Lords Sitting of 6 May 1968

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Birmingham.

RHODESIA: SECURITY COUNCIL RESOLUTION
THE MINISTER OF STATE FOR COMMONWEALTH AFFAIRS (LORD SHEPHERD): My Lords, with permission I would make a short personal statement. In the supplementary questions and answers which followed my Statement on April 24 about the United Nations resolution on Rhodesia, I said in reply to the noble Earl, Lord Swinton, that the consequent Orders in Council supporting our United Nations resolution would not become operative until the Orders had been passed by both Houses of Parliament (Vol. 291, col. 663). What I had in mind was whether the Orders required the Affirmative procedure. What I should have said was that, as on previous occasions, the Orders will be laid before Parliament as soon as they are made, and can be brought into operation at any time thereafter, but they will lapse at the end of 28 days of making unless they have been affirmatively approved by both Houses. I apologise to the House.

AIRCRAFT SAFETY REQUIREMENTS
2.38 p.m.
LORD OGMORE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they have made a decision on the safety requirements in the future in respect of the large trans-ocean aircraft and the airbus, whereby such aircraft will be obliged to carry liferafts on flights over water.]
LORD BESWICK: My Lords, liferafts sufficient to accommodate all persons on
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board are required by legislation to be carried on overwater flights by all British-registered public transport aircraft, when either more than 400 nautical miles or more than 90 minutes' flying time from the nearest aerodrome at which an emergency landing can be made. No changes in this legislation are foreseen.
LORD OGMORE: My Lords, I am grateful to the noble Lord for that Answer. May I ask him two questions arising out of it? First, does the report that consideration is being given to the relaxing of the provisions which the noble Lord has just read out refer to the Boeing 747? Secondly, should not the provisions, far from being relaxed, be tightened up, in view of the fact that we shall soon be having these monsters in the air carrying 500 to 800 passengers? What happens if they come down on the sea five or ten miles from the shore? Are the passengers to swim ashore?
LORD BESWICK: My Lords, I have seen suggestions that these requirements might be varied and that the operators or manufacturers might put forward some proposals. If these proposals are put forward by responsible bodies, of course they will be considered, but the arguments will have to be very convincing indeed for these requirements to be relaxed. The Government have no intention of reducing the safety factor.
As to the noble Lord's second question, one can see that with the introduction of aircraft carrying 500 to 800 passengers, a completely new factor is injected into this and it is possible to visualise a unique accident, something along the "Torrey Canyon" lines, which would arouse a good deal of feeling. I am sure that the noble Lord is right when he says that we have to bear in mind the need to improve rather than to relax safety standards.
LORD TREFGARNE: My Lords, is it not the case that the projected A.300 Anglo-European air-bus would be prohibited from flying more than 30 minutes' flying time from the shore? Can the noble Lord confirm that there is no likelihood of the relaxation of the regulations in respect of this aircraft?
LORD BESWICK: My Lords, the European air-bus would come under the regulations I have already indicated. I

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will not say there is no question—because apparently the question has been raised in some quarters—but so far as the Government are concerned there has been no decision at all to vary the regulations.
LORD TREFGARNE: My Lords, does the noble Lord mean that the Anglo-European air-bus will be allowed to fly 90 minutes' flying time or 400 miles from the shore even though it has only two engines?
LORD BESWICK: No, my Lords, the A.300, being a twin-engined aircraft, would come under the tighter performance requirement.
LORD OGMORE: My Lords, is the noble Lord aware that his answer, and still more his attitude, is very satisfactory?

THE CROWN AGENTS
2.40 p.m.
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what contribution the Treasury makes to the costs of the Crown Agents' office, staff, and functions, what other Governments contribute, who is responsible for the appointment of its administrators, and to whom they report their activities.]
LORD SHEPHERD: My Lords, no contributions are made by the Treasury to the costs of the Crown Agents' office. I am told also that no such contributions are made by any other Government. The Crown Agents have a published scale of charges for the services which they provide, and these charges are paid by individual principals to the extent to which they employ the Crown Agents' services. These charges cover the cost of the office and staff. The three Crown Agents are appointed by the Minister of Overseas Development and they appoint their own staff. They report to their principals on the work which they carry out on their behalf and at their expense. In addition they publish an Annual Report.
LORD BROCKWAY: My Lords, may I ask my noble friend whether this institution has not now become an anomaly
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and whether, in view of the fact that Her Majesty's Government bear the major expenses for it through the Treasury and through Overseas Development appointed administrators—if I am wrong, I have misheard—it is not an anomaly that this institution should be able, for ample, to buy arms from foreign Governments which are used for purposes which have not the endorsement of this Government, as in Nigeria to-day? May I ask my noble friend whether he will not consider looking at the whole basis of this institution, in view of the modern circumstances of the Commonwealth?
LORD SHEPHERD: My Lords, I apologise to my noble friend because I did not make myself clear to him. I said that no contributions were made by the Treasury to the Crown Agents office; and that is a fact. The noble Lord has deployed an argument by way of a question, which he did with great force the other day when I made it perfectly clear what Her Majesty's Government's view was. I have nothing further to add.
LORD OGMORE: My Lords, is it not a fact that if the Crown Agents' services were not required by their customers the Crown Agents would not exist? Are not their services very much appreciated by territories, now independent, which were formerly Colonies?
LORD SHEPHERD: My Lords, the noble Lord is quite right. He may be interested to know that the Crown Agents service some 80 different Governments, some within the Commonwealth and some outside the Commonwealth, and also some 160 international organisations.
LORD ERROLL OF HALE: My Lords, could the noble Lord inform you Lordships that the Crown Agents do rot discriminate in any way against our EFTA partners in their placing of contracts?
LORD SHEPHERD: My Lords, the relationship of the Crown Agents is with their principals, on the basis of a customer seeking a service. It is perfectly right, as the noble Lord, Lord Erroll, has said, that they buy according to the wishes of their principals.
LORD BROCKWAY: My Lords, I apologise to my noble friend for mishearing him, as I quite genuinely did. But may I ask him this further question?

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In the present position of the Commonwealth, is not the Crown Agents institution an anomaly? Is it not the case (unless I again misheard him) that the administrators are appointed by our Overseas Development Corporation, yet the Agency is responsible to the independent Commonwealth Government? Does not that situation merit some reconsideration?
LORD SHEPHERD: My Lords, there is much in our life which I suppose could be said to be an anomaly, but this is an organisation that has been in being for some 100 years. It has given great service to the Commonwealth and Colonial Governments, and I think it would be utterly wrong for us to take a special view in this organisation, which is clearly for the service of Commonwealth and other Governments who wish to use it.
LORD BEAUMONT OF WHITLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will use their influence to alter the name of the "Crown Agents" in the near future.]
LORD SHEPHERD: My Lords, I do not feel that Her Majesty's Government should use their influence to change this title, which has been in use for over 100 years and is held in high regard in both financial and commercial circles both here and overseas.
LORD BEAUMONT OF WHITLEY: My Lords, while thanking the noble Lord for that Answer, may I ask him whether the Government will reconsider this matter, in view of the fact that the Crown Agents do not appear to be under the control either of the Crown or of Her Majesty's Government, and that therefore, there may be considerable misconceptions on the part of people who do not know the situation so long as they are called "Crown Agents"?
LORD SHEPHERD: My Lords, I do not think there is any misconception. As I replied to the noble Lord, Lord Erroll, this is an organisation that not only buys on behalf of its principals in the United
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Kingdom but is perfectly free to buy anywhere in Europe, and I suppose, for that matter, in Russia and China. It is merely a service. It has given service to 80 countries and 160 international organisations. I should have thought that if there was a feeling that there should be a change, it would be best left to the Crown Agents and their principals to say whether a change should be made.
LORD BEAUMONT OF WHITLEY: My Lords, why the title "Crown Agents", if they are not responsible to the Crown?
LORD SHEPHERD: My Lords, it is a part of history. Originally the organisation was called the Crown Agents for the Colonies, and then it was later changed to the Crown Agents for Overseas Government Administrations. It is just a question of history.
LORD COLYTON: My Lords, is it not a fact that under their existing name the amount of business transacted by the Crown Agents every year is increasing enormously, both in countries in Her Majesty's dominions and in Commonwealth and other overseas countries? Secondly, is it not a fact that there is not the slightest evidence that the name "Crown Agents" has ever deterred any country from making use of its services, but, on the contrary, the office's record and the very high standards it has set have been of the highest value, as the noble Lord said, in both commercial and financial circles throughout the world?
LORD SHEPHERD: My Lords, if there is any proof in the pudding it is clearly in the eating, and, as the noble Lord has said, the principals are obviously satisfied with the services of the Crown Agents.
LORD MITCHISON: My Lords, is it not like Lloyd's Agents, for whom Lloyd's have a major responsibility in connection with surveys, but who do a lot of other business all over the world for which Lloyd's have no responsibility whatever?
LORD SHEPHERD: My Lords, that is a "twister". If my noble friend will permit me, I will read it and perhaps reply to it.

GIBRALTAR
LORD BESWICK: My Lords, my noble friend Lord Shepherd will be making a Statement on Gibraltar at a convenient moment after 3.30 p.m.

BERMUDA
LORD BROCKWAY: My Lords, in view of the fact that negotiations are now proceeding, I beg leave to ask that the Notice of my Petition from the inhabitants of Bermuda which is on the Order Paper may be withdrawn.
Notice of Petition, by leave, withdrawn.

EXPORT GUARANTEES BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

FIREARMS BILL [H.L.]
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I beg to move that this Report be now received.
Moved, that the Report be now received.—(Lord Gardiner.)
On Question, Motion agreed to.

SECRETARY OF STATE FOR EMPLOYMENT AND PRODUCTIVITY ORDER 1968
2.50 p.m.
THE PAYMASTER GENERAL (LORD SHACKLETON): My Lords, I rise to move the Motion standing in my name on the Order Paper, which, as your Lordships will see, concerns the new Department concerned with labour, productivity, prices and incomes. Subject to the approval of this Order all the functions of the office of Minister of Labour will be transferred to the new office of Secretary of State for Employment and Productivity, and the title of Ministry of Labour will be discontinued. This is a development of great importance because the new Department will have a clear responsibility for all the major problems which directly affect the working people of Britain and the major issues which can arise between employers and employees, prices and pay, holidays
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and sick pay, employment, training, productivity, safety and health at work.
I am sure that noble Lords, of whom there are some in your Lordships' House who have been connected with the Ministry of Labour (the noble Lord, Lord Drumalbyn, for one) will wish to recall the hard and dedicated work of the Ministry of Labour and its staff ever since it was created on January 11, 1917, to play a vital part in the organisation of victory—I thought that the noble Lord, Lord Drumalbyn, was at one time Parliamentary Secretary to the Ministry of Labour, but I beg his pardon. He is a man of so many parts that I assumed he had been.
The role of the Ministry in improving working conditions and industrial relations is familiar to us all. Some might say that 22 Ministers of Labour in a span of some fifty years (although it does not match the full heights of achievement of the previous Governments in regard to the number of Defence Ministers) was putting too big a premium on the merits of change. But it is a fact that many distinguished men have held this office, as well as one woman of very great distinction, Margaret Bondfield, the first woman Cabinet Minister, but not, I am happy to say, the last. At least two Members of your Lordships' House (and I now have to exclude Lord Drumalbyn from this category) have themselves played these parts. The late Lord Monckton, when he was Sir Walter Monckton, had a most distinguished part, as also did the noble Viscount, Lord Blakenham, who, if I may say so, was somewhat underestimated as a Minister of Labour. He played an important part, too.
We should also like to acknowledge the part which the present Minister of Power played in difficult conditions, sitting or lying on his bag of nails and the tolerance and wisdom he brought to bear. Under his leadership in the past three years there have been some notable extensions of the Ministry's responsibilities (the noble Lord, Lord Erroll of Hale, will have his traditional opportunity for frivolity during his speech. I do not expect a serious speech in reply from him, but perhaps he could keep his gems for that), and of course, the Ministry has, under my right honourable friend, played an important part in

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industrial relations and in training, in partnership with employers and unions.
We in your Lordships' House have often discussed and stressed the vital importance of lifting productivity to a far higher level, and it is plain that there is a great deal of scope for increasing productivity in all levels of industry from the board room to the shop floor. The Secretary of State and her Department will be giving every encouragement to management and unions to develop a new attitude to productivity bargaining within the framework of the prices and incomes policy which has put productivity at its centre. I imagine that your Lordships do not wish me to embark on a discussion of prices and incomes. This particularly tricky or pleasurable topic, however one may look at it, will undoubtedly come before us in due course when a new Bill appears. But the new office and the new Department make it possible for all aspects of labour productivity to be brought together, including the vital links between pay, costs and prices. There is a great deal to be done in this field, and both management and unions are inevitably becoming much more concerned about the need and scope for developing new productivity bargaining.
The new Department will be able to offer increasing help to them especially as the new productivity division is developed. Of course, the encouragement of higher productivity involves several factors—investment, technology, industrial reorganisation—and the Department of Economic Affairs and the Ministry of Technology will continue to play their particular roles here. Of course, what are sometimes known as the Sponsoring Departments, the productivity Departments, will also be concerned, and there is the work being done by Government, managements and unions in working together in the N.E.D.C. and the "little Neddies"—the economic development councils for particular industries.
It is particularly important to focus on productivity. There will be in the Department a special productivity division charged with the specific task of raising productivity through more efficient use of manpower in industry, and this division will have the help of persons with management and trade union experience and knowledge, and the support in the re-
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gions of a strengthened industrial relations service. The economic, industrial and technological changes, of which there are many and which I need not describe, give rise to many serious problems, and the new Department will have increased responsibilities and will have to meet greater needs, particularly in the human field. I should like myself, from my own experience as a manager in industry dealing with the Ministry of Labour, to pay tribute to the wisdom and understanding of humanity and of the problems of humanity that I have myself found in dealing with Ministry of Labour officials, and to the efforts they make, the quickness with which they respond to a redundancy situation, or any other situation, in an attempt to minimise hardship and waste of human resources.
Although a firm foundation has been laid for the expansion of industrial training and retraining we need larger and quicker results. I remember the Bill coming before this House—I think it was Lord Blakenham who was responsible for it at the time—and I remember our concern at the smallness of the effort as compared with that of other countries. To-day there are 21 industrial training boards and five more will be set up during 1968. There are also now an increasing number of Government training centres, 38, as compared with 25 in 1964, and by 1970 we shall have 55 centres.
In all these fields I am sure that the new Department will carry on these traditions and marry them up with its new responsibilities, and I am quite certain that under my right honourable friend the new Minister, the new First Secretary, it will vigorously meet the challenge that confronts it. I would not underestimate the problems that confront it, but I am sure your Lordships will regard this as a logical and serious step, and I hope that this proposal will receive the approval of your Lordships. My Lords, I beg to move.
Moved, That an Humble Address be presented to Her Majesty praying that the Secretary of State for Employment and Productivity Order 1968 be made in the form of the draft laid before the House on Tuesday the 23rd April.—(Lord Shackleton.)
2.58 p.m.
LORD ERROLL OF HALE: My Lords, it is once again my happy duty to thank

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the noble Lord the Paymaster General for introducing this Order with his customary felicity, and also for explaining it to us in such clear terms. It is almost impossible nowadays to introduce a subject of this sort without becoming involved in trying to explain in a few words the many complications of Government organisation at the present time. If any man could succeed in this task this afternoon it is the noble Lord the Paymaster General, and I am sure we are all grateful to him for this. I am only sorry that he expects nothing but a frivolous reply from these Benches.
LORD SHACKLETON: No; just from the noble Lord.
LORD ERROLL OF HALE: My Lords, I shall do my best to maintain my reputation with the noble Lord, and also perhaps to say one or two words of more serious content. I want particularly to comment on two matters, first of all the new title and then, secondly, the proposed new functions, particularly those functions which deal especially with more vigorous and detailed intervention in industry. As regards the name, speaking for myself I have never been fussy about a name. I have always thought it more important to get on with the job one was given than to worry about the title, whether it is the title of a Department or anything else.
Looking back over the years it is both odd and amusing to reflect that so often it is the Socialist apostles of egalitarianism who adore the old historical titles of Government offices, and who plead most vehemently against their abolition. Before I was in your Lordships' House the late Lord Morrison of Lambeth (and I well recall reading his remarks) made a passionate advocacy for the retention of such titles as "Lord President of the Council", "Lord Privy Seal", and so on, when there was some suggestion during a debate in your Lordships' House that these titles should be abolished and new ones put in their place. They have their nostalgia and their charm, and I, from the more conservative position in your Lordships' House, would be all for keeping some of these old titles. However, it is most interesting to find that the Labour Government are all for keeping these ancient titles; indeed, I felt it was
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rather a sad day when the President of the Board of Education became the mere Minister of Education. As a former holder of the office of President of the Board of Trade, I am delighted that that title has been kept, although the holder's powers have been sadly diminished.
Here, however, we have a rather different case, because "Minister of Labour" was a well known and honourable title, and we cannot see that there is any real need to change it. Is the grandiloquent name of "First Secretary of Stale and Secretary of State for Employment and Productivity" better than "Minister of Labour"? Everybody at least understood what the Minister of Labour did and had to do, and if it was a good enough title for "Ernie" Bevin it is surely a good enough title for the present holder of that office.
I was glad that the Paymaster General referred to Miss Margaret Bondfield. I had a reference to her in my notes, because I felt it was a great shame that in the Press comment on Mrs. Castle's distinguished succession to this important office, when there were naturally references to her being a woman, I do not remember a single mention of Miss Margaret Bondfield, who was in her day a distinguished Minister of Labour in the Labour Administration of that time. As the Paymaster General has al ready referred to her in pleasing terms I will not say more, but I should not like this day to go by without a nod back to Miss Margaret Bondfield, and the great things which she did.
I wish also to thank the noble Lord for his kindly references to several Conservative Ministers of Labour who certainly tried to do what they could to maintain the importance of this office. If the Ministry of Labour's functions and powers need extending, then by all means extend them, but that does not meat that the title of the Department need be dressed up in such an elaborate way. I expect that before long we shall have an appropriate "whizz kid" abbreviation. Even the Ministry of Technology is now known everywhere as "Mintech" and presumably the new department will be known as "Minprod". Indeed, we are going over more and more to the Eastern European concept of having elaborate names for Government Departments which are then interestingly

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abbreviated into almost equally unpronounceable versions in Hungarian, Czechoslovakian, Bulgarian, Roumanian and Russian. So, in the months to come, I shall, I hope not too frivolously, be referring to "Minprod", which is what I suggest we must now call the new Department.
It may be that the right honourable lady, being offered the appointment of Minister of Labour when she was called to "No. 10"—and we who have been fortunate enough to be invited to become Ministers know what exciting and exhilarating occasions these are—did not want to be at the head of a Ministry which had been described as a "bed of nails" and was determined to change it. The Paymaster General noticed that the noble Lord the Leader of the Opposition and I were laughing slightly, because I think that in fact the noble Lord said "bag of nails". For those of us on this side of the House—and I suspect for many noble Lords opposite—the term "bag of nails" has a very special connotation which perhaps should not be discussed too much in your Lordships' presence, at any rate in the afternoon, although perhaps late at night the phrase "bag of nails" might be discussed. However, the right honourable lady was probably determined to change the old image of the bed of nails, and I wish her luck.
Nevertheless, I feel sorry for those trade union leaders—and I am delighted to see here this afternoon several important trade union leaders of former days who have now joined your Lordships' House, and I am sure they will bear me out that it will be a hard thing for trade union leaders to march boldly into the Ministry with the word "productivity" above the front door. We also have such jargon phrases as "nil norms", "3½ per cent. Ceilings", "freeze" and "squeeze", as part of the normal routine. Not for the present generation of trade union leaders are the old days of storming up to the Ministry of Labour, being photographed outside and standing up for their rights and their unions. All is now changed. They know, too, that they are no longer dealing with a Minister who was himself a trade union leader in the past, and this indicates a notable change of front.
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Naturally it is difficult for me to discuss a Minister who is in another place, because clearly she cannot be present to answer anything I say. I will merely put it this way: I think that Mrs. Castle commands our respect for the remarkable work she did, for example, at the Ministry of Transport, in connection with the breathalyser. It aroused great antipathy and unpopularity but she saw it through, and now it is generally accepted. She is a bonny fighter. She has great verve and she has acquired a great deal of experience. She is, in a sense, one of my political "pin-ups". I admire the political "guts" that she has. I also admire the way she learns from her job. When she had to go to that tough meeting in Margate to address the Amalgamated Engineering Federation last Sunday week, she went by private helicopter—and a bonny photograph it was of her being strapped in. She had learned from her time at the Ministry of Transport not to try the coast roads of Britain on a Sunday morning, nor to go by British Rail.
The right honourable lady will bring to the problems of labour and productivity all the verve and skill of her past experience. I feel slightly sorry for some of the more staid trade union leaders who will now, for the first time, have to deal with somebody who is determined to "breathalyse" them into action; and probably to "breathalyse" a few employers into action as well. She will have severe tasks ahead. She has been open enough with the public to refer to herself as an impatient lady. Indeed, I must say that what rather horrified me, when reading the speech that she made in another place, was that that impatience was so strongly manifest and she was so determined to insist on more and detailed intervention in industry. That indeed was her theme throughout—"stimulus", "drive", "We cannot afford to wait on events", "We must have initiative". These are the phrases in her speech which recurred again and again. Maybe that is right when dealing with motorists or the problems of parking places; but is it the right way to go about the important and delicate problem of industrial relations in an advanced industrial country such as ours? Time will show. It may be she will do well to remember the Fabian philosophy of "gradualism", rather than that which seems to be the policy of Her

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Majesty's Government at the present time—fast and possibly erratic interventions.
I must say, looking at her speech—and I regard it as a speech of Her Majesty's Government and not just of a Minister—I am alarmed at the warning which the First Secretary of State and Secretary of State for Employment and Productivity (it is a "mouthful") gave in the House of Commons on Thursday last. She declared that both she and her Department were going to interfere—her word—in productivity bargaining from boardroom to shop floor. Such a view does not surprise me, but particularly at such a critical time for the restoration and strengthening of the nation's economic health it does shock me. Such detailed intervention cannot but have damaging repercussions throughout industry.
This speech is, to my mind, a classic illustration of adherence to dangerous doctrinaire policies and out-of-date political philosophy which has little relevance to the economic needs of to-day. It is always tempting to say, "Let us intervene let us get something done", and to think that people who know their business cannot know enough and "we shall intervene". In another sense, it is repeating part of the argument which the noble Lord the Paymaster General and I had on Thursday last. What industry really wants is co-operation with the Government and not condescension. Give industry, which claims to know its job, a chance to do its job properly. If the new Department, with this vigorous new Minister at its head, can learn to collaborate with industry at all levels—and I emphasise the word "collaborate"—it will have our good wishes. If it insists on brash interference and on rough intervention, with provocative statements the country will suffer and the Government with it.
3.13 p.m.
LORD CONESFORD: My Lords, before the noble Lord replies, I hope I may point out that, in spite of all that is said about increased functions and so forth, the Order before us simply transfers existing powers and does nothing else. As regards increased powers nothing is being created or proposed. What is being proposed is to give a very long name to replace an existing short name. That is, of course, in normal
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pursuance of Government policy, never to use few words where many ran be substituted.
I recognise some very good qualities in the Minister who is to receive this great title, but I hope that she will not be tempted to indulge in too much jargon. The amount of jargon that is indulged in in this sphere is already alarming. If I might give one rather absurd example, I called attention, I suppose about twenty years ago, to the origins of this trouble, when Governments showed that their two favourite words were "overall", which normally means nothing, and "target" which means even less, and of course, the two words quickly became married and one got the "overall target". You would naturally think that an overall target would be quite impossible to miss, but precisely the opposite is the truth: no hit has yet been recorded. "Ceiling" is another great fa.v3urite. You do all sorts of things with ceilings. In one Government announcement some time ago—I do not think it was by the present Government, I rather think it was the previous Socialist Government—we even had people "waiving the ceiling", which was a rather novel conception. None of this indulgence in absurd verbiage really serves any cause that any sensible Government would have at heart.
One of the things that was missing from the spirited speech of the noble Lord the Leader of the House in introducing this Motion was to tell us whose productivity it was proposed to increase. There is a great deal of productivity which might well be increased in the national interest, but the only productivity which I think will quite certainly be increased as a result of this Order is in the number of civil servants in the Ministry which we are discussing. The only thing that they will produce with their increased numbers is likely to be an immense amount of forms. The amount of forms now produced already does great injury to those producers, manufacturers and providers of services who are doing their best to promote the export trade and serve the national interest in other ways. I hope very much that the new Minister, for whose talents and energy I have great respect, if she is to be saddled with this rather longwinded title, will at least keep quite clear in her head what productivity it is

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desired to increase and what productivity should be very definitely diminished.
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, may I make a very brief intervention? I must confess that I was rather surprised by the terms in which the noble Lord, Lord Erroll of Hale, spoke. I think my noble friends the trade union leaders we have here can look after themselves extremely well, but the noble Lord referred to condescension in the Government's approach to this subject. I thought that his own speech was also extremely condescending to someone who is, after all, deeply concerned with the survival of this country. If the noble Lord does not want the Minister to be concerned with productivity, what does he want her to be concerned with? I thought his remarks about the trade union leaders now playing a different role in regard to productivity showed perhaps a mistaken view of the whole history of the trade union movement.
VISCOUNT ST. DAVIDS: My Lords, may I just say that the noble Lord, Lord Conesford, seems to have made a slight error? I must point out that it is in his English, in that he was referring to productivity and talking about production. We wish to increase productivity in all manner of things, but there are, as he quite rightly points out, some things whose production it might be a good thing to reduce. The two words do not mean the same thing.
LORD CONESFORD: My Lords, I do not think I suggested they did. But would it not be possible, even if the intention is to increase the number of forms, to do it with fewer and not more civil servants?
3.18 p.m.
LORD DOUGLASS OF CLEVELAND: My Lords, may I intervene briefly? I am really entranced by the ideas some people have of productivity. The noble Lord, Lord Erroll of Hale, really was his old self; I have heard him like this on more than one occasion in private. He talked about the new term "Minprod". I should say that "Miniprod" would be better, because "mini" is applied to skirts which reveal whether the wearer is bow-legged or knock-kneed. I am not
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quite sure whether the management of this country is bow-legged or knock-kneed, and it is one of the reasons why we cannot make progress in regard to productivity. I sat on "Neddy" for a number of years, since its inception until I retired. In "Neddy" we had close regard to what could be achieved by way of productivity. Always the question arose as to the number of men or women who were employed in making certain things, but very rarely as to the number of management.
Maybe it is just as well that we are a little forthright in this House when we deal with a question like this, because as one of the old guard of whom the noble Lord, Lord Erroll, spoke, I had to deal with this subject for quite a long time. I remember on one occasion I was called upon to answer for the large number of employees in a certain steelworks compared with the number employed in America and on the Continent. I leaned across the negotiating table and said to the employers: "I will take any steelworks you like in this country and examine the reasons for its having more men and making less tons, as you have put it, as compared with Europe or with America". There are many technical reasons for this. It depends on the state of the plant. The plant with the least number of employees is not always the most profitable, and I think it is time that people who simply talk about "men" and "tons" started to talk about the profits that are made in that particular industry, and why they are made, and why they are not made. When I said that I would undertake to examine the number of men employed in any steelworks in this country for the purpose of achieving productivity, I laid down a condition. I said, "I want to examine the men right up to the managing director." I never heard another thing about it.
Do not let us imagine that the excess manning that is alleged to exist in this country is simply that of the worker, because when dealing with the incomes and prices policy how often do people start by talking about a wages policy? That is what they mean. They do not mean an incomes policy; they do not mean a prices policy; they mean a wages policy. Until the workers in this country are more involved in the management of industry than they are to-day, we shall

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not get the co-operation we want. They will ask questions about the cost of production.
Here let me bring in another point. At the Prime Minister's Conference some two years ago we were dealing with this question of productivity, and I asked that in regard to any industry in this country, whatever it may be, we should select different firms, look at their balance sheets and find out why some firms could make a bigger profit than others. This was a fairly simple question. I suggested that we should then do what I had to do some thirty years ago; that is, to examine the costs of departments. I suggested that we should have to take big firms with similar departments in different parts of the country, or sometimes in the same part of the country, and look at one department as compared with the equivalent department in another firm to find out where the weaknesses were. Not only should the directors find out where the weaknesses were, but the workers should also find out where the weaknesses were; and we should have before us not a balance sheet but a statement of costs, to find out where the labour costs were high and where the investment costs were high and whether you were putting too much money into the wrong department of the works or into the wrong sector of the industry. How much of this examination has been carried out in any industry in this country?
I do not mind people dealing with this question humorously, but I am getting a little tired of this scepticism about productivity being achieved by Government help. Government help is needed to get productivity, but if the managements of the different firms do not co-operate you will not get that productivity. It is as simple as that. Some firms are making good profits without looking at this question as closely as they might.
I would suggest that coupling the Ministry of Labour with the Ministry of Productivity can involve the workers, because when they are discussing the rights or wrongs of a wage increase they will be coupling with it the rights and wrongs of a prices increase. How are you to control wages if the workers have no conception as to what is happening with regard to prices? I am not talking about controlling prices now; I am talking about knowing what is happening so far as prices are concerned. I read in a news-
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paper over the week-end that in one industry the retail profit margin was 80 per cent. I do not know whether that is so or not. But I should like to see such a statement followed up to find out whether it is true; and if it is, why it is. If the profit margin is going to be that, how do you expect the workers to have any regard to an incomes policy in circumstances of that kind?
I have spoken previously on a similar subject in this House. I said then that if you have a bank rate of 8 per cent. there is not much use talking about productivity. If you want better productivity invariably you need better investment. I gave as an instance a plant which cost £100 million. If £100 million was borrowed in order to put up a plant of that particular character, 1 per cent. interest would obviously be £1 million, and if the bank rate were 5 per cent. it would be £5 million. I hope your Lordships will listen carefully, and will not smile, because if you do not solve this problem you will not solve your productivity question. If your bank rate is 8 per cent., then the interest will be £8 million. That is a difference of £3 million on the investment cost.
Now equate that with the workers: that is the year's wages of 3,000 workers at £20 a week. Are you asking the workers to accept an incomes policy with a bank rate of 8 per cent. that is costing £3 million—the wages of 3,000 men at £20 a week—and asking the men to save a handful of pounds? This sort of stupidity will not achieve productivity. I will tell you that now. I am talking about the workers of this country, who are not bothered unduly whether you have a Ministry of Labour or a Ministry of Productivity. They ask that if you do have a Ministry at least it should talk sense and should give us some facts when it asks us to have some regard to the well-being of the country. In short, I am saying that not only the workers should be concerned with the well-being of the country, but the investors and the employers also.
3.28 p.m.
LORD SHACKLETON: My Lords, I think the noble Lord, Lord Erroll, was being characteristically—I hesitate to use the word "frivolous", and I do not know that I knew the "Bag o' Nails" better than he did. He deliberately distorts words to make a joke, and he must not

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be surprised if some of my noble friends regard this as a subject of some seriousness. On the other hand, I acquit the noble Lord, Lord Conesford, of ever being anything but serious when he is devoting his attention to the proper use of the English language. He attempted to bring us back to the transfer of functions which is the subject of this particular Order. He then himself wandered into his favourite subject, which always gives us so much pleasure. I think one day his speeches on the English language should be bound together as an awful warning to us all.
Let me say that I listened closely, and I am particularly concerned to seek his approval in regard to the use of the English language. I think he would also agree that a title serves some value if, in a convenient and short form, it reveals what the subject is all about. I believe that the title of this new Ministry does precisely that. The fact that it was suggested by a group of Conservative Back-Benchers in 1964 is no doubt unknown to the noble Lord, Lord Erroll. May I say that good ideas can come to people in all Parties, even if occasionally they are rather sparse on the other side of the House.
I hope that the noble Lord, having paid a sort of tribute to my right honourable friend, will now recognise that this change is right and desirable and that it recognises the new responsibilities of Government in partnership with industry. I hope that the noble Lord will play his part in taking these changes seriously, for we depend very much on the work of the Ministry of Labour. I sometimes wonder whether the noble Lord ever listens to anything I say, since he is always in permanent conversation.
LORD CARRINGTON: My Lords, as a matter of fact it was my fault. I was saying that the noble Lord the Leader of the House was being a little waspish this afternoon.
LORD SHACKLETON: My Lords, I do not know what to say to the noble Lord, Lord Carrington, since I have so often accused him of being tetchy. Perhaps I am a little waspish with the noble Lord, Lord Erroll, because I get a little tired, and so do my noble friends, of
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the slight air of condescension. My noble friend Lady Llewelyn-Davies made it very clear that we feel that these are important matters. I am not even sure that I welcome the noble Lord's remarks about Margaret Bondfield. I do not think that he has a clue about what Miss Bondfield had to cope with, or the conditions that existed in those days.
LORD ERROLL OF HALE: My Lords, if I may interrupt the noble Lord, I should like to inform him that I was an apprentice in an engineering works in the North of England at that time. I have a great deal of knowledge about labour conditions at the time and about what she tried to do.
LORD SHACKLETON: My Lords, then I acknowledge that the noble Lord is perhaps unique in that. In fact I wonder why he sits on the Benches opposite. These proposals are quite serious. They do not involve a great increase of civil servants; they involve the transfer of 38 civil servants from one Department to another. There may be a small increase in the productivity field. I hope that the noble Lord is not still saying how tetchy or irritable I am to-day.
LORD CARRINGTON: My Lords, I will gladly tell the noble Lord exactly what I was saying. I was saying to my noble friend that he could not win, because if he praises somebody he is told that he should not, and if he attacks somebody he is told that he must not.
LORD SHACKLETON: My Lords, I do not think the noble Lord can win, and I do not think he deserves to win. I would only say that once this Order has gone through we shall have our new Department. I appreciate the sincerity of the remarks of the noble Lord in regard to my right honourable friend. She has shown herself to be a person of very great energy and, if I may say so, a person of elegance even when getting into a helicopter. Her work for this country and her responsibilities during the next few months are of such great importance that I hope we shall pass this Order, conscious that she will need all the support which we can give her.
On Question, Motion agreed to: The said Address to be presented to Her Majesty by the Lords with White Staves.

GIBRALTAR FRONTIER RESTRICTIONS
3.35 p.m.
LORD SHEPHERD: My Lords, I should now like to repeat a Statement which has just been made by my right honourable friend the Secretary of State for Foreign Affairs about Gibraltar:
"The new restrictions imposed by the Spanish Government are, like the earlier ones, unjustified and clearly aimed at damaging the Gibraltarian economy. It is deplorable that the Spanish Government believe that crude pressures can resolve this international problem.
"These arbitrary restrictions can only harm the prospects of an eventual solution acceptable to the people of Gibraltar and satisfactory to the two Governments.
"Her Majesty's Government remain determined to sustain the people of Gibraltar in the difficulties which they are now facing as a result of the policies of the Spanish Government."
LORD CARRINGTON: My Lords, the House must be grateful to the noble Lord, Lord Shepherd. for repeating the Statement on Gibraltar. I am sure that all of us would agree with the terms in which it has been made. I wonder whether the noble Lord could answer two questions. It is not clear to me exactly what the situation is with regard to Spanish workers working in Gibraltar, particularly in the dockyard. Are they to be allowed to come and go as they feel inclined? Secondly, have the Government made any estimate of what effect these measures will have on the economy of Gibraltar in terms of the loss of tourist trade, and so on?
LORD GLADWYN: My Lords, while sharing the hope which is still entertained for an eventual solution acceptable to the people of Gibraltar and satisfactory to both Governments, may I ask Her Majesty's Government whether, in the event of the Spanish Government closing the frontier altogether, they will be prepared to make available the necessary funds to maintain the present standard of living of the inhabitants?
LORD STRATHCLYDE: My Lords, may I ask the noble Lord one question?
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I understand that the frontier at La Linea has been closed. Is it possible for people still to travel by sea from Gibraltar to Algerciras?
LORD SHEPHERD: My Lords, in reply to the last question, I may say that it is still possible to travel by ferry from Gibraltar to Algeciras. As to the question about the Spanish workers, there are some 5,000 Spanish workers who go every day into Gibraltar. In this moment of great difficulty for Gibraltar it is a remarkable thing that the workers have gone into Gibraltar to-day and there has been no difficulty; they have maintained the old tradition of Gibraltarians and Spanish workers being willing to work side by side. We should make it clear that the Spanish workers themselves are not responsible for the activities of the Spanish Government. Clearly we shall have to examine what we can (to in present circumstances. What must be in the forefront of our minds all the time is that whatever we do must be in the interests of the people of Gibraltar, and this we shall abide by.
In regard to the estimate of the effect of these new restrictions, a computer could produce an answer to the numbers who go across at La Linea, but since the Algeciras ferry is open, it is difficult to say what in the end will be the effect. It may well be that it will have a small effect, because many people who now go to Gibraltar en route to Spain or to other places may still prefer to go through Gibraltar, with all the benefits they get by going to Gibraltar, and put up with the inconvenience of going by ferry. Therefore, it is not easy to give an estimate of what its effect will be. But we have made it perfectly clear in Gibraltar, and recently to the Chief Minister in Gibraltar, that we shall support and sustain the people of Gibraltar in these present circumstances.
I do not think at this stage we can say whether we can keep the standard of living as it is. We hope to see it get better. It will depend in the end on the growth of the economy of Gibraltar. It is rather hard to see how this will develop in view of the present restrictions, though we hope that they will be relieved as soon as possible.
LORD ROWLEY: My Lords, might I ask my noble friend whether he would

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not agree that the Spanish Government by taking this action are themselves infringing the resolution of the United Nations calling upon both Governments to negotiate? Are they not seeking to place the United Kingdom Government and the authorities of Gibraltar in duress before they have reported back to the United Nations?
LORD SHEPHERD: My Lords, the noble Lord is quite right. We are obligated by the United Nations resolution to continue discussions, and it is clear that actions of this sort do not provide encouragement for such discussions. I should have thought that their actions clearly are an infringement of the United Nations Charter and are striking at ordinary, decent people.
LORD MERRIVALE: My Lords, what steps are Her Majesty's Government proposing to take to assist the unions and the Government of Gibraltar to employ people from Malta and to train more Gibraltarians in this country so that they can take over the jobs of the Spanish workers in Gibraltar?
LORD SHEPHERD: My Lords, clearly we hope that the male Gibraltarians will follow the example of the female Gibraltarians who have taken up employment which previously, before the restrictions on Spanish female labour, they had not done. As the noble Lord knows, the fact that women now work has made a very considerable difference to the economy of Gibraltar.
In regard to Malta, we have examined the question of finding labour there. But it is not a question of finding men; it is a question of finding people suitable for the economy of Gibraltar. I fear that it seems at the present moment that the type we want in Gibraltar is in very short supply in Malta.
LORD MERRIVALE: My Lords, on this question of training, could the Minister give some assurance that Her Majesty's Government would be prepared to train more Gibraltarians in this country, so that they would be in a position to take up jobs in the dockyard?
LORD SHEPHERD: My Lords, I have every sympathy with that suggestion. I think there are difficulties about supply,
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but I will certainly see what can be done.
LORD GRIMSTON OF WESTBURY: My Lords, in regard to what the noble Lord said about being obligated to a resolution of the United Nations, could he repeat the assurance that we shall not feel obligated to the resolution of the United Nations calling for Gibraltar to be handed over to Spain?
LORD SHEPHERD: My Lords, we have never interpreted that particular resolution as meaning handing Gibraltar to Spain. It is certainly not our intention to do so.

AIR CORPORATIONS BILL
Brought from the Commons, read la, and to be printed.
COMMONWEALTH TELECOMMUNICATIONS BILL [H.L.]
Returned from the Commons, agreed to.

SHOPS (SUNDAY TRADING) (No. 2) BILL [H.L.]
LORD DERWENT: My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(Lord Derwent.)
On Question, Motion agreed to.

MAINTENANCE ORDERS BILL
3.42 p.m.
BARONESS EMMET OF AMBERLEY: My Lords, I beg to move that this Bill be now read a second time. The history of the Bill, which is very short, is that it is a Private Member's Bill which was presented in the other House by the right honourable gentleman, Mr. Quintin Hogg, the Member for St. Marylebone, on November 29, 1967. It had its Second Reading on December 8; it went to Standing Committee on January 24, 1968, and it had its Third Reading in the House on March 22. Your Lordships will find that the full title is a long one. That is because at the time the Bill was passing through another place the Jean Graham-Hall Committee had not reported, and it might have been necessary for an Amendment to be inserted. In

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fact, I understand that that may be done at the Committee stage in your Lordships' House.
If I may run quickly through the Bill, Clause 1 provides that the weekly payment limit of 50s., which has pertained hitherto, shall be increased to £5. The alterations to all the various sections of Acts are set out on the first page in paragraphs (a) to (e). Secondly, under subsection (2) the Secretary of State is to be entitled by order to increase the maximum of £5 to such amount as may be specified. Thirdly, payments made under such an order shall have the immunity of small maintenance payments in the income tax regulations.
Under Clause 2 the Secretary of State is entitled by order to increase the amount of £7 10s. 0d. which may be paid at present to a deserted wife. I should here like to call your Lordships' attention to the fact that in dealing with the maintenance of children this Bill deals not only with the children of deserted wives, but also with the children of unmarried mothers. Under Clause 3 the Secretary of State may by Statutory Instrument also increase the amount of maintenance for the wife. Subsection (2) of that clause says that such orders shall be put before each House and must be passed by them. Under subsection (3) any order made by a magistrates' court at the present moment may be varied to bring it into line with the provisions of the new Bill, which does not extend to Scotland and Northern Ireland.
LORD WELLS-PESTELL: My Lords, before the noble Baroness continues, perhaps she will be good enough to give way to me. I notice that she referred to the deserted wife under Clause 2. Should I be right in assuming that that applies to any wife who succeeds in getting an order in the magistrates' court, regardless of the ground?—it might be based on adultery, or it might be on persistent cruelty.
BARONESS EMMET OF AMBERLEY: Yes, my Lords. I was using the word "deserted" in the wider sense. The object of this Bill is to enable the magistrates' courts to deal with the fall in the value of money over the years. May I quote from Hansard of another place to explain how very drastic this fall has been? The promoter of the Bill mentioned that in 1917 the maximum allowance was
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5s., and that 5s. was one-quarter of the male wage at that time. In 1918 the allowance went up to 10s.; in 1923 it went up to £1; in 1950 it went up to £1 10s. 0d.; and in 1960 it went up to £2 10s. 0d., which was 12.7 per cent., of a male's wage. As the Member for St. Marylebone said, that shows how the children have been losing ground since 1917 when the allowance was a quarter of the male wage.
The Bill really deals with only this one point. Your Lordships will probably know that there are committees sitting at the moment. There is Mr. Justice Payne's committee on the enforcement of payments, and the Law Society are going into the whole divorce proceedings and other family affairs. There was also the Jean Graham-Hall Committee which has reported since this Bill was passed in the other House. Therefore, it was felt that it was better to deal quite simply and straightforwardly with the urgent matter of cash and to get that through, and to postpone to a later stage consideration of other matters.
Certain points were made in the other House, and I should like to go through them in order to save your Lordships' time, and so that you may feel it is unnecessary at this stage to raise them here. The matter of the difference in rights between a deserted wife, in the wider sense of the word, and an unmarried mother was discussed. The unmarried mother has no maintenance rights and no tight of appeal to a higher court. The question of collection under maintenance orders was also gone into. As we all know, a F ill was passed some time ago for the attachment of wages and that worked extremely well the first year, when £2 million was collected and taxpayers' money was saved. Unfortunately, since then various loopholes have been found in the law, and at the moment the attachment of wages is not working at all satisfactorily.
Then the matter of whether the Ministry of Social Security should undertake the collection of moneys clue under orders was discussed at some length, as also was the question of co-operation between magistrates' clerks and the Ministry of Social Security. I am sure that is a question that will have to be gone into at great length and very carefully, but preferably after all those other committees

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have reported. At the present moment the age limit for maintenance is 13, and that point also was discussed. But by considering every case on its merits a court can quite easily raise that age, and that is done. Another question discussed was whether anybody other than a mother might apply to the courts—it may be that the mother has died, or perhaps the child has gone to a grandmother, who Chas no right of application to the courts.
Then, of course, there is the question of the venue. There was a great deal said about the aura of criminality surrounding the present magistrates' domestic courts. All I can say, my Lords, is that I presided over one for nine years, and I cannot remember any aura of criminality hanging around the one I presided over. Domestic cases are very sad, but I think a great deal depends on how the room is set out and on how you take these cases. I do not know of any reason why there should be any feeling of criminality. I remember one particular case, because it was a happy one, which concerned an old couple who had been married for twenty years. They had started to throw pots and pans at each other, and had come to ask for a separation. After a fairly long sitting, a most satisfactory solution was reached. Tears were streaming down the man's face, and the couple went away arm in arm. she saying, "Oh, well, he is nothing but a great big baby." I do not think there was any aura of criminality about that sitting at all.
The question of a maximum figure was discussed, and also the question of how it affected income tax. As I have said, the Graham-Hall Committee had reported since the Bill went through the other place. It was drafted by the Member for Marylebone, with the help of the Home Office, with its Long Title, on the understanding that an Amendment might be put in at a later stage after the Committee had reported; and, as I think I said, we shall in Committee have an Amendment put forward from the Minister which will remove the maximum and leave the orders without limit. My own views are very sympathetic towards that point of view, and I think the Member for Marylebone would agree. In another place, the Minister said—and I hope this
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will appeal to anybody present who might think that we should have a wider discussion to-day:
"It seems to me that we shall have shortly to have a wider look at the law concerning fatherless children, and indeed I suspect that the need for major changes may well have to be faced before the whole review by the Law Commission on Family Law is complete".
I am sure that that is so. This is a welcome statement, and I hope that we shall have some action on it very soon.
I was not in sympathy with the Member for Northampton, who seemed to me to consider—and I hope your Lordships will not think this frivolous—that a man should be able to renounce his responsibility rather like a bumble bee once it has polinated a flower, and have no further interest in the fruit which may result. He suggested that the whole responsibility should be laid on the shoulders of the taxpayer. I was interested to hear from a Chilean friend of mine that his country went some way towards dealing with the matter in this way some years back. The whole responsibility for illegitimate children was taken over by the State. The result was the most enormous increase in the number of illegitimate babies, and they had to revise the law and go back to making the father responsible—with very good results. Nor do I agree with the Member for South Buckinghamshire, who said that to help the illegitimate child would undermine family life. I do not think this is true at all.
I wholeheartedly support this Bill for a particular reason. I think it goes a little way towards redressing the burden regarding childbearing, which seems to me to be increasingly put on the woman. She has to take the pill, whatever the risk; she has to have the operation for abortion, whatever the consequences; and it is up to her to bring up the child, though she can earn a far lower wage than the man and it is sometimes extraordinarily difficult for her to get a job. Although, having had a court myself, I know that when these troubles arise it is very often "six of one and half-a-dozen of the other", nevertheless in these tragedies one has to remember the child. The child has two natural parents, and I think the father should share the responsibility as well as the mother. I beg to move that this Bill be read a second time.
Moved, That the Bill be now read 2a.—(Baroness Emmet of A mberley.)
3.55 p.m.
THE LORD BISHOP OF BIRMINGHAM: My Lords, I thank the noble Baroness for explaining the Bill in its limited spheres, and for expressing her hopes for future legislation. So far as it goes, the Bill is welcome, in that it does something towards mitigating the effects on a section of the community who are entirely innocent victims of the adverse circumstances into which they have been born. Practically all those who have taken part in the discussions on this legislation so far have spoken in favour of improving the financial position of the child born out of wedlock. Always, of course, there are one or two cautious, dissentient voices seeking to establish that any recognition of the human rights of a child born out of wedlock may undermine the institution of marriage. The pamphlet, Fatherless in Law, which was produced by the Church's Board for Social Responsibility, and which has been referred to in previous debates, sets out clearly the belief that the time has come, not only for improving the financial situation of the illegitimate child but for according to him, where possible, a better family status, a proper place in the family continuum.
During the progress of this Bill so far, its inadequacy and limited scope as regards the illegitimate child have already been well discussed, especially in regard to the specific examples of the bad state of affairs with which it does not deal. For example, it has been said that not only are the amounts awarded in affiliation orders usually too low, and possibly the maximum too low, but the mother is subjected to an intolerable burden in the way she has to apply for and collect her maintenance. Consequently, most mothers do not apply. A bigger and better Bill about maintenance is not the answer. The answer is law reform, giving the child horn out of wedlock, where the father can be identified, the same rights vis-à-vis the man responsible for his procreation as the child of a broken marriage. The right to maintenance from the father should be the right of the child, enforced on his behalf where necessary by a guardian appointed for the purpose; and the collection of the maintenance should be ensured by public officials and machinery, where necessary, as a basic
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public responsibility. I am grateful for the way it has been suggested that this may be done. The argument for abolishing all limits to the amount of affiliation orders is not primarily anything to do with the competence of courts to deal with the financial business. It is to do with the basic human right of every child with regard to his known natural father to be supported by that father in the status of life to which the father belongs, be he labourer, technician or millionaire by inheritance.
Government spokesmen have indicated during the progress of the Bill that radical reform to help the child born illegitimately is recognised as due, but because of the shake-up in the English legal system that this would entail this reform will have to be postponed I do not think that that is good enough. This is Human Rights Year, and we should snake a special effort. The spiritual health of society is endangered by the toleration of injustice and suffering for which a partial remedy, at any rate, has been acknowledged as possible here, and already adopted in other countries as it affects the illegitimately-born child. I know enough of the Rules of this House to know that a Bill dealing with finance cannot be amended in this House, and I hope that Amendments will be put down in the other House, especially in the light of the Report of the Graham-Hall Committee. I do not know whether it is possible to add a rider. If it is I hope that we would add a rider to the effect that we hope this Bill is only a very temporary stop-gap, and will soon—the operative word is "soon"—be superseded by a major measure of reform. But I welcome this Bill.
4.0 p.m.
LORD WELLS-PESTELL: My Lords, I, too, welcome this Bill; and since the noble Baroness, Lady Emmet of Amberley, has introduced it so fully, there is, perhaps, no need for me to say very much about it this afternoon. On the other hand, I think it would be a pity if no one from this side of the House—and I dare not include the right reverend Prelate among those "on this side of the House"—said something in favour of it As I understand the noble Baroness, an Amendment is likely to be moved in Committee which may well remove the present limit imposed on

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magistrates' courts. If that is so, then I welcome it gladly, because I think that magistrates should have unlimited power when it comes to fixing maintenance in respect of wives and children.
With your Lordships' permission, I should like to quote from the Report of the Committee on Statutory Maintenance Limits, which says:
"Magistrates are experienced in handling money issues and give a good deal of time and care to the determination of these."
I want to say, with great respect, that perhaps the magistracy is in a far better position to carry out this rather difficult task than any other legal section.
My Lords, if I had any comment which might appear to be adverse it is this. I think that the Bill which the noble Baroness has introduced today is not likely to have very much effect upon the present situation; for at present the number of orders made in magistrates' courts in which the maximum amount is given to the wife and the children is very small. One has to realise that a wife with three children who is entitled to maintenance can get as much as £15 a week—£7 10s. for herself and £2 10s. for each child under the age of 16. I am sure the noble Baroness—I almost said "my noble friend", for her social thinking and mine very often run along parallel lines—would agree that the rate of income for the vast majority of the men appearing before magistrates' courts is not sufficient to enable the court to make a maximum order of £7 10s. for the wife. We often make maximum orders for the children, for the simple reason that experience has shown those of us who have sat in domestic courts over many years that husbands will pay more readily for their children than for their wives. I think we must be alive to the fact that if the limit is removed it does not necessarily mean that orders in respect of wife maintenance and child maintenance will be much higher in the immediate future than they are at the present time.
I feel that this particular Bill may well be the cause of bringing a larger number of couples within the orbit of the magistrates' courts, because the husband's income will make it worth while for the wife to come to the magistrates' court. Obviously, if her husband's income today is in the region of £30 or
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£40 a week it is not to her advantage to bring proceedings in the magistrates' court, where at present the amount of the order that can be made is limited. So I envisage that one of the effects of this Bill will be to bring within the ambit of the magistrates' courts a group or section of the community that are not using them at present.
This is both good and bad. It is good because, if I may say so with great respect, the proceedings in magistrates' courts are cheap and quick. It is bad because, although, as I have said, the proceedings are quick, the fact remains that a good many matrimonial courts are already overburdened. I am glad to see that the noble and learned Lord the Lord Chancellor is here because I would say, again with the greatest respect, that I hope that when this Bill becomes law, if the limit is removed, some attention will be paid to the number of sittings in matrimonial courts and to the time lag that often occurs now in magistrates' courts between the issue of the summons and the hearing of the case. It may be necessary to have more domestic courts, and I think that some of our buildings are not used to their full capacity.
I have been almost warned off the subject by what the noble Baroness, in her speech in introducing the Bill, said about the collection or enforcement of these orders; and my noble friend the Minister may well say, and rightly, that this has no bearing on the Bill to-day. But I cannot resist this opportunity of raising the matter at the present time. I hope that we shall soon hear from the Payne Committee which was set up on July 8, 1966. It is all very well for us to make provision for order amounts to be increased; but I think it is more important that we should give our minds to the whole question of their collection.
In recent months your Lordships have been concerned with various measures to save money; on occasions it has been a question of £6 million, £8 million, £10 million or £20 million; and on occasions we have pared off a little here and a little there. I wonder how many of your Lordships realise that in 1965, the last year for which figures were available, the National Assistance Board, as it was then, assisted 154,000 separated wives, mothers of illegitimate children and divorced women with legitimate children to the tune of £42,721,000.
BARONESS EMMET OF AMBERLEY: My Lords, would the noble Lord allow me to interrupt? Quite a large sum was also collected back; so that the net figure was not, I think, £42 million.
LORD WELLS-PESTELL: My Lords, I think I am going to surprise the noble Baroness. The amount of money collected back was £3,024,000. So there is a net cost of £39 million. I think this is an enormous sum of money; and I believe that in future we shall have to give more attention to its collection. Of the 154,000 women assisted by the then National Assistance Board, 43,000 had court orders. But I think I am right in saying that, of the 43,000 who had court orders, 15,000 did not receive one penny from their husbands. I believe that we ought to do something about this.
LORD ILFORD: My Lords, was that because the husbands could not be traced?
LORD WELLS-PESTELL: That may well be so; I do not know the reason. It may be that in the majority of cases the husbands could not be traced. I have never supported the old Public Assistance because, with great respect, I thought that it was quite inhuman in its approach. Some noble Lords may not agree with me, but I felt that the public assistance committee was, in many respects, quite inhuman in its approach, and I was glad to see that when the whole thing was reorganised under the National Assistance Board it became one of our best institutions. I know the noble Lord, Lord Ilford, himself did a great deal (many of us are aware of what he did) to "humanise", if he will forgive the expression, the National Assistance Board. But I should like to see somebody take responsibility for—I was going to say "chasing" but I will say tracing, the husbands concerned to see that they comply with orders made against them by the courts. I realise that this has no bearing on the present Bill, and what I wanted to say was that, as a Member sitting on this side of your Lordships' House, I support the Bill and wish it well.
4.11 p.m.
BARONESS BROOKE OF YSTRAD-FELLTE: My Lords, my noble friend Lady Emmet of Amberley has introduced a Bill on a matter of great social and humane importance. It is characteristic of her life-long work for justice and fair
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play for all children, whether legitimate or not, that she should choose to introduce and pilot through your Lordships' House a Private Members' Bill which was warmly welcomed and passed in another place.
The social consciences of all thinking and generously-minded people must welcome any measure that seeks to make life even a small degree more tolerable for those unfortunate children who, through no fault or choice of their own, are denied their natural birthright, the natural birthright of any child, of a happy home in which they may grow up surrounded and cherished by the love of both parents. My noble friend has told us of the intentions of the Bill. She has explained fully the clauses that it contains, and we hope that shortly the noble Lord, Lord Stonham, will be telling us of the Government's plans with regard to the recommendations of the Jean Graham-Hall Report:
"That the financial limit prescribed by Statute for orders which may be made in magistrates' courts for the maintenance of wives and children should In abolished".
I would only add, my Lords, that we on this Bench heartily endorse the intention of the Bill, and what we hope will be the proposed Government Amendment, and wish it a swift and successful passage through this House.
4.13 p.m.
LORD ILFORD: My Lords, I desire to intervene in this debate for only a moment in order to make a few observations about what was said by the noble Lord, Lord Wells-Pestell. I am very grateful to the noble Lord for what he found it possible to say about the old National Assistance Board. I take no credit for the matters to which he referred; the credit was due entirely to the staff of the Board and particularly to the local and field staff.
It is of course the case, my Lords, that there are a very large number of husbands who are liable to contribute to the maintenance of their wives and families, but who are not doing so. There are two major reasons for this. The first is the difficulty of tracing the husband. Noble Lords would be astonished if they knew how difficult it is, even with the help of modern methods of inquiry, to trace the whereabouts of an erring husband. The second reason—and perhaps this is no

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less a formidable reason—is that in many cases, where the man is living with another woman, there is another family and his resources are not sufficient to maintain two families. The difference has, of course, to be met by the Supplementary Benefits Commission, as it was met in the past by the National Assistance Board.
When we take account of those two matters, the figures used by the noble Lord, Lord Wells-Pestell, are not quite so surprising as they appeared at first sight. The noble Lord is quite right when he says that there are a large number of liable husbands from whom no payments can be obtained. I can assure the noble Lord that that is in no way due to any default on the part of the Supplementary Benefits Commission. They are most active in endeavouring to trace these liable husbands. But it is no part of the responsibility of the Supplementary Benefits Commission to trace these men. When the change is made in the present law of maintenance—and I agree with those who have said that it is at present very unsatisfactory—I hope that the responsibility for tracing these liable relatives will be effectively placed upon other agencies and not upon the Supplementary Benefits Commission.
There is one other observation about the Bill which I should like to make. I should like to ask the noble Baroness whether the provisions of Clause 2 do not apply to a husband whom a wife is liable to maintain as well as to a wife whom a husband is liable to maintain. I notice that the language of the clause has been chosen very carefully. It refers to "spouses" and to a "party to a marriage". The noble Baroness spoke of wives. I think I am right in saying that it applies to husbands with equal force.
BARONESS EMMET OF AMBERLEY: My Lords, as I understand it, the clause applies to both wives and husbands. Under the National Security Act of some years past responsibility was placed on a wife to maintain her husband, if she had to do so.
4.17 p.m.
THE MINISTER OF STATE, HOME OFFICE (LORD STONHAM): My Lords, on behalf of the Government I should like to congratulate the noble Baroness,
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Lady Emmet of Amberley, on introducing this small but very useful Bill to which the Government extend a warm welcome. I can assure my noble friend Lord Wells-Pestell, who told me that he might have to leave the Chamber before I replied to the debate, that there was never any danger that he would be the only one to speak from this side of the House on behalf of the Bill.
The face of the Bill may seem a little legalistic, but its true complexion is indeed benign. I welcome what my noble friend Lord Wells-Pestell had to say about the work of the noble Lord, Lord Ilford, as Chairman of the National Assistance Board. I was very glad to hear the reply of the noble Lord, Lord Ilford. Despite the very great work which he did as Chairman, I was glad to hear that he did not claim the credit for, as it were, "humanising" the work of the Board. It brought back to me memories of my very dear friend the first Chairman of the Board, the late George Buchanan. I cannot imagine any person more humane than the late George Buchanan. We all know how he started that Department, and all succeeding Chairmen carried on in the same tradition.
My Lords, after the speech of the noble Baroness I need not emphasise the general sympathy of the Government with the difficulties of fatherless families. I am quite sure that none of your Lordships will find this Bill unacceptable, at least so far as it goes. It has had a somewhat curious history. It was introduced and passed in another place while the Departmental Committee was sitting under the Chairmanship of Miss Jean Graham-Hall, one of the stipendiary Metropolitan magistrates,
"to examine the financial limits prescribed by Statute for orders which may be made in magistrates' courts for the maintenance of wives and children, to consider the appropriate machinery for adjusting such limits to changing circumstances, and to make recommendations".
The Government thought it right to reserve their final attitude until the recommendations of that Committee had been received and considered. The sponsors in another place agreed in the circumstances that it would be prudent to allow for the possibility that the Departmental Committee might recommend total abolition of the limits. Accordingly, the Long Title was so drafted

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as to enable the Bill to be modified for that purpose, if this were thought appropriate.
I must also mention that the Long Title as drafted precludes other Amendments which, it is obvious, some of your Lordships might wish to make in order further to ameliorate the plight of fatherless families. For some time now the National Council for the Unmarried Mother and her Child, and other interested organisations, have represented the case for several changes in the law, and it is not disputed that a number of these deserve the most careful consideration. But the Government do not think it would be right, or timely—and the sponsors agreed—that a Bill conceived for a very limited purpose should be put in peril of wide extension. It is quite clear that the problems of fatherless families, with which, in one sense, the Bill is rather marginally concerned, will call for important legislation before long. And I may say here that I share the impatience in this matter of the right reverend Pre-late the Bishop of Birmingham. He wants law reform to provide illegitimate children with the same rights as children of broken families. So do I; and so do we all, I hope. But there are some things that we have to get right first.
We hope soon to have the report of the Committee on the Enforcement of Judgment Debts, now sitting under the chairmanship of Mr. Justice Payne. This has been looking at the enforcement machinery of the courts and in particular at the attachment-of-earnings procedure. I agree with my noble friend Lord WellsPestell that collection is at least as important as the removal of limits or the enlargement of the amount allowed.
Then, as your Lordships are aware, the Law Commission are in the course of a general review of family law, and in due course (and I hope that there will be no undue delay about that "due course") these and other inquiries will produce the basis for new measures. We really must wait for these important reports before considering what further action must be taken.
So much, my Lords, for the origin of the Bill. I now return to the Departmental Committee. Its Report was received in mid-March and published on April 3. The Bill has been through another place and now, on May 6, it is
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here in your Lordships' House. There has been no delay about this. It is just as well, when delay has been complained of, to mention how quickly this has been dealt with. The Departmental Committee's Report is a very comprehensive study of the relevant law and its working. It contains a great deal of statistical information that has never before been available. Without doubt it will be a valuable source of reference for further studies in this field. On behalf of the Government, I express warm appreciation to Miss Graham-Hall and to her Committee for the work they have done to throw new light on the many aspects of the problems of fatherless families.
The Committee's main recommendation is that the limits should be abolished. I would briefly summarise their arguments thus. Children, at any rate, should not be allowed to suffer hardship through the existence of statutory maintenance limits. The present limit for maintenance to a child is too low. Some children have special needs. Some should be cared for by their mothers; some are disabled. But a limit high enough for these cases might have to be as much as £10 a week per child and would hardly amount to a limit at all, particularly when aggregated in a large family. In most cases the men concerned simply have not the resources to pay more; and this is likely to remain a. significant part of the problem. In order to be meaningful, limits ought to operate in some desirable way at the margin of the total population involved, but they could never be made to do so without considerable elaboration. Even then, anomalies would be bound to arise because of the very wide variety of circumstances in these cases.
The Committee tried to find rational criteria for fixing new higher limits and for making adjustments on future occasions. They failed to do so. They then looked to see whether the limits served to buttress a sensible distribution of jurisdiction as between magistrates' courts and the High Court. It became apparent, however, that the two jurisdictions were not alternative and that the removal of limits was very unlikely to result in any significant change in the initiation of maintenance proceedings in magistrates' courts. Against this background the only effect of the limits that the Committee could discern was that a

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small number of children, and an even smaller number of women, were deprived of maintenance, which a small number of men could well afford to pay. The Committee concluded that, as there was no good reason for retaining a limit simply for the sake of doing so, abolition of all limits was the only defensible recommendation. And this was the recommendation they made.
May I respectfully agree with the view put forward by the right reverend Prelate the Bishop of Birmingham, which I may paraphrase as: the abolition of limits has nothing to do with the power of the courts, but will result in a child having the same standard of living as his known father. I think that summarises the right reverend Prelate's argument for the abolition of the limits.
But I think there is another reason. The Committee's Report revealed that most defendants in domestic proceedings are in the lowest income group, that less than 2 per cent. of all orders for wives are for the maximum amount, but a much larger number of orders made in respect of children are for the maximum amount, although even these amount to only 20 per cent. in three categories—affiliation, guardianship and matrimonial orders with provision for both wife and children—and to 35 per cent. in the remaining category—matrimonial orders with provision for children only. That is a very substantial percentage; and this with a maximum. Who knows what orders the magistrates would have made had there been no maximum? Another important factor is that in cases where women and children are awarded maintenance under the same order, the amount for individual children exceeds the amount ordered for the women. I think that the case is overwhelming.
My noble friend Lord Wells-Pestell spoke of the increased volume of work that would fall on magistrates' courts, and asked my noble and learned friend the Lord Chancellor to look at this point particularly, but the Graham-Hall Committee did not think this likely. They made this clear in paragraph 206 of their Report. If a man is getting £40 a week, even now the woman may have, first, the possibility of proceeding in the High Court, where there are now no limits; secondly, the man may agree to a volun-
1300
tary agreement or, thirdly, the woman may still want to get what she can within the limit.
BARONESS EMMET OF AMBERLEY: My Lords, the noble Lord appreciates that an unmarried mother cannot proceed in the High Court for maintenance.
LORD STONHAM: My Lords, I was not dealing particularly with unmarried mothers but was dealing with wives; but I agree with the point the noble Baroness made when she interrupted my noble friend Lord Wells-Pestell. The third point is that the woman may still want to get what she can within the limits. But, in any event, on this particular point the Graham-Hall Committee considered the implications of abolition and felt no special qualms about the capacity of the system to handle the number of cases. I am sure that my noble and learned friend will watch that, but I thought it right to point out that the fears expressed by my noble friend were not generally shared.
My honourable friend Mr. Elystan Morgan announced last week in another place that the Government have accepted the recommendation of the Committee to abolish all limits. On behalf of the Government I would confirm that at Committee stage I shall bring forward Amendments to abolish the limits, and I hope that your Lordships will give them unanimous support. At that stage, I think it will be proper for me to say something about the question of tax on these small maintenance payments, but I hope your Lordships will agree that I need not detain your Lordships on that particular matter today. Once more I congratulate the noble Baroness on introducing this Bill, and I join with her in asking your Lordships to give it a unanimous Second Reading.
4.30 p.m.
BARONESS EMMET OF AMBERLEY: My Lords, I feel singularly fortunate in having been able to present a Bill for Second Reading which has received such unanimous support from both sides of the House and from the right reverend Prelate. There is nothing more that I can add to what has been said. I very much hope, now that the Minister has assured us of his co-operation, that we shall be able to get this Bill through as

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quickly as possible. I omitted to say what I should like to say now; namely, that we owe the Jean Graham-Hall Committee a great debt, because in preparing this Bill, and in preparing what I had to say, I found their Report extraordinarily informative and very readable.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

NATIONAL DEBT COMMISSIONERS' INVESTMENTS
4.32 p.m.
LORD MITCHISON LORD MITCHISON rose to ask Her Majesty's Government whether they are satisfied with the results of the investment of the National Insurance (Reserve) Fund and whether they will introduce legislation to amend the statutory provisions relating to the investment of this and other funds held by the National Debt Commissioners. The noble Lord said: My Lords, I am afraid I am hound to take a little time in giving your Lordships the background to the Question that I wish to ask. I admit at once that I have a bit of a "bee in my bonnet" about this. I think it is a major scandal of a rather complicated kind, and attributable not to one particular Party—neither to the Party opposite nor to that here—but to Parliament as a whole.
I should like to begin by getting rid of, as it were, the National Debt Commissioners, a committee of seven distinguished men which has never met since it met in 1860 under the chairmanship of Mr. Gladstone. The fact of the matter is that there are only three of them who function, and the three who function do so by virtue of an Act passed in 1818: they are the Chancellor of the Exchequer, the Governor of the Bank of England and the Deputy Governor of the Bank of England. That being so, perhaps it is not altogether astonishing that the Treasury have never found it necessary to give them advice.
The National Insurance Act 1965 is a codified Act, and Sections 83 and 84 reproduce without any material alteration two sections of the Act of 1964. Those sections provide for two funds: first of all, the National Insurance Fund. to receive all contributions, including any Exchequer contribution, and to pay out all benefits; and then the National In-
1302
surance Reserve Fund as its reserve, the income from that Reserve Fund to be paid periodically into the National Insurance Fund. Both Funds are now under the control and management of the Minister of Social Security. There are provisions for investment out of them, and they are the subject matter with which I am really concerned.
Section 83(5) of the 1965 Act provides that:
"Any monies forming part of the National Insurance Fund may from time to time be paid over to the National Debt Commissioners and by them invested, in accordance with such directions as may be giver by the Treasury, in securities which are for the time being authorised by Parliament as investments for savings banks funds."
That means any Government or Government guaranteed securities. It does not even include municipal securities, let alone anything by way of an equity or the like. That is the subsection applied to the National Insurance Fund, and there is a subsection later which applies that to the much larger National Insurance Reserve Fund.
The National Insurance Funds between them took over from the previous Health, Pensions and Employment Insurance fund, £886 million of investments. That was when the original Act came into operation. Of that £886 million—and that is a market value figure— £100 million went to start the National Insurance Fund, and the remaining £786 million went to the Reserve Fund. Subsequent payments brought the Reserve Fund up to the figure of £1,168 million at the end of March, 1967. But that huge figure is the figure of total cost, and the total market value is only £845 million. That shows a depreciation of £323 million, or over 27 per cent., on the money that has been put in. The yield from these investments—the investments that had cost £1,168 million—was only £48 million in 1966–67, less nearly £5½ million losses on realisation; that is to say, a not yield of about£3 13s. per cent.
I have always had a great deal of sympathy with the chimpanzee at the zoo who could not count more then five, and when one gets to figures of this magnitude it is a little difficult sometimes to realise what one is dealing with What one is dealing with by way of quality is the pounds, shillings and pence that are contributed to the National Insurance

1303
Fund, partly by the employer, partly by the employed or self-employed, and to a certain extent by the Exchequer. It is the first two types of contribution that are by far the largest. It is out of those contributions that the whole National Insurance Scheme is paid for. Therefore, what we are dealing with is the investment of the whole reserves behind the National Insurance Scheme. My Lords, it is a staggeringly large figure, and in view of the size of the figure I wonder very much why that subsection was put by my Government—the Government I support—into the 1946 Act. There it is.
For the moment I forbear from further comment on that point, and I go on to the year 1957 when evidence was given before the Radcliffe Committee on the Working of the Monetary System. The Radcliffe Committee on the Working of the Monetary System were naturally interested in funds of this kind, and particularly this Fund. The point which the Committee were putting to witnesses from the Bank of England and to witnesses from the Treasury, to whose evidence I am going to refer your Lordships for a moment, was this:
"Are you using the funds and the investment of the funds to support the general monetary system, or do you regard the purposes of the National Insurance Acts—that is to say the whole National Insurance Scheme—as having the first claim?"
There is no doubt whatever what both the Bank of England and the Treasury replied on this point, and although the evidence is rather long I will quote a very short part of it to your Lordships. First of all, at Question 627, the Chief Cashier of the Bank of England, who happens now to be the Governor and therefore one of the National Debt Commissioners, was asked some questions about the support of Government issues. These are supported by the departments to the extent that the public does not take them up, and "the departments" means in effect the Issue Department of the Bank of England which just takes up the surplus. He was asked whether the National Insurance Fund played a part in this, and his reply was:
"There is a very great distinction. 'The Departments', for this purpose, normally means the Issue Department".
1304
Then he went on to a few words that I think are immaterial. He then said that some funds,
"and the National Insurance Fund, have their own investment policy which they follow like any other fund in accordance with their liabilities".
That is to say, they consider what their duty is in relation to the National insurance Acts and liabilities under them and it is that which governs their investments.
There were other following questions which I propose not to go on with; they were all to the same effect. The Treasury witnesses—and I really think this is interesting—said substantially the same There were three questions, and I refer to the first, No. 1047. It was a short question, but it elicited an uncommonly long answer and I will give your Lordships only what I think is the material part of it.
"What we would like to know",
said Professor Cairncross, who asked the question,
"is how far the National Debt Commissioners receive guidance from the Treasury on the investment policy to be pursued?"
Sir Edmund Compton replied:
"There is a constitutional point on that. The National Debt Commissioners, the active ones, are the Chancellor, the Governor and the Deputy Governor".
The Chancellor in that capacity
"is a different person … from the Chancellor as the head of the Treasury. He has, after all, several roles. He is the Minister for the Treasury, he is a National Debt Commissioner, he is a Church Commissioner; he has a number of different functions and this is one of those different functions".
Someone of the same name as the present Chancellor of the Exchequer once described this place as "Mr. Balfour's Poodle". I feel inclined to say that the Chancellor seems to be Mr. Wilson's Hydra with many heads.
I go on to the end of the answer:
"I think the answer to Professor Cairn-cross's question about policy is that they have a wide discretion and pay attention to the needs of, and their duties to, their depositors, and that in carrying that out the National Debt Office keep in close touch with the Treasury. So far there has not been any occasion, that I know of, of any feeling of cleavage between their duty as trustees, if you like to put it so, and the advice the Treasury would wish to give them on grounds of either investment policy or monetary policy".

1305
I regard those answers as perfectly fair. The thing that in the view of the Treasury governs, and ought to govern, the investments of the National Debt Commissioners is their duty as trustees, their duties to their depositors, and that after that, and only after that, they should have regard to any advice the Treasury may give them in relation to general monetary policy.
I go from 1957 to 1961, and this was an occasion when the Trustee Investments Bill, which your Lordships had to consider the other day, was before a Committee of the House of Commons, and the opposition was very voluble. I took a part in it. I am not going to quote my own speeches (I think it is an abominable habit) but I am going to quote the speeches of my principal supporter, who was Mr. Diamond. Mr. Diamond is now the Chief Secretary to the Treasury, and Mr. Diamond is such an honest man and spoke with such conviction that I feel sure he will not have changed his mind. The subject we were discussing was an Amendment to give the National Debt Commissioners in respect of this Reserve Fund and a number of other slightly smaller funds—well, distinctly smaller funds—the powers that were given by that Bill to private trustees. I must just say very shortly that when I moved the Amendment I put it on those lines and said there was no reason why trustees for the public should not have the powers of investment that were being given by the Bill to trustees of private funds in cases, of course, where there were no special provisions in the trust deed.
I was answered by Mr. Barber, who was then the Economic Secretary to the Treasury, and still occupies a very prominent place in political life. I think it is rather significant that Mr. Barber did not say, "We cannot give these powers of investment to the National Debt Commissioners because to do so would deprive the Treasury of essential powers over the general monetary system". On the contrary, having perhaps an indifferent case, he thought this was the moment to slang the plaintiff's attorney, and slang him he did, and quite rightly, and very nicely and very fairly, and what he said, in effect, was:
"This is creeping Socialism. If you let these people invest in equities you will have
1306
the State attired as the Devil creeping in by the back door."
We have heard this kind of thing before, and I hope that after the powers that were given by your Lordships to the local authorities the other day, we shall not hear so much of it again; because if, after all, it is creeping Socialism for the State to have reasonable powers of investment, well then you ought never to allow councils through an investment trust or otherwise to speculate on Wall Street in the way they were allowed to by the Bill your Lordships approved the other day. He said this, and said it rather shortly; and, quite frankly—I hope I am not being unfair to someone for whom I have a great respect—I did not get the feeling that he had a very great belief in it all. Be that as it may, Mr. Diamond then went for him, and with considerable vigour. Mr. Diamond said, first of all:
"I am very interested in many people putting up a lot of money which the Government are losing for them."—[OFFICIAL REPORT, Commons, Standing Committee B; 4/5/61, col. 497.]
That, of course, is a reference to the contributions under the National Insurance Fund, and your Lordships will remember the extent of the losses—over £300 million in depreciation cash losses. And, incidentally, we were told of £40 million on realisations the other day; but that is a different way of looking at it.
Then Mr. Diamond went on, at col. 498.
"It is ridiculous that the Government should seek to stick to an outmoded pattern of refusing to invest in equities, for reasons which I do not understand and which, with the greatest deference to him, the Economic Secretary does not understand, either."
Later he said this—and it was a reference to what the Economic Secretary has said:
"I do not know why the Government seek to introduce prejudice into an objective Amendment by referring to such matters. It is simply a question of a body, which is entrusted with the money belonging to a vast number of people, carrying out its trust in modern terms and efficiently. If the Commissioners had the power which the Amendment seeks to give them to invest in equities they would be able to offset the fall in gilt-edged investments—the great fall in long-dated and irredeemable investments—by the rise in equities which has taken plat and which everyone is satisfied will continue to take place." (col. 500.)

1307
My Lords, Mr. Diamond is an expert accountant in private life, and I do not think it is necessary for me to-day to express views, one way or another, as to how the powers should be used, but that the powers are necessary seems to be perfectly clear.
To quote Mr. Diamond again, he said that the Amendment:
"gives the trustees the right to get out of the chains which have bound them to gilt-edged investment and gives them freedom to look after their beneficiaries fully". (col. 501.)
I cannot see the answer to this sort of argument. Later on Mr. Diamond suggested various methods by which, if it were thought necessary, investment of this fund could be limited in relation to any particular company, either by a percentage or a limitation of votes, so that they could never get control. That seems to be a comparatively minor point. My main point is: what is the reason for persisting in the clause which is now in the National Insurance Act, and to limit these people to a kind of stock on which they have already made these immense losses and on which, so far as I can see, they may again have to incur others? I am not prophesying about the future of the gilt-edge market; I am only talking about powers.
What happened the other day was that the Local Authorities' Mutual Investment Trust Bill came along. What was it about? The very same Trustee Investment Act about which I have been speaking gave the local authorities, under a scheme to be approved, power to invest in equities, and so on. There was provision for Treasury approval, and it was found that this power was not wide enough; and the Bill which came before your Lordships' House the other day in fact gave them power to invest in Wall Street in dollar securities. Your Lordships will find it in the Bill. This is only one instance—perhaps the most extreme instance—of the widening which that Bill gave to the powers of investment of local authorities through their trust. The Bill passed another place without a Division; it was not divided on here, and nobody has objected to it. Is there any sense whatever in allowing local authorities to invest in this sort of way and refusing it to those who are responsible for the contributions of the National Insurance Scheme? I simply
1308
cannot understand it, and I get baffled and cross with myself because I cannot understand it.
What is the motive behind this extraordinary business? Mr. Barber might reasonably have said at the time: "This is a Bill rather about other things; this is a fairly late stage of it and although this is not all that important as a Bill, it is an important Amendment and it ought to be dealt with separately." He said something of the sort, and I quite understand that. But now the Government have come in—and they came in on an Election pamphlet called New Frontiers for Social Security. On page 14 of that pamphlet, which was introduced by my right honourable friend who is now the Lord President of the Council, we find this:
"The contribution income will enable a National Pensions Fund—as outlined in National Superannuation—to be built up. This will be controlled by Trustees appointed by the Government who will have the same opportunities to carry out profitable investment of their funds as Trustees of private pension schemes and insurance companies."
It was part of a larger change, but the principle is quite clearly accepted.
In the same way, when the Local Authorities' Investment Bill came before another place there was a passage from the Minister's speech in support of it. I quoted it the other day, and I beg leave to quote it again because it is directly and, so far as I can see, conclusively in point. He pointed out in effect that what was being done was to give powers. He said:
"I do not believe that we should attempt to supervise the Trust like a nanny in what it is going to do with the options it is proposed the House should give it. We should give these powers without tormenting ourselves as to hypothetical misuse or folly. The simple principle to be decided is whether we should widen these powers of the Trust in the knowledge that this is a very well run Trust in charge of very responsible people and that these powers are unlikely to be misused."—{OFFICIAL REPORT, Commons, 22/3/68; col. 792.]
I take those as the Government's general views, and I shall apply them to this case.
There is no doubt that there has been an enormous loss on this Fund and a very bad income yield from it, but is that due, as I think it is, to the restrictive terms of the Statute, which prescribed its investment in Government securities only?

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Or are we to be forced to the view that it is due to the incompetence of the Chancellor, the Governor of the Bank of England and the Deputy Governor of the Bank of England? I boggle at that last conclusion. If we are to talk about a "well-run Fund" this must be treated, whatever its limitation, as a well-run Fund, and if so, is there any harm in giving these increased powers—legislation will be needed for the purpose—and in leaving the exercise of them to these very responsible gentlemen?
I wish the Hydra would put his heads together a little. It must be very difficult for the Chancellor to disengage himself from his responsibility as the operative National Debt Commissioner (for that is what he is), his responsibility towards the insurance contributors on the one hand, and on the other hand his responsibility as Chancellor for the general monetary system. But he must make a distinction, and perhaps it would help him in the process if he considered his third responsibility. This is the Church Commisioners; he is one of them. They do it better. They have a mixed fund. I am not going to take up your Lordships' time any more with the figures, but they have a mixed fund with a yield of over 6 per cent. They do not seem to lose any money. They do pretty well out of even the fixed-interest part of it, and in their Report they talk about preference shares and debentures of industrial companies, and so on and so forth. I wonder whether perhaps we should do better to take the Fund away from the National Debt Commissioners and hand it over to the right reverend Prelates who grace us with their presence and are always so shy about talking on economic questions.
The fact remains that here is the loss, and the Chancellor of the Exchequer has done uncommonly badly with the contributions of men and women all over the country towards the National Insurance Scheme. And these are not small amounts. This Reserve Fund equals roughly, the contributions for a whole year. I think it is probably kept at that; and if the amount that has been lost were now available those contributions could be lowered or the benefits increased without further charge on the taxpayer. What is the objection to giving power to do that? I do not ask any more. Do not
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ask me to run a fund like this; I would not for a moment claim to be competent to do so. But surely one can and some-body. The local authorities have succeeded in doing so, the Church Commissioners have succeeded in doing so. Surely the Treasury, in all its infinite wisdom, might be able to manage it.
There is one last point, but it is an important one. Roughly speaking, the voluntary pensions funds at present appear from the Morgan Report to amount to about the same capital as the National Insurance Fund. Of course they go to different people; the quantities are different (incidentally, they are not always larger), and there are all kinds of differences; and there is always the broad question whether it is right to compare this with retirement pensions only. But there is no doubt that they are comparable in volume. Not only are they comparable in volume but they have this distinctive feature. I have never heard of anyone outside a lunatic asylum and who had to run a pensions fund who would have put a condition of this sort into the deed. Of course they have mixed funds and they all operate as mixed funds. If my noble friend who is to reply is searching for some exception, all I can say is that he will find only a very small one.
The general principle is perfectly clear. What is the sense of letting insurance companies and other companies invest their funds in equities, for the purpose of providing pensions and the like, when the State, which has the same responsibility to provide pensions and the like, or a very similar one, is precluded from buying the kind of thing which these companies, by experience. have found paid? It cannot be the success of the alternative to which the State has been forced. And this lamentable history, as I see it, reflects no great credit on Parliament. I do not know how these sections got into the National Insurance Act; I do not know what they meant when they got there. Why not say, if that is what you mean, that the whole thing is going to he run by the Chancellor of the Exchequer, in relation, however, to his duty to the depositors?
What you do is take this dead body which has not met since 1860; you call up again, by some curious invocation, the

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ghost of Mr. Gladstone—I do not want to hurt the Liberal Peers by mentioning him —and you then trust to this fictitious body, subject to direction by the Treasury, the narrowest of all possible investment powers. What was the object? Was it the case that those who were responsible for the Bill at the time wanted to have a separate fund to keep it out of the usual machinery of Exchequer control and thought they were doing so by this clause? I do not know. But if I were the Fulton Committee I would have a very good look indeed at this section; at how it got there, how it has worked out and what the present result of it is.
Of course the Government are going to get up and say the usual Treasury thing, I am afraid: that "There is a lot to be said for it; you have put it very clearly; it is quite competent and we congratulate you on doing so much work," and all the rest. Then they will say, "There is a good deal to be said for it in principle and we will consider it." Then they will say, "By now we have come to think there may be something in it, but not yet". Never yet, my Lords: tarry, tarry, dingle and dally. You put these things before the Treasury, as I have so often done over Finance Bills, and the first answer is always, "It is impossible"; and the second answer is, "It is partly impossible". Then the third time they come forward triumphant, and do it. On this occasion they are losing so much money a year (and it is not their own money but that of the contributors to the National Insurance Find) that I hope they will break all their rules and concede at once legislation which is needed for the purpose—but I do not think they will.
5.7 p.m.
LORD HAWKE: My Lords, I must first of all apologise to the noble Lord, Lord Mitchison, for not being present during the first few moments of his speech; the news of his getting up did not appear to come through on the "blower". I think, with due diffidence, that I must also, on behalf of my fellow Church Commissioners and myself, refuse his kind offer to take over the National Insurance Fund. I feel that we have quite enough funds to look after at the moment.
The noble Lord has raised what is, in effect, a tragedy. He has raised it only
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in connection with the National Insurance Fund, which is a big impersonal Government pool. But the component parts of this problem affect as a tragedy many hundreds of thousands, if not millions, of people up and down the country who have their savings, in some cases even their life savings, in Government stock, often of an undated character, which they have seen depreciate in purchasing power ever since the war.
I have not personally gone into the exact figures the noble Lord quoted, but I suspect that a good portion of the capital loss, and the reason for the extremely low rate of interest which this Fund appears to earn, may well spring from what I have seen termed the greatest confidence trick in history, which was when a Labour Chancellor of the Exchequer managed to sell hundreds of millions of pounds of 2½ per cent. stock at par. It is now quoted at about 40.
LORD MITCHISON: My Lords, I thought that somebody would probably say this, so I took the trouble to look over the first Fund. The first Fund that they took over from the existing Fund included a large batch of what are commonly called Dalton's, and the Dalton's went up for a year or two and then went down again. The fact of the matter is that this is the fault of both Governments, and it is not the least use trying to make a Party point out of it. One was just as bad as the other, and each has been equally slow to remedy the obvious mistake in the original Act.
LORD HAWKE: All Governments since the war are responsible for the inflation, but there was only one Chancellor who succeeded in getting the market into such a condition that he was able to float this paper off, at 2½ per cent., at par; and a great deal of these Government funds have lost a great deal of money in the process since. But periodically people suggest that some of these undated stocks should be given a date, even a distant one; and though I know it is absolutely against Treasury rules ever to alter the terms and conditions of a stock once it has been floated, I feel that something on those lines ought to take place. There is in fact one stock, I think at 3½ per cent., which has some form of rather minute sinking fund which amounts to a date, albeit a distant one. But the noble Lord's remedy, which is apparently to

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release some of this money at this extremely low return and invest it in equities—
LORD MITCHISON: My Lords, I am sorry to intervene, but I do not want this kind of thing foisted on me. I said that I am not proposing anything but to give powers, and I made it clear that I did not claim to know how to exercise them. I ventured the opinion that there might be somebody who would know.
LORD HAWKE: Well, my Lords, to give the people the powers and then say they do not propose to use them really has not much point. But if the powers were given to invest in equities, presumably there would be investments in equities, and the immediate return at the moment would be extremely low.
But what I wish to point out is that the noble Lord is advocating a flight from his own Government's paper, which is not a good example to the rest of the market. One of the greatest tragedies in the financial situation of this country at the moment is that the world in general has lost confidence in Government paper, and the first duty of the Chancellor should be to try to restore that confidence. He could do no greater service to this country than again to get people willing to lend to the Government at 5 per cent. Every effort that he makes should be concentrated on that theme rather than on producing methods of being able to put Government funds into equities.
He should encourage savings, because that is the only way by which money can become of value again in this country. A volume of savings is required. The noble Lord, Lord Douglass of Cleveland, was speaking about this not long ago. The richer classes in this country have ceased to save because they have been so heavily taxed that they have no money left to save. The middle classes are saving quite heavily, chiefly through life insurance, which in the end represents about 20 per cent. of the money going into the gilt-edge market, and also in house purchase. But the wage-earning classes in this country are saving remarkably little, yet some of them are making a lot of money. If the Chancellor could persuade the better
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off wage-earning classes of this country to save steadily and to put their money into Government securities, it would make all the difference to the price of gilt-edge, the price of money, the bank rate and everything else. I do not think that the Chancellor is doing anything of that kind at the moment. Certainly the noble Lord's plea that the Government should fly from its own paper is not likely to reinforce the gilt-edge market.
LORD BOOTHBY: My Lords, before the noble Lord sits down, surely he would agree with me that it would take a miracle maker to persuade anybody, after the experiences of the last twenty years, that it was better to invest in gilt-edge securities than equities.
5.15 p.m.
LORD BESWICK: My Loris, my noble friend Lord Mitchison has put me into something of a difficulty. He says that if I congratulate him on the way he has put his case he will simply say, "I told you so. This is the typical Treasury reply to a good case". All I will promise him is that, unlike the right honourable gentleman who replied to him before, I will not slang the prosecuting attorney. My noble friend has put an interesting point of view in an attractive manner, and I am quite sure that it will make even more interesting reading to-morrow. He really launched his case last week during the discussion which we had on the Local Authorities' Mutual Investment Trust Bill. On that occasion I put it to him that there was a distinct and basic difference between the National Insurance Reserve Fund and the Local Authorities' Mutual Investment Trust Fund which was then beir g discussed, and indeed between the National Insurance Fund and all the other funds to which my noble friend referred this evening.
I think the first thing that I ought to do, therefore, is to stress that the public sector funds which we are now discussing—and I refer to the Savings Banks Funds and the other funds held by the National Debt Commissioners as well as the National Insurance Fund—are quite different in purpose and character from the private sector pension and insurance funds. The level of income earned by the public sector funds' investments does

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not affect either the level or the contributions to the fund or the level of pensions or other benefits paid out of the fund. The level of pensions and benefits is determined not by the yields on securities in which the fund is invested, still less by the market value of the fund, but by the Government of the day, in the light of the needs of the pensioner and other beneficiaries, and of what the nation as a whole can afford. For any given level of benefits the Government must take a given amount of spending power out of the economy, whether by way of taxation, contributions or dividends received, to offset the spending power injected into the economy by payment of the benefits. There may well have been some cases in the past—and one thinks of the 'twenties and the 'thirties—when an inflationary injection of increased benefits would have put the economy on its feet, but to-day the situation is entirely otherwise.
There are some who would argue, in opposition to my noble friend's point of view, that effectively contributions to these public funds are part of the Government's income whilst pensions are part of the Government's expenditure. On this view the existence of the funds merely reflects the way in which past surpluses of income over expenditure in one part of the public sector have been accounted for, and the investment of the funds in gilt-edge is seen simply as one of several possible accounting devices. Given this difference between the public and the private sector funds, it is therefore, as I put to my noble friend, a misconception to apply to the public sector funds the test which one normally, and rightly, would apply to the private sector pension and insurance funds.
LORD MITCHISON: My Lords, I am sorry to interrupt my noble friend, but I wish he would not put it all on me. These are indeed my views, but they are also the views of Mr. Diamond in Opposition, of Mr. Crossman in Opposition, and of Mr. Harold Lever in Government. Perhaps we could be told what is wrong with their views as well as what is wrong with mine.
LORD BESWICK: My Lords, perhaps my noble friend will say to what extent he is briefed by Mr. Diamond or Mr. Crossman to speak this afternoon. So
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far as I am concerned, I can answer only my noble friend. What views the Chief Secretary of the Treasury now holds, or what views Mr. Crossman now holds, I am not in a position to say. All I can hint is that the Chief Secretary of the Treasury has seen the brief on which I am to answer my noble friend. However, the position is—and on this I agree with my noble friend—that there is the Reserve Fund, which is a substantial fund, and he is suggesting that it is not being invested to the best advantage. Possibly I could try to deal with that. What we must bear very firmly in mind is that the investment policy of the National Debt Commissioners must be in accordance with the best interests of the nation as a whole. It is impossible to differentiate between the members of the public whose money the Fund is and the nation, since the nation is made up precisely of those same members of the public.
The evidence given before the Radcliffe Inquiry certainly made it clear that the National Debt Commissioners had to bear in mind two responsibilities: first, the national monetary considerations, second, their responsibility as managers of the Fund. But it was never stated in the Report that the latter responsibility should override the former; nor indeed can one look after the public, whose contributions are invested in the Fund, if one at the same time damages the interests of the nation as a whole. Therefore I suggest to my noble friend that it would not be in the interests of the nation, or of the public who go to make up the nation, if the investment policy of the National Debt Commissioners were changed. And I say that for the following reasons.
I doubt whether anyone would dispute that the Government must cover their financing requirements, so far as possible, from income available to the public sector rather than from borrowing outside. If these funds were not made available to the Government, the Government would have to borrow correspondingly more gilt-edge funds on the market. Clearly, if they themselves were not prepared to invest their own funds in gilt edge (I think that this was the point made by the noble Lord, Lord Hawke) then a considerably higher interest rate

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would have to be offered to attract gilt-edge investment. Surely this would not be in the interests of the public.
LORD MITCHISON: My Lords, I must ask my noble friend not to look round at me, or he will get an answer.
LORD BESWICK: I am grateful to my noble friend: I will look firmly in front of me. The Government's problem of debt management would be made very much more difficult, and I cannot see that the national interest would be served by intensifying this problem.
My noble friend makes the point, and it has created some interest outside, that because of this restriction upon their investment policy, the Debt Commissioners have lost considerable sums of money. But this is by no means as simple as it sounds. Capital value may have gone down, but the income from the Fund has increased. In 1948 the income, expressed in terms of the cost price of the assets, was less than 2½ per cent. By 1955, it was 3·3 per cent., and by 1967 a little over 4 per cent. It is inevitable that with the general rise in interest rates the market valuation of gilt-edge securities should go down. But it is only when the securities are realised or converted that a loss can occur. Sales of securities are made only in order to rearrange the portfolio of assets. For example, if there are too many short-dated stocks, they are exchanged for longer-dated securities. The losses of £40 million over the past ten years have been the result of the rearranging of the portfolio, but during this time, though the capital has declined by that amount, the annual interest from the Fund has grown from £40 million in 1957 to £48½ million in 1967.
Looked at from the point of view of the past investment performance of the Reserve Fund, there is no significance in the fact that on any particular day the market value of the assets in the Fund shows a deficit. Probably I might add just one further thought on this question of investment policy. It is not at all certain that in any given period in the future investment in equities will yield higher returns than investment in gilt-edge. I notice in The Times of April 6, for example, the statement that:
"It is perhaps surprising to know that there have been 19 years since the end of the First
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World War in which gilt edge stocks have performed better than equities in capital terms."
The article goes on to say that a piece of research by a firm of stockbrokers points to the conclusion that:
"It is not too early to consider what should be done if signs of a revival in the gilt edge market are seen."
The noble Lord, Lord Hawke, made some reference to what he called the "confidence trick" of selling fixed interest stocks. And my noble friend, by implication at any rate, was denigrating the gilt-edge security as against the equity.
LORD MITCHISON: No, my Lords; that is not fair. This is in regard to the suggestion that the Government should take powers. Why should I or the noble Lord, Lord Hawke, be fathered with the management of the use of the powers? Neither of us looks like a nanny or is a nanny, to quote the language of Mr. Harold Lever the other day.
LORD BESWICK: The noble Lord, Lord Hawke, used some strong words about what he called "Government paper". I am bound to agree with Lord Hawke that if my noble friend had not thought there were advantages in switching from Government stocks to equities, then I see little purpose in demanding the powers for which he now asks. I was going on to make the point that I agree that we are going through a difficult period in regard to the gilt-edge market. The point I make is that the situation is not made easier by those—I do not here refer particularly to my noble friend—who continually decry the value of Government securities. Nobody who looks at the weekend Press and sees all the advertisements applauding the merits of equity stock as against the gilt-edge can escape the fact that they are themselves creating the very dangers against which they advise their readers to beware.
LORD HANWKE: My Lords, the noble Lord and I are absolutely at one. I want to see a strong gilt-edge market and the Government buying at 5 per cent. again. But let the Chancellor of the Exchequer take a whole page in the Sunday Press pointing out the performance of his stock over the last twenty years in purchasing power. If they come up to the

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others, he is welcome. I do not think that he could do it.
LORD BESWICK: My Lords, I am glad to hear that the noble Lord is on my side—although towards the end of what he said I was beginning to wonder whether he was. I was simply going on to say that the more one argues about the advantages of the one, the more difficult it makes the situation for the other.
I have made some inquiries about the cost of advertisements paid for by the Unit Trust people in the Press these days, applauding the advantages of equity shares, and—by inference, at any rate—questioning the stability of fixed interest stocks. One estimate given to me shows that in March alone Unit Trusts advertised to the tune of £182,000. When one sees that kind of advertising and compares it with the whole of the expenditure by the National Savings Committee in some months of only £50,000, one can see that there is a good deal of propaganda all on the one side. I shall not venture further into this delicate area, but it seems to me that the more we harp upon the disadvantages of the gilt-edged market, the less favourable to it is the psychological climate in which investment decisions are made.
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My noble friend has put forward an argument in favour of giving the National Debt Commissioners wider powers of investment. May I now summarise the arguments against? The insurance funds within the public sector are different in many significant respects from the private sector insurance and pension funds. To agree to the National Debt Commissioners switching, or even having the power to switch, from the public sector to the private sector might given an immediate apparent advantage, but it would not be in the public or national interest. Such a policy would inflate the price of equity shares and would make borrowing for the Government a much more expensive operation. The fact that the book value of the securities in these funds has fallen does not mean that the income from the investment has fallen, or that the benefits payable to the pensioners and other beneficiaries has been affected. For all these reasons, therefore, the answer which I have to give to the latter part of the noble Lord's Unstarred Question is that the Government do not propose to amend the statutory provisions relating to the investment powers of the National Debt Commissioners.
House adjourned at half-past five o'clock.