Lords Sitting of 26 February 1963

Preamble
The House met at half past two of the clock, The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Chichester

DEFENCE STATEMENTS
2.35 p.m.
EARL ALEXANDER OF HILLSBOROUGHMy 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 why, despite fundamental changes and developments both national and international during the past year in the field of defence, they now find it unnecessary to continue the practice followed by successive Governments since 1947 of publishing a general statement setting out their defence policy.]
THE FIRST LORD OF THE ADMIRALTY (LORD CARRINGTON): My Lords, the defence policy of Her Majesty's Government remains broadly as set out in the Statement on Defence 1962—namely, the maintenance of a proper balance between the strategic nuclear deterrent and well-equipped, mobile, flexible conventional forces. The Statement on Defence 1963 gives a very
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full and clear picture of the way in which this policy is being carried out.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I am much obliged to the First Lord of the Admiralty for such an amazing reply, for any one of the Members of your Lordships' House who have kept in touch with the defence situation over the last twelve months must be aware of the enormous changes which have taken place and the number of matters upon which the Government have been defeated in their purposes, and we have had no clear statement yet of what the policy is going to be as a consequence. Surely this House and the other House ought to have a White Paper to be able to study the question.
LORD CARRINGTON: My Lords, I do not think that I could agree with the noble Earl the Leader of the Opposition that fundamental changes have taken place. I take it that he is referring to the Nassau Agreement. Well, there was a White Paper published on the Nassau Agreement, so everything is known about that, and, in any event, all the Nassau Agreement did was to substitute one means of delivering the strategic deterrent for another.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, all I have to say about that is that you were banking on Skybolt, in spite of all the warnings that were made, and you did not get it. You have had to have a new policy since, but what it is nobody really knows. That is not the only incident

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during the last twelve months in a good many of these matters affecting the policy for 1962–63. We ought, without question—otherwise you are treating Parliament with contempt—to have the White Paper that we require.
LORD CARRINGTON: My Lords, I really do think that the noble Earl is wrong about this. I do not see why he should expect the Government to write a strategic essay every year, because it happens to be February. There has been no fundamental change in the Government's policy since 1962, when it was very clearly set out for the next five years.
EARL ALEXANDER OF HILLSBOROUGH: Then I suppose we must feel that the Evening Standard was probably right when it suggested that £9 million per word of 205 words in the opening statement by the Ministry of Defence is reckoned by the Government to be sufficient.
LORD SHACKLETON: My Lords, does the First Lord really think it unreasonable to ask the Government to issue a statement every year, when he says there is no fundamental change? Why have they done so for so many years in the past? There have occasionally been years during the period of the Conservative Government when there have been no major changes. Why this sudden decision this year? And would the noble Lord not agree that a decision that the principal responsibility for the strategic deterrent should be carried by the Navy is a major change in defence policy?
LORD CARRINGTON: My Lords, of course that was very clearly set out in the White Paper which was published after the Nassau Agreement. I do not think the noble Lord can have any complaint about that. But I should have thought that what was important was that, if there is a fundamental change in the defence policy, the Government should state what it is and state it clearly in a White Paper. This year there is not and we have not stated it.
LORD SHEPHERD: My Lords, could the noble Lord help us? He has a Motion down on the Order Paper which will seek the approval of this House to
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the Statement on Defence. What are we being asked to approve? Is it the few sentences at the beginning of that document, or would it be all the matters that are arising within the Services?
LORD CARRINGTON: My Lords, the House is going to be asked to approve the continuing defence policy of the Government and the way it is being carried out.
EARL ALEXANDER OF HILLSBOROUGH: I can only hope you will not have as many failures as you have had in the last twelve months.
LORD OGMORE: My Lords, there are two points that I am not quite clear about, and perhaps the noble Lord will clarify them, as they are not clarified in the Defence White Paper. The first point is this. Are we still in agreement that we should have a multilateral force in NATO so far as the deterrents are concerned? The other point is as regards the assignment of our NATO bomber force. What exactly does "assignment" mean? Are we going to relinquish all control? That again is a matter which should be clarified.
LORD CARRINGTON: My Lords, that seems to be an admirable matter to discuss in the Defence debate a fortnight from now.
EARL ALEXANDER OF HILLSBOROUGH: Where is the text for it?
LORD SHACKLETON: My Lords, could I ask the noble Lord whether we may expect a Defence White Paper next year?
LORD CARRINGTON: My Lords, I think if there is a fundamental change in defence policy the noble Lord will get one.
EARL ALEXANDER OF HILLSBOROUGH: Hear, hear! We have already had a fundamental change.

YEMENI FORCE IN SOUTH ARABIAN FEDERATION
EARL ST. ALDWYN: My Lords, I should like to inform your Lordships that at some suitable moment after 3.30 p.m. my noble friend Lord Lansdowne will be making a statement on the Yemen.

BUSINESS OF THE HOUSE
2.40 p.m.
THE MINISTER OF STATE FOR FOREIGN AFFAIRS (THE EARL OF DUNDEE): My Lords, on behalf of my noble friend, I beg to move that Standing Order No. 41 be considered in order to its being dispensed with for the purpose of taking the National Insurance Bill this day through its remaining stages.
Moved, That Standing Order No. 41 be considered in order to its being dispensed with for the purpose of taking the National Insurance Bill this day through its remaining stages.—(The Earl of Dundee.)
On Question, Motion agreed to.

SCOTTISH PULP MILL (WATER SUPPLY) ORDER CONFIRMA TION BILL
Considered on Report (according to Order).

PIG INDUSTRY DEVELOPMENT AUTHORITY (FUNCTIONS) ORDER 1963
2.42 p.m.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (LORD ST. OSWALD): My Lords, I beg to move that the Pig Industry Development Authority (Functions) Order 1963, a copy of which was laid before this House on January 22, be approved. I think it might be for the convenience of the House if we were to discuss this Order in conjunction with the other Orders appearing on the Paper in my name.
The Pig Industry Development Authority (Functions) Order is a simple matter of the mechanics of the Authority, and I think I can deal with it fairly quickly. If noble Lords will look at the definitions in Section 2 of the Meat Research Levy Order—the third of these documents—they will see that "fatstock" is so defined as not to apply to pigs in England, Wales or Scotland. This is because the Pig Industry Development Authority has undertaken to make a voluntary contribution towards the expenses of the proposed Institute each
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year, equivalent to the amount which would have been collected on pigs in Great Britain. The Authority's own funds are raised by exactly the same method as is proposed for the meat research levy—namely, by deduction from the fatstock guarantee payments—and this offer by the Authority will save considerable duplication of effort. Indeed, we should have been happy if we could have collected the whole of the meat industry's contribution on a voluntary basis, but the other branches of the industry are not at present organised in such a way as to make this practicable. But we have thought it best to lay an Order making it clear that the Authority may meet the pig industry's contribution to the proposed Institute in this manner.
The functions of the Authority under Part I of the Third Schedule to the Agriculture Act, 1957, include the promoting of investigations and research, but there is doubt whether a regular and continuing financial contribution such as that to the Meat Research Institute can be said to constitute "promoting". There is also an element of doubt because the P.I.D.A. levy is collected for the furtherance of the interests of the pig industry, and not for the purposes of meat research generally. The object of this Order is therefore to remove these doubts by giving the Authority the additional function of contributing to the funds of any organisation whose objects include undertaking investigations and research relevant to the problems referred to in the Third Schedule to the Act. It removes a technical difficulty without deviating from the objectives which the original functions were designed to serve.
It will now be logical for me to deal with the Pig Industry Development Authority Levy Scheme (Approval) Order. The purpose of this Order is to increase the income of the Authority by raising its levy from 2d. to 4d. per score deadweight with effect from April 1, 1963. The levy is imposed on every pig which benefits from the Fatstock Guarantee Scheme, and is shared between the seller and the buyer. Noble Lords will recall that the Pig Industry Development Authority was created under Part III of the Agriculture Act, 1957. This Act gave effect to the recommendation of the Reorganisation Commission for Pigs and Bacon, that such an

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organisation be set up with functions directed towards improving the industry's efficiency.
The present levy of 2d. per score deadweight was introduced in 1958. It was indicated at that time that the income provided by it would be sufficient for the first year or two of the Authority's existence, but that more money might be required as it extended its activities. The income from a 2d. levy—that is to say, about £500,000—is, is fact, well below the £1 million which the Reorganisation Commission forsaw would be needed for the discharge of the Authority's full range of functions; but the levy was not set higher than this at the outset, because many of the functions had to be developed from scratch, and the Authority did not wish to accumulate unnecessary reserves during its formative years. During its first two years, P.I.D.A. enjoyed an excess of income over expenditure, but since September, 1960, it has been drawing on reserves so created. The stage has therefore been reached where an increase in income is required if the Authority is to continue to discharge its functions effectively.
Since its creation the Authority has taken over existing work on pig progeny testing and recording and the premium boar scheme; to these it has added a boar performance testing scheme which, despite initial difficulties, holds promise of playing an important role in the future selection of breeding sires. A scheme for feed recording and a register of provisionally accredited herds have been introduced, and the Authority is subsidising artificial insemination for pigs as a means of encouraging the development of the technique and its wider use in this country. A most important field of expenditure has been the research and development programmes sponsored by the Authority. These programmes range over a wide field of veterinary, nutritional and management problems. The award of post-graduate scholarships has both enabled useful work to be done and assured a supply of research workers trained in this field. Some of the important subjects covered by the programmes have been carcase dissection; the development of the echo-sounding technique for assessment of lean-fat ratio in the live pig, which I
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saw demonstrated at the Selby station last Friday; and, more recently, the development of other methods for the better assessment of the carcase. The Authority has introduced the Meritmark, which identifies home-produced Wiltshire cured bacon; and it has undertaken a certain amount of advertising as well as general publicity and economic intelligence on behalf of the industry.
The cost of these activities already exceeds the Authority's income, and, because of this, the Authority has in recent months had to mark time on a number of extensions of its activities, which it proposes to embark on as soon as its higher income is assured. The largest increase would go to further research and development work, including the pig industry's contribution to the Meat Research Institute, which the Authority has undertaken to meet. Other fields of additional expenditure include improvements to the pig progeny testing stations; further work on carcase assessment; the expansion of boar performance testing, as soon as present problems are overcome; and a strengthening of the field staff. The Authority is also planning a campaign to assist the producer to reduce costs, with special attention to the need for efficiency in feeding practices. This campaign will be carried out in close consultation with the National Agricultural Advisory Service and the Agricultural Land Service.
Noble Lords may know that the Authority's application for an increase in its levy had a mixed reception when it was first made known in the spring of last year. As a result, the Authority has engaged in consultations with the industry's organisations. These have been most useful, and have, in addition, led to some modifications in the Authority's plans. The value of the consultations which have taken place, and the close collaboration to which they will surely lead in the future, is to establish the need for the Authority to carry the industry with it, satisfying the critics of any particular activity that, in undertaking it to the satisfaction of another section of the industry, the Authority is in fact serving the interests of the industry as a whole. It would clearly be most unreasonable to deprive the Authority of the resources it needs to discharge its responsibilities adequately,

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and I strongly commend for your Lordships' approval the Order now before the House.
I turn now to the Meat Industry (Scientific Research Levy) Order. This Order, if it is approved by Parliament, will be made under Section 9 of the Industrial Organisation and Development Act, 1947. This Act, as noble Lords will recall, provides that charges may be imposed by Order on persons engaged in an industry, if it is thought expedient for funds to be made available for various purposes, one of which, and not the least important, is scientific research. The need for a substantial increase in meat research and for better facilities has been widely recognised for some time; and has been strongly urged both by the Technical Advisory Committee on Meat Research and by the Food Research Advisory Committee. These Committees are fully representative of the food industry and of the meat industry—producers, processors and distributors—in particular.
The Government accept the need for expansion and the object of this Order is to provide for a contribution from the meat industry towards the cost. The proposal is that the Agricultural Research Council—for which my noble Mend the Minister for Science is responsible—should set up a new Meat Research Institute to which the work on meat now being done by the Council's Low Temperature Research Station at Cambridge and the Food Technology Branch of the Ministry of Agriculture, Fisheries and Food will be transferred. The Institute will undertake entirely new work, extending beyond that now done by these two bodies, and will concern itself particularly with new basic studies of the growth and properties of meat tissues and of factors influencing quality.
The programme is being worked out by the Agricultural Research Council which has recently announced the appointment of Dr. M. Ingram of the Low Temperature Research Station as Director of Meat Research. It is too early to give details, but it will probably be concerned with studies of the structure and composition of meat and their relationship to the breeding, feeding and management of the live animals. It will also no doubt include investigations into problems of tenderness and flavour,
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the effect on quality of pre-mortem and post-mortem treatments, and the examination of general problems underlying the processing and preserving of meat. In short, the ultimate objective of the Institute, which will serve the United Kingdom as a whole, will be to enable better meat to be sold more cheaply.
The capital cost of the Institute should be not less than half a million pounds, and the annual cost in the early stages is estimated at at least £100,000. Your Lordships may like to know that the organisation of the new Institute is already in hand. The Government are prepared to meet part of this cost, but it is felt that the industry itself should make some contribution; and the levy which the Order will impose is intended to cover about half the capital and recurrent costs. In order to save on administrative coats, which might otherwise have swallowed a disproportionate amount of the proceeds of the charge, it is proposed to make use of the existing Fatstock Guarantee Scheme machinery and to collect the levy by deduction from the guarantee payments in the method already employed for collecting the Pig Industry Development Authority levy. I am happy to say that the proposals have been generally welcomed. I hope that what I have said will convince the House that this is a very worthwhile project.
Moved, That the Pig Industry Development Authority (Functions) Order 1963 be approved.—(Lord St. Oswald.)
2.55 p.m.
LORD WISE: My Lords, in rising to support the Orders which the noble Lord has introduced may I first say that I welcome his full and clear explanation of them. The Orders need to be read in conjunction with the Annual Report of the Pig Industry Development Authority, which can be obtained from the Printed Paper Office by any of your Lordships who are interested. It is an excellent Report, showing the records of the activities of the Authority, and covers a very wide field.
The noble Lord has referred to part of that Report in regard to research, advertising and other matters and I fully endorse his comments about the need for greater research and greater advertising. The annual accounts of the Authority are

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included in the Report, and it is clear that if the increased levy is acceptable to your Lordships this afternoon the income of the Authority will increase by about £1 million, as was suggested by the noble Lord. Last year the levy rose by no less than £140,000, and the total approached the £500,000 figure. The loss, as shown in the Authority's Report for the year before last, was £118,000; and last year it was £53,000. It is clear, therefore, that the Authority must have more money if they wish to carry on their work for the industry.
There is one further matter on which I should like to touch. The noble Lord referred to paragraph 6 of Part I of the Third Schedule to the Agriculture Act, 1957, but there is another paragraph, No. 10, which refers to another function which the Authority can undertake; that is, the undertaking of arrangements for advertising and increasing the sales of pigs and pig products. The noble Lord has dealt with the question of advertising, but I am concerned in this case with the lack of sales of English bacon. If we are right in assuming that possibly in the near future some proposal will go further abroad and that this country may import more Danish and other bacon, it will be to the detriment of the English product and English curers. It may be that the housewife shows a preference for Danish bacon, but I am struck by the way the grocers and others who sell bacon, do not advertise English bacon but almost invariably advertise Danish. A few days ago I was in a small country town and I inquired of four or five different grocers whether they could supply me with English bacon. Incidentally, I may say that, as a matter of habit, I never eat other than English bacon, and I commend to your Lordships that you, in your turn, should instruct your housewives to buy English bacon. That would very much help the sales of the English products against the imported product. I was offered Danish or Polish bacon; but not one of those shops—and this was in a pig-producing area—were able to offer me English bacon. I want to stress, not only to British housewives but to all concerned in the purchase of English foodstuffs, that there is no better bacon on the market than English.
2.58 p.m.
LORD WALSTON: My Lords, may I add just one point in welcoming these proposals, with my noble friend Lord Wise? I should like to press the noble Lord who introduced these measures not to confine research simply to the production of pigs and of meat but also to what happens to it after it has left the farm. We are sometimes inclined to forget that the amount of money the farmer receives for his product is often little more than 50 per cent. of the amount the housewife pays. In other words, there is just as much money being spent in processing and handling the animal after it has been slaughtered as is spent in rearing it to maturity. Therefore, while undoubtedly it is of extreme importance to have as much research as possible to ensure that the money spent on rearing the animals is well and efficiently spent, and that the pig is properly housed and feeding-stuffs are properly compounded, surely it is no less in the national interest to make sure that the money spent after slaughter is also efficiently spent.
I do not think that even the most ardent advocate of the present system of processing and distributing would maintain that no progress at all can be made in these spheres. I am not sure whether the Orders before the House will make it possible for any money raised by these levies to be directed towards research in this second stage, between the farm and the shop counter: perhaps the noble Lord will make that clear. But if it is possible I very much hope that research will be initiated on this line. If it is not, I hope that thought may be given to it, so that in future it will be possible to devote some money, at least, to this form of research. Because I believe that it will be just as much of ultimate benefit to the consumer of meat and pig products as will any research devoted to the purely agricultural side.
LORD ST. OSWALD: My Lords, I am very grateful for the welcome that both noble Lords have given to these Orders. In fact, I think that the requests they made were all in the form of wishing to see the services emerging from these Orders extended as far as possible. The noble Lord, Lord Wise, wished advertising to be included. As a matter of fact, this was one of the things discussed with the trade before the Orders reached

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the form in which I present them to-day. The trade is opposed to the money being used in this way, and I have to tell the noble Lord that, due to the opinion within the trade, any adoption of a national advertising campaign by levy income has now been dropped, and should such a policy be formulated it is now agreed that the costs should be met from funds other than the general levy.
LORD WILLIAMS OF BARNBURGH: My Lords, can the noble Lord tell us what he means by "the trade"? Which section or sections were opposed to this?
LORD ST. OSWALD: My Lords, the general weight of opinion was against it. I cannot identify within those consulted those who wished for one or the other, but the general weight was against the initial intention to include advertising as one of the activities which would be financed by this levy.
LORD WILLIAMS OF BARNBURGH: But, my Lords, surely if, as the noble Lord states, certain sections of the trade were opposed, he can tell us which sections of the trade opposed the possibility of activity on these lines.
LORD ST. OSWALD: My Lords, I can neither tell the noble Lord the list of all consulted nor, I am afraid, at this moment, can I tell him across the Floor, exactly which opinions were voiced by each individual body consulted. I am not able to do this, but I will try to do so later, if the noble Lord wishes. The noble Lord, Lord Wise, said that he hoped that these Orders would result in people eating more English bacon. Of course, one of the main purposes of this project is to make English bacon and bacon products more competitive and, therefore, more popular in the shops than he has found them to be. The noble Lord, Lord Walston, asked me whether some research could be channelled into processing methods after the carcase had been sent on. I did refer to postmortem processes, which include such things as curing, which I think the noble Lord had in mind.
LORD WALSTON: My Lords, would the noble Lord amplify that? Does it also include actual handling and distribution or is it the purely technical side of curing? Does fresh meat also come under the ambit of this research; and the
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methods of handling meat and getting it into the shops?
LORD ST. OSWALD: My Lords, so far as I know, research would be devoted to the technical aspects of processing meat.
LORD WILLIAMS OF BARNBURGH: My Lords, the noble Lord has told us that nothing is likely to be undertaken on the lines indicated by my noble friend behind me. He told us that certain sections of the trade were opposed to any part of these levies being devoted to that kind of research. Will he now tell us whether the only opposition to research on these lines came from the distributors of bacon after it has been produced?
LORD ST. OSWALD: My Lords, I cannot tell the noble Lord that at the moment.
LORD WILLIAMS OF BARNBURGH: My Lords, will the noble Lord tell us this? Did the noble Lord and his right honourable friend agree or disagree with those who opposed the use on those lines of a possible levy?
LORD ST. OSWALD: My Lords, the ultimate consideration is found in the terms of these Orders to-day, after discussion with the trade.
LORD WILLIAMS OF BARNBURGH: My Lords, but surely the noble Lord is responsible for an Order that his Department has produced? He presents the Order in your Lordships' House, quite properly, and the only thing I had intended to say about these Orders, following the noble Lord's wide-spread speech, was, "Amen"! But at least I should like to know why a section of the pig trade resented any possibility of a contribution being made to research on either the processing or the actual distribution of the finished article.
LORD ST. OSWALD: My Lords, I have no details with me of the actual discussions that went on, which led to the present form and shape of these Orders. If it is possible for me to give details of this to the noble Lord at a later date, I will do so, but I am afraid that I have not the details with me, either in the papers I have or in my mind.
On Question, Motion agreed to.

PIG INDUSTRY DEVELOPMENT AUTHORITY LEVY SCHEME (APPROVAL) ORDER 1963
LORD ST. OSWALD: My Lords, I beg to move that this Order be approved.
Moved, That the Pig Industry Development Authority Levy Scheme (Approval) Order 1963 be approved.—(Lord St. Oswald.)
On Question, Motion agreed to.

MEAT INDUSTRY (SCIENTIFIC RESEARCH LEVY) ORDER 1963
LORD ST. OSWALD: My Lords, I beg to move this Order.
Moved, That the Meat Industry (Scientific Research Levy) Order 1963 be approved.—(Lord St. Oswald.)
On Question, Motion agreed to.

CONSOLIDATED FUND BILL
Read 3a (according to Order), and passed.

NATIONAL INSURANCE BILL
3.19 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(The Earl of Dundee.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MERTHYR in the Chair.]
Clauses 1 and 2 agreed to.
Clause 3 [Graduated contributions]:
BARONESS SUMMERSKILL BARONESS SUMMERSKILL moved, after subsection (1) to insert:
"(2) The lower limit on the amount of weekly pay taken into account under section 1 (1) (b) (ii) of the National Insurance Act 1959 (which fixes the graduated contributions payable by employees and employers) shall be increased from £9 to £10".
The noble Lady said: I must confess that I decided to put this Amendment and the following two on the Order Paper after listening to the Minister in another place because I detected, I thought, a note of sympathy in his voice when he
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was dealing with those aspects of the Bill which I seek to bring before your Lordships this afternoon. I hope that perhaps the noble Earl subsequently will confirm that I did detect a note of sympathy by agreeing to the Amendments.
I do not propose to go into any great detail, because actuarially the matter is very complex; and I am sure the noble Earl has read Hansard carefully and is familiar with the arguments which deal with certain aspects of the Amendment. My object is this. Noble Lords will recall that when it was decided to introduce a graduated insurance scheme the Government felt it was necessary to establish a wage floor and a wage ceiling; and the wage floor is £9. My Amendment seeks to raise the £9 to £10, for this reason. I think all those who have taken an interest in insurance schemes will agree with me that the flat-rate contribution which is made by workers over a number of years finally results in a benefit which is very fairly related to the contribution; and it has been argued on many occasions that it is a good bargain. Nobody will dissent from that. But when it comes to the graduated contribution, it is another matter altogether. No doubt the Government fixed a floor of £9 because they recognised that those in the lowest income brackets are not getting a bargain. Those are the facts, and I think, again actuarially, most people will not dissent from them. The Government, and their wise advisers in this Department, have fixed £9 in order to save the lowest wage earners from a certain hardship.
If we accept that—and I hope the noble Earl will—I want to argue that the £9 should be raised to £10. I am sure that noble Lords know many people, whom we regard as not very well off, earning up to £10 a week. It did appear, therefore, in the first place, that I was seeking to deprive some people of being included in the graduated insurance scheme. On the contrary, I am seeking to protect them. One particular category mentioned in relation to this was the daily worker, the woman who gets £7 a week, say, as an office cleaner, who would certainly not be included in the scheme because she is below the floor of £9. On certain occasions, let me say, when the House is in Recess, she is expected to clean certain offices, perhaps in this building, and more often she will be earning above £9. If she is earning above £9

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only on certain occasions she is then compelled to make this contribution to a graduated insurance scheme. All I am asking now, therefore, is that the £9 should be raised to £10 in order to protect more low-paid wage earners than would be included if the floor were kept at £9. I beg to move.
Amendment moved—
Page 3, line 19, at end insert the said subsection.—(Baroness Summerskill.)
THE EARL OF DUNDEE: I must congratulate the noble Lady on her diligence in going to listen to so much of the proceedings in another place on this Bill, which I think is a very commendable thing to do. Whether she has correctly interpreted the sentiments and tone of my right honourable friend the Minister on all these Amendments I should not like to say. On the second of her Amendments, she may be glad to know that, as a result of my right honourable friend's consideration, I am anticipating her by an Amendment of my own. But on the point of this Amendment, so far as I know, my right honourable friend has not entertained any idea of yielding.
As the noble Lady explained, this Amendment is a verbatim repetition of that moved in another place, and to which she listened. I remember, as I am sure all your Lordships and, indeed, the noble Lady will, that when we brought in the 1959 Bill one of the criticisms was that there were 7 million workers earning less than £9 a week who had no chance of getting a higher graduated pension; and one of the arguments brought against the Bill was that it did not do anything to bring them in. Now, on this Bill, the criticism has been the other way round: that it is perhaps hard (and I quite follow the noble Lady's reasoning on this point) that those who are earning between £9 and £10 a week should have to pay up to (I think it would be) 11d. a week on a £10 wage for the "bricks", as they are called. These bricks build up at sixpence a week for every £7 10s. contributed by a male worker. It is arguable—and we did go into this, as your Lordships remember, fairly thoroughly on the earlier Bill—that if you take the graduated contribution out of its context, by itself, although it is a reasonable bargain, it may not be as good as some others which might be obtained with the same money.
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The Government's answer to that has always been that you cannot separate it from the flat-rate contribution; it is actuarially bound up with it, and we must consider the two together.
If the Government were to accept the proposal to raise the floor from £9 to £10, that would mean that an additional £46 million would have to be raised to meet the resulting deficit in the Fund: because it would not be only the people who are earning between £9 and £10 who would be exempted from this graduated contribution, but everybody earing up to £18 and above would be exempted from that slice which goes from £9 to £10. In order to raise the additional funds necessary to keep the Insurance Fund solvent, it would be necessary to raise the contributions by 9d.—that is to say, 4½d. a side on the flat-rate contribution payable by the insured worker and his employer—and in many cases the worker would suffer a greater loss by the imposition of this additional flat-rate contribution than he would gain by being relieved of the extra graduated contribution, when the benefit is taken into account.
I listened with some sympathy to the noble Lady's example of the part-time employed person (she took as an example an office cleaner) who might be earning normally just under £9, but in certain weeks might earn £10 or more, so that she would pay irregular graduated contributions. Naturally, in these circumstances, it might take a long time to accumulate the first "brick" which would entitle her to some graduated return when the time came for her to receive her pension. That is true, of course. But the same difficulty would apply wherever you fixed the floor. If it were raised from £9 to £10 you would have the same difficulty with people earning £9 15s, a week, who occasionally, as a result of overtime or some other kind of supplementary employment, had weekly earnings of over £10.
While I understand the reasons for this Amendment being put forward, owing to the fact that it would upset the finances of the Fund there would not be any hope of getting my right honourable friend to accept it in present circumstances. As the noble Lady did not go further I shall not go further either into the contingent considerations arising on

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the finances of the Fund. I would only say that I regret that my right honourable friend does not see his way to accept this Amendment.
On Question, Amendment negatived.
Clause 3 agreed to.
Clause 4 agreed to.
3.22 p.m.
THE EARL OF DUNDEE THE EARL OF DUNDEE moved, after Clause 4 to insert the following new clause:
Allowances in respect of incapacities arising from pre-1948 employment
".—(1) The Workmen's Compensation and Benefit (Supplementation) Act 1956 (which provides for the payment of allowances out of the Industrial Injuries Fund in cases of injury or disease arising out of pre-1948 employment and resulting in total disablement or incapacity for work), as amended by section 1 (1) of the Family Allowances and National Insurance Act 1961, shall have effect with the substitution in section 2 of a rate of allowance of 65 shillings a week for the rate of 32 shillings and 6 pence a week.
(2) The Family Allowances and National Insurance Act 1961 (which among other things provided for the payment of improved allowances in respect of incapacities arising from pre-1948 employment) shall, in relation to the payment of allowances for periods of incapacity for work falling after the coming into force of this subsection, be amended—
(a) by the substitution for section 1 (2) (a) (which altered to 66 shillings and to 50 shillings the monetary references in section 2 of the Workmen's Compensation (Supplementation) Act 1951 which operate to limit the maximum weekly rate of allowance which under any scheme under the said Act of 1951 may be paid in cases of injury or disease arising out of pre-1924 employment) of the following paragraph—
'(a) shall be amended by the substitution in section 2 (2) and (8) of references to 86 shillings and to 70 shillings for the references to 66 shillings and 50 shillings (which operate to limit the maximum weekly rate of allowance under any scheme); and';
and
(b) by the substitution in Section 1 (2) (b) and in paragraph 1(d) of Schedule 1 of references to 30 shillings for the references to 10 shillings (which operate to limit the maximum weekly rate of allowance which under any scheme under the said Act of 1951 may be paid in cases of injury or disease arising out of post-1923 employment).
(3) The Industrial Diseases (Benefit) Acts 1951 and 1954 (which authorise the making of schemes for the payment of allowances out of the Industrial Injuries Fund in cases of disease arising out of pre-1948 employment but not entitling the sufferer to workmen's
20
compensation) shall be amended by the substitution in Section 3 (2) of the Pneumoconiosis and Byssinosis Benefit Act 1951 of the words 'or, if the disablement is not total, 42 shillings and 6 pence' for the words' or, if the disablement is not total, 27 shillings and 6 pence' (which were substituted by Section 1 (3) of the said Act of 1961); and any scheme under those Acts of 1951 and 1954 which is in force at the coming into force of this subsection shall have effect accordingly.
(4) If an allowance under the Workmen's Compensation and Benefit (Supplementation) Act 1956 is awarded to a person who has previously been awarded an allowance under the Workmen's Compensation (Supplementation) Act 1951 or the Industrial Diseases (Benefit) Acts 1951 and 1954, and the conditions for entitlement to the two allowances are inconsistent, the decision awarding the allowance under the Act of 1956 shall direct that any sums paid under the other award to which the beneficiary cannot be entitled in addition to the allowance under the Act of 1956 shall be treated as paid on account of the allowance under the Act of 1956:
Provided that the award shall be subject to the condition that if there is a requirement to repay any sums paid on account of the allowance under the said Act of 1951 or the said Acts of 1951 and 1954 the direction shall not have effect in relation to those sums."
The noble Earl said: This Amendment deals with the very intricate subject of the former Workmen's Compensation Act which ended in 1948, and which was succeeded by the Industrial Injuries Act of that year. Under the Industrial Injuries Act, if a workman gets hurt a medical board has to assess the percentage of disablement which he has suffered: 100 per cent. means total disablement, and the Board may assess it at 90, 80, 70 or 50 per cent., or indeed any percentage, for which he receives a proportionate payment under the Act.
Your Lordships will see in Schedule 3 of the Bill a table of figures which gives the new rates payable under the Industrial Injuries Act, as amended by this Bill. Under the old Workmen's Compensation Act, the principle of compensation was quite different. No contributions were payable by the worker. The compensation was payable by the employer who, of course, usually took out an insurance policy to cover it. The payment depended not on the extent of the injury, but on the amount of earnings which the injured worker was found to have lost as a result of his injury. That was a matter not for medical ascertainment but, if necessary, for legal ascertainment in the courts. He was entitled to obtain, subject to a certain maximum, two-thirds of the difference between the wage which

21
he was actually earning and the wage which he would have been earning if it had not been for his injury. That is still the position, but it has been improved by various pieces of legislation since 1948. There was the Workmen's Compensation and Benefit (Supplementation) Act, 1956, and then the amending measure of 1961. But these did not have the effect of putting the wholly or partially disabled worker, whose injury was suffered before 1948, in such a favourable position as the worker who was injured since the Industrial Injuries Act, 1948, was placed on the Statute Book.
In another place a new clause was moved, again identical in wording to the next new clause which the noble Baroness, Lady Summerskill, has put on the Paper. It was debated at considerable length. I think I am right in saying that it was supported or commended by speakers in another place from both sides, and my right honourable friend the Minister said that although he could not promise to do anything in this Bill he would consider urgently what he could do to meet the wishes of Members of another place who had spoken. On that undertaking, the new clause was withdrawn. My right honourable friend has given urgent consideration to the subject, and he has drafted this Amendment which I am now moving.
I will not trouble your Lordships by going through each subsection in consecutive order, but I will indicate as briefly as I can what it does, first, for totally disabled men who are now receiving benefits under the Workmen's Compensation Act, and then for partially disabled men. There are two divisions of each class; that is, people receiving benefits under workmen's compensation, and the time-barred men, who are in a different category. They are the people suffering from slowly developing malignant diseases, mostly byssinosis and pneumoconiosis, which develop so slowly that they may not have been detected in time to earn a right to compensation under the old Workmen's Compensation Act. They were provided for under a new Act—I think it was in the noble Lady's time in 1951.
First, as to the totally disabled men on workmen's compensation. If they are totally disabled they are getting now, if single, 40s. and if married 50s. by way
22
of workmen's compensation alone, together with the allowance payable under the Workmen's Compensation and Benefit (Supplementation) Act, 1956. The present rate of that allowance is 32s. 6d., which means that the total amount being received by a totally disabled man would now be 72s. 6d. if unmarried and 82s. 6d. if married respectively. This Amendment will put their new rate of allowance up from 32s. 6d. to 65s., precisely double, bringing the man's total receipts up to 115s. if he is married and 105s. if he is not, the married rate being equal to that under the new scale for industrial injuries. With regard to the totally disabled time-barred men suffering from these slowly developing diseases, they at present receive a 40s. allowance, whether they are married or single, under the Industrial Diseases (Benefit) Act, 1951, and they get, in addition, the 32s. 6d. payable under the 1956 Act. This Amendment increases the latter to 65s., bringing the aggregate benefit up to 105s. Subject to the qualifying conditions of the insurance schemes, these men can also get the usual dependency increases, if they are otherwise entitled to them, in addition to an insurance benefit. Those are the two classes of what are called "totals"—wholly disabled men.
Now for the "partials". The partially disabled men in receipt of the maximum rate of workmen's compensation, namely, 40s. if they are single and 50s. if they are married, who are at present in receipt of a supplement up to 10s. under the 1961 Act, are now being compensated to the extent of two-thirds of their loss of earnings, subject to this limit of 50s. if they are single and 60s. if they are married. That is the present position. These limits will be raised by this Amendment to 70s. and 80s. respectively. That is the effect of this Amendment, as regards the limits on what a partially disabled man can receive under the Workmen's Compensation Act. As for the partially disabled time-barred men, they are provided for now by way of an allowance first introduced in 1954 under another Industrial Diseases (Benefit) Act. It is now payable at the rate of 27s. 6d. It was originally 20s. before being put up to 27s. 6d. Under this Amendment it will go up to 42s. 6d., an increase of 15s. We also regularise in this Amendment the position of the pre-1924 men.
I do not think I need go further into detail. I think I have given your Lordships a broad and, I hope, reasonably clear outline of what my right honourable friend the Minister has sought to do by producing this Amendment. I hope it will be acceptable both to your Lordships and to those Members of another place who pressed for it and whose wishes my right honourable friend has endeavoured to meet. I beg to move.
Amendment moved—
After Clause 4 insert the said new clause.—(The Earl of Dundee.)
BARONESS SUMMERSKILL: I should like to thank the noble Earl for introducing the Amendment. As the one who was responsible for introducing the original Act in 1951, it has given me considerable satisfaction to know that the unfortunate men suffering from dust diseases, byssinosis and pneumoconiosis, will be relieved in this way. Nobody, I think, can say that we are being overgenerous or extravagant in this matter, because, after all, the expectation of life of these men is necessarily limited. The noble Earl's Amendment has been framed in an erudite manner, which makes the Amendment standing in my name on the Order Paper look rather simple, but I shall have the greatest pleasure in withdrawing my Amendment.
On Question, Amendment agreed to.
THE EARL OF DUNDEE: Before we go on to the next Amendment perhaps it would be convenient to your Lordships now to have the statement on the Yemen. Therefore I beg to move that the House do now resume.
Moved, That the House do now resume.—(The Earl of Dundee.)
On Question, Motion agreed to.
House resumed accordingly.

YEMENI FORCE IN SOUTH ARABIAN FEDERATION
3.34 p.m.
THE MINISTER OF STATE FOR COLONIAL AFFAIRS (THE MARQUESS OF LANSDOWNE): My Lords, it may be for the convenience of your Lordships if I now make a statement on the situation on the frontier between the South Arabian Federation and the Yemen. You may remember that on February
24
19, last week, my noble friend the Duke of Devonshire promised further information when available. A statement is being made in the same terms by my honourable friend in another place:
The High Commissioner for Aden reported three days ago that the Yemeni force had been strengthened and was believed to number about 300 soldiers and tribesmen armed with mortars and machine-guns. Her Majesty's Government were asked by the Federal authorities to assist them, in accordance with our Treaty obligations, to resist this armed trespass on Federal territory. We were fully conscious of these treaty obligations, and moreover we could not allow Federal territory to be used by one side in the Yemeni civil war as a springboard for an attack upon the other side. This would have been entirely contrary to our declared policy of non-involvement.
To give the Yemeni authorities ample opportunity to withdraw their force without the need for further measures, arrangements were made for a message to be conveyed to the Republican authorities in Sana by the representatives of a friendly Power. It was our hope that orders would be given to the Yemeni force to withdraw across the frontier, along the way they had come.
The broadcast by the Republican authorities in Sana on February 20 showed that they were aware of my noble friend's statement in your Lordships' House on the 19th and that they intended to take no action. Their reinforcement of the intruding party during the following days could therefore only be interpreted as a deliberate challenge.
In the absence of any indication that the Yemenis would move of their own accord, the High Commissioner was authorised to issue a local warning to the intruding force and this was delivered in the form of leaflets at twelve minutes past 8 o'clock local time this morning—that is, 5 o'clock this morning. The warning contained an assurance that if the Yemenis left their positions and withdrew from Federal territory, they would not be attacked, but that if they ignored the warning then all necessary measures would be taken to eject them by force.
Members of the Yemeni force were seen to read the warning leaflets. Precisely three hours later, when the

25
ultimatum set in the leaflet expired with no indication of any intention to withdraw, fire was opened upon the Yemeni positions by artillery. At half-past eleven a defiant message was received from the local Yemeni commander claiming that his force was within Yemeni territory. Artillery fire ceased at 11.40 and armoured cars of the Federal regular army moved forward to reconnoitre.
The High Commissioner has just told us that his latest reports tend to indicate that the Yemeni force has in the main withdrawn from the bed of the valley which they were occupying in Federal territory.
EARL ALEXANDER OF HILLSBOROUGH: My Lords, I am glad to have heard the message which is being given in another place. The situation does not seem to be very dangerous at the moment, but no doubt the noble Marquess will keep your Lordships in close touch with events as they go along.
THE MARQUESS OF LANSDOWNE: Yes, my Lords. If there is any further information which your Lordships should have I will see that you receive it.
LORD REA: My Lords, could the noble Marquess say whether, if further information comes in to-day, the House will have that information at once?
THE MARQUESS OF LANSDOWNE: My Lords, it is just conceivable that we might receive further information about the indications of withdrawal. If it is possible for me to convey this information, if we receive it, I will of course see that your Lordships have it as soon as possible, but I would prefer, for convenience' sake, if this could be to-morrow.
LORD WILLIAMS OF BARNBURGH: My Lords, would the noble Earl say whether or not there have been any casualties on either side?
THE MARQUESS OF LANSDOWNE: I am afraid I am not in a position to inform the noble Lord.

NATIONAL INSURANCE BILL
House again in Committee.
Clauses 5 to 7 agreed to.
Schedules 1 to 3 agreed to.
Schedule 4 [Commencement, transitional provisions and construction]:
THE EARL OF DUNDEE: This Amendment is consequential on Amendment No. 2, which has been accepted. I beg to move.
Amendment moved—
Page 17, line 9, at end insert—
("section (Allowances in respect of incapacities arising from pre-1948 employment)").— [The Earl of Dundee.)
On Question, Amendment agreed to.
3.40 p.m.
BARONESS SUMMERSKILL BARONESS SUMMERSKILL moved, in paragraph 1 (1), after "appoint" to insert:
"(not being later than 1st February, 1963, in the case of subsections (3) and (4) of section 1, Schedule 2 and Part II of Schedule 3)".
The noble Baroness said: I beg to move the Amendment standing in my name: its object is to alter the dates when this Bill will come into operation. It is intended at present (subject to the Bill passing this House, of course) that the benefits for unemployment and sickness shall be increased as from March 7 and the rest of the benefits, which consist mostly of retirement pensions, as from May 27. My purpose is to appeal to the Minister to date these benefits from February 1, in order to ensure that these very small increases, for widows, and for the unemployed or sick, should be given immediately, and that these people should not be kept waiting for weeks or months.
I am afraid that my plea can be based only on compassion: it cannot be based on consistency. I cannot advance a logical argument as to why these people should be given these extra increases. There is no precedent. I admit that at times when circumstances were different I have argued that it is difficult to make a benefit retrospective. But there has been no precedent in recent years for the extremely cold weather that we have had. I believe this has been the coldest winter for 80 years. What are these people going to do when they receive

27
this little extra money? The most important items in the budget of retirement pensioners are food and fuel. As the Bill stands, we are asking these people to wait till the end of May, before they receive this extra benefit in order to improve their standard of living. Thirteen years ago, in 1950 (again I think it was mentioned in another place), it was suggested that certain benefits should be made retrospective in entirely different circumstances. But on this occasion I can only ask noble Lords here to exercise compassion in this matter and say that extraordinary methods will be used in order that old-age pensioners should have this extra money before the end of May.
We often read of, and indeed discuss, wage and salary adjustments; and these are invariably made retrospective. Generally, if there is a strong demand from people who will benefit from an increase in wage and salary, it is decided that increases shall be made retrospective. I am pleading here for retirement pensioners who have no powerful pressure group. We are all politicians here, and it would be quite dishonest for any of us to say that Parliament has never in its legislation been moved by a plea from a powerful pressure group; indeed, one dares not imagine, perhaps, what sometimes goes on behind the scenes when these pressure groups are brought to bear upon some poor unsuspecting Minister. But these retirement pensioners must accept quietly. In fact, they are incapable of making much protest. They would certainly be incapable in this bad weather of descending on the Palace of Westminster and demanding at various doors to see Members of Parliament, of either House. Therefore, all one can do in this case is to consider the situation and ask: are they worthy? The amount of money they are going to be given is very small, and I am asking your Lordships to say this afternoon these people are worthy to have it before May 27.
What are the arguments? I know all the arguments: they are administrative. It is argued that it cannot be done. But we have a first-class machine responsible for administering insurance benefits, and it is guided and directed by the agile minds of first-class civil servants. Maybe
28
thirteen years ago this might not have been possible, but surely I feel quite certain that if your Lordships directed that it should be done the retirement pensioners would receive this little extra benefit before May 27. I beg to move.
Amendment moved—
Page 17 line 13, after ("appoint") insert the said words.—(Baroness Summerskill.)
3.47 p.m.
THE EARL OF DUNDEE: This again is a verbatim reproduction of an Amendment moved in another place which was negatived. The noble Baroness has moved it in a speech of great and charming moderation. She has also been very short and she has above all been very frank, I thought. She said candidly that she was moving this Amendment on grounds of compassion and not on those of logic, and naturally one always sympathises with a case which is put like that; and I shall therefore refrain from quoting the long passage from the noble Baroness's explanation in 1951, to which she has herself referred, giving the reasons why the benefits could not be paid more quickly after the then increase was announced. At that time the interval was four or five months. I shall not read the quotation but I have, I must confess to her, quoted it before in dealing with previous Bills, because it does put the case so clearly and convincingly that I always felt nobody could refute it once it had been heard and it is expressed very much more convincingly than I can do.
All I would say is this. At that time, when the noble Baroness gave this explanation of the very complicated work to be done by the Ministry of Pensions officials, there were only a little over 4 million people receiving these benefits, half the number now; there are now 8 million. It has not become less complicated in the interval. The noble Baroness paid a tribute, I am sure, well deserved, to the capacity and efficiency of officials of the Ministry of Pensions. Their task is twice as difficult now as it was then. They have got to do it on top of their ordinary work, and I am advised by my right honourable friend that if they were to attempt to work out all the retrospective claims between February 1 and May 27 it would have the effect of postponing the date when anything could be paid for a still longer period.

29
I think my right honourable friend has done his best to accelerate payment in this case. The short-term benefits, which do not require so much calculation, are being begun on March 7, and as for May 27, which is the date of the long-term benefits, I think this is the shortest period but one that has ever been achieved for any major or substantial change in the rates of retirement and other benefits.
The noble Baroness mentioned the hardships of the winter. I would remind your Lordships that the National Assistance scales were raised in September before the winter had begun, not that anybody had anticipated the weather we would have. But I would also add that of the considerable number of recipients of retirement pensions who are receiving National Assistance, a large number—I think about two-thirds—are receiving special allowances for such things as fuel or special diets, averaging something like 8s. a week; and the National Assistance Board also, of course, almost invariably pay the full rent.
These new increases—I will not argue with the noble Baroness who described them as "trivial"—are increases of between 17 and 18 per cent. in the amount of the benefits, and they represent a much greater rise than the rise in the cost of living. Since the last rise of April, 1961, there has been a movement of about 6 per cent. in the cost of living, and the increases in pensions under this Bill amount to about three times that figure. I think it is not only one of the quickest payments after announcement of any increase but it is also, apart from the small adjustment in 1952, the shortest interval that we have ever had between two major changes in pensions rates: only about two years, from April, 1961 until the present date. The anomalies which would be created by trying to make a retrospective payment are not only extremely difficult to resolve, but they would result in a great deal of inequality, unfairness and no doubt discontent even if it were possible to do this. I am afraid that in those circumstances there could not be any hope of my right honourable friend agreeing to amend the Bill in this manner.
On Question, Amendment negatived.
THE EARL OF DUNDEE: This Amendment is also consequential on Amendment No. 2. I beg to move.
Amendment moved—
Page 18, line 40, at end insert—
("Allowances in respect of incapacities arising from pre-1948 employment
6.—(1) Where an allowance under the Workmen's Compensation and Benefit (Supplementation) Act 1956, or under the Industrial Diseases (Benefit) Acts 1951 and 1954, is or has been awarded before the increase date, the allowance shall, without any claim being made, become payable (except as respects any period falling before the increase date) at the higher weekly rate provided for by section (Allowances in respect of incapacities arising from pre-1948 employment) of this Act, and the award shall have effect accordingly.
(2) Where any such award is made before the increase date, but after that date has been appointed, the award may provide for the allowance to be paid as from that date at the higher weekly rate.
(3) In the foregoing provisions of this paragraph "the increase date" means the date appointed for the higher weekly rate to become effective under subsection (1) of subsection (3), as the case may be, of section (Allowances in respect of incapacities arising from pre-1948 employment of this Act).
(4) Section 1 (4) of the Workmen's Compensation (Supplementation) Act 1951, so far as it prohibits the making of a scheme under that Act unless a draft of the scheme has been laid before Parliament and approved by a resolution of each House, shall not apply to any such scheme made before the expiration of the period of six months beginning with the date of the passing of this Act if the statutory instrument containing the scheme states that the scheme is made in consequence of this Act; but any statutory instrument containing a scheme which, by virtue of the foregoing provision, is not required to be laid and approved in draft as aforesaid before being made shall be subject to annulment in pursuance of a resolution of either House of Parliament.").—(The Earl of Dundee.)
On Question, Amendment agreed to.
Fourth Schedule, as amended, agreed to.
Fifth Schedule [Repeals]:
THE EARL OF DUNDEE: This, and the next Amendment are consequential. I beg to move.
Amendment moved—
Page 20, line 44, column 3, at beginning insert ("Section 1 (1), (3).").—(The Earl of Dundee.)
On Question, Amendment agreed to.
THE EARL OF DUNDEE: I beg to move.
Amendment moved—
Page 20, line 45, column 3, at end insert ("and paragraph 2").—(The Earl of Dundee.)
On Question, Amendment agreed to.
Remaining Schedule, as amended, agreed to.
The Title:
THE EARL OF DUNDEE: I beg to move the Amendments to the Title.
Amendment moved—
Line 14 leave out ("and").—(The Earl of Dundee.)
On Question Amendment agreed to.
THE EARL OF DUNDEE: I beg to move.
Amendment moved—
Line 16, after ("employments") insert ("and to improve the allowances payable out of the Industrial Injuries Fund in respect of incapacities arising from pre-1948 employment;).—(The Earl of Dundee.)
On Question, Amendment agreed to.
Title, as amended, agreed to.
House resumed: Bill reported with Amendments.
Then Standing Order No. 41 having been dispensed with (pursuant to Resolution):
THE EARL OF DUNDEE: My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(The Earl of Dundee.)
On Question, Motion agreed to.
THE EARL OF DUNDEE: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3ª.—(The Earl of Dundee.)
3.55 p.m.
LORD MOLSON: My Lords, I had intended to make a speech on the principles of this Bill on Second Reading. I understood, however, that it had been agreed through the usual channels that there should be no debate on the Second Reading. Therefore I find myself in the somewhat anomalous position of being obliged to refer to the general principles after the Committee stage has been concluded. In another place that would be regarded as a quite unforeseen development, but I believe this is part of the flexibility of the procedure in your Lordships' House which is, I think, to the convenience of everybody, and perhaps especially the Opposition.
32
I cannot think that this measure is well designed for the purpose that it has in mind. The origin and principle of retirement pensions derives from 1926 when Sir Winston Churchill introduced the idea of contributory pensions to be drawn as a matter of right. It then applied only to wage-earners. Legislation following the Beveridge Report made it universal. Under the Act of 1946 everyone was obliged to contribute, and everyone who had contributed became eligible after the lapse of ten years, to draw a pension. The result of that is, first, that everyone is able to draw a pension without proof of need; secondly, in ever-increasing proportion those in receipt of retirement pensions are not in need. Thirdly, it therefore follows that under this Bill, as I calculate it, increases are being given to three persons who are not in need for every one person who is in need. Fourthly, those in need will obtain an extra 6s., while those not in need will obtain an extra 10s.
I think this is a matter of sufficient importance for me to put the same argument again in a different way. Everyone who is in need is able to apply to the National Assistance Board. Let me here pay a tribute to the flexibility and sympathy of the administration of the National Assistance Board. It takes account of the special requirements of every applicant in such matters as fuel and special diet, and in more than 90 per cent. of the cases the rent of the applicant is paid in full. That is an example of flexibility, because there is a great variation in the rents paid by persons who otherwise are in similar circumstances. So greatly do circumstances vary, that even if the pension were increased by £1 instead of by the 10s. by which it is being increased under this Bill, there would still be half a million people who would continue to have to go to the Assistance Board.
National Assistance scales are higher than pensions and therefore pensions which are received are deducted from the scale to determine the amount of assistance given. Those who have no income in addition to their pensions can in almost all cases—perhaps in all cases—draw assistance in supplementation. So the level of pension is of great importance only to those who cannot draw assistance benefit. It therefore follows that those who are, as defined by the

33
scales of the Assistance Board, in need, will benefit under the new arrangements by 6s. a week, while those who have other sources of income and therefore are not in need will benefit by 10s. a week.
The pension has never been tied to the cost of living. It has never been claimed that pensions are sufficient for a person to live upon. It is the Assistance Board who, with great skill, have calculated what is required for subsistence. Under this Bill, so far as I can ascertain, only some 30,000 or 40,000 are likely to be taken off assistance by the increase in pensions. When pensions were originally introduced they were confined to wage-earners most of whom at that time had nothing else on retirement except their retirement pension. It is now being paid to those who have private sources of income—to those who are wealthy, or to those who have just some additional income. It is paid to those who are in receipt of pensions which they have earned by Government service, whether in the Armed Forces or in the Civil Service. It is paid also to those who receive occupational pensions.
There has been an immense increase in the last few years in the number of occupational pensions. They apply now, I think, throughout all the nationalised industries and through a very great many of the larger concerns in private industry. They amount in all to some £1½ million. Therefore, the situation with which the Churchill contributory pensions of 1926 and the Beveridge scheme of 1942 was intended to deal has completely changed. That pension system now is becoming inappropriate to existing circumstances. That was a system of flat-rate benefits paid in return for flat-rate contributions. These contributions are now becoming increasingly burdensome to those who receive low wages, and at the same time the pensions are of little interest to those who are highly paid.
It is only some three years since this Government persuaded your Lordships to approve a measure to introduce graduated retirement pensions, but nothing comparable has been done in the case of unemployed benefit or of sickness benefit. What is happening in this measure is merely another piece of patchwork, and I suggest that in the near future it will be necessary for the whole of this pension scheme to be looked at again in
34
the light of the entirely different circumstances which apply now as compared with 1948.
The arguments I am venturing to put forward are derived from an extremely reputable source—the speech of the Chief Secretary to the Treasury and Paymaster General when, with the Minister of Pensions and National Insurance, he resisted a Motion in the Commons dealing with this matter on November 26 last. It would appear from this recent change in the Government's policy that this is a panic measure intended to alleviate the unemployment which at present exists. But I cannot believe it is wise to make permanent and very important changes in the pensions scheme in order to deal with what we all hope and believe will be a temporary unemployment problem.
The money is being so widely distributed that it is going to be of comparatively small benefit to those who are in greatest need. These additional contributions add a heavy burden to industry and are thereby likely to raise the cost of living at home and to make more difficult the increase of our exports abroad. The expenditure, I venture to say, is entirely disproportionate to the benefit that is going to be obtained. We must be careful in looking at the payment of pensions. Of the whole population in 1911 those who would now be classed as pensioners were 6·7 per cent. of the population, by 1951 it was 13·5, and by 1961 it was 14·8 and still rising.
I hope that this will be the last case of an increase in the flat rate of pension. I regard it as an indiscriminate and undiscriminating distribution of largesse, chiefly at the expense of the contributors. I cannot do better than conclude in the words of the Paymaster-General, speaking in the debate to which I have referred, when he said—and it applies to this Bill [OFFICIAL REPORT, Commons, Vol. 668 (No. 20), col. 146]:
"… while … it would give advantage and help to many people who could well do with it, it would also give, at a heavy cost to the working generation, advantage to those who are not in particular need."
LORD AIREDALE: My Lords, this Bill was amended in Committee this afternoon by the insertion of a new clause after Clause 4. The new clause has a marginal note which makes use of the expression "Pre-1948 employment".

35
Marginal notes, of course, are not strictly part of a Bill, but I submit to your Lordships that even a marginal note ought to be in good English. I venture to submit that the expression "Pre-1948 employment" is bad English. I very much hope that when the Bill is being printed we shall have the pleasure of seeing this marginal note amended so as to read, instead of "Pre-1948 employment", "Employment before 1948".
4.8 p.m.
THE EARL OF DUNDEE: My Lords, I do not know whether it would be possible to improve the style and language of the Bill before Thursday, when we hope it will receive the Royal Assent, but I will certainly represent to my right honourable friend what the noble Lord, Lord Airedale, has said and see what can be done.
I am grateful for the remarks of my noble friend Lord Molson. He may quite possibly be right in saying, as he did to begin with, that this is an ill-conceived or badly-designed Bill which will not fulfil what is in mind, but I am afraid there is nothing I can do about that this afternoon. I would, therefore only acknowledge the very interesting remarks of my noble friend and just say this. I was glad he began by directing his argument to the National Assistance Board and suggesting that its scope should be expanded, because I am sure your Lordships will agree that all parties have been trying for a long time to remove the idea that there is something derogatory about applying to the National Assistance Board. We, of course, understand very well the sentiments of pride and independence which make many people reluctant to do so. But it is, in present circumstances, really not possible to carry on a humane and proper system of social services in a Welfare State without an institution such as the National Assistance Board. My noble friend's argument was that we ought to do more through the National Assistance Board and not so much through these contributory pensions.
Although personally I should have no theoretical objection if some day we could reach a state of society in which everybody had such a good income that a National Assistance Board was un-
36
necessary—I would certainly think that was a good thing—in present circumstances I cannot envisage any state of society in which there would not be at least a few people who ought to be encouraged, I would say, to apply to the National Assistance Board. I think my noble friend and all of your Lordships would perhaps agree that it is a difficult thing, trying to reach the right balance between benefits which are given as of right, in return for a contribution, and assistance which is not given as of right and which depends upon need. Very often our policy is criticised from the opposite angle to that from which it has just been criticised by my noble friend.
We are often told, for example, that we ought to have a much bigger contributory pensions scheme, like they have in Germany, in which a worker may be assured as of right of a payment in his old age which will be sufficient for his needs. But that, of course, would mean a much higher contribution. I believe that the contributions in Germany amount to 12½ per cent. of a man's weekly wage, with the result that they can earn very high pensions as of right. One would not, I think, necessarily argue that in itself 12½ per cent. is too much of anybody's income to save for the purpose of providing for old age. The question is rather: how much we should interfere with a man's liberty to do what he likes with his own money. That, indeed, was the reason—I thought of it when the noble Lord, Lord Molson, went back to the origin of this insurance scheme more than 50 years ago—which prompted Hilaire Belloc to write a book called The Servile State: because he thought that the result of this insurance legislation would be gradually to make the working population into slaves, and the State would take away all their money for their own good and would judge what was best for them. We have to make the best compromise we can, and I am far from saying that we have the best one, but I think we should not rely entirely on National Assistance. I think we should try to improve and extend our contributory pensions system.
It is a good thing, within certain limits, that we should have compulsory contributions supplemented by aid from

37
the Exchequer in order to provide payments as of right. I think it encourages thrift, too, because if everybody were always to get all he required from the National Assistance Board, that would not be an encouragement to anybody to save. The fact that a man gets this pension as of right means that it is his own and, except for the earnings rule for a temporary period between 65 and 70, it is not something which can reduce his other income. I would not quite agree with what my noble friend said at the end—certainly not about this being a panic measure. I do not think it will add to our export difficulties. In fact, I think that to keep unemployment benefit in step proportionately with wages is a good thing for the economy of the country, because it means that we do not have a considerable section of the public with a much lower purchasing power. And I do not think it is a bad thing for our economy and export trade as a whole, to increase purchasing power in that direction.
I think that these contributory benefits, retirement pensions and unemployment benefit, have moved rather faster since 1948 than wage rates. But I do not think it is wrong that we should go on from time to time improving our social service system in this way, so as to keep these contributory benefits in line with the general increases in wages and in national prosperity. That is what we are trying to do in this Bill. It is not a panic measure. It is a step forward, I would submit to your Lordships, in keeping with the steps which we have taken before, and after a rather shorter interval than we have had until now. I therefore commend this Bill to the approval of your Lordships.
On Question, Bill read 3ªwith the Amendments, and passed, and returned to the Commons.

DRAINAGE RATES BILL
Brought from the Commons; read 1ª, and to be printed.

THE POST OFFICE
4.18 p.m.
LORD CROOK LORD CROOK rose to call attention to the work of the Post Office; and to move for Papers. The noble Lord said: My Lords, in moving the Motion which stands on the Order Paper in my name, may I remind your Lordships that the last occasion on which I had something to say about the Post Office was in March, 1961, on the passage of the Post Office Bill; and shortly before that on a Motion which I had ventured to introduce about the telephone service and some of its shortcomings. I recall that deliberately this afternoon for a very special reason, with which I believe all of your Lordships will be in sympathy. I do so because towards the end of that speech I said [OFFICIAL REPORT, Vol. 229, col. 531]:
"We have a Post Office of which we can all be proud. Come fair weather, snow or wind",
we could always rely upon the Post Office service.
I recall that, as much as anything, because of a most unusual thing in a letter which the Postmaster General addressed to The Times in recent weeks. It was unusual in that, while Ministers often pay tributes in Parliamentary debates, on this occasion the Minister had gone out of his way publicly to say that he had received many tributes to the postmen who trudged their way through deep snow to deliver letters, and to engineers who had repaired telephone faults in almost arctic conditions. He ended by saying that the efforts of Post Office staff to maintain communications had not gone unnoticed. I think it would be very churlish of the mover of a Motion this afternoon, who intends in the course of what he has to say to offer some criticisms of the administration of the Post Office, not to say straight away that he is sure he finds in the minds of all your Lordships, and indeed of all thinking members of the public, a reflection of what the Postmaster General has said.
I know something of the difficulties in my own locality. They have gone far beyond the problems of snow getting in the way, and of ice formation; in fact, they have led to the complete stoppage of lifts and of automatic machinery operated by electrical current when, for many hours, we were forced to suffer a blackout. I say that, my Lords, in order to make it clear that no criticism I may

39
offer this afternoon is intended to reflect on the effective work of those servants of the Post Office who, for so many years, and on many occasions very underpaid, have given such loyal service to the State.
However, I want to talk to-day about what the Act did in 1961—or, rather, perhaps, what some of us on this side thought it did. When we accepted it, we hoped that the freedom which was promised to the Post Office—a Post Office which we were told was going to embark upon all sorts of commercial operations—would provide better opportunities for the Post Office. But when we look at the Report—the first we have had—what do we find? I am bound to tell the noble Lord who is going to reply how much better this Annual Report is than any the Post Office has ever produced before—and that applies to the whole of its format and make-up, to say nothing of its illustrations, which show some of those very great things which the Post Office does, and of which we can be proud.
The first picture, for instance, is of Goonhilly. The Goonhilly Downs project, carried out, as it was, not only efficiently but economically, in order to deal with the movement of the satellites, is a tribute, I think, to the whole of the work of the Post Office engineers. There is a picture of the operation of Telex, which is spread not only across Britain and not only across parts of Europe, but is now linking us with the Commonwealth. Then we have a picture of the tower in Tottenham Court Road, which, before long, is going to dominate us, with its 580 feet of dish to try to pick up signals; and where, I understand, we are to be offered (though we shall have to pay for them) perfectly good lunches as the tower revolves. But that is not within the realm of this Report.
What the Report does show, to my horror, is that nearly every one of the estimates which the Post Office has made, one after the other on every subject, has been completely wrong. They have all been nullified by events, and it can be quietly indicated how true that is if one looks at the documents before us. The Post Office has not lived up even to the things which we were told when the Bill was being presented to us. We are still the seventh country in the world
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judged by the number of 'phones per hundred of population. I will not bore your Lordships with the figures, but the United States is up at the top and we are about a quarter of the number down, with countries like Denmark in between. But, of course, more important than that, seventeen years after the war has ended, we are still left with huge waiting lists of people wanting the telephone. There were 50,000 when the Bill was introduced, and we were told then that the limit it was expected anybody would have to wait would be twelve months. The waiting list to-day is 47,000—and some of those, to my knowledge, have been on the waiting list for years—and the Director-General of the Post Office has now been reduced to expressing the view in public that he hopes people will not have to wait longer than two years, because that would not be very good.
The story of the total number of exchange connections is equally woeful. Before the Bill was presented to your Lordships, it was estimated, in the White Paper, Post Office Prospects for 1961–62, that there would be 220,000 connections. In fact, the Report shows that there were 177,000. The next set of Prospects, for 1962–63, forecast another figure of 200,000. The last figure that I have which I can quote with any confidence is that at November 30 last, when eight of the twelve months had gone, when 95,000 was the achievement. It is the same story throughout each one of the things that we find reported. Failure to maintain the growth rate means that the supply has been allowed to fall below demand. In the first eight months of the financial year, which we shall be hearing about in a few weeks' time, the list grew by 7,481. My Lords, it is my belief that the Post Office would have been presented with an even greater problem had it not been for the fact that there were many people who, because of increases in their bills between July, 1961, and March, 1962 (and we ventured to offer some comments when the new scales of charges were presented in this House), gave up their 'phones. They relieved the pressure to the extent, I believe, of as much as 81,000: certainly I heard that there was a fall in demand of at least 30 per cent.
It is also true to say that when the Bill was debated we on this side of the House directed attention to the fact that there were

41
1 million people sharing lines. The noble Lord who then replied for Her Majesty's Government said that they had taken a census and had found that some 100,000 had now got so used to it that they did not mind and would stick it; that 200,000 were actively unhappy; and that another 100,000, given the choice, would presumably choose exclusive lines. We have had the new Post Office, in its new guise, dealing with that problem since March, 1961, and the figure of shared lines, my Lords, is 1 million—exactly the figure at which we started. What is more, the Postmaster-General, in the last speech I can trace on this subject, in May, 1962, said that he could not indicate when anything would be done.
The same is true, of course, of local lines. In the Prospects for 1962–63 we were told that there was a marked increase in the rate of growth of local calls, and that this was expected to be maintained. Now, my Lords, the accounts show that the increase, in fact, was 5 per cent., which is less than half the previous year's figure. Indeed, the Post Office have had some help, because the position might have been even worse if the growth had been as good as they thought it was going to be.
On the conversion of manual to automatic exchanges, we were told that we were to have another 100 conversions in the financial year. I do not know what the figure is now, but, even allowing for disruption by ice and snow, as one is bound to admit there must have been, I do not think there is any hope of the 100 having been achieved. But subscriber trunk dialling shows an even worse record. We were told that 25 per cent. of the exchanges were going to be on S.T.D. by the end of March, 1962, and nearly 40 per cent. by March, 1963. The Post Office Prospects for 1961–62 estimated that by March, 1962, there would be 300 exchanges covering 1½ million of the public—about one quarter of the total subscribers on the telephone service. But the Report shows that, in fact, only 250 were connected, serving only 1 million of the public and estimated in the Report by the Post Office itself as being not one-quarter by merely 18 per cent. of the total. The 1962–63 Prospects that your Lordships and those in another place were given last Spring showed that 500 exchanges would be on S.T.D.—making one-third of the public service by the
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end of this financial year. Apart from the question of snow and frost it is equally unlikely that this figure would have been reached in any case.
The importance of S.T.D. is shown very clearly in the Report because we are told there, as by the Postmaster General in his speeches, that trunk calls are the profit lead in the Post Office. Indeed, the Report shows, to the great credit of the Post Office, that no less than £16 million profit was made in the 1961–62 period. We are also told in the Report that the Post Office must prepare itself for a 13 or 14 per cent. annual increase in the calls. Well, what preparation for that increase does the Post Office propose to make? It is proposed to provide £17 million for capital trunk conjunction circuits in the coming year. That is exactly the sum which was provided under the same heading in 1956–57; when your Lordships may think that prices were somewhat lower, when one went to purchase, than they are to-day.
Finally, in my list of the things that were wrong in the forecasts I come to the most important of all. This stems from all the others and is the forecast of profit. Profits have fallen short because of failure to reach the targets to which I referred. The forecast for the year 1961–62 was £17 million. In fact, what was achieved was £12·6 million. The forecast for this year was the beautifully optimistic one of no less than £34 million. The best that those with whom I am in contact can suggest as a likely total for the end of this financial year in a few weeks' time is £13 million. My Lords, it is, in fact, to that point that I have been trying to lead, because, on the lower profits, the amount to be borrowed from the Exchequer is not even up to the statement given by the noble Lords who sat opposite when they proposed the Bill for our acceptance. The whole basis of what noble Lords on these Benches said on that occasion was that more capital was needed in this supposed freeing of the Post Office from Treasury control. We said that our colleagues in another place had moved Amendment after Amendment in the Standing Committee dealing with this point. They had moved them very effectively and they had been rejected. We did not think it worth while to put those Amendments again here, but we made it clear what we felt about the matter. We were told, "The

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Treasury's 'dead hand' has gone"; but in fact it is still there.
I was very interested and a little intrigued—and this has nothing to do with the particular arguments I am advancing to your Lordships—to find that early in January one of the Post Office hand-outs gave a fascinating account of early troubles in the Post Office over a hundred years ago. The hand-out quoted a great novelist who is known to your Lordships—Anthony Trollope—who, in addition to being a novelist, was also, in order to earn his living, a Post Office surveyor. In the course of his comments he says:
"We were bound down by salutary laws to expense which came from our masters at the Treasury."
I could not help wondering whether the shade of Anthony Trollope had sat in the Distinguished Strangers Gallery in the other place on November 27, 1962, five weeks before-hand, when the Chief Secretary to the Treasury, speaking of public investment, said that the figure for the Post Office was still under discussion.
At least we were told, in speeches by noble Lords opposite when this alleged freedom was bestowed upon the Post Office, that forward planning was essential and that there would be a loan from the Exchequer of £40 million a year. Indeed some of us had been casting about on this matter and quoted Mr. Marples when he was Postmaster General some year or two before that. He had said he could not hope to run the Post Office or any other business he was connected with unless this "Stop-Go", business stopped, and unless there was some planning for five years ahead. It is interesting to note that he was saying that in November in a situation in which he had no idea how much money he was getting for the current financial year. We were told the present Postmaster General shared the views of Mr. Marples.
With this fall in profit and the commitments and capital expenditure, how can the present investment programme be maintained while at the same time reducing the pressure on current resources? The alternative is almost certainly a substantial increase in prices. That would make a rapid expansion of Post Office business much more difficult and indeed a hazardous occupation. At a time when we are worried about it and
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are running a National Productivity Year it would harm industry by increasing the whole of operating costs. It might cut production and cause yet more unemployment.
The Post Office appears to be trying to finance from its current resources too high a proportion of an expanding investment programme. In the earlier years (before the Post Office Act, 1961, that we were told was going to be so helpful) more than half the then much-smaller investment programme was financed internally. The Memorandum on the Post Office Bill, 1961, estimated for about two-thirds to be financed internally. The proportion of investment financed internally in 1961–62 was about that envisaged at the time the Bill was presented to us; that was, about 65 per cent. In the current financial year, 1963–64, the proportion of self-financed investment is going to rise substantially. It is going to rise to 73 per cent. in this financial year and to 80 per cent. next year—this at a time when the level of investment is itself rising rapidly—while the amounts to be invested are increased and the amounts to be borrowed are reduced.
The Post Office is now borrowing, or is going to borrow, less from the Exchequer than envisaged at the time when the Post Office Bill was presented to us. At that time it was assumed that the Post Office would need £500 million for investment over the next four years and that two-thirds of that would be financed internally. Your Lordships were told that £160 million would be financed by borrowing from the Treasury and that that was equivalent, the noble Lord told us in an excellent explanatory speech, to an annual average figure of £40 million. As I have indicated, in the year during which this Bill was moving through Parliament to become an Act, the Post Office received £40 million on loan from the Treasury. In 1962–63, they had to borrow £35 million and now they have committed themselves for the coming year to borrowing only £30 million, and that in respect of a year in which they are planning to step up their investment programme to £150 million, thus leaving £120 million to be found from their current resources.
What is more, the level of investment in the Post Office is expected to go on

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rising. So it should. It will rise to £167 million in 1964–65 and to £177 million in 1965–66. It is difficult to see how the Post Office can expect to finance from current resources such a proportion of its programme. Indeed, it is questionable whether in an industry as capital intensive as the Post Office is in respect of telephones, the internal financing of even two-thirds of investment could achieve a satisfactory rate of expansion. And that is accepting the two-thirds put to us at the time the Bill was before us. It would be at least of some help if the Post Office were getting that amount which was envisaged and promised when the Bill was before Parliament. If the telephone system is to be effective, I suggest that there must be some Post Office borrowing beyond these limits.
Section 9 of the Post Office Act, 1961, empowers the Treasury to make advances to the Postmaster General, and in subsection (3) of that section power is given to the Treasury to make these advances by raising money
"in any manner in which they are authorised to raise money under the National Loans Act, 1939, and any securities created and issued under this subsection shall be deemed for all purposes to have been created and issued under that Act."
I do not have the acumen with regard to loans of my lamented colleague the late Lord Pethick-Lawrence, and I do not pretend to know exactly what is meant by that, so I would ask the noble Lord who is going to reply whether it means that a loan for telephone development could be floated, if that were approved. Perhaps he could even tell us why this subsection was inserted. I realise that sometimes sections are put in as a mere routine insertion and have very little meaning to far too many people. I also realise that this may have some relation to "Neddy" or "Nic" in these days of all these nice committees with friendly names, but no doubt the noble Lord will be able to tell us.
I have referred to only a few of the things for which money is needed in the Post Office. There are a large number of other developments which, in my view, are vital to the export industry as well as to the whole of the country. For instance, there is the electronic exchange. We are all delighted that the Post Office got ahead with this and opened the first electronic exchange last year. I am also
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delighted to hear of two or three other electronic developments on which experiments are being made, because all this is going to be of tremendous importance in capturing the export market. I am quite sure that we are ahead of the United States of America and the rest of the world in these things which our excellent research people, tucked away in the back rooms of the Post Office, are always busy doing.
I do not know how much more money is wanted for the extension of the Scotland-Iceland link. This is of tremendous importance for aircraft control in the Atlantic. I know that it has been opened between Scotland and Iceland, but whether it has got far towards Greenland and on to Canada I do not know. I shall be glad if the noble Lord can tell us, though, if he cannot, we can always hear later on. It is the same with regard to the Anglo-French micro-link, which was opened in 1960 and which has proved so valuable to the Post Office. I know that it was to be multiplied as the years went by, and perhaps the noble Lord can tell us whether that is being done or whether again finance makes it impossible.
If I did not realise that your Lordships can be bored enough by a speech of even half an hour, I could go on talking of the Post Office, of the great work it has done, of the great work it has to do, and also of the great things which are possible and which its scientific and research workers will go on to do—provided we do not let them flee to America because we do not pay them enough or give them good enough conditions. If in moving this Motion I have offered criticisms, it is of governmental policy and not of the Post Office or of its staff. For the Post Office and its staff I have nothing but the greatest praise. My criticism lies with Government policy. I beg to move for Papers.
4.47 p.m.
THE EARL OF LISTOWEL: My Lords, I am sure that my noble friend, with his customary humility, need not have apologised for this Motion. Those noble Lords who are here this afternoon are grateful to him for giving them this chance of another progress report from the Government on the work of the Post Office. We are also grateful to him for a characteristic speech, which had all the

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qualities of being extremely well-informed, balanced and constructive—the sort of speech which your Lordships most appreciate. I should also like to say how glad I am that my noble friend Lord Geddes of Epsom is to speak later in the debate. This is a real and very special treat. I remember when he was the competent and delightful secretary of the Union of Post Office Workers, and I am sure that there is no Member of your Lordships' House who knows more about the workings of the Post Office from the inside, from personal experience, than my noble friend.
As a preliminary to the few remarks I intend to offer, on the basis of careful and prepared thought, I should like to say how warmly I join with my noble friend in offering congratulations to the postal and engineering staff of the Post Office for the way they have carried on during the cold spell. Their devotion to duty has been entirely in accord with what those of us who know the Post Office would have expected, but I think that it was particularly remarkable because it occurred during the worst cold spell of the century. Among all the people whom I met during or after the cold spell, there was not one complaint about the delivery of mail, and I am quite certain that if there had been any serious complaint it would have been brought out in Parliament. This absence of complaint is the surest indication of the way the Post Office staff carried out its work.
Now, may I come to some brief remarks on two subjects, which I think are of outstanding importance? The first of these is the telephone service. Here I shall follow broadly what was said by my noble friend Lord Crook. I was at the Post Office in 1945, seventeen years ago, just after the war. Then, of course, we were faced by this telephone problem. It was much more acute that it is now: we had a much longer waiting list. But it was also much more excusable, because no one was surprised that telephone development in this country was brought to a standstill during five years of war. We were starting to make up for the arrears in the development of the telephone service. However, seventeen years have elapsed since then. The first six years, it is true, were years during which Labour Governments were responsible for the Post Office. But in subsequent years
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there has been a succession of Conservative Governments, and it is during that period of time that the defects of the telephone service should have been remedied. I think that this Government will look back on their record in relation to the telephone service as one of the worst blots on the services they should have rendered to the country; and this applies equally to their predecessors during the period since 1951 of Conservative rule.
I feel sure that it will be agreed by everyone, irrespective of Party, that we have far too few telephones in this country compared to countries in other parts of the world having a similar standard of wealth and standard of living. I will not weary your Lordships by quoting a lot of figures, but I should like to mention one or two. We in this country, as my noble friend Lord Crook said, have 16 telephones to every 1,000 inhabitants. In Norway, a much smaller country than ours—a country of a high standard of living, but not such a high standard per head as we have—they have 21 telephones per 1,000 persons. New Zealand has 32 telephones per 1,000 persons; that is to say, exactly double the number that we have. That, surely, is a rather shameful comparison.
What about new telephones? As my noble friend said, the prospect at the moment is not encouraging. The Postmaster General expected 200,000 new connections this year, and we have reached less than 100,000 during the first eight months. As my noble friend pointed out, it looks as if we are going to fall very far below the target. There is still this wretched waiting list. The waiting list did not change between 1961 and 1962; and on the figures given by my noble friend (I have the same figures, and I hope the noble Lord, Lord Chesham, will correct us if we are wrong) it has fallen only from 53,000 to 47,000 in the first eight months of the current financial year.
What should the Government have done, and what should they do, if they wish to remedy this situation? I want to emphasise that the main thing is what my noble friend was trying to impress upon the Government—namely, a change in the financial policy of the Post Office which would enable it to have more money for capital development. We all

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hoped that this would come about when the Post Office was given its financial independence and freed from Treasury control in 1961. We all looked forward to this as one of the achievements of financial independence. But this has not happened. What is absolutely essential is that a much larger proportion of capital development should be paid for out of loans and a much smaller proportion out of the diminishing profit from the telephone service.
In this respect, I believe that the Post Office, which I regarded, and I think all my successors and predecessors regarded, as, in effect, an extremly important business firm, although it happened to be subject to public control, should be on the same footing in regard to the raising of loans as any big private firm. It should be on the same footing as I.C.I., Unilever's or any other firm which is able to go to the open market and raise capital. I thought my noble friend's question was very pertinent: has the Post Office authority, either by acting on its own or by asking the Treasury to act for it, to go to the open market to raise money? I cannot see any prospect of the Post Office having enough capital for its investment programme, and therefore for any substantial improvement in the telephone service, unless a much greater amount of capital is made available from loans and a much smaller amount is taken from the profits of the service. This ties up with the whole programme for expanding production in this country. If the Government are seriously anxious to expand production, both for consumption at home and for export, then it is absolutely essential to have an efficient and up-to-date telephone service. A telephone service to that standard of quality is essential for business.
The one other matter to which I should like to refer (I apologise to the noble Lord for not having given notice that I would raise this, and, though I hope he may be able to answer me to-day, I shall naturally not complain if his answer is not as full as it would otherwise have been) is that of space communication; that is to say, communication by means of satellites in outer space. This is a revolutionary technical development in communications, comparable to the invention of wireless. At the moment
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it is in an experimental stage, but the fact that Telstar was put up by the Americans, that it functioned satisfactorily and that messages have been received, shows that this has enormous promise for the future. I hope that this country will not leave to Russia and the United States a development of such enormous importance to communications throughout the world. Other forms of space exploration I would gladly leave to out wealthier and more powerful neighbours.
When I was in America last autumn I went to Cape Canaveral, and I was told that the American Government is redoubling expenditure on space exploration because it is determined to reach the moon. I hope that we shall not emulate expenditure of that kind, and that we shall not go in for undertakings which seem to me to be primarily matters of national prestige. Let us leave that to others. But this business of improving communications throughout the world is of immense practical and commercial importance. That is why I think this country should play a leading part, both at its experimental stage and later on, when the operational stage is reached—possibly in only five or six years' time.
What seems to me to be an essential condition for any British or Commonwealth system of space communication is that, so far as we in this country are concerned, our part of it, anyway, should be subject to public ownership and public control.
I should like to ask the noble Lord what is the intention of the Government in that regard. There seem to me to be two perfectly good reasons why it is essential that this development in communications should remain in the public sphere, just as the telephone service is at the moment. The first is because of its incalculable political and military importance. I will not enlarge on that, but every noble Lord would agree that this matter of satellites revolving around the earth carries with it military and political implications of immense importance to the security of our country. The second reason why this should remain in the public sphere, and should not be left to private enterprise, is because the capital that would be required is so enormous that it could be raised only by a partnership between Governments and business. There is an estimate (I do not know how

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accurate it is, but perhaps it gives some rough idea of what may be needed) by the British Space Development Company that £200 million would be needed to launch nine satellites and provide six ground stations. As I say, I do not know how accurate that estimate is, but it gives us some idea of the amount of capital that would be required for a system of this kind.
In the long run, of course, it would be highly profitable, and the capital would bring in a return similar to, or, indeed, rather more than, that of an ordinary private company. But it seems to me that this system of space communications would have to be a partnership between Governments and private enterprise, and also a partnership between at least the Governments of the Commonwealth. I should hope that we might ask the United States to come into this partnership, because, clearly, if we could pool our resources with American resources that would be more economical and more efficient than having two separate systems started up at the same time. If we cannot get the American Government to come in, I think we should certainly ask Commonwealth Governments to come in on this with us. We shall be grateful to the noble Lord who is to reply for anything he can tell us about the Government's intentions in relation to space communication.
5.3 p.m.
LORD GEDDES OF EPSOM: My Lords, the first thing I must do is to thank the noble Earl for his kind references to myself, which brought a blush to cheeks that I thought were beyond that possibility. The next point I want to make is that I may be misunderstood, because it may appear from what I am going to say that I am in disagreement with the noble Lord, Lord Crook, who introduced the Motion, and the noble Earl, Lord Listowel. This is not true. Basically, I entirely agree with them that capital investment in the Post Office is nothing like high enough, and has not been high enough for many years. As a matter of fact, in the postwar period not only was the amount set far too low, but it was continually cut. Had it been at a much higher rate during those years, much of the criticism of the noble Lord need not have
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arisen. I agree that there are certain defeats in the telephone service which ought to be put right. I feel that rather deeply, because I happen to be on a manual exchange where the speed of answering is much more likely to be 50 seconds than 10 seconds, and where I am commonly toll in the morning that there are no lines to London. I continually have to wait while the girl goes up and down the junctions trying to find a line. Incidentally, I always find that extremely irritating, and I wonder why it is necessary that I have to hear the pop, pop, crackle, pop, as she goes up and down trying to find a line.
I agree that basically there is a need for more capital investment. One might be forgiven for believing, in the light of the speeches of the noble Lord and the noble Earl, on a Report which is called the Post Office Report and Accounts, that it was a telecommunications organisation or a telephone company of some kind. Of course it is nothing of the sort. The Post Office is still basically an organisation which runs a service for the whole population, in the form of conveyance of letters, post cards, parcels, et cetera, and rendering a large number of other services, some twenty in number, for various agencies. It was significant that when the noble Lord, Lord Crook, paid his tribute to the staff—in which, of course, we shall all want to join—his first reference was to the postmen. This, I thought, was quite a natural thing, and it is true that the postmen (not more, I agree, than the telephone linesmen, but particularly the postmen) have done magnificent work during this particularly bad period.
The two noble Lords will forgive me if I say that the other part of the Post Office staff, the vast majority of them, performing the vast majority of Post Office services, are sometimes inclined to think, in the light of a debate of this kind, that the telephone service is becoming—may I be forgiven for saying this?—the pampered daughter, and that people are apt to forget the perils of the brothers who do the work. It is, of course, true that the telephone service at the present moment does magnificent work. It earns most of the profit of the Post Office. This was not always so, as noble Lords know. There was a time when the telephone service was almost wholly supported out of the profits of the postal side. It is

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equally true that it would be possible to raise a very large profit indeed by a very small increase in postal rates. I am not suggesting to the noble Lord that rates should go up; I am merely trying to illustrate that the postal service is still the most important part of the services rendered by the Post Office.
The other point to bear in mind is this. While it is true that the telephone service makes a great contribution, particularly to industry and commerce, it serves only a minority of the population, whereas the postal side serves everyone. The whole population benefits from the postal side. When one bears in mind that in the forecast last year the capital expenditure for the postal side was reckoned to be about £9 million, and for the telecommunications side £122 million, one is apt to believe that there is some need to consider not only increased capital investment but priorities in this respect.
I want to speak for a moment on behalf of those people on what is known as the postal side, who believe that they, too, have a claim for consideration when it comes to capital investment. There are still a large number of post offices in which Post Office staff are working and which are appallingly bad. While it is necessary, as has already been said, that the telephone service should have much more capital investment, there are those on the postal side who believe that the Postmaster General, when he is looking at capital investment, thinks, as would appear from the discussions today, that the only people who really count in the Post Office service are those on the telephone side. There are people in the Post Office who believe that only the telephone side counts. But there are others. I do not disagree basically with what has been said by the two noble Lords who preceded me, but my plea is that when consideration is given to improved capital investment there shall be a material improvement in the capital investment of the postal side.
My last point refers to one result of mechanisation on the telephone side. I do not deny that much has been done by the Administration in discussion with the trade unions to try to deal with the inevitable redundancy that arises from mechanisation in the Post Office, as elsewhere. I do not deny that much has been done to try to reduce the evils, and
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to a very large extent they have been removed. But can I ask the Minister that further consideration be given to the case of the single person who is involved in a transfer arising from redundancy? There seems to be a mistaken idea that the single person is more mobile than a married one; and this is not necessarily true. It certainly is not necessarily true when dealing with a single woman, who very often has responsibilities equal to, and in a degree greater than, those of a married man. When a married man is transferred as a result of redundancy he gets compensation. It may not be adequate but at least he gets compensation. Where a single person is involved, particularly a single girl, she gets no compensation at all, the assumption being that she can move from this town to that town without any hardship or difficulty. There is a recent case on record where a girl in the telephone service, redundant as a result of mechanisation, found herself in the position of being unable to move because of an aged parent and had to take a drop in salary of a very considerable amount; in fact, 24s. 6d.
I want to suggest to the noble Lord that this is the sort of thing that surely ought to be given much more consideration than it is. It may be possible to quote Treasury regulations to say that this or that cannot be done, but I would suggest that there is something to be said for the idea that in a case of redundancy arising from mechanisation or the construction of an automatic exchange, anybody who is forced to lose salary or wages, call it what you will, should be allowed to retain on a personal basis the salary at the time of transfer. This is not asking too much; it is not asking even for a precedent to be created. I should have thought not only that it was fair and just but that it could be a charge against the Post Office that a decision to cause them to transfer at loss is harsh. I would ask whether or not it is possible for this also to be given consideration.
I have little more to say except to repeat that I do not want it to be thought that I am in disagreement with the two noble Lords. I do believe that capital investment ought to be increased, but I also believe it is necessary that we should bear in mind that there are two sides to the Post Office, telephone communications

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and postal; and postal still is, and I believe will remain in the future, the most important part of the Post Office service.
5.12 p.m.
LORD AIREDALE: My Lords, I have only one small point to make which I had hoped to tuck into some quiet corner of a rather longer debate than we have had this afternoon. There is a Post Office in the Central Lobby of this building which is called the "House of Commons Branch Office". It is used, of course, by all who come to the Palace of Westminster: Members of both Houses of Parliament, officials and visitors. I suppose the class of people who use it least are the Members of another place, because they have another Post Office which is their very own, situated just beside their own Members' Lobby. I would suggest that a better name for the Central Lobby Post Office in this building would be either the "Houses of Parliament Branch Office" or the "Palace of Westminster Branch Office".
It is true that there is a House of Lords postmark over ordinary prepaid letters which are posted within the precincts of this House, but apparently this does not apply to "Official Paid" letters; and when your Lordships receive through the post a communication from the Lord Great Chamberlain it has upon it, in the bottom left-hand corner, the ornate seal inscribed, "Lord Great Chamberlain, House of Lords", and in the top right-hand corner the postmark "Official Paid, House of Commons Branch Office". I would suggest to your Lordships that it would be a better thing if the Central Lobby Post Office were renamed so as to recognise the fact that it serves all who come on their lawful occasion to the Palace of Westminster.
5.16 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD CHESHAM): My Lords I should like to begin what I have to say in a usual but by no means insincere way; that is, by thanking the noble Lord, Lord Crook, for his initiation of this debate. I think we should be grateful to him because, like him and others of your Lordships, I feel that a debate about Post Office affairs on a fairly general basis from time to time is very helpful. I should
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like to express my gratitude to the noble Lord not only for the way he started the debate but for his kind thought and cooperation in "tipping me off", so to speak, about a large number of the points he intended to raise. I appreciate that very much; and to show my appreciation I am going to ask him if he will allow me to compare him to a kind of barrow boy who has pushed before us a wheelbarrow full of extremely assorted fruit in the shape of the points that he has raised. It is extremely nice, will be very much appreciated and is encouraging to all the people concerned that among the load he included some strawberries as well as some raspberries. Perhaps he will not mind my adding that he seemed to me to have included one or two lemons as well.
I felt that he rather started his argument on a particular point with one of these lemons, and that is the question of the number of telephones per head of the population, on which he quoted various figures. I am happy to say that, unless I have my sums wrong (and I do not think I have), in this matter we come out sixth and not seventh, as he said. This is one of those matters which gives rise to the old saw about figures being able to prove almost anything. But I certainly consider that his bald statement as to our position in the number of telephones per 1,000 of population, and so on, needs a little qualification. I want to try to qualify it, not defensively but so that we see the true picture from these particular figures.
The noble Earl, Lord Listowel, referred to the number we had per 1,000 of the population. I think he made a slip of the tongue there and meant per hundred.
THE EARL OF LISTOWEL: I thank the noble Lord for correcting what was a slip of the tongue.
LORD CHESHAM: I say it only because I thought it was one. Apart from merely saying baldly that America, for instance, has 39½ telephones per hundred of the population while we have the figure that was mentioned, therefore it is a very bad thing, and that several other much smaller countries are way ahead of us, and so on, I think that there are other perspectives that we must use to look at this particular figure. Three of the countries which rated above us on that scale have a

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population about the size of London—not of the United Kingdom. And it must be remembered that in this country, perhaps it would not be entirely disagreeable to your Lordships if I said we suffer from having a much greater population density than the other countries. In the number of telephones installed, the number of telephones there are in this country, we come second in the world, not sixth. We come second only to America; although with the total of population divided by the number of telephones it comes out that we are in sixth position.
I suppose it would be reasonably true to say that one is likely to find more telephones in countries where people can well afford a telephone than in others where they cannot. If you take the figures on the basis of gross domestic product you find that the same six countries are in the lead. The order per 100 of population is United States, Sweden, Switzerland, Canada, Australia and then ourselves. The same six countries are in the leading position; the positions change somewhat among the first five. We are still sixth, taken on the basis of national wealth. Therefore I do not think it can be said that the use of telephones—what is technically, I believe, called "telephone penetration"—is unreasonable, by international standards, on that basis. I do not think that to choose that one narrow factor is the fairest possible way of assessing our position in the world.
The noble Lord, Lord Crook, said that the Post Office has failed to live up to various forecasts that have been made in the past on various matters; on the number of new subscribers connected, on the reduction of the waiting list, on the manual exchange conversions, S.T.D. development, rate of increase in local calls and so on. I think I must take some of these individually; this debate would scarcely be suitably conducted if we did not discuss these things individually, because they are important. If, as in the case of new subscribers connected, there is a shortfall, as indeed there is, the next important thing is to discuss the significance of it. The noble Lord gave us several figures, but the main ones he gave us were net figures, and that is the total number of connections made in a year less removals and less cessations of
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service. I want to work in gross terms because I think it keeps the position a little more clear. The stated target in Post Office Prospects, 1961–62, was that it was expected to bring service to 460,000 applicants that year; in fact, it came to 445,000, so to that extent the noble Lord is correct. The following year the figure was 450,000, and 415,000 were actually connected. That shortfall was due primarily to the fact that there was, as the noble Lord mentioned, a falling away in demand after the tariff increases which took place in July, 1961. The shortfall in the second period was because the demand again was less buoyant—if that is the word; at any rate, it was less than was expected.
Having considered all that, and the reasons for it, we expect that there will be a greater expansion in 1963–64 and we expect to connect up 510,000 in that year. All the same, even if those targets, for the reasons I have briefly mentioned, are not achieved, it does not mean that the position regarding either the present or the future is hopelessly bad, because it is expected that in March this year the total number of telephones connected in this country will be 5,200,000, and it will be 240,000 more than that in twelve months' time. That is again a figure representing, of course, an increase which is a net one.
The waiting list has always intrigued your Lordships. I have had a little experience of this myself in the past. I should like to give your Lordships the latest position, because the inference has rather been that little has happened. I would quote what the list was at the end of March. On March 31, 1960, it was 49,000. At the same date in 1961, it was 55,000. At the same date in 1962, it was 48,000, the figure of which the noble Lord, Lord Crook, reminded us. At December 31 of last year, which is the latest figure that I can give, the number was 45,000. So it is somewhat lower. And there were at that time a large number—104,000—which were actually in the pipeline being provided.
LORD CROOK: My Lords, before the noble Lord leaves this subject, I wonder whether he has the figures of how many people on the waiting list to-day have been on it for how many years?
LORD CHESHAM: My Lords, I have not the full figure available. The noble Lord quoted the Director-General as saying that people should not be on the waiting list for more than two years. I think the number who have been waiting in excess of two years is 3,000. I sincerely hope they will not have to wait very much longer.
The question of the number of shared lines was mentioned. It was stated that some time ago there were one million, and there are still one million. We had a little hollow, mocking laughter from the noble Earl who leads the Opposition, but who is not here now. But perhaps it is as well not to overlook what is the significant use of this system. It is a system which helps to make a better use of capital, and enables a greater number of subscribers to get a telephone than could be done in certain areas if they were to have an exclusive service. There is a slight advantage, in that the rental is £2 less; and it is still true to say, so far as I am aware, that the great majority of the million who have it are by no means dissatisfied and find the service really quite satisfactory. I know that the noble Lord thought that in some way that was not a sensible thing to say; but I believe it is a sensible thing to say, and that there is a part to be played by the shared-line system.
I know that your Lordships who go to America—I have been there only once so far, but others of your Lordships go more often—are usually impressed by the service over there. But I wonder whether that would be so if one judged it on the service over the country as a whole. I think that most of us tend to go to the more civilised centres where the service is probably very good indeed. But I have always understood that the party-line system was an integral part of the American way of life, at any rate when you get out into the more remote parts of the mid-West and so on. So evidently we are not the only ones who find that there is some good in it.
To turn to the question of the conversion of manual exchanges to automatic, your Lordships will probably remember that the programme for this was laid down and approved in June, 1959. It was that all manual exchanges should be replaced by 1970. That programme is going along
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quite satisfactorily, I am glad to say, at the approximate rate of two conversions a week. As at January 1, 1959, there were 1,041 manual exchanges serving 1 million connections. By January 1 of this year that number had gone down to 638, serving 700,000. The forecast was, in round terms, 100 a year, and that is about the rate of progress. I do not think that there is any significant falling below the target in this respect.
The noble Lord referred to local calls; he said that they were now increasing at a rate of 5 per cent., and that the rate ought to be higher. I must admit that the marked increase he referred to in the Post Office Prospects, while perhaps being unspecified, tended to give a brighter picture than was actually the case. Perhaps we are at fault in some way for having done that. But if there is any fault it was a genuine one. In point of fact, with increasing automation and with S.T.D. and so on, it is becoming increasingly difficult to sort out what is the local call traffic. But I can say that if a slight over-emphasis was given to local calls which gives rise to criticism, we can certainly hope with reasonable confidence that that increase of 5 per cent. will be continued.
As to S.T.D. itself, the installation is steadily going ahead. I agree that the noble Lord was correct factually in saying that it was not so far advanced at the present time as had been hoped. I should like to give your Lordships the latest position as I know it—there have been some complications arising because of the considerable increase in the amount of trunk traffic, which has been of the order of 14 per cent.; and in London in particular it has caused difficulties on which we are working hard and I think I can claim that we are having some success in overcoming them. The result is that over one and a half million subscribers now have S.T.D., including about three-quarters of the people in Central London, with the same kind of proportion in other large cities, and 26½ per cent. of all trunk calls are now dialled. It remains extremely popular with the users of the trunk services, and I think it would not be unreasonable to look forward with some confidence to achieving the target of making it available to nine tenths of subscribers by 1970.

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Your Lordships will probably remember that the planned growth of this system was set out in a graph in the White Paper, Post Office Capital Expenditure, 1960–61. From that graph it was possible to see that we had expected that by now 38 per cent. of all subscribers would have it. There is the delay I have mentioned, which is being worked on, with the result that the actual figure, as near as I can give it in round terms, is 33⅓ per cent. instead of 38 per cent. I do not think we are likely to get back on to the planned position on the graph for about three years; but there is every reason to think that we shall get back to it then and that the programme will be completed by 1970.
I come, it seems to me, to more and more important points as I go along, and I am coming on to the question of finance by the same path as that chosen by the noble Lord, Lord Crook—namely, by way of profits. I think your Lordships will agree that when you make an estimate you make it to the best of your ability in the light of every factor you can think of as existing at the time, anticipating the future as best you can. However intelligently you do that, however hard you work at it, it remains an estimate. I seem to recollect that we have had one or two jolly passages at arms across the Floor of the House about the meaning and the importance to be attached to an estimate. But it remains an estimate—that is, the best you can do at the time.
It is certainly true to say, because it is there for all to see, that the profits fell from £24 million in 1960–61 to £13½ million in 1961–62, and that in spite of increases in charges. There are two reasons for that. One is that business has not been up to expectations: secondly, costs have been heavier than had been anticipated. The telephone business did expand, but the growth in the number of subscribers and of local calls, as I have already said, was not so great as we had hoped for. Parcel traffic went down, and the public did not go in for pools quite so much as they had been doing. That is something which is really of considerable commercial interest to the Post Office because of the vast amount of correspondence and sales of postal orders involved. On the expenditure side there were increases in pay and in prices, which added £20 million to the
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year's bill. The rather adverse trends which exhibited themselves then have not made their disappearance this year. Business has in fact been expanding, but only at the same rate as in 1961–62. And frankly, we had been hoping that it would have grown faster than that.
There has, of course, been a nasty shock to revenue owing to the weather and the cessation of the pools business. Of course, it would have been worse still if the splendid panel had not got to work. And I wish the noble Lord, Lord Brabazon of Tara, were in his place so that, on behalf of the Post Office, I could thank him for keeping the revenue going. There are also further increases in pay and prices to be allowed for. These are setbacks and their full effect will no doubt be apparent when the White Paper which is due out in the middle of next month appears. I have no idea what we shall see in it, but I think it would not be intelligent to expect anything other than that the hopes expressed in last year's White Paper will not be fulfilled.
My Lords, all that is a necessary preamble to the question of the financing of the Post Office's capital programme. The noble Lord, Lord Geddes of Epsom, who I thought made a most interesting speech, gave his views about the division, as it were, between postal and telecommunication services. I certainly have no desire or intention to drive a wedge between him and the noble Lord, Lord Crook—I should much prefer both noble Lords to work that out themselves, on the duelling field, if necessary. All I will say to Lord Geddes of Epsom is that I note carefully what he has said. I am sure that it is a matter of keeping the balance between the two, to which my right honourable friend, in his consideration, attaches considerable weight. But, apart from the distribution, and the question of where the emphasis should be in the capital programme, there seems to be a community of thought among the noble Lords as to how it should be achieved. My Lords, I hope that without undue over-simplification, I can deal with this point not at great length and reasonably simply.
It is perfectly right, as we were told, that the Post Office in recent years has financed something like 70 per cent. of its capital requirements from its own resources. That is a principle to which noble Lords opposite, particularly those

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now sitting on the Front Bench, appeared to take considerable exception; they betrayed, I thought, a good deal of suspicion of that as a method. I hope I shall be able to dispel some of that suspicion. This is no new discovery. Financing capital from your own resources has long been the practice in private industry, and I think I may say that nationalised industries are now increasingly tending that way themselves.
THE EARL OF LISTOWEL: My Lords, may I interrupt the noble Lord for a moment? I am sure we all agree about this, and I want there to be no misunderstanding. It is not a question of capital from the profits of the services as compared with capital raised from outside. It is a question of the proportion of capital from both sources. I think that is the only question at issue.
LORD CHESHAM: Yes, my Lord, I grasped that point, I think. I have not quite developed my theme as far as I should wish. I still find no reason to retract anything I said, because I still think, as the noble Earl said, that the only question is as to the division of it. I am going on to say that I certainly got the impression (as, I think, did the House), that the noble Earl and Lord Crook viewed the division with the greatest suspicion—a suspicion which I am endeavouring to prove is groundless. Perhaps I was not clear the first time, but that is what I had intended to convey.
Perhaps the noble Earl will recall Command Paper No. 1337, which was the Government's policy on the financial and economic obligations of the nationalised industries. The Government referred to the desirability of doing just that at the time. Perhaps it might be of interest to compare the division—as the noble Earl calls it—between the Post Office and what is happening in other industries. The Coal Board, in 1959–60—three financial years ago—was finding 23 per cent.; in 1960–61 it went up to 96 per cent., and for the next year up to 100 per cent. of its capital was found from its own resources. The Electricity Council figures are in the 40's: for the last three years, they are 41, 43 and 47 per cent. The Gas Council figures are 45, 66, and last year 79 per cent. I do not think that as a matter of principle there could be anything objectionable there.
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The noble Lord nods his head in a friendly way. I am glad of that because I want to go on to the next point, which is even more important.
What I want to get across is that there is nothing rigid, nothing fixed or stable. about the extent of what we will call self—financing in which the Post Office indulges. Obviously the percentage—the division—is going to depend on the capital requirements themselves, the financial out-turn of the business, and the profits. My Lords, that is not geared to some mystic formula as a result of which the next year's capital programme is directly formulated. It may be of interest to look at the figures of capital expenditure for the last five years. Going back to 1958–59, the figure was £96 million; in the following year, 1959–60, it was £100 million; in 1960–61, £105 million; in 1961–62, £125 million; in 1962–63, £133 million; and the programme that has already been approved for 1963–64 amounts to £156 million. That is not "peanuts". It represents an increase of 50 per cent. in three years or four years, whichever way you look at it.
But it is an increase of 50 per cent. in a pretty short time. I do not think it can really be complained that the Post Office is being starved of a capital development programme. Clearly, in 1963–64, to achieve that considerably increased figure which I have just mentioned, the division, the percentage, of what will be found and what will have to be made up by Treasury borrowing will depend on the financial results of the year. We shall learn those when the White Paper comes out, and that will be the time to assess what is to be the Treasury borrowing, because I assure your Lordships that there is no set process of reducing Treasury borrowing. I do not think the noble Lord said there was, but I believe he did a little implying.
The figures over the last four financial years are: 1959–60, £20 million borrowed; 1960–61, £37 million; 1961–62, £40 million; and it is expected to be £35 million in the current year. The noble Lord said something about £30 million in the future, but that is a little piece of knowledge which I do not share as no decision has yet been made, because, my Lords, as I have just tried to explain, no decision can yet be made.

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But I hope I have said enough on that subject to indicate that there is no sort of magic attached to a percentage above which borrowing may not go, or a kind of automatic ceiling on the Treasury borrowing. Therefore I think I may claim that the fears expressed that the capital programme would not be adhered to because of that division are groundless.
The noble Earl, Lord Listowel, asked a direct question: whether the Post Office has authority to go to the open market. If there must be a clear answer "Yes" or "No", the answer is, "No". The noble Lord, Lord Crook, had in mind that Section 9, particularly subsection (3) of Section 9, of the Post Office Act, 1961, had some interesting and devious meaning which meant that the Post Office could do that. Let me reassure the House, quite briefly, that Section 9 of the Act is a purely technical provision, which is included in nearly all such legislation, to give the Treasury the power they need to make advances in this way to the Post Office. It does not mean that a special telephone loan could be floated by the Post Office. It does technically mean that the Treasury could float one, if that were the only way they could think of for raising the necessary money. But I really do not think that one should think in those terms—that they would want to resort to that. There are plenty of other ways. It is a standard provision in legislation authorising the Treasury to issue capital advances, and that is all there is to it. I hope, therefore, that I have allayed more fears in that respect.
Before I turn to one or two other points which I must mention, I would refer to the proposal put forward by the noble Lord, Lord Airedale, about the Post Office in the Central Lobby. It has been called the House of Commons Branch Office for quite a time, but I agree that that is probably not the best description of it. It is a handy one, but it certainly does not pretend to be the best one. Administratively, so to speak, there is no need to change it, because it works as it is, but there would be no objection to renaming it The Houses of Parliament Post Office, for instance, if that is what is preferred by all concerned. The noble Lord prefers it and, if nobody minds having a personal opinion from me, I should prefer it, too. Quite how we are going to find out the opinion of all concerned, including the Members of
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another place, I am not quite sure, but if a strong, all-round proposal were put forward, I know my right honourable friend the Postmaster General would be only too happy to consider the request sympathetically.
The noble Lord, Lord Geddes of Epsom, drew attention to what I thought was an interesting point about single people being transferred on redundancy. I know he will not expect me to be able to give him a considered answer to-day, except that I would say that it seemed to me that he put his point with some thought, and, I know, with great seriousness. I should like to consider carefully what he has said, and I will certainly see that it is drawn to the attention of my right honourable friend.
The noble Lord. Lord Crook, at the end of his speech, had a basket of rather smaller miscellaneous fruit. You can pop those in and out of your mouth quite quickly, and I will deal now with some of the points that he raised at that time. The noble Lord mentioned Telex, in particular, and I am happy to say that inland Telex is going along very nicely. The 10,000th line has recently been added to the system. We expect that the growth of the system will be about 15 per cent. next year, and that the traffic on it will be growing at a rate of about 20 per cent. On the overseas side, the noble Lord pointed out that we have a very good Commonwealth link. We have, in fact, a Telex service link to 75 countries, including all the major Commonwealth countries; in addition to which it is now possible for people to use the service to dial their calls to most West European countries, which again is an advance.
I would mention, too, developments in the cable service. I do not think the noble Lord referred to it, but I wish to do so because another Transatlantic cable will be brought into service in the autumn of this year. That will be the first direct telephone cable link between Britain and the United States. The other information I wanted your Lordships to know was that the long Pacific link of the Commonwealth cable network will also be completed in the autumn of this year, connecting Canada to New Zealand and Australia and enabling a decent and reliable telephone service between those countries and here. We shall also be laying the first direct telephone cable

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between this country and Germany, which will be the first of a programme of six new cables to Western Europe to be laid in the next five years. A further system is to be completed by 1966. Plans have been agreed between the Governments of Britain, Canada, Australia, New Zealand, Malay and Singapore for the cable link from Australia to Singapore and Hong Kong through New Guinea and North Borneo. So that is another interesting point.
The noble Lord inquired about electronic exchanges, and I very much welcomed what he said because we agree with him. The first one, as he said, came into experimental use at Highgate Wood last December, and when my right honourable friend accepted it from the manufacturers he announced joint plans which the Post Office and industry have for three further exchanges. They will be prototypes for potential production ones, and they are due to open, at Goringon-Thames, Pembury, in Kent, and Leighton Buzzard, during 1964. I thought perhaps the noble Lord would like to know that. We hope that we shall go over to electronic exchanges in this country as soon as we can. But, besides that, as the noble Lord said, there is a large potential export market for them, and he was perfectly right when he said that we are in as good a position with regard to electronic exchanges as anyone in the world—and, I am happy to say, better than most.
The noble Earl, Lord Listowel, mentioned the very important question of satellites and space communications. I thought he would like to know that the Post Office is co-operating with the American National Aeronautics and Space Administration and with the American Telephone and Telegraph Company in experiments for transmitting telephone, telegraph and television services by means of satellites—Telstar, Relay and so on. The results of these experiments, at our end of them, have been most encouraging. Goonhilly has proved extremely efficient, and we feel that already it may well represent a pretty close approach to the ultimate design of an operational station. It also has the merit of being much less costly than its American counterpart. So I hope that the noble Earl will feel satisfied that we are by no means lagging behind in the technical field.
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It is difficult to say at the present time what the commercial future will be, but certainly any development will have to remain under public control—although there is, of course, a considerable part to be played by industry in the matter. But I think it is a field, as the noble Earl said, where international co-operation is essential, and I can tell the noble Earl that Her Majesty's Government are fully aware of the need for understanding and co-operation with other countries. I think that is the way we must continue to look at it.
The noble Lord referred to that delightful submarine telephone cable from Scotland to Iceland, known as SCOTICE, and hoped that it had been, or was going to be, extended from Iceland to Canada, via Greenland. I am happy to tell him that it has recently been extended, and that part of it, he will be overjoyed to know, is called ICECAN. The radio tower he mentioned is going, ahead near the Museum Exchange; so far, it is up to 280 of its 520 feet. Installation of its equipment should begin in the spring of 1964, and we hope that the first microwave system will be operational in early 1965. He also mentioned the existing microwave link to France, and there again I can tell him they are putting in additional equipment, in partnership with French P.T.T. By autumn of next year there should be 600 additional telephone channels to the Continent available by that means.
My Lords, I have covered a number of points, some of them extremely briefly and quite a number of them, I think I may claim, with reasonable satisfaction from the Post Office point of view. Before I conclude, there is one more thing I must say. I am going to end where the noble Lord, Lord Crook, began (and I was very happy to hear the noble Earl, Lord Listowel, make remarks in very much the same vein); and that is with a reference to the praise which must be given to the staff of the Post Office, whether on the postal side or on the telecommunications side, who have been involved in great difficulties in regard to working, conditions. I should like, my Lords, to recognise that, and to tell your Lordships one or two stories—not perhaps individual in themselves, but merely as typical of what went on.
I should like to tell you of the train that got stuck in the snow near Keswick,

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where the postman from the local office turned out, unloaded the mail and humped it all through a mile of deep snow to the office. I should like to tell you about the postmen of Brighton, when there were difficulties in getting to work. As many as 100 of them each day were getting up at half past three in the morning and walking considerable distances from the outskirts to the central sorting office in order to get the delivery through. I should like to tell your Lordships about the postman from Stroud who was the first person to get through to the village of Bisley, which was completely cut off from the evening of December 29 until January 1. The road was completely blocked. The postman made his way across fields, through deep drifts, as best he could, and he finally arrived at Bisley in a state of exhaustion. One hour later, a police convoy arrived with a snow plough, but, in the meantime, the postman had been revived with a hot drink by the sub-postmaster and carried on with his delivery. He returned to his own office at 6.30 that evening, having been on the job outside for twelve hours.
My Lords, the power cuts that were referred to struck very hard at Luton. The main sorting office at Luton was without heat or light for eighteen hours. That did not defeat them, my Lords. They brought a mail van and some motor-cycles into the sorting office to provide light, and simply worked in their overcoats to defeat the lack of warmth. Thus they got the mail sorted out, and to time. The postwomen have kept their end up in exactly the same way. There was a village near Oldham where the postwoman who delivers there only once during the whole time failed to make her deliveries—and she acted as a conveyor of medicine to the sick in addition. My Lords, there must be literally thousands of stories like that among the postal people, and literally thousands more among those engaged on the telephone and telegraph side, because not only did they have a great deal of increased traffic to put up with but, of course, an almost unprecedented number of extra faults. They had to go through the most awful conditions in order to fix them, and they very often had to carry their equipment through the snow because, of course, all the vehicles were stuck.
There was, for instance the engineer who took four hours to reach an isolated
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radio station in Devon which was eight miles away. He got stuck for the night with no heat except what the radio valves gave. The next morning he struggled back again, he had a short break for a meal and went straight out to repair an emergency fault on a coastguard line. That, again, is typical of thousands, I am absolutely certain: and in giving unstinted praise to the way in which the Post Office have carried on I am sure that they, in their turn, would wish to acknowledge that the public have been pretty patient over these things and have recognised their efforts on the public's behalf. It shows, I think, one thing and that is that there is, and always has been, in the Post Office very much of a good spirit. That is clear from what I have been saying, and I hope some of it may have been evident in what I have been saying on the other matters that came up in this debate.
LORD AMULREE: My Lords, before the noble Lord sits down, I wonder whether he could explain a curious phrase in his speech: "telephone penetration". I was not quite sure what was expected to penetrate what, unless it were joined up with telephones in a pipe-line. Could the noble Lord say something about this?
LORD CHESHAM: My Lords, I think, had the noble Lord quoted me completely, he would have said that I referred to "what is technically known as 'telephone penetration'." I myself would have called it "distribution". That is what it means: the tentacles of the telephone system spreading among the population.
LORD AMULREE: My Lords, I thank the noble Lord very much for his answer, but I wonder whether these technical phrases could be kept out of common use so that we know what he is talking about.
6.12 p.m.
LORD CROOK: My Lords may I say straight away how grateful I am to the noble Lord who has just replied for his excellent and detailed reply in such an excellent spirit. I think it would be wrong if I were to fail to offer a few observations before asking leave to withdraw my Motion. I should like to thank those who have supported me by speaking this afternoon. The noble Lord,

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Lord Airedale. seems as if he has scored a victory with one quick shot in the bulls-eye. So far as the noble Lord on my left is concerned, he as an ex-Postmaster General and a friend of mine, and one who knows more about this than I do. I was delighted that he spoke on the important subject of satellite communication of which we shall hear a good deal more in the years ahead. At the risk of making the second cheek of Lord Geddes of Epsom blush (the first having already blushed apparently from what the noble Lord opposite said), may I say there was only one reason why I have not mentioned the need to build better premises and give better conditions for the staff in the postal side? That is that, while, when I moved a Motion of this kind fifteen years ago, I covered nearly the whole field, in these days I am conscious of the fact that the ex-general secretary of the Union of Post Office Workers, who worked with me in the trade union movement and the Civil Service for so many years, is here; and I feel it would be a little inopportune, perhaps, if I ventured to move into his own field and not leave it to him. I knew that he would be here and I left this field to him. That does not mean there is the slightest chance of a wedge being driven between us.
I wanted more capital, and I suggested one way in which this capital could be spent. But when we manage to dig the capital out of the Government will be soon enough to have arguments about what we should do with it. I do not resent the noble Lord's calling me a "barrow boy". I quite deliberately (knowing that I was putting over, as the noble Lord said, some "raspberries" or "lemons") tried to put in some strawberries. It would be wrong for noble Lords at this Dispatch Box to talk about the Post Office, and to offer criticisms of Government policy, without also painting a balanced picture expressing appreciation of some of the better things the general public ought to know about. One should also encourage the noble Lord to do what he has done—to give us in this House a review of some of the unusual and not-so-well-known parts of the Post Office service work.
I will not argue with the noble Lord as to whether we are the seventh or the
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sixth in regard to our telephone installations. I can only say that I must rely on the published documents. I got my figure from the documents of "T.E.M.A" (the Telecommunications Manufacturers and Engineers Association), who always entertain the Postmaster General every year and who appear to be completely reliable. Their annual report says: "In eight other countries the increase was more rapid than ours. The increase over the last decade was still lower than that of any other country, with the exception of Denmark."Then we come to it. We come seventh in the list, in the number of stations per 100 of population. But I would not argue over whether we are sixth or seventh. I know that the dinner was about due, and I thought maybe his right honourable friend had been to a new dinner and got a later picture.
LORD CHESHAM: My Lords, I do not want to waste time on this, but I think I ought to say, in justification, that we may both well be right. What I should have said (I meant to say so, but forgot) was that my list was drawn up on countries having more than one million telephones. There might be a difference of qualification in that way—
LORD CROOK: My Lords, I do not think it matters whether we are sixth or seventh; what matters is that we are a long way behind the place in which we ought to be.
On shared lines I should not like the noble Lord to think I should be critical of shared lines as a policy if it were simply that people were offered the opportunity of having either a shared line or their own line. That is what I am accustomed to in America. I go there usually once in every year—I make the noble Lord a gift of this. It is not just that two people share the use of the line. In wild country, where there is not much demand for telephones, and where there is such a long run of wire, then five people will share, and they can still be amicable about it. Of course, they pay accordingly. But they are given that opportunity. The point I was raising here to-day, as I did in 1961, was about those whom the noble Lord who replied on that occasion described as the 200,000 who

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were actively discontented with being on that list. The other 100,000 who were given the chance would get off it. I am not worried about the 700,000 who told the Post Office: "We like cheapness." But we object to making people share lines, with the inconvenience and the lack of secrecy.
On S.T.D. I was glad to hear of the excellent progress. What is not known to everyone is the wonderful public relations job in teaching the public—and this is very necessary—now being done by the Post Office.
My own office goes S.T.D. on March 1 and we have had not only pamphlets for the staff with full details of exhibits they can go to see at public libraries et cetera demonstrating the new method, but also the loan of a short-run film; and in our own film room we have been able to offer to the staff with the co-operation of the Post Office four shows in a day on what the new system means. This is excellent work which is being done in this way. I was sorry that the noble Lord, Lord Brabazon of Tara, was not here to hear the encomium given him for saving Post Office profits, because the noble Lord is only just saved from having to do the same for Sir Gerald Nabarro, who nearly found it was his line as well to do that on last Saturday week.
When I come to the serious point I raised, the noble Lord has not answered it at all; or at least not the first part. He has not mentioned how he can stand there and justify the loan situation and say in 1961 there was £160 million needed in four years and it would be £40 million a year, when automatically it has been watered down, first to £35 million, and then £30 million. Though the noble Lord ventured to tell me that I was wrong, I was quoting from the OFFICIAL REPORT of the House of Commons a statement actually made by his Minister. The right honourable gentleman said:
"Despite that great advance our net borrowings from the Treasury will have fallen"—
fallen, not risen—
"from £37 million in 1960–61 to £30 million in 1963–64".
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So I would say to the noble Lord that I was entitled to say that another £10 million was being lopped off, and if the noble Lord will do me the honour of reading the OFFICIAL REPORT to-morrow, he will see that, apart from any fresh criticism which I offered of what had happened, I said that had we only seen the Post Office getting what they were told they were going to get originally, they would have been at least that much better off.
I would say to the noble Lord how grateful I am to learn of the advance in Atlantic Telex and how the telephone service is going ahead. If I may reminisce, I remember going aboard the ship that laid the first cable across to Canada while she was getting ready, and speaking over the mountains of coiled cable lying in the bows of that wonderful ship. I had a chance of appreciating what a marvellous job of work the technical and research people in the Post Office had done jointly, of course, with the people who had constructed the actual cable. I found that every one of the repeater links put down every forty or sixty miles was gold plated. After all the experiments, they had found that whatever metal they used would become oxydised in time and the Post Office topped it all by gold-plating the lot. I have nothing but praise for the astonishing work done jointly by the industry and the Post Office research workers.
I was also glad to hear that SCOTICE has gone on to ICECAN, and to know that aircraft control across the Atlantic will have been made better and, whatever it may have been in the past, even safer as a result of the Post Office efforts. Finally, I would say to the noble Lord that what he said about the development of Post Office services is what I would have expected of the Post Office. Indeed, it is what I know of the Post Office and the public services. Whatever people may do in the way of throwing mud at the public services, the people in them have an esprit de corps, often missing in commercial concerns; a loyalty to something that they put at the head of everything they have in mind. I would add only that to the service which the Post Office gives, I think that the noble Lord, in such an excellent reply, has done his service this afternoon. I thank him for it, and ask

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leave of the House to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

CLYWEDOG RESERVOIR JOINT AUTHORITY BILL [H.L.]
Committed to a Select Committee.
COMMONWEALTH DEVELOPMENT FINANCE COMPANY BILL [H.L.]
Committed to an Unopposed Bill Committee.

MARINE SOCIETY BILL [H.L.]
Committed to an Unopposed Bill Committee.
House adjourned at twenty-three minutes past six o'clock.