Lords Sitting of 12 March 1969

Preamble
The House met at half past two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Chichester):
The LORD CHANCELLOR on the Woolsack.

LORD WILSON OF LANGSIDE
The Right Honourable Henry Stephen Wilson, Q.C., Lord Advocate for Scotland, Baron Wilson of Langside, of Broughton in the County of the City of Edinburgh, for life—Was, in his robes, introduced between the Lord Shackleton and the Lord Hughes.

POSTAL DELIVERIES: THE TWO-TIER SYSTEM
2.40 p.m.
EARL FERRERS: 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, in view of their statement (Lords Hansard, 11th of February, col. 406) that when mail is delivered by the General Post Office to Havant station, destined for London, the 4d. mail is deliberately sent in the opposite direction to the 5d. mail, they will give instructions that:—

(a) both types of mail, addressed to the same place, will be sent in the same direction and, when possible, at the same time, and

(b) no second-class mail will be subject to deliberate delay and frustration.]

LORD BOWLES: My Lords, I am sorry for any misunderstanding about this. There is no question of 4d. mail destined for London following a different route from that of 5d. mail. The vast majority of 4d. letters posted in Havant are sent direct to most of the principal post office distribution centres in the country. Those for London follow the
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same route as 5d. letters. But when the number of 4d. letters from Havant for some parts of the country is too small to be despatched direct they are sent to Portsmouth for inclusion in despatches from that office. Second-class letters are not delayed unnecessarily: instructions already provide for these to be dealt with when the first-class letters have taken priority.
EARL FERRERS: My Lords, I am grateful to the noble Lord for that reply. Do I understand from the reply that when 4d. and 5d. letters are sent to Havant station the 4d. letters do not go in the reverse direction to the 5d. letters, but that they both go up to London together?
LORD BOWLES: My Lords, I said that they both go the same way to London; they do not go via Portsmouth. The only letters that go via Portsmouth are those to Scotland—the reason is quite simple. There are so few 4d. letters from Havant to Scotland, that when they are sent to the Portsmouth post office they are included in the Portsmouth letters for Scotland and go that way.
THE EARL OF BESSBOROUGH: My Lords, is the noble Lord aware that this happens to be my own railway station? My letters have in fact been sent to Portsmouth when they have been addressed to London.
LORD BOWLES: My Lords, I am very surprised that the noble Earl has not told me about it before.

GUYANA: BRITISH TROOPS AND MEDICAL AID
LORD SORENSEN: 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 British troops are still stationed in Guyana, and what assistance in medical services they are rendering to Guyana.]
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD CHALFONT): My Lords, the Answer to the noble Lord's Question is that British troops are no longer stationed in Guyana.
LORD SORENSEN: My Lords, may I take it, therefore, that the situation in Guyana is now quiet, if not amicable? Would the noble Lord answer the second part of my Question, which he omitted to do, regarding medical services?
LORD CHALFONT: My Lords, I am afraid that in the light of my Answer the second part of the noble Lord's Question does not apply, unless I have misread the Question. As there are no British troops in Guyana, they can scarcely be rendering any medical services. To answer the first and perhaps more serious part of his supplementary question, the situation in Guyana at the moment from the internal security point of view, is quiet.
LORD SORENSEN: My Lords, is the noble Lord aware that both parts of my Question were serious and not humorous? Would he inform me whether the British Government, through any of their Departments, assist financially doctors from this country who are willing to spend some time in assisting medically the people in Guyana?
LORD CHALFONT: My Lords, I am sorry, but I had no intention of suggesting that either part of my noble friend's question was facetious or humorous. I thought, perhaps wrongly, that my answer came into that category. The reply to the question about medical assistance other than military medical assistance, to which the initial Question referred, is that the Ministry of Overseas Development have an aid programme to Guyana, which includes assistance in the development of medical facilities in the area.
LORD CLIFFORD OF CHUDLEIGH: My Lords, could the noble Lord say whether there have recently been any threats from Venezuela claiming about a third of Guyana?
LORD CHALFONT: My Lords, as the noble Lord will know, Venezuela has an existing claim to certain parts of Guyana territory, but the question of threats has not arisen.
LORD HAWKE: My Lords, can the noble Lord say whether there is any truth in a report in the American Press, which I read to-day, that the Amerindian population of Guyana living on the Venezuelan border has now come out in favour of
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Mr. Burnham's Government, whereas previously they have been suspected siding with Venezuela?
LORD CHALFONT: My Lords, I have not seen the report, and this matter goes rather wide of the original Question, if we get any information of that kind I will bring it to the attention of your Lordships' House.

HIGHLANDS AND ISLANDS DEVELOPMENT BOARD
2.46 p.m.
THE DUKE OF ATHOLL: 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 the recent increase in staff of the Highlands and Islands Development Board indicates an increase in their geographical area of operations in the near future.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): No, my Lords. The extra staff are required to cope with the increasing work in the Board's existing area. Before giving further thought to extending the Board's area, my right honourable friend is awaiting the recommendations of the Royal Commission on Local Government in Scotland.
THE DUKE OF ATHOLL: My Lords, while thanking the noble Lord for that Answer, may I ask whether he is aware that many areas similar in type and on the periphery of the crofting counties are having great difficulty in attracting new development because of the attractions available from the Highlands and Islands Development Board? Does he not agree that there is a real danger that these areas may become what are known colloquially as "grey" areas?
LORD HUGHES: My Lords, if we had not been so aware, we should not have made provision in the Act for the possibility of contiguous areas being taken into the jurisdiction of the Board. One must accept that at some point there must be an end to it, otherwise eventually we would reach the English border.
THE EARL OF SELKIRK: My Lords, could the noble Lord say when the Royal Commission on Local Government is likely to report?
LORD HUGHES: My Lords, my latest information is that the Report is expected to be available in the early summer.
THE DUKE OF ATHOLL: But, my Lords, surely there are great differences between the Lowland belt of Scotland which is between the area of the Highlands and Islands Development Board and the English Border and what might loosely be described as the Highland areas of Banffshire, Perthshire and the Islands of Bute and Arran. It is these areas which at the moment are suffering as a result of the Board's activities.
LORD HUGHES: My Lords, there are many differences in Scotland. The similarity is that everybody wishes to have the best possible treatment. Therefore one can expect that they all want to get the benefits of the Board. I recollect that in the last major Scottish debate the noble Lord, Lord Lovat, rebuked me for regarding the North-Eastern area as being part of the Highlands.

GOVERNMENT SECURITIES
LORD RATHCAVAN: 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 propose to take any action with a view to improving the marketability of British Government securities, the prices of which are now lower than they have ever been in spite of the very high return obtainable from them.]
LORD BESWICK: My Lords, my right honourable friend the Chancellor of the Exchequer has no proposals to make at present.
LORD RATHCAVAN: My Lords, may I ask the noble Lord two supplementary questions? First, would he not agree that it is a bad thing for the country that the gilt-edged market should remain in the doldrums as it is at present, thus damaging our image abroad and leading to much greater cost in relation to any new loans
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which have to be issued? Secondly, may I ask him whether he is aware that in some countries, for example in Australia and in South Africa, institutions such as insurance companies are obliged by law to hold a proportion of their assets in Government securities? Might not a scheme of that sort help here? Might it not also be a good plan to exempt all Government securities from capital gains tax? Might not another measure be to sponsor on behalf of the Government an advertising campaign, to draw attention—
SEVERAL NOBLE LORDS: Speech!
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD SHEPHERD): My Lords, I feel that I ought to intervene. The purpose of Question Time is, of course, to elucidate information, but I have a suspicion that the noble Lord is making suggestions to my noble friend. I think he ought to keep his questions to the point and, if possible, in the form of genuine questions.
LORD RATHCAVAN: My Lords, I thought I was asking a question. My last question was to ask the noble Lord, Lord Beswick, whether it might not be a good thing for the Government to sponsor an advertising campaign to popularise Government securities among the general public, including the smaller saver.
LORD BESWICK: My Lords, I quite agree with the noble Lord, Lord Rathcavan, that it is a bad thing that this country should be in the economic situation which we inherited from the previous Government.
SEVERAL NOBLE LORDS: Oh!
LORD BESWICK: And, of course, the position of gilt-edged reflects that economic position. Our task is to get the balance of payments right, when there will be repercussions in the gilt-edged market. The noble Lord also asked whether it would be possible to have some alleviation of taxation, and he put forward the very constructive idea of an advertising campaign. I will bring both of those suggestions to the attention of my right honourable friend.
LORD BYERS: My Lords, on the question of an advertising campaign, may

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I ask what the small saver has done to deserve this threat?
LORD BESWICK: My Lords, I am not quite sure what the noble Lord is getting at.
LORD BYERS: My Lords, why encourage people to buy stocks which will continue to go down under this Government?
LORD BESWICK: My Lords, I think it would probably not be a bad idea if there were some campaign to offset the vigorous campaign that one sees in the Press seven days a week, and especially on Sundays, denigrating gilt-edged.
LORD BYERS: My Lords, the noble Lord is being very unfair. This is not denigrating gilt-edged. The state of gilt-edged is a reflection of the confidence that people feel in the Government.
LORD BESWICK: My Lords, I thought I opened up with a statement, which did not attract a lot of support from the Benches opposite, that the state of the gilt-edged market reflects our economic position generally, which we have not as yet put right.
VISCOUNT ADDISON: My Lords, will the noble Lord consider taking steps to inaugurate a small, cumulative sinking fund for the purchase and drawing of these undated stocks, and so help bolster the price of them over a period of time?
LORD BESWICK: My Lords, that is one of a number of similar proposals which have been made and which I will see are considered by my right honourable friend.
LORD BALOGH: My Lords, does my noble friend realise that the suggestions coming from the opposite Benches are in strict contradiction of the policies enunciated in another place by the spokesman on finance, and will inevitably lead to heavy inflation in monetary circulation, which is the bugbear of the Conservative Party in the Lower House?

THE FORD DISPUTE
LORD BESWICK: My Lords, at a convenient moment after half-past three my noble friend the Leader of the House will be making a Statement on the Ford dispute.

TECHNOLOGICAL CO-OPERATION IN EUROPE
2.54 p.m.
THE EARL OF BESSBOROUGH THE EARL OF BESSBOROUGH rose to call attention to progress in European technological co-operation and to the areas in which further joint projects Papers. The noble Earl said: My Lords, I am grateful to the House for allowing this Motion to go forward this afternoon. I had been hoping we might have had a debate on Marine Science and Technology and the Sea Bed, but as I think the Government's Report has not yet come out we certainly would not have had time to study it by this afternoon. I regret that there has been a long delay in its publication. The Prime Minister promised in another place that it would be ready by last summer's Recess, but now it comes as a kind of Easter egg a year later. I hope that it is a good egg—it is long overdue—and not infertile. A lot of us who visited the Oceanology Exhibition at Brighton at the end of last month would have been glad to have had then a more precise idea of what had been going on in the various marine establishments and in industry. However, now that the Report is about to be published, I hope that we shall be able to have a debate on it after Easter, and I am glad that my noble friend Lord Jellicoe has agreed to take over this Motion.
Since I put down the Motion for discussion to-day, noble Lords will no doubt have seen that an important book has been published, entitled European Advanced Technology—A Programme for Integration by Mr. Christopher Layton. It certainly makes very interesting reading in conjunction with M. ServanSchreiber's The American Challenge. Although it is filled with a wealth of most useful information and is necessary reading for anyone studying the subject, I should however say that, while I agree with a great deal of the book, it has perhaps a certain doctrinaire aspect about

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it which does not enable me to go the whole way with the author. But I do not want to over-emphasise this point, for I think it is in many ways an admirable and most useful work and I am glad that it has come out so conveniently—and, to me, unexpectedly—in time for our debate.
During the past months, partly in preparation for this afternoon, I have paid visits to Brussels and Germany, to France and Scandinavia. My inquiries have been directed mainly to the subject which we are to discuss to-day. What I have to say first concerns the standing of this country on the Continent, as a result of our Government's attitude to certain European technological projects. I am sorry to have to say what I have to say now, but I am getting it over early. I refer particularly to the Government's doubts about the Concorde, to their withdrawal from the ELDO "B" project and to their decision not to contribute to the CERN giant accelerator. How glad we must all he that the Concorde has now flown successfully, and I know we should all like to congratulate the firms concerned, whose long labours have made this possible, and to wish them good fortune. But if certain members of our own Government had had their way, it might never have flown.
I can only say that as a result of their attitude to these three projects the Government's name on the Continent is not exactly sweet-smelling. Officials with whom I have talked and discussed these matters in France, and in Germany, too, have said that the word of an Englishman can no longer be trusted. The Government's earlier doubts about the Concorde put the project in jeopardy in 1964–65 and made the French very unhappy. But our attitude over ELDO and, perhaps to a lesser extent, over the 300 GeV accelerator have made not only the French in Europe suspicious of our word, but also some of our other partners, too. They cannot understand how, at a time when the British Government were advocating closer co-operation, we should decide partly to withdraw from existing co-operative projects. It is very much a case of the Government not practising what they preach, and I am not surprised that many Europeans are sceptical about our Prime Minister's fine words concern
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ing a European technological community. They thought that our reasons for withdrawing must be political. Whatever my personal views were—and I told them that of course I could not support our Government in their attitude—I assured my European friends that I understood that the Government's policy in these cases was based purely on economic and financial grounds. But this did not seem to convince them; and what the French, some Germans and some others, too, have said to me privately behind the British Government's back is not reassuring.
When, therefore, I discussed with officials in these countries the possibility of going in for other joint projects, perhaps less costly than the Concorde or ELDO or the giant accelerator, I was asked whether I considered, as a member of the Opposition in Britain, that they would be justified in joining with a British Government whose record in international relations had been so unreliable. We know what the attitude of our EFTA partners was over the import surcharge, and some of our other partners in the two European projects I have mentioned wonder whether, on the basis of the present Government's broken agreements, they would be wise to go in for further joint projects with us in the future. They might agree that ELDO was not the perfect organisation, but if it did not exist they feel that we should none the less have to create something of the kind. Only multi-national co-operation of some sort would justify the very high research and development costs of such projects.
In other spheres—in particular, oceanography, but in many others, too, like electric cars, air and water pollution, and noise abatement: all subjects of very great concern, especially in the more developed countries in the world to-day—I asked whether we might join them. But in view of our Government's past record some European friends hesitated to give an unqualified, "Yes". Indeed, I came away from some of my talks with the impression that even with these more modest, less costly research projects Britain would not make important progress in integrating her efforts with the Continent while the present British Government were in power.
However, having said this, more in sorrow than in anger, and having got it

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off my chest, I should say that most of the Europeans I met would then add that, despite their present doubts, Britain was in principle a country with which they would wish to co-operate, because they thought we had much to contribute. And in all fairness I admit that certain joint projects with the French look as though they may be successful. I think in particular of the Jaguar strike trainer and the Martel missile, with its television eye. We hope that the Concorde will prove a success, too, as well as the range of helicopters which we are also developing with the French and where they have much to contribute themselves.
What the possibilities are for a multi-role combat aircraft I am not certain. I read in yesterday's Daily Express something to the effect that, with President de Gaulle's backing. M. Dassault, whose company developed the Mirage G fighter, had made a package offer to the Germans on an advanced version of his plane if they dropped the M.R.C.A.; and there is a further reference to this in an article by Mr. Chapman Pincher in the Express to-day. I should be grateful if the noble Lord would comment on these reports. I shall also he interested in anything he can tell us about the state of play in regard to the European air-bus and, of course, the Anglo-German swing-wing plane.
LORD CHALFONT: My Lords, I am sorry to interrupt the noble Earl, but I did not get quite clear what he was asking, and I should like to get it clear so that I can answer it. I missed my Daily Express this morning—a most unusual thing—and I wonder whether the noble Earl could tell me what this story is and to what particular project it refers.
THE EARL OF BESSBOROUGH: My Lords, as I saw it in the Daily Express—I have it here, but I know what they said both yesterday and to-clay—they said yesterday that, with President de Gaulle's backing, M. Dassault, whose company developed the Mirage G fighter, had made a package offer to the Germans of an advanced version of his plane if they dropped out of the multi-role combat aircraft. Then, again, in a very prominent feature article today, also in the Express, it was said that the R.A.F. would probably now he ordering, or might well be ordering, the Mirage G. and that we should not be going ahead with the
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M.R.C.A. I should be grateful if the noble Lord could tell us something about this.
I am glad, too, that after an initially lukewarm reception the Government seem now to have become enthusiastic supporters of the proposed European Molecular Biology Organisation, EMBO, which I hope will follow the form of CERN. It seems generally accepted that molecular biology as it relates to the secret of life and the way in which inherited characteristics are transmitted—a subject still of considerable interest to a number of your Lordships—promises to be the growth basic science which will take the place held by high energy physics after the Second World War; and I agree with a recent editorial in the New Scientist that this European "centre of excellence" promises incalculable returns—certainly greater than those expected from the CERN accelerator.
But co-operative efforts on the Continent are now proceeding apace in other fields, too—and, I might say, without us. Less glamorous and expensive, perhaps, but none the less important, the Maréchal Committee of the Six, now presided over by M. Aigrain, is at the moment creating seven sub-groups: one in computers; the second in telecommunications; a third in transport; a fourth in pollution, of air and water and by noise; a fifth in oceanography; a sixth in metallurgy and a seventh in meteorology. I understand that this Committee have now agreed that one national centre in each of these fields should be the pilot institute which would co-ordinate and guide the work of all others working in the same fields in the other five countries. There is no question. therefore, of forming new establishments, only of co-ordinating the work of existing ones; and from what I heard recently in Paris, progress is encouraging.
Despite the attitude of some of our Continental friends that Britain may not be a very reliable partner in joint projects of this kind, it is, I hope, still the intention of the Six to let us and the Swedes and a few other countries outside the Six co-operate and play our part in this work. I certainly hope so, for it is in my view a matter of urgency if we are to keep pace with the peed of American developments. Far greater, continuous and consecutive attention to

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what is being done on the Continent is, I believe, an urgent need. Some organisation—and I hope that we may belong to it—must, I think, work out European priorities and make some assessment of the pay-off in each case.
My noble friend Lord Newton, in the debate in your Lordships' House on the Motion moved by Lord Byers, stressed the dangers of air pollution. I should like to support very strongly what he said. I believe we are reaching a serious and alarming point in the pollution of the earth's atmosphere, and that research in this matter should have a high cooperative priority. Many other countries think so, too. And in regard to water pollution, I was greatly disturbed by the recent Observer report on the incidence of DDT on the fauna in the Baltic. There are a number of other fields in which I consider that increased co-operative research and also development would seem desirable. I have already mentioned electric cars. The French are certainly working on this, as are also the Swedes, who have done useful work on batteries. Then, too, I still wonder whether vertical take-off and landing aircraft should not be developed on a bilateral or multi-national basis, for the research and development costs on this are still very high. I recognise that we in this country have a tremendous achievement to our credit in the VTOL Harrier aircraft, which I hope other NATO countries will be ordering.
In computer applications and programming machines we know, of course, that we in this country have created an important monopoly in International Computers Limited, and I gather that the Germans, too—Siemens and Telefunken—are thinking of merging into a national monopoly there. How far it may be possible for us to get together on computers is a matter of considerable interest. Even if we are ahead of the Germans in some aspects of computer electronics, I still think we should go in with European partners who have a reputation for reliability and decision-making, as well as for reasons of increasing our markets. We should thus both benefit.
I also believe that there are possibilities for joint research in desalting water, in boilers, blowers and membranes. We know that we lead in flash distillation
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plant, but the Americans are catching up, and I think there is a good case for our having European partners in this field. Flash distillation is not the only method of desalting water, as we know. There are various other methods, using membranes, and also the freezing method. The Atomic Energy Authority is conducting research in these methods, but I still think it would be in our long-term advantage to have European partners, when it comes to the export of plant to Europe and the developing countries overseas. There may also be a good case for applying the same principles in low-temperature research, in semi-conductors, in hydraulics and in solid state physics, as well as in technological agriculture and ecology. Many of these projects might be on an inter-company basis, with or without Government support.
But there are also areas where Government assistance would indubitably be necessary; for example, in economic nuclear-powered container ships, in oceanology, in cosmology and in solar heat applications. In regard to nuclear container ships, I was fortunate last October to be invited by Dr. Stoltenberg, the German Minister for Science, to go on the maiden cruise from Kiel of the "Otto Hahn", which is the German nuclear-powered ore carrier. Although this ship represents, I think, a considerable progress over the United States ship "Savannah", and although our wealthy German friends may feel that they can build this kind of ship, and perhaps a second one, on their own (with, of course, some assistance so far from Euratom), I found that some German industrialists felt that this was an area in which the ship-builders and shipping companies in more than one European country should get together in the future; for there seems little doubt that in ten years or so nuclear container ships carrying meat, say, from Australia and New Zealand to Europe, will certainly prove successful. But research and development costs will continue to be high and I think that we should share them.
Above all, my Lords, I believe that in any joint organisation or consortium it is essential to have a single person in overall charge and that this is particularly true in international collaborative projects. Had my noble friend Lord Caldecote not been obliged to be in America this afternoon, he would, I know, have stressed

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this point. Too often it is assumed that a committee, properly balanced between the different countries involved, is an adequate substitute for a proper management set-up. But such committees may have disastrous results. It is often said that a camel is a horse designed by a committee. It may be a useful beast of burden but it will not win a Derby. I know that my noble friend believes that research activities are an excellent field for technological co-operation; but the principle of single overall control must be applied and Governments must have confidence in management in order to make long-term commitments.
My Lords, co-operative development may be more difficult. ELDO has no doubt suffered because it had no clear commercial objective. We might have hoped that communications satellites would provide this objective, but it has not worked out quite like that. While on the subject of space, may I ask the noble Lord the position in regard to the merging of ESRO and ELDO into one single European Space Authority? We have been advocating this for years now from these Benches in both Houses. I see from an Answer given by the Minister of State in another place on March 5 that the Government have had a series of conversations with the President of ELDO about this matter. I hope that the noble Lord can amplify what Mr. Mallalieu told my honourable friends last week. I wonder whether we should not propose the formation of some kind of European oceanological organisation. This would not, of course, be in the least exclusive, in the sense that it would not preclude full co-operation with other countries in the world. Indeed, if we could bring our own bits and pieces in Europe together I think it would facilitate co-operation with other countries, with or without oceanic seaboards.
The principal troubles in co-operative development are the delays and inefficiencies caused by excessive nationalism. This type of co-operation can be effective only if the Governments concerned believe that co-operation will give the best results for their country. But if, as happens too often now, co-operation is supported in principle simply as a device to strengthen their own country's position in a field, that co-operation is unlikely to be effective in strengthening the European technological base. The fact is
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that in the absence of determination to overcome the inevitable difficulties of co-operation, commercial success will be virtually impossible to achieve and we shall have to continue with the better, though not ideal, alternative of each country doing the best it can in a fully competitive atmosphere. Here, may I say, for the hearing of possible European partners in the variety of fields that I have been mentioning, that whether in inter-company or intergovernmental efforts there has to be a common will to achieve a useful result. There is no point in lecturing the British on the grounds that they do not "think European" while, at the same time, manœuvring on a nationalistic basis to obtain an advantage over us.
The fact is, my Lords, that if European technological co-operation is to advance very far we must all be honest with ourselves about what our best contributions are likely to be and where the other partner or partners are likely to be better. I say this in no idealistic mood but simply because only in this way are we likely to be able to achieve the lead times and sales techniques equalling those of the United States. It is this that will ensure Western Europe, as a group of neighbours in a small world, a prosperous position in the world markets of the 'seventies and the decades of our children.
Above all, I hope that in certain specific areas inter-company co-operation can be developed perhaps on the model of Internuclear, in which firms in this country, T.N.P.G., and firms in Germany, Belgium and Italy have now joined to build—probably on the Belgian-German frontier—a high-temperature gas reactor based on the E.N.E.A. Dragon at Win-frith. Efficient as I believe our own advanced gas-cooled reactors and the steam-generating heavy water reactor are, the fact remains that we have not been conspicuously succesful in selling these types abroad; and this sometimes makes me wonder whether in the case of the fast breeder reactor, too, we should not also have European partners. We know that, although our potential partners are not as far ahead as we are in this field, the Germans and the French one also spending very considerable sums on fast breeder development and there must surely be advantages in our combining our efforts, perhaps by agreeing to let our

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own fast breeder prototype at Dounreay become a European reactor. I feel that our prospects of selling new types of reactor in other European countries would be very much more promising if we did so. We have heard a lot of talk of Europeanising Capenhurst. I should be interested to hear the Government's views on Europeanising Dounreay, too.
In connection with nuclear consortia, I hope the noble Lord will be able to tell the position regarding the AngloGerman-Dutch gas centrifuge project. The Times reports that agreement was reached yesterday to build three centrifuge plants in Britain and the Netherlands; although the previous day it was reported elsewhere that these negotiations were running into troubles. I should be grateful if the noble Lord could tell us what is the latest situation, particularly in relation to the ratification of the Non-Proliferation Treaty.
My Lords, while in no way disparaging co-operation with North America, and indeed the U.S.S.R., on some of these subjects—on the contrary, in some cases, such as pollution, I think this is highly desirable—I feel that there is a strong case for closer ties with Continental European countries in certain research and development projects. That is why I set down this Motion this afternoon, and I hope that the Government will agree that, even if we cannot achieve the kind of overall political solution which the noble Lord, Lord Gladwyn, has advocated, and may well advocate again to-day, some further down-to-earth co-operative possibilities are worth pursuing actively. Individual countries of Western Europe are so accustomed to thinking in terms of their own possible achievements in isolation that they seem to fail to realise the probable requirements of Western Europe as a whole within the next decade. The Americans do not make this mistake.
In other words, if Europe, with Britain, is to remain among the foremost areas in the world it must appreciate the potential size of its market. Firms like Shell, I.C.I. and Unilever are already thinking in this way; but there are very few of them. A factor which should be emphasised here is the probable growth of European populations. We get so accustomed to marvelling at the expansion of the giant populations of China,
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India, Brazil, and so on, that we forget the size of the natural increase in Western Europe and what this means unless standards of living are to be allowed to deteriorate, something which is politically inconceivable. Three great blocs have emerged in the world: in North America, the Soviet Union and China. In view of the way in which these great Powers are separately integrating their research and development effort, surely all those neighbouring countries in Europe, geographically so close to one another, should coordinate their activities, too. I am not advocating the setting up of a Fourth Force in the world, but the creating of circumstances in which it will be easier for Western Europe as a whole, and certain friendly countries overseas, in the Commonwealth and Japan, to co-operate in these fields with other zones. My Lords, I beg to move for Papers.
3.21 p.m.
LORD GLADWYN: My Lords, first of all I should like to congratulate the noble Earl, Lord Bessborough, most sincerely on his initiative in raising this great subject to-day and thus permitting the intervention of the many acknowledged experts on the subject that we observe in our list of speakers. Having said that, my Lords, I should hastily add that I think I am literally the only one with no expert or detailed knowledge of any of the great problems involved in what is known as advanced technology, or even any detailed or expert knowledge of the multifarious organisations concerned. I must even confess to having certain doubts about the general direction in which we are now all being led by the scientists.
My Lords, shall we really be better off or happier when we are hurled about the world at supersonic speeds; when everybody can see and hear what is happening at any moment of time in any corner of the globe; when all our factories are automated; when, thanks to computers, we no longer have to read or write; when there is no more countryside; when our roads will be impassable; when we can all live to be about 200 by buying other people's organs; when babies are produced in test tubes; when romantic love between the sexes is regarded as a sort of infantile disorder and when we can spend days or months in hopeless and encapsulated boredom on our way to

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the uninhabitable planets or even to the dreadful, desolate moon? I must say, my Lords, that I doubt it.
But still, if that is to be our fate we cannot do much to prevent it. It is something which is, apparently, inherent in our modern type of society. We might, I suppose, in so far as we British are concerned, desperately try to avoid it by breaking up all the machines and becoming a nation of Luddites. But that might be even worse. The thought of the British in the year 2100 or so becoming something like the Navajo Indians, practising their curious old customs in native reserves and gazed at from their helicopters by rich tourists from overseas, is hardly encouraging. Yet, my Lords, exaggeration apart, this is something that could begin to happen by the end of this century if we do not look out.
There is, after all, no lack of evidence to this effect in the papers which the noble Earl, Lord Bessborough, has so kindly circulated and which, with all my ignorance, I have clone my best to absorb. According to the authoritative Report of what is called the Business and Industry Advisory Committee of O.E.C.D., unless a successful effort is made shortly to co-ordinate and streamline European production in the sphere of advanced technology generally the Western European countries will, over the next ten years, lose orders of something like £10,000 million, and quite possibly more. It is thus indeed difficult to avoid the conclusion so dramaticaly brought out, as we all know, in M. jean-Jacques Servan-Schreiber's recent book, that by about 1976—and that is not very far away—they will be completely at the mercy of the United States of America. Unless indeed the various national industries in Europe combine, the Western European countries simply will not have the means—this is what M. Servan-Schreiber brings out—with which to finance the essential research and development, if they are to compete with the industries of the super Powers (and Russia may be in that category by that time) which will by then be able to produce the latest models that the Europeans will be forced to buy. Even if these are produced in Europe under licence the situation, as I understand it, will be little better since the real know-how and the capable management will, naturally, remain on the other side of
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the ocean. Under any showing therefore Europe would be hound to be in the second rank, if that, and the disparity would be bound to get worse as time goes on.
Even now the Japanese, so I read, are on their way to entering what is called the "post-industrial" phase. The danger, therefore, is that the Europeans, provided that they really cannot unite, will not only not reach this phase, but may even one day replace the so-called underdeveloped countries as the hewers of wood and drawers of water. But it is not only to avoid this fate or even, as it were, to "keep up with the Joneses" that I should like to join what I hope will be the great chorus to-day urging the Governments concerned, or as many of them as will, to come forward with real plans for ending what is an absurd and indeed, as I think, a suicidal state of affairs. For it must surely now be evident that the creation of some kind of political entity in Western Europe is the surest, and perhaps the only way, to achieve a real détente and end the dangerous confrontation of two super Powers on the Elbe.
In the Soviet-American dialogue which may well now be impending, the possible creation of such a body as this would seem to be the only feasible means, of achieving not so much the reunification of Germany (what exactly is "Germany" after all?) as tolerable relations between the Western Germans, successfully embodied in some greater whole, and their Eastern brothers who would still be, as it were, in special relationship with the Soviet Union. By such means as these the two super Powers might come to some kind of enduring relationship which they might in any case be induced to achieve owing to their common distrust of China. If, on the other hand, Western Europe remains weak and divided, it is not clear how the Americans could ever contemplate taking the risk of any withdrawal of their armed forces. I am sorry for the apparent digression, my Lords, but I thought it very material to the case a am putting forward.
We might even reflect also on another point, that there are perhaps certain enduring civilised traditions in our old Continent which, if we came together, could with advantage be maintained for the purpose of, as it were, mitigating the

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full rigours of the technological revolution to which I referred at the beginning of my speech.
So, my Lords, what is needed to achieve greater unity in the, after all, highly important, perhaps even vitally important, technological sphere? The answer in general terms is obvious. We have only to read our papers. Thus Mr. Robert Maxwell in his, as I think, wholly admirable report to the Council of Europe last September, after recalling the chief weaknesses of the present system, which we all know about—too many organisations achieving too little; no possibility of adjusting the total output according to objectives or priorities; no machinery to bring the private sector into play—put forward the possible solution of what he calls a "high level European Council" dealing with all existing organisations and then came up to his final conclusion, which I venture to quote. What he says is this:
"In the last analysis, only a surrender of some sovereignty can possibly get over this inherently great difficulty of Europe, which leads to endless delays and passing up of real technological opportunities. The better the organisational structure, the more smoothly the Council functions and the readier States will be to give up their sovereignty to it and without some such surrender it is impossible to carry out any work. Without some such surrender of sovereignty—which I express as not requiring unanimity in the Council—progress is impossible."
Well, my Lords, if you work that out, you will see that if unanimity is not required, what Mr. Maxwell is suggesting in fact is weighted voting. It is that, therefore, that he regards as absolutely essential if any progress is to be made.
It seems to me that nobody who has read this report with attention, nor anybody who has read the recent work of Mr. Christopher Layton—who we all hope will soon be a Liberal Member of Parliament—can come to any other conclusion than that Europe cannot make efficient use of its resources unless it develops Community-style institutions. Nobody, in other words, can possibly doubt that what is absolutely necessary, and necessary now, is some form of weighted majority voting in at any rate some technological spheres and in certain existing organisations. It is also evident that even in advance of such a decision on weighted majority voting in certain spheres, real
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progress could be made by the general adoption of the device (for it is a device) of an Independent Commission, not necessarily with any powers of its own but composed of persons owing no allegiance to any one Government. That is the point.
In his second presentation at Strasbourg last January, Mr. Maxwell said:
"The only way to make real progress in European space matters will probably be, to begin with, by the setting up by the Ministers of a European Space Commission consisting of experts, nominated by the Ministers themselves, preferably by some form of qualified vote, who would not receive any instructions, but, on the contrary, would be under an obligation to consider all problems referred to them by the Ministers from the point of view of Europe as a whole. Eventually the Ministers themselves will have to adopt a qualified majority voting system in any case, but the first step in this direction would be the promotion of a European Commission on the lines I have suggested."
Some may criticise Mr. Maxwell, but nobody has ever accused him of being a starry-eyed visionary, and, indeed, he expressly disclaimed any such qualification in his speech. But if he supports this idea of a Commission, I cannot see why Governments should apparently think that it is an impracticable proposal. Yet your Lordships will see, if you consult the Record of our debate on March 4 on the situation arising from the "Soames Affair", that when I asked the noble Lord, Lord Chalfont, whether he thought that he could make substantial progress towards integration in fields outside the Community Treaties of Rome and Paris without the introduction of techniques such as weighted majority voting, he replied:
"Yes, I believe that progress can be made and I believe that it is already being made. It is made in the steps which we have taken in the W.E.U."
It seems to me, and I hope that it will seem to your Lordships, that in adopting this attitude the Government are not only flying in the face of all really expert opinion; worse still, they seem—and I say only "seem"—to be deliberately throwing away the real chance which they still have of breaking with our sad, nationalist or Gaullist past and taking the lead with proposals which, if put forward by them, might at long last result in the formation of a genuine European Community. Such proposals might of course be put forward in the

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W.E.U., though, as we all know, no decision can be taken by that body without unanimous consent. Or they might conceivably be floated in diplomatic circles. But the obvious place, surely, to try them out would now seem to be in the so-called Monnet Committee, the "Action Committee for a United States of Europe".
In the communiqué which was published this morning, the second section reads as follows:
"Following the same method, the Committee intends to draw up proposals concerning political integration, including defence, which is indispensable for the completion of European unity. It will submit these proposals to the Governments."
Our representatives on that Committee include Mr. Walter Padley, Mr. George Brown and Mr. Michael Stewart, the Foreign Secretary himself. So now I imagine that the Government, if they will, have an opportunity of putting forward really constructive and far-reaching proposals in this forum and then seeing that they are adopted by everybody, except, presumably, the Gaullists. The great thing is that the Government should not take the line which I am afraid they have taken until now, that "We will agree with anything that all the others agree to but will actively come out with some ideas of their own.
Once again, therefore, I urge them to reconsider their present rather negative policy. Once again I suggest that they, and also the official opposition in which, alas!, the Gaullist infection appears to be rapidly spreading, should associate themselves with what I firmly believe are the forces of the future. This great issue, as we all know, cuts clean across normal Party allegiances. So let all those who believe in a European Community rather than in a Europe of States now stand up and be counted. If they do, we might have some chance of progressing with European technology generally. But for so long as they do not, however good the intentions of Governments may be, little or no progress will be made.

FORD MOTOR COMPANY DISPUTE
3.40 p.m.
THE LORD PRIVY SEAL (LORD SHACKLETON): My Lords, with your Lordships' permission, I should like to repeat a Statement that is being made by my right honourable friend the Secretary of State for Employment and Productivity in another place on the present situation in the Ford dispute. Noble Lords have probably also had an opportunity to study my right honourable friend's Statement in another place on Monday. To-day's Statement is as follows:
"Since I reported to the House on Monday, talks with representatives of the unions and of the Ford management have continued at my .Department.
"In these discussions the unions represented unanimously to the Company that the continuing possibility of legal action against the T. & G. W. U. and the A.E.F. was an obstacle to a return to normal industrial negotiation. In view of this, the company yesterday gave an assurance that they would not pursue further legal action and so instructed their legal advisers.
"In the subsequent talks the unions put forward yesterday—I understand by a majority decision—the following demands as prior conditions for a resumption of work;

(1) Implementation of the pay increases and related provisions of the package deal but with the dropping of the so-called penalty clauses;

(2) Withdrawal of a provision in the package deal that the unions should give 21 days' notice of constitutional strike action;

(3) An indication that the Company would improve the pity increases provided in the package deal following a return to work.

"The unions also indicated that in the subsequent negotiations they would wish to query certain points in the provisions of the package deal setting out guide lines for the introduction of productivity improvements.
"For its part, the company has taken the line that it is prepared to re-negotiate the package deal but only within

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the agreed negotiating machinery following resumption of work. It has pointed out that, since the package deal negotiated last month has been implemented from March 1 at the request of the majority of the trade union side of the National Joint Negotiating Committee, some 7,000 Ford employees who are still at work are already enjoying its benefits. The company therefore proposed that resumption of work should take place on the basis of the new deal on the clear understanding that the company would immediately negotiate with the unions the substitution of alternative provisions for any clauses not found acceptable. Alternatively, the company was prepared to revert to the previous agreement reached in 1967 as a basis for resumption of work and enter into immediate negotiations for the production of an entirely new package deal. This morning the trade unions rejected these proposals from the company, again I understand by a majority, and the talks have therefore broken down.
"The House will I am sure share my profound regret at this outcome and my deep concern at the continuing serious loss of production and exports. My Department will, of course, continue to keep in close touch with both sides and will be ready to help at any time when this seems possible."
EARL JELLICOE: My Lords, I am sure your Lordships are grateful to the noble Lord the Leader of the House for repeating this Statement. I certainly do not wish to say anything that would in any way exacerbate what I feel all of us believe to be a deplorable situation. It is deplorable in terms of lost production and in the forced idleness of many workers who, I am convinced, would be only too glad to return to work. It is deplorable in terms of lost exports at a critical period in our attempted climb back to economic recovery. It is deplorable also in the light of the possible threat of lost investment in this country in a very important sector of our economy. I must say that I deeply regret to have this confirmation, that what would appear to be a very reasonable offer on the part of the company has been rejected, albeit by a majority vote.
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I should like to ask the noble Lord two questions. First, is there not a case, in the light of this deplorable situation, for the Government's introducing rather earlier than their present programme would appear to allow the trade union legislation which they have in mind? Secondly, do not these deplorable events reinforce the case for making contractual agreements voluntarily arrived at between management and the trade union side legally enforceable?
LORD BYERS: My Lords, this is indeed a depressing Statement on a very depressing situation. I would express the hope that Her Majesty's Government will not remain inactive in this situation, and that they could perhaps put their emphasis on persuading the unions that it is in their own long-term interests to honour the present agreement, to return to work, and immediately to start new negotiations, as the company has suggested, for a new deal. Can it be put to the unions that if there is no intention to honour this present agreement, but merely a desire to try to pick out the best parts of it, no management could ever agree to negotiate a new agreement, which might suffer the same fate? I put this forward as a possible suggestion. I hope that we shall not have any inactivity here. I realise the tremendous job that the Secretary of State for Employment and Productivity has, but I am sure that if she could have one more go at the unions on these lines we might get some results.
LORD SHACKLETON: My Lords, I appreciate noble Lords' not pressing me hard at this moment. Clearly, in a matter as delicate as this the less I say, not being the Minister actually in charge of this situation, the better. I agree almost wholly with the remarks of the noble Lord, Lord Byers, and I agree with the noble Earl, Lord Jellicoe, except in relation to his latter remarks. Next Tuesday we are to debate the Government's White Paper, In Place of Strife. In relation to the making of binding bargains, there was nothing in this particular instance, which is not an agreement entered into with an employers' association, to prevent the parties, if both sides had agreed to do so, from making the agreement legally binding. But I think the noble Lord, Lord Byers, was on to an important

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point. Although I must not quote what Mr. George Brown said in another place, noble Lords will know what he said, and they will know that my right honourable friend entirely agreed with him that progress in the improvement of industrial relations must depend on the honouring of agreements that have been entered into.
I would say that my right honourable friend is showing her usual tremendous energy, and her officials are hard at work in this delicate business of attempting a conciliation. Therefore I will not say any more, other than that I think the House is quite right, as indeed is the country, to look with alarm and anxiety at this very dangerous situation.

TECHNOLOGICAL CO-OPERATION IN EUROPE
3.48 p.m.
Debate Resumed.
LORD CHALFONT: My Lords, to return to the question of technological progress in Europe, we have listened to two interesting opening speeches, one which dealt almost exclusively with the technical technological aspects of European co-operation, and the other, from the noble Lord, Lord Gladwyn, which dealt more with the political framework within which this technological progress might take place. I would say at once that I do not propose to take up all the points made by the noble Earl, Lord Bessborough. His speech was characteristically detailed and comprehensive and he brought up a great many points about joint projects in technological matters. I should like to take up some of the more important points, and to leave the others to when I come to wind up the debate (if I may do so with the leave of the House), and to weave the whole thing together into some kind of pattern.
So far as the speech of the noble Lord, Lord Gladwyn, is concerned, I thought that he painted a rather gloomy picture of the future of the world in the dread grip of the scientists. It sounded to me rather like one of those Peter Simple columns in the Daily Telegraph. But he went on to disclaim any intention to be a Luddite in these matters, and so I acquit him of the worst suspicions that I entertained
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when he started to speak. I entirely agree with the noble Lord, of course, about the doubtful future that we must have in Europe if we cannot do some of the things that he and the noble Earl outlined. I agree with him, too, that if we are to have a strong Europe, technologically, economically and politically, it is necessary to accept that we must all be prepared to give up some of our sovereignty. There is no doubt in my mind that if we are to move forward in the international field, whether in Europe or in broader international fields, we must at this stage in our political development be prepared to accept that the nation State is not the final element in the political structure, and we must be prepared to see our national sovereignty eroded in the cause of international co-operation.
When we consider the European scene, particularly, as we are invited by the noble Earl to do to-day, one of the most important factors we much consider, I think, is one that he has mentioned: that we live to-day in a world in which super-Power blocs are predominant. He mentioned the three that most people would identify as being those in which most of the great political decisions of the world are taken. Certainly such decisions are taken now in the United States and the Soviet Union, and I agree with his implication that quite soon they may be taken also in the People's Republic of China, which I believe will be a super-Power before many people are prepared to accept. In practically every field of activity, political, military, economic, technological, those super-Powers now predominate, and this seems to me to be the real case for the strengthening of Europe. It is not only a question of creating a single market; it is also a question of building a Europe that is united and integrated in all fields, especially perhaps the political one. Here I go a long way with a number of things that the noble Lord, Lord Gladwyn, has said, although, as he will know, not all the way.
We regard the enlargement of the present Communities in Europe as being the best basis for this kind of integration, but as practically everyone who can read will know, there is a veto on the enlargement of those Communities. We are concerned, naturally, that while that pathway is blocked the whole of Europe should

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not be paralysed, and we are determined that it should not be. We have therefore been looking for other ways of moving forward, not only in the political field but in military matters. and also in the field that we are specifically considering to-day, the field of technology. I am therefore grateful, as I am sure all your Lordships are, to the noble Earl for bringing this matter forward for us to look at, albeit briefly, to-day.
Perhaps I may, in a very few minutes, recapitulate the political story that has brought us to where we are to-day. After the French veto to which I referred, of December, 1967, a series of proposals were drawn up by the Ministers of the Benelux countries, and these were formally presented to the other members of the European Community and to the four applicant countries in January, 1968. One of the provisions of the proposals was that joint action should be undertaken in fields not covered by the Community Treaties—that is to say, by the Treaties of Rome and of Paris—and the number of people to participate in these joint activities would of course vary according to the project. One of the fields of projects specifically mentioned was that of technology.
The then Foreign Secretary announced our acceptance of these proposals, which would have allowed us to go forward in technological and other co-operation, at a meeting of the Western European Union in January, 1968. In February, 1968, the Italian Government played its part in this process by circulating a memorandum, of which we were given a copy; and although it was similar in a number of aspects to the Benelux proposals, it gave prominence to, and isolated, a number of these proposals. At the next meeting of the Western European Union, which took place in Rome in October, the Belgian Government made its contribution, when Monsieur Harmel took up one of the themes of the Benelux proposals. He put forward suggestions for co-operating in fields not covered by the Community, and specifically he proposed co-operation and consultation in the fields of foreign policy and defence. But he mentioned—and this was discussed at some length at the meeting which I attended in Rome—the very clear possibility that other areas, monetary policy and technology, might be added at a later date.
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So, as a result of that and of a meeting which took place in the margin of NATO a little later, and at which the Foreign and Commonwealth Secretary was present, it was agreed that a draft paper should be produced at W.E.U., in Luxembourg, in 1969. At that meeting six delegations of the Western European Union—that is to say, all the countries present except the French—agreed to consult on important matters of foreign policy before taking decisions in that field. The possibility of consulting on other matters, including technology, was left open for later discussion. So that is where we stand at the moment. We are going forward inside the Western European Union with an obligation to consult on matters of foreign policy, and the field is left open for consultation of a similar kind to take place in that forum on technological matters.
In the meantime, of course, as the noble Earl has mentioned, there are already two important projects going on inside the Common Market, to which I think we have every hope of being invited to accede, or at least to take part in. The first is what used to be called the Marechal Group—now, as we have been told, called the Aigrain Group, because Monsieur Aigrain has taken over its chairmanship from Monsieur Marechal. This was a Group which was set up in 1965 with terms of reference to:
"investigate the problems connected with working out a co-ordinated or common policy in the field of Scientific and Technical Re search, and to propose measures for putting such a policy into effect".
This Working Group produced a report in September, 1967, and as a result the Council of the Common Market adopted a resolution, now sometimes known as the Luxembourg Resolution, which set out a programme of investigations into this field of technology.
The Marechal Group, or Aigrain Group as it now is, took those up until 1968, when the Dutch Government, as part of its programme of insisting that the applicant countries, including the United Kingdom, should be brought into these deliberations, held up the work of the Marechal Group—in fact, virtually brought it to a standstill. The Group has now resumed work and, as the noble Earl, Lord Bessborough, has said, there is a possibility that we may be invited to participate in it. As I think he will know, our position is that we should be prepared to

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consider taking part in the work of this Group if we received an invitation from the Six as a whole to do so, but only on a basis of complete equality, and not with any kind of second-class membership.
The second project that I referred to is in the field of international patents. The Member States of the E.E.C., the Common Market, approved at their meeting in March a draft memorandum which was to be sent to certain non-Member States in Europe, including ourselves, inviting them to participate in negotiating a European Patent Convention. This may not sound anything very dramatic or spectacular, but I am sure noble Lords will realise that of course it is an extremely crucial matter to be solved if we are ever going to move forward to anything like a European company, certainly any European company of a highly advanced technological type. Our position on that remains that we naturally want to see any positive move made towards harmonising patents, and we are now looking forward to receiving an invitation from the Six to take part in negotiating a Convention on European Patent, which I think will be (although, as I say, it does not sound very dramatic) a fairly important step forward. But I must say again that we want to take part as a full and equal member. We are ready to take part in any preliminary discussions that the Common Market countries may propose to that end.
Whatever may become of these invitations and of the other activities I have outlined, it is essential (and here I agree entirely with the two noble Lords who have spoken already) that co-operation in Europe should be strengthened, especially in the industrial sphere. Both the noble Lords who spoke earlier mentioned the book by M. Jean-Jacques Servan-Schreiber, called The American Challenge, and as a result of that and of other publicity given to the American technological invasion of Europe it has been suggested that Europe is virtually being colonised by the big United States corporations. I think this is an over-simplified picture, and indeed there are fields in which the United States investment works to the advantage of Europe. I do not think one ought to be too black and white about this, but certainly I agree that there are disturbing implications, and the wide differences—which are growing differences—in some sectors of
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technological capability between Europe and the United States are a matter of real concern.
It is not so much the fact that knowledge and expertise are lacking in Europe; it is not a lack of inventiveness. Indeed in many advanced technological fields I think we can claim that in this country, certainly, and in Europe as a whole, we are at least as inventive, and in some cases more so, as the Americans. What we really lack is the capacity to develop these inventions and to produce and market them quickly enough to meet the United States competition. That is the difference. I believe it is not, as it is often called, a technological gap that exists between us so much as a management gap, or the means of producing and marketing highly advanced technological equipment after the basic research has ended. The basic reason for this is that we lack a large enough market. The United States bases its advanced technological industries on a market of over 200 million. We cannot, because we are not yet integrated.
Noble Lords who have personal experience of this will know that technology-based industries have a high cost; they are labour intensive and capital intensive and all these costs are now so high. There is another factor which comes into this, which is the factor of built-in obsolescence—the speed at which advanced technological equipment becomes obsolete. All this means that if a European producer, whether he is British, French or German, is going to make investment in advanced technological equipment worth while, he must have a home market of something like the size of the American market. I do not want to take an arbitrary figure but it is probably somewhere about 200 million. If he has a market smaller than that the chances are that his operations will be unsuccessful. What we need—and this hardly needs saying after the remarks I have just made—is a home market as wide as the whole of Western Europe. It is just as simple as that, if we are going to make investment in technological projects worth while. It is self-evident that it is not until there is a widely integrated European market that we shall be able to compete on equal terms with American industry in the advanced sectors.

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Those few remarks point basically to the need for European integration, both in the political field that was outlined by the noble Lord, Lord Gladwyn, and in the economic field. But when we come on to the specifically technological field, the area to which the noble Earl devoted himself, he was good enough to admit that there is already a good deal of technological co-operation in Europe. There is co-operation within the framework of international organisations, like O.E.C.D., and of course quite apart from intergovernmental co-operation there is important collaboration between industrial and commercial firms, who talk to their opposite numbers without necessarily referring to or even informing their Governments. After all, in countries like ours and other democratic countries there is no reason why they should do so.
Then, of course, there are the numerous joint governmental projects, to which the noble Earl has already referred. As I have said, I hope he will forgive me if I do not take up each one of the points that he made because he covered practically the whole field of technological cooperation, but I should like to mention briefly one or two of the things he brought to the notice of your Lordships. I think there is very little to be said about Concorde at the moment. It is one of our major projects with France. It is perhaps paradoxical that most of our technological co-operation in Europe of a bilateral kind is with France, and the Concorde aircraft is one of our major projects. I think everyone here will know that it made its maiden flight on March 2 and now goes on to the next stage of its development. Also, as the noble Earl has said, we are co-operating with the French on the Martel air-to-surface guided missile, the Jaguar aircraft—and indeed something I think he did not mention, a series of three Anglo-French helicopters.
We are discussing with the Germans, the Dutch and the Italians the other joint project of which the noble Earl made a good deal in his speech, that is the M.R.C.A., or multi-role combat aircraft. This is scheduled to come into service in the second half of the 1970s. It is a project which is likely to involve the production of well over a thousand aircraft, and it is the largest single European col-
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laborative project in prospect at the moment. A decision whether to proceed with the next stage of this project, which is known as the "project definition stage" should be taken within the next two months or so. Here perhaps I should say that I am afraid I cannot comment very constructively on the Press report that was brought to my notice by the noble Earl, in his speech, about some kind of package deal between the French and the Germans on this project. The article concerned, which appeared in the Daily Express, has now been brought in to me and I have had a chance to read it. All I can say is that we have no official information about this; no word has come to us from our German friends, certainly, and I suspect that the idea that the Royal Air Force might find itself equipped with French aircraft is, to say the least, premature.
The next project of particular interest to which I should like to refer is the CERN project—C.E.R.N. being the initial letters of the French title of the European Organisation for Nuclear Research. This was set up in 1954 and its aim was to provide for collaboration among European States in nuclear research. Therefore its object is purely scientific, but it is a successful example of European co-operation; and its technological work, which I am assured by my scientific friends is of a very high order, is carried out in its laboratory at Meyrin in Switzerland. As the noble Earl said, this organisation proposes to build a giant accelerator with a Hower of 300 GeV. This will be the largest accelerator in the world, and in 1968 the Government announced that they had considered carefully whether or not to participate in this project. Although they recognised the scientific value of it, they were particularly concerned at the effect which taking part in this project might have on the balance of resources between high energy physics, in which, of course, the giant accelerator is an element, and other scientific activities. There is a strong argument advanced by scientists that high energy physics already gets too much of the money allocated to scientific research. We were concerned about this, and also at this time we had to take into account the implications of the devaluation of sterling. We reluctantly came to the conclusion that in the light of other commitments we could not

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justify expenditure on this very large project.
The question of the gas centrifuge was also raised. As many noble Lords will know, this is a project for collaborating in exploiting the gas centrifuge, which is a method of producing enriched uranium. This is an extremely important scientific development and the Ministers met in November of last year, and again recently, to discuss this project. An agreement on this project will of course have very considerable political significance. This is not necessarily confined to the three countries concerned.
THE EARL OF BESSBOROUGH: My Lords, may I ask the noble Lord this question? It was definitely stated in The Times this morning that agreement had been reached yesterday. Mr. Wedgwood Benn and Mr. Mulley were there and Dr. Stoltenberg and the Dutch, and agreement had been reached to set up three centrifuge plants, I think in Britain and Holland, but not I suppose in Germany.
LORD CHALFONT: My Lords, I was just coming on to that. The noble Earl beat me to it, as he so often does. I was about to deal first with his question about the Non-Proliferation Treaty, but now that he has brought up the question of the communiqué of yesterday's meeting perhaps I may deal with that. It was indeed stated that we had reached broad agreement on the structure of what is called a tripartite collaborative venture, and among those decisions, as The Times reported, and I think the noble Earl quoted from that newspaper, it has been decided to set up two joint enrichment plants, one in the United Kingdom and one in the Netherlands. The headquarters of this venture—I may not be using the exact word for the installation—will be in the Federal Republic of Germany. Later the communiqué went on to say:
"Ministers recalled their agreement at The Hague that the collaborative arrangements would have to be consistent with the policies of the three Governments in relation to the non-proliferation of nuclear weapons and to their international obligations in this field. They agreed that it would be necessary to include in the proposed agreement on centrifuge collaboration appropriate mutual undertakings and provision for appropriate safeguards to be applied in relation thereto."
I hope that what I have said will put the noble Earl's mind at rest on the
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compatibility of this tripartite collaboration and our responsibilities under the Non-Proliferation Treaty.
I would now briefly mention one or two other points—I must not keep your Lordships any longer at this stage. We have some plans afoot in Europe in the field of fast breeder reactors, which the noble Earl mentioned. There is, first of all, as he will know, a top level expert group. It is drawn from the member-nations of the organisation called ENEA, which is the European Nuclear Energy Agency, and this is considering prospects for various types of nuclear reactors known as the fast breeder reactor. On the two specific questions he asked me, the Europeanising—I am using his word although I would not necessarily use it myself—of Capenhurst and Dounreay, I think he will recall that we had discussions last year with several European countries about arrangements for assuring them of supplies of enriched uranium from Capenhurst for their civil reactors, and I think he will sea that these ideas are to a great extent, or might well be, now overtaken by the centrifuge collaboration project.
So far as the Dounreay project is concerned, whether we might turn that into a European venture or not, this subject was discussed last year again with the ENEA, the European Nuclear Energy Agency, and the discussions are still going on. So far as Dounreay is concerned, the development has reached a point where its technology is a commercial matter, and it is not a question of Europeanising it in an inter-governmental sense but really of licensing the project; and this we are discussing with a number of our European friends.
Perhaps I ought to deal briefly with the space question, although if any noble Lords wish to press me further on this subject I shall be delighted to go into it more fully when I, with leave, wild up the debate. But as the noble Earl was rather critical, albeit in a very graceful way, of our approach to European space projects, I think I ought to say this We have had our differences with our European partners and it would be foolish to try to conceal the fact. I think most of them exist because we firmly believe that space projects, like any other technological project, must be judged by purely economic criteria. I use the words "economic criteria" in a very broad, not

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in any short-term and immediate, sense. It does not seem to us to make sense to try as it were to buy political integration and political goodwill by taking part in scientific ventures which we do not believe are economically and industrially viable.
To us, the ELDO programme, the launcher programme, which the noble Earl particularly mentioned, simply does not make sense. It does not make sense for us and it does not make sense for Europe, and on both counts I think we were right to take the action we took. As I say, if I am pressed I shall be delighted to go into details later. It is quite wide of the mark for the noble Earl to suggest that we withdrew for political reasons. That view has no validity at all. In the first place, to say that we withdrew is not strictly correct, but to say that we did so for political reasons is well wide of the mark.
THE EARL OF BESSBOROUGH: My Lords, I said that we partly withdrew from the ELDO "B" project, going on to 1971. I should like to make it clear that I was not expressing views of my own; I was reporting very positive views expressed to me by officials in Europe.
LORD CHALFONT: My Lords, I take the noble Earl's point. I was making the point that I hope the noble Earl will not give validity to those views. They do not bear examination. What we did was not to withdraw but simply to decline, for good reasons which I am prepared to go into if pressed, to undertake additional expenditure. We did not withdraw from anything.
The noble Earl asked me a specific question about ELDO and ESRO and their merging, and he will know that we voted for a resolution of the European Space Conference which called for the setting up of an integrated European Space Organisation to carry out an agreed European space programme. A committee of officials has now been set up to work out a convention for this organisation by October of this year. This will be presented to the next European Space Conference, at which I expect the noble Earl will be present, early in 1970. We have nominated our member for this committee and he will attend the first meeting of the committee, which is due to take place on March 18—in fact next week.
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I am coming to the end of these remarks which I have to offer at this stage of the debate. The noble Earl mentioned the criticisms of the Government from some of our friends on the Continent. I realise that he was only reporting faithfully what he had heard, but I should like to say this—and this is the point I want to make at this stage of the debate, because it might create a framework in which later remarks could be made and against which they might be weighed. We have very strict and searching criteria of value for money which have to be applied to any project for technological and scientific co-operation. We insist that any expenditure, whether it is expenditure of money or of resources or of skill, is allocated in such a way that we get the maximum benefit from it. As a result, some of our friends have accused us of being un-European; and of course the opposite is the case. I am quite sure noble Lords will agree that it is not, and it cannot be, in the interests of Europe, whether this is a widened Europe or the present Europe, to distort the allocation of scarce resources simply in order to ward off ill-informed criticisms of being anti-European.
Where there are opportunities for collaborative ventures we are always looking for them; and I think, as I have pointed out in the (I hope) short time that I have taken so far, we have taken part, and are taking part, in a number of collaborative ventures. If any others come to light, we shall study them closely. Provided that we find them satisfactory from all points of view, we shall take part in them, or at least shall consider taking part in them. But they must be satisfactory from all points of view. It is not enough that they should be European: they must, as the jargon has it, be cost-effective; they must be industrially and economically viable. But I think that to suggest that because of this we are in some way un-European is really to be, if I may say so, quite perverse. I am sure that the people who study and know about these matters in Europe will agree that we shall be of far more use to them in Europe if we take an intelligent view of this kind of project than if we simply rush into everything just because it happens to have on it a European label.
THE EARL OF BESSBOROUGH: My Lords, I am sorry to interrupt the noble

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Lord once again, but how does he apply the cost-effective criteria ot, say, joint research into air pollution, which many people consider to he extremely important? We cannot apply cost-effectiveness to every project, I think. Would he think so?
LORD CHALFONT: My Lords, if you take cost-effectiveness in its widest sense, I think it is possible to apply to any project the criterion of what returns from this project we expect for the resources that we deploy and expend upon it. Of course, it is not always true that you are going to get back an immediate financial return. Your return might be one of some other value; and in the case mentioned by the noble Earl I think everybody would agree that if you get back a return that is of value to the human environment you probably have something that is worth the resources expended. But there must be a cost-effective factor and a cost-effective calculation made here. I only make the point that it is not enough to take part in a venture simply because it has a European label on it, and then to pat yourself on the back and say, "That shows what good Europeans we are" It may in fact show what bad Europeans we are.
LORD GLADWYN: My Lords, may I interrupt the noble Lord for a moment? Would he not agree that it is not only for each nation to make its estimate of cost-effectiveness? It is for the Group as a whole to say whether they think a project is cost-effective. What the noble Lord seems to suggest is that we should be sole judges of whether the great common European project is cost-effective or not. I had hoped that I had suggested certain means by which this could be discerned and discovered. The noble Lord has not referred to that point at all.
LORD CHALFONT: No, my Lords. I thought that, if the noble Lord would forgive me, I would not in the course of this debate follow hint down that particular road because it is a rather wide area. One could in fact conduct an entire debate on the subject of integration, international commissions, weighted voting, supra-nationality and so on. That is the whole point of the noble Lord, but it is not really the point of the Motion before the House to-day. Where I do agree with him is that European tech
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nological co-operation can never be fully effective until there is greater integration, until the Community is enlarged. But surely no noble Lord would suggest that we in this country, however much we believe in a widened and unified Europe, should go into a project which we believe to be commercially and economically unviable simply because other people taking part in it believe it to be viable. This seems to me to be suggesting that we should take part in projects that might involve us in great commercial loss and be a waste of scarce resources, simply because other people believe them to be viable when we do not. I am sure that no noble Lord in this House would suggest that we should handle the nation's resources of skill and of capital in that way.
I have said all I want to say at this stage. I think there has been some steady progress in European technological co-operation and in joint projects. We shall continue to look for opportunities to take part in these projects so long as they seem to us to be cost-effective. I have. I know, not covered all the points that were brought out in the noble Earl's most interesting and comprehensive speech, but I shall listen with interest to the speeches that follow, and I shall hope at the end to cover all the points made, both in the two opening speeches and in those which are to follow.
4.26 p.m.
LORD JACKSON OF BURNLEY: My Lords, I too would associate myself with the expression of thanks to the noble Earl, Lord Bessborough, for introducing this important Motion. None of us can he in any doubt that it is of the greatest importance that we foster and contribute wherever possible to closer collaboration with Europe in the scientific and technological field, but I was pleased that the noble Lord. Lord Chalfont, made the point that we must be careful to interpret "technology" in much wider terms than research and development and as extending through design, production, management and marketing. In some of these aspects we may have a good deal to learn from Europe.
I hope that your Lordships will find it helpful if I try to break down into three areas the subject of technological collaboration. The first one was concentrated on particularly by the noble Earl; he referred to it as "advanced technology".

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This concerned such subjects as space, aircraft, nuclear and advanced electronics problems. Within this area, of course, fall inter-Government activities such as he mentioned: ESRO, ELDO, CERN, Concorde and so on. I do not propose to make any further comments on that particular area, because I regard it as by no means the only area, and there are times when I think it is not necessarily the most important area, of desirable collaboration in Europe. Certainly, by itself, it will not constitute an adequate base for European collaboration.
The second area, on which I should like to say rather more, I will describe as "basic technology", which is not easy to describe in a few words but in mechanical engineering, for example, it would cover a wide range of techniques in materials production and processing: subjects like welding, tribology and metrology, and a whole diversity of basic technological knowledge and understanding which affords the base on which industries thrive, or fail to thrive, and lacking which no industry, in my opinion, can hope to participate effectively in the advanced technologies to which the noble Earl referred.
My impression is that in this area of basic technology there is quite extensive and rapidly growing collaboration. It takes the form of technical publications, of conferences and increasingly direct collaboration between our national establishments of research and development, our industrial research associations and our universities with corresponding institutions on the Continent. There is, I know, increasingly close association between industrial concerns in this area. I do not wish to suggest for a moment that there is not considerable scope for further extension of this collaboration, and I should like to pay tribute to what I believe the Ministry of Technology is doing in stimulating more basic work within this country and in fostering closer collaboration in this field.
I would ask the noble Lord, Lord Chalfont, whether he is aware of the recent establishment of what is called the European Industrial Research Management Association, which comprises a grouping of over eighty of the largest European firms and which is said to be
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self-financing and is intended to provide for discussion of basic technological issues in industrial firms. I distinguish greatly between discussing it in industrial terms and in terms of outside institutions. I should certainly like to know if he can tell us whether any British firms are involved in this association.
My third area I will call "industrial technology". This is the aggregation of the intimate techniques and skills employed by different sectors of industry within their own particular fields. As I see it, this is not an area of technology in which Government can play, or should play, a significant part, except in so far as it exercises an indirect influence on the vigour and initiative of industry through its procurement procedures and through fiscal and legal devices which remove impediments.
May I at this point say a further word about the so-called technological gap? Perhaps the noble Earl, Lord Bessborough, had advanced technology in mind as the focal point of this gap, and it must be admitted that in such fields as space, supersonic flight, micro-electronics and computers Europe is at a disadvantageous economic state of development relative to the United States. But there are a whole range of less exotic fields, fields of much greater present economic importance, covering such industrial activities as machine tools, plastic-making machines, printing equipment, plate glass manufacture, shipbuilding, aspects of motor vehicles and telecommunications equipment in which Europe is not the weaker community. Indeed, in the field of motor vehicles your Lordships may well be surprised when I say that such technological advances as fuel injection, disc brakes, hydrolastic suspension and monocoque construction all came from Europe. Unfortunately, one cannot say that they all came from this country, hut we are now talking of Europe, and Europe is not in many fields the weak partner that we sometimes think she is.
I would suggest, therefore, that there is no occasion this afternoon for us to think of Europe in any sense of inferiority because the Americans are capable of quite magnificent. almost incredible, technological achievements. What Europe has to do, and do quickly, is to harness

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and develop in depth its immense intellectual potential and industrial resources, and this is why I think we should not put all our attention on the advanced technologies, because these will not contribute much in the short term to our economic strength.
Would your Lordships allow me now to change the emphasis? I should like to spend a few moments talking about the sociological, as distinct from the material, aspects of technological progress, and by way of introduction I would refer to a new field of intellectual endeavour known as "technological forecasting". This is an attempt to predict along the time scale the likely achievability of definable scientific and technological objectives. In the main, these possibilities have been outlined by scientists and technologists working within, and thinking outwards, from their own disciplines, and having read a good deal about this forecasting I am in no doubt that in the main the possibilities that have been forecast will prove to be achievable; or it may well be that in the pursuit of them other more desirable scientific and technological objectives will emerge and effort will be concentrated on them. The uncertainty, as I see it, lies much more in the time scale. It depends then on the scale of effort devoted to the project, and this involves what we are discussing this afternoon, international collaboration. But what I want to refer to more specifically is another uncertainly as to whether some of these objectives will prove to he worth achieving in humanitarian terms; and I feel the more prompted to refer to this because of the debate held on February 19 and initiated by the noble Lord. Lord Byers.
Some of the possibilities that have been forecast, indeed many of them, no doubt would bring unadulterated benefits to the community, but there will be others—and I suspect from now on more in the biological field than in the field of the physical sciences—which will give considerable cause for anxiety. After all, in the field of the physical sciences we have been taken to the limit of anxiety by the hydrogen bomb. What causes me concern in this matter is that, irrespective of benefits or anxieties, the pursuit of essential scientific and technological ends in the absence of a parallel and commensurate pursuit of the means of resolving
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the sociological consequences will lead us into increasing difficulty. It can only exaggerate anxieties of the kind that were expressed in the previous debate, and reveal the increasing discrepancy between our ability to solve scientific and technological problems and to resolve the issues which they raise sociologically.
If I may now do so, I should like to put alongside the kind of possibilities that have been posed so far the need for us, and for Europe, to start, as it were. at the other end of the situation; to define the social problems either already existing, or likely to result from further technological progress, and start from there and assess what kind of contribution science and technology can play, and will need to play, in their resolution. I should like to mention what seems to me to be a quite outstanding field: that of urban development. There seems no doubt that not merely highly developed countries but under-developed countries are faced with the certainty of increasingly large urban conurbations, and this field of sociological development and of problems affords an immense field of contribution from science and technology.
May I mention a few of the problems that are involved? First, within the field of building technology, there are problems covering such questions as demountable buildings, the use of plastics in building construction, heat and sound insulation, the design and production of houses for developing countries, and the structure of the housing industry. Secondly, problems of computation, involving the application of computer science and technique to a wide range of urban problems in demography, such as forecasting housing needs, the types and balance of employment, transport facilities, power supplies and educational development. Then environmental studies in respect of safety, noise, atmospheric pollution, vibration, and the definition and maintenance of standards in these respects. Then transportation in all its known and, as it were, possible aspects, including electric cars, conveyor belts, pipe-lines, and so on. Then services for urban areas, demanding improvements in their arrangements for electricity, gas, water supplies and improved means of waste disposal and drainage. One could go on in this way.

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I do not wish to suggest that sonic of these problems are not being studied—indeed, decisions are being taken and action is being taken—but I should like to ask (and I hope that the noble Lord Lord Chalfont, will have an answer for me) who in this country is responsible for co-ordinating the study of this range of problems. It seems to me that no single country in Europe could attack this comprehensive range with an adequate effort to resolve them with the urgency which is required. I see this, as I am sure does the noble Earl, Lord Bessborough, as a crucial, fruitful and not expensive field of European collaboration.
Close scientific and technological collaboration, however it is discussed in detail, is only possible through close personal contacts. This is an aspect which has not been touched upon this afternoon. As I see it, Europe is at a disadvantage as compared with the United States and the U.S.S.R. This is due in part to language difficulties, but also to the fact that in the United States there is much greater provision for travelling fellowships which are attracting to the United States, and not to Europe, a substantial proportion of our mature graduate output for research and related work and, unfortunately, in many cases for permanent residence. I am aware that the Royal Society and the Science Research Council are trying very hard to increase the flow of people within Europe. The sums of money which are available for this task are far too small in the light of its importance, and I hope that when circumstances permit the Government will find it possible to increase the allocation of resources.
I should like to lead up to a further question to the noble Lord, Lord Chalfont. I myself would much prefer an increase in the flow of graduates for research within Europe between centres of excellence in particular fields rather than an attempt to create a grandiose new scientific-cum-technological institute such as was proposed a few years ago and which, I understand, is still under consideration. Unfortunately, I do not find it possible to get a clear statement of the present position, and I hope that the noble Lord will be able to help me on this matter. I am much more sceptical of such an institute in technological than
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in scientific terms. As I implied earlier in my remarks, the place where technology comes to fruition is productive industry. If an outside institution, be it academic or otherwise, is to make an important contribution to technological progress, this will be dependent on the intimacy of its association with industry. This is difficult enough to achieve in this country between individual institutions and industry as to suggest to me that the time is by no means ripe to try to achieve success in this field in Europe. On the other hand, where it is possible to establish close co-operation between an industry and an educational institution in Europe, I hope that every possible means will be found to ensure a flow of Britishers to this co-operative effort.
In conclusion, I suggest that, if European technological collaboration extends no further than the hope that we may thereby achieve closer comparability with the United States in our 'standard of living, this will take us nowhere worth going to—unless, at the same time, by deliberate and sustained endeavour we seek to reduce the discrepancy between the standard of living which is already enjoyed and the standard of the developing countries. I realise that this would lead into another debate, but unless we seek deliberately to resolve this discrepancy, even to the point of our own hardship, I consider that the concentration of technological collaboration in our own interests will lead to tragedy. Therefore, I express the hope that some day we shall have another debate on that matter in relation to the subject which we are debating to-day.
4.45 p.m.
LORD BALERNO: My Lords, I wish to join with other noble Lords in thanking the noble Earl, Lord Bessborough, for initiating this debate. This is a fascinating subject to those of us who are connected with the technological developments in this country, but it is also a vital subject, for unless we solve these problems we shall not have the material resources to run a Welfare State. I do not propose to deal with the point raised by the noble Lord, Lord Chalfont, about the management gap. That is beyond my ken, and there are others in the House who are better qualified to deal with that matter. Nor do I propose to follow the noble

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Lord, Lord Jackson of Burnley, in his fascinating consideration of the sociological aspect of whether any specific work is worth while. There must be justification for any work, and this is a matter of vital importance, not only to the future of our nation but to mankind as a whole.
I am apprehensive that, inadvertently, in the organisation of technology we may be pressing for too large a European superstructure. There are real dangers that we might create little empires of special branches of technology with one expert from Germany, another expert from France, and another expert from Italy, all in the same unit and all having to be appointed in order to keep a proper balance of nations and tongues. We should avoid imposing any superstructure of this nature. I am also apprehensive about the suggestion that a sort of M.I.T. or Caltech. might be set up in Europe. I think it has been suggested that Brussels might be a good place for such a body. I feel that this would be complicated and expensive, in view of what it might eventually produce. There would be a danger of its becoming a white elephant.
I am all for reinforcing our present technological units, most of which are technological departments of our universities. A little duplication among our university colleges is good and necessary for the dispersal of ideas and the sorting out of problems, but we should avoid the situation that too many colleges may cover too many specific technologies at one time. Already in this country we have too many universities and too little money to supply them. Therefore we must rationalise the specific projects which are being undertaken by the various universities, though the shortage of money will go some way to bring about such a rationalisation.
When one considers the linkage of colleges in this country which are studying the same specific technology, one should bear in mind that there should also be linkages with colleges in Europe doing the same specific work. That is the way in which the best co-operation, the cooperation of the scientists will be secured. The noble Lord, Lord Jackson of Burnley, has pointed out that there is already a great deal of collaboration going on, and the noble Earl, Lord Bessborough, mentioned certain subjects
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in this connection. I propose to mention briefly three of them, because each illustrates the fact that collaboration is going on, and is possibly going on entirely adequately.
The first subject is molecular biology where there is a very complete flow of scientists throughout the whole of Europe and, indeed, throughout the whole world. I doubt whether more co-ordination is needed than is going on at the present time. If the noble Lord, Lord Todd, had been in his place, I should have spoken with some hesitation, because this is his subject rather than mine. My second example is that of desalination, work on which is progressing, and in the van of the progress is Professor Silver, of Glasgow University. I should be very surprised indeed if there were not complete co-operation and interchange of ideas between everybody who is studying desalination in Europe and Professor Silver. I do not think that further co-ordination is necessary.
THE EARL OF BESSBCROUGH: My Lords, I was thinking of co-operation with a commercial aim in view, which would cover the exporting of plant. I am quite certain that the interchange of information between establishments in Europe is very good, but I was thinking entirely of the marketing aspect.
LORD BALERNO: My Lords, I take the noble Earl's point, and I am sorry that I misunderstood him in that way. This comes back to the point made by the noble Lord, Lord Chalfont, and I am not competent to follow either of the noble Lords. I fear over-organisation of the basic technological sciences. I support the noble Lord, Lord Jackson, in his plea for closer personal contact and all that can be done to ensure it. There must be an interflow of brains between the nations; and, in order of importance, I support, first, what the noble Lord, Lord Jackson, has said about post-graduate work and travel fellowships. To my mind, these fellowships are very inadequate at the present time. Much more could be done about post-graduates from this country going to do postgraduate work in their technology in Italy, France, Germany or any other country that is studying the particular technology.
Secondly, I suggest that there should he interchange of professors and lecturers. By that I do not mean just coming over

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for a week; I mean coming over for a year, two years or three years, but retaining their status at their original universities. More should be done along those lines. It will take a certain amount of money, since it is not merely a matter of organisation; but I am sure that if the money were available the universities and colleges would discover means of spending it profitably.
The third point that I wish to make about the interflow of brains—though this is at a level of lesser importance than the other two—is with regard to undergraduate exchange. It is perhaps partly for the universities themselves to put their house in order here, though this raises the question of Government grants to students. But a scheme under which an undergraduate would spend a complete year at a university on the Continent, which would count towards his course in this country, might be developed. After all, such a system is working very successfully in certain universities for the study of modern languages where one complete year out of four is spent abroad. Another point about undergraduate exchange, which I ask the Government seriously to consider, is that they should take off the tax where European students coming to study at universities in this country are paying full fees.
The trouble is that at present the inter-flow of ideas is not being encouraged. It may be difficult for the noble Lord, Lord Chalfont, to reply to this point right away, but this is a matter which is hindering somewhat the flow of students. My view is that it is extremely important to fertilise the grass roots of technological co-operation. If you are training the students, developing them at the postgraduate stage and developing the colleges where the specific technologies are growing, then the problems for decision will be put on to the plate of the right people. Co-operation should arise more from the development of technological work than from any attempt to superimpose it from above. Co-operation grows naturally; on no account should it be superimposed or it becomes a dead hand.
4.58 p.m.
LORD WYNNE-JONES: My Lords, like others of your Lordships I am very grateful to the noble Earl, Lord Bessborough, for having given us the oppor
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tunity to discuss this subject. But, as an admirer of his, I was rather sorry that he had to devote 22·3 per cent. of his speech to something that was more appropriate to the hustings. However, in the further development of his speech he gave us a very elegant and exact account of what is happening all around Europe. I do not want to go over the whole details of technological work, which have been ably dealt with by other noble Lords and will no doubt continue to be dealt with in this debate. I want to deal a little with the subject to which both the noble Lord, Lord Balerno, and the noble Lord, Lord Jackson of Burnley, referred, which was the setting up of research laboratories.
Reference has been made to a European institute of technology. I think this derives from a remark made by the Prime Minister in his Guildhall speech of 1967, when he mentioned as one of the desirable objectives an institute of technology. However, after reading his remarks I think it is more than likely that he was not referring to an actual physical institute. Indeed, the noble Lord, Lord Chalfont, suggested to me before the debate that that was so, and perhaps he will be able to confirm what I have said. The actual remarks made by the Prime Minister were:
"We are prepared—and here I pay tribute to the forward thinking of the C.B.I.—to join with other Governments, and with industry here and on the Continent, in sponsoring a multilateral European institute of technology to examine case by case, area by area, industry by industry the means to greater European technological co-operation."
I do not think that suggests an actual research institute. At any rate, I hope it does not, because I agree with what the noble Lord, Lord Balerno, and the noble Lord, Lord Jackson, said; that is, that these international laboratories for scientific research are really misconceived.
In my opinion, there are only three reasons why one should set up such a laboratory. One is that equipment of such costliness, of such magnitude, is involved that it is impossible or very difficult for a single country to provide it—at least, for a European country to provide it. This, of course, happened in connection with the development of nuclear facilities in Geneva, although I believe that some difficulty was caused there by the fact that the French had the purest iron available for a magnet, and they were not

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prepared to let it out of France. I understand that the magnet is in France but its poles peep into Switzerland. Thereby, French pride and national prestige are conserved, and at the same time international work can be carried out. One can see that this rather limits the location of an appropriate laboratory.
A second reason why one might set up such a laboratory would be if one were concerned with a location that was available in only one country. An example of this would be astronomical observations which might be suitably placed, as indeed they have been, in Switzerland, high up in the Alps; and it would obviously be difficult to do this in the Netherlands or in Denmark. So it is clear that one has a second reason there. A third reason—and here it would be perhaps less of a laboratory than close co-operation—would he the observation of phenomena that were widespread, and where it was necessary to make the observations over a wide territory. A typical example of that is in oceanographic observations, where I can see every advantage in having very close collaboration.
If one does not have these, all one does is to put people together, creating all the problems of supervising them when they speak different languages, when they belong to different nations and when the control of the laboratory is almost certainly under a varied national control. I am afraid that I have little belief in the solution put forward by the noble Lord, Lord Gladwyn; it seems to me that that is a will-o'-the-wisp so far as we are concerned in the immediate future. I think, my Lords, that it is most important that when we talk about European co-operation in research we should first of all not regard it as exclusive. We should regard it as a useful thing to be done because there may be people who are prepared to do it and there may be problems that can be solved. We do not want to think, because we have lost an Empire, that we are going to conquer the Continent.
5.3 p.m.
LORD TODD: My Lords, like other speakers I must express my gratitude to the noble Earl, Lord Bessborough, for introducing this debate to-day. He in his speech, and other speakers later in their contributions, touched on a number
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of the points which I myself wished to make. For that reason, I am going to be rather general, and I hope rather brief; but I should like to pick up a number of these points and pull them together. It has always seemed to me that when people talk about European technological co-operation they tend to do so in terms of inter-Governmental projects like ELDO or Concorde, and they usually seem to overlook the fact that, however grandiose or expensive a project of this type may be, it represent; only one aspect—and then not even the most important one—of technological co-operation. I am going to confine my remarks essentially to technological cooperation: I do not wish to follow the noble Lord, Lord Jackson of Burnley, into the byways of sociology, however important these may be.
Basically, the need for greater cooperation technologically in Europe rests on the danger that native European industry may lose its position and slip into decline in face of penetration by large, technologically advanced American industrial corporations. It is clear that this is a real danger; but it is equally clear, I think, that it is not due to any deficiency in European research and development skills. The so-called "technological gap", as I think the noble Lord, Lord Chalfont, has already stressed, is not the gap in research and development skills: it is essentially a gap in industrial capability. No doubt there are a number of factors concerned in this, and among them there may be deficiencies in management techniques in Europe. But to my mind by far the most important reason for this greater capability in America is the size of its domestic market—a domestic market which is big enough to encourage the growth of large enterprises able to risk large sums of money on new ventures with an economy of scale when they go to production and a reasonable prospect of an adequate return.
We are accustomed to hearing people talk about the astonishing difference in productivity per man in American industry as compared with British and European. Factors of three and four are bandied about. I sometimes wonder whether that gap would not look a great deal smaller if one took into account the differences in, say, scale of production

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in such industries as the chemical industry, or in the length of production runs in industries like the aircraft industry. After all, the technological gap between Europe and the United States of America would simply vanish overnight if the 50 American States seceded from the Union and set themselves up as independent entities on the lines of the European States. I do not think that is likely to happen, so I think that Europe has got to do something itself. There is only one way it can do this, and that is by recognising that it should be one unit and one market. That means that, if we are going to make it effective, we shall have to go in for technological co-operation at the level of the industries themselves, and that co-operation will have to develop on the pattern of normal commercial operations involving the exchange of know-how, the concentration of production, perhaps in some fields the development of more supra-national companies, and so on.
The barriers to developments of this type are of course formidable, and are a consequence of the historical evolution of the fragmented Europe which we all know to-day. To remove these barriers, Governments will have to take seriously, and as matters of urgency, a great many problems, such as those concerning patent and company law, trade barriers and freedom of capital movement; and in particular they must seek to achieve a far higher degree of standardisation in every area throughout Europe than we have yet achieved. I think that only if this is done will it be even possible to get industrial co-operation to develop in a rational and fruitful way. True, Governments may well have to discard some of their cherished freedom of action on the way, but I think we must recognise that 19th century ideas of national sovereignty are incompatible with the realities of 20th century technology.
In the debate to-day there has been mention of a number of large technological projects operated on a bilateral or multilateral basis and involving, essentially, Government money. Of course there are some areas, like nuclear energy and aerospace, where in many cases the cost of new projects is so enormous that they are beyond the reach of industry, and even beyond the reach of individual
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countries, so that if countries are going to participate at all they will have to combine. A good case can be made for a number of these. I was glad to hear from the noble Lord, Lord Chalfont, that some serious consideration is being given to the question of fast nuclear reactors, because it seems absurd that we, being currently well in the lead in this area, should see quite independent efforts in the same area going on in, for example, France and Germany. I hope that the possibility of a joint effort in this field will be explored as a matter of sonic urgency.
In the aerospace field we have seen the ELDO project and the Concorde project, and we have heard to-day about the present status of projects such as the European air-bus and the proposed multi-role combat aircraft. Of such projects all I would say is that all of them need close study before we embark on them: we ought to have a pretty solid assurance that they are viable, or likely to be viable, commercially and technologically, because good technology and bad projects do not go well together. We ought also, before embarking on them, to form some idea of the likely cost.
It is true that it is not possible to make precise estimates of cost when dealing with wholly new technology, but I am sure that many noble Lords must, like myself, have noticed with dismay the inevitable escalation that occurs with every project of this type that comes forward. I can understand an estimate being perhaps 50 per cent. out, or even perhaps 100 per cent. Out; but the escalations we see make me feel that we ought to look more closely at our machinery for estimating costs. I hope that before we embark on anything like the multi-role combat aircraft we shall get some satisfaction that it is likely to work; and, secondly, that we shall be realistic when we first make a pronouncement about its probable cost. One thing that must be remembered is that once one embarks on an international project of this type it is extremely difficult to withdraw without incurring, perhaps rightly, a great deal of political odium.
My Lords, I should like, finally, to make one or two comments about such projects as the European air-bus, which at first sight looks a very reasonable thing, and the Concorde project. It seems to

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me that the trouble is that co-operation in Europe in civil aviation is generally considered in terms of exchange of research and development information and in terms of joint projects for new aircraft. But I do not think that this attacks the central weakness of our position at all. Europe has a larger population than the United States and is just as extensive geographically, but it makes much less use of civil aviation. The United Kingdom and the E.E.C. countries together buy only about half as many aircraft as the U.S.A., and the utilisation is generally lower. That means that Europe is making relatively less use of this form of transport and that there is consequently less opportunity for European aircraft to prove their qualities in their domestic markets and to get their costs down by long production runs. In this way, they become less attractive to overseas aircraft buyers.
If this is so, it seems to me that improving the environment for civil air transport in Europe should be a vital part of any programme of technological co-operation. Initiative could be taken in a number of directions. For example, we all know the notorious unreliability of European weather, which causes all kinds of delays and diversions and diminishes the appeal of air traffic. But fully reliable automatic landing systems are now available. Could they not be brought into standard use and so make European aviation completely reliable in any type of weather? Again, much of Europe is densely populated. If we consider only cities with populations of more than 250,000, there are more than twice as many of them situated within 1,000 km. of each other as in the United States. This, it would seem to me, points to a real need for short take-off aircraft working from small airfields, and particularly to the development of really accurate integrated air traffic control systems leading to a dense network of short-range inter-city services.
My Lords, these remarks bring me back to the point that I tried to make at the outset. What we really need most of all is not large and spectacular projects but technological co-operation in depth, right down to the level of individual industries and firms. I believe that large aerospace projects will be of value in the long term only in so far as they encourage and promote the will to a far more wide
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spread integration of what I would call Europe's at present underdeveloped industrial capability.
5.17 p.m.
LORD TREFGARNE: My Lords, in rising to participate in this debate I, too, must thank the noble Earl, Lord Bessborough, for putting down this Motion and giving us this opportunity to discuss collaboration on technological matters in Europe. I propose to be as brief as possible, because of the long list of speakers remaining, and to confine my remarks to aircraft collaboration in particular. The collaboration in aeronautical matters has not been uniformly successful, at least to date. I should like to consider four principal projects; at least principal so far as I see them, although I realise that there may be other noble Lords who would put a higher priority on other projects.
First, I would mention the Anglo-European air-bus, now designated the A 300B. I am of the opinion that this project has failed so far and that the promise that it holds is so limited as to suggest that we ought actively to consider whether or not to continue in it. We know—or at least we were told just before Christmas—that the cost of that project had very seriously escalated. Then, just after that escalation had been announced, we heard that a radical redesign had taken place and that we were now to call the aircraft the A 300B. It was to be a smaller aircraft fitted with the RB 211 engine which had been so successful in the American market. I would ask the noble Lord who is to reply whether he can give us the latest figure on the cost of that project having regard to the recent re-design.
The increase in cost, however, is not the only objection I have to that project. The second objection concerns the question of minimum orders of which the Government made great play when we were considering this aircraft on an earlier occasion. They said, I think, that 75 was the minimum level of orders that could be accented but the airlines were reluctant to commit themselves to that figure and that they, the Government, were therefore unwilling to proceed with the project. The re-design of the project which was announced just before Christmas was apparently done at the behest of the airlines, and there should

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therefore now presumably be no objection to the airlines committing themselves more firmly to the aircraft. But they have not done so. Perhaps, therefore, there are further difficulties, which might result in our having to look elsewhere for a suitable machine.
But, my Lords, regardless of the airlines, I have very grave doubts about proceeding with any large transport aircraft of this nature which has only two wing-mounted engines. The tri-engine layout or the tail-engine layout is, in the view of many people, a much safer and a better arrangement. We notice with interest that the Boeing Company, until recently exponents of the underwing design are now tending to go back to the tail engine design. Their latest proposal, an aircraft very competitive with the A 300B, is a tail-engined aeroplane.
The third objection to the A 300B is the question of time. We are told that that aircraft, if we now proceeded with it, could be in service in 1973. But, of course, if Boeing decided to proceed with their proposed aircraft, that could certainly be in service before 1973, not by much perhaps, but at least by a year and possibly by 18 months. That company has a very wide experience of that sort of aircraft, which is not a very advanced aircraft by Concorde or S.S.T. standards. Furthermore, because of its considerable experience in this field, Boeing is able to generate much greater customer confidence than might be possible by the consortium proposed to produce the Anglo-European aircraft, which consists of three companies—the British company Hawker Siddeley; the French company, Sud Aviation and a German company which has been specially formed for this programme.
One should not assume that the chaos—and it can hardly be called less—that surrounded the American supersonic transport problem is likely also to surround any air-bus project that they may launch. Some months ago, I asked an Unstarred Question about the future of the air-bus. At that time I pointed out what, to me, appeared to be the absurdity of proceeding with an aircraft which was going to use, as was then proposed, the RB 207 engine which at that stage was to be developed only for this aircraft. I grant that the new A 300B proposal now uses the RB 211, or smaller engine, which
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has been ordered for the American aircraft the Lockheed 1011. This is good, but the other objections remain.
In my view, and I believe in the view of many others, the fundamental design changes—and they were fundamental—made or announced to this aircraft last Christmas were the convulsions of a dying project. I wonder if, when the noble Lord replies to the debate, he can say whether the Government are still financing the initial design work of the air-bus. We know that they were financing the design of the A 300, but there is some doubt about whether they are still providing funds for the A 300B. In my view the A 300B is a political aircraft of doubtful design philosophy, unwanted by the airlines and likely to arrive too late. I therefore urge the Government to withdraw from this project and to consider urgently whether they should not now support the BAC 311 which has been advanced as an alternative. I hold no brief for BAC, but I believe that the 311 is worthy of support. I also believe that if the Government thought it right, in the wider interests of European collaboration, to stipulate that any support for that aircraft was conditional upon major parts of the airframe being subcontracted to European constructors, this would be an acceptable and a reasonable proposal.
I should like briefly to touch on the multi-role combat aircraft. Judging by the remarks of the noble Earl, Lord Bessborough, when he opened the debate, there may still be some major hurdles for that aircraft to overcome. I am always suspicious of the "multi-role" anything, particularly aircraft, and I wonder whether, if we proceed with this machine, we may not find ourselves with an aircraft designed to fill many roles but capable of filling none. This, perhaps, was one of the problems with the American F111, which had a vast number of variants to fill all sorts of different roles for the American Navy, the U.S. Air Force, and, indeed, at one stage for the R.A.F., but which, in the last resort, was found to be unsatisfactory.
My suspicions of the M.R.C.A. are deepened when I hear that the design leadership in that project, if we proceed, is to be divided; so that for the single seater aircraft the Germans will have the leadership while we shall have the

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leadership for the two-seater machines. It seems likely, therefore, that that, too, may run the risk of becoming a political aircraft. I wonder whether the cause of European collaboration which, with reservations, I generally support, will be best fostered by advancing with projects of this nature when we might get a better aeroplane for less cost with a national project. I am perhaps biased. Being fairly closely concerned with aircraft of one form or another, I naturally tend to support the British industry. But the M.R.C.A. seems to present all sorts of problems which have not perhaps been too carefully gone into.
The other military aircraft at present under consideration—indeed, further than that, it is now flying in prototype form—the Jaguar, appears to have survived Government whims and fancies on both sides of the Channel and, with luck, may have a sound future. But, like the Concorde, to which I now come, that depends upon a satisfactory test programme. I have put clown in your Lordships' House a number of Starred Questions concerning the progress of the Concorde and, contrary to what I have been branded in the past, I am not a "Concorde knocker". Indeed, I believe that, like the Comet 1 some 15 years ago, the Concorde is now poised to scoop the pool. As testing proceeds I expect to see many of the so-far uncommitted airlines in a position where they will have to take options on, or, better still, place orders for the machine. We are often told that the future of the Concorde is doubtful because of the boom on the one hand, or perhaps, on the other hand, because people do not want to get to New York in only 3½ hours instead of 7 hours. I suggest that people who say that should study the history of air transport, and indeed of all forms of transport, rather more carefully, because every time a faster aircraft or means of transportation is applied to a particular route, the customers always want to go on the faster aeroplanes, even if, as may be the case with the Concorde, they have to pay more for doing so. When jet aircraft were introduced on the North Atlantic route, piston-engined aircraft were running half empty or worse.
Initially, of course, when the Concorde comes into service the 747s will also be operating—in other words, the large
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jumbo jets—and I am sure that there will be a surplus of capacity, for a while anyway, while the traffic growth catches up with the available seats. In that competitive position the larger aircraft will find themselves very pressed. If, therefore, airlines are obliged to order supersonic aeroplanes, the Concorde, with its lead, variously estimated from five to seven years, is likely to be the only competitor in the market. I leave aside the Soviet supersonic aeroplane, not because I do not think it will be a competitor, but because I do not know, and I do not think that any of us can predict, what is likely to happen with that aircraft in the world markets; although it the past performance of the Soviet aircraft industry is anything to go by it is unlikely to be much of a threat.
I suggest, my Lords, that in the euphoria of the first flight of the Concorde which took place the other week and the apparent rosy commercial future before it, we ought not to forget that the programme is running very late. The lead that it has over the Boeing supersonic aeroplane (Boeing is, of course, responsible for the American supersonic programme) is due largely to the difficulties and mistakes that the Americans have made and not to the smooth progress of the British project. I wonder whether there is not an object lesson in that delay which is applicable to other collaborative projects. Perhaps the lesson is that before Concorde, Sud Aviation, the French company who all along have had design leadership for the airframe of the Concorde project, had little or no experience of a subsonic transport aircraft let alone a supersonic one. The only aircraft it had ever built was the Caravelle which was certainly a successful aeroplane but was by no stretch of the imagination a modern aeroplane, either then or now. I do not want to rub in this point too much, because clearly it is a delicate one, but we must not forget that the Concorde's first flight was a year behind schedule. One can but wonder whether that delay would have happened had the design leadership been differently arranged.
There is one other bright star in the Concorde firmament and that is the collaboration that has taken place with the greatest possible success between the British Air Registration Board and the

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Bureau Veritas, the French air-worthiness authority. I know that my interpretation of the French position in that respect is not quite accurate but certainly the British contribution from the Air Registration Board has been splendid. I have suggested, by giving some specific examples, that collaboration has not always been as happy as it might have been. The noble Earl, Lord Bessborough, in his opening remarks, referred to the view of his French colleagues and others that it was difficult for them to know whether to embark on further collaborative projects with us because they wondered whether again they could take our word. I would remind your Lordships that though this point of view is understandable, it was the French who withdrew from the A.F.V.G. project, not us. There, in the background, they were quietly producing their own, and only weeks after they had withdrawn from the collaborative project their own aircraft first flew. They must have been planning that aircraft months before their withdrawal from the collaborative project.
So there are hazards in this collaboration, one of which is unilateral withdrawal, whether by us or by the French. I am convinced, however, that where properly qualified partners can be found and where financial penalties and delays—because there are always delays in collaborative projects—can be quantified and found acceptable, collaboration can be an advantage. Collaboration in aeronautical matters is an expensive and time-consuming business, but none the less I believe that it is essential.
5.32 p.m.
LORD RITCHIE-CALDER: My Lords, like other noble Lords, I want to thank the noble Earl, Lord Bess-borough, for giving us the opportunity of debating this subject. I should also like to point out that while the noble Earl was going round Europe, examining the problems of co-operation between countries, finding out our shortcomings and trying to see how we could close this gap between the ebullient American economy and our apparently lagging one, I was in America on exactly the opposite errand. I had been called in by various people in America to consider whether this ebullient technology was not only running away but also creating the kind
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of problems which the noble Lord, Lord Jackson of Burnley, has illustrated so well. In fact, they were calling in the Old World to redeem the New.
I felt this acutely when listening to my noble friend Lord Chalfont. When I was in the United States, I went to Forest Lawn, that great cemetery of Evelyn Waugh's books and of Jessica Milford, where they have a huge notice, which says:
"Pay now, die later."
I am afraid that to me this is what cost effectiveness means in the terms presented to us to-day. If the only criterion we are going to consider is cost effectiveness, then I say, "Pay now, die later", because what in fact we are selling is the ultimate quality of life.
Even in a debate of this kind on the merits of technology I do not think that we should ignore what the noble Lord, Lord Jackson of Burnley, was pointing out so strongly, the corollary to this, which the noble Earl himself brought out at the beginning of his speech. There are other areas of co-operation and collaboration than technology, areas which somehow I feel cannot be judged m terms of cost effectiveness. In these areas, of air pollution, of noise abatement, of wrong urban development, we shall come to a time in the foreseeable future when the Eurasian highway will be the High Street or Main Street of the world city. Then if we go across Europe and find that it has been destroyed by all the successes of technology, we shall begin to realise the consequences which we have ignored. Therefore, I insist that one of the corollaries of our consideration of technology is to find, inside technology or outside, protection against its abuse.
There is only one other point I want to make. Until I learned that the question of cost effectiveness is apparently to be the criterion of all values—I thought it was statesmanship and political judgment which was involved in this matter but now I find that it is book-keeping—I was going to congratulate the Government on gas centrifuge and on the fact that with the Dutch and with the Germans we have arrived at some apparent settlement, not yet fully confirmed, in which I saw some kind of judgment. Over many years my concern has been the

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dangers of nuclear arms, and the great concern which those of us who know something about this subject have had, ever since we found that the restraint of the ultimate vast cost of separation might be effectively reduced by the production of uranium 235 by gas centrifuge, is that this would give us the cut-price bomb, the Woolworth bomb. Now, this morning, I feel that we have managed to get this under control, and that through the Minister for Disarmament, Mr. Mulley, and the Minister of Technology, we are thinking of a means of effectively producing peaceful uses and controlling possible military uses. I believe, as my noble friend Lord Chalfont told us, that we have in fact secured the control of this issue within the Non-proliferation Treaty. But I hope that this is not just a question of cost effectiveness, because we may be taking this out of this worthwhile political demonstration and reducing it merely to elements which would not be highly commendable.
LORD CHALFONT: My Lords, I wonder whether my noble friend would give way, in case he should sit down under some misapprehension. I would make it clear that when I talked of the judgment of cost effectiveness I was referring to a specific project for the production of a launcher by the European Launcher Development Organisation, with which the British Government decided, for arguments of cost effectiveness, not to continue and on which not to undertake any additional expenses. I should be the very last to suggest that all technological endeavour should be judged on a cost effectiveness basis. As my noble friend has rightly said, statesmanship, compassion and humanity must play a great part, and I hope that I have not given the impression that I think in any other way.
LORD RITCHIE-CALDER: My Lords, I thank my noble friend for that Answer. I was merely stressing what he is stressing now: that we ought to have other values than merely whether this is going to be a cheaper or even a better way of doing something of which we disapprove. I remember that in our discussion on the 300 MeV in this House, some of us did not go on the basis of cost effectiveness, simply saying that this was going to cost as much as a naval dockyard in order to provide a high voltage accelerator
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machine for the physicists. We felt—and I hope that most noble Lords here feel—that the judgment taken by the Government on that is a firm judgment. We felt that this was a question not of values merely in terms of money, but in terms of judgment. I myself objected to it, and would still object to it, on the grounds that we were paying danegeld to the nuclear hierarchy and that we should not in these circumstances do that kind of thing. This is not a question of cost efficiency, but a question of a larger and wider balance as to whether we want to do this kind of thing while neglecting other areas in which, as the noble Lord said, compassion and many other things enter.
5.42 p.m.
LORD MERRIVALE: My Lords, I, too, should like to express my appreciation to my noble friend Lord Bessborough for initiating this debate. I apologise to my noble friend and to the House for not being in my place when he ma le his speech, but it was impossible for me to be here at that time. It is interesting to bear in mind, when considering European technological co-operation, that since the last war nearly 60 per cont. of all major technological innovations have been originated in Europe, and that half of these originated in the United Kingdom. This may possibly explain the Belgian Government's statement in their Note on technological co-operation which they presented to the Communities Council of Ministers on February 29, 1968, to the effect that in the realm of computers, nuclear generation, aircraft and spatial devices Britain had a notable technological advance from which Europe should derive all the advantages possible.
It is also certainly welcome news that on December 10 last the Council of Ministers unanimously adopted a resolution opening the way to closer technological co-operation between the Six and other European countries, especially Britain and the other three membership applicants. But I think this will not mean much unless Governments are prepared to take positive decisions on specific industries and projects. If one considers Europe's space programme, I think it is fairly true to say that it is at the moment in disarray on account of Her Majesty's Government's attitude. I understand that during the Western European Union Parliamentary Committee meeting held

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mid-January in London the French representatives said that Her Majesty's Government's policy on European techological co-operation was falling between two stools. They said that Her Majesty's Government were criticising, and withdrawing from plans for developing European rocket launchers without proposing anything worth while to replace them.
In the same vein, Mr. Theo Lefevre, the Belgian Science Minister, and the current President of the ELDO Council of Ministers, commenting recently on the present situation in European space cooperation, and expressing views regarding the merging of Europe's space organisations, had this to say:
"Looking back, we can now see that it was a mistake to set up in 1963 two European space organisations"—
he was referring to ELDO and ESRO—
"one for launchers and the other for scientific satellites, instead of creating a European NASA."
I understand that last year the Spaey Committee was set up, and that agreement was reached between Britain and the Six regarding the functioning of a European NASA, though I understand, too, that a compromise was reached at that time regarding launchers. Since then it would appear that Her Majesty's Government have been dragging their feet regarding a long-term applications programme, which in the past, anyhow, I understand has held up the drafting of a European NASA convention. In view of what the noble Lord, Lord Chalfont, said earlier regarding this Convention, which is soon to be drafted, does that mean that a long-term applications programme has now been agreed with our partners?
In spite of what the noble Lord, Lord Chalfont, said about cost-effectiveness in his intervention when Lord Ritchie-Calder was speaking (and I am thinking here of launchers), does he not feel that in the interests of European unity Her Majesty's Government should reconsider their attitude so as to adhere to a principle which was agreed, in effect, at the Bonn Conference; namely, "solidarity until objectives are achieved", instead of solidarity as far as the ceiling?—and I am talking about the financial ceiling. Does the noble Lord not feel in this context that it is most regrettable that,
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again, M. Lefevre, a Minister of a country which has supported us so diligently and effectively in the past, should feel compelled to say, in an interview reported in the Brussels paper, Le Soir: "Britain has let us down."?
Turning to computers, the merging of companies which produced International Computers Limited may have engendered a quantitative change in the structure of Britain's computer industry which may well be capable of "buttoning up" (if I may use that expression) the United Kingdom's computer market. But the real struggle for power must take place in Europe. With this in mind, I understand that this company is looking towards Europe to extend and reinforce opposition to the Americans. Can the noble Lord, Lord Chalfont, tell us, when he comes to reply, whether Her Majesty's Government are giving any encouragement with regard to a grouping of European companies in this particular field?
In this context of computers, I should like to quote some words from Christopher Layton's recent book, European Advanced Technology, in which he says:
"Governments should encourage this process of industrial integration by working out joint requirements in computer systems, agreeing on a common policy for the standardisation of data coding and high-level languages, and using the financial help they give to development to promote European companies instead of purely national ones."
It would seem that the opportunities in this field for computers are vast, for according to Louis Armand, in his book, Le Pari Européen, consideration is even being given to placing in orbit the "memories" of computers so that they may be consulted from all points on earth—in other words, libraries of the sky.
As the noble Lord, Lord Brown, said in Brussels on February 8, 1968, and the noble Lord, Lord Chalfont, said earlier to-day, it was necessary for Europe to create a single, homogeneous, industrially developed market. He also said that Britain, as a contribution to its development, was collaborating towards the technological development of Europe on a Government-to-Government basis; also in the sharing of research programmes and by commercial arrangements between industries. Surely much more needs to be done to facilitate inter-penetration between firms in the United Kingdom and

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on the Continent and towards promoting increased joint requirements. On the aircraft and components side, for instance, Dowty in the United Kingdom and Messier in France have created joint subsidiaries; the French subsidiary to handle contract work for the Jaguar, the British subsidiary for the airbus.
On the hovercraft side, the British Hovercraft Corporation are co-operating with an Italian group regarding a military requirement. I understand, too, that the British Hovercraft Corporation are interested in the French URBA system manufactured by La Societé l'Energetique. I understand that this could lead to a joint requirement for such a type of urban transportation. But for this type of linkup to thrive I feel that a far less nationalistic outlook is required in this country. I have given only small examples of co-operation, but I feel that we should be thinking in terms of large-scale twinning of companies. I also feel—in fact I am fairly confident—that the Minister will have been interested in the example of the Agfa-Gevaert combination of companies which, as Christopher Layton says in his book, presents an up-to-date case study in overcoming the existing obstacles to merging across European frontiers; in other words, a European response to the challenge of American scale.
Earlier on the noble Lord, Lord Chalfont, referred to the fact that the Communities Council had agreed to a French proposal for a European patents system to he examined. If I understood the Minister aright, he expressed willingness for Her Majesty's Government to participate in any discussions for creating a European Patents Board. I must say that the news the noble Lord has given this afternoon is most welcome, for again according to Louis Armand's hook this question of a European patent system has been considered now for the last 15 or 16 years. As to the Maréchal Committee, to which the Minister referred, I understand that that Committee was instructed to submit by March of this year a report on the possibilities for co-operation with non-member countries. Can the Minister when he comes to wind up say whether the report is out and is being studied by the Council of Ministers?
In conclusion, my Lords, I would say that one hears around this country and in Europe much about technological co
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operation and all the benefits one should derive from it, but so far little of a positive nature seems to have been done. As I said, excessive nationalism in various countries is a lot to blame for this, and one hopes that Her Majesty's Government could take a certain lead, when considering the Communities Council's proposals, resulting from the Maréchal Committee report, to achieve to a greater extent a concerted policy regarding orders in the public sector. That is something which the Belgian Government raised last year in the Council of Ministers of the Communities, and I hope that this is a matter which Her Majesty's Government will consider very carefully, for without this it seems to me that it will be difficult to build up European technological cooperation to any great extent or to achieve a larger grouping of companies.
5.54 p.m.
LORD KINGS NORTON: My Lords, the Motion which the noble Earl, Lord Bessborough, has moved this afternoon, and which we have all welcomed, relates specifically to progress in European technological co-operation. I feel that some noble Lords this afternoon have interpreted that term somewhat liberally. Technology is the application of experience and scientific knowledge to the creation of new things and new processes; and my personal hope is that any new European ventures in technology in which we participate will be in accordance with that definition and will, moreover, be designed to be, if successful, of true benefit to both ourselves and our colleagues.
I cannot help feeling that for the time being we are producing new scientific facts quite fast enough and that any additional effort in the field of science and technology should largely be devoted to applying them. This is not a theorem for all time, but as I say for the time being. I believe we should at present be concentrating on producing new "hardware", new systems, new processes, both at home and in our collaboration with Europe, and the quite ordinary firms can play an important part. Whether the new institutes under the Maréchal Committee are likely to have a similar point of view I do not know, but I certainly hope so.
Recently there has been a great deal of direct international co-operation in technology. The most massive example, as has been mentioned several times this

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afternoon, is the Concorde. After years of labour, elaborate arrangements for Franco-British collaboration, the great test programme has started satisfactorily. One cannot but wonder, however, whether this great feat of technology, which is a notable monument to international co-operation, would not have been easier to achieve had there been, as the noble Earl suggested in a more general context, a single person in overall charge; and not only a single person in overall charge, I would say, but a single organisation for the task. We have had the picture of two great organisations working in concert, and, good as the result has been, I think the concert orchestra would inevitably have been more harmonious under a single conductor. The development of modern technology is difficult enough without organisational complication.
I have seen something of this myself because, as Chairman of the Air Registration Board, I have been concerned with the achievement, not only, as the noble Lord, Lord Trefgarne, mentioned, with the Bureau Veritas but with the Secretariat General d'Aviation Civile and the Section Technique Aeronautique, of a single set of airworthiness requirements by which to judge the safety of the Concorde. Once again, good will and common sense have triumphed, but the adoption of a single code of a single authority would have been far less wearing for all concerned. That is one of the things which will have to be brought to pass if the future of civil aviation in Europe, as the noble Lord, Lord Todd, was envisaging it, is to eventuate in a reasonable time.
But it is not much use being critical of the organisations which exist unless one is prepared to make suggestions for what might take their place. My feeling is, my Lords—I am not now referring to the Concorde or to any particular case at all—that international technological objectives are best achieved by single international technological teams, and that these are most likely to come into existence as the result of industrial associations, either consortia of European companies or mergers of European companies, or special companies brought into existence for special projects and internationally staffed. I should like British firms to be
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encouraged to look across the Channel and to look across the North Sea to see with whom they might effect advantageous commercial conjunctions—and here I think I am on the same track as the noble Lord, Lord Merrivale, was a few moments ago.
There are many technological objectives which British firms are perfectly capable of achieving on their own. There are some which begin to look too big for single firms, and occasionally too great even for an association of British firms alone. Sometimes, too, technology developed abroad is more stimulating or more advanced than our own, and it is not difficult to discover a number of areas where the combined effort of a Continental and a United Kingdom firm would be definitely fruitful. It is possible to identify combinations of, say, British production efficiency and Dutch technology, or British scientific strength and French manufacturing skills, which, if effected, would be industrially especially powerful. I agree with the noble Earl that it would not be inappropriate for such combinations to receive Governmental assistance in our own case, possibly, through the I.R.C.
My chief reason for speaking in this debate to-day, therefore, is simply to emphasise the advantages of industrial technological co-operation with Europe; to emphasise in fact just one of the facets of the wide-ranging speech made by the noble Earl, Lord Bessborough. We are familiar in industry with the notion of buying and selling licences for know-how and paying and receiving royalities for the use of patents. This is the minimum kind of co-operation. I should like to see, in a variety of industries, more international teamwork aimed at profitable and beneficial objectives. Collaboration need not be confined to great projects at national level.
One final point. The noble Earl, Lord Bessborough, suggested that ELDO suffered because it had no clear commercial objective. I think he is right, and I understood the noble Lord, Lord Chalfont, agreed. But the European uranium project reported in the Press this morning does not appear to suffer from this defect. It can indeed be profitable in the usual commercial sense of the word, and I found it encouraging to gather from the communiqué that this

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considerable technological operation is likely to be organised on sound industrial lines.
6.3 p.m.
THE EARL OF KINNOULL: My Lords, as others have done, I should like to add my congratulations to the noble Earl, Lord Bessborough, upon moving this important Motion on European co-operation so skilfully. As drawn it covers an immensely wide range of subjects, and for this reason it is an attractive debate to take part in, because it is to be hoped that one does not repeat too much of what has been said before. The noble Lord, Lord Gladwyn, perhaps flatters a number of us when he indicates that he is the only non-expert on technology who is taking part. My purpose in taking part in this debate to-day is to draw attention to the aircraft industry in European co-operation, as the noble Lord, Lord Trefgarne, has done, and as I suspect the noble Lord, Lord Granville of Eye, will do.
This industry has proved, I believe, the most difficult of all to harmonise successfully into European collaboration, as the noble Lord, Lord Trefgarne, has said. Its potential benefits are enormous—greater, I believe, than many of the subjects which have been raised this afternoon. A strong European aircraft industry has the obvious advantages of shared research and development costs, the basic home market which its members provide, and its experience and expertise in the design of new aircraft. All these can surely wrest from the American aircraft industry the near-monopoly grip it has at present over the Western markets.
This American stranglehold in practice means the supply of some 85 per cent. of all civil and military aircraft in service in the Western World. Above these natural advantages a strong European aviation industry has one great commercial advantage over the American industry, and that is the remarkable difference between the man-hour costs. I am told that the man-hour costs in Europe are approximately one-third of what they are in America. If one relates this to production, one finds that the man-hour costs of aircraft amount to something like 50 per cent. of the cost of building the aircraft. It is this factor among others, which in time must make a European
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aircraft industry very competitive with its American counterpart.
Having described what I believe are the obvious benefits of European co-operation, and adding, if I may, the important fact that the civil aviation industry is without doubt a very great growth industry, I am led to ask what we see as the result, so far, of European collaboration and the effect it has had on the British aircraft industry. I believe that the answer to that would be, from an optimist, "disappointing", and from a pessimist, "very damaging".
On the military side (and perhaps I could say here it always appears that on the military side there is a distinct advantage over the civil side, as Governments are the main purchasers and the manufacturers are assured of at least a minimum market), there have been three major projects, not including the helicopters. In the first place, there was the ill-fated A.F.V.G. project. In my opinion the cancellation of this project, on which the Government had set their hearts as the cornerstone of our defence policy, caused a serious setback in European co-operation; and it led to serious doubts as to the real intentions of France, as to the future of European collaboration and the role which each partner would play in it.
To be more cheerful, one looks at the Jaguar project. This project already has a basic market of over 400 aircraft and from all accounts it seems to be going rather well. It is a project with a joint company with, I believe, a good central control—something which the noble Lord, Lord Kings Norton, reminded us was an essential factor. Then we have the important potential project, the M.R.C.A. which again the noble Lord, Lord Trefgarne, mentioned. This is the successor to the A.F.V.G. and is a contender for the lush and rich markets of the replacement to the 1,000-odd F104s serving the NATO countries. In my opinion this project is vital to the future health of the British aircraft industry yet, despite the noble Lord's words of comfort this afternoon, we witness delay von delay in the making of any announcement. We read of meeting after meeting between Governments, with no apparent decisions being taken; and now we hear from the noble Earl, Lord Bessborough,

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that there is a whisper that the whole project may be abandoned in favour of a French project. I hope the noble Lord who is to reply will be able to give us some firm assurance that this is not true; and I should be glad if, at the same time, he could give us some facts—as, for instance, the date when the proposed agreement is to be signed with the Germans.
If I may now turn briefly to the civil side of aviation, we see the two major projects. We see the Concorde, which has already been discussed, and also the European air-bus. Like the M.R.C.A. it is clouded with uncertainty: uncertainty whether it is the right aircraft; uncertainty whether it will be a commercial success; and uncertainty about which European partners will be eventually involved in it. We read that the Government are very hesitant as to whether they should commit a sizeable investment into what in their opinion may be considered a doubtful commercial success. We read of the other partners' growing impatience at the Government's hesitancy, and we learn now that there is to be a meeting in Bonn to-morrow and on Friday between the French and German Governments when it could well be that a decision will be made to go ahead with the European air-bus without Britain. Perhaps when the noble Lord replies he could comment on whether in fact France and Germany have warned Britain of this possibility.
The result of both the military and civil joint projects is that Britain is involved in only two of the major projects and faces the strong possibility of being squeezed out of two other major projects, the M.R.C.A. and the European air-bus. The question one immediately asks oneself is what happens if the British aircraft industry does lose out on these projects. Will the Government finance the industry to go it alone with British projects, or will the Royal Air Force be reduced to purchasing American or French replacements or B.E.A. to purchasing an American or European air-bus?
The measure of the success of collaboration for the aircraft industry has up to now in my opinion been very frustrating, and the reasons, I believe, are mainly two. The first is the problem
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of national prestige, coupled with a deep I suspicion among the partners as to what role and share of the cake each will get. And the second is lack of central control, as the noble Lord, Lord Kings Norton, said, of each project, leading to delays and rising costs and much frustration. From all of this I believe that the British aircraft industry has a special case now for careful Government protection in European collaboration. It is by far the largest and most powerful partner, twice the size of the French industry, six times the size of the German industry. And for that reason it is the most vulnerable. It has the greatest experience and knowledge and it is equal in this field to the American industry. It carries out most valuable export orders and of course is again the centre of a great growth industry.
It is my belief that this great industry has in the past been not strongly enough supported by the Government, particularly over the terms of agreement of the European project. For instance, over the five major projects the British airframe industry has been given only one design leadership and that was the leadership of the ill-fated A.F.V.G. project. I really do not think that is very good. The British equipment industry has also, I think, had little protection. In the case of the Concorde, Sud Aviation has tended to go to the American aeronautical equipment companies when no suitable equipment is available in France. On the other hand, to give the Government credit, the British aero engine industry, and Rolls Royce in particular, have been supported particularly over the European air-bus project. If, however, the project is built without Britain it is doubtful in many people's minds whether Rolls Royce would in fact win the contract.
I would end by saying that basically European collaboration must be right in the long term view. I believe our experience up to now has been very frustrating, and I hope the lessons have been learned. What I believe is the real problem facing the Government and the British aircraft industry to-day is not the long-term future of European co-operation but the immediate threat of an apparent policy of a so-called European partner to exclude us from two of the major projects to come, the air-bus and the M.R.C.A. If this threat should

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become a reality, the British industry would, I believe, be faced with a serious danger of becoming merely a sub-contractor of the future, unless the Government are prepared to back it on a "go-it-alone" policy with British projects. The noble Earl, Lord Bessborough, described his Motion as an Easter egg which he hoped was not infertile. The proof of infertility will, I think, be judged by the way the noble Lord, Lord Chalfont, replies to the debate. I hope that in the case of the aviation industry he will be able to say something to reassure the Government's support for the industry. Such support now seems more than ever vital during these rather turbulent times of European co-operation.
6.15 p.m.
LORD SHERFIELD: My Lords, we are all grateful to the noble Earl, Lord Bessborough, for introducing this Motion. It covers a very wide spectrum, and the aspect on which I shall mainly concentrate is the danger of using technology for political purposes. It has been said with truth that this country is ahead of other Western European countries in most fields of technology, though many of the European countries are making rapid strides. Since the direct road into Europe is blocked for the foreseeable future, it has no doubt been very tempting to use such technological advantage as we have as a stalking horse to try to get ourselves in by a roundabout route. I was on the whole encouraged by the approach of the noble Lord, Lord Chalfont, on this matter, and I think that I may be speaking on very much the same wavelength.
Apart from specific projects and proposals, some large kites have been flown from Whitehall; for example, the proposal for a European technological community, whatever that meant. That kite has, I think, been hauled down and been replaced by more concrete proposals; for example, that for a European technological institute, to which the noble Lord, Lord Wynne-Jones, referred. On specific projects, past experience illustrates the hazards of trying to exploit technology for political ends. The ELDO proposal, for example, was designed to off-load Blue Streak on to Europe. It was not a success, and we were, in my personal view, quite right to decide to
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come out of that organisation. Perhaps it is "offside" to comment on the Concorde so soon after its maiden flight, yet its story demonstrates what can happen when a political objective is paramount. We must all hope that the Concorde will prove to be a viable commercial aeroplane. I was very much encouraged by the optimism of the noble Lord, Lord Trefgarne, on this subject. However, I suspect that the Government were quite right to try to cancel it on technical and cost grounds five years ago. But they found that they were caught in a political net from which there was no escape.
LORD TREFGARNE: My Lords, I wonder whether the noble Lord would allow me to intervene. He mentioned Concorde. I accept, despite my optimism, that the Concorde must prove itself in its test programme to justify ultimate production.
LORD SHERFIELD: I thank the noble Lord. I would illustrate my theme in the context of atomic energy, the area of which I have the greatest experience though I recognise that I may now be somewhat out of date. It is in the field of atomic energy that we have the only technological community which has so far been brought into existence, Euratom, and its history clearly brings out the difficulties inherent in this type of organisation. Frustrated by nationalistic policies, saddled with an expensive research programme mainly directed to the development of a reactor probably without a commercial future, it gives clear indications of what to avoid in the future.
Happily, atomic energy also provides an example of a successful venture in European technological collaboration, the Dragon project. It has had the advantage of a specific objective, the development of a reactor prototype with commercial possibilities. It has the further advantage of the management having been in the hands of a single country. Here I should like to support strongly the views of noble Lords who have advocated this principle of single management as opposed to separate management and separate design and development teams. Admittedly, there were some delays due to the international nature of the project and to the difficulty of awarding and carrying out contracts in a number of countries, but national projects are also subject

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to delays, and the Dragon was not greatly out of line in this respect. This project has been notable for its low political content and minimal Government interference. The design has now been taken up by a European industrial consortium, British, German and Swiss, and is being marketed on its economic merits.
My next point, which has a strong bearing on the character of future projects, is the progress now made in this country, the Netherlands and Germany in the development of isotope separation in uranium by the centrifuge method, to which a number of noble Lords have referred. The news that an agreement on the shape of this project has been reached between the three countries is welcome. I do not know whether there has been a technological breakthrough in this most difficult process, and I hope that any temptation on the part of the Press and others to overplay the prospects will be strongly resisted. Atomic energy projects have suffered severely in the past from premature and exaggerated claims of industrial and commercial success.
If this process really now shows promise of being technically feasible and economically viable on an industrial scale, then it may well be more suitable for the satisfaction of European needs for low enriched uranium than an increase in diffusion plant capacity. But I trust it will be left to an industrial consortium or consortia to develop and market the process. I was encouraged by reports in the Press that this is in fact the intention and that there will be one prime contractor to build the plant, and a single marketing organisation. I listened carefully to what the noble Lord. Lord Chalfont, had to say on this subject, and I found it reassuring as far as it went. Of course, I realise that there are international implications in this project; notably that there is an inspection problem in relation to the proliferation of nuclear weapons, and that this must be handled between Governments. But otherwise I hope that the project will not be dealt with as a matter of high political significance, but rather as a co-operative industrial and commercial undertaking.
I do not suppose that there is any field in which there is a greater duplication and waste of resources in Europe than in
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the field of fast reactor technology, which was mentioned by the noble Earl, Lord Bessborough, and by the noble Lord, Lord Todd. The extreme nationalism of the European approach to this subject is the prime cause of this duplication; and in view of the major lead in this field which this country enjoys, we cannot be blamed for it. However, now that the fast reactor is on the verge of commercial exploitation, it seems that a fresh attempt should be made towards some rationalisation of the European effort.
Here, again, I consider that this attempt can best be made at the industrial level, and the first step so far as this country is concerned must surely be to commercialise the work on the Dounreay fast reactor by transferring the responsibility for the construction and completion of the prototype to industry. I have therefore noted with some pleasure that there is a proposal to transfer the Atomic Energy Authority fast reactor team to one of the consortia, and I hope that any difficulty there may be in doing this will be resolved as quickly as possible. The sooner the Nuclear Power Group takes charge, the sooner it can explore the possibility of collaboration with other European industry.
This brings me to the question of nuclear fuel. Here the Atomic Energy Authority has already taken steps to collaborate with Europe by setting up joint fuel companies in Italy and Germany, with the Italian company making progress. This is another field in which it should be possible to operate by means of a European consortium at the industrial level. But a further step needs to be taken in this country before great progress is likely to be made in this direction. This step is to transfer the nuclear fuel operations of the Atomic Energy Authority to a separate company in which, while the Authority may have a substantial holding, it would also take industrial partners who are already involved in the nuclear fuel field, like Rio-Tinto-Zinc and Rolls Royce. This was one of the recommendations of the Select Committee on Science and Technology, and it would be interesting to know what progress is being made in putting this recommendation into effect. Perhaps the Minister may be able to say something about this matter when he comes to reply. There is not much room for delay in this field if we are not

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once more to be overtaken by an international company based in the United States.
Much is made about the success of CERN as a co-operative venture in the field of higher energy physics, and it has indeed been a success, but it is well known that international collaboration gets easier as the project approximates to pure basic research, and progressively more difficult the nearer you get to industrial and commercial application. The objective of CERN, for all the huge sums invested in it and proposed to be invested in its possible successor, is pure research. The same is true of nuclear fusion, a field in which Euratom can claim some success.
Judging from these precedents, I believe better results are likely to follow in the future by dealing with most large collaborative schemes as industrial and commercial enterprises rather than as political or prestige projects. Nowadays, Governments are so heavily involved in research and development, and indeed in national industrial applications, that it may be impracticable to denationalise such ventures altogether. My belief is—here, I think I am saying in different words the same thing as the noble Lord, lord Kings Norton—that they should be approached on their economic and commercial merit and left as far as possible to the industries in each country to work out. I have no recent information as to how Foratom is getting along, but I think that this organisation might serve as an instrument for the kind of European industrial collaboration which is needed in the nuclear field.
I submit that political advantage (at all events, in successful cases there will be substantial political gain) should be treated as "fall out" from the technological collaboration, rather than the other way round. It seems that in the past projects have been selected for political reasons and the economic and commercial advantages taken largely on trust. Technological success, as many American examples show, is due more to management than to scientific research, more to practical organisation and proper market research than to political motives: one design team, not two; single management for each project, not a duumvirate or a triumvirate. These are preconditions for success. Official supervision may indeed be necessary where
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Governmental money is involved, but it should not lead to interference or to an attempt to control management. There is, however, one area in which collaboration is essential on a Governmental level, and that is in NATO, where the Scientific Committee offers an important forum for European and European/North American scientific collaboration. With the revival of support in the evolution of NATO as a result of the Czechoslovak crisis it would be interesting to know—perhaps I should know—how this organisation is progressing.
There is just one more view which I have to express, arising out of inter-Governmental co-operation, and that is that the lesser should be preferred to the greater. If a Community or a new organisation is proposed, settle for an Institute; if an Institute is proposed, try for a specific project. The International Geophysical Year and the Year of the Quiet Sun were examples of successful international scientific collaboration without the need to set up any permanent international organisation. Such an organisation, even an Institute, involves the creation of a vested interest and an international bureaucracy, with all the expensive administrative consquences that flow from it.
One word, in conclusion. The noble Earl, Lord Bessborough, referred to Mr. Christopher Layton's book, European Advanced Technology—and very interesting it is. But I would strike a note of of caution. The book seems often to asume that Europe is as we should like it to be, not as it is. The programme it advocates is so ambitious as to be unrealistic in terms of current European attitudes. We shall, I fear, have to be content with more modest and more partial solutions in a smaller number of cases. I have ventured to suggest one or two in areas of which I have had some experience, but even so I fear that I may have been propounding counsels of perfection.
6.32 p.m.
LORD ARWYN: My Lords, we are all grateful to the noble Earl, Lord Bessborough, for initiating this debate and giving those of us who have given a thought to various aspects of the subject an opportunity to place their conclusions on record. My noble friend Lord Chalfont stated that a Convention report

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on the European patent situation might be expected. For the five minutes or so which I intend speaking I should like to concentrate on that one problem which must be solved before any real, cohesive technological co-operation can be developed and stabilised.
There is a long history of the lack of co-ordination in the practice of patent law, and the differences have to be experienced in order to realise how wide they can be between one country and another. The need, therefore, to have another and. I hope, final examination of these differences is an urgent prerequisite to any progress in co-operation, especially where the products of research are brought to fruition. Such an examination might prove a greater degree of possible kinship between us and one or two of the nations of the E.E.C. A start has to be made to finalise this problem. This start could be one of the "limited and specified spheres" which the noble Lord. Lord Gladwyn, suggested in his speech in this Chamber on March 4. From a Convention report, which should be thorough, an end could be made of the differences in patent law and practice and a new European pattern could emerge. It would be one problem we could solve outside the Treaty of Rome. Until this particular problem is solved there will always be the danger of handicapping complete technological co-operation, if not of crippling it seriously.
My Lords, my right honourable friend the President of the Board of Trade announced on May 10, 1967, the appointment of a Departmental Committee to examine and report on the British patent system and patent law. He also stated his intention to set up a Standing Committee to advise the Board of Trade on more urgent questions of international collaboration in patent matters. If this Standing Committee has been appointed I should like to ask whether progress has been sufficient for a report in the not too distant future.
From the information in the second paragraph of page 29 of the brochure entitled Britain and International Scientific Co-operation we learn that:
"Since 1945 much discussion on harmonisation of national patent laws and on the possibilities of some form of international patent grant has taken place"—
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I repeat, since 1945—
"and is continuing—for example in the Council of Europe and among member countries of the E.E.C. and EFTA and, recently, at the Secretariat of the Industrial Property Union.
"In 1962 the E.E.C. countries published a draft convention relating to a European Patent Law and the Board of Trade issued a translation. At that time the United Kingdom Government said that if, as seemed likely, the final convention were satisfactory it would wish to accede provided that it could do so as a full member."
This was in 1962. We are now in 1969, and we are not yet members.
My Lords, we are now discussing what is possible within "the limited and specified spheres" which were suggested by the noble Lord, Lord Gladwyn, and if we take the limited and specified sphere of approach one need is to harmonise and, if possible, standardise the form of international patents of European industry, if European industry is to close the technology gap. There are difficulties in the way; one, of course, is of language as well as practice, but the English language is becoming increasingly more of a lingua franca even for the Japanese, as well as for other countries. I think it would be right to say that the standards of British patent agents are on the highest professional level and could very well be included in the basis of a code of international conduct.
Our approach to patent law is based on our common law, and the Continental system is based on civil law. There is a considerable difference. It is sad, even ironic, to realise that we in this country started the patent system way back in the seventeenth century. Now we have to wait upon others whose systems are yet lacking in many of the fruits of our experience. We should be ready now with a new initiative of our own to unite, step by step, with, say, Germany and Holland, and others who might then see the advantage of such co-operation. Ultimately we could agree on a form of European patent; and unless we do I cannot see full-scale development of European technological co-operation at all. One thing I think is certain: the United States, especially the big companies in the United States, would welcome the institution of a European patent control system. If this step can be achieved, the closing of the technology gap could extend beyond Europe.

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In conclusion I would say this. The need was identified and pinpointed 24 years ago. Is it not time that we took the initiative in a new limited approach, in the hope that the merits of our efforts to seek collaboration will inspire others to co-operate. Even success in a limited approach must be pursued with determination before we can establish a new and lasting foundation on which good will can be built. My Lords, I apologise that in a few minutes I have to leave for another engagement and I therefore regret that I shall not be able to hear the speech of my noble friend Lord Chalfont in reply to the debate.
6.40 p.m.
LORD IRONSIDE: My Lords, I am grateful to my noble friend Lord Bess-borough for putting down this Motion and introducing it so skilfully. As my noble friend mentioned, we have seen the publication of Christopher Layton's book entitled European Advanced Technology which takes the reader on a conducted tour through the technological gardens of Europe with a nicely embroidered commentary about what is blooming and what is not. Mr. Layton considers that a good deal is not blooming. Those who are specialists will recognise the levels of perception that he achieves, and certainly his book and for that matter a good deal of other published material drives us into realising that there are critical thresholds in most advanced sciences and technologies below which our efforts can largely be dissipated and above which we have to work in order to achieve any success at all, but that in the latter case the rewards sometimes can be very high indeed.
It has been said that history is not a good guide because we have improved since then, and if we have it is because intuitive thinking has become a highly technical matter. Some promising lines of development or scientific research fail to yield results as expected after enormous effort and sums of money have been expended, and in research in particular misses are probably more frequent than hits. If it was easy to get hits all the time, then we should not be troubled with the agonising decisions about the allocation of national funds. Here is where the difficulties lie—in trying to get our priorities right and in trying to deploy
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available funds to the best advantage. And it does not always mean "going it alone". Results can be achieved by co-operation on an international basis and my noble friend's Motion seeks to highlight this in Europe. There are two main matters to consider: first, to seek ways of building up joint research efforts in order to save money and avoid duplication; secondly, to seek industrial alignments to obtain economies of scale, and in both cases to match United States progress. There is no point in joining in international co-operative ventures unless there is some particular point in doing so on the lines I have mentioned.
In the scientific field, it is "big" science that strains national budgets and the co-operative ventures in space and high energy physics are worth reviewing. I should like to declare an interest in both these fields. As the noble Lord, Lord Chalfont, has said, CERN, which started in the early '50s as a European centre for the study of high energy physics, has matched the United States' efforts in this direction and can be regarded as an extension to the facilities of a number of European universities, facilities which any one country would find difficulty in affording and which has given the Treaty countries in Europe the opportunity of making a major contribution to the advancement of fundamental science in the field of particle physics. In the words of the Convention,
"CERN provides for collaboration among European States in nuclear research of a pure scientific and fundamental character and in research essentially related thereto."
Its output is therefore largely in terms of scientific knowledge. Accounts of all work are published and annually it publishes a highly professional report, not the sort of report which could be debated in your Lordships' House.
CERN has developed steadily over the years and has recently conceived a number of expensive projects indeed, most of which have attracted the support of the Treaty countries, the latest of which—and most expensive of all—is the 300 GeV accelerator which, if it goes ahead, is to cost £150 million by 1977. Assuming a 9 per cent. growth rate in this country of Science Research Council expenditure per year, the experts believe that our contribution, which is around 25 per cent., to the 300 GeV project can be contained

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within the existing budgets as distributed over the many fields of science. The technical case for the 300 GeV accelerator has been made out and the implications of the proposed United Kingdom involvement have been fully discussed in the White Paper on the subject. As a result, the Government have concluded that we cannot justify participation at present on financial grounds. Unfortunately, nobody has yet thought of a cheaper way of carrying out particle physics studies and the scientific merit of the new accelerator is not in doubt. If we have the money, I believe that this is a pure science investment which is justified subject to safeguards.
But what is going to happen? This is one of the fields where making headway clearly means working above the critical threshold of effort and facilities. If we do not contribute in due course to the 300 GeV accelerator, and the other Treaty countries in consequence decide to abandon the project, then to remain in a viable position in this field of science our national effort would have to he stepped up above the threshold—and probably the CERN contribution anyway—otherwise we shall have to consider the possibility of opting out of the main high energy field and reducing our efforts to fringe work. Will the noble Lord, Lord Chalfont, in his reply he able to give us the Government's present thinking on participation in this particular venture in the CERN programme and, for that matter, their general thinking on the future of CERN? Do the Government feel that the Convention could be renegotiated in any way in order to improve it?
LORD WYNNE-JONES: My Lords, will the noble Lord explain why he thinks that it is desirable that this should be done in Europe, rather than in America or in the U.S.S.R.? I should have thought that it is equally possible for scientists to share in any activity of this sort, wherever it occurs.
LORD IRONSIDE: I would agree with the noble Lord, Lord Wynne-Jones, on this point, and in fact it may well be the best thing to co-operate with other countries not on a European basis, but on a world basis.
CERN has been one example of how to organise a European scientific centre
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and keep it going over the years. The ingredients needed for doing this are imaginative programmes and continuity. But there is a grave danger now that a gap could occur after the completion of experiments using the intersecting storage rings. However, there is one other aspect of CERN which has caused some concern to a great many people. It is that contracts gained by British industry for supplying CERN facilities have been few and far between. Reasons have been argued over and over again, but I believe that it is not surprising in view of the fact that CERN have no special mandate to encourage technology and industrial participation, which, incidentally, is in direct contrast to ESRO. But I feel that in cases of European co-operative ventures, contracts to industry count as benefits, and if the ground rules are well-conceived British industry can compete as well as any in Europe. One cannot force industry to get contracts with CERN, but I should be interested to hear whether the Government have given further thought to this particular aspect of CERN affairs and what new conclusion they have reached.
I should like to talk about ESRO, which was conceived in 1960 and is similar in principle to the CERN organisation and I think has a better set of ground rules, even though its charter is slightly different. I have been personally connected with the ESRO organisation as a supplier. I have seen it grow from a small hut in the gardens of Delft University to the network of establishments which now exist in various Treaty countries. It is a remarkable rate of growth in these initial years.
The convention defines that provision must be made:
"to promote collaboration among European States in space research and technology exclusively for peaceful purposes".
Thus industrial participation has been recognised from the start and British industry has received a speakable share of contracts, although still not in proportion to the subscription. Unlike the CERN situation, industry has been able to identify future products more readily and has probably, therefore, put in greater efforts to get business. Also, one cannot deny that there is a strong British base for aerospace business, anyway, and this has been a natural advantage.

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However, the present institutional arrangements are far from ideal from the point of view of ESRO, ELDO and CETS. In fact, the situation in ESRO deteriorated in 1966 to such a point that it lost its legality in the planning sense. I mean by this that it could not plan beyond 1971, and this, in the European technology centre in Holland, has certainly led to a lowering of morale and a loss of the best scientists. I do not want to detract from ESRO'S successes, as the Organisation has launched three scientific satellites with the aid of U.S. launchers, and all these satellites have been very successful indeed. This is a considerable initial achievement, but there has been a serious gap in the programmes which has brought great disillusionment in those areas.
Combination of space interests in the ELDO and ESRO organisations seems logical, so that European requirements for launch vehicles can be organised by one European space authority which can manage scientific exploration in space, as well as the more important phase which we have to consider of application satellites which, in the estimation of the broad opinion of forecasters, could bring benefits of hundreds of millions of pounds per year to Europe and the United States for a number of years ahead, for what is, by space standards, a small investment of something like £100 million. Surely this is the sort of thing in which we should have a stake.
It is all very well for ESRO to plan a large astronomical satellite, which, incidentally, if it had come off might have given ESRO technical indigestion. And the Jupiter probe—an idea which NASA has been trying to sell to Europe for a long time—would that have worked out? These are scientific projects of great magnitude. In United States' eyes we may be best at doing the scientific missions, but if we do not have a stake in applications our industry will not obtain the full benefits of exploiting space techniques. I am not here referring only to the business of making a satellite body and designing the means to launch it into this or that orbit; I am referring to all the techniques for exploiting earth resources—communications, broadcasting and monitoring the atmosphere and the weather. There is a long list of disciplines involved, such
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as optics, photography at different wavelengths, radar, infra-red, lasers, spectroscopy, television and general electronics of a very vast nature. Analysis on a grand scale, only possible with computers and highly-developed software, would be required, and hence a sophisticated technical approach is necessary.
One might argue that it is the space fraternity which has been stimulating the use of application satellites to keep themselves in business. But some attention has been forthcoming from the earthly professions who would make use of the remote sensing and other application satellites. I have heard it said, for example, that in agriculture there is no interest in obtaining information remotely from a satellite; but, on the other hand, I find people in the fields of geography, geology, oceanography and meteorology who have expressed considerable interest. I should like to see the professions studying this problem in earnest to see what it is they want from these satellites. The reason I say this now is that there is the more delicate question of organising a resources satellite chain from the diplomatic point of view, so that distrust is not engendered by the countries who may feel that they have natural resources to exploit or to be exploited. Clearly, the United States and Russia can put up satellites and can use them in what way they like, without much objection at the moment. But if European States are going to co-operate, it will be much more necessary to arrange international agreement as soon as possible. It is far more difficult to do this at the moment than to put a satellite up into space.
I now turn to the question of a European Technical Institute which I believe, if agreement could be reached, could focus its interests on to the really important fields of technical excellence, such as computers, underwater studies, transport and power generation. Little has been said in detail by the Government about their idea of such a technical institute. Do they have in mind, for example, that this will be an institute like the International Institute of Refrigeration, which divides itself up into sections or commissions and conducts its business at conferences and publishes papers—in other words, a rather loosely constituted sort of institute? Or is it to be centred in one enormous permanent

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building in one country? Probably this would not be the best idea, in any case, but it might be very sensible indeed to consider one institute with different wings or centres of excellence in different countries.
I say this because we have no European organisation centred in this country at the moment—at least, not one of which I am aware—and I think that in any future European organisation it would be essential to have an establishment here, if for no other reason than a psychological one. The Dragon reactor at Winfrith, which was mentioned by the noble Lord, Lord Sherfield, is a good example of how a European establishment works in England, and I believe that Continental scientists were very impressed by it. The very fact of having European centres here would, I am sure, give a lead to British industry as well as to Europ: as a whole. If one is to get the best out of European co-operation, it does not seem logical to me always to have establishments located on the Continent of Europe. I shall be grateful if the noble Lord who will reply for the Government will say in more detail what sort of technological community is being proposed. Is he able to spell out some of the principal points which the Government have in mind?
Co-operation in science and technology ultimately strengthens industry, and it is the birth of new co-operative ventures from scratch that inspires, whether they be scientific or industrial. I believe that the most difficult thing to do is to make a success of a joint venture which picks up old projects and facilitates and tries to refashion them. Was it right, for example, to build ELDO on Blue Streak? Would ELDO have succeeded better if the European designs had started from scratch? Similarly, if a joint European venture in fast breeder reactors is set up, I believe that success would not necessarily be assured by throwing in the Dounreay reactor to seed the growth. The basis of real success in reactors might be to start work on an entirely new facility to meet considered European needs.
Scientists, it seems, do not readily like to work on other people's partly completed schemes—the "not invented here" factor comes into operation. This after
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noon the high-speed centrifuge was mentioned, and this may be thought to be a promising project to enter into because it is something which is starting from scratch. One of the most difficult problems in connection with this venture will be the mechanical engineering of the centrifuge, so that it will work properly at the very high revolutions which will have to be achieved—something of the order of 100,000 r.p.m.
A new body which is likely to prosper is the European Molecular Biology Organisation. The big question here is: should there be a European laboratory? In the field of bio-medicine the organisation of people to work together in one laboratory does not seem to offer advantages over and above the exchanges which naturally occur. Molecular biology, which is more specialised, may not demand fantastically expensive facilities like CERN and ESRO, in which case a European laboratory will, in my view. have no particular advantages. In fact, the European Molecular Biology Conference, established by twelve nations in the CERN, Agreement on February 13 of this year, has decided that a central laboratory is not yet necessary. Medical science is in fact the most international of all sciences, and the exchanges and publications are prolific. But if very expensive facilities are required for molecular biology later on, then I think there would be some sense in creating a European central laboratory.
My Lords, in conclusion I think that the scientific areas that need strengthening most—
LORD SHACKLETON: My Lords, may I interrupt the noble Lord, whose speech I am following with great interest? Has he any further information he can give on this subject? I have heard a great deal about the controversy over the European Institute for Molecular Biology. He raised doubts; he mentioned them. I wondered whether he thought it was worth pursuing the arguments as to why this should be such an inappropriate area. He referred in particular to the fact that this was, in his opinion, unsuitable; that it was more suitable to small laboratories. I was wondering whether there is anything more he can say, because I think it is a very interesting subject, and it is rather depressing if this is not a suitable area.
LORD IRONSIDE: My Lords, I think that this is a suitable area for co-operation, but I must admit here that I have not read the detailed report on the plans for setting up the central laboratory. However, from other comment that I have come across I understand that the actual outlays for molecular biology are not very great; and the latest comment that I know of is that in fact this laboratory does not need to be considered yet. If some fantastically large facility like an enormous electron microscope, or something like that, is required, then I can see some sense in considering this particular laboratory further.
I think that the scientific areas that most need strengthening are, first, the exploitation of computer technology (and I have not mentioned this yet), in all its aspects of process control, number crunching and language—particularly language, perhaps, because here there are a variety of languages, rather like the variety of railway gauges which existed in the last century. And it may be that a European Institute concentrating on computer languages might be able to evolve what might even become a standard language. Then management techniques here are also very much concerned with computers; and in the next decade, particularly, I think, oceanography and nuclear power. There are other aspects, but I think that these are the really important ones.
7.3 p.m.
LORD GRANVILLE OF EYE: My Lords, like the noble Lord I always listen with interest to the noble Earl, Lord Bessborough, to whom we are indebted for introducing another of these technological debates. He knows his subject so well, and he always makes it appear so easy to those who have the opportunity to listen to him. Yet sometimes I wonder what these debates in fact achieve. The Opposition itemise a number of queries and the Government itemise a number of replies, and that seems to be that, until the next debate. Indeed, my Lords, I sometimes wonder, listening to these debates and to the complex technological problems which have been referred to, how a busy Cabinet can take decisions on these highly technical and scientific problems at all.
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Later, when the Government have listened to the experts and sorted out the various schools of thought—and there are many—and taken a common sense judgment on policy, in many cases these decisions taken by the Government have to be put into international agreements, both in the public and in what has been referred to as the private business sector—which of course explains why my noble friend the Minister of State is replying to this debate. But I would say, having listened to the speeches to-day, that we appear to be making progress with several projects which arc worth while, and it is my view that it is important to our standard of living in future years that we do so, for we have missed the bus so many times in the past, or have finished up buying American.
The noble Earl, Lord Bessborough, referred, as did other noble Lords, to the controversial Concorde, and I should be glad to have the assurance of my noble friend Lord Chalfont on this project. I hope that, after the tests have been made in France, and when the Concorde in this country has been flown here, the Government will take the decision to go on with this project. It has those who "knock" it in the Press; it has those who are in favour of it. But I believe that the balance of considered opinion about this, both in civil aviation and on technological grounds, will be that this aircraft not only can be a great dollar-earner for this country, one that will be able to help in a very considerable way our balance of payments problems in the 'seventies, but, even more than that, perhaps, can help us establish, or re-establish, the European lead in civil aviation.
My Lords, the great aircraft plants in this country, on the Continent and in the United States of America are going to need important projects. Both here and on the Continent, and in the United States of America, the competition is going to be intensive. Since 1935 we have increasingly, year after year, carried a great deal of our national economy in armament projects of every kind, and in our engineering and technological industries. if we get peace in Vietnam, as well as a measure of international disarmament, it will mean that Governments in all of these countries will have to turn to civil projects as never before. I ask your Lordships: in all the work

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that is going on in research and technical development on the Continent, in the United States and in this country, are we ready for this? I believe that America is planning this now, and I believe that this is very much in the mind of President Nixon when he discusses the international industrial problems of the future.
I suppose that since 1935 a great deal of the industry of America, the Continent and this country has been concerned in what is referred to by some people as "the wasting products"; and once these vast orders for military aircraft begin to wane, we shall be hard put to it to find projects for the great plants in all countries. It is not enough to say that we are going into consumer goods. Unless we can face this problem in research and technical developments now, we may in the 'seventies be facing large-scale unemployment.
My Lords, the noble Lord, Lord Sherfield, and the noble Lord, Lord Kings Norton, said that many of these international projects in the public sector should be left to private industry to undertake themselves. I only hope that he will have the opportunity one day to go to the United States of America to try to sell British aircraft. I suppose one of the finest salesmen we have had there is my right honourable friend Mr. John Stone-house, who was very successful in this respect. But the moment you go to the United States of America as a representative of private industry to sell aircraft, your customer must immediately refer to Washington; and it then becomes a political matter, a matter for the Government. To think that you can go, as a representative of private industry here, to the Continent or to the United States, or to other large markets, and sell without Government backing, without Government assistance on currency, is to live in Cloud-Cuckoo-land. More and more, it is the Government that we depend upon to see that we get these large-scale orders, these great capital goods orders, that are so important to our balance of payments.
THE EARL OF KINNOULL: My Lords, does this apply to aircraft equipment, as well as to aircraft?
LORD GRANVILLE OF EYE: My Lords, if you ask any salesman of British
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aircraft equipment who sells in the United States he will answer: Yes, it does.
My Lords, as my noble friend Lord Chalfont said in his speech, we all know it to be true that we have led in technology but have lost over marketing. Of course, whether it be in films, in aircraft or in anything else, America, with a population of 200 million against our 50 million, has a bigger market. But as my noble friend has said, this will not be so if we have the common sense to pursue our ends in combination with Europe, and with the Commonwealth. We should never forget that Australia turned to the United States for much of her technology and aircraft research and development as well as hardware because here at some time we forgot the Commonwealth—and in this thought I include Canada.
My Lords, I suppose that the one thing we have learned in recent years is that no country in our economic position and with our resources can afford many of these important and worthwhile projects which will have a great future in the '70s and '80s. No country alone can afford them: but together, in association with the European countries, we can; and it is this end that we must pursue. Of course, as many noble Lords have said in this debate, the amount of money available is one of the factors to be taken into account in deciding on any projects in competition. Which project? How much money is available? The strain on Ministers in making their decisions is considerable; the strain on technical personnel throughout industry is considerable, quite apart from the problem of the brain-drain, because the Governments of all large countries are to-day involved not only in the economic management of their nation but in these technological problems in the public and private sectors. But if we go on in the way we are going—and I believe that we are going in the right direction—the prize is great. I hope that the Minister will go forward, and will even take risks—and particularly on the Concorde—to try to achieve this aim.
7.14 p.m.
LORD ST. OSWALD: My Lords, many speakers, and most justifiably, have congratulated my noble friend Lord Bess-borough on setting down this Motion for debate and on the manner in which he

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opened it. The noble Lord, Lord Wynne-Jones, in the most charming manner, chided him for occupying part of his speech with passages which he considered would be better delivered on the hustings. Of course, it would be pleasant, for a naturally peaceful and friendly character like myself, to be able to place the great subject of technology, especially in the setting of to-day's debate, above and aside altogether from politics and the conduct of the Government of the day. It would he a particular relief in view of the fact that the debate is to be wound up on behalf of the Government by the noble Lord, Lord Chalfont, who inclines to take everything I say so terribly personally. It would indeed be agreeable to saunter through the technological garden of Europe pretending that everything in that garden was lovely with the help of British green fingers. It would be pleasant but not, I think, responsible in a Parliamentary sense.
In this debate we have had to take into account the vital importance of technology to the prosperity and standard of living of any advanced nation and, in particular, ours, so dependent through history on the skills of the people rather than on raw materials. We have had to take into account the native enterprise as well as the skill of our people which has enabled us to overcome so far, but only just so far, the handicaps of a relatively restricted home market and the lack of some most important mineral resources. We have had to take into account the impetus and inventive drive of the brilliant individuals and design teams which were employed within our borders and which were envied by many other lands five years ago.
All these elements have been deprived, disheartened or reduced in some degree during these last years when expectation has turned often to a form of disillusion. We have had to take into account—and this must be the most poignant factor of all for the noble Lord. Lord Chalfont—the great opportunity which our technological virility gave us in our bid to join the European Community. It should have been, it could have been, one of the principal keys to the Continent of Europe—to open the door. Where it has been used at all by Her Majesty's Government, it has been used too often to turn the lock against us, partially, only partially, but discouragingly.
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In such circumstances, however tenderhearted the man at this Dispatch Box may be, those failures cannot be ignored nor the perpetrators comfortably and altogether excused. I doubt whether there is any heart more politically tender than my own. I will therefore spare the noble Lord, Lord Chalfont, in two ways. I will be as brief as I can in summing up the content of this full and fecund rebate, frequently critical. I will also state, in deference to the noble Lord's acute sensitivity, that I do not personally believe that he had any responsibility for any of the failures to which I soon have to refer. I will personally drape him, figuratively. in a whiter-than-white sheet in that respect.
LORD CHALFONT: My Lords, may I briefly interrupt to say that I doubt very much whether the noble Lord will be able to lay any failures at the door of the present Administration; but if he does he must understand that I share them.
LORD ST. OSWALD: My Lords, the noble Lord is very noble; for there are a good many. However, to begin with, I ought to say that there are areas in which the Government can still retrieve the position, or even make an ad vance over new ground. It has been pro.)osed that a European Institute of Science and Technology might be set up by O.E.C.D., probably at Maastricht in Holland. France has not yet agreed to support this although I understand that we, together with the Dutch and some other European countries, have given support to the idea. The noble Lord, Lord Chalfont, dealt with certain moves towards this and I found what he said reassuring and encouraging as far as he was able to go. I am not minded to press him further unless he feels that by enlarging on what he said about three and a half hours ago with reference, for instance, to an enlarged Aierain Committee he can give me and others further encouragement.
My Lords, the Government can. of course, give encouragement to private firms to work together on a large scale. One of the three Continental models for this is the Agfa-Gevaert consortium mentioned fairly extensively in Mr. Christopher Layton's book. These are the multi-based European industries. Can the Minister tell us what our Government are doing by way of encouraging private

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industry in Britain to set up or join in consortia across the Channel?
I am not going to dwell at any great length on the Concorde. My noble friend Lord Trefgarne and others have done so. I pray that this great aircraft may achieve success, in spite of an early effort to kill it off shortly after the Government assumed power. I wish it success for a great range of reasons, the maximum of success; and will not grudge and will not withhold any congratulations which accrue to members of the Government, in particular (and I am happy that he is sitting in the Chamber) the noble Lord, Lord Beswick, and the noble Lord, Lord Chalfont, who have been its enthusiastic champions. I went to see the two existing Concordes at Filton and Toulouse in their earlier days, and I was moved and heartened by the concept and its implementation. I was troubled by some of the lost or missing opportunities of closer and more immediate collaboration, but I believe that these shortcomings have since been overcome. Concorde is a reality in the air over France; it will soon be a reality in the air over England, and it is something from which we can all draw satisfaction and pride.
My Lords, there are other joint aircraft ventures on which the future may smile. In opening the debate my noble friend spoke of the Jaguar. He also spoke of the Anglo-French helicopters. He invited the noble Lord, Lord Chalfont, to inform us on the progress or otherwise of the desired M.R.C.A.—the multi-role combat aircraft—and the European air-bus. With regard to the former many of us, I know, would like the noble Lord, Lord Chalfont, when winding up the debate, to be more definite than he was in his opening speech about the lack (as we all hope) of substance in the report of the Dassault offer to the Germans as a substitute for M.R.C.A. To hear from the noble Lord. Lord Chalfont, as we did, that predictions about the R.A.F. receiving eventually the Mirage G were "premature" fell short of the denial which we should like to have. My Lords, my noble friend Lord Balerno, and other noble Lords, asked to what extent the Government are enthusiastic or hopeful regarding the proposed European Molecular Biology Organisation, and this may be one of the
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matters on which the noble Lord will be ready to expound. It was also mentioned a minute or two ago by my noble friend Lord Ironside.
There are four major, thrusting projects in which the Continental countries of Europe counted on our co-operation and even leadership. All have 'been mentioned in this debate, some more extensively than others. But in case the mnemonics have disconnected themselves from the organisations in the minds of some of your Lordships, I will name them briefly now. There is ELDO, the European Launcher Development Organisation; ESRO, the European Space Research Organisation CETS the Conseil Européen des Télécommunications par Satellite and CERN, the Conseil Européen de Récherche Nucléaire. My Lords, the British attitude to all of these is a theme for sadness, a theme of forfeited opportunity and faith destroyed, or at least disrupted.
ELDO and ESRO seem to me the saddest and, in a sense, the most significant of these. The purpose of ELDO was, and remains, to enable Europe to play an independent part in space. The agreement was signed in 1962 and entered into force on March 2, 1964. A change of Government took place in Britain in October of that year. Within 18 months, at the beginning of June. 1966, the new Government had indicated the possibility of Britain's withdrawal from ELDO, but for the time being they decided to remain. Since then, last year, however. a decision has been made to pull out by 1971. I do not know whether the Government will say—I do not think they will—that there has been no irretrievable announcement about pulling out, but they have made clear that our partners cannot count on us beyond that date of 1971.
There has been a further piece of financial sleight of hand regarding the £17 million which the Government undertook to contribute during their remaining years of membership. An amount of £7 million is to be withdrawn—the Government will, I suppose, say "diverted" rather than "withdrawn", as this sum is to be transferred to a project which the Government prefer, that is. a programme of application satellites. I think I am right in saying that this programme does not yet exist, in that it is not yet embodied in a committee. There may be a working

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party of some kind, and I have heard of a proposal for a Governmental conference during this month or next. Perhaps the noble Lord will say whether a date has been fixed for such a conference or what stage the project, or the embryo project, has reached. Will he also say, so far as he can, what degree of enthusiasm and support has been shown by our erstwhile partners in ELDO for an embryo to which we have arbitrarily decided to transfer £7 million which they had a right to expect as part of our residual contribution to ELDO?
The justifying of our withdrawing from ELDO could, it seems to many of us, hardly be called convincing. As I understand it. the argument is that because ELDO, with its reduced budget, could no longer have the same targets as the original ELDO, the new concept—I believe it is called Target Plan T.9—comprehends a different programme, a new programme, from which we arc therefore entitled to absent ourselves and to reduce and cease our contribution. As it was chiefly Britain who brought about this reduction in the budget and thereby the lowering of the target, there is something a little cynical in this line of argument. The noble Lord has said very frankly that he is ready to be more explicit on this issue, and I shall be grateful to him for that.
ESRO came into official being on March 21. 1964. It set itself a very clear programme: the tiring of fully-instrumented vertical sounding-rockets; the launching of two fully-instrumented satellites in near earth orbits; the launching of four eccentric orbit satellites and the launching, in the sixth year of the programme, of two fully-instrumented space probes or large satellites. with the eventual launching of several large astronomical satellites. That was undoubtedly an ambitious programme, but to most of the partners in EsRo it seemed realistic. So far as her contribution is concerned Britain has now set a 6 per cent. annual growth: a ceiling of 6 per cent. This is less than the other partners consider necessary. ESRO counts among its successes the 2,000th orbit of the satellite Aurorae, completed on February 22. Aurorae has now been in orbit for five months with all systems fully operational and collecting valuable scientific data. This is the programme, the success story, on which we have set a gross ceiling of 6 per cent. The other partners, therefore, have the option either
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of cutting down the whole programme at Britain's behest, or compensating from their own resources for Britain's under-investment.
CERN came into being on September 29, 1954. As we have heard in this debate, although a partner, Britain has stood aloof from the major project, that of the 300 GeV giant accelerator. The noble Lord, Lord Chalfont, mentioned other projects receiving better support from Britain, but he will none the less be aware of the disappointment caused by our self-exclusion from the most important project of all. My Lords, we are standing completely aside from CETS, the European Council for Television Satellites, a field in which I should have thought, and others indeed believe, that we should have a distinguished part to play.
All this adds up to a sorry impression of Britain in European eyes. In opening the debate my noble friend related something of his embarrassment in having to defend British reluctance or aloofness. I have had the same experience. It was said to me the other day by a friend of Britain within the Community that we are making it more and more difficult for such friends to defend us and to promote our entry. He told me that the only interpreted reason for this conduct was that we wished to retain as many technological "chips" in our hands as possible with which to buy our place at the European table. Some of them are very high value "chips" indeed, but the nations of urope are not playing roulette. What they wish to see from Britain is European behaviour, as an earnest of our realistic intention and good faith.
The noble Lord, Lord Chalfont, has made a great deal, as he had to, of the touchstone of cost effectiveness. He explained during the speech of the noble Lord, Lord Ritchie-Calder, that he was referring specifically to the ELDO project. It is only fair, I think, to say that until that moment my noble friend Lord Bessborough and I, and, I think, the noble Lord, Lord Ritchie-Calder, and perhaps other noble Lords, had the impression that he was making this explanation of our technological reluctance, across the board. So it is right to emphasise that we are alone or almost

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alone, in that particular partnership. in thinking the project not worth continuing.
One way of looking at science and technology is as part of the great campaign, generally a bloodless and productive campaign, of humanity against the unknown. That unknown can be microscopic or infinite, visible or invisible, tangible or intangible, audible or inaudible. Whatever its form, it is a proper challenge to the human spirit and intellect. It is worthy of doughty campaigners. In that campaign Britain must belong in the front line. It is depressing to observe that on many fronts we have fallen back among the camp followers. If the noble Lord in winding up can give examples of where we are advancing to our rightful place in the order of battle, he will raise the morale of everyone in this Chamber and of many outside its walls and beyond the coasts of our country.
LORD BOOTHBY: My Lords, may I ask the noble Lord why we were not in the front line twenty years ago, when we could have been?
LORD ST. OSWALD: My Lords, the noble Lord has given his own answer about ninety times.
7.32 p.m.
LORD CHALFONT: My Lords, I am in somewhat of a difficulty, because if I were to answer in my winding up speech all the questions put to me we should be here for a very long time and we have another item of business coming this evening. What I propose to do, with the indulgence of the House, is to wind up very briefly, covering a few general points and going very lightly over the major projects that have been mentioned. If any noble Lord feels that any question of his has to be answered, he has two remedies. If he feels that he can contain himself this evening, he can write to me and I guarantee to give him a full answer to his question. If he feels that he really must have an answer now, of course I will give way on any point. I hope this will meet with the approval of your Lordships, because I have already made one long speech this evening.
Perhaps I should begin by saying that I hope the noble Lord, Lord St. Oswald,
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does not think that I am over-sensitive about his animadversions and strictures upon me and my performances. On the contrary, I enjoy a little invective, as he obviously does. I know that it is all in the best possible spirit. Incidentally. I congratulate him on his impeccable pronunciation.
LORD ST. OSWALD: Not quite.
LORD CHALFONT: Well, interesting, if not impeccable. I should like to repair an omission in my earlier speech, because I think that some noble Lords, including the noble Lord, Lord Gladwyn, felt that I had not sufficiently dealt with the central subject, by saying that of course I go a good deal of the way with the noble Lord, Lord Gladwyn, in the case which he made for having some way of discovering and identifying common purposes in technology just as we hope to find ways of discovering common purposes in political matters, foreign policy and defence. As he and other noble Lords have rightly suggested, the Monnet Action Committee for a United States of Europe is an excellent forum for the exchange of ideas of this kind. As we know, this is a non-official forum. It does not commit or represent Governments, simply Parties. But, as the noble Lord pointed out, part of our representation on it includes a member of Her Majesty's Government, and I see no reason why the ideas which we have on this subject of some kind of machinery for identifying and solving problems should not be put forward in that forum and I can assure him that I am confident that they will be.
LORD GLADWYN: I thank the noble Lord very much.
LORD CHALFONT: My Lords, I come to a whole range of problems that have been raised to-night. I think that I should answer on the spot the specific question put by the noble Lord, Lord Jackson of Burnley, because he was asking for information. And I am fortunate enough to have the information. He asked whether British firms were taking part in the European Industrial Research Management Association. I can tell him that they are taking part and that those taking part so far are Lucas, British Oxygen, Distillers, Guest Keen, Parsons, Piikington, Rolls Royce, Tube Investment

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and Vickers—a fairly resounding roll call, I think he will agree.
In regard to the European Technological Institute, the Giscard d'Estaing proposal, I propose to say no more unless I am pressed, than that we are going along with it. The proposal for a European technological centre which the noble Lord, Lord Wynne-Jones, rightly said was a better name for the Prime Minister's proposal than the other, remains on the table, and if anyone wishes to take it up we shall he interested to discuss it with them. We have heard a good deal about the European Molecular Biology Conference, and there has been a certain amount of talk about the laboratory project within this general organisation. I can only say that the idea of setting up a European laboratory, which came in for a certain amount of criticism this evening, is under expert study and I think that it would be wrong for me to make any kind of comment on that until the study is completed. We cannot know what our attitude will be until the experts have had their say.
The noble Earl, Lord Kinnoull, asked about the multi-role combat aircraft. I am sorry that I cannot add to this but I can tell him that within the next two months, give or take a week, there will be a decision on the project definition stage of this aircraft. The air-bus was another question which came in for a good deal of attention and here, unless pressed, I should like to confine myself to answering the specific question put by the noble Lord, Lord Trefgarne, who asked what was the cost of the A.300B and whether Her Majesty's Government would be financing it. I can tell him that the firms which I mentioned in my opening speech, who produced the proposals for the A.300B, estimate the cost, at January, 1968, prices, at somewhat over £170 million but, of course, this is an estimate which could escalate, as everybody knows. There is no Government commitment to expenditure on this project and indeed, as I said earlier, we have not given a view on this estimate.
THE EARL OF KINNOULL: My Lords, could the noble Lord say how much money Hawker Siddeley have now been involved with, as they have been continuing this development for three or four months?
LORD CHALFONT: My Lords, the general position about the A.300B is that we took part in the first stage of this airbus project with the Germans and French. I cannot give the noble Earl details at this moment about the actual financial commitment here, but the firms withdrew their proposals for the A.300B in December, as the noble Earl already knows, and put forward these proposals for a smaller aircraft with an RB.211 engine, costing about £170 million. These are being studied in detail with the French and the Germans. I can only say that our criterion here—this seems to have worried people in other contexts but I really must insist here upon our criterion—is that this project should be commercially viable, and we shall study the proposals in this light. I am sorry that at the moment I cannot give any more detailed information than that.
LORD TREFGARNE: I am sorry to interrupt the noble Lord again, but this is a rather important point. Can he say whether the sum of £170 million he has mentioned—which I take it is the total contribution from all three possible participants—includes the development that may be necessary for the RB.211 engines?
LORD CHALFONT: My Lords, I am afraid I cannot give that information to the noble Lord, but I will write to him and let him know. Obviously, it must be available; it is just that I have not got it at the moment.
I think it would be wise now to come on to the ELDO project, and to do so quite briefly. I think I have said all that I want to say about this matter. I could go through the history of it, and give long explanations of why we declined to go ahead with the additional expenditure, but all I feel bound to say at the moment is that there was no sinister political implication in this. We felt that this continual escalation in costs, which rose to something like £224 million in 1968, from the original cost of £70 million, which is an escalation of considerable proportions, was Teaching a stage where it would be quite wrong for any responsible Government, having to take great care about the allocation of their resources, to go on with the proposals that our Allies were putting. I hope that I shall not be pressed further

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on this point. As I say, I could go into a great deal of chapter and verse, but it would take a long time.
My Lords, on the question of Concorde, the other important point that has been made, like everyone else in your Lordships' House I hope that the success of this project will in the end be achieved. I cannot give any categorical assurances about anything to do with this programme, because we do not know yet exactly how it is going to turn out. Concorde has, of course, proved itself with flight testing, and I think everyone is delighted that it has. B.O.A.C. hope to have the second prototype flying in about April or May, and I see no reason why it should not go on from then.
Unless any noble Lord feels that I have missed something that I should deal with now I should like to wind up these brief remarks simply by going back to the general points which have been made by many noble Lords, and perhaps most cogently by the noble Lords, Lord Jackson of Burnley and Lord Ritchie-Calder: that is the need to apply wider criteria to this whole business of technology and technological collaboration than simply the immediate narrow criteria of cost effectiveness. I agree with this entirely. I agree especially with the argument of the gap that has developed between the rich and the poor countries of the world, a gap that is growing and not getting narrower: the rich are getting richer, and the poor are getting poorer. Unless we are prepared as an industrial developed country to do something about this, we shall be faced with a confrontation of a kind that will make the cold war of the last 25 years look very much like a children's party.
I think that, in this particular context, which I regard as being possibly the most important psychological political problem that we have to face in the last half of this century, Europe can play its part; and this is a part that we, the British Government, want Europe to play. This is not to be a rich man's club; it is not to be a collection of rich white nations all intent upon the importance of their own material prosperity: if it were, then I, for one, would not want any part of it. This must be a Continent which will improve its own prosperity, improve its own
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security, and improve its own political influence: one which will then make that political influence felt around the world in solving the great problems of hunger, race and population, and this terrible and growing gulf between the rich and poor.
As the noble Lords, Lord Jackson and Lord Ritchie-Calder, have wisely said, cost effectiveness is all right, but only if with it goes statesmanship and a proper appreciation of the needs of humanity. I believe that your Lordships may be confident that Her Majesty's Government will have those factors in mind whenever we consider this or any other international problem. We must assess the right priorities for the allocation of our resources, some of which arc scarce. But I believe that your Lordships can be confident that, in doing so, we shall have at heart not only the wider interests of our people, but those of the people of the rest of the world.
7.44 p.m.
THE EARL OF BESSBOROUGH: My Lords, I am most grateful to all noble Lords who have spoken in this, to me, fascinating debate, but I should like particularly to thank the noble Lord, Lord Chalfont, and my noble friend Lord St. Oswald for their excellent winding-up speeches. It seems to me that there has been some general agreement about the importance of European consortia, bilateral or multi-national, at the industrial level as between firms with a minimum of Government interference. The noble Lord, Lord Sherfield, was particularly strong on this, but so were the noble Lords, Lord Kings Norton and Lord Balerno, among others. In my view this approach should certainly take priority over dealing with these problems through formal governmental organisations, although I am glad that the noble Lord, Lord Chalfont, has been able to tell us that there is a chance of our becoming members of the R and D Committee of the Six, the Mareéchal or Aigrain Group. Again, I was glad that the noble Lord, Lord Jackson of Burnley, stressed urban research in development, and those less exotic and expensive fields such as pollution, to which I personally attach great importance. I fully agree with all that the noble Lord said about this matter.

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We must, my Lords, as the noble Lord, Lord Chalfont, has said, work out European priorities. We do not quite know how this is going to be done, but it must be done through some group or in some way. And these priorities must be worked out often, but not always, on a cost effective basis. There was general agreement, I think, on the importance of single management control. All speakers have made important and distinctive contributions. I am sorry that I cannot mention them all, but I must now leave the floor to the noble Lord, Lord Boothby, and withdraw my Motion.
Motion for Papers, by leave, withdrawn.

THE PRICE OF GOLD AND INTERNATIONAL TRADE
7.48 p.m.
LORD BOOTHBY LORD BOOTHBY rose to ask Her Majesty's Government: Whether they are aware of the urgent need to double the price of monetary gold in order to provide sufficient international liquidity to finance the growing volume of world production and trade which is to be expected over the next decade, to prevent recurrent monetary crises, and to give necessary assistance to the underdeveloped countries. The noble Lord said: My Lords, I hasten to say that at this late hour I shall be as brief as possible, which means pretty brief indeed. As I am a little touchy on this particular subject, I think I ought at the outset to declare a personal interest: I own a few Consolidated Gold mining shares; I only wish that I owned more of them.
My Lords, we are living in an age of vast potential expansion, vast poverty and a vast shortage of international liquidity. I do not think anybody would deny this. Bank rate in this country is 8 per cent.—a crisis rate; if I may say so, a disgraceful rate—and interest rates in the United States and other countries are rising. But the dollar and sterling still claim to be the reserve currencies of the world. They do this with what result? Production is being throttled back in the rich industrial countries of the West, and money which is urgently needed in the underdeveloped and starving countries of the rest of the world is being denied to them. My question, therefore, is a perfectly simple one: how do Her Majesty's Government
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propose to get out of this dilemma by means of an increase in international liquidity, which is the only possible way?
As I have often said before, it all stems from Bretton Woods. The theoretical price paid there for fixed exchanges was adequate international monetary reserves, and they were not provided. The Americans then possessed most of the monetary gold of the world, and that is why they insisted on convertibility, which within two years brought about the first and biggest crash of the pound. I am on the Record about this. On July 31, 1947, I said in another place:
"This convertibility of sterling is imposing upon us an unbearable burden which we are simply not capable of carrying…It is sheer, stark insanity, in our present position, to embark upon this ludicrous course."—[OFFICIAL REPORT, Commons; cols. 765–6.]
That can be quoted from debates and no doubt will be in the OFFICIAL REPORT. Within five weeks, my Lords, convertibility was abandoned in disarray; and within two years the pound was sharply devalued.
True, the scarce currency clause was written into the Bretton Woods Agreement, but in fact it has never operated. Why? Because the whole onus of restoring a balance of payments was then put upon the deficit countries and not upon the surplus countries. Here again I am on the Record, because I said it at the time. As Dr. Aschinger subsequently said:
"When a country runs into deficit the fault usually lies with itself. Surpluses, on the other hand, are very often the upshot of inflationary trends in other countries."
The implications of this doctrine, if it is true, are not very encouraging for us; because it means that, if we do get into surplus, as Her Majesty's Government are desperately trying to do, it will be due to the defects of other countries; and that is not a very satisfactory situation.
I have frequently said that fixed exchange rates, unco-ordinated monetary policies (national monetary policies), a gold price fixed in 1934 and never since changed, and non-discriminatory international trade can never be made to mix or work. This has now been proved. There have been 11 devaluations of the franc and the pound since Bretton Woods. There has been a persistent and worsening shortage of national reserves. particularly gold. We have now reached a stage when restrictions of every kind

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are being imposed by most countries in the world, almost daily, in order to preserve a system that was allegedly designed to permit freedom of trade and payments—and, with it, economic expansion. Contraction is now the order of the day.
Two questions arise. First, was American insistence on convertibility at a fixed price of 35 dollars an ounce in 1945 at Bretton Woods due to the fact that at the time they had most of the monetary gold in the world, and with it economic domination over the world? I thought so, and said so, at the time. In fact, we did hand over economic power over Western Europe to the United States for nearly twenty years—witness Marshall Aid. And not only over Western Europe; over the whole world outside the Soviet orbit.
The second question is: was there a more sinister motive? Lenin (who nobody can deny had a capacious intellect) said that in order to overthrow the capitalist system gold had to be overthrown first. But he went on to qualify that statement. He said that in the existing state of the world, and until capitalism had been overthrown, the Soviet Union should use such gold production as they possessed—which is rather less than many of us think—to the best practical purposes. And they have used it to the best practical purposes. We do not know (I see the noble Lord, Lord Ritchie-Calder, shaking his head) how much gold the Soviet Union do possess; all we can say is that they are certainly using it to the best advantage.
Reverting to my question—was there a more sinister motive?—as I have said, Lenin stated that the overthrow of gold must be a necessary prelude to the overthrow of the capitalist system. Mr. Harry Dexter White was not a stupid man. Did he see ahead as far as that? On this point I do not carry with me my noble friend Lord Robbins, who is a passionate defender of Mr. Harry Dexter White. But before he died Mr. Harry Dexter White was being exhibited as a Communist and as a paying member—well, not a paying member but an actual member—of the Communist Party. Alternatively, it could have been that the ultimate demonetisation of gold, and its replacement as a world reserve currency by an inconvertible dollar, was the longterm objective of the United States. And
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I say to your Lordships tonight that neither of these is a feasible solution.
I conclude my speech with a few assumptions and a few conclusions. The assumptions are these. There is a great and growing shortage of international liquidity to finance a great and growing increase in the volume of world production and trade. Not even my noble friend Lord Balogh can deny that. Hence, what Lord Cromer has aptly described as the "Bankers' Bedlam". Too late to avert a crisis, the bankers scurry off to Basle, where they must have almost permanent rooms in the hotels, and there either fail to agree, or get the deficit countries, including ourselves, into even greater and more inextricable debt by means of "currency swaps" and other devices. Hence the I.M.F. Budget with which we are to be presented next month and which we face with some trepidation. I hope that it will not be too harsh. They are quite kind and quite genial chaps, the I.M.F. boys; but do not let us be under any illusion that it is the Chancellor of the Exchequer who any longer decides what the British Budget is to be. It is the I.M.F. boys who come over and pay such frequent visits to the Treasury who tell him what he had better do, and in fact what he has got to do.
My Lords, the third assumption is that gold will continue to be the basis of settlement of international surpluses and deficits, and for a long time to come will hold a privileged rank among international means of payment. The link between national reserves and gold must therefore be preserved. Why? Simply because the great majority of countries, especially in Europe, trust gold more than paper money, Government promises (just look at War Loan or Daltons when you think of Government promises), and paper panaceas such as the proposed Special Drawing Rights, which have no backing in terms of gold at all, and which in any event, even on the most optimistic assumption, cannot seriously dent the world illiquidity at the present time.
Two billion dollars has been mentioned as a maximum figure. It is nothing like enough. We should not forget, I think, that the purchasing power of the dollar itself has fallen by between 80 and 90 per cent. since 1940. The cure lies

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in expansion, industrial expansion, not further restriction; and a rise in the price of gold to 70 dollars an ounce would only be in line with the depreciation of the dollar in terms of purchasing power since the price was fixed at 35 dollars an ounce in 1934.
My fourth assumption (and I am nearing the end of my assumptions) is that by refusing to raise the price of monetary gold we have aggravated the liquidity shortage by discouraging the production of gold, now running at only about a 1 per cent. increase; and by diverting what is produced from central banks into private hands and for private purposes. We have made sterling almost useless, and the dollar, with the present U.S. deficit, highly suspect, as reserve currencies. We have created a great uncertainty about the future price of gold which we see reflected in the Press every single day and almost every hour of our lives. This is encouraging speculators all over the world, and meanwhile we have been forced to deny much-needed aid to the underdeveloped countries. If the drawing rights of the underdeveloped countries to-day were added together, the figure would not counterbalance that of the United States alone.
My fifth assumption is that the short-term debts of the United Kingdom are, as the noble Earl, Lord Cromer, has said, hollow bricks manufactured at Basle and elsewhere during the past five years, and gilded, for the sake of appearances, in mortgaged gold—and that is not real money to me. Our present so-called international system, as Enoch Powell so aptly said the other day, is based on the systemisation of a lie—the lie that the relative values of gold and of respective paper and credit currencies are constant; because they are not.
My sixth assumption is that reasonable stability of exchange rates, although highly desirable, is no longer of paramount importance. I do not go all the way with the noble Lord, Lord Crowther, when he says that fixed exchange rates should be done away with altogether, and that we should go back to floating exchange rates. I think there should be wider margins, and I leave it at that. As a seventh assumption and before I reach—to the great relief of your Lordships—my conclusions, I would remind you that
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Mr. Schweizer said only last year in New York that the pre-eminent role of gold in the international monetary system is still assured.
If that is the case, based on these assumptions I reach my conclusions, which are that there are only two ways out: first, the demonetisation of gold, using the S.D.Rs. as a screwdriver, and the replacement of gold by an inconvertible dollar. That is what Mr. Fowler, the Secretary of the U.S. Treasury, was clearly after in Washington last September. It proved to be a non-starter then; it will prove to be a non-starter for the rest of our lives, and I should think for the lives of our children and grandchildren. S.D.Rs, as a screwdriver? My Lords, an axe would be required; and a screwdriver is no axe.
The second way out is an increase in the price of gold. It is the only commodity the price of which has not moved since 1934, as against every other commodity in the world the price of which has doubled, trebled or quadrupled. To double the price of gold would give us all a breathing space, perhaps of ten years, perhaps even longer, in which to devise a rational international mcnetary system based on gold and the International Monetary Fund, which in due course should be developed into a Central Bank for central banks, as many of us have said, and many of the leading bankers have said during recent years, but about which absolutely nothing has been done.
This doubling of the price or gold would immediately increase the liquid reserves of the Group of Ten—the rich countries of the world—and enable them to avert constant currency crises between one another, and to give aid to the less fortunate peoples of the world—including, let me add, the coloured population of South Africa. It would greatly improve our own prospects for a continued rise in exports, for which the Government, to give them due credit, are striving very hard indeed, and enable us to realise at last that borrowing is not the same thing as having money in the bank. It would re-establish international monetary law embodied in the E.M.F. Charter and now being recklessly and flagrantly contravened. It would be the precise opposite of the old pre-1914 gold standard because it would be a guarantor

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of stability and liquidity alike, in a context of expansion.
Finally, my Lords, it would stop the speculation and private hoarding—speculation about the future price of gold, not only from day to day but from hour to hour—for many years, perhaps for ever, if the I.M.F. scheme which I have so long and so often advocated came off, because gold would flow only into central banks, and from them to the I.M.F. itself. I see no reason why, if this system were to be devised, the central banks should not give at least one third of their gold reserves to the I.M.F., which would then be in complete control. That degree of supra-nationalism seems to me to be necessary and desirable. It would bring an end to the present ghastly uncertainty about the future price of gold, with all its speculation and hoarding, and dreadful and dreaded consequences.
Meanwhile—and this is the end—the two-tier system is not working, and nobody can claim that it is. It has become an urgent necessity to find within the next few weeks—or months, at the outside—a temporary modus vivendi between Pretoria and Washington regarding the sale of newly mined gold to the central banks. If this happened—and mercifully there are signs of it under the new American Administration—we should be spared, at least for a time, the crises from which we reel to-day, one to another. The ultimate solution remains to double the price of monetary gold and to link this with a radical reform of the I.M.F. which would transform it into a Central Bank for central banks.
My Lords, I thank you for having listened to me yet again on this subject. I promise you that I shall not trouble you with it again for a very long time. Before I sit down perhaps I may say that I am reminded of a man who was very different from myself. He was ornate; I am by nature sedate. He was howled down in Parliament. That fate has not yet befallen me, although at one moment I feared it might befall me this evening when I made yet another speech on this subject. He was finally acclaimed as one of the greatest statesmen this country has ever produced. Alas! the only person who has ever acclaimed me as that, is myself. My Lords, Disraeli said, when he was howled down at the end of his
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maiden speech (and this is a Bowdlerised version): "You will not listen to me today but one day you will listen to me". And one day, my Lords, you will listen to me on the subject of the price of gold.
8.9 p.m.
THE EARL OF DUNDEE: My Lords, the reason why the noble Lord, Lord Boothby, has put down this Unstarred Question is because he wants a big increase in the present insufficient amount of international currency. What I should like to say is that all those who want to increase liquidity ought not to dispute too much with each other about the best means of doing so; for that will only help those financial and banking authorities in all countries who do not accept the need for greater liquidity, and who may not be in the majority but who have on their side the weight of inertia, and who also have on their side the timidity of ephemeral political Governments who, in democratic countries, are often apt to play for safety and to do nothing, especially if those who want something done spend all their time in disputing with each other about how to do it.
My own view, which I have expressed to your Lordships before, was put very well, and I could not put it better, by the late Lord Keynes in the draft which he wrote of his plan for a clearing union during the war, which was approved at that time by the British Treasury. Lord Keynes said:
"We need a quantum of international currency, which is neither determined in an unpredictable and irrelevant manner, as, for example by the technical progress of the gold industry, nor subject to large variations depending on the gold reserve policies of individual countries, but which is governed by the actual current requirements of world commerce, and is also capable of deliberate expansion and contraction to offset deflationary and inflationary tendencies in effective world demand."
My Lords, if Lord Keynes had got what he hoped to get then, the Free World would have had a clearing union with unconditional drawing rights on 25,000 million dollars worth of bancors, as he would have called them, and the Free World would now be a vastly stronger world. Its potential growth would not have been constantly hampered and frustrated by a shortage of international currency reserves which has caused these continual balance-of-payments crises in one free country after another.
LORD BOOTHBY: My Lords, may I interrupt my noble friend for one moment, merely to say that of course he is right, and Bancor would have been absolutely right. But Bancor was destroyed by Mr. Vinson and Mr. Harry Dexter White in the teeth of Keynes.
THE EARL OF DUNDEE: My Lords, I know it was. I was going to say that the noble Lord, Lord Beswick, yesterday, in reply to a Question, was good enough to give your Lordships sonic comparative figures about international currency reserves and world exports. He gave the figures for 1948: total amount of exports 53·3 thousand million dollars—or 53·3 billion dollars, as the Americans call it; total amount of reserve currencies in 1948, 48 billion dollars. In 1967 there were 190·5 thousand million dollars of exports, compared with only 73·5 billion dollars of currency reserves. If I may add one more figure, which I got from the International Monetary Fund publication, in 1938—before the war—the figures were 27,000 million dollars of exports and about 29,000 million dollars of reserves. So that in 1938 the reserves exceeded the exports by 7 or 8 per cent., in 1948 the exports exceeded the reserves by 10 or 11 per cent., and in 1967, now, the reserves are only 37 per cent. of world exports, compared with more than 100 per cent. before the war.
My Lords, surely when the noble Lord gives the expected figures by which international reserves would be increased by the Special Drawing Rights of something like 2 billion dollars a year for five years, amounting to about 2 per cent. of the total, he must agree that these increases are dwarfed by the tremendous increases in exports for which he gave your Lordships figures yesterday. The noble Lord quite rightly added that the velocity of circulation reduces the need for more currency. Of course that is true, both in domestic monetary transactions and in international ones, too. But the noble Lord would surely not suggest that the velocity of circulation since the war has increased by nearly 300 per cent.
LORD BALOGH: My Lords, may I ask the noble Earl a question?
THE EARL OF DUNDEE: The noble Lord is going to speak in a minute; could he not put it then?
LORD BALOGH: I should like to ask a question, not to make a statement. What does the noble Earl mean by velocity of circulation of gold?
THE EARL OF DUNDEE: My Lords, I do not know if the noble Lord was in the House at Question Time yesterday, but when the noble Lord, Lord Beswick, very kindly gave me these figures on the recent comparisons between currency reserves and world trade, he pointed out, quite rightly, that the quicker money circulates the less of it you need; and that is an obvious platitude.
The noble Lord, Lord Boothby, as he told us, has been giving advice to many people for a very long time, and for some reason they have never taken his advice. But he has perhaps partly made up for it by continually telling us how right he has always been. Let us suppose that, by sonic miracle, the financial and monetary authorities of the world were to accept the noble Lord's advice now and double the price of gold. The present total of international currency reserves given by the noble Lord, Lord Beswick, was 73,000 million dollars, and last July he gave the distribution of this figure between gold and paper currency—about 40,000 million dollars of gold and the balance in paper currency. If Lord Boothby's suggestion were adopted, that would only increase international reserves by another 40,000 million dollars, so that you would have 80,000 million dollars worth of gold, and adding on the other 33,000 million dollars of paper currency you would get a total of 113,000 million dollars, which is still less than 60 per cent. of the total of world trade, still a much lower percentage than we had either in 1948 or in 1938. I should not have thought that an increase of this order was an unreasonable one, having regard to the needs of the world for more international liquidity.
Of course I know the noble Lord cannot get up and say that he is in favour of increasing the price of gold. It is a matter which has often been considered, sometimes favourably, by the Treasury, but the great obstacle is the attitude of America. without whose agreement it would not be any use. The late President Kennedy was advised, which your Lordships may think was not good advice, but he took it, to give a pledge that the gold content of the dollar would never be reduced. In American economic termin

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ology devaluation is synonymous with raising the price of gold, which of course is not really true at all. It would be true if you devalued the dollar in terms of gold but did not devalue other currencies in terms of gold. But if you devalue all currencies simultaneously in terms of gold, that simply means that you are acknowledging the fact that gold ought to have risen in price, as all other commodities have risen, in the last thirty or forty years. But if the Americans think it is a matter of national pride that they cannot do this, it would not be practicable to try to do it without them. What we can perhaps do is to talk to people of influence on institutions like the Group of Ten or O.E.E.C., who may be willing to listen and to think of, to them, new ideas of this kind. But if we do not, if we cannot persuade the Americans to agree to an alteration in the value of gold, we must at least try to persuade them and others to do something upon an immeasurably larger scale than has been done by the recent Special Drawing Rights Scheme.
Of course it is true that, in the last twenty or thirty years, the economy of the Free World has advanced. But it has advanced unevenly, like a cripple with one leg and a crutch; and the only reason why it has been able to continue to advance in the uneven way in which it has advanced, is that the United States have never been required to pay off their vast external currency deficit which has been accumulating for the last twenty years. Suppose that they found they had to pay it off; suppose that the international bankers required them to pay back some of it—it amounts, I think, to more than 20,000 million dollars. Or suppose that you got an American Congress or an American Administration who suddenly felt that they ought to try to pay off their foreign debts in foreign currency. Or suppose that the American public became tired, as they may well do some day before long, of bearing so much of the burden of helping underdeveloped countries, of defending the Free World and of helping other countries with their trading deficits.
Suppose that were to occur, and that America were to stop accumulating this vast currency deficit. The economy of the Free World would then collapse more disastrously than it did in 1931; and if
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we are to get rid of this lurking danger which is always behind us, we must increase international liquidity to a far greater extent than what is now proposed, and we must do it soon.
8.23 p.m.
LORD BALOGH: My Lords, I rise in fear and trembling. When a humble person like myself disagrees with the noble Lord, Lord Boothby, and the noble Earl, Lord Dundee, he must indeed be in terrible panic. Nevertheless, if I rise to my feet in order to oppose their view, it is really because I understood Keynes once to say that gold is one of those barbarous relics which mislead us into the abyss. The noble Lord, Lord Boothby, said that we ought to raise the price of gold in order to end the uncertainty about its price. Should one, for instance, legiti-mise car speeding because there are many people who exceed the speed limit? Should we further speculation by satisfying people's speculative urge, by giving them profits, by raising the price of gold? They will thirst for more.
What is most interesting in this debate is that we have never been given facts: nor have we been given any idea of the relationship of the monetary side to the real facts of production. First of all, we ought to look at trade. Since the last World War trade has expanded far faster than production, and it is still rising very fast indeed. There is no proof that there is a shortage of international liquidity if you look at trade, because trade has never before been expanding quite so fast. Even last year the expansion was near its maximum—not quite the maximum, but near its maximum. So from that point of view, again, there is absolutely no reason to suppose—
LORD BOOTHBY: My Lords, may I interrupt the noble Lord for one moment, to ask him about the prosperity of South-East Asia and South America?
LORD BALOGH: My Lords, the prosperity of those countries is connected with various political factors into which we do not now need to enter. In any case, I could not give them because I am not a great expert on them, although I have visited those countries. But I should not have thought that it had anything much to do with gold. Actually, the gold reserves of the Latin American countries have increased quite smartly. One of

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the troubles is that they cannot spend it fast enough on development expenditure.
The noble Earl, Lord Dundee, says that he does not believe that the velocity of circulation (whatever he may mean by that in this context) is rising very fast. What is happening is that on the basis of a certain amount of gold a much larger credit is built up. You may express it in this way—I think it is a perfectly sensible way of expressing it—but the real situation is that we have expanded credit on the basis of gold and foreign exchange reserves much further than it was expanded before. Indeed, what I am a little puzzled about is that the noble Earl, Lord Dundee, now says that we want to have more liquidity because the monetary circulation has not risen fast enough. I always understood that his friends, both here and in the lower House, had been complaining that the monetary circulation has risen too fast and that our Government at the moment were rather reckless in increasing monetary circulation in this country too much.
THE EARL OF DUNDEE: My Lords, I think the noble Lord is confusing domestic monetary circulation with international monetary circulation. My remarks about velocity were simply a comment on what Lord Beswick said yesterday in reply to a Question, and if the noble Lord would take the trouble to read it I think he would understand it.
LORD BESWICK: My Lords, I think in fairness to the noble Earl I ought to say that I was referring to the improved or increased international co-operation, the swap arrangements and so on, which enabled us, as my noble friend is also saying, I think, to make a given quantity of monetary reserves do a greater job.
LORD BALOGH: But, my Lords, the internal circulation has an immense amount to do with it; it has a most intimate connection with it. What does international liquidity do? It is to pay balances; not for trade—for trade balances. If all countries expand together the trade can expand rapidly without the balances rising, because both imports and exports rise together. The need for reserves arises when there is a great difference between the policies of various important Governments in respect to their internal prosperity. If one country expands rapidly then the other will not. Difficulties have arisen to some extent,
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but only to some extent, from the fact that the Germans especially, and to some extent also the Japanese, have not been expanding that fast in terms of money, but they have been expanding very fast in real terms; therefore their exports have gone up, their imports have not risen as fast, and we have had to pay in cash. That sort of cash payment needs international liquidity. International liquidity is necessary to pay for the balances.
I fear that for us, the British, now to say that we need more international balances is not altogether a very tactful or a very good thing, because obviously our personal problems are involved. Therefore it would be much better if we waited so that somebody else should take the matter up so far as the international situation is concerned. Because foreign countries—and especially the French—will make an enormous case against us by saying that we want much more international liquidity in order that we may be able to go on in what they call our "profligate way". Obviously there is little in that case again us; but for tactical reasons I am sorry that the noble Lord, Lord Boothby, has raised this matter just now.
It seems to me that if this world is to find its balance again there are two major problems to be overcome. The first is, as the noble Lord, Lord Boothby, said himself, very rightly, that a system should be established in which creditor countries have to contribute to the balancing process as much as debtor countries; that creditor countries should be made to benefit by expanding as much as debtor countries are forced to contract. In that way, the need for international liquidity will decrease.
The second thing, it seems to me, is that in making our readjustments we shall have to give up our main reliance on indirect global controls. Neither deflation nor inflation have been working very well when managed either by fiscal or by monetary policy. It seems to me that a much more sophisticated and much more direct policy on incomes VS ill be needed if the creditor countries are to be permitted to expand without their fear of being overwhelmed by an irresistible wave of inflation—which obviously Professor Shiller is now resisting; and by resisting it he makes the process of readjustment in all other countries much more

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difficult. In our case it is the increase in our wages and other incomes which constitutes the basic danger for our international liquidity and our international solvency. So long as our incomes rise faster than our productivity we shall not be able to accelerate the increase in productivity sufficiently, our costs per unit of output will rise faster than those of other countries, and we shall, therefore, be in debt; and therefore we shall lose our economic independence. It seems to me that this is the point to emphasise.
I do not believe that a revaluation of gold—apart from giving profit to people who ought not to get any profit out of their anti-social activities, and apart from giving a national present to Russia. to Rhodesia and to South Africa—will accomplish very much. It may accomplish one thing, however: that the rich will get richer and the poor may get much poorer, because some of their debts have been expressed, unfortunately, in gold. Therefore, I feel that for once I must, with deep sorrow, part company with my noble friend Lord Boothby—I hope he still calls me that after this. I think that much more direct, much more thoughtful, much less arbitrary and much less "squandermania" measures are needed than a change in the price of gold.
8.35 p.m.
LORD FRASER OF LONSDALE: My Lords, I arrived in Britain from South Africa only to-day. I only knew of this debate at a late hour to-day, and therefore I am speaking almost off the cuff, though noble Lords are aware that on a number of previous occasions I have shown an interest and declared an interest in South Africa. I shall be very brief and deal with only two or three points in a vast subject. One of them was mentioned by the noble Lord who has just sat down. We do not want, he said—he almost said it would be a painful thing, but he did not quite use those words—to reward those who do not deserve to make a profit. Now, who are they?
LORD BALOGH: Speculators.
LORD FRASER OF LONSDALE: My Lords, people who mine. Why should they not be rewarded fairly according to
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the cost of the efforts they make, just as every other labourer is worthy of his hire? Investors—if you like, speculators. Is not this a word bandied about by politicians to cause prejudice? A speculator is surely a person who buys and sells, and thereby makes a market; and there must be a market, whether you are talking about rice, wheat, boots and shoes, platinum, diamonds or gold.
LORD BOOTHBY: My Lords, if I may interrupt my noble friend for one moment, I might say that Lord Keynes was one of the greatest and most successful speculators of all time.
LORD FRASER OF LONSDALE: My Lords, indeed he was. It is no crime to speculate. Secondly, it is no crime to enrich South Africa or Russia because you do not happen to agree with some of their internal policies. If we were to devise our economic way of life in order to enrich those countries who pursued policies we liked, and to avoid enriching those countries who pursued policies we did not like, we should get into a terrible tangle. Surely we must trade with the whole world without prejudice, and without trying to direct our affairs this way or that.
The noble Lord, Lord Balogh, said that not only would the rich get richer—which he would regard as a terrible thing apparently—but the poor would get poorer. Not at all. Whenever the rich get richer the poor get richer too, because there are more riches to go round, and if trade and industry and world movement of affairs increases, it enriches everybody. If South Africa gets richer, or Russia gets richer, the world is not going to be impoverished thereby; it is going to be enriched. In particular, in southern Africa neighbouring African countries are going to be enriched because more and more the Republic of South Africa is itself becoming not only an economic adviser and supporter, but a power in southern Africa, a power for good, just as we have sought in vain for many years to be a power for good in other parts of the world. Unless one is going to cut off one's nose to spite one's face, one cannot say, "We will not do something that is going to be good for the trade of the whole world because it will enrich particular countries".

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I wish to make a plea for a slightly different solution from that which has been argued by the noble Lord, Lord Boothby, and that is a return to the free rates of exchange and a free price for gold which was the system for the greater part of the last 100 years. 1 have ventured to say on other occasions that it is only since we have had a fixed price for gold that we have had recurrent gold crises; they did not exist before. If the price of gold is fixed by the terms of demand and supply, by the daily market in gold itself, then it is self-adjusting, and one does not build up the pressures which lead to these recurrent and upsetting gold crises.
The noble Lord, Lord Boothby, ventured to quote himself from Hansard of twenty years ago, if I may say so with great effect. I have not got Hansard here and I did not expect to speak tonight, but I may remind those Members of the House who happened to be present of a debate on finance which was held in the last week of November of last year. Just before I went to South Africa I spoke on this subject, and ventured to say that there would be another crisis in a short time, possibly within a year. In fact it occurred within a fortnight, and we had Mr. Jenkins's mini-Budget. I prophesy again, and I am sorry to be a prophet of woe, that unless we tackle together the problem of the exchanges and the problem of gold intelligently and sensibly—and that means freeing it, and freeing it probably means allowing it to rise—we shall be forced to do it in circumstances after yet another crisis. Who knows that it may not come in another fortnight? If it does not come in another fortnight, it may be in another month; and if it is not in another month, it will be in another six months. But it is as inevitable as the return of the sun to-morrow morning. Therefore, I support my noble friend Lord Boothby, and I am glad that he has brought this matter back before the House.
I should like to say one last word to my noble friend Lord Dundee. If Keynes's schemes for this and that had been followed, how different it would have been. But how many "if's" and "and's" are there in the world? If Socialism had operated for the last fifty years, the noble Lord, Lord Balogh. no dou'lle would he richer in intelligence and in happiness, if he was not a com
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missar as well. Maybe we would all have been better off and the rich would have been poorer or the poor richer, or perhaps they would all have been poorer. But "if's" and "and's" do not get us anywhere. The fact is that people as a whole do not believe in Keynes. I was a believer in Keynes when I was a young man, and read him with the greatest of interest. I hoped that his wisdom might prevail among the leaders of the world: but it did not. The fact remains that gold is the only guiding commodity in the financial structure in which all people in the world believe. Theorists like Lord Balogh who do not believe in it are limited in number, and they are not the people who rule Governments—even he does not now, I believe. Gold is believed in; paper is not.
I apologise for repeating one other sentence which I uttered last November. We in these Islands and the voters in most countries that have voters do not trust their own Treasuries. How much less can one trust the Treasuries of other countries? If one does not trust them, how can one expect to make a paper credit-note work?
8.45 p.m.
LORD RITCHIE-CALDER: My Lords, I intervene only because I am provoked by Lord Boothby's reference to Harry Dexter White. I am reporting a circumstance which was part of history. I was the messenger in 1942, just after Pearl Harbour, who took to America Keynes's proposals on Bancor. I did not understand it; I do not understand it now. I was merely the messenger "by hand of officer alone" on a mission to the White House. One thing which was clear, obvious and manifest—Keynes said it and I say it now—is that Harry Dexter White was the tool of Wall Street. He was not a Communist; he never was a Communist, and he died in the process of being accused of being one. That was in the McCarthy days.
I would ask Lord Boothby not to repeat this absolutely macabre story in which White was identified as a Communist. He was not. He was, in Keynes's terms, a tool of 'Wall Street, Why? Because, as the agent of Wall Street, he shot down Bancor. He destroyed the whole idea of an international currency for which

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Keynes was working and which he canvassed in this Chamber, and which one might think was workable. It was not destroyed by some great Communist intrigue: it was destroyed by the demand at that time in the United States that one should not have any international currency but the dollar—but, by concession, they conceded the acceptance of sterling as one of two reserve currencies. There was no gold dollar to which this could be related, yet the whole of the subsequent currency was related to a dollar which was never minted because the U.S. itself had gone off the gold standard—a dollar which did not exist.
If we are going to ask ourselves this question, I must seriously ask your Lordships to consider what is the literal meaning of gold. I do not care who is interested in gold investments or gold mining. There is only one purpose that I know to which to put gold and make it work. That is to make a wedding ring of it and put it on your wife's finger and send her to the wash-tub. There is no other purpose for gold except ornamental or in backing up a currency. We have to escape from the mythology which those like the noble Lord, Lord Fraser of Lonsdale, are creating. It is a mythology which we must destroy. The noble Lord, Lord Balogh, said that we are creating an enormous potential of production. We are trying to put it through gold pipes but we have not enough gold to produce the right diameter.
LORD BOOTHBY: My Lords, before the noble Lord, Lord Beswick, replies perhaps he would allow me to say this to the noble Lord, Lord Ritchie-Calder. If he gives his personal authority that Harry Dexter White was not a Communist, then I accept it. I also have it on the authority of the noble Lord, Lord Robbins. The only thing that strikes me as funny is that before he died he was proclaimed as a Communist, not only in the American Press but in the Press of the world, and I have never seen it authoritatively contradicted.
LORD RITCHIE-CALDER: My Lords, may I reply by saying that the answer is that that is McCarthyism.
8.49 p.m.
LORD BESWICK: My Lords, I was fascinated by what the noble Lord, Lord
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Boothby, had to say, and I was equally interested to hear what was said by the noble Earl, Lord Dundee, by my noble friend Lord Balogh, by the noble Lord, Lord Fraser of Lonsdale, and my noble friend Lord Ritchie-Calder. This is indeed a fascinating subject. It is a mythology that we are discussing. But I am particularly grateful to the noble Lord, Lord Boothby, for raising this matter, as it gives me an opportunity of saying that the Government are opposed to an increase in the price of monetary gold and I am going to give the reasons why.
Of course, as the noble Lord, Lord Boothby, the noble Earl, Lord Dundee, and others have said, there is a need for more international liquidity. The point at issue is the method of achieving it. To raise the monetary price of gold would certainly increase liquidity, and it could conceivably bring about a certain strengthening of the monetary system at least for a short time. But it would also have many harmful effects, of which not least would be the loss of the present opportunity of reforming the international monetary system on a sounder and better basis. I propose to spell out six reasons why the Government reject this pressure for an increase in the official gold price.
First, it would mean an excessive and sudden increase in liquidity. We cannot have intermittent changes in gold price if there is to be stability in the international monetary system. That is why in 1934 it was necessary to raise the price to a level at which people could have confidence in it for a long period. Those who advocate an increase in the price as does the noble Lord, Lord Boothby, call for a doubling of the price Ito 70 dollars an ounce. Think what this would mean, my Lords. World gold reserves at present stand at about 39 billion dollars, out of total reserves of gold and foreign exchange of about 67 billion dollars. The effect of doubling the price would be immediately to raise the total of world reserves to about 106 billion dollars, plus an enormous flow from new production and private holdings into official reserves. We need an increase in liquidity, but not a sudden jump like this. In due course a time would come when there would be new pressure for another increase in the price of gold and the world would again be facing the

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question whether the increase in liquidity was to come about by this means or by some other.
Secondly, the gold price method would mean that the increase of liquidity would be distributed in a harmful and undesirable way. The gold in official reserves at present is overwhelmingly concentrated in the hands of the strong countries. Those with already ample reserves would have more, while many countries with exiguous reserves would gain nothing. I do not need to emphasise the fact that it would be grossly inequitable and would leave the countries which have held their reserves mainly in the form of currencies with a justifiable grievance. It would be an inefficient method. More reserves are needed for the world as a whole, if world trade is to benefit, not just for those who are already well padded. I am not arguing that an increase in the gold price is to be resisted because it would benefit countries like South Africa and the Soviet Union. Indeed the truth is that it would probably create a major inflationary problem in the South African economy. That is a secondary point. The main point is that the new liquidity would not go where it is needed. I know that it is suggested by M. Rueff, the gold apostle, and Lord Boothby in his new apostolic role, that after the price has been increased something might be done to redistribute some of the gains to the less-developed countries. I regard this as an admission of the inadequacy of this technique for increasing liquidity. The practical problems involved in making such a redistribution would obviously be very great.
Thirdly, so sudden and large an increase in liquidity would probably have inflationary effects. This is not a matter of Governments going on a spendng spree with their newly-gained reserves. The greater danger of inflation lies in the unloading of private hoards which would be provoked by the price increase. Countries where there is a lot of private gold hoarding, such as France and India, would feel this particularly.
Fourthly, and most importantly, an increase in the price of gold would probably mean throwing away an opportunity to advance towards a more rational monetary system. If we rely on gold, no matter what the price, the supply of international reserves is arbitrary. The noble Earl, Lord Dundee, quoted the
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words of Lord Keynes in his "Proposals for an International Clearing Union", and he could not have quoted better words. I should have quoted them myself if the noble Earl had not given them to us. But instead I will quote from someone else, from the truly prophetic speech made in this Chamber—and it was in this Chamber, although at the time it was occupied by the House of Commons—on December 12, 1945, by Mr. Boothby, as he then was. He then said:
"I believe it"—
that is, gold—
"is the greatest obstacle to the one thing which will get the world to its economic goal, which is a continuous policy of economic expansion".
I know, as he reminded us, that he was relating that evil of gold in the context of Bretton Woods, but it was gold itself which he attacked as he made clear in remarks which followed. He said then:
"Many hon. Members will remember vividly the Debates of 1925, and the old days of the gold standard of the 1920s. This Debate is like living the whole thing over again. We finished the last war"—
that was, of course, the 1914–18 war—
"a prosperous country, with a prosperous agriculture. It took ten years of deflation to turn it into a really poor country, with a derelict agriculture, the workers migrating to the United States, factories, dockyards and workshops closed down, and with 3 million unemployed. That is what the gold standard did to us last time."
Progress towards the objectives of a genuinely international currency has been slow. Lord Keynes's far-seeing proposals have still to be translated into reality. It may be many years before we get to a point at which the world can rely on an international paper money managed by an international agent or some kind of World Central Bank. But we should not underestimate the progress we have made with the scheme for Special Drawing Rights. Nor should we underestimate the contribution made by this country to get the world to move forward towards reason.
Many people may have been misled by the title of "Special Drawing Rights". S.D.R.s are not a borrowing facility. They are a new form of reserves in themselves. They are quite unlike the existing drawing rights in the I.M.F.—they do not confer on countries the right to draw or borrow currencies from a central pool. Indeed, the radically new thing about

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S.D.R.s is that there is no central pool or deposit of currencies or gold to back them. Their value lies simply in the fact that all participants in the scheme have undertaken, within the regulations of the scheme, to accept S.D.R.s from other members and provide currency in exchange. In practice, therefore, they will be used in much the same way as gold is now used for the settlement of deficits.
The noble Lord, Lord Boothby, said that the scheme would never get off the ground, but it is now in process of ratification, and there is every reason to expect that that process will be completed this spring, and Her Majesty's Government hope that it will be possible to make the first distribution of S.D.R.s before the end of this year. An increase in the price of gold at this stage would, I believe, undercut the foundations of this new edifice. The incentive to move forward would go. We should be back to relying on the arbitrary supply of a certain beautiful metal. International co-operation to regulate the world's supply of reserves would have been dealt a very heavy blow.
Fifthly, my Lords, an increase in the price of gold would create very great problems for the International Monetary Fund, and especially for its debtors. This is a point which we in this country must take very seriously indeed. Debts to the I.M.F. carry a gold-value guarantee and a doubling of the price of gold would mean that those debts would be doubled in terms of sterling or dollars. It is true that the I.M.F. has the right to waive this guarantee. But since there is an absolute gold-value guarantee on the Fund's liability to its creditors, which cannot be waived, we can by no means take it for granted that our debts would not be increased. The I.M.F. would be in some difficulty, and we cannot be quite sure how these problems would be solved. We should of course benefit from an increase in the price because the value of our own gold holdings would go up; but the fact is that our debts to the I.M.F. at present exceed our holdings of gold.
Finally, although we must recognise that in practice the gold price is in the hands of the United States authorities, the fact is that the American Government is opposed, as are we, to an increase in the
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price of gold. This applies to the new Administration as it did to the old.
LORD BOOTHBY: My Lords, is the noble Lord sure?
LORD FRASER OF LONSDALE: Qualify it.
LORD BESWICK: I do not qualify that at all. That is the opinion which Her Majesty's Government hold; and, of course, we have had recent opportunities to find out what is the policy of the United States of America.
My Lords, these reasons seem to me to add up to a formidable case indeed against an increase in the price of gold. I have made no mention so far of the two-tier gold system. Since the conference in Washington a year ago the monetary gold price has been separated from the price of gold on the free market. This is taken by some (and it was by the noble Lord, Lord Boothby, this evening) as being an indication that the system is about to collapse. But the fact is that, despite recent bidding in a thin market, the two-tier system has worked smoothly since it was introduced a year ago. It is, in a way, a recognition of the dual role of gold: on the one hand, as a medium for official reserves and, through the dollar price, a yardstick for exchange rates; on the other hand, as a commodity which has industrial uses and which people all over the world have always liked to possess, in the same way as they like to possess silver or diamonds. But, of course, there is an overlap between the two functions. A certain amount of private buying of gold takes place because people believe that the monetary price will go up. It is true that private and industrial demand for gold has been rising steadily, but this does not give us any indication of the price which gold would command if it were purely a commodity. The price is inflated by hopes that the monetary price will be increased—and, as I have said, we are against an increase in the monetary price.
Similarly, it is quite misleading to draw attention to the general increase in prices since 1934, when the gold price was fixed, and to argue that the gold price should have gone up in parallel. The fact is that the gold price was fixed in 1934 at a level far above its commodity value—at a level at which the

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United States could buy all the gold it wanted. But there is no reason to believe that the sequence of events of the early 1930s will be repeated in the late 1960s or in the 1970s. We are living in a very different world indeed.
LORD BOOTHBY: My Lords, if the noble Lord will forgive me for saying so, by raising the price of gold to that level it pulled the world out of the greatest depression the world has ever known.
LORD BESWICK: Yes, my Lords; that step was then taken and it did have tin effect—but here we are again arguing the same old points all over again. As I said earlier, the noble Lord, Lord Boothby, wanted, so did I want and so does Her Majesty's Government want a rational system which would start us off on a new basis. My Lords, for these reasons I have to reject the proposals that were put forward so interestingly by the noble Lord, Lord Boothby.

MINES AND QUARRIES (TIPS) BILL
Returned from the Commons with the Amendments agreed to.
TEESSIDE CORPORATION BILL
Brought from the Commons; read 1ª, and referred to the Examiners.