Lords Sitting of 16 December 1963

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

STANDARD FORM CONTRACTS
2.36 p.m.
LORD AIREDALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they have considered the Molony Committee's observation that standard form contracts "which large and sometimes monopolistic organisations devise and require their customers to accept … invariably incorporate clauses which eliminate or reduce what would otherwise be the liability of the party who drafts the provisions; and this is usually liability for negligence"; and whether they propose to put a stop to this practice.]
THE LORD CHANCELLOR (LORD DILHORNE): My Lords, the Molony Committee's observation to which the noble Lord has drawn attention must be read in conjunction with that Committee's conclusion that this problem is one facet of a much wider problem involving the whole question of liability for tort. The Molony Committee did not think it right to make any recommendation concerning
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one aspect of a large problem, much of which lay outside the Committee's terms of reference, although they considered the whole subject worthy of study. Her Majesty's Government have taken note of this suggestion.
LORD AIREDALE: My Lords, I am much obliged to the noble and learned Lord for his reply.

RHODESIA & NYASALAND FEDERATION: DISPOSAL OF ASSETS
THE EARL OF LISTOWEL: 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 what agreements, if any, have been made between the Governments of the Territories of the Federation of Rhodesia and Nyasaland in regard to allocation of movable property of the type referred to in Section 10(2) of the Draft Federation of Rhodesia and Nyasaland (Dissolution) Order in Council 1963; whether such agreements are in writing, and if so whether the Government will lay the same before the House and, in particular, any agreement giving the precise terms in regard to the allocation of equipment of the armed forces of the Federation between the Territories.]
THE MINISTER OF STATE FOR COMMONWEALTH RELATIONS AND FOR THE COLONIES (THE DUKE OF DEVONSHIRE): My Lords, there is a great range of movable property, the disposal

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of which has necessarily had to be treated within the context of separate reports by the Dissolution Committees dealing with particular subjects or functions. It is the acceptance of these various reports by the Territorial Governments which constitutes their agreement to the allocation, in the terms of Clause 10(2) of the Draft Order in Council, of the property in question. There are no formal written agreements. With regard to the movable assets of the defence forces, it was agreed by all the Governments which participated in the inter-governmental meeting on defence in September this year that current authorised holdings of equipment should be transferred with units, and that the residue should be divided proportionately in relation to the future strengths, type and composition of units in each Territory.
THE EARL OF LISTOWEL: My Lords, I am much obliged for this Answer. May I ask whether it would be possible for these Reports of the Committee concerned to the Territorial Governments to be made available for the use of Members of your Lordships' House, possibly by being placed in the Library? May I also ask whether the noble Duke is not aware that information of this kind is absolutely essential for proper consideration of the arrangements which Her Majesty's Government are making for the winding-up of the Federation?
THE DUKE OF DEVONSHIRE: My Lords, I am sure that my right honourable friend the Secretary of State would have no wish to withhold information that would be of use to Members of your Lordships' House or of another place. I will bring the representations of the noble Earl to my right honourable friend's attention.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, may I take it that that includes reference to arms and equipment of a military character, and that we can have the information of how they are finally to be disposed of?
THE DUKE OF DEVONSHIRE: Certainly, my Lords, it would include the fullest information we have at our disposal.

CENSUS IN 1966
VISCOUNT GOSCHEN: My Lords, I should like to inform the House that at a suitable moment after 3.30 p.m. my noble friend Lord Newton will make a statement on the Census in 1966.
EARL ALEXANDER OF HILLS-BOROUGH: My Lords, is this a different date from that generally followed for this purpose? If it is not an ordinary Census for a decade, what period is it going to cover?
THE MINISTER WITHOUT PORTFOLIO (LORD CARRINGTON): My Lords, it is rather a special one. Perhaps if the noble Earl will wait until the statement is made, all will be revealed to him.

SUNDAY ENTERTAINMENTS ACT, 1932
THE MINISTER OF STATE, HOME OFFICE (LORD DERWENT): My Lords, I beg to move that this Order be approved.
Moved, That the Order made by the Secretary of State for the Home Department under the Act, for extending Section 1 of the Act to the Borough of Berwick-upon-Tweed, be approved.—(Lord Derwent.)
On Question, Motion agreed to.
LORD DERWENT: My Lords, I beg to move that this Order be approved.
Moved, That the Order made by the Secretary of State for the Home Department under the Act, for extending Section 1 of the Act to the Urban District of Horwich, be approved.—(Lord Derwent.)
On Question, Motion agreed to.

EXPIRING LAWS CONTINUANCE BILL
Order of the Day for the Second Reading read.
LORD DERWENT: My Lords, the list of Acts which this Bill seeks to prolong is clearly set out in the Explanatory Memorandum, and I shall therefore, with the permission of the House, carry out what has been the practice for some years. I shall move the Second Reading

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formally, and later I will try to answer any questions that noble Lords may wish to raise. I beg to move that this Bill be read a second time.
Moved, That the Bill be now read 2a.—(Lord Derwent.)
THE LORD CHANCELLOR: The Question is that this Bill be now read a second time. As many as are of that opinion will say, "Content"? To the contrary, "Not Content"? The Contents have it.
THE EARL OF LISTOWEL: My Lords, if I may speak with the leave of the House, I know that the procedure of this House is flexible, and I should like the House to consider that there are several noble Lords who had intended to take part in a discussion on this Bill, and whether or not it is desirable that any formal Motion should preclude them from doing so.
THE LORD CHANCELLOR: My Lords, I am in some difficulty. I put the Question. I paused and looked, but I did not see anyone starting to move, so I went on and completed the Question. But if it is your Lordships' wish, I dare say one can treat that as not having been completed, and as my just having put the Question. I am at your Lordships' disposal. I did look round and did not see anyone moving, and I thought there might have been some change.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I must say I am a little puzzled. But I rather understood from what the Minister said, as did my colleagues, that if the Motion were moved formally he would answer the debate later, and that that would mean that we should go straight into Committee.
LORD CARRINGTON: My Lords, I am sure that that is what was understood. I think that what perhaps happened was that the Liberal Party were a little slow off the mark.
LORD OGMORE: Well, my Lords, if it is my fault, I must apologise. I must add that I was half-way up when the Lord Chancellor put the Question. I think as a matter of fact that, as usual, the Conservative Party have slipped in a quick one.
THE LORD CHANCELLOR: My Lords, I had no intention of moving too
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quickly. I have never been accused of that before. I should like to know what the position is—whether we are to deal with this Bill as if it had been read a second time and the House is now in Committee to deal with it. If it is your Lordships' desire that I should take it that the Question has not been completed, I am perfectly willing to do so; but I should like to be clear where we are.
LORD SALTOUN: *My Lords, this is a situation which has occurred more than once in my experience, and the matter has been settled, and has always been held to be settled, by the House going back and discussing the Second Reading of the Bill, as we are perfectly entitled to do, provided that no single Lord objects. I have no objection myself.
LORD BARNBY: My Lords, I should like to add a personal experience of an exactly similar occurrence under one of the noble and learned Lord's predecessors. While I should have thought it perfectly reasonable to permit the House to continue its discussion, the ruling then was very definitely that, having stood up and put the Motion, the noble and learned Lord would not withdraw.
LORD CARRINGTON: My Lords, I think that all your Lordships were expecting a Second Reading debate on this particular measure, and the only reason we are not having it at this moment is because there has been a slight slip-up between my noble and learned friend on the Woolsack and the noble Lord, Lord Ogmore. If your Lordships are agreeable, it seems to me that we should do what the noble Lord, Lord Saltoun, suggests: treat the incident as if it had never happened and have a Second Reading debate.
LORD OGMORE: My Lords, I am grateful to your Lordships. As I say, if it is any fault of mine in not rising speedily, as I usually do, I must apologise to your Lordships' House. This Bill is a hardy annual, but I notice that one of the hardy annuals which usually appear with it, the Act relating to the employment of schoolchildren in Scottish potato picking, has now disappeared. We are to assume that Scottish agriculture will be struggling along in future without schoolchildren.
*See col. 101.

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The only Act referred to in the Bill to which I wish to draw attention is the Commonwealth Immigrants Act. The objections to the Act, when it was originally introduced, were not so much that it imposed control but that, as was felt in both Houses of Parliament and in the Press, the Bill amounted to a colour bar. There is little doubt that any state or country, if it feels fit, is entitled to impose restrictions. In fact a country is bound to reserve the power to impose restrictions on immigration, otherwise there might be a flood of immigrants at a time when it was most inconvenient for a country to sustain them.
Such questions as housing and employment come into the matter, and I feel that any State must reserve the right to impose conditions. But there is no doubt that it was felt in the Commonwealth, at the time when the Bill was going through Parliament, that it was basically a colour bar, especially in view of the fact that the Republic of Ireland, which is not in the Commonwealth, was put in a special position. Of course, there is a considerable traffic the other way. I see that in the White Paper (Cmd. 2151) it is estimated that in 1962, 102,000 British people left these islands for other parts of the Commonwealth. We are now faced with the continuation of this measure, after one year's experience of it, and I feel that there are certain considerations which should be borne in mind.
At the Liberal Assembly this year, a resolution passed on the Commonwealth included reference to this particular problem, and I should like to read the preamble to the resolution and the part which refers to this problem:
"This Assembly affirms its belief in the future of the Commonwealth as a free association of free peoples, concerned to foster world peace and prosperity, individual freedom and the rule of law. Recognising that the Commonwealth is passing through a time of change, this Assembly calls upon the Governments of all Commonwealth countries to give priority to co-ordinating policies of Commonwealth development and puts forward the following programme as a basis for action: …"
The resolution asked for:
"Commonwealth consultation toward an agreed policy for immigration, exclusion and expulsion and rights of political asylum for Commonwealth citizens."
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This is not only a question of immigration. It is a question of the exclusion of Commonwealth citizens who intend to come here; and the expulsion of Commonwealth citizens once they are here; and also, as we have seen on more than one occasion during the past year, of the right of political asylum for Commonwealth citizens, which is not nearly so extensive as the right of asylum for foreigners—and that seems a very odd position to be in.
The main point is that I should like the Government, at the next Commonwealth Prime Ministers' Conference, to take up this whole question, in order to see whether they cannot get an agreed policy on these subjects of immigration, expulsion, exclusion and the right of political asylum. All fit in together, and to look at one, to the exclusion of the others, would be a mistake, because they are all very important. I feel, therefore, that we should have an agreed Commonwealth policy on these issues.
There is, I think, in the Act we are now considering one great weakness: that the measures, and the decisions under them, apply to the dependent territories as well as to the independent territories. The independent territories, by and large, can look after themselves. They all have Governments; they all attend the Prime Ministers' Conference, and they are members of the United Nations. They are well able to look after the rights of their own citizens, and are never backward, I am happy to say, in so doing. But this does not apply to the dependent territories of the Commonwealth; that is, those that are still colonial territories. Their citizens have no independent Governments to speak for them; they are not members of the United Nations; their Prime Ministers, if they have any, do not attend the Prime Ministers' Conference, and their peoples are citizens of the United Kingdom and Colonies, just as we are.
There are very few people concerned. Even last year the figures for entry to this country were only 5,961, and that figure includes people from a number of territories which will soon be independent. So the number of people coming from the residuary colonial territories—those which will not in the near future, or even in the foreseeable future, be able to stand on their own feet as independent members—is very

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small. In fact, my Lords, we are discussing 2,000 or 3,000 people a year, or some number of that order; so in this case there is no problem of numbers. But there is a great moral problem and, I should have thought, almost a legal problem. These people are, after all, citizens of the United Kingdom and Colonies. We the Government and Parliament of this country, so far as they are concerned, are Caesar, and I think they should be entitled as of right to come here, to come to Caesar, whenever they want to, without any let or hindrance. These are our own people, being citizens of the United Kingdom and Commonwealth, and I feel that the least we can do is to enable this particular small class of person to come here without any Immigrants Act or restriction or quota, or anything else.
The Government must sooner or later make up their mind what they are going to do with these people. On the Bahamas Bill the other day the noble Duke the Duke of Devonshire informed me that at long last, very belatedly, the Government are considering this problem. It will not brook delay very much longer. This is one way in which I think they can help the people of these various small territories, whose fate at the moment is very much in the air. My Lords, that is all I have to say on the Bill. I ask the Government to look at this problem to which I have referred and see whether, before the next Bill comes up, whatever Government are then in power, they will introduce an amending Act to make sure that the right of these people from the dependent territories to come to this country is unfettered and unqualified.
2.53 p.m.
THE EARL OF LISTOWEL: My Lords, again with the leave of the House, I should like to follow the example of the noble Lord, Lord Ogmore, by making a few comments on the Commonwealth Immigrants Act, 1962, which is renewed in Part I of the Schedule to this Bill. My comments are by way of explanation of our attitude to the proposal to renew this Act, and also of request to the Government to consider the problem of immigration from Commonwealth countries overseas in its broadest context. Our attitude, I think, can be put in one sentence: we do not like to see this Act renewed by the
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present Bill, but we accept the regrettable necessity for control of immigration to this country from Commonwealth countries overseas.
We do not like this Act, and the main reasons why we opposed it, as your Lordships will remember, when it came before the House just over a year ago, still appear to be as valid as they were at that time. We opposed it because it discriminated, on grounds of colour and race against persons wishing to come to this country. I say immediately that this was not the intention of the Bill; but it certainly was its effect. We have only to look at the persons who have been kept out to see that that has been the effect of this law. The vast majority of the persons who have been kept out of this country, as I have no doubt the noble Lord opposite would agree, would have come from India, Pakistan and the West Indies. The next reason why we opposed it was because the other Commonwealth countries had not been consulted about the terms of the proposed ban on their citizens, and far less agreed to it. It was, in fact, imposed unilaterally by the Government here. Finally, we opposed the Act because, for the first time in our history, it introduced a legal barrier against the free entry of Commonwealth citizens into this country; a principle of which we had all been proud.
But we must be realists, my Lords, and we have to face with realism the enormous potential increase in Commonwealth immigration since July, 1962; that is to say, since the ending of the long period of free entry. The figures which were given by the Home Secretary in another place were, I thought, extremely convincing. I believe that if all the Commonwealth applicants in the last sixteen months had been free to come here we should have had at least 500,000 immigrants, or as many as came here during the last six years before control started—the noble Lord will correct me if my estimates are wrong. I am also informed that current applications are running at the rate of about 500,000 a year. If we had allowed this flood of immigrants to come in, we should have created a grave social problem, and the difficulties would have been as serious for the immigrants as for our own people.

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In these circumstances, the case for some measure of control has, I think, become unanswerable. What we oppose is the Government's way of doing it. We should like the Government to make another effort at consultation; to consult with the Commonwealth Governments and invite them, if they will, to make their own arrangements about restricting the numbers of people coming to this country from theirs. In that case, our own restrictions, imposed unilaterally by this Government, would be temporary—they would not be, as the present restrictions appear to be, permanent; that is to say continuing from year to year—pending agreements with Commonwealth Governments about restrictions of their own. And as soon as these agreements had been reached, we could lift our restrictions.
We believe that Her Majesty's Government are responsible for doing a great deal of harm to Commonwealth relations by their unimaginative attitude to the whole problem of immigration. The immigration problem cannot be solved by control alone. If we fail to integrate the immigrants into the communities where they live and work, I believe that we shall soon have a serious race problem on our hands. The Government should not stand aside, as they are doing at the present time, and leave the whole responsibility to individuals and local authorities in the areas where these people live. They should give financial assistance, particularly in matters of housing and education, to local authorities and voluntary bodies who are trying to help the immigrants. But that is not enough. The Government should do more than merely help the local authorities, local people and local bodies: they should legislate (and we shall do this if it has not been done before the next General Election) to make illegal incitement to race hatred, whether against non-Europeans or Jews, and to ban racial discrimination in public places. These are some of the things which the Government could do to help immigrants who come to this country, who are here already, and who will be coming under the Act which is in force and which will be renewed in the next year.
But, of course, measures limited to this country alone are not sufficient to
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make a big reduction in the number of people who want to come here from overseas. The reason for the rising tide of these would-be immigrants is clearly the pressure of poverty and unemployment in the underdeveloped areas in the Commonwealth in which they live. We shall fail in our duty to the Commonwealth unless we do far more than we are doing at the present time to remove the conditions which produce these immigrants. We should like to see much more money spent on economic aid to the underdeveloped countries in the Commonwealth, and we should certainly do that if we had the responsibility for doing so.
LORD HAWKE: My Lords, would the noble Earl answer one question before he leaves this particular subject? He now says that the chief tide of immigrants is likely to come from Pakistan and India, and that the best way of stopping the tide of immigrants is to raise the standard of living of those people. How does he propose to raise the standard of living of 500 million people to such an extent that they will not want to leave their country?
THE EARL OF LISTOWEL: If we spend more on economic aid to these countries, there would be fewer people who would want to leave their homes and come over here. Obviously it would not stop immigration from these countries altogether, but clearly we must raise their standard of living by means of economic aid, as I was going to suggest, by doing what we can to improve their trade with the outside world. We should do much more to increase the volume of Commonwealth trade and to stabilise commodity prices, because these are two things which would make an immense difference to the economic progress of these developing countries. I am quite certain that if the Government had a more sympathetic and imaginative attitude to the whole immigration problem they would realise that the measure of control proposed in this Bill is not enough. They should take a much more active part in helping immigrants to settle down in this country and in removing the conditions which oblige them to come here.
3.4 p.m.
LORD MILVERTON: My Lords, I want to make only two comments, the first in relation to the statement made by the noble Lord, Lord Ogmore, that the Commonwealth Immigrants Act was a measure against coloured people. This is not the place or the time to go into all these arguments again, but when that Bill was before this House I took a prominent part in supporting it, and I should very much resent being accused of having been a party to any measure which had a basis of objection to colour. I would remind the noble Lord, Lord Ogmore, that although a number of people advanced that argument, and have used it, the implication, as I gathered from his speech, that that was the almost universal view of the Act throughout the Commonwealth, is not, in my opinion, a correct statement.
The noble Earl, Lord Listowel, said that he admitted the regrettable necessity for restriction of immigration, but in effect it has been a restriction of coloured people. That may be true; but what an astounding argument that is! If there is a law saying that, in the interests of this country, certain things are not to be, if it so happens in application that the majority of people affected by it are coloured people, are we then to exempt them from the law to which others are subject? That seems to me an extraordinarily illogical attitude to take. To my mind, the interest in this Act from beginning to end is the interest of the people of this country and of the immigrants themselves. There is no use going into all those arguments again. The idea was that people who had work to come to would gladly be received, but we wished to avoid having a growing community in this country who did not fit in and who perhaps had nowhere to live and no work to do. I thought it desirable that there should at least be some contradiction of this idea that there is a coloured basis for that Act I personally would deny any trace of that idea behind it.
3.7 p.m.
LORD DERWENT: My Lords, as I said that I would try to answer questions, may I first of all try to answer the points raised by the noble Lord, Lord Ogmore? He gave a general welcome to the renewal of this Act, but he raised
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a question which the noble Earl, Lord Listowel, also raised; that was the question of consultation. I would say that we continuously consult with the High Commissioners and Governments as to the operation of the Act. When alterations are going to take place, we let them know in advance, and we discuss the alterations with them. That will continue. The main point raised by the noble Lord, Lord Ogmore, was the question about what virtually come to Crown Colonies, Dependencies: that is, countries which are not independent. It is not quite as easy as he said. He is quite right in saying that the number of dependent territories is steadily decreasing as they are becoming independent. It is true that if his suggestion were adopted now the rate of immigration to the United Kingdom would not be affected so much as it would have been at one time, because more and more countries are becoming independent.
Nevertheless, I think this must be remembered: the total population of the remaining Colonies—that is, the dependent Colonies—is almost 10 million, and they still include a number of territories, such as Malta, British Guiana and Barbados, from which a considerable number of immigrants come. Of course, these three territories may gain independence in the foreseeable future, but there are at present no plans for granting independence to Hong Kong, which has a population of 3½ million people. The Government do not feel it right to give the inhabitants of the remaining colonial territories—that is to say, those inhabitants who have no personal connection with the United Kingdom—a right of entry which is not available to the rest of the Commonwealth. From our point of view the question is as simple as that. We do not think that these dependent territories should have rights that the independent territories have not got.
I would go further. If we were to do now what the noble Lord, Lord Ogmore, suggests, parts of the West Indies would have rights that other parts of the West Indies have not got. We cannot believe that is right. The noble Lord raised a point about the Commonwealth Prime Ministers' Conference. Of course, it is up to any of the territories concerned to raise this question, and it is a matter

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which must be under continuous review as more and more countries become independent.
LORD OGMORE: My Lords, could the noble Lord explain why the Government do not think it right? There is a great distinction between these two types. Why do they not think it right that they should be admitted here?
LORD DERWENT: My Lords, in view of the numbers involved, which, as I say, at the moment are somewhere about 10 million, if we find it necessary—and I think this is generally agreed—to restrict and control Commonwealth immigration, we think that the restriction should apply to both kinds of territory. We are still controlling immigration. If we could do away with all immigration control in the Commonwealth, then they would both be on the same footing.
As regards the questions raised by the noble Earl, Lord Listowel: as my noble friend Lord Milverton said, he again raised the question of this being a colour bar Act on the basis, so far as I can make out—and I do not think I am misquoting him—that there are more people of colour than white people who have not been permitted to come here, who have been refused vouchers. That is entirely natural because there are many more coloured people than white people applying to come in. So obviously there would be more. I think the noble Earl will realise that if there were only one country to which the control was not applied it would completely flood us with applications and would take all the "C" vouchers. During this last year, after informing all the High Commissioners, we did restrict "C" vouchers to 25 per cent. for any one country.
The noble Earl mentioned also India and Pakistan. The control of immigration from those countries has, of course, been partly due to the difficulties of Indians and Pakistanis in getting passports and foreign exchange. This has meant that, instead of an even flow from these countries, at one moment there has been very heavy immigration and at other moments rather slow immigration. But the idea of letting the countries themselves control their immigration has been tried and it has not worked, and one of the reasons why it
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has not worked is that each has different passport rules and different exchange rules.
Let us remember this quite clearly. If we are going to impose an immigration policy because we think we have been forced into that position—and the noble Lord opposite has agreed with that—we cannot hide behind other people's skirts. It is our responsibility, and it is for us to make the rules and not to suggest that the other countries should make their own rules as regards emigration to this country. It would be very unfair on many of those countries and there would be some sort of Dutch action going on as to how to get round their numbers, and so on. This is a British Government responsibility. We do not think it is the responsibility of the independent countries.
I do not think there was any other material point which the noble Earl raised that I have not answered—he will correct me if I am wrong. We are very interested to hear what is the policy of the Labour Party, but we did not quite get the details we should have liked, and, speaking for myself, I am just as foggy about it as when the noble Earl began to speak.
LORD HAWKE: My Lords, before the noble Lord sits down, could he tell us whether he has any evidence of forged "C" certificates and illegal immigration?
LORD DERWENT: My Lords, it is known that there have been certain forged certificates. The numbers we do not know until they are presented at our immigration points. Speaking only from memory, I think the number that have actually been refused entry on forged or falsified vouchers is something like half a dozen. But what the numbers in existence are we cannot tell.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I am sorry that the noble Lord, Lord Derwent, is in a foggy condition. It is an awfully unfortunate position to be in. Foggy dew is dangerous at any time, so it has been said in song, and there is no need for him to be foggy about this at all. I am quite sure that he must have studied the debates in another place. They have been open to all Members of this House to read, and it is quite clear, as my noble friend has said already,

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that the necessity of a restriction in regard to what we can economically and socially afford to take here is undoubted. But when you come to consider the other matters which are brought in you cannot get away from the actual expressions of opinion which have come from many sections of the Commonwealth with regard to its effect. It is true, of course, as was almost certain from the beginning when the Act was brought in, that the largest number of persons affected are likely to be from the coloured races within the Commonwealth. But there are people in this country who go on developing the acuteness of the colour problem themselves by talking in the other direction from those who want to give more freedom and liberty to the coloured races.
However, this is the real point why this matter was raised in the House of Commons. What we have to see to is that the relations between this country and all sections of the Commonwealth, whether they are mainly white, mixed or preponderantly coloured, should be on the finest and most mutual and co-operative basis we can establish. And it is already admitted that there will in the future be a growing two-way traffic in this matter. While, therefore, we do not oppose the idea of having an Act ultimately on the Statute Book which gives us the right to restrict in certain conditions, according to our views, the immigration concerned, yet we say that it would be right and proper for the British Government to say: "We must go on with this for another twelve months, perhaps, but in the meantime let us not merely have a formal consultation, but let us negotiate some firm position for the future in regard to the Commonwealth."
When the noble Lord says that as long as the Conservatives are in power it is entirely their responsibility to control this traffic altogether, then I do not agree with him. I think that he should be willing to negotiate with the representatives of the Commonwealth in all these varying conditions which I have mentioned, not only with regard to immigration, but with regard to the migration of people from this country in the other direction. That is what we want. We want to see proper control ultimately, but it must be by agreement
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after negotiation. That, surely, should be the right of the free members of all the Commonwealth.
LORD DERWENT: My Lords, may I just say to the noble Earl that I pointed out that consultations on these matters are continuous.
EARL ALEXANDER OF HILLSBOROUGH: I do not know exactly what is meant by "consultations" in view of almost the last remark the noble Lord made before he sat down. In fact, what he said was that so long as the Conservative Government are in office this is their policy. That is not negotiating; it is not even having a decent consultation.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

TRUSTEE SAVINGS BANKS BILL [H.L.]
3.19 p.m.
Order of the Day for the Second Reading read.
LORD BURDEN: My Lords, the purpose of this Bill is to enable trustee savings banks to open current accounts for their depositors. I should like to mention that in the preparation of the Bill both the Treasury and the National Debt Office have been most helpful, but, of course, the Trustee Savings Banks' Association accepts full responsibility for the Bill. In addition, the matter has been the subject of lengthy discussions with the Committee of the London Clearing Banks in order to ensure that their interests are fully safeguarded, and I am informed that the provisions of the Bill have, in principle, been agreed to. Before coming to the Bill, I must declare an interest. I have the honour to be a vice-president of the Trustee Savings Banks' Association and a vice-president of a trustee savings bank. The noble Viscount, Lord Mackintosh of Halifax, whose great work for the Savings Movement will be known to everyone of us, would have liked to be present this afternoon but, unfortunately, is unable to do so. He has, however, authorised me to say that he, together with the National Savings Committee, heartily endorses

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the Bill; and with his great prestige in the Savings Movement, I am sure your Lordships will agree that that is most useful.
Trustee savings banks have a long history. Ever since 1817 they have been subject to Government control. It would, indeed, be fascinating to trace the changes in social habits during the past 150 years as reflected by savings by those using trustee savings banks. However, it will suffice to say that today there are nearly 9 million trustee savings banks depositors. There is one trend which is important and which has been encouraged by the Wages Act, 1960. I refer, of course, to the payment of wages and salaries by cheque, either direct to the employee or to his credit in a bank. May I trouble your Lordships with a few figures?
As I have already mentioned, there are are nearly 9 million depositors in the Ordinary Department of the trustee savings banks, and the average balance standing to the credit of those depositors is over £100. But the annual turnover is about £1,800 million; that is approximately double the total sum due to the depositors; and this turnover involves nearly 80 million separate transactions yearly. Nearly one half of those transactions are repayments, and under the existing procedure for the withdrawal of money from trustee savings banks, depositors are required to attend at the bank's counters and sign forms of receipt. Then, after the entries have been recorded in the bank books and counter records, they receive the sum demanded, either in cash or in the form of a cheque drawn by the bank payable to a third party.
My Lords, this procedure, in the second half of the twentieth century, is both cumbersome and inconvenient for both depositor and bank alike. It is evident that many present-day depositors would prefer to enjoy the means of making payments without first being obliged to attend at their bank office and there perhaps to stand in a queue before being served. The possession of a cheque book which would enable a savings bank depositor to make payments to a third party without the necessity of visiting his bank on every occasion is, therefore, a facility which
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he not only desires but deserves in this age of higher living standards. The introduction of a trustee savings banks cheque service is, I respectfully submit, a vital as well as a natural step in the development of the service which the trustee savings banks render. It is not a change of function but merely an extension of the means of repaying deposits.
For many years the Trustee Savings Banks, if requested to do so, have repaid sums by means of cheques drawn by the banks themselves. This is in itself a time-consuming procedure, and it is only natural that the banks should wish to afford the facility of personal cheque books to those depositors who require them. The trustee savings banks appreciate that a full range of banking facilities is available to those members of the public who choose to avail themselves of the services offered by the joint stock banks, and they have no desire to impinge upon the business of these institutions. Nevertheless, the trustee savings banks are desirous of providing their depositors with a withdrawal service which would be in keeping with the implications of a suggestion made in the Report of the Radcliffe Committee and which would be compatible with present-day requirements—a service which, if given, would be to the mutual advantage of both the depositors and the savings banks themselves.
This Bill, which is designed to permit the introduction of trustee savings bank cheques, has been drafted after lengthy discussion with the Committee of the London Clearing Banks, with a view to protecting the interests of the joint stock banks. It is not intended that the proposed cheque service should do more than provide an additional method of withdrawing money; and to that end the Bill provides specifically, first, that no overdrafts will be permitted; secondly, that no one engaged in a trade or business will be allowed to operate a cheque account for the purpose of such trade or business; and, thirdly, that no interest will be credited to cheque accounts. The latter provision is included to ensure that it will not be more advantageous for an individual to operate a cheque account with a trustee savings bank rather than with a joint stock bank. The provision will also enable a trustee savings bank

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to use the income derived from the invested balances of deposits standing to the credit of cheque accounts to defray in part the costs of operating the cheque service.
The Bill also provides for the setting up of a scale of charges to depositors for the provision of cheque books, which charges, together with the income to be derived from invested balances, will have to be sufficient to meet the entire cost of the cheque service; for it is not the wish of either the Government or the trustee savings banks themselves that the new service should in any way become a charge on public funds. The proposed cheque service is essentially a facility that is to-day desired, and required, by trustee savings bank depositors, and for which it is firmly believed they will be prepared to pay a fair and equitable remuneration.
I have covered most of the points in what I have ventured to submit to your Lordships, and therefore I will only briefly run through the clauses of the Bill. Clause 1 enables a trustee savings bank to receive deposits of money on current account repayable by cheque or other written order drawn by the person in whose name the account stands, and provides that no interest shall be paid on the account. It also states that the rules of a trustee savings bank must provide for the requirements set out in Schedule 1 to the Bill, namely, that no one concerned with the bank shall derive any profit from the operation of the current account service—apart from normal salaries and expenses; second, that current accounts shall be kept separately from Ordinary Department and Special Investment Department accounts; and, third, that statements of account shall be rendered to current account depositors at intervals of not more than six months.
Clause 2 provides that current accounts may be opened for suitable persons who are trustee savings bank depositors who either have a savings account with a minimum deposit, as laid down in the rules of the bank, or have had a savings account for not less than a minimum period of time, as laid down by the rules of the Bank, and who declare that the current account will not be used for trade or business purposes. Clause 3 provides that no overdrafts shall be permitted on current
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accounts. Clause 4 provides for the operation of a charges scheme to help defray the expenses of the current account service. Clause 5 empowers the National Debt Commissioners to require variations of the charges scheme or the cessation of the current account service. Clause 6 sets out the manner in which the operating expenses of the current account service shall be defrayed. Clause 7 provides for the investment of current account deposits. Clause 8 sets out the powers of enforcement of the terms of the Bill by the Trustee Savings Banks Inspection Committee and the National Debt Commissioners. Clause 9 provides for the minor modifications of the Trustee Savings Banks Acts, 1954 and 1958, as set out in Schedule 2, necessitated by this Bill.
Clause 10 provides for the payment to the Exchequer of any additional income accruing to the Fund for the Banks for Savings which is attributable to the current account service, and for charging to the Consolidated Fund of the United Kingdom any additional excess of expenditure over income on the Fund for the Banks for Savings which is attributable to the current account service. Clause 11 lists the interpretation of expressions contained in the Bill. Clause 12 provides that nothing in the Bill shall affect the operation of other enactments relating to the Ordinary deposits, referred to in the Bill as savings account deposits. Clause 13 cites the short title of the Bill and its extent to Northern Ireland, the Isle of Man and the Channel Islands.
My Lords, trustee savings banks have, as I have previously mentioned, given an honourable service to the public, mostly for small investors, over a period of more than 140 years. I respectfully submit that the provisions of this Bill will enable trustee savings banks more effectively and efficiently to run that service in the future. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Burden.)
3.33 p.m.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, may I say that I had been hoping that my noble friend Lord Peddie would have been in attendance this afternoon, but it is probable that the debate has come on

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earlier than he expected, and he had other things to do. But I am sure that, had he been here, he would have been glad to suport my noble friend Lord Burden in the submissions he made in moving the Second Reading of this Bill. I think there is no need for me to speak in detail about it—the details have been given completely by Lord Burden. I should like to inform the House that as this affects many branches of the community, and in particular the small savers in the community, in whom my Party is always especially interested, I think that we are likely to find, if not unanimity among them, certainly a large majority who will support this Bill. I hope, therefore, that the House will give it a Second Reading.
3.34 p.m.
LORD CHORLEY: My Lords, may I just say a word about this Bill? Certainly I do not want to oppose its Second Reading, but I am a little worried by it in a way, because obviously it is going to make it much easier for depositors in trustee savings banks to get their money out quickly. One of the great points about the whole trustee savings banks system has been that it puts a brake, as it were, on people who have saved money and prevents them from spending it too quickly or too thoughtlessly. The Savings Banks Movement has been a remarkable success; in fact I feel that its success has not received sufficient recognition, particularly in the years since the end of the war. There has been a most remarkable phenomenon—an enormous expansion in the number of depositors in savings banks, not only in this country but in Western Europe generally, I understand; and there is an International Savings Banks Association which is doing exceedingly valuable work.
I appreciate that this enormous growth in deposits and the great increase in the number of depositors have given rise to some difficulty in the way of withdrawals. As Lord Burden said in his excellent introductory speech, it is rather a cumbersome process. But, of course, as I said just now, it was devised in the first place to provide a brake on the depositor in regard to his withdrawing his savings too quickly. A large part
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of the object of the Savings Banks Movement is that the savings should not be withdrawn too easily—possibly in connection with some rather wild-cat scheme which might attract a man's attention. It is true that he will require to have a deposit account before he can transfer his money into a current account; but if he can move his deposits to where they can be easily available to meet his cheque, then, as I understand it, there will, in effect, be no safeguard against a situation in which the whole of the savings, possibly of a lifetime, may be rapidly used up. I understood that at one stage in the discussions there was a proposal to put a limit of £50 on the amount which might be withdrawn. That was evidently found to be of doubtful value. But I think it rather a pity that that idea was not pursued because, obviously, some brake of that kind would have been useful.
On the whole, however, I am inclined to think that the convenience which this Bill provides more than compensates for the weakening which I am sure it is going to have on the savings banks system. In all the circumstances, I am not prepared to oppose the Bill—indeed, think I should be prepared to support it. At the same time, I shall watch with a certain amount of anxiety the development of the use of this scheme. If it were possible to give to the Registrar of Friendly Societies, whose work in this connection has been of outstanding value (nobody can study the awards in difficult disputes which arise in connection with savings banks deposits without appreciating the great value of the work which is done by the Registrar), power to make rules which would act at any rate to some extent, as an additional brake, it would be of great value. Possibly the Government might be prepared to consider whether something of that kind could be done: I daresay that it has already been considered. On the whole, I am prepared to support this Bill, albeit with certain misgivings.
3.40 p.m.
THE CHANCELLOR OF THE DUCHY OF LANCASTER (VISCOUNT BLAKENHAM): My Lords, I am glad that the noble Lord, Lord Chorley, having raised certain doubts, said when he ended his speech that, on balance, he

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thought the convenience which was going to be created overcame the disadvantages that he had in mind. I am sure that the noble Lord, Lord Burden, will consider the case that has been put to him by his noble friend. I am sure also that everybody in this House will welcome, first of all the Bill and, secondly, the way in which it was introduced by the noble Lord, Lord Burden. He clearly outlined the purposes of the Bill, and, without going into too much detail, ran us through the clauses in the Bill. I can assure the noble Lord that, so far as the Government and also, I am sure, both sides of this House are concerned, this Bill will attract the sympathy and support of everybody.
The noble Lord mentioned what great trouble had been taken to consult with other bodies concerned, and I think that it is because of the trouble taken that the Bill is as straightforward and clear a measure as we have before us today. I am very glad that the noble Lord made reference to Lord Mackintosh of Halifax and the National Savings Committee. Every one of your Lordships would like to pay a great tribute to Lord Mackintosh of Halifax for the immense job of work he has done on behalf of the Savings Movement, and the fact that this Bill has his own approval as well as that of the National Savings Committee obviously will commend it even further to your Lordships.
As the noble Lord, Lord Burden, has said, the Bill's purpose is to enable the Trustee Savings Bank to offer a cheque service to their depositors. The Trustee Savings Bank movement has a very long and honourable history which goes right back into the early years of the 19th century. I do not think anybody denies that the trustee savings banks over all those years have built up a fine record of service to the community. They are, I think we would all agree, a friendly institution and they have shown that the small saver can place his money in them with the advantages of complete security as well as complete liquidity. Wherever they operate these banks are contributing a fine service. They are helping the country not only as a source of finance but also through the work they do in promoting and encouraging savings and the habit of thrift. As the noble Lord, Lord Chorley, has said, the
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vast increase in the scale of savings in this country is something which we can all commend and welcome as it not only strengthens the position of the individual, but also strengthens the position of the nation as a whole.
As the noble Lord, Lord Burden, rightly said, over 9 million people hold accounts at trustee savings banks and I feel, despite the doubts expressed by Lord Chorley, that it is right in the conditions of to-day, when in fact much thought is being given to ways of improving our machinery for the transmission of money, that a cheque service should be available to those trustee savings banks which would like it. This is very much in line with the new right for wages to be paid by cheque. Incidentally, I myself, in another place, actually obtained approval of that House for an Order in Council to this effect. I am therefore sure that what the noble Lord is proposing is right. Each bank of course will be able, because of the permissive nature of the Bill, to consider the best interests of its own customers. I shall not, because the noble Lord has been into the details of the Bill, detain the House any further, but I would end by saying that I think this is a Bill which is genuinely designed to enlarge the services of what is already a great banking movement; and this is a small but very valuable measure which I hope will find a general welcome.
LORD OGMORE: My Lords, before the noble Lord replies, I have listened carefully to the discussion on the Second Reading and particularly to the suggestion of the noble Lord, Lord Chorley. I hope that the noble Lord, Lord Burden, will think a great deal before he accepts Lord Chorley's suggestion. I fail to see why there should be this restriction proposed by Lord Chorley on savings bank accounts of this kind. Surely the depositor knows his own business best, and if he and the bank come to an agreement I do not see why the law should impose on him a maximum, and a very low maximum at that. Fifty pounds seems to me a ridiculously low maximum. People to-day are educated, and restrictions by law of these kinds imposed on them in carrying out their ordinary, day-to-day business seem to me to do nothing but harm. Therefore,

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I hope the noble Lord, Lord Burden, will think very carefully before he accepts any such suggestion.
LORD BURDEN: My Lords, I should like first of all to thank noble Lords for the very kind reception they have given to this Bill; I particularly appreciated the remarks of the noble Viscount, Lord Blakenham, in welcoming the Bill on behalf of the Government. I am sure that the Executive Committee of the Trustee Savings Banks will consider carefully all that has been said in this debate, and I can assure my noble friend Lord Chorley that what he has ventured to say will also be considered carefully. Broadly speaking, I think one can say, however, in line with what the noble Lord, Lord Ogmore, has said, that once the savings habit has been developed—the psychology, so to speak, of savings themselves—it is not likely to be very much affected by the introduction of a new method which depositors can operate. It ties up with the payment of wages and salaries by cheque. Again I would thank your Lordships most sincerely for the reception which has been given to this Bill.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

CENSUS IN 1966
3.48 p.m.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF HEALTH (LORD NEWTON): My Lords, with your permission, I should like to repeat a statement which is being made in another place by my right honourable friend the Minister of Health about the holding of a Census in 1966. The statement is as follows:
"With one exception, during the last war, a census of population has been taken every tenth year since 1801. The Government have decided that for the effective implementation of their policies there is a need for another census in 1966, after a period of only five years since the last one. At a time of rapid change and development, the traditional ten years is too long to wait for the hard figures which only a census gives, and the Census Act, 1920, contains express powers to
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hold a census every five years, subject to the authority of Parliament.
"The effective use of man-power and the planning of land use, of housing, and of environmental, health and social services—all these must begin with the latest figures about the population both as it is now and as it will be in the future. A relatively small percentage migration into a populous area or a relatively small change in the make-up of its population may seriously affect the amount of land and the amount of money required for housing, schools, hospitals and other services.
"The census will also be of value to users outside Government—to those engaged in research in the social sciences, economics and medicine and to industry and trade. Account will be taken, as in the past, of these needs in deciding on the topics to be covered.
"The Government have considered whether the census in 1966 need, for the purposes for which it is wanted, involve full coverage of every household in the country. They have concluded that it need not and that, with the exception of certain 'special study' areas, a 10 per cent. sample census will suffice, and they have authorised the necessary preparations to be made. As a sample enumeration is novel to the United Kingdom there will be a test of the sampling procedures in the spring of next year. This will involve approaches to a few thousand householders willing to co-operate.
"A draft Order in Council directing that the census be taken and prescribing the particulars to be required from householders will be laid before the House in due course."
That, my Lords, is the statement.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I am very much obliged to the Minister for giving us this statement, which is exceedingly interesting. The position is that, as the noble Lord says, the Government have the power to put the Census Act, 1920, into operation and to have an interim census. But when one considers what is in the statement, the reason for the census and the purposes for which it is found to be necessary the proposition

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to have a sort of Gallup Poll conducted by the Government upon a very limited section of the community seems rather extraordinary. It would be interesting—I feel sure the Government must have the figures ready, although we have only just seen this statement—to know what is the likely cost of a full census, what is the likely cost of the 10 per cent. census, and how much of value we lose in respect of information received from a sort of 10 per cent. Gallup Poll of the community. We have no idea at the moment—I do not know whether there is going to be a debate on this matter at some time—which special areas are to have a closer study than the rest will have. But I am not very satisfied at the moment that what the Government have announced to-day is altogether the best way of proceeding. I think either we ought to know more details now, or we ought to have a debate on the matter
LORD NEWTON: My Lords, I am obliged to the noble Earl for what he has said. The cost of the proposed sample census will be about £1 million, and the cost of a full census would be about £4 million. The Government are satisfied, after very full consideration, that a sample census as is proposed will be sufficient to achieve the purposes which I outlined in the statement. The details of how it is going to be organised have still to be worked out in consultation with local authorities and others, but the Government thought it right to give Parliament as soon as possible an indication of what their intentions are.
BARONESS SUMMERSKILL: My Lords, may I add something to what my noble friend has said? I agree with him, and I am sure the whole House agrees, that a census is desirable, because during the last few years there have been some striking social changes which have been commented on in both Houses, in the Press, on the television and so on. We have had only a very short time to consider the matter since we were given the information that this census was to be taken, but I think that this is rather a short-sighted economy, because some of the social changes which come within the terms of reference of this census, as described in this statement, can surely be assessed only in a full census. They are national changes, not local changes.
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I attach great importance to the migration of people from the North to the South—and this is not a migration of old people; it is a migration of young people from the North to the South. This is very important. One can only deduce what is the pressure on houses, the pressure on schools and the pressure on hospitals, if we have a complete census coving the North and the South. This afternoon we have been discussing Commonwealth immigration—another social problem—and there are special factors here. At this stage I think we should be told precisely where people from the Commonwealth countries are living, because again there are special problems of education. We have learnt that in some areas these boys and girls from the Commonwealth have been segregated in certain classes, because they have not been able to speak the language. It has been argued, I think quite rightly, that this is wrong; there should be integration. Again, how can you arrange your schools unless you know precisely where these pockets, let us say, of immigrants are living?
The statement mentions health. In some hospitals there are long waiting lists for certain surgeons or physicians. Specialties of all kinds are distributed in different ways. How can we know, in the light of the Ten-Year Plan for hospitals, just how these hospitals should be distributed to the best advantage, unless we have a complete census? I might also say, as I am speaking about health, that not only are there long waiting lists; there is another problem of the distribution of general practitioners. In some areas they are over-provided, in other areas they are under-provided, and some of this problem is related to the change in population. My final point is on the subject of drugs. There is a higher consumption of drugs in some areas than in others. Again, there must be certain factors in the population which account for this.
I have just commented on certain aspects of this statement which have occurred to me. Although one has not had a great deal of time to consider the matter, I think, with regard to the difference between £1 million and £4 million and the amount of money in relation to the population which will finally be spent on hospitals, schools

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and social services, that it is a shortsighted economy not to do this particular job thoroughly.
LORD NEWTON: My Lords, I was very glad to hear that the noble Lady considers that it is right to have another census after only five years. The actual questions which will be asked in the census have still to be determined after full consultation with people like the local authorities and university research workers, and other research workers. Similarly the sort of topics upon which elucidation is deirable has also to be decided. But, in general, I would not dissent at all from the subjects which the noble Baroness suggested as being worthy of further investigation.
On the question of whether the objects we have in mind can be achieved as well in a partial census as in a full one, I recognise that this can be a matter of opinion. But we have considered this matter very carefully indeed, and I can only repeat that in the view of Her Majesty's Government this sample census will be sufficient for the purposes we have in mind.
LORD OGMORE: My Lords, could the noble Lord tell us what the special study areas are to be?
LORD NEWTON: My Lords, I cannot tell the noble Lord where they will be. I think they will be few; they will be areas where there seems to be the most urgent need for special studies calling for very detailed information. We envisage that there will be a few areas with exceptional characteristics where a full census will be desirable. But I am afraid I cannot say more about that at the moment, because there is nothing to say.
LORD SILKIN: My Lords, I should like to ask the noble Lord two questions. The first is this. Is this intended to be a once-for-all census in 1966, and then shall we go on to the ordinary ten-year period; or is it contemplated that there will be a census in future every five years? The other question is this. If this census is to be of any value at all, the results ought to be available much sooner than the results under the existing census. I believe it usually takes a year or more before we get any results from the census. Will the noble
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Lord make representations, to make sure that we get the results more quickly than we normally do? Otherwise, by the time we get the results they may be out of date.
LORD NEWTON: My Lords, nothing I have said should be taken to prejudge the question whether there will be some sort of census every five years in the future. I just do not know. I should think it probable, but, again, I would not put it higher than that: that in 1971 there will be another full census as there was in 1961. But I should not wish to be dogmatic at all about this.
As regards the availability of the results, we hope they will start to be available from a few months after the actual taking of the census, and that all the results will be available by the end of 1967. We certainly hope that results will come along much more quickly than they have done in respect of the last census, where we have got behind with our programme. The reason for that was that the use of a computer for the first time unfortunately presented problems which had not been envisaged, but we have learned a lot from our experience of these computers. I certainly agree with the noble Lord that the results should be made available as soon as they possibly can be.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, to meet the point made by my noble friend Lord Silkin with regard to the time of publication, it seems to me that if, out of the 10 per cent. sample census, you are not going to get information before the end of 1967, then you might just as well have the full census. If you are going to use a computer, I hope you will be very certain of what programme questions are put to the computer.
LORD NEWTON: My Lords, perhaps I did not make it quite clear. We hope that the results will start coming along and start to be published a very few months after the holding of the census, and that all the results will be available by the end of 1967.
LORD SILKIN: But, my Lords, that is well over a year from the time the census is taken. Surely the noble Lord could make representations to see all the results are made available much sooner than that.
LORD NEWTON: I will certainly take note of the noble Lord's view that the production of the results should be as quick as possible. There is nothing between him and us on that. Certainly it is the intention to produce the results as quickly as this can be done.
LORD OGMORE: But, my Lords, the Gallup polls and the national opinion polls come out in about a week, as I understand it, or within a fortnight, of being taken. A period of over a year seems to me to do away with a great deal of the merit of having a poll at all.
LORD NEWTON: My Lords, I would not say that a census is really comparable with a Gallup poll.

ELECTRICITY AND GAS BILL
4.3 p.m.
Order of the Day for the Second Reading read.
LORD DERWENT: My Lords, this Bill enables the borrowing limits of the electricity and gas industries to be raised by £2,390 million in all. The borrowing powers of the Electricity Council and Boards in England and Wales are to be raised from £2,300 million to £3,300 million, or such sum not exceeding £4,400 million as the Minister may Specify by Order. The present combined borrowing limits of the two Scottish Electricity Boards amount to £415 million. The Bill provides for a new joint limit of £500 million, which may be raised by Order to £580 million. The Gas Council and Boards are now limited to borrowing £525 million, and the new limit is £600 million, which may be raised by Order to £650 million. In each case the initial limit is likely to be reached in about three years' time, and the final limit after a further three years or so. The Bill further brings the provisions for financing the nationalised industries from the Exchequer into line with those for the other nationalised industries. It also provides that if a Council or Board member leaves before his term of office has expired, the Minister may require the Council or the Board to pay compensation.
Your Lordships may find it convenient if I say something about each of these
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groups of industries separately. Let us look first at the electricity industry in England and Wales. The borrowing figures I have mentioned are very large, yet the industry expects to provide from revenue almost as much again to make up a total investment of £4,600 million over seven years. The reason for the increase is an expanding economy and rising standards of living, and electricity consumption is growing to match them. It is an index of better living in our homes, and of greater industrial prosperity.
The forecasting of demand is critical because generating stations take five or more years to bring into operation, and therefore the capacity on which we depend at any time has to be planned that much earlier. Perhaps the industry should have recognised the acceleration of demand sooner, and should have planned sooner for capacity to meet it. The Chairman of the Electricity Council has said—and I agree with him—that there ought to have been a major survey of domestic demand between 1955 and 1961. However, the industry has of recent years greatly strengthened its forecasting arrangements. The estimates this year take account of the effects on the industry of the Government's backing for the N.E.D.C. 4 per cent. objective.
Peak demand is estimated to increase at a rate of 91¼ per cent. a year, compared with a figure of 6 per cent. only five years ago. Within the period up to March, 1970, the Generating Board hope to restore a plant margin of 14 per cent. above the estimated maximum demand in average cold weather. Such a margin is essential for safety, mainly because some plant will always be out of service when the maximum demand occurs. Last winter the growth of load had outpaced the installation of new plant so far that the industry started with a margin of only 7 per cent. The results we all know, and we are all concerned about the coming winter.
The Electricity Council and the Generating Board have done a very great deal since the end of last winter to prepare for bad weather, and we hope that they will be able to get through this year without serious difficulty. But the shortage of plant capacity must be made good as soon as possible. This

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will take time, even with a very large investment programme, because demand is still expected to grow rapidly, and because of the five or more years needed to build power stations. In addition to the expansion of generating capacity, the industry must also greatly increase expenditure on transmission and distribution to get the extra power to the consumers. As can be seen from the figures, this programme will call for heavy capital expenditure, and will make great claims on the energy and resourcefulness of the Boards and their contractors.
Most of the power stations built in the period covered by the Bill will burn coal or oil. The increase in size of generating sets to 500 megawatts is expected to secure large economies in capital costs and operating costs. This period will also see the completion of our present nuclear power programme, bringing about 5,000 megawatts into commission. Berkeley and Bradwell were already contributing to electricity supplies last winter; Hunterston will soon start supplying power for the South of Scotland Electricity Board; and six other stations are now in various stages towards commissioning. As your Lordships are probably aware, the future of the nuclear power programme is being reviewed, and the Government expect shortly to be able to consider the Committee's report.
Let me now turn to the electricity supply industry in Scotland. As in England and Wales, demand for electricity has grown enormously. The rate of growth in Scotland is more than 10 per cent. a year, and maximum demand has grown to match it. The Scottish Boards consider that they should plan to increase the amount of generating capacity by some 4,000 megawatts by 1970, taking account of the National Economic Development Council's objective of 4 per cent. annual economic growth. Obviously, in Scotland, as in England and Wales, this means very large investment. Nearly £500 million will be needed over the seven years from 1963 to 1970. The Boards hope to finance about £260 million of this from their own resources, but they will also have to borrow large sums.
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A novel feature of the Bill is that it provides a single borrowing limit for the two Scottish Boards, in place of the present separate limits. The Government believe that this provision will create the conditions favourable to the achievement of its policy for electricity in Scotland. It will make it possible for the generation, transmission and distribution of electricity in Scotland to be carried out on the most economic basis possible. It will encourage close consultation and co-operation between the Boards. It will enable the Boards to take decisions on investment for the maximum benefit of Scottish consumers, free from the restriction of separate borrowing limits.
It has been a notable feature of the nationalised electricity supply industries throughout the country—in England, Wales and Scotland—that they have contributed so greatly to the well-being of country people. Rural electrification has brought modern production methods and better living within the reach of people living often many miles from towns and cities. Last March 89 per cent. of farms and 97 per cent. of other rural premises had been connected in England and Wales. In the South of Scotland rural electrification is almost complete. In the North of Scotland, in spite of the large area and sparse population, 92 per cent. of the work has been done. This is a great achievement.
Now I come to the gas industry. Here the last few years have seen a dramatic change in the industry's prospects. When we last considered a borrowing Bill for gas in 1960, the industry was struggling to keep its place in the market. Now many new developments have come to fruition, and others are in sight. There is real hope for reductions in the cost of gas manufacture, and so great promise for the expansion of gas sales. An annual increase of 3 per cent. seems to be established, and the Gas Council has estimated its future capital needs on the basis of a possible 5 per cent. annual increase in sales.
New raw materials are the key to this remarkable change in the industry's prospects. Until very recently gas making was based solely on coal of special gas making quality. Now non-coking coals are being used in the two Lurgi plants; gas is being made from a

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variety of oil fractions, and early next year gas will be made here from imported liquid methane. The industry's own research efforts have contributed much to these developments. It is obviously a great strength to the industry to have its raw material supplies so broadly based. Nor is this the end of the possibilities for raw materials. Recently your Lordships gave the Continental Shelf Bill a Second Reading, and discussed the Government's proposals for regulating the exploration and exploitation of the raw materials which may lie under the sea bed. And your Lordships will be aware of the major find of natural gas in Holland.
All in all, there are remarkable opportunities for gas, and it is wholly in the country's interest to enable the gas industry to take full advantage of them. Innovation and expansion cost money. Over the seven years to which the Bill relates the gas industry may need to spend as much as £540 million. The Gas Boards will be able to provide more than two-thirds of this themselves, but they will still need to borrow the remainder.
My Lords, to-day we are considering two competing industries. There must be competition between them if the consumer is to have his choice, at the lowest cost to himself and the community. But the Minister of Power has the work of co-ordinating the expansion of these industries. The borrowing powers in this Bill will be exercised within investment programmes which the Minister will review annually and approve from time to time. The aim will be to ensure that there is enough energy for the economic expansion the Government have in view, and that the supply from each industry will regularly reflect its economic and competitive position. We need investment in both industries. I invite your Lordships to approve the proposals for investment in electricity and gas reflected in this Bill. I beg to move that this Bill be read a second time.
Moved, That the Bill be now read 2a.—(Lord Derwent.)
4.15 p.m.
LORD LINDGREN: My Lords, may I first of all say how much I appreciated the detailed explanation which the noble Lord, Lord Derwent, has given to the House. From his sipping of water it
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seems that he has been making that explanation under some discomfort; and we all wish him a speedy recovery from his obviously sore throat. To put the noble Lord at his ease—if he wants to be put at ease—may I assure him that there will be no opposition to the Second Reading of this Bill from this side of the House; but I feel I must register some protest, and if not some protest, some regret, that we should be discussing this Bill in an afternoon when there is so much business before the House, because one therefore feels a little restrained from going beyond the real scope of the Bill.
I think, in fairness to these industries and to those associated with them and to the country, that the annual reports of the Gas Council and the Electricity Council—those very fine pamphlets, Gas Goes Ahead and Finance for More Power—ought really to be discussed in this House. It is not so very long since we had the Report of the Select Committee on the Nationalised Industries both for the gas and for the electrical industry; and although in this House we are not associated with the Select Committee I think it would be a little churlish if we did not express our appreciation of the excellent work done by them and the diligent inquiry which is undertaken by members of another place. We must bear in mind that they do not work in the glare of publicity, with headlines in the London evening newspapers or in the national Press; but they carry out really sound and solid work on behalf of the nation in our nationalised industries. The effect of the Reports of the Select Committee has really been to give a very good bill of health to both the gas and the electrical industries.
With some fairness, noble Lords opposite might say that we on this side of the House, and our colleagues in another place, are a little biased in favour of nationalised industries; but no one can really accuse the Tory party of being in favour of nationalised industries. In fact, with a little spitefulness we might say from this side of the House that if there is the possibility of their putting a spoke in the wheel they are only too glad to do it. But when one appreciates the fact that the Select Committee give such a Report on the efficiency and the national effectiveness of these two industries (the added facilities for capital development of which we are discussing)

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then I think the industries and the country may be proud of what has been done since their nationalisation.
But, as the Minister has pointed out, it would be foolish not to admit that there have been some shortcomings—especially, perhaps, in the electrical industry. The noble Lord, Lord Derwent, referred to the "average" cold snap or "average" cold weather. I do not know exactly what average cold weather is. As a trade unionist and a wage earner in the old days, I was always being confronted with the average wage—which I never seemed to reach. But last year we did have very difficult weather; and I would concede that it was above average in its intensity. At least, we can say that it was very exceptional and we had to suffer cuts in the electrical industry.
I have admitted that there was a shortage in capacity to meet this exceptional demand, but the noble Lord, Lord Derwent, rather implied that the fault for not being able to meet the additional requirements lay with the industry. I would not admit that. There may have been some underestimating on the part of the industry and some selling of equipment to use electricity over the capacity to meet the peak. But the Government have a heavy responsibility for the capital provision within this industry. Apart from the 1958 cuts that were required—and let me point out that the noble Lord rightly referred to the period from the conception of a generating station to production as between five and ten years—the Government have interfered with the industry, cutting back the programme developments and the availability of capital, and for this they have to take a heavy responsibility. Their "Stop and Go" policy affecting the capital programme makes it extremely difficult, not only for the industry itself, but also for all those outside the industry providing the equipment which is required.
Another point is the insistence of this Government that the industry should provide its own finance for development. The noble Lord, Lord Derwent, referred to the provision for capital development from revenue as being nearly 50 per cent. I have been associated with local government over a long period of time, and all Governments—not only Tory Govern-
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ments—have insisted, when we have tried to finance projects from revenue, that we have no right to charge the ratepayers of to-day for the capital expenditure which is going to benefit the ratepayers ten or fifteen years hence. Yet here we are, forcing charges on present consumers in order to provide capital development which will benefit consumers who are not yet within the range of the industry.
Here one may criticise the nationalised industries, but there are no private enterprise industries which provide from their own revenues 50 per cent. of their capital development. I feel that this insistence upon the provision of capital development from revenue is a heavy burden on the industry, though I admit that in fifteen or twenty years' time future consumers will derive some benefit from what the present consumers are paying in additional charges. May I point out that even a predecessor of the present Minister of Fuel and Power (I think it was Mr. Richard Wood, but there have been so many changes in ministerial appointments by the present Government that it is a little difficult to keep up with who are in office), in meeting criticisms of the electricity industry for not being able to meet the excessive demands of last winter, said that it was not the function of the industry to provide excess capacity to meet a demand which might arise once every ten, fifteen or twenty years. But this is equally the responsibility of the Government, in not having allowed the industry to meet its own development plans in its own way.
If I have a complaint about the present Government, it is of the manner in which they interfere with the day-to-day management, not only of the electricity industry but of all the nationalised industries. It is necessary to give a nationalised industry opportunities to develop as an industry. Here again, the Government fall down. The electricity industry does not stand on its own feet as an industry. It is part of the national fuel system of the country. We cannot deal with gas and electricity as separate viable industries without considering the national economy and our fuel and power requirements as a whole. Let us face it. We have only one basic raw material for the production of power—that is, coal. The alternatives are materials derived outside the country; and when

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it comes to national defence, and dependence on our own resources in time of urgent national need, then we have to rely on coal alone.
I do not intend to refer at length to the position of Scotland and its two Boards. I have read the speech of my honourable friend the Member for Hamilton, Mr. Tom Fraser, on the Second Reading of the Bill in another place, and I think that it would be—I was going to say "saucy", but that is hardly a word for your Lordships' House—unfitting for me to develop the Scottish position, when he has dealt with it in such an admirable manner in another place.
I would conclude by dealing with rural development, to which the noble Lord, Lord Derwent, referred. Here again, one has to admit that, since 1947, electricity has been able to develop in the countryside in a manner which would not have been possible under private enterprise, where the companies were considering only the interests of the capital investments within their own industry, or under local authorities, which were concerned only with making a supply available at the cheapest possible rates to the consumers within their own locality.
Although this point must be a little outside the scope of the Bill, I have been disturbed by the suggestion that, because of the additional costs which are bound to arise in rural development, there should be a special tariff for rural areas. It is easy to make comparatively cheap distribution in a densely populated urban area, where one has consumers on either side of every street within the area. But when one comes to rural areas, with isolated farms, and small pockets of housing, the amount of capital required for the comparatively small amount of supply is, I admit, very high indeed. There has been some talk of special tariffs in order to meet that added cost. I hope that no such tariffs will be imposed. If we are to maintain the rural population of this country, and stop the drift from the countryside to the town, then we must supply the rural areas, so far as possible (one cannot do it altogether), with the amenities for the home, particularly for the housewife—electric supply, water supply, sanitation and the rest.
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If I have one complaint against the distribution side of the electrical industry, it is that we have (I believe it is) twelve Boards in England and Wales, and we have twelve general arrangements in regard to tariffs, with varying charges from one area to another. After all, we talk in this country about the redevelopment of areas which are at the moment having a difficult time. It is quite obvious from what I said before that the development within the South-East of England will be much easier—the tariffs and everything else will be easier—than it will be in the North-East, or in areas which are comparatively wanting development. If I have a criticism, it is that, rather than have twelve Boards, with twelve different tariffs, we should perhaps retain the twelve Boards, but at least work towards the unification of tariffs, including those in the rural areas.
We give this Bill a Second Reading and, if necessary, we should even like to see it expanded. We hope that there will be no interference from the Government side with the plans which will be made by the generating industry and by the Boards as a result of the authorisation which this Bill gives them. If we give them authorisation to go ahead with programmes one day, and interfere with them the next, then we cannot expect the industry to carry out an ordered progress; and it is the ordered progress of the industry which we on this side of the House most earnestly desire, as I am certain noble Lords opposite do, too.
4.35 p.m.
LORD MERRIVALE: My Lords, I do not propose to follow the noble Lord in his criticism of the Government's handling of the gas and electricity industry. I propose to confine my remarks to the electricity industry. In 1962–63 that industry took approximately 50 per cent. of the nationalised industries' investment, and will account for 70 cent. of the projected increase in investment between 1962–63 and 1964–65. My noble friend Lord Derwent referred to the growing demand, and he called it "an index of better living". In view of that, I think it is understandable that we should be asked to approve these proposals earlier than expected. We are told in a Treasury publication that the

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biggest increase during that period will be for the building up of the main transmission system, and there is to be an expected expenditure of £162 million in 1964–65, as against £57 million in 1962–63. I should like to take this opportunity to echo the words of the Select Committee on Nationalised Industries, as regards electricity, when they said they were impressed by the care and skill shown by the industry in reconciling its engineering needs with the claims of amenity. Naturally, this refers also to the question of the siting of new generating stations.
This question of the siting of generating stations leads me to a point on the supply of fuel. We have been told in various publications and Government statements that the generating stations of the future will mainly be of the 2,000-megawatt variety, incorporating units of 500 megawatts. No doubt coal will remain the principal fuel for quite a long time to come, and I am glad that the noble Lord, Lord Lindgren, stressed the use of coal for the fuelling of our stations of the future. Therefore, I think its efficient deployment is a major consideration.
I would recognise here the flexibility of our railway system, but, in view of an encouraging policy on the part of the Government, the Boards and the Council of siting new power stations with careful regard to probable fuel sources and transport flows, should not careful consideration be given to the economic potential of supplying these power stations by pipe-line? For instance, on an average working day the fuelling of a 2,000-megawatt station calls for 20 of the heaviest coal trains that the railways can handle at the present time; and that involves the corresponding problem of the returning empty wagons, while a 20 inch pipeline for the hydraulic movement of coal would achieve exactly the same result.
Here, too, I think we should mention, because it is a welcome development, the close relations which exist between the Generating Board and the Coal Board. I should like to take this opportunity of asking my noble friend what progress has been achieved, or what conclusions have been reached, regarding the experimental ten-mile
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pipe-line from Ollerton Colliery to High Marnham Power Station, or the shorter one, the two-mile pipe-line connecting Walton Colliery to Wakefield Power Station. I think it is true to say that in the next few years the biggest supplies of power station coal will be coming from the East Midlands and Yorkshire coalfields. Therefore, a hydraulic system of transport of these fuels may indeed be an efficient and cheap form of transport.
I should like to ask my noble friend, further, whether the possibility of the piped movement of fuel into inland generating plant is being considered, as against the other method of a continuous development in overhead movement of power from seaboard stations to inland centres of consumption. On this question of pipe-line transport, Mr. W. V. Sheppard. who is the Director General, Production, of the National Coal Board, on current experimental and development work which is going on at the moment on the hydraulic transport of coal states that we cannot expect any worthwhile contribution before 1970. As the ten-year agreement between the Generating Board and the railways expires in 1968, could not the programme concerning this question of whether it is feasible or economic to move coal in the form of a slurry be speeded up so as to coincide a little better with the expiry of the agreement?
To turn now to the question of load factor and demand, one is no doubt pleased to learn that the Boards are putting a considerable effort into the development of off-peak loads, by the promotion of storage heaters, to which the noble Lord, Lord Lindgren, referred, and by encouraging industry to use more electricity at off-peak times. But the fact still remains that the load factor has been decreasing since 1960–61, when it was 48·5 per cent. In 1961–62 it was 47·9 per cent. and in 1962–63 it was 47·7 per cent. The Select Committee, to which the noble Lord, Lord Lindgren, referred rightly stated, I feel with humility, that a full-scale marketing organisation is needed also for the purpose of influencing demand in order to improve the load factor by the right design of tariffs. I understand that the Electricity Council has a working party who seem to be studying alternative tariff systems, but I feel that the fact

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still remains that effective electric space heating is expensive with regard to running costs. I remember a few years ago making inquiries with the British Electrical Development Association on this question of running costs for under-floor heating. I came to the conclusion that it would be reasonable to operate this under-floor heating, provided that I was satisfied with a room temperature of the order of 60° Fahrenheit. But I did not feel it was very high, and so I did not take this project any further.
Could consideration be given to a preferential tariff for fitted appliances—by "fitted" I mean not mobile appliances—which are thermostatically controlled; in other words, for temperature-sensitive loads, as they are called in the official publication. I feel that such a step might encourage a further use of that form of space heating and, at the same time, provide a satisfactory base load for the power stations.
Possibly my noble friend's right honourable friend might also impress upon the Minister of Transport the merits of developing railway electrification as a type of load which has a high load factor. I should like, with respect, to draw his attention to an interesting article which appeared in an American technical publication in May, 1960. The publication was called Electrical Engineering, and the title of the article was "Economic trends make railroad electrification inevitable". Although I do not want to discuss the question of the railways, electrified railways can provide a good base load, and that is why I refer to it. I feel too there have been uncertainties about the programme of electrification projects and a lack of information as to the intentions of the British Railways Board. However, I believe that the Board should be commended for their joint action in setting up this electric traction course—a twelve-months course—at the Imperial College, London, for in the past it was only at Loughborough, I think, where one could attend such a course.
Finally, I should like to say a few words on the question of peak demand. In another place, on the Second Reading of this Bill, the Minister said that the shortage of plant capacity must be made good as soon as possible. Those are most encouraging words. One can but welcome a further statement that in
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view of last winter's experience the whole question of safety margins is being seriously considered. That matter was mentioned by a Ministry witness before the Select Committee, and I believe it appears in paragraph 118 of the Report. If France can have gone since 1950 without any breakdowns of supply, one fails to see why we in this country cannot attain the same security of supply. France must surely at times have been faced with the same problems of insulator flashovers, for instance, of industrial dirt on, or of icing of, the insulators, and so forth, so I cannot see why we cannot satisfactorily tackle this problem for the future. I believe that there is cause for anxiety when under severe weather conditions supplies can be cut off to the extent of up to 20 per cent. of normal consumption.
On the question of available plant or available generating capacity, I am led to wonder whether the proposed margin of 14 per cent., to which my noble friend Lord Derwent referred, is sufficient when one remembers, as he stressed, that five to six years are needed for a station to be operative—that is, from plant planning to installation and operation—and remembering again last winter's experience, when there was a peak demand of the order from 32,100 megawatts, 6,100 more than the 1957 estimate, that is, around one-fifth or 20 per cent. in excess demand. That is why I am wondering whether the 14 per cent. is sufficient. My Lords, those are the only remarks I propose to make on this Bill. I certainly support the Government on this question of providing further investment for the electricity and the gas industries.
4.50 p.m.
LORD CHAMPION: My Lords, I agree with the noble Lord, Lord Merrivale, on some of the points that he has made, certainly on the point of the desirability of ensuring the continuation and, indeed, the extension of the use of our indigenous fuel, coal, for the electricity industry. I believe we must do this in relation to gas, too, and I hope to return to this point later on in my speech. I must say, on the piped movement of coal, to which the noble Lord referred, that I hope, as a transport man, we shall not embark too hastily upon this without very careful consideration. Clearly, we shall have

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to consider this in regard to the amount of railway capacity that would be disused and the capital involved in it. Nevertheless, I would say, with him, that if it were found, on balance, to be better for the national economy to send our coal by these methods from the pits to the various places where it is used, it is not for transport men to stand in the way but to consider the national economy rather than narrow sectional interests.
Like my noble friend Lord Lindgren, I was grateful to the noble Lord, Lord Derwent, for the way in which he introduced this Bill. I thought he did it fairly and placed the facts of the Bill clearly before the House. The Bill, as he rightly said, is a simple Bill to extend the borrowing powers of these two nationalised industries. If it is a simple Bill, I regard it as important not only for the fact that it sanctions a large amount of capital but also for the fact that it enables us, on Second Reading, to examine the functioning of these two industries. We are, I think, better able to do this because of the outstanding Reports on the two industries by the Select Committee on the Nationalised Industries. That Committee applied the surgeon's knife with great skill and laid the entrails of these two industries open to microscopic examination such as is seldom, if ever, applied to a private industry. I would say that these two industries have emerged extraordinarily well from this close and searching examination by the Select Committee on Estimates. Both examinations were, indeed, positively ruthless in their character, but I am bound to say that I think their conclusions fair in relation to the industries, and that they show that these two industries were well managed and efficiently run.
When I was a Member in the other place I was a Member of the Select Committee which actually led to the setting up of the Select Committee on the Nationalised Industries, and after it was set up I sat on it for some little time. I must admit that in its early days I never thought it possible for such a Committee to do such outstanding work as is shown in the Report of 1961 on the Gas Industry and the Report of May of this year on the Electricity Industry. I admit too, that before this
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Committee was set up I entertained a fear that the Select Committee on Estimates might do something that Parliament had never intended it to do, namely, to some extent to interfere in the day-to-day running of the industries. I also had the fear that its Reports might be heavily weighted by the Government majority and that the conclusions might be a little bit twisted. I must admit I had that slight fear. But under the skilled chairmanship of those who have chaired that Committee—I am thinking here of the two Reports I have just mentioned, the first under Sir Toby Low, now the noble Lord, Lord Aldington, and the second under Sir Richard Nugent—the Committee have laid bare the vitals of these industries for inspection by Parliament, but not, so far as it seems to me, to justify the fears that I held about the possibility of undue Parliamentary interference in the day-to-day running of the industries; and certainly I see no trace in the conclusions to which they have arrived of undue Party political bias.
In passing, I am bound to say that these important Reports from this Committee do not receive from Parliament the attention they deserve. The first of these two Reports issued in 1961, had to wait 2½ years before being considered, and it was considered then only because this Bill was presented to another place. The second Report, in May of this year, may very well have had to wait as long or very much longer if such a Bill had not come along. Incidentally—and the noble Lord, Lord Lindgren, referred to this—the Second Reading of this Bill took place in another place on a Friday in a very thin House, and here to-day we are debating this Bill, when these two Reports are bound to enter into our consideration, in what is also a very thin House. I believe that this Committee, its Reports and this Bill deserve very much more attention than they have received in the other place or in this House to-day.
As a result of reading these two Reports I have no doubts at all about the wisdom of passing this Bill. Both undertakings have emerged as well-managed, essential undertakings which have, within the limits imposed upon them by Ministerial interference and by physical and financial considerations, done extraordinarily well. I believe I

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should have had to say that, even if I had not already had a personal predilection in favour of the nationalisation measures passed by the Government of 1945–50. However, there are a few points which appear to me to emerge from the Report that ought to be stressed.
The first of these I have already mentioned, Ministerial interference in the industry. The Select Committee, quite fairly, points to a number of examples of this in its Report on the Gas Industry. It is clearly the Government's intention that the nationalised industries should be to a much larger extent self-financing. My noble friend Lord Lindgren cast some doubts upon this, but I must say that, on balance, I believe these industries should be more self-financing than they have been in the past, although I agree with him that there is always a danger of making the present consumer pay too much towards the cost of the undertaking to be used in the future. But, on balance, I think that they must self-finance a little more of their capital than they have done in the past.
If they are going to be more self-financing, however, they must be allowed to raise out of their tariffs sufficient money to enable them to do so. In 1957, the Eastern Gas Board, realising that they needed more revenue, planned to raise their tariffs by 3d. a therm. They received a letter from the Ministry allowing them to raise them by 2d. The result was, that instead of making a surplus of about £600,000 in 1958–59 and a deficit of £250,000 in 1959–60, they had deficits of £400,000 and £1,300,000 for those years respectively, a total deficit of £1,700,000, instead of a surplus of about £350,000 for those two years. The Minister also intervened in 1957 when he allowed the North Thames Gas Board to make an increase of 2d. a therm when that Board sought to increase its tariffs by 2·15d. That Board, it is true, did manage to make a surplus for that year, but it was a small one. It was seeking to make a surplus because it knew that the Government wanted the industry to be to a greater degree self-financing. But they were not able to make anything like as much as they ought to have been able to make, and that was due purely to
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the interference by the Minister in the tariffs to be charged.
Another example of Ministerial interference was in the case of the Northern Gas Board, where the hiring out of gas appliances is traditional. In the national interest in 1955 the Gas and Electricity Boards agreed that this kind of business ought not to expand for a period of two years, and the Northern Gas Board reluctantly agreed. The Minister heard with approval of this arrangement, and he kept it in operation until 1961, four years after the expiration of the joint arrangement, even although that Gas Board is convinced that this hiring business is highly profitable. The Statute under which the Gas Council was set up foresaw that certain checks on prices might be necessary. But the power was vested in the Gas Council and not in the Minister. This is the point that I think one must stress in this connection: that it was the Council and not the Minister of Power, which was given by Statute the job of interference in tariffs.
The electricity industry has the same story of ministerial interference. In 1958 the Government asked the Central Electricity Generating Board whether the bulk supply tariff could be reduced as a contribution to the Government's endeavour to stabilise prices. It did so, and as a result its revenue for that year was reduced by over £2 million, a factor, as my noble friend said, in this business of getting sufficient plant to meet the emergency when it comes along. The Merseyside, North Wales and Midlands Boards proposed in 1956 to raise their tariffs. In the national interest the Minister advised against the increases, although the Boards had made it clear that they were seeking a higher level of self-financing, which was part of the story outlined by the noble Lord, Lord Derwent, to-day. The Merseyside and North Wales Boards brought forward their proposals again in 1958, but they were not allowed to raise their tariffs until 1961, with serious consequences to those Boards' finances and the inevitable postponement of a higher degree of self-financing. As I have said, I agree with the Government's wish that these industries should be to a greater degree self-financing, they must be allowed sufficient money with

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which to do it, and it must be earned out of income.
I completely support the Select Committee in their statement in paragraph 44 of the 1963 Report:
"Your Committee equally accept that when the Minister of Power made these interventions he did so in the belief that the national interest demanded them. Nevertheless, your Committee criticised them for the same reason as the Select Committee of 1960–61 criticised similar interventions by the Minister of Power in the tariffs of the gas industry; Parliament has laid down what, in relation to the nationalised industries, Ministers must do, and Ministers have been doing something else. The result has been that the accounts laid before Parliament by the Boards in the affected years did not give a true picture of their managerial capabilities".
I believe this is important and I would underline that last sentence; that the Reports cannot present a true picture of the managerial capacity and capabilities of this undertaking purely because of the fact that the Minister interferes and intervenes from time to time in their work. There is no doubt that to some extent, the Minister's interference did have some effect, particularly in cuts of transmission capital expenditure, in the difficulties experienced by the country, though I would not place too much emphasis on this.
The fact is that this industry, despite what I have said about its managerial capacity and so on, failed to forecast the phenomenal growth of demand that took place. They did not really appreciate what was going on, despite the fact that they must have been able to see to what extent domestic space heaters were being sold, apparatus that could be bought cheaply and switched on easily once it was plugged in. The Minister has told us they have now devised a better method for forecasting for the future, but I am sure that that will not mean that all the problems will be solved in the coming winter, or the winter we are now in, or any winter in the immediate future if we run into the same sort of difficulties again. The electricity industry suffers, as does London Transport, for example, from the shape of its demand, the peaks and valleys, with capital earning very much too little for too much of its time. The Electricity Council miscalculated, I have said, the effect of the growth of the use of the domestic heater. But there can be no
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doubt, whatever miscalculations they might have made, that the valley will be for many years to come during the period 11 p.m. to 7 a.m.
In this connection I believe that the domestic storage heater is a large part of the answer, for a large part of the peak demand comes from the easily switched on domestic heater. But I believe that the storage heater, the one that can take electricity during the 11 p.m. to 7 a.m. period and give it out over the rest of the day, should go a long way towards lifting that valley towards the peak, which is so much of the trouble—and, indeed, will have the opposite effect of lowering the peak, because the electricity taken during the night, and perhaps boosted during the lunch-hour of the day, would be giving off its heat. I believe that in this respect the Electricity Council fell down badly. The domestic storage heater was developed in 1952, but the Electricity Council wasted a great deal of time, before altering its tariffs to meet and encourage the sale of this storage heater, fighting Customs and Excise over purchase tax. It was perhaps understandable that it should do that, but, by its fight, and by failing to adjust its tariffs to meet this exceptionally good form of domestic heating, the Council delayed its introduction generally in this country until 1961. The result has been that many people who during the period 1952 to 1963 have been looking for some form of reasonably cheap heating for their houses went in for oil and solid fuel heating, when they might very well have gone in for this storage heating. The noble Lord, Lord Merrivale, I think might be an example of this, judging by what he said a few minutes ago.
On this point, the Select Committee on the Nationalised Industries clearly support the industry's plea for the removal of purchase tax from this form of electric heater, the storage heater: and the Select Committee point out the inconsistency of the Treasury's approach. They say:
"On the one hand, financial objectives have been set to ensure that the industry makes an economic use of capital furnished by the Exchequer: on the other, a tax is kept on an appliance which, if used on a large enough scale, would materially reduce the demand on the system's peak and the need for so much capital."

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On this whole point of ministerial intervention in the working of these two nationalised industries, I am bound to say that I believe that the use of them as a means of regulating our economy is particularly justified in the present state of our knowledge of managing the economy. But I would say that when the Minister does intervene in the working of these industries it should be done by clear-cut directives, reported to Parliament at the lime, and intervention on tariffs should be done only after the Minister's position vis-à-vis these industries has been regularised by statutory powers. In saying this I am merely dotting the i's and crossing the t's of the Select Committee on the Nationalised Industries.
The final point I would make relates to research, first on the generating side of the electricity industry. The Generating Board's expenditure on research is in the region of about 1 per cent. of their turnover, which I notice is about the figure suggested as the broad objective for the Iron and Steel Industry, by a special committee on research in that industry. I know it is a different industry, but I should have thought that this might be just about right when one takes into consideration the fact that there is being spent by the manufacturing industry £65 million a year, which is the equivalent of 4 per cent. on the total turnover. So I should have thought that 1 per cent. is not too far out. On the other hand, it seems to me that the gas industry, considering the problems facing it on the supply of its raw material, might very well step up its research, particularly in relation to the use of our sole indigenous raw material, coal. Quite clearly, in this the National Coal Board must co-operate to the full, otherwise it will see the use of coal in the gas industry being squeezed out by oil, natural gas and the like, as was mentioned to some extent by the noble Lord, Lord Derwent, in his opening speech.
I believe, too, that research into the underground storage of gas is extremely important, and in this connection I understand that legislation is urgently required. Underground storage and the mass production of gas, feeding into a national gas grid, may well require a change in the structure of the gas industry so that production and feeding into
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the grid may take place on a national rather than a regional basis. Of course, the gas industry is highly regionalised, and some change of structure might be necessary to enable this mass production to be achieved. I think that a thorough study of all this demands the attention of the Government.
When I was asked to look at this Bill I wondered what I could find to say. The more I studied the Reports upon these industries the more I wondered what I could leave out. And when I look at the clock I realise that there are some things that I have said that, in the interests of the comfort of the House, I ought to have left out. But I have not touched on many vital matters, such as the relationship of the Generating Board with the Atomic Energy Authority and the manufacturing firms. I must admit that I rather expected to see the noble Lord, Lord Coleraine, in his place to-day, firing his broadsides at the Government on this point, as he did not so long ago in a debate. But this Bill provides the necessary capital for these industries. I believe it is a worthwhile Bill. I believe it is a Bill which will provide the money for industries that I consider reasonably well managed and efficient, and in the national interest, and I certainly support the Bill.
5.16 p.m.
LORD DERWENT: My Lords, I thank all noble Lords who have spoken for the support they have given to this Bill. As the noble Lord, Lord Lindgren, said when he started, much of what he had to say was not really directly applicable to this Bill; and the other two noble Lords have followed his example. May I say that I am glad they did. I quite agree with noble Lords that these Reports have not been properly debated. We have not been able to debate them to-day. But I am glad they raised the questions that they have in fact raised. I do not know that I can answer all their points, but I shall do my best to answer at any rate some of them.
The first question that was put by the noble Lord, Lord Lindgren, was: what is average cold weather? That is quite easy: it is weather that is not exceptionally cold. I want to put right one thing that the noble Lord said. He said that I accused the electricity industry of being responsible for breakdowns last

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year—it was not quite in those words, I really did not say that, and I would not say it. What I said was that the Chairman of the Electricity Council has said they had made an error in having no major survey of domestic demands in the particular years he mentioned. That, I think, is true, and I think it should be known; and it should also be known that we believe their method of estimating now to be a much more efficient one than hitherto.
Then there was the question raised by the noble Lord, Lord Lindgren, about profits being ploughed back into capital expenditure. I do not think I shall go into that now. I think the noble Lord, Lord Champion, had better argue it out with the noble Lord, Lord Lindgren. But there is quite another side to that question, and, considering the amount of money available, it speeds up the provision of new plant which is to the great benefit of existing consumers. If plant is allowed to run down, the cost of either gas or electricity will go up because of inefficiency. There is not only one side to the question, but I will not expand on that.
There was the important question of the noble Lord, Lord Lindgren, with regard to whether there could, or might, be differentiation of tariffs between urban and rural areas. This is a question for the Boards. The Boards are opposed to having differentiation. Their urban and rural networks are fully integrated, and differential tariffs would be bound to lead to trouble and ill will because of anomalies on the boundaries between the zones where there are different charges. My right honourable friend accepts in full their view that this is undesirable.
My noble friend Lord Merrivale asked a whole series of questions which were highly technical, and I do not think they were all particularly applicable to this Bill. However, he mentioned one or two points on which I should like to say a word. One concerned the siting of power stations and the kind of fuel they use. This depends on the circumstances. If, for instance, a power station is sited near to an oil refinery, then the station will use oil. That is quite obvious, for purely economic reasons. How one conveys the power or the fuel depends on the locality; and in so far as the Minis-
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ter is involved at all, and, indeed, so far as the Boards are concerned, it must be a question of which is the most economic method of handling the matter. It might be right in one case to use the fuel at hand, and in another case to move the power. These matters are very much under consideration both by the Boards and by the Ministry, and discussions are going on all the time.
The more technical aspect of his question concerned piped movements of fuel. My best answer, and certainly the easiest, is to refer your Lordships to the Central Electricity Generating Board Report and Accounts, 1962–63. There are two paragraphs which I should like to read. The first one, paragraph 185, deals with the hydraulic transport of coal and reads as follows:
"The experimental 2,000 ft. pipe-line at Marchwood provided design information for relatively short-distance hydraulic transport of coal from pithead to power station."
—this deals with my noble friend's question about the short-haul. Then the paragraph continues:
"A 5-in. diameter pipe-line, 2,000 yards long, between Walton colliery and Wakefield power station in the North-Eastern Region is being constructed for research and operational use; it is expected to convey up to 1,000 tons of coal a day. In the same region, the relative rates of wear for various metals are being measured in laboratory work; these measurements will be correlated with the results obtained using the Walton-Wakefield pipe-line, and then used to predict the life of pipe-line materials. Theoretical and experimental research is also in progress to see whether pumping costs can be reduced by the use of higher density mixtures."
LORD MERRIVALE: My Lords, I was aware of that information. I was asking merely whether the programme of research could be speeded up, so that it could be implemented not about 1970 but, possibly, 1968.
LORD DERWENT: At this experimental stage, when one has no experimental decision, it is a little difficult to say how quickly one can move thereafter. That is the important thing. Until we have gone further with the experimental work, we cannot say whether it can be speeded up.
The other particular point raised by my noble friend was whether we considered the 14 per cent. reserve margin

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adequate. To the best of our knowledge, we believe that it should be adequate. It allows for certain plant to be out of use at the most critical moment, as is bound to happen. That reserve will be watched, but we hope that it is all right.
Various questions were raised by the noble Lord, Lord Champion, which I have, to some extent, answered already, in replying to the noble Lord, Lord Lindgren. I am most grateful to the noble Lord, Lord Champion, for his general support. I should like to add that there are continual experiments going on (and this has nothing to do with the Government) as between the Railways Board and the various fuel industries in regard to the different forms of trucks, containers and so on, including experiments at the moment with continuously moving trucks—that is to say, trucks which never halt. This is a matter in which the various Boards are working together closely and doing much experimental work.
Both noble Lords opposite complained about Government interference, and the noble Lord, Lord Champion, explained in more detail, I think, what they meant. During the early years when these new nationalised industries started we had not found the right connection between Government and nationalised industries. One must remember that the Government of to-day not only watches the expenditure of money but is also a guardian, in the overall fuel policy, of the public. That has always been one of the difficulties. I would point out to the noble Lord, Lord Champion, that the examples he gave of ministerial interference in electricity and gas in regard to prices and tariffs and so on belonged to a period before the Government's policy of agreeing the financial objectives with the industry. Government policy was altered, and the Government then decided that they must agree with the industries' future objectives, particularly from the financial point of view.
LORD CHAMPION: My Lords, would the noble Lord agree that the White Paper to which he refers merely gave in words to Parliament what had been the existing policy for quite a long time before? I am going by replies given to the Select Committee on the Nationalised Industries by Ministry officials and others.
LORD DERWENT: That had been what was going on, I am not denying it. Government policy was altered some time ago and the financial objectives have been agreed to by noble Lords, and they will involve increases in prices. It is part of the understanding that where prices have to be increased of necessity, the industry should be free to do so. I hope that makes the present position quite clear, whatever happened in the past.
The noble Lord, Lord Champion, raised the question of purchase tax on storage heaters. The purchase tax was taken off last September.
LORD CHAMPION: I thought it was.
LORD DERWENT: Nearly half of the gas industry's total expenditure on research is directed to coal-based processes. I think there is not the slightest doubt that coal will be the main form of material used by the gas industry for a great many years.
The proposals to modernise the structure of the gas industry will in due course be put before Parliament. I cannot say very much at the moment as to whether the question of underground storage of gas will involve legislation. I doubt whether legislation will be possible in this Parliament. I can go so far as to say that the necessary legislation—nobody has seen it except the civil servants who are working on it—is being prepared, so that when we have time to go ahead something should be ready. I hope I have answered all the main questions and that your Lordships will now give the Bill a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

PLANT VARIETIES AND SEEDS BILL [H.L.]
5.29 p.m.
Order of the Day read for receiving the Report of Amendments.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (LORD ST. OSWALD): My Lords, I beg to move that this Report be now received. I should like, with your Lordships' permission, to deal together with the first group of Amendments which arise in consequence of the Amendments to which my noble friend Lord Amherst of Hackney spoke during the Committee stage, and which he withdrew upon my promise to meet his wishes so far as I could. This group includes Amendments Nos. 1, 2, 3, 4 and the first part of No. 5.
The purpose of my noble friend's Amendment was to permit breeders to make contractual arrangements for the multiplication of the basic seed or other propagating material of their new varieties before a plant breeders' rights scheme comes into operation without thereby disqualifying the particular variety for protection because some of these contracts involve a sale between the breeder and the contract grower. As I explained to the Committee, it was never our intention that the bulking-up of varieties under contract should be penalised in this way, and, with welcome support from the other side of your Lordships' House, I undertook to introduce a suitable Government amendment.
My noble friend's Amendment related solely to sales in the period before a scheme comes into force. This is dealt with in paragraph 2(1) of Part II of Schedule 2, page 41 of the Bill. The bulking-up period may however run on past this and it seems necessary also to deal with the period from the date of the scheme and up to the date of application for rights, involving an amendment to paragraph 2(2) as well.
The main effect of this group of Amendments is therefore to enable breeders to enter into contractual arrangements for the multiplication of seed or other propagating material of their new variety both before the introduction of a scheme and, once a scheme has been made, before application for
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grant of rights, without thereby making the variety ineligible for grant. At the same time, we must ensure that the concession is not used as a loophole for the commercial sale of a variety under the guise of multiplication. That is evidently what my noble friend Lord Amherst of Hackney had in mind in providing that the material grown under contract must be for re-sale or return to the person entitled to apply for rights. As drafted, however, his Amendment did not limit the concession to the two parties properly concerned—breeder and contract grower—nor did it require that the whole of the product of the multiplication and any surplus original seed should all be returned to the breeder. These points, with which I am sure my noble friend will agree, are covered by the Government Amendments.
To turn now to the Order Paper, the two Amendments to Schedule 1 make it clear that sales in the course of bulking-up in the period between application for and grant of rights will not prevent breeders from enjoying the benefits of a protective direction under the Schedule. This is a form of temporary protection for a breeder while his application is pending, and it gives him a remedy against anyone who might pirate his variety while the Controller is examining it. To obtain this limited protection the breeder has to undertake not to exploit the variety himself until rights are granted. What these Amendments do, in effect, is to say that sales in the course of bulking up under contract will not involve a breech of this undertaking.
Apart from the drafting changes in lines 6 and 11 on page 41, the proposed new paragraph (4) to Schedule 2 is the main Amendment on contract growing for multiplication purposes, and I have already explained its purpose. The remaining Amendment introduces a new sub-paragraph (5) which replaces subparagraph (4) of the printed Bill and introduces some new matter which I will explain to your Lordships. Subparagraph (5) will enable a breeder to dispose of material of his plant variety which becomes surplus to his requirements in the course of trials or at the multiplication stage, as well as during the course of his breeding programme which is already covered by the Bill, always provided that he disposes of the

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surplus for non-reproductive purposes. He will have to include information about this on his form of application for rights. For example, surplus cereal seed could not be sold as seed—this would invalidate an application for rights—but would have to be sent to the mill as consumption material, or sold as animal feed. Seed potatoes would need to be sold as ware or for fodder. These will be relatively small quantities of material and no difficulty is foreseen in breeders making suitable arrangements. My noble friend Lord Amherst of Hackney is unfortunately unable to be present this afternoon, as he informed me, but I have reason to believe that he is satisfied with the Amendment as drafted. I beg to move.
Moved, That the Report be now received.—(Lord St. Oswald.)
On Question, Motion agreed to: Report of Amendments received accordingly.
Schedule 1 [Protection of Applicant for Rights while Application is Pending]:
LORD ST. OSWALD: My Lords, I beg to move.
Amendment moved—
Page 38, line 11, after ("that") insert ("subject to the exceptions in the next following sub-paragraph,").—(Lord St. Oswald.)
On Question, Amendment agreed to.
LORD ST. OSWALD: My Lords, I beg to move.
Amendment moved—
Page 38, line 18, at end insert—
("(3) An undertaking under this paragraph shall not prevent the applicant from making any offer for sale or sale which in the period before the application would be permitted by sub-paragraphs (3), (4) or (5) of paragraph 2 of Part II of Schedule 2 to this Act, or the exposure for sale of material where an offer for sale of that material would be so permitted.").—(Lord St. Oswald.)
On Question, Amendment agreed to.
Schedule 2 [Priorities between applicants for rights]:
LORD ST. OSWALD: My Lords, I beg to move Amendment No. 3.
Amendment moved—
Page 41, line 6, leave out ("paragraph") and insert ("Schedule").—(Lord St. Oswald.)
On Question, Amendment agreed to.
LORD ST. OSWALD LORD ST. OSWALD moved, in paragraph 2, to leave out sub-paragraph (4) and to insert instead:
("(4) Where an applicant makes, or proposes to make, arrangements under which some other person uses reproductive material of the plant variety under the control of the applicant for the purpose of increasing the applicant's stock, or of carrying out tests or trials, and under which the whole of the material produced, directly or indirectly, from that reproductive material, and any unused reproductive material, becomes or remains the property of the applicant, the said sub-paragraphs (1) and (2) shall not apply—

(a) to a sale or offer for sale of the reproductive material by the applicant to any such other person as part of such arrangements, or

(b) to a sale by the other person to the applicant of the material produced, directly or indirectly, from that reproductive material.

(5) The said sub-paragraphs (1) and (2) shall not apply to an offer for sale or sale of material, not being reproductive material, which, having been produced in the course of—

(a) the breeding of the plant variety, or

(b) increasing the applicant's stock of material of the plant variety, or carrying out tests or trials of the plant variety,

has been found to be in excess of what was required for those purposes.
Transitory provisions for period ending 11 th May 1965
3.—(1) Where an application in the form prescribed for the purposes of this Schedule by regulations under section 9 of this Act is made at a time not later than 11th May 1965, and the applicant does not ask for a protective direction, sub-paragraphs (1) and (2) of the last foregoing paragraph shall not apply to any offer for sale or sale in the period beginning with 12th November 1963 and ending with that time if the Controller is satisfied that the applicant took all steps reasonably open to him to ensure that any person to whom material of the plant variety has been offered or sold during the said period has been informed in writing that an application for a grant of plant breeders' rights may be made in respect of the variety.
(2) Where an application is allowed by virtue of this paragraph, section 7(2) of this Act shall not apply to any compulsory licence granted as respects the plant variety to which the application relates.")
The noble Lord said: My Lords, if I may I will now turn to the second part of Amendment 5 headed "Transitory provisions for period ending 11th May, 1965". This is designed to meet another point raised by my noble friend Lord Amherst of Hackney during the Committee stage of the Bill. He noted that there might well be a hiatus between the publication of the Bill on November 12 last

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and the introduction of schemes for the various species of plants during which breeders might see a commercial advantage in holding back their new varieties from the market, since by releasing them they would be certain to lose all opportunity of obtaining protection under the Bill as it stood. In Committee I expressed sympathy with my noble friend's desire to overcome this difficulty, in the interests both of the breeders and of the farmers who need these improved new varieties, and the new paragraph 3 is designed to meet the point he had in mind by amending the rules about prior sales.
These rules are in Part II of Schedule 2. As the Bill stands, any sale or offer for sale of plant material of a variety made before a scheme for the species concerned comes into operation would rule out that variety from a subsequent grant of rights. So also would sales made in the United Kingdom, with the breeder's consent, between the date of operation of the scheme and the date the breeder makes his application for rights. What the Amendment does is to enable the breeder, without forfeiting his claim to rights, to sell material of his variety—seed and so forth—during a limited period before the the scheme for the species comes into force and before he makes his application for rights.
The concession granted by this Amendment is purely temporary, and it will be available only for varieties for which the breeders submit their applications for rights by May 11, 1965, which is eighteen months after the publication of the Bill on November 12 last. As noble Lords will appreciate, no application for rights can be made until a scheme for the species concerned is in operation, so that the concession is, in practice, limited to sales of varieties covered by any schemes which Ministers bring into operation before the end of the eighteen months' period.
I acknowledge at once that the transitional period of eighteen months which we have chosen to include in the Amendment is arbitrary, as any period of this kind must be. I hope, however, that your Lordships will agree that eighteen months from the publication of the Bill is about right and will meet the reasonable needs of breeders who, although now
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ready, or almost ready, to put their new varieties on the market, are uncertain whether to do so. As regards the number of schemes which might be made before the end of the concession period, naturally at this stage no promises can be made, but it seems reasonable to hope that it will prove possible to make and bring into operation a number of schemes, possibly more than the minimum of five which we must have before the Government can ratify the International Convention. The first schemes might include wheat, barley, oats, potatoes and roses provided no unforeseen difficulties arise. My Lords, there is much spadework to be done before any scheme can be made, and I would particularly ask the plant breeders not to treat the hopes I have expressed for the future as a firm forecast. We shall be doing our best.
I have explained the main purport of the new paragraph 3, but I should also point out that the Amendment includes certain safeguards for the users of new varieties affected by the prior marketing concession. In the first place, the breeder who takes advantage of the concession must warn purchasers that he may later be making an application for the grant of rights in his variety. Such a warning will put the buyer on notice that at a later stage, when he may wish to reproduce the variety for further resale, he may be called upon to seek a licence from the breeder and to pay him a royalty.
A further safeguard is in sub-paragraph (2) of the new paragraph 3, and concerns Clause 7(2) of the Bill. This says that, if a scheme so provides, compulsory licences issued by the Controller should not operate for some fixed period from the date of grant of rights in any variety covered by the scheme. It would seem quite wrong, however, that a breeder who takes advantage of the prior marketing concession should be put in a position where he could during this period refuse licences to would-be growers and sellers without the risk of his refusal being overruled by the Controller. Sub-paragraph (2) of the Amendment deals with this by an appropriate extension of the Controller's compulsory licensing powers. The third safeguard which the Government have thought it necessary to incorporate

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in the Amendment is to ensure that a breeder who markets in the concession period should not later on, when he makes his application for rights, be able to cease marketing and put a stop to sales by his earlier customers by getting the Controller to issue a protective direction under Schedule 1.
My Lords, this is a very complicated subject, and I am afraid I have taken up a lot of your Lordships' time, but I should like to conclude my remarks on the new paragraph 3 by claiming that the prior marketing concession, originally suggested in a different form by my noble friend Lord Amherst of Hackney and incorporated with certain safeguards in the new paragraphs, strikes a reasonable balance between the legitimate hopes of the plant breeders and the need of the agricultural industry for improved new varieties. I beg to move.
Amendment moved—
Page 41, line 29, leave out sub-paragraph (4) and insert the said new sub-paragraph and paragraph.—(Lord St. Oswald.)
On Question, Amendment agreed to.

STAMP TRADING
5.43 p.m.
LORD SHEPHERD LORD SHEPHERD rose to ask Her Majesty's Government, following the first major recommendation of the Consumer Council relating to Stamp Trading, whether they are now prepared to support legislation to implement the recommendation. The noble Lord said: My Lords, I beg to ask the Government the Question that stands in my name on the Order Paper, which is in identical terms to a Question I asked on December 5, together with another on the same subject. In view of the unsatisfactory reply I then received, I gave notice that I proposed to raise the matter as soon as possible. My Lords, I would first of all make it clear that I do not wish to enter into the controversy between those concerns who sell retail with the use of stamps and those other concerns who are opposed to it. I wish to raise a very narrow issue, in which I believe the position of the consumer is directly involved.
Before proceeding in this matter I would ask the Minister to take note of
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the reply that the noble and learned Lord the Lord Chancellor gave me in answer to a supplementary question which arose on the first Question that I put on December 5. The noble and learned Lord the Lord Chancellor said [OFFICIAL. REPORT, Vol. 253 (No. 14), col. 1012]:
"… I do not think that there is any ministerial responsibility whatsoever for the private arrangements entered into by companies with other individuals; and their rights must depend on the terms of the arrangements they enter into."
My Lords, I was at that stage asking what were the legal liabilities of a stamp company to the stamp holder, the stamp collector. I believe that there is a ministerial responsibility directly arising when, in the view of the Minister and the Government, there is a possibility that a consumer may have a fraud committed upon him.
If the Lord Chancellor cannot accept that there is a ministerial responsibility to intervene on behalf of the consumer, I would draw his attention, and the attention of the noble Lord, Lord Drumalbyn, particularly, to the Hire-Purchase (No. 2) Bill, for which the noble Lord opposite is responsible. In Clause 12 the Government are clearly taking a line that, in certain parts of a contract between the consumer—that is, the hirer—and the hire-purchase company, there may be declared void certain provisions in a contract relating to the death of the hirer. Therefore I would say that there is clear evidence, not only in this Bill but in other legislation, that a ministerial responsibility is accepted.
The main point that I wish to make this evening is to endeavour to establish what are the rights of stamp holders or stamp collectors. I seek to establish that there is a considerable possibility that fraud may be committed upon the consumer, and I would suggest to the Minister opposite that, in quite recent years, the Government have themselves produced legislation where they have felt that fraud was possible. I would cite to the noble Lord opposite the Prevention of Fraud (Investments) Act, 1958, which covered the unit trusts—those companies who were taking in advance money for investment. The Government then thought it right to produce legislation.
My Lords, I believe that we must recognise that the system of free gifts is

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not new. Manufacturers have for many years used free gifts as a sales gimmick and as an advertising effort. I can well remember, as a youngster, collecting cigarette cards. Then there were cigarette vouchers, for which one could get quite useful gifts, such as cutlery; and in recent years the detergent companies and the cereal firms have all been giving different forms of free gifts—plastic flowers and plastic toys. These were quite acceptable to the public, although there was criticism from different parties as to whether it would not be better for the companies to reduce their prices rather than to include these quite useless gimmicks in their packets: but at least it was quite legal.
I would suggest, however, that there is a considerable difference between the giving of stamps and the giving of free gifts by a manufacturer. In the latter case, the manufacturer is the sole person who will suffer if he fails to meet the offer which he has made. If he were to produce shoddy gifts, or gifts which did not match up to what was being offered, the customer could soon bring a very heavy penalty upon him by withdrawing her support from that manufactured line. But in the case of stamp trading we have a third party entering the scene—a party over which there is no control, either by the manufacturer or by the retailer. I suggest to the House that a retailer could be put into a very dangerous position with his customers if the stamp company decided to withdraw from, or break, their contract with that retailer. We might well then find customers who had obtained from a retailer stamps which were not sufficient in number to be redeemed for a worthwhile gift; and, because of the broken contract—and perhaps because there is no further outlet for those particular stamps and no means of continuing the collection—these stamps would have become completely worthless.
I would ask noble Lords to be clear in their own minds exactly what stamps are. They are, in fact, as it is claimed, merely a sales advertising gimmick. Perhaps in the minds of the stamp trading companies that may be so, although I doubt it. It is perfectly clear, if you look at many of the advertisements of retailers—and I have one here—that these stamps are most definitely being offered as a discount. I do not think
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there is any question about it; in the minds of the consumers the stamps are being given as a discount.
I am sure most of your Lordships are aware of the way in which this business is transacted. We have the case of the stamp company making a contract with the retailer and making the retailer perhaps the sole distributor of stamps within his district. The retailer obligates himself for the period of the contract to buy stamps according to the value of his turnover—and I believe a figure of £10 million to £12 million has been given for 1963. I have seen one contract between a stamp company and a retailer. There was only one clause in it which dealt with redemption; and, as I saw it, the only obligation that the stamp company undertook was to redeem the stamps according to the terms and conditions in the stamp collector's book. This point I will come back to in a moment.
The stamp company makes its profits by buying gifts at a discount and also through those stamps which are not redeemed. This is a figure which is hard to assess; I believe it is close to about 60 per cent., and this is part and parcel of the business. But what really concerns me is the use they make of the money they receive perhaps four to six months in advance of their being called upon to redeem it. In the contract that I saw no protection was called for by the retailer from the stamp company that the stamp company should ensure that when the funds they were collecting on the stamps were called to be redeemed there were funds available to meet that redemption. So far as I could see, there was no protection there whatsoever. When I asked the Government what was the legal liability of stamp trading companies to honour the stamps, the noble and learned Lord the Lord Chancellor replied—I think, quite rightly—as follows [OFFICIAL REPORT, Vol. 253 (No. 14), col. 1011]:
"The legal liability of stamp trading companies to the recipients of stamps will depend in each case first on whether it can be said that the arrangements made constitute a contract with the customer, and, if they do, upon the terms of the contract."
The contract that I saw was clearly one between the retailer and the stamp company. I do not believe it was possible under that contract for a consumer at any time to make a claim on the

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stamp company. Therefore, I should have thought that the real answer to my first question was that there was no legal liability on the stamp company to redeem the stamps. I would ask the House to consider the terms that are on the collector's book; and perhaps noble Lords may have seen some of them. This book is the only document that is in the possession of the stamp collector.
I looked at one the other day, and it was of a company considered to be in the first flight of stamp companies. The first item in it was this: that these stamps merely record the support that the customer has given to the licenceholder—that is, the retailer. It is merely a record of that support. Secondly—and this is the point I made to the noble and learned Lord who sits on the Woolsack—the title to the stamps remains solely with the stamp company. The title to the stamps never passes from the stamp company either to the retailer or to the consumer or the customer. Thirdly, the terms could be varied without notice; and the number of stamps or books required for a particular gift that appeared in the advertised gift catalogue could be varied without notice. In other words, a Ronson lighter that is of the value of 6,000 stamps could, without notice, be increased to 10,000 or 12,000, and the consumer or customer would have no right whatsoever to complain. In fact, the, only right that the stamp collector has—and it is clearly stated in the book—is to paste the stamps into the book. That is his only right.
When one thinks of this customer I have spoken about who wanted to get a Ronson lighter for 6,000 stamps, it may seem rather hard when this represents £165 worth of purchases. If you have saved stamps on purchases to the value of £165, I should have thought you would expect a little more title than you have. Therefore, I would ask the Government, in the light of these facts—and they must be as much aware of them as I am and as is anyone who can read them intelligently—what are the value of these stamps at present? What can be the claim? May I illustrate the danger I see in this matter. These companies are selling stamps for cash. The retailer in many circumstances is being merely blackmailed—if I can use
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that word—into going into the stamp business; and this is particularly so if his competitors are already in it. And this blackmail is stronger upon the smaller retailer who already has enough difficulty in trading against the big combines. The stamp company has collected large sums of money.
I do not wish to impute any base motives to any of the existing stamp companies, but perhaps I could illustrate the matter in this way. Let us imagine two of our number, Members of this Chamber with the "gift of the gab", going out and selling stamps to a number of retailers on this kind of contract. Perhaps in six months we could collect £50,000 or £60,000 in cash. It is possible. When the claim for redemption appears we either uplift the number of stamps required for our gifts—and we should be free to do it according to the terms—or we could go into voluntary liquidation. Going into voluntary liquidation, we could honour those debts that we had, but we should not be called upon to honour the stamps because the stamps are still ours, as a company, because we have retained the title to them.
LORD HAWKE: My Lords, in case we then skipped to America, is this an extraditable offence or not?
LORD SHEPHERD: My Lords, I think we should ask the noble and learned Lord who sits on the Woolsack. But I do not believe this would be an offence.
THE LORD CHANCELLOR: My Lords, perhaps I could intervene and be of some help. I have not yet heard the noble Lord say that it was a criminal offence. You can only connect extradition with a criminal offence. Going into liquidation is not criminal.
LORD HAWKE: My Lords, I am not suggesting going into liquidation. I am suggesting "skipping" without giving anything.
LORD SHEPHERD: My Lords, I hoped that I had made myself clear. A company could collect this money and fail to redeem the stamps, yet they would not have committed a criminal offence, or even a civil offence, because what they are doing is within the terms in the collector's book.

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This is the problem with which I wish to confront the Government. I do not impute any base motives to any of the existing companies, a number of which are substantial concerns. But last year there were three major organisations and since stamps have become popular, the figure has mushroomed to about 50. All of them are private companies, the majority having a minimum capital. Therefore, I suggest that if they have the ability to "put it across", it would not be difficult to make a "killing" without calling the law upon them. Another point is that most of these companies are of external origin—American or Canadian.
I would ask the Government whether they would consider not only legislation to put into effect the recommendation of the Consumer Council, that the value of stamps should be printed upon them, but also legislation requiring stamp companies to be licensed, and that the Government should, by Order, lay down provisions to ensure that these companies make available funds to meet the redemption of the stamps they issue. I think that the Government could well accept this suggestion. They have included the provisions I suggest in the Prevention of Fraud (investments) Act, 1958, and there the Government were legislating to deal with responsible unit trust companies. If the Government were to accept the need for the protection of the consumers, it would become essential that the value of the stamps should be clearly defined. Unless there is a value on the stamps, it will not be possible for a consumer at any time to make a legitimate claim on a stamp company.
I have put this as a very narrow issue. I hope that the noble Lord who is going to reply will not say that it is hypothetical. I understand that what I fear has not so far taken place, but there is the possibility and there is concern about it. These companies are increasing rapidly, and I believe that the Government would do well to pass legislation ensuring that they operate in a responsible way. I believe that major companies, like Green Shield Stamps, would welcome such legislation, just as the hire-purchase companies accepted and supported legislation to deal with
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those hire-purchase companies who were being reported for malpractices. Knowing the dangers, I think that the Government and your Lordships' House should not stand aside, but should take action as soon as possible. I beg to ask the Question on the Order Paper.
6.5 p.m.
LORD AIREDALE: My Lords, I should like to support what the noble Lord, Lord Shepherd, is asking for. I am conscious that all those who are waiting to speak know a great deal more about this subject that I do; therefore I promise on this occasion to be extremely brief. May I first add two examples to the example of the Ronson lighter, which the noble Lord gave? You can obtain with trading stamps an Ilford Sportsman Vario Camera. It costs £12. The number of stamps needed to get this camera is 20,280. In order to get all those stamps, you have to spend £507. If you spent £507 at "the Co-op.", you would get a dividend of £25 7s. 0d. which would enable you to buy two Ilford Sportsman Vario cameras. The second example is that you can get a Black and Decker D500 electric drill, which costs £7 retail, if you get 11,232 trading stamps. To get these stamps, you have to spend £280 16s. 0d. If you spent that sum at "the Co-op.", you would then have a dividend of £14 Os. 10d., and if you did not want two electric drills, you could get one electric drill in half the time.
Whether these examples illustrate that "Co-op" dividends represent the most remarkable, abnormal value, I rather doubt; because, after all, rival retailers have succeeded in competing fairly successfully against "the Co-ops" for a great many years now. I think the conclusion to be drawn from these two examples is that one trading stamps scheme, at least, is thoroughly bad value for the consumer. The Consumer Council recommended, as the noble Lord has pointed out, that these stamps should bear their cash value and should be redeemable for cash at the option of the customer. What I think has not been very closely gone into so far is how the cash value is to be determined.
On this point, Mr. John Bloom, who I think runs two trading stamps schemes, was very quick off the mark. No sooner had the Consumer Council made their

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recommendation than Mr. John Bloom was reported as saying:
"We"—
I think that is one of his trading stamp companies—
"are now ready to declare war on rival stamp groups and champion the consumer against the anti-stamp Distributive Trades Alliance."
The Distributive Trades Alliance includes the following: Home and Colonial Stores, Maypole, Lipton's, Boot's, British Home Stores, the House of Fraser, the International Stores, the John Lewis Partnership, Mac Fisheries, Sainsbury's and W. H. Smith. If I wanted a champion to protect me against that array, he would have to be some champion, indeed. I wonder whether Mr. John Bloom is up to this task.
Mr. John Bloom then goes on to announce his cash scheme. He says that Supa Gold savings books will be exchangeable for about 10s. or a gift worth between £1 or £1 10s. at normal retail prices. That sounds to me a little "airy-fairy", if I may say so. If we are to have values for trading stamps, I would suggest that we need something rather more precise. I should have thought the only satisfactory value was the price paid for the stamps by the retailer, because he might otherwise just as well hand the discount in money, or in savings stamps, to his own customers, without introducing the stamp scheme firm.
That is all I wish to say. I only hope that when the Minister winds up this debate he will not fall back upon that argument, which is another of the dicta of Mr. John Bloom, that "the public are not idiots". I believe that that is rather an absurd argument. It could be used to resist legislation to stop share-pushing. Of course the public are not idiots. But that does not mean that they do not need some measure of protection against new-fangled schemes of one kind and another. I very much hope that the Government will look sympathetically at the recommendation of the Council and the subject matter of this debate which the noble Lord has just raised.
6.10 p.m.
BARONESS BURTON OF COVENTRY: My Lords, I am sure we are all grateful to my noble friend Lord Shepherd for giving us the opportunity of discussing
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this matter tonight. He asks the Government
"whether they are now prepared to support legislation to implement the recommendation"
of the Consumer Council relating to stamp trading. I should like—I think it probably would help—just to get on the Record what are these recommendations that we are now discussing. I quote from The Times of November 30, which said that the Consumer Council had stated:
"To enable consumers to know what advantage, if any, they are obtaining from the retailer giving stamps, the council considers that the following conditions should be complied with: (a) each stamp or page should be marked with its cash value; (b) goods in catalogues and the redemption centres should be clearly priced in cash as well as in stamps; (c) stamps should be redeemable for cash at the customer's option. The Council proposes to explore, with other interests concerned, by what means, including legislation, these requirements can be achieved."
In discussing trading stamps tonight, we are talking about something that was actually being used before the First World War; and so, as the House obviously knows from that, trading stamps are not new. What is new is the extent of their impact on grocery, plus the fact that they have now been taken up by some of the bigger traders. If your Lordships have not already seen it, I would commend as worth reading an article on stamp trading in the December issue of Marketing, which is the Journal of the Institute of Marketing and Sales Management. It seemed to me very adequate and completely unbiased.
Obviously, there are wide differences of opinion as to the merits and demerits of stamp trading. There is little doubt that everyone, in this House and outside, could cite actual examples which would be correct and would prove either side of the argument. But, amid all these pros and cons, one thing is certain: that the amount of publicity obtained by editorial coverage throughout the Press would have cost trading stamp companies hundreds of thousands of pounds—if they could have bought it. And, of course, as we know, in this country they could not have bought it. I would emphasise that I am speaking of editorial coverage, and not of paid advertisements.
My Lords, many well-informed people to whom I have talked about this matter,

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people with no axe to grind at all, believe that this whole affair is really a struggle for outright leadership in the British food market. I have heard that from a great many sources, and it seems to me that there is a good deal in it. I have said before that I think this is a selling gimmick. As we all know, in recent years we have had a good many of these. We have had free gifts, offers of "two for one", and giant packets and plastic flowers. Some weeks ago I was reading an article about coupons cut from cornflakes packets, and until I read that article I was unaware (I do not know whether your Lordships are) that more knives, forks and spoons are bought in Britain to-day with coupons cut from cornflakes packets than ever go through the shops. I understand that this fact is accepted in Sheffield, which, as we all know, is the home of the cutlery business. If we leave on one side for the moment the huge purchases of the stamp companies, I think this one fact that I have quoted helps us to realise the size and importance which the "premium" trade is beginning to assume in quite substantial parts of our economy.
I should like to quote the final short paragraph from an article which appeared in the Sunday Times on November 17 last. It said:
"Some people, of course, regard premiums as a perfect pest. But ever since Which?, to its own surprise, found there was thicker plate on cornflakes premium spoons than there was on most of the conventional variety, the movement has shown little signs of looking back—let alone of self-liquidating itself."
To be quite honest, my Lords, these offers do not attract me—quite the reverse; I have got tired of them coming through my letter box. But they do attract a good many people. I have mentioned premiums because I think these premium offers are not far removed from stamp trading, and are, I believe, allied to the principle of getting something for nothing, or getting a little more than one otherwise would get.
That brings me to the first point I want to make on the question of stamps. I believe—and nothing will shake me in this belief—that the housewife stands to gain: she must, my Lords, if she is a good shopper. With due deference to the noble Lord, Lord Airedale,
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women are not stupid. I do not mean that he said they were, but he said he hoped that this view would not be advanced as an argument for not doing anything. As I say, women who do the shopping are not stupid; and neither are men who do the shopping. Those of us who do our own shopping, week by week, obviously know prices. I know if I go into a shop whether something has gone up by a ½d., 1d. or 2d. from the previous week. I must know if I go there each week. If we find that prices have gone up, obviously it is up to us to decide whether or not we continue to shop at that shop. If they have not gone up, and stamps are given, then we must have gained. Stamps do not appeal to me—I have said that on many occasions—but I feel that there is incontrovertible proof that many shoppers like them.
I have said before, and I still maintain, that the way to fight trading stamps is with first-class quality, first-class service and good prices. Perhaps I can do a little advertising here, as it is not for me. I do a good deal of my shopping at the organisation run by my noble friend Lord Sainsbury; and, equally, I shop a good deal at the organisation run by the noble Lord, Lord Marks of Broughton, who sits on the other side of the House. I think that the value for money offered by these two organisations would be proof against any customer loss due to trading stamps; and I should like to say to my noble friend Lord Sainsbury that nothing would induce me to leave his stores to go elsewhere to get trading stamps. But what I deplore is the stoppage of supplies to retailers from the opposing camps in this battle, because this can only harm the shopper and restrict choice.
That brings me to my second point, resale price maintenance. I should like to say to the Minister (though I hope it is unnecessary) that it is not the slightest use the Government or anyone else saving that resale price maintenance and trading stamps are not connected. Suppliers have been withholding supplies on the basis of resale price maintenance, declaring that the giving of trading stamps with price maintained goods is selling below the agreed price. I believe that resale price maintenance should go, as do most people, including, I believe, the

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Board of Trade; but I would add a proviso. As I said on November 21 last in this House [OFFICIAL REPORT, Vol. 253 (No. 6), col. 517]:
"… any rule either for or against resale price maintenance would have to make provision for exceptional trades so that either way each case would be treated on its merits."
I do not know whether the Minister, when he comes to reply to-night, will give us any indication of the attitude of the Government on this matter, or whether we have to wait until January 17, when the Bill comes up in another place. I would assure him that we are all, in this House and outside, anxiously awaiting the decision which the Government have taken in this matter, and hoping that the kites that have been flown indicate a change of heart in public, anyway.
With that I come to the third point on this matter. With the abolition of resale price maintenance, I think the trading stamps should be made encashable. I would suggest that customers should have an option of cash or goods. I took note of what the noble Lord, Lord Airedale, said, but it is obvious to us all that the cash value must be less than that of the goods, because the merchandise is bought by bulk purchase in vast quantities wholesale. I think that has to be faced. What I thought was interesting was that in the United States, in those States where stamps are encashable, only 2 per cent. are redeemed for cash. That seemed to me a most interesting pointer. I do not know about the rest of your Lordships, but I do not hold very strong views about whether the goods in the stamp companies' catalogues should be marked for cash as well as for numbers of stamps. I believe that shoppers should keep a watchful eye to see that the goods in the catalogue are good merchandise. Branded merchandise will be known for its prices by most shoppers, and at the moment I do not think that I should be prepared to go to battle on that particular issue.
We must be fair, and I am sure we all agree that it is not for us to tell people what they should or should not collect. On the point of being fair, if we secure the abolition of resale price maintenances so that those retailers who wish to do so may legally lower prices on their price maintained goods, and if trading stamps are made encashable, with an option for cash or goods, then surely trading stamps should be allowed
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to take their place with other selling gimmicks, and the shopping public should be allowed to decide by its purse whether or not they are desirable. I submit to your Lordships that it is not for us to legislate either side out of existence.
In conclusion, I do not know whether he still holds these views—and I have never met him—but I remember the chairman of Pricerite saying on October 14 last that it was not his concern to question the merits or demerits of stamp trading on a theoretical level. I was struck by his last sentence, and I made a note of it. He said that what mattered was that "the customers had made it quite plain that they wanted trading stamps." From last week's Economist, that of December 7, I noted that the Motor Agents' Association estimates that 4,000 out of some 35,000 filling stations now use stamps; that Blue Star maintains that stamps were essential because it was losing business to retailers who were using them; and that its managing director, Mr. Maurice Deen, says he would not mind if stamps were prohibited but that the public wants them. I see our job in Parliament as one of ensuring, so far as is humanly possible, that the battle is a fair one.
6.25 p.m.
LORD SAINSBURY: My Lords, may I, before saying a few words on the issue raised by the Question of my noble friend Lord Shepherd, declare an interest in the matter as a retailer. May I then turn to my noble friend Lady Burton of Coventry, and thank her for her unsolicited testimonial, and then may I proceed to disagree with her? May I say, first of all, that I think it is entirely misleading to draw a comparison between ordinary sales promotion and stamps. Stamps are a permanent levy of 2½ per cent. on the total turnover of the retailer. To compare that with a free gift of some artificial flowers with a packet of detergent which is paid for by the manufacturers is, I think, misleading. Secondly, my noble friend said that the housewife will gain. Here I think it is most important to draw a distinction between short-term and long-term. The housewife may well gain in the opening stages of any stamp promotion schemes when retailers take up stamps. I do not know about Lady Burton of Coventry, but I am more

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concerned with the long-term effects of stamp trading, and not the short-term effects.
The long-term effects in the United States of America, so far as food is concerned, make it abundantly clear to anybody who studies the evidence objectively that stamp trading raises the price of food. It raises the cost of distribution, and one of the leading executives of one of the biggest and most successful supermarket chains in the United States of America told me less than a month ago that it does not stop at 2½ per cent. and it does not stop at ordinary stamp promotions. You get double stamps, you get treble stamps, and you get special stamps at certain times of the week. And you do not stop at stamps. You have a 100-dollar competition in your stores as well. The result of all this is that promotion costs among supermarket operators in America to-day are not 2 per cent., but 4 per cent.—their biggest expense after the wage bill.
As regards resale price maintenance, I agree with the noble Baroness, as I think I indicated in my maiden speech in your Lordships' House. When discussing some form of regulation and control for stamp trading, it may be worth while to survey briefly what has happened in the field of legislation in other countries. In the United States about half the States have considered legislation in the matter during recent years. As a result of this, Kansas State bans stamp trading. A number of other States have imposed various restrictions on the stamp companies, such as compulsory cash redemption, periodic auditing of their books, registration, and the requirements to keep reserves for the redemption of outstanding stamps.
Two Canadian Provinces, Alberta and Saskatchewan, have outlawed stamps. In Europe a number of countries have found that stamp trading raises public issues. Norway banned trading stamps as a form of unfair competition. In Belgium stamps must bear their money value, and cash convertibility is obligatory. In France and Germany stamp trading is greatly restricted. Stamps can be redeemed only for cash, for articles of nominal value or for the
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same article as originally purchased. Finally, in Italy stamp schemes have to be licensed by the Finance Ministry.
This brief summary of procedures in other countries shows the valid form legislation can take. It could take the form of complete abolition, as in Alberta and Saskatchewan, or Kansas in the United States, or as in Norway. In my view, a case can be made for abolition. But I do not myself feel it is justified. I feel there is a very much stronger case for control and regulations in the interests of the consumer, and legislation should cover the points made by the Consumer Council. I will not again enumerate those points, but I should like to refer to the third of their recommendations, that stamps should be redeemable for cash at the customer's option.
I think an important feature of such legislation must be a provision which bars stamp companies from fixing a substantial difference between the gift value and the cash value of the stamps. This has already been referred to by my noble friend Lord Airedale. But a certain washing-machine seller—I will not give him any further publicity—has recently acquired certain stamp companies. He has announced that he is prepared to give rather less than 50 per cent. of the gift value in cash. This is a very well known technique in North America. You make your cash redemption so low in relation to the reputed value of the gifts that you discourage as many people as possible from cash redemption.
In my view, it is necessary and desirable that a fourth point should be added to the recommendations of the Consumer Council when Parliament considers legislation on this issue. Like insurance companies, stamp companies receive money from the public in advance of the services they render. In my view, the fact that the stamp companies get the consumers' money via retailers does not affect this similarity. Stamp companies are tempted to consider this money as capital, and immobilise it by spending it on the expansion of their business. In more than one case, when stamp companies went bankrupt they were unable to redeem stamps which were outstanding and the consumers did not receive any compensation. As

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your Lordships know, insurance companies in this country have been under a legal obligation for a long time to keep sufficient reserves against their liabilities. In addition to their balance sheets, they must submit special returns to the Board of Trade to prove that their reserves are satisfactory. I think a similar legal provision is necessary as regards stamp companies. They should be subject to public control, and I suggest they should be licensed and supervised by the Board of Trade to ensure that appropriate funds are kept to meet their obligations to the public.
My Lords, my views on stamp trading are fairly well known, but they have never been better expressed than by Sir Richard Burbidge, one of the chairmen of the retail section of the recent "Productivity, the Next Five Years" conference at Eastbourne. At the final plenary session he said:
"We took the view that stamp trading diverted the attention of the consumer from the essential points of quality and value and. therefore, was not only irrelevant to good and efficient shopkeeping but detrimental to real retail productivity."
I believe that the public are entitled to certain safeguards with regard to stamp trading, and that no Government that profess to have the consumers' interest at heart can escape their responsibilities in the matter.
6.37 p.m.
THE EARL OF SANDWICH: My Lords, I will not occupy your Lordships more than a moment or two, as I speak as an ordinary member of the public without special knowledge of this stamp trading. I am very glad the noble Lord, Lord Sainsbury, has declared his interest, because I was written to this morning by somebody on the other side of the argument and asked how it was possible that a noble Lord could use his position in your Lordships' House to attack the commercial policies of his rivals. I replied that, of course, these remarks were usually accompanied by a statement expressing a commercial interest, as we have just had, and that that discounted a due percentage of the value judgments of the speaker. In any case, the opinions of the noble Lord, Lord Sainsbury, on this subject are very well known, and even if lie had not declared his personal interest this afternoon I am sure nobody would have objected.
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This debate so far (if one can call it a debate), with the exception of a brave and genial speech by the noble Baroness, Lady Burton of Coventry, has been a chorus of disapproval of the stamp trading which is going on throughout the country with, I should have thought, increasing public interest and excitement; a chorus of disapproval so characteristic of the Nonconformist conscience of the Labour Party and of the Liberal Party. They are always trying to get the Government to legislate to prevent something; to stop its being done—"Go upstairs and find out what little Tommy is doing, and stop him doing it". That is the attitude of the Labour Party in every aspect of public life. It gets increasingly irritating as time goes on. I hope that in the case of stamp trading there is going to be an absolutely smashing reply from my noble friend Lord Drumalbyn and that he is going to tell the Labour Party where they get off on this whole question.
We have heard the noble Lord, Lord Shepherd, who made three points. First of all, he said—and I think I took down his words correctly—that if more traders go broke, people will be left with un-saleable books, and in the very next sentence he said that stamps are being offered as a discount. Either of those two propositions may carry a calamity with it, but both cannot do so. They cancel each other out. His next point was that Ronson lighters—and we had another example from the noble Lord, Lord Airedale, about the price of Ilford Sportsman Cameras—could be purchased with stamps to the equivalent of £165 of purchases. This is like a sort of inverted little black baby argument. If the amount is infantile, why complain about the giant that stamp trading is becoming throughout the country?
Finally, the noble Lord, Lord Shepherd, asked for legislation, as did other speakers with the exception of the noble Baroness, Lady Burton of Coventry, who I do not think actually did, to protect poor purchasers from themselves. The noble Lord, Lord Airedale, exampled share-pushing. If by share-pushing he means issuing false prospectuses, then of course that was a principle against the natural justice of the last century, and this led in due course to its creation as an actual crime by legislation. There is nothing in stamp trading equivalent to getting people to

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buy on false prospectuses. I cannot think what he meant by share-pushing if he was not regarding it in that light.
We come finally to the noble Lord, Lord Sainsbury, himself, who says that stamps are a permanent levy of 2½ per cent. on the retailer. That may be true. But what does that show and how does it matter if it is? Any retailer is perfectly at liberty to improve his trade by adding a new percentage of some sort of another to his overheads. You can move into a better thoroughfare, install better furniture in your shop, add all sorts of cachets to your trading reputation.
LORD SAINSBURY: My Lords, I do not want to interrupt, but I think the noble Earl, on reflection, will agree that in talking of this permanent levy of 2½ per cent. on the retailer's turnover I was drawing a comparison with manufacturers' gift schemes and saying they were not truly comparable.
THE EARL OF SANDWICH: Manufacturers' gift schemes have been declared by the noble Baroness, Lady Burton of Coventry, to be quite "O.K." and I think they are myself. I remember before the war, not trading stamps, which she said were in fact in operation, but trading in cigarette cards, as I was at school. One soon acquired large numbers of cigarette cards in an album and sold them at a profit, which enabled one to buy more goods in the school shop. We have had for a very long time past cereal food cartons which can be given to our children to trade in for various benefits. Why is there this extraordinary outcry now about stamp trading?
Then the noble Lord, Lord Sainsbury, says it raises the price of food. If so, what on earth is there to fear? What does he in particular fear? His organisation, highly reputable in every way, has opened up a vast advertising campaign. I see the pages of the Evening Standard absolutely plastered with advertisements of Sainsbury's goods at certain prices—and all power to him, if he wants to do that. But why is he opening up a vast sales campaign to help his shops to maintain their level of activity, and yet comes here to your Lordships' House and gets angry and upset about the possibility that stamp
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trading is going to raise the price of food? All sorts of things can raise the price of food. Entering the Common Market would have raised the price of food. To get morally excited and disturbed about raising the price of food is a genial occupation for a straightforward politician going into a General Election campaign, but for a man who cares about the principles of public saving I should not think it is the right one to use.
LORD AIREDALE: My Lords, may I ask the noble Earl whether he would wish his food to cost more in order that he could save up 11,000 stamps and get an electric drill? If he wants that, good luck to him; but most of us think it better to have cheap food.
THE EARL OF SANDWICH: That is the noble Lord's own opinion. I prefer the view of the noble Baroness, Lady Burton of Coventry, of the aspect of millions of independent shoppers throughout the country who, although it is perhaps suggested that there may be a slight increase in the price of the goods they are buying because they get these trading stamps, like to get them and go home and stick them in the album, and have the exciting prospect after 150 years of getting a radio gramophone. And why should they not? I hope my noble friend is going to do what I asked him to do earlier—issue a smashing reply from Her Majesty's Government.
6.45 p.m.
LORD SHACKLETON: My Lords, it is unusual in a debate dealing with commercial matters for so many interests to be declared from this side of the House, and indeed it is a reversal of the normal pattern—I say that for the benefit of the noble Earl. But I will do so, even though my original intention was to support my noble friend Lord Shepherd on his very moderate and extremely well argued proposals. I do not intend to answer the noble Earl. I have listened to him many times in another place, and I can only say that he gets more offensive every time he speaks. His reputation in this way may add to the liveliness of our debates but it does not add to the seriousness of them.
This is not a debate, I hope, which anyone is trying to conduct on an emotional basis. We have just had a little

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bit of emotion. Nor does it help if we try to bring Party politics into everything, even if the Prime Minister has urged us to do so—and it may be that the noble Earl, Lord Sandwich, is following his ex-noble Earl colleague in this matter. But I think we can discuss this question—I hope we can—without bringing in the Party political line, because I am sure that in this matter there are many friends of the noble Lord, Lord Sainsbury, who would be very hurt if it were suggested that they were in any way Labour Party supporters.
We have covered so much ground that I do not think there is very much more to explain on this subject. One or two points have arisen in the debate, on which I would comment. I should have liked, in particular, to refer to my noble friend Lady Burton of Coventry. She did, I think, say that the case for and against trading stamps was so well known that there was no need to deploy the case more.
BARONESS BURTON OF COVENTRY: My Lords, I said nothing like that at all. I do not know what the noble Lord has in mind. I certainly never said it was so well known there was no need to deploy the case for or against. I never mentioned it in that way.
LORD SHACKLETON: I do not know exactly what the noble Lady said. At any rate she was not going to give the case for trading stamps. My point was that I rather feel that it is a pity the case for trading stamps has not been given, so that we could have debated it. But there are one or two points that need to be mentioned. First of all, in the grocery trade there is very little resale price maintenance left; and nobody, I am sure, knows this better than the noble Baroness. It so happens that I and some of my friends are personally opposed to resale price maintenance, though this is not the issue we are debating to-day.
The argument that in America only 2 per cent. of the people who have taken trading stamps have chosen to change them for cash is simply due to the unrealistic value that is put on those stamps, and I am sure the noble Baroness knew this perfectly well before she put this particular argument. And, of course, it is material to our
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whole consideration of legislation if, as is recommended by the Consumer Council, the value is to be put on those stamps, what that value should be.
I think it is desirable to examine a little what the cost structure of retail trading is, and particularly in the grocery business. I do not think it is realised just how small the gross margin in grocery is. It is somewhere between 16 and 20 per cent. In department store trade it may be rather higher—it may be up to 30 per cent. And I do not doubt that in certain department stores it is higher still, though no doubt the service would justify it.
LORD MABANE: Not in food.
LORD SHACKLETON: Nothing like that in food. I am suggesting a figure of 16 to 18 or 20 per cent. Let me take 18 per cent. I think we are agreed that the cost of these trading stamps is 2½ per cent., and if the firm that adopts trading stamps has not only to pay its way and regain its money but also make a profit, it has got to increase its turnover not by 20 per cent. but by, probably, as much as 30 per cent. It will be a smaller figure, possibly, in commodities where the mark-un is larger, but in food, in order to make it worthwhile, they have to increase their turnover by 30 per cent.
It is worth while looking at the economics of this situation, whatever the Government may do. I appreciate, as we all do on this side, the difficulty of legislating in this connection. The last thing we should want to do, even if it were possible—and I do not believe it is—is to ban trading stamps, although this has been done in other countries. But the effect of the present set-up is to create an overwhelming compulsion on the retailer, especially the small retailer, to get in before it is too late. I would not go quite so far as to suggest that this is a form of protection racket, but some of the pressures about which we have heard have been very severe, and I have heard of one chamber of commerce, in particular, who have expressed concern that the pressures are such as to induce a fear in the retailer, again probably one without the resources, to get in first. What then happens? Either the whole of the retail trade adopts it, in which case in order to make the scheme

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pay, they have to increase their turnover—and in the food side, it must be by 30 per cent. I do not know the exact figures of the size of the food trade—my noble friend Lord Sainsbury might be able to give these. But I think it may be somewhere about £4,000 million—it may be more or less. It is not conceivable that it is possible to produce an extra £1,000 million worth of trade, just like that. The only effect can be that costs go up and the supply of goods to the housewife, or to anyone else, is reduced and a useless form of activity is thereby financed.
I appreciate that it is difficult to legislate in this particular field. It is possible to indulge in certain "gimmicky" practices—to indulge in all sorts of practices in trade and commerce which, providing they are on a limited scale, do not do harm to the body politic. But I would suggest that this practice does harm. It so happens that in the retail trade, and particularly the food trade, one of the most highly competitive industries in this country—except for resale price maintenance, on which there is a special argument, but even discounting that—we approach more nearly the ideal of perfect competition which the classical economist sought, but which we have failed so lamentably to achieve. But this giving of trading stamps is inducing something which interferes with this competition. Furthermore, it becomes a serious distraction in the efficiency of the retailer whose job it is to compete in terms of quality, and service and of price.
The retail and the distributive trades have frequently been criticised on the ground that their productivity has not been as high as it should be, and there have been arguments as to whether so many people should go into the retail trade. This adds another and useless link in the distributive trade. Furthermore, it does so in a way that gently leads—I would commend this to the noble Earl, Lord Sandwich—the purchaser into buying his or her goods in a more restricted market, in having to obtain the Ronson lighter, or whatever it may be, again from a narrower choice, because it is not possible to carry anything like the stock to provide the range that complete freedom to go into any shop,
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whether it be private or co-operative, would otherwise permit.
THE EARL OF SANDWICH: My Lords, may I make a point to the noble Lord? Is that not again a matter where the consumer is capable of making up his own mind whether he wants to buy a Ronson lighter, or any other lighter, for cash in an ordinary shop, Or whether he likes to acquire it through the collection of stamps?
LORD SHACKLETON: My Lords, I do not think that the noble Lord is capable of absorbing the arguments on this matter. What I am suggesting is that, without it being made clear—
THE EARL OF SANDWICH: Who is being offensive now?
LORD SHACKLETON: I am. I am always delighted to be offensive to a noble Lord who brings an atmosphere into every debate that I have ever known him to take part in which can only be described as slightly venomous on occasions. But the point about this particular argument is that trading stamps do, in fact, restrict the choice. It is possible that the noble Earl, Lord Sandwich, in the interests of freedom, would permit subliminal advertisements on the radio. The Government, however, have seen fit to prevent this under the Television Act. There are all sorts of restrictions, of a kind that the noble Earl, Lord Sandwich may not like, to protect the consumer and the public. My noble friend Lord Shepherd recently referred to the Hire-Purchase Bill, which is designed precisely to do what in fact my noble friend wishes to achieve, if the Government are prepared to adopt the proposals of the Consumer Council.
I think we are obviously steadily advancing towards not the brave new world, but the mad new world, in which simple issues will be distorted and concealed from us. We have had a taste of this in the interview that was published by the Chairman of King Korn. King Korn said
"You British are tough nuts, but we are going to crack you."
He said:
"By the time I am finished with Br in you will be able to get trading stamps with postage stamps."
He then went on to indicate that undertakers should provide trading stamps.

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I suppose that is of some value, if you have a large number of elderly relatives. Providing you go to the same undertaker you can acquire and accumulate something for your book. I notice that he was rather annoyed with British Railways. He said:
"This Beeching fellow has fouled up that idea. But King Korn is going to be King of England by the time we finish."
My Lords, I hope that the noble Earl, Lord Sandwich, enjoys it!
6.58 p.m.
THE MINISTER OF STATE, BOARD OF TRADE (LORD DRUMALBYN): My Lords, I am extremely grateful to the noble Lord, Lord Shepherd, for having initiated a most interesting debate. I am not quite certain whether he realised just how interesting a debate he was going to initiate when he did so, but certainly he was good enough to warn me, unaccustomed as I am to all the ways of your Lordships' House, that this might be the case. If I were to answer the Question that he put and leave it at that, I think I should incur and, indeed, I would deserve to incur the displeasure of your Lordships, because he has asked:
"Her Majesty's Government, following the first major recommendation of the Consumer Council relating to Stamp Trading, if they are now prepared to support legislation to implement the recommendation."
Well, I am bound to tell the noble Lord that, so far as the Government are concerned, the Consumer Council have not yet addressed any recommendation to them. What they have done, I think, is to express publicly certain opinions. As to the second point, about legislation, I hope to be able to deal with that in the course of what I have to say.
I should like first of all to say one or two things about the many interesting interventions in the course of this debate. The first point is whether it is possible for legislation to control stamp trading. In listening to the speeches of the noble Lords, Lord Sainsbury and Lord Shackleton, one could not help thinking that what they really wanted was to abolish stamp trading altogether, although Lord Sainsbury did make some interesting proposals for the control of stamp trading which he added to the suggestions made by the Consumer Council. The noble Baroness, Lady Burton of Coventry, went further still and tried to cajole me, if I
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may say so, into making statements about resale price maintenance, a subject on which my right honourable friend the Secretary of State has indicated he will be making a statement in due course. Therefore, it would certainly not be proper for me to make a statement on that subject to-night.
I recognise, as the noble Lord, Lord Shepherd, invited me to recognise, that there are certain occasions when it is desirable for the Government to legislate; that is to say, where fraud or abuse has arisen and needs to be stopped. In those cases, provided that somebody can show that legislation is likely to stop them, the Government would not, of course, be averse to such legislation. The noble Lord recognised in the course of what he said that in his original Question he appeared to be inviting the Government to express opinions on, and to accept ministerial responsibility for, a particular contract which might be entered into by an individual. The noble Lord, Lord Morrison of Lambeth (who is not present), seemed to think that the Government ought to be in a position to interpret, sometimes in advance, particular contracts and give advice upon them. I do not think there was any question of that in to-day's debate. I am bound to say that the debate has been very much weighted on one side, although I shall be giving the other side of the picture to some extent in the course of what I have to say.
As has been mentioned by noble Lords and by the noble Baroness, stamp trading is not new. It dates back to the last century. There was a resurgence of it in this country in the 1930s, and I would remind your Lordships that a Committee was then set up by the Board of Trade to consider both gift coupons and stamp trading. It reported in 1933 that these practices were not detrimental to the public interest and did not call for any legislative intervention.
LORD SAINSBURY: My Lords, if I may interrupt the noble Lord, I would point out that one of the five members did disagree, and I should like to read from his disagreement:
"I do not accept the general conclusion in respect of trading stamp companies unless these are constituted by retailers. I am apprehensive of the growth of independent companies strong enough to impose on retailers the costs of a

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stamp system of which the profits go elsewhere."
So that 20 per cent. of the committee did not agree with the main conclusion.
LORD DRUMALBYN: I quite accept that. I thought I ought at any rate to put the majority view to your Lordships' House. I think I should say that the Molony Committee on Consumer Protection last year endorsed those conclusions. After expressing the opinion that consumers would be better off if prices were reduced by the cost of the stamp, they added these words:
"We would not feel justified however in trying to dictate the forms of publicity or sales promotion to be adopted by manufacturers or other traders provided that alternative methods are not intrinsically objectionable."
Then one has to ask straight away: is stamp trading intrinsically objectionable? It is indubitably a form of sales promotion, and one of many. The noble Lord, Lord Sainsbury, pointed out that it was a levy on the retailer, though whether or not it is likely to be a permanent levy remains very much to be seen. I should say also to the noble Lord that there is really no conclusive evidence of the effect of stamps on prices. A report was published by the United States Department of Agriculture in 1959 on trading stamps and their impact on food prices, and they concluded that the cost of stamp schemes is neither met entirely by increased prices nor, on the other hand, met from profits on a greater turnover. It suggested that the schemes are financed partly from increased' turnover, partly from higher prices, and partly by a reduction in profits.
The next question is: are there abuses which need to be corrected? I would agree that the stamps represent a form of rebate on retail selling price to the consumer. They are normally redeemable in the form of goods. Some of the goods which are advertised, as has been made plain this evening by the noble Lord, Lord Airedale, and others, are branded articles, so that their retail value is approximately known; others, I understand, can be examined at one of the stamp trading concern's own premises. Because the rebate cannot immediately be calculated, or can be calculated only with difficulty, it is suggested that stamps should have a cash
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value printed on them to enable the consumer, if he or she wished, to compare the price of identical goods in shops which do not offer stamps. It is true that such a requirement was imposed in some of the States of America before the war. But the circumstances there are not the same as they are here; and, of course, general economic conditions are now quite different from what they were in the 1930's.
The next question is: is there any inherent reason why the consumer should know the exact value of the stamps?—I am not referring to the legal reason, which I will come to in a moment. If he does not mind not knowing it, well, that is one thing; but if he dislikes not knowing it, and thinks he can get better value elsewhere, the remedy is surely in his own hands. But the fact that stamp trading is enjoying considerable popularity, which may or may not be ephemeral (it is estimated currently to apply to about 7 per cent. of total retail trade in this country) suggests that many people do like getting and collecting stamps, the cash value of which is not declared. In point of fact my right honourable friend the Secretary of State received only to-day a letter in those very terms emphasising that point very strongly.
LORD SHACKLETON: My Lords, would the noble Lord not agree that the large number of people who have hire-purchase agreements which do not fully reveal—or have not in the past revealed—the terms adequately, like them; and that on the same basis there is therefore no need to legislate as the Government are now doing on interest rates and advertisements?
LORD DRUMALBYN: My Lords, the question I was posing was whether there was an inherent reason why there should be a cash value on stamps. I think what the noble Lord is switching to at the moment is whether, in not having a cash value, there is a source of fraud which ought to be prevented. I think that is a slightly different question. I would not deny for an instant that some people might like stamps if the cash value were declared. As has been mentioned to-day, one firm has indicated in very broad terms its intention to state a cash value on stamps—an intention which has been adversely criticised by the noble

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Lord, Lord Sainsbury, from one angle to-day. Nevertheless, that in itself—the mere fact that some might prefer cash value to be shown—is not a reason to legislate.
LORD AIREDALE: My Lords, may I interrupt? Surely the principal reason for legislating, the principal reason for having cash values shown on stamps, is that the customer is thereby enabled to compare comparative prices in one shop which has a price and no stamps and another shop which has another price and stamps, so that it is possible for the customer readily to ascertain the value of the stamps. In the Weights and Measures Bill, the Government were most careful to introduce legislation whereby people should be able to compare prices and so on.
LORD DRUMALBYN: That is perfectly true, and I do not deny that for an instant. But what I am saying is that this is a measure of sales promotion. It takes the form of a rebate, but it is a measure of sales promotion. If there were evidence of widespread deceit or misrepresentation in this country regarding the true value of the goods offered in return for the stamps, then there would be a case for protecting the consumer against such malpractices. I can only say that I have no evidence of the existence of such malpractices and, so far as I know, the giving of stamps misleads nobody.
LORD SAINSBURY: My Lords, I am sorry to interrupt again, but surely there is this point. The stamps bear the figure "6d." on them; but that relates to the price of the groceries or other goods purchased, and not to the gift. Is the noble Lord so certain that everybody who is given a stamp knows that that is what that 6d relates to? I do not see that it can be so.
LORD DRUMALBYN: I think the noble Lord, Lord Sainsbury, is talking about a particular case. The stamps I have seen recently did not bear "6d." on them. But I have no doubt that a customer who was accustomed to trading in a certain shop would know very well what that"6d." meant.
I can well understand the fear that such malpractices might grow up. But I would ask noble Lords to consider this fact. The stamp trader, after all,
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has to sell his stamps to the retailer, and he has to satisfy the retailer of the advantages of giving them. I recognise that there can be strong pressure on the retailer in a competitive way, regarding it in competition with other retailers, to consider that it might be an advantage for him to take the stamps. This is one of the considerations that the retailer has to take into account. Before buying the stamps he will wish to be assured that his customers will not be disappointed; because if they are that will react adversely on the retailer; and as the retailer himself is anxious to stay in business he will wish to satisfy himself of the bona fides of the stamp trader. It seems to me therefore that the fears that either, on the one hand, the stamp trading concerns will become so strong as to constitute a kind of protection racket, or, on the other, that there will be such a proliferation of stamp trading concerns so weak as to be unable to meet their obligations, are very much exaggerated. However, this is something that will have to be watched.
It may well be that a consumer who has collected the hundreds or thousands of stamps required for an article is dissatisfied with its quality when he or she gets it. If so, in future he or she may well avoid shops which give trading stamps. However that may be, it is certainly more than likely, to put it no lower, that the retail value of that article will be greater than the amount that she would have been given in cash if there had been the option to take cash. I do not think there is any doubt of that at all. I am not at all sure that many of those who are pressing for trading stamps to bear their cash values are not doing so not so much to protect the consumer as to protect what they conceive to be their own interests.
LORD SHEPHERD: No. Is the noble Lord suggesting that the Consumer Council have a personal interest involved?
LORD DRUMALBYN: Not at all. The noble Lord, Lord Shepherd, must not read into what I say more than I actually said. I said that many of those who are pressing for this may have their own interests in mind no less, or even more, perhaps, than the desire to protect the consumer—and one cannot blame

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them for that, if they are in business themselves.
So far, is this not really a conflict between the retailers; a conflict which should be fought out between them in the ordinary way of competition? There can be no doubt that stamp trading companies have a very strong interest in avoiding abuses. My Lords, one major scandal could well put an end to stamp trading for a very long time. As I have said, there is no evidence of abuses, though that is not to say they may not arise in the future. It is to guard against that sort of thing that the Consumer Council has been created. Its function is to be continually vigilant. It can also carry out particular studies—for example, how stamp trading is affecting the interests of consumers and is likely to do so in the future; and I understand that the Council proposes to make just such a study.
Then we come to the next point: is the law working badly, or is it obscure? Are the rights of the consumer sufficiently safeguarded?—which was the main point the noble Lord, Lord Shepherd, was making, or exploring. Of course, without examining each of the contracts that stamp trading companies make with retailers, it is impossible to say. But let us look, first, at the relationship between the consumer and the stamp trading company. A consumer who wished to make a claim against a stamp trading company would first have to establish that there was a contract between him and the company. My Lords, I am advised that in order to establish such a contract it is necessary to show that an offer has been made and accepted and, under English law, that "consideration" has been given. I am advised that it may well be that an advertisement issued by a stamp trading company would, in the ordinary way, amount to an offer of a continuing nature to all members of the public that, if they purchase goods at shops at which stamps are issued, they will obtain stamps which can later be exchanged for goods. The consumer who is aware of this offer will be regarded as accepting it when he buys goods at such a shop and obtains stamps from the shopkeeper; and the same act of buying the goods would be regarded in law as good consideration. Prima
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facie, therefore, there would be a binding contract which would entitle the consumer to change his stamps for goods.
I recognise that this is entirely hypothetical. As the noble and learned Lord the Lord Chancellor said, this entirely depends on the terms of the contract and on the circumstances of the case. But I would venture respectfully, not being an expert, to disagree with the noble Lord, Lord Shepherd, when he said that unless there is a value on the stamps it will not be possible to make a valid claim on the stamp trading company. With respect, my advice does not conform with that view.
LORD SHEPHERD: Might I put this question?—because this is important. Would the noble Lord not agree that the stamps will be redeemed according to the terms—and I was very careful when dealing with them, and read them out—which include a term that they can be varied? To take the case of the lighter that I quoted at 6,000 stamps, the stamp company could say that it is now worth 25,000 stamps. In other words, by the mere alteration of those figures they can change the whole basis.
LORD DRUMALBYN: I would certainly agree, and that is what I meant when I said that it depends on the contract and it depends on the circumstances. That is certainly so. But again I would come back to this point: that, if the stamp trader wants to go on selling his stamps to retailers, he has to be able to show his own bona fides, and he has to show to the retailer that it is to the retailer's customers' advantage that the retailer should enter into a contract with him as regards stamps.
The second point, I think, is the relationship between the stamp trader and the retailer. Reference has been made by several noble Lords to the possibility that the stamp trader might become insolvent, might go out of business or might refuse to honour stamps which a retailer still had in stock. There, legal difficulties could arise, of course, as to the rights of a retailer and of a third party, such as the consumer. I am bound to say that at present it is not easy to see how legislation could altogether prevent them from arising, but I think it is right to say that the Government are keeping an open mind on this

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subject. Thirdly, there is the relationship between the retailer and the consumer, and here opinions differ as to the legal position. All I would say is this: that, in spite of the fact that stamp trading is more than half a century old, there does not seem so far to have been a case which has given rise to a general ruling—which suggests that the question has, so far at any rate, been more academic than practical.
So, if I might sum up, my Lords, I would say that there is no reason to suppose that the state of the law in regard to trading stamps is such that legislation is urgently necessary. However, the Government and the Consumer Council will continue to watch this position very carefully, and they will take into account in particular all the various points that have been made by your Lordships in the debate this evening.
LORD MABANE: My Lords, may I ask the noble Lord one question? Has the advice of the Inland Revenue been sought in this matter?
LORD DRUMALBYN: I am not quite clear in what respect the noble Lord has it in mind.
LORD MABANE: The opportunity for income tax avoidance.
LORD DRUMALBYN: I shall be very happy to go into the point that the noble Lord, Lord Mabane, has raised, that there might be an opportunity for tax avoidance here. I will certainly look into that further point.
7.33 p.m.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I must say that I am obliged to the noble Lord, Lord Drumalbyn, for the attention he has given to the debate. He has quoted a great many things which have been said. But I am filled with a sense of profound disappointment because, as he thought there were more speakers in the House to-night against trading stamps without some protection for the consumer, he should wish to do as much as he has done to-night to try to justify the position of the trading stamp business. The position is, of course, that the protection racket, which was referred to by my noble friend Lord Shackleton, is more in danger from experience than
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perhaps from what we can say in a debate in this House to-night. If one looks at the Sunday Times of December 15, one there sees the case of a managing director of a great chain of twenty supermarkets who, after eighteen months' experience of trading stamps, has had to give them up altogether because they meant increasing the prices to the customer. This is the experience of a man and his company running a very large chain of supermarkets. This is surely something the Board of Trade will have to consider in relation to any considered findings of the Consumer Council that it is not in the interests of the general consumer of this country for this kind of thing to go on.
LORD DRUMALBYN: My Lords, will the noble Earl forgive my interrupting? I understood from what he was saying before that this concern had given up trading stamps because of the effect on their own business.
EARL ALEXANDER OF HILLSBOROUGH: Yes.
LORD DRUMALBYN: The noble Earl went on to say, I thought, that the Board of Trade would have to look at the matter because it was not in the interests of the consumer. With respect, are those not two separate points, and did not the firm give up the trading stamps in its own interest?
EARL ALEXANDER OF HILLSBOROUGH: I think it probably did give them up in its own interest, but also in its customers' interests, because they were in fact losing trade as a result of the practice of the firm in relation to trading stamps, in using trading stamps. That was the point. However, I do not want to take up too much of the time of the House, because the House has been very well treated by the time it has given to this matter to-night. But what seems to be still escaping the noble Lord who answers for the Government is this: that this is an imposition by a parasitical organisation outside the retail trade, levying upon the retail trade something which they must make up in one way or another. They are promised that there will be larger business because of this so-called sales "gimmick", but once it has spread to the whole of the retail trade (if they are all frightened by the same kind of threat) then there

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is no advantage to any retailer who has this permanent levy to pay upon his business turnover.
The noble Lord does not yet seem to have properly understood the analysis of the case that my noble friend Lord Shepherd has put, and which has been referred to by my noble friend Lord Shackleton. My Lords, 2½ per cent. is about the average levy upon a retailer's turnover in respect of the stamps. What has to be covered by that levy? First of all, you have to pay for the printing of the stamps. Then, you have to pay for the large headquarters organisation—not one, but more than one headquarters of these stamp traders. Then they have to arrange somehow or other to try to get a little profit somewhere by getting, at a discount if possible, supplies of the presents they are to give on the stamps. To each purchaser of goods in a shop giving trading stamps, the real value of the stamps she gets is certainly well below 2d. for every pound, and has been averaged out at something between 1d. and 1½d. It did not seem to me that the noble Lord quite understood that my noble friend Lord Shepherd wants passed on to the consumer the real value of the stamps she gets. Then, perhaps, she will
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begin to find out, as has been proved by the actual trading inquiries that we have made, that in many cases she has to spend £35 10s. in buying goods in order to obtain stamps that will give her an article worth 5s. 10d. That is the kind of thing we want to see brought into the open, and nobody has yet really answered that case.
I am very much obliged to the noble Lord, Lord Drumalbyn. He is new to this House, but already I can see that he is going to make a very courteous Member of it, and I wish him every possible success in his work as a Minister. But I hope I shall not have to go away to-night with the feeling that he has made up his mind on these things, although his argument seemed to go that way. The thing is nonsensical in the extreme to everybody in this business except the man who sells the stamps to the trade. It is really nonsense to everybody else. This is a parasitical organisation, pushed on to take profits out of the retail traders in the hope that the consumers will be deceived by the infinitesimal percentage they get of what they have to buy in the shop.
House adjourned at half past seven o'clock.