DECIMAL CURRENCY BILL

HL Deb 27 June 1967 vol 284 cc142-55

5.54 p.m.

Order of the Day for the Second Reading read.

LORD SHEPHERD

My Lords, my ears certainly pricked up when the noble Lord, Lord Maelor, issued an invitation to your Lordships to attend the Eisteddfod next week. May I say that, if I could count upon that invitation being accepted, this House would certainly be up by July 28. I am quite sure that we could get through a good deal of business if some of our noble friends could proceed to Wales for this performance.

My right honourable friend the Chancellor of the Exchequer, when introducing this Bill in another place, referred to it as an historic occasion. And so it is, because this is the first step in changing from a currency system of coinage and notes which has stood us in good stead for very many years and in moving to a new system of currency. Perhaps in some respects the gilt has gone off the historic significance of this Bill, in the sense that we have already had a major debate, on January 30 of this year, on the Motion of the noble Lord, Lord Redmayne, when we had a very full and very interesting discussion. Therefore, in moving the Second Reading I do not intend to deal with the basic issue which divides the Government and the noble Lord, Lord Redmayne, and his supporters. We covered that very fully on January 30, and having seen the Amendment of the noble Lord, Lord Airedale, I think it is quite clear that this issue will be debated very fully on Thursday. Therefore, I shall limit myself to the main provisions of the Bill.

The major provisions of the Bill are for the introduction of a decimal currency system in 1971, and for the constitution and functioning of the Decimal Currency Board. The Bill covers only the basic policy issues. It does not cover all aspects on which legislation will be required before "Decimal Day". These will be included in a second Bill which it is proposed to introduce later in the preparatory period. While it is too early yet to say what the exact provisions of this second Bill will be, it is likely to cover such matters as payment in the new currency, legal tender, transactions in pounds, shillings and pence during the transitional period; payments during and after the transitional period, and a provision for concurrent legal tender during the transitional period. On a number of these matters the Decimal Currency Board will need to consult with the affected interests.

Clause 1 of the present Bill provides for the introduction in 1971, on a day to be appointed by the Treasury, of a decimal currency based on the pound sterling as the major unit and on the new penny as a minor unit; a new penny being a one-hundreth part of the pound sterling. The Government's intention is that, in accordance with the recommendation of the Halsbury Committee, the appointed day shall be in February, 1971. The Decimal Currency Board will recommend exactly which day.

Clause 2 and Schedule I provide for the coinage of the new currency. The bronze coinage will be a new halfpenny, equal in value to 1.2 pennies of the present currency; a new penny, equal in value to 2.4 of the present pennies, and two new pence, equal in value to 4.8 of the present pennies. In size these coins will be slightly larger than the silver threepenny piece, the farthing and the present halfpenny. They will be in weight/value relationship; that is to say, a new penny will be twice the weight of a new halfpenny and half the weight of the new twopenny piece. The cupronickel coins consist of a 5-new-penny and a 10-new-penny piece. These also are to be in weight/value relationship. They will have the same weight, diameter and value as the present 1s. and 2s. pieces.

The clause also extends the existing power to introduce new coins by Proclamation, and permits the issue before the appointed day of decimal coins for use as coins of the existing currency. These powers will enable the Government to introduce a 50-new-penny piece, the specifications of which have yet to be decided; and, should there be a clear demand, a high value coin between 10 and 50-new-penny pieces—for example, perhaps a 20 or a 25-new-penny piece. The question whether there is a popular demand for a coin in this range, and whether or not such a coin is introduced, will of course depend very much on the advice given by the Decimal Currency Board.

The decision to introduce a 50-new-penny piece has been made on economic grounds. The average life of a 10s. note is some five months, and the costs of distribution, withdrawal and replacement are heavy—and these increase annually. A new 50-new-penny coin would cost more to produce initially, but it would have a life of some fifty years. Subject to the views of the Decimal Currency Board, the Government have it in mind to issue a number of 5, 10 and possibly 50-new-penny pieces before Decimal Day to accustom the public to these new decimal coins.

Clause 3 makes certain minor amendments to the Coinage Acts 1870 to 1946. There are two changes of substance. One permits coins to be made by persons other than the Mint provided that they are made with the authority of the Mint. This will enable the Royal Mint, should the need arise, to contract out the making of decimal coins. This is basically an insurance policy. The Government's plan is that the decimal coinage shall be made at a Decimal Mint which is to be built in South Wales. The Royal Mint will eventually be transferred to that site. The other change brings statutory provisions into line with existing practice by providing that expenses incurred in the purchase of metal for coins are to be defrayed out of voted moneys instead of being met out of the Consolidated Fund.

Clause 4 and Schedule 3 provide for the constitution of the Decimal Currency Board. The clause provides for the appointment of a Chairman and members by the Treasury, and for the expenses of the Board to be defrayed out of moneys provided by Parliament. Provisions relating to the Board's constitution, members, staff and proceedings are set out in Schedule 3. The Decimal Currency Board was set up as an advisory body in mid-December, 1966. Sir William Fisk is the Chairman, and the noble Lord, Lord Erroll of Hale, is the Deputy Chairman. Although the Bill provides for the appointment of a Chairman and 13 other members as the maximum, the total number appointed to the Board so far is 10. There is at present no intention to increase the number beyond 10, but the Bill enables that to be done if it seems desirable. The staff of the Board consists of a secretary, an assistant secretary and supporting staff. There is also an engineering support group headed by a superintending engineer.

Clause 5 sets out the functions of the Board. In general, these are to facilitate the transition from the existing to the new currency and coinage; and its particular functions are described in the clause. The Treasury have power to give the Board general directions on the exercise of its functions, and the Board is required to make an annual report to the Treasury which, in turn, must lay a copy of every report before each House of Parliament.

Clause 6 provides for the dissolution and the winding up of the Board by Statutory Instrument at the end of the transitional period, after which the Board, once it has wound up its affairs, will no longer be required. It is not possible now to say what length the changeover period is likely to be, and this is a matter on which the Board will advise the Government. Legal arrangements for the bringing of the changeover to an end will most probably be covered in the second Decimal Currency Bill. Clause 7 sets out the Short Title, the interpretation and the extent of the Bill.

Those, my Lords, are the provisions of the Bill. I do not think there is any doubt that the House, Parliament and now, I think, the country welcome the change to a decimal currency. We ourselves have accepted the principle. I hope, therefore, that the House will give the Bill a Second Reading, and that in Committee on Thursday we can debate once again the main issue, as to what should be the major and the minor units of the new currency. I beg to move that this Bill be now read a second time.

Moved, That the Bill be now read 2^a.—(Lord Shepherd.)

6.6 p.m.

THE EARL OF DUNDEE

My Lords, as arranged through the usual channels, I shall not comment upon anything which the noble Lord, Lord Shepherd, has said at all, although in view of its fascinating interest it is extremely difficult to refrain from doing so. My reason for not commenting is that all that I have to say and all that many of my noble friends have to say can be said on one Amendment on Committee stage, and we do not want to spend time in repetition. In another place, a Reasoned Amendment against the Bill was moved from the Conservative Front Bench on Second Reading, the Reasoned Amendment being to have a 10s. pound instead of a 20s. pound; and there was a very full debate. The Conservative Party did not put on their Whips because they wished to allow a free vote on their side. The Government, of course, as they were entitled to do, did put on their Whips. The same thing will happen here with regard to the Amendment to be moved on Thursday in Committee. I had intended to put the Amendment down this morning, but, finding that the noble Lord, Lord Airedale, had already done so, I and my noble friend Lord Redmayne simply added our names to his Amendment.

The only other thing I will say is that we had a very full debate on this subject on January 30, when a great deal of interest was expressed on both sides of the House. As I have said, we on this side shall not be putting on our Whips—there will be an entirely free vote—so the Government will have a great advantage. Everybody will agree, I think, that this is a very important subject. The Financial Times said not long ago that it was the most important question which Parliament would decide in 1967; and when it is decided it will commit the country for a very long time. It is the kind of subject on which both Houses of Parliament ought to have an opportunity of expressing their views and of listening to a wide range of opinion. I therefore hope very much that all of your Lordships who can do so and who have any interest in this subject will do your best to be in the House on Thursday to hear the discussion and, if possible, to vote upon the Amendment.

6.8 p.m.

LORD KAHN

My Lords, I intervene in this debate because I am opposed to the whole principle of this Bill. I am not concerned with the intricacies of the controversy to which your Lordships' House has already devoted one debate and to which it will be devoting further time on Thursday. That controversy is simply one small illustration of my major thesis; namely, that the decimalisation of our currency is just one more of those monstrous irrelevancies of which, in the economic field, the Government seem so fond—although I must admit that on this occasion they seem to have very nearly unanimous support from all sides of your Lordships' House.

Decimalisation will result in a great deal of effort wasted and resources wasted, and in a great deal of confusion and exasperation. My Lords, to what purpose is this going to happen? The adoption of decimal currency will not facilitate our international trading and financial operations. If the Government are really serious about the virtues of international competition, why do they not present to your Lordships' House a metric system Bill? The adoption of the metric system of weights and measures would be progress in a really effective sense. It would be worth while spending time in debating the measure and in devoting resources and energy to making the change. The fact that this Bill is a Decimal Currency Bill and not a metric system Bill, is one more reason for wondering how serious the Government are in grappling with the country's economic and industrial handicaps.

To turn to a different field, why cannot the available energy be devoted to formulating a measure for securing universal transferability of pension rights under private occupational pension schemes?—a measure important for the improvement of labour mobility which was proposed by the staff of the National Economic Development office in the course of a document published in the early summer of 1963. Surely four years should suffice for considering an important proposal of that kind and for drafting the necessary legislation.

However, the subject of this debate is our currency system. That system has one great virtue; and that virtue is revealed if one considers the accurate facility at mental arithmetic, in pounds, shillings and pence, displayed by numerous shop assistants and the like in this country and compares it with the often laborious inaccuracy with which, abroad, each item has to be written on a scrap of paper and all items have then to be added up. The British currency system presents an invigorating mental challenge to our schoolchildren. They meet that challenge and are all the better for it.

My Lords, my submission is that this measure is a distraction away from what is important and that it will result in a waste of effort and resources. That being my submission, it would be inappropriate for me to add further to the wasted time which your Lordships' House has already devoted, and will be further devoting, to this measure. For the same reason it would be inappropriate for me to try to divide the House.

6.14 p.m.

LORD SINCLAIR OF CLEEVE

My Lords, I confess that I have considerable sympathy with the point of view expressed by the noble Lord, Lord Kahn, whose judgment I had good reason to respect in the short time during the last war when we worked together. But on this occasion I am afraid that I must disagree with him. In this day and age I can see no alternative to decimalisation, however great the inconveniences and however great the spur may be in the educational field by the retention of the present system. I must confess to a feeling of disappointment that on this occasion the usual channels have contrived to allow so little time for a Second Reading debate on a measure so important to all of us—to trade, industry, commerce, to banking and to every phase of our national life, and to every individual in this country. I lay no claim to be an authority on procedure, but in the ten years that I have been privileged to attend your Lordships' House I have always understood that a Second Reading debate was an appropriate occasion for the development of the general arguments on any important measure.

Even though to-day we recognise that this Bill and the issues arising out of it were very fully examined in another place by a Standing Committee which sat for five days in the fortnight preceding the Whitsuntide Recess—and on that basis we are enjoined not to repeat arguments then used if they can be avoided—I hope that I may be permitted, bearing in mind that injunction, to sketch as briefly as possible the general arguments on which I would hope to base an Amendment which might be acceptable to the House on Thursday.

LORD SHEPHERD

My Lords, may I intervene at this point? I think I should make it clear that what was discussed through the usual channels in terms of limiting speeches from these Benches and from the Benches opposite was in no way a gag on any noble Lord. That would be the last thing in my mind. If it were so intended, I am quite sure that it would not have been condoned by noble Lords opposite. The noble Lord is free to put the case he intends to make, and I shall be most interested to listen to him.

LORD SINCLAIR OF CLEEVE

My Lords, I thank the noble Lord for that intervention. I will try to be a brief as possible and merely to sketch the arguments. There are three runners in this race at the present time: the pound/cent/half-cent; the 10s./cent and the pound/mil. Their respective merits and demerits will be very fully examined at the Committee stage. There are, I believe, some serious disadvantages to the pound/cent/half-cent system. In saying this, I am not criticising the Halsbury Committee; yet I think it is surely right, now that we are at the point of decision, that a fresh look should be taken in the light of present and now foreseeable circumstances, at recommendations which were made more than four years ago. In 1961–62 when the Halsbury Committee were still sitting, the issue of the Common Market was not the live issue that it is to-day.

I believe that the main argument against the pound/cent/half-cent system is that it is inflationary, inflexible and inconvenient in terms of coinage. The last, I believe, can be tolerated if necessary; but the first two are serious disadvantages. I would contend that it is inflationary because under it the minimum price variation upward or downward is 1.2 pence as compared with the existing half-penny or half-penny equivalent. Of course, that could be met by adding another coin, the one-fifth cent, to the Government pound/cent/half-cent scheme. But this is not proposed. Furthermore, if we join the Common Market we may find it necessary to have still smaller coins, as other European countries have, for the purposes of sales tax; and a small coin may be convenient, if not absolutely essential, in the event of an added value tax.

The 10s./cent system is, of course, convenient in terms of coinage and it, too, could have the half-cent or half-penny equivalent; but so far its proponents have not seen fit to advocate that. But that system, of course, does not retain the pound. The pound/mil system would certainly be no more inconvenient, in terms of coinage than the pound/cent/half-cent. It retains the halfpenny equivalent and is completely flexible.

I will not take up the time of the House to-night by arguing these points in detail, because I understand that it will be more appropriate to do so at Committee stage, but before I sit down I should like to say a world about the position of the Confederation of British Industry and the attitude of trade and industry on this question, so far as I know it. The position of the C.B.I. has been frequently misrepresented or misunderstood. I am a member of the Council of that body, and over the years I have participated in most of their deliberations on this subject. I can assure your Lordships that since the Government first indicated their intention to give effect to the recommendations of the Halsbury Committee the C.B.I. position has been as follows.

Before the issue of the White Paper there was a large volume of opinion in favour of the 10s. rather than the pound as the major unit, if the 10s. system were to include the half-cent or the half-penny equivalent. But there was a relatively small weight of opinion in favour of the 10s. system if it did not include the half-penny equivalent. After the White Paper was issue, and the details of the proposals were studied, the volume of support for the pound/florin/mil system grew, and culminated in specific and repeated representations to the Government that this was the system which the C.B.I. preferred. I believe that the Government are in no doubt that the C.B.I. are against the pound/half-cent system, for the reasons that I have given earlier. I do not think that the C.B.I. would, so to speak, go to the stake for the retention of the sixpenny coin, thought they would like to see it retained, but on the desirability of retaining the half-penny equivalent, and of having a system capable of adjustment without radical alteration if European trading conditions made that desirable, they would have no doubt.

The Multiple Shops Federation and the National Association of Multiple Grocers favour a refinement of the pound/florin/mil system; namely, the pound/cent/mil; the cent being a hundredth part of the pound, and the mil a tenth part of the cent, and the minimum coin minted being a 2-mil equivalent to the halfpenny. The Federation of Milk Marketing Boards, the National Dairymen's Association and other associations concerned with the retail distribution of milk are insistent on the importance of retaining the halfpenny equivalent. The commodities for which the retention of the halfpenny equivalent is important include beer, bread, confectionery, eggs, milk, petrol, sugar and tobacco. I would not pretend that there is unanimity on the part of all retail trading organisations, and I am sure that my noble friend Baroness Elliot of Harwood will take the opportunity to amplify that point. I know that there are many who would rate the convenience and associability of the 10s./cent system, with or without the halfpenny equivalent, as all important.

But, my Lords, it would appear that nothing is going to shift Her Majesty's Government from the pound, and I for one, speaking personally, should hate to see them shift from the pound. I am convinced that if we are to change to a decimal currency the pound/florin/mil or some variant of it (and I hope to have an opportunity of explaining some variant of it on Committee stage) is the best system. We are now legislating for generations to come. This system preserves the essentials, as I see it, and is completely flexible.

6.25 p.m.

BARONESS ELLIOT OF HARWOOD

My Lords, the noble Lord, Lord Sinclair of Cleeve, spoke about "three runners". I do not know which my runner is, in the heirarchy of one, two or three, but I feel strongly that I am an unrepentant "ten-bobber". Whether the noble Lord, Lord Shepherd, puts that first, second or third I do not know, but I must testify that I intend to speak on Thursday at much greater length, and have indeed indicated my support for an Amendment on the subject. But I should like to say a brief word now and to stress the point again.

We have had a debate on this subject so I do not propose to go over the details of the system. But on looking again at the Halsbury Committee Report I note that they talk about the importance of the transition period; that transition should be made smoothly, and that it would be wrong to disregard the worry and distress which a change of currency could involve, particularly for some old people and for harassed housewives. There is no doubt that the transition period with the 10s./cent unit would be much easier than with any other unit, and I think that is one of the points which we must consider. Of course, the transition period will pass; nevertheless, I believe that, so far as associability is concerned and helping the ordinary consuming public, the 10s. system has a great advantage over the pound/cent/half-cent system and over the pound/florin/mil system which has been described by the noble Lord, Lord Sinclair of Cleeve.

The other argument which I think is paramount is that if we are to change the currency—and I am in favour of a decimal currency—surely the need is to change it to a currency which fits in with the rest of the world. The argument that a pure decimal currency will line us up with our friends across the Channel and make our business machines standard with those used in other countries seems to me to be very important. The system which the Government offer us, the retention of the pound as the main unit, does not do this. I cannot take seriously the argument that as an important industrial country we should have a heavy unit, heavier than the 10s. unit. If we had a 10s. unit it would in fact be quite a heavy unit compared with units of other countries; therefore I think that argument would fall.

The system about which the noble Lord, Lord Sinclair of Cleeve, has spoken, the pound/florin/mil system, has some supporters, but I do not think as many as the 10s./cent system. I know that the number of people anxious to have the 10s. system and represented by retail and other interests on our Decimal Coinage Committee runs into millions, and although some of them may have considered the pound/florin/mil system I do not think that is what they really favour. It would be very complicated. It is based on the figure of a thousand—a thousand little coins in a row making up a pound—which seems to me a fantastic idea. I do not think it is something which would recommend itself to the Treasury. At the moment the Treasury is backing the wrong horse, as I think, but I cannot believe it would back that one. So I think that the adoption of the pound/florin/mil system would be a step backward rather than a step forward.

I understand that the main argument about the halfpenny; but it is the fact, I think, that those nations who have gone over to the 10s./cent unit, or some of them—South Africa, for one—kept the half cent in their currency but very soon it dropped out, because they did not find it was necessary. We know that recently both South Africa and Australia have changed their currency to the 10s./cent system and that it has worked extremely successfully. The associability and ease of changeover has, I understand, been far easier and better than people expected. It has, in fact, been a great success.

So I stand firmy on the "ten bob" and I would ask the Government to heed the views of those millions of ordinary people who desperately want a ten shilling unit, which would keep us in line with the rest of Europe. I hope we shall discuss this further. I do not propose to discuss other systems, though the noble Lord, Lord Sinclair of Cleeve, has told us that a part of the population support them. I think that the big majority of ordinary people who daily handle currency in small coinage—I mean the ordinary shopkeepers and shoppers—favour the ten shilling unit, and that is the unit I beg the Government to consider even at this late hour.

LORD REDMAYNE

My Lords, I do not want to speak to the Bill, but I should like to ask the noble Lord, Lord Shepherd, one question. I am not happy about the matter of the timing either of the previous debate on this Bill or of this one. I do not know if I read the Order Paper correctly, but I should like to ask that this question should be put down as first business on Thursday if possible.

6.32 p.m.

LORD SHEPHERD

My Lords, may I say how grateful I am to those noble Lords who have stayed at this relatively late hour to take part in, and listen to, our debate. It is certainly with no disrespect to noble Lords that I say that the only new thing I have heard this afternoon is the speech of my noble friend Lord Kahn, who is opposed to the whole idea of decimalisation. I am bound to say that I have a sneaking sympathy with him. I like the halfcrown and the "two-bob" piece. I am sure it is going to take me a little longer than the noble Baroness, Lady Elliot of Harwood, in spite of all her fears about it, to get used to the new coinage, but I think that I am a reasonably intelligent sort of chap and in the end I shall be able to shop with the decimal coinage.

We shall have a debate on Thursday. I wonder how we are going to manage our Committee stage. If the noble Lord, Lord Sinclair of Cleeve, puts down an Amendment for the mil, clearly he will have to vote with the Government for the pound. He can hardly vote with the "ten-bobbers". If we have a Division on the noble Lord's Amendment, I cannot see the noble Baroness abstaining, and no doubt I shall walk through the Division Lobby with her. Perhaps, with the noble Earl, Lord Dundee, and the noble Lord, Lord Redmayne, we can devise a way whereby we can have a debate on this issue. There may be some procedural difficulties, but being the House of Lords, we may be able to manage our affairs so that those who wish to vote one way will be able to do so.

May I say to the noble Lord, Lord Redmayne, that I am sorry that this historic Bill should have come so late in the evening. We had a number of Private Members' Bills before the House. I am conscious of the rights of Private Members—I have been told about them every day. And these Bills were down on the Order Paper before we were able to get this Bill on the Paper.

THE EARL OF DUNDEE

My Lords, my noble friend was not objecting to this to-day. He only hoped that Thursday's Committee stage on this Bill would be the first Order.

LORD SHEPHERD

I was seeking to defend myself by explaining why the Bill was so late to-day. I give the noble Lord, Lord Redmayne, this assurance: that if there are any Bills in front of this Bill on Thursday, they will be formal. If there is any possibility that a debate is likely to arise on any of them, I shall ask the House to agree to their consideration being postponed until we have had the Committee stage of this Bill.

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