence is not required by law, since music and dancing is not public—that is, in the case of the normal night club, so called, in the West End of London—the present law has the effect that the London County Council, as the music and dancing licensing authority for London, must have issued a certificate that they are satisfied that the premises fulfil the Council's requirements for the granting of a music and dancing licence. The stipendiary magistrate must be satisfied that the whole or any part of the premises is so structurally adapted for this purpose—that is, for music and dancing.

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In extending these provisions to the country generally Clause 8 (1) and the Third Schedule have the effect that the control will in every respect be as adequate and strict as it is in the present law as regards London—that is, the law to which the noble Viscount referred, which was introduced by his right honourable friend Mr. Chuter Ede. The proposal to extend these facilities to the country generally will implement the recommendation that has been urged by the British Travel and Holidays Association, among many others, for the benefit of tourists and visitors.
LORD MACDONALD OF GWAENYSGOR: My Lords, we get this general reference to "many others". Could the noble Earl identify any of these associations? I have never been able to find out what associations have been approached and consulted.
EARL BATHURST: The British Hotels and Restaurants Association is one of them, and no doubt the licensed victuallers and the people who run such establishments. There is no doubt that they are keen to be able to run such establishments, which they have not been able to do in the past.
It has been represented that it will assist the general policy of providing reasonable and attractive facilities for holiday makers, both British and from overseas; and I think that is true. The noble Lord will no doubt have been to coastal holiday resorts where not very much goes on in the way of pleasant entertainment, and certainly on the lines of dancing, eating and drinking, after eleven o'clock in the evening. That is one of the effects of the present situation which we are setting out to remedy.
The existing specialised provisions limited to London were originally introduced in 1949, following representations from all these various associations, boards and so forth, in which the noble Lord is interested. In those days the Government felt that it was right to put forward the present existing laws. The proposal in the Bill will not lead to a proliferation of premises selling drink until 2 o'clock in the morning. There are stringent conditions which have to be satisfied. Moreover, the sale of drink can continue only so long as
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the music and dancing continues. By no means every hotel, restaurant or registered club, even if it can satisfy the conditions specified in the Bill, will want to provide music and dancing as late as 2 o'clock in the morning. I think that that probably satisfies the case the noble Lord mentioned of his local township at Taunton. On the other hand, I suspect that at Stratford-on-Avon it might be to the great advantage of residents and visitors to be able to go and have a good meal, and to dance and be able to drink under the extended hours. In fact, I can think of no better evening to have, if such a thing were possible; and it will be possible under this Bill. That this is a fairly expensive proposition is not to be doubted, and the provisions are not likely to be used except where there is a real demand for them.
There is the further safeguard that any licensed premises with a specialised certificate will, like all other licensed premises, be open to police inspection; and whereas clubs generally are not open to police inspection, those with a specialised certificate will be. That point will particularly interest the noble Lord, Lord Stonham, in connection with a later Amendment in his name. The police will thus have full powers to see that the law is striotly observed, which is not always the case under the present law. Moreover, they are given special power to apply at any time to the magistrates' court for the revocation of the specialised certificate on the ground that this is expedient by reason of the occurrence of disorderly or indecent conduct on the premises.
I have outlined, at some length, I am afraid, the provisions in this Bill to protect the public, and those who wish to take advantage of the Bill when it becomes law, and I think in every way the protection is superior to that which exists at present. I can commend this extension of the hours under the Bill because of the convenience and the entertainment of the ordinary man and woman and visitors to this country. I ask your Lordships not to accept the Amendment.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I must say that I am most disappointed with the reply. I am sure the noble Earl has tried to help up by answering the two Amendments that have not been moved, but he clearly

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has not done so. We shall have to deal with them when we come to them. But I cannot see any real argument against the present Amendment moved by my noble friend Lord Stonham. It is all very well to write off the value of the case which my noble friend Lord Stonham has put in the present economic circumstances. We have been discussing the Finance Rill to-day and talking about the serious economic position which is coming. Your Lordships may remember that I quoted Winston Churchill by saying that the Tories had "an open hand at the Treasury and an open door in the public house." Here is another instance of it. At the very moment When you are talking about putting other restrictions on the people with regard to the economic situation, you are corning along extending the hours of drinking and expending money upon it, at the very time when we want to get the people, you say—and one noble Lord used the word this afternoon from those Benches—"disciplined" in these difficult economic circumstances.
What has happened? What you are doing is to take hold of one concession, which has been made for police purposes mainly in the London area alone, and to extend it to the whole of the country. It must mean an increase in the liquor trade. It must mean more expenditure than would otherwise have been made. It is almost a denial of the very things which we have had pleaded to-day in the general appeal for a get-together of all sections of industry. I think this is a great misnomer, and I am very sorry. As to what we shall do about the further Amendments, I will not say at the moment, but I am bound to say that, if this is not carried to-night, then we shall have to consider its future and the rest of the Bill. We will vote on the next Amendment.
On Question, Amendment negatived.
9.27 p.m.
LORD STONHAM LORD STONHAM moved to leave out subsection (6). The noble Lord said: In moving this Amendment in the name of my noble Leader and my noble friend, Lord Macdonald of Gwaenysgor, I should like to tell the noble Earl, Lord Bathurst, immediately that I feel there is a distinct difference between this and the previous Amendment. The point is that the subsection as it now stands will make
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Saturday night like any other weekday night so far as permitted hours are concerned, and that Good Friday and Christmas Day equally will be ordinary weekdays. That means that on Good Friday morning, since the Thursday hours will be ordinary hours, drinking will go on up to 2 o'clock or 3 o'clock in the morning in London, and it is exactly the same on Christmas Day.
First of all, I should like to say that, from the economic point of view, this is entirely unnecessary. Most people will know that if there is one night in the year when it is inadvisable to hold a function, whether it be a theatre or cinema function or dance, or anything in that line, it is Christmas Eve. If you go to the cinemas and the theatres you will see them virtually empty, because on Christmas Eve, whether it be for secular or other reasons, people are much too busy with their preparations or their business to go to entertainment. To a lesser extent, it is the same on the Thursday before Good Friday.
My main objection to the retention of this subsection, certainly in its present form, is that I think it is completely abominable to have Good Friday and Christmas Day regarded as ordinary days so far as licensing hours are concerned. I cannot possibly imagine how your Lordships can accept such a subsection in the Bill. It is said that only one person in about ten goes to church with any kind of regularity, but we are not yet a completely secular nation and a very large number of people do go to service on Good Fridays, certainly at Easter, and a very much larger number of people go to service either on Christmas Day or Christmas Eve.
I suppose that most of us have been to midnight Mass or midnight Communion on Christmas Eve. I was at one time church warden of a church which held about 1,400 people, and that church was always full at midnight Communion on Christmas Eve and it was a very distressing thing to find that some people, mostly young people, who had never been to church before, or at least not for a very long time, would come into church the worse for drink. It would be the last thing that a church warden would want to do to deny anyone the right to take Communion, but one would expect people to go to Communion in a fitting manner. That was

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my difficult task sometimes, and I suppose it is for every church warden at Christmas, but I wish it were not so. That, presumably, is when people can get drink in public houses only up to say 11 o'clock at night. It is now proposed that Christmas Day should be an ordinary day and that they should get drink up to 2 o'clock in the morning. Good Friday is supposed to be exactly the same.
On Wednesday evening last week I had a rather extraordinary experience. I am president of a society which is raising, or trying to raise, a lot of money to plant trees in Israel—I am the only non-Jew—and I took the chair at the meeting last Wednesday evening quite late. We were discussing functions to raise money. It was suggested that a function should be held on a Thursday evening, to which there was strong objection from the ladies present, and when I asked why they said it would not give sufficient time to prepare for the Sabbath, which they call the Shabbath, which is a Saturday and is prepared for on Friday evening. They would not go to a cinema or theatre on a Thursday evening because they would not have time to prepare for the Sabbath 24 hours later. It seems an extraordinary thing that here we are proposing that Christmas Day and Good Friday should be regarded as ordinary weekdays. I just cannot believe that there has been any demand for that and I cannot understand why those two days out of 365, as it were, have been gratuitously included in this clause. I do not believe that the licensed trade has asked for this. I cannot think that the club proprietors or licensed restaurants want it.
I ask your Lordships to support us in this Amendment if the Government are not prepared to accept it, as I hope they will be. In any case, if this Amendment is not accepted we will certainly at a later stage introduce another Amendment to remove the words "Christmas Day" and "Good Friday" from this subsection. I beg to move.
Amendment moved—
Page 18, line 39, leave out subsection (6).—(Lord Stonham.)
EARL BATHURST: I know what feelings the noble Lord, Lord Stonham,
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has with regard to Sunday, Good Friday and Christmas Day, and I appreciate his feelings, and those of probably many other Members of your Lordships' House, as well as of others in the country who feel the same. This clause of the Bill will not compel people to go to an establishment of entertainment: it is only permissive. I do not say that two wrongs make a right. Nevertheless, Her Majesty's Government believe and are told that there is a demand for entertainment on these nights. I personally can see no great reason why people who wish to avail themselves of the relaxation of the law that the Bill will give should not take advantage of it.
With regard to Good Friday and Christmas Day, we are not by the Bill extending the law. The words used in the 1953 consolidation Act cast doubt on what was allowed and what was not. The clause therefore clarifies the position as it was in 1945. There is, however, an extension on Sunday morning. That was why I hoped that it would be to the convenience of your Lordships to cover the three Amendments. In my earlier long speech, I made the case for this relaxation in the licensing hours and the extensions which the Bill will give. Sunday morning is one of them. It is a modest extension. It will not do great damage to the ordinary man and woman, and it is, without doubt, an extension that is wanted by ordinary people when one considers that Saturday night is the night that people like to go out and to enjoy themselves.
LORD STONHAM: Not Sunday morning.
EARL BATHURST: The noble Lord says, "Not Sunday morning"; but a Saturday night stops at twelve o'clock. Night life in the West End is dead and nothing happens after twelve o'clock in a reputable and a well-run establishment. In fact, when such establishments should be giving a night out, with entertainment, to decent, ordinary men and women—and it is to them that I am referring throughout—they are not able to do so. There is no doubt, I am certain, that there will be a demand for this extension. In view of what I have said to the noble Lord's first Amendment, I ask your Lordships also to reject this Amendment that the noble Lord has moved with regard to Sunday mornings.
9.39 p.m.
THE LORD BISHOP OF LIVERPOOL: My Lords, I had no intention of speaking on this clause, but I feel impelled to do so and to say that I shall support the Amendment. Some of us feel concerned, and much more particularly for the young people. In the past, there has been a movement away from the observance of Sunday, Good Friday and Christmas, but I believe that there are signs, especially among the young people, of a desire to return to observance of those great days of our religion and of an acknowledgment that a great deal of trouble in this country is due to the ignoring of our faith and the observance of those holy days of our faith.
Our young people, particularly, are finding it difficult now to get to church on Sunday morning for their Holy Communion because the tendency has been to stay out late on Saturday night. That is when it is only twelve o'clock. If by law we are going to make it possible, and give them the temptation, to stay up until later hours, we shall be doing a great disservice to religion in this country, and to the observance of the days which we long to see observed much more fully than they have been in the past.
I do not know what are the conditions in London—I have not lived in London for many years—but I know that in Merseyside there would be no real demand for an extension of these hours to the times that have been mentioned of two or three in the morning. Nor do I think there is any desire for them by those in authority. The Chief Constable, I believe, would bear me out when I say that I do not think we want this sort of thing. Our greatest trouble to-day is of young people taking too much alcoholic liquor. That is one of our biggest problems, and anything we can do to help them at this time will be a service not only to them but to our country. I shall support the Amendment.
LORD OGMORE: I, too, should like to support the Amendment, because I feel that it is quite wrong to do what the Government proposes in this respect, and the right reverend Prelate has added the weight of his testimony to this point of view. It seems to me that either
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we are a Christian country or we are not. The Dean of Westminster the other night called this the "post-Christian era," and certainly if this clause goes through he will have every justification for calling it that.
To my mind, one of the greatest drawbacks to our influence throughout the world, particularly in the Far East and in Africa, has been the fact that we Christians do not stand up for our religion and are not prepared to make sacrifices for it. Here in London, in the heart of a so-called Christian country, it proposed to apply this rule that on a Sunday morning this licence shall be obtainable, and dancing and music will go on until the small hours of Sunday. And I am horrified to find that the same sort of provisions are to be applied to Christmas Day and to Good Friday, the two most serious days, the most religious days, shall we say, in the Christian Calendar. You cannot go to a Mohammedan country and do any of these things on a Mohammedan Friday, and one of the many things that I admire about the Jews is that an Orthodox Jew complies strictly with the rules of his religion on his Sabbath.
The noble Earl talked about the ordinary man and the ordinary woman, and what they want in the modern Babylon of London. If what we see in the West End is what the ordinary man and woman want, then I am very sorry for the ordinary man and the ordinary woman. But I do not regard this laxity in this country, particularly on a Sunday, and on Christmas Day and Good Friday, as being other than a deplorable thing. I have no doubt that the noble Lord will describe us Free Churchmen, Lord Macdonald of Gwaenysgor, Lord Alexander of Hillsborough and myself, as Puritans, kill-joys and all the rest of it, as your ancestors have described our ancestors for the last three hundred years; but it is only comparatively recently that there has been this laxity. There was no laxity on the Continent until the French Revolution. They would not do these things on a Sunday until the French Revolution came along. So that, in fact, if you go back through traditions and through history you will find all the way through, as far back as we have been Christians, that Christians have observed Sundays; that they have

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observed Christmas Day, and that they have observed Good Friday.
Why Should we, in a Christian country, make special provisions against our religion for atheists?—because that is what we are asked to do. The noble Earl, Lord Bathurst, seems to assume that the ordinary man and the ordinary woman, is an atheist or, at any rate, an agnostic. Why should we be asked to do that? This is a Christian country, and one of the precepts of the Christian religion, surely, is the observance of Sunday, the seventh day of the week, the day for recreation which means spiritual recreation.
When I was a boy my father and grandfather would never in their lives, in the pre-motor car days, have taken a horse out on a Sunday, except in the direst necessity of illness or something of that kind; and the same thing applied after the motor cars came. In fact, I, today, do not like to take a motor car out on a Sunday unless I am bound to do so. I think if there were more of that spirit of observance of Sunday, Christmas Day and Good Friday it would be better for the country, because it is not the people who observe the laws who are the peril in this country to-day; it is those who are undisciplined, as Mr. Selwyn Lloyd has pointed out. His appeal at Harwarden was not to have more clubs open, to spend more; it was a call for discipline, and I am glad to see Mr. Selwyn Lloyd has gone back to the Liberal views he held when he was a Liberal candidate, and is tending to bring in a Liberal point of view. I am sure the country will be all the better. I hope your Lordships will in fact sup, port this Amendment and I, for one, will be very glad to go into the Lobby with my noble friend.
LORD GRENFELL: I must say I do feel a little disturbed about this question of Christmas Day and Good Friday. I fully understand that people who are working all through the week may wish on a normal Saturday throughout the year to have an extension. I would accept that fully. But with regard to Christmas Day and Good Friday I cannot help feeling that those are two very special days. We think of them as such special days that we wish to differentiate them from the remainder of the days in
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the year. I would ask my noble friend Lord Bathurst if Her Majesty's Government could look at this again and take out Christmas Day and Good Friday. Otherwise I feel that my conscience must tell me that I must go into the Lobby for this Amendment.
LORD AUCKLAND: Had the previous Amendment been put to a Division I would have had no hesitation in recording my vote with the Government, but if this Amendment is pressed I shall support it. Christmas is a holy day, and there are, as the right reverend Prelate has said, all too few people in church on Good Friday and Christmas Day. I am glad to say that my local church is rather an exception here, for the Midnight Communion it is always packed to capacity. Many of the congregation are young people, chiefly because there is a very thriving group"17 plus" it is called—of young church workers.
I 'believe that normally youngsters outside London should be allowed to go to restaurants and hotels where there is dancing, provided it is under proper control, until late hours. After all, young people (and not all of them live in London) may wish to celebrate their engagement or some special occasion, and there is no reason why they should not do so in a properly supervised place. But I feel that Good Friday and Christmas Day should be exceptions. The place to be on Christmas Eve is in the home, helping with Christmas preparations, and there are those who go to church on Christmas morning, and the same on Good Friday. I join with my noble friend Lord Grenfell in imploring Her Majesty's Government to reconsider this proposal.
9.50 p.m.
THE EARL OF NORTHESK: May I take an intermediate view between my noble friends Lord Grenfell and Lord Auckland? I agree that Good Friday is a day of great religious significance, but I would suggest to the right reverend Prelate, who has spoken so well, that Christmas Day is a day of rejoicing to us all. It is the Birth of Our Lord. Ought we not to be able to celebrate that in whatever way we wish? I am not suggesting alcoholically, but that is rather the temper of this Bill. I suggest that Christmas Day is a day of rejoicing, as also is Easter—the Resurrection. But I

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agree with my two noble friends that Good Friday might be excluded from the Bill, whereas Easter and Christmas might be included in it. I feel that would meet the feelings, certainly of myself and of the majority of the people of this country.
LORD MACDONALD OF GWAENYSGOR: Just a couple of sentences. I do not know whether the noble Earl will accept the Amendment. If he is agreeable, I need say nothing. He does not look like accepting the Amendment at the moment. I would say, first of all, that the later the hour of closing the greater the danger to life and limb and morals.
THE EARL OF NORTHESK: I made no reference to any later hours of closing.
LORD MACDONALD OF GWAENYSGOR: I was not referring to the noble Earl. I will repeat what I have just said, because it needs to be repeated—the later the hour of closing the greater the danger to life and limb and morals. That is one reason why I am for this Amendment.
The other reason is the one emphasised by a number of noble Lords. In some parts of the world, especially in the Far East, we are looked upon as a Christian country. I cannot think of anything that would impress them more than the Government's acceptance of this Amendment. I am most anxious that the noble Earl should not reject it out of hand to-night. I should like him to think about it. I realise that neither he nor the noble Earl, Lord Dundee, can perhaps go so far as to accept it, but I should like them to promise the Committee that they will be prepared to reconsider it between now and Report. It is, in my opinion, a vital Amendment.
LORD STONHAM: I do not know whether the noble Earl is going to reply to the invitation. I should be very glad if he would. But I think I should make it quite clear that just an undertaking to look at this again, or to refer it to
his right honourable friend, would not be quite good enough in this instance. We should require at least an assurance that he is prepared to move an Amendment on Report stage which would exclude from this clause Good Friday and Christmas Day. I thought I would make that clear so as to avoid any misunderstanding; otherwise, we shall have to divide on this Amendment.
THE DUKE OF ATHOLL: May I say that since nobody appears to support the Government, I support them wholeheartedly in this case. I hope that they will not give way. As probably many noble Lords know, we in Scotland do not celebrate Christmas Day. I do not think we are any the worse for it. With the possible exception of Good Friday, I think this Amendment is completely without support in any part of the country. I hope that the Government will stick to their guns.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I should have thought that, in general, we are already sufficiently handicapped in this country from having longer hours of opening, all the week pretty well, and certainly very much less favourable Sunday opening regulations than apply in Scotland. There is not such wide publicity in Scotland for the sale of drink as there is in this country—not by any means. I should have thought that the noble Duke would have been much more inclined to support the Christian faith of his own family, and to see that these days are properly observed in this country even if not in Scotland. I hope that the noble Earl will be able to tell us that he is going to accept this Amendment. If not, the only thing to do is to go to a Division. Then he can think about it again, and we will put it down again on Report.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 15; Not-Contents, 26.

CONTENTS

Alexander of Hillsborough, V.

Colwyn, L.

Macdonald of Gwaenysgor, L.

Auckland, L.

Fortescue, E.

Merthyr, L.

Baldwin of Bewdley, E.

Grenfell, L.

Ogmore, L.

Boston, L.

Howard of Glossop, L.

Stonham, L. [Teller.]

Burden. L. [Teller.]

Liverpool, L. Bp,

Strang, L.

NOT-CONTENTS

Ampthill, L.

Davidson, V.

Mowbray and Stourton, L.

Atholl, D.

Denham, L.

Newall, L.

Barnby, L.

Digby, L.

Newton, L. [Teller.]

Bathurst, E.

Dundee, E.

Northesk, E.

Brecon, L.

Fraser of North Cape, L.

St. Oswald, L. [Teller.]

Bridgeman, V.

Goschen, V.

Strathclyde, L.

Chesham, L.

Hastings, L.

Waldegrave, E.

Colville of Culross, V.

Lansdowne, M.

Waleran, L.

Craigton, L.

Merrivale, L.

On Question, Amendment agreed to.

10.3 p.m.
VISCOUNT ALEXANDER OF HILLS-BOROUGH VISCOUNT ALEXANDER OF HILLS-BOROUGH had given Notice of his intention to move to leave out subsection (7). The noble Viscount said: Amendment No. 18 is, of course, of less importance than No. 17, but it deals with a principle on which the Temperance Council of the Christian Churches are very much concerned. We are leaving it to a very late hour in London. I do not propose to move the Amendment now, but I am going to ask the noble Earl if he will tell me whether this might be considered. The Government have their main clause for 2 a.m. in the Provinces. I can see no case for including this subsection, but if we cannot get agreement on it we will leave it to Report.
EARL BATHURST EARL BATHURST moved in subsection (8) after "any" to insert "licensed". The noble Earl said: This Amendment is a technical Amendment. The effect of subsection (8) of Clause 8 is to free premises where a special hours certificate is in force from the application of the Sunday Observance Act, 1780, as regards the hours on a Sunday morning during which the certificate operates. This is necessary because the Act forbids on a Sunday any public entertainment for which a charge is made for admission. If subsection (8) of Clause 8 had not been inserted into the Bill, then no public music or dancing could take place after 12 o'clock on a Saturday night, and a special hours certificate of extension of the permitted hours would therefore be useless on a Saturday night. The 1780 Act forbids only public entertainment, and since it does not prohibit private entertainment, or entertainment provided for members in a club in a private sense, it is unnecessary for subsection (8) of Clause 8 to apply to anything other than licensed premises. I beg to move.
Amendment moved—
Page 19, line 12, at end insert "licensed".—(Earl Bathurst.)
EARL BATHURST: This Amendment is consequential.
Amendment moved—
Page 19, line 13, after ("of") insert ("licensed").—(Earl Bathurst.)
Clause 8, as amended, agreed to.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I should like to know at this hour what the intention of the Government is with regard to Business. I think it is about time we moved to adjourn.
THE EARL OF DUNDEE: I have just been informed through the usual channels that it has been agreed to go as far as Amendment No. 24.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I have never agreed to that.
THE EARL OF DUNDEE: Then I am afraid that I have been misinformed, Would the noble Viscount like to take Number 22? The pubs do not shut until 10.30.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I do not know how far this clause is going to commit me, because I have not had all the advice I want on it. I will not go to Clause 15. I have been in this House since half past two, except for 40 minutes, and I am not going on much longer. We are not paid for it.
LORD OGMORE: I should like to support what the noble Viscount has said. We were told that we would stop at 10 o'clock and, frankly, I think that is quite late enough. We have our livings to earn. It is somebody's fault,

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although I do not know whose, but the fact is that this Bill comes on only at late stages in our Business and I do not think is fair to ask us to sit after this hour. We have a lot of Bills to deal with to-morrow and I think that we ought to adjourn.
THE EARL OF DUNDEE: In the circumstances. I would not dream of asking your Lordships to sit any later. It appears that I have been misinformed. I was told that it was agreed that we should go to Amendment No. 24. But
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since the noble Viscount does not want to move Amendment No. 22—there is still twenty minutes before closing time—I beg to move that the House do now resume.
Moved, That the House do now resume.—(The Earl of Dundee.)
On Question, Motion agreed to and House resumed accordingly.
House adjourned at eight minutes past ten o'clock.