HL Deb 24 January 1968 vol 288 cc311-431

2.19 p.m.

Debate resumed on the Amendment moved yesterday by the Earl Jellicoe to Lord Shackleton's Motion, "That this House approves the policies announced by the Prime Minister in his Statement made to the House of Commons on 16th January"; namely, to leave out all words after the first House "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".


My Lords, there are still 23 of your Lordships who are likely to speak and, since none of us wants to divide at an inconveniently late hour to-night, I will try to be short. This Motion, moved yesterday by the noble Lord the Leader of the House asks us to approve measures announced last week which are intended to shift £500 million from home consumption to export, so as to correct our adverse balance of payments. I hope that none of your Lordships is under the illusion which sometimes seems to be entertained by some international bankers that every good and virtuous trading country should always try to achieve a trading surplus, exports plus invisibles always exceeding imports. For if all countries were to pursue this mathematical impossibility resolutely and simultaneously, international trade would cease entirely.

For about twenty years or so the United States of America has had a huge and continuous adverse trade balance, to the enormous benefit of a whole world, including themselves, and I believe that the same is true of Japan. The Americans have been able to do this not because of their unnecessarily high (as I think) gold reserves, but because their economy has grown so abundantly that no one has ever doubted their ability to fulfil their obligations; and I shall not mention in this debate the steps which the American Government are now thought to be considering with the object of changing this position and creating a trading surplus which, if it were done, might possibly have rather serious effects on the Free World.

A country can be damaged by an adverse balance only if at the same time it is spending more than it earns, which is a very different thing, and if its economy is not growing, so that people think it will not be able to pay its debts and maintain its currency. Our own economy in Britain since the war has grown very fast, though not very constantly. It would have grown much faster and much less inconstantly if we had had as few restrictive practices in industry as the United States have had, and if it had not been for the prevalent post-war belief that the British people have some divine right, to be paid more money every year. In his admirable maiden speech yesterday, my noble friend Lord Thorneycroft referred to the assumption that if production should increase this year everybody may have a 3½ per cent. increase in wages which, I think he rightly implied, might not be a good thing for the future of our economic strength.

We have built on this British economy a heavy structure of social services, including an ambitious design for the advance of secondary and higher education, which unhappily has had to be deferred. Whether it is deferred for only two years or longer will probably depend on our success or otherwise in increasing our economic strength. At the same time, we have contributed more than our share to the defence of the free world.

We have all had some difficulties, including some litle local difficulties, as my noble friend Lord Thorneycroft will remember, and we have all had some setbacks, but until two months ago we had not been unsuccessful on the whole. Our social services have expanded and our Armed Forces have carried out efficiently—indeed, brilliantly—the tasks which they have been given to do in Malaya, Korea, Indonesia, Africa and elsewhere, often preventing a little war from growing into a big war, to the great benefit of peace and of world prosperity.

In my view, there would never have been any need for the humiliating events of the last two months, the anger and dismay of our allies and those whom we still have a duty to protect, the reversal of so many solemn undertakings so soon after they were given, the devaluation not only of our currency but also of our credibility for the future, if Her Majesty's Government had been capable of good economic planning and of reasonable foresight. Our difficulty in criticising the Government is not to find some promise which they have broken or some crisis which they have failed to foresee. Our difficulty is to find any undertaking which they have not had to change, or any event of which they have become aware in time to do something about it. The Government's record makes me think of the famous letter written by W. S. Gilbert to the managing director of the Southern Railway: Dear Sir: Saturday morning, which occurs fairly frequently and at easily foreseen intervals, always seems to take your railway by surprise. I should like to congratulate the noble Lord, Lord Shackleton, on becoming the Leader of this House. This we all warmly welcome. His speech yesterday, I thought, was characteristically moderate and fair—but I will not say all the nice things which I really think about him in case it gets him banned for six months from Labour Party meetings. In his speech the noble Lord went back to the 1964 trade deficit. He said that he did not want to make a Party point of it, and neither do I. But I think that it is relevant to say that, whatever one may think about the nature of that trade deficit, no one can claim that it was not fully foreseen and fully provided against. Anyone who takes the trouble to read Mr. Maudling's Budget speech will see that he fully explained that he expected a very large adverse trade balance in the coming year, partly because he thought there would be large investments in foreign oil which he thought would be very remunerative, and which did happen, and partly because he thought that there would be exceptionally heavy industrial stocking, which in fact took place, in preparation for a big new rise in industrial expansion. He also explained the ample credit guarantees which he had obtained in anticipation of this deficit from the International Monetary Fund, from the American Government and from Europe.

The first blow to my own belief in the Labour Government's ability to judge public affairs was their pretence—because I think it must have been a pretence—that they had not been properly informed about that trade deficit and that it had greatly surprised and upset them. In my view, they created an entirely artificial financial crises in the autumn of 1964, and they have been "bellyaching" about it ever since. The next blow to my belief in their capacity to govern was probably a perfectly genuine difference between my own economic views and theirs. I do not think that the bulk of the Labour Party or the majority of the Labour Government really believe or understand that the heavy increases of taxation, which they had said it would not be necessary for them to impose but which they did impose immediately after they came into office, were likely to have the effect—and in my view have had the effect—of retarding economic growth; and I do not think that they understand this now. There was £500 million of extra tax immediately after the Government took office, which arose to £1,000 million extra last year. The noble Lord, Lord Shackleton, in his speech yesterday, explaining the Government's policy said: Productivity was tackled through the tax structure, by corporation tax, by selective employment tax."—[OFFICIAL REPORT, 23/1/68; col. 134.] For reasons of time, I do not want to go into the economic pros and cons of that statement, but I think it is due to your Lordships to mention the fact that these two taxes happen to be two of the reasons why I am supporting the Amendment to the Government's Motion.

The thing that finally convinced me of the Government's inability to plan intelligently was the so-called National Plan, which purported to be a comprehensive guide to the course of the British economy for the six years 1964 to 1970. It was published in 1965, a year after it was supposed to have begun; it was abandoned in 1966, four years before it was supposed to finish. I do not think it contained one single estimate which has not been falsified or one single proposal which has been carried into effect. It is now almost forgotten and completely unhonoured, not to mention unwept and unsung.

The noble Lord, Lord Shackleton, said yesterday—and I am sure it is true—that in the early months of 1967 the Government and their advisers had every reason to believe that their economic policy was working well. I am sure that they had reasons for thinking so, but I do not know anybody else who had. The early months of 1967 were anything from six to nine months after the financial crisis of July, 1966, which was totally unforeseen by the Chancellor of the Exchequer and which took the Government completely by surprise. I am bound to say—and I think it has always appeared to most people—that while it was difficult enough to hit our economic targets under the Tory record of "Stop-Go", it has been quite impossible to do it under the Labour record of "Stop-Stop".

In 1964 our index of industrial production went up by 9 points. That, I think, was a record figure, and if you could keep that up you could carry a pretty considerable trade deficit for a considerable time. In 1965 the index of industrial production went up by only 31 points, which is still not too bad. In 1966 it went up by 11 points. In 1967, the year in which the Government thought that everything was going well, I am sorry to say that it had slipped back by 1½ points, and it is now back where it was in 1965. The really terrifying thing, in my opinion, about this Government is that their achievements always seem to be in inverse ratio to their efforts: everything that they try to do is not done, and everything that they try not to do is done. Since the end of 1965 the British economy, which the Government have tried hard to foster and improve, has actually enjoyed less growth and less progress than the Rhodesian economy, which this Government have tried to destroy, or at least tried to injure. The Government's home policy has, unintentionally, inflicted more damage on our economy than sanctions have intentionally inflicted on Rhodesia.

Even if the Government did not think up to the very last moment that devaluation would be forced upon them, would it not still have been prudent for a Government of planners to make at least some provisional plan against a contingency which they must have known to be possible, even if they did not think it was likely? Was it really necessary to tell us, first, that this was a release from the straitjacket, and then that it was an economic defeat? And was it right that we and our friends abroad should have to endure the spectacle of a squabbling Cabinet for two months, unable to agree either on how many recent promises should be broken to appease the Left-Wing "crackpots", or on how little should be done towards restoring the economic strength of the country?

Once upon a time there was a Prime Minister. His name was Lord Melbourne. He was not a very good Prime Minister, and he made a good many mistakes. But one day he said to his Cabinet: "Gentlemen, it does not matter what we say as long as we all say the same thing". Newspaper reporters in the 1830's were just as anxious as they have always been to find out what Cabinet Ministers were thinking, but they did not always guess the answer with such astonishing accuracy as they seem able to do now.

My noble friend Lord Jellicoe ended his speech yesterday with the suggestion that the Government should resign. I do not know whether or not they will accept this advice, but just in case they do not, may I be allowed to offer them a little more advice? I have often tried to do this before, and they have never accepted any of it; but I should like to go on trying. First of all, I would say to them: If you really think it right to take £500 million out of domestic consumption, for goodness' sake! use the regulator now and do not wait until March. Of course, there is no economic device that can stop all the unnecessary expenditure which you want to stop, and encourage all the productive expenditure which you want to encourage, but the regulator is the nearest thing that we have to it.

Next I would implore the Government to drop the Transport Bill, which is going to add £70 million to our industrial costs. That extra cost will make a pretty big reduction in the benefits of devaluation. And may I repeat the warning which I gave in the Scottish debate last December; namely, that this increase in transport costs is going to hit a development area like Scotland very much harder, because long hauls there are more common I would ask the Government to abolish than in the English conurbations? Next the selective employment tax, which I would describe as the stupidest imposition which the misguided ingenuity of theoretical economists has ever inflicted on a bewildered people.

Then I would suggest that the Government should adjust their direct taxation with the deliberate purpose of encouraging savings and increasing incentives to industrial and commercial success: because we shall never have a satisfactory growth in the economy again until we get better incentives than we have now and a less stifling burden of direct taxation which penalises success.

My Lords, finally the noble Lord, Lord Shackleton, spoke about the incomes policy. As your Lordships will remember, when the Labour Party were in Opposition they would not support our incomes policy, on the pretext that the N.I.C. Statutory Instrument and White Paper did not refer to the control of profits; which was not true—it did. Nevertheless, I think most of us on this side wish to support the Government's prices and incomes policy. Certainly I would wish to do so. I have put it to the Government before, and I would end up by saying again, that the success of an incomes policy is bound to depend to a very large extent on the removal of restrictive practices. And I would put it to the Government that they should have the courage to tackle the problem of trade union reform now and remove restrictive practices, because I do not think that the country can afford to wait for the Report of the Royal Commission. My Lords, I think that if the Government could do all these things, they could still save a great deal from the economic wreck which they have created.

2.41 p.m.


My Lords, the noble Lord, Lord Windlesham, said in his quietly reasoned if somewhat despondent speech in the early hours of this morning that this has been an unusual debate: unusual in its immediate causes; unusual in the number of speakers taking part; unusual in the number of maiden speakers. And, of course, we have had a moving contribution from the former Leader of the House, who had found it necessary to emphasise his words by resigning from his high office. To my noble friends Lady Llewelyn-Davies and Lord Carron, and to the noble Lords, Lord Franks and Lord Thorneycroft, I offer my congratulations. I believe that none of them stayed to hear all the tributes which were paid to them last night, but they were couched in very warm phrases indeed. I content myself by agreeing with the consensus that never before have four maiden speeches of such rare quality been heard in one day. Possibly I may also be permitted, as one who has worked under my noble friend Lord Longford in two Government Departments, as well as in my association with him as Chief Whip, to say how much I admire the dignified manner of his resignation, and to acknowledge publicly my gratitude to him for all his unique kindness.

References were made yesterday to the current fashion of criticising political life in Britain. But yesterday we heard from one public figure on this side that he, the only old Etonian in the Cabinet, had resigned office because others less fortunate than he were being deprived of educational opportunities; and from the other side another public figure, with probably more personal experience than anyone in the Opposition of the administration of our national finances, that he largely agrees with the policies of his political opponents. With these two examples before us, my Lords, surely it cannot be said that by the tests of integrity this country falls short of any other.

One advantage in having this debate: in your Lordships' House some days after that in another place is that it gave an opportunity for a more objective and balanced view of the measures announced in the Prime Minister's Statement. A more objective appraisal was certainly called for. As the Sunday Times said last weekend, there had been "too much hysteria". The noble Lord, Lord Cones-ford, rightly said that there is a duty to tell the truth. But there is a difference between telling the truth as an individual sees it and talking ourselves into trouble. We cannot expect confidence abroad if it is undermined at home. After all, one fact which emerges from the debate here and elsewhere is that, whilst no one has been enthusiastic about everything in this Statement, everyone has agreed with something. From the far Left to the far Right parts of the package have been hailed as sensible, practical, courageous and even long overdue and historically important. The noble Earl, Lord Longford, felt it necessary to resign from the Cabinet, but even he made it clear that his disagreement has been over one item, an important item as he says, but still only one item in what otherwise he was ready to support.

It is said—and Lord Grimston of Westbury seemed to be saying it again last night—that the defence cuts have been put into the package only to appease critics of the Left, who otherwise would not tolerate prescription charges. But that is as unfair as it is untrue. It is unfair because it smears an honest attempt to get all sections and interests to make some contribution. The noble Lord, Lord Windlesham, characterised this as an excess in expediency. Well, it depends upon one's definition of expedient, but I thought he was confusing expedience with a proper political attempt to be fair as between one section of the community and another. And the charge is untrue because so many have welcomed this re-phasing of our run-down who by no stretch of the imagination can be called extreme Left-Wingers. Neither the noble Lord, Lord Gladwyn, nor Lord Boothby, nor indeed Lord Thorneycroft or Lord Longford would fit into the category of Leftists. And it is at least relevant to note that the official spokesman for the Conservative Opposition in the Commons has said that for Britain in 1967 to take a leading role in reinvigorating the military alliance in South-East Asia … seems to me not to be an act of imagination but … a symptom of hallucination". This re-phasing of our military rundown we hold to be reasonable and supported by responsible people. I will return later to political implications of this military cut-back, but now I want to support the claim that the cuts in civil expenditure are equally reasonable and can, with varying degrees of reluctance, be supported by all fairminded men and women. Take first this contribution to economies made by education. The raising of the school-leaving age to 16 is to be postponed from 1970–71 to 1972–73. But it is quite wrong to assume that all educational advance has been halted. The school building programme as a whole will still continue at a record level. The expansion of the teaching force will not be affected. There will be a continual improvement in staffing standards, in both primary and secondary schools, into the early 1970s.

The Schools Council will press ahead with plans for curriculum development associated with the raising of the school leaving age. The postponement will give more time for this and for the retraining of teachers. There is, I agree, an educational loss to those who leave before 16, but none will leave compulsorily, and an anticipated 30 per cent. will stay on voluntarily. Though the quantity of education is not to be increased, it is intended that the quality will be improved, and among other indications is the estimated reduction in the average number of pupils per teacher, which in January, 1972, would have been 22.5 on the original plans, but with the two-year deferment should now be 21.7.

Then there is this cut in house building, which at first sight seemed such a serious blow to our original aspirations. In England and Wales there will be a reduction of 15,000 houses in each of the years 1968 and 1969, but the new house completions will still be a record. In each of the three years since taking office the Government have set a new record in house building for the United Kingdom. From 174,000 in 1965, completion of public authority houses has gone up until last year it was 211,000; and in 1970, with the cuts, the figure should be 220,000. The total for public and private building in 1967 is 425,500, a record figure, and the Government's support to owner-occupation, by the mortgage option scheme, and by 100 per cent. mortgage guarantee schemes, should ensure that this combined total is exceeded in the years ahead.

The re-imposition of prescription charges I confess seems to me the least justifiable of all the cuts. In this I can only agree with my noble friend Lord Brockway. On grounds of administrative economy, a straightforward insurance payment must surely be preferable but, nevertheless, here again it is fair to consider the context. In answer to the straight question which my noble friend posed about £25 million, the fact is that the estimated saving does take into account estimated expenditure on the extra administration. The cost of prescriptions in 1949 was some £30 million. The estimated figure for last year was £146 million. If one makes special provision, as we propose to do, for the young, the old, the chronic sick and expectant and nursing mothers, surely this cut is the least damaging to Britain's health services? In answer to my noble friend Lord Brockway about the Medicine Bill which, as he said, should mean some reduction in our drug bill, a Bill should be introduced into the other place, if not next week, then probably the week after.

The noble Earl, Lord Jellicoe, yesterday regretted the cutting of the major roads programme. It will be cut by £40 million in the years 1968–69 and 1969–70. He accepted that the most weight of the cuts should fall on secondary roads, but he might have mentioned that the main objective of the motorway programme, 1,000 miles by 1970, is unchanged. He could have expressed some satisfaction that there are no substantial changes in the trunk road programme of 350 miles in Great Britain before 1970, but the noble Earl picked upon major roads. This game of agreeing with the economic cuts in general, but criticising them in particular, is surely something we carry too far. If we are to make economies, something has to go. The noble Lord, Lord Windlesham, and again the noble Earl, Lord Dundee, criticised the £70 million which they claimed would be expended on bus undertakings under the provisions of the Transport Bill. Of course, this does not represent any new expediture; this is not a question of a new charge on our national resources. This is only a matter of transferring a claim upon our national resources from one undertaking to another. I was greatly interested in what the noble Lord said about American techniques of securing cost effectiveness in Government Departments. I have not had the opportunity since midnight of checking what he said, but I give him an undertaking that I will find out what has been done on the documents which he said he made available and I will write to him as soon as possible, and give him the reactions of the Treasury.

So it is possible to go through each of the items in the list of civil economies and show that each is reasonable and can be fitted into a socially responsible attitude. Indeed, I can well see some noble Lords—and I can well see the thought passing through the mind of the noble Lord, Lord Carrington—anxious to criticise the Government, saying that we are being too reasonable and that these cuts will not add up to a sufficient reduction of public expenditure. To that charge I draw attention to two factors. One is the inescapable increase in the section of our community which make special claims upon public expenditure, the young, up to school-leaving age, and the older, after retirement. In 1955, 18.3 million of our people came within these two broad categories. By 1965, 20.5 million came into these categories. By 1975, the trend will have increased to an estimated 23.5 million, and so the same cost of public expenditure must rise.

In debates in both Houses, both Opposition and Government speakers have continually demanded improvements in social services, in education, and in the health services. Time and again we have had demands for more and better roads, and it is just not good enough to demand proper improvements and then complain when the bill is presented. The other fact of life which some of those who now demand further cuts in public expenditure appear to ignore is that, despite popular belief, we even now spend less on public account and more by way of personal consumption than almost any other industrial country.

The recently published O.E.C.D. statistics are especially interesting. They show that up to 1965 the proportion of our gross national product privately consumed in the United Kingdom was 64 per cent. The comparative figure for France was 63.8 per cent.; for Germany, 56.8 per cent.; for Italy, 62.3 per cent.; and for Switzerland 58.4 per cent. Even the United States—which is held to be a country where everyone can choose how he or she spends money—are below ourselves with 62.6 per cent. Only Belgium in the Western World appears to have had a greater proportion of private consumption. The Chancellor, nevertheless, has made it quite clear that in order to reduce home demand, and to free an additional portion of our national output for the export market, he will, as necessary, reduce private consumption by increased taxation.

The noble Earl, Lord Dundee, posed the question as to why these proposals are not announced at the same time as the cuts? Of course, it is always easier to be dogmatic about these things if one has not the responsibility for executing them. The Chancellor's reasoning is understandable. In the first place, all this talk about a "spending spree" is unsupported by basic information. The relative facts will not be known for some weeks. It would have been quite wrong to impose restrictive measures on motor cars such a short time after the previous measure, before the latest sales figures were known. Moreover, at this time the economy can afford a surge in demand: there is slack to be taken up; we still have too many unemployed. Many of the consumer durables bought over Christmas and before are actually produced in the development areas. I understand that some 75 per cent. of all the washing machines on sale in this country come from the development areas. The increasing export effort has not yet made its impact on goods in the pipeline or in the retail shops. Soon we should see—and we shall be happy to see it—increasing competition between export and home demand for available resources. By that time, additional measures will need to bite. Meanwhile, the Chancellor has announced that he is bringing forward the date of his Budget.

Many noble Lords, and the noble Earl, again, referred to the importance of the prices and incomes policy. Some spoke of this as if it were something that did not affect human beings. I am bound to say on this that I attach more value to what was said by the noble Lord, Lord Carron. He at any rate knows from hard experience just what human problems are involved in bringing down this abstract theory of an incomes policy to the practical operation of restricting the money which a man takes home to his wife in his pay packet.

We should not underestimate what has been done so far in a democratic society to operate an effective prices and incomes policy. Between the first and second halves of 1967 the total wage and salary bill, seasonally adjusted, rose by 2 per cent.—well below the 3.6 per cent. increase in 1965 and the 4 per cent. increase in 1964. In the first half of 1967 the prices charged by the manufacturing industry and the home market were virtually unchanged. Between the fourth quarter of 1966 and the fourth quarter of 1967 the index of retail prices rose by 2.1 per cent., considerably less than the average rate of increase over the years 1960 to 1966. Therefore no one should underestimate the efforts that have been made. But I accept, and the Government accept, that probably the greatest single difference between success and failure in the post-devaluation export effort will be the result of the renewed efforts now being made to get agreement, one way or the other, to prevent wages chasing prices. As the Chancellor has said, he could take out of the economy the total amount put into it by increased wage demands, but not, of course, before higher wages had put up prices for the export markets.

I add only this. The efforts of the Government are not made more easy by speeches like those made yesterday by the noble Lord, Lord Macpherson of Drumochter, or by remarks like those, in an otherwise interesting speech, made by the noble Lord, Lord Belstead, who seem to regard all increases of income to the better off as incentives, and all improvements in wages of the lower paid as inflationary.


My Lords, if I may interrupt the noble Lord for a moment, I should like to say that in fact I did not say anything of the sort in my speech last night.


My Lords, we are at some disadvantage, of course, in not having the copy of Hansard before us. I can only rely upon my notes, and if they prove to be inaccurate I apologise, but the formula which I understand the noble Lord was putting to this House was that on the one hand we had to have additional incentives for the executives, and on the other hand if there was industrial unrest among the operatives we needed legal powers to deal with it. That kind of attitude and approach does not make the task upon which the Government are at present engaged, in trying to get an agreed incomes policy, easier.

My noble friend, Lord Chalfont, last night dealt thoroughly and authoritatively with the whole practice and philosophy of overseas military operations in the modern world, by a country in our position. It was a powerful speech—I think that is commonly agreed. In a sense, as an answer to the arguments advanced in support of the Opposition Amendment, it was a case of a sledgehammer to crack a nut.

There was, in fact, little left of the main Opposition case on this point, after the speech of the noble Lord, Lord Thorneycroft. If any were disposed, as the noble Earl, Lord Dundee, appears to be disposed, to believe that our economic troubles started with Mr. Wilson, I hope they will read again what Lord Thorneycroft said about playing on the edge of bankruptcy in the days of Mr. Macmillan. There were few of the noble Lord's listeners who did not take, and one sensed it, a deeper breath when the noble Lord said that if his warnings in those days had been heeded, his Party may well have lost an Election but the country would have been spared its present humiliation. But I would say to the noble Lord, in fairness to Mr. Macmillan, that I do not believe our real trouble even started under his Administration.

I have been looking at the figures provided to me for overseas military expenditure for each of the years since 1952. No doubt they are familiar to some; they are worth pondering again by all. In 1952 our gross military expenditure overseas was £158 million, but it was reduced by payments of one kind or another, mostly in that year from the United States of America, to nothing more than £12 million. Steadily that £12 million has risen: £17 million the following year; £60 million in 1954; up to £129 million in 1959; £267 million in 1964 and £272 million in 1966. Can anyone really say that it is incompetent to resolve to cut that figure by 1971?

Apart from the consequences to our balance of payments position, can we be certain that military expenditure on this scale has kept the peace in, say, the Middle East; that it has kept the Suez Canal open; or kept the oil flowing? It was an official Defence spokesman for the Opposition in the Commons who actually said: It was just because we were physically present in the area that our oil and our reserves were in danger when other people's were not. As to South-East Asia, an area of increasing importance and one of the most richly endowed parts of the world's earth surface, the noble Lord, Lord Gladwyn, and the noble Lord, Lord Thorneycroft, had some reservations about a total withdrawal. We were all impressed by what they said, and it will be considered. But as my noble friend the Leader of the House told us, constructive discussions are going on about the establishment of a joint air defence system for Singapore and Malaysia. It is good to see this collaboration of Singapore and Malaysia—just as it is to see signs of similar collaboration in the Middle East. That kind of collective security, by the countries immediately concerned, may well prove far more effective in maintaining political stability than military intervention by an outside foreign Power. After all, it has not exactly been proved conclusively that military intervention in Vietnam will guarantee political stability in the area.

The cry that went up in two world wars that "Australia will be there" is at once one of the most simple and the most moving slogans that I have ever heard, and I am sure that it would be said in reverse if ever Australia or New Zealand was in peril. The noble Earl, Lord Jellicoe, said it would be inconceivable that we should not go to the aid of those two countries if they were attacked. Of course he is right. There is an emotional involvement there, but the determination is none the less real for that. My noble friend Lord Chalfont dealt with the military implications of that determination, and I cannot add more to what he so well said.


My Lords, may I interrupt the noble Lord for a moment? As I understand it, and I have been following his argument very closely, he is saying that our troops overseas in the last few years have not added to the stability of the areas in which they have been based and it would have been better if they had not been there. This is an argument which the noble Lord, Lord Gladwyn, has advanced for three years. I think it is a perfectly tenable argument. I do not happen to agree with it. What I do not understand is why the Government have been saying precisely the opposite until now.


My Lords, it is perfectly possible to make that point. I think this is a matter in which the arguments have been going backwards and forwards. I think now the truth is beginning to emerge much more clearly, and what has been said by Mr. Powell, the noble Lord, Lord Gladwyn, and by, among others, the noble Lord, Lord Boothby, is, I think, beginning to gain ground. That I think is one of the interesting factors of the present debate that is going on. The noble Lord may think he scored a debating point, but these are serious issues. These are matters in which we have to establish the truth, and I believe the truth is as I have just explained.

I would refer again, if I may, to the words of my noble friend Lady Llewelyn-Davies, when she said that in many areas of the world to-day, where once we relied upon military power for our influence, new factors are of growing importance. Economic aid and technical assistance are now more helpful in the securing of social stability, and are much more likely to lead to political influence.

My Lords, I would only add this about Australia and New Zealand. Now that some of the dust of the Common Market controversy has settled, I should like to see a great new effort to rebuild the proportions of trade which once we did with each other. I agree absolutely with what the noble Lord, Lord Carrington, said in a recent newspaper article about the value to both sides of renewing British investment in that part of the world—once we can afford it.

I believe there began to emerge from the debate yesterday a clearer picture of the position that Britain can hold in the world of the future. Our concentration of military capability may well prove as decisive to our political and economic advance as did the French withdrawal from Indo-China and Algeria. The Britain of the future will have commitments which she really can fulfil. Slowly, and indeed painfully, our in dustry is reshaping itself to fit modern technical facts. The industrial troubles in coal, transport and the docks are themselves only indicative of the process of change that is going on. The mergers in shipbuilding, in the motorcar industry, in the electrical industry, Government assisted if not inspired, are part of the process of modernisation. Devaluation, a defeat, as my noble friend Lord Shackleton said, for the policies which we had previously pursued, makes one vital difference to this package of economic cuts. This time, as against the other stops in the "Stop-Go" cycle, we have the opportunity to divert spare capacity to the export trade.

I absolutely agree with my noble friend Lord Longford that there is a need, a crying need, to identify and brighten our moral principles. I should like to think that if Britain accepts, as so many in industry to-day appear ready to do, the present economic challenges, we shall not only be ready to proclaim our principles, but we shall have the material basis on which we can apply them.

3.14 p.m.


My Lords, in this wide-ranging debate I propose to confine myself to one single subject, namely, to press the Government, with all the force at my command and all the reasoning which I hope to give to the House, to reverse their fatal decision of refusing to send ships and aircraft to South Africa. In doing so I am responding to an appeal made to me by my noble friend, Lord Jellicoe, in what, if I may say so without impertinence, I thought an absolutely model speech in every way. He said that on this subject I could speak with a unique authority. Well, I do not know about authority, but I certainly can speak with a knowledge that I suppose nobody else in this House can have, because the agreement known as the Simonstown Agreement was negotiated and made by the noble and gallant Field Marshal Lord Alexander of Tunis as Defence Minister and myself as Secretary of State for the Commonwealth, assisted, of course, by all the Chiefs of Staff, and we were negotiating with Dr. Erasmus, who was the Minister of Defence in the Union of South Africa.

The Simonstown Agreement was a very comprehensive agreement in every way. First of all, strategically it covered the whole range of command from Gibraltar right round to Mombasa in the Indian Ocean. In the second place, it gave to the United Kingdom and her allies in any war the full use of the South African ports. Some people have talked as though that just meant Simonstown. It does not, of course. Simonstown is relatively unimportant from that point of view. The vital ports on such an occasion, as to-day, are Durban and Cape Town. When I was the Resident Minister in Africa in the latter part of the war it was my duty to make constant visits to South Africa, when I was always the guest of General Smuts. I was able to see in those years, when the Mediterranean was closed, how invaluable those ports were. I think I am right in saying that in those two years of the war before the Mediterranean was open again upwards of 1 million tons of Allied shipping used the ports of Durban and Cape Town. That is just as important to-day. It was referred to very effectively by my noble friend Lord Milverton, whose speech I read—I was unable to hear it—and who worked so closely with me in those days.

But the supply side was equally important, perhaps even more important. South Africa agreed to place in the United Kingdom all orders for ships and aircraft which they would require for their defence programme under the Agreement, and those were estimated at the start at not less than £18 or £19 million and were certain as time went on greatly to increase. Observe, my Lords, that there was nothing in this agreement for the supply of ships, the supply of aircraft, which could conceivably in any respect affect apartheid.

The Agreement was not signed in August, 1954, because Mr. Erasmus, with whom negotiations were extremely cordial all through, not unnaturally was anxious to be quite sure. He had been unable to be in touch with his Government the whole time on some matters. I remember, for instance, that one occasion was a Saturday afternoon. It is not always easy to get in touch with Governments on Saturday afternoons. He wanted to be quite sure that, though he himself was in the fullest agreement, he had not exceeded his authority. In fact, when the Agreement was referred to the Union Government the Union Government fully approved the whole Agreement which was accepted and endorsed in every single detail.

What has appeared odd to some people, not unnaturally, is that when the Agreement came to be published and formalised it was put into the name of the Secretary of State for Foreign Affairs, and not into the name of the Commonwealth Secretary or the Defence Minister. I understand that the reason for that was that, being in the nature of a Treaty, the documents had to stand in the name of the Secretary of State for Foreign Affairs. But the Agreement as set out in those documents in that Treaty (if that is the right way to express it) was in every single particular the Agreement which Lord Alexander of Tunis and I had negotiated with Mr. Erasmus. The British Government and the South African Government gave full effect to that Agreement from then onwards, and it certainly operated greatly to our mutual advantage.

Now I want to tell the House something else, which will be complete news to noble Lords, because it will not be found in any Treaty. At the time, in March, 1961, when South Africa was forced to leave the Commonwealth, much against the wishes, as I know, of Mr. Macmillan, the British Prime Minister at the time, I found myself, at a dinner given by my noble friend Lord Fraser of Lonsdale, sitting next to Dr. Verwoerd, the Prime Minister of South Africa. He said to me: "Whatever happens, I mean to continuo in full force the Agreement that Alexander and you made with our Government."

I think your Lordships will agree that that was a most generous gesture to be made by South Africa, at a time when, one can imagine, they were feeling pretty sore under the collar. Those are the facts, and this is the Agreement, so invaluable to us in every way, which the Government insist on breaking—at a time when we need exports most and, as was said over and over again yesterday, at a time when the use of the ports is more valuable to us than ever. Does it not seem strange that although we export and sell readily—I do not dissent from this—to Russia, whose treatment of her nationals shocks us just as apartheid shocks us, but who acts also against us in a great many places in the world, by subversive activities and in other ways, we refuse to sell ships and aircraft to South Africa who seeks only to remain our ally and our friend?

I have told the House the full story of the Simonstown Agreement and its sequel. No one can deny those facts. I therefore beg the Government, in this critical time, to reverse their foolish decision. Can folly go further than to persist in this embargo? I hope that noble Lords will bear those facts in mind in the vote which they give to-night. I do not know what answer we shall have from the Government; but whatever they say, I hope that they will not seek to deny those facts.

My Lords, I said that I would deal with only one subject. That was my intention. But as so much has been said with which I most cordially agree, about the importance of wage restraint and an incomes policy it may not be wholly irrelevent, and I hope not impertinent to the Government, to remind them of what happened in the National Government of 1931. I agree that it was then not a question of increases coming forward, but of a number of cuts being made. The highest cuts in the different salaries and so on rose to 12½, per cent. What the National Government at that time did was to say, "If those cuts are to be implemented, surely we ought to set an example", and the Government themselves made a cut of 20 per cent. in their own salaries. That may perhaps not be wholly irrelevant, and I hope not unhelpful as a suggestion to-day.

3.28 p.m.


My Lords, I appreciate that it is the wise custom of this House that those who rise to speak to your Lordships for the first time should cast their remarks in a non-controversial form; and I shall try to say what I wish to say in accordance with that good custom. Like the noble Earl, Lord Swinton, I wish to speak about one point only, but it is a matter on which I have strong feelings and strong convictions, and I confess I should have found it easier to say what I wish to say in rather fiercer language.

I am most alarmed—I repeat, alarmed—about the school-leaving age decision. I stand firmly behind the Government in their courageous approach to the problem of cutting public expenditure where necessary. I am well aware that all those who have the great national services at heart will have one service or one point in one service about which personally they feel particularly strongly. But I want to argue—and I hope to convince some of your Lordships—that this particular decision about postponing the raising of the school-leaving age is in some ways in a special position. The cutting of established and accepted expenditure is one thing. The postponement of a planned and long-determined and accepted advance in education is another.

It seems to me that something has gone wrong with the priorities. It would appear that even this Government have not appreciated what risks they take and what in general is the significance of such a postponement The Government have shown, admirably, in my view, that there are some things which can be saved. The old and the chronic sick are protected from the prescription charges, and there is to be no cut—quite rightly in my view—in the number of teachers. Therefore, some things can be saved. But the cause of the school-leaving age has for the time being been lost. I have said that not even the Government, despite the persuasive advocacy of the noble Earl, Lord Longford, can realise the risks they are taking and the significance of this decision. I take note that the saving is a pretty small one in such a very large issue.

I am told by statisticians, whose knowledge and calculations I greatly trust, that the savings will be considerably less than those mentioned by the Prime Minister. The Prime Minister's calculations they tell me—and evidently a good deal is known about these figures—make sense only on the assumption that the capital expenditures which are to be cut are on minor buildings account. In that event, that would quite soon begin to affect the coming in of the bills and would therefore have an effect on expenditure. But if, as applies in a great many cases, the expenditure which is tied to the raising of the school-leaving age in 1971 is inextricably bound up with major buildings, then any cuts which are made, if they can be made, will not begin to affect the bills in the years under consideration, except very much more slowly.

In these circumstances the Prime Minister's estimates are probably likely to be in excess of what can be done; indeed, what can be done will not be more than two-thirds of what the Prime Minister said. So, in relation to what would be a great advance, if one accepts it as a great advance, the savings are small. They will not be quick; they will not come in in the years which are important, before the military cuts begin to take effect; and in general it is difficult not to conclude that the economic arguments alone, in the eyes of those who know the facts, cannot have been sufficient to cause a decision of this magnitude and importance.

I think of those of us in my generation who have fought for the great educational advances of our time. When I say "my generation", I mean the generation who were young soldiers in the First War, and the generations immediately following. We think of the causes which have been fought for and won; the universal introduction of secondary education; three-year training for teachers, the expansion of the universities; and now the revolutionary transformation—not before it was duc—in further education and in the rest of the field of higher education. Those of us who have fought for these great advances in education know that they are not easily attained. They are not great, popular measures which command enormous numbers of enthusiastic votes where politicians are driven before the fury of the masses. We all know that any decision about raising the school-leaving age is a matter of judgment, a difficult matter, and a matter in which it takes some time for opinion to settle down and come to the correct decision.

The parents who wish their children to remain at school after the present school-leaving age can keep them there; and no doubt they will do so. The real argument is about those children who, given the economic forces involved, will want to go out into the market to earn money and join the happy teenage plutocracy. It is an advance that will come, not by being forced by public opinion, but only by statesmanship. All these great educational advances—of which there have been several, many of them very difficult to decide—have come about when the leaders of the nation, the statesmen, have at long last, usually pretty late in the day, come to the view that it is time they ought to occur. Yet now the opportunity has been taken, when faced with not very strong economic arguments, to allow a great setback to take place.

Your Lordships may think that I am exaggerating, but those of us who have been in the university business in these days of expansion and have done what we can to promote it and to see it through, know that with these advances it is necessary to keep up the momentum, and that when momentum is lost a great many more things will almost certainly be lost than those one thinks are in fact being put at risk or postponed. Momentum in such matters is almost everything. Many people in the universities, to their great credit, have fought hard through the years. They have kept their eye on the ball; they have watched what has been happening, and in advance have tried to keep their teeth in the reform of the expansion of the universities. If they had lost the momentum of advance, then the history of these years would have been very different. The universities were caught napping—perhaps your Lordships will think to their shame—over the question of fees for overseas students. They heard nothing about the proposal to increase fees until about 24 hours before it was announced. They said nothing very vigorous for a few days, and then the Government were so committed in the matter that they could not possibly consider any arguments from anybody. This illustrates the point that if you are caught napping about one of these reforms of the kind which requires momentum and the maintenance of momentum, you are lost.

We have to recognise that this question of raising the school-leaving age will be a very difficult one in 1973. The year 1971 was carefully chosen. The year 1969 was looked at; 1970 was looked at; and 1971 was chosen.

As your Lordships know, the great Act of 1944 committed itself to the raising of the school-leaving age to 16 at the right time. As you also know, the Crowther Report came out in two chapters, arguing with very great cogency that this reform was overdue, both in the interests of the nation and in the interests of the individual young. This advance has been being built up for a long time and has been accepted—at least, so we thought—and the year 1971 was chosen. The arrangements were put in hand, and since planning—though, perhaps, so soon in the history of planning, it is not as good as we should all like—counts for a very great deal, putting back the processes of planning is a very serious matter.

After 1971 the relevant age groups go up in numbers. When we come to look at 1973, the numbers to be provided for will look somewhat larger, and rising as compared with the numbers of 1971. The whole educational climate of the argument in 1973, as those of us who have to argue for educational causes in Whitehall and Westminster well know, is hardly likely to be easier than it has been. Let me therefore speak and face the future. We have been fighting for twenty years for this cause. It is a cause requiring judgment, statesmanship, planning, determination, getting your teeth into it and sticking to it. Here we are, with a very grave setback. After fighting for twenty years, I am sure we must reconcile ourselves to two more years of hard arguing and hard persuading, or we shall find ourselves in a worse position on this issue in 1973 than we are in now. In other words, unless we fight hard, and begin as from to-day, we may well find that we have lost this great reform after all these years of argument and difficult deliberations, not for two years but for ever, or at least for another long period of time.

3.43 p.m.


My Lords, it is my privilege this afternoon, on behalf of your Lordships' House, to offer congratulations to the noble Lord, Lord Morris of Grasmere, on his maiden speech in this House. The noble Lord has made a great contribution with his speech this afternoon and, if I may say so without being impertinent, it is a joy to listen to someone who is so well-educated that he does not have to be burdened, as I have to be, with notes. I believe I am right in saying, if my education is sufficiently wide for me to be correct, that the noble Lord was Vice-Chancellor of Leeds University and he is either pro-Chancellor of, or has had a great deal to do with, Bradford University. I am sure your Lordships will welcome him back again, if he makes another contribution such as he has made this afternoon.

I also come now to one subject, as the last speakers have done, and that subject in my case is, of course, the Territorial Army; and I make no apology for taking your Lordships' time on this vital question as we face it to-day. I should like to make it quite clear that I intervene in this debate in my position as Chairman of the Territorial Army Council, which I have had the honour to serve for some years. Before I go any further I want to tell your Lordships that my Council and I, and the various chairmen and even commanding officers, are perfectly aware of the very serious situation in which this country finds itself to-day. We are not asking any of you to listen to us; we are not asking for favours; we are not asking for sympathy. We are asking for common sense.

I believe it is two years ago this very week that we had what I thought was the end of the match, and only last week I realised that a second innings was to be played. I would let your Lordships know that that second innings will be played. It may not be as exciting as an innings that is being played elsewhere in the world this afternoon. It might have been quite fun, were it not for the terrible situation and the vital questions which have to be answered. I should like to take this opportunity of recording my deep appreciation of, and thanks for, the enormous number of telegrams and letters that are pouring in. How many of your Lordships have been favoured, as I have in the past week, sitting at my breakfast table and opening one after the other of these messages? It is very moving and very touching; but it makes me realise even more the great responsibilities that I bear to my Council and the Territorials this afternoon.

I do not propose to weary your Lordships with a lot of details of the past, but I would remind you that in 1965, in the spring and in the summer, the reorganisation of the T.A., as we knew it then, was under consideration by the Government. It was at the end of July that, without any consultation at all, I was informed about the changes which were to take place, but those changes did not at that moment include the T. and A.V.R.III Force. We of the Council played our part in the Ministry of Defence, and the Opposition quite rightly played its part. Then we came to the autumn of 1965. In December there was the debate in another place where the majority came down for the Government, though I think it was of only one or two. Through fear at that moment, we opened negotiations again; and eventually, two years ago this week, the T. and A.V.R. was founded.

When the reorganisation took place the regiments, the yeomanries, the artilleries and the battalions were to lose all our names, all our titles and everything that meant. But by the advent of the T. and A.V.R.III those were retained to the tune of 87 units, and those who could possibly have retained some in other ways gave them up and were willing to join this Force in order to preserve their identity.

Now the members of this Force were armed with only a uniform and a rifle, and they had a few land-rovers. They were put on the Home Office Vote—nine-tenths of it was paid by the Home Office and one-tenth of it by the Ministry of Defence—but they were administered by the Ministry of Defence. And though they were so lightly equipped, they were, my Lords, soldiers of the Queen. This Force, we were told by the Home Office, would be allowed a maximum of £3 million per year. As our budget stands, by April 1 of this year, at the end of the first full year of this Force, we shall have made great strides, and we shall in fact have existed on £2½ million. This, my Lords, is what the Government propose at this moment to abolish. This afternoon I listened to the noble Lord, Lord Beswick, standing at the Government Box here, talking of £70 million, £50 million and other such sums. In comparison, this is a pittance. I know it is important—that every pound may be. But here we have this Force of young enthusiasts who wish to give some voluntary help to their country being told, after having been formed nine months, "You are not wanted. Go home".

I have had a letter from the Colonel of the 9th Battalion Territorials, the Queen's Regiment, Royal Sussex, of which I have the privilege to be Honorary Colonel. He wrote to me on Saturday: I have explained to all the troops what all this means, but they just will NOT go home". That is the spirit, my Lords, that this Government wish to destroy.

I was never a very great soldier, but it is forty years ago next April that I first became a Territorial. I should have thought that when the Regular Army was going to be cut down one thing was essential, and that was to maintain your Reserve; and you should, I believe, technically increase its power. If this Force is to be abolished there will be areas where for quite a few miles there will be no troops at all, and the whole of the strength of the country will be so limited that I tremble to think of the responsibilities that will lie at the feet of those who take this step. Have your Lordships forgotten that in 1938 the Territorial Army was doubled overnight because of the crisis at that time? Must I remind you that all those battalions were virtually up to strength by August, 1939, and within twenty-four hours of the call-up they were virtually 100 per cent. on parade? These, my Lords, are the people that you want to throw away. You have never understood them. Why do you not ask some people—I could name them—to come and tell you a little about the Territorials and what they stand for in this country?

The idea of this Force was to help the civil police. These men were used at the "Torrey Canyon" oil disaster, and they have been helping with the foot-and-mouth epidemic through this winter. Conversations were going on with the police authorities to see how much use they might be to them, and the police, I know, were looking forward to having them. I must make it clear now that I summoned my Executive to meet me last Monday, and at the end of the meeting there was unanimous agreement. It was not a case of looking for it: I felt it. I said, "Are we agreed that if this takes place and we are abolished, never again can we possibly raise the Territorials?" That, my Lords, is the sad fact.

On Monday of last week, at 10.30 o'clock in the morning, I received a message that the Secretary of State for Defence, Mr. Healey, would like to see me at 12 o'clock on the Tuesday. An inquiry was made to discover if there were any alternative hours, and I was informed, "No; it will be 12 o'clock on Tuesday." I went, and I was given the news in much the same way as I received it some two-and-a-half years ago. There was no consultation there was no decision. In fact, there is no plan, because I said to Mr. Healey, "You mentioned care and maintenance. What does this entail?". His answer to me was roughly this: "We have not had time to consider the future, and of course we cannot get on without the help of your Council." How long, my Lords, have I to stand and listen to all this? How long do you expect me to be treated like this? I look after the Territorials to the best of my ability because of this country, and I put my personal pride to one side; but there may well be a limit to what can be expected.

This morning I had a talk with Mr. Reynolds, the Minister of Defence for Administration. I asked him point blank: "What happens if I come here and say that I want the Force, the T. and A.V.R.III, to continue exactly as it is, and you must withdraw?". He said, "It would be absolutely useless, and the discussions which I have suggested we might have for the care and maintenance would never get off the floor. They would be dead." Then I asked him whether he felt that the situation was such that we might possibly have some useful discussions; and we probed in one or two places and I came to the conclusion that if we were going to be killed without discussion, that was not the part I would play. I told Mr. Reynolds this morning that I would discuss with my Working Party, which I had already set up, and that we will meet people at various levels of the Ministry of Defence to see what we can work out with whatever money they can give us.

But as I have been informed that it is worthwhile to have these discussions on the care and maintenance (and if you are going to care and maintain against the day when you may be able to expand, so as to bring us back to where we are or to an even greater strength) may I ask the noble and learned Lord, the Lord Chancellor, who, I believe, is to reply for the Government to-night, whether that means what I believe it to mean: that the abolition of the T. & A.V.R. III will not take place?—because there will be no point in having these discussions if there is nothing upon which to build when that moment may come. I want to send out a message to the Territorials of this country that something will be saved and that the word "abolition" itself is abolished from that statement.

The question of redundancy creeps in again, and I asked the Minister this morning to make it quite clear that no steps will be taken before we have had a chance to examine our proposals and to discuss them; and I understand that this will be undertaken. Eighteen months ago, in July, 1966, I informed my Council that I did not propose to continue after July of this year. During the last week I have given great thought to whether this was not the moment when I should retire. But I have come to my own conclusion that my place is beside the Territorials at this hour. They have been good enough to show their confidence in me. I will bat on in this second innings, in the hope that we shall obtain something which I shall be able to hand over to my successor next July. If we meet with final defeat I shall apologise to the Territorials of this country for my failure. I shall never surrender.

4.5 p.m.


My Lords, I am exceedingly grateful for the kindly tradition that enables your Lordships to regard with sympathy those who speak in this House for the first time. This tradition is a great comfort to me and I will do my best not to abuse your Lordships' benevolence.

I regard it as extremely opportune that I speak after the noble Duke because I support a great deal of what he has said. I should regard it as detrimental to the national interest to handle the A.V.R. problem in a way that would result in the total abolition of the Territorial Army tradition. However, I would ask your Lordships to think for just a moment of how this problem came to arise. It came because the problem of the reserve forces in general, and the Territorial Army in particular, was left to "go bad" in a substantial way. The present Administration, when it tackled the problem of the Territorial Army, found—and this was only a very small aspect—that at least 40 Artillery regiments were armed with 25-pounder guns of the last war which, if they were to go into action, would require their ammunition to be specially reconstructed.

When one is faced with problems of this kind—and with burdens of cost weighing heavily overall—it is not surprising (and it has happened before, under all Administrations) that Gresham's Law applies: the bad drives out the good. I believe that the A.V.R.III is a military necessity but I would not put it in military terms. I would say that it has been one of the major factors in the stability of our political life. This has been so largely because, from the 17th century onwards, a dialogue has been carried on in a civilised way between the Army and the rest of the nation. It is part of the Army's glory—and I speak here as a Regular soldier—but the occasions upon which Regular soldiers, while serving, have sought to interfere in politics are extremely rare. We have to search our memories very hard to discover even isolated instances.

The fact that the dialogue has continued—and is carried out—in a civilised way is due, in my judgment, to the existence of the Territorial Army. It is a fact that we live in times of great instability—instability in the international field, instability at home. The new generations are coming along and I look at these young people and I wonder (and this is a sure sign that I am getting very old) whether they will face up to responsibility quite as I would wish them to do. But the fact that a body of men exists who are prepared to give up their leisure time in the service of their country is a major stabilising factor. Their numbers are not very great; the original figure for A.V.R.III was 22,000; and I suppose that by now they have recruited up to 15,000 or so. But if, on the budget which the noble Duke mentioned, they have done that, then I think the present Administration, of which I was recently a member, would be very wise to look again at this problem.

Your Lordships who have held administrative positions of much greater responsibility than I, will know what can happen when an unwanted item or a recently-acquired item gets on to the budget of a Department which is suddenly faced with an economy call. This item, which you have not had for very long, which you do not particularly want and which you do not know very much about—out it goes! The A.V.R. III is the victim of the fact of its transfer to the budget of the Home Office. I would suggest to your Lordships that one of the things the Government should do is bring it back from the Home Office to where it belongs, in the Ministry of Defence; and they should keep it on something more than a care-and-maintenance basis, because if it is left on such a basis for a number of years, then the tradition upon which is is founded will die, or at least tend to wither away.

I would congratulate the Government and the noble Duke on the fact that there are to be talks, and that in the talks there will be a careful look at the care-and-maintenance basis. An examination should be made with great care to see whether A.V.R. 111 can be preserved, not in terms of its current military value but in terms of its value as an area which fosters an understanding of the Armed Forces and which may also provide a recruiting ground (the noble Duke did not mention this), and a very valuable recruiting ground, for A.V.R. II and the Regular Army. It is for these reasons that I support the noble Duke's plea this afternoon.

I would say, however, to the noble Duke—and this point is made in no sense as a rebuke—that he was a little hard when he suggested that those who happen to hold the views that I share, or at least shared until I sat on the Cross-Benches, do not understand the Territorial Army. I joined as a volunteer when I was a youngster about the age of 16, and what I always regarded as for my sins I served in a Territorial battalion until I became a Regular. I know that the noble Lord, Lord Chalfont, also served in a Territorial unit. I understand the anxiety of the noble Duke, but I hope he will not think that, because there are those who do not go the whole way with him, we do not understand and sympathise with the cause he has espoused.

My Lords, I must be very mindful of the pressure of time, but I wish to trespass on your Lordships' kindness this afternoon as there are one or two things that I think should be said. I shall go into the Division Lobby to-night in support of the Government, but I have doubts; not about the package deal, but what I would call some of the reasons on which it is based. I would remind your Lordships that in Defence matters policies take a long time to come to fruition. The period of gestation is, what?—ten years, twelve years? The wrath of the gods which is visited upon us now does not stem primarily from the acts of the present Administration. In my judgment it originated in the 1957–58 Defence White Paper.

What was there done by that White Paper? We abolished conscription under political pressure, and prematurely in my judgment, without regard to the consequences. What was the consequence? A bill which, at the present time, contains about the same percentage for pay, and what I would call allowances and non-effective charges, including the pay of civilians, now as then. But now ten years later we have 300,000 fewer men serving in the Armed Forces and over 100,000 fewer civilians. The result has been—because of the steps that were taken in 1957—a constant pressure on the Defence expenditure ceiling, with the result that, first, we cannot afford the equipment and, secondly, if the package deals mean anything we now cannot afford the men. I do not cast any blame. Both Parties have their share.

But there was another factor. If one reads the 1957 White Paper, one does not have to go very far before one finds it was actuated by precisely the same principles and forces which forced the Government to take the action they have taken in the present situation; precisely the same. The then Government put all their money on an independent British nuclear weapon, Blue Streak. We carried on for four years. This was succeeded by other weapons which cost a lot and achieved nothing and then in due course we progressed through Skybolt to Polaris and then F.111. But, my Lords, one of the things that astonishes me about the present White Paper (and, may I say, about that very highly intelligent band of gentlemen the defence critics) is that not one word, so far as I can discover, has been said about the continuance of Polaris.

My Lords, if you are going to withdraw from the Far East, and if in actual fact you have long since given up, as I hope we have, any belief in a British independent nuclear deterrent, what now is the purpose of the Polaris submarines? There are to be four. The first one, "Resolution", will become operational shortly. Where is it to operate? In the Atlantic, armed with A.3, at a time when the Americans have dozens of missiles with even greater hitting force than Polaris, and when it adds nothing to our strength? Or it is to go to the Far East? Are we going to deploy it there at the very time when we are withdrawing from the Far East? Are we going to send this expensive complex into the Far East and, if so, at what cost? What we do know is that the bill, even now, over the next decade, will run into hundreds of millions of pounds—and here we are, saving a few millions on postponing the raising of the school leaving age or saving £2½ million to get rid of A.V.R. III.

My Lords, I am always happy to place my services at the disposal of your Lordships, and I would put forward a constructive proposal. It is that the Government should offer to re-sell Polaris back to the Americans. If we could re-sell it back to them they could afford to reconstruct it. They could arm it with Poseidon. Western hitting power would thereby be increased and we should accumulate at once—because they could afford to pay us over the exchanges—some hundreds of millions of pounds which would be of practical value in the situation in which we now are.

My Lords, I turn to another factor, the position of the British Army of the Rhine. We are told in paragraph 11 of the Government White Paper—here I must try to get my quotation reasonably right—that our security lies fundamentally in Europe. This is a doctrine which has been taken abroad, in my submission, for no military reason. Oh, yes!—politically, very important. This is our second obsession. It is an addition to the independent nuclear deterrent. If it is based on the intention to go into the Common Market regardless, then yes; you have to pay lip service to it. But, my Lords, how did this European commitment come about? Sir Anthony Eden, as he then was—the Earl of Avon—went in October, 1954, to a Conference in Paris—there is a very readable account about what took place in Lord Moran's book Churchill. The story is told of how Lord Moran came next morning, full of joy and great triumph, and talked to the then Prime Minister of how M. Mendes France and M. Spaak had congratulated Sir Anthony Eden on his great triumph. He recalls that General Eisenhower had said that this was of fundamental importance, and that Britain had taken a most tremendous step in undertaking to keep four divisions in Europe and the 2nd Tactical Air Force. Mr. Churchill said, "That? That is of no importance. We can break that at any time." And so before the ink was dry on the Paris agreement the four divisions became 77,000 the 77,000 was run down to 64,000 and then to 55,000. My Lords, if noble Lords on the Opposition Benches want to talk about broken pledges they should look at the number of occasions on which the most categorical assurances were given to our European allies and members of NATO that that 55,000 would be available. But we have never reached that figure at any time in the past ten years.

There is something even more than that. It depends for its fighting capacity on what? On atomic tactical weapons. The two we possess, the Honest John and the 8 inch Howitzer are American and they are obsolescent. That is not all the story. At the present time inside the Northern Army Group we have fewer troops than the Germans. They have 65,000 and they provide Army nuclear support weapons—the "Sergeant" and the "Pershing" without which B.A.O.R. could not fight for five minutes. If our military position in the world depends upon NATO and our position in Europe, then it is our clear duty to ensure that our forces in Europe are up to strength, that they are militarily viable and that they are armed with the weapons which are necessary for the discharge of their function.

The picture is even more ludicrous than that. In order to save offset costs, what is done is to maintain in Europe battalions which are under strength, because it makes a smaller claim on our foreign exchange if the numbers are fewer. So we have the picture of battalions at home up to establishment, and when they go to the Rhine Army they are reduced in strength. That is all right so far as display in the shop window is concerned, but in military terms it deceives nobody but ourselves. On this occasion I will not trespass further on your Lordships' kindness beyond making two suggestions, couched in military terms, both of which will help enormously our economy and our prestige. Get rid of Polaris, and either bring back the Rhine Army or equip it and man it to the point where it is militarily viable. If you cannot do this, bring it back.

That leaves me one final point. It is the practice, commonplace now, to denigrate the Prime Minister's integrity. Anything that can throw doubt upon his word is an accepted form. I am one of those people who judge men not by what they say but by what they do. I agree with the noble Earl, Lord Jellicoe, when he said that this country can do much better than it is already doing, bat it can do so only if we recognise facts. The Prime Minister, when Leader of the Opposition, with great courage did something that no other leader of a political Party since the end of the war has had the courage to do. While leading a Party which contains an element of men who do not regard the use of force as morally justifiable in any circumstances, the Prime Minister offered talks in order to elevate defence beyond the Party struggle. He did that in Opposition and he has done it three times again since he became Prime Minister, with the specific intention of trying to get this problem right. Because on this a great deal depends, not only in terms of power but also in terms of prestige and of the economy. He made no progress. Would it not be fitting if your Lordships' House took the lead in this matter and on defence questions tried on all occasions to clear our minds on the facts before we argued on matters of opinion? Thus by establishing the facts we can make our contribution to building an informed public opinion, without which in a democracy little will avail.

4.24 p.m.


My Lords, there falls to me the privilege of congratulating the noble Lord, Lord Wigg, on his maiden speech. Your Lordships are always pleased when we get new Members who know what they are talking about and that applies to the noble Lord, to whom we were so delighted to listen this afternoon. We hope that on future occasions he will be able to inform us about his work in his new job, in the same way as he has informed us to-day about matters of defence. We shall look forward to hearing him on a great many other occasions.

In the short time at my disposal, I want to deal with our domestic problems rather than with our problems overseas. First I want to say a word about housing. I think it is lamentable if we do not try to build the largest number of houses we possibly can. All those who have worked in any form of social service realise that good housing is essential, and that if people are properly housed it lessens the demand for other services. I have for a long time been particularly interested in the elderly, and one of the great problems is connected with the houses in which they are forced, through economic and other circumstances, to live. A large number of my colleagues in the medical profession would agree that the amount of sickness which is either caused by bad housing or accentuated by bad housing is substantial. If we have first-class housing, we shall cut down the bills in all sorts of other directions. That is why I am sorry that the housing programme may be affected. I am sure that that is wrong. Turning to fields about which I do not know so much, I feel that a good deal of juvenile delinquency and broken families is caused by bad housing. To have too many people living together in cramped conditions breeds reactions and emotions which may lead finally to some kind of explosion.

I regard the roads as being part of the country's capital assets. We do not have the road system in this country that we need to have. It works all right, but we are behind some countries in Europe. I should like to think that no suggestion will be made that road programmes might be reduced, because they are of enormous practical value to this country. In parenthesis, I would add that it seems to me a curious thing that local authorities maintain secondary roads to the same standard as first-class roads. That is a practical habit if you have all the money in the world to do it with. In foreign countries secondary roads are reasonably kept up, but not to the same level as here. I wonder whether it would be worth while looking at this point—I do not go into questions of danger and accidents—because it seems to me something that might be considered.

I should now like to turn to one or two matters affecting health. I have no particular view about the issue of milk in secondary schools, but I would sug gest that there are some children who will not benefit from it. A good many boys and girls do not get it. I know that when I was young milk was a drink I could not stand. I took every opportunity I could of pouring it out of the window when my parents gave it to me. So I am not madly keen to give milk to boys and girls of higher ages. But I think that it should be available to children who need it, those who do not get a good breakfast before they come to school. Would it not be possible to make some kind of scheme which would allow such children to get milk without at the same time giving it to all the older schoolchildren?

I regret—although here again it may lead to other things which are good—the increase in the dental charges from £1 to 30s. I regret it not because I mind people having to pay it but because we have not a very good standard of dental hygiene in this country. In fact, a large number of people who have something wrong with their teeth go to the dentist and say, "Pull out my teeth", and do not try to conserve them. It is a bad thing to have one's teeth out, and the more one can keep one's own teeth in, the better. It is rather expensive, but that is what the dental service is for. I am wondering, now that prices for the operations are going up, whether the newly-formed Council for Education could do something to teach people to value the conserving of their teeth, even though it may cost a little more money.

Then we come to the vexed question of the prescription charges. I do not really like them, and I am not sure that, with the innumerable exceptions there are going to be, they will bring in as much money as is expected. Will they really save the doctors any time? I doubt whether they will save much time, because the people who want a prescription can often be dealt with in one or two minutes if they go and see their doctor, and for that they have to pay, whereas patients can go and see their doctor on some personal matter which they wish to discuss—matrimonial difficulties, or whatever it may be—and that may take quite a long time, for which no money changes hands at all. Yet the value to the patient can be just as great as if he is given a prescription for a drug. That, I think, is what one found when prescription charges were in before. There is also a danger of doctors' over-prescribing for people. They tend to give their patients more than they require so that they do not have to go back and pay an extra sum. That can take up quite a lot of the money and drugs which one would expect to save on prescription charges. The same thing applies to what I think have been called "blunderbuss" prescriptions, with people trying to get several different things put on the same prescription because they think it may be something the patient may want, though they are not sure. That again, I think, is one of the troubles that will happen if we get prescription charges.

Then there are the people who are possibly rather mean, economical, or maybe have not much money. They will not take their prescriptions to the chemist because they do not wish to spend the money. That may be a deplorable thing. I am not going into a moral judgment of it, but it may mean that somebody who needs medicine quite urgently does not get it simply because of that little difficulty put in his way in going to get it.

Another thing which I find very distressing over the prescription charges is that we have gone back to the dreadful old phrase, the "chronic sick." It is a hangover from the bad side of the Poor Law. What it means, and how it can be defined, I do not know. On one or two occasions I have put down Questions, both Starred and Unstarred, to try to find out who the Government think the chronic sick are, but I have never yet succeded in getting a satisfactory reply. Does this mean that the unfortunate doctors will have to decide who are the chronic sick? Does it mean that the Ministry will lay down certain categories? As I say, who the "chronic sick" are, I do not know, and it is a bad old phrase to have brought back.

Finally, I am pleased to see that there is to be no cut in the hospital building programme. But I wonder whether we could make some saving in the programme by cashing in on what I might call local patriotism and local interest. In the old days, before the National Health Service came in, the money was raised voluntarily for hospital rebuilding, hospital departments, and that sort of thing. When the Health Service came in in 1948 that was not allowed. But it is coming back a little now, with money subscribed by the friends of the various hospitals. One wonders if one could not make a real saving of money, a contribution, if you like, by encouraging local patriotism to collect money for new buildings or remodelling old buildings. One is told that any surplus money there may be is mopped up in taxation. I do not think for one moment that this is true, because one sees what large sums certain lucky voluntary agencies get regularly every year from the general public, and one sees legacies left to certain voluntary organisations. I think there is not so much money as there was, but there is a good deal of money floating around now which I believe could be tapped and which would go some way towards increasing the amount of money available for hospitals, and so go some way towards reducing the cost to the State. I have put these few points quite briefly before your Lordships because there are a number of other noble Lords to speak, and I do not want to take up too much time.

4.38 p.m.


My Lords, I do not normally inflict my views upon your Lordships, and indeed I should not have ventured to do so to-day were it not for the great anxiety which I feel about the Government's policy on the Persian Gulf. This is an area with which I have a certain acquaintance, and where I should declare a business interest: indeed, I have visited the area since the devaluation crisis.

Before I come to this particular topic, I should like quite briefly to say a word or two about the economic crisis in general. I think the matter was admirably summed up for us yesterday in the brilliant speech which was made by tie noble Lord, Lord Franks. He pointed out that we had really come to what was a turning point in the affairs of this nation. He pointed out that steadily over the years our position had worsened; that rather than make economies in the past we had borrowed money abroad until eventually our credit was exhausted, and that then, in default of anything else, we had had to devalue. The noble Lord pointed out that this was, in effect., really the last chance to restore our affairs, and that if we failed now we faced nothing but further devaluation and a steady dc-cline in the prosperity of this country and the standard of life of our people. I believe that, by and large, this is true.

In a situation of this gravity, frankly I do not believe that this is the moment to throw political brickbats. As the noble Lord, Lord Franks, said, what we need is leadership from the Government and a national effort by the people of this country. I, for one, am convinced that if we can get the first the second will follow. But if we say this, I do not think it means that we should not face up to the causes of our present position. Indeed, in my view, if we are to survive it is absolutely essential that we should do so. On this matter I agree with a great deal of what was said by my noble friend Lord Jellicoe yesterday, and also by the noble Lord, Lord Franks.

In addition to this, I should like to pray in aid the views of Dr. Erhard, and I do this for two reasons: first of all, because as the architect of the German economic miracle I think Dr. Erhard is somebody to whom we must all listen with respect; and, secondly, because I feel sometimes that views of a friendly outsider, such a person, can see our problems more clearly than we perhaps can see them ourselves. Also, after all, Dr. Erhard has always been a very good friend of this country. I should therefore like to quote to your Lordships a passage from an article he wrote in the Sunday Telegraph of the 14th of this month entitled, "Why not a British economic miracle?" In that article he attempted to analyse the causes of our difficulties and wrote this, which I think is something to which we might pay attention: The root of the evil, as I have already indicated, lies partly in wrong decisions of principle as to which social and economic policies were best suited to overcome the baleful after-effects of the war. Britain decided to move towards the Welfare State. But an attempt to maintain and even expand such a Welfare State without the necessary economic strength, discipline and order can, in the long run, only end in economic collapse. Of course, a State cannot be blamed for wanting to give its citizens social security and protection from want. But it can be blamed for that ideological obstinacy which turns this aim into a so-called sacred cow—into a doctrine of absolute value that must be proclaimed and practised even where there is no real need for it and where large sections of the population have never accepted it. We Germans should be especially wide-awake and watchful in this respect, for among us also there are signs of a disturbing tendency to make welfare a form of compulsion. If the phenomenon of the complete Welfare State has become known as 'the English sickness' then it is not the social welfare system long practised in Scandinavia that is meant so much as this deliberate refusal to keep everything within the limits of what is materially possible. The dangers from continuing this trend, which reaches far beyond Britain, threaten the social structure of the entire free world. For if the bill being run up cannot be covered by rising productivity, the result can only be inflation. To follow such a course is no longer a pious illusion; it is deliberate self-deception. Those words are, I think, something that we should all think about, and we might ask ourselves whether there might not be a good deal of truth in what Dr. Erhard has said. So much for the causes of the crisis.

I now should like to turn to the crisis itself. Obviously, in this situation, major cuts in Government expenditure were inevitable. But I am quite sure your Lordships would agree that it is essential that we should make the right cuts, and that we should not, in an endeavour to spare ourselves sacrifices which must be painful to all of us, cut expenditure which is calculated to improve our productive capacity and competitive efficiency, or take measures which will have an adverse effect upon our foreign trade. Whether we like it or not (as I think was said yesterday by a noble Lord), we have to face the fact that we cannot insulate ourselves from the world. We are fundamentally an international trading nation, and it is in this context that I should like to end by briefly saying a few words about the Persian Gulf.

As your Lordships will be aware, the Arab States in the Persian Gulf nearly all are under British protection, and we have therefore made promises to these people which I do not myself feel we can dishonour without previous agreement with them. I believe that if we do so, not only do we break our word, but probably worse, from the point of view of our reputation in the world, particularly as traders, we do great damage to our reputation in the world at large. I think that until recently the people in this part of the world trusted us and believed that our word was our bond. This trust, I am sorry to say, has already been fairly rudely shattered by devaluation since, believing in the Government's pledges, they left their money in sterling and suffered severe losses. When I was out there just after devaluation, there is no doubt that there was a feeling of considerable bitterness about this.

But, my Lords, the withdrawal of our forces from this area at this moment will, in my view, be the final blow to such little confidence as still exists in our good faith. And, quite apart from this, quite apart from any moral obligation which there may be in this part of the world, I believe there are vastly important issues at stake. As your Lordships are well aware, most of these Gulf States are rich in oil, and although it may be that their political systems are still mostly mediæval, in the sense that the Ruler still has absolute power, they have been well advised, and the wealth which they derive from oil is being expended for the benefit of their people as a whole. One has only to go there to see the schools, hospitals, housing, roads and sanitation which is steadily being improved; and one can see a steadily rising standard of life. Therefore, I say to your Lordships that these people have a vested interest in stability, because they know that in stability there will be prosperity for them. Here in a troubled world is an area of peace and prosperity, and the fact that this is so is in no small measure due to our presence in that part of the world.

But we should not delude ourselves that there are not dangers; of course there are dangers. The very wealth of these Gulf States makes them an object of envy to people like Colonel Nasser and to the N.L.F., all of whom will be only too ready to start subversion in this area; and, of course, on top of that, there is the danger of disputes between the Arab States themselves. There are many outstanding territorial claims. Iraq claims part of Kuwait; Persia claims Bahrein; Saudi Arabia claims a large part of Abu Dhabi. And the fact that these dangers are at present contained by our presence in the area does not mean that, if we were to depart, there would not be a very serious risk. I am not trying to argue, by saying this, that we have to be there. What I say is that, before we go, we must ensure that there is some stable system of security and defence and of agreement between these Arab States, which will enable us to go with a clear conscience, feeling that this vitally important part of the world can continue to enjoy stability.

Last night the noble Lord, Lord Chalfont, talked about an orderly withdrawal. What is now proposed is not in my view an orderly withdrawal. It is, e n the contrary, a hurried, I would almost say a panic-stricken withdrawal, and we shall leave behind us a vacuum which nobody at the moment is able to fill. Therefore, I believe it is absolutely essential that we should work for a closer integration of all these States, and particularly of the great States of Saudi Arabia and Persia. I am quite sure that until something on these lines has been arranged it would be not only dishonourable but a terrible mistake for us to get out.

Finally, I should like to draw your Lordships' attention to our own interests, and I mention these last because I thought this was the proper order in which to put them. Nevertheless, I think it is estimated that British firms and interests have assets of a capital value of something like £1,000 million in the Persian Gulf. We have an annual revenue in foreign exchange, mainly in dollars because oil is dealt with in dollars, of some £200 million per annum. As against this, my Lords, the total cost of our defence in the area is something between £12 million and £20 million at the outside; I should not like to put an exact figure on it. When one considers that in any case the cuts envisaged are not going to help our economy for, at any rate, two years; when it is considered, as the noble Earl, Lord Swinton, pointed out earlier this afternoon, that the Government without batting an eyelid turned down an arms contract of £200 million from South Africa; when it is considered, only as an insurance, that for £12 million to £15 million we could protect interests worth £200 million a year in foreign exchange, I must confess I cannot see the sense of this precipitate withdrawal. Unfortunately I was not present yesterday, but I read the speech of the noble Lord, Lord Chalfont. If he was present he would say that I was, as I think he said, "a nonsensical blimp", and what I am saying shows complete ignorance of the elementary facts of life. He may be right. All I can say in return is that from a business point of view this seems to be midsummer madness.

My Lords, I end as I started. I have said that I believe we are at the crossroads. I do not believe this is a moment when we can afford to make mistakes, let alone mistakes of the magnitude of this one. The mere announcement of our intended withdrawal has done immense harm in the whole of the Persian Gulf. I still do not believe it is too late to have second thoughts and, therefore, I earnestly implore the Government to give further consideration to this matter.

4.52 p.m.


My Lords, it is customary to ask for the indulgence of your Lordships' House on the occasion of a maiden speech. There have been several very remarkable speeches in the debate which has ranged over the past two days. I should like to add my tribute to the noble Earl, Lord Longford, for his moving speech on his resignation, and also to his successor for his clear defence of Government policy in his first speech after his appointment as Leader of the House. I would join with those who wish him well in that very important office. It is also very encouraging to follow the maiden speech of the noble Lord, Lord Wigg, as perhaps it gives one better odds in favour of finishing the course.

I understand it is the custom of your Lordships' House that a maiden speech should not be controversial. But in a two-day debate of this character on the Motion which is on the Order Paper, that is a little difficult. However, I will do my best, but I am not very hopeful. The Government Motion asks for approval of the policy announced by the Prime Minister in his speech on January 16. The Opposition Amendment rather pinpoints defence, and has done so in most of their speeches of criticism. Of course, it has not been mentioned much in the past two days, but for many years we hoped for disarmament. Let us hope the Prime Minister puts his right hat on and may make some headway on this subject and Vietnam in his talks in Moscow. I think we should remember—as I am sure the noble Lord, Lord Chalfont, does—that the cheapest defence, to say the least, is real and effective disarmament.

The noble Earl the Deputy Leader of the Opposition said in his speech yester day that it is the first duty of a Government to defend its people. It is also the duty of a Government to avoid spending more than it can afford. He was answered by the noble Lord, Lord Thorneycroft, in that remarkable speech of his, who said that all Governments have been spending more than they could afford for years. I am sure all of us who listened to Lord Thorneycroft yesterday could not have heard a more remarkable speech. In my humble view, it almost had the effect of altering the whole tone, if not the whole course, of the debate. One had to rub one's eyes a little to realise from which side of the House his speech was being made. That was a bonus for the Government. Maybe the Government's luck has changed and the imponderables are beginning to break the right way for them. In fact, so telling was the speech from the noble Lord, Lord Thorneycroft, that one wonders whether a nostalgia for a presence East of Suez will press the Opposition to vote in their full strength to-night.

The noble Lord, Lord Chalfont, made an equally strong speech to those of us who heard it last night. He spoke about the responsibilities of a Government for defence, and so on, and said that they also had the responsibility for the economic security and wellbeing of the people, without which there could be no real security in any great nation. But I think the Government, and your Lordships' House, have to face up to these realities concerning the modern cost of defence. Perhaps—as has been said in so many speeches—the East of Suez and the Gulf decision may itself be historical. Unfortunately I did not see the television broadcast by the Prime Minister of Australia, but as the noble Lord, Lord Beswick, said in his speech to-day, this country would, of course, unhesitatingly go to the aid of any of its friends in the Antipodes.

If we are going to face up to realities, I think we have to remember that Australia and Canada have for some years relied on America for their main weapons and defence. The United States of America, and a great Power like Russia, have vast production lines from which they can supply the hardware of aircraft and weapons to their allies. For years we have not been in that lead. So the Government have been forced to cancel the order for the F.111. The cost of these new planes, the hardware, the delivery, the spares, has really become fantastic. Maybe this decision with regard to the F.111 will give our own aircraft industry a new start with its technical potential, which, as your Lordships know, is second to none in the world.

Reference has been made to the strain upon Ministers in modern-day Government—the tremendous strain of taking day-to-day decisions in constantly changing circumstances and under very great international pressures. In this modern form of government it is no longer the responsibility of Ministers merely to consider the annual review of these great problems; and the pressure on senior Ministers, individually and collectively, of world events has become enormous. I happen to believe that the present Minister is a good Minister of Defence. I think he has done his job well in most difficult circumstances. I think he has been subject to a campaign in the Press and on television which amounts almost to political character assassination. How can a Minister responsible for the defence of this country, and all that this entails in negotiations with other Powers, function in that kind of atmosphere? In any event, he has shown great courage and he is carrying on and doing an extremely difficult job well. I personally hope that the Press and television headliners are satisfied that they are doing a good job in a free society in this campaign. There are countries in the world where this sort of licence by a free democracy, a free society, without full responsibility has perhaps led in the end to government by a Committee of Colonels.

If I may refer again to the speech made by the noble Lord, Lord Thorneycroft, he said yesterday, "Well, we have been hare before; we have had it all before". Of course we have. I believe that one of the great changes which has taken place in the technique of modern government in parliamentary democracy is that in fact we are in an era of constant or instant government by economic regulators. We have the autumn Budgets, the Estimates; but, as the noble Lord said, they are introduced by all Governments. In a sense the Cabinet are rather like a board of directors who are in constant session. Of course they have to change their minds. When a board of directors such as the present-day Cabinet are faced with vast and immense responsibilities they cannot go on treating those problems as though they are selling a bottle of patent medicine.

Of course they have to exercise sound and good judgment in the decisions which they take. It is not only what the Government here desire: their decisions are affected by the decisions of other countries with whom we are trading and dealing all over the world, and by what Sir Winston Churchill once called "our old friends the imponderables and the march of world events". In the old days Governments introduced the Queen's Speech; they had their Budgets, and, at worst, they might have an autumn Budget. But that situation has now gone, and the economic and financial statements, and the economic regulators which are made by the Govment, of whatever Party, from time to time have largely taken their place. In fact it has created what amounts to a new ministerial practice. As I have said, a Minister to-day changes his mind and his decisions, and is forced to change his policy on current affairs; but anyone who thinks that he should therefore have to suffer, as some people have said, what amounts to political character assassination is, in my view, living in a bygone age, to say the least. Those who think this way ought to have 24 hours on the day-to-day running of the centre of the sterling area, for which this country is responsible, and all that that means, and upon which we depend for our lives.

In the package which has been produced, and the cuts, following on devaluation, as has been said by so many noble Lords, if we are not to lose the value of devaluation we have to increase our productivity in the export trade. A great number of speeches have been made upon this subject and there have been television appearances, broadcasts, and the like. But has it got through to the factory floor? If we are really going to do something, apart from listening to speeches about it, I think these things depend upon the managing director putting forward his productivity and incentive schemes to the men and to the unions and getting their agreement. And I believe that it can be done.

The best incentive, of course, is the pay packet, or the take-home salary, or the final dividend with which one is left. But incentive schemes, if they are tackled by the managing director, who puts them over to his people in the workshops, can be linked to increased productivity and to the export trade. I hope very much that we are going to make a fresh attempt to get down to the factory floor level on this vital problem, without the solution to which all the cuts and all the things that have been done hitherto will have been done in vain.

I think this applies also to those industries which have to take the place of some of the imports at the present time. Of course I can talk about this subject; there can be television appearances, and somebody else can make a speech about it. But is any action being taken considering the vast amount of stuff that is being imported into this country—stuff that could be made here by our own designers and producers and by our own workpeople? Also I hope that the Government will not lose sight of the tremendous importance of increasing our own agricultural productivity and output.

I listened with great interest last night to the speech made by the noble Lord, Lord Soper, and I agree with much of what he said. We must have a changed mentality on many of these problems. If I may say so to the noble Lord, we, as a nation, must worship efficiency as never before. If we are to survive, and if we are ever going to become a great industrial power-house, to get our balance of payments right as a self-respecting people, this question of efficiency must be tackled right through the nation, through industry, nationalised or national industry, Government Departments, public services—the lot. In every walk of life, if we are not going to be efficient let us throw in the hat, because we have not a chance. Other countries with which we are competing are efficient and are working hard—and I know that their people are taking home a good pay packet. But until we can tackle this problem nationally, in every way that I have suggested, I do not think we shall be able to solve it. And this certainly applies to the enormous burden that Whitehall, whether it is efficient or not, is carrying at the present time, and illustrates the vital necessity to transfer some of its responsibilities to the regions.

I could not help remembering, when the noble Lord, Lord Thorneycroft, was speaking, the price that we have had to pay for the "never had it so good" mentality. If ever there was a fundamental error in political psychology, that was it. I think the public have at last been told the truth by the Prime Minister, and the answer now is to face realities: it is up to them. Coming into this House what impresses me about your Lordships' House is the absence of rancour or the sharp knife of Party warfare. As so many noble Lords have said in their speeches, we have in this House a great and objective part to play in helping to promote the right image, the modern image, in a progressive democracy, and to show that we in this country can still make it work.

5.12 p.m.


My Lords, it is a great privilege to be the first Member of your Lordships' House to congratulate the noble Lord, Lord Granville of Eye, on his maiden speech. It was a speech of sincerity, a quality which is very much appreciated in your Lordships' House. Indeed, perhaps I might venture to say that this debate has been outstanding for this quality of sincerity. To-day, like yesterday, has been notable for maiden speeches, and I should like in a general way to pay my own tribute to the other maiden speakers as well.

At the end of his speech this afternoon the noble Earl, Lord Dundee, said that he supported an incomes policy, and the noble Earl, Lord Swinton, ended his speech on much the same theme. My difficulty is that if the context is that of the present Government's present incomes policy I agree very much with the words used yesterday by the noble Lord, Lord Franks, in yet another maiden speech, "a certain haziness and fuzziness of outlook".

Your Lordships are no doubt familiar with the paragraph in the Prime Minister's Statement that deals with the subject of incomes policy, paragraph 59, and I will not spend time reading it. But I should like to read a passage from a speech made by the Prime Minister in another place in the debate last Thursday on the same subject. He said: We have agreed with the T.U.C. that we are as concerned as it is to see that the voluntary system does not break down, but equally, while its figure, given the greatest degree of industrial statesmanship by the T.U.C. and the member-unions and cooperation by the C.B.I., could be realisable, we cannot afford more, and this we have told the T.U.C. We have made clear that if this ceiling figure were to become a minimum, or to be substantially exceeded, then not only will it be necessary, as my right honourable friend [the Chancellor of the Exchequer] has made clear, for any excess beyond this figure to be taken back at a national level by increased taxation, but, also, that the voluntary system in which the Government, this House, unions and management generally have placed their trust, would have to be substantially strengthened, if need be by new powers."—[OFFICIAL REPORT, Commons, 18/1/68, col. 1987.] I simply pause to comment that I do not quite understand how a voluntary system can, if it is to remain voluntary, be strengthened by new powers.

I should like first to deal with the reference made in that passage by the Prime Minister to the question of taxation. If wages go up too fast you take out the difference in additional taxes, an idea which is I think attributable to the new Chancellor of the Exchequer. It sounds first of all rather like keeping the whole form in because one boy has behaved badly. But, of-course, there is more in it than that. I think it is based on the idea that, at any rate for a time, if wages go up too fast the cost of living will fail to keep pace with them, and there will be an increase in the level of real wages above what the economy can stand, and that is the reason for compensatory action by adding to the burden of taxes. Even granted the argument—which is, I think, a rather short-run argument—of course these extra taxes do nothing to remedy the basic harm that is done by unduly rapidly rising wages. The effect on money costs of production and on the competitive position of the country, of the extra taxes will if anything only exacerbate the problem.

Devaluation—this has very often been said—puts this country into a wonderful position. It would be tragic if the benefit were lost in the course of only a few years. I imagine that if money earnings were to rise by no more than 5 per cent. a year the country would retain in a com petitive sense the position in which devaluation places it. But suppose that money earnings, instead of rising at 5 per cent. a year, were to rise at 8 per cent. a year assisted by the drift, which is quite easily possible, then the benefit of devaluation for exports would last three and a half years. The noble Lord, Lord Franks, spoke yesterday of "a year or two at most", but I think that in that passage the noble Lord was perhaps being unduly pessimistic.

Another point in the passage which I have read from the speech in another place by the Prime Minister relates to co-operation with the C.B.I. When the Government pretty well renounced responsibility for taking a leading role in a tripartite policy with the T.U.C.and C.B.I. in operating a prices and incomes policy, they relied on co-operation of a fruitful kind between the T.U.C. and the C.B.I. I will read from the Economic Review, 1968, published a few days ago, what the T.U.C. have to say on this subject, phrased perhaps in somewhat restrained language: Relations with the C.B.I. It cannot be said that the T.U.C.-C.B.I. Committee has as yet achieved any remarkable breakthroughs. It has tended to discuss general issues in general terms, and on none of them have the exchange of views so far resulted in a noticeable change of attitude on either side. Then they go on in this document to try to be a little more hopeful about the future. But it is too late to go on being hopeful about the future. We must deal with the present, and seize our opportunity or it will be gone for ever.

I do not think it is too uncharitable to say that the Government's view about the T.U.C's incomes policy is, first of all, that the Government do not really agree with that policy; secondly, the Government do not think that the T.U.C. are capable of carrying out even their own policy; bat thirdly, that the T.U.C. must be given an opportunity to demonstrate that failure. I would suggest to the Government that they are making a serious psychological mistake in announcing their methods in a series of penny packets. As the noble Earl, Lord Jellicoe, put it yesterday: Once again the economy is being exposed to the erosion of Government by driblets."—[OFFICIAL REPORT, 23/1/68, col. 148.] This method of operation prevents the generation of a sense of crisis calling for sacrifice and undermines confidence in the Government.

The Prices and Incomes Act 1967, which is the Act which puts some teeth into the Prices and Incomes Act 1966, is a temporary Act which lapses in the coming August. Would it not be much better if the Government were to announce at once that the reserve powers are to be prolonged, and indicate that these reserve powers are intended for use only on somewhat rare occasions, and intended as a backing to the T.U.C. in the carrying out by the T.U.C. of their policy, and not as an attack on the Trade Union Movement?

Yesterday, the noble Lord, Lord Carron, in another notable maiden speech, said that it would be a massive disappointment if voluntary restraint failed, thereby compelling the intervention by the Government, which in the circumstances would in his opinion be inevitable. I agree with the noble Lord. It would be a massive disappointment. The country is not in a mood for many more disappointments. Far better, I suggest, to face the issue now. I would not myself despair of convincing the T.U.C. that the announcement by the Government of the intention to retain compulsory reserve powers was to be a help to the T.U.C. in carrying out their policy.

Now a word about the T.U.C.'s policy on wages. In the document from which I have quoted they deal with the period from the middle of 1968 to the middle of 1969. They make what I think the Government and others believe to be the somewhat optimistic forecast, that productivity—output per head—will rise in that twelve months period by 5 per cent. From that they argue that it would be all right if wage-earnings were to rise on the average during that period by the same figure of 5 per cent.

Quite properly, in this document the T.U.C. make an allowance for local bargaining of 1½1 per cent. in the twelve months. That leaves 3½ per cent., or, as the T.U.C. prefer to put it, 3½ to 4 per cent., in that twelve months period for rises in wages brought about by national settlements. If that was the achievement by June, 1969, I think it would be a most remarkable one. But I am afraid that I cannot pretend that I think that, if left to the T.U.C., it is likely to be attained.

One has to remember that all these figures are averages. If some national negotiations result in national wages going up by more than 3½ per cent. in the twelve months period, it requires that other national negotiations shall either not take place at all or shall result in a smaller rise in wages during that twelve months period. If some local bargains affecting some sectors of the labour force bring about more than a 1½ per cent. addition to the rise brought about by national settlements in that twelve months period, then others must bring about none at all or very little.

I repeat my plea, the same plea as that put forward yesterday by the noble Lord, Lord Franks. Devaluation, irrespective of the character of its causation, presents the country with a wonderful opportunity. If that opportunity is frittered away it would be a national tragedy.

5.26 p.m.


My Lords, I want to take your Lordships back again to the problem of the defence cuts. As so much has been said already, I do not intend to keep your Lordships long; but I think there are still one or two points that should be made from this Dispatch Box.

I want, first of all, to say a word about the Far East and the question of the base there. We recognise the enormous cost of such a base as Singapore. When I was acting as colonel of my regiment a few years ago I went out to Singapore, and I was horrified at the enormous administrative overheads that have to exist there. The trouble about our forces is that they are very much married and they have large families. In the distant parts of the world this involves expensive flats, schools, staff for schools, buses to take the children to school, buses to take the families shopping; and the bill becomes simply enormous before anything whatsoever to do with defence emerges. It is clear that nowadays, particularly after devaluation, we cannot keep this going, even if we want to.

I was most impressed with the wonderful maiden speech of my noble friend Lord Thorneycroft yesterday. I believe that we should start cutting down that base now. But if the Government must make a plan to cut down, let them make it a planning date and consult with the people on the spot and with the heads of States before announcing what is to be done. I do not understand why it should be necessary to say that we are going to take everything away. The word "base" has become a dirty word. I believe that in certain parts of the world where we are still really welcome and where we are asked to stay, a few troops are all that is required to give confidence. They can look after equipment which it is perhaps difficult to transport by air and which it takes a long time to move by sea. I am sure that if we are asked to remain in any part of the world we should get round the table with the heads of the countries who are interested and see what we can do to help. Before the war we did not need a big base everywhere. We had a couple of companies of about 200 men in Cyprus to keep order. There were some nasty riots, but this force was quite adequate to handle the situation. Somehow we seem now to require such a very large hammer, very often to crack a very small nut.

So that my advice to the Government would be to look at these problems, in conjunction with those who are most anxious that we should not abdicate all our responsibilities, as quickly as possible, to see what we should do to help. But that by no means is saying that we should stay if we are not wanted. After all, we have done a lot, and are doing a good deal now, in different parts of the world with very small training teams, just a handful of seconded officers. The whole of the Malayan Army, when it was re-formed, was run by British officers gradually handing over to Malayan officers, until at present it is an entirely Malayan force. Yet they still like to see a few of us around the place, and this does not cost very much money. This ultimatum by the Government has wounded all our friends and it makes everything very much more difficult.

I should like now to say something about capability. The noble Lord, Lord Shackleton, in his most interesting opening speech said: 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."—[OFFICIAL REPORT, 23/1/68, col. 140.] We on this side of the House entirely agree with that. But to affirm that we should retain this sort of capability, iii the light of the cuts which are being made and our position in the world, is a very sweeping statement. I will not deal with this subject now, but we shall pursue it vigorously in a defence debate, because we want to know exactly how this capability can be retained. The Government must realise that, if they are serious about this, it is very difficult in peace time to go anywhere and be effective without even a skeleton organisation on or near the spot. And no one has mentioned that if we ever had to put this capability into effect, somebody would do everything possible to stop our doing it.

Then, in addition to the question o" being able to send troops to tar distant places with difficult climates, there is the question of acclimatisation. Again many of your Lordships will be bored by my rubbing it in; but we have thrown away one place where we can do this—the Island of Malta, where we are very welcome indeed and where there is an excellent climate for acclimatisation to hot countries. I do not think that we now have anywhere else; or we shall not have when we leave Singapore and Malaysia.


My Lords, in the interests of brevity in my speech yesterday I cut out a passage on overseas training. We have certainly not ruled this out, and indeed we hope that our forces, as they do now, will do overseas training in different parts of the world, if they are welcome there. This does not fully meet the noble Lord's point on acclimatisation, but it goes some way towards it.


My Lords, I am very grateful to the noble Lord. We have had in the past very friendly discussions on this subject. The great difficulty, of course, is the enormous expense of sending troops. One would like to send battalions, as they have been sent, to Australia and to Canada, but I feel that that is now going to be more difficult than ever. However, I am delighted that this matter is being borne in mind by the Government.

Whenever I have spoken in defence debates I have reminded your Lordships that we must consider the distant future, not only to-morrow, but the day after tomorrow, a future which no one can possibly predict; the future world of your Lordships' grandchildren and great-grandchildren. And we must never allow our forces to be so emasculated that they cannot be increased in time of national emergency.

The noble Lord, Lord Chalfont, mentioned this when he referred to a threat to the integrity of Australia and New Zealand, and said that in such a case we should almost certainly be "involved in a situation of mobilisation." God forbid that such a thing should ever happen, but I am glad to see that the noble Lord has obviously not lost sight of it. Yet it is difficult to see how under the present organisation proposed by the Government we could ever meet such a serious situation. Therefore in any course which the Government are considering—and the noble Lord, Lord Shackleton, referred to further disbandments and amalgamations—I hope that this will be remembered. After all, the Government tell us that in a year or two's time we shall be prosperous again. But they do not say that when we reach that happy position they will repair our defences. I hope that when the noble and learned Lord replies he will be able to give us an assurance on this matter.

I want finally to say a word about the reserve forces. I shall keep my remarks very short because I am sure, like all your Lordships, that after having heard the impressive speech of the noble Duke there is very little left to say from this side of the House since we agree entirely with everything he said. What the noble Duke said is the policy of our Party, and it is only necessary for me to underline his words so that there is no doubt that the Conservative Party are behind him. It is monstrous that A.V.R.III is being abolished almost as soon as it is created. Our Territorial Army has always been known as the cheapest military force in the world, and for many years it has been the envy of every Continental country, who consider us quite mad to do away with a force which is inspired with such a terrific voluntary spirit and costs the country so little. The A.V.R.III, even though ill-equipped and given little encouragement by the Government, has already risen to the challenge of the splendid spirit of voluntary service which was shown by the Territorial Army in two world wars. If the sum to be saved were large, one might be prepared to bow to the inevitable; but A.V.R.III costs such an absurdly small proportion of our national income that I ask the Government to think again. I would remind the Government (this was referred to by the noble Lord, Lord Wigg, in his most interesting and admirable maiden speech) that A.V.R.II, which is the reserve for the Regular Army, is greatly supported by A.V.R.III, and will be very adversely affected if this force is to be disbanded. It may even make it completely worthless and we shall have to think again haw to produce reserves.

I have referred to the speech of the noble Lord, Lord Wigg, which I found most impressive. For many years as a soldier, and indeed since retiring, I have been most interested in everything the noble Lord has said. He has always spoken up for the Army. I have not always agreed with him, but I have always admired the tremendous research which he undertakes—and this was certainly the case when he was in Opposition—to back his views as to any improvements which are necessary. I am very glad indeed that he has joined your Lordships' House. We have a number of us in all parts of the House who are very interested in defence, and he and the noble Lord, Lord Thorneycroft, are two very welcome recruits who will, I hope, speak up often on these matters.

The noble Lord, Lord Leatherland, was going to speak but, to show the friendliness of the "Defence Club" on all sides of the House, he has entrusted me with saying a few words on his behalf. But in case I forget it and am corrected by him, I should say that he is definitely going to vote for the Government in this debate. However, at the same time he agrees entirely with us, and would have echoed our plea that this cheap little force, A.V.R. III, which is growing in efficiency should be retained.

He and I are equally certain that, if it is kept, it ought to be returned to the Ministry of Defence and taken away from the Home Office. It should never have been given to the Home Office, and I hope that the noble Duke will succeed in his efforts to get it retained and put under the Ministry of Defence.

In another place, my right honourable friend Mr. Enoch Powell has emphatically stated, and I repeat it here, that we shall do our best to restore a Territorial Army that is a genuine citizen volunteer force, and I know that we shall have the backing of the whole country in our efforts when we do it.

5.42 p.m.


My Lords, I must apologise for concentrating on a very small item in the Government's "package", compared with the enormously important worldwide issues which have been under discussion in the course of this debate. But I should like to speak a word or two of comfort to those noble Lords on this side of the House who have been occasioned some real distress by the reimposition of prescription charges. I am a devoted and very active adherent of the National Health Service. I think it is the finest, the most imaginative, the most comprehensive of all our welfare services in this country, and perhaps in every other country, and I believe it has paid a wonderful dividend in terms of public health. I should, indeed, be prepared to fight in the last ditch against any attempt to impose charges upon patients for medical advice or medical treatment. But I think that the prescription charges raise a slightly different question.

When the charges were abolished by the present Government, I feared that that would bring into the already overcrowded, overworked surgeries of general practitioners a number of people who normally would go to the local chemist and pay, quite gladly, without hardship, for their aspirins, their laxatives, their cough mixtures and the sort of things that people normally buy and use without going to the doctor. I feared that many of those people would appear in doctors' surgeries demanding attention. It seems to have happened, because we have had a very great increase—I think it was something over 16 per cent.—in the number of items prescribed since the relaxation of the charges.

Certainly, some of my colleagues on this side of the House would say that that 16 per cent. represents hard-pressed people who, for the first time, are able to acquire medicaments of various sorts which are necessary for their health. I would question that, and I think quite a number of the extra applicants and extra items are simply the result of rather frivolous and not very necessary demands for free medicines. I am basing that assumption on conversations I have had with very many general practitioners working under the National Health Service. As a member of the Inner London Executive Council, I have been closely in touch with them in connection with the private practitioner side of the Service.

The Government's proposal involves certain exceptions—the under-15s, which will, I think, alleviate any hardship that might be caused to low-wage families with a number of children; the over-65s and the chronic sick. The noble Lord, Lord Amulree, expressed some doubt as to whether it was possible to define the "chronic sick", and as he spoke I was reminded of a remark made by a legal luminary in a discussion connected with a recent prosecution over an obscene book. He said, "I cannot define 'pornography', but I know it when I see it." Probably a general practitioner may not be able to define "chronic sickness", but he knows it when he sees it.

It has been suggested, and I think this morning's issue of The Times indicated, that such discrimination would inflict an unnecessary burden on general practitioners, and that is possibly so. But the burden of discrimination which general practitioners already bear is so enormous that I cannot believe that the extra accession of discriminatory burden can make very much difference. They are responsible for giving certificates or withholding certificates. They are responsible for giving or not giving, at their discretion, letters for hospital treatment or for in-patient treatment. They are responsible for calling in or for not calling in the services of specialists and consultants. Their whole life in a modern surgery is compounded of responsibility, and I think that the free list would be quite easy to operate fairly, leaving a great deal of responsibility in the hands of the general practitioner.

It would be quite easy to furnish a separate prescription pad. I think that the existing pad with the prescription forms is numbered E.C.10. The doctor could have a separate pad of forms numbered E.C.10a, or whatever it may be. It has been suggested that the free prescription form might be printed in a different colour. I should deprecate that, because I think that people are apt to walk in and out of surgeries and go through waiting rooms with their prescription forms in their hands, and a different colour might emphasise that discrimination. But I feel perfectly convinced, from my knowledge of general practitioners and of the work they do and the patients they serve, that they would welcome, and do welcome, the return of prescription charges; and that it will mean a much greater relief to them than any extra burden of discrimination that is placed upon them.

Of course, in principle, it is an adulteration of the pure milk of the free medical service, and I think it could be argued that, with rather freely-given exceptions, it would involve an inconsiderable amount of public money—inconsiderable when compared with what we are prepared, I presume, to spend on manufacturing and subsidising those odious, unwanted, prestige symbols, the supersonic Concordes. I base my plea for prescription charges not on the saving of public money, but on the saving of general practitioner time. It may be that noble Lords on the other side of the House will agree with what I say for the wrong reasons. It may seem to them to represent the beginning of the imposition of medical charges generally. I cannot help that. I do not mind them agreeing for the wrong reasons if I can persuade some noble Lords on this side of the House to agree for the right reasons.

5.50 p.m.


My Lords, so many admirable speeches have been made on technical issues during this debate, notably from our maiden speakers, that I hesitate to try to recall the House to some of the broad issues which are before us. I think it is essential to keep these broad issues in our minds because, at any rate for myself, having them in my mind, I want to try to explain why, from these Benches, I shall go into the Lobby tonight to vote for the Government and against the Amendment. The broad issues which are before us, which really have been the aims of this country for the past 15 to 20 years, are three. The first is maintaining a peacekeeping role, not only in Europe but at one time in the Middle East, and to-day even in the Far East; the second is maintaining sterling as a reserve currency, and maintaining the sterling area; and the third is increasing the standard of living and the welfare of the people of this country, and increasing the efficiency of our productive capacity.

My Lords, those three aims have failed. They have failed because they are incapable of all being realised with the resources of this country. It has been beyond the power of any Government to do this. It has been beyond the power of both Conservative and Labour Governments to do this; and they have failed because we have been stretched beyond our resources. That is why we have had the reappraisal and the cuts which we are debating now. The Government are blamed for these cuts, but this reappraisal is long overdue. But for the results of the 1964 Election, this reappraisal would have had to be done by the Conservative Party, because the Conservative Party, as a Government, ran into difficulties during the 1960s. With the 1960s came an end to that long, happy period in the 1950s when there was a shortage of consumer goods all over the world and we were able to have a ready export market. But in the 1960s we faced increasing competition, and we all know the difficulties of those years.

These difficulties coincided with a period of vast public expenditure by the Conservative Government on education, transport and welfare, and also, of course, there was enormous expenditure on defence. All these new kinds of expenditure were put into the pipeline in the 1960s, but we did not get the growth during the 1960s to pay for them. To take the one Report which I know well, almost by heart, the Robbins Report, its recommendations were based on a calculation that we should have a 3½ per cent. growth rate. We have not had that growth rate. That, of course, is why we ran into difficulties regarding expenditure on higher education, and indeed on the educational system as a whole. That is why, when the Labour Government took office in 1964, they faced a financial crisis which was not of their making.

That crisis, of course, was the one which Mr. Maudling was responsible for as Chancellor of the Exchequer. I do not wish to blame Mr. Maudling. I think that Mr. Maudling, according to his own lights, was trying to do what the country as a whole believed in as a policy. He was trying to increase growth by expansion. Although I think he went dangerously far in that as the General Election drew near and did not use the regulator as it should have been used at that time (for fear, of course, of its effect on the result of the Election), it was nevertheless a reasonable aim; and if the present Government are to be blamed for the failure of their policies in not achieving growth, I think we should also realise that other, previous Governments, should also be blamed.

Now when Labour came to power it had a terribly difficult problem to face. In the very first weeks there was this problem of whether to devalue or not. I do not regard "devaluation" as a dirty word. I think it is one of the many means by which the economy can be manipulated. The decision was taken not to devalue. I do not want to go at all into the reasons why that decision was taken; there was obviously very much pressure from our American allies. But, leaving that aside, the Labour policy was to try, again through growth, to obtain the margin necessary to carry the three commitments which I mentioned at the beginning of my speech. This attempt again failed in July. 1966. We could not get the growth; and, of course, the reason for that was partly due to the great increase in public expenditure which at the very time when the Labour Government took power began to come through the pipeline in terms of commitments, with some of which, of course, they agreed but with others of which they did not agree. But they were commitments which inescapably they had to accept.

My Lords, there is no villain in this piece. There is certainly no single villain. We all know how complex are the difficulties of maintaining the balance of payments. We all know the problems which we as a country face in reorganising our productive capacity and in making every institution more productive. We should all recognise that among our difficulties in recent years has been the escalation of the Vietnam war, with the weakness of American currency as a result and, therefore, the decrease in international liquidity. That has greatly endangered our own position. But among our Government Departments there is one which I do not think is usually associated in people's minds with great public expenditure, and yet, in a sense, it is the Department which creates a demand for immense public expenditure. That Department is the Foreign Office. The Foreign Office, by its foreign policy, creates commitments overseas which the Ministry of Defence has to meet.

Now our foreign policy, it seems to me, has for long been overdue for reappraisal; and here I should like to draw a distinction between the foreign policy of this country in recent years and that of France. In this country, President de Gaulle is not perhaps the most popular Head of State at the moment, but one thing that President de Gaulle does understand is power. One of his most notable achievements in France was to reduce the defence and overseas commitments of that country. He did so, let us be quite clear, by breaking every pledge he had ever made; so that when we talk about the breaking of pledges (to which I shall return in a moment) I think we should bear in mind that you cannot have a reappraisal of a major question of foreign policy, or of any home policy, without in fact the so-called breaking of pledges.


My Lords, if the noble Lord would forgive my interrupting him, may I ask whether he is advocating that we should have our foreign policy based on that of the General?


No, my Lords. What I was trying to do was to draw an analogy with General de Gaulle's power in France, he having changed its foreign policy from one with great overseas commitments. Of course, in the case of Indo-China, he was not in power at the time France withdrew from that country; but there were commitments, particularly in Algeria, and commitments also in the French Imperial possessions. This is, of course, an analogy with what is happening by way of cuts in the Far East at the moment.

If I may go back a little further, perhaps General de Gaulle also remembered, as he is a man who has always, the history of his country in his mind, the situation in France in the eighteenth century—the situation, in fact, which led to the French Revolution—when France was grossly over-extended, keeping an enormous land army in Europe to fight European wars, and trying at the same time to maintain and perhaps extend its Empire abroad. On the other hand, in the eighteenth century this country certainly took on commitments overseas and fought wars overseas, but it paid allies on the Continent, from German States and Austria, to do its fighting for it in Europe.

The British policy in the eighteenth century was the wise one and the French policy was the disastrous one. Again going back into history, you will find the same analogy with Spain in the seventeenth century. And these comparisons are not irrelevant, because, of course, this is a problem which faces every country which has been a major power and which has had a great role in the world and then from the point of view of foreign policy has had to make a reappraisal. The Labour Party is not alone in believing that we should cut our commitments overseas. This has been urged in the City of London by the merchant bankers time and time again. If you talk to the merchant bankers you will find that they said that any attempt by Britain to have an independent foreign policy, when it cannot sustain it because it is economically unable to do so, is an illusion. It is not, as I say, simply a piece of doctrinaire Left-Wing thought.

Of course, this policy of trying to maintain vast commitments overseas has led us into the defence difficulties which have been so often in our minds: for example, the TSR.2 and Skybolt. And these projects, of course, came from Conservative Ministers whose patriotism does not come into question. Mr. Julian Amery comes to my mind as I speak. Mr. Julian Amery is particularly well known for his passionate feeling that this country ought to play an independent role in the world. But it is patriotism of a misguided kind; and he led this country, it seems to me, into massive expenditure which has never seen any return of any kind.

My Lords, the only thing I have found at all to question, therefore, in the speech of the noble Lord, Lord Chalfont, which I greatly admired and which I thought courageous, was when he tried to reassure noble Lords on the Benches opposite that we still would remain top of the league in defence in Europe. I shall be frank. I wish we were equal at the top of the league with other Powers. I think this is another adjustment which will have to come. People talk about broken pledges but there are pledges which have to be broken when you try to make a reappraisal of your policy. If I may remind your Lordships, certain pledges were undoubtedly broken by the first Labour Government after the war. They were the pledges to the Indian princes when we quit India. Does anybody doubt that it was right for us to quit India? Does anybody now doubt that if we had not done so it would not have been massacres, terrible and appalling as they were, which took place between the Hindu and the Moslem populations; it would have been massacres of British soldiers? This is relevant to the point mentioned a moment ago: why cannot we keep small garrisons overseas? That seems to me to invite disaster. Cyprus was mentioned. That is a case in point. If you keep a small garrison overseas it invites escalation of a conflict which you cannot sustain. In fact, it seems to me that in the 1950s and the 1960s, time and time again we have been pressed out, often in humiliating circumstances, from places which we never should have been defending.

But I should like to refer to one point that the noble Lord the Leader of the House made in his opening speech, when he pleaded that those who oppose these cuts should say what alternatives they would wish to put in their place. Not one word have we heard from the other side of the House on this point. I have had to look up the debate in another place I have found that Members of the Opposition in the other place said on this point that they would put two kinds of cuts in place of these vast defence cuts. One was to reduce the number of civil servants; the other was to cut school meals.

Let us be clear about a reduction it; the Civil Service. The Civil Service is the organisation by which, and through which, vast kinds of welfare and other services are given to the public. I am the last to say that the Civil Service could not be cut; I think it could. I think for example—at least, I am so informed; for I am not competent to give this as an opinion—that the Land Commission could disappear overnight and be replaced simply by a piece of legislation which would do the work that the civil servants in the Land Commission try to do. But on that I should not really express an opinion. Nevertheless it is an illusion to think that you can cut the Civil Service without cutting the welfare and social services and services in all directions. The second thing we are asked to do is to cut school meals. This, I think, gives a clue to what the Opposition must have in mind, if they say they dislike so passionately these defence cuts. To cut school meals is to do that which affects the poorest classes in our community. Is it really the intention that these are the classes that should suffer if we have to make a reappraisal of this kind?


My Lords, may I interrupt the noble Lord at this point? I think he must either not have been in the House of Commons or has not read properly the Hansard of another place. What was suggested by my right honourable friend Mr. Macleod was that, however unpopular it might be, it might in the national interests be better to cut school meals than to postpone the raising of the school-leaving age. It was nothing whatever to do with defence.


My Lords, I am sorry not to be able to agree with the noble Lord. I do not think this is the point. I think you have here two kinds of cuts. You must face the question that if you do not cut defence, what are you to put in its place? The answer must be cutting those things which we hope are going to increase our productivity in the country or cutting social welfare. I believe the Government took the right choice. That is why I shall go into the Lobby to vote for the Government, because I do not believe that the old imperialist role which the defence costs were meant to sustain can any longer be sustained by this country. I believe in the arguments and actions of the Government in defending the social services and, above all, in trying in their way to improve productivity in this country. These are the important things.

6.7 p.m.


My Lords, a great deal has been said already in this debate, and I will try not to repeat what has already been covered. I disagree with the noble Lord, Lord Annan, on one particular point; but I will come to that in a moment. I should like to return to the question of defence cuts, because there are one or two angles on it which have not been touched upon. The first is the arithmetic. Here I should like to ask the Government a question. When the present Administration came into power, the rate of expenditure was 6.8 per cent. of our gross national product Through various cuts over three year; they have reduced it to 6.5 per cent Now they tell us, in the latest package, that they will reduce the amounts to a total of £1,600 million instead of the £2,200 million that they inherited. I should like to know what percentage that is of the gross national product—because the noble Lord, Lord Chalfont, last night read out a list of expenditures by the European Powers, France, Germany and Italy, to show that in fact we spend more Whether we spend more or not I am not quite sure, because it depends on the answer to that question.

But let me speak in terms of manpower—and that is only one way of measuring the figure. Incidentally I am quoting from the same document as did the noble Lord, Lord Chalfont, for we happen to belong to the same society. The manpower of the forces maintained by Italy is 416,000; by France, 520,000 and by Germany 460,000. According to the latest package, I calculate that the United Kingdom forces will by 1972 be 340,000. Although mechanically we may be the top Power in Europe, so far as manpower is concerned it will not be so. I do not quarrel with that, necessarily, because I agree that we have to face very heavy cuts at the present time. I am not challenging the width and depth of those cuts at the present time, although I must observe, as has been said, that the cuts in the defence forces are much higher than those in the social services.

Another arithmetical effect of these cuts which has not yet been mentioned is the question of keeping up in the modern technique of weapons. If we do not have the best equipment we shall suffer if we ever have to fight, as any naval officer will quote from the experience of the "Hood" and the "Bismarck". I think the "Hood" was sunk in two minutes, or something dreadful like that. The same thing occurred when the British Army, fighting with its latest tanks, came up against the German "Tiger" tank. The British tanks were out-gunned, out-ranged and out-armoured. It took several British tanks to defeat one "Tiger" tank.

Similarly, although I know the question of roles comes into it, with the Royal Air Force. That, above all, is a Service that needs the most modern weapons. To try to cover up the loss of the F.111, which would have been the most modern swing-wing and the fastest aircraft with long range in any Service; to say that the others will do, would, of course, be found not to be true if you happened to be driving the thing in the air and you met—


My Lords, would the noble Lord allow me to intervene? I do not know whom he is accusing of covering up, but he certainly should not accuse me of covering up on the loss of the F.111, if he heard me yesterday.


My Lords, I am not accusing the noble Lord, the Leader of the House. I should not do that unless he actually said it, and he did not. It has been said in another place and it has been said on television. Whoever said it, the fact will be, I am afraid, that the Royal Air Force will be equipped with second line aircraft.

The next thing I should like to come to is the strategic policy, and I shall finish with a plan at the end. I am sure that the noble Lord the Leader of the House will be pleased to hear that there is a plan coming, especially in view of the remarks of the last speaker who said that no one had yet offered one. I should like to offer a plan for the defence cuts. When it comes to the strategic policy, I agree entirely with what was said last night by the noble Lord, Lord Chalfont, that we must be very careful (I am paraphrasing the noble Lord) to make sure that we keep up with the new climate of weapons and the technology of new weapons, especially nuclear weapons. One effect of the nuclear weapons, and the terrific superiority of the two super Powers, has been that there have been no general wars; but there has been a great number of very serious limited wars. I will not go through the list of them. We have to face the fact, as has been said in the White Paper, that we live in a world where the United Nations is not yet able to control the situation and where we have to be prepared to fight.

I will not go into the question of broken pledges to our friends and allies overseas, because that has already been covered, except to point to one or two little details. I was in Singapore and Malaya only about two months ago, and I did not hear a single word from any local man to the effect that they wanted us to leave. On the contrary, they implored us to stay. I believe that was the situation until only a few days ago. Similarly in the Persian Gulf, there is no question of anybody asking us to leave; they want us to stay. If you visit the Sultan of Muscat, as I did, you will find that he puts it in much more tactical terms. He said that if the British leave Aden the hostile forces, or the unfriendly forces at least, will be 130 miles from his frontier and 120 miles from his palace. Although the Sultan has his own defence force it is not a particularly modern one. So there are two areas where we are being asked by the local people to stay—in South-East Asia and the Persian Gulf, not to mention our two old Commonwealth partners, Australia and New Zealand.

I would emphasise a point that was made by the New Zealand Prime Minister; it is the difference between totally withdrawing and leaving a small garrison, because to withdraw totally is a complete act. The whole of this question of withdrawal from the East is one not of principle but of timing. I do not think anyone would argue that we should stay there for ever. It has been established in debates in your Lordships' House and in another place that we cannot stay for ever and that one day we shall go.

I would observe, in passing, that the chief troubles in South East Asia have been the legacy of Imperial Powers, through the French and the Dutch withdrawing without due planning. I must agree that we are not doing that, but I believe that instead of announcing dates for withdrawal, which is a habit now, we ought to withdraw by plan. The plan ought to be contingent on events. I suggest that there ought to be in these areas withdrawal by two stages, governed by two stages of events. The first is when local Governments are unable to compete with local threats or perhaps even with internal affairs, although we should be careful not to take part in internal affairs; and the second is when we have practically withdrawn and have only small forces left, when we are in a position as the Government describe, where we could go back at any time with strong forces; although exactly how and by what route seems to be a little uncertain. I suggest that that should be the formula.

I agree entirely with what was said by the noble Lord, Lord Thurlow, about the validity of small garrisons. I do not agree with what has been said about the risk of their presence leading to an escalation into very serious warfare. On the contrary, as I have said in previous debates, very often a situation has been quietened and calmed down without a shot having been fired. I recall one instance when there were very serious threats of riots in Bahrein during the Suez crisis, where one rather weak infantry company quelled incipient riots without firing a shot. That has happened many times in other places, but such events are not always publicised.

I will not go into the validity of a small garrison except to say, as I have said before, that a company to-day is worth a battalion next week and a brigade in a fortnight's time. But it is extremely difficult to fly in a brigade without the tanks and the ammunition on the ground and without a fairly large place to receive it, whereas we could defend our friends and help them very often by the presence of a small, inoffensive force.

I now come to the choice. If we accept that there are to be heavy cuts—and I am one of those who do accept this, reluctantly—where I quarrel with the present package plan is not in the size or the ultimate effect so much as the direction of it. We are, in fact, forced to choose between Europe and the East, and the question of timing comes in. It has been said many times before that Europe is quiet at present and not only is the threat absent but it does not look like recurring. The noble and gallant Viscount, Field Marshal Montgomery, said only two years ago in this House that B.A.O.R. was doing nothing. That might be a slight exaggeration. I think that what he meant was that it was not firing shots in anger—whereas the British defence forces have been firing shots in anger for well over twenty years in the East, and he would be a bold man who would say that that is not going to continue if we stay there. The enormous headquarters in the Far East have been referred to by the noble Lords, Lord Thorneycroft and Lord Thurlow. I entirely agree with them. One has only to see the schools in Singapore to realise the size of the base there: it is colossal. We have four bases, and I think we ought to reduce to one; and I would recommend small forces.

One other feature I should have dealt with is that these defence cuts planned do not save many dollars. So far as I can see, the only dollars saved are in paying the full price for the F.111, though we have to pay a fairly heavy penalty. I understand that we save £400 million over ten years.

Two years ago in this House I recommended that B.A.O.R., with the supporting R.A.F. forces, should be cut by half. The noble and gallant Field Marshal did not disagree with that. His opinion was that the Rhine Army could well be reduced to a division. To my mind it is not a good allocation of British military effort to line up division after division on the European central front with other nations who are capable of providing ground manpower. I believe that the proper way to support NATO is on the sea and in the air, and recently the Secretary for Defence admitted publicly that this was an arguable case. There is a great deal to be said for strengthening these arms in the Atlantic.

I must agree with what the noble Lord, Lord Wigg, said about the strength of Rhine Army. When we send a unit, it is reduced to small proportions. There are companies of thirty and forty men. I would reduce Rhine Army by a half—and I mean a half; I do not mean just three brigades, but a reduction in group headquarters, in spare Army and Corp headquarters and in quite a lot of Air Force Administration. I think we should find that that would save £50 million a year in marks, which is a hard currency. Under my plan this amount would have been saved over two years. One speaker has said that merchant bankers were questioning the validity of our defences overseas. Of course one can always quote case against case. But when I rang up a businessman in the City who had been in Hong Kong for many years, he said, "I am absolutely sick. Have we forgotten our friends?" But that is by the way. My Lords, I have stated my plan. My formula would be to save marks by bringing the Rhine Army home from Europe and to save dollars by not ordering American aircraft in future.

6.24 p.m.


My Lords, I find the noble Lord's speech interesting, but what we are discussing to-day is an Amendment of censure of the Government. The Amendment is in the same terms as that which was discussed in another place for two days and defeated, and I regret that the Opposition thought fit to put down this Amendment in this House. It seems to me that they are not doing themselves justice. If one looks at the terms of the Amendment, and the occasion of it, it is, to say the least of it, unfortunate.

A few days ago, on January l4, Mr. Harold Macmillan, whose services to the Tory Party I am sure noble Lords opposite fully recognise (after all, he "saved their bacon" after Suez), described this House as a "mausoleum". I would not venture to use language of that kind. But when an ex-Tory Prime Minister uses it, I begin to think a little. What are we invited to do? We are invited to pass an Amendment of censure in precisely the terms which were debated and rejected by another place and to pass it in a "mausoleum". I doubt whether it does justice to whatever our role may be, but I think that it is not altogether an unfair description of the present procedure.

To turn to the Amendment, what it says is this. After the usual words of abuse, it ascribes the present situation to the Government's "mismanagement of the economy". I have rarely heard a more preposterous suggestion. Is it really suggested that the particular thing we are dealing with at the moment, the balance of trade, is due to the Government's mismanagement of the economy? I would remind your Lordships that when the Tory Government went out in 1964, they left a combined figure of capital and current debts amounting to £776 million. This had to be met. These were debts due to the world at large incurred by them, and it was this total which shocked the then Labour Chancellor of the Exchequer in November of that year.

What has happened to this debt? In 1965, it had been reduced to £342 million in 1966, to £175 million; and from the figures for the first three quarters of last year, which are all that have yet been published, it looks as if the figure has been further reduced. What has happened is perfectly clear. We tried to reduce the unconscionable burden of debt left over by the Tory Administration. We have been successful in doing it. We had a good hope that we might be able to do it without devaluation, but in that we have not been successful. Nobody likes this painful result. The Labour Party do not like it.

I am not certain that the Party opposite have chosen the right part to attack. They go on to say in their Amendment that the Statement is purely negative in character". It is not purely negative in character, if you look at it; but it would not be very surprising if it were when its object is to cut public expenditure—of course, it is negative in that sense.

Then the Amendment comes to the real "meat" of the matter: it deplores cuts in defence which involve breaking faith with friends and allies and will severely undermine our national security. This bit of humbug comes from the Party which was responsible for Suez. Suez was the end of "gunboat diplomacy" in the world and it was promoted by the Tory Party opposite. I am not going into the subsequent disclosure of the doubtful proceedings about Suez, but will merely say that it was undertaken in breach of our obvious obligations under the United Nations Charter. Apparently it does not shock the Party opposite to break the United Nations Charter, but it shocks them profoundly, as my noble friend Lord Annan, with whose speech I found myself in complete agreement, pointed out, if there has been alleged breach of faith as regards time—not the fact of our departure from the Gulf and the other places which have been mentioned.

How can one really tell? I was not under the table when Mr. George Thomson went out and talked with these people, and I do not know what was said. It is perfectly obvious that a great deal depends on what was said, and on the impression that was formed not only by Mr. Thomson, but by those with whom he was talking. It seems to me to be completely unfounded to say that there has been any breach of faith of a reprehensible character here such as there was over Suez. That is as I see it. I have listened to these attacks time after time. I do not feel bound to go quite so far as the noble Lord, Lord Annan, did and say that they are absolutely inevitable, because I do not know what they were; and I do not see how one can know what they were. The result has been a lot of rather violent abuse of the Government, but not a word to back it up or to make it clear that there was anything of a serious national character.

At the end of the day, I say this—and it has been said before from these Benches. If the Government of the day find that they cannot discharge their duties at home as the Government of this country and at the same time maintain fully certain obligations abroad, then it stands to common sense that one or other has to go. I note with some amazement that noble Lords opposite think that the right things to do, in those circumstances, is to preserve the obligations abroad at all costs and to break faith with the people of this country. I cannot concur in that.

I want to call the attention of your Lordships to one more thing, and that is the functions of this House in a matter of this kind. I had hoped that we were not going to have the usual Party wrangle. I say at once that we have not had it from everybody, and a notable instance was the noble Lord, Lord Thorneycroft, who made a maiden speech that was as impartial in its form as it was honest in its substance. It struck me as an absolutely honest speech, and in the circumstances I think that was rather fine. I am prepared to accept what he said: that Mr. Harold Macmillan rather liked being on the verge of bankruptcy. But there are other things than that.

I think one has to realise that the background of this is not merely Suez: it is even older than that. At the turn of the century we in this country had a third share of the world's exports. By 1950 we had one quarter. When the Tory Government came in for the period from 1951 to 1964 the proportion continued to fall steadily, from 22 per cent. to 14 per cent. and there has been another rather smaller fall in the last year or two. In fact what it comes to is this: that during the whole of the 20th century we have been losing our share of the world's trade, and particularly of exports. That, of course, is the long-standing reason for the difficulties that we are in now.

I should have thought that a Chamber like this, which, after all, contains a wealth of experience and quite a lot of judgment, would be competent to face up to that sort of problem and, instead of making a Party wrangle of it, would consider the position of the country and suggest what in their opinion should be done. This is not the sort of contribution that I heard from the noble Lord who preceded me.


My Lords, may I intervene? Am I to understand that the noble Lord thinks that any criticism of the Government, or any suggestion that they are in any way to blame for our present situation, is indulging in Party politics? If so, would he say that they are entirely free from blame in hanging on East of Suez for three years? Has that nothing to do with their getting into their present mess?


I am afraid dial I do not follow this supposed argument. The point I am making is that by moving a Vote of Censure on the Government in terms which an elected Chamber has already rejected, after full discussion, the Party Opposite are making not only a tactical mistake, but a sad misjudgment of what this Chamber can do. I do not see what that has to do with what I understood the noble Lord to be suggesting. But perhaps, if he wishes, he will tell me some time later.


I asked the noble Lord if he thought the Government were absolutely free from blame in any way.


I am afraid I did not catch what the noble Lord said. It is going to be rather difficult. Is this a serious objection or not; or is it an attempt to score a tactical point? I think the Liberals did very well over this. They succeeded in disagreeing with everybody. They disagreed with the Conservatives on the Amendment, and they disagreed with the Labour Party on the original Motion. I hope that they will be content with this. It was a very fine effort.

If I may go on for a moment or two more—and I shall not be more than a moment or two over this—I should have liked us to face up to the question that the gradual fall in British trade indicates something which itself can be paralleled by other figures of the same kind. The fact is that we are slipping back in the world, and have been for some time past. We are still a wealthy country: we are still a very fine country: and in some fields, as my noble friend Lady Llewelyn-Davies of Hastoe so clearly pointed out in her maiden speech yesterday, we lead the world. It was in looking at the very matter that she was mentioning, the immunological discoveries in medicine lately and the trend of scientific venture, that I thought we had a lead that we might keep in mind when considering the broad political problem that I should have liked to see considered to-day.

There was an article in the New Scientist of January 18, on page 121—and though I happen to know the author, it is not for that reason that I quote it. He was criticising a statement that had appeared in the Press about the operation by way of transplanting hearts, and he said: Fundamental research is never going to finish. To write that displays a total misconception of the nature of scientific progress. I think it also betrays a total misconception of the nature of political progress. I think it is essential that we should realise that the kind of task we have to deal with in a changing world is one which does not end, but continues. Then, later in the same article, the author wrote: This state of affairs suggests another popular notion, also in my opinion totally mistaken; that is, that things are getting so complicated that soon nobody will be able to understand any branch of science properly and we shall have to depend on computers. There is much the same conception nowadays about politics. I like the conclusion in the article, which was: The beauty of science is that the more we learn the, more we understand. That is the main thing that I think it is our duty to try to get over from here, as well as from the other Chamber. It is the duty of Parliament as a whole to try to make people understand that politics is not an impossible thing to understand; that we have to govern ourselves if we do not want other people to come and do so, and in order to do it we must try to dig deep and think as simply as we may.

I have listened to-day to a great deal of technical comment, rather off a Vote of Censure I should have thought, but aptly made. I believe that we could adapt the functions and procedure of this House to have that sort of comment made and considered calmly, without noble Lords opposite feeling bound to curse the Government up hill and down dale for things for which they themselves and their Party are just as much, if not more, responsible, and could treat the whole matter which has now become a national responsibility as something to be faced and understood by the nation, and not to be the subject of the kind of thing that appeared on the Order Paper in the name of the Conservative Party.


My Lords, before the noble Lord sits down, may I help him over the 1967 trade figures? I think he said that he did not know the trade figures for last year. I can tell him the figures. Our imports exceeded our exports by £1,161 million. The trade deficit with the world, taking into consideration the earnings from invisible exports like insurance, was £565 million. I thought perhaps I would give the noble Lord that information, as I understood him to say that he did not know the figures.


My Lords, that is very interesting, but they are the wrong figures. The figures I was giving were the figures of the balance of capital and currency at the end of the year, and it would be very surprising if those figures were made fully available yet. Only the first three-quarters are available. May I reciprocate? The noble Lord has made one of the few constructive suggestions in the course of this debate. He at any rate suggested an alternative to the troubles we have to face. He said that the verges of the roads in this country ought to be mown more rarely, about half as frequently as they often are. May I suggest to him that, though notionally he disagrees with it, he might find a tethered municipal cow very useful, or on trunk roads a similar tethered national cow—one of "Barbara's beasties", in fact.

6.43 p.m.


My Lords, I do not know whether the noble Lord, Lord Mitchison, considers that a political wrangle is simpler to hold than a scientific wrangle, but he very nearly had a trade wrangle at the same time with my noble friend. But I do know that when the noble Lord made his speech he knew that he would have a wrangle. He has already had one with the noble Lord, Lord Gladwyn. But I beg to have only a very small wrangle with him now. He mentioned the wording of my noble friend's Amendment. If the measures which the Government have taken since they have been in power, and the ones which they are about to take—for instance, the measures under the Road Transport Bill, the selective employment tax, steel nationalisation, the Land Commission, the present capital gains tax position—are not mismanagement of our economy, I do not know what is. Again, every one of the measures which are the subject of our debate, as I understand it, is a cut. If that is not a negative measure, I do not know what is, and I see nothing that is positive in these suggestions. Great statesmen—


My Lords, will the noble Earl allow me to intervene. The removal of the selective employment tax cannot possibly assist in this matter. If the noble Earl will consider that this is public expenditure, and that there is a similar question awaiting us later about private expenditure, he will see that the removal of the selective employment tax, whatever its merits on other grounds, certainly could not help over this.


My Lords, I do not know whether it would assist or not. All I know is that we have to pay. It means very little taxation income to the country, and, as I see it, as do the experts who know these things, I would classify it as gross mismanagement.

Great statesmen and administratons, with retired noble and gallant Service Chiefs and businessmen, have spoken in your Lordships' House in this debate. Very nearly all, I think, have been honoured to come to your Lordship' House in recognition of duties that they themselves have carried out in the service of the country. I speak before your Lordships solely as an hereditary Peer, and I have had the honour of serving as a very junior Minister in your Lordships' House. My family have served the Crown since the times of the Civil Wars, with their lives and with their limbs. In 1771 my ancestor, the second Earl, was the Lord Chancellor sitting upon the Woolsack. The third Earl Bathurst was Secretary of State for War and the Colonies from 1812 to 1827, and was a partner with the illustrious ancestor of the noble Duke, the Duke of Wellington, in the victories against the international enemy of the day, Napoleon's France, from Portugal to the very end at Waterloo. Together, the third Earl and that noble Duke laid the foundations of the modern British Commonwealth, as it was.

I have noted that there are 17 townships and places throughout the world which bear my name. I also noted that there are 39 places which bear the name of the noble and gallant Duke, the Duke of Wellington. There are 18 named after the noble Duke, the Duke of Norfolk, who made that magnificent speech to us this afternoon. And, if your Lordships are interested, I also noted that there are 42 places called Wilson—most of them are "Wilson Bills" in the United States. Which Wilson the 43rd will be named after I leave to your Lordships' conjecture. But these places that bear my name were founded for strategy and the maintenance of our trade routes at the time. One hundred and fifty years later, to-day, they still exist and are in the Free World. Men and women from those places assisted this country with their blood in maintaining that freedom And yet to-day I believe firmly there is still an international enemy, and that enemy must be recognised wherever it may be, as international Communism My noble friend Lord Swinton has mentioned the factors of security. They are every bit as vital to this country and the Free World to-day as they were 150 years ago.

Three times, my Lords, a Socialist Government have been elected by this country. Three times Socialist policy, Socialist ineptitude and Socialist ill-judgment, have brought about financial chaos in the land. There are noble Lords who have spoken in this debate, as there are right honourable Members in another place, who believe that we are near to ruin. I do not know. The people of this country did not vote to have that chaos. The only solution which the Socialist Government apparently have to solve this problem, entirely of their own making, is the economy measures which are the subject of this debate. My noble friend Lord Jellicoe says they are negative; the noble Lord, Lord Mitchison, apparently thinks they are positive.

My Lords, I am ready to "back Britain"; millions of men and women throughout the country will back Britain. But I can see no help forthcoming from the pressures which the noble Lords opposite are putting forward with their Socialist Government. I seen only frustrations to our everyday life. I see one result only: that is, that for the sake of a doubtful £700 million economy at some time in the future—is it two years?—this country will cease to be reckoned as a great World Power by our friends and foes alike.

It is too late to argue with the noble Lord, Lord Annan: I prefer to take the views of my noble and gallant friend Lord Thurlow, and I have no doubt that there are many ways and means in which this defence problem can be worked out. The facts will be these. By the time these cuts have come into operation there will be no supersonic air force. The great regiments, many referred to by the noble Duke, will have been cut to the hone, and even disbanded, as many have been already. The naval bases will be shut up and indefensible, and we shall have no reserves. In passing, may I on this remind your Lordships' House of the ardent and faithful service which has been carried on throughout this country ever since 1939 by the Civil Defence Corps, the Auxiliary Fire Service and all the other auxiliary services? They would be needed not only in the case of a thermo-nuclear attack, but also in the event of a train disaster, or such other disasters as can happen. I would merely throw out to your Lordships my belief that one day we should debate whether or not we can cash in on this great voluntary spirit and produce out of the morgue that has happened as a result of these cuts, some great emergency service, available alike in war and peace. That is not the purpose of my speech to your Lordships this evening, but I wanted to give credit to those people in the Civil Defence.

Shorn of our power, what help can we be to our friends if they need us? These cuts cannot stand up to the principles of good government. How do they help the maintenance of our institutions? I do not think even Lord Mitchison could agree that they do. They cannot help to defend our country and our friends to the best of our ability, and they cannot possibly raise the standard of living of the people. I now think of those people in those Bathursts throughout the world: Gambia, with 20,000 people in the capital of that newly independent State: South Africa; Australia; Canada. All these are in the dangerous places of the world. Mauritius needs our help to-day. The Socialist Prime Minister from Singapore says that he needs our help to-day. Who can tell who is going to need our help to-morrow? My Lords, it may not be for long that hereditary Peers will have the honour of taking part in your Lordships' great debates. I can only say, thinking of those people in the Bathursts scattered throughout the world, thinking of those principles of good government which I have mentioned and quoted, that I think they are particularly apt, in view of my noble friend's Amendment. I beg to support the Amendment, and I intend to vote with my noble friend.

6.55 p.m.


My Lords, if I had to start raking up some of my progenitors, I should have to draw attention to one or two queer folk, and one of them a very well known figure in the Chartist world some 140 years ago. I suppose that is why I sit on this side of the House, and why the noble Earl, Lord Bathurst, sits on the other. We admire sincerity, whoever brings it to the front. While, as a Yorkshireman, I ground my teeth when the Duke of Norfolk was sent with the cricket team to Australia, this afternoon I have doffed my cap to him metaphorically dozens of times. I rarely have heard a more sincere exposition of a man's mind in simple terms than from the Duke of Norfolk. We are with him on it, because we cannot afford in any circumstances to kick in the teeth sincere, voluntary effort, wherever it is.

The sincere thing I want to say this evening—and I am going to be brief because I have a wager with Lord Beswick that I am down in less than ten minutes—is this. During the strike a mill near my place had materials consigned to it which lay for four weeks outside the bar at Liverpool. There were 350 employees in jeopardy of their employment, and it was through no fault of their own. What happened? A boat was sent in the slight hope that the raw materials might be unloaded on a good tide at Londonderry. It missed it and went to Brest, where it had to be unloaded on the quayside, and it was put on the railway to Le Havre. A little boat brought it from Le Havre to Runcorn. As the commodities were being unloaded at Runcorn a cable was received from the sellers saying that it had not to be unloaded unless 10 per cent. of the original purchase price was paid. Anybody is as dull as ditchwater if he cannot relate that kind of incident to his own particular way of living or his livelihood. What I am saying is this, by inference, saving time: we cannot afford a repetition of what we had in the docks before devaluation, because if we have a repetition of that we shall have a second "dose" and it will be the last. That is what the Government must be thinking about. It is no use letting these things grow up and surprise them. Somebody made a very amusing quotation this afternoon with regard to that.

My second point is that we have heard over the years now, until we are sick and weary of the nostrums and the arguments, about balance of payments. Do your Lordships know that if you analyse those arguments, apart from the academics—some good, some poor—a lot of economists have to say what they do because the tune is called by those who employ them, which means argument about the criteria? I say that the criteria for the balance of payments have never been accurately stated or diagnosed. Let noble Lords cast their memories back just a week or two. A reference was made in this House to the Report on Invisible Earnings. Do noble Lords remember it? Magnificient! Did that not catch everybody by surprise? Of course it did. Was not everybody amazed when they saw the figures in terms of the shift of importance of aid and overseas investment? Was it not an amazing thing to see that if we had no more overseas commitments than we had in 1938 we should not be in debt at all? That would be extremely valuable.

Why do the political Parties not get together on this matter and decide to commission a similar study, or perhaps a more comprehensive one, to that given to Sir Thomas Brand's Committee when they set about the invisible earnings study? If the young man, William Clark, was employed in the same position as director, I am perfectly certain that out of such an examination of the balance-of-payments criteria, good would come.

We are definitely committed to certain rules in the prosperity club, of which we are members throughout the world. We can no longer venture or stray into extravagance, either internally or externally, without being called to book at some point. During this past week the O.E.C.D. has even been studying the question of calling the Americans to book. It does not matter who strays outside the rules of this prosperity club, they will have their knuckles rapped. It will not be much more than five years—ten at most—before the Russians are members of the prosperity club, because the possibility of membership begins when the per capita income is round about £300 equivalent in sterling. I am not saying whether that figure was before devaluation or after. The profit motive that the Russians have gone on to in the last four years is a result of the fact that they are just about getting to the point of being members of the prosperity club.

I should like to go on and develop the question of aid, but I shall lose my wager if I do not shut up. I hope my suggestion will be given consideration and that a study will be made. It need not take long, but there is no question about it—it could be lifted out of politics, except to the extent where extravagance took place or where a principle was introduced on which the country could debate it. I want to say to the Government that they have been honest and straightforward on our Front Bench about the situation we are in. They have sat on the penitence stool and they have accepted responsibility. May I express the hope that they will carry on with this and really get down to some hard work, showing the country what they can really do in this matter, because they are capable of it?

There has been a lot of—ill-deserved—denigration of Harold Wilson during this last week or two, and I ask the Government not to stay too long on the stool of penitence but really to get on with the job and make a success of it, because I believe they can if they are not afraid of doing the unpopular thing, which they are not.

7.5 p.m.


My Lords, we are nearing the end of a very long debate during which we have had seven excellent maiden speeches, from the noble Lord, Lord Thorneycroft, the noble Lord, Lord Carron, my noble friend Lord Franks, the noble Baroness, Lady Llewelyn Davies, the noble Lord, Lord Morris of Grasmere, the noble Lord, Lord Wigg, and the noble Lord, Lord Granville of Eye. In the time that I have allotted myself I cannot possibly pay to those maiden speeches the adequate tribute which they certainly deserve. I can only say that they helped to make a memorable debate, and one which has been carried on at a high level. I calculate that by the end of the debate there will have been 50 speakers, and I sympathise with the noble and learned Lord on the Woolsack in having to reply to such a wide-ranging debate.

Before offering one or two comments I hope I shall be forgiven if I make one digression. This debate is taking place a week after the debate in the Commons and after the vital vote in the Commons has been taken. I hope the debate here will not be regarded as coming too late for the Government to reconsider any of their decisions. For example, I hope careful attention will be paid to the speech of the noble Duke, the Duke of Norfolk. It was a most impressive speech. I hope that the advice and warning of many of your Lordships during this debate will percolate through to the Government, but I think this debate has indicated the need for some reform of our Parliamentary procedures.

In addition to these marathon debates, I should like to see some way of drawing upon the undoubted talent that exists in this House. Perhaps once the composition and powers have been reformed there may be closer collaboration between this House and another place. I should like to see specialist Committees set up on such things as defence, foreign affairs and economic affairs, and served by Members of both Houses. I think we might well follow the procedure of the Select Committee on Estimates, in order that there might be a real study in depth—for example, into the role of defence for Britain in the nuclear age, or how best to curb consumer spending at a time such as the present, or how best to apply the principle of selectivity in the social services with the minimum of embarrassment to those who have to undergo a means test.

To take one more example, we might study the distinction between productive and unproductive public expenditure—and there certainly is an important distinction. I should regard the subsidising of the rents of those who can afford to pay the full economic rent as unproductive public expenditure. On the other hand, I regard the expenditure on education as productive—it certainly should be—and I believe that cuts in education are cuts we can ill afford to make.

Many of your Lordships have referred to the moving speech made by the noble Earl, Lord Longford, and I would certainly echo what has been said. My own brief comment on this subject of the raising of the school-leaving age is this. If the Government had said, "We are desperately short of teachers; we have not enough buildings; we must have a little more time to tackle the problem and to prevent overcrowding in teacher training colleges", at any rate it would have been a debatable point. That is not what they have said, and what I fear is that after this delay of two years we shall still be short of buildings and we shall still be short of teachers. But, of course, this is just one more example of going back upon a firm assurance, and I think that has been one of the themes of this debate. I think we have to face the fact that this going back on assurances tends to undermine respect not only for the Government but for our Parliamentary system. In opening the debate yesterday, the Leader of the House referred to excessive despondency. I would prefer to call it bewilderment. I think it is due in part to the sudden reversals of policy and going back upon assurances.

But, of course, this is not new. When the Conservatives were in office from 1951 to 1964—and I was in another place during the whole of that period—I sometimes used to gasp with astonishment at the political somersaults, and I used to be amazed sometimes to hear Ministers pursuing policies which a few years before they had denounced. My Conservative friends, in private but not in public, used to say, "This is just an example of the advantages of the pragmatic approach to politics". I was not entirely convinced. When the change of Government took place and the present Prime Minister appeared on television, he referred to the advantages of pragmatism, and I thought that was a little ominous.

The trouble with the pragmatic or empirical approach is that so often it can become a euphemism for having no clear guiding principle but living from day to day without a definite goal. And so it has appeared to many people in the country. It has appeared not so much a ship being temporarily blown off course; it has rather looked like the course itself being determined by the winds rather than the master of the ship. In other words, policy has seemed to be determined by events, events which very often the Government seem quite unable to control. That, I think, is the main burden of the criticism in this debate. And I think it is this that has contributed to the disillusionment, and this disillusionment will make it infinitely more difficult to restore the confidence abroad and at home which is vitally necessary if we are to get over our present financial troubles.

If I may refer again to the Leader of the House, he called for constructive criticism, and I think it is fair to say that nearly every speaker has offered at least one constructive point during this debate. I will try to make one point myself on the rather more dark and dull subject of home economics. It would be foolish in winding up for my Liberal colleagues to attempt to cover all the ground. My noble friend Lord Gladwyn has dealt adequately with our views on defence. I would repeat one question which was not answered by the noble Lord, Lord Chalfont. My noble friend asked: Why not organise communications the other way round the world; namely, westabout? I do not think that point was answered, but possibly the noble and learned Lord on the Woolsack may reply to it.

My noble friend Lord Amulree has dealt with housing and health. I should like to take up one point made by my noble friend Lord Franks in an extremely interesting maiden speech. He said that the crux of the whole affair is the switch from personal consumption to exports. Of course, that is true. There is no doubt that there has been a spending spree since devaluation. That should have been anticipated and, I think, provided for. There is a very simple reason for this; that is, that many people expect prices to rise and have taken the opportunity of baying before that happens. It has not, I believe, come wholly out of spare income. Some part has come out of savings, and we now have the reverse of that process. Here, I think, a distinction should be made between personal earnings and personal spending, because it is the spending that is the serious matter at the present time.

I think it is clear that there will be, and will have to be, a Budget surplus. In fact, we have been warned about a probable increase in taxation. But I do not myself think that the only solution lies in compulsory saving by massive taxation. There are other possibilities, and this is what I call my practical suggestion. I suggest, if unfortunately there has to be compulsion, that all wage and salary increases not fully justified by productivity bargains should be set aside and invested, preferably in a wide range of unit trusts to spread the risks. Withdrawals would not be permitted for, say, a couple of years, and tax would not be payable on the increased earnings until the money was withdrawn and spent. This scheme has been worked out in some detail. I myself took part in writing a little booklet about it.

This idea now has the support of a very distinguished person; namely, Mr. Aubrey Jones, and I should like to quote very briefly from an article by him in the Sunday Times of Sunday, January 21. I will not take up time quoting more than a few sentences, but in an article headed, "What next for the consumer?" he said: If both the wage-earner and the dividend recipient are asked to forgo increases, the wage-earner forgoes his permanently, whereas the dividend recipient, while forgoing an increase in dividends, can at the end of the day enjoy an increase in the capital value of his investment because of ploughed-back profits. Should we not endeavour to put the wage-earner and dividend recipient on a par? Then he goes on to explain in detail, and he says: The savings could be invested in categories of investment laid down by law and in ways which ensured that they could grow roughly with the growth in the gross national investment. The paragraph concludes with this sentence: In this way the discrepancy between wage-earner and dividend recipient could be in part removed. I know that this is a new departure. Let me say it is very different from the rather discredited post-war credits, which was a form of compulsory loan to the Government. I am aware that the noble and learned Lord on the Woolsack cannot anticipate the Chancellor of the Exchequer's Budget, but I hope at any rate we may hear that serious consideration will be given to ideas of this sort. I am absolutely certain that we must be prepared to think of new ideas in the situation to-day.

Finally, I come to the question of the vote. I do not regard a vote in this House as quite so important as a vote in the Commons, partly because we know that in any case the Conservatives can carry the day if they so wish. But I will explain our own views on the Liberal Benches. We are in entire agreement with our colleagues in another place where there was a similar Amendment, I understand, tabled by the Official Opposition. We could not possibly vote for the Conservative Amendment, which gives the impression that their only real concern is maintaining expenditure on defence East of Suez. The noble Lord, Lord Carrington, has already agreed that there is a fundamental difference of view between the Liberals and those on the Conservative Benches on this matter. Therefore, there is only one possible course: we shall vote against the Conservative Amendment. I hope that from my remarks it will be abundantly clear that that does not imply a vote of confidence in the Government. To return to my opening words, although this debate is taking place a week after that in the Commons, I hope what has been said will be heeded by the Government. Having studied the cuts, I am quite certain that there are more battles ahead.

7.20 p.m.


My Lords, I only hope that, when the time comes, the Liberals will remember what to do. As I was unavoidably prevented from being in the House on Monday I did not have the opportunity of welcoming the noble Lord, Lord Shackleton, in his new position as Leader of the House. In spite of the fact that he spent a number of years in another place, there will be no one in the House who does not feel that the noble Lord is truly a "House of Lords man"; and I know that he will lead your Lordships' House with distinction and will be careful of the rights and privileges of all Peers, of whatever Party. So far as I am concerned, I certainly give him the undertaking that we will cooperate with him, as we have done with his predecessor, in the smooth running of the House.

Perhaps your Lordships will allow me to say one word about the noble Earl, Lord Longford, who for three years has been Leader of this House. As a matter of fact, he and I came to the House at almost exactly the same time. The only difference was that he came by merit and I came by accident. All of us will greatly miss his presence on the Front Bench opposite, and not least the wit and the humanity with which he conducted the affairs of the Government. I think, too, that the Government will miss his integrity and his compassion for the underdog.

Happily, the noble Earl has removed himself only a few feet from where he used to sit, and we shall look forward to hearing him in the future as in the past, though it may be that we shall expect his speeches to contain rather less of the blandishments which he so cunningly used to distract our attention from the matter in hand. As Leader of the Opposition I always found it a pleasure to do business with the noble Earl, because I counted him, and count him, as a firm friend, and one from whom I have had so many personal kindnesses.

My Lords, we are at the end of a two-day debate in which there have been a number of outstanding speeches. Those of us who remember our children's books will remember that there were seven maids with seven mops, and that there were Snow White and the Seven Dwarfs. In these last two days we had had seven "maidens", and all I can say is that they have acquitted themselves as well as did the seven wise virgins. I do not wish to single out any particular speeches that have been made over these last two days—there have been so many good ones—but perhaps your Lordships will just allow me to mention two of them, one by my noble friend Lord Belstead, which I greatly regret so few of your Lordships were able to hear last night, and the other by the noble Duke, the Duke of Norfolk, whose speech reflected the lifetime of service he has given to the Territorial Army.

It falls to me now to wind up on behalf of the Opposition. My noble friend Lord Jellicoe, in his speech yesterday, made it perfectly plain why we found it necessary to move the Amendment, and so many of your Lordships have discussed the cuts in expenditure, and the Government's economic policy, that it is unnecessary for me to make a long speech or to cover the whole range of economic policy. Nevertheless, there are a number of things that I want to say. My noble friend Lord Jellicoe said yesterday that "we are all in this mess together". Well, so we are; and, regardless of Party, we want to get out of it. All of us, wherever we sit in the House, are primarily interested in Britain and the British people, and not in Party advantage. But this does not release us from our duty to say what we think.

The noble Lord, Lord Shackleton, in his speech yesterday (I paraphrase it: I hope not unfairly), said, "I am sorry; the Government have made a terrible mess. We admit it. But do not let us talk about that. What we are going to do now is what matters." My Lords, it is not really quite so easy as that. In my view, it is not "playing Party politics" to criticise the Government for what they have done and are proposing to do: this is what the Opposition is for. By our criticism we seek to do two things. The first, in the national interest, is to convince the Government of the error of their ways. Sometimes we succeed:—for example, we have convinced them, apparently, that there is something to be said for selectivity in the social services. But we also criticise, not, I hope, unfairly, or by bringing in personalities, in order to convince our fellow countrymen and women that we on this side have the clearer vision and are more capable of forming a successful Administration than those opposite.

I do not expect that noble Lords opposite will share that view. But it is one that I happen to hold most strongly, and it means that I do not want to be, and cannot be, as detached as some of your Lordships on the Cross-Benches feel they are able to be, or as, indeed, one of my ex-colleagues felt that he was able to be. That is not my inclination, and it is not my job, for I believe that we as a Party can do better, and we should be given the chance. Therefore, what I say will not be particularly welcome to noble Lords opposite.


My Lords, I wonder whether I may intervene—I appreciate the noble Lord's giving way. He said that he paraphrased my speech. I did make it clear, and said, that of course the Opposition Parties have a duty to criticise the Government. I went on—and I hope I put it in fair perspective—to make a request for alternative suggestions, of which we have had some.


My Lords, the noble Lord, Lord Shackleton, knows that I do not in the least want to misrepresent what he said, and I have no doubt that, as a result of what he said, he will agree 100 per cent. with what I have just said. So there is nothing between us.

There is, first of all, the question of timing: the timing of the Statement we are discussing, and the timing of the Budget and the budgetary measures which the Chancellor tells us are to follow. It has become increasingly clear—though I think all of us must have long realised it—that devaluation was not a carefully prepared act undertaken by the Government, with all their plans laid and with the necessary follow-up action ready to be taken. We have been told (and I am sure this is right) that if devaluation is to be successful we have only a comparatively short time in which to make it so. It is also true that, coupled with the actual economic significance of devaluation, there is the factor of confidence in the pound and confidence in this country, which is in itself, and in its own way, quite as important, if not more so.

It would therefore seem desirable, for both these reasons, economic and practical, together with the question of confidence, that after devaluation was announced measures to make it successful and to restore that confidence should have been announced at once. But this did not happen. Nothing happened after the announcement of devaluation, except what amounted almost to a public debate, illustrating the tensions and disputes and disagreements within the Cabinet. Day by day we read in our papers the latest instalment of who was not, or who was, going to resign; what the effect was likely to be on the Left Wing of the Labour Party, or on the Right Wing, if such-and-such a cut was made; how this would be received all over the world, and the impossibility of doing more or less in the way of cuts.

Certainly, the impression given to me was that of a Government who were unable to make up their mind, incapable, because of the dissension among their own followers, of giving a lead, and far removed from what the Prime Minister used to refer to as "the smack of firm government." I cannot believe that the public exposure of the frailties of the Labour Party and the Labour Cabinet can have added to the confidence—or perhaps one should say, the lack of confidence—with which this country and this Government are, alas! regarded abroad.

However, we now have an announcement of the Government's measures to curtail public expenditure. I shall have more to say on this in a moment. At the same time as these decisions were announced, and in the certain knowledge of all of us that private spending, as well as public spending, would have to be cut in some measure, we were told by the Chancellor of the Exchequer that he was going to do nothing until his Budget in the middle of March, because he wanted to see the way in which things were going. I must say that I regard that statement almost as an incitement to the public to spend while they may, to stock up before there is a clampdown. I was astonished to hear the noble Lord, Lord Beswick in his speech this afternoon tell us that this was precisely the object of the Government; that they wanted a "spending spree." I. hope that I have not misunderstood him, but he seemed to tell us that this was precisely what was intended by the Government.


Then the noble Lord should read in to-morrow's Hansard what I said. I said nothing of the kind. I said that a "spending spree", if such there be—and the noble Lord has no figures on which to base that—will not affect the problem at present because there is spare capacity.


My Lords, we shall see what the noble Lord said. I do not wish at ail to misrepresent him, but he went very nearly as far as I went. As I say, we shall see to-morrow. But certainly I cannot believe that, whatever difficulties may have faced the Chancellor—and I do not for one moment underrate them—I do not think he was wise not to combine in one Statement on one day the measures he believes it right to take in both the public and the private sector. I think that there is a real danger of a "spending spree" which will make the Chancellor's task more difficult and may, alas!, make our punishment more severe.

I think that there was equally a psychological mistake. In the speeches which I have made to your Lordships on the economic situation in the past three years. I have said on a number of occasions that no Government had yet managed to bring home to the people of this country the gravity of our economic situation, since, although we seem perpetually to have headlines about "Crisis", the standard of living, in spite of these difficulties, rose continuously. Most people no longer believed that talks of "Crisis" were any more connected with themselves than landing a man on the moon. But I think that now, for the first time, at any rate for the first time for a great many years, the people of this country really are aware of the seriousness of our situation. They have been shocked into awareness by devaluation and by an awareness of the consequences which they all know are going to follow. I think that the five secretaries in Surbiton are good evidence of this. I believe that there is a feeling in this country that things are bad and that we must all get down to putting them right—a feeling which at the moment is unfocused. People are not sure how, and in what way, they can help.

The build-up to the Statement last week was such that almost everybody in the country expected grave measures to be announced which would affect them personally—not only cuts in Government expenditure, but also changes in taxation which would affect them very deeply. And they were prepared to accept these necessary sacrifices, provided that they were given a clear and definite lead; a lead from the Government as to why it was necessary, what they must do to ensure that we overcome these present difficulties and make it unnecessary for this ever to happen again. No such statement has come from the Government, and inevitably there is a feeling of anti-climax. This does not seem to me to be a sensible or an imaginative way of dealing with human beings who are longing for a lead and anxious to help. Here I agree very much with what was said by the noble Lord, Lord Franks, yesterday about the need for the Government to have a clear and coherent theme and policy which will be backed and supported by the people of this country. I fear that the Government have missed a great opportunity and have at the same time made their economic task that much more difficult.

I do not intend to talk in any detail about the cuts at home. Some of them I accept; others fill me with doubt—for example, the postponement of the raising of the school-leaving age, and the investment grants which, as my noble friend Lord Jellicoe said, seem to me to be absolutely bogus. The defence cuts, so far from helping our position in the next year, make it worse but there are certain good things to be said about them as a whole, and I think these things should be said. In the first place, the cuts are a recognition by the Government of a need to cut public expenditure. And that, coming from a Labour Government, is of the greatest importance—it is realistic. Secondly, they show that the Government, in the interests of the country, are prepared to sacrifice a number of things which they hold very dear. And this in itself is something to be commended. The fact that we on this side have been arguing for more selectivity in the social services—and I hope that the Government will go further than they have done so far—and for the reimposition of the charge on prescriptions does not make it any the more easy for the Labour Party to accept them. I acknowledge this, and I do not in any way wish to underestimate the lengths to which the Government have gone in the face of great difficulties.

I do not know whether the cuts in public expenditure are adequate. It is difficult to know by what yardstick they should be measured. I confess that on this point I have the most serious doubts. I think that my noble friend Lord Jellicoe was right when he said that the true saving will be under £200 million. If we look at estimates for the next few years it would appear that the cuts are relatively insignificant. Certainly the trends are disturbing. To a certain extent we shall have to suspend judgment until we know what the Chancellor of the Exchequer is going to do in the Budget, but no doubt a good many of us will watch very carefully to see whether or not the Government have decided that personal expenditure and personal incomes should be cut more drastically than Government expenditure.

My Lords, it is the cuts in defence which create the most misgivings among those of us who sit on this side of the House. They do so for three reasons. First, because of the effect they will have on the Armed Forces and their capability for intervention in the future; secondly, because of the effects which our withdrawal from East of Suez will have on the stability of the area and on our friends and our allies; and, thirdly, because of the effects which the abandonment of undertakings freely entered into will have on Britain's good name and her influence in the world.

I take first the effect on the Forces themselves. This is not the right moment to go into any detail, and I feel sure that we ought to have a debate on defence fairly soon in order to discuss these things in more detail. Nevertheless, I think that I should say something now. Have the Government, for example, made an assessment of the effect that these cuts will have on the recruiting and morale of the Services? I cannot think that, after so many changes of plan in the three years of this Government's life, it will be easy to persuade men of the type needed that any of the three Services will offer them a reasonable career so long as we have a Labour Government. It was already beginning to be apparent after the cuts of July that recruiting, particularly of officers, was on the down-turn. This trend will be accelerated and gives grave concern to all of us.

In regard to equipment, I am at a loss to understand how the Royal Air Force is to remain a force capable of competing on equal terms with other first-class air forces of the world. Time and again Mr. Healey has told us that the whole basis of Royal Air Force re-equipment was the Anglo-French swing-wing aircraft and the stop-gap F.111s. Both these have disappeared, and the Royal Air Force is left with no modern equipment in sight, other than the Jaguar. We shall have to press very hard to find out what are the plans for the re-equipment of the Royal Air Force, so that it may continue to play its role in those areas of the world in which the Government are still prepared to contribute to the cause of freedom.

As for the Royal Navy, I have never disguised my conviction of the folly of abandoning the Fleet Air Arm. I do not intend to repeat the arguments again, but as a result of this last decision the Royal Navy will now have no means of reconnaissance, no strike capability, and will very likely be incapable of playing a role outside Europe, without bases, without aircraft and without surface-to-surface missiles. We are also told that, in addition to the withdrawal from East of Suez, cuts will probably be made in the British Army of the Rhine, and that there is to be a slowing down of the naval building programme. We are instead to have a final Review, which comes only six months after the last "final Review", and the results of which will probably emerge just before the next "final Review" is announced. I have grave fears about the viability of the Forces and their capability of defending this country and its interests.

There are, of course, those who have always maintained, or maintained for a long time past, such as the noble Lord, Lord Gladwyn, that Britain should not have a military presence East of Suez. I do not happen to agree with this, but it is a perfectly legitimate argument. I do not agree with it for a number of reasons. The British forces in the Gulf and in Singapore and in Malaysia add stability, and in some cases create stability, in an area which is basically unstable. We have large British interests in those areas and there can be no doubt that the presence of British forces is a security for those British interests. We have friends and allies in that part of the world with whom we have freely entered into pacts and treaties. There is no question that both in the Persian Gulf and in South-East Asia we are still needed and wanted.

They believe—the people of that area—that our presence is a safeguard and a stabilising factor. The reaction of the Sheikhs is evidence of this, and I hope very much that the proposal that there should be some contribution to our expenditure in the Gulf by the Sheiks will not be dismissed quite so cavalierly as the Minister of Defence dismissed it. There is the mission of Mr. Lee Kuan Yew, who came to plead with the Labour Government not to leave Singapore undefended. There were the reactions of the Australians and the New Zealanders. This is plentiful evidence that nobody wants us to go. There are many arguments for withdrawing from a country in which we are not wanted, though sometimes even then it may be our duty to stay. But there can be few military reasons for withdrawing and letting down your friends in circumstances in which they wish you to stay.

It is very noticeable how much advice Labour Members of Parliament are prepared to give about Vietnam, about East-West relations, about Africa, about the United Nations and all the rest of it. But I say this to them: if you wish your advice to be heeded, then you must be prepared to contribute something to the stability of the world in the common front against aggression. Nobody is going to pay much attention to a country which has abdicated its responsibilities and is not willing to honour its commitments. From now on we have to expect that the Mr. Wilson who flies to Moscow and then on to Washington is a very different-sized figure on the world stage from the Mr. Wilson of three years ago. World politics is about power, and if you do not have the power it is no good pretending that you still count as much as you did or that you have as much influence. And with influence comes trade, and we should not minimise the effect on our visible and invisible trade of retrenchment on the scale envisaged.

For these reasons, and I put them very briefly, I believe that we should maintain our forces East of Suez—not, of course, for ever; I quite agree (and it is almost the only thing I did agree with in the noble Lord's speech) that all this is changing; the politics of power is changing. Sooner or later we may find that we are not needed or that we are not wanted, and we shall wish and find it desirable to withdraw, having made arrangements with our friends and allies. But not it seems now; not when the Vietnam war is still raging and when the whole stability of South-East Asia is in question.

Ironically enough, all these reasons that I have been giving have at one time or another—all of them—been advanced by the principal Ministers of the Government. We can all quote from the Prime Minister, from Mr. Brown and from Mr. Healey speeches in which they echo the arguments and sentiments which I have just expressed. I do not intend to quote them. They are sadly and pathetically within the recollection of all of us. It is perfectly legitimate to argue that a British presence East of Suez is not in Britain's interest, and, as I say, there are those who have done so. I am sure the noble Lord, Lord Annan, has been quite consistent and has done it for years. But it is distasteful, to say the least of it, to find Ministers saying exactly the opposite of what they were saying a few short months ago, and trying to clothe what has been forced on them with the cloak of respectability of a strategic and Defence argument. I should feel much happier about the speech of the noble Lord, Lord Chalfont, if he had not, by remaining in the Government after the Defence White Paper of 1966, by his presence made it perfectly obvious that he agreed with what was then said.

But this does not really fool us. We all know that the real reason for most of these defence decisions is to make the "package" of Government cuts acceptable to the rank-and-file of the Labour Party. The cuts do not save any money next year; indeed, defence expenditure will rise as a result of the cancellation charges, though this is skilfully disguised in the White Paper. I do not know whit those cancellation charges will be, but I am sure they will make a large reduction in the already rather "phoney" figure of £300 million. In any event, they will be far too late to have any effect on the success or otherwise of devaluation. They are a poor and scarcely camouflaged sop to the Left Wing of the Labour Party. This became only too clear when I went to listen to the Prime Minister in another place, and the only time that he got a cheer—and it was a loud one—was when he announced these drastic defence cuts and the abandonment of our commitments and the breaking of our promises. I do not find it agreeable to listen to people cheering at Britain breaking her promises.


My Lords, what is the alternative saving? I think the noble Lord may have forgotten to tell us.


My Lords perhaps the noble Lord will allow me to go on. Well, I will deal with that if he likes. I hoped to finish this speech without that sort of interruption, but if the noble Lord wishes me to deal with it, it is this. If the devaluation is successful, as one hopes it will be, we shall hope that our gross national product will go up. That is the first thing. These cuts do not take effect for eighteen months or more. The second thing, as my noble friend said earlier on in this debate, is that there are a number of Labour Party proposals which we would abandon, such as the Industrial Aid Bill and the Land Commission and all the rest of it, and we feel it would be perfectly possible to save money in order to continue. I think there are some defence cuts which should be made. I think there should be a run-down in some of our bases. But what I do not think is that this country, with its great tradition, should "rat" on its promises merely for the sake of a few pounds.

I have misgivings about the future of our forces. I view with alarm the effect of our withdrawal on the stability of the Persian Gulf and of South-East Asia and its effect upon our allies, and I feel ashamed that my country should have broken its word and abandoned its promises and commitments. I confess I find it difficult to understand how some Ministers can continue in office. I should not mind so much if this were just a personal thing. It is, after all, for them to decide where their duty lies and then they have to live with it. But it goes deeper than that. In making the speeches and in making the promises they have not only committed themselves, but they have committed Britain and her good name. They speak not only for themselves but for all of us, and I do not understand how a Government, elected on a programme which they have now completely reversed in almost every particular, can continue or should continue in office.

I do not as a general rule believe that much purpose is served by your Lordships' dividing on issues of this kind. We can make our views felt by weight of argument rather than by numbers. But on this occasion the Government have gone out of their way to put down what, in effect, amounts to a vote of confidence in themselves. None of us on this side could, with an easy conscience, allow that Motion to go unchallenged, for we have no confidence in this Government and we pray that the time will not be far removed when we shall have done with them.

7.50 p.m.


My Lords, this is the end of a long debate, and I hope that none of your Lordships will mind if I do not mention every speaker who has taken part in the debate and do not attempt to answer every question. If I did, we should be here until a very late hour indeed. I want simply to summarise the Government's position. But I must say, first, that we have listened to seven remarkable maiden speeches. The most remarkable, perhaps, was that by the noble Lord, Lord Thorneycroft, to which I shall be returning. We then had a speech from the noble Lord, Lord Franks; and, if I may, I want to comment on that at a later stage. Then there was the speech of the noble Lord, Lord Carron, with all his trade union experience.

As to the next, your Lordships will, I think, feel that in my noble friend Lady Llewelyn-Davies we have a new Member of experience, intelligence and charm. Then we have been interested to hear the views of the noble Lord, Lord Morris of Grasmere, about the school-leaving age. I know personally the devotion which the noble Lord, Lord Wigg, has for the Services, and we have all listened with the greatest interest to his speech on that subject. We have heard, too, from the noble Lord, Lord Granville of Eye, on the importance of the incomes policy. I am quite sure that we shall all wish to hear from those noble Lords again.

My Lords, my noble friend Lord Shackleton, in opening this debate on the first day, said that it was a continuation of the debate in another place. I do not think I agree with that; I think it has been a repetition. During the last weeks the very important questions under discussion have very properly been discussed, up hill and down dale, in every newspaper in the country, in a great many television programmes and in broadcasts, and a two-day debate has taken place in the elected Chamber. It is very proper no doubt that the hereditary Chamber should also consider them; but I think it would be right to say that while no doubt most of us would feel that everything had been very much better put in this House than anywhere else, really no new arguments have been raised. It has been the same argument.

What does it come to? There is here, of course, at the basis of all this, a question of economics. In my first year in office I regretted very much that I had never had any training in economics. In my second and third years I have been more doubtful, because I find that at almost every point the expert economists are completely divided; so I wonder whether it would have done any good if I had studied economics. Even if you take a simple question like, "Do we at this point put up the bank rate 1 per cent.?", you will find half the economists saying, "Yes, that is obviously the right step in present circumstances and it will create confidence abroad because it will show that you are taking the right steps", and the other half saying, "This will be fatal from the point of view of confidence; they will all take it as a sign of panic". As your Lordships will by now have gathered, I have no great faith in the advice of economists.

Ever since the war we have had one economic crisis after another; and I want to make it quite clear that in what I am about to say I. am not in any way making a Party point. What happens—and it does not matter which Party is in power—is that the Government of the day have to take a number of unpleasant steps which no doubt make them unpopular, and when they become unpopular the Opposition say: "Yah! You are a discredited lot. Why don't you resign? It is obvious the country want us as the Government and not you". This happens whichever Party is in power.

There is a passage which I should like to read, if I may, from the resignation speech of the noble Lord, Lord Thorneycroft, but it would be fair to read first the concluding sentences of the preceding speech, which was a speech by Mr. Gaitskell. This was on January 23, 1958. He said: One thing which is quite certain is that the Government and the Party opposite are divided on this issue—some Members opposite are quite honest enough to realise that. They are discredited in the country. They are, without doubt, moving to electoral defeat. They have lost the confidence of the country. While they stay in office, not only our economic policy but our foreign policy is paralysed. We lose chance after chance of seizing the initiative in world affairs and at home their economic policy is, at best, uncertain, shifting and weak and, at worst, calculated to stifle our energies and divide the nation. I say to the Government frankly that it is time they went. It is wrong for the country that they should stay. They are tired, troubled men. Let them cling to office no longer. Let them take their rest and let the people choose a new Government "—[OFFICIAL REPORT, Commons, 23/1/58, col. 1294.] And I point out to the noble Lord, Lord Caccia, as we all know we then had the night of the long knives, and the Government won the next General Election—verb sap!

In the course of that debate the noble Lord, Lord Thorneycroft, said: The point I want to put is the quite simple one that for twelve years"— this was 1958— we have been attempting to do more than our resources could manage, and in the process we have been gravely weakening ourselves. We have, in a sense, been trying to do two things at the same time. First, we have sought to be a nuclear power, matching missile with missile and anti-missile with anti-missile, and with large—and I am not suggesting that economies have not been made—conventional forces in the Far East, the Middle East and the Atlantic at the same time. That is one branch of endeavour which we have attempted. At the same time, we have sought to maintain a Welfare State at as high a level as—sometimes at an even higher level than—that of the United States of America. We have been trying to do those things against the background of having to repay debt abroad during the next eight years of a total equal to the whole of our existing reserves; against the background of having to meet maturing debt in this country next year at a higher level even than the very high level of business; against the background of seeking to conduct a great international banking business and against a background of sustaining our position of one of the world's major overseas investors. In those circumstances, it is small wonder that we find some difficulties" [Col. 1295.] Later, my Lords, he said this, after referring to our aims: Those are not unworthy aims, but let no politician, of any party, be under any illusions as to what all this has meant. It has meant that over twelve years we have slithered from one crisis to another. Sometimes it has been a balance of payments crisis and sometimes has been an exchange crisis, but always is has been a crisis. It has meant a £ sterling which has sunk from 20s. to 12s. That is not a picture of the nation we would wish to see. It is a picture of a nation in full retreat from its responsibilities. That is not the path to greatness. It is the road to ruin." [Col. 1296.] Further years have passed since then. We had the crisis of 1960. Of course, I am not personally a very great enthusiast of the capitalist system, merely because it does not seem to me to work very well. What country would put up with an internal economic system under which no man could make a profit at the end of the year unless some other man made an equivalent loss? Yet, as the noble Earl, Lord Dundee, pointed out, all countries cannot export more than they import. There is also, at the back of it, a lack of international liquidity, which my right honourable friend the Home Secretary, when Chancellor of the Exchequer, did his best, as we know, to liberalise. There is only one European country, I think—but it is an unfair example—which seems to have mastered these difficulties. It is the one with, I think, the highest living standard in Europe—Sweden. I say it is an unfair example because they have had what I think is the rather unfair advantage of having had a Socialist Government for 35 years.

My Lords, in 1963 we had a deficit. I think no-one would doubt what again the noble Lord, Lord Thorneycroft, said in this respect. Our experience since the war has been that each time the crisis gets worse and each time it gets more difficult to put right. Here is a point on which I am not sure that I am altogether in agreement with the noble Lord, Lord Annan. It seemed to me at the time that just as it would have been in the country's interests if the advice of the noble Lord, Lord Thorneycroft, had been taken and there had been a General Election then—whether they won the Election or not—so, having regard to the difficulties once you run into deficit, it would have been to the advantage of the country (whatever Government had been elected) if we had had a General Election in 1963 so that the crisis we were coming into could have been firmly tackled. It is unfortunate that, owing to the difficulties of leadership in the Conservative Party at that time, they put the Election off until the last possible moment, so that there was no Election until October, 1964, by which time, as we know, the deficit was £776 million. If this shows anything at all, it shows how important it is, regardless of Party politics, that if ever anything of this kind happens again it should be tackled urgently and at an early stage, whether there is an approaching General Election or not.

My Lords, we thought, and still think, that we have the answer to this recurring set of crises. Primarily, it was a question of having lagged behind the Common Market for a long time in relation to exports; it was, I think, common ground that our industries had not modernised themselves to anything like the same extent that our rivals had. And, accordingly, we took what steps we could to help industry to modernise. There is the policy on incomes, prices and productivity. It is the first time, I think, that any Government have managed to achieve an incomes policy at all; and on the whole, although it is capable of improvement, considering the industrial and other difficulties, it has in the result done pretty well.

We had the National Plan which was compiled after consultation with every industry as to what each industry thought it could do within a particular period looking ahead. It turned out, undoubtedly, to be too optimistic. Then there were the N.E.D.C.s, the "little Neddies", corporation tax, investment grants, the setting up of the Industrial Reorganisation Corporation, restraint on investments overseas and the regional employment premium. And I believe that this Government have done every single thing that any Government could do to help development in the development areas, the North East, Wales and Scotland.

But, of course, all these things take time before they produce results. What we said we were seeking to do was to cut the deficit in half the first year and finish it off the second year, and that then we hoped go into surplus. At first, things seemed to me to be going well. We did in fact cut the deficit to half in the first year—in fact, rather more than half. Then, very suddenly, in July, 1966, with the shipping strike, we ran into a run on the pound and had to take unpleasant steps which, naturally, we should have wished to avoid. It may be—I do not know—that we were trying to do too much. It would not be surprising, I think, if that had been so: a new Government coming into power for the first time for 13 years; with not a motorway, with hardly a hospital built since the war, with the position in the schools, the grave shortage of universities, and the problems of the old age pensioners. So far as strikes are concerned, I will return later to that subject.

It may be—again I do not know—that we should have devalued in July, 1966. I suppose the economic historians will one day tell us. We thought, rightly or wrongly, that a country ought not to devalue unless it had to; and that view was shared strongly by the Opposition. Then, finally, in November last, there was the Middle East war and the dock strike and we had to devalue. I think the noble Lord, Lord Franks, referring to devaluation, said it was a device that we had employed. Let us be plain about this. We were not "employing" anything: we devalued because we had to; it was a failure.

Referring for a moment to the Middle East and to the dock strike, I suppose that if I were asked what two things had surprised me most, coming into politics in my old age, I should say, first of all, that as a lawyer I was always brought up to believe that Parliament could do anything, which in law is right; and therefore a Government with a majority could do anything. The first thing that surprises me is to find out how limited are the powers of a Government. First, because of the time scale. You are very much bound by what your predecessors have done; and you find yourself in all sorts of positions in which there is nothing to do except to carry on something which your predecessors started. It is perhaps worth bearing in mind that with a modern sophisticated aircraft, military or civil, it takes about seven years from the time you order it off the drawing board until you get it.

Secondly, you cannot be responsible for external events—or even, sometimes, for internal events such as foot-and-mouth, which has cost £70 million; storms in Glasgow, some millions of pounds of damage, mainly to roofs; the Middle East war, when suddenly all goods have to be paid for coming round Africa instead of through the Suez Canal. And no way has yet been found, as we must admit, to end strikes. I will say more about that later.

Devaluation presented us with two very grave disadvantages which are obvious: namely, first that we have to pay more for our imports; and, second, that we do not get so much from our exports. While on devaluation, may I say that I agree with the noble Lord, Lord Carron, first in regard to avoiding a floating rate, and, second, when he said that the technicalities were carried out with great skill. I noticed a great difference between the British Press and the foreign Press about this. I keep an eye on the foreign Press because they are at least objective, whereas—and this is no complaint: it is the fact—the British Press are almost entirely Conservative and one does not always get a balanced view.

What was important, of course, was the rate to which we devalued. It would be no good if we did not devalue enough. On the other hand, if we devalued too much, everybody else that mattered would have come down with us, and then we should have been no better off. There is no doubt that the point to which we did devalue was the maximum point to which we could have devalued without countries that mattered following us down. There is no real doubt, I think, that while devaluation has these two grave disadvantages for us, it also brings with it a great opportunity because of the lower prices at which we can now export. Of course, price is not everything: quality matters, too; and so do deliveries. And much may still depend on whether we are going to have, in particular, transport strikes.

I share the general view in the House that something ought to be done about strikes. But it is very easy to say this. I am as disappointed as anybody that the Royal Commission on trade union law has not yet reported. I hope that it will do so in two or three months time. There has been passionate advocacy in one quarter for everything which Australia does: the cooling-off periods, industrial courts, enforcement of agreements and so on. That is true. But it is also true that in Australia they have more strikes, and more days lost a year, in relation to population, through strikes, than we have. I think we must now rely on the Royal Commission.

What we have to do to take advantage of this opportunity is again, I think, not seriously challenged. We have limited resources, and therefore we must see to it that the appropriate resources are not all used up for home consumption but are available for export. This means that home consumption has to be pared. It is the fact, I think, as my noble friend Lord Beswick pointed out, that as between public consumption and private consumption we spend more on private consumption and less on public consumption than most countries do. In 1965 the United States proportion of G.N.P. spent on public consumption was 18.1 per cent., and ours was only 16.7. Private consumption in the United Kingdom was 64 per cent., and in the United States 62.6. The average for the Common Market was 60.5 per cent. So it might have been reasonable to say that the curb should be placed primarily, if not wholly, on private consumption. But we thought that public consumption must bear its share and it was up to the Government to give a lead.

It has been said, and it is a fair point, "Why did you not do both these things together?" I think that my noble friend Lord Shackleton and my noble friend Lord Beswick have already answered that. Partly it was a question of practicability. Every Government has always found it difficult to cut down expenditure. There are numerous forms of expenditure where it would simply be throwing money away if something was stopped in the middle. Therefore our task was to conduct a complete survey of the whole of public expenditure to decide what the total degree of curbing public expediture should be and in what fields. This, as noble Lords can imagine, has been a vast task for officials, and subsequently for Ministers and then for the Cabinet. It would, I believe, have been literally impossible for the officials and the Ministers to tackle at the same time what in effect is a Budget, particularly if that Budget was to take into account (as it may well and should do, I am sure) new ideas such as those put forward by the noble Lord, Lord Wade.

Perhaps I ought to add this. The Government had already taken very substantial action to cut back home demand at the time of devaluation. Everybody seems to have forgotten that. And now, with the public expenditure cuts announced by my right honourable friend the Prime Minister, before deciding the scale of further action to cut private spending the Chancellor prefers to wait for the detailed short-term economic forecast that the Treasury will be making in the month ahead. There is no undue pressure on resources at the moment. Unemployment is well over 2 per cent. and very high by post-war standards, and it is by no means clear that the recent signs of a consumers' spree represent the beginning of a new trend rather than simply being a temporary phenomenon associated with fears of high and direct taxation. The Chancellor recognises, however, that it would be wrong to prolong the interval between necessary action to curb public expenditure, which the Government have now taken, and action to curb private spending. For this reason he has brought forward the date of the Budget substantially.

My Lords, if that is so, people may well ask, What ought we to do? Is there anything that we can be getting on with?". Well there are two things, because, as the noble Lord, Lord Kahn, and the noble Lord, Lord Granville of Eye, pointed out, it is no less important now than it has ever been to maintain the policy of incomes, prices and productivity. Everybody in industry, particularly those who are able to export, can go straight ahead. It goes further than that, because every man in industry and every trade union, every man on the shop floor or every man who goes to a union branch meeting, will be doing his part for his country if, first, he avoids any unnecessary strike, and secondly, if he curbs demands for increases in pay.

The other thing which people can do is to save. Clearly, voluntary savings have a vital part to play in assisting the necessary switch of national resources. Many forms of national savings, in particular, offer a very convenient way of contributing to the country's recovery and to investment. Not everyone may be able to work an extra half-hour a day, but many could put a half-hour's earnings into a savings bank or into National Savings Certificates or Premium Bonds. This could be done very easily at any post office. National Savings provide an opportunity for everyone to "Back Britain".

In the measures to be taken I do not detect any real criticism of the extent to which it is proposed to curb Government expenditure. The same, I think, is true of the foreign Press. They seem to think that it is about the right amount. Nobody considers it is too large, I think, and few think it is too small. I may be wrong, but I remember only one speaker in your Lordships' House, I think it was the noble Viscount, Lord Massereene and Ferrard, who said he thought it was too small. Otherwise I do not remember any criticism of the total amount. If that is so, I should have thought that if anybody suggests that something which is in the programme should be omitted, he is bound to suggest what he thinks ought to take its place.

None of us likes almost any item in the total package. I agree with the noble Lord, Lord Amulree; housing has always been my number one priority. I followed what the noble Lord said about prescriptions and I would say to him that the increase in dental charges from £1 to 30s. is a case in which the 30s. is the exact equivalent of what the pound was when the amount was fixed, so it is not, in a sense, a real increase. As to prescription charges, I have great sympathy with what was said yesterday by my noble friend Lord Brockway.

I must say that there was a time when I regarded this as a question of principle. I remember when Mr. Bevan and Mr. Wilson resigned because of charges being imposed for dental treatment and so on, and for spectacles in the Health Service. I thought that that was absolutely wrong. It seemed to me that there were two Socialist things which the Labour Government had then done. One was leaving India and the other was the establishing of the National Health Service, a truly Socialist thing. From each according to his means, to each according to his needs. I felt that if Mr. Gaitskell did not understand that, he could not be a Socialist, and I contemplated resigning from the Party. I said that it was a vital question of principle, and if one once started charging for the National Health Service how could the principle endure?

Well, my Lords, I think now that I was wrong. It may be that I am soft in the head now and was right then, but I now think that I was wrong. I do not think it is a question of principle. I think Mr. Bevan was right when he said that politics is the art of choosing priorities. Any Government at any time has only a certain amount of money, and one has to take principles and practices into account in order to make the right decision as to how the money should be spent. I should add, for the benefit of my noble friend Lord Brockway, if I may, that the number of prescriptions since the charges were taken off has gone up from 208 million per year to 268 million per year.

With regard to the school-leaving age, we all respect the integrity of my noble friend Lord Longford, and we know what strong personal views he has on a number of subjects. If I had to choose which item in the package I disliked most, I should say it was postponing raising the school-leaving age. At the same time I do not think that this is really a question of principle either. If a year or two ago there had arisen a controversy as to whether the raising of the school-leaving age should be brought forward a year or even two years, I do not think anybody would have thought of that as a question of principle. Of course, it could be said, "If you do not bring it forward 400,000 children are going to be affected for the rest of their lives"; but the year in which you do it, I should have thought, was relative and not really a question of principle.

I know that in the National Union of Teachers a majority are against postponing the raising of the school leaving age, but the Scottish teaching profession is of a different opinion. They have approved the Government's decision. They have always taken this line, on the ground that the shortage of teachers in Scotland is so great that they cannot cope with the greater number of pupils at present. All their organisations have taken this view—the Educational Institute of Scotland, the Scottish Teachers' Union, the Scottish Schoolmasters' Association and the General Teaching Council, which is the statutory body set up to advise the Secretary of State On matters affecting the teaching profession in Scotland. There is no English equivalent to that body. The English National Association of Schoolmasters takes the same view as the Scottish teachers.

While I regret this cut more than any other, I should not have thought that it was a question of principle if one is going to say that the totality of what the Government propose to do is both right and essential but that one objects to this particular item. I should think that there was some onus on those who express that view to say what alternative they suggest. Nothing has been more remarkable in this debate, especially among noble Lords who have spoken on defence, as the failure to say how much the cut should be and what other cuts ought to have been made that have not been made.

Cutting the Civil Service still more is always very popular. We have placed already a standstill order. This will inconvenience the public—I do not want there to be any misunderstanding about that. The reason why the Civil Service increases is very simple. The population increases, people have motor cars and there must be more driving licences and taxation licences. If the Civil Service remains the same, then the noble Viscount, Lord Massereene and Ferrard, who suggested this, must not cry out if he is unable to drive for a week or two because his driving licence has not arrived. Whether people queue at the post offices I do not know, but we must realise that in an expanding community with a growing population there is bound to be some increase in the Civil Service in some fields.

It is right and inevitable that this means that there must be reductions in other fields. To give an example, ever since I took office we have had a crash programme to extend the compulsory registration of titles to land to all the built-up areas in the country. This is one way of achieving the simplification of the transfer of land. That is not to be stopped, but it is to be very much slowed down so as not to employ more officials as county by county we extend the compulsory registration of land.

Tolls on major roads have been suggested. We have considered that, but anybody who has seen this in operation, as I dare say the noble Viscount has seen it in New York, where there are five to six lines of traffic going one way and the other, and at rush hours a high maximum density, will realise that we found in relation to English roads and density that it is doubtful whether the tolls collected would pay for the cost of collecting them. At least, they would not bring in a sufficient amount.

The noble Viscount also said that there was a lot of waste on local authority minor roads and on local staff. We entirely agree, but the noble Viscount had not done his homework as well as usual, because in paragraph 45 of the White Paper dealing with local authorities it says: Local authorities are being asked to find £75 million over two years out of their expenditure on the maintenance and improvement of their roads. And paragraph 60 mentions the 46 per cent. increase in local authority staffs. The noble Viscount will find the subject matter of the actions we are taking in paragraph 50.

The noble Viscount also suggested raising the price of school meals. It would require at least 2s. extra—that is to say, 3s. 6d. per meal, which would be a good deal more than the cost of the meal—to provide an amount which would enable us to avoid deferring the raising of the school leaving age. And obviously a charge of that kind per child per meal would cancel the effect of family allowances.

The only other alternative, which I am afraid would not raise the £75 million, is a reduction in ministerial salaries. This would be a very proper thing to consider when we are considering the private sector. The House will remember that the Lawrence Committee reported on what they thought Members of Parliament and Ministers ought to have. The Government implemented that Report so far as Members of Parliament are concerned. Ministers took only half and have ever since taken only half, though nobody has the slightest idea of this and nobody gives them any credit for it. One is always on delicate ground in this field. People will either say, "Yes, you ought to do that", or say, "That is simply a gimmick". There have been no really sensible suggestions of any alternative cuts which it would be profitable to make.

I should like to say something on Defence, but I do not want to say too much because my noble friends Lord Shackleton and Lord Chalfont have already spoken on this so fully. In reply to the noble Duke, the Duke of Norfolk, I would say that it would have been very nice if, before making what to them are serious cuts, we could have consulted universities, schools and teachers' organisations, the medical profession and the building societies. But on the timescale it was not possible to do that.

With regard to the meaning of "care and maintenance basis", may I be allowed to say that we must get the thing into proportion. We are not abolishing the voluntary system. T. & A.V.R.I and II are to be 37,000 and T. & A.V.R.III approximately half that, 14,500, and only these will be affected. But I confirm the undertaking given by the Minister of Defence for Administration that no steps to disband Category III will be taken before the T.A. Council has discussed the proposals and made its recommendations. Further discussions are in fact being held on the question of the care and maintenance organisation.

I can assure the noble Lord, Lord Wigg, that there is modern equipment in the Rhine Army. I have listened with sympathy to what he has said about Category III. I agree with the noble Lord, Lord Thurlow, that we ought to have an early Defence debate, when the matters can be gone into in more detail. The answer to the question raised by the noble Lord, Lord Bourne, is, assuming an average increase around 3 per cent. in G.N.P., the defence percentage in 1972–73 will be about 5.

Defence has been so covered that I really wish to add little to what has been said. It has seemed to me, and I think to many, for a long time that this country had still to decide what its place was in the modern post-war world, and it had seemed to many of us that it was impossible any longer to pretend that we were really a world Power. I think myself it is a welcome end to what I regard as a folie de grandeur. We can never, I think, afford again to occupy that position. The world Powers to-day are the United States and Russia, and there are obviously large potentials about China. But ahead of everybody else we have been spending a larger proportion of our G.N.P. than any other Western Power. Our future lies in Europe, to whose defence we should, and will, continue to contribute.

I suppose that one of the difficulties has been the extraordinary expense of modern sophisticated equipment. I think I am right in saying that during the war there was a public appeal to wealthy people to find £5,000 for a Spitfire. That, I believe, was slightly underestimated, but it was the nearest round figure: it was the figure given by the Government. One hundred Spitfires, I suppose, would cost £500,000. One hundred F.111s would cost about £430 million—a saving of £400 million, even after paying cancellation charges. This shows the astonishing extent to which sophisticated modern weapons have risen in cost.

So far as Singapore is concerned, the decision in relation to the Far East is really not this decision. The decision was made when we decided to withdraw in the middle 1970s, which we took as being 1973–77. That is when the decision was taken. What we have now had to do, owing to devaluation and the additional expense—everything has to be paid across the exchanges—is to leave two years earlier, but nevertheless in four years' time. In four years those countries, which are not impoverished in the sense that many underdeveloped countries unfortunately are, should be able, within a time, to provide, with our assistance, perhaps partly in sophisticated equipment and partly in training units, a defence system of their own. After all, Singapore is booming, partly with merchants opening a branch there from Hong Kong. Singapore's reserves are, I think, £200 million for a population of 2 million. I wish that our reserves were anything like that in proportion.

So far as concerns the Gulf, of which several noble Lords have spoken, for about 16 years I acted for one of the Western oil companies active in the Middle East, and I am familiar with the set-up. I have read all the Treaties and letters of engagement. Most of them date from the last century. There is not a single one which puts upon us any obligation to have any troops in the Gulf at all. It was not until well after the last war that we had anything except a naval force in the neighbourhood. Until about five years ago, I think it would be right to say that the oil companies in the Middle East wanted all the oil they could get. Then about five years ago it became apparent that there was a surplus of oil in the world, and I have thought ever since, rightly or wrongly, that the need of the Arab oil-producing companies to sell their oil to us is greater than our need to buy it from them. I think that became apparent during the Middle East war, Your Lordships may remember that for political reasons, believing—of course, quite falsely—that we had taken part they turned all the taps off. Then pretty soon they were fairly anxious to turn them on again, because they wanted the money. When they turned the taps off, the fact that we had troops there did not stop them turning them off; they could not shoot them in the back. They did not turn them on again because we had troops there. Our interest is really commercial.

There is, as we have seen from Aden—I say no more than this—some danger in agreements for local forces made with Arabian sheikhs. We were in the end fortunate in regard to Aden, first because of the quality of the Governor; secondly, because of the quality and conduct of our Armed Forces there; and, thirdly, and not least, because of the activities of my noble friend Lord Shackleton, particularly in the last week. I suggest it does not matter which way round you go if you have to go to the Far East. There are two airfields in Canada and four in the United States, and one can go one way or the other.

My Lords, if I once start on South Africa, about which I confess I feel strongly, I am afraid that we shall be here for a very long time, and I hope that noble Lords, and particularly the noble Earl, Lord Swinton, will not mind if I do not deal with that subject today. Tomorrow we have a debate on the United Nations, when the noble Lord, Lord Caradon, will be here, and after that debate, as I understand it, there is an Unstarred Question in the name of the noble Lord, Lord Alport, on Rhodesia. So this seems to me to be very much within the field of tomorrow's debate.

Finally, may I say this. The right reverend Prelate the Bishop of Leicester said that we had had a sensational Press. The noble Lord, Lord Franks, was sorry that we built everything up so much, because when the package was announced he thought it was an anti-climax. The noble Lord, Lord Carrington, raised rather the same point. May I make it quite clear that we did not build anything up at all? One of the things that you discover in politics is that you have been at Cabinet meetings which have never been held; or that there has been a violent row on a subject which has never been discussed. We certainly have not done anything to build it up. I do not know whether the noble Lord will ever live to see the day, or whether I shall live to see the day, when a political correspondent says in the papers: "I have tried my best to find out what happened in the Cabinet this morning. I have tackled every single member of the Cabinet, and I have asked the Secretary of the Cabinet. None of them will tell me, so I am afraid that I do not know". There must always be rows, and very often fights going on: there is constant speculation by intelligent correspondents. But it is speculation. If they make a speculation, it is 50–50 whether they get it right. I remember one case in which one political correspondent—certainly there was a division of opinion in the Cabinet—named everybody, who was on which side, and got it 100 per cent. wrong. That must be, I think, very unusual.

Coming to the end, I must, I think, say this to your Lordships. I began by indicating that I was not strongly in favour of economic crises which are used as a "football" between political Parties. Reverting to something that my noble friend Lord Longford said, I feel that there has recently been in the papers a vicious vilification and denigration of the Prime Minister which has really passed all the bounds of public decency. One can understand it in a way, because it was clear that, whether the Government were popular or not, the people had great confidence in the Prime Minister, and one can well understand how a Conservative Press, felt that they were not going to do arty good unless they could break that confidence. But there comes a point, I think, where personal denigration affects politicians of all Parties. Sitting on the Woolsack, I could not help noticing, two things about this debate. First, I do not think for any debate I have ever seen the House more crowded, or the Visitors' Gallery more empty. It has filled up a little for the Vote, but for most of the time it has been practically empty. I think that people generally are sick and tired of Party politics. They think, I believe, on the whole—and it is our duty to explain it to them—that the steps which the Government propose to take are the right steps, the right size; and it is equally true, I believe, that there is no real alternative. I think they want us to get on with it, and they want to help if they can.

This matter has been argued out at good length in the Press and on television, and for two days in the elected Chamber. I notice that in reports from our Ambassadors the foreign Press paid a good deal of attention to the result of the Vote in the elected Chamber, because the Conservative Opposition did not oppose, and the Vote in support of the Government was 304 to 9. This has been taken in other countries as showing that, in these very difficult and unpopular steps, the Government have the country as a whole behind them.

I would ask noble Lords in the hereditary Chamber who are thinking of carrying a Vote of Censure against the Government to consider what they are doing, and I would particularly ask Cross-Benchers, whatever Party they belong to, or if they belong to no Party, to consider whether it is really in the interests

of our country that those abroad, who may not understand the complications of the hereditary system or the built-in Conservative majority, should wake up to find the Government defeated. For this reason which I venture to give, I would ask such noble Lords to vote against the Amendment, or, alternatively, to abstain.

8.43 p.m.

Their Lordships divided: Contents 148; Not-Contents 107.

Aberdare, L. Dundee, E. Molson, L.
Aberdeen and Temair, M. Dundonald, E. Monckton of Brenchley, V.
Ailwyn, L. Eccles, V. Morrison, L.
Albemarle, E. Effingham, E. Mottistone, L.
Aldington, L. Egremont, L. Mountevans, L.
Allerton, L. Ellenborough, L. Mowbray and Stourton, L.
Alport, L. Elliot of Harwood, Bs. Nairne, Bs.
Amherst of Hackney, L. Emmet of Amberley, Bs. Newton, L.
Ampthill, L. Erroll of Hale, L. Norfolk, D. (E. Marshal.)
Ashbourne, L. Essex, E. Oakshott, L.
Atholl, D. Ferrers, E. Pender, L.
Auckland, L. Ferrier, L. Penrhyn, L.
Audley, Bs. Fraser of North Cape, L. Piercy, L.
Balerno, L. Gage, V. Rathcavan, L.
Bathurst, E. Glasgow, E. Reading, M.
Belhaven and Stenton, L. Glendevon, L. Redesdale, L.
Belstead, L. Glendyne, L. Redmayne, L.
Bessborough, E. Grantchester, L. Rochdale, V.
Boston, L. Gray, L. Rockley, L.
Bourne, L. Greenway, L. Ruthven of Freeland, Ly.
Boyd of Merton, V. Grimston of Westbury, L. St. Aldwyn, E. [Teller.]
Brentford, V. Hacking, L. St. Helens, L.
Bridgeman, V. Hastings, L. St. Oswald, L.
Brooke of Cumnor, L. Hawke, L. Salter, L.
Brooke of Ystradfellte, Bs. Hayter, L. Sandford, L.
Buckton, L. Hives, L. Sandys, L.
Burnham, L. Howard of Glossop, L. Savile, L.
Caccia, L. Hylton-Foster, Bs. Selkirk, E.
Carrington, L. Ilford, L. Sempill, Ly.
Clifford of Chudleigh, L. Inchyra, L. Shannon, E.
Clitheroe, L. Inglewood, L. Sherfield, L.
Coleraine, L. Jellicoe, E. Sinclair of Cleeve, L.
Colgrain, L. Jessel, L. Strange, L.
Conesford, L. Killearn, L. Strange of Knokin, Bs.
Cork and Orrery, E. Kinnoull, E. Strathcarron, L.
Cottesloe, L. Lambert, V. Strathclyde, L.
Craigavon, V. Leigh, L. Swansea, L.
Craigmyle, L. Lindsey and Abingdon, E. Swinton, E.
Cranbrook, E. Lloyd, L. Teynham, L.
Crathorne, L. Long, V. Thurlow, L.
Crawshaw, L. Lonsdale, E. Tweedsmuir, L.
Croft, L. MacAndrew, L. Vivian, L.
Cromartie, E. McCorquodale of Newton, L. Wakefield of Kendal, L.
Daventry, V. Malmesbury, E. Ward of Witley, V.
Denham, L. [Teller.] Massereene and Ferrard, V. Wedgwood, L.
Derwent, L. May, L. Willingdon, M.
Digby, L. Mersey, V. Wolverton, L.
Dilhorne, V. Mills, V. Woolton, E.
Drumalbyn, L. Milverton, L. Younger of Leckie, V.
Dudley, L.
Addison, V. Gardiner, L. (L. Chancellor.) Moyle, L.
Airedale, L. Garnsworthy, L. Nunburnholme, L.
Amulree, L. Geddes of Epsom, L. Pargiter, L.
Annan, L. Gifford, L. Peddie, L.
Arwyn, L. Gladwyn, L. Phillips, Bs.
Asquith of Yarnbury, Bs. Goodman, L. Platt, L.
Beaumont of Whitley, L. Granville of Eye, L. Popplewell, L.
Beswick, L. [Teller.] Granville-West, L. Raglan, L.
Birk, Bs. Hall, V. Rathcreedan, L.
Blyton, L. Henderson, L. Rhodes, L.
Bowden, L. Henley, L. Ritchie-Calder, L.
Bowles, L. [Teller.] Heycock, L. Royle, L.
Brockway, L. Hill of Wivenhoe, L. St. Davids, V.
Brown, L. Hilton of Upton, L. Serota, Bs.
Buckinghamshire, E. Hirshfield, L. Shackleton, E. (L. Privy Seal.)
Burden, L. Hughes, L. Shepherd, L.
Burton of Coventry, Bs. Hunt, L. Silkin, L.
Caradon, L. Hurcomb, L. Snow, L.
Carnock, L. Iddesleigh, E. Soper, L.
Carron, L. Kahn, L. Sorensen, L.
Chalfont, L. Kennet, L. Stocks, Bs.
Champion, L. Kilbracken, L. Stonham, L.
Chorley, L. Kirkwood, L. Stow Hill, L.
Citrine, L. Latham, L. Strabolgi, L.
Collison, L. Leatherland, L. Summerskill, Bs.
Cooper of Stockton Heath, L. Lindgren, L. Swanborough, Bs.
Crook, L. Llewelyn-Davies, L. Taylor of Mansfield, L.
Darwen, L. Llewelyn-Davies of Hastoe, Bs. Tayside, L.
Delacourt-Smith, L. Lloyd of Hampstead, L. Wade, L.
Donaldson of Kingsbridge, L. Longford, E. Wells-Pestell, L.
Douglass of Cleveland, L. McLeavy, L. Wigg, L.
Evans of Hungershall, L. Maelor, L. Williamson, L.
Faringdon, L. Mais, L. Winterbottom, L.
Fiske, L. Milner of Leeds, L. Woolley, L.
Fleck, L. Mitchison, L. Wynne-Jones, L.
Gaitskell, Bs. Morris of Kenwood, L.

On Question, Motion, as amended, agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.