THE SCOTTISH ECONOMY

HL Deb 02 November 1966 vol 277 cc577-684

2.55 p.m.

THE EARL OF PERTH rose to call attention to Cmnd. 2864 on the Scottish Economy; and to move for Papers. The noble Earl said: My Lords, some of your Lordships will recall that this Motion was originally in the name of my most noble friend Lord Lothian, but he and several other senior Peers thought it was better that it should be very clear that this debate was a non-Party affair in the interests of Scotland I was therefore asked if I would lead, and as your Lordships will see from the list the noble Marquess will himself speak from the Opposition Front Bench shortly afterwards.

There is one other point I should like to make on the debate before I get down to my main theme. I understand that most of the Peers who are to take part in this aftenoon's debate will be speaking on the industrial and on the service and educational side of the White Paper. On the subjects of agriculture, forestry and the Highlands and Islands, we look forward to having a later debate, and I hope that that debate will take place before the Agricultural Price Review. I would say to the Whips who are concerned with these matters that I hope they will note our request that we should have a debate on the agricultural side a little later.

The sub-title of the White Paper is "A Plan for Expansion". I think that anybody who read it originally must have been hopeful and expectant as to its contents, but nine months have gone by since it was issued and, unhappily, the planned rate of development and expansion has received a check. Given the present circumstances of the United Kingdom, I think we must accept this situation as it is, but all the same I cannot forbear to point out that if only the whole of the United Kingdom had increased its exports by the same rate as the exports from Scotland—Scotland's increase over the last five years has been 50 per cent, more than the increase of the United Kingdom as a whole—perhaps we should never have needed the freeze and all its attendant horrors. This fact surely entitles Scotland to special consideration at present, special encouragement to carry on with as little check as possible to the general benefit and wellbeing of the country. I do not want to overplead for specially favoured treatment because there is a problem for the country as a whole, but surely it entitles us to a reasonable treatment and we should not suffer discriminatory action which may very soon endanger the present revival and improvement in Scotland. As I hope to show later, the recent measures imposed on the whole country will in fact hurt Scotland and hit it very hard indeed.

At the beginning of the White Paper, we find in paragraph 1 that the plan is for 130,000 new jobs by 1970. Roughly half of this would be in the manufacturing and construction industries, and the other half in the service industries. In regard to manufacture, I fear we have to accept that the timetable there has got to be changed. But when it comes to the service industries, which are vital to Scotland's life, I feel very differently. The selective employment tax and reduced help to hotels, on top of the freeze, are going too far. Chapter VII of the White Paper is devoted to the service industries, and paragraph after paragraph shows the vital importance of the service industries to Scotland. If one takes for example paragraph 121, it says: …the service industries with a net gain of 56,000 jobs made the major contribution to the expansion of employment in the years 1960 to 1964. On the basis that nothing succeeds like success, one would have expected the planners to make special arrangements to foster this growth even now. Perhaps, though, they thought that service industries were somehow an unwarranted luxury at this time, and that that would be wrong; manufacture must be the thing. If so, they could not have read further on the same page, because paragraph 124 says: The service industries, therefore, have a major role to play in the build-up of modern manufacturing industry and in the reduction of emigration from Scotland. I have one last quotation, and that is from paragraph 143. I must confess that I was tempted to read the whole of it, but I shall read only one sentence which says: The Government is conscious of the role which the service industries have to play in the expansion of the Scottish economy. How, if the Government were conscious of this role, could they with a good conscience impose the selective employment tax on Scotland immediately afterwards? I cannot believe it was done deliberately to discriminate and hurt us. Rather, I believe, was it a tax conceived in haste, by we all know whom, to be repented at leisure. The repentance must come soon, or there will be great damage to Scotland's growth and even to its relations with the rest of Britain. If I am told that the figures show that so far the freeze has had less effect in Scotland than it has elsewhere in the country, my answer is that it is early times yet. We have a special momentum in Scotland which takes time to run down, but if it does run down it will be very much harder to get it started again.

In a debate in July on the economic situation, I suggested to the noble Lord, Lord Hughes, that S.E.T. in the Highlands and Islands should be abolished, pointing out that no less than 75 per cent. of the employment in the Highlands and Islands is in the service industries. The noble Lord, Lord Hughes, turned the suggestion down and said that it would have helped if there had been the slightest precedent from the preceding Government, to encourage him to go to the Chancellor and ask for special treatment. Surely, this misses the point of the selective employment tax—it is selective; it is not a blunt instrument or, if it is, it should not be.

Since that time I have found several new allies in my plea for the removal of this tax, notably Colin Clark in the Lloyds Bank Review of October. As a matter of fact, he goes much further than I suggested, in that he proposes a regional payroll tax or a rebate. The tax would be as high as 20 per cent. for London, and there would be a rebate of no less than 17 per cent. for the Highlands and Islands. We do not have time to elaborate his theme, but I suggest that it is well worth your Lordships' study and that of the Government.

There has been an even more significant move, if newspaper reports are to be believed—namely, that the Scottish Economic Planning Council is thinking along the lines that I suggested, and is making representations accordingly. I hope that is true. However, after reading the White Paper on the service industries, and appreciating fully their enormous importance to Scotland, I now want to raise my bid. I want to suggest to the noble Lord, Lord Hughes, that the whole of Scotland, or almost the whole of Scotland, should be exempted from S.E.T.; and, if this leads to people coming to Scotland from the South, that is what we want.

This brings me to the second main point which I want to develop: how to stop net emigration from Scotland. The Scottish Council (Development and Industry) recently studied this problem, and showed not that more people are leaving Scotland than other parts of the country, but that fewer people from the rest of the country go to Scotland. Apparently Scotland does not attract. The Council made a careful study and found a number of reasons for this. I am going to touch on only one of them, and it is one where Government action is possible now, despite the freeze. I refer to the fact of Government employment, either directly or in their research departments. I am afraid that until now, whether it be Conservative or Labour, the Government have failed lamentably to get their work out of London and the South-East.

Let me quote one figure. In 1963–64 no less than 62 per cent. of all public expenditure on industrial research and other research was in London and the South-East. There was 62 per cent in that small area. It is worse than that, because it meant that many of the best young brains from Scotland, who had been to university and were all keen to do their job after obtaining their degrees, had no alternative but to leave, to come to London or the South-East to get a job which was fitting.

In Scotland, the magazine of the Scottish Council, there was an article in April which, again, I would commend to your Lordships. It was entitled "Can Britain afford London?", and the answer conclusively was, No. There is no doubt that the centralisation in London and the South-East is of great damage and cost to the rest of the country. I recall that a year or two ago the Economist had a solution for this. They suggested that the whole of Government should be moved out of London, I think it was to York or Newcastle. It was not far enough for me, but never mind; I think it was along the right lines.

I feel a new thinking is needed. The Government should not be constantly preoccupied with London's problems, London's traffic congestion, how to make Londoners' lives more tolerable. Let us leave it for a bit, and use the money that we should save by spending elsewhere in the country. Let me give one example of expenditure in London. The capital cost of the new Victoria Underground is to be some £65 million, for the convenience, I suppose, of the London shoppers and the London commuters. How the capital is to be repaid nobody knows; certainly not in the ordinary ways, when one realises that there is already a Government subsidy to London Transport of nearly £4 million. Against this figure of £65 million for the new Underground for London's convenience, what do we find? Those two great bridges over the Forth and over the Tay—and we all know how much the noble Lord, Lord Hughes, had to do with that over the Tay—cost only about £40 million, or two-thirds of the cost of this Victoria Underground. Those bridges are doing more than almost anything else to ensure the new life in the centre of Scotland. Not only that, but we have to pay a toll at the same time.

Again, the Government and their planners ought to think on the way they spend. They should stop not only schemes for new undergrounds, overpasses or underpasses; stop playing about with plans for a new Piccadilly Circus, a new Covent Garden Market somewhere else, or even the plans for a new Whitehall, which might be to the advantage of Parliament but to the disadvantage of a lot of other people. Let them for a time—let us say for ten years—call it off, and let them spend the money elsewhere in the country. I believe this would help stop the drift to London and the South-East almost more than anything else.

Naturally, when I talk in this way about London I think of Edinburgh. And I want to see Edinburgh's amenities and social life encouraged. Let us take, for example, the Festival. This, surely, should be much more heavily supported with Government grants—for example, to build permanent and worthy centres for the arts. Has it always to be the Festival Hall in London, or Covent Garden, or the National Theatre, in London, which is to get our money? Are there not other parts of the country which are deserving of real help?

I know that the Arts Council and Miss Jennie Lee are trying to do something for the Provinces. But Edinburgh is something more than the Provinces: it is the capital of Scotland, and I think that as such it deserves special consideration—and not only in the way I have outlined; all your Lordships can think of others. There is the scandal of Turn house; the need for new roads and hotels; and, above all, I come back to the moving of Government Departments and research centres out of London. The aim must be to attract people from other parts of Britain into Scotland; and if Edinburgh can offer a good and full life to all and Government jobs to some, this must be of help.

There are two maiden speakers this afternoon whom we are all most anxious to hear, and fourteen other speakers who will be talking on this White Paper. Many of them have far more detailed knowledge than I can offer to your Lordships. But before I sit down I would again ask the noble Lord, Lord Hughes, whether he will plead with the Government for two things. The first is that they reconsider the selective employment tax and its effect on Scotland, especially in the Highlands and the Islands. I believe that its incidence is unfair, and that, if it is not changed very soon, the tax and the freeze may set back Scottish expansion for many years. My second request is for favour to Edinburgh—and, indeed, to all the rest of the country, other than London and the South-East—and, above all, that a special effort should be made to move Government Departments and research centres to the North. It is our due, and I hope that we shall see some positive results, even now, on this particular point. These steps would do much to avoid hurt to Scotland—a Scotland which, at long last, until recently, had been on its way to recovery and even prosperity. My Lords, I beg to move for Papers.

3.13 p.m.

THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES)

My Lords, this is an unaccustomed place in the list of speakers for me to occupy in a debate on Scottish affairs, and I hope that in due course, by leave of the House, I shall be permitted to speak again in that place which I customarily occupy in these debates; but I thought it would be for the convenience of the House if, with permission, I were to divide my speech into two parts, so that those who succeed me in the debate may, if they so wish, make reference to Government policy as I have stated it. Then my closing remarks will be available solely to reply to the debate.

My Lords, I am grateful to the noble Earl, Lord Perth, for having initiated this debate, primarily because it comes at a time of anxiety and concern to the people of Scotland and gives your Lordships' House an opportunity to put the picture into focus. My Lords, this is a time for facts. An optimistic gloss would be an outrage to those people in Scotland who will be feeling the effects of unemployment during this coming winter. A pessimistic review, on the other hand, which sought to threaten the future with dire calamity, would be a scandal. It would be a scandal because it would be unsupported by truth. Let us therefore hold to facts and disdain fancies.

I agree that the measures of restraint which the Government announced last July were unpalatable. They were imposed, not because they were desired but because they were necessary in the national interest—and I would remind your Lordships that throughout the Government have promised to keep a close watch to ensure that no disproportionate upset will emerge for Scotland or, for that matter, any of the development areas. At no time did we promise to isolate Scotland entirely from the effects of the deflationary measures; that would not be possible. The measures are designed to strengthen the basic economy of the whole country. Scotland is bound to share in the burden, but it must be a share which is fair both to our resources and to our needs. We must and shall share in the strengthened economy which develops as a result of these measures.

My Lords, let us look at the facts. There has been some increase in unemployment beyond the seasonal normal. It is of greater seriousness in one or two areas—for example, West Lothian—than is the general rule, but despite all that has been said recently the October figure for Scotland, at 67,000, is lower than that for the years 1962 and 1963, when unemployment was 84,000 and 90,000 respectively. It is even better than the figure of October 1964, and noble Lords opposite will remember that they believed then that the economy had never been in better shape.

Let me cite three facts of measures which have been taken to safeguard the immediate situation. First, building controls are not applied, although their scope has been extended outside the development areas. Second, there are no restrictions on Government-financed factory building, including that by the New Town Development Corporations. Third, the Scottish Department's share of the national £55 million deferment in central and local government capital spending has been proportionately small. It amounts to £3½ million. Moreover, the requests for restraint communicated to the Scottish banks—and I would remind your Lordships that they have to lodge special deposits with the Bank of England at the rate of 1 per cent., whereas the English banks have had to lodge at the rate of 2 per cent.—make allowances for different conditions in Scotland. I suggest that we should base our appreciation of current events on these hard facts.

I now turn to the longer term, and to the plans set out in the White Paper on the Scottish Economy. The Government now accept that the growth targets in the National Plan are not attainable as early as 1970. Since the objectives in the Scottish White Paper were linked to the National Plan, it is right to ask how these objectives are likely to be affected. As my right honourable friend the Secretary of State explained in a debate in another place on August 2, the targets for Scotland remain the same. These targets were derived from a combination of two sets of assumptions, the first related to the expected national growth rate and the second to the special conditions in Scotland where, as a result of deliberate investment designed to achieve social and industrial change, the developing sectors will have a higher rate of growth than in the United Kingdom as a whole.

As I have said, Scotland cannot be isolated from the present economic measures. Accordingly, although there may well be some adaptations in the timing of the action to be taken, there will be no change in the transformation taking place in the Scottish economy. The programmes to provide houses, roads and environmental amenities will in the long run create the right conditions for a growing demand for employment. There is ample evidence that the general strategy of development set out in the Scottish Plan is unaffected.

In the Borders, two advance factories to be built at Berwick and Kelso were announced by me a few weeks ago. Other far-reaching proposals for the Borders are at present subject to the appropriate statutory procedure, as the correspondence columns of the Scotsman will bear witness. In the North-East a detailed programme will be worked out to make possible an increase in the urban population of the area of some 20,000 over the next ten years. A major feasibility study of the potential of the Tayside area to accommodate its full share of a greater Scottish population will be carried out. In Central Scotland, discussions are taking place to start new centres of growth which will exploit the developing communication net- work. The Highlands and Islands Development Board are pressing on with their work to bring new life to that area and the Government have expanded the forestry planting programme. There is no doubt that the Government's continuing regional development policies will enable the aims of the Scottish Plan to be achieved.

Perhaps it would be appropriate that, having mentioned the Highlands and Islands Development Board, I should refer to the plea of the noble Earl, Lord Perth, in relation to the selective employment tax, and, in particular, to its effects on the Highlands. He has argued that it should be excluded from the operation of the selective employment tax. In fact, having made the preliminary bid, he then decided to advance on his own bid and sought to exclude the whole of Scotland from the selective employment tax. I have no doubt that the exclusion of any part, or the whole, of Scotland from the effects of any particular measure of taxation would undoubtedly be a strong incentive for people to transfer to the North; it would be very nice if the people of Scotland did not have to pay income tax or purchase tax. The noble Earl has chosen this particular piece of taxation as the one of which Scotland would wish to be rid.

It is essential that this tax, and indeed any tax—I accept this point—should not operate to jeopardise the maintenance and development of the Highland economy. Assurances have been given by the Government that the operation of the tax and its effects on the Highlands and other regions of Scotland will be kept under close review. That was not an empty promise. We are doing what we undertook to do; we are keeping the situation under close review, and I repeat the assurance that if action is necessary on this tax to safeguard the interests of these areas it will be taken. There are, however, two factors which are important. First, while the problems of developing the Highland economy call for special measures, we should be chary about treating the Highlands and Islands as if that area and its people were quite separate and distinct from the rest of the country. This is not the view on which the Highlands and Islands Development (Scotland) Act 1965 was based, as is made clear in the first section of that Act. Secondly, we must keep in mind the objective we have for the Highlands and Islands. This has to be considered in terms of positive and constructive measures of development, of building up the economy and enabling the area to provide its people with an economic way of life and also to make its proper contribution to the national economy.

Primarily, therefore, we should be looking for the means of promoting the right kind of development. The Highlands and Islands Development Board, though concerned about the possible effects of the selective employment tax, are quite clear that the real priority must rest on the positive, constructive side. It is in the development of worthwhile projects that the real hope of salvation for the Highlands lies. The Board have made a good start and I know are pressing on with many further developments. Up to the end of September they had approved 127 applications for financial assistance for industrial and commercial projects, amounting to £536,000, with a potential of 667 jobs. In relation to the figures talked about in this House from time to time, 667 jobs may not sound a great many; but if I were to compare the population of the seven crofter counties with the population of Glasgow, this is equivalent to 2,500 jobs being found in the City of Glasgow—and even there 2,500 jobs would be regarded as of major importance. So the Board have made a good start in what, after all, is less than a year of operation.

I have already recited the facts that may be said to stand guard over Scotland's economy. It is proper to draw some conclusions from them, and there should be no doubt in anyone's mind that economic and industrial development in Scotland will continue to forge ahead. Within the Scottish Development Area enterprises in manufacturing and extractive and construction industries will be eligible for outright investment grant to meet 40 per cent. of the cost of new plant and machinery. These grants are straight entitlement, provided that the equipment comes within the eligible categories.

It is not only the newcomers who are being looked after. Within the Scottish area expanding industry will also be eligible for a wider range of Board of Trade assistance, including building grants at the rate of 25 per cent. and, in some cases, at a new rate of as much as 35 per cent. These tonic measures, coupled with the training grants available from the Ministry of Labour and other forms of assistance, provide the most positive encouragement to growth. For the first time, too, the special inducements are being offered to firms throughout most of Scotland and go far to meet the needs of large areas of the North-East, the South-West and the Borders, whose problems, at least in the opinion of the people of those areas, have for so long been ignored. The new and wider powers which the present Government have taken afford grounds for confidence in the future. I would remind the House that these wider powers became operative only on August 19. But even with the more limited powers which we inherited we have stimulated industrial development on a scale not paralleled in any similar period in the recent past.

I do not propose to weary the House with a statistical barrage, but there are some things we must have clearly in our minds; and they are, I think, easy to remember. First, there are the industrial development certificates—a primary weapon of Government policy, with the previous Government as with the present. Projects approved in Scotland between October, 1964, and the end of September, 1966, amounted to nearly 19 million square feet. In the two years before October, 1964, the figure was 10 million square feet. The expected additional employment which will arise from our approvals is 48,000 jobs; and from the previous Government's approvals over the similar period, 28,000 jobs. Furthermore, during these last two years the proportion of industrial development certificates issued in Scotland, as compared to the national total, has been very much higher than Scotland's proportion of insured employees. My Lords, the significant point of this is that it shows a major shift in the emphasis of development to North of the Border.

Next, there are the advance factories. The pace of Board of Trade advance factory building is higher than it has ever been. In the two years since October, 1964, 27 factories, amounting to 439,000 square feet, have been authorised, compared to 24 factories, totalling 666,000 square feet, authorised by the previous Government during the whole of its term of office of over 30 years. The advance factory, my Lords, is a development tool, the effectiveness of which has been amply demonstrated. We intend to continue to make good use of it, so that what you have heard of advance factories up to the present will certainly not be the last. No less important are the facts about financial assistance. Here are the latest figures for the year to July, 1966. Total Board of Trade assistance to industry in Scotland under the Local Employment Acts, including grants and loans and the cost of factory building, amounted in that period to over £15½ million. This is a figure which has not been exceeded since 1960–62, and that was the period when very substantial assistance was being given to the B.M.C. and Rootes projects. This is a measure of the considerable advance in Government assistance in this recent period.

Lastly, my Lords, there are the facts about immigrant firms. During the period from January, 1965, to September, 1966, 66 of them decided to set up in Scotland for the first time. The process continues. Only a few weeks ago it was announced that Rank Taylor Hobson would be setting up the first stage of a major project at Kirkcaldy. In Fife, too, Elliot Automation have just announced that they intend to set up new projects or extension at Glenrothes, Cowdenbeath and Hillend, with some 700 jobs. Honeywell Controls are occupying two factories at Bellshill in addition to their current expansion at Newhouse. New projects are not confined to the central belt of Scotland. Crosse and Blackwell are transferring production from London to Peterhead, increasing their labour force there by some hundreds, a very major development for Peterhead. A major private development firm has decided to develop new industrial estates at Airdrie, Govan and Possil, in Glasgow, and at Dundee.

My Lords, speaking in Glasgow on December 8, 1964, on an occasion which several noble Lords will remember, Mr. Edward Heath said: Why should a foreigner now come to this country to invest money when he found that his own country was being affronted on so many occasions by the attitude of the present Government! My Lords, the Leader of the Opposition was very far wrong in the pessimistic review which he made on that occasion of the future of Scottish industry. From January, 1965, to September, 1966, 17 foreign firms have taken a decision to set up in Scotland. Why therefore did they not follow Mr. Heath's lead'? I suggest my Lords, that the answer is quite simple. Unlike the Leader of the Opposition, they had no political motivation in this matter at all. They came to the conclusion, 17 times over, that industrial success was to be found in Scotland, and they wanted to share in it. That is why they came. My Lords, if I were to compile a catalogue of this Government's successes in its Scottish policy, it would include quite a number of names. It would include the names of I.C.I., of Hewlett Packard, Yale and Towne, of Honeywell, Elliot Automation, Rank Taylor Hobson, Burroughs, Hoover, Bourne, and Alfred Herbert. All people who have come or expanded during the regime of this Government. My Lords, there are more to come. No one knows better than the noble Lord, Lord Drumalbyn, that the surest way to lose a project is to announce it before the people themselves are ready to tell it. So all I can say is that there are more to come.

My Lords, I wish now to come to the second special point which the noble Earl, Lord Perth, made and of which he had given me previous notice. It is his plea for the inclusion of Edinburgh in the special development area. There is much misunderstanding about Edinburgh's position regarding industrial grants. Some of the criticisms which have been made (not, of course, by the noble Earl) almost suggest that the Government have cast a ring round "Auld Reekie" and are determined to stifle development there. This is palpably untrue. Enterprises in Edinburgh which satisfy the basic criteria for grant will receive grants at the rate of 20 per cent. of their capital expenditure together with the normal tax allowances on the remainder. It is, however, the case that Edinburgh and Leith do not qualify for grants at the 40 per cent. rate. This is because they do not satisfy the criteria laid down in the Industrial Development Act regarding the level of unemployment and the trends of employment and population change. In particular, the rate of growth of employment in Edinburgh over recent years has been much faster than that in the rest of Scotland; while the unemployment rate in Edinburgh, at 1.4 per cent., is well below the Scottish and the Great Britain average. But having said that, I must say that the Government do not exclude for all time the possibility of changes should circumstances warrant them.

LORD DRUMALBYN

My Lords, may I ask the noble Lord a question on that point which I think is important? In the past it has been customary to allow grant to firms in one area which is not a grant area in so far as they provide jobs for people from contiguous places which are in development areas. Does this, or does it not, apply to Edinburgh?

LORD HUGHES

My Lords, if the noble Lord, Lord Drumalbyn, does not mind, I will deal with that point at the end of my speech. I think I know the answer, but I would prefer to be fortified by what I understand has been irreverently referred to as the "pigeon post" to the Box.

I believe I have already said that the Government do not exclude the possibility of changes in the future should circumstances warrant them. The Act expressly provides for amendments to the initial list of development areas should changing economic or other relevant circumstances require. On the subject of the dispersal of Government employment, the system of office development control has recently been extended to the wider areas of the South-East of England and the Midlands. While too much cannot be expected of this step in the short-term the extension of control should give added impetus to the Government's policy of office dispersal to development areas. The Government are showing a positive example in their direction of self-contained or readily separable office units to the regions.

In addition to the announcement which the previous Government made about the move of the Post Office Savings Bank, Scotland has, since October 1964, benefited from the decision to set up the Board of Trade Investment Grant Office in Glasgow—100 jobs—and the Ministry of Social Security Office at Cumbernauld, which will handle all Great Britain repayments of selective employment tax in respect of domestic employees—this in volves some 300 jobs—and the transfer of the Post Office Philatelic Bureau, of 70 jobs, from London to Edinburgh. None of these is a major undertaking. It is one of the unfortunate things about the efforts to "winkle" Government employment out of London that success is sometimes easier with the smaller bodies. However, I assure the noble Earl that our eyes are not firmly set merely on minor methods.

To come back to my final remarks, we must ensure, not only that the basic structure of industry in Scotland continues to change with the introduction of new projects and the expansion of existing ones, but also that the whole of Scottish industry becomes modernised and more efficient. We must maintain a high level of industrial investment. We must apply new techniques and technologies, so that existing investment yields the best possible return. But perhaps most important is the overriding necessity to make the best use of labour. This can be done only by achieving a greater adaptability of labour. This is being helped by Government action in the field of training, and in the provision of houses; but it depends, in the last resort, on the attitudes of management and of men.

The use of manpower resources was fully discussed recently at a conference in Scotland organised jointly by the Ministry of Labour and the British Institute of Management. Those present at that conference had no doubt that Scottish problems cannot be seen simply in terms of providing new jobs. Not only must workers be employed; they must be employed more efficiently. In the long run, higher productivity and higher employment go hand in hand. The Government believe that confidence in the long-term expansion of the Scottish economy exists and that the present period of restraint, regrettable as it is, will be but the prelude to an even greater pattern of long-term growth than we have ever seen in the past.

3.42 p.m.

VISCOUNT MUIRSHIEL

My Lords, in asking for your tolerance of what I am afraid will inevitably be a nervous maiden speech, I must apologise also for a certain delay in delivering it. Although it so happens that I am one of those for whom a maiden speech in this Chamber is not a unique occasion, that does not make my job any easier, because on the previous occasion when I made a maiden speech here I had to apologise for a delay of no less than four and a half years from the date of entering. On this occasion, anyway, I am two years up. My difficulty is still greater because, as a number of noble Lords present know—and know to their sorrow—I followed my first speech with a great many, and later far too many, more speeches, so really I should be apologising for starting the process over again, instead of for speaking at all. But I can assure your Lordships that I will not repeat the error.

This White Paper which we are debating is an extremely interesting document and as a statement of intention, it contains very little with which I should wish to quarrel. The noble Lord, Lord Hughes, has given an interesting and encouraging account of how he sees the development since the White Paper was published; of what has happened which may affect its implementation and what delays there might be in implementation. I do not propose, in what I hope will be a non-controversial speech, as this one must be, to follow the noble Lord too far into some of the figures he gave as to achievement since his Government came into power compared with what had happened before. The only thing I would say which may be slightly controversial is that I feel that, as a record of past achievement, this White Paper is highly flattering to the work of a great many people, including previous Governments, who had laid the foundations without which the forecast of events in the White Paper and in what the noble Lord said this afternoon would have been nothing more than airy fantasies. But that is as far as I shall go to-day.

What I should like to do—and I believe that it is proper to do this about people who do not appear too much in the public eye—is to pay high tribute to the extremely effective continuity of thinking and work of the devoted and able group of permanent officials, both at St. Andrew's House and in other Government Departments, whose work inevitably is involved in the development of Scotland. Governments and Ministers come, and, I can assure the noble Lord, Lord Hughes, Governments and Ministers also go. They can, and they do, inject new ideas and new thinking. They can, and they do, inject impetus. But in the middle-term and long-term tasks with which we are faced in Scotland, and with which this White Paper deals, the structure of the Department, of St. Andrew's House, the quality of those serving it, the nature of the planning machinery, the Department's links with other Departments, its links with outside bodies, its links with industry, industrialists and industrial thinking—all these provide that continuity of constructive work and thought, also available to the Secretary of State of the day, without which the objectives of this White Paper could not possibly be realised.

Let me be clear about this. Any of us who has had anything to do with St. Andrew's House has nothing but the highest admiration for the quality and ability and the devoted work of the people in that Department, and nothing I am going to say subsequently implies any criticism of the permanent officials or of any other Government servants. I am talking about principles, not people.

What I would emphasise is that in the world in which we are living, when Governments cannot avoid being acutely involved in matters which previously they hardly touched at all, the channels of communication between the official planning machine and the outside world should not only be clear and effective, but must be reasonably widely known and understood by the general public and not only by the relatively few people who have reason to be in close contact with them. In the term "general public" I include industrialists and all those thinking on industrial developments; because what is done or not done in these few years is not only going to affect the lives of everyone in Scotland but also the whole physical environment in which we live, especially in some parts of Scotland which at present hardly know what is coming to them in the years to come.

Unfortunately, I think that at the moment there is a good deal of obscurity—or perhaps it is just plain ignorance—both about what is happening and about the links between the Government, outside bodies and the general public and industrialists at this time. We know of the existence of the Scottish Economic Planning Council. I certainly am a little hazy as to its members and very hazy as to its precise duties, functions and powers. We know of the existence of the Scottish Planning Board—some of us do, anyway. I am under the impression that this is still exclusively a body of permanent officials, but I have heard that there was an injection of some outside people into this Board. This is a matter which raises an important point of principle, which I should not like to deal with this afternoon, but I should be most interested to know whether there are any outsiders on the Board—by that I mean people who are not permanent officials.

We know that the Highlands Panel has gone, a body that really did valuable work in its time, but its place has been taken by the Highlands and Islands Development Board. I was glad to hear what the noble Lord, Lord Hughes, had to say about the progress it is making in its work. I understand that there is an advisory body attached to the Highlands and Islands Development Board. I have a hazy recollection also that there were to be area consultative or advisory bodies setup in a number of areas of Scotland, and I believe that some are already in existence, but it is not easy to find out what these bodies are and what they are doing. It may be my own fault, but I do not know how many of these bodies exist—and I doubt if other people know either—how they are composed, whom they are advising, and just what they are supposed to do. Are they supposed to originate thinking, or are they there to consider matters referred to them by the Secretary of State? And is it the Secretary of State or is it the Scottish Council who refer matters to them?

Then there is the question of executive functions. Presumably the Scottish Planning Board has executive functions through its membership and through the Ministers who are in charge of the Departments represented on that Board. The Highlands and Islands Development Board, within its financial limitations, certainly has executive functions, but I think it is true that no other body has anything but advisory functions. Although I am afraid I myself was guilty of setting up a number of comparable bodies, I am frankly nervous of a proliferation of purely advisory bodies, particularly nominated bodies advisory to other nominated bodies, as distinct from bodies which may be advisory direct to the Secretary of State, for which there is a strong case. These advisory bodies can be used as a drug. I should not wish to suggest that the present Secretary of State needs purple hearts, but they can be used as a drug to relieve, or at least postpone, the agony of the problems which any Secretary of State is faced with if he is thinking ahead. Drugs can be useful, but they can be dangerous; and they are certainly no substitute for a great many other things that must be done.

On this matter, all I would say is that the type of body which can do the most valuable work for Scotland is a body such as the Scottish Council (Development and Industry). It is independent; it is of the highest standing; it is free to comment and criticise the actions and inactions of Government; it is free to approach industry at home and abroad without the quite unavoidable inhibitions—and I mean no disrepect to officials—of any body which stems direct from government. I sincerely hope that the existence of the Scottish Planning Council and the other bodies to which I have referred, admirable as their memberships may be, has not reduced below what it used to be the close and constant contact between the Secretary of State and the senior officials and members of the senior staff of the Scottish Council (Development and Industry). Certainly in my time, and I know in my successor's in the Scottish Office, that contact, which was close and constant, was of the greatest importance. Even in the presence of the noble Lord, Lord Polwarth, I would say that his work and the work of his Council was one of the most important elements in making possible what has already happened in Scotland.

Of course, planning and action by Governments and Departments is essential, but there are limits to the effectiveness of the official approach. At this stage of our evolution and our structure of evolution there certainly may be a place for a series of consultative bodies to provide a two-way channel of ideas of information, and, of course, to study the whole strategy of location of development and all the infrastructure necessary for development. But in the search for new industries, new types of industry and new sources of growth I do not believe that any of these bodies can replace the sustained and detailed efforts of the kind undertaken by the Scottish Council (Development and Industry). I would urge that the Secretary of State and his senior officials should not rely solely on the large number of advisory bodies which are growing up, and fail to maintain contacts, not only with the Scottish Council, but also directly with industrialists and other experts who really are thinking, hard about the future of Scotland. In brief, while in no way wishing to denigrate the possible importance of the Planning Council and these various advisory bodies, I would urge that their composition, their method of working, their chain of responsibility—whom they are responsible to, who gives them papers to study—and their contact should be much more widely known.

Another important point is: What is the point of contact between these bodies and local Members of Parliament? Are local Members of Parliament automatically members? Are they automatically in touch with what they are doing? Or is it up to them to try to find out what these bodies are doing? Local Members of Parliament have been very valuable indeed in past years in helping on the development of their particular areas. It would be a great pity if this new advisory system and planning system shut them off so that they did not know what was going on.

There is one other point that I would urge. I do not think there is any risk of this now, but in later years it would be very easy to lull ourselves to sleep in the complacent belief that, because we have a nice, tidy, planning structure on paper, this will be a substitute for the kind of consistent work which must go on if we are to develop the whole future of Scotland in the way that we want to. I repeat that I do not think there is any danger of this at the moment; but I know from personal experience, not in Government but outside Government, that an advisory body without powers can in time lose interest and wither away; it continues functioning without anything to do and loses all its value. The corollary to that would be to say: "Let us develop their powers and give them real executive functions." In that case, I would say that the method of nomination of membership of these boards would require careful reconsideration. I believe that there will always be a case for a certain amount of nomination, but I should certainly prefer that there should be some element of direct or indirect elected representation on bodies if they are given powers. My warning is that if, sooner or later, they are not given powers their usefulness will finish.

There is one other point that I want to make before I sit down, and I will make it as briefly as I can. A development is going on, almost unknown except to those who are personally interested or directly involved, and it is a development which may become of the greatest importance in the whole method of carriage of goods by sea over the long-distance sea lines. I refer to the rapidly increasing use of containers as a means of moving cargo unhandled from the point of origin straight through to the point of delivery overseas. Up until now these containers have been used a lot on inland service and on the short sea trades. But this new development is coming much faster than anybody realised up to a short time ago, and it may mean within a relatively short period of time that the greater part of Britain's overseas trade in the long-distance trades will move in containers, themselves carried in ships designed specifically to carry containers and nothing else.

The consequences can be very far-reaching for shipping, shipbuilding and ports. However, I am not going to touch on these this afternoon, because it is too big a subject. What I would suggest and recommend to the noble Lord, Lord Hughes, as deserving of careful study is this. It seems just possible—and I do not put it higher than that—that this new type of movement could change the whole future of the distribution of industry in the country. Up to now, I think it is right to say that the factors influencing the location of industry, and therefore populations, have been access to raw materials—coal and wool and ore. Populations grew around these and they became self reproducing. The other major factor was access to a big sea port and to sea transport. The interesting thing about this new development is that, while the containers have to be put ashore, they will not and need not be discharged anywhere near the shore, and there will be—and they are developing now—inland container ports which in the future may be just as important as a seaport at sea.

I do not think I need elaborate in a speech this afternoon how important this might be. It is a completely new concept of the movement of goods, and it may be that we shall find, with careful thought by the planners and a combined operation between the strategic planners (if one may so describe the Government's planning structure) and the Scottish Council that there is an important new factor which has come into existence which could help us greatly in the future of developing those parts of Scotland which are at present considered too remote from either ports or the main centres of population. I do not want to go further than that this afternoon, and I apologise for speaking longer than I had hoped. I can only plead that, having subjected myself to two years' delay so far, I will try not to offend too often.

4.1 p.m.

THE MARQUESS OF LOTHIAN

My Lords, my first and most pleasant duty to-day is to congratulate, on behalf of everybody in the House, the noble Viscount, Lord Muirshiel, who has just spoken to us. He said, as I think we were all aware, that it has taken him two years to come to the point of taking the plunge. I am sure we shall all agree that it was well worth waiting for, and we all hope he will repeat at frequent intervals the wise and thoughtful type of speech to which we have just listened.

I should also like to thank the noble Earl, Lord Perth, for so kindly taking the burden of moving this Motion off my shoulders. He explained to your Lordships that this was because he felt that, so far as possible, we should like to keep this debate on a fairly non-political level, although I have no doubt that from time to time some mild politics will intrude themselves.

The Motion is worded so as to draw attention to the White Paper on The Scottish Economy, which was published last February. As the noble Earl, Lord Perth, said, the picture has changed con- siderably since then, and therefore the situation in Scotland that we are debating to-day is somewhat different from what it was last February. And, of course, the effect on long-term planning, as the noble Lord, Lord Hughes, remarked, has been quite marked. Since last February we have had the selective employment tax, the July measures, and the compulsory wages and prices standstill. I certainly do not intend to go into the causes of any of these measures—we have discussed them endlessly in this House. But I want to say that many of us in Scotland are becoming increasingly concerned about their long-term effects. My fear is that they may in time come to be seen as a series of quite severe body blows. The noble Earl has told your Lordships of the consequences of the selective employment tax on the Highlands and Islands, and he has had an answer—I am afraid not particularly to his liking—from the noble Lord, Lord Hughes. But, in addition to that, we are now beginning to see the effects of deflation on the motor industry in Scotland, increasing unemployment and short time—in an industry which is only just beginning to take root in Scotland. Those of your Lordships who live in Scotland will have noticed signs or other indications of short-time working in other industries and, for instance, a lessening of activity in the building industry.

I feel that in Scotland this is particularly serious, for although in the past decade or so we have seen a great encouraging beginning to the diversification of Scottish industry, and a great influx of new light industry, mainly into the Central Lowlands—and the noble Lord, Lord Hughes, has mentioned this—this is not yet I feel upon a scale sufficient to absorb any large degree of unemployment which may emerge.

What happens then, my Lords? The answer, I am afraid, is simple and familiar—emigration. By and large, a person who becomes unemployed in Scotland leaves the country and does not come back, because he has little choice; and I am afraid that this, to my mind, makes some of the encouraging tones of the White Paper seem rather forlorn. Another example is in industrial investment. Here the figures are levelling off. A recent Confederation of British Industry survey on industrial trends in Scotland says: More firms than ever before have reported that they expect to authorise less capital expenditure in the next twelve months on buildings and plant and machinery. There is now, for the first time in three years, a downward balance of firms reporting on the values of new orders received in the last four months, and the trend in output is less upward than it was formerly. These are all straws in the wind.

I hope that my noble friend Lord Polwarth will be giving the House more details and information, based on his extremely wide knowledge and experience. But I was glad to hear from the noble Lord, Lord Hughes, of progress that has been made. I am sure we all welcome it but, at the same time, I still feel that the general picture is one of deceleration, less investment, output levelling off, and pockets of unemployment beginning to emerge. What strikes me particularly is the long-term position, for I do not think that the Scottish economy is yet sufficiently flexible to shoulder sudden changes in economic policy. Trends, once they have set in, are apt to last a long time.

An article in the Scotsman last Saturday said this: Deflation gathers a negative momentum which cannot immediately be reversed by expansionist measures. I cited the example of an unemployed person in Scotland going to find work possibly in the South of England. It will be very hard to induce such a person to come back again. For one thing, it is true, I think, that financial rewards are generally greater in England than in Scotland. In passing, I feel that this question of the wage differential between the two countries is something which, if it has not been looked into, might well be the subject of Government attention.

If I might again quote from the Scotsman, it says: The crunch is still to come and when it does the impact may be hard and the damage long lasting. This is what I and my colleagues on these Benches fear, and I think the trouble is that the Government have failed to appreciate that conditions in Scotland are not comparable to those in, say, the Midlands or the South of England. I entirely acquit the noble Lord, Lord Hughes, and his colleagues in the Scottish Office of this charge, but in some ways they seem to be prisoners of their own Government in these matters. I wish that they would speak out more, and tell what they know is the truth—at least, what I hope they know is the truth—which is that Government policy, which may be appropriate for Birmingham or Oxford (although some people would doubt it), is in danger of jeopardising everything that has been done since the war to put the economy of Scotland on to a sound and balanced basis.

I think that to some extent that is the reason for the increase in Scottish nationalism which we are beginning to see—an increase which I do not believe to be an entirely political matter. I believe it is a genuine gesture of national pride and defiance which we should do well not to ignore. I believe it springs from the ancient and traditional, and not altogether unfounded suspicion that the further one is away from Whitehall the less attention one will get from the Government. Some people might think this is a good thing, but the suspicion remains that where Scotland is concerned, anyway, it is not always good and Whitehall does not always care. Those of us who feel differently about this matter—and probably the whole House will feel included in this—must prove it to the country. I believe the Conservative Government did so when they were in office, but of course we did have the advantage of having two Scottish Prime Ministers in succession.

Those of us who have had the privilege of holding ministerial office know that there is nothing more disheartening or irritating than criticism that is made purely to score points in the political game. I am sure none of your Lordships would wish to make the Government's task more difficult if and when they have to impose unpopular measures which are necessary and will benefit the whole of the country. At the same time, if we consider something to be unnecessary or ill-thought-out such measures must be analysed to prevent results which may be harmful and short-sighted, and possibly unfair.

If I have tried to put forward in most general terms what seem to me to be some of the more disturbing features of the Scottish economy to-day, I think nevertheless that the question that really matters is, what should be done? We all hope that the Government's measures will have the desired effect on the nation's economy and that it will be possible to ease their rigidity as soon as possible, but I should like to mention three matters upon which I think attention should now be concentrated; and I hope that other noble Lords in this debate will mention many others.

First of all—and this is a general plea—I would urge the Government to cut out wasteful expenditure on purely doctrinaire measures and give a lead by concentrating their priorities on the immediate and practical problems, which I hope will become more evident as this debate proceeds to-day. If they do that, I am quite certain that Scotland will respond; and I hope that, at the same time, they will keep a close eye on necessary Government expenditure—that is to say, that they will see that economies are made wherever possible. I was talking to a Scots architect friend of mine the other day, and he happened to mention that he still notices a difference in the pricing of contracts for Government work, where the whole atmosphere seemed to be very much more easy than for similar private contracts.

I remember that at the last General Election I said several times that in my view the present Government's decision to make the whole of Scotland, with the exception of Edinburgh, a development area, and therefore eligible for the 40 per cent. grant, was a mistake. I still think this to be so, because, as we all know, there is a limit to the finance that is available. We all know that if the jam is spread too thinly it is not beneficial; indeed, it can hardly be noticed. Therefore, in my view, the Government's policy of diffusing their efforts over too many projects—each in itself no doubt highly worthwhile—may result in spreading financial jam too thinly, with the result that no one will benefit sufficiently. I personally feel that it would have been better to retain the system initiated by the previous Government, of concentrating first on selected growth points and building them up into prosperous, thriving areas which will increasingly influence and enrich the surrounding districts.

Thirdly, I want to re-emphasise the importance of communications. The White Paper has a fair amount to say about this matter, and I think it is one of great urgency. For Scotland, because of its geographical position and its own physical features, and despite the many undoubted improvements that have been made over the past few years, is still suffering from a road and rail system which is adding a great many millions of pounds in transport costs to the nation's industrial bill. I do not think that anyone need emphasise the importance of first-class road links to England from Scotland, on both the East and the West coast; but equally needed are good East—West Links, especially, in my view, South of the central belt. Also needed are links connecting the Forth and Tay road bridges, through Fife, up the North-East coast to Aberdeen and beyond; and possibly, in view of increasing development in the Moray Firth area, continued in that direction. Everything must be done to overcome the disadvantage of distance and to reduce transport costs for industry, for agriculture, and also, of course, the rapidly developing forestry industry. I would ask the House to try to make this the very highest priority.

I believe that my noble friend Lady Elliot of Harwood will be discussing rail closures in one particular part of the world which affects her and myself fairly intimately, and I am sure she will make out an overwhelmingly convincing case for the retention of the Waverley line. If I may, I should like in advance to back her up in everything that she is going to say. I would only comment now that to close a line that is serving an area which is just about to he developed industrially seems an extraordinary way to run a railway.

In conclusion, my Lords, I would say this. The Scottish nation is hard-working and proud, and possesses great and partially untapped reserves of tenacity, skill and dependability. We have taken knocks in the past, as I am sure the noble Lord, Lord Hughes, would be the first to agree: but over the last ten or fifteen years the Scottish economy, which is always a delicate plant, has shown signs of strong growth. Nevertheless, I believe that there is a real danger now that it may wither again. I know that the noble Lord, Lord Hughes, is as anxious as we all are to prevent this happening, for it would "knock the stuffing out" of Scotland.

We live in an age when some people, particularly politicians, seem to think that if they can find the right word to describe a particular condition it will make the condition itself more acceptable. I am thinking, for instance, of "redundant" for "unemployed"; "shakeout" for "find another job", and so on. Now we have the word "freeze". This expression seems to me to give the impression that at the end of the freeze one will come out more or less the same as one went in, and as good as new. But the truth is, I believe, that the cold and clammy hand of deflation will not only freeze Scotland rigid but will leave her far worse off in the end, for she will have lost much that she cannot easily or quickly recover. For this reason I earnestly ask the noble Lord seriously to consider the points I have made. I realise that he will probably not be able to answer them to-day, but I do ask him to consider them and, if possible, get action on them.

4.20 p.m.

LORD KILMANY

My Lords, in asking for your Lordships' indulgence in addressing this House for the first time, I must, as did my noble friend, Lord Muirshiel, admit right away that this is not the first occasion on which I have made a speech in this Chamber. I think it was about 23 years ago, if I remember rightly, I was sitting on this very Bench and I think in this part of the Bench when, during the time that your Lordships were so courteous as to allow another place to occupy this place, I found myself making a speech here. What that speech was about is irrelevant to this debate to-day; nor indeed could I refresh my memory, because it was in secret session and no record was taken of it. But I am bound to say I have the clearest recollection that at the end of the debate when I sought to leave the precincts the policeman at the gate told me, in high delight, that the Secretary of State for War of that time, when he had called for his car after having heard out my speech, which had made him twenty minutes late for his engagement, had declared, not under his breath but loud and clear for all to hear, that he would have that young officer court- martialled within a month. Happily, I can assure your Lordships that that never occurred.

But if I may proceed from that, I had intended to assure your Lordships straight away that in the normal manner of a maiden speech I would this afternoon take the greatest care not to be too critical or controversial in anything I said. But again I am bound to admit that yesterday afternoon at about two o'clock that good intention was all but blown away at Turnhouse aerodrome, and it was not blown away by a 90-miles-anhour hurricane or anything of that sort; it was blown away by an average fresh wind that happened to blow across the runway, and as a result we, the passengers waiting to catch the 2.35 'plane from Edinburgh to London, were trundled off instead by bus to Glasgow. Finally we arrived 4½ hours later at seven o'clock, having missed all our engagements and vowing, one and all, to register our discontent and disappointment that so little had been done to improve the state of Scotland's capital airport, Turnhouse. I think your Lordships, certainly those of us who come from Scotland, would be agreed that the improvement of Turn-house is really first among the "musts" if we are to hold our own in economic development in the United Kingdom.

But there are other "musts", too, and I wonder whether your Lordships would forgive me if I concentrate my few remarks primarily on those parts of Scotland—the South-East and the Border Country—with which I have been most closely connected during the last fifteen years or so. I should like to continue on the theme of transport, and I was glad to hear the noble Lord speaking from the Front Bench drawing attention to the vital importance of transport and development. Surely, we should turn now to the Report and try to bring this need for transport into the context of the Report that we are examining. I turn to page 46. I noticed that the noble Earl, Lord Perth, was quick to assure your Lordships that he would not quote at length for fear of wearying the House, but if I may admit to a shortcoming it is to a predilection for brave words when they command universal assent; and I believe I am speaking brave words that have been agreed to command universal assent when I refer to what is said here about the development of the Galashiels area of Scotland. Here I quote: There are at present some 73,000 people living within 15 miles of Galashiels: this is a sizeable labour catchment on which to build. If it is allowed to dwindle, so will the opportunity of preserving and building upon it. This is where the real case for action lies. Those are brave words, and I read a little further on that it is planned to increase the population thereabouts by some 25,000 persons. Splendid! But now should we not ask ourselves what contribution our transport experts are making towards this effort at development? We are going to find my noble friend, Lady Elliot of Harwood, I am sure, making the case with chapter and verse. May I just make the case roughly and sketch it? Suffice to put the point. How can development of that area be assisted by the closing of the one and only vital railway line? It is proposed, as we read and as we know, to close the Waverley to Carlisle railway line, which serves Galashiels and the neighbouring burghs. It is no doubt to be closed first for passengers, but after that, as we have learned from experience, to be closed also for goods.

On what basis is this closure taking place? Very largely on the disappointing financial figures of the working of that railway line. But why are the figures disappointing? Surely it is largely because the timetable has been so misarranged as to be highly inconvenient to the would-be passengers who might otherwise have used that line. Then, again, this line is to be closed quite regardless of weather conditions, which, as all of us who live in that part of the world remember, three or four years ago made it impossible to travel by road from place to place. All I would say to the House to-day, in a non-controversial sense, is—to frame it in a question—does this really make sense?

May I turn from that to another part of that area, to Berwick-upon-Tweed? Here again I might quote, and this time quite shortly, from the Report. Again it is on page 46: The important point about action to improve the condition of the Eastern Area is that it really should work for the benefit of the area as a whole…Berwick-upon-Tweed is the obvious place for the first concentration of effort, and as the focus of communications it can draw on a wide catchment area. There, again, what splendid words! Nobody could dissent from that. But what about this focus of communications? To begin with there is no focus of air communication at all, because there is no air communication within 60 miles. Then what about rail communication? Well, I think one of the most alarming threats to that part of Scotland is at present being discussed, and that is the possible down-grading of the East Coast railway line between Newcastle and Berwick-on-Tweed. If that is to happen I am told that it will entail a discontinuation of the sleeper service from Berwick-on-Tweed to London.

Your Lordships have great experience of business. Is it not one of the essentials certainly of a subsidiary factory—which is the type of thing one would like to see attracted to the Berwick-on-Tweed area—that its manager should from time to time have easy access to his central office board in London? If you cannot fly, and if you cannot go by motor car, it is no good trying to go by rail by day, because you use up all the day in your journey. There is only one convenient way: to go by night, and by night sleeper. I believe I am saying no more than the truth when I say that any managing director, considering proposing to his board the setting up of a subsidiary factory in any area, would ask them first and foremost on the question of communication: "Can my man get from that site to and from London quickly and conveniently?" If we abolish this first-class sleeper service, the answer would be "No"; and "No" would be the answer, I am afraid, to a great proportion of the possible factories which we are all so anxious to attract thereabouts.

I do not want to go further; I must keep an eye upon the clock. But no mention of transport would be complete if it spoke only of railways and only of the air. The roads are important, too. May I again be forgiven if I keep to my local approach and mention part of the A1 road between London and Scotland? In England that road is often very good indeed, but from Berwick-on-Tweed to Edinburgh it cannot, by any standard whatever, be called good. I know that the noble Lord, Lord Hughes, has good knowledge of these things. I invite him to drive his own motor car along there, not at this time of the year but perhaps in the months of August or September. Let him be a little late travelling North on the way from Berwick-on-Tweed for his engagement in Edinburgh, so that he is in the sort of temper that will resent the frustration of a long queue of lorries and of caravans, especially on that narrow winding part of the road by-passing Dunbar. If at the end of that journey Lord Hughes is not thinking eye to eye with me on that particular subject it would be most disappointing.

May I close on a serious note, again echoing what has been already said? I refer to the question of the damage done by the selective employment tax to the intentions of the White Paper. May I follow the noble Earl, Lord Perth, in quoting from the White Paper, this time from page 32: Adequate and up-to-date services are important if Scotland is to be an attractive area for incoming industrialists…The service industries, therefore, have a major role to play in the build-up of modern manufacturing industry and in the reduction of emigration from Scotland. Those are sonorous terms from which I do not believe one of your Lordships could dissent. But here we have S.E.T. standing in the way. Am I asking too much of the noble Lord, Lord Hughes, when I say that he would be doing more good for Scotland by this one sentence than in any other way if, at the close of the debate, he would give us an assurance that the Government not only will once again look into the incidence of S.E.T., but, having facts enough before them, would abolish it right away where Scotland is concerned?

4.35 p.m.

LORD MITCHISON

My Lords, for many years I have revered the noble Lord who has just spoken, when he sat in the Chair in another place and showed three qualities. Each of them we found most attractive: a complete impartiality, which has perhaps wavered just a little to-day; a sense of humour, which certainly has not, and a delightful courtesy. It is nice that he should show them again as he has to-day in speaking here, and I should like to congratulate him quite sincerely, and express the hope that I shall hear him again and again in this House. Sometimes things get a little dull. He certainly will not contribute to that; he will relieve us of it.

Next, I must turn, I think, to apologise for being an Englishman with the temerity to get up in a Scots debate. All I can say, by way of excuse, is two things: first, I have had long connection with Scotland—indeed, I live there; and, secondly, I have from time to time tried to persuade private Members of another place to introduce the shortest Private Member's Bill on record. I feel that this Private Member's Bill would satisfy everybody, because it would contain only two clauses, the first being: The Acts of Union are hereby dissolved and the second: This Act shall not apply to Scotland. The second clause might have had the effect of dissuading Scotsmen from speaking about the Bill. But your Lordships will see that I have taken a great interest in Scotland for a long time. I was thinking about that Bill to-day. So far as I know, it has not been proposed or passed; indeed, the first paragraph of the White Paper we are discussing to-day emphasises the connection not only between Scotland and England, but between the Scottish Plan and the National Plan, and this is the Scottish part of it.

In those circumstances, it seems to me a little strange that we should be taking this occasion to say that a tax which has been levied in a national crisis (I make no comment upon who may or may not be responsible for it) should not apply to Scotland. I do not quite know why not. It is perfectly true that the services in Scotland employ a large number of people. So they do in England. I am not sure that the exact proportion matters much. I would ask your Lordships to remember that that tax had two objects. The first was to raise a considerable sum of money. If it was not going to be raised in that way, it had to be raised in another. The second was to impose on services as such taxation which had hitherto fallen much too heavily on goods. I am not going to argue the case to-day. I am going to say simply that those are serious reasons, and therefore I cannot see the grounds for saying that a tax which applies to England should not apply to Scotland, too.

If I may proceed from that to make just one other comment on the general position in Scotland, I looked at the percentage of unemployment in Scotland and I traced it over the years. So far as I know, it is not given in this White Paper, but it is in the Ministry of Labour documents. In 1964, when a certain political change took place, the rate was 3.7 per cent. That was not an exceptional figure. The average for that and the four preceding years had been 3.8 per cent. On the last available figures in July, taking the average over the seventeen months, it has now fallen to under 3 per cent.—actually, it is 2.87 per cent. These small percentages are percentages of a large figure, and, so far as I can see, they give a true picture of what has happened about finding new jobs in Scotland.

The plain result is that since the present Government, or its immediate predecessor, came into power there has been a marked improvement in the position of Scotland. Indeed, I do not think it would be denied by noble Lords who have spoken from the Benches opposite. They have spoken, in my opinion quite rightly, not merely about a change, but about a large and sweeping change happening in Scotland, which is well illustrated by the White Paper which we are debating to-day.

It is true that the White Paper is concerned with what is to be done in the future, but one must look at the immediate past, and one sees that in every single subject the most encouraging changes are taking place. One can talk about advance factories, and so on, but these are the instruments. What is so encouraging is the generality of it. I do not want to give the whole credit for this to one Government or another. In a Scots debate one might say how cordially glad we are that this has been happening in the last few years. I do not even need to insist on 1964, though it was, as it happened, a turning point. That in itself is very encouraging.

I felt, too, that there was a psychological element in this White Paper, which I found heartening. It may have been written by officials in St. Andrew's House (it could hardly have been written by the Secretary of State personally, I imagine), but what is interesting about it is that people are realising, as I see it, for the first time the terrific capacity of the Scots in working on new things. That capacity is now for the first time going to receive encouragement by doing what one noble Lord asked for; that is, by moving new, lively, growing industries—in fact new thinking altogether, in academic matters, too—from England to Scotland; and doing it quite deliberately in order to keep a fair balance between the countries, so that each country should give all it can of that which it can best do. If one can once get that spirit in Scotland—and it seems to me, as an Englishman living there, that it has been a trifle lacking during my lifetime—it is surely possible to go a very long way indeed. That, as much as the figures involved and all the rest of it, is what encourages me when I look at this White Paper.

I turn to say a word or two about the Highlands and Islands. I have seen a certain amount of this, too, and I agree with most of the conclusions in this plan. I should like to develop in one rather odd direction what I was saying just now. The importance of fishing and fisheries on the West Coast of Scotland, at any rate, is rather underestimated. It is not, of course, a cure-all. I put on my fishing tie to-day in order to say that there is much more to this matter than one would realise in looking at the White Paper. I take two instances to illustrate this. What is mentioned more than once in the White Paper is the possibility of what is sometimes called "farming at sea": marine farming, gathering the harvest from the sea which was once described as "unharvested"—though the man who used that term was not a Scot; he was only a Greek; and Scots have more enterprise. That is a possibility, and I am very glad to see that it is being considered—not, of course, as an immediate remedy, but as a long-term development—in this White Paper. That is an illustration of the kind of thing that may be possible when Scots, with their questing minds, are induced to look at what may be done in their own country before they decide to go away.

Much of this is a question of the amount of "push" you give to a Highlander. You have got to give him some "push" or he will not move at all. If you give him too much, he will go to New Zealand or Nova Scotia. If you give him something that is a little too much, he will probably go to England. But what you want him to do at present is to move in and about Scotland, and to foster this spirit which I find between the lines of this Report.

LORD BOOTHBY

My Lords, before the noble Lord leaves the subject of fish, I am sure he realises that by far the most encouraging development in the herring fishing industry in the last two years has taken place off the West Coast of Scotland, which is very good.

LORD MITCHISON

I am glad to hear it, and I know that the herring fishing industry has been doing much better lately. The reasons for that are rather complicated. But the Report is rather inclined not to give sufficient room to the possibilities of fishing. It is not quite consistent. One part of it is more encouraging than another.

The other subject I wish to mention is forestry. I am very glad indeed to see the importance which the Report so rightly gives to forestry in the development of Scotland. It is a question of getting enough land, and it is quite untrue to say—and the Report makes this clear—that this is a conflict between agriculture and forestry. There is plenty of room in the Highlands of Scotland for both of them. When one looks at the figures of the numbers employed, they are not far different from the numbers employed in fishing. They are quite small, and I feel that there is room for more. If one is to have in the Highlands of Scotland the forestry villages or settlements that one has already, one can easily tack on to them a little more. I know that professional foresters do not think much of this idea, but I am not sure that I entirely agree with them. I believe a little more could be done in the direction of making the early products of forestry on the spot. I simply put it up as a suggestion, and shall be interested to hear what my noble friend has to say.

In conclusion, may I say a word in praise of the herring? It is a humble fish, but it is remarkably good eating and it is possible to do some very nice things with it. I go out into the London shops and get a herring "dolled up" in one way or another, but the trouble is that I always find that it comes from some place abroad. I thought we were all for restricting imports a little at the moment. Cannot more be done by way of processing in Scotland? I know that the standard answer is that if you put up a canning station you will get canning for only part of the year, but I should have thought some combination was possible, just as a combination in employment between forestry and agriculture has proved very successful in other countries.

It is perhaps suitable to end with a mild frivolity on taxes. I know very well a member of the Highland Panel who had one great remedy, not delivered officially, for anything that is wrong in Scotland—and this I am sure will encourage the noble Viscount opposite. It was duty-free whisky in Mull. Unfortunately, there must be taxes in both countries, and they have to be more or less the same.

4.50 p.m.

LORD POLWARTH

My Lords, we are all deeply indebted to the noble Earl for initiating what I hope is becoming an annual examination of Scotland's economic health. We are very grateful to the noble Lord, Lord Hughes, for the most comprehensive and sincere review which he gave of the achievements and aspirations of Scotland. On a more personal note, if he will forgive me for saying so, I think we are very fortunate to have as Government spokesman on Scottish affairs someone who has played so close a personal part as he has in a number of Scotland's most important developments of to-day.

I think we have also had two maiden speeches which show us how extremely fortunate this House is in receiving such an accession of talent, of experience in the affairs and the administration of Scotland. In his speech the noble Viscount, Lord Muirshiel, was more than kind about the work of the Scottish Council. I should like to say in reply that the Scottish Council has throughout its existence enjoyed a very happy cooperation with St. Andrew's House. I would equally say that I do not think it has ever enjoyed a happier period of co-operation than during the noble Viscount's tenure of office as Secretary of State. Perhaps I was in a position to know more than the general public at large, or at least to suspect—because knowledge might be improper—the very doughty battles that he fought among his colleagues in Government on Scotland's behalf.

The title of the paper we are debating is, of course, The Scottish Economy, 1965 to 1970, A Plan for Expansion, and the aim of it is summed-up extremely well in the Secretary of State's foreword. It is an aim with which I think we would all agree: to speed up the evolution of a modern industrial structure in Scotland"— the key words are "a modern industrial structure"— providing more jobs and stemming the outward flow of young Scots to the South. But I think we should be quite clear what the White Paper is, and what it is not.

It is certainly not a comprehensive plan, far less a panacea for Scotland's economic problems, if indeed there ever could be one, which I very much doubt. As a plan it mainly outlines a programme of public works by central and local Government, at the rate of some £400 million a year over the five years, which is a very considerable and desirable contribution to one part of the problem, particularly if it can be kept up throughout the present period of national stringency. On this I think we were relieved to have the assurances of the noble Lord, Lord Hughes, in his first speech.

The plan contains a most useful mine of information relating to Scotland's economy as a whole, but when it comes to the fundamental need, the need for industrial growth, it is largely a statement of objectives and aspirations without a great deal of indication of the methods and techniques by which it is going to be brought about. I am sorry, too, that it takes rather for granted the very remarkable progress that has been made in Scotland, not merely in the last two years, on which the noble Lord, Lord Hughes, rather naturally concentrated, but over the whole of the last twenty years since the end of the last war. I think it is worth reflecting on that progress as a reminder that what we have done in the past we can do again, and will need to do.

Where, then, do we stand to-day? Unemployment has been very substantially reduced, even if the coming winter is seeing it rise again—let us hope temporarily. Our industrial structure has been immeasurably strengthened, but in spite of that there are no grounds for complacency to-day. The White Paper recognised, as I think we would all agree, that no economy can thrive—and that includes Scotland's—if its population is on the decline or has an ageing structure. The noble Earl, Lord Perth, has already referred to the Scottish Council's recent study on migration as it affects Scotland, which brought out some fairly disturbing facts on which I should like to say just a little more.

Emigration is nothing new so far as Scotland is concerned, and I think there would be fairly general agreement that this is something from which the world—dare I say not excluding England?—has tended to benefit. It has, of course, been a drain of Scotland's life-blood, of many of her younger, more ambitious folk. But at least over the years this loss by migration has been exceeded in numbers by natural increase, by the excess of births over deaths. Over the last ten years the rate of natural increase in Scotland has been on average about one-third higher than for England and Wales, though the discrepancy has tended to reduce during the later part of that period. This is a trend the reasons for which it would be most interesting to speculate on, though possibly not particularly appropriate to-day.

However, the population of Scotland, therefore, continued to increase, albeit slowly, till the year 1963–64, when it still grew though only by some 1,700 souls. In 1964–65, for which the figures were not available when this White Paper was printed, for the first time in history, so far as records go, net emigration from Scotland got ahead of the natural increase and Scotland's population actually fell, not by much, but by some 2,400 people. So the hard fact is that, in spite of all that has been achieved and in spite of increased prosperity, migration has not slackened its pull; it has increased it. The figures of net emigration from Scotland for the last four recorded years were, consecutively, 29,000, 34,000, 40,000 and 43,000. It has been on a steadily rising scale.

I have deliberately said "net emigration", because it is very far from being a one-way traffic as is frequently supposed. Part of it, of course, is emigration overseas—and I know that here the noble Lord, Lord Hughes, may take issue with me—a trend which does not seem to be related particularly closely to conditions in Scotland so much as to wider considerations. The rate of overseas migration fluctuates pretty widely over periods of years, but it seems to be more probable that it is related less to, say, the rate of unemployment in Scotland, than to conditions and the state of prosperity in the principal countries to which this migration takes place. This, again, is another wider subject. But it appears from this that overseas migration from Scotland is unlikely to diminish greatly over the long term, because the lure of the developing, dynamic younger countries has always been strong to the Scot. Of the 43,000 net emigration in 1964–65, 21,000—almost half—went overseas.

Turning next—because this is a question of the available statistics—to the numbers of insured employees, the numbers of the working population, we find that over the last five recorded years the average figure of net emigration from Scotland to England and Wales was just under 16,000 a year, and—this is the significant part—it represented the difference between 48,000 a year leaving Scotland and 32,000 coming in from the rest of the country. So it was very far from being in one direction only. What is more, the survey showed that the rate of emigration to the rest of Britain as a whole was not higher, but actually lower, in proportion to our population, than it was from the North of England and from Wales—both regions with problems similar to ours. The significant difference, as the noble Earl, Lord Perth, mentioned, was in the influx of people into Scotland, which was considerably lower proportionately than it was into the other areas such as the North of England and Wales.

So, taking this survey of migration in conjunction with the White Paper, I think two things in particular stand out. In the first paragraph of the White Paper a basic assumption is made of a reduction in net emigration from Scotland to some 20,000 people a year. As this is around the current level of overseas emigration alone (which seems, as I surmised earlier, unlikely to decline), this assumption would mean that if we are to get net emigration down to about 20,000 we must bring the flow of people between Scotland and the rest of the United Kingdom more or less into balance. More or less as many must come in from the South as go out to it—and we are very far from this position, my Lords. In 1964–65 some 22,000 souls went to the South from Scotland; and that is a measure of the tremendous change which must still be brought about in Scotland if the projections of the White Paper based on these figures are to be achieved. This leads also to the second point: that the problem is not so much to stem the outward flow of Scots to the South as it is to stimulate the inward flow from the South.

What, then, are the principal reasons for this trend, and what can we do about it? Most of the reasons, I think, can be summed up under one broad heading—lack of opportunity, whether it be in choice of work, in earnings, in prospects for promotion or in housing and living conditions. Despite all that has been done, the need, first and foremost, is for a still greater change in the pattern of our industry towards more of the developing and expanding spheres. It is essential, therefore, in the first place, that we maintain the present system of financial inducements, of grants and loans and of factory building, coupled with strict control of the issue of industrial development certificates—and we were glad to hear from the noble Lord, Lord Hughes, the promises in this direction. Along with this, we must continue to dispel ignorance about Scotland as a place in which to live and work. A great deal has already been achieved in this direction in the last three years by the Scottish Council's publicity campaign, which has been financed pound for pound by Government and industry itself. This effort must be maintained.

The White Paper very rightly emphasises the importance of more industry based on science, and here there is one thing in particular which can be done by the Government. It is touched on in the Paper but is not really developed, though it has been mentioned earlier in this debate. It is to endeavour to steer to Scotland and similar areas some more of its own technological research and development projects, and the departments which administer them. It is all too easy for these projects and departments to proliferate in and around London, very often on grounds of personal preference and convenience; and, because industry in these spheres must be in close touch with these projects and departments, they act as a magnet for the very industries which we are seeking to get established in Scotland. Earlier this year the Scottish Council met the then Minister of Technology and suggested to him a number of potential projects of this kind, notably one for the development of the growing science of bio-engineering, about which some of your Lordships will know more than I do, but nothing much seems to have happened. We have at least, I am glad to say, the promise of an Institute of Machine Tool and Control Technology to be set up at East Kilbride. I hope the Government will push on with this with all speed, and will give it the resources it needs.

I mentioned in this context the importance of personal contact. More and more is this so in a world of international technology and international markets. Both ideas and sales result from personal contact, and that is why I am sorry that the paper does not lay more stress than it does on the importance of good communications, particularly by air. From Scotland to the South, and also to North America, air services are now reasonably adequate, even if B.E.A. have their periodical disruptions, as they did earlier this summer; even if the noble Lord, Lord Kilmany, was blown off course from Edinburgh to Glasgow; and even if, yesterday evening, the noble Earl, Lord Haddington, and I were delayed an hour and a half by something as undignified for an airplane as having a puncture. But what we badly need now are more air services from Scotland, possibly via the North of England, direct to the Continent of Europe, without going through the congestion and complications of London Airport. I am glad to say that one independent operator has made a good start on such a service from Scotland and Newcastle to Germany, but we still feel that B.E.A., as a national carrier, with their superior resources, could do a great deal more in this direction than they have so far shown signs of doing. We feel that a gentle prod from the Government, or perhaps a not so gentle prod, might help.

Lastly, my Lords, I come to two of the greatest barriers of all to industrial growth, as borne out time and again in dealing with companies, whether trying to expand in Scotland or looking for new sites there: first, lack of skilled labour, and, second, lack of suitable housing. While skilled labour is not nearly so scarce as it is in the South, there is still not enough to meet the demands both of established and growing industries in Scotland and of those who would like to move into Scotland from outside. Reference is of course made in the Paper to the need for training and retraining labour, both in Government centres and inside industry itself. What is clear is that this will have to be on a still larger scale and that much more publicity and encouragement should be given to men and women to undertake training in the new skills. I was very disappointed to read in the Press that of 1,300 or so people recently declared redundant at the Linwood and Bathgate motor plants, only a couple of dozen have so far opted to learn a new skill at one of the Government centres. I think there may well be a case for a campaign to encourage people more strongly to take the plunge to train in a new skill.

Then there is this eternal question of housing, about which so much has been said. The fall-off in local authority housing in Scotland was disappointing, but in current conditions not surprising, with the very high interest rates and with the traditional pattern of subsidised rents which bears so heavily on local authority rates and all those who pay them. It is unfortunate that just when Governments of both Parties had brought pressure for more realistic rent policies, these have had to be forestalled or put aside by the freeze. What I think we should recognise are the very considerable efforts that are being made by the Scottish Office, by the colleagues of the noble Lord, Lord Hughes, to get this housing programme going again as it should, and I think we must welcome the recovery in housing figures in the last few months.

However, it is not just a question of numbers of houses, but of quality, too. We still lag greatly behind the South in this respect. There is a serious shortage of houses for owner occupation, particularly by the executive ranks in industry. Time and again this factor comes up. Only two days ago I had a personal letter from the head of a well-known company which already has a successful plant in Scotland. In it he explained to me, with obvious regret, because his operation had been a success, that they had been obliged to plan their next development in the South. I do not know how or where he is getting an industrial development certificate, but he said that they were having to do this for two reasons, partly a lack of adequate housing in their Scottish location for people of the type they would be employing, and partly—and this other reason is significant, and goes back to one of my earlier points the need to be near their research laboratories. That is a reminder of the importance of trying to bring more of these facilities North—not only Government facilities but also those of private industry.

I have tried to set out the main fields in which action is needed and in which the Government can help if we are to continue to increase our rate of industrial growth and provide the opportunities which a growing and prosperous population will demand. Financial inducements and factory building; more technological research and development; better communications; more training for skills; more houses and a better variety of them. Meanwhile, a great deal is going on in Scotland, I am glad to say, at the hands of industry and commerce itself. Scotland leads Britain in the markets of the world: another survey which the Scottish Council recently carried out estimates that in 1964 we exported 18½ per cent. of our manufacturing output, compared with 15½ per cent. for the United Kingdom as a whole. This was not solely attributable to the one prominent Scottish export about which we all know. It represents £575 per employee in manufacturing, compared with £504 in the rest of the country. We have sent trade missions to almost every country in Europe and to the Antipodes, too. The latest of these, organised by the new Scottish Exports Committee, left last week-end for the United States. It was thirty strong, probably the largest all-round British trade mission to visit that country, and under the leadership of Lord Clydesmuir, my successor as Chairman of the Scottish Council, who otherwise would have been here to-day. This venture has the backing of the Scottish Council, the Scottish Chambers of Commerce and the C.B.I. in Scotland. I am glad to say that in to-day's Times Lord Clydesmuir is reported from Chicago as broadcasting the attractions of Scotland as a location for American industry. I am sure that we all wish him success.

On the scientific and technological front, which is so important, we shall shortly be sending out a group to explore the possibility of forging new direct links between industry and research institutions in countries overseas and in Scotland. We must aim to keep up with the most advanced development in this field, not merely in England but anywhere in the world; and this we propose to try to do. I would at this point say one thing only about the shorter-term position with which we are faced, because of its possible implications for the longer-term. While Scotland is undoubtedly much more resistant than in the past to temporary fluctuations in trade, there is clearly going to be a good deal of unemployment and short-time working this winter in the motor and other industries; and this is already spreading to some of the dependent industries, such as steel. At the same time there are as yet not as many opportunities for alternative employment in Scotland as there are in the Midlands and the South.

As the noble Lord, Lord Hughes, said, it is no use pretending that Scotland's industries can be isolated from the effects of the squeeze. We are quite prepared to play our part in putting the national economy on its feet. But, at the same time, I think there is a little resentment that we should be given medicine for a disease from which we are not really suffering—the disease of inflation, which really has its seat in the over-heated Midlands and the South. In the past one of our great problems in attracting new industry has been to get rid of the legacy of stormy industrial relations, which had its origin in the depression of the 1930's, a legacy which since the war has been much more of a myth than a fact. But the scars of the 'thirties were deep and the myth dies hard. In recent years one of the most encouraging things in Scotland has been the improvement in labour relations, as witness the recent Clyde shipyard agreement and the restraint shown a few weeks ago by the workers at the Linwood motor plant. It would be the greatest possible tragedy for Scotland if short-term policies were to result in reopening the scars and in souring industrial relations again.

I realise the difficulties, but I would ask the Government to do everything in their power to prevent this occurring. That said, I would end by saying that it is encouraging that in the field of Scottish industrial development industry and Government have largely the same aim and the same broad ideas as to how that is to be achieved, despite occasional differences of emphasis and in matters of detail. That aim is that Scotland should hold out as good opportunities for work and prosperity as any other part of the country, an aim which, I submit, is in the national interest, and not in Scotland's alone.

5.17 p.m.

LORD RITCHIE-CALDER

My Lords, it is my good fortune and at the same time my affliction that I should follow the noble Lord, Lord Polwarth. Although he has given me the opportunity to say the things I want to say, he has also said some of them much more effectively than I could have done. One point which I want to stress and which he stressed is the enormous importance—as I am sure everyone here will realise—of injecting more and more technological research into Scotland. This happens to be one of my own preoccupations, but it is nevertheless true. One of the great difficulties about development of Scotland is the fact that, as we all know, we believe in or want to live in our past. It is a complaint we suffer from—practically every one of us. It is this tattered tartan we wear; it is this pride in poverty; the sense that what we were we still are. This cannot be so any more; because what we are forgetting in our own past is the nature of our own achievements. I would remind the House that among other things, the steam-engine came out of Greenock; radar came out of Angus; penicillin came out of the Burns' country. Why should we not sing about this as we do about the regrets and laments of the past?

We have a great history of scientific achievement. It has been basic achievement, as always. Even James Watt had to come to England to tie up with Bolton in order to make a commercial success of the steam engine. We failed with penicillin, although we contributed in Fleming, because, as I pointed out in my maiden speech, the Americans were more highly-developed technologically. We must realise that the permanence of our achievements in development in Scotland must lie in bringing to Scotland, and encouraging within Scotland, the source springs of industrial development. You cannot have simply delegated science. Our tragedy has been—it has been cured largely in recent years—owing to the fact that we have set up or have had to settle for branch factories and subsidiary industries; that they came to us with their sources elsewhere. As the noble Lord. Lord Polwarth, pointed out, as an excuse for not following up, in one recent case they had to go back to their sources of research.

Industry without research is like a cut flower without the roots of the plant; it will die. It must be rooted locally and must be in close relationship with the science from which it is going to derive—and, after all, I say with legitimate pride, we have a fairly conspicuous scientific reservoir in Scotland, in the academic sense—and it must be in relation to the industries which are going to derive the benefit. Out of this feedback between science, technology and industry we can hope to have, and shall have, a continuing and permanent basis of industrial development. This is something we badly need. The prospects, and indeed the account in the White Paper, are enormously encouraging. It is something of which we were aware, even those of us who feel, as all Scotsmen feel, that Scotland has, somehow or other, been neglected at one time or another.

In the jargon of international relations, we speak about some countries as being "developed"; "we speak of other countries as being" "developing", and of some as being "highly developed". I have another term: countries which have been "dis-developed". At one stage it was manifestly clear that Scotland was "dis-developed". It had given of itself, of its resources, with such enormous generosity in the Industrial Revolution; and from its devotion to heavy industry it had become, as we know to our cost in historical perspective, merely a Vulcan's forge, or the arsenal, which always flourishes in time of war and always declines and diminishes in time of peace. Fortunately, after the Second World War we did not suffer that fate, as we did after the First World War.

I would point with some pride to the fact that some of us with a deep concern for Scotland did manage, immediately after the war, to get a recognition from the then Government—from the late Lord Morrison of Lambeth, who as Mr. Herbert Morrison was Lord President of the Council—of the desperate, real and genuine need for the transfer to Scotland of at least Government enterprise in research. This was what the noble Earl, Lord Perth, pointed out. In fact at one time (I forget which year he referred to) he was quoting 63 per cent. of all the Government research as located in the London area. Indeed, it is almost true to say that at the end of the war the proportion must have been over 90 per cent.

THE EARL OF PERTH

My Lords, it was only last year that it was still 62 per cent.

LORD RITCHIE-CALDER

My Lords 62 per cent. last year compares, I must say, very favourably with what was true in 1946 and 1947, when most of the research was concentrated in the London area. We did succeed then in bringing to Scotland the National Engineering Laboratory, which is now to be the base also of the Institute of Machine Tools, with controlled technology to which the noble Lord, Lord Polwarth, referred. This again, I think, was a very important development: that we succeeded in bringing this advanced technology—modern machine tools and computer-controlled techniques, and so on—to Scotland. It was a great encouragement—and not only to industrial development. It encourages relationships with the academics and with the new technological universities and gives fresh impetus to the development of inspired (I think that is the word) research in Scotland; research which will produce new results while resolving problems.

My Lords, I would take up one point made by the noble Lord, Lord Mitchison, and say very seriously that this whole question of farming the Western lochs is something which we ought seriously and urgently to be doing. As some Scottish noble Lords will remember, we did have an experiment in Loch Sween with the use of artificial fertiliser. We tried to encourage and stimulate fish farming. The trouble was that Loch Sween was a little colder than the Atlantic and the fish migrated. But we could, by modern techniques—by electric impulses across the mouth of the loch for example, as I suggested on another occasion—develop fish farming. If we located one of our atomic power stations like Hunterston near a loch, the waste steam power and heat could be used to make the fish more comfortable, or make the Atlantic less attractive. Also, I may say, I do not think it necessary even to use fertiliser. At the bottom of the lochs we have a great natural compost heap in the shape of the organic waste of the sea. I would commend to my noble friend Lord Hughes that somehow we develop an outsize pneumatic pump, a bicycle pump, and just pump up this waste into the higher levels of the lochs, and see whether we should be able to feed the food fish we need. I am also very glad that we managed to salvage Dounreay and that we are able to continue in the advanced field of atomic energy beyond its original direction.

Our most wasteful and costly emigration, I think, is described in a phrase which I do not particularly like, the "brain-drain"—the export and the consequent loss of highly educated people. After all, we have boasted of the quality of education in Scotland. We have exported very generously people who in their own ways have made important contributions, in this case to science. It does not matter greatly where scientists do their work, but it is always nice to have them a little nearer home in order that they may give the essential leadership and inspiration for industrial development.

It is important also to remember that in the planning of Scotland we do not build another Antonine Wall across Scotland. In the past, we have tended industrially to develop the central belt of Scotland and the Lowlands. At this moment we are tending, both industrially and academically, to build a wall between the South and the North. I earnestly hope that when looking at the map of Scotland we shall realise—as I am sure my noble friend Lord Hughes realises—the tremendous importance, in these days of foot-loose energy—that is electrical energy—of developing scientific centres in the Highlands, and indeed the Islands. We in Scotland, looking at the prospects without despondency, might also look at the warning which is implicit in the emigration figures given by the noble Lord, Lord Polwarth. It is that we are not only losing people overseas to help the development of the world—which must be one of my concerns as Professor of International Relations—but are also losing them, reluctantly, to England.

It is, I think, important that we consider what the future population movement is going to be, particularly in terms of such projects as the Channel Tunnel. I look upon the Channel Tunnel, not with disfavour, but as a potential drain-pipe, because once again it will simply be an inducement for a movement, not only of transport but of population to the South. We have a battle with England which has never been settled, and never will be settled, not even in our repeated and reasserted grievance; we have the battle of population, of the need for the recognition that there is a drift and a potentiality of loss from Scotland which Scotland can ill-afford in terms of manpower, and particularly intellectual manpower. If we are going to keep our people and our brains in Scotland, we have to develop our resources precisely in the terms of this White Paper, reinforced by what has been said by the noble Lord, Lord Polwarth, who I think knows more about this subject than any other living man.

5.30 p.m.

BARONESS ELLIOT OF HARWOOD

My Lords, I am sure that we have all listened with tremendous interest to the two maiden speeches we have heard to-day from noble Lords on this side of the House, and I should like to add my congratulations to them. I would also say how delighted we all were that they chose a debate on Scotland in which to speak for the first time, because they are distinguished Scotsmen and what they say will have great influence, not only in this House but also outside.

Though I realise that in debating the Scottish economy we do no want to make particular reference to agriculture or forestry, I think that it would be unwise if we took Scottish economy as being something entirely separate from the agricultural industry. My noble friend Lord Perth has said that he is going to call for a debate on agriculture later on, towards the time when the Price Review is being made. But I should like to speak as a Borderer about the Borders, and I could not do so without mentioning some of the questions which at the moment are causing a great deal of uneasiness, and even despair, among agriculturists in the Borders and in other upland areas in the North of Scotland. I am sure that the noble Lord, Lord Hughes, will be sympathetic and I do not want to dwell on this subject, but I should not like to speak in a Scottish debate without drawing attention to it.

This large volume is a fine document, but while it contains pages and pages about the industrial side of the economic development of Scotland, it contains little about agriculture. If we look at the map of Scotland we cannot get away from the fact that vast areas will never be industrialised, and therefore we must take care of these areas, as well as of the areas where industrial expansion is possible. But the Report contains valuable information about agriculture. It shows, for instance, that an increase in agricultural output has been achieved by a labour force which in ten years has declined by 20 per cent., while the productivity per man has increased by over 40 per cent.—a rate which exceeds the average for all industries in the country. That is something of which we can be very proud. That is a good record for one industry, but it receives scant recognition when people talk about future plans for Scotland.

Paragraphs 99 and 100 plan for the expansion of the production of beef and mutton, but those in the livestock industry at the present moment, and the contribution which livestock farmers in the Borders and in other hill and upland areas are making, are getting a poor return. Little has been done to encourage farmers to breed beef cattle. There has been an enormous drop in the selling price of hill lambs. In fact, some graziers in the Borders are making comparisons between 1966 and the years between 1931 and 1933, which I remember and which I hope will never come back. This is a very serious matter.

The White Paper also refers to beef production as playing an important part in the increase of agricultural production, which is given as 8 or 9 per cent., at constant prices. I can only tell your Lordships (and I hope that the noble Lord, Lord Hughes, will pass this on to his right honourable friend the Minister of Agriculture) that the situation at the moment with regard to beef is very serious indeed. We have just had a number of important calf sales in the Borders and, with the exception of one, the prices have been disastrous. At one famous Border centre there were 500 more calves for sale, and the prices were so had that a great many farmers took home many of the cattle, in order to keep them a little longer, fatten them on and try to get a better price later. This is not an encouragement to increase productivity and help the economy of Scotland.

Many suggestions have been made, in the Press and elsewhere, about why this has happened. It has been suggested that the Minister of Agriculture allowed 25,000 head of Irish cattle to come into this country as against 14,000 in 1965. This, I am sure, had a detrimental effect on cattle farming in Scotland. I wonder whether the noble Lord, Lord Hughes, could draw attention to this point, though I dare say it has been done before now, and see whether something could be done to postpone or control these imports to some extent in order to encourage the home production of livestock, because in many areas of Scotland the production of livestock is the best economic use of the land.

The plans for the development of the Border area emphasise new industries and housing. A consultative committee, to which my noble friend Lord Muirshiel drew attention, has been set up. I think that this is an excellent idea. I am not in the least opposed to it. But when I analyse the membership of this Council, I find that of the 23 members there is only one who is designated as representing the agricultural industry—this is an area in which agriculture is vital and he comes from north Northumberland. I would suggest to the noble Lord, Lord Hughes, that surely it would have been proper to invite one of the Border farmers—and there are some fine farmers in the area—to serve on the Council. Of course, I know that some of the other members are interested in and know about agriculture, but they are not designated as representing agriculture.

I should like to make one other comment to the noble Lord about the 22 other members. Industry in the Borders is largely the manufacturing of woollens, hosiery and knitted goods and largely employs women labour. Indeed, this has always been one of our problems, the greater employment for women than for men. Yet there is not one single woman on the Council, not even a trade union representative. There must be thousands of women working in the hosiery trade who are members of a union and, if nowhere else, we might have had among the trade union representatives one woman. I would beg the noble Lord to suggest to the Secretary of State that he gives consideration to this point before the matter goes very much further.

Appendix A of the White Paper is devoted to the Borders. This part of the Report has been carefully done and shows an understanding of the depopulation of the Borders and of the need to stop it, of the need to attract more people and more industry to the area and to develop the natural resources and the tourist attractions of the Borders. Nobody could possibly quarrel with this. It is an excellent analysis and one that we all know is correct. Those of us who live in the area feel great anxiety about many of the problems which are outlined in this appendix, and which we would do all in our power to solve.

I am not one of those directly involved with the new development proposals around Galashiels which are described here and which have been referred to by the noble Lord, Lord Kilmany. If I make any criticism of this, I do not want the Minister to think that I have any personal interest in it; I have none, beyond the fact that I am on the county council and am interested in everything that happens in the area. But only last week in the local press (and I have the newspaper here) I saw a sketch plan brought forward, and I suddenly realised, when I was looking at it, that the published plan puts the whole of this development in a very beautiful part of the Tweed Valley. It is all in one place, so to speak, and it takes a large piece of land which is very fine agricultural land. The housing and the factories will run very nearly up to the windows of Abbotsford House, one of our great centres of the tourist industry and a house of tremendous interest to a great many people.

I think, looking at it simply from the outside, that to take this beautiful stretch of the Tweed Valley, when, knowing the area very well, I feel there may be other sites, is in many ways a great pity. I wonder whether everything has been done to try to find other sites. I know that this is difficult to do and that every time you want to take land there are objections. But there are areas. For instance, Newtown St. Boswells, one of the towns where the county council operates, is an area which could well be developed considerably without injuring much of the scenic area or the agricultural industry, and certainly not injuring some of the great historical sites.

There is another big industrial town, the town of Hawick, which might very well share in the development. I cannot see why it should all be in one area. Could some of the development be shared? Could it be shared with other towns? Actually the distances in that area are not very great. If you take five or ten miles round Galashiels you run into a number of towns where you could make considerable development which would be of great value and, from the point of view of amenity, would not be so distressing to many people. As I say, the plan has only just been published to the public, and it has not yet come before the county council. I believe there will be an inquiry on the proposal, and I hope it may be possible to combine the need for development with the need for preserving certain historic and important points in the county.

Lastly, I come to the question of transport, and here I speak with considerable knowledge and experience and, above all, a practical use of both the railway and the roads. As the noble Lord, Lord Kilmany, has mentioned, the railway is threatened with closure, and an inquiry is to be held in two weeks' time. Rail is the only way that travellers from the Border towns of Galashiels, Melrose, St. Boswells, Hawick and Newcastleton can get to London, or that directors from the Midland hosiery towns—I am thinking of Nottingham and Leeds in particular—can come, as they often do, to the hosiery industry of Hawick and Galashiels. These links with hosiery towns and the Border towns, and the link between Edinburgh and Carlisle and the South are links which I do not think we can do without. I have not seen the economics of the railway—I travel on it twice a week, and every sleeper is always taken—and I cannot understand how it is that it does not pay. I cannot believe that the night sleeper train every night each way does not pay when it is always full.

Then there is the important point that students doing technical work travel from Galashiels to Edinburgh to go to colleges of further education, and they travel from Hawick to Galashiels where there is a fine technical college. This railway is used continuously in this way. Yet the idea seems to be that the whole thing should be scrapped and that we are to be told to travel by road. To plan a development at great cost to the Government (and we hope it will bring prosperity to the area) with 1,000 houses, factory space and all the rest of it, and issue a report about it, and at the same time to post up throughout the entire railway line closure notices for January 1, seems to me to be a contradiction in terms. I cannot imagine how you can want to make this development and then take away the vital link.

I am told that the Transport Users' Consultative Committee have received more protests over this proposal than any other railway closure. We are told to travel by road, by bus or by car. But this area is surrounded by hills, as the noble Lord, Lord Kilmany, said, and the roads over Carter Bar, Soutra Hill and over the Limekilne edge are very often blocked by snow in the winter, and often are icy and dangerous. The noble Lord, Lord Kilmany, mentioned, too, the question of the East Coast railway route, Berwick up to Edinburgh. To take that away will make it even worse, because in the bad winter of 1962–63 it was possible to motor 40 miles along the Tweed valley and catch a train at Berwick-on-Tweed because there was not much snow there. But if that railway is taken away the people there will be completely isolated.

This is a serious matter in the area about which I am talking and which I know so well. It is the Border, with hills all around, and in the ancient days, as I do not need to remind your Lordships, we fought quite successfully for some 300 years to preserve our area from the English. The geographical formation has not altered, although the inhabitants have. We do not fight the English quite so hard as we used to, but I am beginning to think that I may do so if this railway is closed. The railway as our central link is most important to transport. We have no airport, and cannot have one, because we are surrounded by hills. The roads will be tremendously expensive if we try to double them, and they will still have to go over the hills. It is vital to us that this railway should not be closed down. If it is, the Borders will shut up shop; and I pray that this will never happen.

The noble Lord, Lord Hughes, has many problems to deal with, but I hope that these problems of the Border area—and I am not the only one to speak about them; the noble Lords, Lord Kilmany and Lord Polwarth, know them well—will have his close attention, because this is a vital matter to the whole of Scotland. If this development is to take place, and it should take place, we should get the best possible result; but we shall not unless the railway, the transport, is there, and we get support from the Scottish Office for all this work. I beg him to consider this in the future.

5.50 p.m.

LORD REAY

My Lords, I will not say much, in view of what has already admirably been said, and will doubtless admirably be repeated before the end of the day. There is nothing sardonic in that reference. I believe that repetition these days is essential, and that in the case, for example, of the selective employment tax it is most enjoyable both to indulge in and to listen to it, such a sense of common outrage has it given to all those who have felt insulted by what must surely amount to an unageing monument to fiscal incompetence.

I should like to say something about the depopulated areas of Scotland, and to speak in particular about the Borders, though with conclusions which will be relevant to Scotland as a whole. The Highlands and the Lowlands have been heavily depopulated—in fact, the Lowlands more particularly. The 1951–61 Census showed that the net emigration figures were twice those for the Borders as they have been for the Highlands. Worse than that, these net figures disguise the fact that immigration was immigration of the retired, and that emigration, those leaving the country, was emigration of the younger. The White Paper shows that there was a drop of 21 per cent. of those in the 20–45 age group. The problem of these areas is not one of unemployment. Indeed, there is a shortage of labour, and in the Borders there is a shortage in the textile industry which employs over four-fifths of manufacturing employment. These industries are forced to import daily labour, to rely heavily on part-time female labour, to recruit retired railway men, and to set up branch factories in areas outside the Borders altogether.

The problem of the Borders and the depopulated areas of Scotland generally is that the type of employment offered is unattractive to young men, in that it does not offer them skilled jobs. Secondly, the problem is that, with emigration, schools have closed, transport facilities have been axed because they have become uneconomic, and hospitals have not been proceeded with—in short, the services of the community have been withdrawn. Thirdly, in the train of this there has come a loss of confidence that there will ever be any restoration.

The answer to all this is not, I think, some heavy industrial complex nor, indeed, a new town, but the grafting on—and this, I think, is what the noble Baroness, Lady Elliot of Harwood, was saying—to existing burghs of small factories. What I think is wanted are small firms, light engineering firms, firms making car component parts, possibly tied to the large car firms in Central Scotland, firms dealing with the processing of locally produced raw materials, for instance, furniture from trees and the canning of agricultural produce. If this is done, and firms of this kind are brought in, clearly this will create job opportunities and in order that these jobs will be filled in due course by people locally born, there will have to be an extension of schools for further education, otherwise in the end we shall simply be importing labour along with capital. At the moment there is only one establishment for further education existing in the Borders—namely, the Scottish Woollen Technical College at Galashiels.

But this is not the trend at all at the moment, this trend of possible improvement in these areas. Certainly the whole of Scotland has been declared a development area, with the exception of Edinburgh, and this has had the effect of removing discrimination in favour of the central belt of Scotland against the depopulated areas. In that sense it has equalised the position. But what it does is still to leave all the natural disadvantages and disincentives to industry of those areas that is to say, poor and threatened transport, lack of skilled labour, and poor ancillary services. All these remain to discourage investment into those areas.

What will therefore need to be done is something further to extend the concessions made to these depopulated areas: not necessarily some sort of blanket investment-induced extension system, but a system which would discriminate between the small and the larger firms. This would perhaps make it less easy for a small firm to get investment incentives to set up in the central belt of Scotland, but easier for it to do so in the Borders. In this case you could possibly have some criterion of the number of people they were likely to employ.

There are two points I should like to make with reference to the Borders. In the first place,transport—and on this I would certainly agree with everything the noble Baroness, Lady Elliot of Harwood, has said. It seems amazing to expect that there could be development of this area until a decision has been taken to retain the railway and the announcement has been made that this has been done. Although at the moment I understand it is only the passenger services that are threatened, the pattern in the Borders has been sufficiently frequent of freight services being withdrawn immediately after passenger services for no one to be confident that freight services would remain even if the passenger services were reprieved. I think there has been an instance recently of a firm near Hawick which, offered an opportunity of expansion when it was given some large contract, decided that it had to move out of the area purely on the question of the uncertainty of the railway.

Apart from the railway, there are complaints that the bus services are uneconomic to run. One of the sights of the Borders is very large buses proceeding up very narrow lanes with about three people on board. What I would suggest is some sort of minibus system, something which would take a dozen people and which could be run much more cheaply. I suggest that this should be looked into. On the question of private transport, most people are dependent on private cars, and most people possess them. I have no doubt that in the future on a national level private transport must be made relatively much more expensive than it now is as against public transport. It seems that for those areas there would be a case regionally for making it cheaper. Car insurance is much cheaper in Border counties than it is in London, and already offers an example of how you can have some cost differential in private motoring. I think this is something which will have to be borne in mind.

On the second Border point, I should like to refer to the hotel industry and the selective employment tax. Here it is unquestionably a conspicuous assault on the prospects for tourism, and for this, the White Paper itself says, much could be done to increase. But it also does very little for the services in the Borders themselves for the local inhabitants. The White Paper rather quaintly refers to the rather limited shopping, eating, and entertainment facilities for places of their size that exist in these Border towns. Of course, the catering facilities are lamentable in these Border towns, and this will do nothing whatever to improve upon them.

The Chancellor of the Exchequer has already said—and to some extent the noble Lord, Lord Hughes, intimated more or less the same this afternoon—that regional adjustment to the selective employment tax would be considered if it was shown to be justified. The point of this is that the Highlands and the Borders are deeply dependent on the services, and proportionately very much more so than the rest of the country. If you differentiated the selective employment tax in favour of these regions, you would certainly be offering an extra incentive to industry in those areas because of this extremely high proportion of services in them. More than this, you would be removing the new incentives which have recently and perversely been introduced.

It may be said: What does all this matter? Local complaint—of which there is clearly a great deal—comes from families who are losing their relations and friends. Certainly there will be an economic cost in restoring the area to proper health. Certainly the greatest care will always have to be taken to preserve the scenic character of that extraordinarily beautiful country, and to avoid the hideous mistakes, some of which have already been made, of replanting Glasgow-type constructions in the outer fringes of the Borders. But it can be done, to the social benefit of the area, without excessive expense and without the destruction of the beauty, provided that sufficient care is taken over planning and architecture. But one thing seems to be clear, and that is that if nothing is done the proportion of the retired will rise within these areas, that is to say the proportion of those who go there because they do not want development, over the proportions of those who were born and would have taken jobs there and would have wanted development but had to leave the country. The consequence of this would be that political Parties would ultimately find it was not in their interests to demand any local development because it was no longer wanted, and it would seem to me to be a waste if, in those circumstances, the Borders never received any development at all.

6.1 p.m.

THE EARL OF SELKIRK

My Lords, this debate has been greatly coloured and enriched by the speeches of the noble Viscount, Lord Muirshiel, and the noble Lord, Lord Kilmany, both of whom have spoken to us with great skill and great information, and we are deeply indebted to them.

For a number of reasons we do not generally discuss this particular subject on a Party basis—though we do not exclude, shall I say, a few political decorations from time to time when it becomes appropriate—and this is inevitably so, because no Government will remain in power by Scottish votes; it does so essentially on the votes of the residential areas of London. Therefore any exchanges on a Scottish subject are not likely to make the Government very much stronger or very much weaker. But if this enables us to speak with frankness and without over-accusations of partisanship, I am sure that it will make the debate more interesting.

I would start by agreeing entirely with the noble Lord, Lord Hughes, that the economy of this Island is one; that is to say, we can never have a prosperous Scotland unless we have a prosperous England. But let us take the converse: we cannot long have a prosperous England if the peripheries of this Island are not reasonably prosperous. Therefore there is great danger of thinking that one can have a core in the middle where life is rich and noble while the outer parts are less so. For that reason I am concerned on two counts rather strongly, one dealing with the past and the other with the future.

It is common ground that the last four or five years in Scotland have been years of great development, arising from whatever cause, and that this development is continuing right up to the present time. In spite of that, migration from Scotland has never been higher than it is now. I do not mind migration of itself, as the noble Lord, Lord Polwarth, has said. We can at least say that Scotland does not look like suffering from the "population explosion" which is threatening so many parts of the world; and we might even say that in a number of years' time the population will have decreased to a point where it will not be worth discussing. But I am concerned with the cause, and I am not sure whether any of us fully knows the reason why this has happened. The White Paper itself—I will not say that it is wholly lacking in a vein of optimism—does not even claim to do more than reduce the migration rate by half in five years. There is an assumption that this is a feature which is going on and is not likely to be stopped. I think we have a concern to know why this migration has occurred to the extent it has done.

Secondly, as regards the future, there is no doubt that the measures which the Government have taken are bound to have not only an adverse effect on Scotland but, quite likely, a continuing one. As the noble Lord, Lord Polwarth, has so rightly said, the Government are working in an endeavour to reduce the overheated economy of London and of Birmingham. No Government in their senses would apply these economic measures to Scotland, and the problem which I think we have to look at is whether, in the course of keeping the balance in other parts of the country, irreparable damage is going to be done to Scotland. Of course the Government seek to reduce consumption while maintaining production, but so far no Government have succeeded in doing it, and it is for the future to see whether this Government can succeed.

The noble Lord, Lord Mitchison, made a very interesting remark—and I welcome the fact that an Englishman should take part in this debate. I wish there were more who were brave enough to do so. He said that S.E.T. was imposed at a time of national crisis. I am given to understand that the outlines of the Budget were prepared before the General Election. Are we then to understand that in fact the General Election was conducted at a time of national crisis? Also, when the crisis is ended are we to understand that S.E.T. will be removed? The danger is that this is a considered policy of Her Majestys' Government, and it is that to which we object.

The essence which I should like to mention here is that we are, I believe, still accepting the broad basis of the Toothill Report; that is, an emphasis on growth. It is because we believe that growth is essential that I think it a pity that Edinburgh was left out. I chink this is not simply a question of examining unemployment figures but one of finding foundations on which economic growth can take place.

When the noble Lord, Lord Hughes, was speaking two years ago (maybe this is not very fair, but it is important to remember that quite a lot has happened since then) he spoke about investment, as the noble Marquess, Lord Lothian, did to-day, and he said that it was not our expectation that any downward revision would follow."— Of course this is not the view of the Chancellor of the Exchequer to-day. Then Lord Hughes went on to say—and this is perhaps even more serious—with regard to services in industry, and particularly construction: that is one field which is brighter than others". I do not know whether the noble Lord will wish to repeat that remark to-day, but I am afraid it is highly unlikely that it will be a fair description of what the position is at the moment.

I think it is fair to ask whether the Government are distinguishing the requirements of Scotland sharply enough from those of other parts of the country. I thought there was a good deal in what the noble Lord, Lord Hughes, said about matters being under review; action, if necessary, would be taken; there were discussions proceeding. This is all very desirable, and no Government can avoid it altogether. But he also said that establishment of 27 advanced factories had been announced. In fact, of those announced since the present Government came into power, three have been completed, and three nest factories. So some of these forecasts for the future have in fact still to be fulfilled. I think this is most disappointing, because advanced factories are tremendously important to industrial estates. And, if I may add this, I think that a little paint on some of the industrial estates would make them look more attractive. What I am really saying is that I think there is an element of equal sharing of miseries in many of the applications which have taken place, rather than a search to build and develop areas of economic growth which could take place.

It is interesting that the most important developments in Scotland in recent years have been made by American firms. More American firms have developed there than English firms. I do not think Americans can be thought to be anything but hard-headed, and I wonder whether there is not a psychological element in this which could in fact be overcome, rather than an economic one. It is true, of course, that Scotland and America have had very close contacts, and that over a hundred years ago organisations such as the North British Rubber Company, The Singer Sewing Machine Company and Babcock & Wilcox, as well as others, came to Scotland, but this process has been enormously intensified in recent years. Is there any reason why this should not be done by firms from England?

My Lords, there are three factors which I think would make it difficult. One, of course, is the size of the consumer market which attracts the South-West of England. One cannot do much about that, but one can try not to make it bigger. That at least would be a sensible thing to do. The second point concerns the centres of decision of design and development. The noble Lord, Lord Ritchie-Calder, said that where scientists do their work does not matter. I profoundly disagree; I think it matters a great deal indeed, and if there is any lack at the present time it is because there is not enough high-grade technological work in Scotland. The figures show quite clearly that, while there is rather more than the average number of skilled workmen—artisans if you like—there is a considerably lower number of technologists and scientists. Thirdly, the Government can do a lot about the subject of contracts, and the plain fact about a contract is that if you are nearer the contracting party it is a good deal easier to get it. I will not speak about housing; it has been dealt with so frequently that I will not say anything more about it to-day.

I should like to make three pleas. First may I say this. The Government put a lot of emphasis on planning. Might I ask whether they would give industry an equal chance of planning? I am not saying for a moment that investment allowances or investment incentives are necessarily any worse than before, but there has been a change. Why not let it run on on the same basis, well worked out by accountants, known by law and enabling better forecasting? Why change it around? If you want continuous planning by industry, let the incentives run on for quite a time.

The next point—here I am repeating what has been said very well already—is the need for research institutions. I have no doubt that the National Engineering Laboratory is very valuable indeed. The noble Lord, Lord Polwarth, spoke about the possibility of a bio-engineering research organisation. The establishment of chairs in the universities makes this a very suitable subject for development in Scotland.

I would, if I might, refer to something which I know the noble Lord, Lord Hughes, agrees about, and which I should like to think he has done something more about, and it is the close contact of universities, industry and Government so that each can know what is being done and not live is isolation without telling each other what is available to them. This is not a question of research work; this is a question of applying what is known already but is not available to other people.

Finally, may I again make a plea for the provision of air services to the Continent? My noble friend Lord Polwarth has said it already, but I am saying it again in the hope that reiteration may perhaps eventually penetrate into the soul of the Government. This is an essential element in the economic development of the country. I see the White Paper says this: Provision of air services is the commercial responsibility of any interested operators. Can the noble Lord say that a really long-term franchise will be given to any operator who is competent who provides a service between Scotland and any point on the Continent? If the noble Lord could say that, I believe it would be the greatest encouragement for something of this sort to take place. We are, of course, inevitably sharing in deflation with England, but I do ask the noble Lord to remember that if the development of recent years has a set-back it may be a setback not very easily reversed.

6.15 p.m.

VISCOUNTMASSEREENE AND FERRARD

My Lords, I shall just deal very briefly with the problems of the Highlands and Islands in regard to this plan. First of all, I should like to congratulate the two maiden speakers we have heard to-day on their extremely excellent speeches.

Taking the cue from the noble Baroness, Lady Elliot of Harwood, I must really refer for a few moments to the disastrous store sheep and cattle prices we have had in the Highlands this Autumn. The noble Baroness complained about the store prices in the Border counties. The store prices in the Highlands were even worse. Taking the average, lamb prices at Oban were down 30 per cent. Some were down far more than that. Apart from that, unfortunately the farmers in the Western Highlands and Islands had a very bad lambing season and their lambing percentage was down 20 per cent. Therefore, by very simple arithmetic, farmers in the Western Highlands and Islands generally are down 50 per cent. in their income. The same thing applies to the suckled-calf trade; the prices there were also down 30 per cent., and in many cases more. What is required is a rescue operation. I feel the Government ought to make some quick subsidy payment. If they could make the ewe subsidy for this coming year, say, 30s. it would save many small farmers.

For the future the Government must really look into the problem of the extra-marginal hill farms. It does become an arguable point, from the point of view of the economic wellbeing of the country, whether there is really any point in continuing to subsidise some of these farms. By extra-marginal farms I mean farms that cannot produce a lambing percentage over 50 per cent. I think that perhaps in the future the subsidy should be so arranged that if any farms did not have a lambing percentage of 50 per cent. or over they should not get the subsidy. I would certainly not apply that to the crofting community, because crofting is a way of life and I am all for upholding it by heavy subsidy from the point of view of social reasons. But by these subsidies on extra-marginal hill land the Government are subsidising people like myself, and I often feel rather guilty for taking them because it is really uneconomic from the point of view of the country. In the east of Kent I can produce as many lambs on 100 acres as on 3,000 acres in the Western Highlands. That really makes you think. For instance, this Autumn I was selling lambs at Is. a pound, and in some cases under 1s. a pound. At the same time, I was selling venison to Germany at 2s. a pound, all transport paid. We have really come to a funny pass when you can sell your venison for far more than your agricultural produce attracts.

The noble Baroness, Lady Elliot of Harwood, rather thought the reason for the slump in store prices was the greater importation of Irish cattle. She may be right there, but I should have thought that the real reason is the credit squeeze, that the dealers cannot get the money from the banks to buy in the store-market. I should say that the credit squeeze is the real trouble. I do not blame the Government for having a credit squeeze; it was necessary.

As I have said before in your Lordships' House, I have always been a strong advocate of forestry. Other landlords in the Highlands do not always agree with me, but I have always been a strong supporter of it. You have only to look at the figures to see that with 120 acres planted you employ one man. On every 5,000 acres of sheep ground I personally employ only one shepherd. The figures speak for themselves. Allied to tourism, forestry is, in my opinion, the answer for the Highlands. I was pleased to read in the Report that the Forestry Commission are to increase planting in the Highland area to 20,000 acres a year from 1969.

While speaking in favour of the Forestry Commission I must just add one or two criticisms. It is only natural, I suppose, but in their purchases of land the Forestry Commission are inclined to try always to get the best hill land. It is obvious why, because on the best land you grow the best trees. But there is plenty of sour, acid peat land with cotton-grass and deer grass, where you cannot grow sawmill timber but you can grow pulp wood and wood for chipboard manufacture. I think that the Forestry Commission ought to be more pioneering in the type of land they buy. They should really experiment more on this sour, acid peat land. For instance, you can grow certain trees such as the lodge pole pine, and you can crow the Austrian pine. One never sees the Austrian pine planted by the Forestry Commission. I have some wonderful specimens of Austrian pine which were planted on land where if you planted a larch tree it would be but a shrub. I think that the Forestry Commission ought to experiment. As I said before, they should be a little more pioneering.

But we are going to have another problem when these forests mature in regard to the transportation of pulp wood to Fort William. We have to take it to the pier or railhead, or wherever it has to go. The trouble with the Western Highland areas is that the roads are so small and the majority of the bridges cannot take heavy loads. We shall have to take the timber in small loads by lorry, which is going to make transport rather uneconomic. I do not really know what is the answer to that problem. I suppose it is to strengthen all the bridges and widen the roads, but that would cost millions of pounds.

I should like for a moment to speak about the employment of labour as it is mentioned in the Report. I am pleased to see that the Report at last acknowledges that agriculture cannot solve the labour problem in the Highlands. I have said this for years, but one has had an ignorant clamouring, I hasten to say not in your Lordships' House but throughout the country: "Put the people back on the land". But you cannot put them back into agriculture. Certainly you can put them back through forestry, and you can also help a great deal in tourism, but not in agriculture. The number of farm employees in the Highlands has been decreasing by 2 per cent. every year for the last decade, and this decrease will probably grow.

The noble Baroness, Lady Elliot of Harwood, has rightly pointed out the wonderful productivity record of Scottish agriculture. I think it is paragraph 99 which says that agriculture in Scotland can continue to increase its labour productivity by releasing manpower resources to other sectors of the economy. It is quite impossible for Highland farmers to lose any more manpower. Hill farms are under-manned as it is, and if we lose any more manpower from the hill farms a large number of sheep and cattle will have to go too. In my opinion, you cannot have any more increase in productivity in the Highlands through hill farming.

If I may turn for a moment to tourism, I should like to bracket that with sport. It is rather surprising that the Report makes no mention of sport. Somehow, it appears to be a "dirty" word. Why, I do not know. Tremendous revenue is brought into the Highlands through grouse, the salmon and the stag. Yet no mention at all is made of this. I think it was the noble Lord, Lord Hughes, talking of the selective employment tax, who said (I hope he will correct me if I quote him wrongly) that it will be quite impossible to differentiate in regard to the selective employment tax, and, so to speak, to allow the Highlands to go free.

LORD HUGHES

My Lords, may I just intervene? What I said was that it would not be possible to exempt the whole of Scotland from the operation of one particular tax. Noble Lords will recollect that the noble Earl, Lord Perth, started with a bid to exempt the Highlands, and then he raised it to exempt the whole of Scotland.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I thought the noble Lord said that it would be quite impossible to exempt the Highlands. In the Highlands 75 per cent. of the people are employed in the service industries, and the selective employment tax has been a great blow to hotel-keepers, and therefore to tourism generally. Tourism can be of great help to the crofting industry through the bed-and-breakfast trade, the supply of milk and eggs and the employment provided in hotels during the season. The Government must be careful, through the various Boards concerned, to see that in their zeal to attract tourists to the Highlands they do not spoil the priceless heritage of beauty with which nature has endowed the Highlands. If it is once spoilt, one of the finest wild life sanctuaries in Europe will be destroyed; and if the beauty of the Highlands is destroyed, it can never be recreated. We do not want any Blackpools or Margates in the Highlands. We want plenty of tourists—the more the better but we want tourists who will get their pleasure from the beauty surrounding them.

Lately we have had quite a few planners roaming around the Highlands. These enthusiasts, fresh from the universities, usually visit the Highlands when the weather is at its best. They are quite ignorant of the climatic conditions pertaining throughout the major part of the year. I read the other day the report of a survey which was made by a team from Edinburgh University of a part of Scotland with which I am very conversant. The team produced a report which was completely divorced from all practicability. It was Quite astounding.

One of their suggestions was to have a yachting and boating marina on Loch-na-Keal, on the West Coast of Mull. Any yachtsman or local fisherman could have told them that this is one of the most dangerous and exposed lochs on the whole Atlantic seaboard, yet that report contains this absurd suggestion. I only hope that Professor Grieve has his feet firmly on the ground when he reads such reports. We do not want any ghastly fiascos in the Highlands like the groundnuts scheme in Africa. I and my employees have quite a time rescuing people off the hills. If we have to fish them out of the sea as well, God help us! We shall have our hands full.

I was extremely interested to hear the noble Lord, Lord Hughes, tell us about what the Highlands Development Board has done so far, and it can be of great help to the Highlands. It can certainly be of great help in promoting more hotels, as the Highlands are short of tourist accommodation. Owing to the great increase in the number of tourists in the Highlands—of which I am all in favour, though your Lordships may not believe me—we have far more hikers on the hills. This is making matters very difficult and is becoming a great problem from the aspect of sporting rents. This is especially true of the stalking season during the six weeks from September 1 to the middle of October. There are large areas of hills which cannot be utilised for sport at all at present. This means quite a loss of revenue. Therefore, I was wondering whether the Government, through the tourist boards, could, during this short season, try to control the tourists on the hills by saying that they must use certain rights of way or he certainly under some form of control. It is most unfair that one is taxed on sporting rights, but the sport is ruined by tourists, so one gets the worst of both worlds. I put this forward as a suggestion, and I hope something can be done about it.

The other way in which tourist boards could help would be by issuing hikers with a code of behaviour on the hills. I have had some very nasty experiences. I have been going about my business, walking up a glen, and before I have known what is happening two or three-ton boulders have come crashing down. I have looked up and seen hikers about 2,000 feet above shoving down boulders. I usually have a rifle and have often been sorely tempted to use it. If the tourists on the hills are not controlled in the stalking season, I am afraid one day we shall have a fatal accident, because somebody may get shot.

I would end by saying a word about the charges on the MacBrayne steamers in the Hebrides. These charges are far too high, far higher than those on cross-channel boats elsewhere, and this is a great drag on the economy of the Highlands. MacBrayne's are, I understand, part of and controlled by British Railways, and the Government ought to try to lessen the charges, to help the islanders. I was intending to say something about transport, but I will not take up time on that matter now. I should like to thank the authorities for the work they have done in creating an airstrip on the island of Mull. We are very appreciative of this, and we hope to have a service there from Glasgow next summer. It is practical schemes of this sort, such as airstrips, as well as hotels, on which the Highland Development Board should concentrate. These projects are more practical than having yachting marinas in gale-torn lochs or pony-trekking over bottomless bogs. I hope the Highland Development Board does not get led astray on such harebrained schemes.

6.40 p.m.

LORD FERRIER

My Lords, I propose to confine my contributions to the debate to brief comments on the air and road communication problems. One can touch only the fringe of the subject in a debate like this, but I take the view that the White Paper is too complacent about the urgency of the need for improved communications. This was a point which the noble Marquess, Lord Lothian, made in his speech, and I agree with him.

As for the air transport system, various noble Lords have had a dig at our air services. Many have emphasised their importance, and their importance to our economy. Now that the error of selecting Abbotsinch for an airport has been consummated, it is essential that more should be done to make it acceptable to the travelling public. The distances and the stairs without escalators which have to be traversed by passengers are unreasonably burdensome. I also understand that passengers' baggage cannot be booked through to destination from the air terminal in Glasgow. These may be trivial matters, but they are disadvantages which at least should be readily solvable.

However, on the air traffic side is the Minister satisfied about the question of radar equipment? Is it fully adequate? If not, when will it be? As your Lordships will appreciate, facilities at Abbots-inch do not, alas, concern Glasgow and the West alone. Too often passengers to and from Edinburgh airport have wearily to tread its paths, as we heard from the noble Lord, Lord Kilmany, whose maiden speech we so enjoyed. They have to tread its paths, because their aircraft cannot land or take off at Turn-house, to which airport I now turn and to which reference has already been made by a number of speakers.

The fact is that Edinburgh does not possess an up-to-date airport. This is the situation which the capital of Scotland has to face, and I return to the need for an adequate North-East and South-West runway. The existing main runway is not related to the prevailing wind, as we all know, and it is not long enough, anyway. The noble Lord, Lord Kilmany, was caught out yesterday. I may be unlucky, but since the matter was raised earlier this year in your Lordships' House, I have twice been inconvenienced by Turnhouse being closed because of a cross wind. This fact may be concealed under a general reference to weather conditions. I suggest that may have been the case on August 13, when it was closed in the evening and the broadcast said: "Owing to weather conditions over Edinburgh…". It was a cross wind, as was apparently the case last night. Can the Minister tell us what prospect there is of an early decision on this major development of Edinburgh airport?

Quite apart from its effect on business, it is of great importance and urgency, I believe, if Edinburgh is to be ready to deal in a modern way with the Commonwealth Games when they take place there in 1970. What is more, Turnhouse now serves Fife and much of Central Scotland, as well as Edinburgh and the South-East. Its unreliability also affects feeder services from the North, as I think the noble Earl, Lord Cromartie, has said before in this House. I imagine that the development department have had access to the interesting report on the subject prepared by the Edinburgh Junior Chamber of Commerce. I should be interested to know whether the noble Lord, Lord Hughes, has had access to this. It has a great bearing on the subject.

Also, is it too much to hope that the Minister can give us some glimmer of anticipation that the nettle is firmly grasped, before the long overdue reconstruction of the airport buildings—already inadequate—is considered, and that any development of the buildings is related to the major long-term scheme. Admittedly, long-term means the extension of the whole airfield towards the North, and the realignment of the A.9 road. The problem has to be faced some time. Why not now?

It is so easy to say that the traffic through the airport does not warrant this or that, but from the days of the Toothill Report it has been emphasised that the traffic potential cannot be measured until the airport is up to date. Is it to be wondered at that, as the Report says on page 76, Scottish aerodromes are still under-utilised in varying degrees."? Obviously, efficiency must have an especial bearing, too, on the potential of direct services between Scotland and the Continent. The noble Earl, Lord Selkirk, mentioned this just now, and the noble Lord, Lord Polwarth, also has pointed to the importance in the economic context of direct services to the Continent. Scotland's capital, first of all, should have a capital airport. We have, admittedly, one through-service from Glasgow through Newcastle to the Continent, but the noble Earl, Lord Selkirk, will know that it cannot pay to produce an overseas service unless it is a daily service and unless adequate traffic is available.

I pause there, because the noble Earl made a good point which I should like to re-emphasise—namely, that if the Air Transport Licensing Board are prepared to grant a long-term franchise, then perhaps some independent might be able to put on a service. But although the independents have injected more energy into our air services, their operations are, of course, controlled by the Air Transport Licensing Board. That is right enough, but are the Government and the Air Transport Licensing Board sufficiently conscious of the importance of continuity? I say this to cap what the noble Earl said, that if there is a long franchise it puts an undertaking in a better posi- tion to be enterprising in looking for traffic.

I have talked about re-aligning the A.9 road, so your Lordships would be surprised if I did not return to my old tack of wondering about the by-pass around Edinburgh. I believe there is a great need for an up-to-date, Buchanan-like approach to the by-passing of towns and cities in Scotland—and I do not say Edinburgh only. However as we have just been talking about air services, and as the noble Baroness was talking about communications from the South-East and the importance to the South-East of adequate services to and from London or the Continent, it should be borne in mind that one of the many reasons why there should be a by-pass around Edinburgh is to facilitate access to the airport from the Lothians and the South-East.

Talking of roadwork, the White Paper shows that road construction in Scotland is going ahead. There is no question about it, and large sums of money are being allocated to it. But in terms of the country's economy, is it yet enough? And are city authorities sufficiently co-operative? One point about that, and about the by-passing of Edinburgh, is that in addition to all the past reasons why it should have been built, there is a further reason—namely, the staggering price which it is obvious the inner ring road is going to place upon the city.

I ask: what progress is being made with the promised traffic survey which the noble Lord, Lord Hughes, has mentioned on previous occasions? How wide will the net of this analysis be cast? I ask this because the Forth and Tay Road Bridges have highlighted the overall nature of this traffic problem in central Scotland—indeed, in the whole of the South of Scotland. I make so bold as to suggest that in the Minister's own town of Dundee there should be some quick thinking about the need for a more widely cast by-pass, despite the foresight which years ago created the Kinsway Ring. The same, only more so, applies to the "lang toon" of Kirkcaldy, which has no Kingsway. The rapid development of the economy of the Kingdom of Fife arising from the two bridges demands that Kirkcaldy should be freed as soon as ever possible from the pressures which through industrial traffic places upon its narrow pat- tern. I think it is fair to say that Kirkcaldy has been outstandingly successful in attracting new industries, but its capacity to satisfy these new industries is being impaired by traffic congestion. Does the Fife problem come within the orbit of the survey which we believe to be in hand?

While on the subject of Fife, I consider that the problem of the road system, or the lack of it, connecting the two bridges is so important, so manifest and so urgent that surely it should receive especial consideration. The same applies, or will shortly do so, to the A702, which is now prominent in the plan at the end of the White Paper as the main link between Edinburgh and the A74 to Carlisle. This A702, which has hitherto been an adequate road, will soon become a nightmare, especially to villages which are not by-passed. Of course, similar if not so urgent problems arise all over Scotland—and here I would turn back to the speech of the noble Lord, Lord Hughes, in which he pictured enormous expansion. It seems to me proper to say that if this expansion is to continue as he hopes—and we hope—it will then it follows that an expansion in communications must go hand in hand with it.

My Lords, I pin my faith on one sentence in the White Paper, where, on page 71, the section on roads ends with the words: This will require a great deal of detailed work and a possible re-assessment of the priorities as we enter the 1970s". Your Lordships will all hope, as I do, that this reassessment will become more than a possibility and that it will be before—I repeat, before—we enter the 1970s.

6.54 p.m.

LORD BALERNO

My Lords, as a sufferer from the deficiencies of Turn-house, I should like to congratulate the noble Lord, Lord Ferrier, on his vigorous presentation of the possibilities of that airport if only somebody would pay attention to it and get on with the job. I should like to congratulate also my noble friend Lord Muirshiel on his maiden speech. It must have been exceedingly nostalgic for him to hear the speech of the noble Lord, Lord Hughes, and to hear phrases that he himself had used as Secretary of State for Scotland being used in a slightly different way. In his day, Lord Muirshiel used to speak about the number of jobs that were in the pipeline, and, if I remember aright, he got that figure up to something of the order of 36,000. He must also have felt nostalgic when he heard about the road development. Most of the road development that is being completed now, particularly the Edinburgh—Glasgow road, which is going ahead so well, was largely planned by Lord Muirshiel when he was Secretary of State.

I was interested in what the noble Lord said about the development of the container service, and I wonder whether that development will not be associated with something which may be rather alarming for the city of Glasgow. I wonder whether it will be necessary to continue dredging the Clyde, and whether it will not be better to create a port for the container service further "doon the waa'er". The noble Lord, Lord Kilmany, gave us a most vigorous speech, and I congratulate him upon it, but he has made me very much afraid to follow him by the polish and the skill that he exercised in his presentation.

My Lords, we have heard a lot about the development of scientific discovery and the necessity for technological exploitation. I should like to quote from a report which has recently been published, the triennial manpower survey of engineers, The Manpower Resources for Science and Technology, by Sir Willis Jackson. His words are pregnant and particularly important for Scotland at the present moment. An opening sentence in that report runs as follows: Resources of technological and scientific manpower are inelastic, but may be made highly adaptable"— and here are the pregnant words— if we can see far enough ahead to take the necessary steps in time. While this report covers the United Kingdom, the problems it discusses are more acute in Scotland than they are in England.

In the United Kingdom as a whole, the report concludes: …the present output of qualified engineers, technologists and scientists is still deficient in relation to ascertainable short-term demand, let alone to need, however this may be calculated". I would draw your Lordships' attention to the fact that at present Scotland is producing more graduates in science and technology for export to England and overseas than we are keeping at home, and a smaller proportion of those who stay in Scotland are in industry because we must have a sufficiency to staff our colleges and universities. At this moment, the water is running out of the Scottish bath of technology faster than it is being pumped in from schools, colleges and universities.

Pace the noble Lord, Lord Ritchie-Calder, I would question whether any substantial brake can or should be put upon the number of graduates in science and technology who seek their fortune furth of Scotland. Nor would this be desirable to the nation as a whole. We must therefore look to producing more of this valuable species; and it is the responsibility of the Government to ensure that the educational system is given clear objectives to meet the developing situation. A working group of Sir Willis Jackson's committee, under the chairmanship of Professor Michael Swan, Principal of the University of Edinburgh, has produced a report bearing the formidable title, Manpower Parameters for Scientific Growth. This report shows that in recent years there has been a fall in the proportion of science and technology graduates entering industry, and in some disciplines there has been an actual fall in numbers. But the important conclusion, to which I would draw your Lordships' attention, is—and I quote: …there is a clear need to encourage more boys and girls to prepare themselves for Science and Technology. It is no use creating more places in the universities unless you increase the flow from the schools. The Swan Report says, The vital issue is the motivation of the individual"; and on this it calls for a wider recognition of the vital role played in the schools by first-class teaching in science and mathematics. A boy coming to university to study some technology must be able to appreciate the theoretical approach to his subject. This requires a high standard in mathematics. Many boys and their teachers appreciate this standard and therefore seek some other field of academic endeavour. But if the teaching of mathematics in the schools is of a sufficiently high standard, then not only will the boy incline to a technology, but, more importantly perhaps, he is unlikely ever to regret having embarked on a technological career.

There are in Scotland, I regret to say, too few teachers in mathematics and science who have the highest teaching qualification, a thing we call "Chapter V". This situation is almost certainly going to get worse as the present senior teachers approach their pensions and the gap of production of 1939 to 1945 comes into view. This problem has already been recognised by successive Governments and, most notably, by the Report of the Committee under the chairmanship of the late Sir Edward Appleton, which was concerned solely with the provision of teachers of mathematics. But with what result? The shortage is still acute, and this particular and vital bottleneck in our development is not even mentioned in the plan for the expansion of the Scottish economy.

I realise that the Strathclyde and Herriot-Watt Universities have been giving opportunities to teachers already in service to improve their academic qualification in mathematics. Teachers holding what are called Article 39 certificates can become eligible for Chapter V if they work hard and spend a year at these universities. Unfortunately, not every education authority in Scotland appreciates this and it is vitally important. There is one, not very far from St. Andrew's House, which refuses to give the normal salary to one of its mathematical masters who is attending the full-time course at the Herriot-Watt University. He is having to pay for his own keep and that of his family while getting this qualification. While this is not typical of most education authorities in Scotland, it does show how blind some responsible persons in Scotland are to the urgency of this situation.

My Lords, as a nation we could get by with a shortage of classics masters or history masters or art or music masters; but the country just cannot afford to miss developing the abilities of any youth who has an inclination for mathematics. Recently, I animadverted in the presence of the head of a Glasgow school that mathematicians were born that way. I was quickly pulled up and told that it was largely a matter of their teaching; a boy of good intellectual capacity, given the right teaching, can certainly become a good mathematician. There is no shortage of boys with the innate capacity; the shortage is in the teachers of mathematics. This is confirmed by an article which appears in The Times this very morning. It describes new methods of teaching mathematics and the extraordinarily successful results obtained. In one school this fresh approach has increased by a half the number of boys wanting to pursue mathematics beyond "O" level.

As a matter of fact, there is nothing new in this; you will find all the methods described in the Spens Report of 1939. The only thing new is that it has taken a quarter of a century to get on with doing it. In fact, the most pregnant part in the Spens Report relating to this subject is a quotation from a paper written in 1914. Must we in Scotland wait for another 25 years until we get mathematics teaching put right? We are guilty of wishful thinking regarding the expansion and development of our own science-based industries if we do not get ahead with it much more quickly. Just now we are practically static. The pattern of industry is changing in Scotland, and if we are going to survive with a measure of prosperity we must recognise that techniques in industries can become obsolescent in a very few years. Without flexibility our future as an industrial nation is in jeopardy. Not only is the pattern changing but there is also what the Swan Committee calls a shift in the spectrum of employments. Jobs formerly carried out by craftsmen are replaced by others more scientifically based and demanding more sophisticated skills. There is much else that I should like to mention, such as the provision of graduates for higher degrees. Are the right type of young men going on for degrees? Is there financial provision for graduates—especially if they are married—to go on for higher degrees? I do not think there is. I think far more could go on if there were more Government scholarships available for them. I would commend this point very much to the consideration of the Government.

There is another line of action that I would commend to the Government if they wish to see their five-year plan ever implemented in Scotland. The Royal Society of Edinburgh might be termed a consortium of scientists and technologists. It brings us all together for mutual discussion. The Society provides a library where most, but not all, of the scientific journals are available for scientists and technologists in Scotland. It is very largely drawn on by scientists working on the development of science-based industries who are not located near universities and university libraries. The current intake of journals by the Royal Society of Edinburgh is 2,000 a year. To function fully this should be increased by another 25 per cent. But there is no money to keep up with the ordinary rises in the cost of living, much less to expand the services that the Society offers. I should like to remind those Borderers that are here today that an early President of the Royal Society of Edinburgh was Sir Walter Scott; and he combined science and technology in being the first person ever to install gas in a private house, which he did in Abbotsford.

Of the work that the Society is doing directly and indirectly for the economic prosperity of Scotland, it is not too much to say that if the Royal Society of Edinburgh did not exist the Government would have to create such a body—and it could not be created for much less than half a million pounds. In fact, the Society gets along on a paltry grant of a little over £10,000 and has no opportunity for expansion, particularly in further library facilities. My Lords, the years are passing and the demand for scientific brains is continuing and expanding. As things stand now in Scotland we are in no way matching up to the situation. Our industries will be almost wholly dependent on the parent industries of other countries. The noble Earl, Lord Selkirk, described how many American science-based industries are moving in to do their work here and their scientific discoveries elsewhere. If we are not careful, we shall become industrially very much a satellite nation. If we do not do something soon, we shall not even be that: we shall be a satellite, but no longer a nation.

7.10 p.m.

THE EARL OF DUNDONALD

My Lords, like earlier speakers, I should like to thank the noble Earl, Lord Perth, for introducing this Motion, and the noble Lord, Lord Hughes, for his most interesting speech. We have also had two excellent maiden speeches. I look forward with great interest to the "second innings" of the noble Lord, Lord Hughes, and I hope that he will be able to answer some of the further questions which have been raised.

Most of the speakers have been talking about the economy from the industrial and commercial point of view, because we earnestly hope that before long we shall have another debate to cover agriculture in the wider sense—forestry, fishing, and so on. Although one or two noble Lords have touched on the subject of agriculture and made certain specific points, I feel that it would be wrong if a little further emphasis were not placed on the predicament of all farmers, in the Highlands and in the Islands in particular, as a result of measures taken by the Government, which we realise, or believe, were for the benefit of the whole country, since the publication of this White Paper nearly a year ago.

If my memory is right, we have had since then three official Budgets, or their equivalent, not counting the manifold special or emergency measures which have been frequently introduced. These Budgets, or the special financial measures, provided, as I see it, three main "medicines" for the farmers in the Highlands and Islands. In my view, these medicines affected the farmers in that part of the country far more severely than farmers in the rest of the country, although we know that certain effects, such as that of the credit squeeze have affected the whole country. The medicines were the selective employment tax, the additional or emergency credit, squeeze—that is, the last one—and the substantial increase in fuel taxation, which I do not think has been mentioned to-day and which was introduced during the summer.

Prior to the effects of these measures the people in the Islands, in particular, felt the full force of the seamen's strike. I realise that this is past history, and that that matter has now been resolved, but the effects of the seamen's strike are still apparent in the Islands. In the first place, the people there lost a lot of the tourist trade, for people who took their holidays at that time did not come to the Islands, and they could not come at a later date. The islanders, too, were not able to ship their early livestock to the mainland markets; they hoped for better sales later in the summer, and in the autumn, but of course they were not aware of the further shocks they were to receive as the year went by.

A great deal has been said about the selective employment tax, mainly in connection with tourism and the services in Scotland. I agree with every word that has been said against it. Apart from the hardship caused to everybody, be he hotelier or be he farmer, I believe that any right-thinking person would realise that it is, in fact, downright robbery to have to make this interest-free loan to the Government. It is really complete nonsense in respect of the Highlands and most of the mainland in the West of Scotland. The noble Lord, Lord Mitchison, said that Scotland had to have income tax, as England did. One is not disputing the existing forms of taxation, but, I ask, to what industry is a man supposed to be redeployed (I think that is the object of the selective employment tax) when he comes from Colonsay, Rum, Mull, Eigg or Tiree, or in fact almost anywhere on the Western mainland, unless he goes substantially further south? Or he may well have to leave Scotland. In my view it is complete nonsense.

A further point I would make about selective employment tax which I do not think has been mentioned so far, is that all service costs will go up, if they have not already done so. Hotel bills and transport costs, either by boat or by road, will go up, and in Scotland, of course, the distances are quite substantial. It means that the hotelier, or the farmer, in the Highlands or Islands will pay far more for goods delivered to him in any form. The cost of getting livestock to market will also go up. Then there is the extra fuel tax, which some people have forgotten about—the extra 6d. a gallon that was added during the summer. In the remoter parts of Scotland one becomes accustomed to paying something between 2d. and 4d. a gallon more for fuel than is paid in a mainland centre, like London or Glasgow; but with the 6d. that was added, plus the selective employment tax which is starting to take effect on transport costs, the cost of fuel to farmers and hoteliers in the remoter parts, and indeed to all the people who live there, will become quite prohibitive. And people in the remoter parts are less able to bear this.

My Lords, I shall be quite brief in the rest of what I have to say. Parliament adjourned for the Summer Recess just prior to the lamb sales and weaned-calf sales, as has been mentioned. The main body blow, as I see it—it really was the main body blow—was delivered to the farmers just prior to the Recess in the form of the emergency credit squeeze (the last one) and the effects were sorely felt by the farmers in the Highlands while Parliament was on holiday. I am not going into detail about prices: I do not think this the right time to do so. That may come out in a future debate on agriculture. All I wish to register with the Government is that many farmers in the Highlands arc finding themselves in severe financial difficulties before the winter has arrived.

Take the beef cattle position. I am not going to quote prices, but some noble Lords may not be fully conversant with the chain of events. In the Highlands we breed beef cattle which, when weaned, at six months or later, are sold in the North of England, mainly in Yorkshire; and later they move on, either to become butchers' beef or for breeding. The buying and placing of these cattle is done mostly by dealers who are experts. Those dealers have not access to the credit which they require to do their work. Secondly, the farmers in the North of England, principally in Yorkshire, where the weaned calves normally go, are also short of money, so that two links have come out of the chain. What happens? The farmers—I am thinking particularly of farmers from the Islands—bring their calves to market and are faced with the alternative of taking a rock-bottom price or the cost of transporting their stock home again. This affects the farmer from the Islands more seriously than the farmer from the mainland. If he takes them back to his farm on the Islands, he is faced with an additional cost of, roughly, £15 per head in trying to winter them himself; and up to now, in my knowledge, he has not been able to get this additional finance from the bank, so he is in considerable difficulty.

I would conclude by asking the noble Lord, Lord Hughes, whether he can give some reassurance on this point when he winds up. I am sure that he is aware of the predicament of farmers in the Highlands and Islands—and this applies to farmers of all sizes, from the small crofting farmer to the large farmer. I read in the paper to-day that there is about to be some easing in the credit position of farmers, though I have not read the full details. I would ask the noble Lord whether he could represent to the Chancellor of the Exchequer the predicament of the farmers in the Highlands and Islands now. And reinforcing what the noble Earl, Lord Perth, said, could he not represent the view which has been expressed by many people to the Secretary of State already, that the selective employment tax and the credit squeeze should be applied on a regional basis? We have had a hint about this this afternoon and perhaps in his reply the noble Lord could give the assurance that that would be represented to the Chancellor of the Exchequer.

7.22 p.m.

THE DUKE OF ATHOLL

My Lords, I must apologise for not putting my name down to speak, but I knew that unfortunately I should have to arrive late for this debate and I was not sure whether I should be here in time. I should also like to say how sad I am to have missed the opening speech of my noble friend Lord Perth and the first "go" of the noble Lord, Lord Hughes, and to assure him that I shall listen to his second effort this evening with great interest; and if afterwards he goes on strike and demands a position more consonant with someone who makes so many important speeches, I am sure that every noble Lord on this side will be only too delighted to support him.

First, I should like to give a little credit to the present Government. I think that they have made two decisions which in the long run are bound to be of great help to Scotland. One is to keep Dounreay going beyond the experimental stage, and the other is not to have any more hydroelectric schemes except for pump storage schemes. I think that the economics behind these are convincing, but none the less they entail grave decisions for the Secretary of State, and I should like to give him and the Government credit for them.

I would emphasise everything that has been said about the selective employment tax and the effect it has had on Highlands hotels. I have just been at Mallaig and the hotel I was staying at is going to shut this winter for the first winter ever, because the incidence of the selective employment tax makes it no longer possible for it to remain open during the winter. This can only be detrimental to the standard of hotels throughout the Highlands of Scotland, which in many cases are not terribly good, as they will lose their key staff through not remaining open during the winter months.

We have also had a body blow in the removal of investment allowances. Though your Lordships' House agreed to put in investment grants instead, unfortunately another place did not agree with this, for reasons which I cannot quite make out. They seem to disapprove of hotels in principle and are frightened that transport cafes might benefit from it.

I agree with every word that my noble friend Lord Dundonald has said about the effect of the lack of credit and the forced loan on farmers. I know that they will get it back eventually, but I would remind the noble Lord and the Government that it was a forced loan which eventually lost King Charles I his head and brought the Divine Right of Kings to an end. This one might easily cause the Divine Right of Chancellors of the Exchequer to come to an end. Having said which, I think that other noble Lords have covered farming far better than I could.

May I say that I do not think that The Scottish Economy, 1965 to 1970 (Cmnd. 2864) does justice to private forestry. It dismisses it in paragraph 119 with the words: Substantial inducements are already available for the encouragement of private forestry, and planting by private interests is at present running at the rate of 14,000 acres a year, of which between 4,000–4,500 acres are in the crofting counties. This is all very good, but it does not say that it would like this to expand. It says that it would like State forestry to expand. I think that private forestry ought to expand, too, and I am sure that the noble Lord, Lord Hughes, would agree with me on this, and I should be grateful if he would say so.

The reason why private forest owners are worried at the moment is that they do not have confidence in the present Government. They do not believe that the Government are really heart and soul behind them. I should like the noble Lord to say that they are. This lack of confidence was induced by the fact that originally forestry was going to be affected by the capital gains tax and eventually was excluded, and originally was going to pay the selective employment tax but is now going to be on a parity with agriculture and get it back after the forced-loan period of five months. I would ask the noble Lord to say categorically that this Government do support private forestry and will not do anything to disturb the present system whereby we have some hope in 70 years' time of actually benefiting from the trees we plant now.

Lastly, I would say a word about salmon fishing. Again, the White Paper dismisses salmon fishing with little reference to its position in the Highlands economy. Paragraph 108 says: Plans for development of salmon and trout fishing, in Scotland, the notional value of which much exceeds the market price of the catch (approximately £1.5 m.), must await full consideration of the report received in 1965 of the Hunter Committee on Scottish Salmon and Trout Fisheries. Can the noble Lord tell us whether this full consideration has yet been given? Another nine months have passed since this White Paper was printed. Can he say whether next February we shall once again be faced with an order prohibiting drift netting for yet another year and still no signs of any legislation based on the Hunter Report in a more permanent form? Since I believe that there have been developments since he answered questions last Wednesday on the spread of Irish salmon disease, can he tell us what methods the Government are going to use to try to counteract this? I believe I am right in saying that this disease has definitely been identified in the River Esk, which flows into the Solway Firth, and also the River Calder. I am absolutely amazed that, so far as I can see, in the whole Appendix on the Highlands and Islands there is no mention of salmon or trout fishing.

Crofting gets several paragraphs all to itself, and, according to this White Paper, the total value of the produce of crofters is £5 million. If we believe the statement that the notional value exceeds the market price of the catch, surely the total value of salmon fishing must be in the region of £5 million. It seems an extraordinary lack of balance that crofting should get so much attention and salmon fishing so little, particularly as it appears to be likely that we will lose all the revenue from salmon fishing for the next thirty years, if the past outbreak of this disease is anything to go by. I think that we could do with a lot of enlightenment on this subject. Once again, I should like to apologise to your Lordships for speaking so late and without putting my name down, but I hope that the noble Lord, Lord Hughes, will be able to answer some of these questions.

7.30 p.m.

LORD DRUMALBYN

My Lords, we are coming towards the end of a debate which was introduced so delightfully and so pungently by my noble friend Lord Perth and has been carried on by a great many speakers who have made a tremendous variety of points, stretching from industrial estates to salmon fishing. I should hesitate to refer to any particular speech that has been made were it not for the fact that we have had two maiden speeches, one by my old boss, my noble friend Lord Muirshiel, and the other from one who has presided in the Chair many times when I have caught his eye, the noble Lord, Lord Kilmany. In those circumstances, it would be an impertinence for me to say anything about these speeches, except that I have been proud to serve under Lord Muirshiel and I was proud of him to-day. As for Lord Kilmany, he is a very old friend, and I cannot say more than that he delighted us to-day, as he has done so often in the past.

The noble Lord, Lord Hughes, made an interesting speech, and I think he was right to say that this was a time of anxiety and concern for all people in Scotland and that we ought not to put an optimistic gloss on the present situation. I think he was entitled to tell us the achievements that have occurred in the last year, but I am not quite certain that he has yet said enough about the present situation and what we may expect in the coming few months. I am sure we should all wish to avoid doing anything in any way to shake confidence, but I think it is important that we should be aware of what is actually happening at the present time. I know that it is difficult to give concrete facts, because there is always a delay in collecting statistics. Nevertheless, I feel that the noble Lords opposite might have been a little more sensitive to the suggestion that the selective employment tax need not and should not have been applied to Scotland had they been fully aware of what would happen as a result.

The noble Lord gave us figures for what had happened from October, 1964, to September, 1966, and compared that period with the previous two years. I am sure he would agree it would be absurd to suppose that on the night of October 16 the industrialists in Scotland sat down and made out new plans, promptly submitted them in the next few weeks to the Board of Trade and duly got their I.D.C.s, and that what has happened from October, 1964, to September, 1966, so far as I.D.C.s are concerned, is due entirely to the advent of a Labour Government.

LORD HUGHES

Will the noble Lord permit me to intervene? He is, in fact, confusing dates. This is always the trouble about quoting more than one set of statistics. The figures I gave from October were the figures of advance factories approved by the Government, and that is the definite Government action and decisions taken. When I came to give the figures for I.D.C.s, in order to measure the situation to some extent, I gave the position from January, 1965.

LORD DRUMALBYN

I do not want to enter into any point of dispute with the noble Lord on this, but if he will look again at the figures he gave, I think he will find that in both cases he gave them for two years. The figures he gave from January, 1965, to September, 1966, were for immigrant firms, and I wrote them down at the time he said it. He may have made a verbal slip in giving the figures.

However that may be, I would say to the noble Lord, Lord Mitchison, that it was not in 1964 that the turning point came, in employment or anything else. If he looks at the graph of employment, he will see that there was a steady drop from the middle of 1963, when it had gone up to a peak, until it reached the lowest point. So it was in 1963 that this happened, and it was all due, as my noble friend Lord Muirshiel said so powerfully, to the excellent planning work done, not only by Ministers but, one might almost say mainly, by all those devoted people who have been working so hard for the kind of improvement that we have been seeing lately. It has been a build-up over a considerable time.

As the noble Lord quite rightly said, these figures are not records, because the records occurred, as he said, in the years of 1961 and 1961–62. He gave the figures of 19 million square feet and 48,000 jobs. In the period at which I am looking at the present time (and this is given in the Scottish Digest statistics), the total assistance offered in 1960–61 was over £25 million; it was over £19 million in 1961–62, and, as he quoted, in 1965–66 it was about £15,600,000—about £500,000 more than in 1965. The interesting thing about that and I think it is worth while emphasising it in this debate to-day—is that there was a time, which my noble friend Lord Muirshiel will well remember, when there was a down-turn after these decisions were taken and we were seriously worried as to whether or not these developments would continue. The fact is that they did, and I believe that they have been fully justified and that the firms themselves have been very glad they went on with them.

There is a lesson in this debate, and I hope it is one that will be driven home to everybody. There is a down-turn just now. We know that small firms are having difficulty in finding finance, and I hope that the noble Lord, Lord Hughes, in his reply, will say something about the relaxation, of which we read in this morning's papers, on bank lending. I understand from The Times this morning that banks are to be allowed to relax lending restrictions in support of productive investment in manufacture and in agriculture; and we are glad of that. But the fact remains that up to now the selective employment tax has been taking a large amount of finance out of industry, and it will not be until next year that it will be made available again.

The point I am trying to make now is that in spite of this down-turn—or even because of the down-turn—this is exactly the time when development should be going on. I hope the noble Lord will be able to tell us, in his reply, that he has no reason to believe that there is any great reluctance on the part of industry to going on with development at the present time. Nevertheless, there are these figures of which we are aware. We know, for example, that I.C.I. have had to delay by a year the new nylon polymer plant at Ardeer. I daresay that is for reasons affecting the industry, as much as for reasons affecting national finance. But an inquiry held by the C.B.I. as to the position of various firms found that 56 per cent. of firms are likely to authorise less expenditure next year than in this year. The Board of Trade itself refers to a down-turn in investment of 7 to 8 per cent. next year, and the Economist, I think, has estimated the down-turn as likely to be 20 per cent.

This is the immediate problem with which the Government have to try to deal. It may be that we are to have a slackening in demand, but the point, surely, is this. Presumably the objective, so far as Scotland is concerned, is to bring the level of employment and the level of industrial activity up to the same level as in the rest of the country. If that is so, one has to take into account the fact that with an unemployment level of 1.9 per cent. in the country as a whole and 3 per cent. or so in Scotland (I believe that is right on the latest figures) we are already far above the level that the Prime Minister has said is likely to be the level after the end of the freeze.

We must deal with this problem, and we must deal with it now. This is the justification for having more special measures for dealing with our problems in Scotland, and more differential measures than exist under the Government's present plans. It is true that there is a special level of grant for industrial investment in Scotland—plant and machinery 40 per cent. But if that 40 per cent. is not to be paid for eighteen months, it is reduced by 12 per cent., by way of interest. We have heard about the I.O.U.s of the Government being discounted in some way or other on the market. At what rate of interest are they to be discounted? This is vital when you are considering what the real value of benefits is. It is no use talking about a figure of 40 per cent. the ques tion is how long people will have to wait for that money.

Will the Government get down and really think of this problem? I know that the Scottish Council made a comparison of the figures as between one set of allowances in the future and those that existed in the past. They thought that, on balance, taking the figures entirely at face value, so far as the new scheme is concerned the figures were slightly better than those of the old scheme. But that comparison did not take account of what might be called the peripheral factors. If the Government really want to give additional assistance in this way, it is vital that they should take account of these other factors and make a straight comparison. This is where we are really doubtful whether the Government are in a position to grapple with the problems in Scotland, with a view to seeing that their objectives and targets are fulfilled. The longer it is put off, the more difficult it will be to bring the Scottish level of employment and industrial activity up to that of the rest of the country. At a time when unemployment is increasing elsewhere, it could be made an objective of Government policy to do everything possible to ensure that the foundations are laid in the future to secure the objectives that the Government have in mind.

A good many of the points in question have been referred to already. My noble friend Lord Balerno made a powerful speech about the educational side and the steps that have to be taken there. I should like to put a point on the training side. Reference is made in the White Paper to this subject, and I think it is essential that great steps should be taken to ensure that appropriate measures are taken in the future for training our young people and retraining the older people. The Education Report says that of the technical colleges started under a Conservative Government, four were completed last year—Ayr, Bathgate, Clydebank and Galashiels. Four more were under construction: the Aberdeen College of Commerce, the two technical colleges at Kilmarnock and Motherwell and The Scottish Woollen Technical College. Extensions to technical colleges at Arbroath and Thurso were also completed.

The S.T.E.C.C.—that is, the Scottish Technical Education Consultative Council—recommended that a target of 100,000 for day release should be set. The actual numbers in 1965 were a little over 54,000. This target the Government accepted, but it is unfortunate that they should have cut back the number of projects begun last year. The value was only one-third of the projects started in 1964. Can the noble Lord say what the value of starts in the current year will be? In a country where communities are so widely scattered as they are in parts of Scotland, day release, of course, cannot be the only answer. The alternative, block release, is inconvenient for industry and costly for local authorities. If the Government are serious about ensuring adequate further education for all they must give further financial assistance to thinly populated local authority areas in Scotland. Alternatively, the Government themselves should take over responsibility for block release, possibly combining it with retraining facilities.

I have referred in previous debates to the French system of centres of apprenticeship, where boys leave school perhaps a year earlier and start in those centres. They carry on for three years in the centres, and are then able to go out and take their places straightaway in industry—subject, of course, to acclimatisation to the particular industry or shop that they join—and they ultimately get their apprenticeship certificate. I do not say that this is a perfect pattern, but I do say that we in Scotland should be trying various methods of getting over this problem.

I would go further and say that where there is one dominant firm, or dominant industry, in a district, they should be enabled, through grants paid, perhaps, through the Central Training Council or the appropriate industrial training board, to give both training and further education to all who could benefit from their courses. This, I think, is inherent in the Government's policy of departing from a policy we followed of confining the assistance to industry mainly to growth centres—not entirely, but mainly. If it is the intention of the Government to spread assistance much more widely over, say, many small towns, this will be the only way, short of pursuing a policy very largely of block releases, of getting any kind of local day release in these smaller places. The Central Training Council said that it looks f9rward to an increasing co-ordination of further education and industrial training. I believe that experiments should be carried out designed both to meet local conditions and to provide general experience as to the best means of conducting training, retraining and further education in the future in these remoter places. I think it would be a good thing if the Government were to provide a special Vote each year for this kind of experimentation, and I think, as I have already said, that they should start in Scotland.

The departure from the policy of growth points has been giving us a good deal of concern. This was the policy of reinforcement of success: the building up of new towns—nobody knows more than the noble Lord himself about that—the building up of balanced communities, the provision of a variety of opportunity, the availability of a full range of services locally, not least educational and training services, technical colleges and the like: and it was recognised I think, that most people nowadays seem to want to live and bring up their children in fair-sized communities where there is a general availability of opportunity.

I am sorry to say that the Government have departed from that, and I would echo what the noble Earl, Lord Selkirk, said: that we do not want to keep changing our policy too frequently. Unless industry can know what are its possibilities, unless parents can know what are the possibilities of training well ahead, I think there will be a much less rapid growth than would otherwise be possible.

A great deal has been said about the provision of adequate and quick communications. I disagreed slightly with only one observation which my noble friend Lord Lothian made, when he talked about the willingness, I think it was, of England to co-operate in providing communications between Scotland and England. This is something which I think the Government must press very hard, and the Scottish Office must press very hard on the Government. Here we have been busy providing the best possible communications up the West coast from Carlisle to the North, and if this is going to be held up by the failure of England to provide in good time the appropriate joining communications to take the traffic from Scotland down to England, and from England up to Scotland, Scotland will have good reason to complain. If the Party opposite wants to apply one single set of taxation proposals, such as selective employment tax, to Scotland they must also treat communications on a national basis and make certain that we have the best possible communications linking Scotland with England; and that goes for the East coast as well, and for rail as well as road.

I hope the noble Lord will say something about air. This is a matter which, so long as I have been in politics, since the war, has always been a sore spot with the Scots and I believe it is high time a decision was reached about Turn-house. By all means, turn Turn-house over to Edinburgh Corporation, but make certain that it is put in the right condition and its services are completed before it is handed over to Edinburgh Corporation to run, otherwise we shall be placing an impossible burden upon the Corporation.

It is absolutely essential that the best use should be made of resources and that development should be based on local resources. The greatest development that has taken place, of course, in Scotland in recent years is the Wiggins Teape development at Fort William. May I with the utmost frankness ask the noble Lord: will he make certain that the interests of Scotland in this regard are properly safeguarded? We are looking to the future, with all the negotiations that are likely to take place on the EFTA level, the E.E.C. level, and so forth. Will he make absolutely certain that that investment is properly safeguarded and that it is not ditched by the Government at any time? We in Scotland speak from very long memories indeed, and this has happened with one treaty after another at different times over two hundred years and more. So will he look to this very carefully indeed?

Lastly, it is absolutely essential to ensure that Government structure, central and local, is right. The noble Viscount, Lord Muirshiel, has spoken on this subject and I hope the noble Lord will deal with that also. I do not want to prolong this debate any further. I hope the noble Lord will be able to answer the points which have been made—or some of them at any rate; it might take rather a long time if he answered them all.

LORD CHAMPION

We should be here all night.

LORD DRUMALBYN

But I hope the noble Lord will grasp the point that continuity of investment is of the utmost importance. I hope he will deal with the points made by my noble friend Lord Polwarth on migration, which I think is a most important subject. I hope, too, that he will cover the point dealing with training and retraining, and perhaps finally say a word about the absolute need for good industrial relations and the experiments which are, or ought to be, taking place in Scotland in this connection.

If I may say one thing on industrial relations, and perhaps differ just marginally from my noble friend Lord Polwarth, good industrial relations are fine in good times. The test of good industrial relations, however, is whether they can stand up to bad times. This is what we have to aim at in Scotland, and I believe that with a common effort from us all we shall be able to achieve it.

7.59 p.m.

LORD HUGHES

My Lords, may I have the permission of the House to speak for a few minutes more? I wish to start by apologising to the noble Lord, Lord Drumalblyn. Of course he is perfectly correct: the figures which I quoted for I.D.C.s were for the period for the two years to October. The figures which I very carefully gave for January onwards were for the foreign firms coming into the country, because I wished to be absolutely certain I was claiming credit only for those who came in after Mr. Heath had made his statement in December. Obviously, in any matter of this kind there can be no clear dividing line at which one can say "Everything up to here was the responsibility of one person, and after that it was the responsibility of somebody else". We all tend to make the mistake: those in Government claim the credit as far back as they can possibly go and those who have left office are still claiming credit two years afterwards. The truth lies somewhere in between.

I will now express, belatedly (because it seems such a very long time ago since they addressed us) my congratulations to the maiden speakers. I should like first to refer to the speech of the noble Viscount, Lord Muirshiel. He knows that, with the exception of the present Secretary of State, he was my favourite Secretary of State for Scotland. After all, no other Secretary of State for Scotland ever said "Yes" to me when I asked for the Tay Road Bridge. I will come back in a moment to some of the points the noble Viscount made. I also enjoyed the maiden speech of the noble Lord, Lord Kilmany. I do not think anyone could say for one moment that he departed from the requirements to be brief and to be non-controversial, but he put forward his non-controversy in such a forthright way that I am looking forward to the day when he really makes up his mind to "tuck into" me. I have not the slightest doubt that, after all the years in another place when he was forced to be completely unbiased, he will be able from time to time to shed that disability.

The noble Viscount, Lord Muirshiel, started off by paying a very well deserved tribute to the civil servants in St. Andrew's House, and he said that the White Paper was in itself excellent and might also be taken as a tribute to previous Governments. I think that must be admitted. We have never claimed that nothing happened before 1964: all we have said is that the pace has hotted up very considerably since 1964. I was particularly happy about the glowing tributes paid by the noble Viscount to the civil servants, particularly those in St. Andrew's House, because latterly one has had the impression that a civil servant ought to be apologising for his very existence. One of the things thrown at the Government is that we have too many of them—I hear noble Lords say, "Hear, hear!" But when we say that we have got a Government Department employing 1,000 civil servants to Cumbernauld that is a good thing, provided that we have got them out of England. One cannot have it both ways.

The noble Lord asked for some information about the planning bodies, the Planning Board and Planning Council. As he thought, the Planning Board consists entirely of officials, with one exception. Its meetings are attended, not always but I think very frequently, by Mr. George Middleton, who is the Vice-Chairman of the Planning Council, and this has been found to be desirable to keep him well in the picture of what the Board is doing. The Planning Council, on the other hand, is a body which has been appointed by the Secretary of State, very broadly representative of interests throughout Scotland, commerce, industry, chambers of commerce, trade unions, local authorities and so on. I think it is a well-chosen body, as representative as a body can be without making it unduly cumbersome in size; but it suffers from the same defect as the Border Consultative Council to which the noble Baroness, Lady Elliot of Harwood, referred: that there is no woman on it.

There is no woman on the Scottish Planning Council for the same reason that there is no woman on the Border body: none of the people who were invited to make nominations to the Secretary of State nominated a woman, and I have not the slightest doubt that if this situation is remedied in the future by nominations of women going to the Secretary of State he will give them exactly the same consideration as others. I can assure your Lordships that he has no bias against women on public bodies.

LORD POLWARTH

My Lords, would the noble Lord allow me to ask whether this is definitely the case; that the appointments to these bodies are by nomination? Are they not, in fact, nominations by the Secretary of State after having names put forward by other people?

LORD HUGHES

They are appointments by the Secretary of State from nominations which are made. But the Secretary of State has invited almost everybody concerned to submit names to him, and nobody who was asked to submit names submitted the name of a woman. We have told this to quite a number of women's organisations since the body came into existence.

The noble Marquess, Lord Lothian, feared that the deflationary effects of the present situation might be more long-lasting. No one, of course, is in any position to give guarantees about that. All I can say is that it is the intention of Her Majesty's Government that anything which is possible for the Government to do to prevent the effects, other than the short-term effects, will be done; and we do not think that the effects will in fact be long-lasting.

The more important point on this was that he said (and the noble Earl, Lord Selkirk, said the same thing, in more violent terms than those used by the noble Marquess) that Scotland did not like having applied to it a medicine for a disease from which it was not suffering. I am sorry; it was the noble Lord, Lord Polwarth, who said that. What the noble Earl, Lord Selkirk said, I think, was that no Government in its senses would apply to Scotland the measures of deflation necessary for the over-heated areas of the South. I should never have dared to use words like that of the Governments before October, 1964; because the fundamental difference—andthis is why I am persuaded that the deflationary effects will not be long-lasting—is that this Government have sought to differentiate between what has been done in deflationary policy in over-heated areas and what has been done in Scotland.

In the case of measures from which Scotland can be isolated, we have done that; and I mentioned the three steps that were taken to protect Scotland from the deflation. I said that we could not be isolated entirely. After all, the B.M.C. factory at Bathgate makes trucks. It does not sell the trucks only in Scotland, so that if there is the introduction of a 40 per cent. deposit, and a reduction of the period over which payments can be made, there is no way in which Scotland can be insulated against an effect of that kind. Steps which we can take, where it is possible to have a policy applying one way in one part of the country in these deflationary measures, have in fact been taken, and if the fact that the Government did not do that meant that the Government were without sense, it was the noble Earl, Lord Selkirk, who said that of previous Governments, not myself.

The noble Lord, Lord Kilmany, and others spoke about Turnhouse. I know it would give very great satisfaction to Lord Kilmany, to Lord Polwarth, to a whole host of noble Lords, as it would give great satisfaction to me, if I could say that the second runway is to be provided. I am sorry I am not in a position to say that, because the facts remain as they were. Noble Lords think, just like everybody else, very vividly of the occasions when they are held up by cross winds, but as the previous Government found and as this Government found—for the weather has not changed because the Government changed—the number bf diversions caused owing to cross winds is slightly over 1 per cent. That is fact and we cannot get away from it. If there were unlimited money to spend, obviously having a second runway is desirable, but in any system of priorities the second runway must wait. I regret that as much as others, and' it is a theme to which I will return in the course of the next few minutes.

LORD DRUMALBYN

My Lords, may I ask the noble Lord this? He is talking of diversions. He presumably means diversions on landing. Very often the difficulty is that you cannot take off because of cross winds.

LORD HUGHES

My Lords, I should not wish to be committed, but I should suspect that the weather that causes a diversion in regard to landing would be similar to the weather which may affect take-off. I am not certain on this. All I know is that in the two and a half years or so that I have been using the service more regularly I have been diverted twice, and once it was because the only place in Scotland where the firemen were not on strike was at Prestwick; it was nothing to do with cross winds.

The noble Lord, Lord Kilmany, offered me what did not seem to be at all an attractive invitation. He invited me to go careering about in my own car on a Border road, at a time when he seemed to be willing to guarantee I should not arrive at my destination in time. I can assure him that it is quite unnecessary for me to do that. I have now on several occasions made the journey in my own car across the Tay Road Bridge and eventually the Forth Road Bridge. The feeling that I have as I am coming through the Fife roads is quite similar to the one he has on going through the Border country. I was glad to hear what the noble Lord, Lord Ferrier, had to say about the state of the Fife roads. I will make certain that my colleague in the Scottish Department who is responsible for the roads reads that, in the hope that when the money is available some of us will have our priorities pushed up the list. One thing is certain: all our priorities cannot be pushed to the top of the list.

I was glad that my noble friend Lord Mitchison mentioned marine farming and also fishing in the Western Islands. I believe that we are on the threshold of really interesting developments in regard to fish farms. I saw quite recently in Denmark what could be done in that way, and the extent to which it has developed there has made it a flourishing business. Given conditions of a similar kind I believe it possible that we may have the same thing in the Highlands of Scotland, and in parts of England and Wales as well. The Highlands and Islands Board are of the same opinion as my noble friend about the value of fishing on the Western coast, and one of their projects has been to make money available for the provision of 25 boats over a period of years, particularly for the fishermen on the West Coast.

The noble Baroness Lady Elliot of Harwood, and a number of others, made some most pertinent and relevant points in relation to agriculture. I agree entirely with the noble Earl, Lord Perth, about the desirability of having another debate on agriculture at an early date. I am most carefully not looking at the Government Chief Whip, but I think it would perhaps strengthen my hand and that of the noble Earl, Lord Perth, if I were not to devote any of my time to replying to the agricultural or to the forestry points, not because I think they are unimportant, not because I think they lack urgency, but simply because I do not think I can do the subjects justice in a few remarks in a speech of a few minutes at this time. I would look forward, as I think the rest of your Lordships would, to an early debate on this subject.

On the matter of the Hawick railway line, to which quite a number of noble Lords referred, I want to use the exact wording of the note that I have, because I had a suspicion—I would not put it any stronger than that—that the noble Baroness just might raise this matter. This is the position. The British Railways Board, with the consent of the Minister of Transport, published on August 17 their proposals to withdraw passenger services from the line. In accordance with statutory procedures, written objections based on hardship grounds—a record number, it is understood—have been submitted to the Scottish Transport Users' Consultative Committee which has arranged for a public hearing at Hawick on November 16 and 17. The Committee will, in due course, submit to the Minister their assessment of the hardship likely to be caused to users by the proposed closure together with any recommendations they may have for alternative services to alleviate such hardship.

The Minister will, as is usual in Scottish cases, consult the Secretary of State for his general interest and will also seek the views of the Scottish Economic Planning Council on the effects of the proposals on the economic development of the area served by the line. The Council, in their consideration of the case, will have the advice of the Consultative Group for the Borders which will be able to draw on the survey at present being carried out by consultants. It is hoped that this report will be available in the New Year.

I think it might be also of advantage if I quote a reply given in another place on June 21, to a question by Mr. David Steel, when the Parliamentary Secretary to the Ministry of Transport said: My right honourable friend the Secretary of State for Scotland has recently appointed an Economic Planning Consultative Group for the Borders. The group will be able to draw on the comprehensive survey now being carried out by consultants from Edinburgh University and will be putting its views to the Scottish Economic Planning Council on the ultimate value of the line for the economy of this area. He expects the Economic Planning Council to be able to make its full assessment by the beginning of next year. It is right that consideration should at the same time he given to the effects which any closure of the line might have on existing users and the extent to which hardship, if any, could be mitigated by alternative services. These are matters for the Scottish Transport Users' Consultative Committee, operating under the procedure laid down in the Transport Act 1962. My right honourable friend is therefore informing the Railways Board that it may publish the proposal under the Transport Act, hut I would emphasise that this action in no way prejudges her eventual decision."—[OFFICIAL REPORT, Commons, Vol. 730, col. 60; 21/6/66.] Obviously, at this stage I cannot go further than that.

The noble Earl, Lord Selkirk, referred to migration, as of course in the first instance did the noble Lord, Lord Polwarth. I think that Lord Selkirk adopted much of the Report of the Scottish Council on this matter. I do not disagree to any great extent with that Report. I do not disagree to any great extent with what the noble Lord, Lord Polwarth, said about migration—with one exception. I do not think the Council are entitled to assume that migration to places outside the United Kingdom is something which is immutable and which is not affected by the ordinary economic circumstances of the country, any more than migration out of Scotland to England is unaffected by the economic circumstances. I believe that no matter how prosperous Scotland may become there will always be people who will want to go out of Scotland. It may be that they only want to go to London; it may be that they want to go to Canada or Australia, or to other parts of the world. I think that will continue to be the case. Whether people migrate either to go South of the Border or to leave our shores altogether, I am firmly convinced that their inability to get for themselves the job they want, the income they want, the type of conditions they want for their family, has a bearing on their going abroad just as much as on their moving South.

So when we talk about having migration, I do not accept that we can draw only on the figures of those who are moving South to accomplish that object. There is no way of proving this. I am pretty certain that the Scottish Council's figures in relation to movements within the country are accurate, but it is not so easy to get information about those who are going abroad, Therefore I think that they were probably working on less fact than in the former case. I hope so, because from the point of view of Scotland if there is no way in which we can stop some 20,000 or upwards of our population leaving our country every year for foreign or Commonwealth parts, then, although it may be a good thing for those parts, it is certainly not a good thing for Scotland, and we should like to see it diminished.

The noble Lord, Lord Polwarth, and others, including the noble Lord, Lord Drumalbyn, referred to the need for further education and the training of labour. The Government are very conscious of the importance of this. Lord Polwarth also mentioned that few people are at present taking advantage of these things. I think at this stage of the operation in relation to Bathgate and Linwood, this is perhaps understandable. If a man decides to go for re-training it is a big step in his life and he regards it as a complete change, and perhaps it is too soon after the event to take the decision to go for re-training. But the Government have increased, and intend to increase still further, the facilities for re-training, because if we are going to make the best use of our labour resources there must be a great deal more re-training than we have ever contemplated in the past. On that point there is no difference at all between the noble Lord and myself.

The noble Lord, Lord Polwarth, also referred to the Institute of Advanced Machine and Control Technology at East Kilbride. We think, as I gather he does, that this is a first-class development. The Institute will make full use of the unique facilities of the National Engineering Laboratory and the University of Strathclyde will have a special part to play. The intention will be to foster the closest links between the Institute, the universities and industry through the formation of a mixed team of Government scientists, university research workers and industrial technologists who will work together on problems. We expect that the Institute will come into operation within the next year. I assure the noble Lord that the resources will be made available to it and willfully reflect the importance of the development.

My noble friend Lord Ritchie-Calder touched upon this point also. He thought Scotland had been "dis-developed". That is perfectly true, and if one looks at the figures of jobs lost to Scotland because of this "dis-development" between 1961 and 1964 (there is no sinister significance in these facts; it just happens to be a set of figures which are available to me—it was a process which was going on before, and to a certain extent it has continued to go on since) one sees that the number of jobs lost to Scotland in mining, shipbuilding, textiles, leatherwork, confectionery and baking was in fact 63,000. During these years a considerable part of the difficulty was in trying to create new jobs fast enough to overtake the jobs which were being lost. Fortunately for Scotland, this is a process which cannot go on at the same pace in the years ahead as it has gone on in the last five or six years. After all, we could lose mining jobs as fast as this ten years from now only if we were opening pits for the sole purpose of closing them down again. So perhaps we are over the worst in that sense, and to a certain extent the job is a little easier, in that we intend almost immediately to get the full value for the new jobs which are being created.

As I said in my opening remarks, it would be wrong to put an optimistic gloss on the situation. I have no desire at all to be complacent about it, because so much remains to be done. But having regard to the fact that the number of new jobs mentioned in the White Paper was 130,000, in the last two years of which I spoke and for which I claimed the credit, and of which Lord Drumalbyn would seek to deprive me of at least the first month or two, the number of jobs was 48,000. So we are getting near to the annual figure which is necessary if we are to get 130,000 in five years. I did not use the phrase which Lord Drumalbyn attributed to the noble Viscount, Lord Muirshiel, about jobs being "in the pipe-line". I do not like the phrase "in the pipe-line". The trouble is that nobody knew how long the pipeline was, and never knew when the jobs were going to come out of the end of it.

In regard to the speech of the noble Lord, Lord Balerno, I have one very strong regret about it. I wish that it had been made much earlier in the debate, when the House was more fully occupied. It was a speech well worth listening to. I feel that anything I attempt to say in reply to it will serve only to detract from its value. I found in it little, if anything, with which to disagree. I certainly intend to read the speech in Hansard, and I hope that other noble Lords, both those who heard the speech and those who had left before it was delivered, will do the same. It is very likely that we can learn something from a close study of what the noble Lord said, and I am most grateful to him for saying it. Having said that, I cannot be very helpful to him about the Royal Society. This is not necessarily the best time to be asking for more money for anybody.

In the interests of time I will refrain from replying to any other noble Lords, though I cannot resist the temptation to refer, very briefly, to the remarks of the noble Viscount, Lord Massereene and Ferrard. He said that he was in favour of tourism, and then looked around as if he expected everybody to contradict him. Then he went on to make it perfectly clear that, while he was in favour of tourism, he was strongly against tourists. I wondered whether, if at some time in the immediate future a tourist should be shot anywhere in the vicinity of the noble Viscount, his speech to-day will be capable of being used in evidence against him. The rest of his remarks were very much in the category of the agricultural remarks, and I hope that at not too distant a date he may receive an answer to them.

Finally, there is the point of the noble Lord, Lord Drumalbyn, about the pulp mill at Fort William. He asked: will the Government safeguard this project with our E.F.T.A. friends and with the E.E.C.? I think that is a very fair question, but I do not know the answer. All I can say is that it is the best indication I have had for a long time that at least one member of Her Majesty's Opposition does not think that the thing to do is to sign the Treaty of Rome headlong and then hope to safeguard matters afterwards. It is quite a good example of just the sort of thing which makes Her Majesty's Government wish to look at both sides of the coin, before taking a decision which will be irreversible.

I am very conscious of the fact that I have not replied to much that has been said in the debate. I have not, so far as I know, dodged points which are difficult and answered others which are easy. But I think that the debate which has taken place has been, as these Scottish debates have always been, much more helpful than otherwise. No one has raised anything which could be regarded as merely a debating point. But I can assure your Lordships that, not only will I read the speech of the noble Lord, Lord Balerno, because I look forward to doing that with the greatest of enjoyment, but I will read through the debate, so that if there are points which I ought to have answered and have not done, it will give me satisfaction to reply in writing to the noble Lord concerned.

8.32 p.m.

THE EARL OF PERTH

My Lords, this has been a good debate and it has been a memorable debate, in that we have had two maiden speeches. There was the noble Viscount, Lord Muirshiel, with his great wisdom and knowledge of Government machinery; and we must all remember how much the foundations of what we have been debating to-day were laid at the time when he was in office. Then there was the noble Lord, Lord Kilmany, with a robust speech, fighting for the Borders, as did many other noble Lords.

We have to thank the noble Lord, Lord Hughes, especially, for having spoken twice, and for having in the second speech answered so fully, covering so much of the debate. I know I echo all our thoughts in thanking him. I am grateful that he has promised continuing and close review of S.E.T. I am also grateful for his telling us of the few crumbs of offices which have moved to the North. I would repeat the figure of 62 per cent. of research still being done in London and the South-East, and I hope that before too long we may get one or two bigger crumbs—perhaps whole sandwiches of offices.

I thought that the noble Lord, Lord Polwarth, made one point which must cause all of your Lordships great anxiety: the fact that the overall population of Scotland last year was on the decrease. This is the first time this has happened for a very long while. Of course, if that process continued we could solve the problem of unemployment, but it would not be the way that any of us want. It makes all the more certain that we must press on for opportunities for more new jobs, and also press on to make what I would call general life more attractive in Scotland. When I say that, I have Edinburgh particularly in mind.

It is getting late, and it is not for me to take up the points of all the other speakers. It is sufficient for me to say that I feel sure that the noble Lord, Lord Hughes—indeed, he has just said he will—and the Scottish Office will study the many and constructive suggestions that have been made, and will act upon them wherever they can. I feel sure, even before the next debate, that that will be equally true of agriculture. I beg leave to withdraw my Motion, and I thank your Lordships very much.

Motion for Papers, by leave, withdrawn.

House adjourned at twenty-five minutes before nine o'clock