Lords Sitting of 1 December 1966

Preamble
The House met at three of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Bristol

COMPETITIONS IN MATHEMATICS
3.5 p.m.
LORD SNOW: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will institute official mathematical competitions, on the lines of the Olympiads in the U.S.S.R.]
BARONESS PHILLIPS: My Lords, the Government's view is that it is best left to independent organisations to promote mathematical and, for that matter, other competitions. The Government appreciate the importance to this country's technological progress of a high standard of mathematical education and the stimulus which competitions on Olympiad lines can give to mathematics students. But the educational system of the country is based on devolution, and the Government consider that it would be a mistake to attempt to take over these competitions or to supersede them by officially run contests.
LORD SNOW: My Lords, I am grateful to my noble friend for that Answer. May I ask the noble Lady to suggest to the Government that there may be a case for looking again at this matter? We all know that private initiative has done a great deal, and we are grateful both to the Guinness Foundation and to eminent mathematicians for running these competitions, but they have gone as far as they can go. May I ask the Government to consider whether the results of extending them may be worth while? May I also ask Her Majesty's Government to remember that Government participation in such competitions would suggest an interest in intellectual excellence which at this moment it is very desirable that they should be appearing to encourage?
BARONESS PHILLIPS: My Lords, I thank my noble friend for his questions. I would remind him—possibly in reply to both his supplementary questions—that the local education authorities are jealous of their rights and privileges in this connection. I will certainly take his suggestions to the Minister. The encouragement given by Her Majesty's Government shows that they agree with him in connection with the stimulus given to mathematics students.

AIR-SEA AND MOUNTAIN RESCUES BY R.A.F. UNITS
3.8 p.m.
LORD PEDDIE: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government how many incidents involving Air-Sea Rescue and Mountain Rescue Units of the Royal Air Force occured in 1964, 1965 and during 1966, and the cost involved.]
THE MINISTER OF DEFENCE FOR THE ROYAL AIR FORCE (LORD SHACKLETON): My Lords, the annual cost to the R.A.F. of the Search and Rescue Helicopter Organisation in the United Kingdom, together with the Mountain Rescue Teams is currently estimated to be £1 million. This figure excludes the cost of certain other R.A.F. units which are not established primarily for search and rescue tasks; for example, the Shackleton Maritime Reconnaissance aircraft. I regret that a similar figure for search and rescue units overseas is not readily available. In 1964 the R.A.F. were involved in a total of 653 search and rescue incidents at home and over seas; in 1965, 719; and up to October 31 this year, 838. The numbers of people rescued were 257 in 1964, 257 in 1965; and 352 this year, up to October 31. Approximately 85 per cent. of those rescued were civilians. The helicopter organisation, the marine craft units and the mountain rescue teams exist to meet Service requirements, and the assistance they give to the general public is generally speaking, as it were, a by product, although a very large one.
LORD PEDDLE: My Lords, may I thank my noble friend for that most illuminating reply which reflects great credit upon the R.A.F. rescue units? Many of these rescues have been conducted at great personal danger, and I should be glad to know how many, if any, awards have been granted to members of these units.
LORD SHACKLETON: My Lords, I am grateful to my noble friend for that tribute to the gallantry, in particular, and also to the professional skill of the personnel involved in these humanitarian duties. The actual number of awards in the period is 25, which includes one George Medal, three Air Force Crosses, the D.F.C. and many other awards.
LORD PEDDLE: My Lords, may I ask my noble friend a further question dealing with the expense involved? May I ask whether any charge is made for the use of the helicopters involved in air-sea rescue?
LORD SHACKLETON: No, My Lords, we do not charge for carrying out any rescues where life may be in danger in the case of either civilians bathing or ships at sea. This is consistent with the long-standing maritime tradition that aid is always offered without thought of monetary reward. We make charges for evacuation cases where we fly civilians to hospital. These are charges which are met by the local authorities. Generally speaking, there is no charge either to individuals or to other bodies for such rescues.
LORD PEDDIE: My Lords, I thank my noble friend.
LORD BRECON: My Lords, could the Minister tell us what happens when mountaineers get into difficulty? Are charges made on these occasions?
LORD SHACKLETON: No, my Lords, I should say that both these types of operation also carry a bonus of training experience. The mountain rescue teams are composed almost wholly of volunteers with, perhaps, a senior N.C.O. as leader. Again, no charge is made. Perhaps I might add, in fairness, that the Fleet Air Arm also takes part in air-sea rescues.
LORD CHORLEY: My Lords, can the Minister tell us how many of these rescues are mountain rescues, as opposed
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to others? is he aware how very good is the co-operation between the volunteer rescue teams and the Service rescue teams?
LORD SHACKLETON: My Lords, the figures are a little difficult to interpret. They are a comparatively small proportion. The number of people rescued this year so far by mountain rescue teams is 16. Last year the figure was 18, and the year before, 10. There is again that same camaraderie of the mountains, although some of these rescues, like others, are made necessary by the folly of individuals.

HIGH BUILDINGS IN LONDON
3.14 p.m.
LORD FARINGDON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what, if any, is their policy with regard to high buildings in London.]
THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET): My Lords, policy On high buildings in London is primarily the responsibility of the local planning authorities, the Greater London Council and the London boroughs. When buildings over 150 feet, in the central area, and over 125 feet elsewhere, are proposed, boroughs must refer applications to the Greater London Council if they wish to grant permission.
The development plan for the former London County Council area requires the planning authorities to ensure that high buildings are properly sited. The present arrangements are not, however, the last word. The Greater London Council are required to formulate a policy for high buildings as part of the Greater London development plan which they must submit for my right honourable friend's approval by the end of 1968. Their preliminary report on the plan, which was published last week, has a section on this subject and I commend it to the noble Lord's attention.
LORD FARINGDON: My Lords, I do not think that the noble Lord, Lord Kennet, will expect me to thank him very much for that Answer. I should like to

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ask whether the noble Lord or Her Majesty's Government are aware of the extreme anxiety felt by the public generally about the crushing up in an apparently quite incoherent manner of these tall buildings? I would ask, in particular, whether the noble Lord would not agree with me that the value of our parks for the purpose of recreation depends to a large extent on the fact that they are able to produce the illusion to those who frequent them of a contact—too difficult to obtain in most cities—with Nature, and that this is immediately vitiated when tall buildings come up over the horizon of the parks? May I ask the noble Lord whether one would not conclude from this that it is desirable that high buildings should be situated in such a way that they are not visible from the parks?
LORD KENNET: My Lords, the Government are aware of the existence of doubt, and even disquiet, in the public mind about the siting of high buildings in London. On the special question of the parks, I should say that my right honourable friend the Minister of Public Building and Works has to be consulted—although he has no veto—about the siting of tall buildings within 50* yards of any Royal Park or Palace. However, I would assure my noble friend that this whole policy is under discussion at the moment, in preparation for the submission of the Greater London Plan by 1968, between the Greater London Council and the borough councils, and that my right honourable friend's officials in the Ministry of Housing and Local Government will do what they can to enable the best possible policy to be devised in 1968.
LORD OAKSHOTT: My Lords, refer ring back to the original Answer and the responsibilities of the Greater London Council, can the noble Lord say, in regard to the immediate area of Whitehall, whether this responsibility still exists within the competence of the Greater London Council in parts of it where the 50-yard rule would not apply? If the responsibility does lie with them, will Her Majesty's Government pay great attention to any possible redevelopment in the area of Whitehall so that the
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beautiful silhouettes which exist in certain parts of it may be preserved?
LORD KENNET: My Lords, the greater part of what we think of as Whitehall is Crown property, and the Crown, as the House will know, is exempt from planning permission. But there exists a procedure whereby development on Crown property is discussed between the Ministers concerned and the local authority, generally under the ægis of my right honourable friend's Department, and agreement is reached in accordance with this procedure.
LORD CONESFORD: My Lords, does the Minister recall the very valuable comments on the point raised by the noble Lord, Lord Faringdon, which were made some time ago in a Report of the Royal Fine Art Commission which drew particular attention to the importance of avoiding the destruction of what is a uniquely valuable feature of London, the illusion which you can get in some of our parks of being in the country? Will he bear that Report of the Royal Fine Art Commission very carefully in mind?
LORD KENNET: Yes, my Lords.
LORD CHCRLEY: My Lords, did I hear the noble Lord, Lord Kennet, refer to 50 yards? If so, does he think that with a building which is going to be well over 50 yards high there is any point in a regulation of this kind? Would it not be better to extend the distance to 500 yards, or even 5,000 yards?
LORD KENNET: My Lords, we shall bear the noble Lord's question closely in mind in the consultations which are proceeding.
THE MARQUESS OF SALISBURY: My Lords, I understood the Minister to say that in cases of areas like Whitehall, which are largely Crown property, discussions take place between the Minister concerned, or the Department concerned, and the Greater London Council. With whom does the final decision rest in such cases?
LORD KENNET: My Lords, I am not aware, without preparation, of cases where, as a practical matter, the question of where the final decision rests has ever arisen. Agreement, I think, is always reached.
LORD FARINGDON: My Lords, may I enlighten the noble Lord? It has

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occurred. One of the very worst offences against the amenities of the Parks was the result of ministerial action taken against some other authorities.
THE MARQUESS OF SALISBURY: My Lords, supposing a further Question was put down on the point I raised, would the Minister do his best to answer it? It seems to me to be a point of some importance.
LORD KENNET: My Lords, of course, I will do my best to answer it, but the proceedings under Circular No. 100 are normally confidential.
LORD HASTINGS: My Lords, would the noble Lord say why buildings 150 feet high are allowed in the central area of London without special attention while outside that area the limit is only 125 feet? Would it not be better if the regulations were framed the other way round, and tall buildings kept to a minimum in the central area?
LORD KENNET: My Lords, this point, too, is under consideration at the present time between the Greater London Council and the boroughs.
THE EARL OF SWINTON: My Lords, does the Minister's answer to my noble friend Lord Salisbury really mean that Parliament is not to be taken into the confidence of the Government and the Greater London Council on Whitehall, which after all is a great national institution?
LORD KENNET: No, my Lords, I think not. Ministers are responsible to Parliament, and they conduct consultations and reach joint decisions with local authorities which immediately become public property.

HUMBER BRIDGE
3.22 p.m.
LORD PEDDIE: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, in view of the recent Yorkshire and Humberside Economic Planning Council Report, which urges construction of a Humber Bridge as vital to Humberside development, they will announce at an early date plans for proceeding with this project.]
THE MINISTER WITHOUT PORT FOLIO (LORD CHAMPION): My Lords, my right honourable friend the Minister of Transport hopes to be able to make a statement soon about the A.1 to Humber side trunk road network and to deal with the Humber Bridge in the course of that statement.
LORD PEDDLE: My Lords, would my noble friend be prepared to indicate that Her Majesty's Government support the recent statement made by the Economic Planning Council, that the full development of Humberside needs a bridge that will span the North and South banks?
LORD CHAMPION: My Lords, I know that the decision of that body has been communicated to my right honourable friend. I cannot here make any announcement in advance of the statement, which she hopes, as I said, to make soon.
LORD INGLEWOOD: My Lords, could the noble Lord tell us which authority will be responsible for the design of this bridge, since it will have its two ends in different counties with separate planning authorities?
LORD CHAMPION: My Lords, a very good question, but very wide of the Question on the Order Paper.
LORD DERWENT: My Lords, are Her Majesty's Government fully seized of the urgency of this particular matter at this particular moment, because if we intend to enter the Common Market in the near future, this bridge will be essential for expanding trade with the Continent.
LORD CHAMPION: My Lords, this is one of the considerations which the Government have in mind at this very moment.
LORD PEDDIE: My Lords, in view of the sympathetic statements which have been made by Her Majesty's Government, may I ask my noble friend whether any approach has been made in recent months to the bridge consortium which is available for the building of a bridge?
LORD CHAMPION: My Lords, all I know in this connection is that there was an Act of Parliament in 1959 which set up the Humber Bridge Board, and that since that date the Board have continued to urge on the Government the necessity for providing money. But this, of course, is a matter for consideration, for there

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is some little difficulty in providing the £12½million or so required for this purpose.
LORD PEDDIE: My Lord, may I ask whether money is the sole factor at this moment that is causing the Government to be somewhat reluctant to commit themselves?
LORD CHAMPION: My Lords, money is always a matter of some difficulty for any Government, even where we have acceptable priorities. We are not absolutely sure whether this is one of the first major priorities for the expenditure of such a vast sum of money. But, as I have said, the Government are going into the matter at this very moment.
LORD CONESFORD: My Lords, has it not been the practice for a number of years to consult the Royal Fine Art Commission on the design of any new bridge of this importance; and should we not make certain that that practice will be followed in this case?
LORD CHAMPION: My Lords, I certainly hope that it will, because I feel that the design of bridges is of enormous importance in the development of our roads. I am bound to say that in travel ling on our motorways I am delighted, in the main, with the design of the bridges I pass under.

MINISTERIAL STATEMENTS
LORD SHEPHERD: My Lords, at a suitable moment after 3.30 o'clock, my noble friend the Leader of the House will be making a Statement on Rhodesia. This will be followed by a Statement by my noble friend Lord Brown on investment incentives.
LIVERPOOL CORPORATION BILL
Read 3a, with the Amendments, and passed, and returned to the Commons.

ROSS AND CROMARTY (STRATH CARRON-SOUTH STROME ROAD) ORDER CONFIRMATION BILL.
Brought from the Commons; read 1a, and pursuant to the Private Legislation Procedure (Scotland) Act 1936), deemed
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to have been read 2a and reported from the Committee.

NATIONAL HEALTH SERVICE (SUPERANNUATION) (SCOTLAND) AMENDMENT REGULATIONS 1966
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): My Lords, I beg to move that the National Health Service (Superannuation) (Scotland) Amendment Regulations1966, a draft of which was laid before this House on November 8, be approved. May I suggest to your Lordships that it might also be convenient to discuss at the same time the similar Regulations for England and Wales which, with one exception, introduce the same provisions as the Scottion Regulations? The one exception is a relatively minor provision in the English Regulations which is not required in the Scottish Regulations.
The Regulations amend the principal Regulations of 1961 and revoke the 1962 amending Regulations. The main changes are given in the explanatory note on page 41, but, like all superannuation regulations, they are complex and I hope it will be acceptable to your Lordships if I outline the more important of the pro visions. These Regulations follow the valuation at March, 1962, by the Government Actuary of the superannuation scheme in England and Wales which disclosed a surplus. The report on the Scottish scheme has not yet been received but we have been assured by the Government Actuary that it will not differ materially from that for England and Wales. A direct result of the report is that it has been possible in Regulation 30 to discontinue the employers' supplementary contribution of 1½ per cent. which was introduced in 1962 to meet, in part, a deficit in the scheme at March, 1955, when the scheme was previously valued by the Government Actuary.
A number of the Regulations improve the benefits payable to doctors and dentists in general practice. As the remuneration of a general dental or medical practitioner drops in his later years of service his pension has been calculated as a flat-rate percentage of his total remuneration during service and not, as for officers in the health service, in relation to his final

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salary. We have now agreed with the professions, who have represented that pensions of practitioners are low compared with officers, the new formula in Regulation 8. The percentage of earnings used to calculate the pension will now increase as service increases, that is 1½ per cent. of earnings in their first ten years, 1¾ per cent. in the next ten years, 2 per cent. in the third ten years, 2¼ per cent. in the fourth ten years and 2½ per cent. for any years beyond the fortieth. Regulations 4to 12 make similar adjustments to other benefits to practitioners.
A further provision relating to practitioners is at Regulation 42. When a person retires from the Health Service and is later re-employed or takes up some other employment in the public service his pension is reduced if necessary so that he does not receive more by way of pension and salary than he was earning be fore he retired. This Regulation provides that the level of abatement applied to a practitioner shall be related not to his earnings when he retired but to his best three consecutive years of earnings.
The benefits of part-time specialists in hospitals are at present calculated on the same basis as for doctors and dentists in general practice, but the new formula for practitioners to which I have referred would not be appropriate for them. Regulations 13 to 20 therefore provide that, for future service, their benefits will be calculated in the same way as for officers in the Health Service with the necessary adjustment to take account of the fact that they are part-time and not full-time officers. If, however, the present basis is more favourable in the case of any individual practitioner it will continue to apply.
We have found it possible to introduce an optional improvement in the level of widow's pension provided. A married man at present surrenders two-thirds of his lump sum retiring allowance to provide a widow's pension equivalent to one-third of his own. Regulation 21 gives him—or his widow if he should die in service—the Option of surrendering the remaining part of the lump sum in return for an increase to the widow's pension from a third to a half of the husband's pension.
Regulation 23 introduces allowances in respect of dependent children of officers
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who have at least ten years' service and who die either in service or following retirement on pension on or after the operative date of the Regulations. The rates of the allowances are given in Schedule 1, and I would draw the attention of the House in particular to the fact that the rate for wholly orphaned children is double that for children with a surviving parent or step-parent.
The last change I should like to mention concerns redundancy which, though not a major problem in the Health Service, occurs from time to time. The 1962 amending Regulations introduced immediate pensions for officers with ten years' service or more who were made redundant after age fifty-five. A man or a woman with at least ten years' service but who is under fifty-five years of age when made redundant will now be en titled by Regulations 24 and 25 to a pension at age sixty or, for certain special classes like nurses, at age fifty-five; in other words, his pension will be frozen until he reaches that age. I should like to say, in conclusion, that all the staff interests have been fully consulted. While they would have liked us to go further than we have felt able to go in some instances, they have generally welcomed the changes incorporated in these Regulations. My Lords, I beg to move.
Moved, That the Draft National Health Service (Superannuation) (Scotland) Amendment Regulations 1966, laid before the House on November 8, 1966, be approved.—(Lord Hughes.)

RHODESIA
3.34 p.m.
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): My Lords, with permission, I should like to make a Statement on Rhodesia, using the words of my right honourable friend the Prime Minister in another place. His words were:
"As the House will already know, I shall be leaving this afternoon, together with my right honourable friends the Commonwealth Secretary and the Attorney General, for a meeting with the Governor of Rhodesia and Mr. Ian Smith.
"The purpose of this meeting is to ascertain whether, within the programme of action to which the British

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Government are committed by the communiqué issued at the end of the recent meeting of Commonwealth Prime Ministers, a settlement of the Rhodesian problem can be reached on the basis of the principles to which successive British Governments have throughout adhered.
"I must make it clear to the House that the fact that this meeting is taking place should not be allowed to disguise the fact that despite the signs of movement we have had in the last week there is still, as far as I can at this moment judge, a considerable gap to bridge. The House will wish us to do everything in our power to get a settlement, and this we shall seek to do; but the House equally will insist, as the Government are insisting, that there can be no question of a settlement which does not honour the principles which all of us in this House stand by. The House will agree that a decision one way or the other cannot be delayed any longer. If no settlement on the terms which we are prepared to commend to this House is possible, then it is right that this fact should be known and known quickly.
"I shall, of course, make a full report to the House after my return."
My Lords, that concludes the Prime Minister's words.
LORD CARRINGTON: My Lords. I must thank the noble Earl for repeating this Statement. This is obviously not the occasion for a debate or questioning, and I would confine myself to only saying that I am sure everybody will wish the Prime Minister well and earnestly hope that out of this will come a settlement.
LORD WADE: My Lords, I should like to thank the noble Earl the Leader of the House for this Statement. I note that the Prime Minister will be making a full statement on his return. Is it possible for the noble Earl to give us any indication of when this full statement will be made? Is it likely to be on Monday?
THE EARL OF LONGFORD: My Lords, I am grateful, and I am sure the Government will be, both to the noble Lord, Lord Carrington, the Leader of the Opposition, and to the noble Lord, Lord Wade, speaking for the Liberal Party, for
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their good wishes. This is a time when the earnest good wishes of all Members of this House are of special value.
The noble Lord, Lord Wade, asked me when I thought that a further statement would be made after the return of the Prime Minister. I would suppose—of course, in a situation as flexible as this one cannot give any guarantees—that there would be some statement on Monday, although I cannot promise this. I should also think it likely that this House might wish to debate Rhodesia during next week, and, after some discussion, we are at the moment earmarking next Wednesday. But the situation is so flexible that here again I think it would be unwise for me to commit the Government, and I do not suppose the House would wish to be committed, to holding a debate on a particular day.
LORD ALPORT: My Lords, will the noble Earl find some means of conveying to His Excellency the Governor the admiration that a great many people in this country feel for his staunchness and wisdom over the very trying period of the last year?
THE EARL OF LONGFORD: My Lords, I feel sure that what the noble Lord has said will be immensely welcome to the Governor. When the noble Lord says that this admiration is felt by a great many people, I should think it is felt by everybody who has studied the matter at all.

NATIONAL HEALTH SERVICE (SUPERANNUATION) (SCOTLAND) AMENDMENT REGULATIONS 1966
3.39 p.m.
Debate resumed.
LORD WINDLESHAM: My Lords, from this side of the House I should like to thank the noble Lord, Lord Hughes, for his explanation of these Regulations, and to say that they are welcome to us. They represent an improvement to an important occupational pension scheme covering many thousands of people in the public service. Particularly welcome are the provisions mentioned by the noble Lord for dependent children of deceased officers—the first time children of deceased officers have been included within the scheme—and the

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wider option given to widows of deceased officers, who can now receive up to one half of their husband's pension, in place of one-third, taking a correspondingly smaller lump sum benefit in consequence.
The lack of transferability—although there are some improvements contained in the new Regulations—into private schemes, while understandable, is nevertheless a matter for regret. This is relevant to the one Regulation mentioned by the noble Lord which is not in the Scottish Amendment Regulations, but is in the Regulations for England and Wales—namely, the provision concerning the Medical Research Council's employees. There are two points in particular I should like to put to the noble Lord opposite. The first is with regard to the position of the older practitioners. These are the practitioners who joined the Health Service in 1948 when they were already over the age of 45. It is a large group—approximately one-seventh of the total number of practitioners are in this age category, and both the British Medical Association and the British Dental Association have made representations to the Minister of Health on their behalf. These are the people who have carried much of the burden of the National Health Service. They do not receive any great benefit from the new Regulations, because the escalating scales in Regulation 8 depend on the length of service, and not on the age of the practitioner. Therefore, the practitioner who comes into the scheme later in life gets a low pension simply because he does not have the opportunity of serving long enough to get to the higher rate of pension.
I should be interested to know whether the noble Lord opposite has any more accurate figures, but I understand that the practitioners in this group who retire to-day are receiving a pension only of the order of £700 to £800 on average. So their actual income on retirement is extremely low. I would suggest that funds to increase this could have been found from within the scheme. Had Regulation 30(2) of the Scottish Regulations—29(2) of the England and Wales Regulations—not discontinued the employers' supplementary contribution there would have been funds available to benefit the older doctor.
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This leads into my second point. As the noble Lord, Lord Hughes, has said, these Regulations are intensely complex, and although they represent some useful improvements, in a number of ways that have been discussed, it is nevertheless extremely unlikely that they will be at all widely appreciated by the Health Ser vice employees who are to benefit from them. The negotiating panels and a few others will certainly understand them, but whether the older doctors, nurses and others will appreciate the changes that have been made because of the extreme complexity of the wording and the length of Regulations must be extremely doubtful. The impact of regulations of this sort in any event is only likely to affect the general atmosphere within the National Health Service. No young man is going to decide to train as a doctor just because of the quality of the pension scheme.
Nor do I think pension arrangements affect to any great extent whether doctors, dentists and other Health Service employees remain within it or not. The level of superannuation is not a strong enough motive to determine decisions which are as important as that. None the less, they do affect the relationship between the Government and the Health Service, and the confidence, or lack of it, between the two.
And so I should like to ask the noble Lord whether it would not have been better to try to use the surplus to benefit the older doctors, in one generous, easily understood gesture, either by weighting the proportion that they receive, or by giving a larger lump sum on retirement. Action on these lines would have done something more significant to improve relations between the Government and the National Health Service employees.
3.45 p.m.
LORD HUGHES: My Lords, I am grateful to the noble Lord, Lord Windlesham, for the welcome he has ex pressed to the Regulations. I would agree with him that the Government do not expect that improvements in super annuation benefits which people will receive some forty years ahead will have any effect on the recruitment of young doctors or other people into the Service. The effect, so far as the Service generally is concerned, must obviously be the total

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one, and the general impression which is created in the Service is that superannuation arrangements are better than they have been.
The noble Lord suggested that people, particularly older people, might not appreciate the changes which have been made because of the complexity of the Regulations. I submit to your Lordships that what the Government have done in these new Regulations has not been to increase their complexity. They have always been complex. What we have done is to improve benefits. I think that when individual doctors, nurses or others concerned know—as they will fairly speedily know—the effect of the new Regulations on their own personal position, they will at least concede that the position is better than it was. In the negotiations and, finally, at a meeting with the Minister—this is on the point about the older practitioners—both the B.M.A. and the B.D.A. represented that something more than what is provided by the formula should be done for the older doctor. The actuarial advice—and one must remember that these schemes proceed very largely on actuarial advice, if not almost entirely—is that the older doctors are getting full value for their contributions and that there are no superannuation grounds for giving them more.
When my right honourable friend met the professions' representatives, he told them that no more could be done for the older doctor. He referred to this actuarial advice. He pointed out that doctors and dentists were not alone in that their superannuable service reckons only from 1948. Many nurses and other National Health Service employees, as well as employees outside the National Health Service, are in the same category. He had sympathy with them on human grounds, but he could not make an exception for one group, however deserving they might be. Nevertheless, I would point out that there is a benefit to these older doctors, because one of the things they get is the backdating of the 1¾ per cent. for, I think, four years, from 1962 to 1958. It may not be worth a great deal in actual money, but it adds a little to the pensions which these older people will now get.
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My final remark is related to what could have been done if we had not discontinued the 1½ per cent. supplementary contribution. I would remind your Lordships that the 1½per cent. supplementary contribution was for the specific purpose of making good a deficiency which was shown in the scheme as a result of the valuation. That position no longer arises, and it would not, I submit to your Lordships, be proper to continue a contribution for a deficiency which no longer exists and then apply it to purposes which in fact recreated a deficiency.
On Question, Motion agreed to.

NATIONAL HEALTH SERVICE (SUPERANNUATION) (AMEND MENT) REGULATIONS 1966
3.49 p.m.
BARONESS PHILLIPS: My Lords, I beg to move that these Regulations be approved. The noble Lord, Lord Hughes, has, with your Lordships' consent, spoken for England and Wales as well as for Scotland. There is, however, one Regulation for which there is no corresponding Scottish Regulation and to which I should perhaps draw your Lordships' attention. Under Regulation 48 no new employee of the Medical Research Council will, after a date to be specified, be admitted to the National Health Service Scheme. The Council are introducing their own superannuation scheme which new staff will join. An employee who was covered by the previous direction may be released from it to join the Council's own scheme if he gives notice to that effect in writing and if the Minister is satisfied that the Council will make adequate provision for his superannuation. This amendment has the full agreement of the Medical Research Council. I commend these Regulations to your Lordships. My Lords, I beg to move.
Moved, That the Draft National Health Service (Superannuation) (Amendment) Regulations 1966, laid before the House on November 8, 1966, be approved.—(Baroness Phillips.)
LORD WINDLESHAM: My Lords, not only has Regulation 48 the "full agreement" of the Medical Research Council but, as the noble Baroness, Lady Phillips, will know, the Council has in

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fact been pressing it for four years, ever since 1962. So she is putting it in a lukewarm way. There are about 2,000 employees of the Medical Research Council involved here. They were not in the National Health Service super-annuation scheme until 1959. The academic staff were in the F.S.S.U. for universities, and joined the N.H.S. scheme only in 1959. By 1962 the Medical Research Council was anxious to return the academic staff to the F.S.S.U. for two reasons. First, the F.S.S.U. benefits, as a result of the recommendations of the Hale Committee, had increased substantially in value because of the additional supplements from the Treasury. Secondly—and this relates to the general point I mentioned earlier in relation to the whole National Health Service super-annuation scheme—the academic staffs found it extremely difficult to move from universities into the employ of the Medical Research Council because they could not transfer their pension rights from one scheme to the other. This underlines the necessity for full transferability.
Since it is four years ago that the Council first made representations on this matter to the Ministry of Health, I have no doubt it will be extremely pleased by this Regulation. It is likely that almost all the academic staff will take advantage of the option to transfer out of the N.H.S. scheme in order to return once again into the improved F.S.S.U. scheme.
BARONESS PHILLIPS: My Lords, I should like to thank the noble Lord for his courteous response to this amendment. On a purely personal note, I could not agree with him more about transferability, speaking as a member of another profession where the same problems have arisen. I have been given a note to the effect that those in the F.S.S.U. were allowed to stay in it despite the direction; a transfer payment will be made from the National Health Ser vice scheme to the F.S.S.U. for those who transfer to it. I am not sure whether the noble Lord will understand the point; I do not. Perhaps it would be safer if I say that I will write to the noble Lord. I am glad the. Medical Research Council's employees are in agreement.
On Question, Motion agreed to.

EXPIRING LAWS CONTINUANCE BILL
Read 3a (according to Order), and passed.

INDUSTRIAL REORGANISATION CORPORATION BILL
3.53 p.m.
Order of the Day for the Second Reading read.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR THE ROYAL NAVY (LORD WINTER-BOTTOM): My Lords, in this country, where the Industrial Revolution started, we have perhaps a heavier burden of industrial history to carry than any of our competitors abroad. Our pattern of towns, communications, and the location of our basic industries, was determined by factors which were dominant one or two centuries ago but which have less validity to-day. And this is also true of industrial undertakings. Some old, good and respected undertakings are what they are, not because of rational decisions made on the basis of long-term economic forecasts, but simply as the result of a series of historical accidents.
For example, the company in which I started my working life was founded by my grandfather in the middle of the last century to make artificial leather. designed to replace real leather used in the book-binding industry. It prospered, won a monopoly in one item of industrial textiles, then made even more money which had to be invested in other industries because there was little room left in the original field of growth. Our most profitable subsidiary was Obtained in settlement of a debt—completely by accident—and when I left the successor organisation to take up my present appointment, the company which started making artificial leather in Salford in the middle of the 19th century was involved in the technical textile, the drawing office, the plywood, the industrialised building, the aluminium tube, the copper insulating and the surgical equipment industries. It is, in fact, a large historical accident, and, I would venture to say, typical of a number of the older British companies.

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The need to rationalise and modernise the inherited pattern of British industry is an idea which is generally accepted. We have to compete at home and abroad with the industries of our competitors, which have often been founded with the most modern plant after a detailed study of our successes and mistakes, and which may be larger than their opposite numbers in the United Kingdom. Competitive pressures have forced units of British industry to merge; this trend has been assisted by the great financial institutions of which this country can rightly be proud. And manufacturing industry itself has acted as a catalyst; for example, Imperial Chemical Industries, considering, in my opinion rightly, that the cotton textile industry must be rationalised, backed the English Sewing Cotton Company with many millions of its money to achieve this end.
Since so much is being done by existing institutions, your Lordships may per haps ask why should the State intervene, and enter the merchant banking business. The answer to this question is given in paragraphs 4 and 5 of the White Paper (Cmnd. 2889), outlining the Government's proposals for the Reorganisation Corporation, and with your Lordships' permission I shall read these clauses to you:
"Paragraph 4: There is no evidence that we can rely on market forces alone to pro duce the necessary structural changes at the pace required. Some of the industries most in need of rationalisation have an in-built tendency to stay as they are. Either there are a few large firms which are tempted to live and let live; or there are a number of small ones, none of which alone is strong enough to achieve the scale of operations needed for international competition. More over. some mergers simply lead to a concentration of ownership without securing a more effective deployment of the assets of the merged companies and result in loosely-knit groups of comparatively small production units ranging over a wide variety of manufacturing activities.
"Paragraph 5: Although there is now a large number of institutions which can provide specialist services to meet the financial and other needs of industry, there is no organisation whose special function is to search for opportunities to promote rationalisation schemes which could yield substantial benefits to the national economy. Merchant banks and issuing houses carry through a great many mergers every year, but they can in general only act at their clients' request".—
and that is the key point.
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"Desirable regroupings fail to take place through lack of initiative and sponsorship, or because, when opportunities arise, there is no one ready to grasp them. The Government consider that this gap in the institutional framework needs to be filled and they propose to set up a new statutory body for the purpose, to be called the Industrial Reorganisation Corporation. The necessary legislation will be introduced as soon as possible."
This White Paper was published at the end of January, and had it not been for the General Election the Bill would have been brought forward earlier. The Government are now anxious that it should receive the Royal Assent as soon as possible, so that the Corporation can get ahead with its urgent task of promoting the rationalisation of British industry.
There was some discussion of the White Paper during the debate in your Lordships' House on 9th February on the Economic Situation. At that stage noble Lords opposite showed no great enthusiasm for the Government's proposals. By now, their attitude may have changed, for, after an initial period of hesitation and doubt, the City and industry generally seem to have accepted that the Corporation will play a very useful part in strengthening the private sector of the British economy. The correctness of this statement is surely confirmed when we look at the impressive list of the names of those gentlemen who have consented to serve on the Board of the Corporation. Very few people now dispute that structural changes are needed in many sectors of industry if we are to continue to compete effectively in international trade.
The Bill is relatively short and straightforward. A number of its provisions are common form in legislation establishing public corporations. Clause 1 establishes the Corporation as a statutory body and provides for the appointment of its chairman and members. The then First Secretary announced in January that Sir Frank Kearton had agreed to become the Corporation's first chairman; and in May he was able to report that Mr. Ronald Grierson would be the deputy chairman and managing director and that nine other distinguished men with a wide knowledge of industrial affairs had accepted invitations to serve as members. Sir Frank Kearton and his colleagues have already begun preparatory work and are planning the Corporation's initial programme. The

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Corporation cannot, of course, move into top gear until the Bill becomes law; but the groundwork for rationalisation schemes in one or two key sectors of the economy can be prepared in the next few months, so that there will be as little delay as possible before the Corporation becomes fully effective.
Clause 2 of the Bill sets out the Corporation's functions and describes its powers. A distinction has been made between schemes for promoting or assisting the reorganisation or development of any industry or section of an industry (which are covered by Clause 2(1)(a)), and schemes for establishing or developing an individual industrial enterprise (which are dealt with in Clause 2(1)(b)). The Corporation will have complete freedom to carry out schemes of the first sort—that is, rationalisation schemes involving several firms—subject only to any directions of a general character which it may be given under subsection (4). But it will not be able to carry out schemes affecting only one company unless it has been specifically requested to do so by the Secretary of State.
LORD HAWKE: My Lords, before the noble Lord leaves that point, could he expound to us the relations between this new set-up and the various monopolies and mergers legislation? Will it have to go before that Commission or not?
LORD WINTERBOTTOM: Perhaps it would take a better form in the debate if my noble friend on winding up answered that particular question. I think the point is a valid one, but my noble friend will give the answer.
Circumstances will almost certainly arise in which the Reconstruction Corporation will need to give its backing to a single company if it is to achieve the objectives for which it is being set up. For example, the White Paper said that the Corporation might need
"to provide capital for new projects or expansions of special importance to the economy".
The Government believe that the Corporation should be able to support desirable projects of that kind, but they recognise that Parliament may wish to keep a closer watch over this part of the Corporation's activities than over its main function of promoting rationalisation. This distinction has therefore been made in the Bill, so that the Secretary
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of State will be directly accountable to Parliament for any requests he makes to the Corporation.
Subsection (2) of Clause 2 confers on the Corporation the usual general power to act in ways which will enable it to discharge its functions, and also gives a number of specific examples of the Corporation's likely fields of activity. It will obviously need to acquire, hold and dispose of securities, both fixed-interest stock and equities. For example, after studying the situation in a particular sector of industry, the Corporation may decide that there is one existing company which has the managerial talent and other resources necessary to form the nucleus for are organisation scheme. But this company may not have sufficient financial reserves to make cash offers for other companies in the same field, nor a high enough market rating to enable it to bring about mergers by means of share-exchange arrangements. The Corporation will therefore have to give it financial backing so that the reorganization scheme may be carried through. This financial support might well take the form of a fixed-interest loan, carrying with it the option to convert into an equity holding in the new grouping which would be created if the scheme was successfully completed.
The Corporation's power to take up equities has created some controversy and it has been claimed that the Corporation will be able to use this power to bring about nationalisation "by the backdoor". This is not the case. The Corporation will have no compulsory powers and will have no more right than any existing company or institution to compel shareholders to accept any proposals it may make to them. But it is not unusual for merchant banks and other institutions which assist with the development of companies or the formation of new groupings to be given an opportunity to take a stake in the equity, and it is expected that the same will hold true in the case of the Corporation.
At this point may I interject a personal observation? Surely, my Lords, the time has come when we should banish emotion from our thinking when we consider the proposals of any Government to intervene in our economic and industrial affairs. In our complex society it is a necessity; on both sides of the Iron

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Curtain we have to learn to live with the mixed economy. One of the truest things said recently on this subject was said by a Conservative Peer, the noble Lord, Lord Melchett. When asked why he, as a Conservative, was willing to preside over the nationalised steel industry he replied:
"The Capitalist label is a little outdated, don't you think? The country now has a modern mixed economy. If one can help in any way in the national interest, then one must do so."
This attitude, I am certain, serves this country far better than does the inverted Marxist thinking of Mr. Enoch Powell, with his determination to continue the class war and his bitter attacks on those distinguished individuals whose sense of duty has compelled them to serve the society in which they live.
Clauses 3 to 7 contain this Bill's financial provisions. The White Paper said that if the Corporation was to operate on an effective scale, it would need to have large financial resources at its disposal; and proposed that in the first instance the Corporation should have the right to draw up to £150 million from the Exchequer. This proposal would be given effect by Clause 7 of the Bill. The ceiling of £150 million imposed by the clause is an absolute one—there is no provision for raising it by order. During the last few months there have been some conflicting opinions expressed about the figure of £150 million. Some people have said that the Corporation will be able to make a significant impact on our structural problems without drawing on its funds at all rapidly; others have argued, on the contrary, that £150 million will be needed within a year or two. It is very difficult, I think your Lordships would agree, to make firm forecasts, but the Government expect the financial pro vision being made in the Bill to be sufficient to enable the Corporation to operate successfully for several years. By that time, it will probably have become to some extent self-financing, as the in vestments it will have made in its early years achieve full profitability. The White Paper made it clear that the Corporation will not act as a general holding company, and the faster it turns over its capital the greater will be its capacity to promote rationalisation. On the other hand, it is not the intention that the
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Corporation should be forced to dispose of its profitable investments at the earliest possible moment, when for good commercial and industrial reasons it might wish to retain them. If experience shows that the Corporation needs funds in excess of the present limit of £150 million, amending legislation would be introduced.
Clause 7 envisages that there will be four separate elements to the Corporation's finances. These are: loans from the Consolidated Fund, investments of Exchequer dividend capital, guarantees given by the Corporation in respect of loans made to companies by third parties, and temporary borrowing, principally by way of overdraft. The overdraft element is not expected to be a very significant one and in any case Clause 3(2) enables the Secretary of State to put a limit on the total amount which the Corporation may seek to borrow in this way.
The Corporation's liability in respect of guarantees on loans from third parties will also be subject to any limitation the Secretary of State may place on it, under the powers given to him by Clause 2(3). The ability to give guarantees may prove to be very useful to the Corporation, particularly as a means of providing short-term financial assistance to new groupings while more satisfactory permanent arrangements are being worked out. However, any guarantee which the Corporation gives will add to the contingent liability on the Exchequer. It has therefore been thought right that the total value of guarantees should be included within the ceiling of £150 million which Clause 7 imposes on the Corporation's funds.
The major part of the Corporation's financial resources will take the form of Exchequer loans, which are provided for in Clause 4 of the Bill. The Secretary of State, with the approval of the Treasury, will settle the terms and conditions on which such loans are to be made, but the Government's intention is that the rate of interest charged to the Corporation will be no less than the rate which the Government themselves would have to pay at the time in question on market loans of a similar term.
Finally, there are the arrangements for making payments of Exchequer dividend capital to the Corporation, which are set out in Clause 5. By providing the Corporation with part of its funds in the form

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of Exchequer dividend capital the Government will, in effect, be taking an equity stake in the Corporation. There will not be a fixed return, but dividend payments will be made at a rate which will depend on the profitability of the Corporation's activities. It is not anticipated that the Corporation will earn big profits in its first few years, since rationalisation schemes inevitably take some years to have their full effect. But after this initial period the Government will expect to receive a very satisfactory return on their investment of Exchequer dividend capital.
Under Clause 5, the Secretary of State will be able to recommend to the Corporation in advance the rate of return which he considers it should aim to earn in any future period on its drawings of Exchequer dividend capital. Thus the members and staff of the Corporation will not be in any doubt about the nature of the Corporation's financial objectives—it will have to aim to earn the fixed rate on Exchequer loans and the recommended rate on Exchequer dividend capital. At the same time, it will be possible to vary the recommended rate to take account of changes in the Corporation's financial circumstances. A low rate will probably be appropriate in the early years, which will then he increased as the Corporation's operations realise more profits. By means of this procedure the Government will be able to achieve the right balance between flexibility and control in their financial dealings with the Corporation.
At the end of each accounting year the Corporation will be under an obligation to consider the amount of any dividend it should propose to pay to the Government in respect of its Exchequer dividend capital drawings. But the Government will not be obliged to accept the Corporation's proposal. Subsection 3(b) of Clause 5 enables the Secretary of State, after consultation with the Corporation and with the Treasury's consent, to determine that a larger or smaller dividend should, in fact, be paid. This arrangement follows the precedent set by the Air Corporations Act in revising the financial obligations of the British Over seas Airways Corporation.
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There is only one further aspect of the Bill to which attention might be drawn: the provisions relating to the Corporation's annual report contained in Clause 9. In the Government's view—and I believe it to be in your Lordships' view, too—the Corporation's annual report will be a very important document, which should be full and informative and provide all the facts necessary to enable the Corporation's performance to he fairly assessed. The Corporation will in some ways be a new and experimental kind of public body, and in some of its activities it may be unable to avoid creating controversy—not controversy necessarily of a political kind, but argument about the commercial and industrial wisdom of particular courses of action. Parliament and the public at large will rightly expect to receive a full and prompt account each year of the Corporation's activities. Clause 9 puts the Corporation under a legal obligation to produce such a report; this obligation goes a good deal further in certain respects than that imposed by the present Companies Act, especially so far as the provision of information about share holdings and the speed of publication are concerned.
My Lords, the Labour Party in the two recent Election campaigns, stressed the need to modernise the British economy at every level and in every sense. We have not been deterred by the economic difficulties that have beset the country, nor shall we be. No one with any sense of history or knowledge of public administration will expect changes overnight, but I am convinced that various acts of this Government, such as the creation of the Ministry of Technology and the Corporation which we are discussing to-day, will help those elements in British industry who recognise the need for change to overcome the inertia which is preventing this country from using to the full the potential which we all know is there. I commend this Industrial Reorganisation Corporation Bill for your Lordships' approval. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Winterbottom.)

INVESTMENT INCENTIVES
4.17 p.m.
THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN): My Lords, with permission, I should like to repeat a Statement made in another place by my right honourable friend the President of the Board of Trade. The Statement is as follows:
"Since the National Productivity Conference in September the Government have been considering whether it is necessary to give some additional stimulus to industrial investment during the period immediately ahead. We have discussed this question with representatives of industry in the light of recent surveys of investment intentions, which suggested that there was likely to be a fall in private industrial investment next year.
"We have now decided to effect a temporary increase in the rates of investment grant payable by the Board of Trade under Part I of the Industrial Development Act 1966. The standard rate in respect of eligible capital expenditure incurred between January 1, 1967, and December 31, 1968, will be increased from 20 per cent. to 25 per cent. and the rate for development areas from 40 per cent. to 45 per cent. These higher rates will apply to eligible plant and machinery used by manufacturing, extractive and construction industries; and also to mining works, scientific research equipment and certain computers. The rate for ships, hovercraft and most computers which is at present 20 per cent. throughout the country, will be correspondingly increased to 25 per cent. Under the Act expenditure is regarded as having been incurred when the sums of which it consists became payable. This is explained in more detail in the booklet I have recently issued for industry. I should emphasise, however, that the mere placing of a contract within the two year period will not in itself attract the higher rates of grant on expenditure under the contract. Such expenditure will qualify for the higher rate only in so far as it is incurred before the end of 1968.
"There will be no change in the coverage or other features of the invest-
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ment grants scheme. Claims made during 1967 in respect of expenditure incurred during 1966 will qualify only for the existing rates of grant of 20 per cent. or 40 per cent. The booklet on investment grants which I published earlier this week describes the details of the scheme and makes clear that the standard long-term rates will be 40 per cent. in the Development Areas and 20 per cent. in the rest of the country.
"The necessary Order under Section 7 of the Industrial Development Act will be brought before Parliament as soon as possible.
"We also intend to speed up the payment of claims as soon as we have had sufficient experience next year to judge what is practicable. My right honourable friends the Minister of Agriculture, Fisheries and Food and the Secretary of State for Scotland will be making corresponding arrangements for increased grants for agriculture and fishing vessels."
That concludes my right honourable friend's Statement.
4.22 p.m.
LORD DRUMALBYN: My Lords, I should like to thank the noble Lord for having repeated in this House the Statement of his right honourable friend. I wish to ask one or two questions. The first is, does he not think it is most unfortunate that, almost before the scheme has come into operation at all, it is necessary to change it? Does this not reflect very seriously on the Government's economic policy? Secondly, I would ask whether he considers that the difference which is being made in this scheme is adequate to balance the anticipated decline in investment expenditure in the coming year.
The noble Lord spoke about speeding up the payments. What we must ask him from this side of the House is from what speed he is going to speed them up. What is the expected speed at present? I understood that it was a matter of eighteen months, and this in itself is surely a considerable deterrent to investment expenditure. Would it not have been better if at the same time as making this improvement he had arranged for interest to be paid on the amounts outstanding at the time the expenditure is incurred?
LORD SHAWCROSS: My Lords, before the noble Lord replies to that

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question, I wonder whether I might say a few words on this matter, as this is a subject in which I am deeply interested and concerned and in which I do not want to inject any note of Party political recrimination. I am grateful for this relief, small as it is. I think it is too small. I think that, before long, the Government will have to consider whether either an increase in the actual amount of grant should be made, or whether they should give far more serious consideration than has hitherto been done to the possibility of allowing, on a selective basis free depreciation in connection with new capital investment. But does the noble Lord not appreciate that financial assistance alone at this time is not going to be enough to secure any massive fresh investment in the private sector? What industrialists now need to be assured of is that they are going to have markets in which they can sell the goods they produce with their new equipment, and that if indeed they succeed in selling them in those markets they will be allowed to retain a reasonable proportion of the profits they may hope to make from them.
LORD WADE: My Lords, in thanking the noble Lord for his Statement, may I say that I welcome it so far as it goes. Would the noble Lord not agree that additional stimulus to industrial investment will be of particular importance in 1967, in view of the anticipated fall in private industrial investment? What steps do the Government propose to take to try to ensure that this stimulus will be of some real effect in the coming year 1967 and that it will not be too late for that year?
LORD BROWN: My Lords, as it is freshest in my mind, perhaps I may take first the question which was asked by the noble Lord, Lord Wade. The whole purpose of the scheme is indeed to stimulate investment in 1967. Perhaps the point has been misunderstood. The scheme provides an addition of 5 per cent. to investment which is entered into in 1966 and where the expenditure is incurred before the end of 1968. If any body wants to get advantage from the scheme during the two years, they will have to move pretty quickly to a commitment during 1967.
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May I turn to some of the other questions which were put to me? The noble Lord, Lord Drumalbyn, referred to the fact that before the original grant level was introduced the scheme had been changed. I think this is a welcome sign on the part of Her Majesty's Government of flexibility to circumstances as they arise. I do not accept it as a matter for criticism that they have been ready to act so rapidly on the stimulus of a possible decline in investment. The question was asked whether this is an adequate amount. The actual amount involved in extra expense to the Exchequer is roughly £60 million a year. That is £120 million over the two years, although these additional amounts will not arise in this financial year or in 1967–68. This will give some idea of the scale of the incentive which is proposed.
As to the comments made about speeding up payments, the original provision is that they should be paid eighteen months after claim, with the undertaking that this will be brought down, if possible, to six months. It is too early to say what can be done about speeding this up. The administration of the scheme is complex, but we hope to be able to say something about it later. Certainly it is our intention to reduce the lapse of time between claim and payment as rapidly as possible.
In regard to the remarks of the noble Lord, Lord Shawcross, I think the only point he made which was special and separate from those I have already answered related to the securing of markets which was needed to correct the situation. The Government intend to adhere to the policies which have been explored at such length in this House and elsewhere, so long as it seems necessary to ensure that inflation is grappled with. These measures are intended to stimulate investment, because it is the Government's view that whereas we must reduce consumer demand—and by those means we inevitably reduce temporary market possibilities—we must at the same time make certain that investment does not fall.
BARONESS ELLIOT OF HAR WOOD: My Lords, may I ask the noble Lord to what fields the investment grants apply? He mentioned agriculture and fisheries and said something about vessels. Does he mean agriculture and fisheries from the point of view of seagoing craft,

827
or does the word "agriculture" in this sense also mean agricultural investment grants?
LORD BROWN: My Lords, would the noble Lady excuse me from answering this question? It means going into a great deal of detail, all of which is dealt with in the booklet which is available to noble Lords in the Library. Does that answer the noble Lady?
LADY ELLIOT OF HARWOOD: My Lords, it does, and I thank the noble Lord.
THE EARL OF SELKIRK: My Lords, am I correct in thinking that no investment grants of any kind will be paid until after the end of next year? Is that the current position?
LORD BROWN: Under the 20 per cent. and the 40 per cent. levels, it is planned to start paying investment grants arising on capital expenditure in the first quarter of 1966 in mid-1967. Thereafter it is hoped to begin closing the gap of eighteen months as quickly as possible.
LORD HAWKE: My Lords, do I take it that Her Majesty's Government still treat the service industries as pariahs, in spite of the fact that service industries can mop up at little expense the purchasing power of the consumer in imported goods?
LORD BROWN: I think it would be wiser not to become involved in that issue at this stage.
LORD DRUMALBYN: I thank the noble Lord for answering all the questions so conscientiously. May I ask him about the possibility of allowing interest during the outstanding period between the time when the expenditure is actually incurred and payment is made, and the time when grant is received'? This would act as a considerable incentive to the Department, and I am sure the Treasury would watch it very carefully indeed to see that payments were made quickly.
LORD BROWN: My Lords, I will undertake to have a look at it. It has probably been looked at and discarded, because the complexities of the grant system are considerable. It would certainly add to the cost to the Exchequer and I think this would be frowned upon. But if the noble Lord wishes, I will have it looked at.

INDUSTRIAL REORGANISATION CORPORATION BILL
4.30 p.m.
Debate resumed.
LORD DRUMALBYN: My Lords, should like to thank the noble Lord, Lord Winterbottom, for the most interesting exposition which he has made of this Bill. I have read through all the proceedings in another place, and, if I may say so, he gave in a comparatively short space of time a much clearer ex position of the Bill than I was able to derive from all those proceedings. My only comment is that if the Industrial Reorganisation Corporation moves as fast as he did in his speech, we shall by the end of next year have completely reorganised the economy. For that reason, it is perhaps a little difficult to follow everything he has said. So I propose to make a rather probing speech, and I hope that some of the points I make will be dealt with.
This Bill has been graded in many different ways. I have seen it described, always in cliché, as a landmark in our economic development; I have seen it described as a milestone to Socialism, and I have seen it described as a spanner in the works. The justification given in the White Paper, to which the noble Lord drew our attention, for setting up the Corporation is that there is a need for more concentration and rationalisation to promote the greater efficiency and competitiveness of British industry. I was not quite certain, when the noble Lord referred to his own "firm", whether he saw room for greater efficiency and greater competitiveness in his own Ministry, but it certainly was an example from his own experience. Secondly, the pace and scale of such change, it is claimed in the White Paper, do not match the needs of the national economy. Thirdly, there is no evidence, according to the White Paper, that we can rely on market prices alone to produce the necessary structural changes at the pace required. From this, the White Paper concludes that such a body as the Industrial Reorganisation Corporation should be set up.
Of course, that seems to beg some questions. For example, what is the pace required? It is recorded that, of the 200

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largest firms in the world outside the United States of America in 1964, Britain headed the league with 58, Japan came next with 34, and Germany had 32, despite its wider market in the E.E.C. In medium-sized firms there seems to be a close correlation between ourselves and Germany, if one looks, for example, at the machine-tool industry. Secondly, what evidence is there that market forces will not produce the necessary structural changes? I would only comment that none is offered, and I shall give some reasons for thinking that, given the necessary information, a great deal more can be done as things are. It has to be remembered, of course, that we are here committing ourselves to a maximum of £150 million expenditure.
Thirdly, if there are industries which are in need of rationalisation, and in which rationalisation is not proceeding apace, what are they? I shall revert to these problems. If there is a need for some new initiative to promote mergers, is a body of the type and structure pro posed in this Bill the right organ to promote them? If this is the main need, is it wise to give it other powers and duties such as "establishing industrial enterprises"—that is, new ones—and acquiring and placing at the disposal of others plant, machinery and other equipment? Lastly, is it worth up to £150 million?
At what pace have mergers been taking place? The White Paper says that:
"the process has been accelerating in recent years and may be expected to continue."
Mr. Nicholas Stacey, in Mergers in Modern Business, says that in the ten years to the end of 1963 there were 655 quoted companies and 4,344 private companies that were acquired by take-overs—4,999 in all in those ten years. The rate of take-over of public companies in 1963 was nearly double the rate in 1954, while the number of private companies acquired increased from 233 to 808. These figures do not include the mergers, small in number, between two or more companies, as distinct from acquisitions by one company of another. The Government have also stated that between 1959 and 1963 publicly quoted companies spent an average of £335 million a year on acquisitions involving cash payments of £145
830
million or so a year. This is quite considerable and is, as the White Paper says, an accelerating activity.
Viewed from the celestial heights of Government, many of these mergers may have appeared haphazard because the Government did not know the motives for them. In the main, they took place because one or other of the parties, or both, had been confronted with some particular problem, whether it was management, succession, procurement, manufacture, marketing, research or finance. Some may have succeeded; others may have proved failures. In some the purchaser may have paid too much; in others he may have paid too little. But one thing is quite certain. The same will continue to apply whoever brings the merger about and whatever the motives for it.
Given this rate of reorganisation, how many more mergers a year do the Government estimate should be promoted, and how many do they estimate this new Corporation, by itself, will promote a year? The Government must have some idea of the size and nature of the gap to be filled. I am quite certain that the noble Lord who is to reply will say that it is not so much the quantity as the quality of mergers that matters. I could not agree more. Mergers must be between compatible companies—unless, of course, the object is to close down the company acquired. As Sir Donald Stokes has said, it is one thing to launch a merger; it is quite another to make it work. But if it is the Government's intention that in certain industries mergers are required and should be encouraged, what are those industries? The Government cannot any longer be coy about telling the public. As the noble Lord said in his speech, the board-designate has already been considering this matter.
In introducing the Bill in another place, the Secretary of State said that there would be two tasks immediately facing the Corporation. The first was to deal with projects that will be ripe for action straight away; and the second was to estimate priorities among a number of different possibilities. What are these projects ripe for immediate action? The nearest the Government have come to any pronouncement was at the Third Reading in another place, when the

831
Minister of State for the Department of Economic Affairs said:
"The sort of firms to which the Corporation will have to pay attention in the first place—firms which should be making a greater contribution to our export-import balance—will, I think, be found in the engineering industries."
He went on:
"…one of the tasks which the Corporation may well perform will be the creation of consortia for specific export jobs, assisting British firms, for instance, to co-operate against foreign rivals."—[OFFICIAL REPORT, Commons, Vol. 736 (Vol. 101), cols. 1234–5; 22/11/66.]
No doubt there is room for such consortia between willing partners in appropriate circumstances. But why is it necessary to set up a £150 million Corporation to achieve this? Is the Corporation itself to form specialist export houses and market the products of consortia abroad, for example? Can the noble Lord give us more information on this point? The White Paper claims that what are called "desirable re-groupings" fail to take place because there is no organisation whose special function it is to promote rationalisation schemes which possesses the know-how and finance to clinch them. The White Paper says that there is a "gap in the institutional frame work" which needs to be filled—a gap both functional and financial.
May we look first at the functional gap? In the last decade or so, in addition to merchant bankers and others skilled in negotiating industrial marriages, there has grown up a new type of expert known as a corporate counsellor, who not only advises on mergers but looks for opportunities of rationalisation and amalgamations. Quite apart from this, the truth is that it is not so much lack of experts as lack of access to information about private companies that has hampered those who would like to bring about more industrial mergers. The obligation laid by the Companies Bill on private companies to submit their balance sheets, profit and loss accounts and directors' reports would remove this obstacle—and remove it just as effectively if it incorporates the Jenkins Committee's recommendation that they should not have to include details of emoluments, turnover and rents as if it does not. The information will then be open to inspection by all interested in promoting fusions. Indeed, without this the Indus-
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trial Reorganisation Corporation will be at a grave disadvantage vis-à-vis those who already have wide experience and copious files of information.
What we are entitled to ask is that the Industrial Reorganisation Corporation will not enjoy any special privilege in regard to access to information. First, will the noble Lord who is to wind up the debate (I believe it is the noble Lord the Chief Whip) give an assurance that information supplied in confidence to Government Departments will not be passed on to the Industrial Reorganisation Corporation? Secondly, will he confirm that, since the Industrial Reorganisation Corporation is not to have any status, privilege or immunity of the Crown, it will be an offence for a Government Department, or any member of it, to pass on to the Industrial Reorganisation Corporation information obtained under the Statistics of Trade Act?
Thirdly, will the Industrial Reorganisation Corporation enjoy any privilege in obtaining information from the Registrar not available to the public in general, and to other would-be promoters of mergers in particular? Fourthly, will the Indus trial Reorganisation Corporation be in any privileged position in consulting the Board of Trade in advance about pro posed mergers, particularly on the mono poly aspect—the point about which my noble friend behind me asked? I noticed that this was the point which was made in the speech of the Secretary of State in opening the debate in another place, and I was perhaps a little surprised that the noble Lord, Lord Winterbottom, did not refer to it this afternoon.
LORD SHEPHERD: My Lords, may I say, on the point which the noble Lord made when he spoke about mergers, that presumably he means mergers in which the Industrial Reorganisation Corporation is interested, and not other mergers that may be taking place.
LORD DRUMALBYN: Yes; the mergers in which the Corporation is interested. What I am asking is that the Industrial Reorganisation Corporation should not be in any privileged position in going to the Board of Trade and consulting them about mergers in advance, and getting clearance—a position which would not be equally available to any other merchant bank, to any consultants, or, indeed, to the firms themselves.

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My Lords, so much for the alleged functional gap. What of the alleged financial gap? Here, if I may again refer to Mr. Stacey, he says:
"There is no gainsaying that some desirable company mergers have not and are still not taking place; the simple and justifiable explanation of these instances is that such proposals fall below the criterion of commercial viability".
The question follows: is it, then, the intention of the Government that the Industrial Reorganisation Corporation should carry through company mergers that are not commercially viable; and, if so, how is the Corporation to pay its way? The Bill, in Clause 2(2)(d), gives power to the Industrial Reorganisation Corporation to acquire and place at the disposal of others not only premises but plant, machinery and other equipment. This could be interpreted as giving them power to do what the Cotton Reorganisation Commission (or is it "Board"?) did—in effect, to give grants on plant and machinery even if it could not give more direct encouragement to the scrap ping of old plant and machinery.
If it does this, again, how is it going to pay its way? If a fusion is commercially viable, there should be no difficulty in raising any necessary finance, provided the Government ensure the appropriate eoonomic climate. If, on the other hand, the Government continue to squeeze credit and reduce profits by in creased taxation, coupled with an economic policy designed to reduce demand and raise overheads, they can hardly expect the requisite finance for investment, including investment for mergers—and the little contribution that has been made this afternoon will not go very far and certainly will not have much of an immediate impact—to be forthcoming. What I am saying is that if there is a financial gap it is a gap of the Government's making.
I turn now to the proposed structure of the Industrial Reorganisation Corporation. Just by the way, the noble Lord referred to the Industrial "Reconstruction" Corporation, which I thought was a very nice name.
LORD WINTERBOTTOM: It was a slip of the tongue.
LORD DRUMALBYN: I should just like to pick out these points, because I want to relate what I have to say to them.
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The Corporation is to enjoy the status and privileges of a statutory corporation, but not any status, immunity or privilege of the Crown. I speak here as a layman, but according to the Bill it is not to be regarded as "enjoying Crown status". I do not know whether the noble Lord can answer this point to-day: perhaps it is more a Committee point, but it seems an important one. We are not concerned merely with what the law would regard; we are concerned with the fact, and in Committee we shall have to examine the subtle distinction between "not enjoying" and "not to be regarded as enjoying" such a status. The same applies—even more so—to the words "not to be regarded as the servant or agent of the Crown". Either the Corporation is or it is not the servant or agent, however it may be regarded. In some respects it plainly is the servant, because under the Bill it must at least comply with directions of a general character as to the exercise and performance of its functions.
Thirdly, as to finance, as the noble Lord said, the Corporation can borrow short-term where it pleases, subject to a limit to be imposed from time to time by its sponsoring Department, the Department of Economic Affairs. Then, it is to derive its long-term finance from, first of all, Exchequer loans, which I think the noble Lord said would be its major source of finance, the interest on which, he said, was to be not less than (he added the words "not less", which I do not think have been used before) that at which the Treasury itself can raise money. Then there is the Exchequer investment capital—that is, the Exchequer is to place the taxpayers' money at risk—subject to a limit of £50 million, "or such greater sum as" the Secretary of State for Economic Affairs "may from time to time by order specify." In other words, within the total of the £150 million Parliament is being asked to enter into an open-ended commitment on this score. Incidentally, the order is to be subject to approval by the Commons House of Parliament alone.
Whether noble Lords agree or disagree with my description of Clause 5, dealing with Exchequer investment, as an open-ended commitment, there can be no dispute that the Bill gives the impression that the Board will have to pay interest on its loan capital and will

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be expected to aim at a level of dividend to be agreed with the Government, and to pay dividends to the Government. I think it is right to ask: how is it going to do it? How is it going to pay its way? First of all, I take it that the Corporation will need to have an "intelligence unit", which is bound to be costly. It will have to examine a fearful number of balance sheets and do an immense amount of research. Or is all this—and I put this question deliberately—to be done gratis for it by some Government agency or Department? The noble Lord wags his head in denial, so I take it that this is going to be a cost to the Corporation.
Then again, the actual negotiation of mergers is a highly skilled operation, and is generally conducted in return for fees to be paid by the acquiring company, fixed in relation to the work done and not generally—though it is so sometimes—as a percentage of the capital or the assets of the companies merged. In any case, the Corporation could hardly represent both sides simultaneously in negotiations.
The Corporation is also empowered to give guarantees—in particular, to guarantee loans raised by companies elsewhere. The Minister of State said in the Standing Committee of another place:
"The Corporation will not lash money about. The object is, indeed, not to spend any of its money at all if it can avoid it".
It it does that, I am afraid it will not pay its way—and how can it avoid it? How will it be able to meet these commitments and at the same time pay its way? Surely the answers are clear. Will it not exact payment for its services (and I think what the noble Lord said would confirm this) in promoting a merger by taking an equity interest in the new groupings; that is, if the amalagamated undertaking agrees? Some companies may refuse to acquire on such terms. Secondly, will it not seek opportunities for investment in private enterprise? Thirdly, will it not seek opportunities to use its powers under Clause 2(1)(b) to
"establish or develop, or promote or assist the establishment or development of, any industrial enterprise…"?
And will it not try to persuade Departments to request it to do so in order that
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it may pay its way? We are told that the Corporation will not act as a holding company; that it will be expected to turn over its capital. But in order to meet the finance requirements of the Bill, it will not merely have to nurse the groupings it creates or encourages until they become profitable, but have to hold on to its investments after they have become profitable.
Is it not clear from this Bill that the Government are trying to satisfy too many conflicting aims of too many conflicting people, of too many conflicting supporters? If we need a Government-sponsored industrial matchmaker, in addition to the marriage brokers who already exist, why clutter it up with all these other jobs? The establishing, developing and the running of industrial enterprises is a different sort of job from promoting mergers, as is the purchase and leasing of premises plant and machinery, and acting as an industrial bank, like the I.C.F.C. This is to be matchmaker, midwife, mother and moneylender, all in one.
How far shall we see the Industrial Reorganisation Corporation taking over some of the functions of the Board of Trade Advisory Committee and the Board of Trade—providing equity capital under this Bill instead of making loans and grants to industries setting up in the development areas under the Local Employment Acts? That is a question to which I should like to know the answer. How far is this envisaged? We know that many members of the Party opposite believe that if public funds are made available, the State should have a share in the profits. How many reflect that it may be losses, perhaps of the entire equity capital, and not profits that have to be shared?
The noble Lord invites us to banish emotion from this debate. That does not mean that we can afford to banish sincere differences of opinion. There are Departmental interests which dislike having to come to the representatives of the taxpayers and ask for money when they want to launch a big new enterprise or participate in the launching of one, as the Conservative Government came to Parliament when it was a question of loans to Wiggins Teape at Fort William. How much easier to pass a Bill making up to £50 million available, with the prospect of an almost unlimited amount more without further legislation!

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We on this side believe that it is right for the State to encourage industry to go to the less prosperous areas by giving financial assistance in the form of loans or grants, and to give free depreciation allowances to compensate them for the higher cost of setting up and operating in these areas. But we do not believe that it is right, except for defence or in other special circumstances, for public money to be too readily available by way of investment in private enterprise. Still less do we believe in the State having a controlling interest in private enterprise (as it has been suggested the Corporation might have in some instances) because we fear the inherent dangers of unfair competition, unfair preference and the economic distortion involved.
I am quite ready to accept that the noble Lord, Lord Winterbottom, genuinely believes that this Bill is intended to make, and will make, private enterprise and the economy as a whole more efficient and more profitable. But I believe there are very serious dangers that will have to be faced; that as time goes on the purposes to which this Bill is being put will tend to be widened beyond recognition and that in consequence, through growing State intervention, the judgment, the sense of responsibility and the self-confidence of industry will be weakened. We are bound to assume that the Prime Minister and the Secretary of State for Economic Affairs meant what they said about setting up State companies in backward and declining industries and in the new scientific industries, on what was described as a really massive scale, not to mention the machine tool industry, when they ex pressed their belief in the famous Clause Four.
One of the insidious aspects of this Bill is the tacit assumption that something will be in the national interest because the Industrial Reorganisation Corporation thinks it will be. It is the tacit assumption that those who resist the advances of the I.R.C.—those who do not, to use that word which is of such danger to the independence of judgment, "co-operate"—will be acting against the public interest with all the implied undertones of Government favour or disfavour. Parliament can provide money; it cannot provide infallibility.
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So far as the match making side of this is concerned, I, for one, think that the Government choice of Sir Frank Kearton, of Courtaulds, and Mr. Ronald Grierson, of Warburgs, is about as good as could be made. Certainly, Sir Frank has plenty of experience of mergers. The Observer stated last January that in the previous eighteen months he had acquired 60 cotton mills; and, of course, he conducted the most celebrated anti-merger operation of our times. So he has the experience and no doubt the sympathy of both sides. The board which the Government have appointed—perhaps to observe the constitutional niceties I should have said, "designated"—contains many men Whose reputations are secure whether the experiment succeeds or fails, pro vided that they discharge their functions, whatever they may be, with fairness and a respect for the independence and judgment of others. For my part, I wish them well, whatever they have to do. But what I want to know, and what we are all entitled to know, is: what are they to do?
The Bill says that they can do any thing whatever for the purpose of promoting industrial efficiency and profitability and assisting the economy of the United Kingdom—anything whatsoever. So far we have not been told anything like as much as we should have been told of the alleged gap to be filled so far as mergers are concerned. Has the chair man-designate been told? If so, why should we not all know? Is the Industrial Reorganisation Corporation to have some kind of privilege or priority in promoting what are called desirable mergers? Or is the plain truth that the Government have not the slightest idea, and that the promotion of mergers is simply a cover for other activities or, at the best, a comparatively minor accompaniment to them?
The noble Lord sighs; but we have not had an answer to this. He must for give us for having some suspicions on this matter when the Bill has gone through all the stages in another place and no answer has come from the Government at all, except for the small one I mentioned before. We want a case to be made out for this official matchmaker. Neither in the White Paper, nor in the debates in another place, nor in the speech of the noble Lord has a case been made

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out. We shall continue to press for answers to our questions. If we do not get them to-day, then we shall press again for them on the remaining stages of the Bill. Whatever the case for a match maker, there can be no justification for turning the Corporation into a maid-of all-work.
I would say this in conclusion. Let the noble Lord beware! He was emphatic that only persuasion will be used to pro mote mergers. We have seen all too clearly how what starts as voluntary co-operation is apt to end with compulsion. Our anxiety about this Bill—which we shall not vote against—is threefold: first, that the Industrial Reorganisation Corporation will be an obsessive rather than a discriminating matchmaker; secondly, that voluntary co-operation will end with compulsion here, too—although not necessarily under the Board as at present designated; and, thirdly, that the systematic intrusion of the State into the area of private enterprise will grow apace from these small beginnings.
5.0 p.m.
LORD HENLEY: My Lords, the Liberal Party gives this Bill a very much warmer welcome than did the noble Lord, Lord Drumalbyn. I am bound to say I believe that if I had access to the files of the Conservative Party I should find somewhere in them a Bill very like this Bill. I am encouraged to think so when I am reminded by one of the Sunday newspapers—I forget which and when—of what Mr. Harold Macmillan said on industrial reorganisation about thirty years ago. One hesitates to quote some thing which might appear to he out of context, but in a book which Mr. Harold Macmillan wrote, The Middle Way, he devoted a great deal of thought and a very long chapter to industrial reconstruction. What he proposed was an industrial reorganisation Bill. Under the Bill, among other things, he proposed that some authority might not be content to play a passive role, but would itself assist in the drafting of schemes and in efforts to persuade the industry to accept them. Mr. Macmillan does in fact use the word "compulsory". He refers to:
"Special schemes requiring separate legislation for the compulsory reorganisation of industries and services regarded as being of key importance to general economic prosperity, and where the nature of the reorganisation might
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involve the interests of more than one industry."
Your Lordships may say that that is a very long time ago, that it was written in 1938 about conditions that then appertained. Nevertheless, as I say, it is a for midable suggestion from a very formidable man, and I cannot help thinking that the Conservative Party would bring in a Bill of this nature.
We on these Benches support this Bill. We feel that there is a need for it and that this is the right way to do it. We do not think that this Bill goes too far. The noble Lord, Lord Drumalbyn, although he says he might accept the match-making part, does not like to accept the maid of-all-work side of it. Well, I think we accept both the match-making and the maid-of-all-work. We feel that the Government have made out a good case. Incidentally, I should like to congratulate my very old friend and comrade-in-arms on a really excellent exposition of this Bill. It is vital in many respects to have something like this, if we are to compete with the rest of the world and again, from the point of view of those on the Liberal Benches, when we go into Europe it will be all the more important.
Another aspect for which we like it very much has been mentioned before—the question of trying to cope with the relationship between monopoly and public interest. The noble Lord, Lord Hawke, raised this point and the noble Lord, Lord Drumalbyn, partially answered his question. I think it has been stated in terms that the Corporation will not pro mote mergers without a clearance from the Monopolies Commission. I think this very valuable. After all, we are trying to build up firms and organisations into much bigger units and there is the extraordinarily difficult problem of making corporations and firms bigger and, at the same time, balancing that against the public interest. It seems to me that probably the I.R.C. is better placed to deal with this difficult problem of balance than any other institution.
With regard to the maid-of-all-work side, we on these Benches very much welcome that aspect of the Corporation which is to deal with new ventures. We think that is one of the most important aspects. The noble Lord, Lord Drumalbyn, was worried that there would be a danger of its becoming widened beyond

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all recognition or of its being cluttered up with other jobs. I do not feel so. I welcome that aspect. Then, from a purely Liberal point of view again, we welcome the aspect of its being able to help with the balance of the economy between the regions. I know this is a very small part of the functions of the Corporation, but nevertheless I think it is a significant part. We on these Benches feel that the work proposed cannot be done either by a market economy or by merchant bankers alone.
Increasingly we do not live in a market economy, and I hope that some of your Lordships have been listening to the Reith Lectures by Professor J. K. Galbraith. I will not attempt to summarise what he said, but in fact he did say this, and I entirely agree. We are living less and less in a market economy and still less and less will a market economy be able to help. The long-termplanning and complexity, and the number of different things involved in a modern industrial undertaking are so long-term and difficult that a Corporation which is designing some new project, plans it not only in relation to every piece of the thing they are making, but from the price onwards. We are geared to the kind of price to which they work; it is not the other way round. In such a world it is doubtful how much can be done by a market economy in promoting the sort of mergers we have in mind.
The same applies to the merchant banks. I liked the word used by the noble Lord, Lord Winterbottom, about this new super merchant bank, as the Corporation is going to be, being purposive. So far as the ordinary merchant bank is concerned, as he said, it has to take orders from its clients and work that way round. Here we are going to work from the point of view of a super-purposive merchant bank using exactly the same methods as a merchant bank with, added to them, that degree of specialisation and indeed long-term thinking which would be outside the scope of a merchant bank.
My Lords, what seems to me interesting is that this new proposal appears to be acceptable to a great many industrialists and also to a great many people in the City, not least, so far as I can make out among those friends I have in the City, among merchant bankers them-
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selves. So I do not understand why the Conservative Party is against it at the moment. I hope that this is not part and parcel of the business of attacking a Government all the time on all fronts for no very good reason. It surprises me. As I say, my friends in the City and a great many industrialists whom I know seem to accept this idea. Thinkers in the Conservative Party, if I may refer to Mr. Harold Macmillan in these terms, have been talking about this for many years; yet now the Conservative Party attack it right, left and centre on grounds which do not seem to me to add up to very much.
I agree that they may say, in reply to my suggestion that they have just such a Bill in their files, "Well, yes we have, but that Bill would not allow a Government or a corporation to take up the equity." This is a point on which one can, of course, differ. I accept the Labour view that Governments or corporations should be allowed to pick up the equity and this is in fact the right way for Governments to conduct business; and that if the public has in vested money it should have some profit. My own feeling is that this would be a far better way of collecting betterment than that proposed in the idiotic Land Commission Bill. However, to return to the Conservative Party, not only have they in the past been thinking of it but actually on a number of occasions have been moving in the same sort of direction with regard to particular industries. I think they are making much too much of this aspect of market economy and I hope they will pay some attention to what Professor J. K. Galbraith has to say.
On the question of nationalisation, which I think worries the Conservative Party, I feel that in so far as the nationalisation of certain industries under certain conditions is suitable, this seems to be the sensible way of dealing with them. I am speaking very much for myself, be cause I do not know how far that would be acceptable to my noble friends.
There are one or two other small criticisms I should like to make. There is a general feeling that the Government do not quite know where they are going with this and whether it will work at all. I do not accept that. This Corporation is going to work as a super-merchant

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bank. We know how a merchant bank works, and presumably a super-merchant bank will work in much the same way. But in so far as this is not altogether true, this applies to any new venture. In regard to the feeling which the noble Lord, Lord Drumalbyn, expressed, which boils down to wondering how the actual members of this Corporation are going to interpret their functions, I agree there is enormous scope for them to do so in all sorts of different ways. But the first thing that strikes me is what a remarkably able and imaginative lot of people the Government have chosen. I think that we could well risk it so far as they are concerned.
There is one other point, which strictly is irrelevant to the Bill, but which I throw out as something worth thinking about. I know that the Industrial Re-organisation Corporation has nothing to do with agriculture and land owning. But agriculture is an industry, and one which is in grave need of reorganisation, in grave need of mergers and in grave need of having its structure put right, and, after all, this is what this Bill was meant to do with regard to other industries. In view of the fact that this Corporation can do almost anything, I wonder whether it might be worth thinking about using its activities in the field of agriculture, where we are in such difficulties and seem to have got bogged down, and whether the Corporation could also apply its functions to land-owning where again units have been fragmented until practically all landholdings are much too small. Could not the Corporation operate somewhat like the Forestry Commission or, outside the Government, like the National Trust and build up something, either on the marriage broking or the maid-of-all-work side, which might be significant in the landowning field. That might be a much better way of approaching this problem than through the Land Commission, which, so far from welcome, I think is—well, we have been talking about it all this week and will be next, and I will say no more.
In conclusion, my Lords, may I say that we on these Liberal Benches think that this Corporation is a good idea. The need is expanding and cannot be met by the market economy and merchant
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banks alone. If the Government had not introduced such a measure, the Conservative Party, if they had been in their position, would have had to do so in their stead. We support it.
5.15 p.m.
LORD SHAWCROSS: My Lords, I must begin, I think, by declaring an interest. I have a business association with a large international wholesale bank and also with an issuing house. Both of these, I suppose, might be considered to be affected and might indeed be affected by these proposals. I shall try not to allow that to prevent my approaching the matter with reasonable objectivity, and I should add that I speak in this matter entirely for myself and not for my associates.
Of course, what is understood by "objectivity" is a matter upon which different people take different views. I remember that in the last economic debate in your Lordships' House I made the rather trite observation that I thought that in these grave times these matters ought to be treated in a non-Party political way and without political recriminations. From the nods I received from the Government Benches, I gathered that that met with approval, but when in the course of my argument I proceeded to develop—and who could avoid it?—some criticisms of Government policy, I realised that noble Lords on the Government Benches regarded objectivity as something which meant being objectionable to the opposite side of the House and not objectionable to them. I shall not allow myself to be discouraged by that and I hope that I shall not be driven from my Cross-Bench approach to this and indeed to other proposals.
I think that a good many Committee points are likely to arise on this rather loosely drawn Bill and, indeed, already some Committee points have very properly been raised. I would prefer, if I may, to confine myself to the real principle behind this measure as it is, I think, understood in the country and particularly perhaps in industry and in the City. The objection to this Bill is that it is thought to be, or at least that it could be, an instrument of State Socialism. There is force in that objection, and I quite understand it. I ought to. After all, twenty years ago I was a Socialist myself,

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and had been one for over twenty years. But five years of very active experience in Government convinced me that, whatever might be the position from an idealistic point of view, Socialism just did not work in practice. My experience since then in the law, in industry and in business has made me the more sure of it.
So my approach to this Bill is frankly this. I do not think that the Members of your Lordships' House who are not supporters of the present Administration need feel called upon to assist in the passage of any obviously Socialist measures. On the contrary, I think that the time is coming, if it has not already come, when the leaders of private enterprise, in this House and outside it, will have to consider whether, in the light of recent events, they should not more actively assert the advantages of the system in which they believe rather than collaborate in measures which are intended to undermine it. The question I ask myself on this occasion is whether this is such a measure; and I agree with the noble Lord, Lord Drumalbyn, that this is a matter which we ought to approach without any undue emotion.
My Lords, there are already in existence a number of measures by which the Government of the day do, or can, intervene in the activities of private enterprise. Some of them were introduced by Conservative Administrations. Many of them are capable of being used to the disadvantage of the private sector—and, indeed, some are. But while there is no doubt that this proposed Industrial Reorganisation Corporation could be used in a way which would impair the useful and normal functions of the merchant banks and take away equity control from private enterprise, it does not of necessity follow that the machinery would be used for such a purpose. This is a possibility. But the fact that a knife may be used for the purposes of murder does not lead us to reject all uses of knives for other and more legitimate purposes.
I think we must assume in regard to this Bill two things. We must assume, first of all, that the distinguished gentlemen who have been appointed, provisionally, to the board of this proposed Corporation will not abuse the powers
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they have been given. There may be some who think that the chairman is still under some illusions in regard to the benevolence of the Labour Party towards private industry—I do not know. But I do not think anyone would suspect him, or any other of the members of the proposed board, as being dedicated Socialists.
I would make only one point in regard to the board; it is quite a small matter, and really a Committee point. I believe there is nothing in the Bill as to their tenure of office. I should have thought it ought to be made clear that they cannot be dismissed by the stroke of a pen. One would not suspect for a moment that Her Majesty's present advisers would be guilty of any such chicanery, but it would be unfortunate if the legal position were such that they could all he dismissed and other persons of a very different complexion could be put in their place. But there is another safeguard, and that is the safeguard of Parliament. I think we must assume that Parliament—and if the Government continue on their present courses it may before long be a Parliament of a different political complexion—will be able to ensure that this Corporation will not abuse the powers they have been given by using them for Socialist purposes.
This Bill marks a significant change in Government policy. Only a short time ago "bigness" in industry was regarded as a dirty word. I am certainly not one of those who think that all small firms are bad; of course they are not. There are a great many, particularly, I think, specialist firms, which are highly successful. But there are many which are not. I am familiar with the table which one often hears read out about the 200 biggest firms outside the United States of America. Relative positions in this league table are changing very rapidly. But it is not really in point to compare the firms in the United Kingdom with those on the Continent of Europe, some of them quite new firms, with access to unlimited capital, and very often without the same need that our firms have of competing in the export markets of the world. In any event, the fact that we have 58 of the leaders amongst the 200 big firms is really no reason why we should not have many more.

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I believe—I have been saying this for a long time, and, indeed, I said it in the days when I was a member of the then Labour Government—that one of the great weaknesses in this country is that we are conditioned or accustomed to doing things by penny numbers. We talk about modernising Britain, and what do we do? Apart from the "blue chip" firms, we remain content to have a multiplicity of small firms, unable to afford adequate re-equipment; lacking perhaps the courage and perhaps the capital to take a long-term view on the pay-off; too small to take advantage of economies of scale-flow production, multiple shift working, computers, automatic controls and all the rest of it. But these are the essential tools of modern industry if we are to compete successfully in the markets of the world.
Just consider two of our most important industries—namely, engineering and building. In the engineering industry there are believed to be no fewer than 27,000 firms, employing more than five employees each. That really is quite a nonsense. In the building industry the number is so great that nobody has been able to count them: it is something of the order of 90,000 or 100,000 similar firms. I am a great believer in competition, but not competition between penny farthings.
LORD SHEPHERD: Hear, hear!
LORD SHAWCROSS: The noble Lord says "Hear, hear!", but, after all, it is the noble Lord's Government (I am glad that they are now having second thoughts) which not so long ago encouraged this—if I may change the metaphor—"horse and buggie" philosophy by introducing legislation which imposed a prima facie bar on any mergers involving a joint capital of more than £5 million. Five millions pounds, in these days when it costs more than that to build a single aircraft!
We really must now go for bigness. In industry after industry I believe the only future lies in rationalisation, or in mergers into units sufficiently large to justify the capital investment and permit the techniques of management, control and organisation on which efficiency and success in modern industry depends: and, I would add, which are able to give to
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the workers in industry that degree of security which they not unreasonably nowadays demand.
Can we be sure that, without some such machinery as that proposed in the Bill, we can accomplish this, as I believe it to be, desirable reorganisation? I am not sure that we can. The merchant bankers, in spite of a great deal of discouragement from the Government, have done a lot. Several wealthy and far-sighted industrialists, in spite of a great deal of public obliquy, have effected some very useful take-overs which have improved the overall efficiency of the industries with which they have been concerned. A great many mergers have taken place—one big merger is under discussion to-day—and British industry as a whole is no doubt better for them. But the merchant banks are not always able to bring about mergers which would in themselves be desirable. In the negotiations they are of necessity, and in the nature of things, acting for one side or the other, and in consequence they do not always command the complete confidence of both sides. They will not always have full information about the whole field of some particular sector of industry which this Corporation, as I anticipate, would be able to study in depth.
It is not quite true to say that the merchant banks can never take initiatives in these matters; very often they do take initiatives. But I have no doubt that this Corporation would be in a better position in many cases to take a completely impartial and authoritative initiative. It is not intended that this Corporation should have compulsory powers. They ought not to intervene at all except, perhaps, by way of suggestion to the merchant banks, where the ordinary market processes are capable of producing the necessary results; they should not put up capital where capital is available in the market on ordinary commercial terms; and they certainly ought not to attempt to compete with the merchant banks in the ordinary functions of the market.
But there remain cases, I believe, in which the merchant banks, useful as they are, cannot be wholly effective: cases where complacent managements will not listen to their advice; cases where a rather longer term view has to be taken of the pay-off than would be possible on

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a merely commercial basis; and cases where the Corporation, acting impartially and with the high authority that I think this Corporation should possess, will be capable of providing a kind of catalyst. Still more—and this, perhaps, is really the most important point about this piece of legislation—the very existence of this Corporation, the studies it will make of particular sectors of industry, the opportunities it will have and which it will be able to point out, should bring about a complete change of climate from those days of the £5 million limit introduced by the present Government, and will encourage an atmosphere in industry as a whole which is favourable to mergers and to bigness—an atmosphere of which the merchant banks can then take advantage and in which those banks can then themselves help to bring about the mergers which appear so desirable.
I venture to think that the Bill is very much the child of the present Foreign Secretary, and no doubt when he conceived it he had very much in mind the larger markets in which he hoped that Britain would eventually compete, particularly, as the noble Lord, Lord Henley, said, the Common Market into which he is pledged to carry us. It may be some time before our entry into the Common Market is accepted. I wish we could have made a rather more unequivocal declaration of our desire to join now. But the Foreign Secretary is, if I may be permitted without impertinence to say so, a man of great energy, of great enthusiasms and of great sincerity, and I believe this is a legitimate ambition of his which he will do his utmost to fulfil. We must be ready in British industry for that day; ready to meet the big and efficient units, not only those on the Continent of Europe whose structure may not be vastly different from our own, but also those in the United States of America and now in Japan with whom we shall have to compete in Europe and in the markets of the world.
As I have said, this Bill is no doubt loosely drawn, and I daresay many improvements can be made to it in Committee. That is one of the useful functions of your Lordships' House, but in broad principle, and in so far as this Bill will encourage a change in climate and promote bigness and rationalisation in industry, I commend it to your Lordships.
5.33 p.m.
LORD ALDINGTON: My Lords, I find myself in such almost complete agreement with the noble Lord, Lord Shawcross, that in the last few minutes I have been wondering whether it would be right for me to detain your Lordships further, but as I happen to take a somewhat different view from that of my noble friend Lord Drumalbyn I think it would be right to explain myself.
I suppose that I should start by saying that I might or might not have an interest to declare—I do not think it is possible for anyone connected with industry or with banking to know at this stage that he has—but I hope noble Lords will acquit me of having said things or adopted an attitude to this Bill which is tinged by any of my interests. I do not think I have. I have tried to take a broad general view of the economy, and the value to the economy and the efficiency of industry of an idea like this, and I have come to the conclusion that the idea of an Industrial Reorganisation Corporation definitely has merits. I would add my belief that the purposes behind the creation of this Corporation might perhaps better have been achieved by an extension of one of the private enterprise financial corporations, such as the Finance Corporation of Industry or the Industrial and Commercial Finance Corporation. I think if that had been done it would have avoided the difficulties that arise from using public money, and avoided the fears of back-door nationalisation and of unfairness.
Incidentally, I do not think that the main problem in the majority of cases of desirable mergers is that of finding funds. The main problem lies in some of the other points which my noble friend Lord Shawcross has mentioned, but since the course of using private enterprise corporations has (if it has been examined at all) been rejected, or at any rate has not been adopted by the Government, I certainly do not reject the possibility that a statutory corporation like the one proposed to us to-day—though it has some disadvantages because it is a statutory corporation—may have a valuable role. For it may well be that in cases where the normal machinery has failed to bring about what is needed, the initiative—and I think it is initiative that is important here—that can be taken by a body like

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this, which is manifestly impartial as between one industrial company and another, may lead to mergers, amalgamations, rationalisations, or whatever they may be called, being achieved sooner than they would have been achieved in other circumstances.
I agree with the noble Lord that speed is important in this matter, particularly as we come towards the Common Market. I think the I.R.C. may be particularly useful in arranging for stronger industrial units in fields of industry where the organisation of business has grown. The noble Lord who very agreeably introduced the Bill used the expression "has grown historically" I would go further and say "has grown higgledy-piggledy", which a great many of our companies have done. For example, a number of our large or medium-sized industrial groups or companies owe their size not so much to one particular activity as to a number of different, though related, activities in some of which greater size would give greater strength and efficiency.
My noble friend suggested that it would be desirable for Parliament to be informed by the Government and by the Corporation, when it is set up, of the spheres in which they propose to operate. I would, with respect, suggest to him that, just as in human affairs the earlier stages of courtship are not normally conducted in public, so in industrial courtships it is also normally desirable not to conduct them in public.
LORD DRUMALBYN: My Lords, may I intervene for a moment? What I was asking was in connection with the broad fields in which these activities are carried out. We have been told many times that it is within certain industries that this kind of amalgamation is required. I certainly was not suggesting that particular amalgamations should be ventilated in this House.
LORD ALDINGTON: My Lords, I am glad to hear from my noble friend what he had in mind, but I think there is a limit to the amount of information that can be required in advance of any action of this kind. Those of your Lordships who believe, as I do, in the efficacy of market forces may well ask me the
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pertinent question: why is it that market forces do not produce desirable rationalisations, mergers, and so on, without the intervention of a statutory corporation? As has been said already, we have no absolute proof that they do not, and indeed, as the White Paper which has been quoted, Cmnd. 2889, acknowledges, they usually do.
But I think most of us who have studied the problems of industry have concluded, from our own studies in the spheres in which we work and from reading about other people's problems, that all is not absolutely perfect in this respect. I do not think that we can expect to get absolute, cast-iron evidence of this proposition, but most of us rely upon the feelings or the hunches that have come to us in the course of our experience in these matters in reaching this conclusion. But I think that is only part of the answer to that question about market forces. Incidentally, I was almost horrified to hear the spokesman for the Liberal Party seeming to tell us that he as a representative of the Liberal Party in this House no longer believed in the efficacy of market forces or that we were living in a market economy. Indeed we have moved a long way if that is the modern, up-to-date view of the Liberal Party.
I think the other part of the answer to that question is to attack the premise. The premise is that the I.R.C. will be going contrary to market forces. I do not believe it will do any such thing.
LORD SHEPHERD: It is not meant to.
LORD ALDINGTON: As the noble Lord has said—I was hoping he was going to say it—it is not meant to do that. It is on this point that I should like to address a few remarks to your Lordships. While I think that the I.R.C. has merits as an idea, I must confess that the Bill as at present drawn invalidates a great many of those merits. It invalidates them because it is drawn very vaguely, rather sloppily, and is a bit slovenly. I will explain what I mean. It has appeared to commend itself to the noble Lord. Lord Henley, who found it convenient that all sorts of things might be done, but I am bound to say it does not commend itself to me. I do not like the idea of Parliament setting up a new

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statutory Corporation which has no duty at all. It has functions, it has powers, but it has no duty. Perhaps there I should correct myself when I say it has no duty. The only duty it has under the Bill is in Clause 2(4) under which it has to carry out the general directions of the Secretary of State. The noble Lord shakes his head, but there is a difference between function, which is broad, and duty, and I think it important for reasons I am coming to that a statutory Corporation should have its job clearly defined.
I think it also important that criteria should be laid down by which it should govern itself in carrying out its function. After all, one of the objects of the Corporation is to increase efficiency in industry, and it surely is regrettable, to say the least of it, that Parliament should be contravening all the simplest tenets of commercial and industrial efficiency in failing carefully to outline duties and responsibilities and in failing to insist that the Corporation must itself carry out its activities with the utmost efficiency, the only criterion for which in the long run is profit: of course, not profit at once—no one involving themselves in activities like this can expect that—but at the end of a reasonable period, a profit achieved because its investments and loans are themselves profitable.
There is no great mystery about what the Corporation is intended to do. The former First Secretary of State has outlined it quite clearly in speeches and it is outlined in the White Paper in the two paragraphs which the noble Lord, Lord Winterbottom, in introducing this debate so agreeably—I would congratulate him on that—read to us this afternoon. It is my submission to your Lordships that the Bill would be strengthened, and should be strengthened, by the inclusion of a clause setting out quite clearly what the duty is and doing this by using the words that are used in the White Paper. Just to show noble Lords what I have in mind, a possible clause would read like this:
"It shall be the duty of the Corporation to identify those industrial activities where reorganisation, by amalgamation or otherwise, of production units is likely to lead to increased efficiency and profitability, and to encourage, and in appropriate cases to participate in, such action as is necessary to achieve that end and
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in all respects to conduct its own activities in a commercially profitable manner."
I do not say that particular form of words is absolutely right, but I commend to your Lordships the desirability of having the duty clearly laid down in the Bill.
I believe that if the duty had been clearly laid down many of the doubts and fears outlined to us this afternoon so clearly and so forcibly by the noble Lord, Lord Drumalbyn, would not have been necessary. It is because of the absence of this duty, the absence of following up, and, as it were, codifying what has been laid down in the White Paper, that many people, I think, with respect, fail to share the view which the noble Lord who preceded me and I myself hold about the merit of the idea of an Industrial Reorganisation Corporation. There are, incidentally, some other points in the White Paper which at the Committee stage I think we might give consideration to embodying in the Bill also.
It may be said, and it has been hinted, that the distinguished and able men who have been recruited for the Corporation, and in particular the chairman and managing director elect, need no such written instructions. That may be so, indeed it is so, but we are not legislating for Sir Frank Kearton and Mr. Ronald Grierson; we are setting up a statutory body which, like other statutory bodies, is subject to Parliamentary control. And, as I reminded your Lordships, we are setting up a body which is concerned with industrial efficiency, and we must see that we ourselves are efficient in creating it.
This leads me to ask the Government I how is it proposed that this new body should be accountable to Parliament for its activities. Is the Secretary of State's account to the Comptroller and Auditor General (I think it is provided for in Clause 8) and the certificate of the Comptroller and Auditor General to be the only channel of accountability? Or is the I.R.C. to be subject, for example, to inquiries of the Select Committee on Nationalised Industries in another place? Mention of that Committee will perhaps indicate to your Lordships why it is, with my experience of seven years, or about that, as chairman of that Committee in another place, that I am stressing some of these points.

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If it is to be so subject to inquiry of that kind, is there to be no limit set upon the information which that Committee may require the Corporation to disclose? Such information might, for example, affect the affairs of a number of privately owned companies with whom the I.R.C. was doing business, and might go far beyond the information which had to be disclosed and was normally disclosed under the Companies Act or the new Companies Bill when it becomes law. This might become a serious point, because unless it is quite clear what is involved in Parliamentary accountability we might find that quite inadvertently we have built in deterrents to rationalisation and merger operations, rather than incentives, as we all wish. Incidentally, I followed with full support the questions which the noble Lord, Lord Drumalbyn, asked about confidentiality of information in the hands of the Government. I would say it is just as important that information that gets into the hands of the I.R.C. should be kept confidential to them and should not be available to the Government. I think my noble friend would agree with that point as well.
I leave to the end the question of Government interference. I hope it is agreed on all sides that the Corporation will work best and most effectively in the interests of industrial efficiency and profitability if it is not subject to interference by the Government; and by interference by the Government I do not just mean directions, because that is not the way in which Governments have interfered in the last fifteen years with nationalised industries. It is much more interference by exhortation and persuasion. One would like to be assured, for example, that the general directions which the Secretary of State may give under Clause 2(4) will not relate to any specific proposals that he or his Department may have thought up for amalgamations and mergers, and, in particular, to the participation of Government funds in the resulting merged companies or corporations.
However, it is my belief that we should ensure in this Bill that commercial and industrial considerations are at all times dominant, and that Government requirements which run counter to economic sense, whether advocating subsidised rates
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of interest or whether they are directions about the way in which investments should be made, cannot be imposed on I.R.C.
I have mentioned the Select Committee on Nationalised Industries, and I think it is true that none of us here can avoid the conclusion that, in a way, this is a nationalisation Bill. For whatever may be the emotive force of that word, this is a nationalised Corporation, though it involves no expropriation of an existing body as most nationalisation Bills have done. It is because this is the first nationalisation Bill that has come before Parliament since I gained my experience as Chairman of the Select Committee on Nationalised Industries in another place that I have been making these points to your Lordships. My opinion—and this was supported by all-Party agreement in our discussion there—was, and still is, that many of the early failings of some of the older post-war nationalised industries were due to mistakes, and to vagueness and ambiguities in the drafting of the early legislation—mistakes which were put right by some of my noble friends in the course of later years.
If we now want to make the I.R.C. work properly we must, I submit, attend much more closely than the present draft of the Bill has attended to the delineation of the duties and the setting down of the governing criteria. For we must know by experience that all public bodies are subject to persuasive influences of Ministers, to the dogma of their political Parties, to public opinion as expressed through newspapers, serious and less serious, and to the influence of Parliamentary questioning and debate. Unless the originating Statute is absolutely clear on what has to be done, and how what has to be done is to be judged, there are great dangers that men, however good and however well-intentioned, who are in charge of the affairs, may drift off course.
I hope, therefore, that the Government, and others of your Lordships, will support me if I try, I hope in company with others, to improve the drafting of the Bill during the Committee stage. But, with that proviso, I should like to give my humble support to the idea behind the Bill.
5.53 p.m.
LORD BARNBY: My Lords, on reading the White Paper I, like many others, got the impression that something really promising was being worked out. Then, when the Bill itself was published, like many others I found a development of the kind of anxieties that the noble Lord, Lord Shawcross, has so clearly put to us, a fear that this meant an extension of nationalisation. Many of us feel exactly as he does, that that is not necessarily going to contribute to efficiency.
We were somewhat relieved when the name of Frank Kearton was published as the chairman: that gave some reassurance. One must have a whimsical reflection on the liberalities of his recent expressions, verbal and written. But again it seems paradoxical that a really constructive thing, such as the merger of the great company of which he is the head with I.C.I., was opposed by him. That seems quite curious, because there were many (and I certainly was one among them) who felt that on grounds of research particularly, and again particularly in the fibre divisions, there was great advantage in the possibility of integration, and particularly because, in the possibilities then thought of, of our entry into the European Community, the size of the merged undertaking would be able to match that of the great Continental companies.
My noble friend Lord Aldington, who has just sat down, voiced many of the anxieties, which are justified; and he went so far as to make definite recommendations of improvement. But this is a Second Reading debate. Generally, on Second Reading of a Bill we discuss the basic principles, and not so much the actual details. It is natural now that anyone with any responsibility who has sat watching for a period of time the evolution of industry should ask, "Well, what other moves of a similar character have been developed in other, let us say, English-speaking countries?" Our minds can go back to our own Trade Facilities Act. We have the individual attack on industries like the cotton and the shipbuilding industries.
The noble Lord, Lord Winterbottom, in moving the Second Reading, referred to the cotton industry. That industry, in particular, from which evolved the Lan-
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cashire Cotton Corporation, was the result of specific action through legislation, and it achieved some success. Shipbuilding difficulties have been recognised by the present Government in special legislation. Speaking of having responsibility for controlling an industry, I look back to my time, some years ago, in a Government Department which was responsible for the administration of an industry. It is extraordinary how that can develop one's belief that collective activity is much better than activity under private enterprise. But one soon recovers from that noxious influence on the termination of one's appointment.
My noble friend Lord Aldington quite properly referred several times to the I.C.F.C., and I believe to the Commonwealth Finance Corporation and other bodies which exist here, and asked why they could not have been adequately reinforced in relation to anything that this Bill is proposing to do. One can look further afield, to Canada. I think the Canadians have a system of what they call Crown companies. They have achieved a great deal of what this Bill is, I suppose, aimed at. I would look in another direction, one which I think is the most effective, looked at from its speed of results—to the Industrial Development Corporation of South Africa, which has already shown the diversity into which legislation of this kind can go without impinging on the private enterprise principle.
I listened with great interest to the speeches which have been made in this debate to-day; it was a rewarding experience because this is a great proposal for the development of industry. I had intended to probe, so that when the noble Lord, Lord Shepherd, comes to reply he could give me some further information. But my noble friend Lord Drumalbyn put forward a series of inquiries for elucidation which I am sure Lord Shepherd will need to take a long time to answer. So pointed and wide-ranging were Lord Drumalbyn's questions that, they left little for anybody else to add.
Lord Drumalbyn said that he hoped that only persuasion would be used to produce mergers. While echoing that broad hope that any other measures should be avoided, I should like to ask Lord Shepherd how Clause 2 of the

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Bill, which appears to indicate that there must be direction from the Secretary of State, would apply to a particular sector of an industry where the fragmentation of small firms prevented any movement which would eliminate competition and lead to the survival of the fittest. This looked like happening in the shipbuilding industry, and it may also happen in other industries. I should like to ask the noble Lord how that problem will be tackled. Is the D.E.A. to have the power, responsibility or authority of indicating to the Industrial Reorganisation Corporation that it should move into such an industry? And, if voluntary action does not work, at what point, and in what way, will the power under this Bill be used to achieve progress? One can readily picture situations in industry where that sort of movement not only would be profitable, but would also be desirable in contributing to the health of the economy of the country as a whole.
One is inclined to compare the proposed powers under this Bill and the way in which they will function with other examples which we have had before us. For example, the Port of London Authority can raise money independently of Government funds; and I recall my own experience in the Central Electricity Board (of which I was a member for seventeen years until the noble Lord, Lord Citrine, empowered by a nationalisation Act, took it over and became its head, and great success attended his direction of it) which achieved a great integration of private firms without resort to Government financial assistance. It operated under the statutory powers of civilian management without Government finance, and I believe that it did a pretty good job and provided a good foundation for what the noble Lord, Lord Citrine, took over.
I hope that examples of this sort will be scrutinised by this Corporation so that it can avoid the grave misgivings voiced by the noble Lord, Lord Shawcross, that this Bill might move towards nationalisation on a larger scale than has occurred hitherto. But certainly in regard to fragmented industries, I believe that there is much room for improvement. My Lords, it is in that spirit that I suspend any misgivings, and
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hope that we shall see a constructive attitude behind this Bill. I therefore give it my support.
6.5 p.m.
LORD ER ROLL OF HALE: My Lords, we have had a most interesting debate this afternoon upon what in another place proved to be a very controversial Bill. The contributions from the noble Lord, Lord Shawcross, and others indicate a fairly substantial measure of support for what is an imaginative and interesting Bill. I had prepared a good deal of material this afternoon on matters which I should have liked to raise, but they have already been covered by earlier speakers. Therefore, as there is another Bill to be discussed to-night, I will be brief; although that does not mean to say that I am not interested in the Bill and would not have said many things about it had they not for the most part been said already.
My first anxiety is how the Corporation can be a profitable Corporation. The noble Lord who introduced the Bill in such an interesting way emphasised that the Corporation was to be profitable over the long-term, not the short-term. But the difficulty which besets the Corporation, as I see it, is that the really profitable, good mergers will take place in any event, assisted, where necessary, by existing institutions. It will always be operating on the margins, on the ones which the existing institutions are not quite prepared to take on and which may or may not be profitable. Or the Corporation may even have to go into an area where mergers are not likely to be profitable but which should be undertaken for some reason other than profit-making.
Much the same problems arose between 1945 and 1951 for two bodies which were set up by the then Labour Government. The first was the Colonial Development Corporation which was faced with exactly the same problem. If there was a profitable development in a Colony, private enterprise took it on. Therefore, the C.D.C. were left with only the doubtful starters, such as the mineral bodies which no mining company thought worth while exploiting, or the hotel project in British Honduras which no hotelier thought worth risking his money on. The result was that the C.D.C. had a very

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shaky time. The other body was the National Research and Development Corporation—again an imaginative scheme which sounded good at the time—a national body set up to take over the great task of exploiting Britain's many unused inventions which were lying mouldering in the files of the Patent Office. It was going to take over inventions developed in Government Departments and so on. It was a great concept, but they had great difficulty, and I think still do, in using up the money which was granted to them because they, too, operate on a very narrow band. All the good inventions are eagerly taken up by industry, and, apart from the inventions of the cranks, there are only a very few which merit the attention of this Corporation.
I feel that the real difficulty which is likely to face the I.R.C. is that of finding groups of firms suitable for merging which will produce a profit in the long run. Furthermore, of course, there will be the danger that the powerful board, in desperation after two or three years at having got rid of only three or four million pounds of public money, may be tempted to take greater risks than they should normally undertake. They will say, "We have not made much progress. We ought to do more. Perhaps we have been too cautious. Perhaps we should go for this merger proposal which a year ago we thought was not likely to be profitable." If they succumb to that kind of temptation, then before long the Corporation will get a bad name, and in a few years' time we shall be having a debate in your Lordships' House to discuss the appalling losses of the Industrial Reorganisation Corporation. I hope that this will not arise. Indeed, I make the point in my speech so that we can all help the Corporation to guard against this danger.
Now I wish to turn to the matter which was mentioned by the noble Lord in opening, when he said that we should not bring emotion into this discussion. My noble friend Lord Drumalbyn touched on that. I hope that if we have a difference of opinion with the Government it will not be dismissed as being emotional. After all, they have done enough to us in the last two years for us to feel very emotional about the Government as a whole. I think we are quite entitled to
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express in strong terms what we feel about Government policies, and particularly about whether or not the Industrial Reorganisation Corporation is to be an instrument for nationalisation.
I know it can be a somewhat esoteric argument, but the point I should like to make is that it is always a one-way traffic. The Government are always taking on a bit more in one way or another: they never relinquish anything. They never put back to private enterprise what they once have held, although there are a number of cases where they could perfectly well do so. That is why we must watch very closely indeed any further extension of State intervention into the field of British industry and commerce.
The intentions of the Labour Government were quite clearly expressed in Signpost to the 'Sixties. With your Lordships' permission, I should like to quote one sentence from it:
"Already we can see public ownership developing in various forms, nationalisation for a whole industry or firm, State participation in industrial companies on a partnership basis, the establishment of State-owned undertakings competing with private firms, municipal enterprise and, finally, co-operative ownership."
The Labour Party are perfectly entitled to hold this as their view. I think that the Industrial Reorganisation Corporation slots very neatly into that sentence which I have just read out. Noble Lords opposite nod in assent. This is what we complain about; this continual encroachment into the field of private industry and commerce, under the thin excuse that such intervention is needed in order to create a greater measure of industrial efficiency.
I have looked at much comment in the Press and elsewhere on the Industrial Reorganisation Corporation. I think it should be realised that, although most noble Lords have this afternoon given a favourable wind to this Bill, there are important elements of industrial opinion which are opposed to it, as I am. I should like to quote what the board of Imperial Chemical Industries had to say when the White Paper came out. This was a very unusual statement. It is rarely that one gets a board of a large public company making a united statement on a matter of Government policy. This was not just Sir Paul Chambers speaking as a public figure in his own

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right; here is the board of Britain's largest public company making a statement as follows:
"Although the Board of I.C.I. have consistently followed a policy of assisting the Government of the day in any measures which might be in the interests of the country, they feel bound to make known their attitude to the proposed Industrial Reorganisation Corporation. In their view, while further rationalisation of some section of British industry is desirable in order to accelerate the rate at which productivity can be increased, the method proposed by the Government is undesirable and will prove to be ineffective. The general tone of the very brief White Paper on this subject and the reference to Exchequer Dividend Capital confirm the impression that the Government Intends to extend its control over industry, to interfere still more with individual initiative, and to further the policy of the public ownership of the means of production which the Government is committed to implement in one form or another."
I will not elaborate on that, but I think your Lordships should know that that is the considered view of the whole board of Britain's largest industrial company.
The noble Lord, Lord Henley, wanted to know why we as a Conservative Party were attacking the Bill so much. Our answer is that it is not because of the way in which the Government say it will be used, but for the way in which it is capable of being used. I was reassured to be told that the Industrial Reorganisation Corporation will use only persuasion. But, of course, persuasion can take many forms. I can quite see the situation arising where there are perhaps five firms which the Corporation wishes to merge, but one chap does not want to be merged. He is doing quite well, he has a good little business exporting its fair share, and giving steady employment to perhaps 200 or 300 work-people. So the Corporation will say to him, "Well, of course, it is going to be very difficult for you if you are the odd man out, because you will be a small man competing against the merged giant. Hadn't you better come along in and join us?" I do not see how the Industrial Reorganisation Corporation can resist that form of coercion, and I think it will be most unfortunate—
LORD HENLEY: My Lords, would not the noble Lord agree that this same state of affairs arises when an ordinary merchant bank produces a scheme of this nature?
LORD ERROLL OF HALE: My Lords, that is usually only a merger between two. It is very rarely—in fact, I cannot think of a case on the spur of the moment—that a merchant bank has successfully produced a merger of five or six companies simultaneously, or of virtually the whole of a particular branch of industry.
LORD SHEPHERD: My Lords, would the noble Lord refresh my memory? Did not the Conservative Party assist rationalisation in the aircraft industry by threats or otherwise, with the possible withdrawal of orders unless there were amalgamations within that industry? True, it was for the national interest, but this was the case, was it not?
LORD ERROLL OF HALE: Yes, my Lords. But there the situation was rather different, because the Government were using their power as the industry's largest customer. There is a very big difference if you are a customer. Undoubtedly, although some mergers take place by what are called "market forces", they are, of course, the combined activities of customers, in buying or withholding their custom from some firms and not from others. It is on quite a different footing from the proposals about the way in which the Industrial Reorganisation Corporation is to act.
I hope very much, therefore, that the Corporation will be scrupulously careful in the way it approaches small firms as well as big ones. The noble Lord. Lord Shawcross, said a great deal about the importance of size, but we must also remember that although there may be many firms in the engineering industry that is because it is a very big industry. There are small firms as well as big ones, and particularly there are those which serve individual localities. I can quite see that for the sake of so-called tidiness, one will get mergers between a number of scattered firms in the country, and the benefit will be that they are bossed by some remote head office of the group. An engineering firm in Gloucester, for example, may be very well placed to supply its customers, and will not stand in any need of being merged with other companies in other parts of the country, even though they are making similar products. So let us not go in too much for

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tidiness, in the belief that marriage for its own sake is necessarily a good thing.
Before I sit down, I should like to deal with the rather unpleasant remark—the only unpleasant remark which the noble Lord, Lord Winterbottom, made in the course of his speech—about my esteemed friend and colleague, Mr. Enoch Powell. Mr. Powell expresses his opinion forcefully and vigorously, but it is sincerely held. At no time in his recent statements has he indulged in what the noble Lord has called "class warfare". I think it is very important that he should remind the country that there are alternative solutions to those proposed by the Government. This is a growing disease, if I may say so, among members of the Government to complain if we venture to differ from them and to suggest alternatives. The noble Lord, Lord Champion, may not have been in the Chamber when we were told that we must not be emotional because we ventured to disagree with the Bill. We intend to be emotional when required, and give notice that we shall do so as often as we wish if we are sufficiently provoked. Having said that, I would say that we will not oppose the Bill on Second Reading, but we will, of course, return to it on Committee stage and hope to introduce some modest improvements.
6.19 p.m.
LORD SHEPHERD: My Lords, may I first of all say to the noble Lord, Lord Erroll of Hale, that if he were a salmon he would not survive very long; because, I must say, of all noble Lords in this House, I have never known any noble Lord to be so quick to rise to the fly which is cast upon the waters. But I am quite sure that this is really due to the noble Lord's desire to enjoy the debates of this House.
This has been to me a most interesting debate, although I must confess not an easy one to wind up on Second Reading. Many of the points should perhaps be explored in detail in Committee. May I say, particularly, to the noble Lord, Lord Shawcross, that I enjoyed his speech, and I agreed with a great deal of it. I think it was the noble Lord, Lord Conesford, who the other day accused me of generalising. I thought that the noble Lord, Lord Shawcross, was falling into that trap when speaking so freely and so warmly of the free enterprise
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system, as though the tree enterprise system is one of all virtue and no vice, and as though we who sit on these Benches, and perhaps loosely describe ourselves as Socialists, have no virtue. I think that we can all fall into the trap of generalising. I wish the free enterprise system had all the virtues which the noble Lord, Lord Shawcross, now believes it to have. In a few days' time we shall be debating the problems of redeployment and the problems of retraining, and I hope the noble Lord, Lord Shawcross, will be here, because this subject provides, perhaps, one of the best examples, of the failure of free enterprise—the failure to nurture and develop what is one of our greatest assets, the use of our manpower. But at this late hour I do not wish to go on debating the virtues of one system or the other characteristics of the other.
May I say to the noble Lord, Lord Shawcross, and to the noble Lord, Lord Aldington, in regard to their criticism about the loose drafting of this Bill, that that has been done for a purpose? We felt that the Corporation should have as wide an authorisation as possible. I well remember how, when we were in Opposition (the noble Lord, Lord Drumalbyn, in particular, will remember this), we moved Amendments to a number of Bills, which the noble Lord, Lord Drumalbyn, had in his charge on behalf of the Conservative Government, so as to try to lay down the duties of certain Boards. He was right—although we did not necessarily agree with him at the time—when he said then that when you try to lay down a duty the problem is how you define it. Do you put it in such a wide way that all the possible requirements are in the Bill? I will read very carefully the suggestion of the noble Lord, Lord Aldington, as to a proposed Amendment. I should be very happy to discuss it with him, as would the Department, because if he wishes to improve the quality of this Bill then I am with him 100 per cent. But I think we must watch very carefully that we do not put constraint upon this Corporation.
In reply to the noble Lord, Lord Shawcross, in regard to tenure of office and his fear that members of this Corporation might be dismissed by the Secretary of State if he disapproved of their actions, I would point out that the

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specific grounds under which the Minister can dismiss a member of the Corporation are laid down in the Schedule. The noble Lord was quite right in saying that there is no period of office mentioned. I understand that one of the difficulties here is that members of this Corporation may wish to serve for varying periods of time. I have no idea how long the chairman himself wishes to serve as chairman of this Corporation; or, indeed, any of the other distinguished members of it. I understand that the view of the Government at the present moment is that there should be a period of three to five years; but I think one must try to leave it to the discretion of the chairman of the Corporation and the Secretary of State to say what the period should be. Whether we can give the protection the noble Lord has in mind is a matter which I shall certainly consider with my right honourable friend.
I would certainly agree with the noble Lord, Lord Shawcross, about bigness of industry. Bigness is not always a sign of efficiency, nor do small companies necessarily have less to contribute. But, unlike the noble Lord, Lord Shawcross, I came from business into politics, and, as the noble Lord, Lord Barnby, knows—I have spoken to him many times about the industry in which he is particularly concerned—I am quite sure from my own experience of selling overseas that if there had been amalgamations, mergers, between companies in the wool industry their position in many markets would have been infinitely stronger, not merely on the grounds of production but through their ability to carry out research, and even in the designing of materials and colours.
On Lord Aldington's point about the Corporation's accountability to Parliament, may I say that clearly its report could be a subject for debate. It is a report that will have to be published within four months from the end of the accounting period. Moreover, the Minister himself will be responsible to Parliament for any instructions or directions that he may give to the Corporation; and certainly I should have thought that the occasions when the Minister or the Treasury are making funds available to the Corporation would provide opportunities for accountability through the
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Estimates Committee of the House of Commons. But I will see that the noble Lord has a fuller reply on this point.
I would assure the noble Lord, Lord Aldington, that the Government and the Minister do not intend to interfere with the everyday running of the Corporation. In fact, it must be taken of great significance that although, under Clause 2(1)(b), the Secretary of State may request the Corporation to undertake an enterprise, the Corporation is not obliged to carry out that request. Subsection (1) says the Corporation "may" do it. Furthermore, the words in subsection (4) are, "of a general character". To those who fear that the Secretary of State might instruct the Corporation to nationalise a particular industry, I would say that I do not think that such an instruction would come within the phrase, "of a general character". I am quite sure that the fears of those noble Lords who are afraid that this Corporation will be used for the nationalisation of one company or of a number of companies are entirely unfounded.
I was very grateful to the noble Lord, Lord Henley, for his support, and for his quotation from the comments and views of a very distinguished member of the Conservative Party—and I hope the noble Lord, Lord Drumalbyn, will take note of them. There are times, as the noble Lord, Lord Henley, knows, when the Conservatives do come up with good ideas. One of their greatest failures, I think, is the implementation of such ideas—and this is perhaps one of the matters which we shall be able to discuss when we come to debate retraining and, in particular, the Carr Report, which was issued in 1958 but the legislation on which we did not get until 1963.
LORD DRUMALBYN: Who blocked that?
LORD SHEPHERD: We shall be able to debate that in a short time.
My Lords, I listened very carefully to the noble Lord, Lord Barnby. He, again, I think, was interested in the power of direction by the Minister and the use of public and private funds. In its promotion of mergers this Corporation will not necessarily be using public funds. As I said in a debate some time ago, when we were discussing the proposal to set up

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this Corporation it may well be that mergers could be brought about through the initiative of the Corporation, although any capital needed would be provided by the merchant banks, or even by other market institutions. Indeed, in some cases the guarantees which this Corporation will be able to give will ensure that private money becomes available for a proposed merger. There may be occasions when public funds will also be of benefit to companies, but it will be for the Corporation to decide how best to bring about mergers.
I think it was the noble Lord, Lord Drumalbyn, who used the terms "marriage broker" and "mother-in-law", in the sense that the Corporation will arrange the marriage and will then find out how best to make the marriage a success. Clearly, the Corporation's task will be to bring about a merger, but there are various problems involved in mergers, or, perhaps, reasons why a merger needs to take place. One has merely to look at Clause 2(2)(d), in regard to the supply of plant and equipment—and I am thinking here particularly of engineering industries; those industries which prefabricate and carry a considerable quantity of spare parts. Here you would have an amalgamation of two or three companies into quite a large organisation. Clearly, a computer would be of great value for stocktaking, processing, and anticipating sales developments and the like. It might be that in that amalgamation initially there would not be sufficient funds, and the Corporation might help by providing a computer.
There is another point—and I hope the House will not think that this is wrong. It might be that in an amalgamation the I.R.C., by supplying particular equipment, would be able to help other industries that are producing new forms of equipment, such as computers. This could be a two-edged way of assisting industry.
LORD DRUMALBYN: My Lords, I am not clear about this. Could the noble Lord explain what are the advantages of supplying machinery, rather than supplying money to buy the machinery? The only advantage that I can see would be if a stock of materials and plant were held and an entirely new kind of leasing business were entered into.
LORD SHEPHERD: My Lords, the noble Lord is quite right. It might be advantageous to the merger that money should be provided—and money can be provided. On the other hand, it might be that the firms concerned would prefer to receive equipment, either on loan, on rental or on lease. So the Corporation has this flexibility to assist in a particular merger in whatever is the most suitable way.
May I say to the noble Lord, Lord Drumalbyn, that I thought much of his speech had a familiar ring; it was very much like a speech that was made in another place. I am sorry he was not satisfied with the answers that my right honourable friend gave, and I hope I can go some way to satisfying him. I will not say that I can go all the way, because he put his questions so quickly that I was not able to take a note of them all. But I will see that the noble Lord receives replies, either this evening or by letter. The main fear of the noble Lord was with regard to information. He thought that the Corporation might be in a privileged situation; that it could obtain information from Government Departments. I think he had in mind the Statistics of Trade Act. I would assure the noble Lord that this Corporation will be no more in a privileged position than any other commercial organisation in this country. I think those words will be sufficient to cover all the various questions he asked in regard to information. The Corporation will be in no special privileged position.
The noble Lord went on to ask whether, in the case of bringing about a merger, the Board would have to obtain approval from the Board of Trade in regard to the Monopolies and Mergers Act. This was the point the noble Lord, Lord Hawke, made. The noble Lord will remember that the Monopolies and Mergers Act defines a monopoly situation as that which obtains when a company or a group of companies provides 33⅓ per cent. of the home market.
LORD DRUMALBYN: Or where the merger will result in its doing so.
LORD SHEPHERD: Yes, my Lords, the noble Lord is correct. It is when the merger will result in that situation. As I understand it, under the Act ordinary companies who wish to undertake a

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merger may consult with the Board of Trade. It is true that the advice that the Board of Trade may give may not be 100 per cent. binding and that the merger may still be referred to the Monopolies Commission, but, in practice, I think the advice of the Board of Trade would be such that a company could decide whether to go on with the merger or not. As I understand it, the I.R.C. would be very much in a similar position. It is clear, when you look at the requirements of Clause 2(1), that the Board would be in close consultation with the Board of Trade on any possible mergers and that advice would be sought. I do not expect this Corporation to undertake or permit or encourage a merger which is clearly contrary to the public interest.
LORD SHAWCROSS: My Lords, is the noble Lord quite right in what he said about monopolies legislation. Is not the position this: that the noble Lord's own Government introduced legislation making it possible for the Board of Trade to refer to the Monopolies Commission any merger involving a joint capital of over £5 million? There is no question of having two-thirds of the market in that provision. Of course, these matters go to the Monopolies Commission only on reference by the President of the Board of Trade, and presumably there would be discussions before any such mergers were arranged.
LORD SHEPHERD: My Lords, I am grateful to the noble Lord. He is quite correct in terms of the £5 million capital.
LORD DRUMALBYN: My Lords, is the noble Lord certain that the noble Lord, Lord Shawcross, is correct? Is it not £5 million worth of assets taken over, and not that the joint assets will amount to £5 million?
LORD SHEPHERD: My Lords, this is one of the occasions when my carrier pigeon has not come to my assistance. I will look into it. I was under the impression that it was 33⅓ per cent. of the market; the noble Lord, Lord Shawcross, thinks it is a joint capital of £5 million. I will look into it and write to the noble Lord.
LORD ERROLL OF HALE: My Lords, we should all like to know.
LORD SHEPHERD: My Lords, the matter will be raised in Committee.
In regard to Clause 1(6), the noble Lord wanted to explore the situation of the status of the Corporation. It is clearly not protected by Crown status. Subsection (6) makes it perfectly clear that this Corporation will remain in the same category as any other merchant bank or, to use the phrase used by the noble Lord, Lord Henley, any super-merchant bank.
I should like to take up one point with the noble Lord, Lord Erroll of Hale, in regard to profitability. The Government hope that this Corporation will be profitable, that it will earn, particularly from equity capital, a reasonable and fair return on the money invested; but I do not think we should judge this Corporation only on its profitability in terms of profit on capital. I see it very much as the servant of industry. I think we shall have to judge it in the years to come in relation to the mergers that have taken place and the results of those mergers. I do not take quite the view of the noble Lord, Lord Erroll of Hale, that only broken-down organisations are likely to be affected by this Corporation and that virile companies will go to the private merchant banks. I know, from my own commercial experience, of a number of very good companies that could well be merged but for difficulties in the way of finance. I believe that the noble Lord, Lord Erroll of Hale, was right in one regard: that we must be patient in seeing the operation of this Corporation. I hope we shall be able to judge its success not only on the profit it earns for the community but also, and above all, on the effect it has on the structure of industry.
My Lords, I am quite sure that I have not answered all of the questions of the noble Lord, Lord Drumalbyn; but I will see that he is supplied with answers to them; particularly as I hope the House will agree that we should take the Committee stage of this Bill on Thursday, December 8. That is only about a week from now; but, as my noble friend Lord Winterbottom said, the members of the Corporation though it is not yet formerly established, have been undertaking some work; there have been a number of very important inquiries. I

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am quite sure that the noble Lord, Lord Aldington, as a merchant banker will agree with me that some mergers, if they are delayed, may well be lost. Therefore, I think there would be considerable advantage, not only to this House but also to industry and to the country, if we could try to have this organisation in existence by the New Year.
LORD ALDINGTON: My Lords, may I interrupt the noble Lord to ask whether it is absolutely essential that we have the Committee stage on Thursday next? The noble Lord has kindly asked me to have consultations with him, which I propose to do, but the time is short in which to get the consultations over—presumably they will not start until Monday or Tuesday—and then get something on to the paper which we can discuss on Thursday. It seems very quick when we are dealing with a major problem.
LORD SHEPHERD: My Lords, I have had consultations. I did not realise there was any particular difficulty, but I will certainly have a conversation with the noble Lord, Lord Aldington, to see what can be arranged with regard to business. At the same time, I hope that the noble Lord takes my point about the need to try to ensure that this Bill receives the Royal Assent by Christmas, recognising also that if the noble Lord is successful in amending the Bill there will be need to send it back to another place for approval. But we can look again at the timetable.
LORD ALDINGTON: They will agree with it automatically.
LORD DRUMALBYN: My Lords, there seems to be rather a vital question at issue here. If I understand him aright, the noble Lord, Lord Shepherd, is saying that there are some possible mergers which might fail unless this legislation is enacted. If no public money is involved there is nothing to prevent those mergers from going on whether or not the Corporation has a legal status. On the other hand, if public money is being pledged now, without any Act of Parliament, is this constitutionally correct?
LORD SHEPHERD: My Lords, I have not said anything of the sort I said there have been a number of inquiries, which means that there are organisations
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which are interested and which would like to merge and receive assistance from the Corporation within the terms of this Bill, when it becomes an Act. There is no impropriety here at all. What I said was that if there is delay there is always the possibility that possible mergers may fail. Therefore, I am very anxious to see this Bill on the Statute Book by Christmas. But I certainly will do my best to see that all opportunities for discussion are provided between now and the Committee stage. I will always be available to any noble Lord who wishes to see me or to see the Department concerned. With those rather inadequate remarks, I hope that your Lordships will give this Bill a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

NATIONAL COAL BOARD (ADDITIONAL POWERS) BILL
6.42 p.m.
Order of the Day for the Second Reading read.
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE, HOME OFFICE, (LORD STONHAM): My Lords, I beg to move that this Bill be now read a second time. This simple Bill deals with one aspect of an exciting national prospect. Its purpose is to increase the nation's participation in the fruits of United Kingdom territorial waters, and the United Kingdom's share of the Continental Shelf, by enabling the National Coal Board to search there for oil and gas. Before dealing with the provisions of the Bill, I would sketch in briefly the background of development in the search for oil and gas off our shores.
The 25 companies or groups who hold licences to explore there are spending over £100 million on initial exploration work alone. Thirty-one wells have been drilled, there are now 10 drilling rigs at work, and soon there will be 12. It gives me great pleasure to announce that so far six potentially commercial gas fields have been discovered. This is a great achievement for the beginning of the search, and we hope that it will continue as a success story. Oil has also been found in one well, and although it is not yet known whether there is enough for commercial exploitation, it is certainly encouraging.

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No one yet knows the extent of the resources in the North Sea because many more appraisal wells must be sunk to establish the full extent of the fields already found and many "wildcat" wells will be required to probe for other fields. One pipe-line has already been laid on the sea bed from B.P.'s gas discovery 42 miles East of the Humber to a point North of the Humber at Easington. Gas should begin to flow through this pipe in the early months of next year. More pipe-lines are planned. Starting next year gas supplies are expected to build up, until by 1970 we confidently expect to be getting from the North Sea at least 1,000 million cubic feet a day. This is approximately equal to all the town gas now being supplied in the whole of Britain. In terms of heat value it is equivalent to about 13 million tons of coal a year.
In the Government's view it is right and proper to let our own fuel industries compete on equal terms with existing Continental Shelf operators both British and foreign. The Gas Council are already participating, and we propose to put the National Coal Board in the same position. In this way we can increase national participation without the State itself joining directly in the enterprise, and without creating any new organisation. We recognise, of course, that this is sensible only if the National Coal Board can take on this new responsibility without detriment to its present important function of supplying coal. My right honourable friend the Minister of Power has been assured that the Board can do this.
The British subsidiaries of two large American companies, Gulf Oil and Allied Chemical, have given the National Coal Board options to join them in their licences. To take up these options, as the Board and the Government wish, the Board needs the additional powers provided in the Bill.
The extent of the powers to be given to the National Coal Board has required careful thought. The Government have 'wished to give proper scope for the Board to conduct a successful commercial enterprise, while limiting it to the search for oil and gas and activities directly connected therewith. A point to which I would particularly invite your Lordships' attention is that the powers pro-
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posed to be given to the National Coal Board by the Bill do not include those of refining the crude oil or gas, of distributing petroleum products, or of making petrochemicals. The Board is to be empowered only to search, bore for, and get, oil and gas in the sea bed and subsoil of our territorial waters and our share of the Continental Shelf; to make the oil or gas saleable in its crude form, and to sell it.
The Board will be able to operate in partnership or alone. It will also be able to operate in relation to any international agreement for the joint exploitation of fields extending across the international boundaries of the Continental Shelf, so that it may secure its full share of the oil or gas in the areas in which it is licensed. While precluded from refining, petroleum distribution and petrochemical manufacturing, the Board will be able to use any oil or gas got under this Bill in works or installations it already operates under its main powers contained in the Coal Industry Nationalisation Act 1946.
Under the Coal Industry Act 1949, the Board is prohibited from operating outside Great Britain, unless with the Minister of Power's consent. A similar restriction is contained in this Bill, with the result that any oil or gas got under the proposed powers may not be treated or disposed of other than at the well head, or in Great Britain, unless the Minister makes an Order authorising it to be done elsewhere. Such an Order, if made, would require the approval of Parliament. In using or supplying any natural gas found, the Board will be governed, as are all other North Sea operators, by the somewhat complex provisions of Section 9 of the Continental Shelf Act 1964. Thus it will need the Minister of Power's consent to sell the gas other than to a Gas Board, or to use the gas itself. I am bound to say that under this section the Minister has to give his consent to the supply or use of gas for industrial purposes as set out in subsection (4).
The activities of the Board under the Bill will be governed by licences on the same model as those which bind all other operators in the United Kingdom part of the Continental Shelf. In addition, the Board will operate under the general provisions of the Coal Industry Acts.

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Thus the Board will be required to settle the lines of expenditure on capital account with the Minister from time to time, and any borrowings by the Board must be within the statutory limits on borrowings which are at present laid down by the Coal Industry Act 1965. The Minister has power to direct the form in which the Board's accounts shall be kept, and as the Board's activities under this Bill will be regarded as a main ancillary activity, the Board will distinguish them separately in its annual accounts. The House can be assured that there will be a full disclosure, in the Board's accounts, of the money it invests in oil and gas activities and the return it receives.
Your Lordships are entitled to ask what the scale of expenditure by the Board on these activities is likely to be, but as the House will appreciate, financial plans can be made only when the Board has the powers sought under the Bill and can negotiate with its partners. Purely as an indication of the expenditure on exploration over the first few years, my right honourable friend the Minister of Power has given a figure of not more than £6 million. If, as we hope, the Board and their partners are successful in finding oil or gas, expenditure by the Board on development could substantially exceed this figure.
Coming to the provisions of the Bill, I feel that there is little that I need add about the provisions of what is virtually a one clause Bill. The clause is an addition to the National Coal Board's existing powers to enable it to search for, and bore for, natural gas and oil; to make such products saleable and to sell them; provided that it cannot sell overseas without the agreement of the Minister. Any borrowings necessitated by the exercise of these powers will be governed by the Coal Industry Act 1965, and are subject to the overall limit on all the Board's borrowings set out in that Act. This is a small but important Bill, likely to increase the benefit to the nation of the treasure lying hidden in the sea around our shores, and it is in that belief that I commend it to your Lordships. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Stonham.)
6.54 p.m.
EARL FERRERS: My Lords, we are grateful to the noble Lord, Lord Stonham, for introducing this Bill and for explaining its purpose to us. As I see it, the Bill has two great merits: it is short, and one can understand it. Therefore I have no hesitation in wholly commending it to your Lordships—on those two grounds only. I wish that my enthusiasm for the way in which it was drafted could be matched by enthusiasm for its contents, but there are one or two drawbacks of a major nature to which I should like to draw the attention of your Lordships. I listened carefully to the noble Lord's justification of the Bill, and from what he said one might consider that it was a perfectly innocuous Bill. But what in fact does it do? The noble Lord explained that its sole purpose was to allow the Coal Board to drill for oil and gas in the North Sea. This poses a whole posse of questions, such as: should a nationalised industry drill for oil and gas? If so, should the nationalised industry be the Coal Board? And if so, why?
The drilling which has been done in the North Sea and the strikes which have been obtained are thrilling and stimulating to everyone. It opens up the whole possibility of finding cheaper gas over the next decades, far cheaper than from the fuels which we have had to use. This is wholly good, and one would like to see much—and more—British participation in this. The noble Lord argued forcibly that the Bill offers just that. It can be argued that outside the Civil Service the National Coal Board is the biggest employer of labour, second only to General Motors. In terms of assets, it is the third largest concern outside the United States. In terms of sales, it is the third largest outside the United States. This may probably put it in a good position to enter the gas prospecting field. But is this so?
The Coal Board was set up in 1946 for one specific purpose, which was to take over the coal mines, run them and sell the coal which they produced. If we look at the Coal Industry Act 1946, we see in the very first paragraph that its purpose is the "working and mining of coal", "to secure the efficient development of the coal mining industry","to make supplies of coal available", "to search and bore for coal". It was set

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up not to run the railways or atomic energy or, indeed, to prospect for gas. This is a wholly different purpose from that for which the Coal Board was set up.
LORD PARGITER: My Lords, may I suggest to the noble Earl that we live in a changing world. Because the Coal Board was set up for a certain purpose in connection with the securing of coal, must it be tied to that purpose for all time?
EARL FERRERS: My Lords, that, with respect, is what the Act says.
LORD PARGITER: My Lords, I said that we are living in changing times. No one envisaged at the time of the Act—or did they'?—the drilling of the North Sea for oil.
EARL FERRERS: My Lords, I dare say they did not. If this is to be an extension of nationalisation, we should be told so. Because this Bill is really introducing the nationalisation of oil drilling. That may be a suitable thing to do, but let us be perfectly clear that this is what is happening. My noble friend Lord Erroll of Hale said in the debate on the last Bill, "We must watch closely for any further State intervention in industry". And that is what is being done by this Bill. It could well be argued that it is desirable for more British participation in the oil drilling industry, but, if that is so, why do the Government choose the Coal Board. Would not the drilling for gas be better done by the Gas Council? After all, the Gas Council is concerned in the manufacture of gas and in the economics of gas extraction; it is concerned with the economics of natural gas versus manufactured gas. It was set up to deal with gas. It must know more about gas than the Coal Board. It is facing increasing demands for gas and is confronted with an enormous potential of raw material on its doorstep, but yet, for some reason, the Government choose to allow the Coal Board to do this drilling. One wonders why.
I have come to a number of conclusions, and one of them is that in all probability this is an attempt to shore up the finances of the Coal Board, because, let us face it, the coal industry is a shrinking industry. This is a fact which I think the noble Lord, Lord Blyton, at
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least, would not like to acknowledge; but, nevertheless, it is a fact. This does not mean to say that it is a defunct industry, because it is not; but it is a shrinking industry. When one looks back to the post-war years and thinks of how we could not get enough coal, it seems almost ironical that nowadays we are producing less and requiring less. About ten years ago we were producing something like 223 million tons of coal a year, and this year we are down to 170 or 175 million tons.
The Coal Board are seized of this situation and are trying, like a prudent business organisation, to diversify their assets and diversify their interests. It may be prudent for a public company operating on commercial terms with private money to diversify its interests, but I question whether it is prudent for a nationalised undertaking, operating with public money obtained at cut-price rates, which has just had £415 million written off, has been allowed to increase its borrowing up to £700 million, and has, at the same time, had its worst financial year since its inception, making a loss of £24.8 million.
But this is, of course, stated Coal Board policy. Indeed, the noble Lord, Lord Robens of Woldingham, says in Coal News:
"The whole object of our diversification is to defend the vast investment back at the pits. We are not branching out into any business which does not clearly serve this end."
I am bound to say that I fail to see how investing in the gas business and stimulating the development of a rival fuel is defending the vast investments back at the pits. But in order to find out how this is defending this investment we have to look a little further into the Coal Board's perambulations, and we look into some of the other ways in which the Coal Board have made investments. I wonder whether many noble Lords would know that the Coal Board have, for instance, a vast stake in Barcross Ltd., or the British Creosote Company Ltd., or Pitch Polymer Products Ltd.; whether, indeed, many people are aware that the Coal Board even owns shares in a firm called Farm Way Ltd., which used to be the Northern Farmers' Trading Association. This seems to be an extraordinary firm for the Coal Board to invest in.
Indeed, how many people would know that the Whittlesea Central Brick Company is owned 90 per cent. by the Coal

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Board, with an investment of nearly £2 million; and J. H. Sankey is owned 60 per cent. by the Coal Board, with an investment of something like £1 million. Of course, the argument goes that Sankey's, for instance, make boilers; boilers use coal, and therefore it is a good idea that Sankey's and the Coal Board should join up. But if you look into that further, you find that Sankey's are not just boiler builders; they are building material manufacturers who manufacture a great range of things like plaster board, and I think baths and flush lavatories, which are far removed from anything to do with coal.
Then there are other companies which the Coal Board have taken and absorbed into their subsidiaries. So gradually the Coal Board have been putting out their fingers further and further into industry. One of the companies in which the Coal Board are interested—and I would stress that this is germane to this Bill—is a company called Staveley Chemicals. This is a harmless enough sounding name, and in fact it is a company which was set up jointly by the Coal Board and Stewart & Lloyds in June, 1965. So when Stewart & Lloyds become nationalised this will be a wholly nationally owned company. If one looks at the memorandum of association of Staveley Chemicals Ltd., one sees that the company has very wide powers indeed—powers far wider, I might say, than the Coal Board have. They are allowed:
"To manufacture, prepare and sell chemicals and chemical products and to treat, refine, process and deal in all such substances and to buy, sell, export, import and deal in all substances, apparatus and things capable of being used in such business as aforesaid."
They are allowed:
"To manufacture, buy, sell, improve, repair, alter, prepare for market, treat, and deal in all kinds of plant machinery, implements, tools, utensils, apparatus, hardware, rolling stock, materials, products, fittings, appliances, substances, articles and things necessary or required in, or useful, or capable of being used, in any of the above specified businesses, or in connection therewith, or usually dealt in by persons engaged therein.
"To carry on any other businesses, whether manufacturing or otherwise, which may seem to the Company capable of being conveniently carried on in connection with any of the above-specified objects, or calculated directly or indirectly to enhance the value of or render profitable any of the Company's property or rights."
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And so it goes on.
As I say, this Company has very wide powers indeed. But, according to the Coal Board's report of 1965–66, the company is being set up to make benzene and cyclo-hexane. Cyclo-hexane is a derivative of benzene and is used as a raw material in the production of nylon. Benzene comes from benzole, which in turn comes from coal, and so we get back eventually to the slender link with the Coal Board. It would be a perfectly valid argument, which I do not propose to pursue this evening, to discuss whether the Coal Board should be allowed to enter the field of petro-chemical business, even when the chemicals so derived are coal-based. But the memorandum of association of Staveley Chemicals gives the Company wide powers for the manufacture of any chemicals, even those from gas.
Your Lordships know that all the drilling in the North Sea is guided, constructed and legalised by the Continental Shelf Act, 1964. Under Section 9(2) of the Continental Shelf Act the holder of the licence may not use the gas which he produces in Great Britain without the consent of the Minister. Anyone who drills for gas may not use this gas in Great Britain without the Minister's consent. But the holder of a licence may apply for consent if the gas is to be used
"for a process in which the gas is used otherwise than as a fuel."
So if you are going to use it in that way, you may apply for a licence to the Minister; and in this case, the Minister, under subsection (3), shall give his consent. Your Lordships will note that it is not "may" give his consent, but "shall"; he has no option. Then subsection (5) of Section 9 states that:
"For the purposes of this section gas provided by a company for the use of any subsidiary or holding company thereof, or of any subsidiary of such a holding company shall be deemed to be used by that company."
LORD STONHAM: My Lords, may I interrupt the noble Earl? I think he should add that when the Minister has given his consent he does not discriminate between whether the owner or user of the gas is a public undertaking or a private enterprise undertaking.
EARL FERRERS: No, my Lords; the noble Lord must contain himself a little longer. I am aware of that, but the

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point is that under this Bill as it is now drafted the National Coal Board may drill for gas and may subsequently pass the gas to its own company of Staveley Chemicals, which may in turn produce petro-chemicals. In other words the State, under the ægis of the National Coal Board, is entering the field of oil drilling and the field of the petro-chemico business in direct competition with private industry. Again, this may be desirable. We on this side of the House do not think it necessarily is, but let us be perfectly clear that this is what the Bill is doing, and therefore it is not quite so innocuous as the noble Lord, Lord Stonham, made out when he made his opening speech. It is an extension of the nationalised industries into the field of oil drilling and chemical manufacturing, and the great difference between this and private enterprise is, of course, that this is to be financed out of public money borrowed at advantageous rates for purposes wholly different from that for which it is going to be used.
In my opinion, the National Coal Board is hugely involved financially in the coal industry. It has a tremendous operation of closing down many pits, rehousing miners, retraining them, re-placing them. This is a vast undertaking economically, socially and politically and it seems to me that the National Coal Board has enough on its plate without going into this new and differing sphere.
When the Bill was in another place the Parliamentary Secretary to the Minister of Power said, when the Opposition were objecting to this, that they were looking for lions under the bed. I thought this was rather a graphic description, but of course the Minister was quite right; we were, and I think we found some. It is sometimes necessary to look under the bed to see what is there, and I think in this Bill there is a lion sitting there and I hope we have been able to pull him out a bit. Naturally, we do not intend to divide the House on this Bill, but I cannot pretend that we can give it quite the blessing that the noble Lord would like us to give it.
7.13 p.m.
LORD AUCKLAND: My Lords, like my noble friend I have a good many misgivings about this small measure. First of all, I should like to ask the noble
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Lord, Lord Stonham, how many personnel are expected to be employed in this operation, which has far-reaching implications, and added to that it is going to need a considerable amount of training which will presumably be financed with public money, so that the cost to the Exchequer will be a good deal larger than is implied in the Bill.
I should also like to ask the noble Lord (and I apologise for not giving notice of the question) whether there have been any consultations with the oil companies, such as B.P., regarding these operations, because presumably the oil companies have sunk a good deal of private capital into this project, and I do not know what the legal position here is regarding compensation for any work which may be taken from them.
I agree with my noble friend Lord Ferrers when he says that the National Coal Board is already very much committed, as it is; one reads of the problems at Bevercotes colliery. I am the last person to run down the National Coal Board which under the noble Lord, Lord Robens of Woldingham, has been doing a very good job; but so much remains to be done within its own industry. For these reasons, while we would hesitate to divide the House on Second Reading a good deal more examination of the Bill will be necessary during its further stages.
7.15 p.m.
LORD STONHAM: My Lords, perhaps, with your Lordships' permission, I may reply briefly. The noble Earl, Lord Ferrers, spoke about discovering lions under the bed. If he discovered them I do not think he really produced them. He raised my hopes when he started off by highly commending the Bill, but then dashed them by expressing extreme displeasure and unhappiness throughout his speech. That was the very reverse of the mongrel at the dog show, who, of course, was not highly commended but highly delighted; and I should have preferred it that way.
I expected the noble Earl in his very interesting speech, to discuss the Bill, but almost the whole of his remarks were devoted to what I feel is the exploitation of a deep-seated difference of opinion in these matters which exists between the Government and the Opposition. The noble Earl asked: should nationalised

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industries drill for oil and gas? If so, should it be the National Coal Board? If so, why? He said he would like to see more British participation. How much more British could you have your participation than to have the National Coal Board participating, which has ancillary undertakings but which in the main exists to exploit Britain's one major indigenous mineral? It could hardly be more British than that.
With regard to the nation benefiting, in what more direct way can the nation as a whole, meaning the people of this country, benefit than if the exploitation of this discovery is in the hands, in large measure, of a national, publicly-owned undertaking? I put this forward with some diffidence, but it seemed to me, as I listened to the noble Earl, Lord Ferrers, to be more and more clear that his fundamental objection to this Bill and to the acquisition by the National Coal Board of a share in these two licences is that it will limit the possible area for private profit. If that is the main objection, it leaves me quite unmoved. In fact, I and the Government rejoice in the possibility that the British participation in this enterprise should have a greater percentage of public ownership through the National Coal Board than would have been the case if they had not been offered these two licences and if we did not have this Bill. And before the noble Lord, Lord Auckland, considers opposing the Bill to the extent of rejecting it, I hope, since I agree with him so much on many matters, that he will search his heart on this particular point.
LORD AUCKLAND: My Lords, may I assure the noble Lord, Lord Stonham, that I have no intention of opposing it; I was merely stating the reservations which I have regarding it. I would certainly not advise a Second Reading Division.
LORD STONHAM: I am very glad to hear that; it was a misunderstanding of what I heard the noble Lord say about opposing the Second Reading, but obviously that was not his intention. The noble Earl, Lord Ferrers, asked me why the Gas Council were not to be the people concerned. He must surely be aware that the Gas Council are already very much concerned in this field, and in fact—
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again I rejoice in this—the three fields in which the Gas Council are participating and have a share are so far likely to be the three most productive ones of all. I should hope that if these two also turn out extremely well the noble Earl will rejoice with me, because it is something for the British people.
EARL FERRERS: My Lords, may I interrupt the noble Lord for one moment and ask him to explain, if the Coal Board is going to do so well out of this, to whom it is going to sell its gas? Is it going to "milk" the Gas Council?
LORD STONHAM: The noble Earl must be aware that the Coal Board, for other than the uses for its industries to which he has referred, must offer it to the Gas Council.
EARL FERRERS: In other words, make the Gas Council help to pay for the business of the Coal Board.
LORD STONHAM: If the noble Earl is not aware he ought to be that in this matter, whether these wells are explored by private enterprise or by public money, there must be an agreement, which the Minister must approve, about a reasonable price. There is no question of exploitation, as the noble Earl ought to be aware, because his noble friend Lord Erroll of Hale made the original arrangement, and it is a very good arrangement. I think it is a good arrangement, even if it was made by a Conservative Minister. After all, one gets very few opportunities to praise the Opposition, and I think one should do so whenever possible.
EARL FERRERS: It was opposed by noble Lords opposite when they were in Opposition.
LORD STONHAM: Not completely, and certainly not in this House. Part of that arrangement is that the State gets a 12; per cent. royalty on the proceeds of all these wells or boreholes, whoever owns them, and after six years 50 per cent. of the enterprise reverts to the State anyway. So that basically, in the arrangement made originally by the noble Lord, Lord Erroll of Hale, when he was Minister, he, too, felt that although it was right in the first instance to have diversification of enterprise, public and private, everybody having a fair opportunity to

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apply for licences, in the end if this thing was going to do well the State should profit.
The noble Earl asked me why the Coal Board got this opportunity. The answer is, simply because it was offered to them by two commercial firms, doubtless because it suited them, just as it suited the Coal Board. I should have thought that a very happy amalgam of interests. Then he spoke about the Coal Board's diversification—and I congratulate him on his research, which I shall read again with the greatest of interest and I am sure approval; in fact, my approval was growing the more he went on.
But there is some inconsistency, because where he was talking about a firm named Sankey, which manufactured everything from the kitchen stove to "what-have-you", obviously that was good because it was enterprising. But I cannot understand why the noble Earl thinks that when the Coal Board diversifies it is not in the national interest. The noble Earl said he could not see why the Board should concern itself with gas, when its main job was to get coal. But I should have thought the connection was obvious: because so much coal is used for the production of gas, and all coal for the production of heat and energy. So the connection is a very direct one. With regard to the Gas Council, they will be very fully occupied in this matter, and I am quite certain that, although, as I understand it, the options were not offered to them they have no kind of objection to the Coal Board's taking part in this way.
The noble Lord, Lord Auckland asked me two questions; first, what would be
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the number of personnel employed. I am sorry to say I cannot give him that figure, not because it is not immediately available but because so far it is not possible to make an estimate; and in any case, as I said in my opening speech, the Coal Board itself cannot get down to the final negotiations until after this Bill is on the Statute Book. The noble Lord asked whether there had been consultations with other companies, such as B.P. Everybody had a chance to apply for a licence and to have apportionment of an area of exploration, and the two companies, Allied Chemical and Gulf Oil, were two of the successful applicants. They have decided that they would like to have the participation of the National Coal Board. So that the question of consulting B.P. or some other enterprise does not arise. All companies had the same chance; and, subject to their skill, efficiency and enterprise, I hope, that they will have the same good luck.
My Lords, this is, in total, one of the most exciting economic discoveries, I think, of our lifetime, at least in or around our own country; and this Bill will provide that a great industry, headed by a great public corporation, will increase its prosperity—or, shall we say, in view of the losses that were mentioned, get nearer to viability. And, despite what the noble Earl said, it is still a great industry and will be for many years to come. I hope that, despite your criticisms, and the misgivings that have been expressed, your Lordships will welcome this Bill and give it a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.