HL Deb 09 November 1967 vol 286 cc558-84

6.59 p.m.

LORD RHODES rose to ask Her Majesty's Government: Whether they will make a Statement on the situation in Hong Kong, and on matters arising out of the recent visit of Lord Shepherd to that Colony. The noble Lord said: My Lords, I was greatly heartened when I heard in the Prorogation Speech the words: My Government have supported the people of Hong Kong, whose fortitude and steadfast spirit they have greatly admired in recent months.

I am going to make a few comments on the subject of Hong Kong which I hope will result in some action. I have great hopes of this, because when, about ten or twelve weeks ago, I was invited by several bodies there to go to Hong Kong to comment on the situation I did not know that my noble friend Lord Shepherd was going to take over the office of Minister of State for Commonwealth Affairs. I found when I got there that he was, and I told them in Hong Kong that they had a Minister who was prepared to do something, even though it might mean he would have to stick out his neck and make himself unpopular with his colleagues.

When the people in Hong Kong talk about themselves they discuss economic problems, and the point is usually made that they are in the middle of a low-class economy; that they are in the middle of a low-wage group of countries—South Korea, China, Taiwan and Japan. This, of course, is true. There are special circumstances relating to Hong Kong, in particular, as the possible termination of treaty rights in 1998 has to be taken into consideration. When people are investing in Hong Kong this time factor is very important, probably more important than in any other place in the world.

Land is scarce, and although miracles have been performed in land reclamation to provide new building sites, it is very expensive. Anyone who knows how to read a balance sheet and sees the fixed assets in a British company set-up, or an American, or any other, company in the Western World, knows what is the cost for land, plant, machinery and for commodities like water. These fixed assets are as expensive in Hong Kong as in any place in the world. This is important. So the factor which gives Hong Kong the edge of its competitiors is its cheap labour. The refugees who crowded in from Communist China ensured a quiescent labour force for many years; but now a new labour force has grown up, a new generation which has not known China. It is of no use for the authorities, or anyone else, to threaten the younger people in Hong Kong with a picture of how difficult things are on the mainland: they do not care; they are Hong Kong citizens, and they have known nothing else.

Discontent has crystallised in riots. Last year it was the Right-Wing political unions and this year it has been the Left-Wing political unions. The small industrial unions are not associated with either kind of riot. I suppose that the Communists in Hong Kong amount to no more than 4 per cent. of the population. Their organisation is good and their potential for trouble-making is extensive. Neither the political unions who follow the Communists nor those who follow Chiang Kai-shek have, up to date, been interested in obtaining better conditions or better wages, but the industrial unions have. As low wages are regarded by the employers as a necessity, in order to compete with other low-wage countries, the industrial unions campaigning for better wages and conditions have been kept at arm's length. This situation has suited the employers who have worked in the past on the basis of "divide and rule"; and up to now that has paid off.

Since the riots earlier this year, however, the situation has changed. All Hong Kong knows that a return to the normal pre-riot days is impossible for Government employers and workers. So it is imperative that a major attempt be made to clear up the jungle of labour relations. A strong Government labour office is a "must". Employment offices should be opened so that the unemployed workers may register, and a complete register of places of employment should be made. There is an ordinance which sets out that registration must take place, but only 11,000 out of the estimated 25,000 places of employment are known to be registered. The system of recruitment which has been common in Hong Kong for many years must go. Under this system an employer says to a foreman, "Get me six men, will you?" The foreman goes to his relatives and friends and gets six men, and these men are forced thereafter to pay a sum of money to the foreman who has been influential in getting them their jobs.

The prevalent belief that the contact of Hong Kong people with Government is restricted must give place to a positive and constructive system of communication between people and Government. This may not be possible under the type of régime we have at present. The old type of Government House rule is quite out of date and quite out of touch. It may be that we could set up a new pattern, in the closing days of our colonial rule, by bringing in, at the expiration of the present Governor's term, a new type of Governor, a political Governor, who would understand the moods and motives of the people. There is now a good opportunity. The difficulties of the last few months have done more than years of argument from outside would ever do. They see their future clearly; that they will have to co-operate and bring in a new system and that the relationship between workers and employers and Government will have to be changed. My Lords, the representatives of the industrial unions have assured me that the workers would respond.

I wish to say a word about the thousands of workers who were dismissed when the Communist unions called their strike in the public utilities and docks. Large numbers are still out of work, and this situation cannot be allowed to continue. It may be said, how does one know that; how can you tell? A man who is a ticket collector on a ferry, a responsible job by Chinese standards, and who was sacked because he struck on that day in June, filters into the food market and becomes a coolie again.

Nobody knows where these people have gone, because there is no registration, and in many cases nobody cares. Their unemployment cannot be allowed to become chronic. Other work must be provided now, and the Hong Kong Government must take the initiative. If it were possible to have an office where the men could have cards stamped, that would be fine, but it is not so easy as that. If these men who have lost their jobs could save face by a transition period in which they could work for other employers or on jobs created by the Government, they would be able to work themselves back into their old self-respect. Admittedly it would be difficult for the Hong Kong Government to take the plunge, motivated as they have been in the past by profit and loss and traditionally balancing capital expenditure with current revenue. As the situation looks at the moment, there can be no option but to go ahead and take the initiative. All that Hong Kong needs to see is the dust rising from the soil being tipped in the harbour to make the airport runway larger.

There is any amount of schemes, such as the tunnel and the new towns. All this needs to be done as a demonstration of our intentions, because fundamentally we have a duty towards these 4 million ordinary, hard-working, intelligent folk, and to the generation that is coming behind us in this country. If we lose this opportunity and lose our foothold on the mainland of China, it means that we shall lose a potential export trade of the future—and Japan will "swipe" the lot. It is our duty to stay there, but we can do this only on conditions. Unless some of these things I am bringing out tonight are put into operation, we shall be out of Hong Kong on our necks within two years.

For many years the Hong Kong Government have budgeted for a deficit and achieved large surpluses. I wonder whether anybody can tell me what is going to happen to the £250 million sterling balance that they have, if for one reason or another we were put in the same position of handing over as we are in Aden at the present time. If the example of the colonial empire of the past, where there was disruption and insurrection culminating in riots, with a harried retreat, were to be repeated all over again, then whose is the sterling balance? Are we then to start years and years of argument about whether it is theirs or ours, meanwhile losing precious time and precious opportunities of exporting to a continent which will one day be a magnificent market, with its hardworking and intelligent people?

As a result of working from six o'clock in the morning sometimes to midnight whilst I was there, I saw all the principal officials of the Hong Kong Chamber of Commerce, the Hong Kong Spinners' Association, the Export Association, the Chinese Manufacturers' Association, all the unofficial members of the Legislative Council and the Executive Council, bankers, businessmen, leaders of the industrial unions, members of the urban council, the Hong Kong Association and the Chinese Association. I was brought in touch with a man who was engaged in trying to establish a proper industrial union, and who had never been noticed or recognised or accepted by anybody in Hong Kong at all. I was a comparative stranger—I have been there only five times—and I was introduced to a first-class man, as honest as the day is long, who would be prepared to be the hard core, as it were, of a movement which would help to save the situation. When I told unofficial members of the two councils, they heartily endorsed the points I made, and practically all the associations I have mentioned did the same. But the unofficial members went further. They said, "What about education? What about a policy for youth? What about transport?".

As transport is one of the examples of what needs to be done, I propose to have a word on this subject now. Public transport in Hong Kong has been operated for many years by private enterprise, under franchises granted by the Government in return for royalty payments. There are a number of different companies. There is the Kowloon Motor Bus Company in Kowloon and the new territories, and the Chinese Motor Bus and Hong Kong Tramways on the island. In the harbour there are two ferry companies—the Yamant and Star Ferries. This system worked satisfactorily for a long time, but when the population explosion took place in the late 'fifties and early 'sixties, it became inadequate to meet public demand and some form of Government advice was necessary. So a transport advisory committee was set up, and in 1965 this was formalised with the appointment of a Commissioner of Transport.

The bus companies, although publicly owned, are family concerns and lack professional management. The owner of one of the companies (or shall I say the principal shareholder) was away in Bangkok when I was there, and I had the opportunity of seeing how inadequately managed this bus company was. It was a practical example. There is a constant pull between the duties of public utilities to meet public needs and the demands of shareholders for a return on their investment. That is natural in a society like they have, where it has been a case of making money quickly. The opportunity has been there; they have been opportunists, and they have taken a chance. This occurs to a lesser extent in the case of the ferry companies and the tramways, where management is efficient and knowledgeable about public transport, and the shares are widely held.

The 1967 troubles have affected public transport in a series of token strikes for purely political reasons. On June 24 this year a general strike was called, and this affected all companies to a greater or lesser degree, and particularly the Kowloon Motor Bus Company, whose union was largely Communist. The ferry companies managed to operate more or less normally, and the tramways and China Motorbus Company ran limited services. All in all, about 7,000 workers were affected and out of jobs. They were given every opportunity by their employers (apart from the hard core) to return, but only a limited number did so. They just disappeared into the general community. Either the Communist unions were supporting them financially, or their friends or relations were giving them aid.

Following this, it was evident that professional management was needed urgently in the two bus companies, and the Commissioner of Transport and his bus expert, who had been doing their best to run, in all but name, Kowloon Motors, had to push "Uncle Joe, China Motorbus Company and all". What I am coming to, my Lords, is this. Is it not time, in these circumstances, which have shown up the weaknesses of this organisation, that it was recognised that there is a strong case for a Transport Commission to co-ordinate and run public transport in the Colony, utilising those with experience who are already there, and recruiting others?

All kinds of things came to light while I was there. People were coming all the time expressing their desire to do something about this situation. Everybody I talked to, whoever he was, told me: "Our biggest danger is not these bombs. It is the danger that will come from inaction and a reversal to the old dead hand of an out-dated Administration". These are the people who know full well, as I do and as your Lordships do, that the Administration of Hong Kong has done a wonderful job. It has housed people in great difficulties. It has run the place exceedingly well, up to the point when it needed change; and then it did not know how to change. It does not know how to change now, and it is up to people here to see that it does.

The noble Lord, Lord Shepherd, who has this matter at heart, knows how over the years Hong Kong has been held up as a glowing example of prosperity, and of how things should be run: the old Colonial Office dying on its feet, merging into a Commonwealth Office, seeing those remnants of countries overseas finishing up in disorder and disintegration, and costing money; Administrations here in this country saying to themselves over past years: "Hong Kong is a shining example. Leave it alone. Let it get on with it. Let them do what they like." And they have not known how to change. This is the crisis.

I am not going through the claims of education and many other matters, but there is one thing that I, as a Yorkshireman and North-countryman, must mention; and it is this. The Hong Kong manufacturers have been "taken for a ride". Importers have gone over to Hong Kong. They have gone to one factory and said: What is your price?" Then they have gone to the next, in the most primitive kind of way, and finished up, perhaps with the Six, with a bargain price, then coming over here to sell it under the 160 million square yards they are allowed to send into this country. In good times they would sell at 7½ per cent. below our price in this country. They could have sold at 30 per cent. lower than our price here. But look at the money they have missed—money that could have been going into the pockets of the lower-paid workers, while they themselves would still have been getting more profits in their own pockets. Is it not time that we woke up about it? This was acceptable to all the people in these organisations at that time. They are ready for it. Here are the Board of Trade setting up a Textiles Council. There is trouble in Lancashire because of the low-cost imports and disruption of prices. If only Hong Kong (they know it, but they want to be led to do it) would have their own representatives here, working with the Price Disruption Committee of the Textiles Council in Lancashire, they would be able to get better prices for their products, and would also be able to pay better wages to their workers.

My Lords, I could go on for a long time reviewing all these things which came up. I want us to stay there. I do not want us to go out of Hong Kong. I want us to come out, if we do at some time, with honour and distinction on social and moral grounds, as having done our duty to those 4 million citizens of Hong Kong, as having done our duty to scores and scores of fine firms there which have enabled Hong Kong to find homes for millions of people—I do not underrate this—so that we can be a stepping-off place for the exports to that great continent.

Yesterday I received a letter from one of the eminent men in Hong Kong. The noble Lord, Lord Shepherd, knows him; I have told him his name. He says: There is certainly a desire for change among the mass of the people, and our recent troubles have convinced many business leaders that changes are necessary. He is a big business man. He continues: Some of the more perspicacious members of the Government are equally convinced, but unfortunately few, if any, of them are right at the top. What is needed now is for you to apply continuous pressure on the Government here, so as to ensure that all the promises and hopes of recent weeks are translated into action. If this is not done, then the voices of laissez-faire and do-nothing will once again be heard, and so will be lost this great opportunity for meaningful change. And this would be a very great pity indeed, for I honestly feel that we have a wonderful opportunity of coming out of this confrontation far, far, stronger as a community than when we went into it, provided we seize and use these opportunities which undoubtedly now exist, and act with imagination and energy. The time factor is all-important. I repeat, unless we take the initiative soon this wonderful opportunity will be gone, possibly for ever.

Well, if my listeners here to-night feel that there is anything in the case I have propounded, they know that there is nothing in it that shows the slightest intention in my mind of trying to "rock the boat"; rather I want to put some sinews and strength into the remaining days of our stay in Hong Kong.

7.32 p.m.

THE EARL OF BESSBOROUGH

My Lords, I am grateful to the noble Lord for having put down this Question, although it is indeed very late and perhaps it was a rather longer speech than your Lordships are sometimes accustomed to on an Unstarred Question. But it was a highly illuminating speech and I think very well worth making. However, I hope that, as it is late, the noble Lord, Lord Shepherd, will forgive me if, when I have spoken, I have to leave, because in fact at this moment I should be by the side of his right honourable friend the Foreign Secretary and Sir Alec Douglas-Home at Carlton Gardens. Therefore I hope that my apology will be accepted.

Many things have happened since our last debate on Hong Kong in June and since the noble Lord, Lord Beswick, answered Lord Rowley's Question in July about Hong Kong's water supplies. If I may return to the noble Lord, Lord Rhodes, I think, even if I take a somewhat different line from his, that it is very gallant indeed of the noble Lord to have made this trip to Hong Kong and to give us the benefit of his reflections. I believe the noble Lord's full Ole is Lord Rhodes, of Saddleworth, and we should all agree that in making this trip the noble Lord has shown himself worthy of his saddle—I hope no other noble Lord has made that pun—as well as worthy of his seat in your Lordships' House, and of his county of Yorkshire.

I would say at the outset—I go straight to the point—that there now appears to be little doubt that China does not wish to seize Hong Kong from the British. The switching on of the water supplies on October 1 would seem to make this clear. That act would also seem to show that the authorities in Peking probably have some control over their extremists. On the other hand, it also seems evident that Peking cannot disown their extremist supporters entirely, and that they must keep up a kind of façade of resistance to British colonialism.

It may be that Peking would like to lower the standard of living in Hong Kong, so that the difference between Hong Kong and China was not so glaring. At all events, I expect the pinpricks to British rule will probably continue for some time; and I see that as recently as October 20 our Chargé d'Affaires in China, Mr. Hopson, who, I am sure, has the sympathy of the whole House in his present position, was summoned to the Chinese Foreign Ministry to receive a protest about what the Chinese describe as "provocative acts in the border area of Shum Chun" and to ask us to remove immediately the barbed wire entanglements there. That was not very many days ago. The situation, therefore, is still serious, and I think it must be the view of most noble Lords on both sides of the House that our policy should be to main-tam a firm front against disruption and, while avoiding provocation, to make it quite clear that we intend to stay in Hong Kong; and I hope that Lord Shepherd, or Lord Beswick, who knows this subject equally well, will be in a position to say as much when he replies this evening.

I was glad to read a transcript of the full text of Lord Shepherd's talk on radio and television at the end of his eight-day visit to the Colony, and to see that he repeated then his assurance that Her Majesty's Government and the British people were determined to support and sustain the Colony. I hope he will be able to repeat that assurance to us tonight. I was glad, with the noble Lord, Lord Rhodes, to see the tribute which the noble Lord, Lord Shepherd, paid in that talk to the services rendered by British soldiers, the police and the people of Hong Kong, who have stood, as the noble Lord said, so steadfast and resolute. I would join in endorsing this tribute to them, and also in giving our full support to the Governor, Sir David Trench, who has, I consider, been somewhat unreasonably criticised and who, despite what Lord Rhodes said, is, I believe, doing an excellent job in very difficult circumstances.

LORD RHODES

My Lords, I cannot let that pass. I agree with what the noble Earl said. What I said was that, after his term of office, it would probably be necessary to appoint a political Governor. He has done a good job.

THE EARL OF BESSBOROUGH

My Lords, I should not like to express an opinion on that point myself. All I would say now is that I think we all ought to wish the Governor good health and strength in a very difficult task.

Since our debate in June incidents of bomb-throwing and riots have continued almost without a let-up until quite recently, but there now seems to be comparative quiet, although I think there was another incident—

LORD RHODES

Yesterday.

THE EARL OF BESSBOROUGH

—a day or two ago. To read from the Press, one would have thought there was a state of near chaos at one time; but this I am told by people, including noble Lords who have been in Hong Kong recently, is very far from true, and the bombs thrown were sometimes no bigger than large fire crackers. But it is, of course, true that many people have been hurt and killed, and we cannot be complacent about this matter.

The outstanding problem was, of course, the 48-hour ultimatum on August 21, followed on the 23rd of that month by the sacking of the British Embassy in China. I am glad to see, however, that President Chou En-lai has reproved the Red Guards in that connection. The sacking may not have been a deliberate act of policy by the Chinese Government, but I suppose they felt they had to do something, deplorable as this was, when their ultimatum expired.

Where are a few questions, of which I have given him notice, which I should like to ask the noble Lord about the situation in the Colony. On October 4 a British police inspector was kidnapped and has still, so far as I know, not been returned. I should be interested to know whether the Government can say what has been done about that, and if there is any news of him. The most important fact in the recent dispute, as I have already said, is that China has switched on the water. I gather that in accordance with the agreement 15,000 million gallons should flow from China into Hong Kong from October 1 to June 30. Because of drought Hong Kong had been very short of water, and use of water had been rationed, I think, to 4 hours every fourth day. I gather than the new reservoir with a capacity of 30,000 million gallons has been constructed, but this does not, of course, mean that China's water will not continue to be needed. I also understand that there is talk of the construction of another reservoir. I wonder if the noble Lord could tell us whether there are any such plans.

In regard to food, in August and September Hong Kong became very short of supplies from China. The Hong Kong Government announced on August 16 that they were taking steps to find new sources of food, possibly from Indonesia and the Philippines and I gather that food is now flowing regularly at the level of about 75 per cent. of the amounts previous to May, when the trouble started. I hope the noble Lord can tell us what firm plans they have for providing new sources of food.

In regard to the military situation, the Secretary of State for Defence said on July 5 that there were about 10,000 British servicemen, including Gurkhas, in Hong Kong. I think this is an increase on the figure at the end of last year. Therefore, may I ask whether a decision has yet been taken regarding the size of this force in Hong Kong? Also, will the Government give a renewed assurance that, whatever reductions are made in the Far East, a garrison will be maintained in Hong Kong?

In regard to labour reform, I agree with what the noble Lord, Lord Rhodes, has said, and certainly with what the noble Lord, Lord Shepherd, said in his television interview about the granting of a statutory one day off each week to all workers in the Colony. I believe some firms already do this, but with noble Lords on the other side of the House we also would press for an improvement in working conditions; and I need hardly say that we are as concerned as others are about the possibility of there still being "sweated labour" in the Colony. On the other hand, as I think the noble Lord, Lord Rhodes, recognises, Hong Kong must remain competitive with South Korea and Taiwan; but I do not see any reason why she should flat continue to be so and yet improve labour conditions.

There is one other rather delicate matter on which I hope the noble Lord may be able to throw some light. It is the question of the ships from Hong Kong which are trading with Hanoi. Having recently been in the United States of America, I know that some Americans are very angry indeed about this so-called British trade with their enemies. I think this was cited as one of the main reasons why Congress has been making difficulties about British arms contracts. I should be most grateful to the noble Lord if he could tell us what this trade consists of and what ships are involved. I believe the trade to be very minor, and, indeed, an infinitesimal part of the total and very considerable exports which Hong Kong has made lately, but I wanted to draw the attention of the Government to the feeling in the United States, especially in Congress. I want to make it absolutely clear that I am not implying any criticism here, but that I am merely seeking information which I hope the noble Lord will be able to give, because I think if we appear to be trying to "hush up" this trade the Americans will become even more suspicious.

This may not be the moment to raise the question of the long-term future of Hong Kong. As your Lordships know, the lease of the New Territories expires in 1998. But even if this problem is a long way off, I should like to ask the Government at what stage we should start thinking about it, and how viable the Island can be without the New Territories?

The short-term problem, when we leave Singapore in the early 'seventies, is perhaps more relevant, and I should like to know what the Government have in mi id. Will Hong Kong then be run directly by Whitehall rather than through the Commander-in-Chief in Singapore? I think I am right in saying that while the Chinese in Hong Kong support their Government on the spot, they have not so much confidence, I regret to say, in Whitehall. I hope the noble Lord, by what he says, will be able to give them that confidence. The people in Hong Kong see us leaving Aden and Singapore, and this is not reassuring.

We have been told that the population of Hong Kong is now near to some 4 million, and it is extraordinary to reflect that Lord Palmerston in the last century could describe it as a barren island with hardly a house on it. Hong Kong lives by trade, and I am glad to see how impressively her exports have risen. I believe they rose during the first nine months of this year to a record £294 million. Hong Kong must be congratulated on this remarkable export achievement.

The Colony is undoubtedly a valuable commercial asset, but trade depends on confidence. Clearly the worst service we could pay the territory would be to exaggerate the present difficulties, especially since it now seems that China has no intention of marching into the Island or starving it out. Therefore in my view there is no reason why Hong Kong should not continue to flourish, and I feel sure it will do so if the Government here pursue the right policies, as I sincerely hope they will.

7.47 p.m.

LORD MOYNIHAN

My Lords, it was with some trepidation that I decided to speak to your Lordships again on the subject of Hong Kong since, as your Lordships may remember, on the last occasion that I did so I was referred to by the noble Lord, Lord Beswick, as a "Red Guard". It is my aim to see a strong, just and benevolent British Government in Hong Kong for as long as possible, which surely is not even pink. My desire to see a greater degree of socialism in the Colony can surely only be applauded by the Government, unless, as I am sure cannot possibly be true, there are any among them who think that social justice is only for the English. Can it then have been my desire to be reassured that contingency planning existed for the evacuation of Hong Kong if it became necessary, and in particular my concern for the loyal and gallant members of the Chinese police force, that elicited this description of "Red Guard"? My concern has been only for the protection and general welfare of the Chinese members of the police force in Hong Kong, to whom I can only add my sincere congratulations to those extended by other speakers. I think the members of the police force have all behaved magnificently.

I should have thought that our record in the Far East of looking after our friends after we have left places was already bad enough to have caused the concern which I expressed on the last occasion. If, however, it is my desire to pinpoint issues, to draw attention to difficulties and injustices and to make life more tolerable for the teeming millions of Chinese instead of mouthing platitudes, that led the noble Lord to make that comment, then perhaps there is room for a few more Red Guards in your Lordships' House.

I have lived in Hong Kong on and off for about a year and I have some considerable knowledge of the place. However, I realise that the noble Lord, Lord Shepherd, has lived there longer and has a greater recent knowledge than mine. I hope that he will not consider these to be loaded questions, because they are questions which basically reflect issues in which I and, I am sure, every socially conscious members of this country are deeply interested. May I ask him whether, on his recent trip, he saw any of the factories where children of 14 work seven days a week and where girls of the same age have been known to work 23 hours in one day? Did he perhaps notice that although income tax was low, education, health and welfare were totally inadequate?

And may I ask him how he, as a Socialist who has fought so hard to see social injustice removed from this country, felt when he saw the situation in a Colony for which, make no mistake, we here in London are responsible? What did he feel then? I put it to you that this country holds a greater degree of responsibility for Hong Kong than for other members of the Commonwealth to whom we give substantial sums of money. I am not here to decry the needs of countries such as Ghana; they are certainly very justified. But are they as justified as what is, after all, our own particular responsibility? Hong Kong is not independent; it is not a member of the Commonwealth; it is a Colony. We here are responsible for it, and, surely, it is to them that we should give the money, not to the other people. I would congratulate the noble Lord, Lord Shepherd, if I may, on his remarks in Hong Kong regarding the death penalty. I am extremely happy to hear that there is no consideration of a return to the death penalty in the present crisis.

I should now like to make a few remarks regarding the proposed reforms. The shorter hours and the lack of one working day per week will fail to protect the thousands of people who are on a daily-pay rate. All the new legislation will mean is that most workers will be robbed of one day's wage. The China Mail is a newspaper for which I have very little time—I have always regarded it as reactionary and have always considered that anybody who was criticised by the China Mail must have some good in him. However, I should like to read two quotations from the China Mail recently, wherein it appears that the noble Lord, Lord Shepherd, is being criticised for being reactionary. To be criticised for being reactionary by the China Mail is quite an achievement. The first quotation is this: It was obvious from what Lord Shepherd, Minister of State for Commonwealth Affairs, said, that no one has asked the women and children how they like the idea of waiting four years to get a 48-hour week. I should like to pose that question to the noble Lord.

The second quotation is: Lord Shepherd talked of a 'revolution in thought', but in fact it is obvious many of Hong Kong's business and industrial leaders are still as reactionary as ever. That the reduction of working hours for women and children should be thrust upon the employers by a Minister from the United Kingdom speaks for itself. For those of your Lordships who do not know Hong Kong or the Press there, I would repeat that the China Mail is a Right-wing newspaper, and even it has these things to say.

I should like to make a couple of quick remarks about the question of the type of Governor one should have in Hong Kong, since the subject has been raised by the noble Lord, Lord Rhodes. Let me say immediately that I have nothing but the highest admiration for Sir David Trench, the present Governor. I know the noble Lord, Lord Rhodes, thought exactly the same thing, but his remark was misinterpreted and I do not want mine to be also. However, I agree with him that this is not the kind of background for a Governor one wants to see in Hong Kong to-day. What I should like to see in Hong Kong—and I use the word which I am so fond of, using it this time with a small letter rather than a large one—is a liberal Governor, one with a political background and not one who has risen up through the Foreign Service round that part of the world. I hope I am not going to be accused of being petty, but I should sincerely like to see him take off that ridiculous hat, because I think it carries with it a tremendous significance of old imperial rule, and I should like to see it removed. I should also like to hear the last noon-day gun in Hong Kong, because I think that has similar implications.

What I wish to know also from the noble Lord, Lord Shepherd, is whether or not the Governor of Hong Kong has the right to call out troops there, should it be necessary, without referring it to Whitehall. I believe that he does not have that right. If that is so, may I suggest that that should be changed forthwith, because the time difference between Hong Kong and London is so great that if any situation arose whereby calling out troops became necessary it is certain it would be out of control before a message could be got to London and back again. I hope I am wrong.

LORD SHEPHERD

My Lords, the noble Lord is quite wrong.

LORD MOYNIHAN

I am very happy to hear it. I think the situation in Hong Kong can be summed up very simply. It is a place that needs social reforms very badly. It is a place that is unable to give itself social reforms, and it is a place for which we are responsible, and we must see that those social reforms go through. We have a Socialist Government, in whom many of us who are social reformers have lost a certain amount of faith. A great deal of my faith has been restored by the speech of the noble Lord, Lord Rhodes, this afternoon. I support him in everything he has said regarding social reforms. I will not repeat them all, because it is getting late. I should have liked to devote a considerable amount of time to the question of education. In fact, I came here with a long speech on the subject, which I will not make this evening, although I hope there will be an opportunity to make it on another occasion, because I think the education situation is deplorable. I hope the Government Front Bench will reflect some of the reforming ardour which has been shown by the noble Lord, Lord Rhodes, and to which I, and I am sure everybody on my Benches, subscribe.

7.57 p.m.

LORD SHEPHERD

My Lords, first of all, I would thank the noble Lord, Lord Rhodes, for asking this Unstarred Question, on a Colony that he and I, and clearly other noble Lords also, hold very close to our hearts. I thank him also for the tribute that he paid to me in my responsibilities to this Colony. To a certain extent he embarrassed me, because he appeared to have conveyed this impression of his to those friends of his in Hong Kong, and it may well be that they thought, when I went to Hong Kong quite recently, that I was a magic fairy with a magic wand who could do immediately all those things that were needed to put matters right.

If I may say so, I thought the noble Lord, Lord Rhodes, and to a certain extent the noble Lord, Lord Moynihan, were a little unfair in regard to the Government and the previous Governments of Hong Kong. One of the very great men of my time was Sir Alexander Grantham, the first Governor of Hong Kong immediately after the war. One of the moments I have never forgotten is the tremendous tribute paid to him by ordinary men and women of Hong Kong when he gave up his office. He was then followed by Sir Robert Black, whom I also knew as Governor in Singapore. Now we have Sir David Trench and, if I may say so to my Liberal-Socialist friend across the way, Sir David Trench is a most liberal Governor; he is a most radically minded Governor, and he is just as conscious of the ills that beset Hong Kong as is anyone in your Lordships' House. Let us seek to put this matter into perspective if we can.

Since the war, Hong Kong has achieved a fantastic scale of success. These successes have not come about by accident; they are due to the work of the people and also, I believe, to that of a sound and dedicated Government. Twenty years ago Hong Kong was a small Colony that existed basically on entrepot trade with China and other Asian countries. Later, it had a small simple cotton-weaving industry. To-day it has a population of some 4 million. Its industries now are comparable with, if not superior to, those of other Asian countries. I know of one company which to-day operates in the electronics field, dealing in sophisticated electrical materials and employing some 5,000 workers.

As I have said, today there is a population of some 4 million, but the Colony gives employment to about 1½ million people. It has hospitals, such as the Queen Elizabeth Hospital, to which I went during my visit, that are the envy of the world. Perhaps I might say to my noble friend Lord Beswick, who I gather speaks for the Ministry of Health in your Lordships' House, that if we in Britain had a hospital like the Queen Elizabeth Hospital, visiting dignitaries, instead of being taken to the Harlow New Town, would be taken to that hospital. There has been a dramatic improvement in the health of the people of Hong Kong. In fact, the expenditure on medical and health services represents to-day some 15 per cent. of the annual budget.

My noble friend across the way spoke of education. I believe he used the term "a disgrace". Let us put this into perspective. This Colony, with a population of 3,700,000, in fact sends to school each day something like one million children.

LORD MOYNIHAN

My Lords, I was most particular in saying that I had a long speech on this subject which I was not going to make. I feel it is slightly unfair of the noble Lord to be answering points which I did not make.

LORD SHEPHERD

My Lords, I hope that I am never unfair. But the noble Lord did refer to education as "a disgrace". I am setting this out as an achievement. Later on I will deal with some of the other points. As I was saying, this Colony has something like one million children—nearly 25 per cent. of their population—at school. Some 18 per cent. of the annual budget goes into the field of education. The resettlement of squatters and refugees has probably been the greatest rehousing operation that has taken place in Asia, or perhaps anywhere else in the world, since the war. A new housing programme has just been announced.

No doubt the House will be interested to know, bearing in mind the size of this Colony, that on October 26 of this year, the day after I left Hong Kong, there was a ceremony which marked the one-millionth person to be rehoused. Let it be placed on record that most of this has been done through the resources of Hong Kong. The population has been doubled in the last 20 years. So when we look at, and condemn and criticise, the Administration of Hong Kong—and it may be that there are fields in which we have erred—let us also recognise the achievements which have come about not by a miracle but because of the efforts of the people and of the Government of Hong Kong.

I feel that I should say a few words in regard to what is called confrontation. I do so because I believe there is great misunderstanding as to the situation in Hong Kong. This can be serious in terms of confidence in Hong Kong's ability to carry out its export trade. I am sorry to say that since the disturbances began in May there have been 47 deaths, and 781 persons have been injured. Of these casualties, less than one-third are attributable to bomb incidents—a tactic to which the Communists resorted in July of this year.

As I say, I believe that we must keep these incidents in perspective. The planting of bombs has been done with the object of disrupting the life of the Colony. Some of these bombs have caused loss of life and have injured many others. Only yesterday we heard of the death of one person and many others were injured, in a bomb incident. I am sure that the House would wish to express its sorrow at these personal sufferings by innocent people. I fully appreciate the feeling of anger and resentment—in fact the call, to which the noble Lord referred, for higher punishment for this type of crime. But we must keep this in perspective, for the majority of the bombs have been fakes or have been unsophisticated bombs of the black-powder, "firecracker" type.

I think it is pertinent to ask: To what extent have those who are trying to disrupt the life of the Colony succeeded, both by bomb outrages and by industrial action? The economy is buoyant. So far this year, the value of Hong Kong's domestic exports—and the Colony, quite rightly, depends on its exports—has reached the highest figure ever recorded over the corresponding periods in previous years. This is a remarkable achievement, for the life of the vast majority of the population continues as normal. I think this is a clear indication, as I said in Hong Kong, that the people of Hong Kong were not prepared to be intimidated by troublemakers.

The noble Earl, Lord Bessborough, spoke about the question of water. He recognised a fact which has given us great gratification: that water was turned on on October 1, on due date, by China. Now there is an ample supply of water and, with the Plover Cove scheme coming into being early next year, there is no reason why we should not see this period through. In terms of food, here again, ample supplies, in fact normal supplies, of food are now coming from China.

I come back to the position. On the one hand we had a number of militants seeking to disrupt the life of Hong Kong. But clearly they have failed, and I hope that what I say will not be regarded as just a formal tribute. On behalf of Her Majesty's Government and the British people, I paid a tribute in Hong Kong to the police, both regular and auxiliary, who throughout, despite great provocation, have acted with discipline, fortitude and courage. I would also pay tribute to the part played by British Servicemen and the Gurkhas, for their sense and restraint. If we wish to have an indication of how the ordinary people of Hong Kong have reacted to these militants—and, as we know, the Chinese are not by nature those who normally rally to a military or police force—I would say this. Since the disturbances commenced in May, some 1,500 young men and women, all Chinese, have come forward to join the auxiliary police force. Let us have in mind what that means in practical terms. It means that when they have done their eight hours' stint as a civilian worker, they go on to do an eight-hour stint in the streets of Hong Kong. I think that that response by the young people is sufficient indication of what is the determination of the people of Hong Kong.

I should like now to turn to the subject of labour and social reform. I would make it clear to my noble friend Lord Rhodes that I have only one interest at heart, and that is the ordinary people of Hong Kong. I know something about the ordinary people there. It is true that I was not able to meet all those I should have liked to meet during my visit. This was not the result of any strictures or restraints put upon me by the Government of Hong Kong, but was due entirely to the fact that there are only so many minutes to the hour and only so many hours to the day. But I did see many of those who I thought could help me in what I was seeking, and I give a firm pledge that when I return I will seek a broader and deeper field.

I have spoken of the achievements of Hong Kong. These have resulted from an industrial revolution no less important than our own. But as in all industrial revolutions, social advance has not kept pace with industrial and economic advance. Beyond the glitter of the Hilton and Miramar hotels, beyond the many tourist attractions which are to be found in Hong Kong, there are large numbers of men, women and children who live in appalling conditions, and there are many who work in conditions that really beggar description. To tackle this problem there is need for urgent action in the field of social and labour reform. I was pleased to note during my visit that this view is gaining momentum in responsible circles. It is most important that the Hong Kong Government, and we ourselves, should not allow this momentum to falter, but that we should accept this as an opportunity and a challenge.

I noted what was said by my noble friend Lord Rhodes about the low cost area in which Hong Kong trades. I realise that Hong Kong manufacturers have to pay great attention to competition. But from my experience of industry in the Colony, which at one time was not insignificant, I should venture the thought that many manufacturers are to-day simply competing against each other and, in consequence, are selling their commodities at a cheaper price than outside competition demands. This may well be the result of what has been a cheap labour market. I am sure that if employers approach this problem objectively and take a broader view of what is in the interests of the Colony, it should be possible to improve labour standards and still remain competitive. After all, it is widely acknowledged that improved labour conditions contribute to improved productivity and efficiency. Some changes, particularly in the field of labour reform, are possible—if not immediately, then in the very near future.

As noble Lords will know, following discussions which I had with Government and employers' representatives, agreement was reached for the weekly working hours of all women and young persons in industry to be reduced from 60 to 48 hours. Legislation to give statutory effect to this reduction will shortly be introduced by the Hong Kong Government. The reduction will be effected over a four-year period beginning on December 1 this year. The noble Lord opposite wished to know why this could not be done immediately. Industry needs time for adjustment, and above all else it needs an adjustment, too, in the pay packet. If one were to reduce the hours of work too quickly and the pay packet were to suffer, one would have graver difficulties than those which now confront us in Hong Kong.

I also had discussions on the hours of work for men. I should like to see, and I believe that this is now possible, men given a statutory day off each week. It is already the practice in many companies in Hong Kong to provide for a weekly rest day for men employed in industry. Legislation to improve workmen's compensation benefits and security of employment will be introduced shortly, and the review of other labour legislation is being accelerated. Proposals for strengthening the staff of the labour department are now being very actively pursued—and to my noble friend Lord Rhodes I would say that I do not mean "actively pursued" merely in the Parliamentary sense.

There appears to be a new feeling amongst employers in Hong Kong: a desire to associate themselves more closely with the needs and aspirations of their employees, and to establish an atmosphere in which good labour relations may develop and flourish. This is encouraging and deserves encouragement. Desire is one thing, effective implementation is another. I do not think any of my friends on the employer or management level in Hong Kong will disagree with me when I say that knowledge, experience and know-how in labour relations is sadly lacking, and I hope and have every reason to believe that the employers will now seek assistance and advice on how this can be achieved. In this delicate field of relations between employer and workman, the answer does not lie entirely with Government. Government can provide the framework, but in Hong Kong it requires the initiative of employers because, as my noble friend Lord Rhodes pointed out, the workers are so ill-represented by their own unions and organisations.

Therefore in my view, while it is right and proper that the labour department of the Government should be strengthened and developed, the initiative now lies with the employers. I believe that if the message has got through—and I believe it has got through—they will be setting up the right sort of administration and research, to see how best as good employers they can develop their relations with their workers.

In the field of social reform, I would refer the House to the Report of the Director of Social Welfare. He said on November 1, that there are signs of a growing desire among people in the Colony to build, if possible, a Hong Kong that will be forward looking in every department of activity. He then said, and I quote his words: If, with that desire, is developed the determination to provide the means, then great demands will be thrust upon all who are involved in social work to react to changing needs and develop new approaches and resources so that the services that are needed may be provided. I believe those words show that the way ahead for Hong Kong depends on social as well as economic stability.

My noble friend Lord Rhodes spoke about the gap between Government and people, and to a certain extent I think that a gap has opened up. I believe it is due to the fact that a new generation is growing up in Hong Kong, as my noble friend said. If there is any blame to be attached, I think it is due to the fact that one who lives in a Colony tends to see it as a static position. If one is privileged to visit from time to time, particularly after being away for three or four years, one is struck by the full impact of change. But the Government in Hong Kong is well aware of the position. It is also aware of the new, changed attitudes among the employers and leaders of the various communities in Hong Kong.

My noble friend drew attention to the assets of Hong Kong which lie in London. I question his figure and put the amount a little lower than the figure he gave. My understanding is that if you take away the sums required to back the currency, the amount available is some £80 million, and I understand that much of that is pledged for capital development in the course of the next few years. But, as my noble friend said, Hong Kong has consistently budgeted for a deficit and on only two occasions has that come about. To a certain extent that is due to prudent budgeting, but basically it is due to the fact that in its growth the economy has been infinitely stronger and more firm than had been anticipated. But I certainly take my noble friend's point.

He also spoke about those who were unemployed and who were on strike. The Hong Kong Government has, in fact, set up a special office to see whether it can trace the approximately 9,000 workers involved, but the task has been very difficult. We do not know where most of those men and youths have gone, but there is a continuing effort, because the point is very much in the minds of the Government of Hong Kong.

The noble Earl, Lord Bessborough, asked me about the kidnapped British police inspector. The position is that Her Majesty's Government have made representations to the Government of the Chinese People's Republic, both through the Chinese Chargé d'affaires in London and the British Chargé d'affaires in Peking, requesting that the officer concerned should be returned immediately, and unharmed, to British territory. The Chinese People's Government have taken note of those representations and the matter is being pursued.

The noble Earl also mentioned water and food, to which I referred earlier. He then wished to know the position in regard to the garrison in Hong Kong. It is our intention to maintain an adequate garrison in the Colony. The noble Earl asked about British flag ships registered in Hong Kong continuing to visit North Vietnam. The position is that we have no powers to control the movement of British flag ships under existing merchant shipping legislation. A relatively small number of British vessels registered in Hong Kong are under time charter to foreign firms, whose instructions we are not always able to influence.

The noble Earl asked me whether I would confirm the pledge that I gave in Hong Kong about our sustaining and standing by this Colony. I wish to say this—and these are the words which I used in Hong Kong. Her Majesty's Government will continue to work to this end. This is in regard to our relations with China. But I must make it clear that Her Majesty's Government cannot consider any abdication of their authority or their responsibilities for the people of Hong Kong.

In conclusion, one should say that we look forward particularly to a restoration of good working relations between China and Hong Kong, and also between China and the United Kingdom, based on an understanding of their benefit to each other. I am deeply conscious of our responsibilities to the Colony of Hong Kong. There is much still to be done and there is no magic solution, but I am convinced that, given the opportunity—and I believe the opportunity will be there and will be seized, once the militancy and the attempts to disrupt the economy and the life of Hong Kong are finished—there is this will, not only by the Government of Hong Kong and, in particular, by the Governor himself, but now among the leaders of the communities in Hong Kong, for change. For my part, during my period in the Commonwealth Office I will do my best to help them, and I am convinced that I shall have the support of all my colleagues.

House adjourned at half-past eight o'clock.