HL Deb 12 July 1966 vol 276 cc78-109

3.7 p.m.

Order of the Day for the Second Reading read.

LORD HILTON OF UPTON

My Lords, I beg to move that the Bill be read a second time. Your Lordships will recall that reference was made to a former version of this Bill in the Statement read by my noble friend Lord Mitchison on March 9. The object of the Bill is to provide machinery for controlling the starting dates of some privately sponsored building projects costing £100,000 or more. The control is intended to act as a regulator of demand. It affects only about 7 per cent. of all new construction, estimated at about 500 projects costing about £180 million a year. The purpose is to adjust the rate at which this work is started in order to help to ensure that the total level of demand on the construction industry is roughly in balance with its capacity. When potential demand exceeds the capacity of the industry, socially and economically important projects such as housing, industrial building and work in development districts will be given priority over less essential projects for the resources which are available. The control will not reduce the amount of construction which is carried out. It will, however, help to remove excess demand so that the resources available are used for the most important projects.

The machinery of control is intended to be permanent. This does not mean that the control itself will always be in operation. It will be suspended when it is not needed: when the resources of the industry are sufficient to carry out all the work which it is required to do. But when it appears that demand is going to exceed capacity, it is necessary to have power to take action to reduce demand before the industry becomes overheated. The Government already have powers to reduce demand by restricting investment in the public sector. But if these powers are used without regard to the private sector the effect is to defer work of high social priority in order to make labour and materials available for less essential private projects. It would be wrong to hold back work on universities and roads but to do nothing about offices, shops and restaurants. When restriction is necessary it should be applied also to the private sector, and this requires formal machinery.

The absence of such machinery was an embarrassment to the Government in July, 1965, when restriction was necessary. Measures had to be taken to deal with the economic situation. The construction industry was overheated, and it has been generally accepted that it was necessary to restrain the pressure of demand. If the measures to restrain demand had been confined to the public sector, more essential projects would have had to be deferred. But there was no existing machinery by which the Government could extend the restriction to privately sponsored projects. The only way in which this could be done was by announcing the Government's intention to introduce legislation with retrospective effect to enable the starting dates of privately sponsored projects to be controlled.

Criticism of this action by the Government is support for the creation of the permanent machinery proposed in the Bill. There may be differences of opinion about the prospects for the industry at any particular time, but there can be little controversy about the principles on which the Bill is based: first, that the industry is likely to become overheated again at some future time if demand is unchecked: second, that the private sector should be taken into account as well as the public sector when demand has to be checked: and, third, that when privately sponsored work has to be held back there should be machinery for doing it without recourse to retrospective measures, which we all dislike.

I come now to the content of the Bill. Clause 1 establishes the framework of control by making it unlawful to carry out work in the construction of a build- ing or other fixed work of construction unless it is licensed by the Minister or exempted later in the Bill. The following Clauses, Nos. 2 to 7, then expressly exempt over 90 per cent. of all new construction and alterations. There is a general exemption in Clause 2 of all projects costing less than £100,000. Provision is made for the aggregation of the cost of related projects to prevent evasion by splitting up a project.

Clause 3 exempts all private dwellings, industrial building and research buildings, whatever their value. This exemption is extended to any building providing services to an adjacent exempt building, so that, for example, a warehouse or office in an industrial complex would normally be exempt. The exemption of housing is entrenched in the Bill and cannot be removed without new legislation. All work in development districts is exempted by Clause 4. Your Lordships will be aware that the Government announced in the White Paper on Investment Incentives their intention to introduce new legislation which will replace development districts by new development areas. It is proposed to extend to construction work in the new development areas the exemption from control conferred by the Bill or work in the existing development districts. In the meantime my right honourable friend the Minister of Public Building and Works is authorising work freely in the extended areas. This exemption will ensure that the control does nothing to impede the development of these areas and it is hoped that it may encourage it.

Clause 5 exempts work in the public sector which is controlled by the Government in other ways, by the approval of programmes, by consents to loans, by the provision of finance or by administrative arrangements. Projects in the public sector will be treated in the same way as privately sponsored projects, and there is no need to impose a duplicate control. The avoidance of duplicate control is also the basis for the exemption in Clause 6 of projects for which office development permits or pipe-line construction authorisations have been granted and work for which a war damage cost of works claim may be made.

Clause 7 deals with projects begun before the commencement of the Act. It exempts from control any work carried out after enactment on a project begun or contracted for before July 28, 1965. This was the day after the Government announced their intention to introduce legislation. It also exempts work on a project authorised by the Minister before enactment. This clause contains an element of retrospection. This has been a difficult and controversial matter, to which reference was made in the Statement by my right honourable friend the Lord President of the Council on March 9, which I mentioned earlier. I should like to make it clear that there is no retrospective penal sanction for work done before the Bill becomes law. But when the Bill becomes law it will become unlawful to carry out any work on a project within the scope of the Bill which has not been licensed. It will be unlawful to proceed with an unauthorised project which was started after July 27, 1965, unless a licence is obtained. For this purpose the whole cost of the project counts, and not merely the cost of the work carried out after enactment. There is thus the risk for anyone who went ahead without consulting my right honourable friend that a licence might not be granted to complete a project.

In July, 1965, retrospection was unavoidable because demand had to be reduced immediately. The element of retrospection in the Bill is the minimum that could be devised. Provision was made for the exemption of projects authorised by my right honourable friend in order to ensure that all privately sponsored projects subject to control were not held back until the legislation had been passed and licences could be issued. It would be unworkable now to advance the date in Clause 7 to exempt work on projects begun or contracted for before the enactment of the Bill. This would be unfair on the great majority in the industry who have co-operated with the Government and accepted the deferment of starting dates. It would also invite a rush to get contracts let or work started in the next week or two. Clauses 1 to 7 of the Bill thus set out the scope of the control.

Clause 8 gives the Minister limited Powers to vary the scope by Order. Flexibility is needed in the machinery, and the clause makes provision for suspending control and for varying the exemptions by reference to type of work or geographical situation. The powers are, however, strictly limited.

The cost limit cannot be reduced below £50,000. The exemption of housing cannot be removed. The use of the powers will be subject to full Parliamentary control. Any Order which extends the scope of control will require an Affirmative Resolution by both Houses. Other Orders will be subject to the Negative Resolution procedure.

Clause 9 provides for the enforcement of the control by inspection and the requisition of information. My right honourable friend has undertaken that two days' notice will normally be given of his intention to exercise the power of entry conferred by this clause. Provision is also made in Clause 9 for the consent of the Director of Public Prosecutions to be required for any prosecution under the Bill. This is an additional precaution to ensure that people who act in good faith are not penalised. A specific defence is provided by subsections (5) and (6) of Clause 1 for persons who carry out controlled work without a licence in ignorance. Protection is also provided for the innocent contractor by subsection (11) of Clause 1 to enable him to recover the cost of his work.

My right honourable friend expects the penal sanctions in the Bill to be used only in exceptional circumstances. Similarly the formal powers in Clause 9, particularly the power of entry, would be used only in the last resort. It is necessary to make provisions of this kind in the Bill, but of course my right honourable friend counts on the continued cooperation of the industry for the successful administration of the control. Parliament will be kept informed of the way in which the Act is operated. Under Clause 10 the Minister is required to prepare and lay before Parliament an annual report. This will give such information as numbers and types of applications approved, under consideration or rejected.

The Bill thus provides machinery for controlling a marginal quantity of demand. There is no question of restricting or controlling the output of the industry. The production of the industry must increase in order to cope with the requirements of the industrial programme, the housing programme and other social programmes. The industry needs to expand at a rate greater than that of the rest of the economy, achieving this expansion by increased efficiency without an appreciable increase in manpower. It is the function of the Government to provide the framework in which steady growth can take place, without wide fluctuations in demand. The fluctuations of the past have been bad for growth and efficiency. After the 1960–61 "stop" orders placed in 1961 showed no increase over 1960. In 1962 orders increased by 3 per cent., in 1963 by 10 per cent., and in 1964 by 15 per cent. over the previous years. This increase in demand outstripped increases in capacity and the industry became overheated. There was obvious evidence of overheating in the shortages of labour and materials.

The measures taken by the Government in 1965 checked this rise in demand by deferments in the public sector and by financial checks. There was a decrease of 6 per cent. in new orders in 1965 compared with 1964. As a result the industry has been brought more into balance. There is no longer any general shortage of building materials and none is foreseen. There has been some easing of the pressure of demand for skilled men, but there is still a shortage in many trades. In May 1966 there were 11,757 vacancies for skilled men and only 8,680 skilled men unemployed. These figures were in better balance than in 1965, but there were still three vacancies for every unemployed carpenter and over three for every unemployed bricklayer. There was less unemployment among unskilled men in the industry in May, 1966, than in May, 1965.

The limiting factor on the capacity of the industry is not shortage of materials but shortage of labour, and particularly skilled labour. There are large stocks of bricks—860 million in May—but a shortage of bricklayers. For this reason there is no spare capacity in the industry now. But in considering the need for the control of demand, and thus for the machinery in the Bill, we need to look forward. Decisions taken immediately after the Bill becomes law will affect the pressure on the industry in 1967 and 1968. Demand will increase in 1967. We hope that the increase will be absorbed by extra efficiency, but there would clearly be a danger of overheating in 1967, and in 1968, if there were no checks on the potential increase in demand. Our objective is to prevent overheating by taking measures in good time, instead of waiting until there are widespread shortages before taking action to correct the balance.

I referred earlier to the provision in Clause 7 which exempts from control work on projects authorised in writing before the enactment of the Bill by my right honourable friend the Minister of Public Building and Works. The purpose of this provision was to ensure that urgent schemes were not held back pending legislation. My right honourable friend accordingly announced on November 1, 1965, that he was prepared to consider applications for urgent projects which were in the public interest. He has since indicated that he is prepared to consider applications in respect of any licensable project. By the end of June, 1966, 357 applications had been received, for projects costing £127 million. The breakdown is interesting. Of these, 281 projects costing £95 million had been authorised; 25 applications for projects costing £9 million refused; and 51 applications for projects costing £23 million were under consideration.

The breakdown of the work authorised is as follows: offices—76 projects, costing £25 million; shops—34 projects, costing £10 million; private educational—24 projects, costing £7 million; hotels—22 projects, costing £8 million; hostels—16 projects, costing £3 million; storage—49 projects, costing £15 million; mixed development—23 projects, costing £13 million; miscellaneous (including nursing homes, training centres and religious buildings)—37 projects, costing £14 million. These figures indicate that the policy followed in recent months has been fairly liberal. The starting dates authorised have been spread over the months up to and including next December in order to control the amount of work started in particular months.

When the Bill becomes law my right honourable friend will issue building licences in advance for starting dates up to six months ahead. These licences will be valid provided that work is actually started within six months of the approved date. This means that as much as a year may elapse between the issue of a licence and the start of work. It would be impossible to control demand if licences were issued any further ahead, because the demand and capacity of the construction industry cannot be forecast further ahead. My right honourable friend recognises, however, that it would be useful to developers to have some earlier advice about the prospects of obtaining a licence before incurring expenditure on planning. He will be prepared to give advice, without formal commitment, up to two years before the proposed starting date, or up to three years for complex schemes.

When the pressure on demand makes it necessary to defer some work my right honourable friend has to decide the respective priorities of projects in the public interest. He will have regard both to the urgency and importance of the project and to the load and capacity of the construction industry in the area where the project is planned. He will consult his colleagues about the importance of projects and will, in particular, consult the Minister of Housing and Local Government and the Secretaries of State for Scotland and Wales to see that licensing is used where possible to divert labour to undermanned housing sites. Apart from this, the importance of a project will be judged by its relevance to economic development and efficiency, to housing development and to the implementation of the Government's general policy. The importance of some projects in this sector is fully appreciated, and my right honourable friend will give due weight to the requirements of dispersal of conurbations and the need to reconstruct town centres.

The machinery provided by the Bill will not be used to restrict for restriction's sake: it will be used to defer work when the capacity of the industry is insufficient to carry out all it is asked to do. It will also help to ensure that the less essential work is deferred and that the available resources are devoted to the projects which the country needs most. My Lords, I beg to move.

Moved, That the Bill be now read 2a.—(Lord Hilton of Upton.)

3.33 p.m.

LORD HASTINGS

My Lords, I think I may say without fear of contradiction that we on this side of the House are all grateful to the noble Lord, Lord Hilton of Upton, for presenting this Bill in con- siderable detail, and with great clarity, and also for giving us a great deal of information which, perhaps, on the reading of the Bill we might not otherwise have expected. Above all, I would thank him for presenting the Bill in such a clear style and with such a delivery that it was easy for everybody to comprehend it. That makes things very much more agreeable in a debate of this nature.

Having said that, however, I must add that I rather wondered how the noble Lord would get on in making out the case for this Bill, which during the course of two Sessions in another place (for, of course, this Bill has been presented twice in another place) the ministerial spokesman had failed to make. If I may say so, without seeming to flatter the noble Lord unduly, I feel that he made out a better case for the Bill in this House than was made out in another place. But I would add that I still do not think he has proved his case or justified the introduction of the Bill at all. I was rather sorry that at one stage during the preamble to his speech he allowed himself to read from the brief, which obviously was necessarily given to him, a statement that there is little controversy about the principles on which the Bill is based. A dogmatic statement of that nature really is not acceptable on this side of the House, because in point of fact this Bill is controversial in its principles and also in a considerable part of its detail.

In taking up this argument that it was not controversial, the noble Lord dwelt at some length on the necessity to control private building, on the ground that public building was also controlled. I must point out, however, that this control is very different in its nature, because in the public sector the control is not a system of priorities: it is a purely financial control, emanating from the Treasury. Therefore I think something more ought to he said from the Government side about how the public sector is to be controlled, in the same way as the noble Lord thinks the private sector is going to be controlled, from the point of view of priorities.

The reasons for this Bill are rather extraordinary, and although the noble Lord has, I think, made them clear today, it is worth going back a little to see what they were when the Bill was first premeditated—because, of course, in the first place the previous Minister had said that he had no intention of putting controls upon the building industry. It was only when the Chancellor of the Exchequer made a statement on July 28, 1965, that this Bill was promulgated, or, rather, promised. The Chancellor's reasons for it were, of course, that it would help to reduce our deficit and also to strengthen sterling. But one wondered how it would do that. The only way it could do that would be to cut down capital expenditure; in other words, reduce the amount of construction.

The previous Minister also said that the present measures envisaged "might be inappropriate in the future," and the Parliamentary Secretary of the day at one stage said that this was "a contingency measure". So it was quite clear that originally this legislation was thought to be temporary; yet we now find that the temporary legislation which has been introduced is to be permanent. This is just another example, I regret to say, of the sort of double talk to which we have become all too accustomed since the Labour Government came into power, getting on now for two years ago. It is very difficult, not only for Parliamentarians like ourselves but for the industries concerned and for the public at large to know just where they are when this sort of progression is pursued throughout Government policy, saying one thing at the beginning and winding up with another thing at the end.

We come to a different situation with a new Minister of Public Building and Works, and he has made it clear, as the noble Lord has this afternoon, that this Bill is to be viewed as necessary for the building industry and really nothing to do with the position of the economy of this country. It is to be viewed as permanent planning machinery, and the Minister said: …it is the forward-looking view that is relevant". He said that—and I have quoted his words—in the Second Reading in the other place not very long ago. If this is permanent planning machinery, I am bound to ask, for what purpose? We have been told that only 7 per cent. of all construction is to be controlled. But what is the result? I was going to say that the Government must make up their mind whether it is a negative Bill or a positive Bill, and I will at least say that the noble Lord has told us clearly to-day that it is meant to be a positive measure. Therefore I am bound to assume—as in fact he said in some part of his earlier remarks—that construction will not be reduced.

If 7 per cent. of construction is to be controlled I can only assume that it is for the purpose of building more houses and more factories in the places in which they are needed. Therefore, let us examine the Bill from that point of view. Is it really true that, if fewer hotels and places of entertainment generally are built, we shall get more houses or more factories? At this point it is the economics of the private building industry which we have to consider because, after all, private builders only construct for profit: that is the essence of the industry, or of any industry.

Let us just regard for a moment the Government's record. I do not want to sidetrack the issue into a debate on housing in general, which we shall be having in a week or two; but the Government record is briefly as follows: local authorities' mortgages have been severely cut back in number; the number of building society mortgages is down. We have had the Rent Restriction Act, which ignored the most important finding of the Milner Holland Report in respect of the private sector of the building industry and the provision of houses for rent. We have had increased indirect taxation, and now we are going to have the selective employment tax on top of that. Quite naturally, the result has been that there have been increased costs, increased wages; houses cost more and fewer houses are being built. This really is not surprising.

So I ask the Government: where is the incentive in this Bill to provide the extra houses which we all wish to see? If there is this incentive, then perhaps the Bill is justified. But the noble Lord has not proved to our satisfaction that this is going to happen as the result of this form of control. We know that houses are needed everywhere, but they are needed most of all in the Northern part of the country, the North West and the North East, and in Scotland, where there are the most slums; in other words, in the development districts. Yet it is precisely in these areas where there is complete exemption for all forms of building.

Here, the Government find themselves in rather a cleft stick. On the one hand, they want to ensure a high level of employment in the development districts, and therefore they are preparing to allow the building of hotels and all these other amenities which we know are badly needed in these districts, to improve what we call the quality of life; and to that extent I agree with the Government. On the other hand, they need more houses there than anywhere else in the country. How then, are they going to employ or redistribute the labour in those areas so that they will get the houses if they are going to allow every other form of construction to go ahead?

Has this been thought out, or has any sort of research been done into the availability of labour, and particularly skilled labour, to which the noble, Lord, Lord Hilton of Upton, referred, because that is the gravest shortage of all; or are the Government really saying that from this 7 per cent. saving of construction in the Midlands and the South—because that is where the control will operate—they are going to redeploy construction firms and the labour they use in the development districts, so that, at the same time, they can go ahead not only with building amenities in these districts but also with the houses? Is this really what the Government are saying? If so, how are they going to do it? If they are not going to do this, what is the purpose of the Bill?—because, as I said before, I do not see that by restricting certain building in the Midlands and the South they are necessarily going to get other forms of building put in the Midlands and the South. It may well be that the Government think there is enough house building in the Midlands and the South, and that this really is the whole crux of the Bill and its purpose. This has not been sufficiently explained to us by the Government, and therefore I suggest that at the moment it has not been fully thought out. I should like to know what the Government's proposals are in order to get around the difficulty in which they find themselves, and in which in fact they are proposing to put themselves as a result of this Bill.

If I may turn briefly to a little detail in the Bill, although at nothing like the length to which the noble Lord necessarily went, I would just say that, as a result of its going twice through the other place, we have a much better Bill than we could otherwise have expected, and therefore perhaps we shall not have to spend so much time on it as we should have had to do. Some improvements on the original have been made. As the noble Lord pointed out, there is to be no prosecution without the consent of the Director of Public Prosecutions; also there is to be no imprisonment by magistrates' courts as was originally envisaged. The burden of proof is also to be shifted fairly and squarely on to the shoulders of the person who is ordering and paying for the whole project, and in the future it will be a good defence if any person can reasonably prove that he did not know that he was committing an offence.

Then, when we come to the limit of £100,000, in the original Bill it was thought that the Minister might have power to reduce this to a figure as low as £10,000. Thank goodness that has been altered too, because quite minor private projects would have been caught and an impossible bureaucratic situation would have arisen. Now it is possible that the lowest limit will be £50,000; so that is a slight improvement. On the other hand, something which is going to create uncertainty in the industry is still retained in the Bill. At a stroke of the pen the Minister can say, "I have changed my mind. I have been advised that we now can drop the limit, and these projects of £50,000 will in the future require licences." It is not easy for the building industry, which, as the noble Lord has said, is a forward-looking industry, to plan far ahead on a basis of that sort. So I think that this is a weakness in the Bill.

Now I come to Clause 7, which is the retrospective clause; the noble Lord admitted it had, as he put it, an element of retrospection in it. It will be well remembered by noble Lords in this House how, just before the General Election, the Parliamentary Secretary of the time came down to another place and threatened that anybody going ahead without a licence, although there was then no legal necessity for one, would be subject to penalty if he dared to carry out a project costing over £100,000. Naturally the Minister had to hurry down quickly to say that this was not so at all, and that there would be no legal penalty. It is true that this Bill has no legal penalty written into it. But the effect is going to be the same, because anybody who has not had—whatever you may call it—the wisdom, the common sense or the desire to co-operate, anybody who has not got a letter of consent from the Minister in the meantime, may find that, although he is half way through a £200,000 project, when this Bill becomes law he will be refused a licence. The effect is that this clause will, or can, be used as retrospective legislation; although it is not actually written into the Bill, it will be a penal sanction.

LORD SHEPHERD

My Lords, I think the noble Lord will agree that that would apply only to building that had been started after the Chancellor of the Exchequer had made his statement. It would not apply to a building which had been started or contracted for prior to that date.

LORD HASTINGS

That is quite true. I am dealing with the interval between July, 1965, and the present day. Although one must remember that if the building was started before that time without a licence, the sum expended before the time would also count towards the total cost when the owner applied for a licence. What I am concerned with is this interval of the past year.

The Government must decide—and it is not an easy decision for them, in view of the line they have taken—what they are going to do when presented with such a contract. Are they going to allow it to finish or not? Maybe a hundred thousand pounds' worth of work or more has been completed, and is that all going to be wasted simply because the Minister does not like the fact that somebody started doing this work without his consent? That is what it will come to. It is a most unsatisfactory situation, because in point of fact, even though the Minister and the Government may not like it, the owner or developer will have done nothing illegal: the Government cannot get round that point. Although they say that this is not actually retrospective legisla- tion in the legal sense, in effect it can, and may well, be in some cases retrospective and much to the detriment, perhaps, of the building industry and employment. I can only say that I hope very much that every case will be considered most carefully and with great sympathy, and that the Minister's personal feelings will not be allowed to enter into the matter.

Finally, I come to Clause 8, which is the power to extend or restrict control. This gives the most sweeping powers to the Minister to change virtually everything in the Bill, including the right of interference in the affairs of other Departments—to cite a few, the Ministry of Health, the Ministry of Technology and the Ministry of Education. If this is not duplication of control, which the noble Lord a short while ago was boasting that they were trying to avoid in other clauses, I do not know what is. Perhaps we shall be able to elucidate this point further in Committee stage. The point I want to make here is that if there is to be any slackening of control—that is to say, that the limit may go up perhaps to £200,000, therefore making private building industry to that extent freer to do what it wants—it will require an Affirmative Resolution; in other words, Parliament must then consider the matter and take a decision.

On the other hand, if there is going to be a tightening of control—which we on this side, knowing the Labour Government well and its tendencies past, present and probably future, fear very much will happen—then the Statutory Instrument is subject only to Negative Resolution; that is to say, somebody has to be on the alert and take some action to stop this independently of the instrument coming automatically before Parliament. That is my understanding of the difference between Affirmative and Negative Resolution, but if I am wrong the noble Lord will correct me.

LORD SHEPHERD

You are.

LORD HASTINGS

I hope I am. It seems to me that there is a difference here and that it is easier for the Government to tighten the control rather than to slacken it.

I will conclude my few remarks by declaring that we find the principles of this Bill objectionable, but, not to such an extent, after the consideration which has been given to the Bill twice in another place, that I would advise my noble friends to divide against it. Further, we find it is highly unlikely that the Bill will be effective in the way the noble Lord has tried to make us believe. I consider that the Government have failed to prove their case, and I shall be glad to hear from the noble Lord, Lord Shepherd, when he winds up, whether he has anything more convincing to say which will lead us to believe that the Bill will have the effect the Government hope, and to tell us the way in which they think, in the light of the remarks I have made, they may achieve their goal.

3.55 p.m.

LORD MITCHISON

My Lords, may I begin by associating myself with the kind words which were addressed by the noble Lord, Lord Hastings, to my noble friend on the way in which he presented the Bill. I, too, found it admirably lucid and containing the sort of information which one requires to consider the principle of the matter, as one does, on Second Reading. There is not much more on which I agree with the noble Lord, Lord Hastings. He began by saying that the Government had been inconsistent about this Bill, but I have looked at what has been said about it and am entirely unable to agree with him. It is quite true that the first foreshadowing of the Bill was made by the Chancellor of the Exchequer in relation to private investment, but he made it quite clear, even speaking as Chancellor of the Exchequer on financial matters, that there were social considerations which would govern the principle of selection which is implicit in the Bill. He mentioned development districts and similar matters.

When in fact the first Bill, if I may so call it, was introduced in another place, my right honourable friend, the then Minister, made it abundantly clear. He said that it was permanent legislation. This is not something which has been introduced by my right honourable friend, the present Minister; it has always been intended. He made it equally clear that the Bill had a double purpose, and one can look at it in that way. The first purpose, as I see it, is to deal with what is commonly called "overheating" in this industry. Overheating is no new thing. There was an investigation carried out by "Neddy" in 1964. They made it quite clear that it was a very serious matter, not in the short run but in the long run, and that unless there were some control of some kind there was a serious risk that the construction industry generally would hold back development in the broadest sense in this country; the possibility of this occurring has become more and more apparent for years past. It is not a new business at all. Therefore the object was to see that the demand on the industry was correlated to the industry's capacity to meet it, and in that connection it must be linked with the projects still active in the Ministry—projects which, I hope, will become more active—to improve methods of construction, to improve the use of industrial building, and to effect improvements in other ways also; in other words, to get what is really a rather chaotic industry in many respects a little better adapted for what we require it to do. That was one side of it.

But if you are going to do that, until you can develop the capacity of the industry you must see that the things which are most required to be done receive priority. The most effective priority was given to housing simply by excluding housing altogether from the scope of the Bill. I think that that is quite right; there are other controls over housing. This Bill is really nothing to do with the housing programme. It was something of a "blue herring" which the noble Lord, Lord Hastings, trailed across his speech when he started talking about the housing programme. I think that the housing programme has done a great deal better than he makes out, but I do not think it is really relevant to what we have to consider to-day. What we have to consider to-day is something far more limited than that.

I would agree at once that this Bill is a little like the Irishman's definition of a net—a lot of holes with some string round it. Indeed, Clause 1 appears to contain a fairly sweeping proposition, and that is followed by exceptions. But I think that is unavoidable, because we can all think of instances of buildings which are not socially required. There is the almost standard one of too many petrol stations, and there is the growth of bingo halls. I do not know how many betting shops have been built new, or established in existing buildings. But the only way to define is to take the "rest" method as is done here, and specifically leave out housing and industrial building, too—a very important exception—and then make a number of specific exceptions including the one about development districts, and say that the Bill covers the rest. It is an extremely important "rest", because out of that you have to draw what you want to get rid of, if you are going to equate demand and supply in this industry.

I feel that the noble Lord, Lord Hastings, did not quite follow my noble friend's point, and the point that was indeed made through all the debates on this Bill and on its predecessor in another place; that is, that it does not really restrict anything. The more you can get out of the building industry as a whole, the better we shall all be pleased. But if you cannot get all you want out of it, you must at least see that you build what is required and not what is not required. That is said to be a wicked interference with the right of choice, the freedom of private industry, or something of that sort.

LORD HASTINGS

My Lords, may I just interrupt the noble Lord? I did not miss the point at all, and my answer to it was that the Government have completely failed to prove that, by restricting this 7 per cent. of the industry, they are in fact going to get the priorities they want. I have been told, and the House has been told, that—whether in quantity or value or whatever you may like to choose; I do not know—the overall volume of construction will not fall. The presumption is that, by the Government's restricting what is considered unnecessary building, other building is going to be done, and that is what I have not been convinced of.

LORD MITCHISON

My Lords, perhaps the noble Lord would consider what I said just now about the "Neddy" Report on this several years ago: and, incidentally, what has been said and detailed in all the debates on the matter in another place. The fact is that the industry is overheating. It cannot meet all the demands that will be made upon it, and are being made upon it, in the absence of some control over those demands. That is the point, and it is something which I should have thought was perfectly self-evident.

What are we talking about in the Bill? What is all this about? It is simply that at present the industry, and the part of it with which we are concerned to-day, cannot meet all the actual, let alone all the prospective, demands on it and one must therefore choose. The question to which I was coming was: Who makes the choice? The answer to that, in the year of grace 1966, really must be that that is the responsibility of the Government of the day, and the noble Lord, Lord Hastings, so far from denying it, pressed it firmly. But if that is the position, either he must say that the industry can meet all the demands on it, or he must recognise that there is some reason for directing the industry, through the kind of machinery which is in this Bill, towards what is socially required unless and until you can get the industry to do everything that is required. It may be a desirable object or it may not, but we are a long way from that position now. If the noble Lord wants me to prove that, he is asking me to prove something which was well recognised by this expert Committee, something which I have never heard anybody seriously deny, and that is that there are more demands on the building industry at present within this field than it can meet. That is the whole basis of the Bill.

The other side of the matter is that the choice, as I see it, must be the Government's, and it cannot possibly be left to the unrestricted competition of private industry. Whether a builder can get a larger profit out of building a bingo hall or another petrol pump instead of a schoolmay be very interesting for the builder. He may have his point of view about it, but it is not necessarily our point of view, and it is not a responsible criterion for the Government of the country under any political Party to adopt. That is what this Bill is about.

I do not quite know what the noble Lord really sought by way of proof. What did he want us to show—that the industry in fact cannot meet all the demands on it? Does he not agree that the industry is far from meeting all the demands made upon it? Did he want us to prove to him that there were certain projects which had social advantages and social merits beyond others? Is that a matter of proof, or of individual judgment and opinion? I do not know, but I should have thought there could be no doubt about it. I was really surprised that the noble Lord wanted more than he got from my noble friend and wanted more than was given (I thought, lavishly) below when the Bill was discussed in full.

I am not going through the details of the rest of the Bill. Since there may be proceedings in Committee, it is sufficient at this stage to remove the enormous misunderstanding which there appears to be about the purpose and object of the Bill. It is said that we think it really terrible that people should build; that this is a method of restricting the building industry because, of course, a Socialist Government likes restricting everything, and it is just letting itself rip on the building industry! I thought that prehistoric point of view had tended to disappear over the course of years, and that we were now disposed to attribute a certain amount of common sense to noble Lords opposite. I see one noble Lord fervently shaking his head. I will, therefore, except him from the attribution, and no doubt there are such cases. On the rest of the Bill—

VISCOUNT ECCLES

My Lords, would the noble Lord allow me to interrupt? He asked what proof my noble friend wanted. I am not quite sure myself, but I know what proof I want. I agree that the industry overheats. I agree that it has to be kept in balance if one can do this. But what I cannot agree is this. When the noble Lord, Lord Hilton of Upton, tells us that in one year there was a 15 per cent. rise in orders, how do the Government think that that can be controlled by this tiny little fringe of the industry which is only 10 per cent. at the outside? This is why the Bill is a bad Bill. It does not do what sensible people ought to want it to do.

LORD MITCHISON

My Lords, I am sure the noble Viscount would agree that that is a completely different point from anything that was put by his noble friend. It has some force and to some extent, I agree with it. But I think one must remember one or two things. The first is that if you want more out of the industry, you must give it the capacity of making more and do it at a time when there is a heavy demand on labour generally; that is to say, when you are in the position contemplated by the National Plan that we are likely to suffer generally, outside the construction industry, from a shortage of labour. Therefore, you must see to it that such methods as industrial building, or the reorganisation of the industry itself, are used to the full to maximise the output which you can get out of a given number of men, skilled or unskilled. That is the first point.

Secondly, I think one has to bear in mind that, if you are going to deal with the whole of this problem, then there is already machinery, as indeed I said earlier, for dealing with housing, which is a complicated part of the whole matter and cannot be considered without the industrial building, which is mentioned in this Bill in the same exemption. Nowadays, it seems to me, the two things must stand or fall together. It is no use building new towns which are merely dormitories, to take an instance. My Lords, I will not develop that point any further, for fear of taking up too much time.

About the rest of the Bill, all I will say is that I find the various arguments based on supposed retrospection, or actual retrospection, very unconvincing. What has happened here is quite clear. The Government's intention, substantially as it now is, was announced in July, 1965, by the Chancellor of the Exchequer, and soon after that it was made pretty clear that the building industry was going to be required to conform to that intention. I say that if, after that, anybody chooses to try to avoid what is coming, or to get round the terms of some Bill which is being discussed, then he is in the same sort of position as a man who starts doing work which is contrary to planning arrangements. I do not feel any sympathy with that kind of plea. There have been precedents for that sort of thing; and the Bill has very carefully avoided what is perhaps the most dangerous thing—retrospective punishment. But, be that as it may, it is rather a Committee point.

On the possible extension of the Bill under Clause 8, the noble Lord, Lord Hastings, was wrong. If there is to be any extension of control, an Affirmative Resolution is required. It is only when there is to be a diminution of control (I think that if he looks at the Bill, he will find I am right) that the Negative Resolution procedure is sufficient.

I would say that, in a very difficult field, this Bill keeps a pretty good balance between, on the one side, giving the Minister the powers that are necessary, and no more than are necessary, and, on the other side of the picture, letting people know what they have got to do. What has always been assumed, I think, in these cases, particularly in this industry, is that the connection between the construction industry and the Ministry is in practice fairly close. It always has been, I believe. In these circumstances, I cannot think that any builder who wanted to know what he could do would find any real difficulty in ascertaining it; and we were told that there would be two years or, in other cases, three years for the purpose—a reasonable sort of time. Therefore, I regard this as an admirable instance, within a rather limited field, of using the Government's power to direct a particular industry—and I do not shrink from the word "direct"—to do work which is socially important, in preference to work which is socially less important, whether or not it is more profitable to the builder. I regard it, too, as keeping a balance in the sense I have mentioned.

Therefore, my Lords, speaking for myself, and without regard to the very important position from which I was very properly sacked. I feel that noble Lords who find this Bill, in principle, a horror, are rather conjuring up the horror—a Chinese dragon pulled up out of the smoke and flames: not a very real beast, but a hit of a paper tiger, if I may use another Chinese phrase.

4.15 p.m.

LORD SILKIN

My Lords, I am always glad to hear the speeches of the noble Lord, Lord Hastings. He always makes his meaning clear, and I think that, on the whole, he is as fair as anybody can be when dealing with a controversial subject. I must confess that I had some sympathy with him to-day: he was in a real difficulty in finding something to say against this Bill He started off by saying that there was a difference in principle between ourselves and noble Lords opposite, and I waited to hear what was this principle about which we were disagreeing. But there was not a word.

Having merely announced the difference in principle, the noble Lord went on to say that we had not proved or justified the necessity for the Bill. In other words, it is not a matter of principle; it is a matter of expediency. In fact, his complaint about lack of principle was fortified by the interjection of the noble Viscount, Lord Eccles, who said merely that he did not think it was going to do very much good. That is not an objection of principle; that is an objection of expediency. And when the noble Lord, Lord Hastings, went on to say that we had not proved that this Bill was necessary, I thought he was emphasising this point of expediency. My Lords I do not propose to go into the question of proof, because my noble friend Lord Mitchison, I thought, abundantly proved the necessity for the Bill.

The noble Lord, Lord Hastings, then went on, in the second part of his speech, to say that this was a bad Bill; and I waited to hear in what respect it was a bad Bill. He told us how much it had been improved since it was first introduced, largely, as he said—and he and his friends are quite entitled to the credit for it; that is what an Opposition is for—as the result of proposals by the Opposition in another place. It is a better Bill. But that is not a criticism of the Bill: it is a justification. I waited to hear what were the noble Lord's real criticisms. I think that they amounted to one—namely, that if, under this system, we prevented building taking place, it would not necessarily result in more houses being built in the development areas.

LORD HASTINGS

Or any area.

LORD SILKIN

The noble Lord said that that was where the houses were needed, and his argument was directed to saying that more houses would not be built in development areas because in those areas there was a complete exemption. Of course, his basis is wrong. We need houses all over the country, not merely in the development areas. They will go on just the same, but housing is needed in other parts of the country as well. If you prevent a contract for half a million pounds being carried out in respect of, say, a public hall or an hotel—I am not going to talk about bingo halls; I do not think anyone is going to build bingo halls to-day; but buildings of that sort, which are not of a high priority—is it not pretty certain that, in its place, the contractors would be prepared to undertake building of a character more useful to the community, including houses? It seems to me self-evident.

LORD HASTINGS

My Lords, may I say that the noble Lord, Lord Mitchison, spent practically his entire speech saying that the industry was overheated, and that therefore they must be prevented from undertaking too much work. If that is the real truth of the matter, there is no reason to suppose that, if they are stopped from building hotels, or whatever it may be, they will build houses instead, because they would have been stopped building hotels for the simple reason that they are not able to build everything at the same time. There may be no more building of another nature that they can do.

LORD SILKIN

My Lords, I understand that. But is it not a fact that at the present time, when we talk about the overheating of the building industry, what we mean is that the building industry is undertaking more contracts than it can, in fact, carry out? Is it not almost proverbial that no contractor carries out his contracts within the stipulated time? We know that is the fact, whether in housing or in anything else. One of the reasons—though I know that the contractor blames it on the weather—is that most contractors take on too much work; they take on more than they can handle. They put a few men on one job and a few on another, and do not take most of the jobs seriously enough. The suggestion is that if they were not allowed to take on a certain number of jobs they would be able to utilise their existing resources of labour and materials to the advantage of the jobs that really matter. I would submit that in that sense the volume of work done on housing would increase and output would be substantially greater than it is to-day.

I know that this Bill represents a relatively small interference with the building industry; it has been stated that at the maximum it will not amount to more than 7 per cent. But if licences are to be granted to the extent that my noble friend forecast in his opening speech, then the interference with the building industry will be very slight. It may be that the limit of£100,000 will prove too high, and that it will have to be reduced. But that is a matter which events will determine. The advantage of this Bill, in my view, is that it is flexible: if it turns out that the building industry is capable of coping with all the work it has to do, and that interference is not necessary, then, under Clause 8, the Minister can relax and grant more licences than he would otherwise have done. He can even propose that, for a period, licensing shall not in certain respects be necessary. I hope that he will be able to go further (though this is rather a Committee point) and say that licences will not be necessary in respect of certain types of building, but may still be necessary in others. But we can discuss that on the Committee stage.

Generally, I think this Bill is a good Bill because of its flexibility; because it will permit some kind of restriction where restriction is needed and less where it is not needed. For these reasons, I hope that the Bill will have a quicker passage here than it had in another place. I think there is much less to put right than there was; and I hope that we shall get the Bill through very quickly so that it can operate in good time to give us the greater number of houses that we require.

4.23 p.m.

LORD SHEPHERD

My Lords, if I may, I would join with the noble Lord, Lord Silkin, in expressing a word of sympathy to the noble Lord, Lord Hastings, on his efforts to-day to perform what is, I suppose, the recognised functions of an Opposition: to find some way of criticising Government proposals. I thought the noble Lord tried to make his criticism constructive by asking such questions as: How is the Bill likely to affect house building and the like? I will deal with this in a moment. May I also thank my noble friend Lord Mitchison for his contribution? With his great experience in another place and in the Ministry from which he has just retired (and I think that is a far better expression than the one he used), he is in a far better position to answer this debate and to answer the various points made by the noble Lord, Lord Hastings.

The noble Lord, Lord Hastings, asked whether the Government have made a case for this Bill. He also put the questions: Was there overheating then, is there overheating now, and is it likely that in the future there will be overheating? Let us be quite clear what we mean by "overheating" and the effect that overheating within one particular industry may have on the rest of the national economy, because this is a point that the noble Lord, Lord Hastings, made in terms of balance of payments and the strength of sterling. Overheating is the result of an industry taking on too much work and work far beyond its resources. I do not think there is any doubt that in the period 1963–64 the industry was gravely overheated, not only in terms of materials but in terms of man-power.

In an overheated industry there is a tremendous demand on resources and materials. This can have two effects. First, it may be the cause of high import figures. This was the effect in 1964, when in the South-East we were importing bricks from France. Secondly, it tends to raise the prices of materials for those industries which have to buy, for example, copper and other materials used by the building industry. Shortage of materials and competition for supply is bound to have an effect, and a serious one, not only on the contractors operating in this particular field but also on the whole price structure of, say, all public authority work that is being undertaken. In other words, in an overheated industry the shortage of bricks required for, say, a "Bunny club" would have a serious effect on the price of bricks required for, say, a hospital or a school building. I am sure that nobody in this House would say it was right to allow that to continue.

If the noble Lord, Lord Hastings, will cast his mind back to the period in which he held office, he will remember there was overheating then in terms of materials. Perhaps I can refresh the noble Lord's memory. During 1964 there was a period when there was only a three-day supply of bricks in this country. I should have thought that was a clear example of overheating of demand for a particular form of material; and it applied over the whole range of articles essential for the building of houses, offices and factories. We know, too, that house building was not advancing as fast as we should have liked. Yet we know too—and the noble Lord, Lord Hastings, will remember many of the debates on this subject initiated sometimes by the noble Lord, Lord Conesford—of the number of offices being built in London which were subsequently standing empty. This is a question in some cases of resources not being used to the best advantage; but in terms of manpower it was very serious then, and is still so.

My noble friend Lord Hilton of Upon indicated the position in regard to the number of special trades. But if the noble Lord will refer to the Annexe to The National plan, he will find it gives figures of what the building industry itself foresaw in the period up to 1970 It estimates that nearly another 100,000 operatives will be needed. What was very interesting was that the main demand would not be for unskilled labour but for what the industry refer to as the administrative, technical and clerical workers—and these are the men whom industry will be demanding more and more if we are to go into advanced forms of building. So, on the figures provided by the building industry, at the time of the industrial survey upon which the National Plan was prepared, it is clear that the industry itself foresaw the serious shortage of essential operatives within the industry. And I think they recognised that there was a fear of overheating. My Lords, I do not think that there is any question about it. The case has been made, and I hope the noble Lord, Lord Hastings, is now satisfied that there is a case.

He referred to the question of the development districts. As the noble Lord knows, when we have the Industrial Development Bill in a few weeks' time these districts will be enlarged into very considerable areas. He will be aware that it is the intention of the Government and, the Government believe, the hope of the country, to develop these regions in order to take out the overheating—if we like to use that phrase again—from the Midlands and the South-East. There is a pool of labour. Do not let us exaggerate. In some of the new development areas there are places where there is a labour shortage, but over the area generally a pool of labour is available. If these areas are to be developed, it is clear that we must have not only the factories but hotels and other amenities which make such areas attractive to workers. In the long run we want to see persons, workers and retired individuals, moving from the congested areas of the South-East into the new areas; therefore it is essential that amenities should be provided.

It is true that we are dealing with only about 7 per cent. of the total construction industry, but if the Bill is passed I think that we shall be able to take the steam out of the industry. We may well be able to deploy some of the resources in the South-East to new development areas. There is no question of direction of labour, but I think—I speak from memory and am subject to correction—that operatives in the construction industry are a fairly mobile type of worker. They move from one job to another, and if work is available in the North-East or North-West or in Wales and jobs are not so plentiful in the South, I see no reason why labour should not move from one place to the other.

The noble Lord, Lord Hastings, wanted to know what we are doing to stimulate development areas and the construction industry. May I refresh his memory about the statement made some days ago by the Chancellor of the Exchequer that the construction industry would be receiving investment grants, subject to the investment incentives Bill being passed by your Lordships' House in this Session. In this case the construction industry in development areas will be receiving grants of 40 per cent. for capital expenditure compared with 20 per cent. in the remainder of the country. So we are taking action to assist the construction industry in those areas.

I repeat the words of my noble friend, Lord Hilton of Upton, that we wish to see the construction industry expand. When one considers the tremendous demands that will be placed on it—500,000 houses; schools; hospitals; roads; and the docks which were referred to yesterday by the noble Earl, Lord Jellicoe—one realises that there is plenty of work to be done. I hope that the construction industry will look more to improving productivity through increased efficiency and the greater use of machinery and factory-produced building in order to save on the demands of labour. I am quite sure that there is a very considerable and growing future for the construction industry, particularly, I hope, in the North-East of England.

The noble Lord, Lord Hastings, referred to the difficulties which might arise under Clause 8, where a Minister might decide, using the Affirmative Resolution procedure, to lower the present exemption limits on building. I take the point. But the noble Lord will, I hope, appreciate that my right honourable friend—my noble friend Lord Hilton of Upton said so this afternoon—does not wish to have restriction for the sake of restriction. We should alter these limitations only if circumstances justified it. I hope that necessity will not come. I express the hope, as I did to the noble Lord, Lord Erroll of Hale, last Thursday, that we shall move to a period in which we have less restraint and more incentives. Clearly, the Government in a Bill of this sort could not lay down a period by which notice will have to be given before there could be any lowering of the limit, but I take the point made by the noble Lord, Lord Hastings.

LORD MITCHISON

My Lords, would my noble friend allow me to interrupt him? When speaking about this I had in mind Clause 8(5). I see that if there is any work which has been controlled, and it is proposed by order to remove the control, then an Affirmative Resolution—I beg your Lordships' pardon, I have put it wrongly myself. The point is that if there is any work which is exempt from control, and it is proposed that it should cease to be exempt from control, an Affirmative Resolution is required. I do not think that is quite what the noble Lord, Lord Hastings, said.

LORD HASTINGS

My Lords, I think that I can help the noble Lord. I got it the wrong way round myself. This comes of reading "Whitehall-ese" with its double negatives, too quickly, and I apologise to the noble Lord.

LORD SHEPHERD

My Lords, if I may give some advice to the noble Lord, Lord Hastings, about reading these Bills, I find that the best way to do so is to use a piece of paper and draw it down line by line. I will look at the point made by my noble friend, but it seems clear to me that if the Minister wishes to lower any of the limits he is required to go to both Houses of Parliament and seek an Affirmative Resolution. The point made by the noble Lord, Lord Hastings, was that if a building was in course of erection at a cost of, say, £100,000, for which a licence had been granted—or, shall we say, a building costing £95,000, which would be exempt—and the Minister were then to make an order prescribing a maximum cost of £50,000, should the work cease? I do not think that this is the usual way in which Government Ministries work. It may well be that at a time of great difficulty such a situation might arise, but I cannot believe that it is possible. But I will see between now and the Committee stage what can be done, and if the noble Lord cares to put down a suitable Amendment I shall be happy to give him an answer in Committee.

The noble Lord, Lord Hastings, asked what would be the position regarding a £200,000 building, started after the Chancellor had made his statement, if the builder had no authority to continue. My Lords, let us be frank. My noble friend, Lord Hilton of Upton, gave the number of those companies who carried out the spirit of the statement made by the Chancellor. There were a number who had delays because they accepted the procedure. There were others who had their projects refused for a period. I do not believe that the noble Lord, Lord Hastings, would feel it right that a company which went ahead without any regard to the national interest, when others within the industry did have regard to it, should now be treated in such a way, and that this would be the end of it. If we were to accept this suggestion, when, for instance, we are asking companies in other fields voluntarily to reduce the transfer of funds overseas—if we were to concede this at this stage—all voluntary agreements and understandings between the Government and industries and individuals would be placed in severe jeopardy. However, I will look at the point the noble Lord made, but at this stage I can give him very little hope.

The noble Lord said something in regard to Clause 8 and the Negative Resolution Procedure, but I gather that somebody has whispered into his ear and he now understands the position. I cannot believe that the noble Lord thought that the Government were so hopeful as to think that we could get away with the suggestion he made in his speech—I wish we could. But we were not born yesterday.

I hope we shall have a useful Committee stage. I share the noble Lord's feeling that the two Committee stages in another place did a good job. Concessions were made, I think, on both sides and a useful and well-drafted Bill is before us. We will consider any new points that noble Lords wish to make. Perhaps it would help—and I make this offer to the noble Lord, Lord Hastings, in view of the pressure of time—if I say that my noble friend Lord Hilton of Upton and I shall be pleased to meet him between now and the Committee stage to deal with any points he has brought forward. I hope that the House will give the Bill a Second Reading.

LORD HASTINGS

My Lords, before the noble Lord sits down, I should like to thank him for dealing with practically everything I brought up, but he did not deal with the question of control in the public sector. I made the point that there is only a financial control and not a control such as devised in this Bill. I hope the Government will set about co-ordinating this control in the public sector also on the basis of priorities, because at the moment it is done by different means and there is no co-ordination.

LORD SHEPHERD

My Lords, I apologise to the noble Lord if I did not reply to that point. I think that some public authorities would prefer the type of control in this Bill rather than the unsatisfactory monetary control the Treasury has placed on them from time to time. All the public authorities, including the local authorities and the nationalised industries, are pretty well controlled by the Treasury in time. The private sector, about which we have been talking to-day, is the only sector within the construction industry which has had no form of control. We are putting it on, but we hope that we shall not have to use it for very long. Again, I hope that the House will give the Bill a Second Reading.

On Question, Bill Read 2a, and committed to a Committee of the Whole House.