Lords Sitting of 5 July 1965

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

THE CHANCELLOR OF THE EXCHEQUER'S VISIT TO U.S.A.
LORD SHEPHERD: My Lords, at a suitable moment after 3.30 p.m. I shall be making a Statement on the Chancellor of the Exchequer's visit to the U.S.A.

MONOPOLIES AND MERGERS BILL
2.35 p.m.
Order of the Day for the Second Reading read.
THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES): My Lords, I beg to move that this Bill be now read a second time. I suppose that one of the phenomena of the latter end of the 19th century and of this century has been the efforts that have been made all over the world to cope with the possible abuses that stem from monopolistic practices. I think I am right in saying that the first effort was made by the United States in 1890, with their Sherman Act, and they followed it, in 1914, by the Clayton Act. Since then all over the world something in the way of comparable efforts have been made to cope with this problem. Here in this country we have followed our cautious and characteristic desire to evolve our legislation gradually, and we began in 1948 with the Labour Government's Monopolies and Restrictive Practices (Inquiry and Control) Act. It was followed in 1953 by an amending Act of a similar kind which enlarged the Monopolies Commission from 10 to 25 and enabled the Monopolies Commission to work in groups. Thereafter, until 1956 when the Restrictive Trade Practices Act was brought in, they worked in groups. But after the 1956 Act that was
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discontinued and the number of members of the Monopolies Commission was reduced.
This Bill is really amending the 1948 Act. The 1948 Act will remain the basis of legislative policy on monopolies. The 1948 Act provided for an impartial, thorough and administrative investigation into the facts of monopoly situations and their effects. I mentioned that in 1956 we had the Restrictive Trade Practices Act. Under Part I of that Act many restrictive arrangements were made registrable and referable to the Restrictive Practices Court. In 1964 the Resale Prices Act was enacted which, subject to provisions for exceptions, makes the particular restrictive practice of resale price maintenance generally unlawful. The provisions of the present Bill make no amendments to Part I of the Restrictive Trade Practices Act. The reason is that there was not time or opportunity this Session to do all that needs to be done. This does not mean that the Government are satisfied that the 1956 Act is completely effective as it stands. Noble Lords will know that recent decisions of the Restrictive Practices Court may have made some people aware for the first time that the law on restrictive practices is far-reaching, and capable of effective enforcement. Nevertheless, there are desirable amendments that should be made to the law to render it clearer and tighter. But the present Bill is confined to what is most urgent and most necessary. It is confined to the Monopolies Commission and their field of work, and it operates, as I have said, by amendment to the Monopolies Act, 1948.
First, the Bill reforms what may be described as the machinery for investigation. The provisions on this aspect are technical, but they are not the less important for that. Secondly, the Bill extends the list of matters which may be referred to the Monopolies Commission for investigation. For the first time, mergers are made referable to the Commission. There are special provisions for newspaper mergers. There is a provision which would improve the Board of Trade's power to ask the Monopolies Commission for "general reports". Monopoly conditions, including collective restrictive agreements, in the supply of services are for the first time brought within the law. I will deal with all these matters in more detail in a few moments.

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Thirdly, the Bill looks to the point where a Monopolies Commission investigation has been completed, and the Government have received their report on the particular monopoly, merger or restrictive agreement and its implications for the public interest. The Bill would extend and improve the Government's power to make orders, following up the Commission's findings. The most elaborate provision for thorough and impartial investigation would be useless, as I am sure noble Lords would agree, if at the end of the day there were inadequate powers to do anything about what had been found out. I might add here that need for change in all three sectors was recognised by the previous Administration. I do not think that there is any argument about the general need for moving forward on all these points. In some respects we have thought it necessary to go further than was proposed by the previous Government in their White Paper. The provisions of the Bill are tougher, and to that extent more effective. I come now to the detailed provisions of the Bill.
Clause 1 and Schedule 1 make the improvements in machinery which I have mentioned. The Monopolies Commission is to be enlarged. For the immediate future, the Bill will permit the Board of Trade to make appointments to the Monopolies Commission up to a total maximum of 25 members, which, noble Lords will remember, was the figure in the 1953 Act. But this is not to be a hard-and-fast ceiling. For the first time the Board of Trade will have power by order to raise the maximum figure set by the legislation. We think that this is an important and useful change, and will make it possible to adapt the size of the Commission, if necessary, to changing circumstances. There is also provision for the appointment of paid deputy chairmen, and for the Commission to discharge its functions in groups, again as in the 1953 Act. In this way the number of cases which can be dealt with at any one time should be considerably increased. Clause 1 also gives the Board of Trade an improved power to frame references to the Monopolies Commission in terms which will require the Commission to concentrate on the more significant aspects of the monopoly situation. Finally, Clause 1 includes pro-
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visions which should make it easier for the Monopolies Commission to obtain the evidence they need from industry, and which could be useful if there was any question of lack of co-operation or unnecessary delay.
Clause 2 is the clause which would provide for the Monopolies Commission to investigate price rings and other restrictive arrangements in the supply of services. This clause, I must concede, does not make easy reading. This is partly because, as I have explained, the Bill operates by amendment of the 1948 Act. Much of the background to the proposals for bringing services into the law must be looked for there. Broadly speaking, what the clause does is to take the definition in the 1948 Act of monopoly "conditions" and to apply it to the supply of all types of services. The 1948 Act already provides for inquiry into a very limited class of services (commission processing). That provision is now extended to apply to other types of service. The Government will be empowered to make references to the Commission in all cases where it appears that monopoly conditions prevail, either in the sense that there is a single monopoly firm—I might say here that this situation is likely to be rare in relation to the supply of services—or where there are restrictive arrangements in operation over a sufficiently large percentage of the trade.
This provision applies equally to all types of service. Professional as well as commercial services are included. But there are two general exceptions to which I should draw attention. First, services rendered "under a contract of service" are out of the picture. This means, broadly speaking, that the Monopolies Commission could not be required to investigate restrictions arising in connection with employment. Secondly, there is a relevant provision in the 1948 Act which has the effect that the Government cannot refer monopoly "conditions" to the Commission if the situation in question is expressly authorised by Statute. It is time that the law was brought to bear on restrictive practices in the supply of services, and the Government would hope to make early use of the powers in the Bill; I would invite those who have evidence of monopolistic or restrictive practices in this field to

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bring it forward. All suggestions as to matters which might appropriately be investigated by the Monopolies Commission will be carefully considered.
I come now to an even more important matter on which the Bill breaks new ground—the provision on mergers. Mergers may have far-reaching and important effect on the industries in which they take place, and even on the national economy. These effects may in some cases be beneficial. Mergers may mean better allocation of resources and greater efficiency. Such mergers are to be welcomed. But sometimes a merger may have adverse effects, possibly arising from a reduction in competition, possibly from other factors. The Government take the view, and this view was also expressed by the previous Administration in their White Paper, that in this respect mergers and monopolies present rather similar problems. Monopolies are not necessarily against the public interest, but they may be so in particular circumstances. A procedure of investigation was therefore established, so that the Government and the public could be advised whether in a particular case the existence or operations of a monopoly were contrary to the public interest. In the same way, the Government ought to be able to inform themselves of the implications of mergers, and be able to act effectively where necessary to safeguard the public interest.
The Bill makes provision for investigating mergers. There are two tests in the Bill which will distinguish mergers which come within the field of public scrutiny. The first test would bring in mergers which created or strengthened "monopoly". The second test would bring mergers in, whether or not they made any contribution to monopoly, where a firm taken over exceeded a specified value. But I should emphasise that these are simply qualifying tests. It will be for the Government to decide whether a particular merger should be referred. It will be for the Government to ensure that reference is made only in cases where they believe that there is a risk of detriment to the public interest arising from the merger. It will be for the Government to ensure that their powers are not used in such a way as to impede mergers
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which are demonstrably beneficial. I would stress that many mergers may pass the qualifying test for reference which will never in the event be referred to the Commission at all. The provisions and powers in the Bill are for a small minority of cases where there is a prima facie reason to suspect the outcome of the merger. If there is to be a control of mergers at all, it is our duty to see that it, is effective. The Government believe that if control is to be effective it may be necessary to hold up a merger while it is under investigation or, at least, to prevent the integration of the firms in question in such a way that they cannot subsequently, if necessary, be divorced. The Bill makes the required provision.
Clause 8 of the Bill makes special provision for newspaper mergers. This provision really stands alone. Unlike the other provisions I have described, this clause is not intended to serve economic ends. It is designed to implement the recommendations of the Royal Commission on the Press, which concluded some years ago that action should be taken to regulate the increased concentration of newspaper ownership. There is a lot to be said on both sides on this question. It may be argued that newspaper mergers have not yet produced any disastrous consequences, or that the cure is worse than the disease. I expect that we shall discuss this more fully on Committee stage. After careful consideration, however, the Government have accepted in principle the Royal Commission's conclusion. It has not been possible to follow the Royal Commission in all their detailed proposals for imposing this regulation. In our view, the issues which are likely to arise on a newspaper merger are simply not justiciable. So we could not commit them to a court of law, as the Royal Commission proposed. In providing for newspaper mergers to go to the Monopolies Commission we have taken what we thought to be the only practicable course. Here, again, there is a test to be applied to particular mergers to see whether or not they come within the newspaper provisions of the Bill. But in this case it is not merely a qualifying test. Where the test is satisfied, it will be unlawful to complete the merger without the consent of the Board of Trade. In normal cases there must first be an investigation by the Monopolies Commission. But the

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Board of Trade will be able to dispense with this where only urgent action can save the destiny of a newspaper.
I have now dealt with the new matters which the Bill brings for the first time within the scope of reference of the Monopolies Commission. I must deal finally with the powers to make orders which are to be available to the Government when the Monopolies Commission have reported. The powers conferred by the Bill are set out in Clause 3.
The Bill carries forward and clarifies the powers in the existing legislation, and adds new powers to the list. In ascending order of importance, these new powers are as follows: first, power to require the publication of price-lists; secondly, power to prohibit departure from published price-lists; thirdly, power to control prices; fourthly, power to prohibit further acquisitions or mergers; fifthly, power to provide for the break-up of monopolies or mergers. These are the powers which experience has shown to be necessary, if the Government are to be able efficiently to follow up a Monopolies Commission report. They will not be lightly used. Indeed, in all but the most exceptional case, the reserve power to make an Order should in itself be an effective sanction to secure voluntary action, where this is appropriate, on the part of the firms concerned. But there must be full order-making powers in reserve.
Most far-reaching of all are the powers which the Bill confers to break up firms. The Government agree with the view expressed in the last Administration's White Paper that such powers must be available. But to use them would be a most serious step, to be taken only in the last resort, where it was clear that only this radical solution would safeguard the public interest. The Government have added provisions to the Bill to ensure that the procedure for making orders gives the fullest opportunity for all interested parties to make representations, and for those representations to be considered by the Board of Trade.
There is one rather special case for which some of the powers listed in Clause 3 are made available. This is the case dealt with in Clause 4, where a Monopolies Commission report reveals that a
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monopoly or restrictive arrangement is in conflict with the United Kingdom's international obligations. We are thinking in terms of EFTA and the Stockholm Convention. The Government think it right that they should take this opportunity to show, it contains some provisions of fulfil their obligations.
This is a short Bill, but, as I have tried to show, it contains some provisions of very great importance. We shall have further opportunity to examine its detailed provisions. I should like to conclude by making one general point. The Monopolies Commission are there to be used, and if this Bill is enacted we shall be able to use them more freely and more effectively. More references to the Commission will be made. My right honourable friend the President of the Board of Trade has explained in another place the general principles which the Board of Trade would expect to follow in making references to the Commission. I would urge industry, when investigations are initiated, not to regard the Board of Trade and the Monopolies Commission as simply necessary evils. It has been emphasised on many occasions that an investigation is a neutral and impartial procedure. The intention is simply to elicit the facts, and, if necessary, but only if necessary, to take steps to safeguard the public interest. Experience of monopoly investigations has shown that the Monopolies Commission have not normally found much amiss; the record is not discreditable at all. We do not yet know enough about the new services to say whether experience in that connection will be similar. But in all these cases it must not be assumed that an investigation which does not end in dramatic recommendations has been a waste of time and money, either for the public interest or for the industry in question.
The existence of the Monopolies Commission is in itself a powerful incentive to industry to give adequate weight to the public interest in day-to-day commercial decisions. It is a discipline. It is a sign of the Government's commitment to a competitive and forceful economy. Those firms and sectors of industry which are pulling their weight have nothing whatever to fear from this kind of legislation. If it can improve the utilisation of our industrial and economic resources, it is of value to all, not least to everybody

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associated with the professions, industry and commerce. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Rhodes.)
2.59 p.m.
LORD DRUMALBYN: My Lords, I am sure that we are all extremely grateful to the noble Lord, Lord Rhodes, for his full explanation of the purposes of this Bill. Legislation on monopolies has not been a matter on which there has been a great deal of controversy on principle, although on questions of application and method there has been some difference of opinion. On the main objectives of the Bill, there is no cause to quarrel. Indeed, there is a close similarity between the provisions of the Bill and those contained in the last Government's White Paper (Cmnd. 2299) Monopolies, Mergers and Restrictive Practices, published in March, 1964.
There has been a broadly common approach since the Coalition Government. The noble Lord mentioned that the first legislation was in 1948, but it was in 1944 that the Coalition Government worked out together their policy, published in the White Paper, Employment Policy. In paragraph 54 of that Paper they said this:
"The Government will seek powers to inform themselves of the extent and effect of restrictive agreements and of the activities of combines and to take action to block practices which may bring advantages to sectional producing interests but work to the detriment of the country as a whole."
That, I think, has been the policy of all Parties ever since. I may say, in passing, that it was not until four years later that legislation to give effect to these intentions reached the Statute Book. I say that not to cast any reflection on the will of the Government of the day to deal with the problem as quickly as possible (I realise that they had many other matters in hand), but to stress the inherent difficulties of the problems involved if one is to treat the matter fairly.
This time, the preparatory work, other than the actual drafting of the Bill, had already been done before the present Government came into office. It is hardly surprising that the purposes of the Bill, as set out in the Explanatory Memorandum—and very clearly, if I may say so—follow closely what was fore
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shadowed in the last Government's White Paper, with the exception of the special provision for newspaper mergers, referred to in paragraph (e), and the possible exception in paragraph (d),
"to extend the power to require general reports from the Monopolies Commission."
Even there, noble Lords will recollect—and especially my noble friend Lord Conesford—that it was on one such general report of the Commission, that on collective discrimination, that the Restrictive Trade Practices Act, 1956, was based. So that this proposal in the Bill is not entirely new. I gather that it contains some extension.
The noble Lord, Lord Rhodes, referred to the powers in the Bill, and for my part I accept the necessity for the extension of the powers to require the Commission to look into practices designed to block healthy change, not only in the production or supply of goods, but in the supply of services or the export of goods. I should like to ask the noble Lord who is to reply one question on that point. The White Paper indicated that the then Government intended to bring information agreements within the scope of the 1956 Act, so that particular agreements could be called up by order for registration. This intention is not implemented in the Bill, for the reasons which the noble Lord explained, but I would ask whether Clause 5 can be used to include information agreements, whether in general or as regards prices or in relation to any other exchange of information.
The last Government declared themselves in the White Paper to be satisfied that the present powers to implement recommendations made by the Commission were not adequate. Generally speaking, they said that firms had shown themselves willing to comply with recommendations of the Monopolies Commission at the request of the Board of Trade, or to give undertakings to comply with them, and that they had, in fact, carried out those undertakings. The White Paper did not specify the powers that would be required, but I have no reason to suppose that the powers which the last Government would have sought would have been substantially different from those in the Bill. What matters is not so much the powers themselves—for it is generally recognised that there must be some

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powers in reserve—as the way in which they are exercised. I gather from the noble Lord, Lord Rhodes (and I should like to have confirmation of this) that it is the intention of the Government to proceed by way of voluntary agreement, as before, wherever possible.
At least, we can all welcome the need to obtain the sanction of both Houses to the exercise of the powers, to which I do not think the noble Lord referred, except in the one case to which I shall refer later. The House will naturally have reservations about Clause 3(4)(c), which empowers the Board to regulate prices; but your Lordships will, I am sure, welcome the limitation on the exercise of the power, introduced in another place, to cases where the Commission's report indicates that price levels have been, or are, operating, or are likely to operate, against the public interest. On that I would only comment that perhaps the paragraph appears to need a little redrafting.
I turn now to the question of services. The Bill departs in four main aspects from the White Paper. At present, as the noble Lord said, the only service covered is the application of a process to goods. While the White Paper proposed to limit the services which were to be brought under scrutiny and control for the first time to commercial services (in particular, services relating to goods), Clause 2 covers all services. The last Government considered that it would be better not to try to advance on too broad a front; and, in any case, there were no apparent instances of abuse in professional services not related to the supply of goods, including buildings, which appeared to need immediate attention. I think the House is entitled to know why the Government decided to cover the entire field of services. I would ask the noble Lord who is to reply what specific services the Government have in mind to inquire into, apart from commercial services.
I turn now to the question of mergers. In regard to mergers, in the White Paper the last Government said that they
"recognise and welcome the contribution which mergers can make to the well-being of the community".
But they expressed the belief that there should be power to investigate mergers,
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since in a small minority of them the practices might have harmful results. They therefore intended to seek powers to inquire into any proposed or recently completed merger which would bring a firm within the somewhat artificial definition of a monopoly, or would increase the proportion of the market held by a firm already in the definition. They then added these words:
"The Government do not intend to seek power to hold up a proposed merger while it is being investigated. This could well frustrate desirable mergers."
That is contained in paragraph 25 of the White Paper. But in Clause 6(10) of the Bill the present Government are seeking powers, without the need for Parliamentary approval, to prevent a merger from taking place while the inquiry is in progress, by exercising their powers as if the Commission had already reported and the Board of Trade were considering making an Order to prevent acquisition or undo its effects: in other words, to hold up the merger, whether it is desirable or not.
But how long will it be held up? The Commission, under the Bill, are to report within a period not exceeding six months, which could be extended by a further three months. Then the Board have to consider their findings. I would ask your Lordships to consider whether any merger could take place on exactly the same terms as originally proposed after all that time. Conditions are bound to change in the meantime. Even if the Board of Trade were to lay an obligation on the company to be acquired not to entertain any other offer in the meantime, they cannot impose a complete "freeze" on the whole situation. I must therefore ask the Government: Do they deny that such action may well frustrate desirable mergers?
The noble Lord may say that investigation into proposed mergers can also frustrate them. But if the acquiring company believes that it is both in its own and in the public interest to go through with the merger, and accepts the risk, which it may consider remote or infinitesimal, it will go through with it. But a merger stopped by an order of the Board of Trade which I repeat, is not to be subject, under the Bill, to Parliamentary approval, is almost certainly a merger frustrated. Is that what

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the Government want, even if the merger is found, or would be found when the inquiry were completed, to have been desirable? Of course, if the time of the inquiry were curtailed very substantially the objections to this standstill power would be considerably reduced. But this could be done, I submit, only if some members of the Commission were to be willing to serve full-time, or if there were a panel of experts on mergers, prepared to give their whole time for brief periods, who could be added to the Commission—say professional men and men who had perhaps just retired from industry.
The noble Lord referred to the power of the Board of Trade to add members to the Commission, and I would ask the Government whether it is their intention to contemplate this kind of addition in order to hasten and accelerate the inquiries into mergers. But even so, I am afraid that this power will greatly hamper the growth of the confidence of industry in the Board of Trade that has been taking place in recent years through co-operation in exports and in other ways. It will reduce the willingness of industry to consult the Board of Trade in advance, and yet Clause 8(2) implies that the Board of Trade would like industry to consult it at the stage when a merger is contemplated, no doubt on a strictly confidential basis. But if the Board of Trade has power to stop a company from going ahead with a merger before any inquiry has taken place, industry will be much more wary of consulting it. The company will want to try to tie things up in such a way that a standstill order will not in itself prevent the merger before it tells the Board of Trade anything about it. It will hold up the merger, but it will not prevent it. This is surely what those who are contemplating mergers will want to do before they consult the Board of Trade. This, I think, is unfortunate. The effect of that will be that the kind of mergers that will be frustrated are those which tare opposed by the company to be acquired, and yet it is by no means always only the ones which are opposed that are likely to harm the public interest. Those which are agreed may also do so as much, or, in certain circumstances, more.
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Your Lordships will want to look very carefully at the characteristics of mergers—the qualifications, I think the noble Lord called them—which bring them within the purview of the Bill. A merger or proposed merger, as he said, may be referred to the Commission, not only if the resulting combine will control at least one-third of the supply of goods of any description in the United Kingdom or any part of it—that is, not only if it results in a so-called monopoly—but also if the book value (and I think it was established in another place that the book value was meant, though the Bill says just the value) taken over exceeds £5 million. No satisfactory explanation has yet been given of this figure. There are serious disadvantages in this proposal. In the first place, £5 million may represent a comparatively small proportion of the productive capacity in a particular industry, and in any case only a part of that may be related to goods which the acquiring firm also supplies. In the second place, the book value of the assets is not a sound guide to the importance of a firm in a particular sphere. Its assets may be under-used, and it may be a good thing for the economy that the firm is taken over.
In the third place, the acquiring firm may have no common production interests at all with the firm acquired, and may wish to acquire it simply for the purposes of diversification. The only plausible justification for a value of assets test so far put forward is that it might enable the Board of Trade to intervene to stop a foreign firm from taking over a British company with sizeable assets. Desirable as that might be in some circumstances, it is hard to see on what basis a Commission concerned with monopolies could judge whether or not to recommend that such a merger should be prevented. If it should be, surely some other appropriate means should be found to prevent it.
I turn now to the question of divesting. The whole business of unscrambling the omelette where a merger has taken place and has been adversely reported on by the Commission, is one of the most complicated parts of legislation, and entails, as I think the noble Lord expressed it, the most far-reaching power of all. With that view I would not disagree. Some

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noble Lords may have read the article in The Times of March 21, I think it was, about the unscrambling of the Hanover Trust. The complications are legion, and even include what I believe is known as sub-delegated legislation. I leave that point to others, or to a later stage of the debate, when I think it could be more fully examined.
I turn to newspapers. The third main difference is that special provision is made for newspaper mergers, as distinct from other mergers; and I noticed that the noble Lord said that this power was not intended for economic purposes. In short, the Bill provides that where any newspaper merger would result in a total circulation of 500,000 copies or more, the written consent of the Board of Trade must be obtained, and cannot be obtained until the Commission has inquired and reported, unless, in effect, the newspaper is in such financial difficulties that it must either close down entirely or merge as a matter of urgency.
Most of your Lordships, I think, will have some sympathy with the general purpose of this special provision, designed, no doubt, to prevent two things in particular: first, the sudden acquisition of a large and influential paper, whether daily or Sunday, and the possible, though not necessarily inevitable, consequence of either a change in its editorial policy or the suppression of the paper altogether; and, secondly, the gradual mopping-up and control of papers with bad circulations. What I think the Government have to justify is the arbitrary figure of 500,000 circulation and, secondly, the extraordinary provisions as to the meaning of "associated persons" in Clause 9. Under Clause 9 two brothers, or an uncle or a nephew, must be treated as associated, even if the association has in fact come to an end in circumstances of notorious acrimony—even if they had been running a paper together with a circulation of close on 500,000, and one or the other of them had broken the association and gone off to buy up or found another paper in an entirely different part of the country. Surely this is very much a case where the word "shall", in Clause 9(1), which deals with "associated persons", should be altered to "may". Whether they are associated or not is surely a question of fact, and to assume that they
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are associated when they are not must surely be a violation of the truth.
The fourth and last main deviation from the White Paper is the failure to implement the proposal to appoint a Registrar of combines, or whatever they are to be called. Personally I should prefer to call them combines, rather than monopolies; and "combines", incidentally, was the word used in the passage that I quoted from the 1944 White Paper. After all, "monopoly" means, as the Oxford English Dictionary says,
"the exclusive control by a trade of the whole of the trade."
In the past year or two the Board of Trade have become aware that industry—and one must face this—has not the same confidence in the Monopolies Commission as it has in the courts. As the White Paper expressed it,
"The Commission's inquiries have been of great value, but experience has shown that certain aspects of the law are open to criticism—

" 1. The impression that the same body is asked to carry out the function of both judge and prosecutor.

"2. The length of time which goes to the production of a report.

"3. The lack of powers in the hands of the Government effectively to implement the Commission's recommendations."

The Bill rectifies the third criticism. The second criticism is difficult to rectify without a full-time Commission, and we know the objections to that. As the noble Lord said, the increase in the size of the Commission will enable it to undertake more work simultaneously, but will not necessarily reduce the time taken over any one reference. What should reduce it more than the increase in the size of the Commission is an increase in the size of the staff, together with greater continuity of service in it. The first criticism, that is to say, the impression that the same body is asked to carry out the function of both judge and prosecutor, is the most fundamental. Industry is under no misapprehension as to the task of the Commission, which, as the White Paper says, and, as the noble Lord said, is to elicit the facts and examine them impartially.
Most certainly the integrity and impartiality of the Commission have never been questioned, and nothing I say is intended as any reflection on them whatsoever. What causes concern is the way

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in which the staff present what they believe to be the facts to the Commission and the opportunities for the company concerned to make corrections and to defend its conduct in so far as it is said to conflict with the public interest. I have found from my inquiries in industry a feeling that the company is put into the dock but that it does not have the same opportunity to prove its innocence as a person accused in court. Really it is not any good trying to gloss over this and saying this is an investigating body, because the fact is that where this is in question a firm is expected to prove its innocence of doing things, or creating or preserving conditions, which operate, or may be expected to operate, against the public interest.
With the best will in the world and the utmost desire in the world to be impartial, the staff of the Commission are bound to act in a manner more akin to a detective than to a research historian seeking for truth, and to treat any firms whom the Board of Trade think it worth while to refer to the Commission as suspects.
A Registrar would have had three main functions. First of all, to decide what so-called monopolies the Commission should inquire into—that is to say, to refer his suspicions to the Commission; secondly, to investigate, and, thirdly, to present the case against the company or companies in much the same way as the Registrar of Restrictive Practices does for the Court. It would then have been for the Commission's own staff to draw up the report. This would have enabled the so-called monopoly to know what case it had to answer, and I must say I regret very much that the Government have not accepted this recommendation. As it is, I feel it is not too late to amend the Bill, at least, so as to secure improvements in the procedure of the Commission.
I am inclined to think that Section 8 of the 1948 Act, which permits the Commission to determine its own procedure, ought to be amended so that its rules of procedure should be laid before both Houses and subject to the Negative Resolution procedure. In particular, I believe that any company whose affairs are inquired into should have the right to see the factual part of the report in its entirety before it is presented to the Board of Trade, so that it may comment on what are thought
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to be the facts and the Commission may adjust both the factual part of the report and its recommendations.
LORD SHEPHERD: When the noble Lord says "factual part", does he mean the evidence that has been given to the Commission?
LORD DRUMALBYN: In a sense everything which goes before the Commission is evidence. I am using the words that have been used by the Report of the Committee on Administrative Tribunals and inquiries. The noble Lord has referred to paragraph 343 and to Recommendations 80 and 82 of that Report, and he will find there what I have now said, that the factual part of the report should be shown to the parties. That is completely in line with the recommendations of the Committee, which have been largely implemented. I see no reason why it should not be implemented also in monopoly investigations where, I may say, there is generally very much more at stake. I will add this, too, that considering the extent of the powers that the Bill seeks to confer on the Board of Trade, it is hardly too much to ask that every possible step should be taken and no step should be omitted to get the facts right, for it is on the basis of the facts that decisions to exercise far-reaching powers have to be taken, at least so it is devoutly to be hoped.
In conclusion, may I stress again that ever since 1944 there has been a large measure of agreement between the parties that, on the one hand, a person or company is not to be taken as necessarily operating against the public interest because it is big or because it controls a considerable proportion of the supply of any class of goods, or because it acquires another company; and, on the other hand, we should be vigilant to see that economic power is not abused and that we should be willing and ready to concede powers to the Government to prevent that, subject to proper safeguards. I will end on this note—and I recognise it is a note on which there is a division of opinion. Ever since the 1948 Act was introduced, conditions of employment and remuneration have been outside the Act. Now, of course, the Commission on Prices and Incomes will have power to look into a good many of the circumstances which may lead to increases

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in prices and incomes. But at the root of our troubles at the present moment lies a certain number of practices which seem to be outside the scope of the Commission on Prices and Incomes and yet are not within the scope of the monopolies legislation. Is it not time that somebody had the power to look into all practices—and I quote again from the 1944 White Paper—so that appropriate action is taken
"to check practices which may bring advantages to sectional producing interests"?
And that, of course, means not only the management side but practices which may work to the detriment of the country as a whole.
3.29 p.m.
LORD BYERS: My Lords, on behalf of the Liberal Party I should like to follow the noble Lord, Lord Drumalbyn, and welcome the objectives of this Bill. We agree with the noble Lord, Lord Rhodes, in that we do not regard all monopolies and mergers as bad in themselves; but in our view it is right that they should be scrutinised to see that the power which they possess is not used against the public interest. There are, quite clearly, amalgamations and mergers which should be encouraged (and when I say that I am not referring to any suggested new political alliances: I am speaking entirely in the industrial field), because they will make for greater efficiency. Indeed, in the view of many of us in different parts of the House this may well be the way in which United Kingdom and European industry will have to develop, in order to compete with the might of the United States of America. I take it that there is nothing in this Bill that will prevent useful efficient mergers of that sort. But what we want to see exposed is the monopoly or the amalgamation that is exploiting the public, and for this reason we welcome the stronger powers that are taken in this measure.
In the past, the work of the Monopolies Commission—and I do not say this against its members—has been, in the view of the public, and in the view of many of us, painfully slow. On numerous occasions over the past years we from these Benches have called for an enlargement of the Commission and for the appointment of more sub-committees to
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deal more expeditiously with a larger number of subjects. I am glad to see that this Bill provides for such a development, and I hope that the Government will use the powers they are taking. We have also commented adversely on a number of occasions on the unwillingness, or the inability, of past Governments to ensure that decisions of the Monopolies Commission were adequately enforced. At the time of the General Election, I believe, about 18 of the 23 reports made by the Commission up to that time had found that monopolies existed which were indulging in practices contrary to the public interest, but only in two cases had orders against them been made. I wonder whether the noble Lord, Lord Shepherd, when he comes to reply, will tell us what the score is to-day. Is it any better or is it worse?
LORD DRUMALBYN: My Lords, may I ask the noble Lord whether he does not think it a very good thing that in only two cases out of 20 it was necessary to apply reserve powers, and that the rest should be implemented voluntarily?
LORD BYERS: That is not the impression I have. The impression I have is that there is a good deal of reluctance on the part of industry to get on with the job of complying with the recommendations and the orders of the Court. Certainly if that is not what has been happening, let the Government make it clear. The new powers the Government are taking are to be welcomed, and I hope that they will be used to improve the competitive power of British industry—because that is their object—and to remove the restrictive practices which always flourish in monopoly conditions.
There are only three points that I want to make on this occasion. I follow the noble Lord, Lord Drumalbyn, in saying that I think the Government may have been ill-advised not to accept the proposal made in Command Paper 2299 that a Registrar of Monopolies should be appointed. I should have thought the work of the Commission would be further speeded up if there were somebody who was going to prepare cases impartially for reference to the Commission itself. I should have thought that a good deal could be done to reconsider this proposal. I believe I am right in saying

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that in another place the Minister of State at the Board of Trade expressed his personal view that such an appointment should be made, and I think that he gave the impression that if the Government had had time they, too, would have come down on the side of having a Registrar. I should have thought we have an opportunity in this House to make the necessary Amendment and that the Government should consider the administrative way in which they can give effect to this suggestion.
Secondly, I wonder whether the Government have given sufficient attention to the mechanics of scrutinising mergers before they take place. Very often, secrecy is of paramount importance, if speculation in shares and substantial movements in share prices are to be avoided. How is it proposed to deal with these problems? Are dealings in shares to be suspended by Government order?—because, if so, the period in which this can be done without causing chaos is very limited indeed. Under the Bill, the Commission can take up to six months in order to find out whether a merger is going to be in the public interest, and this is a point which will have to be looked at by the Government, because it will not be possible to have a long period to examine the merger without causing chaos on the Stock Exchange.
Moreover, I would ask whether the test of the public interest is going to be the sole criterion so far as mergers are concerned. Ought we not to give some attention to the position of employees and staff? Because quite often, and quite rightly, a merger results in reduction of staff—that is one of the objects of it. I think it only right that proper arrangements should be made for those who are redundant, for retraining and so on. Therefore, to that extent, I am not satisfied that the public interest in the sole criterion in a matter of this sort.
Thirdly, I hope there will be no attempt (although I got a hint of it, I think, from the noble Lord, Lord Drumalbyn), as there was in another place, to try to bring the trade union movement within the scope of this Bill. I believe this to be quite wrong in principle, and I think it will completely distort the work of the Commission and slow it up. If trade union restrictive prac-
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tices are to be abolished they should either be dealt with by a separate tribunal or left to the normal processes of productivity bargaining, preferably at plant level. These are matters on which I understand the Royal Commission will be expressing a view, and I hope we shall not distort the objects of this Bill, dealing with industrial monopoly situations, by introducing this particular idea. At the time the Resale Prices Bill was before the House we made it clear that it should have been preceded by a Bill to deal with monopolies and mergers, and for that reason I am glad the situation has now been brought about where we have the Resale Prices Act on the Statute Book and we shall have a stronger Bill to deal with monopolies and mergers in the future.
3.36 p.m.
LORD BROWN: My Lords, like previous speakers in this debate I find myself in agreement with the provisions of this Bill because it gives the Government additional necessary powers. I would stress the statement that I find myself in agreement, because I want to be quite critical about some broad issues, and I might inadvertently give the opposite impression. It is a strange fact that on one of the major and rather rare points of agreement between the Labour and the Conservative Parties, both are, as Parties—and I stress the term as Parties—in my humble opinion somewhat confused in their thinking. The point of agreement is a shared dislike of what both refer to as monopolies. Conservatives, I think, have disliked the so-called monopoly because of their admiration for free competition, and Socialists seem to have disliked it because of the feeling that it results in power over the consumer resting in the hands of the few private interests.
I must explain why I think this confusion exists and its nature. First, the term "monopoly" means exclusive power. I think the noble Lord, Lord Byers, has just made this point. But in this sense it would be very hard to find a monopoly in this country, except those covered by patents, and they are not in question. I doubt in fact, whether any exist at all. Your Lordships may think that this is a mere semantic argument, but I believe that the public of this country accept the word in its literal sense and

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are led to believe that real monopolies, big bad wolves, really exist. So the semantic issue is really an extremely important issue in a political sense. It is from this ill-founded conviction on the part of voters that much of the political support for action against the so-called monopolies arises. Thus are we confused by a word.
When political Parties talk about monopoly, it is quite clear that what they really mean is oligopoly. It is a difficult word, but it is in the tradition of the previous word. Lord Drumalbyn mentioned combines, but that is a much less exact word. Oligopoly is the correct word in the circumstances; it means power in the hands of a few companies. It is clear from the Bill that the reference is in fact to oligopoly. Companies are to come under scrutiny if they control more than a third of the market. We may conclude that both Parties fear the growth of oligopoly. This is one of the confusions.
I must break away from my theme at this time to comment on mergers of companies. There are bad mergers when a company buys others which make products widely different from its own products, for sale in quite different markets. Large companies built in this way and constituted by a veritable rag-bag full of small subsidiaries tend to hinder our economy. There are other types of merger where a company seeks to increase its product development, its volume of production and its sales activities, by taking over some of its smaller competitors. So long as these are integrated into a well devised overall organisation, rather than being left as a series of autonomous and possibly badly managed subsidiaries, then, in my opinion, such mergers are generally helpful to our economy. I shall, for clarity, refer to this type of merger as an "integrative merger"—one must invent some more language in this field.
Political insight is confused for another reason. The original anxieties about oligopolies arose at a time when the degree of internationalisation of trade was extremely limited. To-day when the size of the world has shrunk considerably, the existence of many more overseas competitors ready to step into the British market when they see that opportunities exist because of the small number of competitors means that they are not
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nearly as dangerous as they might have been fifty or sixty years ago.
Thus, for example, Unilever faces the competition of American Proctor and Gamble, I.C.I. faces American Monsanto and Dupont; Lucas faces Delco-Remy, and so on. With the current virility of international trade, we have little to fear from the integrative concentration of the supply of specific types of goods into the hands of a smaller number of firms, so long as we keep an eye on the extent to which they resort to inter-company price fixing. We positively need competitive oligopoly. Some may suggest that the oligopoly brings a tendency in industries that remain organised in small units to ill-advised price raising; but I do not think this would be borne out by an investigation. I believe the opposite might well prove to be the case.
The third confusion I want to refer to is concerned with competition itself. It is regarded in an almost absolute sense as a good thing, lauded by politicians and businessmen alike, although the latter spend much of their days trying to get rid of it. On the other hand, price-fixing arrangements are the subject of general odium. Yet it can be logically argued that price-fixing arrangements inhibit the growth of oligopoly by keeping a large number of inefficient small companies in existence—and this clearly happens quite frequently—whilst, on the other hand, continued competition leads inevitably to oligopoly.
What has not seemed to come to the surface is the idea that in some conditions consumer pressure can push producers into a situation where either they resort to price-fixing or the least unsuccessful purchase their less successful competitors and form these oligopolies. Such action may be to the eventual good of the consumer as well as the country, and therefore will certainly open up greater possibilities of exports. But the danger is that the powers in this Bill might be used willy-nilly to inhibit such moves. I am not suggesting they are always good—they can be bad. But they must be judged on their merits. I fear, however, that conventional attitudes may condemn them without looking impartially at the situation.
The current operations of I.C.I. and Courtaulds in the textile industry may

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lead eventually to a situation of oligopoly; indeed, I hope they do. Can anybody doubt that this is greatly in the national interest? Our machine tool industry has put up a pretty wretched performance since the end of the war, although I am glad to see that discussions are going on which are hopeful. It embraces more than 200 firms employing less than thirty people. This is indeed a bad situation, where few of them employ sufficient technicians, do enough product development or have sufficient volume of production to compete with overseas companies.
As an example, two years ago we had in the computer field Leo, Ferranti, Elliott's, I.C.T. and English Electric. Today, these five have become three. It is possible that to save our industry there will have to be one British firm only. Will such a move, if it comes about, attract the conventional anxiety and criticism of the general public and of Parliament? If it does, it will demonstrate just how unrealistic to-day our thinking is, for such a consortium might be essential to keep the British computer industry in existence at all. I hope I have said sufficient to demonstrate that we seem to lack some conceptual clarity on these issues, and I think it is most important that we in the country get them clear as a whole.
Oligopoly, competition, price-fixing, cartelisation, mergers, take-over bids, and the like are references to relationships between trading companies. Such relationships are not essentially bad or good. They are relationships which can work for the good or to the detriment of all concerned, according to their nature and the manner in which they are manipulated. It is right that the Government should have power to examine these relationships. But I think that if society had been clearer about these issues, this Bill might well have contained measures not only for curbing price-fixing and the aggregation of industry but also for encouraging or even arranging such relationships in appropriate circumstances. The Government ought to have powers now to stimulate integrative mergers in the interests of our export industries. There is nothing new in such an idea except its statement in explicit form.
I would remind those who are anxious about the idea I have expressed that the
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Government have already condoned, if not encouraged, almost complete price-fixing in the steel industry; they have pressured the aircraft industry into the formation of fewer and bigger companies, and for the last forty or fifty years they have shielded the automobile industry with high productive tariffs against foreign competition. I think these moves have all been good, with the possible exception of the one in the steel industry.
We are a nation of 50 million people, and we have to compete for our food and our raw materials with Japan, with 100 million people, the European Common Market, with 200 million, the U.S.A., with 250 million, and, last, with Russia, with 300 million or 350 million. If a U.S.A. firm control 10 per cent. of the United States market they have as much volume of production as a British firm which controls 50 per cent. of the British market. That is probably a gross understatement, owing to the relatively larger consumption of most goods in the United States. To-day, in international competition, it is the firm with the large volume of production that has the potentiality of winning the competitive fight. Therefore, we need more large integrated companies rather than fewer.
Many of our companies will not be able to compete internationally unless they control perhaps as much as 50 or 60 per cent. of the home market, and as long as they are efficiently run and are earning overseas currency at an appropriate rate they must be positively encouraged to absorb those of their competitors who are inefficiently using up scarce national resources. I think it is time we stopped those few industrialists who are still talking about themselves as public benefactors in giving employment. They are not and they do not. They use resources which we all know are the source of our national wealth. This Bill is almost silent on the essential criteria for assessing companies. I suggest that these criteria should be the working conditions provided for employees; effectiveness of product development; productive efficiency; service to the consumer; and, above all, the ability to earn foreign currency through exports. We really want an Industrial Efficiency Commission, not a Monopolies Commission.
Using the criteria I have mentioned, if we compare the performance of large

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firms organised in "oligopolies" and small firms fighting it out in classically competitive style, the laurels will, in general, go to the "oligopolies" and not to the small competitors. The latter suffer very often from too much fear of their own early demise, too much difficulty in attracting capital and technological talent, too little prosperity to enable them either to plan their own future or to plan how to export. Necessity can be the mother of invention, but it can often be sterile. The present somewhat unhappy theme of agreement between the two major political Parties is based on too much absolutism on these issues.
I want to come now to one other very important aspect of this matter of the size of the individual company. Suppose, for a moment, that we have a choice, either one company employing 50,000 people, or 50 companies each employing 1,000 people. I want to make a particular point, but before proceeding further I want to make it clear that my comment contains the assumption that what is paid to managers is, in general, an index of their capacity for managerial work. I know that this is obviously not true in every individual case, but I think that it will hold for a large sample. I must exclude those who earn money by percentage on profits. This might run up to £250,000, as we know, and I could not possibly include them in this statement.
Taking this assumption as the basis of what I have to say, in the firm employing 50,000 people one will probably find a chief executive being paid £25,000 a year or thereabouts, with eight subordinates at about £12,000; with 50 people on the next layer at about £8,000, and about 300 at the next layer earning in the £5,000-a-year range. This makes a total of nearly 400 people earning £5,000 or over, who are presumably men of that calibre. If, on the other hand, we take the 50 companies each employing 1,000 people, we will find in each of them one person at the £5,000 mark, and nobody else above that: in other words, 50 people of that calibre against 400 in the large firm. Of those 400 in the large firm there are a substantial proportion who are more capable people than any whom one will find in any of the smaller firms. This is one of the beneficial aspects of integrative concen-
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tration of industry which is often overlooked. This is a sweeping statement in setting up my simple model. It can be criticised in detail, but the broad sense of it is true.
If industry continues to consist mainly of small companies, then it fails to attract in sufficient quantities the potential Beechings, Robens' and Chambers' of our society. Small firms in industry cannot attract sufficient potentially able people, and, instead, at an early stage of their livelihood they become university dons, journalists, lawyers, judges, merchant bankers, research scientists, civil servants. I imply no disrespect for those professions. On the contrary, I suggest that they already contain too much of our top talent. If we create a small number of larger and efficient companies, they will provide the opportunity for a considerable proportion of this country's best brains to get into the front line in the economic battle for greater exports. This is the crucial battle which faces us at this moment.
Before I conclude, may I add one small comment to what was said by the noble Lord, Lord Drumalbyn? I left out of my speech any reference to my personal anxiety about the progress of American business in taking over increasingly key industries in this country. I think there is an ever-present danger of what, rather emotionally, I might call a sort of economic colonialism developing. I know that the French are very keen about this. I took the bottom limit of £5 million assets to be a reference to the need to deal with this sort of thing. I am sure that there ought to be in this Bill means for this Commission to deal with these incipient dangers when foreign firms seek to get into key positions in our industry.
I started by indicating that I welcome this Bill and, for clarity, I say so again, but I urge on the Government the need, first, for a rethinking and reorientation of our attitudes towards monopoly, "oligopoly" and competition within the context of the need for more exports; second, for the encouragement rather than the discouragement of integrative mergers; and, third, for a change in the title of the Bill. May I suggest, as has been suggested in another place, the title "Trades Commission Bill"? Unless it

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is changed, I fear that the confused image which is alive in society about the nature of industry will remain confused.

CHANCELLOR OF THE EXCHEQUER'S VISITS TO NORTH AMERICA
3.56 p.m.
LORD SHEPHERD: My Lords, I think that it may be convenient if I were now to repeat a Statement which has just been made by my right honourable friend the Chancellor of the Exchequer in another place. I will use his own words:
"With your permission, Mr. Speaker, I should like to make a Statement about my visits to Canada and the United States. Both these visits had as their aims the exchange of views and information with my opposite numbers in the two countries, and in particular to see what common ground exists, or can be developed, for achieving progress on the vital question of international liquidity.
"In Ottawa, I had very useful talks with Mr. Walter Gordon, Canadian Minister of Finance, and some of his colleagues.
"In Washington, I met the recently appointed Secretary to the U.S. Treasury, Mr. Henry H. Fowler, and several other U.S. Ministers. In addition, I had conversations with the President and Vice-President. With permission, I will circulate in the OFFICIAL REPORT the text of the Communiqué issued in Washington on 30th June.
"On the particular issue of international liquidity, Her Majesty's Government regard as urgent the problem of devising appropriate arrangements which might be used for the creation of additional liquidity. In this connection, I would remind the House that there is an expectation that the growth of world trade will slow down over the next year. We must try to ensure that our problems are not made more difficult by deficiencies in international monetary arrangements. Some progress has, of course, already been made. As the House knows, if the recommendations recently made by the International Monetary Fund are fully implemented
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the total of Fund quotas will be increased from about 16 billion dollars to 21 billion dollars.
"I am under no illusions about the serious difficulties in the way of making further progress, which can only come by agreement. At present the nations hold many differing views. There are those who believe that the present scale of international liquidity is in itself sufficient, but that the system is being misused by countries in balance-of-payments deficit; while there are others who believe that there is currently a shortage of liquidity and that immediate action should be taken to create more.
"Following from this, nations are not yet in agreement about the priority of the tasks which need to be undertaken. One view, for example, is that the first requirement is to put in hand a fundamental reconstruction of the international monetary system, in the belief that once this has taken place the supply of liquidity will be brought under more conscious control than hitherto. Another view is that comparatively small adjustments in the functioning of the system would be sufficient.
"My talks with the United States authorities show that they are actively considering these problems and are proceeding—as we are—with a sense of urgency. I see the role of Her Majesty's Government as one requiring continued persistence and flexibility. I should myself prefer to reach a solution which is built upon, or is closely linked with, the International Monetary Fund, since this institution has great capacity for expansion and development, and has served the world well during the last twenty years.
"I therefore propose to continue my discussions with the French Finance Minister and with the Secretary of the U.S. Treasury. I also hope to have talks with other Finance Ministers, in an endeavour to secure a solution which will contribute to the growth of world trade and thus assist both the industrialised countries, and also the developing nations.
"The talks in Washington showed that both Governments are agreed that the pound and the dollar will continue to play an essential role as reserve

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currencies; that there is an identity of interests between them; and that both Governments must, and will, maintain and intensify the measures of financial co-operation which already exist."
That is the end of the Statement.
Following is the communiqué referred to :

CHANCELLOR OE THE EXCHEQUER'S TALKS WITH SECRETARY OF U.S. TREASURY
Statement on discussions held June 29 by Chancellor of the Exchequer James Callaghan of Great Britain and Secretary of the Treasury Henry H. Fowler at the United States Treasury:
British Chancellor of the Exchequer James Callaghan and Secretary of the Treasury Henry H. Fowler agreed in their talks at the United States Treasury that in present circumstances the primary contribution of both the United Kingdom and the United States to international financial stability and the improvement in the international monetary system is to achieve and sustain a broad equilibrium in their international balance of payments.
Secretary Fowler noted that the voluntary effort by American bankers and businessmen to reduce their net dollar outlays abroad undertaken earlier this year at the President's request is having an encouraging effect. Provisional indications are that this and the wide range of other efforts being made to end the United States payments deficit resulted in surpluses during March, April and probably in May, however the United States plans no relaxation of its efforts. The country is now entering the period of the year when tourist expenditures increase dollar payments to foreigners markedly. Imports are rising with continued internal expansion and there are increased dollar outlays in South Vietnam and in the Dominican Republic. The accumulation of dollars in reserve holdings abroad in past years is the cause of large continued gold outflows, such as those of the current year.
The Chancellor of the Exchequer and Secretary Fowler agreed that the prospects for an early and sustained equilibrium in the United States balance of payments resulting from the efforts of the last four years were good, and that there should be no relaxation in the execution of President Johnson's programme of February 10, 1965.
The Chancellor said that a substantial improvement had taken place in the British balance of payments during the first quarter of 1965. He expected a big reduction in the deficit on current and long-term capital account for 1965 as a whole. The measures which the British Government had taken in the fields of fiscal policy, credit control, the stimulation of industrial efficiency, incomes policy and economic planning were beginning to work
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through the economy—and he reiterated his aim of balancing Britain's overseas payments in the second half of 1966.
In discussing the interaction of the balance-of-payments programmes of the two countries, the Chancellor drew attention to the effect on the British position of the measures which the United States had undertaken to correct its balance of payments. In this connection, Secretary Fowler emphasised that the guidelines for the voluntary restraint programme take into account the United Kingdom payments problem. The United States pointed out that the British Government's programme described by Mr. Callaghan to the British Parliament on April 12, for continuing to raise gradually the proportion of the British Government's holdings of non-sterling securities in a liquid form, and their use to reinforce the reserves, would involve an adverse impact on the United States balance of payments. Secretary Fowler recognised the need for this British programme and the Chancellor reiterated earlier assurances that the British authorities would continue to co-operate by managing the portfolio in such a way as to minimise the impact of the operations on the United States balance of payments and avoid any significant impact on the United State security markets. He added that these operations had now been carried to a point where the portfolio could be used to reinforce the United Kingdom reserves at short notice.
With respect to the problem of international liquidity, it was felt that a number of countries will require time to consider their attitudes in the light of changing developments in international payments, and with the benefit of technical studies now being completed in the Group of Ten. In this connection, the Chancellor referred to discussions which he had held with M. Giscard d'Estaing, the French Minister of Finance, and Secretary Fowler indicated that he hoped to have talks with the Finance Ministers of other major countries in the latter part of the year on the subject of international liquidity.
These talks would explore the various possibilities with a view towards any reinforcement that would help to assure a payments system fully responsive to the continued growth of international trade.
The British and American Ministers were agreed that any such reinforcement must await the development, out of the present divergent opinions, of an international consensus on this subject, but that constant and persistent efforts should be pressed at the ministerial level, both during and after the meetings of the World Bank and International Monetary Fund. In this connection the Chancellor stressed the importance of the needs of the developing countries.
The Ministers agreed that the two reserve currencies would continue to play an essential part in the financing of international trade and as a medium in which to hold reserves. They recognised that the interests of the two currencies were closely bound up with one another. This identity of interests had already been recognised in the measures of financial co-operation taken by the two countries which should be maintained and intensified.
In addition to the Chancellor and the Secretary, participants in the Treasury discussion included:

Sir Patrick Dean, British Ambassador to the United States,

Sir William Armstrong, Joint Permanent Secretary of the British Treasury,

Sir Denis Rickett, Second Secretary of the British Treasury,

Mr. Robert Neild, Economic Adviser to the British Treasury,

Mr. M. H. Parsons, Executive Director, Bank of England, and

Mr. John Stevens, Economic Minister in the British Embassy, Washington.

Mr. Joseph W. Barr, Under Secretary of the United States Treasury,

Mr. Frederick L. Deming, Under Secretary of the Treasury for Monetary Affairs,

Mr. Merlyn N. Trued, Assistant Secretary of the Treasury for International Affairs, and

Mr. Stanley S. Surrey, Assistant Secretary of the Treasury for Tax Policy.

4.1p.m.
LORD ERROLL OF HALE: My Lords, I should like to thank the noble Lord for his courtesy in reading out the Statement made by the Chancellor of the Exchequer in another place. It seems to me that this was one of those occasions when the talks were undoubtedly useful, but when there was not perhaps a very great deal to put in a Statement after the talks themselves. Perhaps I might be allowed to say that we are glad that the Chancellor was able to go to Washington in the midst of a very complicated Bill in another place, and to have had talks which showed the full co-operation existing between Ministers in Washington and the Chancellor of the Exchequer in this country. Could the noble Lord say what the Chancellor of the Exchequer is going to do next? Is he going to prepare for a major initiative at the Bank and Fund meetings in September?
LORD SHEPHERD: My Lords, I am glad that the noble Lord has welcomed this Statement. I think he will understand if I fail to answer the question which he has just put. I think it would be wrong for me in this House, not being a Treasury Minister, to make any comment as to what actions the Chancellor of the Exchequer intends to take, except to repeat the words in his Statement, that we shall continue with tenacity and a sense of urgency in pursing this infinitely difficult task.
LORD ERROLL OF HALE: My Lords, could the noble Lord perhaps convey to the Chancellor of the Exchequer our wish that he would take such an initiative and thereby continue the good work carried out by his predecessor in this field?
LORD SHEPHERD: My Lords, that, I should have thought, was a double-edged question. But certainly I respond to the noble Lord's first suggestion and will convey his remarks.

MONOPOLIES AND MERGERS BILL
4.5 p.m.
Debate on Second Reading resumed.
LORD FRANCIS-WILLIAMS: My Lords, in rising to support the Monopolies and Mergers Bill, I intend to restrict my attention almost entirely to one clause in it, Clause 8—that dealing with newspapers. I do so because without always, I am afraid, succeeding in my undertaking, I endeavour, so far as possible, to speak in this House only about things of which I know something. I confess at once that my knowledge on the general field of the Monopolies and Mergers Bill is small, but I think I have some knowledge on Clause 8, which deals with newspapers. It is, of course, an extremely important clause, because it marks a complete break with past practice in this country. It is, I think, the first instrument of legislation in recent history to deal specifically with newspapers.
I should like to say right away that I most strongly approve of Clause 8; but because it is, and marks, a break with the past in introducing legislation dealing specifically with newspapers, it has, quite naturally, led to a certain amount of disquiet and some anxiety on the part of many newspapers and newspaper organisations. The clause has been subject to criticism, although of a rather mild and friendly character, by the Press Council, which fears that it may mark, so to speak, the first opening in a move to bring the Press under greater control. But that I do not believe. It has also been attacked with an immense broadside by the Thomson organisation which has widely circulated a long and closely argued criticism of the Bill. I had hoped very much

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that the noble Lord, Lord Thomson of Fleet, might have been present in your Lordships' House when the Bill was having its Second Reading, in order to put before your Lordships the case set out in his organisation's memorandum; but I understand that he is away in Canada. However, I hope that perhaps he will come and speak at the Committee stage.
Let me say at once that I find the objections made by the Thomson organisation, and others, completely unacceptable. They are, I think, based on a complete misjudgment of what the freedom of the Press is really about. The freedom of the Press is the freedom to publish without censorship and without interference by Governments or other organisations, so long as you publish freely within the ordinary law. Controls of mergers, of amalgamations and of monopoly trends in the Press, of the buying and selling of newspapers by millionaires, has nothing whatever to do with the freedom of the Press, as it has been traditionally understood in this country, and as it is defended; because the freedom of the Press is not the possession of newspaper proprietors, or even of newspaper editors and journalists. It is, of course, the possession of the ordinary people of this country, and is simply exercised on their behalf by the provision of newspapers and of a Press that is not subject to censorship or control
Obviously, what has disturbed public opinion, and what was expressed in the Report of the Royal Commission on the Press, out of which this idea emerges, was such mergers, for example, as those under which Odham's Press—owners of an immense number of magazines, and also of the then Daily Herald and the People—were taken over by the Mirror—Pictorial group to form an immense empire controlling both newspapers and magazines to a possibly dangerous extent. Then there was the takeover bid in which the Thomson Group was recently concerned, when an attempt was made to buy the Glasgow Herald, thus putting both the Scotsman and the Glasgow Herald, the two quality daily newspapers in Scotland, under one control—fortunately, as I believe, resisted by local groups in Scotland. This, I think, provides exactly the sort of case in which
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an inquiry by a Commission of this kind is desirable, because great issues of public interest arise.
Originally, the Royal Commission on the Press restricted to daily and Sunday newspapers their proposals for what they called a "court" to examine newspaper mergers, but under this Bill the principle is extended, as I understand it, to local weekly newspapers of all kinds. That is probably right, though it raises some problems which will need consideration; and I hope that they will receive more consideration than they have yet been given before we reach further stages of this Bill. I think the extension is possibly right because we are now at a most interesting stage in newspaper development—a stage at which new methods of production, including web offset printing, photo-setting, the use of computers and so on, make it look as if it will be possible for evening and daily newspapers in the Provinces to become economically viable with a much smaller circulation than has until recently been the case. Indeed, we may see so much of a reversal of the trend that instead of, as in the past twenty or thirty years, having to record the death of newspapers, we may find ourselves in the next few years in the happier position of recording the birth of newspapers.
This is an important development, but it is probable that in the first instance it will depend, in part, upon the operations and the investment potentialities of sizeable newspaper groups which are able (as has been done by the Thomson organisation in Reading) to buy up an existing local weekly paper and, with these new printing techniques, to build an evening newspaper serving the interests of a wider area, which is very desirable indeed. It is not, I think, wholly desirable that a great town like Reading should depend for its evening newspapers, as it at present does, almost entirely upon the London evening newspapers. The local interest—municipal affairs, and all the cultural and other activities of such an area—should be reflected in its evening newspapers.
The same sort of thing has happened, under the same sort of processes, with the development of a new evening paper in Shropshire—the Shropshire Star. Then the Thomson organisation itself, I think, has plans—at any rate, it is surveying

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the ground—for the possible development of some eight evening papers in various provincial centres on the same sort of pattern—that is, for the building of a new evening paper on the foundation of an existing local weekly, with the use of these new techniques of photo-setting, web offset printing, and so on. Although we need to be very careful of too much of a monopoly developing in the hands of any one newspaper group, it is very necessary that we should not, in our anxiety to prevent that, be so concerned that we make it impossible for the development of new newspapers, serving new or old communities, to come into existence. I hope that some consideration will be given to this kind of problem.
In many ways it would obviously be most desirable if new evening papers of this kind could be financed by and could arise from strong local interests, and could have deep roots in their own local communities. I think that the best local newspapers, whether day, evening or weekly, are papers which have these local roots. However, in the nature of things it is highly probable that local groups with the necessary "know-how" and with the necessary knowledge of the new techniques will not exist; and so the only means by which new evening papers of this kind can be brought into existence will be with the aid and assistance, and possibly the investment, of existing newspaper groups. So long as there are means of ensuring that there is some independence of editorial control, some representation of local interests in the new paper, and so on, that may not be a bad thing. And it is possible, if we look at the proposals of this Bill too narrowly, that we may stand in the way of such a development, desirable in many ways as it is, and certainly desirable as it is, as I said earlier, that there should be means to prevent such great mergers in the national Press as we have seen.
My Lords, whilst welcoming Clause 8 of this Bill, as I do, I would also suggest that it needs a good deal of clarification and a certain amount of additional thought. I am very anxious that it should be effective, but effective in the right way. Therefore, not only should we know exactly what is intended, but the clause should be in such a form as to do exactly that. I must say that,
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on reading the Bill, I find a certain confusion as to what exactly is meant by "circulation". In the Explanatory Memorandum of the Bill, it is stated that in Clause 8 the reference to "circulation" is to
"…newspapers having an aggregate daily circulation in the United Kingdom of five hundred thousand or more copies".
But when we come to Clause 8 itself, we find it stated, in subsection (5):
"…the reference to relevant circulation is a reference, in relation to a newspaper published on any given day, to the circulation of that newspaper as published on that day …"
If one can make logical sense of a somewhat confused piece of English, it would seem to suggest that, when one talks about circulation, one is doing so as one in fact normally does when referring to circulation figures (when saying, for example, that a Sunday paper has a circulation of 2,100,000), and that that is the figure which would be regarded as "relevant". However, if it is to be daily circulation, as is suggested in the Explanatory Memorandum, then presumably one would divide that circulation of 2,100,000 by seven in order to bring it to a daily circulation. That would make the figure 300,000, which, of course, would leave the paper outside the confines of this Bill; whereas otherwise, if the relevant circulation is the actual circulation, it would come within it.
This is, I think, a point of some importance, and one which those concerned in newspapers ought to have clarified; because it may be the case—it quite likely is the case—that there will be situations in which a newspaper group controlling a morning and an evening paper in, say, Birmingham or another large town of that kind may have a combined circulation getting very near to this 500,000-a-day figure. It may be approaching, and it may be a sensible thing for it to take an interest in, a group of local weekly newspapers circulating in the area and serving the same sort of interests as does the group itself. Whether their circulation is to be divided by seven to give the figure or whether the figure to be taken is that given in the A.B.C. ratings, and so on, may be a highly relevant consideration in determining whether they can proceed with their discussions with or

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without reference to the Board of Trade. I feel that some clarification is needed, because I am anxious that this clause should operate, and should operate successfully, in the public interest.
I think we could also do with a little more clarification as to what exactly is meant by "a newspaper proprietor". This is particularly important, because in what is a rather exceptional provision—and one which, it seems to me, is open to a certain amount of criticism—the newspaper proprietor can, under this Bill, in certain circumstances, if he fails to do what the Commission require, be sent to prison for up to two years. It may well be that a large majority of the public would neither break their hearts nor burst into tears if Lord Rothermere, Mr. Cecil King or Mr. Max Aitken were conveyed to prison, to remain there for a certain period to be taught a lesson. But who, exactly, is a newspaper proprietor? It is clear when we are dealing with great newspapers, where there is one dominant figure, but what about a paper like the Observer, which is governed and controlled by a trust and which has a group of trustees separate from its group of directors?
Or, to take a quite different case, what about a newspaper group like the East Midland Allied Press, which owns a substantial group of provincial newspapers of one kind or another, the ordinary voting shares of which are held by 371 persons, none of whom has a controlling interest? In that case, are all 371 of them newspaper proprietors? Do they all have to go to prison if they overstep the mark? Because you cannot put a corporation, a company, into prison; and the fact that provision for not only fines but prison sentences is included in this Bill does, as the drafting of the clause shows, indicate that actual persons are thought of. I think that it will be the case increasingly in the future that persons, in that sense, are not likely to be relevant; because, despite the development of a few big newspaper figures or tycoons, what we are seeing now is the development of a managerial revolution in the newspaper industry, whereby companies owning newspapers are run by a board of officials with no dominating shareholder, no newspaper proprietor in the old sense, at all.
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Therefore I suggest that before we come to a later stage of this Bill this, too, needs to be looked at. If we are going to agree that in certain circumstances people ought to be sent to prison, let us at any rate try to be clear in our minds about what we mean by "proprietor" and about whom we intend to send to prison. I wanted to raise these points because I think this clause is important. It marks a new development in our law and in the acceptance of public responsibility to safeguard the public rights in the Press. Therefore it seems to me highly important that we should get it working right.
4.26 p.m.
LORD ERROLL OF HALE: My Lords, I think we have had an interesting debate this afternoon covering many different aspects of this important Bill, so admirably introduced by the noble Lord, Lord Rhodes, not only with his customary clarity but also with his customary brevity. I should like to say how much I enjoyed listening to his explaining, so far as he could in the time, the work and nature of the Bill before us this afternoon. The Bill really extends and varies to a certain extent the stream of legislation passed through Parliament since the end of the war and adopts largely the principles outlined in the White Paper of the last Government issued last year; although it departs in certain important respects from what had been the views of the former Government.
I am very glad to see that the Monopolies Commission is to be strengthened once more; although I should like to place on record that the reason why it was reduced in 1956 was that there was no longer so much work for it to do, since restrictive practices were, in the light of the 1956 Act, to become the responsibility of the Restrictive Practices Court. However, industry and commerce has become more complicated over the last nine or ten years; so the need has grown for an investigating body capable of carrying out several investigations simultaneously.
We on these Benches are glad to see that the provision for increased membership of the Commission, which we proposed, is incorporated in the Bill, but I think noble Lords should realise that

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merely because we have panels which can sit simultaneously it does not mean that investigation can necessarily be carried out any more quickly, despite the special powers taken to overcome wilful delay on the part of those who are being investigated. The fact remains that as these investigations nowadays are much more complicated because industrial processes and arrangements are themselves more complicated, so, if investigations are to be fair, they must be long and painstaking and we must expect the time that will elapse from the referring of the case to the publication of the report to be long, rather than short.
I am sorry that the present Government could not see their way to appointing a separate Registrar for Monopolies, because although the present Ministers of the Board of Trade may say—as I did in my day when I was there—that the Board of Trade and the Monopolies Commission are completely impartial and that there is no question of an investigated firm being in any way "in the dock", the fact remains that often the firm consider themselves to be "in the dock". It would have done a great deal to establish the Monopolies Commission in the favour of industrialists if there had been set up in this Bill a Registrar who could prepare the case and put it to the Monopolies Commission and who could thus show the organisation that was to be investigated just what sort of case it was that the organisation was expected to answer.
As regards the investigating of services, the Government have decided to go further than we recommended and to embrace the whole field of services, both commercial and professional. Naturally we shall—as I am sure will the whole country—watch with the closest interest to see what are the first references which are to be made in respect of services. I hope that the Government will bear in mind that a number of professions have their scales of charges and professional conduct laid down by statutory devices or by Royal Charters, and it would seem wrong that they should be called to account for carrying out what has been provided for by Statute.
Those parts of the Bill, principally Clause 6, which deal with mergers depart substantially from what were our proposals. I do not propose to repeat what
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were our proposals, as that was dealt with so admirably by my noble friend Lord Drumalbyn, who was at the Board of Trade when the White Paper was being prepared and issued. Nevertheless, I think that the effect of this Bill will be to make some firms reluctant to merge who might otherwise have been prepared to do so. Although the powers of the Board of Trade are in large part permissive and not mandatory, the very fact that the Board of Trade could hold up a merger, or break up a merger after it has gone through, will have an inhibiting influence on a number of industrialists and boards of directors who might otherwise have gone ahead.
I thought that the speech of the noble Lord, Lord Brown, was particularly interesting in that he was doubtful, from practical experience as well as from a study of this important subject, whether there is not a great deal to be said for a more rapid rate of merger and to have fewer larger and stronger companies rather than a great number of small ones. Let us remember that many great companies started from small beginnings. We should never forget the importance of the small independent business—whether the manager be worth £5,000 or a quarter of a million—in Britain to-day and in the future.
The figure of £5 million in Clause 6 refers to the assets of a firm to be taken over, and I understand that by "asset" is meant the total book assets. It would be helpful if that could be written into the Bill. Presumably, it means the combined revenue and capital assets; in other words, the figure at the bottom right-hand column of a company's balance sheet. It would be helpful to know exactly what that figure is meant to be in terms of assets. I hope that the figure of £5 million may be explored during the Committee stage, rather than that time be taken up during the Second Reading debate, and that we shall be told exactly why it was chosen. I hope that it is not a case of "Think of a number and double it", but that the Board of Trade have looked at the structure of companies throughout Britain and are able to say, "Were we to draw the line at £4 million it would be too low; if we put the figure at £6 million it would be too high." Any evidence we can be given to show why £5 million is the right figure would, I

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think, help noble Lords in their consideration of this Bill.
Regarding foreign takeovers, I find it difficult to see how the Monopolies Commission could be capable of impartially investigating the desirability or otherwise of a foreign company making a merger deal, or a takeover deal, with a British company. Here factors quite outside the normal purview of the Commission would almost invariably enter into the consideration, and if there had to be decision I should have thought that it would be better coming from the Government, taking into account the political factors, rather than the Monopolies Commission whose information would be of United Kingdom experience and working. Although the noble Lord, Lord Brown, said that we should be careful about foreign companies, I think the words he used were "seizing key sectors of the economy", I think we should also remember that this process of amalgamation and takeover works in more than one direction; and that we should suffer a great deal were the United States to limit and restrict the activities of British companies expanding there.
LORD BROWN: My Lords, what is hitting businessmen on an ever-increasing scale as they go abroad to do their deals is the extent to which a number of foreign Governments and Commonwealth Governments are already in possession of powers which limit the extent to which we can invest in or take control of industries overseas.
LORD ERROLL OF HALE: Yes, I think it a most undesirable trend and one which we should resist, and, with our world-wide influence, try to reverse.
To turn briefly to the question of Press mergers, I thought that the noble Lord, Lord Francis-Williams, made some very interesting points, particularly about what is a newspaper proprietor. Clause 8(6), which deals with that, contains one of those circular definitions which I always find attractive, if not comprehensible. Clause 8(6) says:
"For the purposes of this section—
(a) 'newspaper proprietor' includes, in addition to an actual proprietor of a newspaper, any person having a controlling interest in a body corporate which is a newspaper proprietor, and any body cor-
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porate in which a newspaper proprietor has a controlling interest".
I hope that when the noble Lord studies that subsequently he will find it becomes a little clearer. I must say that to be an associated person or relative would seem even more dangerous than being a newspaper proprietor, because from the following clause one learns that a relative shall be an associated person and, curiously enough, for the purposes of subsection (3):
"…relative ' means a brother, sister, uncle, aunt, nephew, niece, lineal ancestor or descendant (the step-child, adopted child or illegitimate child of any person being taken into account as a relative or to trace a relationship in the same way as that person's child); and references to a wife or husband shall include a former wife or husband and a reputed wife or husband."
I can only wonder what has happened to all the cousins and why they have been left out. Later on we may be given some explanation why this definition of relative has been adopted.
On the subject of Press mergers, I think the question of circulation and the figure of 500,000 after the acquired newspaper has been taken over is one which we should explore more carefully during the Committee stage discussions. Much the same comments as I made in respect of the figure of £5 million would apply to this figure. Has the Board of Trade studied the present circulation figures of newspapers? Are there a number of newspapers with circulations of about 400,000 which, if they took over one small newspaper, would be caught by this provision? Or is it perhaps the case that there are a large number of newspapers with circulations of just over the 500,000 mark which would automatically be caught by the provisions in the Bill if they attempted any further acquisitions? As this is a quite new matter, I think it would be advisable for the Government to insert somewhere in the Clause—I will help them by tabling an appropriate Amendment—the power to vary the figure either up or down in the light of experience, so that if the figure is found to be too high it could be lowered, or if the figure of half-a-million was found not to be the most suitable in practice, it could be raised.
The noble Lord, Lord Rhodes, made some play with the powers being taken particularly to deal with monoplies whose

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practices had been adversely commented on by the Commission. My own experience was that in the absence of powers it was always possible (although it sometimes took a little time) to secure by agreement with the firm or monopoly concerned an undertaking to comply with the wishes of the Government. On balance, I think it is probably right to have these powers in reserve, but I should not like it to be thought that because we operated without such powers, we were not able to be extremely effective in this respect. Although we shall be granting these powers to the Government, I hope that they will be reluctant to use them, and will rely on persuasion, which leaves a much better taste in the mouth than does compulsion. If we may have that assurance, I shall be much happier. Apart from that, as this Bill embodies so much of what was enshrined in our own White Paper, I feel that it would be wrong to prolong the present discussion. Subject to the reservations which my noble friend and I have made, we hope that the Bill will have a good passage.
4.40 p.m.
LORD SHEPHERD: My Lords, I am sure that the Government have a sense of satisfaction at the spirit of this debate. It has been interesting but, above all else, constructive. It has been much in line with the discussions that took place in another place, when Members put Party politics aside for a moment and sought to improve what is an important Bill. I feel that this spirit is likely to continue to prevail in your Lordships' House, particularly as we have the noble Lord, Lord Drumalbyn, an ex-Minister of State, and the noble Lord, Lord Erroll of Hale, an ex-President of the Board of Trade, obviously going to take an active part in the proceedings. This is a formidable combination. I sensed sympathy with the objects of the Bill in what the noble Lord, Lord Erroll of Hale, said when going rather joyfully round the phrases of the definition of what is a newspaper proprietor. The noble Lord well knows that in this class of legislation it is difficult to make a definition clearly understandable, yet prevent loopholes.
I think that I can be brief, because many of the points that have been raised are those for Committee and, in any
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case, if I attempted to answer, I doubt whether noble Lords would be satisfied but would certainly feel that they should raise their points again on Committee. Furthermore, if I attempted to answer all the points that the noble Lord, Lord Drumalbyn, made, we should be here until a late hour. I should like to repeat what my noble friend Lord Rhodes said at the beginning. This is a Bill which is part of the general evolution of legislalation in this field. There is not one of us who believes that this is the end. The Bill is an extension of the first Act of 1948, which was created to obtain for the Government, Parliament and the general public information in a field which, even to those who operate in commerce, is not very clear.
My noble friend Lord Brown alluded to what he called too much absolutism in the attitudes towards this question. On the one side, there is the view that large organisations and monopolies are a danger to the country, and, on the other, there are those who believe that competition can produce all the benefits that the country needs. We all know that competition can lead companies and industries into difficulties, and we know that monopolies, if they are not properly operated to the public good, because of their size and power can be detrimental to the nation and, in particular, to its export trade.
But, with the obtaining of more information about these operations, I believe our views are changing. I think I can say that what we want to-day is not merely competition within our own country, but also the creation of organisations which are able to face competition abroad, which are able to meet and match the large organisations in America and Europe. But we must look at this development carefully. This type of legislation is largely to obtain information, and the Government are now taking powers to act if, from the information obtained from the Monopolies Commission, they consider that a monopoly or merger is likely to be against the public interest. I do not think that industry and commerce need fear this Bill. I should have thought that in many respects they would welcome it.
The noble Lord, Lord Drumalbyn, asked me in regard to services why we have gone a degree further than the

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White Paper produced by his own Administration. We felt that the terms of the White Paper in regard to services connected with goods were too narrow. It might well be necessary to look into insurance and hire-purchase organisations and other services of which one could think. But I would make it clear that the Government share the view of the previous Administration that it is the general commercial services at which we shall take a look first, and at this time we do not contemplate looking into professional services or insurance. Nevertheless, we feel that in drafting this Bill we should draft it sufficiently widely so that, if the need arose, the Government could act.
The noble Lord also asked whether Clause 5 could be brought into effect in regard to information agreements. Clause 5 could be used in regard to information agreements and I believe that in certain circumstances Clause 1(3) could also be used. As to mergers and the standstill power, I take it from what was said in all quarters of the House that your Lordships feel that mergers should be looked into. I remember the serious disquiet in your Lordships' House, in another place and in the Press during the great battle between Courtauld's and I.C.I. One can think of other mergers that have taken place where there was not sufficient information for the public to understand whether such a merger was in the public interest or not. I think there is a general welcome to the Government's taking this power to inquire.
But there would be little purpose in taking this power if it appeared from its use that a merger would be contrary to the public interest and the Government then had no power to take action. In his admirable, short speech, the noble Lord, Lord Byers, drew attention to the difficulties that had arisen about the Monopolies Commission, when they had made reports and the previous Government had been under difficulty in dealing with them. This was because under previous legislation the Government had no power to act. They were dependent upon conciliation and negotiation. We feel that the Government, if on the information that is available to them they consider that a merger is likely to be contrary to the public interest, should
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have this power. There are two qualifications. First of all, there is the question of whether the merger in itself would create a monopoly. In such a situation, the Government could hold up the merger for a period, or could permit it to go forward under certain conditions, and the Bill gives the Board of Trade power to lay down these conditions—for example, that the assets of the company, particularly the machinery and equipment for production, shall not be scrambled in such a way that, if the Monopolies Commission found that the merger was contrary to the public interest, it could not be unscrambled without extreme difficulty.
I think I should stress, particularly in view of the speech of the noble Lord, Lord Drumalbyn, that we do not believe that there will be many mergers that will have to be sent to the Monopolies Commission. In most cases it will be quite clear from the beginning whether the merger should go forward or whether it should stop. It is only in what one might call the very small fringe area, where an element of doubt may arise, that the Minister will think it right to send the case to the Monopolies Commission for investigation. I hope that the public and your Lordships' House will not feel, as might be suggested by the speech of the noble Lord, Lord Drumalbyn, that all classes of mergers are going to be involved. As I have already said, I do not think this will be the case. I believe that only a few will need to be sent to the Monopolies Commission.
I appreciate, of course, some of the difficulties that would be involved if there were a standstill. But what is the alternative? Really, it is to do nothing. I think that, on balance, considering the few companies which are likely to be involved, this is the right course. I certainly hope that all companies which do enter into merger arrangements will consult with the Board of Trade at the earliest possible moment. They will be able to get a great deal of information. As the House knows (and I am sure the noble Lord, Lord Erroll of Hale, will confirm this), these inquiries are treated with the greatest confidence.
LORD BYERS: My Lords, may I ask the noble Lord a question? Does this

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mean that it would be possible to get a clearance from the Board of Trade? If one can do that, of course, it is a different matter.
LORD SHEPHERD: As I understand it, only when there is a prima facie case that a proposed merger is likely to be contrary to the public interest will it be referred to the Monopolies Commission; and if it is clear that it does not come within the provisos—obviously if it does, then it will be vulnerable—it will be up to the Minister, and I imagine that the Board of Trade, given the full information, will quickly be able to make recommendations to the company.
The noble Lord, Lord Drumalbyn, also asked for full-time members of the Monopolies Commission. As the law stands, it is already open to the Board of Trade to make full-time appointments to the Monopolies Commission. One of the greatest difficulties—and the noble Lord referred to this—is whether there should be a small Commission full-time, in which event you become rather limited as to the area of knowledge and experience available, or whether you adopt the practice, as we have it in this country, of generally having part-time personnel on these Commissions, and thereby being able to bring in a wide area of knowledge and experience. I should have thought that this was the best way to do it.
What we are going to do is to strengthen the executive side of the Monopolies Commission so that the resources—one might call it the horsepower behind the personnel—will be very much stronger. I am bound to point out (I do not put this in any Party way) that there was a time, in 1954, when the Monopolies Commission employed, I think, 104 executive officers, and during the ten years in which the noble Lord was the Minister the number fell from 104 to 34. It is our intention to increase that and to give much greater strength to the Commission to act. I feel sure the House will agree with me that this Commission should embrace as wide a knowledge and experience as possible. If we are to have that, we cannot limit the opportunity of finding full-time servants for the Commission.
LORD DRUMALBYN: I am grateful to the noble Lord. I do not think that
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he has quite dealt with the point I tried to raise. The point I tried to raise concerned having full-time members of the Commission to deal particularly with mergers, because of the urgency of the matter. I did not question that, in the general way, it is better to have a widespread knowledge and to accept the greater time that results. But where urgent examination is obviously needed, I should have thought there was a good deal to be said for having a special panel of full-time people who would be able to get on with the job quickly.
LORD SHEPHERD: That is a good point, and I take it from the noble Lord. But, as I said earlier, as the law stands it is already open to the Board of Trade to appoint full-time members of the Monopolies Commission. I will certainly put to my right honourable friend what the noble Lord has said with regard to merger inquiries, but I should have thought that it would be best to leave the construction and the law as it now stands. They have a sense of flexibility, and it is up to the Commission and the Minister to see that these inquiries on mergers are dealt with expeditiously; and I agree that the sooner they are dealt with, the better.
The noble Lords, Lord Drumalbyn, Lord Byers and Lord Erroll of Hale, mentioned the question of a Registrar of Monopolies. My right honourable friend made it quite clear in another place that the Government's mind is not closed to the appointment of a Registrar. Certainly there are advantages, in that it would take away from the political arena the question of deciding what is to be sent to the Monopolies Commission. Maybe there could be such an organisation, and a great deal of the investigation work could be done by the Registrar.
But whatever the advantages may be, the Government were seized of the need (I am sure the noble Earl, Lord Erroll of Hale, will understand this) to draft a relatively short Bill in this First Parliamentary Session of a new Government. We felt that this Monopolies Commission should be dealt with immediately. If we had extended the Bill, it would undoubtedly have been a much larger and more complex Bill than it is to-day. With all the other legislation going through on other matters, it would have been

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extremely difficult to pilot such a Bill through in so short a space of time.
I think it was the noble Lord, Lord Drumalbyn, who said that he was contemplating putting down an Amendment to bring in the Registrar.
LORD DRUMALBYN: With respect, I did not say that. I said that I was contemplating putting down an Amendment to deal with factual reports. I realise that to deal with the position of the Registrar would be a most complicated business.
LORD SHEPHERD: I am glad that the noble Lord has set my mind, and I am sure that of my right honourable friend, at rest, because this would involve us in a difficult task, as the noble Lord, Lord Drumalbyn, will realise, having piloted the Resale Prices Act through your Lordships' House and remembering the difficulties we had in that case.
With regard to the Commissions' procedure, and the evidence, I think this would best be left to the Committee stage. The noble Lord has indicated that he intends to move an Amendment to this effect. We will look at it, and perhaps we might have a conversation with regard to it between now and the Committee stage. I am afraid that I cannot give the noble Lord much hope, if any, in this respect, but we shall certainly listen carefully to what he has to say.
So far as the Press are concerned, I must say that I was rather surprised, in view of some of the strong statements that have appeared in the Press, that noble Lords who have some connection with the Press have not come here to give us the benefit of their views. I am sure that we should have been very pleased to hear them. The Government feel it right, in bringing in a Bill of this type dealing with monopolies and also with mergers, to deal with the problems of mergers within the Press. We feel that we have struck the right balance. It is true that we have departed from the Royal Commission, which was chaired by the noble and learned Lord, Lord Shawcross, but we feel that we shall have achieved the end for which that Commission sat.
One point, which I do not propose really to answer, is with regard to the
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definition of newspaper proprietor. This is very involved. If the noble Lord, Lord Erroll of Hale, and the noble Lord, Lord Francis-Williams, cannot be satisfield in Committee I will undertake to bring the experts together—and they will not be either me or, I am sure, my noble friend Lord Rhodes—and ask them to go through this line by line. Then I would hope that the House in Committee (if the noble Lord, Lord Erroll of Hale, is satisfied) will feel that we have got the right drafting in the Bill.
The noble Lord, Lord Francis-Williams, spoke about the criminal clause. I quite appreciate the feelings in a British Parliament towards inserting criminal sanctions in what is largely a civil commercial piece of legislation. But this type of sanction appears in American and Canadian Anti-Trust laws. I would suggest to the House that where a merger could take place which could result in the death of a paper, and that once it has died the chances of being able to resurrect it again are very small, there should be pretty severe sanctions on any newspaper proprietor taking over and doing something which is unlawful under this Bill. I think we can give this assurance. There is nothing in Clause 8 which is in any way obscure. I cannot believe that there will be any newspaper proprietor who could plead that his innocence was based on ignorance of the law. It is very simple. Therefore, I would not have thought there is any fear of any newspaper proprietor—and here I need not mention any names—accidentally finding himself in prison for two years for the infringement of this law. I would suggest that in the circumstances it is right, taking everything into account, that you should have a fairly severe penalty for this type of infringement.
I think that is all I need to say. I appreciate that there are a number of points which have been made with which I have not dealt. But they are all points which I feel will arise in Committee. The Government will naturally look forward with interest to the suggestions that noble Lords opposite may wish to make. We shall certainly look at them with the greatest possible care, but—and this is in no way a threat—as noble Lords know, the timetable is getting very short and very difficult indeed, and I would hope that we shall have

1119
some understanding in this matter, bearing in mind again that this is one Bill following on others. No doubt we shall learn from experience with this Bill so that the next Bill which this Government produces will be a little better than this one.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

JUSTICES OF THE PEACE BILL [H.L.] SOLICITORS (SCOTLAND) BILL [H.L.]
Returned from the Commons, agreed to.
SOLICITORS BILL [H.L.]
Returned from the Commons, agreed to, with Amendments: the said Amendments to be printed.
CARRIAGE OF GOODS BY ROAD BILL
Brought from the Commons; read 1a, and to be printed.
CRIMINAL PROCEDURE (SCOTLAND) BILL
Brought from the Commons; read 1a, and to be printed.
HOUSING (AMENDMENT) (SCOTLAND) BILL
Brought from the Commons, endorsed with the Certificate from the Speaker that the Bill is a Money Bill, within the meaning of the Parliament Act, 1911; read 1a, and to be printed.
LOCAL GOVERNMENT (SCOTLAND) ACT 1947 (AMENDMENT) (NO. 2) BILL
Brought from the Commons; read 1a, and to be printed.
MERCHANT SHIPPING BILL
Brought from the Commons; read 1a, and to be printed.
CRIMINAL PROCEDURE (ATTENDANCE OF WITNESSSES) BILL
Report of Amendments received (according to Order).

PUBLIC HEALTH (NOTIFICATION OF BIRTHS) BILL
5.7 p.m.
Order of the Day for the Second Reading read.
BARONESS SUMMERSKILL: My Lords, I beg to move that this Bill be read a second time. This is a very short Bill, but nevertheless I regard it as an important measure, and hope your Lordships will agree with me that it is a Bill which should go on to the Statute Book in the shortest possible time. It is designed to ensure that the notification of a child's birth is made quickly and in the best way to the local authority responsible for the care of mothers and young children. Although the Local Government Act, 1958, provided for the delegation of most local health authority functions to the county district councils, it omitted, curiously enough, to include the notification of births. Therefore, in some county areas in England and Wales, where health and welfare functions are made the responsibility of a county district council, notifications of the birth are still being sent to the medical officer of the county. He then passes them to the district medical officer for action. But however promptly he passes on these notifications, there is inevitably some delay and over weekends, of course, there may be two or three days of lost time.
In my opinion it is of paramount importance that a mother and her newborn baby should be visited without delay, since prompt action may lead to early investigation and treatment of an ailment or defect, and certainly it will lead to the mother receiving very good advice. I think your Lordships will agree that local authority maternity and child welfare services have played a large part in the steady improvement in the health of mothers and young children, and the arrangements for notifying births enable medical officers to help to mobilise the services for the care of the mother and child. In order to avoid delay, the

1121
father of the child, or the doctor or midwife, is expected, under Section 203 of the Public Health Act, 1936, to notify a birth to the medical officer of health for the area within six hours of the birth.
Of course, notification and registration are two entirely different things, and the registration of the birth does not have to be made within six hours of the birth of the child. It is patently unsatisfactory that precious time should be lost in an unnecessary passing of papers between authorities. The delay could be eliminated entirely by a simple amendment of Section 203 of the Public Health Act, 1936; and this is precisely what Clause 1(1) of this Bill proposes to do. It provides that in the area of a county district council exercising delegated health and welfare functions the notification of births should be sent direct to the medical officer of the authority. This provision applies to England and Wales. The difficulty does not arise in Scotland.
Subsection (2) deals with an entirely different matter but one to which I am sure your Lordships in these days will attach considerable importance. Subsection (2) requires local health authorities to supply, without charge, to doctors and midwives, prepaid addressed envelopes together with copies of a form of notification. The envelope will take the place of the addressed and stamped card which is all that the 1936 Act requires. It seems to me that personal information about the birth of a child and the details of the birth should be sent under cover.
Furthermore, virtually all authorities now use birth notification forms to collect information about congenital abnormalities apparent at birth. Until fairly recently little was known about congenital abnormalities and the causation of congenital malformations, but the discovery of the effects of radiation and of drugs such as thalidomide has changed matters. The thalidomide tragedy focused attention on the lack of information concerning the incidence of the different types of congenital malformations other than that obtained through mortality statistics, which of course were always available. Had a national scheme for notification been available at the time, it is probable that the increase in limb deformities would have been noticed
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earlier and perhaps some of the tragedies could have been averted.
We did profit by this appalling catastrophe, for during 1963 a scheme was devised for notification of congenital deformities to the medical officer of health, and this came into operation in 1964. This is now voluntarily undertaken by doctors and midwives, but may I say, in parenthesis—and I am quite sure I shall have the support of the House in this—that I regret that this is a voluntary scheme. In view of the mass of inadequately tested drugs on the market which are often taken by expectant mothers, it should be compulsory for a doctor or a midwife to notify the presence of some congenital abnormality in a newly-born child. However, the fact that it is notified is a great step forward. The medical officer of health, in his turn, completes a special form provided by the General Registry Office, on which the details of all malformations, whether single or multiple, can be recorded.
Now the nature of the information about congenital abnormalities underlines the importance of sending the notification in an envelope and not on a postcard. Looking back, it is quite remarkable to think that over all these years we have provided only a postcard for the important information regarding the notification of a birth.
Any additional expenditure arising from the measures proposed in the Bill is likely to be minimal. Therefore a Money Resolution will not be required. Clause 2(2) postpones its operation until one month after its passing. This is to allow the authorities time to make their new arrangements, including the printing of new forms and the envelopes. I would commend these proposals to the House and ask that a Second Reading shall be given to this small, but very important, measure.
Moved, That the Bill be now read 2a.—(Baroness Summerskill.)
5.14 p.m.
LORD NEWTON: My Lords, I did not put my name down on the list because I was not certain whether I should get here in time for this debate; but I should like to thank the noble Baroness, Lady Summerskill, for the careful information she has given us on her small but important Bill, as she herself described it.

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The Bill makes two very sensible amendments to the existing law, and I, for one, and I imagine most of your Lordships, wish the Bill well.
5.15 p.m.
LORD TAYLOR: My Lords, I have not always entirely agreed with my noble friend on every subject in the past, but this afternoon it is a great pleasure to be able to agree wholeheartedly with her and to support this Bill entirely. Her Majesty's Government welcome it, and I am particularly glad to be supporting it because one of its supporters in another place was the noble Baroness's daughter, which just shows what a family team can do.
BARONESS SUMMERSKILL: She is well brought up.
LORD TAYLOR: I agree with the noble Lord, Lord Newton, that it is a useful and necessary little Bill. As the noble Baroness has said, there are two documents which have to be filled in after the birth of every child. The first is the notification of the birth to the local health authority, which has to be done within six hours, and the second is the registration with the Registrar, which has to be done within six weeks. Here we are concerned with the notification within six hours, which has to be done either by the father or the midwife or the doctor. It will usually be the midwife or the doctor, and this is done normally immediately after the birth.
As my noble friend has explained, up to now the notification has been to the medical officer of health of the county or county borough and not to the medical officer of health of the county district, where there were delegated powers, and clearly this could lead to delay of the kind which the noble Lady has described and which was most undesirable. All the associations of local government authorities are keen to see something done about this. The first clause of the Bill will apply to about thirty county district areas where delegation has occurred. I had wondered about the situation in the new Greater London area, but in fact that is covered by Statute, and the new boroughs in the Greater London area are health authorities in their own right, so they will receive the notifications anyway.
The second point, about the substitution of a prepaid envelope for a post
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card, is equally welcome, and for the very reason that the noble Lady has given. First of all, it gives a little privacy to the affair, and secondly, it obviously encourages the doctor or midwife to notify congenital defects and abnormalities. The importance of this, as the noble Lady has said, is very much greater than it used to be, now that new drugs are so frequently coming into use and we may get unexpected and quite terrible happenings, such as the thalidomide tragedy. I agree entirely with her that had the system of notification been in existence at that time we might well have been warned much more quickly than actually was the case.
It is for the local health authorities to devise the kind of form that is inserted into the envelope. It is not laid down by the Ministry of Health, and I imagine most local authorities will now provide a place for the notification of congenital abnormalities. With the postcard, it has sometimes happened that only the fact of birth has been recorded on it, and the congenital abnormalities have had to be notified by letter. Clearly, there may have been some defects in the procedure as a result of that, and, although it is voluntary, I think the new system will be much more efficient and a good thing.
The incidence of these congenital abnormalities is something like 1·7 per cent. It varies a little from area to area. Some of them, of course, are quite uncommon defects; some of them, on the other hand, such as club foot and cleft lip and spinabifida, are more common. There are a number of serious conditions which will not be discovered immediately at birth; for example, some forms of congenital heart disease. But the fact that the child is at once brought under the care of the local health authority infant welfare service through the health visitors will help to pick this up. We have no hesitation, therefore, in hoping that your Lordships will give this Bill a warm welcome and a speedy passage on to the Statute Book.
BARONESS SUMMERSKILL: My Lords, I should like to thank my noble friend and the noble Lords opposite for the support they have given this Bill.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

TRADE DISPUTES BILL
Read 3a (according to Order), with the Amendments, and passed, and returned to the Commons.
LOST PROPERTY (SCOTLAND) BILL
Read 3a (according to Order), and passed.

GREENLAND FISHING OF ATLANTIC SALMON
5.22 p.m.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE rose to ask Her Majesty's Government whether they are aware that exports of Atlantic Salmon from Greenland have risen from 2 metric tons in 1957 to 1,400 metric tons in 1964 due to growth of intense netting using improved methods, and that this increase constitutes a grave danger to salmon stocks in the rivers of Europe; and whether they will initiate discussions with the Danish Government with a view to agreeing on a close season and quantity limitation in the interests of conserving the salmon species. The noble Lord said: My Lords, I beg to ask the Question standing in my name on the Order Paper. I feel there can be no question at all as to the value of the Atlantic Salmon, breeding in the rivers of the Eastern American Seaboard and the rivers of Europe, as a source of food, as an industry of very considerable importance giving much employment, as an inducement to tourism, as a source of revenue in rating by local authorities and as a source of angling sport for many thousands of every section of the community.
It was, I think, your Lordships' House that a few years ago originated Parliamentary attention and persuasion on the Government of that time to take action on drift-net fishing, which at that time was menacing the breeding of salmon in our rivers. But to-day we are facing a danger far greater than that of the drift-net, for the present danger affects not only our own rivers but the whole species of the Atlantic Salmon. The tragedy to me is that the secrets of the salmon in salt water have very largely been revealed. It used to be considered a mystery. I have but to refer to the
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1963 Interim Report of the Hunter Committee, which says on page 8:
"There are enormous gaps in the knowledge of the sea life. We do not know, for example, the routes followed on migration; the feeding grounds; whether the salmon travel in shoals or individually; the depth at which they swim; and what determines the length of the marine phase of their life."
Alas! since that time things have altered, because we now know they spawn in the rivers and go round the Greenland Coast and find feeding grounds which provide their growth.
Your Lordships may have heard, as I have, from two sources, the story of one of the American Atlantic submarines taking the Northern Passage. Through the periscope they saw on an iceberg—and your Lordships know that about one-third of an iceberg shows and two-thirds are below—what they thought were tens of thousands of nodules. Going close they found, through the periscope, that in fact these were salmon vertical, tail down, nose up, sucking plankton from the bottom of icebergs; and those salmon had passed round the Greenland coast.
With this new knowledge and with its exploitation by modern equipment and ever improving methods, the raids on salmon stocks are increasing, in terms, I regret to say, of largely immature fish, because Mr. Allan, the head of the Salmon and Freshwater Fisheries Department of the Ministry of Agriculture and Fisheries, estimates that last year over 600,000 salmon, believed to be immature fish, probably around 5 lb. each in weight, were caught in this perfectly legal but nevertheless devasting Greenland system of netting off shore, and indeed developing netting from boats. If this goes on, in about five years it may well almost extinguish the salmon as a species, and with it those industries I enunciated to your Lordships a moment ago. The depredations between Greenland and Baffin Land are now going to be carried out, indeed I believe are being carried out, by at least three different European countries which have been preparing to drift-net, and therefore we must add this new European drift-netting to the menace of offshore stake netting off Greenland. The poor salmon is having a pretty rough ride and unless we can do something to alter this situation we might say goodbye to it.
I have no wish to confuse or weary your Lordships with figures. I think the

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main figure is the one given in my Question, which gives the picture of the expansion of this Greenland fishing and the export growth of the salmon from Greenland, which of course does not make any allowance for salmon which are home-consumed in Greenland. It is nothing less than an astronomic upsurge: in terms of metric tons—in 1957, two; in 1961, 115; in 1964, 1,400. These fisheries are operated by the Greenlanders with the help of the Danes, and as there is virtually only one salmon river in Greenland it is very clear that the taking of these largely immature fish of around five pounds must be at the expense of European rivers where they spawn, and the Atlantic Eastern seaboard rivers where they spawn. I give your Lordships one more figure only. In 1964, as I say, the Greenland catch was 1,400 metric tons. In 1963 the total world catch by twelve countries, on both sides of the Atlantic, was just over 10 metric tons. Therefore, the Greenland menace is shown by now, and if action is not taken the future disaster can be foreseen. The catch in fact has increased seven hundred times in seven years. That is the case.
The next question I come to is: What can be done? I know that the Government are aware of the problem. But awareness, by itself, is not enough. The Secretary of State for Scotland, answering a Question in another place recently, said that he was
"aware of the recent development of a salmon fishery off the coast of Greenland, but the evidence so far available does not enable us to assess the possible effects on the British salmon fishing industry. Investigations have accordingly been arranged to start this autumn, in co-operation with Danish and Greenland scientists, to secure further information to enable such an assessment to be made. It is necessary to have this fuller information before we can decide what further action, if any, is appropriate."—[OFFICIAL REPORT, Commons, vol. 713, (No. 130), col. 296, Friday, June 4, 1965]
Quite frankly, I find that statement most depressing, because from the figures I have given your Lordships it is clear that here and now there is an urgent problem; and though scientific investigation is no doubt valuable and of interest, and profitable in the solution of the difficulty, the difficulty itself is obvious to every one of your Lordships here to-day. I know that the Government are sending
1128
experts of the Freshwater Fisheries Department to Greenland. But it seems to me that the danger lies in delay, and I would ask the Minister, first: how soon will the scientists give of their results; and, second, what of the further damage to stocks during the investigation?
This problem cannot be solved except internationally. Could not Her Majesty's Government propose to all the countries, now, a standstill on further netting expansion, both off-shore and drift netting, while the scientific investigation goes on? The figures seem to me to justify such action by Her Majesty's Government. Then let a special international conference consider what safe amounts can be taken yearly from the salmon stocks of all the countries, including Greenland. There might be total limits for each country. There might be limitations on the size of the mesh which is used in nets. There should be, as I believe there is here, a prohibition on the method of drift netting. I ask for action as well as investigation.
When the last Government were faced with the problem they took positive action, by Orders in Council, to stop drift netting until the Hunter Committee had reported. I have quoted to your Lordships the preliminary Report of that Committee, and it has certainly given support to the action of the last Government. But the point I want to make to the Minister is that the last Government gave a good example in stopping the rot, as it were, while the problem was being investigated. I hope that the present Government are going to be as energetic and as successful as the last Administration in that particular direction. There is no reason to suppose that the Danes, who are reasonable people, will not co-operate in limitations. We trade with the Danes a great deal. We take much agricultural produce from them. We can remind them that here we have a Ministry of Agriculture and Fisheries, and that we cannot isolate the fish danger from the other agricultural considerations which allow us to take Danish imports. To use the words of Mr. Churchill (as he then was), when he was Prime Minister and used to send out Minutes which some of us remember, I appeal for "action this day"—before lasting harm is done to a great and important industry.
5.35 p.m.
THE EARL OF DUNDEE: My Lords, I am glad that my noble friend has raised this question. Of course it is not so simple as the question of drift netting off our own shores. I hope that it may soon be possible to initiate negotiations with the Danes and the other countries concerned. As my noble friend has said, we were always taught that the question of where salmon went in the winter time, like that of where flies go, was an insoluble mystery. I wish that it had remained so. But now it has been found that the salmon go off to the waters of Greenland in shoals and formations which are quite vulnerable and easily detected. I believe that the fish which are caught are in poor condition. It is a pity that they should be killed in that condition, but they are edible enough to give the fishermen a profit.
My information is that fish caught in Greenland waters have been identified as coming from Scotland, England, Ireland, Sweden, Canada and the United States. So this really is an international question, and one that ought to be discussed in the interests of all countries which have Atlantic salmon and whose economy depends partly on the Atlantic salmon. It is not only a question of what happens in Greenland territorial waters because, as my noble friend has said, it is now believed that in the high seas large shoals of these salmon have been detected and may be caught in large numbers this year by the vessels of several countries.
I know how difficult it is to start international negotiations. Of course it may be that we need more evidence: and it is always a good thing to have more evidence. But I think that we have enough evidence to put forward the proposals for international discussion because, desirable though it is to know even more about the matter than we do, by the time we have found out, not only may stocks be depleted but fishermen from all countries may have staked out a claim and established an interest in these waters; and it is much more difficult to get a Convention stopping people when they have been doing something for four or five years, than it is when they have not yet started. I therefore hope that early action may be taken to produce discussions, not simply in our
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interests but in the general interests of all countries who have Atlantic salmon in their waters.
5.38 p.m.
LORD FORSTER OF HARRABY: My Lords, I am sure the House will be grateful to the noble Lord, Lord Balfour of Inchrye, for raising this question, which is one of extreme importance to the commercial salmon fishing industry of this country and to those who are engaged in it. He has told your Lordships of the extraordinary growth of the Greenland drift-net fishing, and it must be obvious that, if this drift-netting continues on its present scale, it will cause irreparable damage to the rivers of this country, which are largely the nurseries of the Atlantic salmon.
We in this country have long had regard to the necessity for the conservation of salmon. We have a salmon netting close season. We have a close season for rod fishing. During the netting season we provide that the nets should be taken up for 48 hours in each week so that the spawning fish may have an opportunity of getting from the sea into the rivers. Two years ago this House gave effect to an Order prohibiting drift netting within a six-mile limit of the Scottish coast. If, therefore, we are to ask for some form of Convention for the protection of the Atlantic salmon, both in our own interests and in the interests of all other countries into whose rivers the Atlantic salmon go, surely we are not asking for anything unreasonable.
If we do not get some form of Convention, and if the drift netting of Atlantic salmon off the Greenland coast extends in future in anything like the proportions in which it has extended between 1957 and the present date, it is obvious that the Atlantic salmon is going to become extinct. This will result in the extinction of the very valuable commercial salmon fishing in this country, which provides labour in parts of the country, particularly in the North-East of Scotland, where other forms of employment are not easy to secure. I therefore hope that Her Majesty's Government will find themselves able to do something to ensure that the matter of a Convention is raised with the other European countries which are affected, though none is affected so much as we are, because our rivers are the nurseries for the Atlantic salmon.
5.40 p.m.
LORD BOOTHBY: My Lords, my intervention will be very brief. For a number of years I have taken a certain amount of interest in the fishing industry, and I am more concerned than I have ever been by the ruthless over-fishing that is taking place at present, mainly in the North Sea, but at the present time elsewhere as well. We all owe my noble friend Lord Balfour of Inchrye a great debt for putting down this Question to-day. In the course of my lifetime I have seen the once great herring fishing industry of Scotland brought practically to ruin, and I know the cause. It is the relentless industrial fishing of immature fish which are then converted into meal and oil, mainly by the Danes. I am sure that that is the reason why the stocks of herring in the North Sea have fallen so catastrophically.
Lord Balfour of Inchrye made an absolutely devastating case in regard to the salmon. I am not at all sure that it stops there. I believe that over-fishing—a practice which prevailed very widely between the two wars, but which was very much checked by the Second World War, though it is now in full swing again—is one of the greatest menaces of our time. I asked the previous Government some two-and-a-half years ago what action, if any, they were taking about herring, and I was informed that a special Committee—a body called the International Council for the Exploration of the Sea—was investigating the shortage of herring. Since that time I have asked two further Questions, and have been told that no report has been received from that Council, and that no agreement seems to have been reached between any of the fishery experts. Fishery experts are almost as bad as economic experts: they seem to be totally incapable of agreeing about anything.
This is a matter—and this applies also to other matters—which we ought to raise, in the first instance, with the Danes, from whom, as my noble friend Lord Balfour of Inchrye said, we import a great deal of agricultural produce, and from whom we have every reason to demand some concession—and they are not an unreasonable people. I agree wholeheartedly with the noble Lord's final remarks when he said that the time for talk is over and the time for action has
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come. Otherwise we may soon find ourselves without any herring and without any salmon—in which case I personally should prefer to go as speedily as possible to another world.
5.45 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, I should like to support very strongly everything that has been said in this debate. Only last week we were discussing in this House the Highlands and Islands Development Bill and how best to help those areas. Salmon, of course, are one of the great assets of the Highlands and Islands, and I think that if the present Government wish to help the Highlands and Islands they could not do better than now make a start and make representations to the Danish Government on the matter of this netting off the coast of Greenland.
When the salmon leave our European shores they have enough natural enemies to contend with in the sea, and if they have now to contend with this great concentration of netting off the Greenland coast, I can foresee that in even so short a time as three or four years ahead the salmon may become so depleted that they will die out. Your Lordships know that if any species, fish or mammal, get below certain numbers they can never pull back, and will die out. Therefore, I add my full support to the noble Lord, Lord Balfour of Inchrye on his Question, and I thank the noble Lord for raising the subject to-day.
It is astonishing to think that in the last seven years the catch of these Greenland salmon has gone up by 700 times, which is a fantastic figure. The noble Lord also mentioned that over 600,000 salmon were caught last year by this method. The salmon stocks cannot stand that. Denmark and Greenland themselves hardly produce any of the salmon. So far as I am aware, there are in Denmark only three or four salmon rivers—and not very good ones at that. We have a very strong point here, because our country produces, together with Norway, Sweden and Iceland, the great majority of Atlantic salmon, so I hope that, especially in the interests of the Highlands and Islands, Her Majesty's Government will make representations to the Danish Government.
5.49 p.m.
LORD DULVERTON: My Lords, I intervene briefly to support my noble friend Lord Balfour of Inchrye. My noble friend Lord Dundee made a list of other interested countries concerned in this problem. I do not think that he mentioned Iceland. I know that Iceland is very concerned indeed about this matter, and this is a point which I feel is worth noting.
5.50 p.m.
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): My Lords, I am very grateful to the noble Lord, Lord Balfour of Inchrye, for raising this matter, a matter which, as this brief debate has shown, is of great interest to a number of your Lordships. The interest in, and concern about, the matter goes much beyond the confines of your Lordships' House. I should like to confirm that the figures which the noble Lord quoted are, in so far as reports which have reached the Government are concerned, factual. The phenomenal increase to which he referred is by no means an exaggeration of the case. He referred only to the known export figures for Greenland and referred only briefly to the quantity kept for consumption in Greenland itself. So that when that quantity—perhaps some hundreds of tons—is added, the figure of increase is something quite fantastic.
The information which the Government have and which, as I said, confirms the noble Lord's figures, came to us from the Danish Government and is therefore a factual statement of the position. I think it is clear that there has been this phenomenal rise in the catch in recent years, and this follows the provision of freezing plants in the bigger Greenland towns, which have enabled the catch surplus to their own domestic requirements to be preserved in suitable form for export. The catch in 1964 was, in fact, appreciably higher than the salmon catch last year, which was some 1,200 metric tons. The figures which I have quoted leave out grilse, because they are not reflected in the Greenland figures.
As the noble Lord, Lord Balfour of Inchrye, said, there is only one salmon river in West Greenland, so it looks as if the salmon caught off the coast must
1134
have been bred elsewhere; and we know, of course, that salmon tagged mostly as smolts in the United Kingdom and in other countries on either side of the Atlantic have been caught in this fishery. Up to May this year, 64 in all have been caught, just over half of which were tagged in the United Kingdom. Moreover, the expanded fishery represents virtually a new toll by man on the Atlantic salmon stocks. It is natural, therefore, that those concerned with our own salmon fisheries should be worried about the development of the Greenland fishery and its effect on our own salmon stocks.
My Lords, all this we accept; but these portents tell us very little about the effect which the Greenland fishery may have on other fisheries or on stocks. The information is still very scarce on several aspects and insufficient for a final and reliable judgment. There is still a great deal that is relevant to this issue that we do not know. Clearly, some British salmon spend part of their sea life, when they feed and grow, in waters off Greenland. But we do not know what proportion of them do, nor how many of those that get as far as Greenland would in the ordinary course come back.
The partial information we have is to some extent reassuring. All the salmon caught in Greenland that were tagged in Scottish waters came from half a dozen batches of smolts, totalling 38,000, tagged between 1961 and 1963, including both natural and artificially reared smolts. Up to May this year, 945 had been recaptured, but nearly all on their return to Scottish waters and only 13 off Greenland. I could quote other figures for England and Wales which show almost identical proportions, and from which similar inferences could be drawn. But I should like to emphasise that these figures are reassuring only as far as they go, and they must be used with caution, because, among other things, we do not know whether tagged salmon are as easily recognised as such in the Greenland fishery as they are here. So we cannot draw absolute conclusions from these figures. Moreover, nearly 90 per cent. of the tagged Scottish smolts came from one river.
We have had representations that our tagging programme should be extended to cover a larger section of our smolt run, and suggestions as to how this might

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be done. We should like to tag more smolts and to give a better coverage, and we will certainly consider the suggestion made; but, as noble Lords will know, there are difficulties. Smolts are sensitive and delicate creatures and tagging requires very skilled operators. Moreover, it can be done only during the two or three weeks when smolts go to sea; and a further difficulty is that not everyone likes his smolt run interfered with by tagging.
I think I have said enough to indicate that to get a more complete picture, from which firm conclusions could be drawn, a great deal of further investigation is required. I know that that will not be very welcome, but it is an international matter and we cannot proceed as if everything were under our own control. Your Lordships will remember the tremendous reactions, the objections, which took place when we acted on matters which were within our own control. In this we are seeking to have action taken against a much poorer country than our own, and it is even more difficult to persuade Greenland fishermen that what is being done is in their interest and not in the interest of people in other countries. I do not believe that if they took that point of view they would be correct, because at the end of the day they will suffer just as much as anyone else does, if they continue to act as they are doing at the present time. But, having said that, it is necessary to take international action.
This is not something which is within the control of this country. It is not something which is even within the control of ourselves and the Danes. If it were only reasonable people that one had to deal with all the time, action would be quick. If action is taken just between the Danes and ourselves, we have no guarantee that someone else will not just move in; and it has been suggested that others are already moving into this field. So we must have the evidence for proper international action.
So far as the Danes are concerned, we have confirmation of the fact that they are behaving reasonably and are prepared to be helpful. When, a year ago, it was becoming obvious that this Greenland fishery was developing so very rapidly, scientists of our own Department, in co
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operation with Danish scientists, planned a joint tagging programme in Greenland waters, designed to show where the salmon in those waters go to if they are not caught there. This joint operation will be carried out in the late summer and autumn, and I should like to record that for this project we are receiving every help from the Danish authorities. They are contributing very substantially to the cost of the equipment required and providing many of the facilities needed. In the same way, they have been very co-operative in supplying the information about the Greenland fishery which I have mentioned earlier.
For the same reason—the need for fuller information—at the recent meeting in Canada of the International Commission for the North West Atlantic Fisheries (in whose area the Greenland fishery occurs), the United Kingdom joined with others in urging that all the countries concerned should step up their investigations on salmon fisheries. After full discussion, the Commission drew up a schedule of the further information required to enable a proper assessment to be made of the effect of the Greenland fishery on the stocks of the Atlantic salmon, and commended it to all the countries concerned. Although, of course, it is appreciated that the Greenland salmon fishery means a great deal to the economy of that country, the Danish authorities were nevertheless asked through their representatives at the Commission to consider whether means could be found of curbing further expansion of the fishery while the further investigations are proceeding.
That course urged on the Danish authorities was very recent indeed, and there has not yet been time to find out the extent to which it will be possible for them to co-operate in this way. However, it is clear that this matter is of international concern and that if remedial measures prove to be needed they can be taken only by international action. Several noble Lords have suggested to-day that we should seek urgent agreement to international control. The Commission I have mentioned for the North West Atlantic has the duty of recommending to member Governments conservation measures that may be needed, and there is a similar Commission for the North East Atlantic. The United Kingdom is a

1137
member of both. I should like to say, with regard to the remarks made by the noble Lord, Lord Forster of Harraby, that the steps which we ourselves take in this country for conserving stocks give us good grounds on which to ask other people to do it. We are not saying to other people, "Do what we tell you"; we are saying to them, "Do what we do ourselves". It gives us at least a strong moral footing on which to go to the others in this matter.
Regulatory measures for white fish are already in force on both sides of the Atlantic, but it is the practice of both Commissions to base their recommendations on scientific evidence about the state of the stocks and their need for protection, and it will, I think, be readily appreciated that in the absence of such evidence international agreement is not easy to secure. That is why the Government feel that it is necessary to press on urgently with further investigations of the kind I have mentioned. The North-East Atlantic Commission relies for scientific advice on another body whose name I hesitate to mention—the International Council for the Exploration of the Sea—who are concerned, among other things, with the salmon stocks native to the European countries; and I can assure your Lordships that when this body meets in October the United Kingdom representatives wilt press the need for further, urgent investigation.
In the meantime, we shall keep in touch with developments. I do not think we can at present do more on the international side than we are doing, and I hope your Lordships will agree that we have taken and are taking all steps open to us to prepare for dealing with this possible threat to our salmon stocks. International action, as I have said, is necessary: international action, unfortunately, is not always as quick as is desirable; and, with the particular urgency which the noble Lord, Lord Balfour of Inchrye, indicated as being present in this case, where the almost total extinction of salmon stocks could take place within four or five years, we obviously cannot, without some immediate action being taken, go through the ordinary routine of letting this thing go on for years. For that reason, I hope that we shall have the complete cooperation of the Danish Government in
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the very necessary steps which have been urged upon them, not only by ourselves but by the others who took part in the discussions in Canada, so that we can make sure that at least things do not get any worse while the necessary information is being taken; and I would assure your Lordships that these measures will be followed up most wholeheartedly by the Government.
If further inducement were necessary, I think it is the threat or the promise (I do not know quite which it was) which the noble Lord, Lord Boothby, made. I was not quite sure whether the complete elimination of salmon as well as herring was intended to presage his departure from this world, or only an emigration to Greenland. In either event, I think both the Greenlanders and St. Peter should be protected from this contingency, because the noble Lord is very much an acquired taste.

SERVICE PENSIONS: THE CASE OF MR. PAUL MUNCEY
6.4 p.m.
LORD WILLIS LORD WILLIS rose to ask Her Majesty's Government whether they will review the decision of the Ministry of Defence and the Ministry of Pensions by which a Service or war pension was refused to Mr. Paul Muncey: and whether they will amend the general regulations governing the granting of Service and war pensions so that proper financial assistance in the form of an adequate pension may be given as of right to cases of a similar nature. The noble Lord said: My Lords, I beg to ask the Question standing in my name. The facts behind this Question are as follows. Paul Muncey volunteered for the Navy thirteen years ago, when he was 17 years of age. Three years later, aged 20, he was on service with the Navy in the Far East, and he went on a day's shore leave to Sandakan, in North Borneo. During the day he went to a football match: he had a few beers with his mates, and then they all decided to go for a swim in a nearby lagoon. I want to emphasise that it is freely admitted that he had had a few beers, but there is no evidence whatsoever, and it is not true, that he was drunk.
Paul Muncey was the first to go in. It was night, and, unfortunately, in the

1139
moonlight, the depth of water in the lagoon was deceptive. He dived in and broke his neck; and, since that day, for ten years, he has been completely helpless, paralysed and confined to bed. He now lives in a pre-fab. at Greenwich with his widowed mother. They have a total income of £10 5s. 6d. a week, made up of £4 sickness benefit, £1 4s. 6d. as a grant from the Greenwich Hospital Trust and £5 1s. from National Assistance. His mother, of course, cannot work, because she is nursing him full-time. In addition, the British Legion pay 10s. a week for a television rental for him. Out of this total income of £10 5s. 6d., nearly one-fifth—£2 a week—goes in rent. This sum also has to pay for the extra costs of linen, because he cannot move and the linen has to be changed once, and sometimes twice, a day, and laundered. He needs extra heating; a light burns all night; and the doctors have put him on a special high-protein diet, which your Lordships know is expensive, because they are afraid he may get too heavy and his mother may be unable to lift him.
Here let me digress for a moment to say one word about Mrs. Muncey, because I think that, in this cynical world, hers is a story of such unwavering devotion, unceasing tenderness and indomitable courage that it assumes the proportion of a saga. She has faithfully and patiently, and without complaint, nursed her son and attended to his every need for the last ten years. She is the epitome of Blake's lines:
"Love seeketh not itself to please
Nor for itself hath any care
But for another gives its ease,
And builds a Heaven in Hell's despair."
Because, believe me, my Lords, in that little pre-fab. there has been Hell's despair for many years. It is just as well that Paul Muncey has such a mother, for the shameful and scandalous thing which angers me about this story is that everyone else, it seems, has turned his back on them. At every turn they have been met with a grim stone wall of regulations. Successive Ministers, whom I know to be humane, warm-hearted and kind, have, nevertheless, like so many Pontius Pilates, washed their hands of him.
Richard Marsh, M.P. took up the case with the Ministry of Defence last year, and received an answer which can be summarised briefly as follows:
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"The Naval service completed by Paul Muncey is not sufficient to comply with the statutory conditions for an award of a Service pension on invaliding out."
Nor had he served long enough to be eligible for even a grant from Naval funds. The Ministry of Pensions replied that:
"the accident was solely due to Mr. Muncey's own conduct and that since Service conditions neither caused it nor contributed to it, they are unable to award a war pension".
The National Assistance Board regret that it is impossible to pay him a supplement since his basic needs are assessed under the regulations at £2 15s. per week, which is the scale rate for a person living in someone else's household.
My Lords, these are the cold, clerical answers of officialdom, mixed up with a few words of sympathy. But it is not only the case of Paul Muncey with which we must be concerned here: we are concerned also, I think, with a question of principle. We have been told by the Ministry of Pensions that "Service conditions neither caused nor contributed to" the paralysis. To me, this seems to be sheer sleight of hand. Paul Muncey was a minor, a junior, when the accident occurred. He happened to be in North Borneo, not because he decided to go there for a holiday but because the Navy took him there. He had volunteered for the Navy; the Navy decided that he should go to the Far East; and the Navy decided that he should have a day's shore leave in Borneo. In these circumstances it seems to me impossible to argue that Service conditions did not contribute at all to the accident. "Ah", they say, "he was on leave at the time; he was on a day's shore leave." Do the Navy now say that they accept no responsibility for minors on leave, even on one day's shore leave? Do they tell the parents, when their sons sign up: "We accept full responsibility for these youngsters while they are on duty. But if they go on leave and get involved in an accident they are on their own; we wash our hands of them"?
Then it is said that he was skylarking at the time; that he had had a few beers. I went into a naval recruiting office and got some pamphlets and brochures which appealed to young people to join the Navy. All of them stressed the call for adventure, the need of lively lads with active spirits. In the windows outside State House, the main recruiting centre,

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I saw written: "Skill, travel, adventure", and "A life of skill, adventure and security in the Navy." The Navy cannot have it both ways. They cannot expect to have spirited lads who turn off their high spirits when they go on leave.
Finally, I come to the argument of the Ministry of Defence, in effect, that Paul Muncey did not serve long enough to qualify for a Service pension. I accept that this may be the regulation; but, if so, it seems to me that this is a regulation that is bureaucratic, soulless and ought to be destroyed. Paul Muncey served for almost three years—in fact I think it was slightly over. Was he warned when he signed up that he must be careful not to break his neck or to contract a deadly disease until he had served a statutory period? I am not asking for charity for Paul Muncey—although even a little of that would not come amiss: it has been a stranger to his bedside for a long time. I am asking for certain basic elementary rights.
I base my case on these facts: first, he was in Borneo because he was in the Navy—nobody can dodge that—and for no other reason. Therefore Service conditions, of some sort or another, did contribute to his accident. Second, he was a minor; and the Navy must have the same responsibility towards minors that society seeks in a parent or guardian. The Navy cannot expect to get young people of high spirits and, as I have said, expect those high spirits to be confined only to the quarter deck. It might be argued that if the Services accept this argument in principle, they would have to accept an additional burden of pension in many other cases. But why not? They sign on these lads; they expect them to serve; they expect them to be high-spirited. Is it to be argued that we are going to have thousands and thousands of such cases every year? Clearly, that is absurd. Clearly this would mean an extra charge; but it is one which we ought, in all justice, to meet.
If the regulations prevent Paul Muncey from being given a pension then those regulations should be changed; they should be bent or broken, for they are unjust, inhuman and a disgrace to a civilised country. I know, as I have said, that Mr. Richard Marsh, and Miss Margaret Herbison, the Minister of Pensions, are just and compassionate
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people. I know that the Minister in this House is a just and compassionate man. I ask them to remember that in the Labour Party's Election Manifesto we said we were to build a compassionate society. I ask them to remember that compassion is an individual as well as a general thing. I beg them, in judging this and other similar cases, not to forget that. Since I started with Blake, let me finish with him:
"Can I see another's woe,
And not be in sorrow too,
Can I see another's grief,
And not seek for kind relief?"
THE MINISTER OF DEFENCE FOR THE ROYAL AIR FORCE (LORD SHACKLETON): My Lords, I think we would all agree that this is an exceptionally tragic case and it would obviously be agreed that we should treat a case of this kind with the utmost sympathy. We would certainly pay tribute to the quite remarkable devotion that Mrs. Muncey has shown to her son. At the same time, as I listened to the noble Lord I found myself somewhat in disagreement not only with the content of what he said but with his presentation of it. I should like to set out the position of Her Majesty's Government, be it of any Party, in this type of matter. Many of your Lordships will have had experience of cases of this kind and certainly those of us who have served in another place have handled many pension cases in our time and are well aware of the rules that apply. Indeed, I would suggest that much of the noble Lord's speech was rather an attack on the provisions of society as a whole than on the treatment of Mr. Paul Muncey as an individual. But I should like to set out the circumstances.
My noble friend is quite right in his facts as to the tragic injuries which occurred to Paul Muncey. In company with three other seamen on shore leave in British North Borneo, he spent the afternoon in the Sandakan Recreation Club and from there went to a small dance hall with a bar and an adjoining pool which was privately owned by a Chinese proprietor and was open to the general public. In due course Mr. Muncey decided to have a swim; he stripped off his clothes, ran to the diving platform and dived in. Unfortunately, the swimming pool is tidal and at the

1143
time it contained only six inches of water. He landed on his head on the sand on the bottom, fractured his neck and suffered damage to the spinal cord with the result that he is now totally paralysed from the neck down. A naval doctor was on the scene within half an hour and Muncey was moved to the Sandakan Hospital and transferred to the British Military Hospital, Singapore where he remained under treatment until October, 1954. From Singapore he was flown home to the Royal Naval Hospital at Haslar. On the 29th October, 1954, he was invalided from the Royal Navy suffering from quadriplegia and transferred to the Stoke Mandeville Hospital in Buckinghamshire.
The noble Lord referred to the allegation that Paul Muncey had had too much to drink. All I would say on this point is that the question of intoxication is not relevant to this case at all. I personally would not therefore have referred to it. The basic issue is whether or not his injuries were attributable to or aggravated by service. I do not think I need spend much time on the question of Service pensions. The noble Lord, Lord Willis, has referred to the fact that Paul Muncey had only had just over two years' service; and I do not think anyone in the circumstances would question whether he should be eligible for a Service pension. It is obvious that he is entirely outside the purposes of Service pensions.
The question is whether he should be awarded a war or disability pension. This is governed by War Pensions Instruments, administered not by the Ministry of Defence, but by my right honourable friend the Minister of Pensions and National Insurance. It is an essential condition for the award of a pension for disablement that the disablement must be attributable to, or aggravated by, service. I do not need to go into great detail on this, but I am bound to say that the view I took myself when I read the case was that the accident was entirely due to Paul Muncey's own actions and that Service conditions neither caused not contributed to the accident which resulted in disablement. In this type of case there is a statutory right of appeal to an independent pensions appeal tribunal against the Minister's decision. This procedure
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was followed by Mr. Muncey and the Minister's decision was upheld by the tribunal. The decision of the tribunal is legally binding on my right honourable friend and the only further recourse open to Mr. Muncey would be to appeal, by leave, on a point of law to the High Court. He has not done so, no doubt for good reasons. I am not suggesting that There is any possible point of law on which he could appeal.
My Lords, the conditions surrounding the award of disablement pensions are already much more generous than in any comparable field. To extend them even further to cover a case of this kind, tragic as it is, would be quite incompatible with the principle applied hitherto by which such disablement must be due to some Service cause. It has been argued that all accidents to Servicemen should be regarded as attributable to service, irrespective of whether they occur on duty or not, the argument being, as my noble friend suggested, that the victim would not have been where he was—in this case, in Borneo—but for the service which took him there. If this argument is pressed to its logical conclusion, we should be obliged to accept liability for any condition which manifested itself in service. This would entirely cut out the principle of causality on which the War Pensions Scheme is based and would make it virtually impossible to sustain the generally accepted preferences which war pensioners now enjoy. The existence of the War Pension Scheme is because of the acceptance of the principle of Service causation.
The noble Lord, Lord Willis, made some play with the fact that Paul Muncey was a minor. I am not sure what conclusion he draws from this. Should it be that in such circumstances the movements of any young man of under 21 should be completely restricted? Is it really possible for the Government to exercise a special responsibility for a man aged 20? The Royal Navy, in common with other Services, strives to the limits of possibility to take good care of its men, and particularly young men, abroad. But this does not, cannot and, in my view, should not involve continuous supervision. Quite apart from the fact that this course would be quite impracticable, I believe that it would be completely

1145
unwelcome to the men themselves. Paul Muncey was 20 years old; he was not a child, and I cannot think that it could seriously be suggested that the naval authorities were in any sense negligent in allowing him to go ashore off duty without supervision in the circumstances existing at the time.
I fully agree—we all must—that this is a tragic case, and it may well be that the points made by the noble Lord, Lord Willis, should be directed to the provisions that society makes generally, and to whether arrangements for welfare are adequate; but in this case I must stress that the Services are not in a special position, and have certain strict rules which are made and agreed to by Parliament and which it is not open to the Minister or the Government of the day to vary.
It may well be that nothing like enough has been done for Paul Muncey, but what can be done to make up for this absolute tragedy? Here is a young man who is totally paralysed, and it is not possible to make up for that terrible accident. I should point out that, quite apart from the sickness benefit which has been paid continuously since February, 1955, Paul Muncey has also received a certain allowance from the British Legion. In addition, he was awarded a Greenwich Hospital Special Pension of £1 4s. 6d. a week. This was awarded quite exceptionally. Normally, only men with longer service than Muncey are considered for these pensions, so I do not think it would be fair to suggest that Ministers and my predecessors in the Defence Department have regarded this case in a heartless way. Mr. Muncey's mother receives a widow's pension and a National Assistance supplement—
LORD WILLIS: My Lords, may I say that I do not think it is true to say that Mrs. Muncey gets a National Assistance supplement. Their total income is something like £10 5s. 0d. a week, with all the additional things indicated by the noble Lord.
LORD SHACKLETON: My information is that she does receive a supplement. I am quite willing to look further into this matter, but it seems to me that this totals up broadly to the figure mentioned by the noble Lord. All I am suggesting is that, so far as the limits are at present set, the Munceys are receiving what the
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community is prepared to give them, and in addition there is this special pension from the Greenwich Hospital.
LORD WILLIS: My Lords, the noble Lord will excuse my interrupting again, but I want to get this absolutely clear. They have a total income of £10 5s. a week. The income from the Greenwich Hospital is taken into account by the National Assistance Board, with the result that they do not get a supplement. The National Assistance Board have considered this and, as I indicated, do not think that this is a case in which a supplement would be justified.
LORD SHACKLETON: Obviously, I cannot disagree with the noble Lord. I can only stand on the facts I have. I am perfectly willing to look into this matter further, but it does not, to my mind, alter the point I am trying to make, that there has been a very determined attempt, so far as is possible, to look at this case sympathetically.
I should add that in 1959 the then First Sea Lord offered to use his influence to have Muncey transferred to a home, such as the Star and Garter Home at Richmond, where disabled Servicemen have permanent accommodation in a happy atmosphere with the best possible treatment, but it is clearly the wish of Mrs. Muncey and Paul Muncey that he should live at home, and no one would suggest for one moment that Mrs. Muncey should not have her wish and continue to give the devoted service to her son that she is now giving.
My Lords, this is a very tragic case, and all of us would like to do something to help. It has been looked into again as the result of the noble Lord's Question. It has been most carefully and sympathetically considered at every stage, but I see no grounds on which it could be taken further. I would say this to the noble Lord: those of us who have had experience of dealing with pension cases know of many heartbreaking cases where people have been invalided from the Services with a condition not attributable to service, perhaps a rare disease like ankylosing spondylitis, and Parliament has seen fit to agree to certain regulations. Any young man who suffers an accident of this kind is bound to be a

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tragic case, but the remarks of the noble Lord, which were couched in pretty strong language, should, I think, be directed to the wider question of the obligations of society to those members who suffer misfortune. I do not see such a significant difference between a tragedy of this kind which happens in Borneo and a similar tragedy which happens anywhere else in the world. My Lords, in these circumstances I am sorry to say that there is nothing—much as we should like to do so—that we can do further for Paul Muncey.
VISCOUNT GOSCHEN: My Lords, may I ask one question of the noble Lord? If anything does happen to Mrs. Muncey, will this boy still be able to go to the Star and Garter Home?
LORD SHACKLETON: I do not want to rest on the fact that that is a hypothetical question. I should only hope that the offer made before would then be renewed. Certainly this is a matter which has been given very much anxious and sympathetic thought. I am sure that the Royal Navy feels a strong responsibility and would like to do the most it can within the rules as approved by Parliament.

THE EXPORT BONUS
6.30 p.m.
LORD BARNBY LORD BARNBY rose to ask Her Majesty's Government whether they can explain the delay in announcing the conditions upon which exporters can obtain, on certain merchandise regularly exported in volume, the export bonus. The noble Lord said: My Lords, the purpose of this Question is to seek an explanation, hitherto not vouchsafed to repeated delegations from the industry, of the delay in according to manufacturers of wool tops the subvention provided under Section 7(5) of the Finance Act (No. 2), 1964. First of all, I should declare an interest. I am a board member, unpaid, of a body which has for long dealt rationally with redundant equipment in the wool combing industry. This association, I should add, functions with the benevolent familiarity of the Board of Trade.
The export of wool tops by the United Kingdom is not insignificant. In 1964, it
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totalled in value £45 million—an appreciable contribution to the country's export achievement. Indeed, it is an important part of the £160 million of the total exports of the wool textile industry, which places the industry among the top eight exporting industries. I believe it is the fifth—
LORD RHODES: The sixth.
LORD BARNBY: The sixth, the noble Lord, Lord Rhodes, with his knowledge, corrects me. The Act requires a 20 per cent. content of British wool to qualify for rebate. There have been protracted negotiations by authoritative bodies—the statutory Wool Export Council and the British Wool Federation with both the Board of Trade and Customs authorities; but the frustrating debate still continues. There has been helpful consideration by senior officials, but down the line less higher ranking officials, perhaps quite properly in their attempt to defend the taxpayer, have shown costiveness and delay and have advanced many complications. It will be agreed that uncertainty is a discouragement to business and this instance is certainly no encouragement to the export of wool tops to these high values.
Business in this industry is habitually done on slender margins, often as low as 1 or 1½ per cent., with long-term credits thrown in. It is often thought that we disregard cost calculations for heavily depreciated buildings and machinery in calculating prices to overseas customers. Such narrow margins would bring blushes to those in other industries when they think of the margins which they customarily secure. It will be seen that an incentive of the order proposed in the Act of 1¼ per cent. is of great encouragement if exports are to be achieved. What applies to tops would also apply to noils and other by-products. I cannot omit mentioning that the industry here meets subsidised exports from Australia and also competition from exporters in the Argentine and Uruguay who benefit considerably from tax concessions. Indeed, it can be said that this latter assistance also applies to competitors from European countries.
I would seek to forestall technical representations of complications which may be advanced by the noble Lord who is to reply. By his long association with

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the wool industry, he is familiar with all these matters and understands the problem perfectly. But he enjoys our sympathy since, whatever may be his own inclinations, a Minister must often conform to policy reactions of his Department. All the same, this offers to him an opportunity to secure accelerated equity. From a lifelong intimacy with the industry and as past head of its senior trade organisation, for a long period, I could weary the House with technical explanations. This would involve an explanation of the diversity of content or the material price ratio of the content of exported merchandise. Wool values could well vary up to 20 per cent. within twelve months. This would make it difficult to calculate the wool content value on the day a contract was made. The date of contract and the date of delivery might vary up to twelve months, or again the date of arrival might vary as against the date of purchase or sale contract or the ownership of the wool.
I would mention that certain by-products are necessarily a blend of constituent parts from various producers, which would make it impossible to calculate any average in the blend. Merchandise manufactured from British wool automatically attracts a subvention because it meets the required 20 per cent. proviso; but how on earth can the British part and the imported part be separated in a blended product? That is beyond the wit of man. I think that your Lordships have had a sufficiency to understand how complicated this matter can be. The rules of the House prevent me from replying to anything which the noble Lord may say, but I assure him that the present delay is a serious grievance in the industry. I am sure that he is personally sympathetic, and I hope that his sympathy may bring a favourable decision, which will avoid any possible unintentional miscalculations as to the composition of the product, or technical content ratios; it would, if granted, swiftly avoid inescapable long delays for the payment of the bonus. Admitted, this may be a difficult matter in interpretation. But there has been, one understands, a suggestion that each individual trader may average his raw material cost over an extended period. That is just not a practical proposition; it is just cuckoo-land. The
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average of each individual firm, the date of purchase, the date of sale contract, the date of delivery—they would all vary tremendously within the twelve months.
There is talk about arrival on premises. Whose premises—the buyer's, the railway company's, the commission comber's? Again, there is discrimination between a topmaker with combs or one without combs. There is talk of freight included—inland or marine; in United Kingdom or foreign bottoms, or freight excluded? Then, there is cost of labour directly employed. Is that in handling or in manufacture? It may include the cost of independent contracts, as set out in the regulations. Who is to be the independent contractor; and how many are permitted?
I said that I would not weary the House with too much technical data; and your Lordships will appreciate that it is a technical matter, involving very large sums, and it is entitled to a rapid and favourable decision. I venture to suggest to the noble Lord that if he still finds great difficulty in coming into agreement with the industry as to what is and what is not practical, would it be possible to invite a small committee, nominated by the trade, to come down and discuss it with the Board of Trade and the Customs authorities? Here I would say that there exists in this industry a statutory body dealing with all export matters. The secretary of that body is extremely well versed in all matters affecting wool textile export all over the world, and he would be, I suggest, a most valuable man for the noble Lord to recommend to confer with the officers of the Board of Trade and the Customs. I therefore suggest, as a quicker course, that the Government should use powers vested in them in Clause 7(5) of the Finance Act (No. 2), 1964, and make the provision forthwith that wool combed in the United Kingdom shall be regarded as ranking forthwith for subsidy.
We in the industry rejoice that we have the noble Lord, Lord Rhodes, as the Minister, because he understands this industry. He has this opportunity to clarify the position. But, what is more important, he has it in his power to impress upon the Government and the Departments concerned that exports are being jeopardised—and, indeed, it is disquieting how the curve of exports is going down—and to correct a deep sense of grievance

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among the manufacturers and exporters about this apparently inexplicable delay. I hope, therefore, that the noble Lord will feel able now to make a statement which will correct this unhappy state of affairs.
6.45 p.m.
LORD RHODES: My Lords, I am obliged to the noble Lord for telling me in advance what he proposed to say tonight. I suppose that if his Party had been in Government I should have been making exactly the same sort of speech from those Benches. But I am not. I am undermined because I have the knowledge of the other side as well. While the noble Lord is regarded as an elder statesman of industry, and has put his points with clarity and with quite a lot of technical allusions, none the less he has put his case.
I would ask him, first, to consider what the position would have been if we had not introduced a scheme at all. This has nothing to do with my reply, but I must draw his attention to the scheme—and it is encouraging to know what an enormous value is placed on it. The export rebates scheme gives exporters relief from certain indirect taxes which enter into the costs of production and transport of exported goods. That is clear. It is not, as the wording of the noble Lord's Question might be taken to imply, any sort of bonus or subsidy. The Finance (No. 2) Act, passed last autumn, stipulates that goods must be produced or manufactured in the United Kingdom in order to qualify for the rebate, and it has been laid down in the Export Rebates Order, 1965, that goods shall be treated as produced or manufactured in the United Kingdom if, and only if, 20 per cent. or more of the costs of their production or manufacture is attributable to United Kingdom expenditure. The noble Lord must agree that 20 per cent. is a very low proportion to take as the criterion.
The House will appreciate that a minimum standard had to be laid down to ensure that the rebate should not be paid on imported goods resold for export without any process or with only very minor processes carried out in this country.
LORD BARNBY: With the indulgence of the House, may I remind the
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noble Lord that there is a 20 per cent. import duty on these manufactured goods? Therefore the 1¾ per cent. proposed in the subvention would have little effect against the 20 per cent. duty.
LORD RHODES: I am afraid that I must say to the noble Lord that that has nothing to do with it at all. Imported wool into this country carries no duty. It is one of the arrangements made with the Commonwealth countries that it comes in duty-free. You cannot have it both ways: you cannot have it processed in and then do the processing here. The re-export of goods of that kind might afford little or no benefit to the United Kingdom balance of payments; moreover, they would not, in general, have borne the full burden of the United Kingdom taxes which the rebate is designed to offset. I venture to suggest that we have not been ungenerous in placing the qualifying percentage of United Kingdom costs as low as 20 per cent.; indeed, this view has been generally shared by the industrial interests concerned.
I would emphasise, too, that there has been no delay in announcing the 20 per cent. condition. Let me correct the noble Lord on this point. The necessary Statutory Instrument and Notices giving full details were published in the middle of January, well before the first claims for rebate had to be lodged. Any doubt since then, in the case of the wool textile trade, has been mainly due to the trade's requests for reconsideration of the condition and for special treatment. I know that that is the case because I have been doing a bit of it myself. I have sent it to the Customs, it has been back to me, back to the Customs, and back again to me. I have tried my damnedest on this job to do it for the trade, and I am afraid that I cannot.
We appreciate that there are special difficulties in respect of wool tops and products associated with them. There is the question of the price of the raw wool from which the tops are made—that is in answer to the noble Lord's comments about that. Some of this raw wool is British, and in those cases, of course, the United Kingdom content of the tops is 100 per cent. and the export rebate entitlement is clear. Other tops, however, are made from imported raw wool, mainly merino and crossbred, and the

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more expensive qualities, especially if they are not dyed or bleached in the United Kingdom, may fall below the 20 per cent. level because the cost of the raw wool is high in relation to the cost of the processes performed in the United Kingdom. The noble Lord understands this implicitly.
With the cheaper qualities of tops and those most highly processed in the United Kingdom, it seems that the 20 per cent. criterion will usually be met—or it is more likely to be—but there is some uncertainty caused by fluctuations in the price of raw wool. There was a period of high prices last year reflected in recent and current exports of tops. We appreciate that, in a very competitive market like wool, uncertainty whether a particular firm's tops will qualify for the rebate at any one time may inhibit competitive tender. There is also the problem of identifying the import consignment and, therefore, the price of the wool used in making any export consignment of tops. Imported raw wool may be placed in a common stock from which it is drawn indiscriminately when required for processing. Again the noble Lord will understand this rather technical reference.
The solution to these difficulties most favoured by the industry was that a new criterion should be substituted for, or added to, the present one; that the exported tops made from imported wool should qualify for rebate if they have undergone in the United Kingdom certain processes, which would be specified, irrespective of the actual United Kingdom percentage in their costs. This, of course, the noble Lord agreed would be a solution. It would probably be a radical solution, but we are not fully satisfied that a case for it has been made out. In any event, it would require a new Statutory Instrument which could not properly have retrospective effect, so that it would not dispose of such difficulties as have already arisen since the beginning of the export rebates scheme.
As an alternative solution, the industry have put forward three proposals for averaging the prices of imported raw wool so as to give all exports of wool tops the benefit of the export rebate. When the wool trade put up suggestions
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about the averaging of its content, one has to take notice of it, because they know what they are at. They are very knowledgeable on this; but so are we. One proposal is to apply an average United Kingdom content to all export of tops, those made from United Kingdom wool as well as those made from imported wool, thus giving a higher figure for the latter. Another proposal is to apply a similar average to all the exports of an individual firm. The third is to average the prices over a five-year period.
May I assure your Lordships that these proposals have been very fully and sympathetically considered—and I mean that. But the law and our international commitments oblige us to pay rebate to particular claimants individually, and to relate it to the actual goods exported by each claimant; and therefore I am afraid that we cannot treat the whole trade as a single unit. Further, the various kinds of tops, merino and crossbred, each of which may be in the natural state, or bleached or dyed, are separate and distinguishable commodities, and we do not think that it is legally open to us to treat them for the purposes of the export rebates scheme as identical. To do so would, in any case, produce anomalous results—for instance, a firm dealing wholly in unbleached and undyed merino tops might not qualify for rebate, but another firm might qualify for rebate on exactly the same type of goods by averaging them with other types in which it was also dealing. This, it seems to us, could only lead to indefensible distortions of trade.
As regards the third proposal, averaging prices over five years is precluded because there is no suggestion that any of the tops being exported now were, in fact, made from wool imported as long as five years ago. The normal through-put period is a great deal shorter. However, as supplies of raw wool from the various overseas sources reach their peak at yearly intervals, the Customs have now been able to offer the industry a measure of averaging which will go some way to avoid the uncertainties caused by fluctuating prices. The noble Lord shakes his head. I am saying, after sympathetic consideration, what we can do and how far we can go. I have taken it up with the Customs myself, so I hope he will do a bit of nodding instead of shaking.

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The offer that we are making is this. In calculating the United Kingdom content of wool tops for the purpose of the export rebates scheme, claimants may take the price of the raw wool as (1) the average price for the preceding twelve months—and, of course, taking the high costs prevailing over the last twelve months it will work itself out; or (2) the average price for the preceding quarter; or (3) the current price. Perhaps I should make it clear that the prices to be averaged are the actual prices paid for raw wool of the type in question taken into the factory during the selected period. They can have it which way they want it. As I have said, that may be the claim period during which the goods are exported for the quarter or twelve months preceding that period, entirely at the exporter's option. They may exercise this option in the way most favourable to them, and they may exercise it afresh for each quarterly claim. It will apply retrospectively from the beginning of the scheme.
I should like to assure the noble Lord, and the trade, for which I have a great affection, that this offer, though it may not go as far as the industry would have
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liked, is made in a spirit of helpfulness and sympathy with the difficulties to which the noble Lord has drawn attention. I hope that he and the trade will agree that the arrangements that I have outlined should be given a fair run, so that their actual results can in due course be assessed in the light of the practical working of the rebate scheme as a whole. It has been a technical subject. To the noble Lord and myself this does not represent much difficulty at all, because we have been born and bred in it. But I do ask the noble Lord to take back to the trade what I have said about giving it a fair run; and I am perfectly certain that as time goes on he will find that it is not so bad as he made out.

LONDON TRANSPORT BILL
The CHAIRMAN OF COMMITTEES The CHAIRMAN OF COMMITTEES informed the House that the opposition to the Bill was withdrawn: the Orders made on 21st and 29th June last discharged, and Bill committed to the Committee on Unopposed Bills.
House adjourned at seven o'clock.