THE ECONOMIC SITUATION AND PUBLIC EXPENDITURE

HL Deb 23 January 1968 vol 288 cc132-303

2.49 p.m.

THE LORD PRIVY SEAL (LORD SHACKLETON)

My Lords, in rising to move the Motion, "That this House approves the policies announced by the Prime Minister in his Statement made to the House of Commons on 16th January", I am conscious that my baptism as Leader of your Lordships' House is not taking place in the most auspicious circumstances. But one thing I do promise, and that is that I will not seek to gloss over the hard facts or in any way to conceal or to deceive the House as to the realities of the situation as I see it.

I regard the present debate as, in a sense, a continuation of the debate that took place last week in another place, and I do not, therefore—I am sure your Lordships will be relieved to know—intend to repeat all the things that were said on that occasion. Let me say straight away that I have no illusions about the consequences of recent events. They have been damaging to the country and to the standing of the Government; though perhaps it may come from the Opposition that the damage to the former is rather less than to the latter. We frankly admit that with devaluation we have suffered a defeat. The reductions in public expenditure which we have been forced to make are painful, and some are very painful to different individuals. There are certain ones which are painful to me. But equally, my Lords, we do not want to get them out of perspective, and I will try, without, as I say, glossing over the facts, to put them into the perspective from which I believe we should view the situation. I cannot hope in this speech to cover more than a small part of the issues before us, but I will try to touch broadly on the economic situation and then deal with defence; and my noble friend, Lord Chalfont, will be dealing with defence and foreign affairs more fully later.

The first and major question is: Are the measures which have been taken by the Government those that the country really needs? I believe that they are, but one can accept this only if one recognises two things: first, by looking at these decisions in the context, because taking anything out of context makes it become rather misleading; and secondly, by recognising that part of the background is devaluation. The way to handle defeat is not to sink into despondency; it is not to become a nation of moaners. In recent weeks there has perhaps been excessive or over-criticism. It is a fundamental problem in a democracy. The Opposition Parties have a duty to criticise the Government, and no one would deny them that right. But I think we should all be inclined to agree that there has, perhaps, been excessive despondency and anxiety to find a scapegoat to blame. We blame ourselves and we blame the Government, and some of this blame is right; but let us not think that this, in the long run, is the best way to get the best for Britain.

We also have to look rationally and coolly at where we are now, in the early months of 1968, and not just where we were before the war, or where we hoped we were in 1964, or where we thought we were before devaluation. Those events are past, and indulging in nostalgia, either economically or in Imperial terms, or crying over spilt milk will not take us very far. I could not more wholeheartedly endorse the Chancellor of the Exchequer's plea to us to face the realities of the situation as it is now in 1968. That means us all, including the Government. I would ask those opposite to do the same. It is no longer enough to say that what we have done in the past is wrong. With the benefit of hindsight it may well seem to have been. But that is not the point, I think, so far as this debate to-day is concerned. The point is that the critics of the Government must say what they would do instead, accepting what has already gone before. It is the constructive alternatives that we need to examine. Undoubtedly everybody, including the Opposition, has regrets. I can only say that we all have them.

My Lords, I intend to deal with this subject in three parts. I should like to say something first about the context of the situation facing the Government, the economic situation and the military and foreign policy situation; and secondly about the Government's strategy for dealing with these and the part in the strategy which is played by the measures that were announced last week. I think it is necessary to deal with the economic front in rather more detail because this sets the background for the military and foreign policy position. It should not, of course, determine in detail one's foreign policy; but there is little point in a foreign policy which is not backed by the military resources to carry it out, nor is there much point in military expenditure which puts such a strain on the domestic economy as to place the continued prosperity, and even the viability, of the country at stake. The first duty of any Government is to defend its citizens, but in terms of the whole of a Government's duty it is not an absolute. It is a relative priority, but perhaps the most important of the relative priorities.

My Lords, the basic fact of the economic situation is that in 1964 (I am not here making a Party point) we faced the biggest deficit on our balance of payments since the war. This deficit was made up of three parts: the deficit on visible trade, on our exports and imports; the growing burden of Government expenditure overseas and, thirdly, an outflow of long-term capital. The Government chose to tackle this problem on these three fronts. First, the visible trade deficit was the result of 15 years or more during which money incomes had gone up faster than output; and this continual decline in competitiveness led to the visible deficit growing larger in every phase of post-war expansion and the swings that we had.

This decline had to be tackled—ant these have been the objectives of all post-war Governments—both by increasing productivity, and therefore real incomes, and by restraint on the large growth of money incomes. Productivity was tackled through the tax structure, by corporation tax; by selective employment tax; by the direct investment grants and through the restructure of industry via the Ministry of Technology, the "little Neddies", the Industrial Reorganisation Corporation, regional policies and the use of the regional employment premium combined with the differential investment grant. Income policy was tackled first on a voluntary basis and then more drastically during the freeze by legislation.

The second cause of our troubles, Government expenditure overseas, was tackled by reviewing our foreign policy objectives and aiming at a ceiling of £2,000 million for the defence budget. It was, however, inevitable that savings on that front would take considerable time to accrue, and we did not expect to come below this ceiling until about 1970. The third difficulty, the long-term capital account, was tackled by the firm exchange control of investment outside the sterling area and by a voluntary programme of restraining investment within the sterling area.

Our weaknesses therefore were being tackled on all three fronts: on competitiveness, on Government expenditure overseas and on the outflow of capital; and in the early months of 1967 there was every reason (even granting, as we could see then and can see more clearly now, the basic vulnerability of our situation) to suppose that those polices were working. Three-quarters of the balance of payments deficit had been eliminated; productivity had increased more than in any previous inflationary period; money wage rates had stayed constant for six months and the economy was strengthened and ready to move forward. Then new and unforeseen factors intervened. Again I am not using these to defend but to explain, and again it points to our basic vulnerability. They were the Middle East crisis, the unexpected slackening in the growth of world trade, and the dock strike. In these changed circumstances it became clear (it became clear to some earlier than to others) that the policies were insufficient or had not had enough time to work to correct the balance of payments problem; and with the accompanying speculation, it was clear that devaluation was inevitable. This, as I freely admit, was a defeat: it was the defeat of a strategy which had aimed at maintaining the existing position. I would say—and I hope that your Lordships would broadly agree—that a defeat does not necessarily mean a condemnation of the policies that lie behind this strategy. I believe that their importance and their relevance are still valid. In the post-devaluation situation we still need to increase our productivity and our production, to improve our industrial structure, to reduce the regional imbalance and to limit the outflow of money, both of Government expenditure and on private account. Finally, we need, as we have needed for so long, a prices and incomes policy even more. Devaluation helps us to get back into a competitive position and gives industry an opportunity to expand in world markets, but it does not by itself stop the decline in our competitiveness. It is a breathing space and a stimulant, but it is not the cure of the disease itself. Only by holding down the large growth of costs and prices relevant to other countries can we grasp and hold the full advantages of deflation.

To summarise briefly, the economic situation as I see it is this. Given the developments in the world situation, the Government's policies were inadequate to avoid devaluation but these policies are still valid in the new situation. What is now required is that we grasp the opportunities that are offered to us. This means two things. First of all, we must ensure that home demand does not grow so rapidly that export demands are frustrated, and in addition it must be operated so as to remove the demand of inflationary elements in the situation. Secondly, it means an incomes policy. We must continue our restraint of money incomes. The Government measures of last week are directed to both these ends.

Correcting our balance of payments by any means involves selling more exports and buying less imports. It is therefore absolutely inevitable that there is less available than there would have been for us to consume at home. Increases in both public and private consumption must be restrained. Some might say that the whole of these restraints should fall on personal incomes, but I am sure your Lordships would agree that that is not a viable proposition. It would involve very heavy increases in taxation and almost intolerable falls in the take-home pay of some sections of the community. Such a policy could be self-defeating. People would tend to react to tax increases either by de-saving or by making bigger wage claims. If demand were to be restrained still further, taxation would be needed and would only worsen the situation. Then wage claims could force up costs and prices and the competitiveness gained by devaluation would be lost.

Equally, some would say that the adjustments should be taken largely in the public sector, but I suggest that this again is unrealistic. It is just not possible to cut some of the programmes violently in the short term. Much of the expenditure reflects decisions taken some years ago, and to stop it now would involve leaving schools, hospitals or roads only half built, which would be economic nonsense. It would throw some of the burden on to the poorer sections of the community. Finally, such a view would be short-sighted. We need economies in the programmes, cutting the areas where least harm would be done, and this has been our aim. More drastic reductions would have meant that the nation would have found itself either with out-of-date transport or ill-educated or poorly housed, and again none of these is a basis for economic growth.

As I have said, the overriding conditions to make devaluation a success are adequate control of home demand combined with an effective incomes policy. The first of these considerations suggested that large cuts in total consumption were necessary; the second that not all such cuts should fall on personal consumption. I suggest, therefore, that any critics of the Government's policy must tell us the alternative ways of cutting roughly the same amount out of public expenditure.

There is one final point I would make briefly on economic strategy. It is clear that restraint on personal consumption is still to come and there has been criticism of the Government for not doing this all at one time. I can see the force of that argument, but our aim is an expansion led by exports. This certainly means restraining home demand, but we must not hit it so hard that business confidence is lost. This is a very delicate matter. We do not know how quickly the effects of devaluation on exports will occur, and no amount of theoretical work or contingency planning will alter this. Therefore there are positive advantages in waiting to see how devaluation is developing. My personal information suggests a tailing off of the Christmas boom in which such enormous increases in trading took place. This is all that I feel I have time to say at this moment in justifying in broad outline the Government's economic policy. I could go into further details, and I wish there were time, but there are so many speakers that I think your Lordships would rather that the debate developed.

But I must say something about a matter of deep concern to us all—that is, the subject of defence. Indeed my right honourable friend the Prime Minister put it first in his review on January 16. I think we all recognise that the July White Paper and the more recent Statement do effect a radical change in our position. We have shifted our ground towards Europe and our home base, thus emphasising that the defence of this country depends primarily upon the defence of Europe. At the same time we have had to review our commitments overseas.

It is hardly necessary to remind your Lordships that this is not a new process. It is only six months ago that we debated in this Chamber the subject of defence, and in my opening words in that debate I pointed out the need to relate Government expenditure on defence to our national wealth and said that the absolute essential requirement was an unshakable economic base for Britain; and this, I made clear, involved moving our focus more and more towards Europe. I drew attention to the major decision that had been made in the July White Paper, that we should withdraw altogether from our bases in Singapore and Malaysia in the mid-1970s. And your Lordships are now aware of the events which have accelerated that process of withdrawal and made it necessary to fix a date for our withdrawal from the Persian Gulf. Wide-ranging changes have been made not only in the deployment but also, resulting from these decisions, in the size and shape of our forces and in the nature and scale of the equipment which they will require.

It is possible to look at this subject of the withdrawal from and reduction in commitments emotionally, selfishly. Realistically, or according to any of the other words that could be applied, but I do not myself believe, whatever may have been said in the debates on the subject, that the differences between the two sides in this year 1968 are as great as might appear. I do not believe that there are many left who would think that we should have retained indefinitely bases East of Suez, for this would run contrary to the whole pattern of our British Imperial history over the last fifty years. Indeed, the steady withdrawal is not inconsistent with the thinking of some of the more visionary of the men who built the British Empire.

The process of withdrawal has continued under successive Governments. I do not know where we would begin it. We might relate it first to the withdrawal under the Irish Peace Treaty, or the granting of independence and subsequent withdrawal from Egypt; the granting of independence and the withdrawal of forces from India and Pakistan in 1949; the major withdrawals from Africa in the 'fifties. The Conservative Government carry much of the credit for the process of decolonisation and withdrawal in Africa, although there were some sensitive moments, particularly on the withdrawal from Suez, where, if I recall aright, at least one distinguished Member of your Lordships' House resigned from the Government. But whatever the reasons, there has been this steady process of withdrawal, sometimes because this was part of the hard facts of policy, but sometimes stimulated, as on this occasion, where the process has been speeded up by economic factors.

It will not be possible for me to give full details now of the changes in the Forces or the way in which the cuts in commitments are being introduced. My right honourable friend the Secretary of State for Defence, speaking in another place on November 27, made it clear that cuts in our defence budget must be carried out in an orderly way, and that as our capabilities reduced with our commitments there must be the most careful consultation with our Allies at every point. We have on this occasion carried out these consultations. It is clear that our Allies and friends regret—and they have made this quite obvious—our decision. Recently we had a visit from the Prime Minister of Singapore, and again consultations continued right up to the last moment. We have been able to work out, particularly in the Malaysian situation, a scheme of assistance that will enable him, in consultation with his Allies in the area, to provide for those countries some of their own needs on security. In particular, there is agreement, subject to further discussion at professional level, on the provision of an integrated system of air defence covering both Malaysia and Singapore. These discussions will continue also with the Governments of Australia and New Zealand.

It has been made clear that both in the Persian Gulf and in the Far East, apart from the Forces we shall maintain in Hong Kong, which it is not intended to reduce, our military capability will now be based on the United Kingdom and elsewhere in Europe. At the time of the July White Paper we had in mind that we might maintain a military capability even when we no longer had Forces permanently based in the Far East. At that time we had not decided what form this capability should take and whether it should be based in the area or not. We have now taken a firm decision that we shall not have a special capability after the withdrawal of our Forces from East of Suez. We shall, however, still possess a general capability which will be available, if necessary, for deployment overseas at short notice, so that we can not only fulfil our obligations to our remaining dependent territories but also, if necessary, go to the help of our friends and Allies.

The second point I would make is that my right honourable friend was concerned with the orderly process of our rundown. We shall have an opportunity in a defence debate shortly to go into this subject rather more fully. I have the figures here, but they have been published, and I will not weary your Lordships with them at this stage.

On expenditure, the table published with the Prime Minister's Statement shows defence reductions of nil in 1968–69, apart from the £100 million which was already announced last November. All these defence reductions are further cuts in a programme which had been reviewed and reduced on a number of occasions. The total saving from all these reviews, including the latest, on the cost of the programme which the Government inherited, is enormous. It will amount to more than £500 million in 1969–70 and about £1,000 million in the year 1972–73. Although these cuts are large, we ought not to get them out of perspective in relation to the Armed Forces themselves. The exact arrangements of these are still being worked out.

The main consequence to the Royal Navy of our withdrawal from the Far East and the Persian Gulf will be the earlier phasing out of the carrier force, but not until the reductions in commitments have been completed; and there will be some re-phasing in the rate of naval new construction. So far as the Army is concerned, certain reductions announced last July to take effect by April, 1971, will now be completed in 1970, and the further reductions foreshadowed to take place after April, 1971, will, it is proposed, be completed in 1972. The rundown in supporting manpower will take some more time; but we have to face, as we have had to face before, the fact that famous regiments with distinguished histories have to be amalgamated or disbanded. This probably occasions many of your Lordships more pain than almost any other single item.

For the Air Force it is the cancellation of the F.111 that is the greatest blow; and it is this cut in the Armed Forces, as your Lordships will understand, that I personally most regret. I will not conceal my feelings on this subject. We all have our Service loyalties, and my own connection with the R.A.F. and my spell of duty as Air Force Minister more than confirm my own affection and admiration and, indeed, I hope, sense of loyalty to the Service. In a sense, the F.111 had become for the Royal Air Force both the symbol and the reality of the strike reconnaissance power which, if they were to carry out the roles originally assigned to them, they judged to be essential. Now the F.111 is gone, and with it a particular capability which will not be replaced. But I hope that none of us will draw conclusions from this that the Air Force or the other Services will not continue to be superbly manned and well equipped Forces.

Perhaps in some ways the most damaging effects of the cuts will be on the lives and the morale of many Servicemen. I freely admit that these changes represent changes in policy which can cause both disappointment and indeed bitterness. But while I have shown, I hope, that I have no intention of deceiving either your Lordships or the men in the Armed Forces, there are certain factors that we should bear in mind. The Royal Air Force will be second to none in Europe. It will have over 1,000 aircraft, 400 of them the most modern jets. The, Phantoms, the Harriers, the Jaguars, the C.130s and the Nimrods will all be coming into service shortly, many of them next year, and indeed a lot of them (I am not attempting to make any Party point) before aircraft which had previously been planned to go into the Air Force. I say this to justify the statement I have made that the Royal Air. Force will still be superbly equipped.

The Army, though small in comparison to the conscript Armies of our European Allies, will still not only be a much larger Army than we had in Europe before the war but, again, will be, I believe, highly equipped. The Royal Navy will not only be the biggest Navy, in the world after those of the super Powers but will be larger than all the other European NATO navies combined. No doubt the Opposition will have legitimate grounds for criticising the Government's actions, but I hope that your Lordships will bear those facts in mind, because we do not want to get the matter totally out of perspective.

There is little difference of opinion on the basic nature of our problems. I would again urge your Lordships, before we get despondent, that we should regain some sense of proportion. Unlike the vast poor areas of the world which are engulfed by a real crisis between the population explosion and the limitations and rigidities of traditional agriculture, this is still one of the world's richest countries and a creditor country. The transfer of real resources, which is now required and which the Government are determined to carry out, to enable us to balance our international payments and acquire a surplus sufficient to meet our short-term obligations, and to find resources for productive investment, amounts to between 4 and 5 per cent. of the national income. As the process of readjustment will inevitably take some eighteen months to two years, this represents no more than the increase in the gross national product in the same period in unfavourable circumstances; and, my Lords, we should do better than that. On the cuts in social services, which again we all regret so much, it must be borne in mind that they are essentially cuts in planned increases rather than net reductions in present levels.

The measures that we have taken to defend the old parity, which failed in relation to defending the parity, are still exactly the same but they need to be reinforced. They are needed to make the new parity a success—retrenchment in foreign expenditure; a slowing down of the increase of private and public consumption. No axe; no cuts; a restraint which every one of us would practise in our own private lives, but which we seem unable to enforce for ourselves collectively. There is then, I claim, a need for both a sense of proportion, which at times we seem to lose, and a duty for restraint, which we have not as a country yet learnt. This House, I hope, will give the country and the world a lead in regard to this; and if we do, we shall find that we shall be able to say of 1968 that this year we really faced the economic and national issues that were put properly before the nation. My Lords, I beg to move.

Moved, That this House approves the policies announced by the Prime Minister in his Statement made to the House of Commons on 16th January.—(Lord Shackleton.)

3.22 p.m.

EARL JELLICOE

My Lords, I beg to move the Amendment standing in my name on the Order Paper; namely, to leave out all the words after "House" in line 1 and insert: "while having no confidence in Her Majesty's Government whose mismanagement of the economy has led to the present situation, recognises that there is a need to curtail public expenditure, regrets that the Statement is purely negative in character, and deplores cuts in defence which involve breaking faith with friends and allies and will severely undermine our national security".

I am sure that your Lordships will wish me to preface my remarks by congratulating the noble Lord, Lord Shackle-ton, on his first major speech as Leader of the House. He has stolen such few runs as the rather sticky wicket on which he is batting has permitted him. I should also like to congratulate, in advance, the noble Lord, Lord Thorneycroft, on his maiden speech—my old boss at the Ministry of Defence. It was a far happier place in those far-off days, four years ago, than it is now. May I also, in advance, congratulate the three score speakers who are to follow my noble friend, at least on their endurance.

This debate takes place against the sombre setting of the Prime Minister's Statement in another place last week: sombre in its disclosure of the economic pass to which we have been brought; sombre in its military consequences, at least for those who hold the honour of this country dear; and sombre, too, in its political implications. I doubt whether any of us has known a time when the man in the British street has ever entertained a deeper distrust for Whitehall and, indeed, Westminster. He distrusts the present Government. That, perhaps, does not surprise me, or indeed worry me unduly. But there are also signs that this particularised distrust may be flowing over to the institutions of our Parliamentary democracy itself—and that does worry me. Nothing will more surely exacerbate that more general and insidious distrust than the Party game played in a petty Party spirit in what is, above all, a time of real national emergency.

We are all in this for better or for worse. We must hope for better, even though improvement may improve the miserable prospects of our present miserable Government. I must confess that, from some points of view, I should have preferred a general debate these two days, a debate indeed without an Amendment and without a Division; more especially as there are some signs that the Government, late in the day though it is, and possibly under the impulsion of a Chancellor for whom I have a considerable personal and public regard, are acting with somewhat greater realism in some aspects of their economic policy. But to be asked actually to approve this package from this Government, after all that has gone before, with all the doubts the package itself raises and which have yet to be allayed, and containing as it does breaches of this nation's international commitments, commitments on which the ink is hardly dry—that is more than I can stomach. Hence, my Lords, this Amendment, an Amendment which I trust your Lordships will approve tomorrow evening.

Our Amendment refers to our lack of confidence in the Government's ability to manage the economy. I will cite just one example of why we feel that lack of confidence. Only last November, at the start of this Session, we debated economic affairs. Many speakers from these Benches drew attention to the worsening economic situation, to that ugly and unprecedented conjuncture of heavy public expenditure, stagnant production, a worsening trade balance, obstinately high unemployment, and, not least, the pound under pressure. But all we got from the noble Earl the then Leader of the House—and I apologise to him for singling him out—was a bromide, the sort of bromide that this Government have been administering to the people of this country for the last three years. But we know that the picture we painted was not overdrawn. We now know that our visible trade deficit last year, at £565 million, was higher than that for 1964. And within a fortnight of that bromide we were debating devaluation.

My Lords, that devaluation, and the painful package presented to us last week, are the direct consequences, I hold, of the Government's actions and lack of action. They are the direct result of uncontrolled public expenditure, of irrelevant nationalisation, of ill-digested and unduly complicated fiscal measures and of ideological extravagances like the total arms ban on South Africa. But all through these last three years there has been a further and recurrent theme. Time and time again this Government have been some months behind the economic hunt. Time and time again, through failure to take stiff and painful action in time, they have been forced some months later to use still stiffer and more painful measures. The economic history of the last few months illustrates only too vividly this sorry and recurring pattern: the initial complacency—the bromides; the failure to concert measures in advance. Hence the mishandling of the act of devaluation; hence the lack of proper contingency planning; hence the two months' delay between devaluation and the present package. And, curiously enough, this Government, who have shown more sensitivity for their public image than any Government in recent times, have nevertheless shown themselves curiously inept in their public handling of these events.

The Prime Minister in his post-devaluation tranquilliser did his best to blunt the psychological impact of devaluation. I am glad to notice that there has been a change since then. I was glad to notice that the noble Lord, Lord Shackleton, referred to this frankly as a defeat. The Cabinet, by their daily dose of January leaks, no doubt unwittingly dented in advance the impact of the particular package we are discussing to-day. It is not surprising that we question the Government's ability to manage the economy. We—and it is not only we; it is unfortunately also the outside world—question the substance of their policies, and also their presentation.

This lack of confidence in the Government's past performance is a heavy carryover when we, and the outside world come to examine the Government's present package. We recognise—and the Amendment recognises—the need for cuts in public expenditure, given the pass to which we have been brought. We also welcome the first signs that the Government are edging towards sanity in the administration of the social services, in their reluctant and belated conversion to selectivity. But there are three specific cuts in the civil field which I feel bound to question. If roads are to take their cuts it is right that the main weight of the cuts should fall on the secondary road system, but I am more doubtful myself whether in the scale of national cost-effectiveness it is sensible to cut so heavily into the major road programme, especially when we all know how much of the operation of the railway system in this country is uneconomic.

Conversely, my Lords, we are highly critical of the third approach, in paragraph 53 of the White Paper, towards the size of the Civil Service. It has been swollen in three Socialist years by 57,000 people, getting on for the number of our troops whom Mr. Healey intends to get rid of during the next five years. Containing growth is quite insufficient. Reduction is what is required: reduction to targets expressed for each Department—financial targets, I would suggest, related to manpower—and if the concomitant to such a reduction is less legislation, so much the better.

Finally, education. I suspect that not all my noble friends will be with me on this matter, but I for one, not only respect Lord Longford for his resignation; I also wish he had won his battle to maintain Sir Edward Boyle's date of 1970–71 for the raising of the school age to 16. I recognise the difficulties of so doing, but I am convinced myself that the disadvantages to the nation of not so doing outweigh the difficulties. If we are to pull ourselves up in this technological age by the technological bootstrap, we need many more skilled workers and technicians, and this demands at least a full five-year secondary course. Moreover, the continuation of the present system, with its glaring imbalance of those staying on between the North of this country and the South, makes nonsense of the Government's regional policies. I deplore this particular retrenchment, and I wish that more of the noble Earl's colleagues had had the courage of their previous convictions.

So much for specific criticism of the package. I must add a number of general observations about it. The White Paper, if one examines it closely, demonstrates with really startling clarity how during these last three squandered years of this Government public expenditure, despite successive flourishes of the axe, has got quite out of hand. I should like to illustrate this by one example. Owing to the stagnation in our production, it would seem likely that the shortfall in the gross national product in 1970 will be some £2,560 million—that is, below the original target in Mr. Brown's National Plan. But public expenditure by 1970, judging by the figures in the White Paper, will be only some £50 million or £60 million below the original target planned. That, my Lords, is after the present cuts. It raises to my mind, at least, a doubt whether the present package, the November package coupled with the present one, is even now adequate.

That doubt is reinforced by the "phoniness" of some of the cuts themselves. The Government claim that they amount to £300 million. It is a marvellous feat of juggling. On the one hand they exclude from the figures for the next two years the very considerable cancellation charges which will have to be paid then, on the specious grounds that they are transitional. No more transitional than the men who have made these cuts! On the other side of the ledger, they include £80 million for not accelerating the payment of investment grants, having never previously announced that they ever contemplated such further acceleration. It looks as if the true cuts in the package for next year are much nearer £200 million than the £300 million the Government claimed. It also looks as if the Government—at least to this suspicious observer—have fiddled the books in order to appear more bloody, bold and resolute than in fact they are. This is no way to inspire confidence.

So much for the package itself. But once again the presentation of the package appears as faulty as the package. Once again the economy is being exposed to the erosion of Government by driblets. It is clearly the Government's view that devaluation will not work—that we shall not secure sufficient elbow room for more exports—unless, in addition to the cuts in public expenditure, decisive action is taken to restrict consumption. I personally accept the fact that it is unreasonable to ask the new Chancellor of the Exchquer to advance his Budget before mid-March. I would dissent from the view expressed by the noble Lord, Lord Shackleton, that the Christmas spending spree is not continuing—that it is losing momentum, as he expressed it. Any sane housewife who needs a new cooker is rushing to the shops to get it now. I must ask the noble Lords who will be replying, "Is it, or is it not, the Government's intention to use the regulator?" If it is, and if Mr. Jenkins waits for two months, he will need on March 19 to be far more severe than if he were to act now. Surely to the biographer of Asquith the disadvantages of "wait and see" must be obvious. Surely if a touch of the regulator is necessary—and it certainly seems so to me—would it not have been better to have applied it as part and parcel of last week's package? Again, I would claim the Government have missed an obvious psychological opportunity. Again, this apparent absence of any overall economic strategy is no way to inspire confidence.

The third inadequacy in this inadequate package, and one which we deplore in our Amendment, is its air of total negation. My Lords, after these two months of waiting, the unfortunate and puzzled people of this country were entitled to receive not only a bleak package of goods but also a coherent and positive definition of the Government's economic strategy. And this, my Lords, they still await. We still have to learn whether the Government are planning to increase industrial training, which we so clearly need. We still have to learn whether devaluation will be matched by a review and a reduction in our tariffs. We need—but it looks as if this is a need which will go unfulfilled with the present Government—an entirely fresh framework of industrial relations. There is much crying cut to be done by way of improving the machinery of Government and its economic administration. Above all, my Lords, we should be told what the Government are proposing in order to encourage savings and whether, most important of all, their first hesitant steps towards selectivity will be matched by a determination to rid themselves of old dogma and old ideologies, and to ensure that both individuals and corporations receive real incentives for worthwhile effort and success. But none of this emerges from this arid document, and very little has seeped through in the speeches by Ministers in another place. This silence, again, does little to inspire confidence or lo promote real recovery.

My Lords, I turn last to defence. I have tried, at the outset of this long debate, to make my criticisms of the Government's policy reasonably dispassionately. However, as one sees the wounds, the deep wounds, which the Government are inflicting on our Armed Forces, and as one surveys the plethora of broken pledges to those Armed Forces and to our friends and allies, to those who have had faith in us, I find it rather more difficult to avoid a trace of passion. I trust that in military matters I am not a "Blimp". I think that here I am with the noble Lord, Lord Shackleton, because I have recognised that it was unrealistic for us, looking further into this century, to visualise a permanent British military presence on the mainland territories surrounding the Indian Ocean. Likewise I have reckoned that in the intervening period the contribution we could make in and around the Indian Ocean might be marginal. I do not hold, and my Party do not hold, any post-Imperial illusions on this score. But what is crucial is the timing of withdrawal, the manner of withdrawal and what we leave behind.

Timing is vital and it usually only invites trouble if one advertises one's intentions unduly. That is one of the reasons why I was so critical of the fact that the dates for our probable withdrawal from Malaysia and Singapore were given in the Estimates last summer. If one was critical then, one must be despairing now. Now the dates have been significantly advanced. Now a definite timing is given for our extrication from the Persian Gulf. Now no latitude is apparently allowed to ensure that there is a real basis of stability in South-East Asia and in the Gulf before we quit. Now there is no mention of that amphibious force to be stationed either within or around the Indian Ocean with which, for a few brief months, Mr. Healey tantalised us. And, finally, there is the naked breach of undertakings given and obligations assumed, a bare six months ago. And for all this, my Lords, no real reasons in strategy or military posture are advanced. Only the plea of the economic pass to which our rulers have brought us—an argument which looks somewhat hollow when we read that, one way or another, real economies cannot be expected within two years or so.

It is clear (and I welcome what the noble Lord, Lord Shackleton, said) that we must pursue these issues at greater length and in greater depth at an early date. Meanwhile, I wish to confine my comments and my questions to a minimum. In the Persian Gulf what I have mainly feared, at least in recent years, from a premature withdrawal of our direct military presence, was not so much a direct assault on our oil interests but rather that our withdrawal would exacerbate the overlapping claims of the Limitrophe States and lead, in the Gulf area, to a sort of civil war. It seemed to me, as I listened to Mr. Healey in his television interview last night, and as he was dragged knee-deep through a forest of his broken promises, that he was conscious of this danger. He talked about bending our efforts to ensure that there was agreement between the major Gulf Powers on the status quo when our military power was withdrawn. And in paragraph 15 of the White Paper we read that our forces there, after withdrawal, will be available for deployment, if need be, and if we judge it right, in the Gulf.

I put two questions to the noble Lord. First, what happens if by the terminal date, the end of 1971, these conditions of stability have not been assured? Do we then just "rat"? Second, how, given increasing Soviet military penetration of the Middle East and of the Southern Mediterranean shores, do we see our reinforcements reaching the Gulf? Round the Cape, by sea, if they cannot over-fly? And, if so, does this not enhance the importance of the Simonstown base, about which my noble friend Lord Swinton knows so much and which the Government seem wantonly bent on discarding.

As for South-East Asia, I would only say this. Quite frankly, I regard this whole great region as perhaps the crucial arena in our world to-day. It is there, in my view, more than in any other region of the world, in which during the next half decade or so, the great issues of war and peace are most likely to turn. I confess that I was utterly astonished to read that in an interview which Mr. Healey gave to the Sunday Times on January 7 he was reported as saying: There is no doubt that the danger of war in South-East Asia at the moment is very low". That seems to me to be one of the statements, to use Mr. Healey's own phraseology, that had better have been left unsaid.

We shall in due course have many questions to put to noble Lords opposite about the abdication of our responsibilities in South-East Asia, in particular towards Singapore and Malaysia. But I should like to ask one question here touching on our relations with New Zealand and Australia. It is of course inconceivable that we should not attempt to help them should these Commonwealth countries be threatened in a military sense. Those of us who saw the new Prime Minister of Australia on television yesterday evening will have noted that he expressed his lack of assurance about our ability, without bases and without an amphibious force in the area, to come if need be to the assistance of Australia from this country. As he put it, it raises a whole lot of questions to which I want to know the answer". Does this mean that the Government have failed to consult in any proper sense the Government of Australia? Or does it merely mean that, as usual, they have no plans and that there is no answer?

I do not quarrel with the Government's decision to give priority to our military forces in Europe. I am quarrelling only with the exclusive priority, and I wish to put only one question to the noble Lord, Lord Chalfont. In the White Paper there is talk of forthcoming negotiations over offset costs with the Federal German Government. In his winding-up speech in another place, however, the Foreign Secretary categorically stated—and I quote his words from col. 2077 of Hansard for January 18: That is why we are maintaining our contribution in Europe and why the cuts have been made elsewhere". Can the noble Lord, Lord Chalfont, categorically assure us that no further reduction in our Armed Forces on the Continent of Europe is contemplated?

One might have supposed that at the moment when the Government were planning to emasculate our Armed Forces they would at the same time be planning to build up our reserves. But not this Government, my Lords. Not a bit of it. At this precise moment, as your Lordships will have seen from paragraph 43 of the White Paper, they propose to cut home defence to the bone and to wind up, without a word of thanks or a word of explanation of the thinking behind their action, the Civil Defence Corps, the Auxiliary Fire Service and the Territorials—A. and V.R.III. I repeat—no explanation; no thanks; no consultation. It is the old story, with this present Government, of no consultation. If, as I trust, proper consultation is now going to take place between the Council of the Territorial Army and the Government, I hope that there will be no question of disbanding A. and V.R.III while these consultations are in train. I hope that the noble Lord will be able to give us an assurance to that effect.

My Lords, by their savage cuts the Government have done great damage to our national interests, our honour and the Armed Forces themselves. Mr. Healey seems to take quite lightly, at least in public, the breach of those undertakings. But at least he seems a trifle worried about the breach of faith to the Armed Forces themselves, as well he might. In March, 1966, they were told that the major defence decisions had been taken. Only 15 months later there was a retreat from that promise. Further major decisions were taken, and then the finality formula was repeated. Mr. Healey had to eat his words again last November when a further £100 million was knocked off the Defence Vote. And now we have what amounts to a third or fourth Defence Review, if this quilt of broken promises can be called a Defence Review. And a fifth Review and a further White Paper now hang suspended over the heads of the Armed Forces.

The effect of all this, as the noble Lord, Lord Shackleton, rightly recognised, upon the morale of our Armed Forces must clearly be devastating, and we must do all we can, whatever we may feel about these measures—and I hope both sides of your Lordships' House will join in this—to arrest what can be a very dangerous slide. I would therefore implore Mr. Healey not to worry too much about some of his more defined cost-effectiveness techniques—we have seen what their worth has been in practice—but to bend his not inconsiderable energies to making quick and definitive decisions and announcing them. We shall reserve our right to pitch into them if need be, but anything is better for the Armed Forces than this continuing and recurring uncertainty.

To conclude, what sickens me to-day, when I see the disarray of our economy and the dismantling of our defences, is the certain knowledge that this country can do so much better. We all know this perfectly well. We all know that this country is one which par excellence responds to a clear lead. But a clear lead demands clear, cogent and courageous leadership. Only this, in my view, will restore our confidence in ourselves and the confidence of others in us. I cannot honestly any longer pretend that this Government, this defeated Government, can exert that type of democratic leadership, and if this is so it is time they made way for one which can. I beg to move.

Moved, as an. Amendment to the Motion—

To leave out all the words after ("House") in line 1 and insert ("while having no confidence in Her Majesty's Government whose mismanagement of the economy has led to the present situation, recognises that there is a need to curtail public expenditure, regrets that the Statement is purely negative in character, and deplores cuts in defence which involve breaking faith with friends and allies and will severely undermine our national security.")—(Earl Jellicoe.)

3.53 p.m.

LORD GLADWYN

My Lords, I propose, so far as I am concerned, and with the permission of the House, to concentrate this afternoon exclusively on the defence cuts. Later the views of the Liberal Party will be presented on the other cuts. May I, at the outset, say that I agree entirely with the noble Earl, Lord Jellicoe, that this is far too grave a matter for Party politics. I think we all agree that that would be very undesirable. But, my Lords, I believe you would think I was barely human if I failed to recall that, in deciding to remove the British military presence from the whole area of the Indian Ocean in a period of three or four years from now, the Government have in the main at last adopted the policy of the Liberal Party which I had the honour to develop, very broadly, in this House nearly three years ago, and which I have repeated at intervals ever since. Indeed, they have gone even further than we suggested as regards Singapore.

It is all very well for the noble Lord the Leader of the House (whom I should like to take the opportunity of congratulating most sincerely on his appointment; I could not do so yesterday as I was not here) with his charm and infinitely disarming manner, to suggest, as I think he rather did suggest at the beginning of his speech, that we ought, if possible, to forget the past. Admittedly, he seemed to say, "We may have made rather a mess of things, but, after all, that is all water under the bridges and so let us now chiefly concentrate on the future."

Nor do we, contrary to what he said, believe that it was not the actual policy of the Government in the matter of defence which was responsible for the present decision to evacuate the Indian Ocean area. It really was not a case of their being forced to adopt what they apparently believed to be a wrong policy by a series of accidents, by being blown off their course, or being stabbed in the back, or having a rock put in their way by mistake by somebody else, or whatever. It was not, I say, a question of having to adopt a wrong policy owing to a series of accidents. It was, as we think, a case of adopting from the start a wrong policy which was bound to fail. That is our thesis and I am sure it is a right one.

Therefore I think it is necessary for me now to delve a little into the past, and I hope the House will excuse me if I do so. Naturally, on these Benches, at any rate, we take note with much satisfaction of the Government's conversion to our own policy, even if it is a forced conversion, while, as I said, we strongly deplore the fact that the Liberal policy was not adopted when the Government came into power at the end of 1964 or shortly thereafter. How many millions of pounds, how many hundreds of millions of pounds, mostly against the exchanges, have been, or will have been, squandered by the Government by the simple failure to read the writing on the wall? That is anybody's guess.

And the Government may well reflect, too, that had they not been so obstinate in their refusal to listen to Liberal advice they might well not have had, in extremis, as it were, to massacre one or more of their own sacred cows. Who knows, if it had not been for this obstinacy they might even not have been forced to devalue the pound. Certainly it would not have been necessary to violate the various pledges given to the admirable and excellent Prime Minister of Singapore.

What was the advice given by the Liberal Party at the beginning of 1965, nearly three years ago? It was, first that we should clear out of Aden within a reasonably short period of time and subsequently evacuate our various other bases in the Persian Gulf area. Here I may say I do not agree with the noble Earl, Lord Jellicoe, that it is fatal in these matters to name a date. On the contrary (and I think I am speaking for my noble colleagues here), we think that it is only if you do name a date that you will ever get out of these bases; it is the only thing that precipitates the issue. If you do not name a date you go on and on until possibly you are forced out in terrible circumstances.

On Malaysia and Singapore—and your Lordships will remember that the confrontation, as it was called, with Sukarno was going on at the beginning of 1965—we suggested that, having liquidated all our island bases in the Indian Ocean and the Middle East (Cyprus being maintained for so long as there was acute Arab-Israeli tension) our communications should in future be organised "West-about", the other way round the world, and that—and here I quote my own words, which is not always a good thing to do— we should rather try to associate our European neighbours with us in an attempt, in co-operation with the Americans"— and of course I meant also with the Australians— to establish a sensible, long-term plan for the general defence of South-East Asia, and conceivably, of course, also of India, if, as is by no means certain, the Chinese are found over the years to be incurably aggressive in this particularly sensitive area of the world."— [OFFICIAL REPORT, 8/4/65, col. 192.] In general, we suggested that the entire White Paper of the Government was totally unrealistic and should at once be scrapped and re-written. In making this last suggestion I am quite certain that everybody would now think that we were right.

Subsequently, on behalf of the Liberal Party, I questioned the whole potential role East of Suez of the F.111s which the Government insisted on ordering, and have now abandoned, at such a ruinous cost. Who, or what, I asked, were these expensive and potentially nuclear toys going to bomb, and in what conceivable circumstances? Why not rather rely chiefly, East of Suez, on what the Tory Shadow Minister of Defence at one time, and as we think most sensibly, described as an "Asiatic balance of forces", a conception, I believe, subsequently repudiated by the less enlightened leadership of the Tory Party—or perhaps it was not; I do not know.

All this advice, I repeat, is now accepted by the Government. But what a pity they did not accept it before! Your Lordships will remember that when it was first advanced on these Benches it was regarded by both the major Parties as a miserable scuttle—that was the word—which would plunge large areas of Asia into what was always referred to as "chaos". Do the Government still maintain that this will be the inevitable result of the cuts which they now ask us to approve to-day? If they do not, why did they make such foolish remarks then? And would the Tories really, if they came into power, proceed again to imperil the pound by devoting hundreds, perhaps even thousands, of millions of pounds to the reconstitution of any credible British military presence in the Indian Ocean? Would they? If so, then let their colleagues in another place put that into their Election addresses and give some estimate of the cost, and see what happens to them at the polls.

I must say that I have often wondered why a Socialist Government who, after all, could hardly, on the face of it, have been expected to finance a sort of "white-man's burden" policy, should have embarked on a course which, as I observed, I say again, as long ago as April 8, 1965, in this House, ran a grave risk of ending up with a forced devaluation of the pound. I suppose that the main explanation is that they were not only obstinate but also, at that time, a little, I am afraid, swollen-headed. When they came into power the Prime Minister declared that our frontier was "on the Himalayas". I have not actually checked that reference, but no doubt some of my noble friends opposite will give me the date of it if they are so inclined. Then, after his election as Prime Minister, on his return from a triumphant visit to Washington he announced that the great thing for Britain was to "sit at the top table".

Of course, it is clear that the American Government approved of the world peace-keeping mission of Her Majesty's Government, and I suppose they may even have hinted that its maintenance was a condition for American support for the pound. I do not know. But how much better if we had said then, "Thank you, but we propose to maintain the value of our currency, if we can, by our own efforts, and notably by transforming ourselves into a primarily European State with no specific plans for peace-keeping except those assumed in common with our European colleagues and in connection with the United Nations. "However, the contrary attitude persisted, in spite of the gradual, and, I must confess, rather reluctant conversion of the Government, again on Liberal advice, to an acceptance, if not even now, I am afraid, an entirely full acceptance, of what might be called "the European idea". I may perhaps just add here that, as I think Le Monde pointed out last week, if the present change in defence policy had been made earlier our application to join the European Economic Community would have looked much more convincing.

Looking back, one finds it a little extraordinary to observe the number of times when Government spokesmen have declared their absolute belief in the necessity, or apparent necessity, of a world peace-keeping mission for this impoverished country. It was presumably the ghost of the old British Empire speaking. In many ways, nothing is so fundamentally conservative as the Labour Party, and none are so unwilling to abandon the modes of thought and the trappings of our Imperial heritage. At long last, the ghost seems now to have been laid; but until and unless Mr. Healey resigns it will probably, I am afraid, linger on in Cabinet meetings. Positively its last appearance is likely to be in connection with Mauritius.

Well, in politics, I am told and I believe, it seldom pays to dwell on the past, so let us now concentrate just for a moment on the future. What, then, is likely to happen now? However inevitable, it is of course always dangerous to disengage. Nobody would dispute that. But the point is that in our present condition it would be, as we here believe, much more dangerous not to disengage. For then we should probably be sucked into local wars without having the means to pursue them; and nothing could be worse than that. Far from scrapping the aircraft carriers we should, as Mr. Mayhew said when he resigned, want many more carriers. It seems to me to be obvious that what should happen now is the replacement of Mr. Healey, who has been so wrong, by Mr. Mayhew, who has been so right. But as things are, I am not myself pessimistic. I am optimistic by nature. I do not see any real reason to be too pessimistic at the present time, when the Government have adopted what is, after all, as we think, the right policy.

Already, so far as the Gulf is concerned, there are signs—I have read it in the papers, and perhaps the Government can confirm—that the Persians and the Saudis are willing to co-operate and are getting together; and that even the Trucial Sheikhs, or some of them, are, as it were, emerging stealthily from the Middle Ages. This is a healthy process; and to contemplate some fearful carnage in the course of which the Russians or the Egyptians, or both, will establish bases at Bahrein or in Muscat, or somewhere else, is much too pessimistic. Certainly, Russian penetration of the Middle East is a potential menace, but in our strange world of the nuclear balance of terror we must always remember that there is a point beyond which neither super-Power will dare to go. Thus, there is no reason why we and the Americans should not continue to support, if we want to, by gifts or the sale of suitable arms, for instance, those more reasonable régimes in the area which seem to have a good chance of establishing themselves after we go.

As regards the oil, the great thing is, if we can, to get some common policy adopted by the consumers. Here, unfortunately, we come up against the policy of France, who, as we all know, is at present in the process of waging a cold war against her friends. But this deplorable situation would have to be reckoned with whether we evacuated the Gulf or not, and can indeed, I suppose, be ended only when and if we enter the European Economic Community and develop with everybody else concerned some sensible common European policy.

On Singapore, all I can say is that I sincerely trust—and I hope that Lord Chalfont may reply to this later on—that the Government will not entirely ignore the possibility of working out, gradually of course, some scheme for maintaining some British presence in Singapore, even if it is quite limited, but with communications going the other way round the world; and in the process of doing so utilising the enormous facilities of America. After all, the Government, rightly as we think, are continuing to maintain a garrison in Hong Kong, and one might have thought that this could have been combined with some scheme whereby we, and eventually possibly Europe—let us hope so—could be associated with a long-term effort to help to defend Australia and, if possible, to discourage the spread of a sort of militant anti-Western national Communism in South-East Asia, if that is found to be a danger in the course of the years. Heaven forbid that we should become involved in anything resembling the Vietnam war where, as it seems to me, the Americans have been for many years in serious error—and I agree with Walter Lippman over this—by allowing themselves to become involved in full-scale hostilities on the Asian continent. But there must be intelligent and profitable ways of maintaining a Western presence and influence, more especially given the fact that none of the nations concerned, and hardly any of the political parties in the nations concerned, want in any way to come under the influence of China.

There is one other point which I would mention. In my speech in this House in 1965, to which I have already referred, I said that the last thing we should do is seriously to reduce our troops in Germany. I believe that that is still true to-day. In fact it is even more important now than then, for since 1945, unhappily, the forces of nationalism have risen again in several European States; the Western Alliance is weaker; the sense of insecurity, whatever people may say, is growing. The B.A.O.R. is thus an essential component of NATO. It is proof—expensive proof, if you will—of our recognition that our vital interests demand full participation in the defence of Europe. It is very important that nobody should have any reason to doubt—I am sure they will not doubt—the Government's determination to maintain the B.A.O.R. even if they have to part with a considerable amount of foreign exchange in so doing. Of course, if technical economies can be made with no loss of efficiency, then well and good. But if there were any sign of our political will weakening, of our wanting to withdraw from our European responsibilities, I am quite certain that the consequences could be disastrous.

What can I say, my Lords, in conclusion? Perhaps only this. It must be obvious that for a nation such as ours, which ruled a quarter of the world for so long, the process of what has been called "disimperialisation"—

LORD CONESFORD

Oh, no!

LORD GLADWYN

—must be more painful than it is for other States. Yet this process was, and is, inevitable. After two World Wars and the rise of the super-Powers, it was obvious that the Raj could not endure and that it would have to be liquidated. The process of liquidation was rendered largely painless by the device of the Commonwealth—a highly intelligent and sympathetic device which concealed, for some time, as Kipling said, the "sinking of the fire"—a device which has a real and continuing value as a link between industrialised and non-industrialised countries, but still only a device. Now, however, we are indeed back in an island and if we do not want to join Nineveh and Tyre we must find another outlet for the energy, the intelligence and the huge capacity of our ex-Imperial people. There is, in practice, only one direction in which this energy can be put to profitable use, and it points across the Channel. Blocked at the moment, it remains the right road, and we should do well to regard the present difficulties in regard to our entry into Europe as temporary and proceed to do the things which are admittedly necessary before we can enter the European Economic Community in any circumstances.

I believe that the so-called "I'm Backing Britain" movement, however much it may be laughed at and criticised, is at least a sign that the British people are beginning to be conscious of the dangers of their present position in the world, and of the fact that nobody owes them a living. If this spirit catches hold, then, much more quickly than we at present think, we shall succeed in combining, in a new form, the ancient glories of Britain with the ancient glories of Europe. There, I believe, and only there, lies our hope and our destiny.

4.15 p.m.

THE EARL OF LONGFORD

My Lords, we have listened to a fine exposition of the Government's case from the Leader of the House and to two very interesting commentaries from the noble Earl, Lord Jellicoe, and the noble Lord, Lord Gladwyn. We have now the pleasure of listening to about fifty other speeches, including two important pronouncements from the Government side before we come to the winding-up speeches tomorrow night from the noble and learned Lord the Lord Chancellor and the noble Lord, Lord Carrington, which I am sure will be most incisive. I realise that it is rather difficult for a former leader of the House to pay a compliment to the Leader of the Opposition which will not embarrass him. If I imply that Lord Carrington was a marvellous partner, there will be a suggestion that in some way I have "wrapped him up", so I must be careful what I say. But everyone who knows him and who has seen him in this House will agree with me that he is one of the greatest patriots in this country, and that in all he does he puts the country first.

We are looking forward, as soon as I have sat down, to a speech from the noble Lord, Lord Thorneycroft. He has followed me, after a good many years, into this House and is following me in this debate. But I have just followed him in another important activity, the art of resignation, and therefore I am a humble student at his knee. I hope he has found that as the years have passed he has benefited, or the world has benefited, or that somebody has benefited from that great act of sacrifice. I was reading this morning the journal of the late Pope John, and this passage was written when he was about 22: When it is right for me to speak, I will make a point of never speaking about myself either well or ill and never in any way referring to my own affairs unless I am asked about them. I would gladly subscribe to that doctrine, but it is a little difficult in the circumstances. The House is engaged to-day and to-morrow in pondering vast matters of long-term moment to this and other countries, and I do not want to distract attention to my personal problems; but I am sure that noble Lords will expect a few words from me as to why I have resigned from the Cabinet and from the Leadership of the House.

Let me say at once that I resigned on one issue only, by common consent a major issue, as I and many others see it: an issue of enormous significance. I refer, of course, to the decision of the Government to postpone by two years the raising of the school-leaving age. The last Government pledged themselves to a certain date. We in this Government reaffirmed that pledge—and I, as a member of the Cabinet at the time, fully shared the responsibility—as recently as September last year. If the Cabinet had not decided on the postponement of the raising of the school-leaving age, I should have come down to this House and played a prominent part in sponsoring the "package". No one would suppose that, in so doing, I would have meant that every word was inspired—things do not happen in that way in this imperfect world. But I have sponsored it. Apart from this one great difficulty which I have just mentioned, I still feel that I should have been right on sponsor the "package" with all the moral responsibility involved. But with the school-leaving age included I had, and have, no doubt whatever that any words of commendation from me would have stuck in my throat. I should have forfeited my own self-respect for all time if I had uttered them, and the self-respect of anyone who knew me in this House or elsewhere.

My Lords, I shall be as brief as possible. The occasion for a fuller educational discussion can, I suppose, hardly fail to present itself. I was very glad that no attempt was made in another place by the Government spokesman to disguise the profound regret which is felt by the Government at the postponement of the raising of the school-leaving age. The Chancellor of the Exchequer described it as much the most repugnant part of the package, and my right honourable friend Mr. Michael Stewart said he was not going to pretend that the postponement was a blessing in disguise. This, he said—and I am quoting his words: is clearly a great disappointment, and it is really no good dodging the fact."—[OFFICIAL REPORT, Commons, 17/1/68, col. 1904.] I should hope that by now, therefore, it will be clear to all that there is no validity in the suggestion, which has certainly not been made this afternoon (and I was glad to feel that on this matter the noble Earl, Lord Jellicoe, sympathises with me), that there are technical educational reasons why this postponement was in any case desirable.

The same so-called educational arguments raised their heads for a short while, I believe—though I was not in the Cabinet, I was in the Government—in 1947, when the question was one of raising the school-leaving age from 14 to 15. They were mercifully defeated, however, and no one supposes that in 1947 we should have done better to hold the age at 14. It was, indeed, made plain not long ago by a Government spokesman that progress was in a technical sense fully satisfactory, and therefore there is no educational excuse for delaying the introduction of the higher age. We must ask: what has brought about this catastrophic change between the pledge of September and the postponement by two years of to-day? The reason, of course—and I cannot possibly be giving away any secret, because it has been set out fully in public by my late colleagues—is that the economic prospect has in their view deteriorated so sharply that what was ruled out in September has become by January an inescapable duty.

I need hardly say that I do not for one moment question the sincerity of those who take that view. But let us take that purely economic ground for a moment. It does not represent by any means my whole philosophy, but I cannot feel that here the Government's line makes sense. Many experts, many informed commentators, the authors of the major educational Reports, expert American views are agreed. All these experts stress the relevance of raising the school-leaving age to 16 as a direct contribution to the Government's economic recovery. It seems incontestable that a highly industrialised society requires a higher all-round level of education for its citizens to survive and prosper. The Minister—a great friend of mine, incidentally, although there is no special meaning in that—admitted in September that raising the age would mean a loss to the labour force of about 350,000 a year. But this, he said, would be outweighed by the increase in the economic potential of school-leavers as a result of their continued education. It was said on behalf of the Government a few years ago, that the loss of manpower would be outweighed by the ultimate economic gain. We lament", wrote Sir John Newsom to The Times on December 30—and I am sure we all have read, and many of us have debated in this House, the Newsom Report, as we have the Crowther Report, in past times— the brain drain of a proportion of our intellectually able overseas, but our traditional hypocrisy will be manifest if we dig our own drain for 300,000 of our young and push them down it. I now quote Sir Geoffrey Crowther from the same issue of The Times. It is idiotic to suppose that we can be competitive and efficient without a broader educational base. The decision on the leaving age will be the touchstone of our national ability to get the priorities right. If any two educationalists command more support than Sir John Newsom and Sir Geoffrey Crowther I shall be glad to know their names.

I can touch on only a few aspects of this general topic which must be pursued for a moment further. We are told that special assistance—and this kind of criticism was, I think, in the mind of the noble Earl, Lord Jellicoe—for the development areas will be maintained, yet it is precisely those areas that will be badly hit by the decision to defer the raising of the school-leaving age, for it is in those areas where the proportion of those who stay on beyond the age of 15 is at its lowest. There is a grave inconsistency here.

Passing from the economic to the moral aspect, the arguments are equally damaging. We know about the great regional imbalance, particularly the contrast between North and South. It is the underprivileged child who will suffer most from the postponement of the raising of the school-leaving age. There is the child from the home where there is no parental interest in education; and, even more tragic, possibly, there is the child from the home where sheer poverty or other distressing family circumstances force the parent to deny the child the educational opportunity he desperately wishes to give it. Whatever may be the case in other circumstances, it is precisely the weak and underprivileged who will come off worst in education under this proposal.

There are other educational points that I ought to be making but, as we know, there are fifty other speakers. There is a grave doubt in my mind as to whether the full economies will ever be achieved. There is the whole question of the impact of the postponement on delinquency among the young; and many of us who remember that telling speech of the noble Lord, Lord Willis, in our last debate on crime will not need me to underline that point. But two points must at least be mentioned. Sir Edward Boyle, honoured among educationists everywhere, said in 1964 that setting a firm date for the raising of the age must be regarded"— and I am using his words— as a test of our commitment to secondary education for all. He clearly thinks the same to-day; and I am sure he is right. Another point—and it is a very vital one—is this. Whatever may be the case with other features of the package this decision, once it takes effect, cannot be revoked. It deprives many children of opportunities to which they are entitled and which we have promised them, and those opportunities cannot be returned to the children in question. They will be lost to them, by our action, for ever.

So much has been said, and will be said, in one form or another, no doubt very often, by all who care for education. But perhaps for a moment or two—it will not be longer—I can ask forgiveness for striking a different note. Nearly forty years ago, soon after leaving Oxford, I went to live in the Potteries, teaching for the W.E.A., at night, and by day in what would now be called a secondary modern school and later a grammar school. From this experience I acquired a lifelong belief in equality of opportunity for all as a supreme social aspiration, and in equality of educational opportunity as the very centre of that vision. For some time after that experience in the Potteries I worked, as was mentioned by my old friend the noble Earl, Lord Swinton, in the Conservative Research Department, under the munificent rule of the noble Lord, Lord Brooke of Cumnor. I struggled for quite a while—two years perhaps—to see whether ideas such as those I had acquired could be fulfilled under the Conservatives. I reached the conclusion, rightly or wrongly—and I have never doubted the rightness of it—that that was in fact impossible.

When, eventually, I joined the Labour Party thirty years ago the idea of educational equality seemed to me at the very heart of our political convictions. I believe that that is still true. I believe it still lies at the heart of everything we stand for. Nothing that has occurred in recent weeks disturbs my ultimate confidence, but, for me, this postponement of the raising of school-leaving age in all the circumstances represents a grave, if temporary, departure from our fundamental Party principles. Against it I could not fail to make the fullest public protest in my power. I hope and believe that a return to the true path will be swift, total and vigorous.

My Lords, one final word, in a wider perspective. As has been mentioned already to-day, politicians of all Parties are receiving hard knocks just now, many of them, though not perhaps all of them, unjustified. Some of those scribes who are now denigrating the Prime Minister might read again with profit Robert Browning's poem, The Patriot, which begins with the famous line: It was roses, roses all the way … They may recall, in view of their present vicious disparagement, some of their eulogies which were written about the same man not so many months ago. Fortunately, Mr. Harold Wilson is a man of great heart in the two recognised senses. He has the courage to endure and the mercy to forgive—and I would say the same of my other late colleagues.

But for myself, I have reached a stage when the Observer pays tribute to me as one who has now ended a distinguished career, which I think is equivalent, in other terminology which has also been applied to me in the past, to what is called, "being put out to grass". I would not know where the borderline came between those two kinds of fortune. I can therefore, perhaps, for once abuse the privilege of senility and issue a respectful warning, not to my own Party any more than to any other Party—and certainly I do not speak as one who is holier than anyone else. The public are said to be disillusioned. I do not think that that is true in any fundamental sense, but I do think—and it seems to me that we must all agree—that they are bewildered. They have lost their way, and they will not find it by magic or through the intervention of some deus ex machina, whether in the guise of a business chief or otherwise. If anyone is going to help them, it should be us.

It seems to me that we politicians, of all Parties, must clear our minds much more effectively than in recent times as to where our principles lie; and, indeed, as to what constitutes a principle. That is not so easy as it sounds. For example, the postponement in these circumstances of the raising of the school-leaving age seems a principle to me, but it may not seem like a principle to others. So one cannot just fasten one's own principles on to other people. But I do believe that in times ahead we must all, particularly those with responsibilities in public life, spend more time and energy, and show more moral courage, in identifying, proclaiming and giving effect to the principles to which we are prepared to give our lives in peace time. I believe that if we can do that we shall find once more that the British people will respond wholeheartedly in their spirit of sacrifice and striving upward, in their love of justice and their love of home.

4.34 p.m.

LORD THORNEYCROFT

My Lords, I crave the indulgence of the House on the occasion of the first time that I have had the privilege of addressing your Lordships. I believe it is customary to be non-controversial on these occasions, and I can only say that I will do my best. I count it a singular honour to be allowed to follow the noble Earl who has just resumed his seat. If I may be allowed to say so to him without presumption, I thought his speech fulfilled all the highest qualities that one has learnt to expect from a Minister in those particular circumstances. I do not know what powers arrange these things, but there must have been a certain wit in putting me in to follow after the noble Earl. I suppose it was felt that in some sense there would be as least one subject about which I had some experience in an otherwise complicated debate. But if I may say so to the noble Earl, I was moved by his early experiences in the Conservative Central Office, and even at this late stage I am sure that some opening could still be found. But, my Lords, we respect him, not only for the speech which he has made but for his whole attitude to public affairs; and if I may say so on your Lordships' behalf, though only a newcomer, we thank him not only for that but for the many services which he has rendered to your Lordships' House.

In a sense, this is also an anniversary for me. It so happens that it was on January 23, 1958, that I was making the same kind of speech as the noble Earl has made. I was explaining in another place my reasons for parting from the Macmillan Government. As Mr. Anthony Sampson has reminded us in a recent book, Mr. Macmillan, who had great qualities, I think we shall all agree, and who will take a great place in history, found it exciting to live on the edge of bankruptcy. My Lords, I found it very exciting, too. So did my other colleagues in the Treasury. But we found it was an excitement which was perhaps scarcely consistent with our responsibilities for the national Exchequer, and we parted company. I rather reflect upon Pope John's remarks here.

I do not want to talk about myself for more than a moment, but it is an anniversary, and perhaps a couple of minutes would be permitted. I remember that I said then that no Party and very few people could escape all responsibility for some of the economic problems that we faced. I said—and I only recall these words; they may be useful to the noble Lord who is to make the winding-up speech—that we had been attempting to do more than our resources could manage, and that in the process we had been gravely weakening ourselves. I said that we were undertaking nuclear and conventional defences in the Far East, the Middle East and the Atlantic, plus attempting a Welfare State on one of the highest levels in the world: and that we were doing all this against a background of repayment of debt abroad, meeting maturing debt at home, setting up in business as an international banker and engaging on a large scale in foreign aid and investment. I said then, and I think I could say to-day, that these are not unworthy aims, and no one can condemn the men who pursue them, but it meant or had meant that we slithered from one crisis to another, and I warned that unless we mended our ways we should see a steady devaluation in the pound.

My Lords, I am neither so vain nor so silly as to imagine that everything I have said in public life is right, and I must confess to your Lordships that I have made many errors in public affairs. Indeed, I have been privileged to have the opportunity to make many errors in public affairs. So I do not claim by any means that I was always right. But I believe that I and Mr. Birch and Mr. Powell, who were with me, were right on that occasion; and I believe—and I am bound to say this—that if the Macmillan Government had stood then, as I think they should have done, though the Conservative Party might well have lost the next Election, this country would not be in the state of humiliation that it is to-day. That is all I wish to say in reminiscence about myself, but I felt I had some right to say it.

What I have said governs a little my approach to these matters. I will leave to others the detailed examination and analyses of individual men and individual Ministries. I prefer, if I may, in what I say to your Lordships' House, to look a little deeper at the national problems that have led us to this situation, and the measures that may be necessary to extricate ourselves. We are a nation long ago stripped of an Empire, denied access to the only viable commercial and political alternative, the Continent of Europe—denied by the determined opposition of an ageing but very powerful Frenchman. And at the same moment we are undergoing a great, perhaps the greatest, technological revolution of our age. Now to face all those things together is a great challenge; and I am bound to say that as a nation—and I am not talking at the moment about individual Parties—we have certainly so far failed to take it. We have slithered from one crisis to another. And each time we have slithered—and I have watched quite a lot of them—we have slithered a little deeper and have found it a little more difficult to extricate ourselves. And in the measures we take—and they are the same measures: all Governments pursue the same measures; there are no novel ones in all these—each time we have to try a little more; and they work a little less. Finally we reach a point when we have devalued the pound sterling.

I do not think that anyone now would say, after listening to the reverberations of the Cabinet discussions, that this was a planned devaluation. Indeed, I doubt whether anybody would plan a devaluation of the pound sterling. I am sure that nobody to-day believes that we have not devalued the pound in our own pockets—and if there are those who believe that they have only to wait until March 19 to find they are wrong. We are all going to suffer. There is no question of having to select particular branches of society. We are all going to suffer, and suffer severely, from devaluation. I hope that no one believes what a prominent professor of economics wrote in the Observer in the euphorium that followed devaluation: that we have now put the balance of payments back where it belongs as one of the important back room technical concerns of our economic masters. If anybody believes anything as silly as that, he will believe almost anything.

The fact is, my Lords, that devaluation is not a cure, it is a symptom of a disease. It is a disease which some of our Continental friends sometimes call the "English sickness". I suppose it could be defined in part as a continuous overstrain of our resources. I suppose it could be defined in part as a national determination and attempt to take more out of the economy than we put into it—and all these things are apparent to-day—and in part, too, of a determination to spend our way out of our difficulties. We all do it. There is no particular part of the body politic which likes it more than any other. All Prime Ministers like it. No Prime Minister likes to go down to history as the "good Lord Mayor of Birmingham in a lean year"; they all like to be remembered by the things they have constructed round about them.

Take our financial advisers in the Press. I have seen that many of them—not all, but very many—have advocated that we must get expansion by a rather bolder and more radical approach to things. The idea of any man who gets up and says the nation ought to seek to live within its income has been regarded, until fairly recent times, as remarkably "old hat". So we have these symptoms; and perhaps most of all the symptom of a determination not to work the system, not to work a system that depends in its essentials on high profitability and considerable incentives—something which we have all tended to flinch from saying. And while refusing to accept that system, with the profits and incentives that go with it, we have still not had the courage, if we do not like it, to think up something else to put in its place.

We are—and the noble Earl rather indicated this—at a moment in politics when we are all under attack. I think it worth while to remind your Lordships that it is not one Party or another: it is politics in general which are under attack to-day. There are men from all quarters who are coming along and saying that we should find some other way. I have a deep respect for my old friend Lord Robens; but I do not conceive that we should be better run by the Coal Board at the present time. I have listened at a distance to the reverberations of the internal administration in the universities. Nothing I hear there leads me to suppose that government by university professors would get us anywhere. As for business, well, I believe that it is the confusion between the responsibility for running businesses and the responsibility for running Governments that has led us into a good many of the troubles that we have at the present time. If each of us could do his own business, and do it well, I think we might all be in rather better shape.

I recognise the difficulties in which the Government and the Prime Minister find themselves. They are the difficulties of all Governments at all times. The Prime Minister, faced with great difficulties, has to carry his supporters with him; and in our democracy he must carry his supporters with him, even though they are not representative of the country, and even though they are not even representative of those who voted for them at the last Election. For this is the fundamental upon which our political system is based. And Party managers have to pay some regard to the idols of political Parties—and all political Parties have their idols and they must be treated with a certain reverence. F. S. Oliver, in that brilliant analysis of politics, The Endless Adventure, in a greatly moving chapter (which I wish some commentators would read again) called, "In Praise of Politicians", says that all great leaders must—indeed it is necessary from time to time they should—bow down in the House of Rimmon. And perhaps I would only add that the greatest bow down least. I do not want to exaggerate; no one would suggest that the present Prime Minister does not nod from time to time in the House of Rimmon. This I admit. He did, indeed, I think, make a pretty deep obeisance a little time ago.

From the ranks of industry struggling to get exports it should be understood what a battle it is, knowing the keenness of the competition and the difficulties they face, and how much it takes to get even a million here or a million there, suddenly to find £200 million; and to realise that that might not be the end of it, through the unpleasantness that was caused; and to find it was being put forward on the basis that we should not sell submarines but could sell machine tools and handcuffs; to see the orders going to France and the U.S.A.—these were hard things to learn. I recognise the reason that prompted him. I recognise it as well as any man because, like many noble Lords here, I have been brought up in that hard world. But it was a very big price to have to pay.

What about the measures which it was to ease? Let me say this. I believe that in these measures there is a great deal of courage and a great deal of determination, and it must have been very hard, in many cases, for a Government—any Government—and particularly a Government which in the course of time had often been committed in other directions, to put them through. I am not going to stand here and quote phrases in an opposite sense or chide men for changing their opinions. Perhaps it is very necessary in this country to-day, if we are to get through, that many of us should change our opinions. But the test of these measures is not arithmetic; it is not the precise sums that are put forward. It is the purpose that lies behind them, the heart that is in them. If you like, look carefully at the damage which some of them may do. But look too, and look importantly, at what can be built upon them, for at best they are only a beginning.

My Lords, may I say just a few words—a very few words—about defence? May I say that I thought the Government were right to cancel the order for the F.111? I do not conceive that this aircraft has a role in any foreign policy concept that I can wring from the phrases that are in the White Paper, or what I conceive to be in the Government's mind. I think they are right to keep the deterrent. I am happy to see the noble Lord, Lord Chalfont, defending that position—"There is more joy over one sinner that repenteth", as they say. But, in any event, I am happy that they have made that decision, convinced as I am—because I have listened to the same arguments—on the arguments of the Chiefs of Staff, which I believe are really unanswerable upon this point. But where I am a little anxious is about the position in South East Asia.

My Lords, I too heard the remarks of Mr. Gorton, the very able Prime Minister of Australia, last night. I thought he spoke with immense restraint and good sense and understanding of our position. And I thought that he put his finger on what is the real purpose of anybody being in South East Asia. It is not the defence of an Empire that has disappeared; it is not even the defence of an immediate, direct, material interest of one country. It is to give stability in a very unstable part of the world. And when Mr. Gorton says there is danger in leaving now, I beg the Government to listen very carefully to what he says. I have been in that defence world, as the noble Earl, Lord Jellicoe, has, for quite a bit, and he will bear me out. If there is one thing on which the Americans have always been consistent, it is not to leave them alone. It is not that they demand a great contribution; it is that they ask for some presence.

I have read the proposals that we are going to have a capability here, and we hope to be able to deploy it. I think we could. I do not think that vast resources are needed for this purpose. I think you must have a maritime capability of putting troops there, either by strike or commando carriers in some form. But these, after all, are going on until 1971; and by 1971 very many things may have changed. All I ask at this stage is that we should pause before we become too definite about removing all presence from South East Asia. After all, there are many, many Americans who believe in the American fortress. There are many powers in America who are advocating, and always have advocated, that they should give up this lonely struggle and retire within this great fortress of the United States of America. We want to be watchful that we do not give strength to those arguments by removing ourselves.

As for the rest, I would make only two suggestions. One is, do not throw away the offer of a monetary subscription from the sheikhs in the Gulf—do not do that. It is not a novel thing. We do it in Hong Kong. The local people in Hong Kong subscribe very heavily, and very properly. There is nothing wrong or improper about that. When Mr. Healey said it was like a white slaver (one gets very out of touch with the Ministry of Defence) I thought a white slaver was something quite different. But, in any event, I would beg noble Lords opposite to think very carefully before we turn the sheikhs down without, at any rate, some very proper consideration.

The other suggestion is about the base in Singapore. I would urge that somebody make some economies at the base in Singapore straight away. Do not wait until 1971. It is the most extravagant base that we have anywhere in the world. There are really four of them: there is a huge naval base, a huge air base, a huge Army base and the Ministry of Defence. Let us take three of them out. This would save a very considerable amount, and it would do no harm whatever to our defences. I say this only because, while I am anxious to support defence cuts, I want at the end to be left with some "teeth"—not a lot of "tail" but some "teeth". So I commend this as a positive contribution.

So much for defence. One word about the social services. I would say only this about them. It is the theme that matters. May I commend a slogan to your Lordships' House: From each according to his means, to each according to his needs. That slogan has the most respectable antecedents, but it is difficult to carry out without any test of means or any test of needs. The truth is that what we want is a radical looking at the problem of the social services—not back to Beveridge or back to the Webbs, but a new look at these social services in the very different circumstances of the second half of the 20th century. I should hope, my Lords, that somewhere or other a radical may be found to look at it on those lines; not simply in the interests of economy, but in the interests of the poor and of the afflicted as well.

We have these measures, but it is what happens next that matters. The measures are all right. They concern public spending; but where Governments run into difficulties is not simply on public spending, it is on private spending. What is going to happen to prices and incomes? Well, my Lords, we know what is going to happen to prices—they are going to go up. The Government mean them to go up, and they are right. It is part of the mechanics of devaluation that prices go up, and they are clearly going to go up even more when we have the Budget. What is going to happen to incomes? I do not know, but I hear 3½ per cent. on basic wage rates being talked about. My Lords, if we have 3½ per cent. on basic wage rates we shall lose very quickly indeed any advantage we have had through these cuts. An amount of 3½ per cent. on basic wage rates could scarcely mean anything less than over 6 per cent. on take-home pay, and that may well be an understatement.

These things have got to be faced and many of them faced before March 19. I see the Chancellor of the Exchequer's difficulties, but at the moment it is rather like "King Lear". I will do such things,— What they are, yet I know not; but they shall be The terrors of the earth. This is the way to drive people to a spending boom; and to keep on painting the horrors which are to come, while not taking the action, is a very dangerous position for any Government ever to get themselves into. So I urge that we do not wait too long, either in what we do about consumer spending or in saying what has to be said about incomes.

What has to be said about incomes is, "No". I do not say this in any antagonism to Mr. Woodcock. He is taking the best middle position in the trade unions that he can, and all honour to him; it is his job to say it. But from the national interest none of us really has the slightest doubt about what has to be said; it is, "No". Because if we drifted into anything like the wage situation which is current talk at the present time, all the benefits of these cuts and, more important, all the benefits of devaluation would be lost within twelve months. My Lords, it does not need me to say what the next step might be.

Now, there it is. The Government, as I say, have many difficulties. Personally I know it is very easy to say, "Let them go and make way for someone else." Perhaps it would be a good thing if they did. Yet at this moment I should not welcome the spectacle of the disintegration of any British Government, for I should feel in such a moment that my own country was being damaged at a time when it could ill afford operations of that kind, and the damage might well spread to the whole of the body politic. Much more, we must urge the Government to get on with what is a desperate and difficult task. We must tell them that we wilt support them in any measures, however unpopular, provided they are relevant and right. We must try to give an appearance to the world, whatever our divisions here, that behind it all is a country which is not so concerned with differences but more concerned with comradeship, with confidence and with courage.

5.1 p.m.

THE LORD BISHOP OF LEICESTER

My Lords, the House has listened with hushed attention to one of the most remarkable maiden speeches which it has been our privilege to hear for many years. I feel that an apology is due to the noble Lord, Lord Thorneycroft, that the first words of congratulation after his speech—he had a few before—should come from one so distantly related to the political scene as a mere Spiritual Peer. But I am not going to decline the privilege of expressing our immense appreciation of what we have heard. The opening pleasantries with the noble Earl, Lord Longford, were in the most civilised tradition of British political life. The speech itself was delivered with authority and immense weight, and even included two Biblical allusions, one from the Old Testament and one from the New. What more could we ask? I am sure that we shall all look forward with immense pleasure to many similar contributions from the noble Lord in the years to come. I notice that there are three more maiden speeches on the list, and greatly daring I am going to say that if not all the maiden speeches are referred to by all the speakers, I am sure that no discourtesy will be intended.

There are many inhibitions which might operate to prevent those of us who sit on the Episcopal Benches from taking any part in a debate of this kind. There is the obvious inhibition of ignorance. Most of us lay no claim to a detailed knowledge of the financial and economic matters which are being debated. And there is the inhibition of discretion, for it is a matter on which it is difficult to speak without betraying in one way or another some political bias, and that is something which in the modern situation Bishops, on these Benches at least., strive strenuously to avoid. The words of Richard Hooker come to mind: Our safest eloquence is our silence. Yet we, too, have received a written summons and are called to give our counsel, such as it is, in the light of … the arduous and urgent affairs concerning the State considering the difficulties of the said affairs and dangers impending. I feel that it would be a poor thing if no brief word, either of encouragement or warning, could not come from these Benches in the course of a debate of so immense a length.

So I ask myself aloud a few questions. They concern entirely the pyschological atmosphere in the country, which I believe is not irrelevant to the solution of our economic difficulties. Are we suffering from the very success of our Parliamentary system? We have become accustomed to what in effect is a two-Party system of Government. I say this in no disrespect of that other group of Peers who, like us, always remain where they are, however many times others change sides. But the system is accepted as a convention. It has been a convention which has served the nation well, but it is one that needs to be thoroughly understood to be appreciated. For it is like the convention of the law courts, where opposing barristers select from the total number of facts those that best fit their case and arrange them in the most convincing order. But the jury before which Parliamentary duels are fought is the whole nation—indeed, the world. And it is an audience that gets its picture of the contest through a most varied series of media, and few can prophesy what will finally register in their minds, grasp their imaginations or stir their wills. The one thing that is probable is that it will be something said or done without any particular planned purpose.

Is our system too rigid? Are Parliaments too long? In our more volatile society would it not be a good thing if the nation could feel that Parliament could more rapidly reflect its changing moods? Would it be a good thing if there were more, not fewer, rebellious M.Ps? The resignation of our late Leader of the House, quite apart from the reasons for it, has at least reminded the nation that political decisions are not matters that just go on as some great juggernaut that cannot be stopped in its tracks, but can find reflection in the personal actions of those whose judgments are involved. These are some considerations concerning Parliament.

In industry, we have a similar problem. Have we allowed the great industrial machine to get so vast in its organisation that there is no place left for individual initiative? I do not believe that any of us think that the individual actions of the Surbiton typists can in the end count for very much against the weight of great national organisations such as the C.B.I. or the trade unions, but the incident does at least show that what individual people do or say may have effects far beyond anything that could be imagined.

Are we allowing our society to become much too much a society of daily new sensations? Publicity media heighten every incident until it is presented in the most exciting and critical form in which it is possible for it to be presented. How can we achieve those qualities of steadiness and of a sense of proportion which are at least as important as the continual titillating of the public with excitement? Have we given too much time and attention to legislating for the permissive society? I was thinking of some of those groups of unfortunate people or, at any rate, deviant people for whom we have made provisions in our own legislation in this House during recent years. I do not necessarily mean during the present Government. I was thinking of the would-be suicides, those homosexually inclined, those needing or desiring abortions, those who have committed murder; and we must include even those whom we should have once called Sabbath-breakers. All this is a sign of a tolerant, understanding and compassionate society. Nobody could suggest that all these people together represented a very important creative element in the life of our nation. In providing for a permissive society, are we forgetting the need to provide for a challenging society?

Finally, do we understand as a nation what we really mean by an improving and increasing standard of living? It seems to me that there are four different ways in which the individual lot of persons or families can be improved. There is a natural process of growth into experience and maturity, which is, fortunately, the lot of almost all those who work for their living in any way at all. There is the advance that can be made when, through ability or initiative, that rate of progress can be accelerated beyond the normal rate of physical or mental development or experience. There is, thirdly, whether we like it or not, the advance that can be obtained when one particular group, through the process of collective bargaining, can obtain a larger slice of the cake; and that is, in fact, the way in which a great many people's standard of living is either permanently or temporarily improved. Fourthly, there is that general increase of the national wealth which comes through the scientific and technological developments wisely applied to business and commerce.

What we have to remember, as it seems to me, is that a number of people have a big improvement in their standard of living quite apart from this fourth national source of improvement, but that when we are thinking of great national expenditure it is only improvement in that particular field that is going to provide the source of what we want. The present Chancellor of the Exchequer in his Life of Asquith, which has already been referred to, quotes a letter from one who subsequently became a Lord Chancellor here, Lord Haldane. He said in a letter to his then Prime Minister that in his view it was entirely justifiable to take a much larger slice of the increasing wealth of this nation for the defraying of social expenditure of various kinds. What struck me as I read that was that the wealth was there first, before the expenditure. That is something which I think will apply in our nation as well as in all our individual lives.

So I ask myself these questions. Fortunately, they are not the kind of questions which any Government Minister could be expected to answer. But I think they are not unimportant. They remind me of the kind of questions which Matthew Arnold was asking this nation almost exactly 100 years ago when he wrote Culture and Anarchy, and when he contrasted the quest for excellence in education, taste and culture with what he thought to be the vulgarity of the Industrial Revolution as it was working out, and the irrelevance of measures such as those to make, it possible to marry your deceased wife's sister. These are questions that I believe are always with us, and I only hope that our nation, and not only the Government, will find some of the answers to them.

5.15 p.m.

LORD CARRON

My Lords, to deliver one's maiden speech during a debate on a subject of such vital importance, and to follow the brilliance and sincerity of my noble friend Lord Thorneycroft, would be a cause for apprehension were one not fortified in the knowledge of the tolerance shown by your Lordships. Much has been spoken, and more written, in recent times on the economic affairs of Britain, and almost every facet has been covered time and time again from all angles. Had all the advice to Government from all quarters been taken, one wonders what would have ultimately resulted. Possibly little different from the existing situation.

One would find it difficult to define in precise terms of time exactly when our really serious economic problems, as we now know them, commenced. It is, however, well-known that we have been subject to escalating financial and economic dangers for some years. During those years it would probably have been possible, had the right measures been taken at the right time, to arrest the slide in our fortunes and prevent the present acute crisis to which we are still subject. Possibly every one of your Lordships could in hindsight, by one formula or another, now indicate what might have been done. Regrettably, we are unable to put the clock back, and while we may gain some knowledge from past experience, I feel it is fruitless at this time to dwell in the past. We have a duty as a matter of urgency to cope with the present and the future.

Most of the many measures suggested as ideal solutions to our problems would appear to be regarded by those who enunciate them as panaceas which in themselves would, as with the touch of a magic wand, extricate us from our difficulties. Renunciation of the role of sterling, a floating exchange rate, devaluation—all these and other measures have been proposed, singly and in combination. Unfortunately, the full implications of such measures have all too rarely been fully appreciated or their practicability fully assessed.

On the role of sterling, one would really be led to think, having regard to some views expressed, that Britain could shed quite casually, like an old coat, our involvement in sterling as a reserve currency. Surely those who advocate that step should know the major and dangerous complications which would ensue were any but an extremely well-considered, well-planned, exercise of that kind undertaken, and in the fullest consultation with all the interests involved. One must applaud the efforts of the Government to obtain international agreement to the establishment of adequate monetary mechanisms in order to facilitate the increase in world trade on which we as a trading nation are so vitally dependent.

A floating rate is certainly, in our circumstances, a myth. We should not have a floating exchange rate: it would be a sinking rate, with the very adverse consequences that would ensue for the people of Britain—and not only for the people of Britain. Perhaps, my Lords, I am not absolutely correct in that statement. It is academically possible that we could have an exchange rate that really floated, or even floated up. But what would be the formula for that miracle? We should have to take measures so formidable as to be, in my estimation, quite impracticable. A first inescapable necessity would be to establish our real reserves at a level vastly different from their present size, which is, I am sure, known to your Lordships. The kind of miracle required, having regard to present circumstances, just does not happen. I feel it would be futile were I to pursue that line further.

Now that, unfortunately, but in the circumstances inevitably, we have had to devalue, I am sure that many advocates of that step realise that devaluation in itself solves no problems. It can create many, especially when devaluation has to be adopted as a crisis measure. There is some substance in the criticisms concerning the timing of the announcement of the decision, but not knowing the precise problems confronting the Government at that time, I will not comment further. But one can say that in so far as the technicalities were concerned, they were carried out with great skill.

Devaluation having been effected, the Government had of necessity to devise the measures consequentially necessary not only to secure such advantages as devaluation might render possible, but in order to ensure our survival and future progress. I fear that even now there is a failure even in many responsible quarters to recognise the magnitude of the task. Confronted with the massive amount of external debt which has to be redeemed, some in the not far distant future, coupled with our forward commitments, the extent of our balance-of-payments deficit, the international agreements to which we are party, and also the understandable desire of our people to continue to enjoy and increase our standard of living—to find a solution in such circumstances would seem to border on the impossible. In fact, to satisfy all interests involved was, of course, impossible.

In the result, the measures taken by the Government have, as one would expect, attracted criticism from all quarters. Quite simply they go too far for some, and not nearly far enough for others. I doubt very much whether one single item would command universal approval. For my part, I can say that I dislike each one of them, although my reasons in some cases would possibly be opposite to those of others who share my dislike. Nevertheless, as an interim package I consider that the decisions taken are in the circumstances meaningful, and I shall most certainly support the Government in those decisions.

Only the wilfully blind or woefully ignorant could have imagined that the measures already announced would in themselves have sufficed to restore our economic health. The stern warning given by the Chancellor of the Exchequer of forthcoming harsh decisions was to be expected. I share the view that it is unfortunate that the full scope of the measures necessary to ensure our basic stability could not have been announced at once. One cannot ignore the fact that all that has so far been decided has done little to restore international confidence in us. There are those who lightly dismiss the effects of international confidence; but, having regard to our vulnerable position, the restoration of confidence is of major importance to us. Had I the time, and your Lordships the patience, I could develop that theme, and other assertions I have made, much more fully.

So far, I have, I know, joined in the gloom in which, understandably, so many participate. Regrettably, that gloom has not yet lifted, although there is a gleam of light discernible. That light could be a mirage. Unlike the mirage, we ourselves can create reality, but not painlessly, much less by wishful thinking. Just as we all dislike the measures already decided, so we must brace ourselves as a nation to face the stronger measures that the Chancellor will have to devise if they are to be effective. Half-measures will not help, but will, in fact, still more impede our recovery.

My Lords, even the most adequate decisions taken by the Government will not in themselves effect our recovery and provide the basis for sound, sustained expansion. The nation as a whole must be prepared to be full partners in what is, I believe, the most unpalatable and difficult exercise since the end of the last war. As in all such circumstances, there are alternative choices. We can decide to take the not too difficult path, but with ultimate consequences that I do not desire to contemplate. Alternatively, we can face a comparatively short period of self-discipline and self-denial ending in a progressively better future.

A key factor in that interim period is the degree of incomes restraint which must be exercised. Having regard to my own background, I know of nothing more difficult for me to advocate. I have great faith in the capacity of our people to accept sacrifices, provided they are convinced that the wellbeing of the nation is at stake and provided the sacrifices are, and are seen to be, fairly shared. The Government have indicated their dislike of compulsory measures in respect of incomes, preferring to rely on good sense and co-operation in carrying out voluntary adequate restraint. I most certainly hope—and I am sure your Lordships will share my sentiments—that the response will justify the hopes of the Government. It would be a massive disappointment if voluntary restraint failed, thereby compelling the intervention by the Government which in the circumstances would in my opinion, be inevitable.

My Lords, I know how much noble Lords not favourably disposed to the Government dislike the measures on which this debate is based. Very few, if any, on these Benches like them much better. However, whether we like it or not, we are in this situation of very real national crisis. Unfortunately, we cannot work out our salvation in isolation, and it would be foolish to pretend otherwise. Every one of our decisions is scrutinised by powerful influences abroad. In these circumstances, therefore, there devolves upon all of us the responsibility to do nothing at all which would reduce in the slightest degree the confidence so vital to us at this time.

5.28 p.m.

THE EARL OF SELKIRK

My Lords, it is a great honour for me, on your Lordships' behalf, to congratulate the noble Lord, Lord Carron, on the speech—that balanced, clear speech—which we have heard to-day. Lord Carron has been asked, I am sure wisely, by successive Governments to hold appointments of high responsibility. He has been asked to do so similarly by academic bodies; and not least, of course, by his fellow trade unionists. Each of these requests has been made in the knowledge that he normally speaks with fearless frankness on any subject to which he cares to address himself. I think he has been restrained, if balanced and clear, to-day, and I do not doubt that on other occasions he may speak with more force, and possibly brutality. I hope he will address us on frequent occasions, and I assure him of the very warm welcome he will always have here.

My Lords, I should like to congratulate my noble friend Lord Thorneycroft on his speech which I think we all enjoyed. I wonder whether he would have spoken quite so frankly if he had been speaking in the other place. I would also say how glad I am to see the noble Lord, Lord Shackleton, leading the House. We are grateful for the frankness with which he approached his not very attractive task to-day. He may not always be able to be quite so frank as he has been on this occasion, but I know that he has the qualities which this House greatly appreciates and recognises in him. I have to say that I enjoyed very much hearing the noble Earl, Lord Longford, who I think came into the House about the same time as I did, but I have had longer experience on the Back Benches than he has.

I am bound to say that if anyone from Mars were to come down here, and look at the White Paper, and see that next year we are going to spend £15 billion—that is £15,000,000,000—it does seem strange that there is not room for that essential minimum of educational advance to which the noble Earl referred. I can only give, if I may, a wholly uneconomic but simple explanation. Is lit that we have lost a sense of responsibility with public money? Is it that it has ceased to be of importance and significance as it has in the past? I do not want to go back into the past, but I remember that in the far distant "Middle Ages" of October, 1964, I think it was the Prime Minister who said that he could do all that Mr. Maudlin said, and with no overall increase in taxation. From that has flowed, I think, a disregard of public money, and I think it has played a not inconsiderable part in the deflation, the devaluation, the deep indebtedness we have got to.

What I fear now is an attack on the defences of the country. If we look at paragraph 23 of White Paper on Public Expenditure we see this statement: … we shall energetically continue the process of cutting the size of the Ministry of Defence. That is about the only place in which the word "energetically" is used. I expect we are only beginning to see the attacks which are going to be made on our defence system. This is disturbing because, quite frankly, it is very hard to-day to believe any statement that is made on behalf of the Ministry of Defence. Only last summer, as was clearly stated in the Defence White Paper at that time, it was said in the conclusion, on planning the Forces required to carry out this role: This statement marks the end of this process. That was only six months ago. It does mean, unfortunately, that, any statement made now will, I fear, be regarded as very unreliable.

I feel strongly on this question of pledges which have been given, particularly to Asian countries. There may be—one does not know—a moral purgatory for those who do not carry out their promises. But what is quite clear is that there is a pragmatic disadvantage in telling lies and that is that nobody believes you. That is a very serious administrative handicap in any relations which we have to conduct, whether it be by our diplomats, our politicians or, indeed, whether it be our businessmen. I had a letter from a former Indian judge who said that the Englishman's word was his bond. He gave me those words in Spanish; he gave me those words in Arabic, and he assured me in all those languages that the words used to carry a very great deal of weight.

The second thing which has worried me is that this document which we are looking at, and which the noble Earl, Lord Longford, has told us is not necessarily perfect in every syllable, shows a strong tendency to drive this country back on to itself. There is a strong note of what I would call "economic nationalism": the rest of the world does not matter; we can carry on ourselves. It is made a little respectable by talking about Europeans—that sounds a little better. In fact this is not much more than going back on our own economic resources, and no country in the world can be or has been more dependent on international institutions. If we look only at the money which we borrow from the International Monetary Fund, and the basis of our trade, both visible and invisible, this will have to continue on a world basis. We are the worst country to think we can run our own separate economy. I did not find, when in Germany this week, any very great excitement that we should concentrate on Europe. They took much more the line, "If you can pull out of South-East Asia like that, you can pull out of the Rhine just as easily".

The third point I should like to make is this. These proposals show no consideration for the problems of other countries. The outstanding feature, I believe, of this century is the disappearance of empires, not only the British Empire, but about a dozen empires—the Austrian Empire, the Hungarian Empire, the Turkish and the French Empires, all of which have disappeared. The problem is to reconcile the succeeding position with the previous Imperialism. On the whole, we have been pretty successful in doing that. We have not had a Congo, an Algeria, an Indonesia. We have indeed had a Zanzibar, and a Nigeria, but we have not had a Vietnam.

We have not only an interest but indeed a duty to see, if we possibly can, that that does not happen. It is very difficult for the countries in the Indian Ocean. For 25 years ago, with the exception of Ethiopia and Thailand, every one of those countries was under the aegis, in defence and foreign policy, of some European country. This is a terribly difficult task for them to undertake and it is both in our interest and, if we have any sense of moral duty, our moral duty to help them through this very difficult phase. When Malaysia was formed in 1963 it was of course implicit that we should leave Asia in due course. We deliberately "fuzzed" the issue; we did not want to put any detailed point on it. We knew perfectly well that that was the situation. There was never any question of leaving Singapore. I was at the Admiralty all the time Mr. Sandys was there. What we did was to close the dockyard at Hong Kong, close the base at Trincomalee; we handed over Simonstown to the South Africans, on one of the most favourable treaties which this country has ever entered into; and that anyone should allow this to go by default at this time seems crazy and beyond belief.

What is so hard is that these countries have, in some cases, far more intractable social and economic problems than we have ourselves. I referred in a letter to the problems of Singapore—racial, population growth, absence of raw materials, inability to migrate anywhere. But who created that country? We did. We played a very considerable part in it. We are proud of it in many ways. For the way this country grew up we carry no small responsibility, and have no small interest in seeing that it goes on being a success. We may ask ourselves, "Why are we going back from here?" Is this really on economic grounds or questions of principle? I am bound to say that the frank statement to the Press of the Chairman of the Labour Party suggests that this is a question of principle, and that she is glad to get out, regardless of economic consequences.

We have had here quite recently the Prime Minister of Singapore. What he has asked for is really something fairly modest. He is a man, as I think we know, of considerable intellectual ability, a student of Marxism, and indeed one of the few democratic leaders in the world who has defeated an attempted Marxist takeover. He speaks with an articulation which is rarely heard among Asians. What he is seeking is two more years, as a minimum, to start getting into a defensive position. Each and all of us want the nations of Asia to be able to defend themselves. If they cannot defend themselves, then they are a danger to their neighbours and to the whole area. He has been criticised because he has had too much confidence in the Labour Party in this country. It is a criticism which noble Lords must bear in mind, and it is a criticism which has been made by his own people. The real danger seems to me to be—and we saw a reference to this in the Observer this week from Dennis Bloodworth, one of the best reporters in South-East Asia at the present time—that already the Chinese Communist shops are setting up in Singapore. Well, that is good for trade and there is nothing wrong with it, but if this were to lead to a Communist takeover in Singapore there would be war between Malaysia and Singapore for an absolute certainty.

Are we trying to prevent this happening? Are we really making a contribution? After all, we talk about the principle of self-determination, and surely those who live in the area, whether they be Australians, New Zealanders, Singaporians or Malaysians, are entitled to their own views as to what is to the advantage and the benefit of the development in the area. I would refer to a remark made by a Japanese diplomat when he heard that we were going. He said, "I could not believe our luck". I am not against the development of the Japanese economy—I am delighted. But do not let us hand it to them on a silver plate. We have interests there, and if we leave Singapore in a disgruntled state we shall suffer, chiefly probably in our invisible exports, that essential sector which has apparently enabled us to balance our payments, according to recent studies, over the last 140 years. These are the delicate things in which we shall certainly suffer most.

I should like to say a word about the Persian Gulf. It is really remarkable that the year after the Government say that they will leave the Persian Gulf this country will be more dependent upon oil as a primary source of power than on coal. According to the Ministry of Power that is what will happen the year after we leave the Persian Gulf, in which there are two-thirds of the world's resources of oil. Perhaps I may add that I was glad that the noble Lord, Lord Thorneycroft, referred to the most unfortunate and insulting remarks which the Secretary of State for Defence made to one of the rulers in the Persian Gulf, and I hope some apology for that will eventually be made.

The danger is that there may be a gangster takeover. That happened in Bahrain when I was in South-East Asia. A gangster sought to take over the State of Bahrain with, roughly speaking, a cool £100 million in the Bank of England—something that makes the activities of A1 Capone simply slide into insignificance. That is the sort of thing which could happen in the Gulf of Persia, and it is a situation about which we could do something. I have never held the view that once we left Aden we could do very much in Bahrain, but this is something to which we could contribute and for which I believe the people in the area would be grateful.

I ask the Government not to underestimate what will happen in a vacuum in the Indian Ocean, and how important it could be for us. We have had responsibility in the area for a very long time, and the greatest assistance we can render is to give some assurance of stability until they are in a position to defend themselves. The noble Earl, Lord Longford, who I see has left the Chamber, told us that aid was a matter of conscience for the Labour Party. The best aid that can be given to anybody is stability. It is practical for us, and it is practical for the people in the area.

5.46 p.m.

LORD FRANKS

My Lords, this is the first occasion on which I have ventured to address your Lordships. I hope therefore that any mistakes as regards usage or tradition that I may make will be ascribed to ignorance and not insolence. A number of noble Lords who have preceded me have expressed their anxiety about the economic situation and about our prospects. I share those anxieties. I suppose the thoughts that come first to my mind are the disappointing results of last week—the disproportion between the build-up and the character and content of the actual announcement. I have never thought that many of the things there stated were of great importance, particularly those in the strategic and military fields, but so far as economic problems are concerned the centrepiece was missing. I refer to the crux of the whole affair, the switch from personal consumption to exports. That had to be deferred. It had to be put off for two months, until March 19, and as a result there was no pattern to the policy of the Government; there was nothing that they could say to the people of this country. That is one thing that causes me anxiety.

Another cause of anxiety is the general climate of world trade. For twenty years we have lived in a world of expanding trade and a world in which it was easy to trade, but this is changing. The two reserve currencies that have carried so much of that trade on their backs are both in trouble. What happens? Rising nationalism, increasing tendencies to protection. There is a risk—I do not say a probability but a risk—that the volume of world trade will decline. That is a risk that we in this country must take account of, because if it happens—and it could happen—it will not add to our difficulties, it will multiply them.

These are the two things that have been in my mind. I think there is not much that Britain can do in her present weak economic state about the second, but I believe it is worth looking a little harder at the first of the points I have made. I suppose this must be the third or the fourth time that we have had the familiar routine of endless discussions between ministers, an atmosphere of crisis engendered, all the points which are to be announced being well known beforehand, and the result, no novelty or surprise, less than everybody anticipated. It was in that situation that the calculating boys persuaded themselves to put things off for two months. Perhaps they had persuaded the Chancellor of the Exchequer, perhaps even they were right, but they are the men of means, not of ends. They are the masters of methods, not of policies, and I am sure that to have to put off everything that really immediately concerns the people of this country to two months hence was a mistake of policy, not a matter of means or of calculation. But it prevents the nation from giving support to the Government, support which the Government in fact must surely need.

I think it is because of this inability to communicate, to talk with the people, this appearance of being so preoccupied on reconciling Ministers, reconciliation within the Party, surviving in power, that they have not been able, so to speak, to look up over and see and talk to us, the ordinary citizens of the nation. And I am sure this is among the main causes of something which to-day is quite widespread, and that is doubt in the effectiveness of the Government to govern, doubt whether it is in control of the situation. This seems to me important. It is important because now we are in the sixth year of the crisis. At the beginning of the 1960s somebody said we had "never had it so good." He meant the statement, I think, historically. It was also a prophecy. We have never had it so good since then. Year by year we have rolled that crisis forward, Conservative and Labour Governments alike have rolled it forward, by borrowing money from foreign friends. We have borrowed until we could not borrow any more. The next device, which has now been employed, is devaluation. But I think now it is difficult for us to borrow any more. Repetitive devaluation—who would recommend it? We now, I think, with the obscurity stripped away, face the crisis of six years as it is.

I do not say this to attack a Labour Government. My concern is with the British Government, our Government, the Government we have. It seems to me that any citizen of this country is entitled, in a situation like this, to make demands upon his Government, and I make three. Many years ago I travelled down in the train from New York to Washington with Sir Winston Churchill, and after he had had his lunch he suddenly broke into discourse, and he enlarged upon the theme of the difference between a statesman and a politician. The statesman, he said, had a theme, he had a vision; he saw the sort of society that he wanted to aim for; he saw the sort of relations in which he wanted his country to live with its neighbours. And because he had a theme and he had a vision in which he believed he could communicate, he could convince others, he could lead because he would be followed. Not so the politician. He, concerned with day-to-day matters, manipulating his way among persons and circumstances, had no theme. The great need, I suggest, of our Government to-day is a clear and coherent theme and policy which they can tell the people about. Without it there can be no joint effort, no sharing of the burden, no expectation of a common reward. But what can a Government do unless it is backed by and supported by the people it should serve?

I turn to incomes policy. Suppose on March 19 we make our switch, a full and adequate switch from personal consumption to exports—we make room. Even that will not count if the annual round of wages increases, supplemented by wages drift, whether of wages or of earnings or of salaries, goes on. It has gone on for 15 or 20 years. If one had to pick a single cause of our present embarrassments it would be that the system under which we have lived has cracked up, not our real incomes but our money earnings, wages and salaries, year by year, until those money increases, reflected in costs and prices, have made it difficult for us to sell in world markets. That is the position which, unless we change, loses us the effects of devaluation, loses us its opportunities within a year, or two at most.

But so far as I see it, when one looks for a firm, clear framework of policy on incomes one finds a certain haziness and fuzziness of outlook. Three-and-a-half per cent. is mentioned. It seems to mean one thing to the Government one day, something a little different the next, something else to the Trades Union Congress, something different again to the Confederation of British Industry. But surely, if we are to reap the opportunities of our situation, here is the place where we simply cannot afford to be vague, where we have to be firm—I hope, as my noble friend, Lord Carron, said, with consent between the trade unions, the Confederation of British Industry and the Government. But if not, I think it has to be clear and firm anyhow.

I come to my last point. I think and I hope that the Government intend by the way they act to cease organising our nation, fragmenting it, into its separate sectional interests. If there is no clear, central theme and announced policy, which everybody can follow and see roughly the opportunity it presents, and at a time of trouble it is known we are in a mess, what happens? Every man begins to think for himself, every group begins to think where its own interest lies. It may be someone with old-fashioned capitalist attitudes like Mr. Frank Cousins, believing in the virtues of the market, thinking he ought to test the strength of the market in favour of the men he represents; it may be a group of industrialists, wondering whether they should themselves try to think out the way ahead and perhaps getting rebuked for their pains; perhaps it is thousands of families up and down the country buying beds, buying sofas, buying tables and chairs. Why? Because they ate good, hard, durable things and they ate a little worried about the money in their pockets.

Surely the time for the Government to frame a policy is very, very soon, something that is clear and embracing, something with which they can speak for the people and gain their support, without which so little can happen. I spend matt of my time in the society of young men and young women from 18 to 25 years of age, students, undergraduates and graduates. A very large number of them are disinterested in the great institutions of our society, whether social or political. They are not against them; they do not want to reform them—I wish they did. They just think they do not count in their lives and they are insignificant to them. That mood, I think, in the last few months has spread beyond that age group. It is the greatest challenge that the British Government face. To overcome it I am sure there will have to be a complete statement of policy, something which is coherent and can endure through time, something which, though adapted to circumstances, and circumstances changing, nevertheless has an integrity. This is a field in which endless fresh starts are all bad starts; it is better to be nearly right and endure. The effect will be great.

My theme is that a Government cannot be effective unless they can get the support of the people they serve. I do not think in its handling of the present crisis the Government have yet found the way to look beyond their own immediate problems and difficulties and talk to the people in terms that they can understand and to which they can give their assent and therefore give them, the Government, the support they could and must have.

6.0 p.m.

LORD CACCIA

My Lords, it is my great privilege, as the first to follow the noble Lord, Lord Franks, to congratulate him on a speech which was made with authority and clarity, and which I am sure carried its conviction on all sides of the House. Of course he comes to us with a reputation, rightly deserved, on both sides of the Atlantic, and I hope he will make many more occasions to address us in the future and bring his mind to bear on the problems with which the Government are seeking to wrestle.

I will follow him in this respect. I do not want myself to try to take up your Lordships' time by commenting much on particular measures in this package, except that I should like to say my word of tribute to the noble Earl, Lord Longford, for the stand he took about education. I, too, as interested in that field, deplore the decision that has been taken. May I say also that I deplore the manner and the method of the way the defence side of our affairs has been handled. But from what I shall say it will be clear that I am more concerned about the future, even accepting the Government's programme as at present announced. And in the same spirit as the noble Lord, Lord Franks, has spoken, it is not for someone on these Benches to address the Government as if it were just the Labour Government; it is the Government of our country that we are thinking of at this time. It has been part of my duty in many posts abroad to look at a Government's performance and to report upon it, with, I hope, sympathy—because without sympathy you are a bad representative—yet also with objectivity.

If such a friendly foreigner were here, what would his comment be over and above the first comment which I am sure he would make; namely, the one made by the noble Lord, Lord Franks: that there does not seem to be any clear objective in this exercise, except to receive a kind of actuary's account, either from the Prime Minister or the Chancellor of the Exchequer, about how the national books are looking and how, somehow, these books should be got into balance? This without sense of responsibility for the decisions leading to this position, but just simply as a bookkeeping affair. But there is no theme, no objective. I think that would be his first comment.

I think the second comment would be: "The medicine, what is it? It is all stick and no carrot." Of course if he were a friendly foreigner, he would recognise that the British are known to be lions for punishment. But I think he might question whether this particular form of self-inflicted punishment alone will in fact achieve the objects which we still set ourselves. I suppose he would say to himself that it is extraordinary that they think, or apparently think, that there is no other way of running their affairs. He may reflect on taxation that the basis of our present system is not apparently a simple method of raising revenue by means calculated to upset the wealth of the country as little as possible but rather to give an incentive to increase in all ways the size of the "cake". It is rather a system of combined obejctives, partly to raise revenue, partly for social surgery.

I think he would also reflect on how the Inland Revenue have been placed in these last years by various measures, that the social surgery is coming to the point of endangering the manhood of the nation and of effectively achieving emasculation. In the same way, in industrial structure he might say that the British seem to have accepted that it is a law of nature in these Islands that it takes three men to do the job that is done by one man in the United States, and sometimes even for twice the capital invested per man. But it is not a law of nature; it is just the way we happen to choose to run our affairs. Here again, there is not the remotest sign in the speeches made that these things, any more than the taxation, system itself, are going to be looked at; and, if anything, I suppose we wait perhaps for the Royal Commission on the Trade Unions to see whether that may shed light. Here again, up to now it is rather the restrictive side than anything to give hope for increasing the size of the cake.

The same applies, I think, in the way the incentive to export through devaluation has been treated. Here, once more, inescapably there is going to be an offsetting element in the increase in the price of the raw materials. That is not the only offsetting element, because almost every time the Government make an announcement about this there is going to be some increase in cost through taxation, either directly or indirectly, upon the exporter. So now the benefit, far from being 14.3 per cent., is not even 8 per cent., but is driven down lower. Each time the incentive to go and make a bigger "cake" seems to be lost in the concentration on trying to get our books, in an actuarial sense, in balance.

So perhaps I may ask; are thoughts being given to these things? If they are, I would suggest that in order to get the confidence of the foreigner as well as of our own citizens, the Government should make more of them, and so too of other possibilities. Is it, in our particular circumstances, when we are told to welcome the income deriving from investments overseas, really sensible, in our desperate situation, to make it exceedingly difficult to invest in countries who are going to pay? Can we afford really to switch the investment to those countries where the immediate prospect of return is less? I instance the case of Australia.

Then again, I suppose it is fair to ask: what is being thought about and calculated of the advantages to us of a North Atlantic Free Trade Area in industrial goods? I recognise, as Lord Franks has said, that it may be that we were coming to a point where protectionism will increase. But if the Kennedy Round goes through, there are, I understand, a number of industrial goods in exchange between us and the United States where the effective tariff will be only 7 per cent. If it is anything of that order, it is no obstacle whatever to a large American corporation to export to this country—with only an obstacle of 7 per cent. or some such figure. On the other hand, if we could persuade the Americans to accept our goods without tariff even of 7 per cent., this would make a vast difference to the profitability of our exports. I only ask: is this being considered as a possibility. Indeed, if it is a possibility, can we even afford to spurn it?

Once again, I think the friendly foreign observer would make these comments and raise these questions for a particular reason which has already been touched on in this debate. I think he would do so because he would be anxious whether, in the end, at the end of the two or three years, we shall be in fact up and going. If not, the writing is fairly clearly on the wall. There will be another crisis. We shall again have to cut our coat according to our cloth. We shall decide perhaps, in such a circumstance, that defence must once again be looked at. At that time that will be effectively our part in European defence, and the foreigner here will observe that we have already concluded that there is barely a military threat to us. The Home Defence Service is all to be wound up. That implies we have concluded that there is no military threat of any significance in this area. Therefore I think this foreign observer will watch extremely carefully what we do and will make his conclusions from what he thinks we shall in fact be able to carry out, even with good will, at the end of three years and this could greatly affect our possible relations with Europe.

May I pass from these reflections about our economic state of affairs to certain constitutional questions which seem to be of validity now? It has been a great strength to us to be able to boast of our Constitution and our democratic way of life. I would go entirely with what Mr. Macleod said in another place in the debate last week, when he observed that he did not much take to the other various specifics which had been suggested, whether by the chairman of the Coal Board or by anyone else. He concluded by saying that he hoped they would be able to show in the other place that they could conduct a dignified debate about our affairs. I am sure that that is true, and I think that we shall show that equally in this House a very dignified debate can take place.

But is it just a debate that is at issue now over the Constitution? Do the Government consider that if they have to embark on a course radically different from that put to the electors at the General Election when they came to power, they are under any obligation to consult the electors again before putting into force a totally new programme? If so, in what circumstances do they consider such an obligation arises? I submit that it is desirable that we should consider this matter, for in our Constitution there are now few checks and balances other than conventions. The absence of a written Constitution and formal checks has in the past been considered a virtue giving strength and flexibility to our system of Government. But if, in practice, a Government or a series of Governments on their own can alter radically a programme on which they were elected, or as a result of their policies are forced to change such a programme and are under no obligation to consult the electors before the end of their five-year term, we have a strange version of democracy.

LORD GLADWYN

My Lords, would the noble Lord give way for one moment? I think that the Government's case, as I understand it, is that they have not altered their policy; that it has been altered for them by circumstances; that they are not to blame at all, and therefore no constitutional point arises.

LORD CACCIA

My Lords, I should prefer to hear this from the noble Lords when they come to reply, if that is their position. I would only go on to say that such immutable power is not possessed by the President of the United States, who has very distinct checks and balances of a legislative and judicial kind. I think that this is a fair question to ask because, if we are to continue in this way, then we are tending towards a Constitution where what the electorate are invited to do is to return a Prime Minister who, from then on, can do entirely as he pleases so long as he can keep his colleagues together. I thought that Mr. Healey yesterday made it very plain that in certain circumstances they had much better hang together for fear of hanging separately.

Well, there is still perhaps one last check, and that is that at the end of the five-year term the Government will have to face the electorate again. But there is no absolute bar, as I understand it, even in this, for a Government can, if they wish to use their majority, prolong the life of Parliament. It is only a convention that it has not so far been done except in time of war. These things are not now merely academic questions, for there is scarcely a major pledge which was in the Party programme in the last two Elections and which has not now had to be abandoned or drastically amended. This is the case in finance over taxation: in the economy over growth; in defence over our commitments: and I submit that it has become important to know whether there is any point, and if so what point, at which the Government consider they should go back to their original source of power, the electorate, for confirmation or denial. Or is this now in practice merely a question of calculating the date of an Election on the basis of Party tactics? No doubt the Government may think that a change would be a national disaster—they are fully entitled to that view—but if they are not then prepared to consult the electorate, again I ask what sort of democracy have we then got?

To turn from this very general question of the accountability of Government, another constitutional question of some interest arises. What, in the opinion of the Government, should be the convention about Ministerial accountability? The noble Earl, Lord Longford, has a very precise view of this, and one with which I personally have great sympathy. If a Prime Minister tells the British public that the Government, for good reason, are set on a certain course, and indeed asserts that any other course would be full of peril, and then has to abandon that course and set off on another, is there any point where he should now feel any sense of personal accountability? In other words, when does he think that his own word and honour—and in foreign affairs, through his, his country's word and honour—have been so far engaged that he personally should not remain in office? I realise that there is also involved in this the cover of Cabinet responsibility. The Minister of Defence last night said that he was deterred not only by the fact that the Government decisions were ones taken by the Cabinet as a whole and were therefore not personal in any particular sense; there was also the reflection that the country would hardly benefit by a change. Well, that again is entirely a fair point of view. But is it what we understand should be the proper position under the constitutional conventions which are all that now effectively stand to protect the democracy which we have had and which I hope we shall continue to enjoy?

Again, I think these questions would be asked by any foreigner living in our midst. I think he would say, "Their Constitution has stood them in great stead in the past; it has been an enormous source of strength to them; but, if it is run like this, in what precise sense is it really any more a representative democracy?" It is a five-year rule so long as you can keep the team together and you are tinder no commitment at all, as a group or as a person, to go if you do not carry out anything approaching the programme on which you were originally elected. I raise these questions in the hope that they may be answered in a sense which will give comfort to our friends.

I finish by asking one perhaps easier question. In the midst of all our troubles the Prime Minister has gone to Russia. I know that he was invited. Of course that is quite right, and it is right in certain circumstances that we should all wish to back him solidly in any conversations he may have with the rulers of a foreign country, and with Russia in particular. But as questions have been raised, and as the Government have not given any explanation of why he has left his post at this particular time, may I ask them to say something on this, since it would quiet a lot of honest doubt? The normal place for a Prime Minister in a crisis is in his own country. He is the captain of the ship, and should he not be on the bridge? It is not an offensive question to ask, but it is a question which I think needs a reply. Of course, it is impolite to postpone invitations, but one must reflect that this would not be the first invitation that we had issued to, say, a Russian leader of which he had thought fit in his own interest, because of demands at home, to ask for a postponement.

So I ask again, in the hope that this may lead to a reply which would give comfort: what is it that the Prime Minister hopes to achieve by going to Russia at this particular time? I would add only one rider. I beg that we may not be told he has gone there in order to be an honest broker between Russia and the United States over Vietnam. The United States have their own representation, they have their own means of communication with the Russian leaders, and I think it is harbouring a delusion to suggest that they need us in order to be able to communicate over matters of national life and death.

Let me conclude where I started, by saying again how impressed I am sure we all were—and, certainly, I was myself—by the speech of the noble Lord, Lord Franks; and, as a last word, by combining with him in begging the Government to give us all some idea of what is the object of this exercise, other than to hear an actuary's account.

6.22 p.m.

BARONESS LLEWELYN-DAVIES OF HASTOE

My Lords, I have great trepidation on intervening with a maiden speech in such a major de-date, particularly when it is so difficult to follow such distinguished speakers as the noble Lord, Lord Franks, the noble Lord, Lord Thorneycroft, and the noble Lord, Lord Carron. But I think it is agreed in general in your Lordships' House that we have in some way to learn to pay our way in the world. I think it is also clear that there is probably no one noble Lord here tonight who does not find one or many of the proposals which the Government have outlined distasteful.

It would be impossible to improve upon the sincere and moving speech which the noble Earl, Lord Longford, made, particularly about the raising of the school leaving age. Personally, this action seems to me to be not only wrong in principle but to be eating the seed corn. If we are to balance our payments we must have a highly educated working population in order to keep up our exports. Equally distasteful for many noble Lords has been the imposition of the prescription charges. Again, for many of us this is wrong in principle and it will probably be unfair in its application. But we have to face the fact that we must get our economy straight.

What really matters, and what seems to me to be very serious, is the atmosphere in which this is being done; the atmosphere in which discussions are taking place, particularly outside Parliament. There has been a despair—what the Sunday Times called a "near hysteria", a kind of cynicism which I think is new in our country and which I believe to be not only distasteful and wrong but quite unnecessary. I very much welcomed what the noble Lord, Lord Thorneycroft, said about chauvinism and about not going back to 1931 and closing up our trade, and all those mistakes which we made in the past. I think chauvinism is one of the great sins.

Nevertheless, it is important for us to realise that we have a great significance still, and that it does not depend on military commitments. We have a very great potential as a nation, and great contributions to make. If you look at technology, you find that many of our wisest friends in Europe want us with them simply because of our advanced skills in this field. If you turn to pure science, you find we are pioneering basic things which are important in the deepest sense. As a small example, there are three Nobel Prize winners working now in molecular biology which, as your Lordships know, is about the chemistry of the body; it is about heredity. Their researches will almost certainly teach us new things about cancer. They may teach us how to alter character, perhaps desirably. These things are very closely bearing on the science of immunology, without which none of the spectacular and, to some of us, rather shattering heart transplant, and other organ transplant, surgery can succeed. In this field we in this country are pioneering.

One of the things in the Government's measures which I was very glad to welcome was that we did not in any way limit our contribution to the arts. If you look at our actors, our producers, our dancers, you will find that, by their originality, their deeply intuitive and deeply educated performances, we are enriching the theatre everywhere in the world. If you turn to fashion you find we have created a new gaiety of fashion which has become worldwide and which has delighted our eyes in London. Perhaps more important, people come from all over the world to buy our beautifully- designed and made mass-produced clothes. This, in itself, has brought about a minor social revolution. There is nothing which cuts class inequality, particularly for women, better than well-produced clothes and cheap, hygienic, attractive cosmetics. This we should welcome for every reason.

There are many other fields in which we are in the van. I do not know whether your Lordships are particularly fond of "pop" music, but you may not know that in this, too, we in this country are what is called "Top of the Pops". "Pop" music is a very vital expression of young people all over the world, and our "pop" musicians, by their vitality, their sheer inventiveness, their musical subtlety, are listened to and copied all through the Americas, Europe and behind the Iron Curtain. This summer I went to a very distinguished international conference, and was delighted when one of my Russian colleagues asked me if I could teach him to sing a song with a Liverpool accent. This may not be greatness, but it shows influence.

I think it is just as bad for a nation as it is for an individual to have an inferiority complex. I very much share the concern which the noble Earl, Lord Jellicoe, showed about the increasing cynicism over our democratic system of Government. I cannot go all the way with the noble Lord, Lord Caccia, in his, if I may say so with respect, gloomy prognostications about our Constitution. I myself feel that our political and social system is one of our greatest assets. We are a homogeneous society. We are not riven by basic hostilities. Broadly, we all have the same aims. That is why, even in times of great difficulty such as now, we can still design and build new cities which are intended to serve the community and not simply the interests of small sections of it.

My Lords, I feel that in spite of everything we are a rich country. After all, this year we are going to spend something like £2,000 million on gambling and betting alone. I could not help reflecting, when the noble Earl, Lord Jellicoe, was talking about "irrelevant nationalisation", that it is a pity that this industry, which seems to be one of our big growth industries, is not to be nationalised. Then we could pay for the social services—health, and so on—much more painlessly. My Lords, it is difficult to be constructive at a moment like this, but I feel very deeply that there is enormous potential in our country. I should very much dislike to be thought jingoist, but I think we should not forget this. We are a rich country.

Some of my work lies in being chairman for the Hospital for Sick Children in Great Ormond Street. I never cease to wonder at, and to be proud and thankful for, the care that we give our children. We are able to provide an average of more than one nurse for every sick child and to keep the care constant, day and night, week in and week out. It costs an enormous sum every week to keep each child, but the nation affords it, and rightly so. Another side of my work lies in the underdeveloped countries. The sort of children's wards with which I am familiar in Africa are very different. Each cot has two children at the top and one at the bottom. In the case of the tinier babies, they are laid in a row across the cot—four, or even six, and I have seen eight. Your Lordships can imagine the dangers from infection and from cross-infection, and the rest of it; and yet those children are better looked after there than they would be outside.

But in the real things we are still rich. I do not believe that we are significant only when we have far-flung military commitments. I think that even when we are welcome (which is mostly, apparently, when we are just about to withdraw), and especially when we are overwhelmingly not welcome, we do better to cut our coat according to our cloth. I believe that we should have made these defence cuts many years ago, and that we should not be in the present balance-of-payments difficulties if we had. For that reason, my Lords, I wish to support the Government's proposals.

6.33 p.m.

LORD CONESFORD

My Lords, the noble Baroness has addressed the House for the first time in a speech of singular persuasiveness and charm. There were other features which I thought made it remarkable. Though she appeared to hold some notes in her hand, she did not once glance at them. The whole speech was spontaneous and natural; and on a day of most distinguished maiden speeches, I think her speech occupies a worthy place. My Lords, I scarcely know the noble Baroness, although I had known something of the work of her distinguished husband even before he came to this House, because I take the greatest possible interest in architecture. Possibly I have greater agreement with him when he speaks on architectural matters than I am likely always to have with the noble Baroness; but after her speech to-day the whole House will wish to hear her on many occasions.

My Lords, I should like to mention other maiden speeches, because it so happens that I served on a Committee with the noble Lord, Lord Carron, and learned something of his quality, and have met at Oxford and elsewhere the noble Lord, Lord Franks, who gave us such a brilliant maiden speech to-day. But I think I must say a word about the speech of my noble friend Lord Thorneycroft. It is not merely that we are old personal friends, but it so happens that from the year 1951 to the year 1955 he was my Minister. He was President of the Board of Trade and I was the Parliamentary Secretary. That was before the days of the great Wilson innovation when a Department has to have three or four Parliamentary Secretaries—certainly two—if it is to be a Department at all. I was the only Parliamentary Secretary throughout that period; and I think one day either my noble friend Lord Thorneycroft or I will tell the House something about the economic position that the Conservative Government of 1951 inherited. A comparison was drawn by my noble friend Lord Jellicoe on a previous occasion between the position and the deficit that we found and the position and deficit that the present Government found, of which they never cease to remind us. The great difference was that we did not moan about it but set about the resuscitation of the country and its economy. That is the big difference between the two Governments.

Before I pass to the substance of what I am going to say I should like to give a word of welcome also to another personal friend, the present Leader of the House. If the noble Earl, Lord Longford, was to go, we are all agreed that we have the best possible successor—and I liked his approach on this occasion. I agree with so many noble Lords who have spoken that we must not be too pessimistic. On the other hand, we must not hesitate to tell the truth as we see it. To my noble friend the former Leader of the House, Lord Longford, I would say only this. I am quite certain that the honourable step that he has taken will be that which will ensure his own personal happiness. It was the right step, and he has shown on an important occasion that the habit of resignation on a point of principle is not quite obsolete.

My Lords, in the broadcast that the Chancellor of the Exchequer delivered on June 16 there is one very important sentence with which I completely agree. It is this: … there is no greater recipe for disaster than a persistent refusal to face unwelcome facts". That, my Lords, is true. It represents a great declaration from a Socialist, because the fundamental principle of Socialist Governments in this country for some time has been the great principle of the non-recognition of fact. One of the unwelcome facts to be faced is the appalling injury that Her Majesty's Government have inflicted on our country by their incompetence and mismanagement of our affairs. Let me say at once that that would not prevent me from supporting any action that they may take which I think is calculated to put our country right. But I am bound to say that nothing in their record or in their present proposals promises, in my opinion, a successful issue from our present afflictions.

They seem to me altogether to miss the importance of, and the danger to our recovery that has been caused by, the light-hearted way in which they have backed out of their commitments, even their recent commitments. They seem to have no idea of the effect, either in this country or abroad, of the fact that the same Minister of State goes to the Persian Gulf on one occasion, making promises and giving undertakings, and then, within a short time, has to go round and say that he was quite wrong and that the whole thing has been altered. We know, from the Prime Minister of Singapore, from the Prime Minister of Australia, and from others, something of the effect of altering the date from the mid-1970s to the date now proposed: but of course there is no sanctity whatever in their minds about the date now proposed. People who can, almost or entirely without apology, break their word once, may break it again. I entirely agree with what was said by the noble Lord, Lord Caccia, about the effect on our international reputation.

The most important element perhaps in which the Government have gone wrong is in this question of defence. Defence is not a luxury; it is not the last duty of a Government if they can afford it, after doing all the other things they would like to do. Defence is the first duty of a Government. This does not mean, of course, that there is no limit to the sums that we can afford for our defence; but it does mean that we should not pay with our safety to appease those who do not believe in having any defence at all. The noble Lord the Leader of the House—and the whole House accepts his sincerity in this—said with what regret some of these defence cuts have been made. But that was not the attitude of the Chairman of the Labour Party or of a great number of Labour Members of Parliament. Their attitude was: "We need not vote against the Government or resign office over the prescription charges because we are confident that this tremendous abandonment of defence overseas is exactly what we have always wanted; and we welcome it on that ground."

After the appalling injuries they are inflicting on our Armed Forces, this section of the Government's supporters still want the Government to throw their imaginary weight about in foreign affairs. There is scarcely a day in another place when some honourable Member below the Gangway does not demand that the Government should do this, that and the other among the great Powers and in every quarter of the world. They seem completely to overlook the effect that has been brought about by our "ratting" on our obligations and the loss of our defences. Frankly, their attitude is still that which I heard Winston Churchill describe in the House of Commons some thirty years ago. Their motto, he said, is "Disarm and quarrel".

For this ignoring of our obligations, noble Lords do not have to believe me; they have only to study the speech of Sir Dingle Foot, until recently the present Government's Solicitor General. This dishonouring of obligations does not depend in the least on taking the word of any of the Government's opponents; it has been set forth in the speeches of the Government supporters. Yet the Minister of Defence stays in office! In seeking an explanation of this extraordinary phenomenon, I recall a quotation that I have long treasured, although I can no longer give chapter and verse for it. The quotation is as follows: He had a life-long struggle with his own conscience; but he always won. The failing of the defence cuts consists not merely in the fact that they have injured our international reputation; they will not even, I think, produce the results in the saving of foreign currency which provides their only alleged excuse. When we consider the interests at stake in the Persian Gulf and the amount it would cost us to maintain the defence we recently promised, it is out of all proportion even to seek to save the sums we are seeking to save at the enormous price of that which we put at risk.

My Lords, I leave foreign affairs and I come to what is proposed in home affairs. Here, because there are so many other speakers, I shall make only two or three points: They may sound rather disjointed. I very much agree with what was said by the noble Lord, Lord Franks, about the importance of a theme. I believe—and I have made it clear in both Houses and in many speeches I have made in the country—that there are two ways in which a country's economy can be made to work. There is the Communist method of having no Parliamentary government at all and ruling by absolute tyranny. I hate that method; but it can be made to work—although with one exception, and he is not here to-day, there is nobody in this House who wishes that method to be adopted here. The other great method of making an economy work is to rely on the freedoms of a free society and to harness the energies excited by love of those freedoms to benefit the State. I have never been a believer in pure laissez faire. That was always a Liberal and not a Conservative doctrine. But, although I believe that the State must intervene to end abuses, I still believe it is worth harnessing the energies of a free society to produce the results you want.

I mention two or three matters in the hope, a very distant one, that possibly the new Chancellor of the Exchequer—for whose intellectual capacity I have considerable respect and whose personality I found when I was in the House of Commons most agreeable—will consider them and take the right action, but I fear that he may be tempted to go wrong. The first is this question that everybody has seized upon—all the critics have seized upon it quite naturally—of the absurd expansion of the Home Civil Service which it is not proposed in any way to remedy. My Lords, I am not going to join in any attack on the Civil Service. From my experience—and I have held some ministerial offices—I have the greatest and highest respect for the Civil Service; and, of course, the great expansion is not due to the incompetence of the civil servants; it is due to an absurd excess of legislation. Some of that legislation is extremely foolish. It is proposed to go on increasing that volume of legislation, quite irrespective of the certain economic effects on this country. I beg the Chancellor to have a look at this and to ask whether he really believes that anybody, at home or abroad, will believe that he is trying to save this country's economy if he goes on with all the legislation already planned, and does nothing to remove some of the very uneconomic activities that make the retention of this vast increase in the Civil Service necessary.

I am sorry to say that we are beginning, once again, to hear the usual nonsense about dividends. I hope the Chancellor, who is an economist, will look into this nonsense and not be swayed by a popular belief in the nonsense in certain quarters, created largely by the Government's own previous statements. Let me remind your Lordships' House of this simple fact. Company profits and dividends are perfectly distinct things. Let me take them separately.

Profits, I have always thought, were a perfectly proper subject for taxation. But I have always thought that profits were better than losses; and to tell companies, engaged in the export trade and elsewhere, that they should not even try to increase their profits is to say something perfectly absurd and contrary to the national interest. But if they do make profits, what about dividends? In molt cases probably it will not be possible to pay any increased dividend, partly because it may still be very difficult to win the profits and partly because the state of the company may make it desirable to keep the profits in the company. But not always. Sometimes there may well be no reason at all why profits should not be distributed to those entitled to them; namely, the shareholders.

Years ago the Royal Commission on Taxation of Profits and Income came to a conclusion which I have frequently quoted to your Lordships' House. They stated quite clearly that it was not in the national interest that a company should retain in its own coffers profits which it did not need and which, if circulated to the shareholders, might be invested in companies where investment was very badly needed. The reason why I fear there may be further folly on this subject is that in his broadcast speech the Chancellor of the Exchequer said: There can be no automatic increase in wages or salaries or dividends to compensate for price increases. Of course there cannot. Whoever heard of an increase in dividends to compensate for price increases? An increased dividend can be paid only out of profits, and an increased cost of living cannot in itself result in any dividend.

I do not wish to develop this, but if we insist, if the Government insist, on talking nonsense on this subject, so will people throughout the country, and the improvement of our economy will be delayed. It is worth while studying the way the German economy recovered—it is sometimes referred to as an economic miracle—after what happened during the war. It was by relying on freedom and a free society. Now they are very rich, but they did this when they were very poor.

My Lords, my next subject is foreign travel. I know that probably the noble Earl, Lord Longford, thinks that I attach too much importance to this, but I know, too, that the noble Earl recognises my sincerity in the matter. I think that prohibiting a citizen from indulging in foreign travel if he wishes to is barbarous and contrary to the national interest. This has nothing to do with the balance of payments. If I want to take a holiday in France or Italy (and now that I am a very old man I had hoped to see something more of both those countries before I die) I should not wish to go on a package tour such as is advertised, lasting a few days—to be among the bathing belles and all the rest of it; I should want to see some of the great civilisations that Europe has inherited from Rome and Greece and Christianity. I want to be able to travel.

My Lords, we again started this limitation recently, and the British citizen is more limited than any other citizen, I think, in the world—with one possible exception. Hitler did it, and became, in this country, a figure for ridicule over this limitation. The most characteristic socialist institution in the world is the Berlin Wall, which prevents people from getting out of East Germany without the permission of the Government. We ought to be a little frightened of treating the seas that surround this island as a wall which people cannot cross for their own purposes without the permission of the Government.

I know that I may be told that this is what other countries have sometimes found to be necessary. At the present moment America is proposing it, and we may get that business of "Beggar my neighbour" to which reference was made by the noble Lord, Lord Caccia. But what the American Government proposes is something quite different. It does not pretend in any way to limit the amount a citizen may spend abroad on travel. What it does propose to do is to make it more expensive and to tax the person who is going to indulge in that travel. If we are to have this limitation at all, that is the way to do it.

I pass to agriculture. If there is one thing that I should have thought was needed, it is to give some encouragement to agriculture and to stop the disgraceful process of taking agricultural land for this and the other purpose; to the enormous impoverishment of the beauty of this country and the possibility of increasing our food supply. The latest chapter in the Stansted infamy is that they propose to take even an increased quantity of good agricultural land.

My Lords, I apologise if I have taken too long. I have never been so unhappy about the state of our country, but I do not take the pessimistic view that things cannot be improved and go right. I accept what was said by the Leader of the House, that we must not be too pessimistic. But we must be honest enough to realise that the consequences of actions are things which can and ought to be foreseen. I would end with a famous quotation from Bishop Butler, which I think I have inflicted on the House before: Things and actions are what they are and the consequences of them will be what they will be; why then should we desire to be deceived?

7.0 p.m.

LORD SOPER

My Lords, I should like to begin by adding my congratulations to those which have already been given to four maiden speakers of great distinction. I cannot remember more distinctive contributions from those who have spoken for the first time in your Lordships' House. I would pay them the compliment of taking an introduction from the speech of the noble Lord, Lord Thorneycroft, a phrase from the speech of the noble Lord, Lord Franks, and hope that what I have to say will be imbued with the vigorous severity, almost, of the noble Lord, Lord Carron, and perhaps will be a little aerated by the confidence and enthusiasm of the noble Baroness, Lady Llewelyn-Davies.

I noticed in the muscular speech of the noble Lord, Lord Thorneycroft, that he was dubious about the possibilities of a Government run by businessmen, and he extended that dubiety to a Government run by college professors. I thought he was then going to say something about the Church. He did not, but I am sure that he has a similar dubiety about the Church running the country. I reflect that one member of the Church to-day, the right reverend Prelate who spoke, advanced almost as an argument for his intervention his lack of knowledge of what was going on. That prompted me to think how apposite was the reflection of the noble Lord, Lord Franks, that there is a breakdown in communication and that the communication of a theme is required perhaps more than anything else at the moment, if we are to see this matter in which we are now engaged in the proper perspective, to see it steadily and to see it whole. That seems to me an admirable introduction and an admirable text.

I do not believe that the present situation is an economic situation which is prompted by a moral dilemma. It is a matter, if not of moral, then of psychological condition which has precipitated the economic condition. I would begin with one of the most taking comments in the speech of the noble Earl, Lord Longford. There is a widespread sense of bewilderment, which is not only shared perhaps by politicians but more or less is endemic in the community. I should be inclined to think that it was more than bewilderment. I would venture to say that what must come out of these cuts, if they are to be acceptable, is some kind of resolution of this problem of lack of communication of a general theme which would justify them. Let me hasten to add that in some respects I cannot see that this is so. Nevertheless, I should like for a little while to invite your Lordships to look at some of these cuts in the light of this requirement of some overall pattern or theme by which they ought to be judged.

To begin with the defence cuts, I confess, declaring my own faith, that I am delighted that they have been made. I wish that they had been made earlier and were much more thorough. As a thorough-going pacifist, I look forward to the day when we have no defences at all. I make a witness to this. I know that it is an impossible argument at the moment, but it is coming nearer to an argument. It is not much use now having an adequate force or a small force. One noble Lord advocated the strong-arm man keeping his goods in peace, as if that was a suitable argument for the maintenance of armed force. The noble Lord, Lord Thorneycroft quoted from the New Testament but gave only half the quotation: To each according to his need, from each according to his power. But the New Testament goes on to say: … until a stronger than these shall come upon him, there after he shall take from him all the armour in which he trusted". If it is still thought that that is a suitable quotation in support of armaments, it refers to the Devil.

That is not germane to this particular matter. What is germane is that increasingly we are faced with the position where we are either capable of delivering a decisive blow, either we have a competence which is equal to a particular situation, which in many cases must be problematical, or we are just as safe without anything at all. I welcome heartily this reduction in our arms capacity and I hope that it will be the focus of clear and protracted thinking as to what, if anything, is the role of the Armed Forces in a community which is likely to survive to the end of this century.

But that is not the matter about which your Lordships should first of all be concerned to-night. It is much more what the effect of these arms reductions will be on this prevalent condition of bewilderment. There is one fact which can first be put into the locker. Since the devaluation proposals have been made, Gallup Polls have indicated a return of some of the confidence which had previously been lost in the viability of the present Government. I think this is due to the fact that, belated as it may be, the Government have appeared at last to take resolute, forceful, disagreeable action, and this has evoked a favourable comment from people who were bewildered and now are inclined to think that some resolute measures are being taken. I am putting it as bleakly as I can, because I feel that it is necessary to put the case as one sees it in the light of the environment in which one finds oneself.

I feel sure that many of the people with whom I am in contact think that a Government which lives on a diet of eating its own words must necessarily become debilitated unless there is sufficient reason for changing its mind, and the changing of its mind about matters and the breaking of its word need not be a thing of shame if there is an adequate and sufficient cause to prompt that course of action. If a man gets converted, it is perfectly right that he should renounce the purposes and attitudes taken before he was converted, and if a Government becomes converted sincerely to a new attitude, that Government is entirely free to make new judgments and in many cases to repudiate old ones. When it appears to the man in the street that these changes are forced for political and economic reasons which are not related to economic principles, then his bewilderment tends to increase. For there is little virtue in doing the right thing if it is done for the wrong motive.

It is this lack of a sense of virtue in what is happening which is to be found in one corner of these cuts, of which little mention has been made. The Civil Defence organisation is to be disbanded. I have always thought that Civil Defence is a rather macabre charade, but I have an abounding confidence in the sincerity of all kinds of simple people who feel quite genuinely that the only proper safeguard against an atom bomb is not to be there when it goes off, but if you happen to be around it is your bounden duty to do what you can, even if only peripherally, to save the lives of those who in many cases will be on the verge of the actual explosion itself. I recognise that. I still think that it is a waste of time and that there are better things which should occupy people than engaging in that kind of operation, but I think it is entirely improper that the Government should renounce, reject and repudiate that kind of voluntary service without attaching their reasons. The only reasons which would satisfy me are such as these—the need is no longer there, or, in the judgment of the Government, there are better occupations by which ultimately security would be safeguarded and therefore this is a waste of time. It is this kind of thinking which I hope that the Government will be able to say with clearer voice and so meet the demand of the noble Lord, Lord Franks, that this communication of a sense of theme and purpose is the only way to justify what appears to me and many others as a belated but necessary exercise in the reduction of our Armed Forces.

In turning to domestic matters, I have to register my ardent opposition to prescription charges. I believe that they are psychologically rather than economically promoted. I believe that it will be almost impossible to make them effective. I think they will lead to a loss of medication in many cases where medication is necessary, and I think, on the evidence of many people more competent than I am, but also on evidence that comes to me in my own work, it is highly likely that the poorest will suffer. I expect that there are other reasons which do not occur to me at the moment, but those are enough to be getting on with. Therefore I regard this whole question of the imposition of prescription charges with great aversion.

I remember this, too, for a deeper reason still, if I may advert to it. I remember the time when there were no prescriptions except for those who could pay for them. I remember, as a young Minister of the Gospel in the Old Kent Road, the miseries that there prevailed. I know the day when the Welfare State raised the, so to speak, brazen serpent in the wilderness, where so many people were being beaten by the snakes of unemployment, destitution and poverty; and I know that one of the characteristics of the promise for which they looked as they gazed at that brazen serpent, as the Israelites did, was that here was a free and full expression of public welfare in terms of the manifest giving and sharing of responsibility by those who could do this, and the free reception of the benefits at the point at which they were needed.

I know that discrimination can be made between those who can competently pay for these things and those who cannot. But it is not only necessary in judgment and in politics to be right; it is necessary, also, to appear to be right, It is this vision of the brazen serpent, that has now turned into the sacrifice of the sacred cow. I very much object to the idea that this is a sacred cow and is therefore expendable. To me, and to many others, it represents something much higher than that. Until the Government are prepared to renounce and repudiate this infliction of what appears to so many to be an injustice, I for one shall take my individual opposition to prescription charges as far as I can.

I entirely approve of, and, if I may say so without impertinence, I entirely concur with, what the noble Earl, Lord Longford, has said about the other cut, the postponement of the extra school year. I recognise that cuts have to be made. I recognise that many of the cuts are disagreeable. I recognise that the situation is extremely difficult and more complex than I, as a working parson, am capable of understanding. I want to make my contribution. I can only make it, in one sense, by registering my convictions. But I should not like to sit down in such an arid atmosphere as merely to recognise how much good there is in one part of this deal, in the arms package, and how much I disagree with others.

I want to say what I am sure my friends on the Episcopal Bench would say; that is, that if confidence is to be ultimately restored, it must be by an inner revaluation. And I can think of nothing that would restore confidence and a sense of purpose rather than bewilderment than the reintroduction into the minds and hearts of ordinary people of a sensible, intelligent 20th century religious faith. I am well aware that such a change and transformation is as necessary in your Lordships' House and in ray own life as it is in the lives of those whom we regard as the people of this country. Nevertheless, this to me is not some afterthought or some addition to an otherwise pertinent comment. I still believe that we are suffering from a spiritual malaise of which this economic phenomenon is one expression, and alongside those methods that are desperately necessary to get ourselves straight with the bank, straight economically, there remains, as I see it, the more peremptory need that we should recover a faith which will carry us through the difficult times that lie ahead.

7.15 p.m.

LORD MOTTISTONE

My Lords, it is not easy to follow such inspiring statements as those with which the noble Lord, Lord Soper, ended his speech. I do not agree with a great deal of what he had to say earlier, and perhaps at some time I could explain to him the principle of the deterrent in relation to defence forces, whose purpose, indeed, is to save life. It is perhaps worth bearing that in mind.

To turn to my theme, I do not propose this evening to devote much time to defence. I think that what the Government have done is disastrous; but it has been well covered by my noble friends, and I do not want to make more than one point; that is, that in altering the dates on which the Government are proposing to cut defence they are now making it more difficult for their errors to be put right by any successors. This is very dangerous, because errors that are made in defence equipment and manpower cannot be replaced quickly in these days as they could 200 years ago. Here we come to what the noble Lord, Lord Caccia, said: Are we in a democracy when a Government can stay in power indefinitely regardless of what they do? Are we in a democracy when a Government commit themselves to a major mistake and so organise the timing that their successors cannot put this right? That is all I wish to say about defence.

My main point to-night is to go much more fundamentally into the problems which have been touched on by various noble Lords earlier. It is the fact that the Government, no doubt with the best intentions, have lost most of the confidence of this country. I am sure that they are as puzzled about why this has happened as many other people may be. A great deal of study has been given to the question of how men and women should be managed, and in commerce and industry to-day great steps are being taken to bring up to date the methods of managing people. Our system of government, which has evolved itself over so many centuries, is fundamentally at fault in respect of the latest and most modern management methods. This is because it has been based over the years on an assumption that, to put it simply, those at the top know best. This is a theme which starts in the Bible; it starts in early family life. It was necessary up until quite recently, even in the most civilised countries, because individuals who had to be managed were not properly educated. One can probably say that it is only in the last twenty years that the vast majority of people have had sufficient education for it to be not only a good thing but highly important that they should be consulted as to how they could best make their own contribution.

Unfortunately, our present Government, with their Socialist antecedents, will find it even harder to adjust their attitude than Governments of other political Parties. This is because when the Socialists formed their theories they saw that the managers were managing badly; they put the fault down to the managers and said, "We must replace them by the State", instead of putting the fault down to the system, which was the system of authoritarian management. This, my Lords, is probably difficult for people to hoist in in the short space of a brief speech on a Tuesday evening; but it clearly needs serious thought. There is a great deal of literature on this subject, and the fundamental of it—which the noble Earl, Lord Longford, men- tioned in passing—is that there is an equality for us all, an equality of contribution we can all make. And we must recognise that the people who do things, whatever they do, have as much to contribute in deciding what that should be as those who govern them or manage them.

The malaise that has been mentioned—and noble Lords have mentioned it repeatedly—is, I think, in the arrogance of Government, and this applies not only to the Parliamentary members of Government but also to those who sit behind their locked doors and communicate with the public by letter, if they communicate with it at all. Any noble Lords who, like myself, have had the privilege of working in a Ministry will know what a desperate effect this has on one's sense of proportion in relation to one's effect on other people.

I would suggest to the Government that the most important thing they can do is this—and here I go very much with the noble Lord, Lord Franks. We want to be told, and told clearly, what the Government are doing. But even that will not take us through; even that will not be enough, because what we must cure is this arrogance which naturally exists with people in authority. We must recognise that people in the country have a contribution to make, and have a very clear idea what it should be. We should have a two-way communication. In fact, to do this properly we have to unshackle ourselves from centuries of legislation which restricts our movement forward.

Only recently it has been said that the most highly supervised country in the world is Russia, which has the lowest productivity per man, and the second most highly supervised country in the world is our own, and we have the second lowest productivity per man. Now this is a fundamental feature. We can get this dealt with only if we set to work to evaluate all the legislation that exists, with the specific object of getting rid of that which restricts the human individual. Do not get me wrong: of course one does not want to abolish all the criminal law and have the criminals let out of prison. But anything which is hampering development, various tax laws and all these things, needs to be investigated impartially by people who are specially chosen as understanding the value of other people. And this is much more difficult to find than you would think, my Lords. This, in fact, is the solution. Whether we can expect a Socialist Government to arrive at the same conclusion I very much doubt. So perhaps the first thing to do is to invite the Government to step down in order that we can set to work to put this country on its feet.

LORD SORENSEN

My Lords, it was announced earlier to-day that there would be an interval about this time for the purpose of securing adequate refreshment and nourishment, and therefore I beg to move that this House do adjourn until five minutes to eight.

[The Sitting was suspended at 7.25 p.m. and resumed at 7.55 p.m.]

LORD COLERAINE

My Lords, I have never, I think—or not for a very long time—so nearly had the privilege of talking to myself as I have this evening in this House. There is a lot I might say, but in the absence of those to whom I should like to address my words, perhaps it would be unwise to say it. Nevertheless, I think I must express my sympathy with the noble Earl, Lord Longford, in the dilemma in which he finds himself. I must express my admiration for the solution which he finds to that dilemma, and I must thank him for the many courtesies which he has shown to me when he was Leader of the House. If he were here, I should like to welcome the new Leader of the House, and my welcome is none the less sincere because I believe in my bones—although I cannot support it by argument—that he will not be Leader of this House for very long, and that within a far shorter time than many of us expect he will be sitting on this Bench on this side of the House.

My Lords, the debate has been conducted at a very high level, and I hope I shall not fall too far below it. It has been distinguished by some remarkable maiden speeches and if, in the first instance, I single out that most remarkable Parliamentary performance of my noble friend Lord Thorneycroft, I hope I may be allowed to make that exceptional distinction to an old Parliamentary colleague. I think Lord Thorneycroft was entirely justified in disobeying Pope John's injunction. I think he was fully entitled to claim, as he did, that if in 1958 the Government had accepted his advice, instead of his resignation, we should not be in the position we are in to-day. I think, too, he was perfectly right to stress the fact that we were living under a system which depended for its efficacy upon high profits and real incentives, and that we had been making a great mistake in disregarding these realities in the past. I am sure he was right in what he said about the reaction of our allies to the defence proposals of the Government. I am sure he was right in what he said about the Welfare State, that it was something we had to look at again, that we had to re-model, not in the interests only of economy, but also in the interests of the assumed beneficiaries of the Welfare State.

But where I do differ from my noble friend is in this. I do not share his view that it is necessary now, at this stage, to preserve Party unity and that it is better to support a Government, even as bad as this one, rather than seek to dismiss it from office. We have heard from other noble Lords that this is not the time to play Party politics. Now Party politics is to some extent a game, and a very fascinating one. But it is something more than that. Party politics—the Party system—is a clash between opposing beliefs and opposing philosophies, and if we try to gloss over this clash, to pretend that it is not there, we are only doing a grave disservice to the State.

My Lords, it seemed to me that when the noble Lord, Lord Shackleton, moved the Motion standing in his name he exposed at once the dilemma in which this Government, particularly, find themselves; a dilemma from which they can not escape and a dilemma which frustrates, and must continue to frustrate, all their efforts. I mean this. The noble Lord, Lord Shackleton, was at pains to counter what he called "undue pessimism". He was at pains to say that though this was a serious crisis it rea11y was not as serious as all that: it was a temporary setback along the road on which the Government had started and on which now, in new forms, they could continue. The dilemma rests in this: that the Government cannot get from the people the response they need, and the response they must have if we are to get through our difficulties, unless they stress the reality of the crisis. On the other hand, if they do stress the reality of the crisis then it focuses attention on their own failure and their own culpability. I think that is the real reason for what the noble Lord, Lord Franks, in that very remarkable speech, referred to as the lack of a theme and the element of doubt which attach to every action of Her Majesty's Government at the present time.

There was one part of the speech made by the noble Lord, Lord Shackleton, from which I must most forcibly dissent. It was where he said that national defence was not an absolute; it was only the first of a number of relativities. But surely national defence is an absolute, because if you make a mistake there then everything is lost. You can postpone the raising of the school-leaving age but the damage done is not irretrievable, except in so far, as the noble Earl, Lord Longford, says, as you frustrate the hopes of 300,000 children who will be deprived of another year at school—although I am not sure that "hopes" is quite the right word, so far as the children are concerned. But at any rate you can retrieve the error.

If you make a mistake about prescription charges, if you make a mistake about the Health Service, if you make a mistake about house building, those are all errors that you can retrieve. But if you make a mistake about defence, then everything is lost and everything is at risk; and it seems to me that in these cuts in defence to which the Government have committed themselves they are making an error which is putting at risk everything in which they themselves profess to believe. Equality of opportunity is a great thing; but if they have made a mistake in the field of defence there is no equality of opportunity, unless slavery and foreign domination can be so represented. If they have made a mistake about defence there can be no economic growth. I wonder what kind of a world the Government think they are living in. They seem to believe that it is a world in which force is of no account, in which there is no such place as Vietnam, in which there is no such power as Communist China, probing, and probing and probing, down towards Cambodia, down towards Thailand, down towards Malaysia and Singapore, and India.

There was one particular aspect of the Government's proposals which struck a chill through my heart when I heard it announced in another place by the Prime Minister. He spoke of the reduction in the construction of hunter-killer submarines. One would think that members of the Government had not lived through the last war. Perhaps they did not all live through the First War but they must have read about it, and they must realise that twice within living memory this country has been nearly starved into submission; and by slowing down on this hunter-killer programme they are deliberately inviting that risk again. Of course they may say, "Well we have made a mini-realm, a mini-England; nobody is going to bother with us". My Lords, that is what Norway thought thirty years ago.

I should like very briefly to refer to something that the noble Lord, Lord Soper, said, in a speech which impressed me very deeply, particularly his concluding passage. He said that in these days it is no use having small arms; he could see the argument, though he could not accept it, for great armaments, but in the world to-day there was no place for small defence forces. That, my Lords, is going directly against what has happened in the past few years. What has kept the peace in Malaysia? What ended the threat from Indonesia? It was just a small force. And we are so inclined to think in terms of the deterrent and of nuclear war that we forget altogether, I think, the possibility that we might be involved here in this country in a submarine blockade by an enemy, without nuclear war, without a declaration of war and without there being any real state of war, except that we were being slowly starved to death. It seems to me that the Government is taking a risk which no Government ought to take.

We have heard something in the debate to-day about the tough measures the Government is taking; but are they really so tough? If you look at the table in the House of Commons OFFICIAL REPORT of January 17, the day the Prime Minister made his original Statement, you will see that there is only one field in which expenditure will be reduced in 1969–70. In every other field it goes up. They are being tough only in that field which does not hurt their Party susceptibilities. There was another remarkable thing in that Statement by the Prime Minister. He said, and he said it, I think, as a boast, or at any rate as a justification, that all through the social services in the last four years there had been an increase in Government expenditure of between 42 and 48 per cent. I had not realised that until I heard it from the Prime Minister. One knows that measure after measure comes before us. One knows that each one adds to the costs, but one does not realise how quickly the costs add up. And if there was one thing that shocked me more than that statement of the Prime Minister it was this reflection: that I believe each one of those increases in expenditure was supported by the Opposition. My noble friend Lord Thorneycroft is fully justified in saying that all the fault for this crisis has not been on the side of the Government.

My Lords, when he moved his Amendment my noble friend, Lord Jellicoe, said that he regretted the fact that he was moving an Amendment. I regret it too, but for different reasons. My noble friend regretted it because he would much rather not have had a vote at all. I regret it because I would much sooner have had a direct vote on the Government's Motion. After all, the issue before us is not whether cuts in defence are more dangerous than other cuts, though most certainly they are. It is not whether the devaluation of our word is more damaging than the devaluation of our currency, though I am sure that in the long run it will prove to be so. The real issue is the credibility of the Government. The world no longer believes in the Government, the country no longer believes in the Government, the Government no longer believes in itself and certainly this House does not believe in the Government. I think it would have been very much better if we had said so directly.

What is it that has happened in the past two months so to destroy the reputation of Her Majesty's Government? After all, we have had three years of false dawns, of misjudgment, of miscalculation. We have got used to that. But in the last two months something has happened from which this Government cannot, from which I believe no Government could, recover. It has become apparent in these two months that, having got us into this crisis through ill luck or ill judgment or through both, the Government is less interested in solving the crisis than in preserving the unity of the Labour Party. I think that is felt throughout the country and throughout the world. This Government is always talking about priorities. We know now, I think, what its priorities are: first, the survival of the Government; secondly, the survival of the Labour Party; and last, and least I am afraid, the survival of the country.

I have no doubt that the Government has only one duty it can usefully perform now, and that is to appeal to the country for its verdict, and I hope the noble Lord, Lord Chalfont, when he comes to speak a little later on will reply to the questions put to him by the noble Lord, Lord Caccia. Does the Government feel any responsibility to the electorate? Does it feel, in its long course of broken pledges, broken undertakings and reversals of programme, that at some stage before the five-year term is up it must ask the electorate for a new mandate?

8.20 p.m.

LORD BOOTHBY

My Lords, my noble friend Lord Coleraine has made a sincere and bitter speech which I cannot think is wholly unjustified. Unlike my noble friend Lord Thorneycroft, to whose admirable maiden speech we have listened with such pleasure this afternoon, I do not remember ever having been wrong in the course of my Parliamentary career, which now spans a period of over forty years. On March 28, 1961, nearly seven years ago, I ventured to call the attention of your Lordships to the lack of liquid reserves in the Free World, and the consequent effects upon the currencies, economic growth and volume of international trade. I had been on the record for many years before that as an opponent of the Bretton Woods Agreement in 1945, and as saying persistently that a radical revision of its terms was an essential prerequisite to the establishment of a sound and workable international monetary system in the modern world.

I suggested in that speech that the International Monetary Fund should be transformed into an international Central Bank, with adequate powers of credit creation and contraction; or that the proposals put forward by Professor Triffin for a clearing union, should be adopted; that the I.M.F. should in any case be instructed to consider ways and means by which more economic international liquidity could be created, and holdings of national reserve currencies converted into holding of reserves with international backing. And I said that, failing agreement on any of those plans, the only way out was a rise in the dollar price of gold. At least I had the support of the late President Kennedy—and I quote: Increasing international monetary reserves will be required to support the ever-growing volume of trade, services and capital movements among the countries of the free world. Until now the free nations have relied upon increased gold production and continued growth in holdings of dollars and pounds sterling. In the future, it may not always be desirable or appropriate to rely on these sources. We must now, in co-operation with other lending countries, begin to consider ways in which international monetary institutions—especially the International Monetary Fund—can be strengthened and more effectively utilised, both in furnishing needed increases in reserves and in providing the flexibility required to support a healthy and growing world economy. I also had the support of Lord Franks, who made an equally admirable maiden speech this afternoon, when he was Chairman of Lloyds Bank. But nothing came of all this; and this was seven years ago. The British Government, then Conservative, showed no undue enthusiasm. The United States Government stalled. The West German Government hold on grimly to national reserves which, not being an international currency, were in effect sterilised, and did nothing to increase the tenuous liquid resources of the Free World. Finally, the French Government vetoed every proposal for any kind of reform, radical or otherwise, of the international monetary system, and they continue to do so. This—and make no mistake about it, my Lords—is the root cause of the mess in which both we and the United States now find ourselves. In the final analysis, it is yet another form of virulent nationalism which might destroy the Free World if we do not take care. To be amazed at the continuous ineptitude of the financial authorities throughout the Free World is no new sensation for me. It has been going on for forty years. If you imported all the most brilliant economists from Hungary, they could not even chip the granite of the Treasury and the Bank of England. As I have already told your Lordships, there was only one man who has ever done that, and at one critical point when he was laying the foundations of the Welfare State he had to hire a separate Civil Service in order to do it.

I now turn to the proposals of Her Majesty's Government. Some of them are, I think, courageous. The cuts in expenditure at home, even the deferment in the raising of the school-leaving age, seem to me to be both wise and right at this moment of time. I deeply respect the views of the noble Earl, Lord Longford, whose speech and whose action we admire, being in accord with his character and reputation. But I still think that Her Majesty's Government showed courage in making these cuts at home—too late, but better late than never.

I further believe that we are no longer in a position to police the world; and that in principle the decision to withdraw the greater part of our forces from the Far East is the correct one. That also required courage, especially on the part of the Secretary of State for Defence. There are, however, two spots which, in my opinion, are vital not only to the economic wellbeing, but even to the economic survival of this country. The first is the Persian Gulf, where the bulk of our oil supplies comes from. The second is the Cape, which all of it has now to pass, together with all our shipping, which means all our trade to and from Australia, New Zealand, India and Malaysia. I would remind your Lordships that the Suez Canal is likely to be closed for a considerable time to come. But even now the big oil companies are turning over to tankers which are of a size which will never be able to get through the Suez Canal in the future, and they will all have to go round the Cape. This, to anyone who has recently sailed from Cape Town—and I arrived at Southampton only yesterday morning—is most significant. In olden times, when the Suez Canal was open, you hardly ever saw a ship on this route. Now it is jammed with shipping. It is an absolutely fascinating spectacle to see the number of ships and tankers that are moving up and down on that route to the Cape.

I greatly hope that at no distant date, and before any final decisions are taken—and by "decisions" I mean action—a conference will be held in which we ourselves will participate, to concert plans for the defence of our vital interests in these areas. Clearly, Australia, New Zealand, Malaysia, Singapore and ourselves ought to take part in this conference. I would think that we might make a military contribution, and possibly a Naval contribution, to bases to be established in Australia. We ought to move quite quickly. But surely we should do these things, not by ourselves but in concert with our own kith and kin, with the people who have depended upon us. As the noble Lord, Lord Coleraine, pointed out, since the war, with comparatively small forces, we have twice saved Malaysia, first from the Communists and then from the confrontation with Indonesia. It seems to me that we must be in a position at least to get at the Gulf quickly, if the necessity arises. With modern air transport, and a frigate or two at Bahrein, it should be possible at no great cost. If the sheikhs wish to make a contribution to their own defence, I see no reason why the Secretary of State for Defence should put us in the category of mercenaries. This is absolute nonsense. We have taken assistance from many countries in the world in providing for their defence in the past, and I see no reason why we should not take some assistance from those who have so much to lose, in providing for their defence in the future.

I must say that I deplore the decision of the Government not to pull a large proportion of our troops out of Germany. They served their purpose, and served it well, when NATO was formed. Now, it seems to me, they serve no purpose at all. Never was there a more colossal waste of money and so unnecessary a strain upon our balance of payments. If war comes with the Soviet Union, now or in the future, it will be a nuclear war. That would be the end of us all; and that is why I do not think it will come. Meanwhile, to keep all these troops lolling about in Germany at great expense to us in foreign exchange is insanity in our present situation. I would say to Her Majesty's Government: bring them home, they are serving no useful purpose. If any local emergency or "grass fire" war were to break out, we could very quickly put it down with modern air transport and it would cost us no foreign exchange at all.

I have mentioned the Persian Gulf. The other vital area is South Africa. I am well aware that this is not a debate in which the problem of Rhodesia or the problems of apartheid can or should be discussed. But South Africa as a whole fits into the general picture of our defence and economic requirements; and we are now in grave danger of losing the whole of South Africa. This would be a fatal blow to our economy and to our security.

I have just returned from a visit to South Africa and Rhodesia: I landed at Southampton yesterday morning. I can tell your Lordships that I kept well clear of the politicians. I talked to the farmers and to as many people as I could. I spent a week on a farm 80 miles out of Salisbury, I spoke to many ordinary people, and I was even allowed to do a half-an-hour television programme in Salisbury. The only other person who has ever been able to do a television appearance for half-an-hour is Mr. Smith, so I was flattered about it. I did not bring in politics, except to say, when I was asked about the political situation in Rhodesia, that if I had had the personal handling of it for the last six years there would have been no problem at all.

I want to say only two things to your Lordships and to Her Majesty's Government. The first is that I am absolutely convinced that you will not bring down Southern Rhodesia by economic sanctions. This will be only one of the many predictions of Her Majesty's Government which have been falsified by events. If it is any consolation to Ministers, I can tell them that feeling against Conservative Ministers is even greater than that against the Prime Minister. An eminent civil servant in Salisbury told me that negotiating with one Conservative Minister, who must be nameless, was like negotiating with a shadow in a bath.

There is still a fund of good will for the United Kingdom in Rhodesia and in South Africa, but it is diminishing and before very long it will be gone. I believe that there is; now only one way out. First of all, withdraw sanctions. They are no good and act as a perpetual irritant and poison the relationship between the Rhodesians and this country. Secondly, let the Government state their terms, based on the "Tiger" agreement but with much more clarity and with time to negotiate any points which remain obscure. This is the last chance of a settlement which the vast majority of people in Rhodesia, both coloured and white, still desperately desire and which, I believe, could be negotiated on these terms.

As for South Africa, I agree with almost every speaker in the debate that Simonstown is essential to us as a base. It is now threatened. What matters about apartheid is more the methods which are used than the principles which are rigidly held. I had reason to believe when I was in Cape Town that the methods had greatly improved. Mr. Vorster has many more liberal ideas than some of his predecessors. Therefore I deplore our refusal to sell arms to South Africa at this time, arms which would be for our own defence as well as theirs. After all, we are apt to forget, when we are scattering arms all over the world, all over the Middle East, and sending missions to every Communist country in the world, that, whatever one may think about racial policies, South Africa and Rhodesia fought by our side in two world wars. This is all too easily forgotten.

I can only say that neither in Rhodesia nor in South Africa could I detect any signs of racial tension. The growing tension at present is between those countries as a whole and the United Kingdom. I came away with a great feeling of sadness because I feel that this tension is not necessary. We are not doing so well in dark West Africa either; we have not given them much help recently. In short, we are at present losing out in Africa generally. And, when all is said and done, we made it what it is.

I should like to say a few words in conclusion about imports. No one is a greater advocate of increased international trade than I am, but I have never shrunk from physical controls in a time of emergency. November's balance-of-trade deficit was the biggest ever recorded in peace time. The overseas trade accounts published by the Board of Trade make shocking reading and are proof positive that it is far more the excess of imports than the failure to export which is the main cause of our balance of payments difficulties. There was a jump in imports for the first eleven months of 1967 of £409,600,000, or 7 per cent. above the corresponding period of 1966. Nearly half this rise was accounted for by a rise of £177 million in the purchase of machinery and transport equipment, which we could perfectly well have made ourselves. The two manufactured goods categories rose by £120 million—the most noticeable jumps being in imports of iron and steel—for heaven's sake!—by £30 million; of textile yarns and fabrics by £23 million, and of professional and scientific instruments by £18 million. We have an impregnable reputation in all these things, and I say that these imports should not be; they are grossly excessive.

And what about all these luxury goods which come pouring in from all over the world? Do we really need a thousand foreign cheeses when we can produce ample supplies of Cheddar, Cheshire and, for those who have the money, Stilton cheese, which are the three best cheeses in the world—better than any other country can produce? I hope that the President of the Board of Trade will take a hard look at our import bill which accounts, far more than any failure to increase exports, for the deficit in our balance of payments.

Finally, I would make an appeal to the Chancellor of the Exchequer when he is framing his Budget, which is the second part of the economic proposals of the Government. It is that he should distinguish between productive and portfolio investment overseas, and not penalise the companies which are bringing in much-needed revenue to this country by imposing on them taxation which handicaps them enormously in competition with their rivals, particularly the United States. He knows very well the companies which I have in mind. They are the invaluable result of superb British skill and endeavour over many years and they make—and will continue to make if they are only given the chance to do so—a vital contribution in our balance-of-payments problem.

My Lords, I have done. I must apologise to the noble Lord, Lord Chalfont, that I shall not be able to be present when he replies to this debate. I shall be here for the reply to-morrow night, but the reason I beg him to forgive me is that I am already an hour and three-quarters late for a dinner appointment, and there are limits to the extent one can be rude. If it is any consolation to the noble Lord, I would say that because I applaud some of the proposals of the Government and deplore others I propose to abstain in the vote to-morrow might, which perhaps befits a Cross-Bench Member.

8.39 p.m.

LORD SHERFIELD

My Lords, as the third ex-Ambassador in Washington to intervene in this debate, I do not propose to follow the themes of my two predecessors. I shall confine myself to a single point only, the decision to withdraw British forces on the Persian Gulf by 1971. And I have not been in collusion with the noble Earl, Lord Selkirk, or the noble Lord, Lord Boothby, on this matter.

My reason for speaking at all—and one must have a special reason to add to the long list of speakers in this debate—is partly a personal one. Some years ago I was sent on a mission to the Western side of the Persian Gulf. It was after the Abadan affair, the Trucial Oman Scouts were just being formed, and following my visit—I do not claim that it was a consequence of it—increased attention was paid to our relations with the Rulers in that area. I also started the discussions which eventually persuaded one of the Rulers to entrust the management of his sterling balances to a committee in London. There have, of course, been many major forward steps in the development of the area since that time, but I doubt whether the nature of our relationship with the Rulers has changed. It has been essentially one of friendship, trust and confidence. The treaties were there, but the basis of the relationship Went beyond the letter of treaties.

The Secretary of State for Foreign Affairs said in another place last week that the question of our disengagement from the Gulf was one of timing and not of principle. If the Secretary of State had said this about the Far East it would have been less open to question. In the Far East, however much one may regret it, the decision to withdraw had already been taken and announced, though with assurances which have now apparently been negatived. The new decision is to accelerate the process of withdrawal. But in the Gulf, on the contrary, the decision had been to remain there and to build up the base. The decision to withdraw is a sudden reversal of a recent decision. Moreover, the situation in the Far East is quite different from that in the Persian Gulf. In the Far East there is a strong American presence; there is an Australian and New Zealand presence. There are viable States—Malaysia in particular. Our withdrawal is regrettable for obvious reasons: that it throws a heavier burden on our allies. But it is not a complete surprise and it can be regarded as a question of degree and timing.

In the Persian Gulf the British position is predominant. There are, of course, large American interests and an American presence, but this is one of the few remaining areas of the world in which we have a lead and in which our interests justify it, quite apart from our obligations. It is, moreover, an area in which we still seem to be welcome. As the noble Earl, Lord Selkirk, said, our departure will leave a serious vacuum. Stress has been laid, in particular by the noble Lord, Lord Thorneycroft, who made such a forceful maiden speech, on the importance of maintaining stability in South-East Asia, and his remarks apply a fortiori to the Persian Gulf There are at least three territorial claims on Gulf States which are dormant while we stay there. Relatively speaking, our commitment is not an onerous one. It will be even less onerous if some contribution from the Rulers is in fact forthcoming, and I echo the hopes of noble Lords who have preceded me that, if an offer is made, it will be accepted as a share in the collective defence of the area.

I have said that one of the Rulers entrusted the management of his sterling resources to an investment committee in. London. I myself was a member of that committee for two years. Thanks in large measure to the skill and experience of the late Lord Piercy, those investments fructified and prospered. They steadily increased in value. Other Rulers had sterling balances in London, though not, I think, under that formal arrangement. Then came devaluation, which the Rulers I have little doubt were assured would not occur. The shock of confidence was great, but the British presence remained, the obligation stood. Devaluation could be represented as an unavoidable step in the circumstances; not so withdrawal. I have considered the argument that we may be able to exercise more influence without a military presence than with one. I do not accept it and I do not think the Government accepted it a couple of months ago. There is a further point. Our decision to accelerate our withdrawal from the Far East places an additional load on our American allies, but they knew that the withdrawal was planned. It would surely have lessened the strain which the present steps place upon our relations with the United States if we had decided to uphold our obligations in the Gulf.

In saying this I do not think that I am actuated by nostalgia, nor am I the victim of post-Imperialist delusions. I am not even sure that I am out of date. Of course, it is a question of priorities, and everybody knows how hard it is to establish priorities between different objectives of policy. My own view is that successive Governments have been getting their priorities out of balance over a period of years, but that in the last three or four years this imbalance has been dangerously accelerated. Now comes the reckoning.

In their selection of priorities the Government have made decisions in the foreign, political and defence field which are by their nature irreversible. Many of the decisions on the home front, and the postponement of desirable social reforms, are essentially reversible when conditions improve. It has been said elsewhere that there is a package deal of which every ingredient is an essential part. That, I think, is an arbitrary assumption. A package deal can be a bargain at the expense of the national interest. My view is that the decision about the Gulf should not have been part of the package, that the net saving will be small, and that the damage to our political, financial and commercial interests, and those of our friends and allies, will be serious and far-reaching.

8.47 p.m.

LORD CHALFONT

My Lords, I should like, if I may, to concentrate my remarks this evening on that part of the debate which has dealt with matters of defence and foreign policy. Perhaps those noble Lords who have concentrated on matters more related to social policies will bear with me if I leave my noble friend Lord Beswick and my noble and learned friend the Lord Chancellor to take up their points to-morrow. I should, however, like to say that no one on this side of the House could possibly have contemplated without dismay the economic measures that we have had to take in the field of social policy. To many Members, on both sides of the House, these measures conflict with deeply held political and moral convictions.

In this context perhaps I may be allowed to follow other noble Lords in saying how deeply I sympathise with the noble Earl, Lord Longford, in the decision that he had to make; in saying how much I admire the passionate conviction which led him to follow his objection—and regrettably, on this occasion, his objection to one of these measures—to its logical conclusion. I should also like to say how dignified and impressive and moving I found his speech earlier to-day.

As I have said, I shall try to concentrate on matters of defence and foreign policy. I hope that I shall not keep your Lordships too long, but a large number of points have been raised and I shall try to cover them as best I can. I shall, perforce have to cover many of them in a general way, without referring to the specific questions that have been asked, and I hope that noble Lords will bear with me if it seems that some of their questions—all of which have been important and valuable points—are not directly answered.

Perhaps I may begin by making a few brief, general comments about the background and assumptions of this debate—a remarkable debate, in my view—on defence policy. Here I refer back to something which the noble Lord, Lord Soper, said in his intervention in this debate. In the long run, I believe that we shall all have to make a determined effort to extricate ourselves from some notably old-fashioned patterns of thoughts about the uses of armed force in the modern world.

We must realise in time, I think, that the classic doctrines involving the use of arms as an extension of national and communal policies are rapidly becoming outmoded. The ideas about the relationship of military and political establishments—the classic ideas, which have remained virtually unchallenged since the Platonic formulation of the origins of wars, right through the political philosophers of the seventeenth and eighteenth centuries and right up to the often totally misunderstood doctrines of Clausewitz—are quite simply, my Lords, no longer valid. The application of modern technology to weapons systems, particularly the development of inter-continental missiles with nuclear warheads and the development of biological and chemical weapons, has created, in my view, an entirely new climate of international behaviour; or, rather, it should have created it, and in my view must if we are to survive. It seems to me that it will in due time become evident to anyone of intelligence that the use of war as an instrument of national policy is irrational, and will soon become unacceptable.

But of course I realise, as the noble Lord, Lord Soper, realises, that this is to outline a pattern of international behaviour which we cannot hope to achieve for long years to come. In the meantime, we, particularly those in this House and in the other place and in Government, have to live with the world that we have, however imperfect it may be, and in that world we have not only a right but a duty to defend ourselves. Yet even in the context of a world in which nations still maintain powerful military forces and do not hesitate to use them or threaten to use them against real or imagined opponents, I must say that some of the arguments advanced in this debate to-day seem to me to be of rather doubtful validity.

Perhaps I could now quickly look at a few of the specific things that have been said in this debate, not to take them up in any polemical sense, or even indeed in all cases to argue against them, but simply to identify some of the important things that I think have been said. The noble Lord, Lord Gladwyn, mentioned the possibility that, had we changed our defence posture to one of a more European nature earlier, our application to join the Common Market might have been more successful. I take leave to doubt this. I believe there are reasons behind our failure on this occasion to get negotiations going on the Common Market which have singularly little to do with the deployment of our defence forces.

The noble Lord, Lord Thorneycroft—this has been said before, but I do not see any reason why I should not say it as well—made a most statesmanlike and impressive maiden speech. In my short time in your Lordships' House it is, I think, the most remarkable maiden speech I have heard. I have often, with my pm in my hand, attacked the noble Lord n the past, and I hope that he will take these few remarks as some recompense for the pain which I hope he suffered at my hands. The noble Lord, Lord Carron, made another in the series of quite extraordinary maiden speeches that we have heard to-day. It was, as one might expect from one of his distinguished background and illustrious career, quiet but impressive, sincere and effective. I congratulate him sincerely, and hope very much that we shall hear him often again in your Lordships' House.

I should like, if I may, to take up a point made by the noble Earl, Lord Selkirk. He talked of the possibility of a Communist take-over in Singapore, and of his belief that this would lead to war with Malaysia. I do not wish to argue with him at this particular time on the validity of that analysis, but I hope—and, indeed, I know—that by that he is not suggesting that we should therefore stay there for ever; that we should seek indefinitely to try to prevent that happening by the presence of British Forces and a British base. As I say, I do not believe that he is suggesting that. We all know that sooner or later, whatever the threat may be, Singapore will have to look after its own security. What we have done now, for economic reasons, is to bring that day forward; and, as my noble friend Lord Shackleton has said, we shall be prepared to continue to help Singapore and Malaysia over this question of their defence against aggression and their internal security, and talks to this end are actually going on at this moment.

THE EARL OF SELKIRK

My Lords, I wonder whether I may just make this point. Of course, I said specifically that we do not intend to stay there indefinitely What I said was that the Prime Minister of Singapore had asked for two years to get his defences in order. The noble Lord—very wisely, if I may say so—seems to be suggesting that he is going to try to meet that request; that is to say, we are going to be actively concerned in helping Singapore perhaps beyond 1971. If that is what he is saying, then I welcome it as being very valuable.

LORD CHALFONT

My Lords, I should not like the noble Earl to believe that I had made any pledge in this House that had not been made by the Government before. What I am saying is that it is our decision to withdraw from Singapore by the end of 1971, as we have said, but we are discussing with the Prime Minister of Singapore at the moment how his difficulties can be overcome.

My Lords, I thought the noble Lord, Lord Caccia, said one or two rather extraordinary things. I hope he will not take that remark amiss. He suggested that the Government had at the moment no purpose but that of getting their books actuarially in balance. My Lords, I find this an astonishing suggestion.

LORD CACCIA

My Lords, what I said was that I saw the Government were trying to get our books in balance, but that they did not seem to have any ultimate objective beyond that. I was taking up the point that had been made previously.

LORD CHALFONT

Yes, my Lords; I was about to deal with exactly that point. What I was about to say was that this is simply not so. What has been happening is that we have been living beyond our means. This is not a question of simple book-keeping. Living beyond our means as a nation, just as a family, weakens us. When we are a nation, it weakens us at home and it weakens us overseas. Our purpose is quite clear: it is to stop living beyond our means so that we can be strong at home and create confidence overseas. If the noble Lord thinks that a simple exercise in the balancing of books, then I can only say that his brand of economic and political philosophy is to me a bizarre one.

The noble Lord went on to suggest that the disbandment of the Civil Defence organisations demonstrated that the Government now saw, or implied, that there was no military threat to this country. Here again, I find the reasoning curious. If the noble Lord will study the roles of the organisations that he mentioned—the Civil Defence Service, the Territorial Army, the Territorials (that is to say, the Territorial Army Volunteer Reserve, Category III), and the Auxiliary Fire Service—I think he will see that to draw an inference like that is vastly to oversimplify a very complicated matter.

EARL JELLICOE

My Lords, I wonder whether I could interrupt the noble Lord. He has told the noble Lord, Lord Caccia, that he has drawn the wrong inference. Could the noble Lord tell us the right inference to draw?

LORD CHALFONT

Yes, my Lords; if I may be allowed to get on with my speech. I fear that I am going to keep your Lordships a very long time, but this, I can assure the noble Earl, will be dealt with during the course of what I have to say.

My Lords, it would of course be quite wrong of me to pass on without mentioning yet another remarkable maiden speech to-day—that of the noble Baroness, Lady Llewelyn-Davies. This, I think, was perhaps one of the most elegant and delightful speeches that we have heard in your Lordships' House for some time. I was delighted at the tributes that were paid to it. I should like to associate myself with all of them, and to say, too, that I think the noble Baroness redressed perhaps some of the inspissated gloom purveyed by some of the more determined professional Cassandras in your Lordships' House. For that I was especially grateful.

So far as the speech of the noble Lord, Lord Coleraine, is concerned, he was, I think, fierce with the Government. I do not suppose that he would disclaim an intention to be fierce with the Government, so perhaps he will forgive me if I am rather fierce with him; because I think that some of the military arguments put forward by the noble Lord were arguments from the pre-nuclear age. The noble Lord was pained that some members of Her Majesty's Government had not lived through the last two world wars. I confess that I have not. I lived through one but was spared the other. I can assure him, however, that in my view—and I have studied these matters at some length and in some depth—there is no greater recipe for disaster than to base our future military arrangements on the alleged lessons from those two previous engagements.

LORD COLERAINE

Would the noble Lord answer one question? How many submarines do the Russians have? Does he know?

LORD CHALFONT

Yes, at the last count the Russians had something between 500 and 550 ocean-going submarines. I think that is the figure. Although I am delighted to display such erudition without my notes, these figures are, to my mind, totally irrelevant—

LORD COLERAINE

It shows that the Russians are living in the last war, too. Perhaps we should be wise to do the same.

LORD CHALFONT

My Lords, in certain respects I think the Russians are. This is a danger which afflicts a great many Governments. So far as I have anything to do with it, I am determined that it shall not afflict this one.

My Lords, I come now to the noble Earl, Lord Jellicoe, who moved the Amendment. He began by saying—I should say, by implying, for I must be careful how I quote—that he was not going to make a Party political speech. I can only say that I hope he will give us early warning when he does intend to make one. I should like to be here for that occasion. He implied at one stage in his speech that the Government had in some way cheated over cancellation charges, and I think he implied that we had left them out of certain calculations, the calculations, in fact, for the 1968–69 budget. I think this is rather an unfair criticism. If the noble Earl will refer to Hansard for January 16 I think he will see that although we did not specifically detail the cancellation charges (because they had not at that time been calculated in detail) there is a note in Hansard, underneath the figure, which says clearly that this figure may be increased by cancellation charges and other transitional payments. I can assure him that although the detailed figures were not there, there was no intention to mislead.

He also mentioned consultation with the Territorials about their disbandment, and he suggested, I think, that consultations should take place. He asked me to assure him that no disbandment would take place until consultation was complete. Well, I can say that consultations with the Territorial Army Council are taking place. They are designed to discuss the implementation of the decision. Just when the disbandment will begin it is not possible for me to say; but I think I must say that this is a decision that must stand.

On the question of Civil Defence and the Auxiliary Fire Service, the noble Earl took us to task for not expressing thanks and appreciation to these organisations for the work they have done in the past. He gave the impression that we would dismiss them from our presence in a peremptory and cruel way. I hope this is not so. If these thanks have not been properly expressed I, for one, regret it; and I should like now, speaking for myself, for the Government, and I am sure for your Lordships' House, to pay tribute to the valuable and loyal services which these people have rendered: the Territorials, the men and women of the Auxiliary Fire Service and the men and women of the Civil Defence Service. They have served their country well, and their services, I am sure, will never be forgotten.

My Lords, I should like now to deal with the general criticisms that are made, both in the debate and in the Amendment, of the Government's defence and foreign policies.

LORD GRIMSTON OF WESTBURY

My Lords, I am grateful to the noble Lord for giving way. There were two questions which were asked by the noble Lord, Lord Caccia, which it would be of interest to many of us if the noble Lord would answer. The noble Lord will correct me if I do not paraphrase them correctly, but they were roughly these. Is there any point at which this Government would think they should appeal to the nation, having broken nearly every pledge they have ever made? And, with respect to individual Ministers, was there any point at which many of them would think they should resign after having broken every pledge they have made? I think those, more or less, are the questions that my noble friend asked.

LORD CHALFONT

My Lords, I had not missed those questions. I must confess that I had not intended to answer questions which in my view were totally out of tone with the spirit of this debate and which did not attempt to elicit any questions of fact. To my mind, they are statements of extremely tendentious opinion, and it is not my intention to waste your Lordships' time by answering them.

LORD RHODES

Will my noble friend allow me to intervene? Surely the noble Lord, Lord Caccia, is addressing these questions to the wrong side of the House. He should be addressing his questions to the other side, because they have had more experience of this than we have. They went right up to the General Election of 1964, within a few weeks of the end of their term; and they had been very unpopular in the country for about two and a half years.

LORD CHALFONT

I am grateful to my noble friend for that intervention. I think the doctrine of ministerial responsibility and the provisions of the Parliament Act are familiar enough to your Lordships without my taking up too much time on them in a debate of this sort.

May I now go on with the principal criticism which has been directed at the Government about the defence economies that they now propose? It is that we have done irreparable damage to the morale and welfare of the Armed Forces. No-one in this House has a greater sympathy than I for the sailors, soldiers and airmen of this country. I was a professional soldier for 22 years and I know how these people feel when they see their careers once again endangered and their futures disrupted. But I must confess that some of these criticisms seem to me to betray a basic misunderstanding both of the general situation and of the sort of people who serve in the Army, Navy and Air Force. They, as many of your Lordships will know, are the first to realise that men who bear arms bear a double responsibility. They are not only soldiers, they are citizens as well; and it may not be too much to say that in a social democracy like ours they are citizens first and not soldiers first. But certainly they cannot expect—and no soldier that I know worth the name would expect—to escape a share in the responsibility of citizenship by retreating within the closed society of a military establishment.

At a time, my Lords, when we have had to compromise with some of the basic assumptions of a modern civilised society—that, for example, the healthy members of the community should be responsible for the sick; at a time when we have had to cut our housing plans; at a time when we have been forced into economy and, as we have heard many times to-day, to deprive a large number of young people permanently of a full education: at a time like this, it seems to me perverse in the extreme to suggest that the officers and men of the Armed Forces would not be ready to accept part of the burden as well. Of course they are ready to accept it; they always have been. Welfare and the morale of the Armed Forces is of course a vital factor in taking decisions of this sort, but it is only one factor. To elevate it to a position of predominant importance seems to me to misunderstand the whole basic nature of this problem.

In any case, my own experience of this matter leads me to believe that the complaints about damaged morale tend to flow much more copiously outside the Armed Forces than they ever do among the officers and men of the Army, the Navy and the Air Force. Having said all that, my Lords, I do not attempt to conceal that these measures will cause disruption and dislocation in the careers of many officers and soldiers, sailors and airmen. I must say, too, that we, the Government, will do all that we can to minimise that disruption and to help in the training and re-employment of these men when they leave the Forces.

Perhaps one of the most confused arguments advanced against the defence cuts (this is implied in the noble Earl's Amendment) is that in some more or less specified way we are putting at risk the safety and security of these Islands. Perhaps a great deal of the confusion here arises from the modern use of the word "defence" to connote military arrangements and preparations covering the whole range of the Armed Forces. I know this is a current phrase, it is part of the current jargon, but it gives the idea, to my mind quite mistakenly, that when the newspapers headline "Defence Cuts" and when we talk about cuts in the defence establishment something is being done necessarily that will reduce the actual safety and security of the people of Great Britain. In this case that is simply not so.

What we have been doing up to now is carrying the burden of defending democratic institutions in many parts of the world against aggression from outside. I am the first to admit that this has been a great and an honourable role, but we can no longer bear it on our own. Whatever may be the feelings of noble Lords about the abandonment of military bases in the Far East and in the Middle East, it is simply not true to suggest that their abandonment affects the safety, the physical safety, of the citizens of this country. We have only to look at other countries in Western Europe to realise how misleading that kind of argument is. How many overseas bases are maintained by the Governments of Norway or Denmark? How many battalions or brigades of Swedish troops are serving overseas? I can also tell your Lordships the answer to that—there is one battalion and it is serving in the United Nations Force in Cyprus.

LORD BROCKWAY

My Lords, I wonder whether I may interrupt the noble Lord, only because I was to have spoken next, but for the convenience of the noble Lord he is speaking now. I was going to put this question which is now relevant. Is it the intention of Her Majesty's Government to wind up the naval bases East of Suez, two in the Oman, two in Mauritius and one in the Maldives; and if not, why are these to be retained?

LORD CHALFONT

My Lords, first let me thank the noble Lord, Lord Brockway, for allowing me to speak before him. May I say that I think there must be at least a mistake of terminology here, in that, so far as I am aware, there are no naval bases in the places he mentioned. There are no bases of any kind. There are small installations. I think that the noble Lord will find, if he studies the details of the cuts in the Defence White Paper when it appears, that all this will become clear. But I ask him to believe me when I say that there are no bases in the places he has mentioned.

LORD BROCKWAY

My Lords, I did not mean to say "naval bases". I withdraw that.

LORD CHALFONT

My Lords, I was in mid-flow on the subject of the comparison between the Governments of Western Europe and our own. I was asking in a rhetorical way how many battalions, bases and garrisons the countries of Western Europe have overseas. The answer is in practically every case, none whatsoever. Yet I do not believe that any noble Lord would seriously suggest that in taking the measures we now propose to take we shall be putting our safety at any greater risk than that accepted by the countries of Western Europe—Norway, Denmark, Sweden, Switzerland, France and Germany. Of course, the answer for us, as for them, lies in collective security, so long as a military threat exists. I mentioned Switzerland and Sweden. These countries believe that their security lies in a policy of positive neutrality. That is not the path for us. Until the world emerges, as I said earlier, into a more intelligent and rational pattern of international relations, our defences are the defences of Western Europe. That is where our strength will be.

Perhaps the most insidious criticism we hear, and it is relevant to what I have just said, is that which suggests that Britain is in some way giving up her world role and world influence by abandoning military bases outside Europe. This once again perpetuates the tired fallacy that world influence depends exclusively on military power. It is now being suggested that by taking these measures we are in some way condemning Britain to a position of military vassalage and removing her influence on great developments in international relations. I simply do not accept this conception.

It may help to put it into a more rational perspective if I recall for a moment the comparative percentages of national resources being devoted to military expenditure. I may say that the comparisons I shall now be making are not figures compiled by me or by the Government to prove a case. They are published by an independent research organisation, the Institute of Strategic Studies. If we study them, we find that military expenditure in this country last year, 1967–68, was running at 6.4 per cent. of the gross national product. This was the highest percentage of any country in Western Europe, nearly twice as high as that of the Federal Republic of Germany and exactly 2 per cent. higher than that of France. Apart from South Vietnam and the countries involved in the Middle East conflict, last year there were only three countries in the world devoting a higher percentage of their national resources to military expenditure—China, the United States of America and the Soviet Union, a list that will surprise no one in your Lordships' House.

Even when we have carried out the full defence economies we now propose, we shall still be at the top of the table of Western European countries. We shall, in fact, have one of the strongest and most powerfully equipped military establishments in the whole of Western Europe. I am not suggesting that the possession of a powerful military establishment is the most intelligent road to real influence in foreign policy, but I hope that it demolishes the ridiculous proposition that we are about to divest this country of its military strength in some great act of unilateral disarmament.

I come now to the question of broken pledges. I had hoped to be able to deal with these in great detail, because I think that this is a matter that has worried a great number of people, certainly a great number of noble Lords opposite. Much has been made of the fact that we are alleged to have been breaking pledges to our friends and to our allies overseas, and this makes its appearance in the noble Earl's Amendment. If I may say this without being offensive, I think that some of these criticisms are based on a misunderstanding of how military power might be used and partly on a misunderstanding and even ignorance of the exact nature of the undertakings we have made in the past.

So far as the Far East is concerned, the Prime Ministers of Singapore and Malaysia have expressed their confidence publicly that we shall find a way towards helping their people in attempting to protect themselves against the possibility of outside aggression.

THE EARL OF SELKIRK

My Lords, may I ask when that statement was made? I know of no such statement made publicly.

LORD CHALFONT

My Lords, if the noble Earl will read the record of Prime Minister Lee Kuan Yew's public statement before leaving this country after his recent visit, he will find that Mr. Lee expressed confidence that this country intends to support him in overcoming the difficulties caused by our withdrawal. I recommend the noble Earl to read the record of the official speeches.

THE EARL OF SELKIRK

My Lords, that was certainly not the impression I had when I spoke to him a very short time before he left.

LORD CHALFONT

My Lords, this can only be a matter of subjective judgment. We in the Government also spoke to Mr. Lee, and my opinion is that he expressed confidence that this Government would continue to give him help to overcome the difficulties caused by our withdrawal. In fact, we are engaged in talks with his Government at official level about how to do that now.

So far as the Commonwealth countries are concerned, this has caused a great deal of worry, especially as regards Australia and New Zealand. I think we must ask ourselves here exactly what is the threat that people have in mind that might face Australia and New Zealand, and what we should then be expected to do about it. Many people point out, quite rightly, that twice in this century our Commonwealth Allies have come half across the world to our aid in time of war. This is a fact that none of us should forget, and none of us wants to forget. Certainly there would be no question of leaving them abandoned if they should face a similar emergency.

But what is the emergency that they are likely to face? It is not the sort of minor military operation that can be dealt with by a marine commando or a naval task force. If the integrity of Australia and New Zealand is threatened it will be—and this has been mentioned to-day—because there has been a wholesale and overt aggression on a very large scale. The scale of operations of an event like that would be such that the decision of how to deal with it would not be taken by us alone. The scale of operations that we should be involved in then is one of collective security, as I have mentioned before, and it is one which would demand the sort of effort which the national budget and the national Armed Forces of a country like ours in time of peace would be irrelevant to deal with. In a case like that we should almost certainly be involved in a situation of mobilisation. We are talking now of Chinese aggression of South-East Asia. I ask noble Lords to believe that in the modern world, with its facilities and capabilities for quick transport of men and material over long distances in short times, we do not need, in spite of what anybody may say, a military presence in order to exert influence in South-East Asia or in any other part of the world.

I should have liked to deal with that in much more detail, but time will not allow. I would, however, suggest that when we talk about broken pledges it would be as well to stop for a moment to reflect about the kind of world in which we live. It is a world in which, whether we like it or not, the presence of British troops, or indeed of any European troops, although in the past it may have been a guarantee of stability and order, is now—and we must face this—in the minds of many Asians and Africans no such thing. It is indeed, in many cases—and I ask noble Lords to accept this—quite a provocation and a reminder of a colonial era which for many of them has a very bitter taste.

LORD ST. OSWALD

Is that what Lee Kuan Yew told the Government?

LORD CHALFONT

I am not quoting Lee Kuan Yew. I am telling noble Lords what I believe are the principles upon which the Government's defence policy are built. This is a world in which armed forces, as I have said before, are equipped with new and powerful weapons. They can move swiftly and effectively from one part of the world to another at short notice. Of course the Far East, as the noble Earl, Lord Jelicoe, said, is a crucial area in the world. The noble Lord, Lord Thorneycroft, made the same point, and nobody denies it. I agree with this. Of course the Far East and the countries a round the People's Republic of China is a crucial area in the world's security. But we must have priorities. The priority for us lies in the European Atlantic area. We cannot continue to shoulder the role of the world's policeman everywhere in the world. I beg of noble Lords not to confuse a military capability and political influence with a military presence: they are three different things.

In conclusion, I do ask your Lordships' House to look rationally at this question of military expenditure. I have heard it suggested—and it has been suggested again to-day in your Lordships' House—that to talk about the military expenditure you can afford in a society like ours is an abdication of responsibility. People who use this argument say that you should first decide the proper military force you need and then devote whatever proportion of your national resources is required to achieve it. I must confess—I hope that this will not cause offence to anybody—that I find this Blimpish nonsense of the worst kind. It is a reflection of almost complete economic and political illiteracy. The question is one of priorities and a rational balance in the disposal of the nation's resources.

Of course, it is no good having a prosperous community if you cannot defend it from attack and aggression from outside. No one would argue with that. But equally, my Lords, it is no good having all the security you can buy in the world, the most powerful and highly organised military establishment, if behind your impregnable defences the quality of life is forgotten and the nation is unable to pay its way. The question for any responsible Government—and this is a responsible Government—is to decide what proportion of its national resources it can afford to devote to its military strength, and then with that proportion of its resources to buy, organise and train the best military forces that are available. Those are the priorities, and I suggest that no one who has studied political and strategic matters would gainsay that.

Part of the problem of this country for many years is that it has not been paying its way. It has been living beyond its means, and it would continue to do so, in my view, if we continued to spend between 6 and 7 per cent. of our gross national product—something like 25 per cent. of the total Budget—on defence, on military establishments. Of course, it was not possible—and I hope no one opposite would still argue against this—to cut the defence budget without making a major realignment of the foreign policies that give rise to our military needs. To put it at its crudest, as it has been put many times before, you cannot cut the armed forces without cutting the commitments you ask them to fulfil.

I have been reluctant, and still am, to introduce too discordant a note of Party polemics into this debate. But I must say that if I have one basic criticism of the defence policies of the Party opposite—and I made no secret of these criticisms in a previous incarnation—it was that they tried hard to economise in their defence budgets, but without a change in their foreign policies. The result for many years was that, among other things, we had an Army desperately trying to fulfil its tasks about the world with outmoded equipment, with under-strength units and with the illusory techniques of the stage army. Those who talk of damaging the morale of the Armed Forces should bear this in mind. We have now resolved to reduce substantially the deployment of our Armed Forces outside Europe, and this is to my mind a great chance and a great challenge for the Armed Forces of this country. But, as I have said—and I hope I have made myself clear on this point—this is not a matter on which one side or the other can claim a monopoly of wisdom. Nor can it be said that only one side has made mistakes. We have all made our mistakes in the past, and I believe, like other noble Lords, that we owe it to ourselves, and to the people of this country, to say so clearly and frankly.

So far as this Government are concerned, we readily concede that we have been forced by economic pressures into taking measures of social policy that we should dearly have liked to avoid. There are people in this House, and in the country, who feel bitter and angry about the changes in social policy. But I believe that the real betrayal would be if we were not to make clear to the people of this country what sacrifices they are being asked to make to put the country economically back on its feet. And there will be no miracles; there will be no economic miracles, no deus ex machina. We shall all, as the noble Lord, Lord Thorneycroft, said, have to share in the sacrifice. But, my Lords, the people of this country have made sacrifices before. What they ask of us is not some vague and doubtful genuflexion to the great god, leadership. They want the facts and the truth. And that is what we shall give them.

I readily admit, too, that we have been forced into unpalatable decisions on military policy. Here let me say at once that my personal belief is that in the long term our decision to concentrate our military strength in the European Atlantic area, and to disengage in an orderly manner from our commitments elsewhere in the world, is the right one. But I should be less than honest with your Lordships if I did not say that I, as my right honourable friend the Foreign Secretary said in another place, greatly regret that it has been necessary to accelerate this process of disengagement. In doing so we have had to confront some of our allies in the Middle East, in South-East Asia and in Australasia with new and difficult problems. We shall do all we can to mitigate the effects and the difficulties of these decisions. But we have felt it right to tell our friends and allies quite frankly and quite clearly what we intend to do in time for them to lay their plans accordingly.

It is this matter of our defence policy outside Europe that seems to have caused the greatest distress to some noble Lords opposite. There has been much talk of abandoning and defaulting on commitments. The Government do not accept the accusations of bad faith implied in this. Situations have changed; our plans have changed with them. The decisions have not been easy, but we have accepted our responsibility, and we do not now seek to avoid criticism with excuses and special pleading. I would remind those of your Lordships so distressed about the decision to speed up our withdrawal from overseas, and from our commitments there, that we, both Government and Parliament, have a commitment of a more lasting and fundamental kind. It is a commitment to the welfare, the safety and the quality of life of the people of this country. If we are to keep this safe—and this is the kind of duty with which we are charged—we can do so only if, first of all, the economy of this country is placed upon a sound and lasting basis; and this we are resolved to do.

EARL JELLICOE

. My Lords, before the noble Lord sits down I should like to ask him a question on a relatively small area of home defence. I do so only because I thought he was going to answer it and he omitted to do so. In reply to the noble Lord, Lord Caccia, Lord Chalfont said, if I understood him correctly, that Lord Caccia was wrong in assuming the reductions in home defence which the Government are carrying out to a care-and-maintenance basis were based on a belief that there would not be any war involving us in Europe. I asked the noble Lord what they were based on and he said that he would let me know. I still await a reply.

LORD CACCIA

My Lords, in order to get the matter straight, because otherwise I am sure the noble Lord, Lord Chalfont will be answering questions which I did not ask, may I explain that what I said in fact was that the inference might be drawn, even by friendly foreigners. Because, having seen what happened to undertakings which we had given but which, through force majeure, we have had to abandon, or which the Government are abandoning elsewhere, they might ask, "What will happen the next time round if they are in this pickle?" The inference drawn, that what was sauce for the goose in the Middle East is going to be sauce for the gander in Europe, might be wrong, but this would have a damaging effect. Therefore, I hoped he would say something which would show that this sort of thing was not intended.

LORD CHALFONT

My Lords, perhaps I might take this opportunity to say that I hope I did not seem in the course of my speech to be discourteous to the noble Lord. I thought some of the things he said were outside the context of the debate. I did not mean to be brusque. So far as the question is concerned, I think it would be better if we allowed the debate to go on. There is an argument, and an answer to the noble Earl's question. I wonder if he will allow me to ask one of my noble friends to answer in the course of tomorrow's debate.

9.33 p.m.

LORD BROCKWAY

My noble friend Lord Chalfont said that this had been a remarkable debate. I want to make some reference to other speeches, but I cannot begin to-night without recognising the very remarkable speech which the Minister himself has given. I regard that speech as one of the most convincing that I have ever heard in this House. I know that in saying that I am also expressing the views of other Members upon these Benches. My only regret is that Members of another place could not also have heard that speech, and I hope that what the Minister has said will be very widely distributed in this country. I have not heard a more convincing case for Government policy than that which was given by him.

I also wish to express appreciation of the debate as a whole. I am one of those who wish to see a change in the legislative authority of this Assembly. On the other hand, I recognise that this House contributes to ideas and to informed thought in such a way that it would be a loss if it were destroyed. From each side of the House we have had contributions to this debate which have not been restricted to partisan or Party views. I think it has been made quite clear that in all parts of this House there is anxiety about what the Government have proposed, and deep concern about many of their proposals. From the opposite side of the House that concern is mainly concentrated upon defence and foreign policy; on this side of the House it is mostly concerned with social services. In the short time that I shall speak I pm-pose to express what I believe is a very widely held view in our Party upon both those matters.

My Lords, I fail to understand how many of the cuts in the social services which are proposed by the Government are relevant to the problem with which we are faced. In essence that problem is how we are to balance payments by increasing our exports and by reducing our imports. The theory is that in order to increase our exports we must reduce our home expenditure. As I look at some of the proposals that are made for social service cuts, I fail to find how they will effect that object.

May I take first the proposal for charges on the National Health Service prescriptions? From the point of view of domestic expenditure it makes no difference whether those charges are met by the Government or by the patients. In both cases it is a matter of expenditure within our country for home purposes. This change in our social service will have an effect in reducing domestic expenditure only if it reduces the number of prescriptions. If it does have that effect it must be a result of one of two causes: either the patients, because of the charges, do not get the prescriptions they need, or the doctors have been giving prescriptions too frequently. If it is true that patients needing them will be unable to get them, that will be a loss to the health of the community. If it is the fact that this has been due to the too great freedom of doctors in prescribing, that should not be a matter of raising the charges to patients; it should be a matter of direct influence upon the doctors themselves by the Ministry of Health or by the British Medical Association. It is quite clearly not a ground for increasing the charges.

The Prime Minister has estimated that £25 million annually will accrue to the Government as a result of the prescription charges. I should like to know (I hope that an answer will be given on this point when a reply is made to this debate) whether that £25 million includes the cost of administration. Those costs will be very considerable. All of us, I think, on these Benches welcome the fact that the poor, the aged, the chronically sick and those with large families may be exempted from the increased charges. But the cost of the administration of these exemptions, the forms which will have to be sent to doctors, the checking of those forms which will have to be done, will amount to a very considerable sum. If it has not been included in the Prime Minister's estimate of what will accrue the figure will be much less than £25 million.

I put one other point upon the same matter. I have been to my doctor this week, and his alarm, as the alarm of other doctors, is at the increased clerical work which will be imposed upon him in order to fill all the forms that are going to enable these necessary exemptions to take place. Doctors are already a little disturbed. There will be a waste of doctors' time. And I put it to the Government that, at the end of it all, the increased cost of the prescription charges will not be worth it from the point of view of the revenue which they bring to the Government, that it will contribute very little indeed to any solution of the problem of exports and of imports, and that it will be insignificant compared with the repudiation of the principle of a free health service.

Now, my Lords, I agree that if one is making this kind of criticism one should be putting forward some alternative directed towards reducing the cost of the National Health Service. I want to ask the Government this question. What has happened to the recommendations of the Committee of which the noble Lord, Lord Sainsbury, was the chairman? That Committee dealt with the cost of drugs. That Committee made a series of recommendations by which the cost of drugs under the National Health Service might be considerably reduced. I think it is notorious that a few large companies, so centralised as to be almost monopolies, are making large profits out of the supply of drugs to the National Health Service. I suggest to the Government that if they really want a reduction in Health Service charges it would be better to turn to the profits which are being made out of drugs and medicines rather than charging more for the prescriptions which the patients present.

For the sake of time I do not propose to examine in detail the other reductions in the costs of social services. I say only this: that I think the noble Earl, Lord Longford, is absolutely right when he says that the postponement of the lifting of the school-leaving age will do more harm to our economy in the long run than any immediate benefit which it will bring. If our economy is to expand it must be on the basis of a wider education in our community, on the training of more technologists and those who have a knowledge of modern science; and that training will be seriously jeopardised if the raising to 16 of the school-leaving age is to be postponed as is now proposed.

From housing I take one illustration. A great essential in reconstructing our economy is re-employment, and, as noble Lords know, re-employment will often mean that a worker must go from one part of the country to another if he is to be employed in the new industry for which he is trained. That transference from place to place means rehousing; it means an increase in expenditure upon our housing programme. I deplore the fact that the cuts which are proposed in social services include housing.

I do not want to hide from the House the fact that I believe that these cuts are largely irrelevant to the balance-of-payments problem and to economic recovery. In my view, they have mostly been applied to satisfy the international bankers. In my opinion, they have mostly been applied because of the absence of confidence by international bankers, who have an obsession that the economy can be put right only at the cost of the poor, the sick and the underprivileged. I was a Member of another place in 1930 when the international bankers, in response to requests for loans to this country, demanded the most savage cuts upon the unemployed. I cannot hide from this House my feeling that the cuts in the social services which are now taking place are due to the demands which the international bankers are making.

I want to make one general remark, on an assumption which is behind nearly all our discussions and decisions. It is that this country must increase its competitive power among the other nations. I recognise that in a competitive world that must be the case, but I beg Members of this House to remember what happens when, in increasing our competitiveness, we reduce the price of imports from abroad. Often those imports come from the developing countries, and it means that the poverty of the peoples of those countries becomes deeper. Despite all the aid that has been given to them, the standard of life of the populations of African and of Asian territories has fallen because of the fall in prices for their products. I suggest that we should begin to think in terms not of competitiveness, but of world economic co-ordination. We are moving from military war through international agreement. We should be moving from economic war through international agreement.

I turn to the section of these proposals which deals with the cuts in defence East of Suez. If one of the noble Lords who dealt with this were present, he would hear me now confirm his view that many of us support the cuts in defence but oppose the cuts in the social services. My only regret in this matter is that these cuts in defence have been made under economic pressure, rather than from a far-seeing point of view which ought to have been applied three years ago.

Britain cannot and should not attempt to be a world military Power. It cannot, because of economic necessity; it should not, because no one nation should assume that it has the right to police other continents. That duty, when it has to be carried out, should be performed under the international authority of the United Nations. The decision to give up the military presence East of Suez will be historic. Mr. Macleod has suggested in another place that a Conservative Government would reverse it. No Conservative Government can do so because it will be against the whole trend of the history of our present times. The decision is as historic as the late Lord Attlee's recognition of the right of India to independence, which began the colonial political revolution that has swept over Africa, Asia and the Caribbean since the war. Mr. Macleod accepted the colonial revolution and became its instrument. He cannot avoid accepting the revolution which is now ending military empires. This is history.

Each one of us has to decide how he votes to-morrow. There can be no doubt about the vote on this side of the House on the Opposition Amendment. There may be a second vote on the Government proposals as a whole. Some of my friends in another place abstained upon that issue. I deeply respect their conscientious action. British political life will lose its integrity if votes contrary to conscience are whipped into the Lobbies. After careful consideration, however, I have come to this conclusion. The Government, in their East-of-Suez decision, have initiated a world change of enduring importance: they have stepped over a crossroad in history. That decision, in my view, cannot be reversed. The cuts in the social services, in the view of many of us, are a surrender to the bankers, and many of us feel that they are a repudiation of our Socialist principles. But the difference is that they can and will be reversed. I shall not vote for them as in turn they come before this House; but balancing the two factors in the Vote to-morrow, I regard the irreversible decision on foreign policy and defence as more important than the reversible decision about social service cuts, and accordingly if there is a second vote I shall vote for the Government.

9.55 p.m.

LORD ASHBOURNE

My Lords, it is getting late and I assure your Lordships that I shall not detain you for more than three minutes. The axe has fallen on defence spending, and everyone is now familiar with the extent and the reasons for the cuts. My only purpose in intervening this evening is to say how profoundly I hope that the people of this country understand what the consequences may be if, unhappily, we once more find ourselves at war—and that, after all, is what defence is about. I put it in that way because, in the days when I was at the Naval Stall College, a long time ago now, the setting of our schemes or exercises, or whatever they were called, often seemed to open with the sentence "Britain finds herself at war with such-and-such a country."

Oddly enough, that seems to fit the case quite often. We wake up one morning and, against all our hopes and wishes, find ourselves at war. Though, of course, we all hope profoundly to the contrary we may indeed find ourselves at war again one day and if we do I cannot for the life of me see how we are going to bring a war to a successful conclusion if we are to be bereft of all our forces East of Suez. As everyone knows, something like one-third of our overseas trade is with countries East of Suez. We have very extensive trade with Australia and New Zealand, we get great quantities of rubber and tin from Malaya, and nearly a half of our total oil requirements come from the Persian Gulf, and all those goods have to be got back to this country by sea, whoever we find ourselves at war with.

Gone are the days when we had a large Fleet in the Mediterranean based in war time at Alexandria, and when we had an Army and the Royal Air Force in the Western Desert covering the Canal. Gone are the days when we had a base at Aden and could control the Red Sea. Already the Russians have taken our place in those areas, and I shall be surprised if they do not before long penetrate into the Indian Ocean; and of course, it is perfectly clear that in war time we shall never again have the use of the Canal. So all this vast trade from East of Suez must come back to us the thousands of miles by sea round the Cape—10,000 to 12,000 miles in round figures; three to four times the distance between Southampton and New York. Knowing this, we still refuse to supply South Africa with warships and aircraft; we still plan to give up our only bases in the area of Singapore and in the Gulf, and to withdraw virtually all our forces from the area and we still plan to dispense with our carrier force which could for some years to come provide us with four fully equipped and mobile airfields anywhere in the world.

I want to make it as clear as I can that I believe that in this situation in time of war our undefended trade East of Suez would be attacked and virtually brought to a standstill, and without that trade we should not survive for long. Our enemies, whoever they may be, would have their way and we should cease to be a nation to be reckoned with.

10.0 p.m.

LORD MILVERTON

My Lords, in rising to take a very brief part in this debate, I recognise the impossibility of dealing with all the multitude of points that make up the record of the last three years. I do not propose to attempt to do so. I have listened with the greatest care to previous speakers and I hope not to take up more than five or six minutes in recording the impressions of a Back-Bencher in this House—impressions which I believe are shared by a majority of the puzzled ordinary citizens in this country looking in vain for clear guidance from their Government and a full representation of the facts in all their stark urgency.

But, my Lords, what are these facts? Let us look at the last three years. I am not going into them, because we have been implored not to mention the past, but it is inevitable to make just a brief reference to it. Looking at the last three years, we see that a political Messiah came into power who was to have led his country into a better, brighter future. In the event, many promises were broken or ignored and there was much Government spending, which has contributed a great deal to our present plight. We are exhorted to trust the leadership which has led us into this plight, this pass, and to believe that this Rake's Progress—admittedly, the whole blame for it cannot rest on the present Government; it has been, in some respects, a continuous process, but we are dealing with the facts of to-day and the Government which has to face them—is part of the necessary approach to a happy future which only our lack of will can deny to us.

My Lords, it is sometimes interesting to see how these things look from the outside. An eminent American reporter, from the position of an onlooker—who, we are told, sees most of the game—summed it us the other day in this way: The British Government's actions this week have broken the structure of the Anglo-American special relationship and threatened the Anglo-American alliance. They have shattered Britain's essential links with the Commonwealth, and offered this country to Europe instead. They have destroyed the credibility of the British Administration and cracked the foundations of British Socialism's Welfare State. Here, my Lords, perhaps I may mention what I think we constantly need to be reminded of, and that is that you cannot have a Welfare State unless you are able to pay for it. I listened just now to the noble Lord, Lord Chalfont, pointing out that you had to get your priorities right, and that defence did not come first. It is all very well to say, "Let us have a Welfare State and to hell with defence if we have not got the money for it", but neither of those two priorities is the first. The first priority is that our economy should be in such a condition that we have the money to pay for what we want, whether it be a Welfare State or defence. If we have not got that economy, which must be our first priority, then we cannot pay for any of these things and we cannot have either defence commitments or a Welfare State. The fact remains that the British people have open before them an extremely grim future of isolated austerity.

Then, to pile mistake on mistake, the new Chancellor, by promising unpleasant and unpopular tax measures at some time in the future but doing nothing at all about it at present, has triggered off in that process an explosion of consumer buying on a positively fantastic scale. That, anyway, is how a number of people see it. Let me say again that the nation wants to see the whole picture and not the emergency measures in two packets, the first a bundle of so-called economy measures and then a postponement for two months of the other half, the most important portion, relating to taxation measures. So in that case we have a public picture which is distorted and incomplete. We are confronted with a series of hasty withdrawals whose general effect is no doubt likely to give real pleasure to China, Soviet Russia (I can think of no other country which is likely to be pleased with this policy) and the extreme Left Wing of our present Government—to say nothing perhaps of the French Government which hopes to profit largely by our outrageous treatment of South Africa.

The noble Lord, Lord Chalfont, in his intellectual Elysium to which he introduced us just now also does not seem to realise that, although he may convert us, although we may suffer from these delusions about defence and so on, we live in a world in which no other country holds these beliefs, a world which is still largely guided by the good old rule, the simple plan, that "he should take who has the power and he should keep who can". It is no good blinding ourselves to the facts of the world and of human nature.

My Lords, may I, before I finish, take one quick look at the line of policy which we have been discussing? The decision not to supply South Africa with the national defence arms it needs is, however you look at it, a flagrant and grossly neglectful dereliction of their duties by the British Government. It is just one more example of the fitful extemporising which passes for government to-day. These arms are needed for the defence of the sea routes against external aggression, the lifeline not only of ourselves and our trade but of the trade of Western Europe, and a need which is surely high-lighted to-day by the closure of the Suez Canal and the Communist acquisition of a base in Zanzibar—now known as the "Cuba of Africa".

As Captain Marriott reminded us recently, when the leader of the South African Communist Party was asked what he wanted in South Africa—Was it the gold?—he replied, very sensibly, that he would trade all the gold mines in South Africa for Cape Point. Need we say any more? Apart from throwing away £400 million worth of valuable trade, that is the policy which our Government has been following in relation to the protection of our trade routes.

Let me pass on from the rather hasty abandonment of Aden to the Persian Gulf and on to Malaysia. There is the same story of retreat, conducted with a loss of political honour and respect. These questions have been gone into in detail by the speakers, but may I say a final word about Malaysia? I spent 25 years of my life in Malaysia and I have an intimate knowledge of the constituent States and their peoples. Many noble Lords here share with me an affectionate respect for them all and we know how high has been their regard for the British connection, ripening over the years from tutelage and friendship to independence and alliance. And the premature severing of an alliance in this area not only undermines friendship, and appears untrue to friends, but breaks pledges. Moreover, as has been pointed out already by recent speakers, instability in that area may easily cost us more than any defence cuts can possibly save.

My Lords, with due respect to the noble Lord, Lord Chalfont, does he not rather carelessly ignore this? We are told that our military presence is not necessary and so forth, and that it is so easy, in modern conditions, to get there by air when necessary. But is that not overlooking the fact that an immense amount of our trade, which represents a great deal of our invisible earnings, is safeguarded by a relatively small military presence, and that a sudden departure of help from this country is no substitute for a permanent visible presence there? As Lee Kuan Yew told us the other day, he only asks for time. He is straining every nerve to make his country independent of outside help as quickly as he possibly can. But it is no good, as I realise, for me to press these remarks.

May I conclude by turning to one other thing? I regret the apparent tendency in this country towards what I might call centralised inefficiency, and I regret what apparently is the escalating inability to govern properly. Even that we can—I was going to say tolerate; but it is our Government until we elect another one. What I feel is being given insufficient regard is our international reputation, the matter of national honour which is concerned in some of these recent decisions. I cannot, perhaps, do better than remind your Lordships of what our national poet wrote. He is not yet out of favour, and your Lordships will remember what he said about a good name: Good name in man or woman, dear my Lord Is the immediate jewel of their souls. Who steals my purse steals trash, 'tis something; nothing; 'Twas mine, 'tis his and has been slave to thousands. But he that filches from me my good name Robs me of that which not enriches him And makes me poor indeed. That, my Lords, is what I feel, and I implore Her Majesty's Government to remember that they can do a great deal more damage than ostensibly appears by allowing that to happen.

10.14 p.m.

LORD MILFORD

My Lords, as the noble Lord, Lord Shackleton, said at the beginning of his speech, Britain's difficulties are not due to our country being a poor country, for potentially we are a rich country. But at the moment our image is unflattering on the human side, dealing with human beings, because we have an army of unemployed of over 600,000 men and on the economic side our economy is stagnant. Unfortunately, both Tory Governments and our present Labour Government have created this unemployment and stagnation because they believe that, somehow, this is essential in order to increase our exports.

The causes of our difficulties are not due to wages being too high or going up too fast. In other countries on the Continent, and in the West, wages are going up even faster; and they are just as high. It is not because social services in this country are too generous. Our social services, at the moment, are no better than those in many countries in Western Europe. I think the causes are, first, that we have for too long tried to be a world colonial Power; secondly, our enormous military expenditure in the past; and, thirdly, the continual flow of capital from this country abroad, where pockets are far bigger, instead of its being invested in British industry where it would bring our industry up to date. I am sure that nobody really believes that the reducing of the health services, education and other social services is going to increase exports. On the contrary, does not this slashing of Government expenditure increase unemployment? Moreover, devaluation and rising prices, as they are rising today, are deliberately pushing down the purchasing power of the people. Surely that will mean that industry will contract still more.

I welcome the military cuts and our withdrawal from the Far East. I thought that the speech of the noble Lord, Lord Chalfont, was very heartening and full of vision. Many of us in another place and in the trade union movement throughout the country have for years been demanding the cutting down of military expenditure and withdrawal from the Far East, and it is thrilling suddenly to find that we have been proved right. Only a few week; ago we were condemned for putting forward these demands, but today the noble Lord, Lord Chalfont, has told us that we are right. If that had been done before, our difficulties now would have been much less I believe that all our problems in the Far East and in other parts of the world can be solved only by the people themselves in those parts of the world and not by a British police force. I also welcome the cancellation of the F.111. I wonder whether we could not look round to see where we can cut still more. I gather that we are still putting in for American aircraft worth £700 million. And we should think again about the Polaris submarines, which may soon be out of date.

The package deal proposed in another place is like a pill. The sugar coating is the cut in arms, but inside is a bitter pill indeed—the cuts in the social services. The first will undoubtedly help our balance of payments enormously, but I am sure that the cut in the social services will not help our balance of payments at all and has no economic justification whatever. It is against two of the Election pledges of our Government, not to cut down the Health Service and to raise the school leaving age to 16 in 1970/71. So far as I can learn, the excuse is that the social service cats are to maintain confidence. As the noble Lord, Lord Brockway, said: Whose confidence? It is those people who are now publicly known as the "Gnomes". These people are perpetual enemies of any Labour Government or any Socialist movement. They will never vote Labour; in fact, very few of them are British, and they are not even on the British electoral register. We were told that devaluation would bring about a chance to escape such people. Unfortunately, it looks as though we are rejecting he chance and are now appeasing them with the cuts in social services.

I have often asked the same question that Mr. Wilson asked when he was in Opposition in the other place. Mr. Wilson asked: If the Government are in an economic mess, why is if always the patient and others in great need who have to bear the cost? I ask the question again. How can cuts on the social services help exports? How does maintaining unemployment and reducing the purchasing power of people help industry to expand? Cuts in home consumption surely do not lead to industry naturally turning to exports. Nor does this naturally mean that industry will automatically succeed in breaking into foreign markets. We have seen in the past that this does not necessarily happen. We have had crisis after crisis, with the same remedies, and we have seen that this is not a solution.

I believe that what is urgently needed today is that industry should be expanded to its full and unemployment should be banished in this country. The reduction in home demand surely means more contraction of industry, more unemployment, and, as many a columnist is now pointing out, may in the long run raise the cost of exports. This is why the wages front is so important today. Unless wages and the purchasing power of the people rise, unemployment will increase, and we shall be in the vicious position of the 'thirties, when industry stagnated. There was no home demand because of the large army of unemployed, and we know what happened.

Rents are soaring; prices are going up and will go up still more. We are told that we are to have many more indirect taxes, and that wages are to be held down. Do the Government really think that they will have a peaceful time? Already there is frustration, disillusion and anger. I speak frequently to various youth organisations and, as has already been said in this debate, there is cynicism and a political feeling: "A plague on your political houses! You are right outside what life should really mean." I can well understand that. Only better management, where necessary forced and supervised by the Government, and modern equipping of our industries will increase productivity and exports.

I thought the noble Earl, Lord Longford, made a most moving plea on the question of the postponement of the school-leaving age. It is a very shortsighted policy. In 1964 we saw the Prime Minister on television giving us a real vision of the future; a wonderful picture of the new technological age, automation and so forth. And it was thrilling. To carry that out we needed a highly educated younger generation. A really highly educated younger generation is the most terrific capital asset to any country, and it is needed in our country as soon as possible. What are we doing? We are throwing it away for two years, at least. In fact, the cut lowering the school-leaving age is dislocating the whole education machinery of this country. The comprehensive schools are absolutely bewildered. They have plans for 1970–71, and the whole thing has thrown them in confusion. And what about the lowering of the students' grants? Is this not a most vicious movement? Is it not actually discriminating against those students who are not so well off?

The noble Lord, Lord Shackleton, asked for constructive alternatives. The points I am putting forward are not just my own; they have been raised in another place, and at trade union meetings, political meetings, up and down the country. I think it is admitted that the speculators are one of our chief enemies. So could we not block the speculators by reintroducing strict exchange control? Could we not also have strict reduction in export of capital abroad, and also have temporary selective imports control? Would it not be fair to the people of this country to freeze rents and prices of essentials, and not wages? And should we not do all we can, against attacks from certain quarters, to protect democratic rights and freedom of the trade unions?

On the question of incomes, the noble Lord, Lord Thorneycroft, and many other speakers opposite have said, "No. Incomes must not rise". Of course, I suspect that they are talking about incomes of workers and not about the incomes of the rich. But for this reason I think we should put forward also an increased profits tax, introduce a comprehensive capital gains tax and a wealth tax on personal fortunes. I think that in that way we should get real equality of punishment—well, equality of whatever it is on both sides of the House, among all the sections of the people. I think these steps are far more important, and much more likely to have results in helping our economy, than attacks on teeth, health, education and housing.

10.29 p.m.

LORD FERRIER

My Lords, before turning to the main burden of the Amendment of the noble Earl, Lord Jellicoe, which I support, I should like to turn for one moment to a small technical matter in connection with the proposal to impose prescription charges. I see from paragraph 40 of the White Paper that it is proposed, in order to have exceptions properly planned, that conversations should take place between the Government and the medical profession. I mention this because I know that, from the pharmacists' point of view, they are probably delighted that their name is not mentioned in this paragraph, and presumably they will not be consulted. I only hope that that means that the pharmacist will not be expected, as indeed he should not be expected, to have any say, or any judgment left to him, as to who should be an exception and who shall not. I mention this point only because I think that in these conversations with the medical profession and in drafting the rules in regard to the exceptions it should be borne in mind, and the position as to who should be an exception and who should not must be made by the National Health authorities and set out in terms which are perfectly clear and beyond a doubt in that respect.

To turn to the main burthen of the Amendment, I must say that Lord Chalfont's intervention at that time was something I had not expected—perhaps I missed something there. I am sorry that he is not here, but when he made due acknowledgment to his debt to the noble Lord, Lord Brockway, for letting him speak in front of him, I felt that some others might have had the same treatment, because it alters the pattern of one's thinking in regard to a debate of this nature when one has sat through listening to almost every speech.

But, my Lords, it was a powerful speech. Although he denied it, it was full of polemics; it was so powerful that I did not at one moment call out, "What about Mauritius?". It showed absolute lack of understanding of the main contention of people like myself that it is the policies of this Government, nationalisation, the removal of all incentive to profit, and of the incentive to work, restrictive practices and casting aside our invisible exports, the extraordinary policy regarding Rhodesia and South Africa which have knocked the bottom out of our economy. So, of course, this disaster is now upon us.

Having spent my prime of life East of Suez, I cannot restrain a cry of agonised dismay at the pouring out of this country's resources in "pie in the sky" policies. These policies are leading to a breach of faith with our friends and allies. Perhaps the noble Lord, Lord Shackleton, was right when he mentioned not crying over spilt milk: we should not do that. But why was the milk spilt? It was wasted, as I have said, in being poured over the "pie in the sky." If the Government are to go on, I ask them: please do not spill any more. I say that quite deliberately, thinking of, shall we say, the Transport Holdings Bill, the Industrial Expansion Bill and all these very costly proposals which are on the table. Does the Chancellor of the Exchequer really intend to go ahead with this sort of thing? Will he not recognise the need for honesty in facing the facts of the situation in a pragmatic way? Otherwise, the Government will lose the sympathy of the whole nation. They have already lost mine.

The noble Earl, Lord Selkirk, has said far better than I can what I feel about the Far East, and the noble Lord, Lord Milverton, who has just spoken, also p at it to the House in a far better way than I can. I simply cannot believe that we need have become bound to leave a vacuum in the Indian Ocean, as the noble Earl, Lord Selkirk, said. Perhaps I am a little bitter, because I was in India during the transitional years of 1947 to 1949, and at that time had my first taste of the dogmatic and arrogant disregard of experience and established principle which I think characterises the full-blooded theoretical Socialist.

My Lords, the disaster which confronts us—and it is a disaster, a defeat, as the noble Lord, Lord Shackleton said, and as Alistair Cooke said on Sunday—is bad for Britain, bad for the U.S.A. and bad for the world. In my view it is the final victory of the Axis propaganda machine: "Lord Haw-Haw" and "Tokyo Rose". It induced the U.S.A. and the Radicals here to scorn what they called colonialism; it taught people to sneer at the British way of life. The Socialist propagandists have carried on the campaign with sneers at private enterprise, at the public school tradition of fair play, at the "bosses", at your Lordships' House, at British management. They call nationalisation "bringing into public ownership", which of course is not the real background of the whole thing at all. They take an oath of loyalty with one breath and sing the "Red Flag" with the next. They have scorned material success; they have sneered at profit. Loyalty to anything traditional is at a discount. Some intellectuals pour doubt on the value of the family; others doubt faith itself. Is it any wonder that the people are bewildered and mesmerised? As the noble Lord, Lord Thorneycroft, in his splendid maiden speech has said, politics itself is on trial.

I feel that I must repeat what an owner-driver taxi-man said to me a year or so ago when he bewailed the condition of the background and the feeling of people in the country: "Couldn't care less", "Over to you", "Why should I?" "It isn't my job", "Take it or leave it". This, my Lords, is what I believe to be the spiritual malaise to which the noble Lord, Lord Soper, referred. Now we have this disaster. As I see it, the canker of out-dated Socialism is eating away the heart of the old, gnarled, storm-wracked, almost limbless but still erect and hitherto respected British oak, and looks like bringing it crashing to the ground—an oak tree under whose branches once sheltered peace and justice and fair play and prosperity, such as the noble Lord, Lord Milverton, referred to in his splendid speech. But some of its acorns have sprouted into new growth, and there is no wonder in my mind that emigration from this country is turning to a flood.

Of course my sincere sympathy goes out to the many upright and dedicated Socialists to whom the present situation must be a bitter blow. What I believe we must look and strive for is an end to cynicism, a return to respect for moral principles, and a regard for absolute integrity. As I see it, this is the prime requirement for recovering a properly balanced national purpose, so vividly described and so passionately desired by the noble Lord, Lord Franks, in his maiden speech this afternoon.

10.38 p.m.

LORD MACPHERSON OF DRUMOCHTER

My Lords, I rise to speak on behalf of a large part of the business community. From time to time Her Majesty's Government have tried to lay the blame for their failings on the City, and we were even told that we were unpatriotic and that we were undermining the efforts of the Government. This I cannot accept, when the Government themselves have used our export trade to forward their political aims abroad. They have been prepared, irrespective of cost, to impose sanctions and restrictions, and have even prohibited Lloyd's and the insurance companies from meeting legitimate claims. They have doled out hard-earned foreign currency to all and sundry, and in my travels about the world I find countries who consider our financial assistance as their right and that no thanks or consideration is necessary.

The United Kingdom is a trading nation whose survival depends on its trade in goods, banking and insurance, and we can no longer afford to adopt policies which adversely affect these trading interests. I have been privileged to lead three trade missions of the London Chamber of Commerce during the last 12 months, and each time I have learned a little more about the problems we in this country have to face in the export markets. The last mission was to the West Indies, a comparatively small market, but the members of the team worked hard in obtaining business against strong competition from both the U.S.A. and Canada. We arrived back in London with some millions of pounds worth of orders to find a dock strike of five weeks duration.

The measures we are discussing today do not tackle the roots of the problem. What we commercial people require is a Government we can trust and one that will give us financial and economic stability; a Government that will tackle the problems of unofficial strikes and bring back the sanctity of contracts between labour and management. I seriously believe that the trade union movement would welcome legislation that would bring to an end the chaotic state of industrial relations that we are suffering today.

We have created a Welfare State with which I mainly agree, but you cannot have a Welfare State and no incentive. Without incentive you have apathy. In fact, why should people work? How can you run an export trade when goods are held up on the railways, immobilised at the docks and, finally, when the ships themselves are held up with a seaman's strike? All these problems have had to be faced by exporters during the past eighteen months. It is no use our politicians blaming trade and industry for our financial deficits. We are suffering from mismanagement by Government, behaviour which in the private sector would mean bankruptcy or at least dismissal of the management.

We buy American F.111s for some £800 million, and by doing so we strike a serious blow to our aircraft industry and lose our scientists and technical experts. We also sacrifice a most valuable export business, the British aviation industry, trade which once lost is almost impossible to regain, and at the same time we are building up our main competitor in this field. Make no mistake, my Lords, exploration and development of military aircraft are vital to the development of our civil aviation industry. We were told that part of this dollar purchase was to be offset by the sale of special parts and equipment to the U.S.A. How long would that have lasted once American had cornered the world aviation market? Now I understand that the order for F.111s is to be cancelled, with a substantial penalty clause. The net result is irreparable damage to our aircraft industry, loss of our technical experts, a substantial claim in dollars for cancellation and, lastly, no aircraft.

Next, we throw away on political grounds some £500 million worth of military equipment for South Africa, equipment which would be quite useless for dealing with internal strife. The sum of £500 million has been gladly gathered up by France and Germany and other European countries. With this mistaken principle we achieve nothing, except the loss of valuable export business. Unfortunately, it does not stop there. Because of our attitude towards South Africa, during the next three years further purchases of heavy equipment and plant valued at around £250 million have been awarded to these same European countries.

I maintain that we cannot allow or afford this type of policy. For this Government to say that principle is a reason for their action is impossible to accept, and I am sure that there are a great many other people in this country who do not understand our Government's principles, when in practically every other field principles appear to be of no concern.

I should have thought that the Prime Minister's Economic Statement contravenes practically every principle of the Labour Party, yet it has been accepted with only one resignation from the Cabinet, and that by the noble and honourable Earl, Lord Longford. What a loss a man of this character will be to the Cabinet! The action most people want from the Government is, first, unofficial strikes to be made illegal; no National Assistance to be paid to the dependents of those on unofficial strike, and no tax refunds during these unofficial strikes—drastic action, I know, but it would mean no more paralysing unofficial strikes; secondly, the Prime Minister to be given the same powers as the President of the United States to intervene in official strikes, so that when national interests are at stake he could delay proposed strikes for a cooling off period of 90 days; thirdly, the creation of industrial courts where disputes between management and unions can be fairly resolved. This system works in other countries, and I do not see why it should not work here. The last action that people want is the revision of the whole tax structure, to recreate incentive to work in all sections and at all levels of the community.

I agree with what the noble Baroness said in her maiden speech, when she so ably reminded us that we are a great country. I believe we still have the finance, the brains and ability to regain our rightful place in the world, and I have every confidence in the commerce of our country harnessing these resources, provided that we are helped in our task and not stilled and bled by Party politics.

10.50 p.m.

LORD GRIMSTON OF WESTBURY

My Lords, I shall be brief and direct. There are two specific points to which I wish to refer and a general conclusion to which I wish to come. First of all, I want to refer to two of the notable maiden speeches which we have had during the course of this debate. There was first the speech of the noble Lord, Lord Franks, who brought out the necessity for a theme and a leadership which would command the support of the British nation. I believe that that sentiment found a great deal of support in this House. I think that your Lordships were also impressed by the speech of my noble friend Lord Thorneycroft, with all of which I agree, except his concluding sentences; and for this reason; that under the present Government we can never get the theme or the leadership for which Lord Franks so rightly called.

I now turn to the two specific points to which I wish to refer. There is first of all the immense damage to our balance of payments which is being caused by the Government's ban on the export of arms to South Africa. South Africa is our third (I am not sure it is not our second) largest customer. The origin of this arms ban is a resolution of the United Nations—passed, as I well know, with the support of the Tory Government—which bans the export of arms to South Africa. I believe that it was a great mistake that we supported that resolution. But at the time we supported it our representative at the United Nations was given instructions to make it perfectly clear that we should not interpret that resolution as preventing our exporting arms to South Africa for the defence of that country. That was the policy which was pursued, until the present Government abolished the export of all arms.

This decision is leading to a direct loss of some £200 million in various orders for arms, and if this policy goes on it will mean an incalculable indirect loss. One must take into account the question of renewals, and the annoyance—indeed the anger—of the South African Government at being thus treated. The Government are pursuing this policy at a time when they are exhorting exporters to do all they can to export. It does not make their exhortations sound sincere when they are pursuing this policy in regard to the export of arms to South Africa.

Let me illustrate the hypocrisy lying behind this decision. Perhaps your Lordships do not know that we have recently done a deal with France under which we jointly produce aircraft, missiles and helicopters, some with British engines and French parts, and vice versa; but they are joint productions combining British work and French work in the finished product. There is nothing to prevent France exporting any of those items to South Africa, items which are banned by the present Government as exports from this country to South Africa. I do not know whether steps are being taken to bring to an end these contracts with France, or whether France is being pressed not to supply any of them to South Africa. But that seems to me to be a pretty hypocritical position. I notice that it causes amusement on the Government Front Bench, and to the noble Lord, Lord Mitchison.

LORD MITCHISON

My Lords, that was not what I was laughing at.

LORD GRIMSTON OF WESTBURY

Let us for a moment exercise a little imagination. Supposing there is a riot in South Africa which is put down by the missiles or helicopters or submarines jointly produced by France and Britain. The police are then conveyed to the scene of the riot in station wagons exported from the United Kingdom. Then, if you please, the rioters will be clapped into gaol—handcuffed with handcuffs which this Government have gone out of their way to try to export to South Africa. Can you have such utter hypocrisy; and we are losing millions of export trade for this reason: that there is a great principle in refusing defensive weapons for a sea route which is vital to us, as I repeat again, is sheer hypocrisy. It is sheer prejudice on the part of the present Government against South Africa, and it is costing this country dearly. I am delighted that representatives of the C.B.I. and certain Tory Members, including Sir Alec Douglas-Home, are visiting South Africa. I hope they will see to it that it is known there that this policy will be reversed as soon as this Government can be got rid of; and for that reason one hopes that South Africa will not tie herself up too much with orders that will prevent us from ever getting them back again.

Now I turn for one moment to Rhodesia. According to the last estimate of the Prime Minister, I think sanctions there are costing us something like £40 million a year. The amount will go up. But what is the object of the exercise? Are the Government still expecting to bring the Smith régime to their knees and to force NIBMAR? I do not know, but they have given a pledge to the Commonwealth that they will never grant independence except with majority African rule. Paradoxically, I suppose that is a pledge which one imagines they will break if they ever get into negotiation with Smith again.

There are still other speakers to come, and I shall bring my remarks to a close. The pledges and prognostications of this Government are scattered around like broken crockery. The Government are dishonoured and discredited. I have been in politics for a long time, but I do not think I ever heard such a dishonest broadcast as that made by the Prime Minister immediately after devaluation. I am glad to note what the noble Lord, Lord Shackleton, said today, which was certainly never said by the Prime Minister. Last night we were treated to a performance on "Panorama" by the Minister of Defence. He told us then (I do not know whether any of your Lordships saw that broadcast) that pledges had to be broken because devaluation came—as if it just came out of the blue. Of course he never said that devaluation was brought about by the policies of the present Government in the last three years.

Of course, too, with one exception, no one resigns. Instead, the world is being treated to the spectacle of British policy being formed by package deals within the Labour Party designed to maintain their majority in the House of Commons, the whole thing being dressed up as the new vision of a British Government with the guts to do the right thing. That is what the world is being treated to. Can one wonder that, up and down the country, on television, in the Press, in pub and in club, the question forming on people's lips and in people's minds is: How long can this ghastly farce go on? How can this Government be got rid of? That is one of the things which is causing a sort of scepticism about our institutions. They cannot be got rid of because they do not play by the rules, which are unwritten As Ministers are determined to cling to office, one cannot see how this Government can be got rid of. That is the only answer one can give to people who pose this question.

However, I derive some comfort from a dictum of the great philosopher, Francis Bacon, who said: They are ill discoverers who think there s no land because presently they can only see the sea". I have the feeling, my Lords, that despite the attitude of Ministers, landfall, in the shape of a change of Government, may come about in less time than we can at present see. That, my Lords, is the hope and prayer of many, many people in this country.

LORD KILBRACKEN

My, Lords, before the noble Lord sits down, may I just ask him on what he bases his assumption that the country is moving further and further away from the Government, when in fact the latest Gallup Poll, published by a Conservative newspaper since devaluation was announced, shows a massive swing towards the Labour Party of 12 per cent.?

LORD GRIMSTON OF WESTBURY

My Lords, I would hardly call it a massive swing towards the Labour Party, but Gallup Polls are, I quite agree, an indication of the way sentiment is going. But I think it ought not to be forgotten that the last Gallup Poll was taken, I think, before the present package deal was officially announced.

LORD KILBRACKEN

Yes, my Lords, but it was taken after the announcement of devaluation and when the provisions that were announced by the Prime Minister were well known, or well foreseen or well anticipated, by those who were answering the questions put.

LORD GRIMSTON

I do not know about Gallup Polls, but I adhere to my opinion, and time will show.

LORD MOWBRAY AND STOURTON

My Lords, perhaps I may point out that I think the Gallup Poll still showed a 5½, per cent. lead by the Conservative Party over the Government Party.

11.3 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I find it rather amusing that when a Socialist Government are in trouble they say—and we have heard this once or twice to-day—"Ah!, but we are a rich nation". That is true, we are rich nation, but we are not nearly as rich as we used to be, and we are not a rich nation because of Socialism. Far from it: through Socialism we are becoming poorer and poorer.

My Lords, I do not want to rub salt into the wounds too much, because the noble Lord, Lord Shackleton, whom I congratulate most heartily on his new appointment, made, I thought, a rather mild speech, and he also admitted that the Government had been wrong. So as I say, I do not want to rub the salt into the wounds. But he also rather implied, I thought, that perhaps all of us were in some way to blame for the economic troubles of the country. I really cannot allow that to go by without objecting to it, because there are quite a few Members of this House, including myself, who for many years have been criticising the great increase in Government expenditure; and also, of course, I personally have often criticised the accursed habit of professional politicians of promising the people more and more for doing less and less. To put it in its most simple, basic terms, to a great extent that is really the cause of our troubles.

If I may I should like to quote a few figures about these cuts. I do not quarrel with the cuts themselves, apart from those affecting defence, which I find extremely worrying. Apart from those on defence I quite agree with the cuts, but my chief quarrel is that they are quite inadequate. If I may take as an example the present year, 1968, the cuts will produce a saving of £300 million. That is a saving of 2 per cent. in Government expenditure. We have just had passed through Parliament Supplementary Estimates of £120 million, so one has to deduct that sum from the £300 million.

I do not blame the Government for the whole £120 million of the Supplementary Estimates. Quite a lot of that, of course, has to be for compensation for the foot-and-mouth disease outbreak. But we also heard the noble Earl, Lord Jellicoe, speaking about the cancellation of, and the penalty clause for, the F.111. I do not know how much that will be. But if you deduct that, too, then we really get down to a very low figure, which is really chicken-feed. If we now take the next year, 1968–69, it is true that that year's savings will be something between £400 million and £500 million. Public expenditure in that period is already estimated to be an extra £825 million, perhaps even £1,000 million. Therefore the cuts for 1969, like those for 1968, appear to be swallowed up by increase in Government expenditure.

While bearing in mind what the noble Lord, Lord Shackleton, has said, I should like to see the cuts nearer £2.000 million. The noble Lord, Lord Shackleton, said that if we want greater cuts we ought to say how they can be accomplished. I should like to point out certain parts of the economy where I think there could be greater cuts which would be of great benefit to the nation. Several speakers have drawn attention to the Civil Service; and I agree that it is a popular whipping horse. But I have great respect for its members; they are very worthy people. In the last three years, the Civil Service has grown by 52,000, and its cost—I am talking about the white-collared workers—is now £740 million a year. I am not counting the Post Office workers in that figure. With the best will in the world one cannot say that the Civil Service is productive. It is not their fault but certainly the majority is non-productive.

But far worse than this, Civil Service expenditure is completely dwarfed by the budgets of the local councils. For the current year it is an estimated £5,400 million—nearly three times what we spend on defence. Council expenditure has risen more than 9 per cent. a year over the past ten years, double the growth rate of the gross national product, even allowing for inflation. If I may quote further figures, compared to ten years ago, projects paid for out of rates and Government grants for the councils have more than doubled to £3,670 million. In these ten years, council staffs have grown to 789,000. If we add to this figure the Civil Service staff, we get an army of white-collared workers, of the Civil Service and of the councils, of nearly 1½ million. This is where we need to make the cuts. I am quite convinced that here one could make cuts of up to £600 million or £700 million.

The trouble is that the majority of the people control of the spending of these thousands of millions of pounds have never in their lives had to earn a pound competitively, and it is so easy to spend other people's money. I am convinced that vast sums are wasted by the Civil Service and local councils through inefficiency. I should like a Royal Commission or some such body to inquire into the possibility of cutting down this spending and the paring down of staffs.

I am not too happy about the cuts in the education programme with the postponement of the raising of the school-leaving age. I sympathise with the views of the noble Earl, Lord Longford, in that respect. But it may not be so disastrous, because I believe that even under the existing system children are able to stay on longer at school if they show aptitude and wish to do so, though I agree that the late developer may be at a disadvantage. This postponement might have been avoided if we could have put an extra 4d. on school meals, which would have brought in something over £30 million.

The other cut I should like to mention relates to motorways. I do not think it is wise to cut the motorway programme. Why should we not charge tolls on the motorways as has often been mentioned in your Lordships' House? That would save a great deal of money. And why not cut back on minor roads expenditure? It is extraordinary that £83 million of the local councils' road budget goes on minor roads too small to be classified; on cutting grass verges and doing the hedges. Surely a great deal of money could be saved on that. I have always thought this a gross extravagance. Before these cuts the Government were to spend £75 million on motorways.

I am also pleased about the slight saving on council houses. The specifications for most council houses are far too high.

Though it is very nice to see the "Back Britain" campaign, which is an encouraging sign, the only people who can really get us cut of this mess is the Government. They have the power and the means. If they do not do it, no "Back Britain" campaign will help us. Some speakers on the opposite side have said that the spending spree was only over Christmas, but I do not think that that is so. The Chancellor's problem is not to raise more revenue, but to control consumer spending. Everybody seems convinced that the Chancellor, in the Budget, is going to put exorbitant taxes on consumer goods. But that will not stop the wage-earner spending. If he wants something he will buy it irrespective of price, up to a certain limit. Why cannot we have some form of compulsory saving for the wage-earner? For instance, he could have a stamp on his National Insurance card by means of which the employer could deduct so much—perhaps 5 or 10 per cent., or more—from his wages every week. If that were done, it could take a lot of the heat out of the economy and there would not have to be exorbitant taxes on consumer goods. I put forward this view seriously because I think that there is something in it. Allowance would no doubt have to be made for further inflation in respect of such savings.

I should like to say a few words to back up what one or two speakers have said about the Persian Gulf. I think also that our premature withdrawal from Singapore is deplorable. We appear to have broken our word, and from the point of view of world opinion this is much more serious than the actual withdrawal. I understand that our presence in the Persian Gulf costs £15 million a year and we have assets of £2,000 million in the oilfields there. It has been said in this debate that we do not require a military presence to protect trade interests or to trade. The noble Lord, Lord Chalfont, said that Norway and Sweden do not have any bases abroad. But we cannot really compare those countries with Great Britain: they are extremely small countries which do not have world-wide interests.

I have always understood that the great point of the presence in the Persian Gulf is the stability that it gives to the States there. This expenditure represents only £15 million a year. It is a flea-bite. If you cut down the road grants to councils for cutting the verges of minor roads, and if they were cut only once, instead of twice, in the summer this would save enough money to keep the presence in the Persian Gulf. It seems criminal to do away with this. My noble friend behind talked about the sanctions on Rhodesia costing £40 or £50 million. If these sanctions were stopped this would more than enable us to continue a presence in the Persian Gulf. This could also be achieved by selling submarines or frigates to South Africa. It seems to me to be crazy, and, to tell the truth, I just do not understand it. Then, why fix a date? What is the point of fixing a date? We saw what happened in Aden. It is quite unnecessary to fix a date for withdrawal. It is far better to keep the world guessing. Russia will be in Aden soon, anyway.

It is the same old story. It is useless for me to say to a Socialist Government—and this does not apply only to the present Government—that they should do what the German Government did and allow national free play of economic forces, with incentives and all that. If this had been done we should have been a much more prosperous nation to-day. All that has happened is that we have been hedged in by taxes, restrictions and a vast Civil Service or bureaucracy. This has really been the cause of our trouble. I only hope that we are not witnessing the last days of Rome.

Talking of that, I should like, before I end, to urge the Government not to go ahead with these new nationalisation plans for nationalising buses and garages. I understand that if they do that an extra £75 million will be drawn into the economy. And the Government say that they want to take the heat out of it. These plans are crazy. The same applies to buying up shares in private industry. All this must be stopped. It is like the Gadarene swine.

THE LORD CHANCELLOR (LORD GARDINER)

My Lords, before the noble Viscount sits down, as I may have to reply to-morrow, would he make clear whether his suggestion for compulsory saving of wages, as he expressed it, applies only to wages and not to salaries, or to himself?

VISCOUNT MASSEREENE AND FERRARD

I should be quite prepared to apply it to salaries and to myself: it would probably be very good for me. But the real spending in the country is done by the wage-earner. I am sure the noble and learned Lord will know, if he has employed men in industry, that they are paid on Friday and some come back on Monday and want a loan. It is extraordinary how they spend their wages. I cannot think what they spend them on, but they certainly spend them very quickly.

11.25 p.m.

LORD STRANGE

My Lords, I congratulate the noble Viscount, Lord Massereene and Ferrard, on such a brilliant speech and also because he did not use notes, which I admire very much in public speaking. I would not be on my feet were it not that I was asked to get something into this speech about the Isle of Man. I shall slip it in so that your Lordships will not notice it, I trust. I have been in and out of the Chamber the whole day, and I am a great sportsman, and I feel somehow it was all rather a shame: there were so many people with not only guns loaded with ammunition but bandoliers of ammunition, all shooting at the Government and the Government had no real ammunition to shoot back. I felt very sorry for the Government. As a Cross-Bencher, I can feel sorry for either side.

I have had three years of listening to all these wonderful talks on ideology, which have ended up with us in such a mess that it is very difficult to know how it can be disentangled. I must admit, when I talk about shooting, that I am throwing a hand-grenade into the Government, but I am throwing it very politely and I am not pulling out the pin. About the second year, I think it was, in all these debates about the ideologies of the country, I found out that I did not really know what ideology was. I thought I did, but I did not really know what it was. I did not like to tell anybody, because I am ignorant enough anyway, and usually talk round things I do not know. I did not know what an ideology was so I got down to studying, it, and the whole room at home was filled with piles of books with matches and paper and old envelopes stuck into them; and finally I got down to what ideology was and its history for 500 years.

Ideology obeys only three rules. First, you have to get a group of people, or somebody, who catch an ideology. First catch your ideology. Once you have it you add a bit here and a bit there, so that it is suitable for everybody. Then you become dedicated to it—so dedicated that you intend never to give it up "until death us do part"—or, as they say in the service, until debt do us part. And so you have this ideology. Phase 2: you have to get power. You must have power to put your ideology over. Phase 3: you have to suppress any opposition to your ideology or it will peter out. Those are the three rules which have run all the ideologies in the 500 years about which I have searched, not year by year, but gap by gap, on the history of ideology.

I know that some of your Lordships rather doubt what I am saying, but it is true. I am going to speak for only eight and a half minutes, and I would just take the history of one ideology to show your Lordships what I mean. For this I am taking the Reformation, which was considered one of the greatest miracles of ideology there has ever been in this country, and it is within my time span of 500 years. The Reformation was really started with a small group—Cranmer, Ridley and Hugh Latimer, who was the grand old man of the party. They were all intellectuals, all highly educated, all charming; all the sort of chaps you like to meet at the Athenæum after dinner. In his education Hugh Latimer went from Cambridge to the Sorbonne in Paris and flushed up at Louvain, and there he got mixed up with a Flemish reformer—all this and Martin Luther, too—and learned a lot of funny stuff on reforms. He brought it home and Cranmer "took up with it". Hugh Latimer was "caught up", and they got this idée fixe that you must have this dedication to the ideal. They all got worked up with it.

The next thing was to get power, and that they obtained, because for Henry VIII they obtained a divorce. Then they obtained a marriage to Anne Boleyn, and obtained her execution for him. So he was quite satisfied with his sort of servants. With power—and your Lordships will understand the meaning of the present crisis in this—you must suppress opposition. You cannot take any other ideas; you must have all your own. I cannot give you all the instances I should like to give, because I am limiting myself and yourselves to time, but they suppressed anything that came up. There was a young lady called. Miss Joan Bosher, who did a little lay preaching on the sly. She came up before Bishop Ridley, was quickly tied to the stake and burnt alive. That stopped her. There was a Dr. Paris. He started a spot of lay teaching and he was flamed. There was a girl in the southern counties. This girl about adolescent age started to have visions, and started prophesying. Some of this was against the ideology and against the State. She came before Archbishop Cranmer, and he very properly had her burnt alive at Smithfield Market. There are many more cases. They dealt with any opposition to ideology.

As luck would have it, as your Lordship's know there was a change of Government and a new ideology came in. Very soon after, Bishop Cranmer was executed. Bishop Ridley found himself in flames at Smithfield Market. It happened that burning next to him was his old friend Hugh Latimer, who was 85 years old at the time. It was he who said the sentence which is famous in English history: We shall this day light such a candle, by God's grace, in England, as I trust shall never be put out". Small boys attribute this to Walter Raleigh, lighting his first cigar, but I believe the other stories were correct. It certainly did light a candle in England. People put themselves and other people in stocks. There was a long series of civil wars. They really do set the pace for ideology.

You will notice the three phases: you have to be dedicated; you have to get power, to put it over and you have to suppress any other form of ideology. I have listened to all this with great interest, brilliantly spoken in your Lordships' House by a great number of brilliant speakers. But I have to smile. Take the case of Rhodesia, which has cost us an enormous amount of money—one of the things which brought us to the present ruin. An innocent thing like Rhodesia. You have the two ideologies: our ideology, that Rhodesians must have democracy, and the African ideology which was pretty well expressed by an African ideologist who was over here last year. He said: We do not want 'one man one vote', we want 'one man one machine gun', to kill all the whites". Anybody who saw the very good film done by the Italians will have seen that they carry out their ideology when they get a chance to do it. From a helicopter there were shots of Zanzibar with people being nicely massacred in the streets. There was one shot of the sea white with the bodies of people who had been massacred. They are people who carry out their ideology. So you get businessmen in the middle between two ideologies. This ideology has cost us, and will cost us, a lot of money.

Many people have spoken today, and I will not rub it in, about the ideology that we cannot supply arms to people because we are against it. We have had the League of Nations and the United Nations and they have not stopped war. You cannot stop war, because territory is our biggest instinct. You can stop war in this way: by having a very powerful army people may not attack you. What the South Africans want to do is buy arms to defend themselves, but of course our ideology prevents our selling them, so we lose enormous sums of money over it.

This is a rather tragic point that I want to bring out, but I must do so. One thinks of men like Archbishop Cranmer and Ridley and old Hugh Latimer, who was 85 when he was burned at the stake—a charming man—but when it came to the point Archbishop Cranmer "ratted". He agreed to alter, to give up his ideology, and I rather think that Bishop Ridley did, too. The actual quotation attributed to Hugh Latimer, which I think he said at the stake, was Be of good comfort, Master Ridley; play the man! We shall this day light such a candle, by God's grace, in England, as I trust shall never be put out. Play the man! That is the point. It seems to me that two of them "ratted" on their own ideology which they had made up themselves, coupled with the name of Martin Luther and a few others. The only man who stood up for his ideology was old Hugh Latimer, who burned pleasantly, believing in the ideology that he had given his life to serve.

I know this stuff is a grenade, but it has to be said. Unfortunately we have today the parallel that the noble Earl, whom I admire personally very much, is the only one who stuck to his ideology and resigned. All the others who are responsible for our ruin, responsible for these ideologies which have cost us so much money, have stayed put. They have "ratted" on their own ideology, but the noble Earl has resigned. His ideology is not one of those fancy things about "two men, two votes"; "one man, one vote or anything like that. It is the normal procedure of the Welfare State, which has got people properly fed, properly clothed. The Government want to have them fully educated, and we are giving up two years of that education, which is odd. It means that the product we have spent all this money to produce will be lost to us for two years. We shall have two years blank in the higher education. I have enormous admiration for the noble Earl, the only one with an ideology that means anything to me or to anybody else, who stuck to it, and if any of these other people who have not resigned come up with any other form of ideology I shall roar with laughter, because I shall not believe they are ever sincere again.

I feel very much for members on the Government Benches, because I know they will have to vote against this Amendment and I know that many of them in their heart of hearts agree with every word I have said. I feel especially sorry for the noble Lord, Lord Shackleton, whom I, as a member of the Cross Benches, welcomed most heartily to this House, for he has to try to sail as stormy a voyage as his celebrated father sailed from Elephant Island, and I wish him all luck with his voyage. As a footnote—I nearly said "footnight", and that would probably have been more appropriate—I would remind your Lordships that the Byzantine Empire did not come to an end because of the Barbarians and the French; it came to an end because the centre was rotten with ideologists arguing together.

11.40 p.m.

THE EARL OF CORK AND ORRERY

My Lords, with your Lordships' permission I propose to tell you a story. It is very short, and in fact the story itself may not give you any particular pleasure but I think your Lordships may well be obliged to me for its brevity. It may have some particular appeal to my noble friend Lord Grimston of Westbury. It is a story about a tempter who said to one of his agents, "I have a job for you. You have heard of a thing called the British military presence East of Suez?" "Certainly," said the agent. "Well," said the tempter, "certain friends of mine are anxious to see this withdrawn rather more suddenly than has been expected so far, and I have agreed to help. You go to London, see the Government—it is a Labour Government, but I am not saying that that makes it harder or easier—and you tempt them into bringing this presence home, say by the end of 1970 or 1971. They will have their price you will find."

But the agent shook his head. "That is bribery," he said. "You cannot bribe British Governments, especially not this one." "What is so special about this one?" said the tempter. "Several things," said the agent. "To begin with, it is hardly any time since they were accused of 'ratting' on some of their agreements by their closest friends, the Australians and the New Zealanders. The British decided they were going to pull out in the mid-'seventies and that upset a lot of people, but they promised they would not do it until others were ready to take over. That is certainly a promise they are not going to break." "Ah," said the tempter, "but they are hard up; they have had to devalue the pound. They will listen to any reasonable offer. "I doubt it," said the agent. "You have forgotten about the arms for South Africa." "Oh yes," said the tempter. "Do you know, I never really got the hang of that. I wish you would explain it."

"It is a bit difficult to explain," replied the other. "I can tell you what happened. When this Labour Government came into power three years ago there was in force a resolution of the United. Nations Security Council requiring its members not to sell arms to South Africa". "Not any kind of arms?", asked the tempter. "No," said the agent. "But the previous Government—that is, the Tory Government—had not agreed with the whole of the resolution, which was non-mandatory anyway; they had agreed to forbid the export of only military equipment and weapons such as could be used for internal security, small arms and so on; that is to say, for use against the blacks. They were quite ready to go on selling armaments used only for defence against external enemies." "Very fair," said the tempter. "So the Tories thought," said the agent. "The Security Council agreed. But when the Labour Government came into power they extended the British embargo to cover the whole thing, external defence and all." "Do you mean they stopped all trade with South Africa?" "Not at all, just external defence; they went on trading in everything else like mad."

"I do not get it", said the tempter. "No more do I", said the agent. "It is something to do with apartheid, and that is where the difficulty comes in, because I cannot see what it has got to do with apartheid. I think it must be some kind of gesture. The odd thing is that it has obviously no effect at all, because the South Africans simply go to somebody else—the French—and buy what they want. Just recently a good deal of pressure has been put on the Government to rescind the external defence part of their embargo. They would not do it for anything, and they still will not".

"Wait a minute", said the tempter. "They will not sell aeroplanes and submarines for the South Africans to defend themselves. That cannot be because they do not approve of them, because they are prepared to sell them anything else. It cannot be in order to make them defenceless, because that would be practically criminal, and anyway they would go next door. It has no effect on the South Africans except to annoy them, and it cannot possibly do any good for the blacks. So what is the idea? It must cost a great many people a pray penny". "£200 million, I believe", said the agent, "and perhaps the Simonstown base. That is the point. All the Government are being asked to do is to change their mind. There is no question of any bilateral agreement being involved, no question of national honour or letting anybody down. So you can see what high-principled people they are. They have such a high moral principle that it forbids them changing their mind, even for £200 million, and now you are asking me to try to tempt them not merely into a harmless change of mind but into breaking faith with nations who are their friends and allies, going back on their agreements, cancelling their assurances which they have given, only a few months ago, remember, and leaving them in the lurch. I have not a chance; they will not listen to me".

But they did listen to him. They fought, and begged him quite a good deal, but after a bit he was able to return to the tempter and report complete success. "And what was the price?", asked the tempter. "Between £320 million and £370 million, calculated at 1964 prices, the first instalment payable in 1968, 1969, 1970". "Is that all they asked?", said the tempter, incredulously. "That is all", said the agent "—that, and the survival of the Labour Party."

11.46 p.m.

LORD DIGBY

My Lords, I come to speak here tonight because I am ashamed—yes, ashamed—when I think of our allies in Australia and America, who supported us through the last two wars, and now, when their soldiers are being killed in defence against Communism, we are leaving their southern flank unguarded. The Government tell us that we must face up to realities. But the reality is that we are the only Power to have had a successful Far Eastern policy since the war, and we should be boasting about it, not scuttling. We have eliminated the Communist emergency in Malaya, and we now have a peaceful Malaya. We stood firm against Indonesian confrontation and we triumphed; and even in Hong Kong, in an impossible situation, the firmness of the authorities has won the respect of the inhabitants and is producing the confidence so necessary for prosperity.

Yes, my Lords, I think we can be justly proud of our stability. But I have spent long enough in that part of the world to know that racial tensions are not far below the surface, and as soon as the word goes round that Britain is deserting her friends our enemies will begin to appear—a riot here, and a murder there. Surely the Government must have learned from Aden. The mere announcement of withdrawal acts as a catalyst to all subversive elements. The self interest of safeguarding our vast assets East of Suez, and the moral duty of standing by our friends impel us to reject these policies.

Now may I turn to the domestic policies. I should like to high-light and support one particular pledge in the Prime Minister's Statement, that there will be no further net increase in the number of civil servants as a whole". I do not think I am alone in welcoming that pledge. But I am trying to look behind it, to see where the catch lies. I have one question to ask the Government. The Statement announces that the civilian manpower in the Defence services will be reduced by 80,000. Can the noble Lord who is to reply for the Government assure the House that no part of this 80,000 reduction will be used to justify an increase elsewhere in the Civil Service? Are these Service civilians part of the Civil Service? Without this assurance what we gain on the swings of the Admiralty civilians, we will lose on the Home Office roundabouts.

This issue of Civil Service expansion is fundamental to the whole of this debate. The salaries alone of the extra civil servants employed since 1964 would be more than the saving we are to have in the next two years from postponing the raising of the school leaving age. But the cost alone is not the only reason; there is also the shortage of trained and educated brains. Logical, educated and trained minds are snapped up by the Civil Service. These are the people required in the administration of industry to ensure that customers' requirements are met. There is a shortage of men and women skilled in administration who should be used where they are most productive.

Finally, fiscal measures are still to come, and we are warned to expect increased taxation. So be it. But I implore the Government: no new taxes, or complication of taxes. Every new tax involves industry in millions of man hours consulting with accountants and lawyers; hours which may be productive in saving tax, but which certainly add nothing to the efficiency of the country. No small part of our present troubles stems from the Alice Through the Looking Glass effect of the tax changes enacted by the Government. Add corporation tax, take away profits tax: add investment grants, take away investment allowances: add S.E.T., take away nothing: add capital gains tax, take away the incentive to earn and save. These changes, whether good or bad in the long term, have undoubtedly hindered productivity in the short term. So I urge the Government not only to contain but to reduce the Civil Service, and let us get on with our job without having to worry about changing taxation. Above all, let us consolidate our success in the Far East before withdrawal.

11.52 p.m.

LORD BELSTEAD

My Lords, the noble Earl, Lord Jellicoe, referred to the speech of the noble Lord, Lord Shackleton, as runs scored on a sticky wicket. At this hour the run-stealers are beginning to flicker somewhat, and I will be brief in the extreme. In company with many other noble Lords I have received encouragement and consideration from the noble Earl, Lord Longford, while he was Leader of the House. I regret deeply that last week the noble Earl felt impelled to resign from the Government. The two-year deferment of the raising of the school-leaving age contains aspects typical of many of the Government's other proposals.

First there are persuasive arguments in favour. Only ten days ago, 21 members of the Plowden Committee reminded the Government of the continuing plight of primary schools in educational priority areas. Then it is argued that many recommendations of the Newsom Report, upon which a 16-year-old school-leaving age was dependent, would not possibly be achieved by 1971. But, as with other cuts, points of principle are involved. One of the ideas, to which the noble Earl, Lord Longford, referred, behind the raising of the school-leaving age was the buoyant hope of improving the training capacity of school leavers. Poised upon the springboard of devaluation, the Government have seen fit to cast this item of buoyancy aside. And, as with other cuts, the effect will remain, so that in 1973 the prize may again elude our grasp. Instead of this proposal it would have been possible to increase the price of school meals. And let us not forget that, contrary to what has been said elsewhere, hardship is alleviated in this sphere by the exemptions system run by local education authorities. Although it is not the province of the Department of Education and Science, is there not a case now for postponing plans for the University of the Air?

One more point on education, a point which I do not think has been mentioned to-day. Recently there was a Burnham award to teachers, and subsequently the Government announced that part of teachers' salary increases in direct grant schools would not on this occasion be met by adding to capitation grants. This has invariably been Government policy since the 1944 Education Act. Now, paragraph 34 of the White Paper declares a reduction in capitation grants to direct grant schools, and I believ3 that this is to be £20 per pupil per annum. Thus out of a general capitation grant of £52 per pupil per annum, the direct grant schools are now to bear a cut of £20 and have lost the normally automatic contribution towards the recent Burnham award, which I am advised could have been expected to be in the region of £5 or £6. It is a far heavier blow than any other sector of education must suffer. There are not wanting those who accuse this Government of subversion of the direct grant schools. I trust this is not true, but only a few weeks ago the Minister asked the Public Schools Commission to advise him upon the future of the direct grant schools. On the evidence, is it possible to believe that the Government have not already pre-judged this issue?

I view with the deepest suspicion those who immediately greeted the defence cuts with applause. This has been gone over again and again today, and I shall be only a few seconds. If such people do so because, after studying the facts, they believe it makes neither economic nor military sense to remain in a given area, or to use particular equipment, then such an opinion is sincere. But if the defence cuts are welcomed from thoughtless prejudice, this is dangerous wickedness. Distinct from the ideal of pacifism of the noble Lord, Lord Soper, which I can only say I admire, there are those who say, "We are a small island. We cannot defend ourselves alone. Therefore, let us throw all our arms away." But, as many of your Lordships know far better than I, Great Britain has never sought security by standing alone. Always this country's policy has been to forge alliances, to maintain power balances.

It is not nostalgic hankering after Empire to point out, as so many noble Lords have done so ably today, that our trade and our security depend upon our alliances, upon our agreements and upon our bases. The vital point which has been made today on this subject is that made by the noble Earl, Lord Jellicoe: that what we must scrutinise most carefully in the future is what is being left behind. Let us bear in mind also that, because of Vietnam, we may be leaving the United States, Australia, New Zealand, Malaysia, Singapore and the Far East at a time when, to quote a phrase of Sir Alec Douglas-Home, the international weather is at its dirtiest.

In another place, the Chancellor of the Exchequer has explained that the impossibility of reducing expenditure on defence before the year after next must ensure a rise in public expenditure next year. What if confidence, both at home and abroad, refuses to wait so long? Her Majesty's Government are lavish with exhortation, but Ministers seem incapable either of making up their own minds or of tightening their own belts. Why, for instance, is the Chancellor waiting until March before tackling private consumer spending? I followed most carefully what the noble Lord, Lord Shackleton, said about the spending spree over Christmas probably levelling off and going down, but all I can say, speaking from personal experience, is that I am moving house at the moment and have certain necessary items of expenditure to face, and, like the rest of the country, I am deciding to spend now, not later.

Mr. Jenkins has affirmed that the Government cannot make what he calls absolute cuts within Ministries. Why on earth not? Perhaps the noble and learned Lord who will be winding-up the debate tomorrow will explain what the Land Commission has done to justify expendi- ture, though, with great respect to the noble and learned Lord, if there is an answer I doubt whether it will be particularly palatable. The White Paper states that there will be no increase in Civil Service numbers in 1968–69, but I wonder. If the Chancellor devises new forms of taxation in the March Budget, as he has every right to do, the Inland Revenue may be in a position where they will simply have to appeal for recruits. The tragedy is that, again and again, the absurd figure of an extra 57,000 civil servants since 1964 is pointed to in derision. That is a wonderful total. It was 45,000. A few weeks after that figure was given in the House, I attended a political meeting at which I thought it would be right to add on another 5,000 because I believed that that was probably what it would rise to; and, sure enough, a couple of days later I found that the figure was in fact 50,000. Mr. Macleod, in another place, gave it last Wednesday as 52,000, and to-day we are up to 57,000. It is to the shame of the Government that the good name of the Civil Service has been devalued in this way.

May I beg: let not Ministers disregard the value of setting an example by economising within their own Departments. With such a touch of leadership, and with incentives, such as the noble Lord, Lord Macpherson of Drumochter, referred to, where the abolition of the present S.E.T. must stand in the forefront, I believe the Government might be amazed at a general response to the unpleasant truth which we are all finding so hard to face: that, owing to devaluation, the standard of living of each one of us must fall.

Finally, my Lords, for ten days preceding the Government Statement there were daily newspaper reports of agonising Cabinet meetings. "Sacred cows" were being slaughtered; Ministers were wrestling with their consciences and with the Labour conscience—and to my knowledge those reports were not denied. The noble Lord, Lord Franks, spoke of a national purpose and theme. At this grave juncture, Ministers have one responsibility only: the future of our country and of our people. The Queen poor; the realm exhausted; the nobility poor and decayed; all things dear; division among ourselves; steadfast enemies but no steadfast friends". No, my Lords, that does not come from one of last Sunday's newspapers. It was a contemporary account of the state of England at the accession of Elizabeth I. That Queen met her crisis by swearing in her Principal Secretary, Sir William Cecil, with words which I find strangely comforting: This judgment I have of you, that you will not be corrupted with any manner of gift, and that you will be faithful to the State, and that without respect of my private will you will give me that counsel that you think best". They were wonderful words. Only a Government without prejudices, without sectional interests and with the good of this country at the top of their list of priorities will lead us safely through to better days ahead.

12.3 a.m.

LORD WINDLESHAM

My Lords, at just a few minutes past midnight we come to the end of the half-way stage in this long debate. I do not regret its length, although I think we should remember the strain on the officials of the House, and the Official Reporters in particular, in a debate of this length. But your Lordships' House seldom meets very late in the evening, and today we have heard many speeches which, in their authority and their wisdom, have accurately reflected, and indeed illuminated, the significance of our national situation.

It has also been an unusual debate because of four most notable speeches from Members addressing your Lordships' House for the first time. I have not been in the House for very long, but I have never known in one day four speeches which so caught the attention and admiration of the House as those of the noble Lords, Lord Thorneycroft, Lord Carron and Lord Franks, and of the noble Baroness, Lady Llewelyn-Davies. There was also the speech by the former Leader of the House, the noble Earl, Lord Longford. It would be inappropriate to try to make Party capital out of his resignation, and I am pleased that nobody sought to do so. The noble Earl did what he did as a matter of principle, and explained why in a speech marked both by reason and by great personal dignity.

My Lords, this debate is much more than just another debate on public expenditure. It is, as the Leader of the Opposition remarked in the House of Commons last week, really about the future of Britain after devaluation."—[OFFICIAL REPORT, Commons, 18/1/1968, col. 1956.] Many of the speeches in your Lordships' House this afternoon have reflected this. Of course it is possible to list the cuts in a piecemeal way, and to speak of them in the aggregate as a "package". The measures have to be individually justified by the Government, and it is right that each of them should now be examined and argued over in terms of relative priorities. But the danger in all this is that a Government—hard-pressed to keep ahead of events—may lose sight of their own objectives. What are the Government trying to do today? Have they got a clear-cut picture of the sort of society they want to achieve in Britain? And if they have, do they have the confidence that they will be able to achieve it? These are the fundamental questions which we should keep in mind as we debate these economies in public expenditure. Let us look, then, in this context at Mr. Wilson's "package" proposals. The first point to note is that the reductions are, in a sense, unreal since the total volume of public expenditure for 1968–69 and 1969–70 will be an increase on the current year. The figures tabled by the Prime Minister after his Statement in the House of Commons last Tuesday, and reprinted in the White Paper, show public expenditure for 1967–68 at £14,387 million, with the revised totals (after the cuts) of £15,078 million for 1968–69, and £15,212 million for 1969–70—all at constant prices, that is, 1967 Survey prices.

It is true that because of continuing commitments, particularly in defence, it is difficult to make immediate savings in public expenditure. Therefore the full impact of a number of the measures will not be seen until some distance in the future. Nevertheless, the fact remains that overall Government expenditure has not been reduced in the next three years: all that has happened is that the very steep planned rate of increase has been cut back. Noble Lords may have seen and noted the Economist's comment last week that the most important implication of the Prime Minister's Statement was: how completely the Treasury, under Mr. Callaghan's stewardship, had lost control over the course of public expenditure. Had it not been for the cuts which have just been announced it was apparently proposed that next year total expenditure by central and local government would have risen by nearly £1,000 million. Even now, with the cuts, the increase will be of the order of £700 million. This simple fact, so easily overlooked in the heat of debate on such crucial matters as who will or will not be allowed to attend meetings of the Parliamentary Labour Party, goes to the heart of Britain's national problem.

Overseas opinion, my Lords, as we know, has doubts about the effectiveness of the present Government to control the economic destinies of Britain. I regret this, but it is inevitable when faced with evidence of this kind that bankers will wonder whether their loans are in good hands. What have the Government been doing this last year? Noble Lords opposite will remember that in April, 1967, the noble Lord, Lord Byers, introduced a Motion in this House calling attention to the growth of public expenditure. There was a long debate, in the course of which the noble Lord, Lord Byers, and myself, itemised some of the management techniques, including those of cost reduction, which are now widely used in industry and are available to the Government.

In reply, the then Leader of the House, the noble Earl, Lord Longford, said that the Government were fully alive to the need to make use of all modern management techniques, and listed a number which he described as being under consideration or already introduced. Later he confessed himself, with remarkable candour, to be somewhat surprised by the number that were in use in Departments of Government. There had, he said, been a great stirring of minds on this matter. Well, my Lords, now we are faced with the results. A planned increase of £1,000 million, cut back with the maximum of publicity and political discord, to an increase of £700 million.

What has become of the cost reduction programme? Was it ever considered? In the debate last April I mentioned the United States Bureau of the Budget Circular A44, a crucial document, and handed a copy of it to the Leader of the House after the debate. That Circular, known possibly to some noble Lords opposite, summarises the details of the American cost-reduction programmes under which each Department or Agency Head is required to report projected savings targets personally to the President. This is the key factor, it has to be a personal responsibility to the centre. It is for this reason that the Leader of the Opposition in another place has proposed there should be a cost-effectiveness unit attached to the Prime Minister's office.

All the indications are of very weak financial management of the economy at the top. Contrary to popular belief, it is not easy to control public spending. All the techniques of modern management will not help unless they are applied firmly and with a sense of priority. This is where the Government have been so vulnerable in the past year. It has already been pointed out, with great eloquence, by the noble Lord, Lord Franks, that priorities can be determined only by reference to values. The traditional values of the Party opposite have been so eroded by the events of the last three years that only one remains unchallenged. That one is expediency. There is nothing wrong with expediency. All Governments have to keep their heads above water; but the difficulty arises when expediency becomes the sole criterion for determining priorities. This was also the theme of the latter part of the speech of the noble Lord, Lord Coleraine.

Let us imagine, my Lords, a dialogue in the Prime Minister's mind. Question: Should prescription charges be introduced? Answer: Yes, 2s. 6d. would do. Question: Why? Answer: Because it is timely. We have to make cuts somewhere and most people can afford it. Question: But won't the Left object? Answer: Yes, but we must all make sacrifices. The point here, my Lords, is that this decision may be the right decision or the wrong decision, but the only grounds on which it is defended is that, although it is undesirable, it is expedient. So the first main criticism of the Government is that there is no evidence of an overall plan, presented in a coherent framework, backed with the authority and persuasive force of coherent vision.

The second main criticism is of ineffective management. I have already referred to the need for a firm grip at the top at the spending Departments in central and local government. This must come from the political leadership. Here there are indications of real weakness. In his Statement last week the Prime Minister, in my view, accepted far too readily the difficulties involved in cutting back projects which were already well advanced, and which could show an immediate reduction. Hence the projecting forward of those items which would show a saving later on. This inability to stop things completely at a late stage is a familiar bugbear of many large organisations. But it has to be done. The prize example, which has been mentioned already in the debate, is the extension of the Transport Holding Company to take into public ownership additional bus and road haulage undertakings to the value of up to £70 million, more than double the anticipated income from prescription charges. It is true that these arrangements were well advanced, but it is also true that the Bill did not receive a Second Reading in another place until January 16, the actual date of the Prime Minister's Statement. Since Parliamentary approval had not been given, we must assume that no irrevocable commitments had been entered into. So here is one measure that could, and should, be stopped in its tracks.

Another example is school meals. The Government have preferred—may I have the attention of noble Lords opposite? I know that it is quarter past twelve, but these are points of some importance to the noble Lord who will be replying to-morrow.

LORD BESWICK

My Lords, may I apologise? I was only trying to sort out one of the points the noble Lord has just made in order that I could answer it.

LORD WINDLESHAM

Let us look at school meals in relation to the decision to defer the raising of the school-leaving age. One of the reasons given is that it is administratively cumbersome to alter the price of school meals, particularly since a 6d. increase—from 1s. to 1s. 6d.—has only recenty been decided, and will take effect in April. So, rather than insisting that these administrative difficulties should be overcome, and increasing the charge to the point where it coincides with the real cost, which is 2s. 7d. per meal, while retaining remissions in cases of hardship, the Government have chosen instead to postpone the raising of the school-leaving age.

This is a decision not only highly regrettable in itself, for the reasons given so eloquently by the former Leader of the House in his speech earlier to-day, but it is also one which has been received with regret overseas. I do net know whether noble Lords have seen the statement by Professor Walter Heller, for example, the former Chairman of the Council of Economic Advisers to the United States Government. This is precisely the sort of structural fundamental I reform which is essential to get Britain out of her present plight. If there was any overall plan for national regeneration, raising the school-leaving age would surely be in it. The fact that it is not, once again shows the Government's lack of a coherent set of values.

We cannot hope to achieve a more dynamic industrial society without more technological skills. The prerequisite of a more skilled society is a more educated society, particularly in the 15 to 16-year-old group. At the moment, these are exactly the young people who are receiving a level of education that may well prevent many of them from reaching their own individual potential in their working lives. But, of course, it is much more than just technological skills that are needed to realise Britain's economic recovery. It is the attitude of mind, even more than the training of the mind, that is crucial.

I believe that in this country we have over the years become too attached to the virtues of stability. Too often precedent and order count for more than initiative and risk-taking. Overmanning and restrictive practices on the shop floor; time-honoured and timid method; of management in the board room; a tax structure that allows little opportunity for the accumulation of capital—these are the things that are holding Britain back to-day. If it does nothing else, devaluation and the measures brought with it will be justified if they provide the jolt that gets this country out of the rut we have been in for far too long.

Your Lordships may have seen the recent series of articles in The Times entitled "What Britain Needs". Contributor after contributor, including such non-Party men as the Chief Rabbi and Professor Fred Hoyle, called for more competition and a greater urge to work. I do not believe that this Government are capable of producing the necessary pre-conditions for the emergence of a new society. Their deep-rooted suspicion of profit as a motive for human conduct; their historical associations with a restrictionist trade union movement—these are the things, as well as others mentioned by the noble Lords, Lord Caccia and Lord Franks, that make them unable to provide the innovation, the opportunities, and the example that are needed. They should make way for the Party that knows where it is going, for a Party that has a consistent vision of the future, and which can provide once again the sort of leadership which the country deserves.

THE EARL OF KINNOULL

My Lords, on behalf of my noble friend Lord Dundee, I beg to move that this debate be adjourned until this afternoon.

Moved accordingly, and, on Question, Motion agreed to: debate adjourned accordingly.